What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-11-18 compared with 2020-11-19 · 439 added, 555 removed, 1635 unchanged (38% of the section changed)

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Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

Report of KPMG LLP, Independent Registered Public Accounting Firm

Consolidated Income Statements – Years Ended 30 September 2020, 2019, and 2018

Consolidated Comprehensive Income Statements – Years Ended 30 September 2020, 2019, and 2018

Consolidated Income Statements – Fiscal Years Ended 30 September 2021, 2020, and 2019

Consolidated Comprehensive Income Statements – Fiscal Years Ended 30 September 2021, 2020, and 2019

Consolidated Balance Sheets – 30 September 2021 and 2020

Consolidated Statements of Cash Flows – Years Ended 30 September 2020, 2019, and 2018

Consolidated Statements of Equity – Years Ended 30 September 2020, 2019, and 2018

Consolidated Statements of Cash Flows – Fiscal Years Ended 30 September 2021, 2020, and 2019

Consolidated Statements of Equity – Fiscal Years Ended 30 September 2021, 2020, and 2019

Notes to Consolidated Financial Statements

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Deloitte & Touche LLP, an independent registered public accounting firm, has issued its opinion on the Company’s internal control over financial reporting as of 30 September 2021 as stated in its report which appears herein.

/s/ Seifi Ghasemi /s/ M.

Seifi Ghasemi M.

Chairman, President, and Executive Vice President and

/s/ Seifi Ghasemi /s/ Melissa N.

Seifi Ghasemi Melissa N.

Chairman, President, and Senior Vice President and

Chief Executive Officer Chief Financial Officer

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We have audited the accompanying consolidated balance sheets of Air Products and Chemicals, Inc.

and subsidiaries (the "Company") as of September 30, 2020 and 2019, the related consolidated income statements, comprehensive income statements, statements of equity, and statements of cash flows, for each of the two years in the period ended September 30, 2020, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of September 30, 2021 and 2020, the related consolidated income statements, comprehensive income statements, statements of equity, and statements of cash flows, for each of the three years in the period ended September 30, 2021, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue – On-site Industrial Gas Customer Contracts – Refer to Notes 1 and 4 to the financial statements

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition – On-site Customer Contracts – Refer to Notes 1 and 4 to the Financial Statements

Critical Audit Matter Description

On-site industrial gas customer contracts involve large capital investments to construct facilities and serve customers who require large volumes of gases and have relatively constant demand.

On-site industrial gas customer contracts involve large capital investments to serve customers who require large volumes of gases and have relatively constant demand.

The Company builds, owns and operates facilities on or near the customer’s facilities to produce and supply the customer with gases under a long-term arrangement.

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• We considered customer payment history, subsequent events, write-offs of customer receivables, collectability, modification of contract terms, and other factors that could impact the amount and timing of revenue recognition.

Revenue Recognition – Cost Incurred Input Method – Refer to Notes 1 and 4 to the Financial Statements

Critical Audit Matter Description

The Company enters into sale of equipment contracts with customers for which the promised goods or services contained within the contracts are integrated with or dependent upon other goods or services for a single output to the customer.

Revenue from the sale of equipment contracts is generally recognized over time as the Company has an enforceable right to payment for performance, as completed, and performance under the contract terms does not create an asset with an alternative use.

The Company uses a cost incurred input method to recognize revenue by which costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations.

Accounting for contracts using the cost incurred input method requires a high degree of judgment to estimate total costs used to recognize revenue.

Changes in estimated costs could have a significant impact on the timing of revenue recognition.

Auditing these estimates requires extensive audit effort due to the complexity around the cost estimation process which involves multiple inputs and variables for sale of equipment contracts and a high degree of auditor judgment when evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to complex contracts with customers for sales of equipment included the following, among others:

• We tested the effectiveness of the Company’s controls related to the amount and timing of revenue recognition for sale of equipment contracts, including controls over developing the estimated costs at completion and the evaluation of changes in estimated total costs for sale of equipment contracts.

• We evaluated the appropriateness and consistency of the methods and assumptions used by management to evaluate estimated total costs and changes in estimated costs to determine if the estimated total costs at completion for sale of equipment contracts were reasonable.

• With the assistance of our professionals having expertise in accounting for sale of equipment contracts, we performed the following:

◦ Evaluated management’s ability to estimate total costs at completion for each selected contract by performing corroborating inquiries with the Company’s project managers and personnel involved with the selected contracts, including inquiries related to the timeline for completion and estimates of future costs to complete the contract.

◦ Selected a sample of estimates of future costs to complete and evaluated management’s estimates of total costs at completion by performing one of the following:

▪ Comparing management’s estimates to documents such as work plans, customer purchase orders, third-party supplier invoices, and subcontractor agreements, or

▪ Developing independent estimates of total costs to completion and comparing our estimates to management’s estimates.

Our independent estimates were based on information such as work plans, customer purchase orders, third-party supplier invoices, subcontractor agreements, and similar historical project experience.

◦ We compared the gross margin on sale of equipment contracts to that of historical periods in order to evaluate the Company's ability to accurately estimate costs at completion.

/s/ Deloitte & Touche LLP

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We have served as the Company's auditor since 2018.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Air Products and Chemicals, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of income, comprehensive income, cash flows and equity of Air Products and Chemicals, Inc.

and Subsidiaries (the Company) for the year ended 30 September 2018, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended 30 September 2018, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2002 to 2018.

Philadelphia, Pennsylvania

November 20, 2018

Air Products and Chemicals, Inc.

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CONSOLIDATED INCOME STATEMENTS

Year Ended 30 September ( Millions of dollars, except for share and per share data)

(Millions of dollars, except for share and per share data)

Fiscal Year Ended 30 September

2021 2020 2019

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Cost reduction actions — — 25.5

Gain on exchange of equity affiliate investments — 29.1 —

Gain on exchange with joint venture partner 36.8 — 29.1

Company headquarters relocation income (expense) — 33.8 —

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Income From Continuing Operations 2,044.6 1,945.4 1,809.4

(Loss) Income from discontinued operations, net of tax ( 14.3 ) — 42.2

Income (Loss) from discontinued operations, net of tax 70.3 ( 14.3 ) —

Net Income 2,114.9 1,931.1 1,809.4

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Net income from continuing operations $ 2,028.8 $ 1,901.0 $ 1,760.0

Net (loss) income from discontinued operations ( 14.3 ) — 42.2

Net income (loss) from discontinued operations 70.3 ( 14.3 ) —

Net Income Attributable to Air Products $ 2,099.1 $ 1,886.7 $ 1,760.0

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CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

Year ended 30 September (Millions of dollars)

2020 2019 2018

(Millions of dollars)

Fiscal Year Ended 30 September 2021 2020 2019

Net Income $ 2,114.9 $ 1,931.1 $ 1,809.4

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Currency translation adjustment

— ( 2.6 ) 3.1

Derivatives, net of tax of $ 13.9 , ($ 17.7 ), and $ 4.5

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Net Income Attributable to Noncontrolling Interests 15.8 44.4 49.4

Other Comprehensive Loss Attributable to Noncontrolling Interests ( 2.0 ) ( 19.9 ) ( 19.0 )

Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests 38.8 ( 2.0 ) ( 19.9 )

Comprehensive Income Attributable to Air Products $ 2,723.3 $ 2,122.2 $ 1,126.3

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CONSOLIDATED BALANCE SHEETS

30 September ( Millions of dollars, except for share and per share data)

(Millions of dollars, except for share and per share data)

Current Assets

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended 30 September ( Millions of dollars)

(Millions of dollars)

Fiscal Year Ended 30 September

2021 2020 2019

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Net income attributable to Air Products 2,099.1 1,886.7 1,760.0

Loss (Income) from discontinued operations 14.3 — ( 42.2 )

(Income) Loss from discontinued operations ( 70.3 ) 14.3 —

Income from continuing operations attributable to Air Products 2,028.8 1,901.0 1,760.0

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Facility closure 23.2 — 29.0

Undistributed (earnings) losses of unconsolidated affiliates ( 161.9 ) ( 75.8 ) ( 59.8 )

Undistributed earnings of equity method investments ( 138.2 ) ( 161.9 ) ( 75.8 )

Gain on sale of assets and investments ( 37.2 ) ( 45.8 ) ( 24.2 )

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Proceeds from stock option exercises 10.6 34.1 68.1

Investments by noncontrolling interests 136.6 17.1 —

Other financing activities ( 28.4 ) ( 97.2 ) ( 19.9 )

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Discontinued Operations

Cash used for operating activities — — ( 12.8 )

Cash provided by operating activities 6.7 — —

Cash provided by investing activities — — —

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CONSOLIDATED STATEMENTS OF EQUITY

Year ended 30 September

(Millions of dollars,

except for per share data)

(Millions of dollars, except for per share data)

Fiscal Year Ended 30 September Common

Stock Capital

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Issuance of treasury shares for stock option and award plans — 2.2 — — 59.7 61.9 — 61.9

Lu'An joint venture — — — — — — 227.4 227.4

Cumulative change in accounting principle — — ( 17.1 ) — — ( 17.1 ) — ( 17.1 )

Other equity transactions — ( 1.3 ) ( 6.1 ) — — ( 7.4 ) ( 1.4 ) ( 8.8 )

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Issuance of treasury shares for stock option and award plans — ( 14.1 ) — — 29.5 15.4 — 15.4

Cumulative change in accounting principle — — ( 17.1 ) — — ( 17.1 ) — ( 17.1 )

Investments by noncontrolling interests — — — — — — 17.1 17.1

Other equity transactions — ( 6.2 ) ( 5.3 ) — — ( 11.5 ) 0.9 ( 10.6 )

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Investments by noncontrolling interests — — — — — — 139.8 139.8

Purchase of noncontrolling interests — ( 1.2 ) — — — ( 1.2 ) ( 4.1 ) ( 5.3 )

Other equity transactions — 0.2 ( 3.9 ) — — ( 3.7 ) — ( 3.7 )

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Revenue Recognition

Cost Reduction Actions

Discontinued Operations

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Supplemental Information

Summary by Quarter (Unaudited)

Business Segment and Geographic Information

Subsequent Events

MAJOR ACCOUNTING POLICIES

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We have determined that we are not a primary beneficiary of any material VIE.

The notes to the consolidated financial statements, unless otherwise indicated, are on a continuing operations basis.

The results of operations and cash flows for our discontinued operations have been segregated from the results of continuing operations and segment results.

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Refer to Note 5, Discontinued Operations , for additional information.

The notes to the consolidated financial statements, unless otherwise indicated, are on a continuing operations basis.

The term "total company" includes both continuing and discontinued operations.

Certain prior year information has been reclassified to conform to the fiscal year 2021 presentation.

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COVID-19 Risks and Uncertainties

In March 2020, the World Health Organization declared the novel strain of coronavirus, COVID-19, a global pandemic and recommended containment and mitigation measures worldwide.

COVID-19 had a negative impact on our operating results in fiscal year 2020, primarily in the regional industrial gas segments.

We continue to monitor its impact on our operations;

however, we are unable to predict the future impact that COVID-19 will have on our future financial position and operating results due to numerous uncertainties, including the duration and severity of the outbreak.

COVID-19, which was declared a global pandemic by the World Health Organization in March 2020, continues to impact our business operations and results.

There continue to be many unknowns regarding the pandemic, including the ongoing spread and severity of the virus and the pace of vaccine rollouts globally.

Given the dynamic nature of these circumstances, uncertainty remains related to how the pandemic may affect our business, results of operations, and overall financial performance.

Revenue Recognition

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Some transactions are made in currencies different from an entity’s functional currency.

Gains and losses from these foreign currency transactions are generally reflected in "Other income (expense), net" on our consolidated income statements as they occur.

Net foreign exchange losses reflected in "Other income (expense), net" were not material for the periods presented.

Refer to the Other Non-Operating Income (Expense), Net section below for discussion on other foreign currency presentation.

Gains and losses from these foreign currency transactions, and the impact of related hedges, are generally reflected in "Other income (expense), net" on our consolidated income statements as they occur and were not material for the periods presented.

Foreign exchange gains and losses from the foreign currency remeasurement of balances associated with intercompany and third-party financing transactions, related income tax assets and liabilities, and the impact of related hedges are reflected within “Other non-operating income (expense), net" and were not material for the periods presented.

In addition, foreign currency forward points and currency swap basis differences that are excluded from the assessment of hedge effectiveness of our cash flow hedges of intercompany loans (“excluded components”) are recorded within “Other non-operating income (expense), net" on a straight-line basis.

Excluded components were expenses of $ 31.0 , $ 33.5 , and $ 33.3 in fiscal years 2021, 2020, and 2019, respectively.

In 2019, excluded components were recorded in “Interest expense” and were not restated upon adoption of accounting guidance in fiscal year 2020 on hedging activities.

Environmental Expenditures

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Share-Based Compensation

We have various share-based compensation programs, which include deferred stock units, stock options, and restricted stock.

We expense the grant-date fair value of these awards over the vesting period during which employees perform related services.

We expense the grant-date fair value of our share-based awards over the vesting period during which employees perform related services.

Expense recognition is accelerated for retirement-eligible individuals who would meet the requirements for vesting of awards upon their retirement.

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Other Non-Operating Income (Expense), net

Other non-operating income (expense), net includes interest income associated with our cash and cash items and short-term investments, certain impacts from hedging activities, and non-service cost components of net periodic pension and postretirement benefit cost.

Other non-operating income (expense), net includes interest income associated with our cash and cash items and short-term investments, certain foreign currency remeasurements and impacts from the related hedging activities discussed in the Foreign Currency section above, and non-service cost components of net periodic pension and postretirement benefit cost.

Our non-service costs primarily include interest cost, expected return on plan assets, amortization of actuarial gains and losses, and settlements.

In fiscal year 2020, we adopted new accounting guidance on hedging activities that changed the income statement presentation of excluded components (foreign currency forward points and currency swap basis differences) of our cash flow hedges of intercompany loans.

This activity is amortized on a straight-line basis within “Other non-operating income (expense), net." In addition, gains and losses from the foreign currency remeasurement of balances associated with intercompany and third-party financing transactions, related income tax assets and liabilities, and the impact of related hedges are also reflected within “Other non-operating income (expense), net.” Refer to Note 2, New Accounting Guidance , for additional information.

Cash and Cash Items

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Short-term investments include time deposits and treasury securities with original maturities greater than three months and less than one year.

Trade Receivables, net

Trade receivables comprise amounts owed to us through our operating activities and are presented net of allowances for doubtful accounts.

The allowances for doubtful accounts represent estimated uncollectible receivables associated with potential customer defaults on contractual obligations.

A provision for customer defaults is made on a general formula basis when it is determined that the risk of some default is probable and estimable but cannot yet be associated with specific customers.

The assessment of the likelihood of customer defaults is based on various factors, including the length of time the receivables are past due, historical experience, and existing economic conditions.

The allowance also includes amounts for certain customers where a risk of default has been specifically identified, considering factors such as the financial condition of the customer and their inability to pay.

The allowance excludes amounts associated with customer disputes over contractual terms and conditions.

