What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-11-16 compared with 2022-11-22 · 497 added, 351 removed, 1714 unchanged (33% of the section changed)

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Notes to Consolidated Financial Statements

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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16 November 2023 16 November 2023

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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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.

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 Recognition – On-site Customer Contracts – Refer to Notes 1 and 6 to the Financial Statements

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• We evaluated customer transactions and agreed the amount of revenue recognized to underlying contracts, customer invoices, and cash receipts.

• We tested the probability of collection of variable components, including penalties, which impacts the amount and timing of revenue which the Company expects to collect.

• We inquired of personnel who oversee operations, customer relations, and revenue recognition as to the presence of contract amendments, and interpretation of contract terms.

• We considered the nature of transactions with related parties and any potential impact on revenue recognition.

Investments in Joint Ventures – Consolidation Accounting – Refer to Notes 1, 7, and 22 to the Financial Statements

Critical Audit Matter Description

In 2022, the Company entered into two significant joint ventures, the Jazan Integrated Gasification and Power Company ("JIGPC") joint venture and the NEOM Green Hydrogen Company (“NGHC”) joint venture, which required assessments to determine if the respective investments should be consolidated by the Company.

The consolidation assessments include an evaluation to determine whether the joint venture investments are variable interest entities (“VIE”).

Application of the VIE accounting model requires the Company to identify whether it is the primary beneficiary of a joint venture when voting interests may not indicate which party maintains a controlling financial interest in the joint venture.

We identified the VIE analysis and primary beneficiary assessment as a critical audit matter.

The application of the VIE accounting model requires a high degree of auditor judgment and additional effort when performing audit procedures to evaluate the reasonableness of management’s judgments related to the VIE analysis and control over the investment, including the need to use professionals in our firm with expertise in accounting for consolidations.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the application of the VIE accounting model for certain joint ventures included the following, among others:

• We tested the effectiveness of the Company’s controls over the initial accounting assessment of joint ventures, including controls over the accuracy and completeness of information the Company used to evaluate the VIE analysis and accounting control criteria.

• We read the joint ventures shareholders’ agreements and related contracts, which govern the formation and activities of the investment, and evaluated the appropriateness of the Company’s accounting conclusion related to the VIE analysis and control of the joint venture.

• We analyzed other qualitative factors, such as the nature of the other investors in the joint venture and relationships with lenders and other counterparties as well as the nature and relative significance of the activities conducted by the shareholders under the various arrangements, to identify factors that may suggest a different conclusion related to management’s assessment of the primary beneficiary.

• We used professionals in our firm having expertise in accounting for consolidations when evaluating the provisions of the joint venture shareholders’ agreement and related contracts.

/s/ Deloitte & Touche LLP

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

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Air Products and Chemicals, Inc.

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Facility closure — — 23.2

Selling and administrative 900.6 828.4 775.9

Research and development 102.9 93.5 83.9

Selling and administrative expense

957.0 900.6 828.4

Research and development expense

105.6 102.9 93.5

Business and asset actions 244.6 73.7 —

Gain on exchange with joint venture partner — — 36.8

Company headquarters relocation income (expense) — — 33.8

Other income (expense), net 34.8 55.9 52.8

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Income From Continuing Operations 2,331.2 2,253.9 2,044.6

Income (Loss) from discontinued operations, net of tax 12.6 70.3 ( 14.3 )

Income from discontinued operations, net of tax 7.4 12.6 70.3

Net Income 2,338.6 2,266.5 2,114.9

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Net income from continuing operations $ 2,292.8 $ 2,243.5 $ 2,028.8

Net income (loss) from discontinued operations 12.6 70.3 ( 14.3 )

Net income from discontinued operations 7.4 12.6 70.3

Net Income Attributable to Air Products $ 2,300.2 $ 2,256.1 $ 2,099.1

Per Share Data*

Per Share Data (A) (U.S.

Dollars per share)

Basic EPS from continuing operations $ 10.31 $ 10.11 $ 9.16

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222.7 222.5 222.5

* Earnings per share ("EPS") is calculated independently for each component and may not sum to total EPS due to rounding.

(A) Earnings per share ("EPS") is calculated independently for each component and may not sum to total EPS due to rounding.

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc.

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Net Income $ 2,338.6 $ 2,266.5 $ 2,114.9

Other Comprehensive (Loss) Income, net of tax:

Other Comprehensive Income (Loss), net of tax:

Translation adjustments, net of tax of ($ 32.8 ), $ 71.2 , and $ 2.8

151.1 ( 1,230.5 ) 267.3

Net (loss) gain on derivatives, net of tax of ($ 63.9 ), ($ 9.0 ), and $ 23.7

Net gain (loss) on derivatives, net of tax of $ 48.6 , ($ 63.9 ), and ($ 9.0 )

369.2 ( 120.3 ) 3.3

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53.8 64.8 74.6

Total Other Comprehensive (Loss) Income ( 1,299.5 ) 663.0 233.5

Total Other Comprehensive Income (Loss) 521.0 ( 1,299.5 ) 663.0

Comprehensive Income 2,859.6 967.0 2,777.9

Net Income Attributable to Noncontrolling Interests 38.4 10.4 15.8

Other Comprehensive (Loss) Income Attributable to Noncontrolling Interests ( 29.3 ) 38.8 ( 2.0 )

Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests 184.3 ( 29.3 ) 38.8

Comprehensive Income Attributable to Air Products $ 2,636.9 $ 985.9 $ 2,723.3

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc.

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Intangible assets, net 334.6 347.5

Operating lease right-of-use assets, net

Noncurrent lease receivables 494.7 583.1

Financing receivables 817.2 —

Other noncurrent assets 1,229.9 947.0

Total Noncurrent Assets 26,802.0 20,909.7

Total Assets $ 27,192.6 $ 26,859.2

Total Assets (A)

$ 32,002.5 $ 27,192.6

Liabilities and Equity

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Long-term debt – related party 150.7 652.0

Noncurrent operating lease liabilities

Other noncurrent liabilities 1,118.0 1,099.1

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Total Noncurrent Liabilities 12,446.4 10,024.4

Total Liabilities 13,490.2 12,771.2

Total Liabilities (A)

16,342.2 13,490.2

Commitments and Contingencies - See Note 18

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Total Air Products Shareholders' Equity 14,312.9 13,144.0

Noncontrolling Interests 558.4 548.3

Noncontrolling Interests (A)

1,347.4 558.4

Total Equity 15,660.3 13,702.4

Total Liabilities and Equity $ 32,002.5 $ 27,192.6

(A) Includes balances associated with a consolidated variable interest entity ("VIE"), including amounts reflected in "Total Assets" that can only be used to settle obligations of the VIE of $ 2,256.8 and $ 519.7 as of 30 September 2023 and 30 September 2022, respectively, as well as liabilities of the VIE reflected within "Total Liabilities" for which creditors do not have recourse to the general credit of Air Products of $ 1,461.1 and $ 506.8 as of 30 September 2023 and 30 September 2022, respectively.

Refer to Note 3, Variable Interest Entities , for additional information.

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc.

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Net income attributable to Air Products 2,300.2 2,256.1 2,099.1

Net (income) loss from discontinued operations ( 12.6 ) ( 70.3 ) 14.3

Net income from discontinued operations ( 7.4 ) ( 12.6 ) ( 70.3 )

Net income from continuing operations attributable to Air Products 2,292.8 2,243.5 2,028.8

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Investment in and advances to unconsolidated affiliates ( 912.0 ) ( 1,658.4 ) ( 76.0 )

Investment in financing receivables ( 665.1 ) — —

Proceeds from sale of assets and investments 25.4 46.2 37.5

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Payments on long-term debt ( 615.4 ) ( 400.0 ) ( 462.9 )

Net increase (decrease) in commercial paper and short-term borrowings 17.9 1.0 ( 54.9 )

Net increase in commercial paper and short-term borrowings 268.2 17.9 1.0

Dividends paid to shareholders ( 1,496.6 ) ( 1,383.3 ) ( 1,256.7 )

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Investments by noncontrolling interests 234.9 21.0 136.6

Distributions to noncontrolling interests ( 115.9 ) ( 4.8 ) ( 5.3 )

Other financing activities ( 205.8 ) ( 36.9 ) ( 23.1 )

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Effect of Exchange Rate Changes on Cash 6.5 ( 130.3 ) 27.8

Increase (Decrease) in cash and cash items ( 1,757.9 ) ( 784.1 ) 3,004.3

Decrease in cash and cash items ( 1,094.0 ) ( 1,757.9 ) ( 784.1 )

Cash and Cash items – Beginning of Year 2,711.0 4,468.9 5,253.0

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The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc.