Changes to the carrying amount of the allowance for doubtful accounts are summarized below:

Credit Losses

We are exposed to credit losses through sales of products and services.

When extending credit, we evaluate customer creditworthiness based on a combination of qualitative and quantitative factors that include, but are not limited to, the customer’s credit score from external providers, financial condition, and past payment experience.

We assess allowances for credit losses on our trade receivables and lease receivable portfolios.

Allowances are evaluated by portfolio on a collective basis where similar characteristics exist.

A provision for customer defaults is made on a general formula basis as the risk of some default is expected but cannot yet be associated with specific customers.

The assessment of the likelihood of default is based on various factors, including the length of time the receivables are past due, historical experience, existing economic conditions, and forward-looking information.

When we identify specific customers with known collectability issues, the assessment for credit losses is performed on an individual basis, considering current and forward-looking information of the customer.

The use of forward-looking information considers economic conditions that may affect the customers’ ability to pay.

Although we historically have not experienced significant credit losses, our exposure to credit losses may increase if our customers are adversely affected by economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the ongoing COVID-19 pandemic, or other customer-specific factors.

We review our reserves for credit losses on a quarterly basis.

Trade receivables comprise amounts owed to us through our operating activities and are presented net of allowances for credit losses.

Changes to the carrying amount of the allowance for credit losses on trade receivables are summarized below:

Balance at 30 September 2018 $ 26.4

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Balance at 30 September 2020 $ 23.9

Adoption of new credit losses standard 0.5

Provision for credit losses 2.7

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Balance at 30 September 2021 $ 25.1

In addition, our lease receivables are presented net of allowances for credit losses.

As of 30 September 2021 and 2020, the credit quality of lease receivables did not require a material allowance for credit losses.

For additional information on our lease arrangements, refer to Note 11, Leases .

We carry inventory that is comprised of finished goods, work-in-process, raw materials and supplies.

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Inventories on our consolidated balance sheets are stated at the lower of cost or net realizable value.

We determine the cost of all our inventories on a first-in, first-out basis ("FIFO").

We write down our inventories for estimated obsolescence or unmarketable inventory based upon assumptions about future demand and market conditions.

Effective 1 July 2018, we determine the cost of all our inventories on a first-in, first-out basis ("FIFO").

Prior to 1 July 2018, we determined the cost of our industrial gas inventories in the United States on a last-in, first-out basis ("LIFO").

We applied this accounting change as a cumulative effect adjustment to cost of sales in the fourth quarter of fiscal year 2018.

This change decreased our cost of sales by $ 24.1 for the quarter and fiscal year ended 30 September 2018.

Equity Investments

Equity Method Investments

The equity method of accounting is used when we exercise significant influence but do not have operating control, generally assumed to be 20% – 50% ownership.

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Capitalized costs include purchased computer software packages, payments to vendors/consultants for development and implementation or modification to a purchased package to meet our requirements, payroll and related costs for employees directly involved in development, and interest incurred while software is being developed.

Capitalized computer software costs are reflected in "Plant and equipment, net" on the consolidated balance sheets and are depreciated over the estimated useful life of the software, generally a period of three to five years .

Capitalized costs are reflected in "Plant and equipment, net" on the consolidated balance sheets and are depreciated over the estimated useful life of the software, generally a period of three to five years .

We capitalize costs incurred with the implementation of a cloud computing arrangement that is a service contract, consistent with our policy for software developed or obtained for internal use.

However, the capitalized costs are reflected in "Other noncurrent assets" on our consolidated balance sheets and expensed over the term of the related hosting arrangement.

Capitalized Interest

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Our asset retirement obligations totaled $ 269.6 and $ 241.4 at 30 September 2021 and 2020, respectively.

Refer to Note 16, Commitments and Contingencies , for further detail.

Business combinations are accounted for using the acquisition method.

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Intangible Assets

Intangible assets with determinable lives primarily consist of customer relationships, purchased patents and technology, and land use rights.

Intangible assets with determinable lives primarily consist of customer relationships, purchased patents and technology, and certain land use rights.

The cost of intangible assets with determinable lives is amortized on a straight-line basis over the estimated period of economic benefit.

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Purchased patents and technology and other finite-lived intangibles are generally amortized over periods of five to fifteen years .

Other intangibles includes land use rights, which are generally amortized over a period of fifty years .

Other intangibles includes certain land use rights, which are generally amortized over a period of fifty years .

Amortizable lives are adjusted whenever there is a change in the estimated period of economic benefit.

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Retirement Benefits

The cost of pension benefits is generally recognized over the employees’ service period.

Our retirement benefit plans are discussed in Note 15, Retirement Benefits .

The cost of benefits we contribute to defined contribution plans is recognized in the year earned.

The cost of benefits under our defined benefit and other post-retirement plans is generally recognized over the employees’ service period.

We use actuarial methods and assumptions in the valuation of defined benefit obligations and the determination of expense.

Differences between actual and expected results or changes in the value of obligations and plan assets are not recognized in earnings as they occur but, rather, are recognized systematically over subsequent periods.

Refer to Note 16, Retirement Benefits , for disclosures related to our pension and other postretirement benefits.

Differences between actual and expected results or changes in the value of obligations and plan assets are recognized systematically over subsequent periods .

NEW ACCOUNTING GUIDANCE

Accounting Guidance Implemented in Fiscal Year 2021

In February 2016, the FASB issued lease guidance (the "new lease guidance") that requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases, including operating leases, with a term in excess of 12 months.

The guidance also expands the quantitative and qualitative disclosure requirements.

We are the lessee under various agreements for real estate, vehicles, aircraft, and other equipment that are accounted for as operating leases.

We adopted this guidance in fiscal year 2020 using a modified retrospective approach with the election to apply the guidance as of 1 October 2019, "the adoption date," instead of the earliest comparative period presented in the consolidated financial statements.

We elected the following practical expedients provided by this guidance:

• The package of practical expedients, which allows us to carry forward the lease population and classification existing as of the adoption date, among other things;

• The land easements practical expedient, which allows us to carry forward our accounting treatment for land easements on agreements existing before the adoption date;

• The hindsight practical expedient, which is used to determine the reasonably certain lease term for existing leases as of the adoption date;

• The component combination practical expedient, which allows us to account for lease and non-lease components associated with that lease as a single component, if certain criteria are met;

• The short-term leases practical expedient, which allows us to not record the related lease liabilities and right-of-use assets for operating leases in which we are the lessee with a term of 12 months or less.

Adoption of the standard resulted in recognition of lease liabilities and right-of-use assets on our consolidated balance sheets as of the adoption date of $ 375.3 and $ 332.3 , respectively.

The standard did not materially affect our retained earnings, results of operations or liquidity.

Refer to Note 12, Leases , for additional information.

Hedging Activities

In August 2017, the FASB issued guidance on hedging activities to expand the related presentation and disclosure requirements, change how companies assess effectiveness, and eliminate the separate measurement and reporting of hedge ineffectiveness.

The guidance also enables more hedging strategies to become eligible for hedge accounting.

We adopted the new guidance on 1 October 2019 on a modified retrospective basis.

The primary impact of adoption was the presentation in the consolidated income statement of foreign currency forward points and currency swap basis differences ("excluded components"), since these are excluded from the assessment of hedge effectiveness for our hedges of intercompany loans.

Historically, the impacts from changes in value of these components were recorded in "Interest expense." In fiscal year 2020, excluded components of $ 33.5 were recognized in "Other non-operating income (expense), net" consistent with the remeasurement of the intercompany loans.

Interest expense of $ 33.3 and $ 42.6 in fiscal years 2019 and 2018, respectively, has not been restated to conform to the 2020 presentation.

In accordance with the transition provisions of the guidance, the separate measurement of ineffectiveness for our cash flow hedging instruments existing as of the date of adoption should be eliminated through a cumulative-effect adjustment within equity.

Ineffectiveness recognized for our cash flow hedging instruments existing as of the date of adoption was not material to the consolidated financial statements.

Retirement Benefit Disclosures

In August 2018, the FASB issued guidance which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The guidance is effective in fiscal year 2021, with early adoption permitted, and must be applied on a retrospective basis.

We adopted this guidance in the fourth quarter of fiscal year 2020 and updated the disclosures contained in Note 16, Retirement Benefits , accordingly.

Other than the modification of certain disclosures, this guidance had no effect on our consolidated financial statements.

New Accounting Guidance to be Implemented

Credit Losses on Financial Instruments

In June 2016, the FASB issued guidance on the measurement of credit losses, which requires measurement and recognition of expected credit losses for financial assets, including trade receivables and capital lease receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

The method to determine a loss is different from the existing guidance, which requires a credit loss to be recognized when it is probable.

We will adopt this guidance at the beginning of fiscal year 2021 under the modified retrospective approach with an adjustment to retained earnings as of the effective date.

This guidance will not have a material impact on our consolidated financial statements upon adoption.

In June 2016, the FASB issued guidance on the measurement of credit losses, which requires measurement and recognition of expected credit losses for financial assets, including trade receivables and lease receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

The method to determine a loss is different from the previous guidance, which delayed recognition of a credit loss until it was probable that a loss had been incurred.

We adopted this guidance on 1 October 2020 using a modified retrospective approach with an after-tax cumulative-effect adjustment of $ 1.3 to retained earnings.

Refer to the “Major Accounting Polices – Credit Losses" section of Note 1, Major Accounting Policies , for a description of our accounting policy on credit losses.

Cloud Computing Implementation Costs

In August 2018, the FASB issued guidance which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software.

We will adopt this guidance at the beginning of fiscal year 2021.

This guidance will not have a material impact on our consolidated financial statements upon adoption.

We adopted this guidance prospectively at the beginning of fiscal year 2021.

Eligible implementation costs previously capitalized in "Plant and equipment, net" were reclassified to "Other noncurrent assets" on our consolidated balance sheets beginning in fiscal year 2021.

This guidance did not have a material impact on our consolidated financial statements upon adoption.

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued an update to simplify the accounting for income taxes and improve consistent application by clarifying or amending existing guidance.

We will adopt this guidance at the beginning of fiscal year 2021.

This guidance will not have a material impact on our consolidated financial statements upon adoption.

We adopted this guidance at the beginning of fiscal year 2021.

This guidance did not have a material impact on our consolidated financial statements upon adoption.

New Accounting Guidance to be Implemented

Reference Rate Reform

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The amendments may be applied to impacted contracts and hedges prospectively through 31 December 2022.

To date, we have had no impacts on our hedging relationships related to reference rate reform.

We had no impacts on our hedging relationships related to reference rate reform in fiscal year 2021.

We will continue to evaluate the impact this guidance could have on our consolidated financial statements.

Fiscal Year 2021

Gain on Exchange With Joint Venture Partner

As of 30 September 2020, we held a 50 % ownership interest in Tyczka Industrie-Gases GmbH ("TIG"), a joint venture in Germany with the Tyczka Group that is primarily a merchant gases business.

We accounted for this arrangement as an equity method investment in our Industrial Gases – EMEA segment.

Effective 23 February 2021 (the "acquisition date"), we agreed with our joint venture partner to separate TIG into two separate businesses.

On the acquisition date, we acquired a portion of the business on a 100 % basis, and our partner paid us $ 10.8 to acquire the rest of the business.

The exchange resulted in a gain of $ 36.8 ($ 27.3 after-tax), which is reflected as “Gain on exchange with joint venture partner” on our consolidated income statements for the fiscal year ended 30 September 2021.

The gain included $ 12.7 from the revaluation of our previously held equity interest in the portion of the business that we retained and $ 24.1 from the sale of our equity interest in the remaining business.

The gain was not recorded in segment results.

We estimated an acquisition date fair value of $ 15.4 for our previously held equity interest in the acquired portion of the business using a market approach, which considered historical earnings and the application of a market-based multiple derived from comparable transactions.

We accounted for the acquisition as a business combination within our Industrial Gases – EMEA segment.

As a result of the acquisition, we recognized intangible assets of $ 16.7 for customer relationships, goodwill of $ 14.5 , and plant and equipment of $ 10.3 .

The customer relationships have a weighted-average useful life of approximately 15 years.

The acquired assets were recorded at their estimated fair values based primarily on a preliminary purchase price allocation.

We may record adjustments to these assets during the preliminary purchase price allocation period, which could be up to one year from the acquisition date.

We expect the acquisition to allow us to have more control over the business we retained and to serve customers more effectively.

The results of this business did not materially impact our consolidated income statements for the periods presented.

Fiscal Year 2020

Asset Acquisition

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("PBF") and commenced contractual long-term supply of hydrogen from those plants to PBF's refineries.

We accounted for the transaction as an asset acquisition and recorded the aggregate purchase price of approximately $ 580 to plant and equipment on our consolidated balance sheets.

We accounted for the transaction as an asset acquisition and recorded the aggregate purchase price of $ 580 to plant and equipment on our consolidated balance sheets.

Business Combinations

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The largest of these acquisitions was the purchase of Oxygen & Argon Works Ltd., the leading manufacturer and marketer of industrial gases in Israel, primarily offering merchant gas products.

We expect this acquisition to create growth opportunities in the region and allow us to leverage synergies and operating efficiencies.

The results of this business are consolidated within our Industrial Gases – EMEA segment and did not materially impact our consolidated income statement.

Our fiscal year 2020 business combinations resulted in the recognition of plant and equipment of $ 71.2 , goodwill of $ 71.1 , and intangible assets of $ 50.7 , partially offset by net liabilities acquired.

The goodwill recognized on the transactions, $ 8.1 of which is deductible for tax purposes, is attributable to expected growth and cost synergies.

The intangible assets recognized primarily resulted from acquired customer relationships, having a weighted-average useful life of 19 years.

The acquired assets and liabilities resulting from our 2020 business combinations were recorded at their estimated fair values, which were calculated based primarily on a preliminary purchase price allocation prepared by independent valuation specialists.

We may record adjustments to these assets and liabilities during the preliminary purchase price allocation period, which could be up to one year from the acquisition date.

The results of this business are consolidated within our Industrial Gases – EMEA segment.

Fiscal Year 2019

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The exchange resulted in a net gain of $ 29.1 , of which $ 15.0 resulted from the revaluation of our previously held equity interest in WuXi to its acquisition date fair value and $ 14.1 resulted from the disposition of our interest in High-Tech Gases.

The net gain was reflected as "Gain on exchange of equity affiliate investments" on our consolidated income statements in fiscal year 2019 and was excluded from the results of the Industrial Gases – Asia segment.

The net gain is reflected as "Gain on exchange with joint venture partner" on our consolidated income statements in fiscal year 2019 and was not recorded in results of the Industrial Gases – Asia segment.

We revalued our previously held 50 % equity interest in WuXi based on an estimated acquisition date fair value of $ 27.0 .

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The remaining business combinations completed in fiscal year 2019 had total consideration, net of cash acquired, of $ 126.6 .

The largest of these business combinations was the acquisition of ACP Europe SA ("ACP"), the largest independent carbon dioxide business in Continental Europe, which closed in the second quarter.

The largest of these business combinations was the acquisition of ACP Europe SA ("ACP"), the largest independent carbon dioxide business in Continental Europe.

The results of this business are consolidated within our Industrial Gases – EMEA segment.

Fiscal Year 2018

Asset Acquisition

On 26 April 2018 ("the acquisition date"), we completed the formation of Air Products Lu An (Changzhi) Co., Ltd.

(the “JV”), a 60 %-owned joint venture with Lu’An Clean Energy Company ("Lu’An").

The results of the JV are consolidated within the Industrial Gases – Asia segment.

Air Products contributed four large air separation units to the JV, and the JV acquired gasification and syngas clean-up assets from Lu’An.

We accounted for the acquisition of the gasification and syngas clean-up assets as an asset acquisition.

In connection with closing the acquisition, we paid net cash of approximately 1.5 billion RMB ($ 235 ) and issued equity of 1.4 billion RMB ($ 227 ) to Lu'An for their noncontrolling interest in the JV.

In addition, Lu'An made a loan of 2.6 billion RMB to the JV, and we established a liability for remaining cash payments.

The issuance of equity to Lu'An for their noncontrolling interest, the long-term debt, and the liability for the remaining cash payments were noncash transactions that were excluded from the consolidated statement of cash flows for the fiscal year ended 30 September 2018.

Refer to Note 15, Debt , for additional information on our related party debt.

Business Combinations

We completed eight acquisitions that were accounted for as business combinations in fiscal year 2018.

These acquisitions had total consideration, net of cash acquired, of $ 355.4 .

The largest of the acquisitions was completed during the first quarter of fiscal year 2018 and primarily consisted of three air separation units serving onsite and merchant customers in China.

The results of this business are consolidated within our Industrial Gases – Asia segment.

REVENUE RECOGNITION

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• On-site Gases —Supply mode associated with customers who require large volumes of gases and have relatively constant demand.

Gases are produced and supplied by large facilities we construct on or near the customers’ facilities or by pipeline systems from centrally located production facilities.

Gases are produced and supplied by large facilities on or near the customers’ facilities or by pipeline systems from centrally located production facilities.

These sale of gas contracts generally have 15 - to 20 - year terms.

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In addition, changes in estimates on projects accounted for under the cost incurred input method are recognized as a cumulative adjustment for the inception-to-date effect of such change.

Changes in estimates unfavorably impacted operating income by approximately $ 19 in fiscal year 2021.

Changes in estimates favorably impacted operating income by approximately $ 7 and $ 37 in fiscal years 2020 and 2019, respectively.

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Disaggregation of Revenue

The table below presents our consolidated sales for fiscal years 2020 and 2019 disaggregated by supply mode for each of our reporting segments.

The table below presents our consolidated sales disaggregated by supply mode for each of our reporting segments.

We believe this presentation best depicts the nature, timing, type of customer, and contract terms for our sales.

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Total $ 3,630.7 $ 1,926.3 $ 2,716.5 $ 364.9 $ 217.9 $ 8,856.3 100 %

On-site $ 2,230.6 $ 728.4 $ 1,622.6 $ — $ — $ 4,581.6 52 %

Merchant 1,642.9 1,274.1 1,041.0 — — 3,958.0 44 %

Sale of Equipment — — — 261.0 118.3 379.3 4 %

Total $ 3,873.5 $ 2,002.5 $ 2,663.6 $ 261.0 $ 118.3 $ 8,918.9 100 %

Remaining Performance Obligations

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We estimate that approximately half of this revenue will be recognized over approximately the next five years and the balance thereafter.

Expected revenue associated with new on-site plants that are not yet onstream is excluded from this amount.

Expected revenue associated with new on-site plants that are not yet on stream is excluded from this amount.

In addition, this amount excludes consideration associated with contracts having an expected duration of less than one year, and variable consideration for which we recognize revenue at the amount to which we have the right to invoice, including pass-through costs related to energy and natural gas.

In the future, actual amounts will differ due to events outside of our control, including but not limited to inflationary price escalations, currency exchange rates, and terminated or renewed contracts.

In the future, actual amounts will differ due to events outside of our control, including, but not limited to, inflationary price escalations;

currency exchange rates;

and amended, terminated, or renewed contracts.

Contract Balances

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Changes in contract asset and liability balances during the fiscal year ended 30 September 2021 were not materially impacted by any other factors.

COST REDUCTION ACTIONS

In fiscal year 2019, we recognized an expense of $ 25.5 for severance and other benefits associated with the elimination or planned elimination of approximately 300 positions.

These actions were taken to drive cost synergies primarily within the Industrial Gases – EMEA and the Industrial Gases – Americas segments.

The charge was not recorded in segment results.

Liabilities associated with these actions are reflected on our consolidated balance sheets within "Payables and accrued liabilities." The table below summarizes the carrying amount of the accrual as of 30 September 2020:

2019 Charge $ 25.5

Cash expenditures ( 6.9 )

Amount reflected in pension liability ( 0.3 )

Currency translation adjustment ( 0.5 )

30 September 2019 $ 17.8

Cash expenditures ( 13.5 )

Currency translation adjustment 0.4

30 September 2020 $ 4.7

DISCONTINUED OPERATIONS

In fiscal year 2021, income from discontinued operations, net of tax, was $ 70.3 .

This included net tax benefits of $ 60.0 recorded upon release of tax liabilities related to uncertain tax positions for which the statute of limitations expired.

Of this benefit, we recorded $ 51.8 in the fourth quarter for liabilities associated with our former Performance Materials Division ("PMD") and $ 8.2 in the third quarter for liabilities associated with our former Energy-from-Waste ("EfW") business.

Additionally, we recorded a tax benefit of $ 10.3 in the first quarter of fiscal year 2021 primarily from the settlement of a state tax appeal related to the gain on the sale of PMD in fiscal year 2017.

Our consolidated statement of cash flows for the fiscal year ended 30 September 2021 includes $ 6.7 received as part of the settlement.

In fiscal year 2020, loss from discontinued operations, net of tax, was $ 14.3 .

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The loss did not have an impact on our cash flows for the fiscal year ended 30 September 2020 .

In fiscal year 2018, income from discontinued operations, net of tax, was $ 42.2 .

This included an income tax benefit of $ 25.6 resulting from the resolution of uncertain tax positions taken in conjunction with the disposition of our former European Homecare business in fiscal year 2012 and an after-tax benefit of $ 17.6 resulting from the resolution of certain post-closing adjustments associated with the sale of our former Performance Materials Division in fiscal year 2017.

These benefits were partially offset by an after-tax loss of $ 1.0 associated with Energy-from-Waste project exit activities.

The components of inventories are as follows:

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Abdullah Hashim Industrial Gases & Equipment Co., Ltd.

INOX Air Products Private Limited ( 50 %);

INFRA Group ( 40 %);

Air Products South Africa (Proprietary) Limited ( 50 %);

Jazan Gas Projects Company ( 26 %);

INOX Air Products Private Limited ( 50 %);

Bangkok Cogeneration Company Limited ( 49 %);

Kulim Industrial Gases Sdn.

Jazan Gas Projects Company ( 26 %);

Bangkok Industrial Gases Co., Ltd.

Sapio Produzione Idrogeno Ossigeno S.r.l.

Kulim Industrial Gases Sdn.

Chengdu Air & Gas Products Ltd.

Tecnologia en Nitrogeno S.

Sapio Produzione Idrogeno Ossigeno S.r.l.

Helios S.p.A.

Tyczka Industrie-Gases GmbH ( 50 %);

INFRA Group ( 40 %);

and principally, other industrial gas producers.

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Noncurrent liabilities 2,852.5 2,958.8

Year Ended 30 September 2020 2019 2018

Fiscal Year Ended 30 September 2021 2020 2019

Net sales $ 3,338.1 $ 2,809.1 $ 2,885.6

Sales less cost of sales 1,212.5 1,193.4 1,050.6

Gross profit 1,492.9 1,212.5 1,193.4

Operating income 962.2 748.6 763.4

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India Finance Act 2020

For the fiscal year ended 30 September 2020, equity affiliates' income includes a benefit of $ 33.8 due to tax legislation passed by the Indian government (the "India Finance Act").

This benefit relates to INOX Air Products Private Limited for the release of our share of accumulated dividend distribution taxes and is included in the fiscal year 2020 net income on a 100% basis in the table above.

Refer to Note 22, Income Taxes , for additional information.

Tax Cuts and Jobs Act

For the fiscal year ended 30 September 2018, equity affiliates' income includes an expense of $ 28.5 for our proportionate share of the impact of the U.S.

Tax Cuts and Jobs Act primarily recorded during the first quarter of fiscal year 2018.

This expense is included in the fiscal year 2018 net income on a 100% basis in the table above.

Our consolidated income statements in fiscal year 2020 include a benefit of $ 33.8 reflected in equity affiliates' income for our share of accumulated dividend distribution taxes released with respect to INOX Air Products Private Limited, an equity affiliate investment in our Industrial Gases – Asia segment.

This benefit, which related to tax legislation passed by the Indian government, was not recorded in segment results.

Refer to Note 21, Income Taxes , for additional information.

The benefit is included in fiscal year 2020 net income in the table above on a 100% basis.

Jazan Gas Project Company

On 19 April 2015, a joint venture between Air Products and ACWA Holding entered into a 20 -year oxygen and nitrogen supply agreement to supply Saudi Aramco’s oil refinery and power plant being built in Jazan, Saudi Arabia.

Air Products owns 26 % of the joint venture and guarantees the repayment of its share of an equity bridge loan.

On 19 April 2015, Jazan Gas Project Company, a joint venture between Air Products and ACWA Holding, entered into a 20-year oxygen and nitrogen supply agreement to supply Aramco’s oil refinery and power plant being built in Jazan, Saudi Arabia.

We own 26 % of the joint venture and guarantee repayment of our share of an equity bridge loan.

ACWA also guarantees their share of the loan.

We determined that the joint venture is a variable interest entity for which we are not the primary beneficiary.

As of 30 September 2020, our consolidated balance sheets included $ 94.4 reflected within "Payables and accrued liabilities" for our obligation to make future equity contributions in 2021 based on our proportionate share of the advances received by the joint venture under the loan.

As of 30 September 2021, our consolidated balance sheets included $ 94.4 reflected within "Payables and accrued liabilities" for our obligation to make equity contributions based on our proportionate share of the advances received by the joint venture under the loan.

Subsequent Event

As part of the Jazan Integrated Gasification and Power Company transaction discussed in Note 24, Subsequent Events , Jazan Gas Project Company sold its air separation units to Aramco in October 2021 and repaid its outstanding debt, including the equity bridge loan.

PLANT AND EQUIPMENT, NET

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Plant and equipment, net $ 13,254.6 $ 11,964.7

(A) Depreciable lives of production facilities related to long-term customer supply contracts are matched to the contract lives.

(A) Depreciable lives of production facilities related to long-term customer supply contracts are generally matched to the contract lives.

(B) The depreciable lives for various types of distribution equipment are:

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20 years for tanks;

7.5 years for customer stations;

generally 7.5 years for customer stations;

and 5 to 15 years for tractors and trailers.

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Asia Industrial

Global Corporate and other Total

Global Corporate

and other Total

Goodwill, net at 30 September 2019 $ 156.3 $ 432.3 $ 178.5 $ 19.6 $ 10.4 $ 797.1

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Goodwill, net at 30 September 2021 $ 151.0 $ 541.5 $ 184.3 $ 19.8 $ 14.9 $ 911.5

In fiscal year 2021, goodwill acquired is primarily attributable to expected cost synergies and growth opportunities related to a business combination completed in the second quarter.

This goodwill is no t deductible for tax purposes.

Refer to Note 3, Acquisitions , for additional information.

30 September 2021 2020 2019

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Impairment Net

Finite-lived:

Customer relationships $ 552.0 ($ 234.7 ) $ 317.3 $ 538.0 ($ 209.9 ) $ 328.1

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Total finite-lived intangible assets 669.3 ( 288.9 ) 380.4 654.7 ( 259.9 ) 394.8

Trade names and trademarks (indefinite-lived) 52.2 ( 11.2 ) 41.0 56.2 ( 12.1 ) 44.1

Indefinite-lived:

Trade names and trademarks 51.2 ( 10.9 ) 40.3 52.2 ( 11.2 ) 41.0

Total Intangible Assets $ 720.5 ($ 299.8 ) $ 420.7 $ 706.9 ($ 271.1 ) $ 435.8

The increase in net intangible assets in fiscal year 2020 was primarily attributable to intangible assets acquired through business combinations, partially offset by amortization.

The decrease in net intangible assets in fiscal year 2021 was primarily attributable to amortization, partially offset by intangible assets acquired through business combinations.

Amortization expense for intangible assets was $ 37.2 , $ 34.5 , and $ 33.1 in fiscal years 2021, 2020, and 2019, respectively.

Refer to Note 1, Major Accounting Policies , for the amortization periods for each major class of intangible assets.

The table below details projected annual amortization expense for intangible assets as of 30 September 2020:

The table below details the amount of amortization expense expected to be recorded for our finite-lived intangible assets in each of the next five years and thereafter:

Thereafter 220.4

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During the fourth quarter of fiscal year 2021, we conducted our annual impairment test of indefinite-lived intangible assets and determined that the fair value of all our intangible assets exceeded their carrying value.

As discussed in Note 2, New Accounting Guidance , we adopted the new lease guidance in fiscal year 2020 using a modified retrospective approach with the election to apply the guidance as of 1 October 2019.

For adoption, we elected the package of practical expedients permitted under the transition guidance to carry forward the historical lease populations as well as their classifications existing as of the adoption date (i.e.

contracts having a lease commencement date prior to 1 October 2019).

Refer to Note 1, Major Accounting Policies , and Note 2, New Accounting Guidance , for additional information on our adoption and related policies under the new lease standard.

Lessee Accounting

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Our finance leases principally relate to the right to use machinery and equipment and are not material.

The operating lease expense for fiscal year 2020 was $ 80.1 .

This amount excludes short-term and variable lease expenses, which were not material.

Amounts associated with operating leases and their presentation on our consolidated balance sheets as of our most recent balance sheet date and our adoption date are as follows:

30 September 2020 1 October 2019

Operating lease ROU asset

Operating lease expense was $ 89.5 and $ 80.1 for fiscal years 2021 and 2020, respectively.

These amounts exclude short-term and variable lease expenses, which were not material.

Amounts associated with operating leases and their presentation on our consolidated balance sheets are as follows:

30 September 2021 2020

Operating lease right-of-use assets

Other noncurrent assets $ 566.2 $ 376.8

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Total operating lease liabilities $ 582.0 $ 406.5

The difference between the ROU assets and lease liabilities recorded upon adoption primarily relate to the land lease associated with our former Energy-from-Waste business in which an ROU asset was not recognized.

30 September 2021 2020

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(B) Calculated on the basis of the discount rate used to calculate the lease liability for each lease and the remaining balance of the lease payments for each lease as of the reporting date.