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— — ( 1,292.6 ) — — ( 1,292.6 ) — ( 1,292.6 )

Dividends to noncontrolling interests — — — — — — ( 31.8 ) ( 31.8 )

Distributions to noncontrolling interests — — — — — — ( 5.3 ) ( 5.3 )

Share-based compensation — 43.5 — — — 43.5 — 43.5

Issuance of treasury shares for stock option and award plans — ( 21.5 ) — — 12.1 ( 9.4 ) — ( 9.4 )

Investments by noncontrolling interest — — — — — — 17.1 17.1

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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— — ( 1,410.6 ) — — ( 1,410.6 ) — ( 1,410.6 )

Dividends to noncontrolling interests — — — — — — ( 5.3 ) ( 5.3 )

Distributions to noncontrolling interests — — — — — — ( 4.8 ) ( 4.8 )

Share-based compensation — 46.0 — — — 46.0 — 46.0

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— — ( 1,526.2 ) — — ( 1,526.2 ) — ( 1,526.2 )

Dividends to noncontrolling interests — — — — — — ( 4.8 ) ( 4.8 )

Distributions to noncontrolling interests — — — — — — ( 115.9 ) ( 115.9 )

Share-based compensation — 54.6 — — — 54.6 — 54.6

Issuance of treasury shares for stock option and award plans — ( 6.1 ) — — 13.7 7.6 — 7.6

Investments by noncontrolling interests — — — — — — 33.0 33.0

Purchase of noncontrolling interests — — — — — — ( 1.9 ) ( 1.9 )

Investments by noncontrolling interests (A)

— — — — — — 682.2 682.2

Other equity transactions — 0.6 ( 4.6 ) — — ( 4.0 ) — ( 4.0 )

Balance as of 30 September 2023 $ 249.4 $ 1,190.5 $ 17,289.7 ($ 2,449.4 ) ($ 1,967.3 ) $ 14,312.9 $ 1,347.4 $ 15,660.3

(A) Includes noncash activity related to the NEOM Green Hydrogen Company joint venture.

Refer to Note 3, Variable Interest Entities , for additional information.

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc.

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New Accounting Guidance

Variable Interest Entities

Business and Asset Actions

Revenue Recognition

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Business Segment and Geographic Information

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BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES

As used in this report, unless the context indicates otherwise, the terms “we,” “our,” “us,” the “Company,” "Air Products," or “registrant” include our controlled subsidiaries and affiliates.

About Air Products

Air Products, a Delaware corporation originally founded in 1940, is a world-leading industrial gases company.

Focused on energy, environmental, and emerging markets, Air Products' core business provides a unique portfolio of products, services, and solutions that include atmospheric gases, process and specialty gases, equipment, and related services to customers in dozens of industries.

Air Products also develops, engineers, builds, owns, and operates some of the world's largest industrial gas and carbon-capture projects, supplying world-scale clean hydrogen for global transportation, industrial markets, and the broader energy transition.

Focused on energy, environmental, and emerging markets, Air Products' core business provides a portfolio of products, and services that include atmospheric gases, process and specialty gases, equipment, and related services to customers in dozens of industries.

Air Products also develops, engineers, builds, owns, and operates some of the world's largest industrial gas and carbon-capture projects, supplying world-scale clean hydrogen that will support the world's transition to lower carbon energy, particularly in the global transportation, and industrial markets.

Air Products trades on the New York Stock Exchange under the symbol "APD."

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Refer to Note 25, Business Segment and Geographic Information , for additional information.

Basis of Presentation

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The comprehensive income related to discontinued operations has not been segregated and is included in the consolidated comprehensive income statements.

There were no assets and liabilities presented as discontinued operations on the consolidated balance sheets.

There were no assets and liabilities presented as discontinued operations on our consolidated balance sheets.

Refer to Note 7, Discontinued Operations , for additional information.

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Actual results could differ from those estimates.

Risks and Uncertainties

We are subject to various risks and uncertainties, including, but not limited to, those resulting from the COVID-19 pandemic as well as from increased inflationary pressures and Russia's invasion of Ukraine.

Due to the dynamic nature of these circumstances, uncertainty remains regarding how these events may affect our business, results of operations, and overall financial performance in future periods.

For example, future events could impact our ability to complete a suspended project in Ukraine and recover the carrying value of related assets, which totaled approximately $ 45 within "Plant and equipment, net" on our consolidated balance sheet as of 30 September 2022.

Reclassifications

Prior year segment information has been reclassified to conform to the fiscal year 2022 presentation, which reflects the reorganization of our reporting segments effective 1 October 2021.

Certain prior year information has been reclassified to conform to the fiscal year 2023 presentation.

For example, beginning in the first quarter of fiscal year 2023, we present "Operating lease right-of-use assets, net" and "Noncurrent operating lease liabilities" in separate captions on our consolidated balance sheets.

These balances were previously presented within "Other noncurrent assets" and "Other noncurrent liabilities," respectively.

Consolidation Principles

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We are considered the primary beneficiary of a VIE when we have both the power to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

During the third quarter of fiscal year 2022, we determined that we are the primary beneficiary of the NEOM Green Hydrogen Company and consolidated the joint venture within our Middle East and India segment.

For additional information, refer to Note 22, Supplemental Information .

We are the primary beneficiary of the NEOM Green Hydrogen Company and consolidate the joint venture within our Middle East and India segment.

For additional information, refer to Note 3, Variable Interest Entities .

We are not the primary beneficiary of any other material VIEs.

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For additional information on this joint venture, refer to Note 9, Equity Affiliates .

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Revenue Recognition

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The principal lives for major classes of plant and equipment are summarized in Note 10, Plant and Equipment, net .

Selling and Administrative

The principal components of selling and administrative expenses are compensation, advertising, and promotional costs.

Selling and Administrative Expense

The principal components of selling and administrative expense are costs related to compensation, administrative functions, and professional fees.

Postemployment Benefits

We provide termination benefits to employees as part of ongoing benefit arrangements and record a liability for termination benefits when probable and estimable.

These criteria are met when management, with the appropriate level of authority, approves and commits to its plan of action for termination;

the plan identifies the employees to be terminated and their related benefits;

and the plan is to be completed within one year.

We provide ongoing benefit arrangements that provide nonretirement postemployment benefits such as severance and outplacement services to involuntarily terminated employees.

We record a liability for these benefits when we determine it is probable that the benefits will be paid in an amount that can be reasonably estimated.

These criteria are met when management, with the appropriate level of authority, approves and commits to a termination plan that identifies impacted employees and their related benefits and is expected to be substantially completed within one year.

We do not provide material one-time benefit arrangements.

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Refer to Note 15, Fair Value Measurements , and Note 17, Retirement Benefits , for information on the methods and assumptions used in our fair value measurements.

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Financial Instruments

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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.

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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 $ 25.1 , $ 23.2 , and $ 31.0 in fiscal years 2023, 2022, and 2021, respectively.

Government Assistance

We receive, or expect to receive in the future, various types of government assistance, primarily in the form of grants or refundable tax credits.

Government assistance is recognized when there is reasonable assurance that we have complied with relevant conditions and the assistance will be received.

Government assistance is recognized in the consolidated income statements on a systematic basis over the periods in which we recognize the related costs for which the government assistance is intended to compensate.