At 30 September 2020, the maturity analysis of lease liabilities, showing the undiscounted cash flows, were as follows:

The following maturity analysis of our operating lease liabilities as of 30 September 2021 presents the undiscounted cash flows for each of the next five years and thereafter with a reconciliation to the lease liability recognized on our balance sheet:

Thereafter 361.5

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Imputed interest ( 91.1 )

Present Value of Lease Liability Recognized on the Balance Sheet $ 406.5

As previously disclosed in our 2019 Form 10-K, at 30 September 2019, prior to our adoption of the new lease guidance, our rent expense under operating leases, including month-to-month agreements was $ 87.0 and $ 82.7 in fiscal years 2019 and 2018, respectively.

In addition, minimum payments due under leases were as follows:

Thereafter 171.4

Total Undiscounted Lease Payments $ 418.0

Present value of lease liability recognized on balance sheet $ 582.0

The impacts associated with our operating leases on the consolidated statements of cash flows are reflected within "Other adjustments" within operating activities.

This includes the non-cash operating lease expense of $ 80.1 as well as a use of cash of $ 90.0 for payments on amounts included in the measurement of the lease liability for fiscal year 2020.

In addition to the ROU assets established upon adoption, we recorded $ 110 of non-cash additions during fiscal year 2020.

This includes non-cash operating lease expense of $ 89.5 and $ 80.1 , as well as a use of cash of $ 98.8 and $ 90.0 for payments on amounts included in the measurement of the lease liability for fiscal years 2021 and 2020, respectively.

We recorded $ 259 and $ 442 of noncash right-of-use asset additions during fiscal years 2021 and 2020, respectively.

We have additional operating leases that have not yet commenced as of 30 September 2021 having lease payments totaling approximately $ 195 .

Lessor Accounting

Historically, certain contracts associated with facilities that are built to provide product to a specific customer were accounted for as leases.

As noted above, we elected the package of practical expedients permitted under the transition guidance to carry forward these lease determinations as of 30 September 2019.

Certain contracts associated with facilities that are built to provide product to a specific customer have been accounted for as leases.

As we generally control the operations and maintenance of the assets that provide the supply of gas to our customers, there have been no new arrangements that qualified as a lease in fiscal year 2021.

In cases where operating lease treatment is appropriate, there is no difference in revenue recognition over the life of the contract as compared to accounting for the contract under a sale of gas agreement.

Under the new lease standard, these contracts qualify for a practical expedient available to lessors to combine the lease and non-lease components and account for the combined component in accordance with the accounting treatment for the predominant component.

These contracts qualify for a practical expedient available to lessors to combine the lease and non-lease components and account for the combined component in accordance with the accounting treatment for the predominant component.

We elected to apply this practical expedient and have accounted for the combined component as product sales under the revenue standard as we control the operations and maintenance of the assets that provide the supply of gas to our customers.

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Additionally, a portion of the revenue representing interest income from the financing component of the lease receivable is reflected as sales over the life of the contract.

During fiscal year 2020, we recognized interest income of $ 71.2 on our lease receivables.

During fiscal years 2021 and 2020, we recognized interest income of $ 67.4 and $ 71.2 on our lease receivables, respectively.

Our contracts generally do not have the option to extend or terminate the lease or provide the customer the right to purchase the asset at the end of the contract term.

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Given the long-term duration of our contracts, there is no assumed residual value for the assets at the end of the lease term.

Lease receivables, net, primarily relate to sales-type leases and are mostly included within "Noncurrent lease receivables" on our consolidated balance sheets, with the remaining balance in "Other receivables and current assets." As of 30 September 2020 and 2019, the credit quality of lease receivables did not require a material allowance for credit losses.

Lease receivables, net, primarily relate to sales-type leases on certain on-site assets which are collected over the contract term.

As of 30 September 2021 and 2020, our lease receivables, net were $ 824.7 and $ 903.0 , respectively.

Lease receivables, net are primarily included within "Noncurrent lease receivables" on our consolidated balance sheets, with the remaining balance in "Other receivables and current assets." The majority of our leases are of high credit quality and were originated prior to fiscal year 2017.

As of 30 September 2021 and 2020, the credit quality of lease receivables did not require a material allowance for credit losses.

Lease payments collected in fiscal years 2021, 2020, and 2019 were $ 166.2 , $ 162.8 , and $ 171.6 , respectively.

These payments reduced the lease receivable balance by $ 98.8 , $ 91.6 , and $ 94.6 in fiscal years 2021, 2020, and 2019, respectively.

At 30 September 2020, minimum lease payments expected to be collected, which reconciles to lease receivables, net, were as follows:

Thereafter 608.5

Total 1,318.8

Unearned interest income ( 415.8 )

Lease Receivables, net $ 903.0

As previously disclosed in our 2019 Form 10-K, at 30 September 2019, prior to our adoption of the new lease guidance, minimum lease payments expected to be collected were as follows:

As of 30 September 2021, minimum lease payments expected to be collected, which reconciles to lease receivables, net, were as follows:

Thereafter 508.7

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Lease Receivables, net $ 824.7

Other than lease payments received during fiscal year 2020 and the impact of currency, there have been no significant changes to our minimum lease payments expected to be collected since those disclosed as of 30 September 2019 in our 2019 Form 10-K.

FINANCIAL INSTRUMENTS

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The primary objective of these forward exchange contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement.

This portfolio of forward exchange contracts consists of many different foreign currency pairs, with a profile that changes from time to time depending on business activity and sourcing decisions.

This portfolio of forward exchange contracts consists of many different foreign currency pairs, with a profile that changes from time to time depending on our business activity and sourcing decisions.

The table below summarizes our outstanding currency price risk management instruments:

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Total Forward Exchange Contracts $ 4,795.8 0.8 $ 5,163.9 0.8

The increase in the notional value of cash flow hedges from 30 September 2019 to 30 September 2020 is primarily due to the addition of a forward exchange contract that hedges the repayment of our Eurobond maturing in fiscal year 2021.

The increase in the notional value of our forward exchange contracts that are not designated is primarily due to the origination of forward exchange contracts that offset other forward exchange contracts previously designated as net investment hedges or cash flow hedges that were de-designated during fiscal year 2020.

The decrease in the notional value of forward exchange contracts that are not designated is primarily due to maturities.

We also use foreign currency-denominated debt to hedge the foreign currency exposures of our net investment in certain foreign subsidiaries.

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The contracts are used to hedge either certain net investments in foreign operations or non-functional currency cash flows related to intercompany loans.

The current cross currency interest rate swap portfolio consists of fixed-to-fixed

swaps primarily between U.S.

The current cross currency interest rate swap portfolio consists of fixed-to-fixed swaps primarily between U.S.

Dollars and Chinese Renminbi, U.S.

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Dollars and Chilean Pesos.

The following table summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:

The table below summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:

30 September US$

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30 September 2021 2020 2021 2020

Current portion of long-term debt $ 400.5 $ — $ 0.5 $ —

Long-term debt — 405.4 — 5.7

The table below summarizes the fair value and balance sheet location of our outstanding derivatives.

Refer to Note 13, Fair Value Measurements , which defines fair value, describes the method for measuring fair value, and provides additional disclosures regarding fair value measurements.

30 September Balance Sheet Location 2021 2020 Balance Sheet Location 2021 2020

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Forward exchange contracts Other receivables and current assets $ 8.7 $ 31.7 Payables and accrued liabilities $ 6.4 $ 28.0

Forward exchange contracts Other noncurrent assets — 8.4 Other noncurrent liabilities — 19.8

Interest rate management contracts Other noncurrent assets — 0.7 Other noncurrent

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Total Derivatives $ 83.4 $ 143.3 $ 121.5 $ 85.6

Refer to Note 14, Fair Value Measurements , which defines fair value, describes the method for measuring fair value, and provides additional disclosures regarding fair value measurements.

The tables below summarize gains (losses) recognized in other comprehensive income during the period related to our net investment and cash flow hedging relationships:

The table below summarizes gains (losses) recognized in other comprehensive income during the period related to our net investment and cash flow hedging relationships:

Net Investment Hedging Relationships

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Forward exchange contracts, excluded components ( 11.7 ) ( 15.2 )

( 6.7 ) ( 34.2 )

Total Amount Recognized in OCI ( 5.7 ) 67.2

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The table below summarizes the location and amounts recognized in income related to our cash flow and fair value hedging relationships by contract type:

Sales Cost of Sales Other Income (Expense), Net Interest Expense Other Non-Operating Income (Expense), Net

Sales Cost of Sales Interest Expense Other Non-Operating Income (Expense), Net

2021 2020 2021 2020 2021 2020 2021 2020

Total Amounts Presented in the Consolidated Income Statement in which the Effects of Cash Flow and Fair Value Hedges are Recorded $ 8,856.3 $ 8,918.9 $ 5,858.1 $ 5,975.5 $ 65.4 $ 49.3 $ 109.3 $ 137.0 $ 30.7 $ 66.7

Total presented in consolidated income statements that includes effects of hedging below $ 10,323.0 $ 8,856.3 $ 7,186.1 $ 5,858.1 $ 141.8 $ 109.3 $ 73.7 $ 30.7

(Gain) Loss Effects of Cash Flow Hedging:

Forward Exchange Contracts:

Amount reclassified from OCI into income (A)

($ 0.2 ) $ 0.5 ($ 1.0 ) $ 0.3 $ — $ 28.5 $ — $ 16.0 ($ 117.9 ) $ —

Amount excluded from effectiveness testing recognized in earnings based on amortization approach (A)

— — — — — — — — 17.0 —

Amount reclassified from OCI into income (B)

— — — — — ( 32.4 ) 4.2 3.9 22.5 —

Amount reclassified from OCI into income ($ 0.8 ) ($ 0.2 ) ($ 0.8 ) ($ 1.0 ) $ — $ — $ 5.2 ($ 117.9 )

Amount excluded from effectiveness testing recognized in earnings based on amortization approach — — — — — — 9.1 17.0

Amount reclassified from OCI into income — — — — 5.6 4.2 39.1 22.5

Total (Gain) Loss Reclassified from OCI to Income ( 0.8 ) ( 0.2 ) ( 0.8 ) ( 1.0 ) 5.6 4.2 53.4 ( 78.4 )

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Total (Gain) Loss Recognized in Income $ — $ — $ — $ — $ — $ — $ — $ —

(A) Net amount excluded from effectiveness testing recognized in interest expense for fiscal year 2019, see Note 2, New Accounting Guidance , for additional details.

(B) Other primarily includes interest rate and cross currency interest rate swaps for which excluded components are recognized in “Payables and accrued liabilities” and “Other receivables and current assets” as a component of accrued interest payable and accrued interest receivable, respectively.

These excluded components are recorded in “Other Non-operating income (expense), net” over the life of the cross currency interest rate swap.

The table below summarizes the location and amounts recognized in income related to our derivatives not designated as hedging instruments by contract type:

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Total Liabilities at Fair Value $ 121.5 $ — $ 121.5 $ — $ 85.6 $ — $ 85.6 $ —

In fiscal year 2020, Air Products issued U.S.

Dollar- and Euro-denominated fixed-rate notes in multiple tranches with aggregate principal amounts of $ 3.8 billion and € 1.0 billion ($ 1.2 billion as of 30 September 2020), respectively.

Dollar-denominated notes were issued on 30 April 2020, and the Euro-denominated notes were issued on 5 May 2020.

The proceeds from these notes were reduced by deferred financing charges and discounts of approximately $ 45 , which are being amortized over the life of the underlying bonds.

We intend to use the majority of the proceeds to fund growth projects and repay debt maturities through 2021.

In August 2020, we repaid a 2.0 % Eurobond of € 300.0 million that had been previously reflected as long-term debt due to our intent to refinance as of 30 September 2019.

The table below summarizes our total outstanding debt as reflected on our consolidated balance sheets as of 30 September 2020 and 2019:

The table below summarizes our total outstanding debt as reflected on our consolidated balance sheets:

30 September 2021 2020

Short-term borrowings (A)

Current portion of long-term debt (B)(C)

Current portion of long-term debt (B)

Long-term debt 6,875.7 7,132.9

Long-term debt – related party (B)

Long-term debt – related party 274.6 297.2

Total Debt $ 7,637.2 $ 7,907.8

(A) Includes bank obligations with weighted average interest rates of 0.6 % and 1.6 % as of 30 September 2021 and 2020, respectively.

(B) Our related party debt resulted from the 2018 acquisition of gasification and syngas clean-up assets from our joint venture partner, Lu'An, who partially funded the acquisition with a loan to the joint venture.

(C) Includes current portions of long-term debt owed to Lu'An of $ 41.3 and $ 37.8 as of 30 September 2020 and 2019, respectively.

Long-term Debt

The coupon interest rates, maturities, and carrying amounts of our long-term debt as of 30 September 2020 and 2019 are summarized in the table below:

30 September Fiscal Year

Maturities 2020 2019

(B) Includes current portion of long-term debt owed to a related party of $ 83.8 and $ 41.3 as of 30 September 2021 and 2020, respectively.

Total related party debt, including the current portion, was $ 358.4 and $ 338.5 as of 30 September 2021 and 30 September 2020, respectively.

This debt primarily relates to a loan with our joint venture partner, Lu’An Clean Energy Company, which partially funded the acquisition of their assets by a consolidated joint venture in 2018.

The table below summarizes the coupon interest rates, fiscal year maturities, and carrying amounts of our long-term debt, including current portion and amounts owed to related parties:

30 September Maturities 2021 2020

Payable in U.S.

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Variable-rate industrial revenue bonds 0.02 % 2035 to 2050 618.9 631.9

30 September Fiscal Year

Maturities 2020 2019

Other 1.57 % 2024 to 2032 14.4 —

Payable in Other Currencies

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Eurobonds 0.80 % 2032 579.1 586.2

Eurobonds 0.80 % 2032 586.2 —

New Taiwan Dollar 1.86 % 2023 to 2028 161.8 —

Other 2023 0.3 0.6

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Chinese Renminbi 5.5 % 2022 to 2027 355.0 338.5

Chinese Renminbi 5.7 % 2033 3.4 —

Capital Lease Obligations (weighted average rate)

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Long-term Debt $ 6,875.7 $ 7,132.9

(A) We have entered into LIBOR-based interest rate swap arrangements with various counterparty financial institutions on the 3.0 % Senior Note maturing in fiscal year 2022.

(A) We entered into LIBOR-based interest rate swaps with various financial institutions to hedge a portion of the 3.0 % Senior Note maturing in fiscal year 2022.

These interest rate swaps have been designated as fair value hedges of the Note.

Refer to Note 12, Financial Instruments , for additional information.

Maturities of long-term debt, including principal amounts owed to related parties, in each of the next five years and thereafter are as follows:

Principal maturities of long-term debt, including current portion and amounts owed to related parties, in each of the next five years and thereafter are as follows:

Thereafter 5,120.5

Total $ 7,684.7

Cash paid for interest, net of amounts capitalized, was $ 150.4 , $ 67.2 , and $ 155.9 in fiscal years 2021, 2020, and 2019, respectively.

Subsequent Event

In November 2021, we repaid the 3.0 % Senior Note of $ 400 , plus interest, on its maturity date.

Debt Covenants

Various debt agreements to which we are a party include financial covenants and other restrictions, including restrictions pertaining to the ability to create property liens and enter into certain sale and leaseback transactions.

As of 30 September 2021, we are in compliance with all the financial and other covenants under our debt agreements.

There were no additional commitments maintained by our foreign subsidiaries as of 30 September 2020.

Cash paid for interest, net of amounts capitalized, was $ 67.2 , $ 155.9 , and $ 123.1 in fiscal years 2020, 2019, and 2018, respectively.

Credit Agreement

We have a $ 2,300 five-year revolving credit agreement maturing 31 March 2022 with a syndicate of banks (the “Credit Agreement”).

Under the Credit Agreement, senior unsecured debt is available to us and certain of our subsidiaries.

The Credit Agreement provides us a source of liquidity and supports our commercial paper program.

Our only financial covenant under the Credit Agreement is a maximum ratio of total debt to total capitalization, or total debt plus total equity, no greater than 70 %.

Credit Facilities

On 31 March 2021, we entered into a five-year $ 2,500 revolving credit agreement with a syndicate of banks (the “2021 Credit Agreement”), under which senior unsecured debt is available to us and certain of our subsidiaries.

The 2021 Credit Agreement provides a source of liquidity and supports our commercial paper program.

The only financial covenant in the 2021 Credit Agreement is a maximum ratio of total debt to capitalization (equal to total debt plus total equity) not to exceed 70 %.

No borrowings were outstanding under the 2021 Credit Agreement as of 30 September 2021.

The 2021 Credit Agreement replaced our previous five-year $ 2,300 revolving credit agreement, which was to have matured on 31 March 2022.

No borrowings were outstanding under the previous agreement as of 30 September 2020 or at the time of its termination.

No early termination penalties were incurred.

We have credit facilities available to certain of our foreign subsidiaries totaling $ 296.7 , of which $ 176.2 was borrowed and outstanding as of 30 September 2021.

2020 Debt Issuance

In fiscal year 2020, we issued U.S.

Dollar- and Euro-denominated fixed-rate notes with aggregate principal amounts of $ 3.8 billion and € 1.0 billion, respectively.

Our consolidated statement of cash flows for the fiscal year ended 30 September 2020 includes long-term debt proceeds of $ 4,895.8 from these issuances.

RETIREMENT BENEFITS

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2021 2020 2019

Year Ended 30 September U.S.

Fiscal Year Ended 30 September U.S.

International U.S.

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The non-service related costs, including pension settlement losses, are presented outside operating income within "Other non-operating income (expense), net."

During the fourth quarter of fiscal year 2018, we recognized a pension settlement loss of $ 43.7 primarily in connection with the transfer of certain pension assets and payment obligations for our U.S.

salaried and hourly plans to an insurer through the purchase of an irrevocable, nonparticipating group annuity contract.

The transaction does not change the amount of the monthly pension benefits received by affected retirees.

Certain of our pension plans provide for a lump sum benefit payment option at the time of retirement, or for corporate officers, six months after their retirement date.

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We recognize pension settlement losses when cash payments exceed the sum of the service and interest cost components of net periodic benefit cost of the plan for the fiscal year.

We recognized pension settlement losses of $ 5.0 , $ 6.2 and $ 5.2 in fiscal years 2020, 2019 and 2018, respectively, to accelerate recognition of a portion of actuarial losses deferred in accumulated other comprehensive loss, primarily associated with the U.S.

We recognized pension settlement losses of $ 1.3 , $ 5.0 and $ 6.2 in fiscal years 2021, 2020 and 2019, respectively, to accelerate recognition of a portion of actuarial losses deferred in accumulated other comprehensive loss associated with the U.S.

supplementary pension plan.

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Amendments 0.5 — 1.6 —

Actuarial loss (gain) 190.5 ( 11.6 ) 380.3 300.2

Actuarial (gain) loss ( 17.7 ) ( 30.9 ) 190.5 ( 11.6 )

Settlements ( 3.0 ) ( 1.8 ) ( 11.7 ) ( 0.9 )

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Noncurrent liabilities 62.5 192.8 391.5 222.7

Net Liability Recognized $ 375.5 $ 222.9 $ 449.2 $ 191.6

Net Asset (Liability) Recognized $ 8.4 ($ 64.6 ) ($ 375.5 ) ($ 222.9 )

The changes in plan assets and benefit obligation that have been recognized in other comprehensive income on a pretax basis during fiscal years 2021 and 2020 consist of the following:

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International

Net actuarial loss arising during the period $ 14.6 $ 68.9 $ 262.9 $ 161.5

Net actuarial (gain)/loss arising during the period ($ 273.2 ) ($ 87.6 ) $ 14.6 $ 68.9

Amortization of net actuarial loss ( 79.8 ) ( 19.8 ) ( 88.7 ) ( 19.7 )

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Total ($ 353.7 ) ($ 107.4 ) ($ 73.7 ) $ 49.2

The net actuarial loss represents the actual changes in the estimated obligation and plan assets that have not yet been recognized in the consolidated income statements and are included in accumulated other comprehensive loss.

Actuarial losses arising during fiscal year 2020 are primarily attributable to lower discount rates, partially offset by higher than expected return on plan assets.

Accumulated actuarial gains and losses that exceed a corridor are amortized over the average remaining service period of U.S.

The net actuarial gains and losses represent the actual changes in the estimated obligation and plan assets that have not yet been recognized in the consolidated income statements and are included in accumulated other comprehensive loss.

Actuarial gains arising during fiscal year 2021 are primarily attributable to higher than expected return on plan assets and higher discount rates.

Accumulated actuarial gains and losses that exceed a corridor are amortized over the average remaining service period of active U.S.

participants, which was approximately seven years as of 30 September 2021.

participants, accumulated actuarial gains and losses that exceed a corridor are amortized over the average remaining life expectancy, which was approximately twenty-five years as of 30 September 2020.

participants, accumulated actuarial gains and losses that exceed a corridor are amortized over the average remaining life expectancy, which was approximately twenty-four years as of 30 September 2021.

The components recognized in accumulated other comprehensive loss on a pretax basis at 30 September consisted of the following:

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Net actuarial loss $ 444.7 $ 535.8 $ 797.7 $ 643.2

Prior service cost (credit) 7.0 3.6 6.6 3.6

Prior service cost 6.3 3.6 7.0 3.6

Net transition liability — 0.4 — 0.4

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The ABO and PBO related to these plans as of 30 September 2021 were $ 86.2 and $ 91.7 , respectively.

As of 30 September 2019, the U.K.

pension plan had plan assets in excess of both PBO and ABO and was therefore not included in the table above.

As of 30 September 2020, the PBO of this plan exceeded the fair value of plan assets, resulting in an increase to the International balances.

As of 30 September 2021, the U.S.

salaried and U.K.

pension plans had plan assets in excess of both PBO and ABO resulting in a decrease to the U.S.

and International balances presented above.

As of 30 September 2020, the PBO of these plans exceeded the fair value of plan assets.

Pension Plan Assets

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plan assets was based on a weighted average of estimated long-term returns of major asset classes and the historical performance of plan assets.

The estimated long-term return for equity, debt securities, and real estate is 7.6 %, 5.1 %, and 6.5 %, respectively.

In determining asset class returns, we take into account historical long-term returns and the value of active management, as well as other economic and market factors.

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The expected asset return for the U.K.

plan, which represents over 80 % of the assets of our International plans, is 5.7 % and was derived from expected equity and debt security returns of 7.3 % and 1.8 %, respectively.

The following table summarizes pension plan assets measured at fair value by asset class (see Note 14, Fair Value Measurements , for definition of the levels):

plan, which represents over 80 % of the assets of our International plans, is 5.30 % and was derived from expected equity and debt security returns.

The table below summarizes pension plan assets measured at fair value by asset class (see Note 13, Fair Value Measurements , for definition of the levels):

30 September Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

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Interests in these funds are valued using the net asset value ("NAV") per share practical expedient and are not classified in the fair value hierarchy.

The following table summarizes changes in fair value of the pension plan assets classified as Level 3, which comprised of investments in insurance contracts:

The table below summarizes changes in fair value of the pension plan assets classified as Level 3, which is comprised of investments in insurance contracts:

Balance at 30 September 2019 $ 254.1

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Assets held at end of year 2.4

Purchases, sales, and settlements, net ( 1.7 )

Balance at 30 September 2020 $ 256.5

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Assets held at end of year ( 7.9 )

Purchases, sales, and settlements, net ( 2.0 )

Balance at 30 September 2021 $ 246.6

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Equity Mutual and Pooled Funds

Shares of mutual funds are valued at the NAV of the fund and are classified as Level 1 assets.

Shares of mutual funds are valued at the daily closing price as reported by the fund.

The mutual funds are required to publish their daily NAV and to transact at that price.

The mutual funds are deemed to be actively traded and are classified as Level 1 assets.

Units of pooled funds are valued at the per unit NAV determined by the fund manager based on the value of the underlying traded holdings and are classified as Level 2 assets.

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Corporate and government bonds are classified as Level 2 assets, as they are either valued at quoted market prices from observable pricing sources at the reporting date or valued based upon comparable securities with similar yields and credit ratings.

Fixed Income Pooled Funds

Fixed income pooled funds are classified as Level 2 assets, as they are valued at the NAV of the shares held at year end, which is determined by the fund manager based on quoted market pricing from observable pricing sources at the reporting date or valued based upon comparable securities with similar yields, credit ratings, or factors.

Fixed income pooled funds may hold government bonds, index linked bonds, corporate bonds, cash and derivative instruments.

Other Pooled Funds

Other pooled funds classified as Level 2 assets are valued at the NAV of the shares held at year end, which is based on the fair value of the underlying investments.

Other pooled funds are classified as Level 2 assets, as they are valued at the NAV of the shares held at year end, which is based on the fair value of the underlying investments.

Insurance Contracts

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Actual benefit payments may vary significantly from these estimates.

Lloyds Equalization Ruling

On 26 October 2018, the United Kingdom High Court issued a ruling related to the equalization of pension plan participants’ benefits for the gender effects of Guaranteed Minimum Pensions.

As a result of this ruling, we estimated the impact of retroactively increasing benefits in our U.K.

plan in accordance with the High Court ruling.

We treated the additional benefits as a prior service cost, which resulted in an increase to our projected benefit obligation and accumulated other comprehensive loss of $ 4.7 during the first quarter of fiscal year 2019.

We are amortizing this cost over the average remaining life expectancy of the U.K.

participants.

Defined Contribution Plans

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The retiree medical costs are capped at a specified dollar amount, with the retiree contributing the remainder.

The cost of these benefits were not material in fiscal years 2020, 2019, and 2018.

The cost of these benefits was not material in fiscal years 2021, 2020, and 2019.

Accumulated postretirement benefit obligations as of the end of fiscal years 2021 and 2020 were $ 27.4 and $ 38.6 , respectively, of which $ 5.5 and $ 7.2 were current obligations, respectively.

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In fiscal years 2021 and 2020, we recognized gains that arose during the period of $ 5.4 and $ 1.3 , respectively.

There was no net actuarial loss amortization in fiscal years 2020 and 2019 as the corridor for the plan was not exceeded.

The net actuarial gain/loss recognized in accumulated other comprehensive loss on a pretax basis was a net gain of $ 3.0 and $ 1.7 as of 30 September 2020 and 2019, respectively.

There was $ 1.8 net actuarial gain amortization in fiscal year 2021 and no actuarial gain amortization in 2020 as the corridor for the plan was not exceeded.

The net actuarial gain recognized in accumulated other comprehensive loss on a pretax basis was $ 6.6 and $ 3.0 as of 30 September 2021 and 2020, respectively.

COMMITMENTS AND CONTINGENCIES

We are involved in various legal proceedings, including commercial, competition, environmental, intellectual property, regulatory, product liability, and insurance matters.

We do not currently believe there are any legal proceedings, individually or in the aggregate, that are reasonably possible to have a material impact on our financial condition, results of operations, or cash flows.

In September 2010, the Brazilian Administrative Council for Economic Defense ("CADE") issued a decision against our Brazilian subsidiary, Air Products Brasil Ltda., and several other Brazilian industrial gas companies for alleged anticompetitive activities.

CADE imposed a civil fine of R$ 179.2 million (approximately $ 33 at 30 September 2021) on Air Products Brasil Ltda.

This fine was based on a recommendation by a unit of the Brazilian Ministry of Justice, whose investigation began in 2003, alleging violation of competition laws with respect to the sale of industrial and medical gases.

This fine was based on a recommendation by a unit of the Brazilian Ministry of Justice, following an investigation beginning in 2003, which alleged violation of competition laws with respect to the sale of industrial and medical gases.

The fines are based on a percentage of our total revenue in Brazil in 2003.

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As a result, no provision has been made in the consolidated financial statements.

We estimate the maximum possible loss to be the full amount of the fine of R$ 179.2 million (approximately $ 32 at 30 September 2020) plus interest accrued thereon until final disposition of the proceedings.

In the event of an adverse final judgment, we estimate the maximum possible loss to be the full amount of the fine of R$ 179.2 million (approximately $ 33 at 30 September 2021) plus interest accrued thereon until final disposition of the proceedings.

Additionally, Winter Storm Uri, a severe winter weather storm in the U.S.

Gulf Coast in February 2021, disrupted our operations and caused power and natural gas prices to spike significantly in Texas.

We are currently in the early stages of litigation of a dispute regarding energy management services related to the impact of this unusual event, and other disputes may arise from such power price increases.

In addition, legislative action may affect power supply and energy management charges.

While it is reasonably possible that we could incur additional costs related to power supply and energy management services in Texas related to the winter storm, it is too early to estimate potential losses, if any, given significant unknowns resulting from the unusual nature of this event.

Environmental

In the normal course of business, we are involved in legal proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA," the federal Superfund law), Resource Conservation and Recovery Act ("RCRA"), and similar state and foreign environmental laws relating to the designation of certain sites for investigation or remediation.

Presently, there are 31 sites on which a final settlement has not been reached where we, along with others, have been designated a potentially responsible party by the Environmental Protection Agency or are otherwise engaged in investigation or remediation, including cleanup activity at certain of our current and former manufacturing sites.

Presently, there are 31 sites on which a final settlement has not been reached where we, along with others, have been designated a potentially responsible party by environmental authorities or are otherwise engaged in investigation or remediation, including cleanup activity at certain of our current and former manufacturing sites.

We continually monitor these sites for which we have environmental exposure.

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During the second quarter of fiscal year 2020, we completed an updated cost review of the environmental remediation status at the Pace facility.

The review was completed in conjunction with requirements to maintain financial assurance per the Consent Order issued by the FDEP and the USEPA discussed below.

The review was completed in conjunction with requirements to maintain financial assurance per the Consent Order issued by the FDEP discussed below.

Based on our review, we expect ongoing activities to continue for 30 years.

Additionally, we will require near-term spending to install new groundwater recovery wells and piping, in addition to future capital to consider the extended time horizon for remediation at the site.

As a result of these changes, we increased our environmental accrual for this site by $ 19 in continuing operations on the consolidated balance sheets and recognized a pre-tax expense of $ 19 in results from discontinued operations in the second quarter of fiscal year 2020.