Government assistance related to assets is included in the balance sheet as a reduction of the cost of the asset and results in reduced depreciation expense over the useful life of the asset.

Government assistance that relates to expenses is recognized in the income statement as a reduction of the related expense or as a component of other income (expense), net.

Government assistance did not have a material impact on our financial statements in fiscal year 2023.

Environmental Expenditures

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The amounts charged to income from continuing operations related to environmental matters totaled $ 24.9 , $ 22.3 , and $ 18.6 in fiscal years 2023, 2022, and 2021, respectively.

In addition, we recorded a pre-tax expense of $ 19.0 in results from discontinued operations to increase our environmental accrual for the Pace facility in the second quarter of fiscal year 2020.

Refer to the Pace discussion within Note 16, Commitments and Contingencies , for additional information.

The measurement of environmental liabilities is based on an evaluation of currently available information with respect to each individual site and considers factors such as existing technology, presently enacted laws and regulations, and prior experience in remediation of contaminated sites.

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This analysis assists in monitoring our overall environmental exposure and serves as a tool to facilitate ongoing communication among our technical experts, environmental managers, environmental lawyers, and financial management to ensure that required accruals are recorded and potential exposures disclosed.

Given inherent uncertainties in evaluating environmental exposures, actual costs to be incurred at identified sites in future periods may vary from the estimates.

Due to inherent uncertainties involved in evaluating environmental exposures, actual costs to be incurred at identified sites in future periods may vary from the estimates.

Refer to Note 18, Commitments and Contingencies , for additional information on our environmental loss contingencies.

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Refer to Note 18, Commitments and Contingencies , for additional information on our current legal proceedings.

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Share-Based Compensation

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Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.

We have elected as an accounting policy to account for Global Intangible Low Tax Income (“GILTI”) as a period cost when incurred.

For additional information regarding our income taxes, refer to Note 23, Income Taxes .

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Credit Losses

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

We are exposed to credit losses primarily 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, lease receivable, and notes receivable portfolios.

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

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

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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.

We also consider variables that may mitigate the inherent credit risk of a particular transaction, such as the estimated fair value of the collateral, whether by use or sale.

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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.

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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

Adoption of new credit losses standard 0.5

Provision for credit losses 7.5

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Balance at 30 September 2023 $ 22.9

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

As of 30 September 2022 and 2021, the credit quality of lease receivables and notes receivable did not require a material allowance for credit losses.

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

As of 30 September 2023 and 2022, the credit quality of lease receivables and financing receivables did not require a material allowance for credit losses.

For additional information on our lease arrangements, refer to Note 13, Leases .

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In addition, “Equity affiliates’ income” includes interest income from shareholder loans viewed as in-substance common stock.

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Plant and Equipment, net

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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

As we build new plant and equipment, we include in the cost of these assets a portion of the interest payments we make during the year.

The amount of capitalized interest was $ 41.0 , $ 28.3 , and $ 15.9 in fiscal years 2022, 2021, and 2020, respectively.

As lessee, we recognize a right-of-use ("ROU") asset and lease liability on the balance sheet for all leases with a term in excess of 12 months.

We determine if an arrangement contains a lease at inception.

The arrangement contains a lease when there is an identifiable asset, we obtain substantially all of the economic benefits from that asset, and we direct how and for what purpose the asset is used during the term of the arrangement.

If the initial term of an arrangement is 12 months or less, we have made an accounting election to not assess if these arrangements contain a lease for inclusion on our balance sheet.

Leases as Lessee

As lessee, we recognize a right-of-use ("ROU") asset and lease liability on the balance sheet for all leases with terms in excess of 12 months.

We evaluate whether an arrangement contains a lease at inception by determining whether there is an identifiable asset, we obtain substantially all the economic benefits from that asset, and we direct how and for what purpose the asset is used during the term of the arrangement.

We apply a practical expedient to exclude arrangements with initial terms of 12 months or less from our balance sheet.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

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Our lease agreements do not contain any material lease incentives, residual value guarantees or restrictions or covenants.

Leases as Lessor

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

Our lease receivables are primarily long-term in nature and relate to sales-type leases on certain on-site assets for which payments are collected over the contract term.

Revenue representing interest income from the financing component of the lease receivable is reflected as sales over the life of the contract.

Table of Conte n t s

In cases for which 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.

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.

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 2023.

Financing Receivables

Some of our acquisitions include terms that provide the seller with both the right to receive all output from the acquired asset for an agreed upon term as well as the right to reacquire the asset at a future date.

In these instances, we evaluate the contract terms to determine whether we have obtained control of the underlying asset, or the transaction qualifies as a financing arrangement.

For transactions that qualify as financing arrangements, we record our investment as a financing receivable, net of any allowances for credit losses, on our consolidated balance sheets.

We then recognize a portion of the payments received as a reduction to the financing receivable.

Related interest income is presented within “Sales” on our consolidated income statements with revenue received to operate the plant.

Interest income on our financing receivables was not material in fiscal year 2023.

Impairment of Long-Lived Assets

Long-lived assets are grouped for impairment testing at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets and liabilities and are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

Long-lived assets are grouped for impairment testing at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets and liabilities.

Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

We assess recoverability by comparing the carrying amount of the asset group to estimated undiscounted future cash flows expected to be generated by the asset group.

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In addition, intangible assets are tested more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists.

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Customer relationships are generally amortized over periods of five to 25 years.

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NEW ACCOUNTING GUIDANCE

New Accounting Guidance to be Implemented

Accounting Guidance Implemented in Fiscal Year 2023

Government Assistance

In November 2021, the Financial Accounting Standards Board ("FASB") issued disclosure guidance to increase the transparency of transactions an entity has with a government that are accounted for by applying a grant or contribution accounting model.

We are evaluating the impact this guidance will have on our annual disclosures within the consolidated financial statements.

We will adopt this guidance prospectively in fiscal year 2023.

Acquired Revenue Contracts in a Business Combination

In October 2021, the FASB issued an update for the recognition of contract assets and liabilities acquired in a business combination.

Rather than recognizing such items at fair value on the acquisition date, the acquirer would measure and recognize contract assets and liabilities in accordance with ASC 606, Revenue from Contracts with Customers , as if it had originated the contract.

This guidance is effective beginning in fiscal year 2024, with early adoption permitted.

The impact of the new standard on our consolidated financial statements and related disclosures will depend on future acquisitions.

We adopted the annual disclosure guidance on a prospective basis in fiscal year 2023.

Refer to Note 1, Basis of Presentation and Major Accounting Policies, for additional information.

Reference Rate Reform

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This update is primarily applicable to our contracts and hedging relationships that reference the London Inter-Bank Offered Rate ("LIBOR").

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

We have had no reference rate reform modifications to date.

This update will be adopted on a prospective basis in the event of any such modifications.

In December 2022, the FASB extended the date through which the amendments may be applied to impacted contracts and hedges to 31 December 2024.

In fiscal year 2023, we amended our remaining interest rate swaps that referenced LIBOR to use a daily compounded Secured Overnight Financing Rate ("SOFR").

There were no financial statement impacts from the amendment.

Table of Conte n t s

VARIABLE INTEREST ENTITIES

We are the primary beneficiary of the NEOM Green Hydrogen Company joint venture ("NGHC"), which is a variable interest entity ("VIE") that is consolidated in our Middle East and India segment.

We are not the primary beneficiary of any other material VIEs.

We account for a VIE for which we exercise significant influence but are not the primary beneficiary, such as the Jazan Integrated Gasification and Power Company joint venture ("JIGPC"), as an equity method investment.

For additional information on JIGPC, refer to Note 9, Equity Affiliates .

The table below summarizes balances associated with NGHC as reflected on our consolidated balance sheets.

For additional information on this joint venture, refer to the "NEOM Green Hydrogen Project" section that follows.