Additionally, we will require near-term spending to install new groundwater recovery wells and ancillary equipment, in addition to future capital to consider the extended time horizon for remediation at the site.

As a result of these changes, we increased our environmental accrual for this site by $ 19 in continuing operations on the consolidated balance sheets and recognized a before-tax expense of $ 19 in results from discontinued operations in the second quarter of fiscal year 2020.

There has been no change to the estimated exposure range related to the Pace facility in fiscal year 2021.

We have implemented many of the remedial corrective measures at the Pace facility required under 1995 Consent Orders issued by the FDEP and the USEPA.

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In the second quarter of fiscal year 2020, we completed an updated cost review which resulted in a change in assumptions regarding future operating costs as discussed above.

The costs we are incurring based on the fiscal year 2020 review are higher than our previous estimates.

At 30 September 2021, $ 9.5 of the environmental accrual was related to the Piedmont site.

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Numerous areas of soil contamination have been addressed, and contaminated groundwater is being recovered and treated.

The SCDHEC issued its final approval to the site-wide feasibility study on 13 June 2017 and the Record of Decision for the site on 27 June 2018.

Field work has started to support the remedial design, and in the fourth quarter of fiscal year 2018, we signed a Consent Agreement Amendment memorializing our obligations to complete the cleanup of the site.

The SCDHEC issued its final approval to the site-wide feasibility study on 13 June 2017 and the Record of Decision for the site on 27 June 2018, after which we signed a Consent Agreement Amendment memorializing our obligations to complete the cleanup of the site.

Remediation has started in accordance with the design, which includes in-situ chemical oxidation treatment, as well as the installation of a soil vapor extraction system to remove volatile organic compounds from the unsaturated soils beneath the impacted areas of the plant.

We estimate that source area remediation and groundwater recovery and treatment will continue through 2029.

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We plan to perform additional work to address other environmental obligations at the site.

This additional work includes remediating, as required, impacted soils, investigating groundwater west of the former PUI facility, performing post closure care for two closed RCRA surface impoundment units, and establishing engineering controls.

In 2012, we estimated the total exposure at this site to be $ 13 .

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Balance at 30 September 2021 $ 269.6

Guarantees and Warranties

We guaranteed the repayment of our 25 % share of an equity bridge loan that has been provided to fund equity commitments to a joint venture arrangement with ACWA Holding in Saudi Arabia.

ACWA also guarantees their share of the loan.

Our maximum exposure under the guarantee, which expires in 2021, is approximately $ 100 .

Air Products has also entered into a long-term sale of equipment contract with the joint venture to engineer, procure, and construct the industrial gas facilities that will supply gases to Saudi Aramco.

We provided bank guarantees to the joint venture to support our performance under the contract.

As of 30 September 2020, our maximum potential payments were $ 247 .

Exposures under the guarantees will be extinguished after completion of the project.

We are party to an equity support agreement and operations guarantee related to an air separation facility constructed in Trinidad for a venture in which we own 50 %.

At 30 September 2020, maximum potential payments under joint and several guarantees were $ 25.0 .

Exposures under the guarantees decline over time and will be completely extinguished by 2024.

To date, no equity contributions or payments have been made since the inception of these guarantees.

The fair value of the above guarantees is not material.

Warranties and Guarantees

We do not expect that any sum we may have to pay in connection with warranties and guarantees will have a material adverse effect on our consolidated financial condition, liquidity, or results of operations.

We, in the normal course of business operations, have issued product warranties related to equipment sales.

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The provision for estimated future costs relating to warranties is not material to the consolidated financial statements.

We do not expect that any sum we may have to pay in connection with guarantees and warranties will have a material adverse effect on our consolidated financial condition, liquidity, or results of operations.

To date, no equity contributions or payments have been made since the inception of the guarantees discussed below.

The fair value of these guarantees is not material.

We are party to an equity support agreement and operations guarantee related to an air separation facility constructed in Trinidad for a venture in which we own 50 %.

At 30 September 2021, maximum potential payments under joint and several guarantees were $ 24.0 .

Exposures under the guarantees decline over time and will be completely extinguished by 2024.

We guaranteed the repayment of our 25 % share of an equity bridge loan that has been provided to fund equity commitments to the Jazan Gas Project Company joint venture with ACWA Holding in Saudi Arabia.

ACWA also guarantees their share of the loan.

As of 30 September 2021, our maximum exposure under the guarantee was approximately $ 100 , and payables and accrued liabilities on our consolidated balance sheets included $ 94.4 for our obligation to make equity contributions.

We also have a long-term sale of equipment contract with the joint venture to engineer, procure, and construct the industrial gas facilities that will supply gases to Aramco.

We provided bank guarantees to the joint venture to support our performance under the contract.

As of 30 September 2021, our maximum potential payments were $ 247 .

Subsequent Event

Our bank guarantees that support performance under the sale of equipment contract remain in place.

Unconditional Purchase Obligations

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however, timing of actual satisfaction of the obligation may vary.

Our unconditional purchase obligations also include commitments for power and natural gas supply as well as feedstock supply or numerous HyCO (hydrogen, carbon monoxide, and syngas) facilities.

Our unconditional purchase obligations also include commitments for power and natural gas supply as well as feedstock supply for numerous HyCO (hydrogen, carbon monoxide, and syngas) facilities.

Our long-term sales contracts to customers are generally matched to the term of these obligations and provide recovery of price increases.

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A summary of the changes in common shares in fiscal year 2021 is presented below:

Year Ended 30 September 2020 2019 2018

Fiscal Year Ended 30 September 2021 2020 2019

Number of common shares outstanding, beginning of year 221,017,459 220,415,262 219,515,245

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SHARE-BASED COMPENSATION

We have various share-based compensation programs, which include deferred stock units, stock options, and restricted stock.

Our outstanding share-based compensation programs include deferred stock units and stock options.

During the fiscal year ended 30 September 2021, we granted market-based and time-based deferred stock units.

Under all programs, the terms of the awards are fixed at the grant date.

We issue shares from treasury stock upon the payout of deferred stock units, the exercise of stock options, and the issuance of restricted stock awards.

As of 30 September 2020, there were 4,341,614 shares available for future grant under our Long-Term Incentive Plan ("LTIP"), which is shareholder approved.

Share-based compensation cost recognized in the consolidated income statements is summarized below:

We have not issued stock option awards since fiscal year 2015.

The terms of our share-based awards are fixed at the grant date.

We issue shares from treasury stock upon payout of deferred stock units and exercise of stock options.

At the annual shareholders meeting held on 28 January 2021, the shareholders approved a new Long-Term Incentive Plan ("LTIP"), which has an authorized pool of 1,500,000 shares available for future grant, plus additional shares underlying awards outstanding on the date the LTIP was adopted but that are not issued.

As of 30 September 2021, there were 1,566,433 shares available for future grant under our LTIP.

Share-based compensation cost recognized on the consolidated income statements is summarized below:

2021 2020 2019

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After-tax share-based compensation cost $ 33.5 $ 42.8 $ 31.5

Before-tax share-based compensation cost is primarily included in "Selling and administrative expense" on our consolidated income statements.

Before-tax share-based compensation cost relates to deferred stock units and is primarily included in "Selling and administrative" on our consolidated income statements.

The amount of share-based compensation cost capitalized in fiscal years 2021, 2020, and 2019 was not material.

Before-tax share-based compensation cost by type of program was as follows:

2020 2019 2018

Deferred Stock Units

Stock options — — 0.2

Restricted stock — 0.1 0.3

Before-tax share-based compensation cost $ 55.8 $ 41.2 $ 38.8

Deferred Stock Units

We have granted deferred stock units to executives, selected employees, and outside directors.

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In addition, we granted 110,555 time-based deferred stock units at a weighted average grant-date fair value of $ 282.48 .

In fiscal years 2019 and 2018, we granted 169,666 and 143,379 time-based deferred stock units at a weighted average grant-date fair value of and $ 168.68 and $ 162.11 , respectively.

In fiscal years 2020 and 2019, we granted 123,448 and 169,666 time-based deferred stock units at a weighted average grant-date fair value of $ 230.92 and $ 168.68 , respectively.

A summary of deferred stock unit activity in fiscal year 2021 is presented below:

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Paid out ( 330 ) 185.33

Forfeited/adjustments 47 131.35

Forfeited ( 17 ) 241.55

Adjusted 87 161.64

Deferred stock units outstanding at 30 September 2021 854 $ 194.12

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Options generally vest incrementally over three years and remain exercisable for ten years from the date of grant.

We have not issued stock option awards since fiscal year 2015.

As of 30 September 2021, there was no unrecognized compensation cost as all stock option awards were fully vested.

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Exercised ( 140 ) 80.63

Forfeited — —

Stock options outstanding and exercisable at 30 September 2021 801 $ 99.79

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The total tax benefit realized from stock option exercises in fiscal year 2021 was $ 6.8 , of which $ 6.5 was the excess tax benefit.

Restricted Stock

The grant-date fair value of restricted stock is estimated on the date of grant based on the closing price of the stock, and compensation cost is generally amortized to expense on a straight-line basis over the vesting period during which employees perform related services.

Expense recognition is accelerated for retirement-eligible individuals who would meet the requirements for vesting of awards upon their retirement.

We have elected to account for forfeitures as they occur rather than to estimate them.

Historically, forfeitures have not been significant.

We have issued shares of restricted stock to certain officers.

Participants are entitled to cash dividends and to vote their respective shares.

Restrictions on shares lift in one to four years or upon the earlier of retirement, death, or disability.

The shares are nontransferable while subject to forfeiture.

A summary of restricted stock activity in fiscal year 2020 is presented below:

Shares (000) Weighted Average

Grant-Date Fair Value

Restricted stock outstanding at 30 September 2019 26 $ 138.00

Vested ( 26 ) 138.00

Restricted stock outstanding at 30 September 2020 — $ —

As of 30 September 2020, there was no unrecognized compensation cost as all restricted stock awards were fully vested.

The total fair value of restricted stock vested during fiscal years 2020, 2019, and 2018 was $ 6.1 , $ 2.6 , and $ 2.2 , respectively.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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Balance at 30 September 2018 ($ 37.6 ) ($ 1,009.8 ) ($ 694.5 ) ($ 1,741.9 )

Other comprehensive income (loss) before reclassifications 45.9 ( 244.6 ) 179.4 ( 19.3 )

Amounts reclassified from AOCL ( 30.4 ) 3.1 133.1 105.8

Net current period other comprehensive income (loss) $ 15.5 ($ 241.5 ) $ 312.5 $ 86.5

Amount attributable to noncontrolling interests — ( 18.8 ) ( 0.2 ) ( 19.0 )

Balance at 30 September 2018 ($ 37.6 ) ($ 1,009.8 ) ($ 694.5 ) ($ 1,741.9 )

Other comprehensive loss before reclassifications ( 44.1 ) ( 356.2 ) ( 326.2 ) ( 726.5 )

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Net current period other comprehensive loss ($ 31.8 ) ($ 358.8 ) ($ 263.0 ) ($ 653.6 )

Amount attributable to noncontrolling interest ( 8.0 ) ( 11.7 ) ( 0.2 ) ( 19.9 )

Amount attributable to noncontrolling interests ( 8.0 ) ( 11.7 ) ( 0.2 ) ( 19.9 )

Balance at 30 September 2019 ($ 61.4 ) ($ 1,356.9 ) ($ 957.3 ) ($ 2,375.6 )

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Balance at 30 September 2020 ($ 54.5 ) ($ 1,142.8 ) ($ 942.8 ) ($ 2,140.1 )

Other comprehensive income before reclassifications 3.3 267.3 274.3 544.9

Amounts reclassified from AOCL 43.5 — 74.6 118.1

Net current period other comprehensive income $ 46.8 $ 267.3 $ 348.9 $ 663.0

Amount attributable to noncontrolling interest 20.6 18.3 ( 0.1 ) 38.8

Balance at 30 September 2021 ($ 28.3 ) ($ 893.8 ) ($ 593.8 ) ($ 1,515.9 )

The table below summarizes the reclassifications out of AOCL and the affected line item on the consolidated income statements:

Year Ended 30 September

Fiscal Year Ended 30 September

2021 2020 2019

(Gain) Loss on Cash Flow Hedges, net of tax

Sales/Cost of sales ($ 1.0 ) $ 0.6 $ 7.1

Sales ($ 0.6 ) ($ 0.2 ) $ 0.4

Cost of sales ( 0.3 ) ( 0.8 ) 0.2

Other income (expense), net — — ( 3.0 )

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Other non-operating income (expense), net (A)

40.9 ( 59.5 ) —

Total (Gain) Loss on Cash Flow Hedges, net of tax $ 43.5 ($ 57.7 ) $ 12.3

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$ 74.6 $ 82.5 $ 63.2

(A) The fiscal year 2020 impact includes amortization of the excluded component and the effective portion of the related hedges.

(A) The fiscal years 2021 and 2020 impacts include amortization of the excluded component and the effective portion of the related hedges.

(B) The fiscal year 2019 impact relates to a net gain on the exchange of two equity affiliates with a joint venture partner.

Refer to Note 3, Acquisitions , for additional information.

The fiscal year 2018 impact relates to an equipment sale resulting from the termination of a contract in the Industrial Gases – Asia segment during the first quarter.

(C) The components of net periodic benefit cost reclassified out of AOCL include items such as prior service cost amortization, actuarial loss amortization, and settlements and are included in “Other non-operating income (expense), net” on the consolidated income statements.

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The table below details the computation of basic and diluted earnings per share ("EPS"):

Year Ended 30 September 2020 2019 2018

Fiscal Year Ended 30 September 2021 2020 2019

Net income from continuing operations $ 2,028.8 $ 1,901.0 $ 1,760.0

Net (loss) income from discontinued operations ( 14.3 ) — 42.2

Net income (loss) from discontinued operations 70.3 ( 14.3 ) —

Net Income Attributable to Air Products $ 2,099.1 $ 1,886.7 $ 1,760.0

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There were no antidilutive outstanding share-based awards in fiscal years 2021, 2020 and 2019.

Outstanding share-based awards of 0.1 million shares were antidilutive and therefore excluded from the computation of diluted EPS for fiscal year 2018.

The following table summarizes the income of U.S.

The table below summarizes income from U.S.

and foreign operations before taxes:

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Income from continuing operations before taxes $ 2,507.4 $ 2,423.8 $ 2,289.5

On 22 December 2017, the United States enacted the U.S.

Tax Cuts and Jobs Act (the “Tax Act” or "Tax Reform"), which significantly changed existing U.S.

tax laws, including a reduction in the federal corporate income tax rate from 35 % to 21 %, a deemed repatriation tax on unremitted foreign earnings, as well as other changes.

Our consolidated income statements reflect a discrete net income tax expense of $ 43.8 and $ 180.6 in fiscal years 2019 and 2018, respectively, related to impacts of the Tax Act.

In fiscal year 2019, our income tax expense reflects the reversal of a non-recurring $ 56.2 benefit recorded in fiscal year 2018 related to the U.S.

taxation of deemed foreign dividends.

This was partially offset by a benefit of $ 12.4 to reduce the total expected costs of the deemed repatriation tax.

The non-recurring benefit recorded in fiscal year 2018 was eliminated by regulations issued in fiscal year 2019.

In fiscal year 2018, our consolidated income statements reflect a discrete net income tax expense of $ 180.6 and a $ 28.5 reduction to equity affiliates' income for the impacts of the Tax Act.

The income tax expense of $ 180.6 included a cost of $ 392.4 , which included $ 322.1 for the deemed repatriation tax and $ 70.3 primarily for additional foreign taxes on the repatriation of foreign earnings.

This cost was partially offset by a $ 211.8 benefit primarily from the re-measurement of our net U.S.

deferred tax liabilities at the lower corporate tax rate.

The deemed repatriation tax of $ 322.1 included the $ 56.2 non-recurring benefit related to the U.S.

taxation of deemed foreign dividends that was eliminated in 2019.

We have historically asserted our intention to indefinitely reinvest foreign earnings in certain foreign subsidiaries.

We reevaluated our historic assertions as a result of enactment of the Tax Act and adjusted our position relative to the indefinitely reinvested earnings of various foreign subsidiaries.

The impact of these changes is included in the $ 70.3 for additional foreign taxes on the repatriation of foreign earnings recorded in fiscal year 2018.

As of 30 September 2020, the remaining balance of the deemed repatriation tax obligation is $ 211.4 , $ 190.9 of which is presented on our consolidated balance sheets in noncurrent liabilities.

We are paying the obligation in installments over six remaining years.

While our accounting for the provisions of the Tax Act is not provisional, further adjustments to the deemed repatriation tax could result from future U.S.

or foreign tax examinations of the years impacted by the calculation or from the issuance of additional federal or state guidance.

As a fiscal year-end taxpayer, certain provisions of the Tax Act became effective in our fiscal year 2018 while other provisions did not become effective until fiscal year 2019.

The corporate tax rate reduction was effective as of 1 January 2018 and, accordingly, reduced our 2018 fiscal year U.S.

federal statutory rate to a blended rate of approximately 24.5 %.

The 21.0 % federal tax rate applied to our fiscal year ended 30 September 2019 and each year thereafter.

The following table details the components of the provision for income taxes:

The table below details the components of our income tax provision:

2021 2020 2019

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Total income tax provision $ 462.8 $ 478.4 $ 480.1

Total company income tax payments, net of refunds, were $ 379.9 , $ 324.3 , and $ 372.0 in fiscal years 2020, 2019, and 2018, respectively.

Cash Paid for Taxes (Net of Cash Refunds)

Income tax payments, net of refunds, were $ 383.8 , $ 379.9 , and $ 324.3 in fiscal years 2021, 2020, and 2019, respectively.

Fiscal year 2021 reflects an income tax refund of $ 6.7 that is related to cash provided by discontinued operations.

India Finance Act 2020

On 27 March 2020, the Indian government passed Finance Act 2020 (the "India Finance Act"), which amended rules regarding the taxation of dividends declared and distributed by Indian companies.

Under the India Finance Act, future dividends declared or distributed by an Indian company are no longer subject to dividend distribution tax.

Instead, any non-resident recipient is subject to a withholding tax.

Our income tax provision for the fiscal year ended 30 September 2020 reflected an expense of $ 20.3 for estimated withholding taxes that we may incur on future dividends related to INOX Air Products Private Limited ("INOX"), an equity affiliate investment in our Industrial Gases – Asia segment.

Additionally, we recorded a benefit of $ 33.8 within "Equity affiliates' income" for our share of accumulated dividend distribution taxes released with respect to INOX.

Tax Cuts and Jobs Act

On 22 December 2017, the United States enacted the U.S.

Tax Cuts and Jobs Act (the “Tax Act” or "Tax Reform"), which significantly changed existing U.S.

tax laws, including a reduction in the federal corporate income tax rate to 21 %, a deemed repatriation tax on unremitted foreign earnings, as well as other changes.

Our consolidated income statements reflect a discrete net income tax expense of $ 43.8 in fiscal year 2019 related to impacts of the Tax Act.

The net expense included the reversal of a non-recurring $ 56.2 benefit initially recorded in fiscal year 2018 related to the U.S.

taxation of deemed foreign dividends, which was eliminated by regulations issued in fiscal year 2019.

The reversal in 2019 was partially offset by a benefit of $ 12.4 to reduce the total expected costs of the deemed repatriation tax.

As of 30 September 2021, the remaining liability for the deemed repatriation tax is $ 177.7 , $ 157.1 of which is presented within noncurrent liabilities on our consolidated balance sheets.

We are paying this obligation in installments over five remaining years.

Effective Tax Rate

The effective tax rate equals the income tax provision divided by income from continuing operations before taxes.

A reconciliation of the differences between the United States federal statutory tax rate and the effective tax rate is as follows:

A reconciliation of the differences between the United States federal statutory tax rate and the effective tax rate is provided below:

(Percent of income before taxes) 2021 2020 2019

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Tax reform repatriation — — 1.9

Tax reform rate change and other — — ( 11.1 )

Tax restructuring benefit — — ( 1.8 )

Domestic production activities — — ( 0.4 )

Other ( 1.4 ) 0.2 ( 1.4 )

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federal statutory rate and include tax holidays and incentives.

As a result of the Tax Act, our effective non-U.S.

tax rates in fiscal years 2020 and 2019 are higher than our statutory rate of 21.0 % in those years.

Our income tax holidays relate to operations in jurisdictions that provide reduced income tax rates for certain qualifying activities and are conditional upon us meeting certain operating thresholds.

The impact of these tax holidays decreased income tax expense by $ 26.9 ($ 0.12 per share) in fiscal year 2020, primarily related to a preferential tax rate in China that is effective until 31 December 2030.

This includes the impact of remeasurement of the deferred tax assets and liabilities due to an extension of the holiday period in China.

The impact of tax holidays in fiscal years 2019 and 2018 were not material.

This includes the impact of remeasurement of the deferred tax assets and liabilities in 2020 due to an extension of the holiday period in China.

The impact of tax holidays in fiscal years 2021 and 2019 was not material.

Tax on foreign repatriated earnings includes benefits and costs related to U.S.

and additional foreign taxation on the current and future repatriation of foreign earnings and a U.S.

and foreign taxation on the current and future repatriation of foreign earnings and a U.S.

benefit for related foreign tax credits.

The enactment of the India Finance Act 2020, increased income tax expense by $ 20.3 and increased equity affiliate income by $ 33.8 for changes in the future tax costs of repatriated earnings.

The effective tax rate in 2020 reflects impacts from the India Finance Act 2020 discussed above.

In addition, the Tax Act included new provisions related to the taxation of foreign operations, known as Global Intangible Low Tax Income (“GILTI”).

We have elected as an accounting policy to account for GILTI as a period cost when incurred.

This and various other provisions of the Tax Act did not become effective until fiscal year 2019 and did not impact our tax provision in fiscal year 2018.

The Tax Act repealed the domestic production activities deduction, effective for our fiscal 2019 tax year.

Share-based compensation reflects the impact from recognition of $ 17.0 , $ 20.0 , and $ 14.6 of excess tax benefits in our provision for income taxes during fiscal years 2021, 2020, and 2019, respectively.

In fiscal year 2018, we recognized a tax benefit of $ 35.7 , net of reserves for uncertain tax positions, and a corresponding decrease to net deferred tax liabilities resulting from the restructuring of several foreign subsidiaries.

In fiscal year 2021, other includes net tax benefits of $ 21.5 , including interest, resulting from the release of U.S.

unrecognized tax benefits upon expiration of the statute of limitations on uncertain tax positions taken in prior years.

Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities are as follows:

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Plant and equipment 1,171.8 1,110.9

Currency gains — 23.9

Unremitted earnings of foreign entities 69.1 58.7

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Deferred tax liabilities related to plant and equipment increased due to the impact of accelerated tax depreciation deductions in excess of book depreciation primarily in the United States.

The deferred tax component for currency transactions moved into an overall deferred tax asset position due primarily to currency movements on hedging transactions as several foreign based currencies strengthened against the U.S.

dollar in fiscal year 2020.

We also realized a deferred tax liability related to the unrealized foreign exchange gain for a euro denominated financial instrument.

Unremitted earnings of foreign entities increased primarily as a result of the enactment of the India Finance Act 2020 which increased the future tax costs of repatriated earnings.

Deferred tax assets related to retirement benefits and compensation accruals are impacted by changes in plan assets and benefit obligations that have been recognized in other comprehensive income.

This balance decreased primarily due to higher than expected asset returns and higher discount rates.

Deferred tax assets related to tax credits and other tax carryforwards decreased primarily due to the utilization of tax credits against our income tax liabilities.

As of 30 September 2021, we had the following deferred tax assets for certain tax credits:

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Foreign Capital Loss 221.6 Indefinite

In fiscal year 2020, the U.S.

Federal capital losses increased by $ 22.6 primarily due to the recognition of a capital loss for the liquidation of a foreign subsidiary.

Of the $ 258.8 of foreign net operating loss carryforwards, $ 111.5 have indefinite carryforward periods.

Foreign net operating losses decreased by $ 116.0 in fiscal year 2020 primarily due to utilization in China and a tax election in India that reduced tax loss carryforwards and decreased plant and equipment net deferred tax liabilities.

The valuation allowance was $ 97.6 and $ 95.0 as of 30 September 2021 and 2020, respectively.

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We believe it is more likely than not that future earnings and reversal of deferred tax liabilities will be sufficient to utilize our deferred tax assets, net of existing valuation allowance, as of 30 September 2021.

As a result of the Tax Act, we recorded $ 373.2 of federal income tax from the deemed repatriation tax on approximately $ 5.8 billion of previously undistributed earnings from our foreign subsidiaries and corporate joint ventures.

These earnings are now eligible to be repatriated to the U.S.

with reduced U.S.

However, such earnings may be subject to foreign withholding and other taxes.

We record foreign and U.S.

income taxes on the undistributed earnings of our foreign subsidiaries and corporate joint ventures unless those earnings are indefinitely reinvested.

We record income taxes on the undistributed earnings of our foreign subsidiaries and corporate joint ventures unless those earnings are indefinitely reinvested.

Such earnings may be subject to foreign withholding and other taxes.

The cumulative undistributed earnings that are considered to be indefinitely reinvested in foreign subsidiaries and corporate joint ventures are included in retained earnings on the consolidated balance sheets and amounted to $ 5.9 billion as of 30 September 2021.

An estimated $ 540.4 in additional foreign withholding and other income taxes would be due if these earnings were remitted as dividends.

A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows:

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of the unrecognized tax benefits, which excludes interest and penalties, is as follows:

2021 2020 2019

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Unrecognized tax benefits balance at end of year $ 140.3 $ 237.0 $ 231.7

As of 30 September 2020 and 2019, we had $ 237.0 and $ 231.7 of unrecognized tax benefits, excluding interest and penalties, respectively.

Of these benefits, $ 86.1 and $ 75.0 as of 30 September 2020 and 2019, respectively, would impact the effective tax rate from continuing operations if recognized.

Of our unrecognized tax benefits as of 30 September 2021, $ 73.7 would impact the effective tax rate from continuing operations if recognized.

In fiscal year 2021, reserves for unrecognized tax benefits decreased $ 104.6 due to statute of limitation expirations.

We released reserves of $ 65.6 related to the sale of our former Performance Materials Division (“PMD”), $ 8.2 associated with our former Energy-from-Waste business (“EfW”), and $ 27.5 for other reserves, including those associated with a tax election benefit related to a non-U.S.

subsidiary in 2017.

Upon release of the reserves related to PMD and EfW, we recorded income tax benefits of $ 51.8 and $ 8.2 , respectively, as a component of discontinued operations.

The PMD reserve was net of related deferred tax assets of $ 13.8 .

The release of other reserves of $ 27.5 was net of related deferred tax assets of $ 8.4 and resulted in an income tax benefit, including interest, of $ 21.5 .

Interest and penalties related to unrecognized tax benefits are recorded as a component of income tax expense and totaled ($ 0.2 ), $ 6.1 , and $ 12.0 in fiscal years 2021, 2020, and 2019, respectively.

Our 2021 expense reflects a benefit from the reversal of accrued interest on reserves released during the period.

Our accrued balance for interest and penalties was $ 24.9 and $ 25.2 as of 30 September 2021 and 2020, respectively.

In fiscal year 2018, $ 119.2 in additions for tax positions of prior years related primarily to uncertain state tax filing positions taken related to the sale of our former Performance Materials Division in fiscal year 2017.

Additions for tax positions of the current year in fiscal year 2018 of $ 26.4 included uncertain tax positions related to the restructuring of foreign subsidiaries and reserves for ongoing transfer pricing uncertainties.

In fiscal year 2018, we received a final audit settlement agreement that resolved uncertainties related to unrecognized tax benefits of $ 43.1 , including interest.

This settlement primarily related to tax positions taken in conjunction with the disposition of our Homecare business in 2012.

As a result, we recorded an income tax benefit of $ 25.6 , including interest, in income from discontinued operations during 2018.

The settlement also resulted in an income tax benefit of approximately $ 9.1 , including interest, in continuing operations for the release of tax reserves on other matters.

We are currently under examination in a number of tax jurisdictions, some of which may be resolved in the next twelve months.

As a result, it is reasonably possible that a change in the unrecognized tax benefits may occur during the next twelve months.

Income Tax Examinations

We are currently under examination in a number of tax jurisdictions.

It is reasonably possible that a change in our unrecognized tax benefits may occur in fiscal year 2022 if any of these examinations are resolved during the next twelve months.

However, quantification of an estimated range cannot be made as of the date of this report.

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Operating lease right-of-use assets $ 566.2 $ 376.8

Deferred tax assets 115.1 115.2

Derivative instruments 45.8 81.7

Noncurrent customer receivable — 118.0

Prepaid tax 19.3 17.0

Pension benefits 219.2 26.5

Long-term deposits on plant and equipment 200.0 100.0

Deferred tax assets 100.2 115.1

Prepaid tax 75.0 19.3

Investments other than equity method 66.9 17.0

Derivative instruments 23.6 45.8

Other 255.4 242.6

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30 September 2021 2020

Operating lease liabilities $ 503.4 $ 335.8

Asset retirement obligations 258.0 236.2

Pension benefits 255.3 614.2

Postretirement benefits 22.1 31.4

Operating lease liabilities (A)

Asset retirement obligations 236.2 201.9

Long-term accrued income taxes related to U.S.

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Derivative instruments 52.7 34.7

Noncurrent customer liability — 118.0

Obligations associated with Energy-from-Waste (A)

Other 153.6 202.7

Other noncurrent liabilities $ 1,640.9 $ 1,916.0

(A) In connection with our adoption of the new lease guidance, the presentation of our lease liability associated with our former Energy-from-Waste project has been recorded in aggregate with our other operating lease liabilities effective 1 October 2019.