30 September 30 September

Cash and cash items $ 78.2 $ 274.7

Trade receivables, net — 1.3

Prepaid expenses 21.4 0.1

Other receivables and current assets 181.6 23.3

Total current assets $ 281.2 $ 299.4

Plant and equipment, net 1,396.1 218.8

Operating lease right-of-use assets, net 228.9 —

Other noncurrent assets 350.6 1.5

Total noncurrent assets $ 1,975.6 $ 220.3

Total assets $ 2,256.8 $ 519.7

Payables and accrued liabilities $ 141.0 $ 58.1

Accrued income taxes 0.6 —

Total current liabilities $ 141.6 $ 58.1

Long-term debt 1,274.4 —

Long-term debt – related party (A)

Noncurrent operating lease liabilities 18.9 —

Other noncurrent liabilities 2.1 1.4

Deferred income taxes 24.1 —

Total noncurrent liabilities $ 1,319.5 $ 448.7

Total liabilities $ 1,461.1 $ 506.8

Accumulated other comprehensive income $ 77.7 $ —

Noncontrolling interests (A)

(A) During the third quarter of fiscal year 2023, outstanding shareholder loans to NGHC were converted to equity in the entity.

Accordingly, related party debt outstanding was reclassified to investments attributable to the noncontrolling partners of NGHC.

This noncash activity is presented within “Investments by noncontrolling interests” on our consolidated statements of equity for the fiscal year ended 30 September 2023.

Table of Conte n t s

NEOM Green Hydrogen Project

In the fourth quarter of fiscal year 2020, we announced the NEOM Green Hydrogen Project (the "NEOM project”), a multi-billion dollar green hydrogen-based ammonia production facility that will be powered by renewable energy in NEOM City, Saudi Arabia.

We, along with our joint venture partners, ACWA Power and NEOM Company, are equal owners in NGHC, which will develop, construct, own, operate, and finance the project.

During the third quarter of fiscal year 2022, we entered into an interim agreement with NGHC under which we commenced construction of the NEOM project.

In addition, we executed an agreement with NGHC under which we will be the exclusive offtaker of green ammonia produced by the NEOM project under a long-term take-if-tendered agreement.

We intend to transport the green ammonia around the world to be dissociated to produce green hydrogen for transportation and industrial markets.

In May 2023, NGHC finalized the $ 6.7 billion engineering, procurement, and construction ("EPC") agreement with Air Products named as the main contractor and system integrator for the facility.

As of 30 September 2023, we had unconditional purchase obligations of approximately $ 5 billion for open purchase orders related to construction of the project.

Air Products has one-third of the voting interests in the NGHC joint venture;

however, substantially all the activities of the joint venture involve or are conducted on behalf of Air Products.

Since we have disproportionately few voting rights relative to our economic interests in the joint venture, we determined that NGHC is a variable interest entity.

In addition, we determined that we are the primary beneficiary of NGHC since we have the power to unilaterally direct certain significant activities, including key design and construction decisions, and we share power with our joint venture partners related to other activities that are significant to the economic performance of NGHC.

Therefore, we consolidate NGHC within the Middle East and India segment.

Project Financing

In May 2023, NGHC secured non-recourse project financing of approximately $ 6.1 billion, which is expected to fund about 73 % of the project and will be drawn over the construction period.

At the same time, NGHC secured additional non-recourse credit facilities totaling approximately $ 500 primarily for working capital needs.

Under the financing, the assets of NGHC can only be used to settle obligations of the joint venture, and creditors of NGHC do not have recourse to the general credit of Air Products.

The joint venture completed its first drawdown on the project financing in July 2023.

The table below summarizes the interest rate, maturity, and carrying amount of borrowings associated with NGHC as of 30 September 2023:

Fiscal Year Maturities

30 September 2023

Payable in U.S.

Dollar variable-rate facilities 6.62 % (A)

Dollar stated-rate facility 5.00 % 2027 to 2053

Total Payable in U.S.

Payable in Other Currencies

Saudi Riyal Loan Facility variable-rate 6.69 % (B)

Total Principal Amount

Unamortized discount and debt issuance costs (C)

Total NGHC Long-term Debt

(A) Reflects a daily compounded SOFR as of 30 September 2023 plus an annual margin of 1.31 %.

This does not include the impact of our floating-to-fixed interest rate swaps, which result in an overall lower interest rate for the borrowings.

These derivative instruments, which had a notional principal amount of $ 1,182.5 and an average pay rate of 2.82 % as of 30 September 2023, are reflected within the table provided in Note 14, Financial Instruments , on page 85 .

(B) Based on the Saudi Arabian Interbank Offered Rate ("SAIBOR") plus an annual margin of 0.8 %.

(C) Our consolidated balance sheet as of 30 September 2023 also includes $ 58.8 for remaining project financing fees that are eligible for deferral as a noncurrent asset until additional borrowings are drawn, at which time the unamortized balance will be reclassified as an offset to the outstanding debt.

The green hydrogen-based ammonia production facility is being constructed on land owned by our joint venture partner, NEOM Company, for which NGHC signed a 50-year lease agreement.

The land lease commenced during the third quarter of fiscal year 2023.

Accordingly, we recorded an operating lease with a right-of-use asset and corresponding liability of $ 223 , of which $ 209 was paid as a lump-sum in August 2023.

Additional payments under the lease will occur after the first 30 years of the lease term.

Table of Conte n t s

BUSINESS AND ASSET ACTIONS

The charges we record for business and asset actions are not recorded in segment results.

Fiscal Year 2023

Our consolidated income statement for the fiscal year ended 30 September 2023 includes an expense of $ 244.6 ($ 204.9 attributable to Air Products after tax) resulting from strategic business and asset actions intended to optimize costs and focus resources on our growth projects.

Of the expense, $ 217.6 resulted from noncash charges to write off assets associated with exited projects that were previously under construction in our Asia and Europe segments.

The assets written off included those related to our withdrawal from coal gasification in Indonesia as well as a project in Ukraine that was permanently suspended due to Russia's invasion of the country.

The remaining expense includes $ 27.0 for severance and other benefits payable to approximately 450 employees due to position eliminations and restructuring of certain organizations globally.

The table below summarizes the carrying amount of the accrual for unpaid benefits as of 30 September 2023, which we expect to substantially pay through fiscal year 2024.

Charge for severance and other benefits $ 27.0

Cash expenditures ( 6.8 )

Currency translation adjustment ( 0.4 )

Amount reflected in "Payables and accrued liabilities" as of 30 September 2023 $ 19.8

Fiscal Year 2022

We divested our small industrial gas business in Russia due to Russia's invasion of Ukraine in the fourth quarter of fiscal year 2022.

As a result, we recorded a noncash business and asset actions charge of $ 73.7 , which included transaction costs and cumulative currency translation losses.

Prior to the divestiture, this business was reflected in our Europe segment.

Fiscal Year 2023

Uzbekistan Asset Purchase

On 25 May 2023, we entered into an investment agreement with the Government of the Republic of Uzbekistan and Uzbekneftegaz JSC (“UNG”) to purchase a natural gas-to-syngas processing facility in Qashqadaryo Province, Uzbekistan, for $ 1 billion.

Under the agreement, Air Products will acquire, own, and operate the facility and supply all offtake products to UNG under a 15 -year on-site contract, with UNG supplying the feedstock natural gas and utilities.

We are accounting for the transaction as a financing arrangement because UNG has the right to reacquire the facility at the end of the contract term.

Accordingly, progress payments of approximately $ 800 , of which $ 600 was completed during f iscal year 2023, are reflected within "Financing Receivables" on our consolidated balance sheet as of 30 September 2023.

The progress payments are reflected within “Investment in financing receivables” on our consolidated statement of cash flows.

In early fiscal year 2024, we made an additional progress payment of $ 100 .

Table of Conte n t s

Fiscal Year 2021

Gain on Exchange With Joint Venture Partner

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The results of this business are consolidated within our Europe segment.

Fiscal Year 2020

Asset Acquisition

On 17 April 2020, we acquired five operating hydrogen production plants from PBF Energy Inc.

("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 in the Americas segment.

The aggregate purchase price of $ 580 is reflected in "Additions to plant and equipment, including long-term deposits" on our consolidated statement of cash flows for the fiscal year ended 30 September 2020.

Business Combinations

We completed three acquisitions on 1 July 2020 that were accounted for as business combinations.

These acquisitions had an aggregate purchase price, net of cash acquired, of $ 185.4 .

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.

The results of this business are consolidated within our Europe segment.

REVENUE RECOGNITION

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Performance obligations associated with this supply mode are satisfied at a point in time when the customer receives and obtains control of the product, which generally occurs upon delivery.

Table of Conte n t s

The timing of revenue recognition for our regional industrial gases businesses is generally consistent with our right to invoice the customer.

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We recorded changes to project estimates that unfavorably impacted operating income by approximately $ 115 , $ 30 , and $ 19 in fiscal years 2023, 2022, and 2021, respectively.

Changes in estimates favorably impacted operating income by approximately $ 7 in fiscal year 2020.

Our changes in estimates would not have significantly impacted amounts recorded in prior years.

Table of Conte n t s

Disaggregation of Revenue

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

The tables below present our consolidated sales disaggregated by supply mode for each of our reportable segments.

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

Americas Asia Europe Middle East

and India Corporate

and other Total %

Americas Asia Europe Middle East and India Corporate and other Total %

On-site $ 3,143.9 $ 1,923.0 $ 1,036.6 $ 75.7 $ — $ 6,179.2 49 %

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Total $ 4,167.6 $ 2,920.8 $ 2,345.6 $ 99.3 $ 789.7 $ 10,323.0 100 %

Interest income associated with financing and lease arrangements accounted for less than 1% of our total consolidated sales in fiscal years 2023, 2022, and 2021.

Remaining Performance Obligations

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This amount includes fixed-charge contract provisions associated with our on-site and sale of equipment supply modes.

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

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

Our remaining performance obligations do not include (1) expected revenue associated with new on-site plants that are not yet on-stream;

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These balances are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.

Table of Conte n t s

Contract assets primarily relate to our sale of equipment contracts for which revenue is recognized over time.

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DISCONTINUED OPERATIONS

In fiscal year 2022, income from discontinued operations, net of tax, was $ 12.6 .

This primarily resulted from a net tax benefit recorded in the fourth quarter upon release of tax liabilities for uncertain tax positions associated with our former Performance Materials Division ("PMD") for which the statute of limitations expired.

Our consolidated statement of cash flows for the fiscal year ended 30 September 2022 reflects cash provided by operating activities of discontinued operations of $ 59.6 primarily from income tax refunds associated with the sale of PMD in 2017.

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 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 income statements include income from discontinued operations, net of tax, of $ 7.4 , $ 12.6 , and $ 70.3 in fiscal years 2023, 2022, and 2021, respectively, primarily from the release of unrecognized tax benefits on uncertain tax positions for which the statute of limitations expired.

In fiscal year 2023, income from discontinued operations, net of tax, of $ 7.4 primarily resulted from a net tax benefit recorded in the fourth quarter upon release of tax liabilities for uncertain tax positions taken with respect to the sale of our former Performance Materials Division ("PMD"), which was completed in 2017.

Additionally, our consolidated statement of cash flows for the fiscal year ended 30 September 2023 reflects cash provided by operating activities of discontinued operations of $ 0.6 from income tax refunds associated with the sale.

In fiscal year 2022, income from discontinued operations, net of tax, of $ 12.6 primarily resulted from a net tax benefit recorded in the fourth quarter upon release of tax liabilities for uncertain tax positions taken with respect to the sale of PMD.

Additionally, our consolidated statement of cash flows for the fiscal year ended 30 September 2022 reflects cash provided by operating activities of discontinued operations of $ 59.6 primarily from income tax refunds associated with the sale.

In fiscal year 2021, income from discontinued operations, net of tax, of $ 70.3 included net tax benefits of $ 60.0 recorded upon release of tax liabilities for uncertain tax positions.

Of this amount, we recorded $ 51.8 in the fourth quarter for liabilities associated with 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.

Our consolidated statement of cash flows for the fiscal year ended 30 September 2021 reflects cash provided by operating activities of discontinued operations of $ 6.7 from cash received as part of the settlement.

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

This resulted from a pre-tax loss of $ 19.0 recorded in the second quarter to increase our existing liability for retained environmental obligations associated with the sale of our former Amines business in September 2006.

Refer to the Pace discussion within Note 16, Commitments and Contingencies , for additional information.

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

The components of inventories are as follows:

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Inventories $ 651.8 $ 514.2

Table of Conte n t s

EQUITY AFFILIATES

"Investment in net assets of and advances to equity affiliates" on our consolidated balance sheets were $ 4,617.8 and $ 3,353.8 as of 30 September 2023 and 2022, respectively.

Substantially all our equity method investments are in foreign affiliates.

In fiscal year 2022, we made an initial investment in the Jazan Integrated Gasification and Power Company ("JIGPC") joint venture as further discussed below.

Substantially all our equity method investments are foreign affiliates.

As of 30 September 2023, our equity affiliates were as follows:

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Summarized Financial Information

The summarized financial information presented below is on a combined 100% basis and has been compiled based on financial statements of our equity affiliates.

The summarized financial information presented below is on a combined 100% basis and has been compiled based on the financial statements of our equity affiliates.

30 September 2023 2022

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(A) Includes financing revenue of $ 1,011.3 , $ 674.6 , and $ 134.9 in fiscal years 2023, 2022, and 2021, respectively.

Financing revenue in fiscal year 2022 primarily relates to the JIGPC joint venture discussed below.

Financing revenue in fiscal years 2023 and 2022 primarily relates to the JIGPC joint venture discussed below.

Investment in Jazan Integrated Gasification and Power Company (“JIGPC”)

On 27 October 2021, we made an initial investment of $ 1.6 billion in JIGPC, 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 represents a 55 % interest in the joint venture, of which 4 % is attributable to the non-controlling partner of Air Products Qudra.

The $ 1.6 billion investment, which includes approximately $ 130 from the non-controlling partner, is primarily in the form of shareholder loans that qualify as in-substance common stock in the joint venture.

We expect to make an additional investment in JIGPC of approximately $ 1 billion in 2023.

During the first quarter of fiscal year 2022, we made an initial investment of $ 1.6 billion to acquire a 55 % ownership interest in the Jazan Integrated Gasification and Power Company ("JIGPC") joint venture of which 4 % is attributable to the noncontrolling partner of Air Products Qudra ("APQ").

During the second quarter of fiscal year 2023, we completed a second investment of $ 908 , which did not change our ownership interest.

Additional information on the JIGPC joint venture is provided below.

Our investments were made primarily in the form of shareholder loans that qualify as in-substance common stock in the joint venture and were executed to align with the timing of the joint venture's purchase of project assets.

The amounts invested included approximately $ 130 and $ 73 received from the noncontrolling partner of APQ for the first and second investment, respectively.

As of 30 September 2023, the carrying value of our investment in JIGPC, including amounts attributable to noncontrolling interests, totaled $ 2,862.2 .

We expect to complete a remaining investment of approximately $ 115 for additional assets to be purchased by the joint venture.

Table of Conte n t s

We determined JIGPC is a variable interest entity for which we are not the primary beneficiary as we do not have the power to direct the activities that are most significant to the economic performance of the joint venture.

Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer.

Since we have the ability to exercise significant influence in the joint venture, we accounted for our investment in JIGPC under the equity method within the Middle East and India segment.

Since we have the ability to exercise significant influence in the joint venture, we accounted for our investment in JIGPC under the equity method within the Middle East and India segment beginning in the first quarter of fiscal year 2022.

Our loss exposure is limited to our investment in the joint venture.

Certain shareholders receive a preferred cash distribution pursuant to the joint venture agreement, which specifies each shareholder’s share of income after considering the amount of cash available for distribution.

As such, the earnings attributable to Air Products may not be proportionate to our ownership interest in the venture.