Company Headquarters Relocation Income (Expense)

During the second quarter of fiscal year 2020, we sold property at our current corporate headquarters located in Trexlertown, Pennsylvania, for net proceeds of $ 44.1 .

The sale was completed in anticipation of relocating our U.S.

headquarters and resulted in a gain of $ 33.8 .

This gain is reflected on our consolidated income statements as "Company headquarters relocation income (expense)" for the fiscal year ended 30 September 2020 and has been excluded from the results of the Corporate and other segment.

Facility Closure

In December 2018, one of our customers was subject to a government enforced shutdown due to environmental reasons.

As a result, we recognized a charge of $ 29.0 during the first quarter of fiscal year 2019 primarily related to the write-off of onsite assets.

This charge was reflected as “Facility closure” on our consolidated income statements for the fiscal year ended 30 September 2019 and was not recorded in segment results.

Related Party Transactions

We have related party sales to some of our equity affiliates and joint venture partners as well as other income primarily from fees charged for use of Air Products' patents and technology.

Our consolidated income statements include sales to some of our equity affiliates and joint venture partners as well as other income primarily from fees charged for use of Air Products' patents and technology.

Sales to and other income from related parties totaled approximately $ 225 , $ 335 , and $ 410 for the fiscal years ended 30 September 2021, 2020, and 2019, respectively.

Sales agreements with related parties include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party.

As of 30 September 2020 and 2019, our consolidated balance sheets include related party trade receivables of approximately $ 95 and $ 130 , respectively.

SUMMARY BY QUARTER (UNAUDITED)

The tables below provide unaudited selected financial data and weighted average share information for each quarter of fiscal years 2020 and 2019:

2020 Q1 Q2 Q3 Q4 Total

Sales $ 2,254.7 $ 2,216.3 $ 2,065.2 $ 2,320.1 $ 8,856.3

Gross profit 768.1

756.2 720.3 753.6 2,998.2

Company headquarters relocation income (expense) (See Note 23)

— 33.8 — — 33.8

Operating income 561.0 577.2 539.2 560.2 2,237.6

Equity affiliates' income 58.2 88.2 (A)

51.2 67.2 264.8 (A)

Income tax provision 120.7 148.5 (A)

109.3 99.9 478.4 (A)

Income from continuing operations 488.9 504.7 457.1 494.7 1,945.4

Loss from discontinued operations, net of tax (See Note 6)

— ( 14.3 ) — — ( 14.3 )

Net income 488.9 490.4 457.1 494.7 1,931.1

Net Income Attributable to Air Products

Net income from continuing operations $ 475.6 $ 492.1 $ 446.5 $ 486.8 $ 1,901.0

Net loss from discontinued operations — ( 14.3 ) — — ( 14.3 )

Net Income Attributable to Air Products $ 475.6 $ 477.8 $ 446.5 $ 486.8 $ 1,886.7

Per Share Data*

Basic EPS from continuing operations $ 2.15 $ 2.22 $ 2.02 $ 2.20 $ 8.59

Basic EPS from discontinued operations — ( 0.06 ) — — ( 0.06 )

Basic EPS Attributable to Air Products $ 2.15 $ 2.16 $ 2.02 $ 2.20 $ 8.53

Diluted EPS from continuing operations $ 2.14 $ 2.21 $ 2.01 $ 2.19 $ 8.55

Diluted EPS from discontinued operations — ( 0.06 ) — — ( 0.06 )

Diluted EPS Attributable to Air Products $ 2.14 $ 2.15 $ 2.01 $ 2.19 $ 8.49

Weighted Average Common Shares (in millions)

Basic 220.9 221.2 221.2 221.3 221.2

Diluted 222.2 222.3 222.4 222.6 222.3

Dividend Information

Dividends declared per common share $ 1.16 $ 1.34 $ 1.34 $ 1.34 $ 5.18

* EPS is calculated independently for each component and may not sum to total EPS due to rounding.

(A) Includes the impact of the enactment of India Finance Act 2020, which increased equity affiliates' income by $ 33.8 and our income tax provision by $ 20.3 .

Refer to Note 22, Income Taxes , for additional information.

2019 Q1 Q2 Q3 Q4 Total

Sales $ 2,224.0 $ 2,187.7 $ 2,224.0 $ 2,283.2 $ 8,918.9

Gross profit 651.0 (A)

713.0 758.0 792.4 2,914.4 (A)

Cost reduction actions (See Note 5)

— — 25.5 — 25.5

Gain on exchange of equity affiliate investments (See Note 3)

— — 29.1 — 29.1

Operating income 455.0 516.5 569.7 603.2 2,144.4

Equity affiliates' income 52.9 46.2 56.4 59.9 215.4

Pension settlement loss (See Note 16)

— 5.0 — — 5.0

Income tax provision 132.1 (B)

107.5 109.3 (B)

131.2 480.1 (B)

Income from continuing operations 357.0 433.5 500.2 518.7 1,809.4

Income from discontinued operations, net of tax — — — — —

Net income 357.0 433.5 500.2 518.7 1,809.4

Net Income Attributable to Air Products

Net income from continuing operations $ 347.5 $ 421.3 $ 488.0 $ 503.2 $ 1,760.0

Net income from discontinued operations — — — — —

Net Income Attributable to Air Products $ 347.5 $ 421.3 $ 488.0 $ 503.2 $ 1,760.0

Per Share Data*

Basic EPS from continuing operations $ 1.58 $ 1.91 $ 2.21 $ 2.28 $ 7.99

Basic EPS from discontinued operations — — — — —

Basic EPS Attributable to Air Products $ 1.58 $ 1.91 $ 2.21 $ 2.28 $ 7.99

Diluted EPS from continuing operations $ 1.57 $ 1.90 $ 2.20 $ 2.27 $ 7.94

Diluted EPS from discontinued operations — — — — —

Diluted EPS Attributable to Air Products $ 1.57 $ 1.90 $ 2.20 $ 2.27 $ 7.94

Weighted Average Common Shares (in millions)

Basic 219.9 220.2 220.6 220.7 220.3

Diluted 221.0 221.4 221.9 222.1 221.6

Dividend Information

Dividends declared per common share $ 1.10 $ 1.16 $ 1.16 $ 1.16 $ 4.58

* EPS is calculated independently for each component and may not sum to total EPS due to rounding.

(A) Includes the impact of a facility closure charge of $ 29.0 resulting from the government enforced shutdown of a customer in December 2018.

Refer to Note 23, Supplemental Information , for additional information.

(B) Includes a discrete net income tax expense of $ 43.8 , primarily recorded in the first quarter of fiscal year 2019 to finalize our estimates of the impacts of the U.S.

Tax Cuts and Jobs Act.

Refer to Note 22, Income Taxes , for additional information.

As of 30 September 2021 and 2020, our consolidated balance sheets included related party trade receivables of approximately $ 90 and $ 95 , respectively.

In addition, refer to Note 14, Debt , for information concerning debt owed to related parties.

Facility Closures

During the second quarter of fiscal year 2021, we recorded a charge of $ 23.2 primarily for a noncash write-down of assets associated with a contract termination in the Industrial Gases – Americas segment.

This charge is reflected as "Facility closure" on our consolidated income statements for the fiscal year ended 30 September 2021 and was not recorded in segment results.

In December 2018, one of our customers was subject to a government enforced shutdown due to environmental reasons.

As a result, we recognized a charge of $ 29.0 during the first quarter of fiscal year 2019 primarily related to the write-off of onsite assets.

This charge was reflected as “Facility closure” on our consolidated income statements for the fiscal year ended 30 September 2019 and was not recorded in segment results.

Company Headquarters Relocation Income (Expense)

During the second quarter of fiscal year 2020, we sold property at our former corporate headquarters located in Trexlertown, Pennsylvania, in anticipation of relocating our U.S.

headquarters.

We received net proceeds of $ 44.1 and recorded a gain of $ 33.8 , which is reflected on our consolidated income statements as "Company headquarters relocation income (expense)" for the fiscal year ended 30 September 2020.

The gain was not recorded in the results of the Corporate and other segment.

Cost Reduction Actions

In fiscal year 2019, we recognized an expense of $ 25.5 for severance and other benefits associated with position eliminations.

These actions were taken to drive cost synergies primarily within the Industrial Gases – EMEA and the Industrial Gases – Americas segments.

The charge is reflected on our consolidated income statements as "Cost reduction actions" for the fiscal year ended 30 September 2019 and was not recorded in segment results .

BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

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Except in the Industrial Gases – EMEA and Corporate and other segments, each reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

Our Industrial Gases – EMEA and Corporate and other segment each include the aggregation of two operating segments that meet the aggregation criteria under GAAP.

Our reporting segments are:

Our Industrial Gases – EMEA and Corporate and other segments each include the aggregation of two operating segments that meet the aggregation criteria under GAAP.

As of 30 September 2021, our reporting segments are:

• Industrial Gases – Americas;

3 unchanged sentences

• Corporate and other

On 4 November 2021, we announced the reorganization of our industrial gases segments effective 1 October 2021.

Refer to Note 24, Subsequent Events , for additional information.

Industrial Gases – Regional

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The industrial gases business also develops, builds, and operates equipment for the production or processing of gases, such as air separation units and non-cryogenic generators.

We supply gases to diversified customers in many industries, including those in refining, chemical, gasification, metals, electronics, manufacturing, and food and beverage.

We distribute gases to our customers through a variety of supply modes including liquid or gaseous bulk supply delivered by tanker or tube trailer and, for smaller customers, packaged gases delivered in cylinders and dewars or small on-sites (cryogenic or non-cryogenic generators).

For large-volume customers, we construct an on-site plant adjacent to or near the customer’s facility or deliver product from one of our pipelines.

We supply gases to diversified customers in many industries, including those in refining, chemical, gasification, metals, electronics, manufacturing, and food and beverage, through a variety of supply modes.

For additional information, refer to Note 4, Revenue Recognition .

Electricity is the largest cost component in the production of atmospheric gases.

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The results of the Corporate and other segment also include income and expense that is not directly associated with the other segments, such as foreign exchange gains and losses.

In addition to assets of the global businesses included in this segment, other assets include cash, deferred tax assets, and financial instruments.

In addition to assets of the global businesses included in this segment, other assets include cash and cash items, short-term investments, deferred tax assets, and financial instruments.

We do not have a homogeneous customer base or end market, and no single customer accounts for more than 10% of our consolidated revenues.

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The table below reconciles total operating income disclosed in the table above to consolidated operating income as reflected on our consolidated income statements:

Year Ended 30 September 2020 2019 2018

Fiscal Year Ended 30 September

2021 2020 2019

Total $ 2,267.8 $ 2,203.8 $ 2,169.8

Change in inventory valuation method — — 24.1

Facility closure ( 23.2 ) — ( 29.0 )

Cost reduction actions — — ( 25.5 )

Gain on exchange of equity affiliate investments — 29.1 —

Gain on exchange with joint venture partner 36.8 — 29.1

Company headquarters relocation income (expense) — 33.8 —

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The table below reconciles total equity affiliates' income disclosed in the table above to consolidated equity affiliates' income as reflected on our consolidated income statements:

Year Ended 30 September 2020 2019 2018

Fiscal Year Ended 30 September

2021 2020 2019

Total $ 294.1 $ 231.0 $ 215.4

India Finance Act 2020 — 33.8 —

Tax reform repatriation - equity method investment — — ( 28.5 )

Consolidated Equity Affiliates' Income $ 294.1 $ 264.8 $ 215.4

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Sales to External Customers

Year Ended 30 September 2020 2019 2018

Fiscal Year Ended 30 September

2021 2020 2019

United States $ 3,895.8 $ 3,359.6 $ 3,351.8

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Geographic information is based on country of origin.

SUBSEQUENT EVENTS

Equity Affiliate Investment in Jazan Integrated Gasification and Power Company (“JIGPC”)

On 27 October 2021, we made an initial investment of $ 1.6 billion in Jazan Integrated Gasification and Power Company ("JIGPC").

JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and Air Products Qudra in the Jazan Economic City, Saudi Arabia.

Our investment, which was made primarily in the form of shareholder loans, represents a 55 % interest in the joint venture, of which 4 % is attributable to the non-controlling partner of Air Products Qudra.

Our $ 1.6 billion investment includes approximately $ 130 received from the non-controlling partner in September 2021.

This cash receipt is reflected within “Investments by noncontrolling interests” on our consolidated statements of equity and cash flows for the fiscal year ended 30 September 2021.

We expect to make an additional investment in JIGPC of approximately $ 1 billion in 2023.

We determined JIGPC is a variable interest entity for which we are not the primary beneficiary.

Therefore, we will account for our investment in JIGPC under the equity method within the Industrial Gases – Middle East segment, a new reporting segment in fiscal year 2022 as discussed below.

JIGPC Joint Venture

On 27 September 2021, JIGPC signed definitive agreements for the acquisition of $ 12 billion of assets from Aramco and related project financing for the purchase.

JIGPC will complete the acquisition of the project assets, which include power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities, in two phases.

JIGPC will commission, operate, and maintain the project assets to supply electricity, steam, hydrogen and utilities to Aramco’s refinery and terminal complex under a 25 -year agreement.

The first phase was completed on 27 October 2021 and included $ 7 billion of the assets.

The second phase is expected to be funded and completed in 2023.

JIGPC will account for the asset transfer as a financing, recording a financing receivable upon acquisition and recognizing financing income over the supply term.

Jazan Gas Project Company

Jazan Gas Project Company (“JGPC”), a joint venture between Air Products and ACWA Holding, entered into a 20 -year oxygen and nitrogen supply agreement in 2015 to supply Aramco’s oil refinery and power plant in Jazan, Saudi Arabia.

Air Products owns 26 % of the joint venture.

In October 2021, the supply agreement between JGPC and Aramco was terminated, and JGPC sold its air separation units to Aramco.

We initially sold these assets to JGPC and deferred revenue and profit equal to our ownership percentage in the joint venture.

With the termination of the supply agreement and sale of the air separation units complete, we will recognize the remaining deferred profit in equity affiliates’ income in the first quarter of fiscal year 2022.

Segment Reorganization

On 4 November 2021, we announced the reorganization of our industrial gases segments.

Beginning in the first quarter of fiscal year 2022, we will report our results under the following five reporting segments:

• Industrial Gases – Americas;

• Industrial Gases – Asia;

• Industrial Gases – Europe;

• Industrial Gases – Middle East;

• Corporate and other

The reorganization reflects the separation of our former Industrial Gases – EMEA segment into two separate reporting segments:

Industrial Gases – Europe and Industrial Gases – Middle East.

The results of an affiliate formerly reflected in the Industrial Gases – Asia segment will now be reported in the Industrial Gases – Middle East segment.

Additionally, the results of our Industrial Gases – Global operating segment will be reflected in the Corporate and other segment.

Except for the Corporate and other segment, each reporting segment will meet the definition of an operating segment and will not include the aggregation of multiple operating segments.

Our Corporate and other segment will include the aggregation of three operating segments that meet the aggregation criteria under GAAP.

Beginning with our Quarterly Report on Form 10-Q for the first quarter of fiscal year 2022, segment results will be presented on a retrospective basis to reflect the reorganization.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data