As of 30 September 2022, the carrying value of our investment totaled $ 1,780.0 and is presented as “Investments in and advances to equity affiliates” on our consolidated balance sheet.

Our loss exposure is limited to our investment in the joint venture.

JIGPC Joint Venture

On 27 September 2021, JIGPC signed definitive agreements for the acquisition of project assets from Aramco for $ 12 billion and entered into 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.

The first phase was completed on 27 October 2021 for $ 7 billion.

The second phase is expected to be completed in 2023.

JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and APQ in the Jazan Economic City, Saudi Arabia.

On 27 September 2021, JIGPC signed definitive agreements for the acquisition of project assets from Aramco for $ 12 billion and entered into related project financing for the purchase of the project assets, which include power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities, in multiple phases.

The first phase was completed on 27 October 2021 for $ 7.39 billion, and the second phase was completed for $ 4.15 billion on 19 January 2023.

We expect JIGPC to acquire additional assets totaling approximately $ 525 .

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, which commenced in the first quarter of fiscal year 2022.

JIGPC accounted for the asset transfer as a financing.

Accordingly, the joint venture recorded a financing receivable upon acquisition and will recognize financing income over the supply term.

JIGPC recorded financing receivables upon acquisition of the assets and recognizes 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.

In October 2021, the supply agreement between JGPC and Aramco was terminated, and JGPC sold its air separation units to Aramco.

Jazan Gas Project Company (“JGPC”), a previous joint venture between Air Products and ACWA Holding, had a 20 -year agreement to supply oxygen and nitrogen to Aramco’s oil refinery and power plant in Jazan.

The parties terminated the supply agreement in October 2021, and JGPC sold its air separation units to Aramco.

We initially sold these assets to JGPC and deferred profit proportionate to our 26 % ownership in the joint venture.

With the termination of the supply agreement and sale of the air separation units complete, we recognized the remaining deferred profit, net of other project finalization costs, in equity affiliates’ income in the first quarter of fiscal year 2022.

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 advances received by the joint venture under an equity bridge loan.

The joint venture utilized a portion of the proceeds from the sale of the air separation units to repay its outstanding debt, including the equity bridge loan.

Accordingly, we recorded a noncash adjustment of $ 94.4 in the first quarter of fiscal year 2022 to reduce our obligation to zero with a corresponding reduction to the carrying value of our investment in the joint venture.

As of 30 September 2022, we no longer have an investment balance in the JGPC joint venture.

Additionally, our consolidated statement of cash flows for fiscal year 2022 includes a noncash adjustment of $ 94.4 to reduce the carrying value of our investment in JGPC to zero and remove an obligation to make equity contributions to JGPC under an equity bridge loan that was no longer required.

Equity Method Investment Impairment

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This charge is reflected on our consolidated income statements within “Equity affiliates' income” and was not recorded in segment results.

India Finance Act 2020

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 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 summarized financial information table above on a 100% basis.

Table of Conte n t s

PLANT AND EQUIPMENT, NET

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Changes to the carrying amount of consolidated goodwill by segment are as follows:

Americas Asia Europe Middle East

and India Corporate

and other Total

Goodwill, net at 30 September 2020 $ 152.6 $ 180.4 $ 516.3 $ 7.8 $ 34.4 $ 891.5

Americas Asia Europe Middle East and India Corporate and other Total

Goodwill, net as of 30 September 2021 $ 151.0 $ 184.3 $ 533.5 $ 8.0 $ 34.7 $ 911.5

Acquisitions (A)

1 unchanged sentence

Currency translation and other ( 7.8 ) ( 11.6 ) ( 93.0 ) 0.3 ( 0.9 ) ( 113.0 )

Goodwill, net at 30 September 2021 $ 151.0 $ 184.3 $ 533.5 $ 8.0 $ 34.7 $ 911.5

Acquisitions (A)

— — 17.0 7.5 — 24.5

Goodwill, net as of 30 September 2022 $ 143.2 $ 172.7 $ 457.5 $ 15.8 $ 33.8 $ 823.0

Currency translation and other 3.4 ( 0.8 ) 36.0 — 0.1 38.7

Goodwill, net at 30 September 2022 $ 143.2 $ 172.7 $ 457.5 $ 15.8 $ 33.8 $ 823.0

(A) Goodwill acquired in fiscal year 2021 was primarily attributable to a business combination completed in the second quarter.

Refer to Note 3, Acquisitions , for additional information.

In fiscal year 2022, goodwill acquired is primarily attributable to expected cost synergies associated with small business combinations, of which $ 3.2 is deductible for tax purposes.

Goodwill, net as of 30 September 2023 $ 146.6 $ 171.9 $ 493.5 $ 15.8 $ 33.9 $ 861.7

(A) Goodwill acquired in fiscal year 2022 was primarily attributable to expected cost synergies associated with small business combinations, of which $ 3.2 was deductible for tax purposes.

30 September 2023 2022 2021

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Goodwill, net $ 861.7 $ 823.0 $ 911.5

(A) Accumulated impairment losses include the impacts of currency translation.

These losses are attributable to our Latin America reporting unit ("LASA") within the Americas segment.

(A) Accumulated impairment losses are attributable to our Latin America reporting unit ("LASA") within the Americas segment and include the impact of currency translation.

We review goodwill for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying value of goodwill might not be recoverable.

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During the fourth quarter of fiscal year 2023, we conducted our annual goodwill impairment test and determined that the fair value of all our reporting units exceeded their carrying value.

Table of Conte n t s

INTANGIBLE ASSETS

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Total intangible assets $ 672.3 ($ 337.7 ) $ 334.6 $ 636.2 ($ 288.7 ) $ 347.5

The decrease in net intangible assets in fiscal year 2022 was primarily attributable to currency impacts due to the strengthening of the U.S Dollar as well as amortization.

Amortization expense for intangible assets was $ 32.5 , $ 35.5 , and $ 37.2 in fiscal years 2023, 2022, and 2021, respectively.

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During the fourth quarter of fiscal year 2023, 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.

Table of Conte n t s

Lessee Accounting

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

Operating lease expense was $ 105.3 , $ 89.5 , and $ 80.1 for fiscal years 2022, 2021, and 2020, respectively.

These amounts do not include 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:

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Operating lease right-of-use assets $ 974.0 $ 694.8

Other noncurrent assets $ 694.7 $ 566.2

Operating lease liabilities

Payables and accrued liabilities 94.7 90.0

Other noncurrent liabilities 592.1 503.4

Noncurrent operating lease liabilities 631.1 592.1

Total operating lease liabilities $ 725.8 $ 682.1

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Present value of lease liability recognized on balance sheet $ 725.8

Operating lease expense was $ 109.9 , $ 105.3 , and $ 89.5 for fiscal years 2023, 2022, and 2021, respectively.

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

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

This includes non-cash operating lease expense of $ 105.3 , $ 89.5 , and $ 80.1 , as well as a use of cash of $ 128.0 , $ 98.8 , and $ 90.0 for payments on amounts included in the measurement of the lease liability for fiscal years 2022, 2021, and 2020, respectively.

We recorded $ 252 , $ 259 , and $ 442 of noncash right-of-use asset additions during fiscal years 2022, 2021, and 2020, respectively.

We have additional operating leases that have not yet commenced as of 30 September 2022 having lease payments totaling approximately $ 120 .

This includes the noncash operating lease expense as well as a use of cash of $ 337.8 , $ 128.0 , and $ 98.8 for payments on amounts included in the measurement of the lease liability for fiscal years 2023, 2022, and 2021, respectively.

Payments in fiscal year 2023 included a lump-sum payment of $ 209 for a land lease associated with the NGHC joint venture.

Refer to Note 3, Variable Interest Entities , for additional information.

We recorded noncash right-of-use asset additions of approximately $ 150 , $ 252 , and $ 259 in fiscal years 2023, 2022, and 2021, respectively.

Table of Conte n t s

Lessor Accounting

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

In cases for which sales-type lease treatment is appropriate, revenue and expense are recognized up front for the sale of equipment component of the contract as compared to revenue recognition over the life of the arrangement under contracts not qualifying as sales-type leases.

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 years 2022, 2021, and 2020, we recognized interest income of $ 59.1 , $ 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.

Instead, renewal of such contracts requires negotiation of mutually agreed terms by both parties.

Unless the customer terminates within the required notice period, the contract will go into evergreen.

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 on certain on-site assets for which payments are collected over the contract term.

As of 30 September 2022 and 2021, our lease receivables, net were $ 660.9 and $ 824.7 , respectively, and 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.

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

Refer to Note 1, Basis of Presentation and Major Accounting Policies , for a description of our accounting policy for arrangements in which we are the lessor.

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

The table below details balances associated with our lease receivables:

30 September 2023 2022

Current lease receivables, net (A)

$ 78.0 $ 77.8

Noncurrent lease receivables, net 494.7 583.1

Total lease receivables, net $ 572.7 $ 660.9

(A) Presented within "Other receivables and current assets" on our consolidated balance sheets.

The majority of our leases are of high credit quality and were originated prior to fiscal year 2017.

As of 30 September 2023 and 2022, the credit quality of lease receivables did not require a material allowance for credit losses.

Lease payments collected in fiscal years 2022, 2021, and 2020 were $ 153.1 , $ 166.2 , and $ 162.8 , respectively.

These payments reduced the noncurrent lease receivable balance by $ 94.0 , $ 98.8 , and $ 91.6 in fiscal years 2022, 2021, and 2020, respectively.

As of 30 September 2022, minimum lease payments expected to be collected, which reconciles to lease receivables, net, were as follows:

The table below summarizes lease payments collected in fiscal years 2023, 2022, and 2021:

Fiscal Year Ended 30 September 2023 2022 2021

Payments that reduced the noncurrent lease receivable balance $ 79.6 $ 94.0 $ 98.8

Payments recognized as interest income 49.6 59.1 67.4

Total lease payments collected $ 129.2 $ 153.1 $ 166.2

As of 30 September 2023, minimum lease payments expected to be collected were as follows:

Thereafter 279.1

1 unchanged sentence

Lease receivables, net $ 572.7

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.

Instead, renewal of such contracts requires negotiation of mutually agreed terms by both parties.

Unless the customer terminates within the required notice period, the contract will go into evergreen.

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

Table of Conte n t s

FINANCIAL INSTRUMENTS

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Total Forward Exchange Contracts $ 6,036.6 0.9 $ 5,601.5 0.8

The increase in the notional value of cash flow hedges in fiscal year 2022 is primarily due to the origination of forward exchange contracts that hedge forecasted foreign currency costs for capital projects.

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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It is our policy to identify, on a continuing basis, the need for debt capital and to evaluate the financial risks inherent in funding the Company with debt capital.

Reflecting the result of this ongoing review, we manage our debt portfolio and hedging program with the intent to (1) reduce funding risk with respect to our borrowings to preserve our access to debt capital and provide debt capital as required for funding and liquidity purposes, and (2) manage the aggregate interest rate risk and the debt portfolio in accordance with certain debt management parameters.

Reflecting the result of this ongoing review, we manage our debt portfolio and hedging program with the intent to (1) reduce funding risk with respect to borrowings made by us to preserve our access to debt capital and provide debt capital as required for funding and liquidity purposes, and (2) manage the aggregate interest rate risk and the debt portfolio in accordance with certain debt management parameters.

Table of Conte n t s

Interest Rate Management Contracts

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It is our policy not to enter into any interest rate management contracts which lever a move in interest rates on a greater than one-to-one basis.

In May 2023, NGHC entered into floating-to-fixed interest rate swaps that are designated as cash flow hedges in connection with the non-recourse project financing secured by the joint venture.

Refer to Note 3, Variable Interest Entities , for additional information.

Cross Currency Interest Rate Swap Contracts

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Notional Average Pay % Average

Interest rate swaps (fair value hedge) $ 800.0 Various 1.64 % 5.0 $ 200.0 LIBOR 2.76 % 0.1

Interest rate swaps (fair value hedge) $ 800.0 SOFR 1.64 % 4.0 $ 800.0 Various 1.64 % 5.0

Interest rate swaps

(cash flow hedge) $ 1,182.5 2.82 % SOFR 22.1 $ — — % — % 0.0

Cross currency interest rate swaps (net investment hedge) $ 80.8 4.60 % 3.65 % 0.9 $ 176.7 4.12 % 3.07 % 1.2

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30 September 2023 2022 2023 2022

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

Long-term debt $ 2,011.4 $ 2,012.9 ($ 80.5 ) ($ 77.1 )

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.

Table of Conte n t s

The tables below summarize the fair value and balance sheet location of our outstanding derivatives.

30 September Balance Sheet Location 2023 2022 Balance Sheet Location 2023 2022

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Forward exchange contracts Other receivables and current assets $ 6.4 $ 6.1 Payables and accrued liabilities $ 4.6 $ 2.1

Interest rate management contracts Other receivables and current assets 3.9 — Payables and accrued liabilities — —

Forward exchange contracts Other noncurrent assets — 0.1 Other noncurrent liabilities — 0.1

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Total Derivatives $ 394.1 $ 189.1 $ 211.4 $ 366.5

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

Refer to Note 15, 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:

Net Investment Hedging Relationships

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Forward exchange contracts, excluded components ( 18.7 ) 2.8

123.2 ( 6.7 )

Total Amount Recognized in OCI 417.8 ( 184.2 )

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Other also includes the recognition of our share of gains and losses, net of tax, related to interest rate swaps held by our equity affiliates .

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

Table of Conte n t s

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

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

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

Table of Conte n t s

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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The amount of unrealized gains and losses related to cash flow hedges as of 30 September 2023 that are expected to be reclassified to earnings in the next twelve months is not material.

The cash flows related to all derivative contracts are reported in the operating activities section of the consolidated statements of cash flows.

The cash flows related to derivative contracts are generally reported in the operating activities section of the consolidated statements of cash flows.

Credit Risk-Related Contingent Features

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We execute financial derivative transactions with counterparties that are highly rated financial institutions, all of which are investment grade at this time.

Some of our underlying derivative agreements give us the right to require the institution to post collateral if its credit rating falls below the pre-established thresholds with Standard & Poor’s or Moody’s.

The collateral that the counterparties would be required to post was $ 345.0 and $ 62.8 as of 30 September 2023 and 2022, respectively.

No financial institution is required to post collateral at this time, as all have credit ratings at or above the applicable threshold.

No financial institution is required to post collateral at this time, as all have credit ratings at or above threshold.

FAIR VALUE MEASUREMENTS

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Level 2 measurements were based on current interest rates for similar investments with comparable credit risk and time to maturity.

Table of Conte n t s

The fair value of our interest rate management contracts and forward exchange contracts are quantified using the income approach and are based on estimates using standard pricing models.

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therefore, the fair value of our debt is classified as a Level 2 measurement.

We generally perform the computation of the fair value of these instruments.

The carrying values and fair values of financial instruments were as follows:

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Accordingly, these items have been excluded from the above table.

The following table summarizes assets and liabilities on the consolidated balance sheets that are measured at fair value on a recurring basis:

Table of Conte n t s

The table below summarizes assets and liabilities on the consolidated balance sheets that are measured at fair value on a recurring basis:

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

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Short-term borrowings (A)

$ 259.5 $ 10.7

Current portion of long-term debt 615.0 548.3

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Total Debt $ 10,305.8 $ 7,644.8

(A) Includes bank obligations with weighted average interest rates of 4.2 % and 0.6 % as of 30 September 2022 and 2021, respectively.

(A) Balances reflect bank obligations with weighted average interest rates of 5.2 % and 4.2 % as of 30 September 2023 and 2022, respectively.

The increase from fiscal year 2022 primarily relates to commercial paper.

Related Party Debt

Total debt owed to related parties was $ 781.0 and $ 358.4 as of 30 September 2022 and 30 September 2021, respectively.

"Current portion of long-term debt" includes amounts owed to related parties of $ 129.0 and $ 83.8 as of 30 September 2022 and 2021, respectively.

Our related party debt includes loans with joint venture partners, including Lu’An Clean Energy Company, as well as shareholder loans associated with the NEOM project.

Refer to Note 22, Supplemental Information , for additional information.

Summary of Debt Instruments

Our related party debt includes loans with our joint venture partners.

Total debt owed to related parties was $ 328.3 and $ 781.0 as of 30 September 2023 and 30 September 2022, respectively, of which $ 177.6 and $ 129.0 , respectively, was reflected within "Current portion of long-term debt" on our consolidated balance sheets.

During the third quarter of fiscal year 2023, outstanding shareholder loans to the NGHC joint venture were converted to equity in the entity.

Refer to Note 3, Variable Interest Entities , for additional information on this joint venture.

The remaining related party debt balance as of 30 September 2023 primarily includes a loan with Lu’An Clean Energy Company.

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 2023, we were in compliance with all the financial and other covenants under our debt agreements.

Table of Conte n t s

Summary of Long-Term Debt Instruments

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.

Variable rates are determined as of 30 September 2023.

30 September Maturities 2023 2022

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Note 2.80 % 2050 950.0 950.0

Other (weighted average rate)

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Eurobonds 0.800 % 2032 528.6 490.1

Eurobonds 4.000 % 2035 740.1 —

Saudi Riyal Loan Facility variable-rate 4.10 % 2023 — 195.6

Saudi Riyal Loan Facility variable-rate 7.00 % 2027 451.1 —

Saudi Riyal Loan Facility 2.00 % 2034 192.1 —

New Taiwan Dollar Loan Facility 1.86 % 2024 to 2028 167.5 189.0

New Taiwan Dollar Loan Facility 2.66 % 2026 to 2029 186.1 31.5

New Taiwan Dollar Loan Facility variable-rate 2.55 % 2026 to 2030 3.1 —

Other 2023 — 0.1

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Chinese Renminbi 5.7 % 2033 14.8 12.2

Non-Recourse Debt Associated With NGHC (A)

2027 to 2053 1,364.8 —

Finance Lease Obligations (weighted average rate)

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Unamortized discount and debt issuance costs ( 165.7 ) ( 45.4 )

Fair value hedge accounting adjustments (A)

Fair value hedge accounting adjustments (B)

( 80.5 ) ( 77.1 )

Total Long-term Debt $ 10,046.3 $ 7,634.1

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Long-term Debt $ 9,280.6 $ 6,433.8

(A) Refer to Note 12, Financial Instruments , for additional information.

(A) Refer to the "NEOM Green Hydrogen Project Financing" section below for additional information.

(B) Refer to Note 14, Financial Instruments , for additional information.

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:

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Total $ 10,292.5

(A) Principal maturities in fiscal year 2023 include the 4.10 % Saudi Riyal Loan Facility of $ 195.6 , which is presented within long-term debt on our consolidated balance sheet as of 30 September 2022 as we entered into a Saudi Riyal Loan Facility in October 2022 and utilized the proceeds to repay the outstanding balance.

The new facility is due in 2027.

Table of Conte n t s

The table below reconciles interest incurred to interest expense as presented on our consolidated income statements.

Capitalized interest represents the portion of interest incurred that we include in the cost of new plant and equipment that we build during the year.

Fiscal Year Ended 30 September 2023 2022 2021

Interest incurred $ 292.9 $ 169.0 $ 170.1

Capitalized interest 115.4 41.0 28.3

Interest expense $ 177.5 $ 128.0 $ 141.8

Cash paid for interest, net of amounts capitalized, was $ 131.5 , $ 128.5 , and $ 150.4 in fiscal years 2023, 2022, and 2021, respectively.

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

Debt Covenants

As of 30 September 2022, we are in compliance with all the financial and other covenants under our debt agreements.

Green Financing

On 3 March 2023, we issued our inaugural multi-currency green bonds under our new Green Finance Framework, which was established to further align our financings with our sustainability strategy.

The concurrent offerings included U.S.

Dollar- and Euro-denominated fixed-rate notes with aggregate principal amounts of $ 600 and € 700 million, respectively.

The proceeds from the notes were reduced by deferred financing charges and discounts of approximately $ 15 , which are being amortized over the life of the underlying bonds.

Credit Facilities

2021 Credit Agreement

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.

On 31 March 2022, we amended the 2021 Credit Agreement to exercise our option to increase the maximum borrowing capacity to $ 2,750 and transition the benchmark rate from LIBOR to the Secured Overnight Financing Rate ("SOFR").

All other terms remain unchanged from the original agreement.

We have a five -year $ 2.75 billion revolving credit agreement maturing 31 March 2026 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 2023.

We have credit facilities available to certain of our foreign subsidiaries totaling $ 749.0 , of which $ 457.5 was borrowed and outstanding as of 30 September 2022.

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

The 2021 Credit Agreement defines total debt as the aggregate principal amount of all indebtedness, excluding limited recourse debt of any project finance subsidiary.

Accordingly, this calculation does not consider borrowings associated with NGHC.

Foreign Credit Facilities

We also have credit facilities available to certain of our foreign subsidiaries totaling $ 1,596.8 , of which $ 1,041.4 was borrowed and outstanding as of 30 September 2023.

The amount borrowed and outstanding as of 30 September 2022 was $ 457.5 .

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.

The increase from 30 September 2022 was driven by borrowings on a new variable-rate Saudi Riyal loan facility that matures in October 2026.

The interest rate on the facility is based on SAIBOR plus an annual margin of 1.35 %.

We entered into this facility in October 2022 and utilized a portion of the proceeds to repay a variable-rate 4.10 % Saudi Riyal loan facility of $ 195.6 , which was presented within long-term debt on our consolidated balance sheet as of 30 September 2022.

NEOM Green Hydrogen Project Financing

In May 2023, NGHC secured non-recourse project financing of approximately $ 6.1 billion, which is expected to fund about 73 % of the NEOM Green Hydrogen Project and will be drawn over the construction period.

At the same time, NGHC secured additional non-recourse credit facilities totaling approximately $ 500 primarily for working capital needs.

As of 30 September 2023, the joint venture had borrowed $ 1.4 billion of the available financing.

For additional information, including details of related debt instruments, refer to Note 3, Variable Interest Entities .

Table of Conte n t s

RETIREMENT BENEFITS

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Service cost $ 10.9 $ 12.3 $ 23.2 $ 18.3 $ 21.5 $ 39.8 $ 21.3 $ 23.4 $ 44.7

Non-service (benefit) cost:

Non-service cost (benefit):

Interest cost 129.9 59.9 189.8 73.9 28.9 102.8 68.9 25.2 94.1

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Settlements 1.4 0.6 2.0 6.0 0.2 6.2 1.3 0.5 1.8

Curtailments — ( 1.9 ) ( 1.9 ) — — — — — —

Other — 0.9 0.9 — 1.3 1.3 — 1.0 1.0

Net Periodic (Benefit) Cost ($ 2.8 ) ($ 0.8 ) ($ 3.6 ) ($ 23.3 ) ($ 14.0 ) ($ 37.3 ) $ 15.8 ($ 8.8 ) $ 7.0

Our service costs are primarily included within "Cost of sales" and "Selling and administrative" on our consolidated income statements.

Net Periodic Cost (Benefit) $ 76.0 $ 34.9 $ 110.9 ($ 2.8 ) ($ 0.8 ) ($ 3.6 ) ($ 23.3 ) ($ 14.0 ) ($ 37.3 )

Our service costs are primarily included within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements.

The amount of service costs capitalized in fiscal years 2023, 2022 and 2021 were not material.

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

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

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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Rate of compensation increase 3.5 % 3.4 % 3.5 % 3.3 % 3.5 % 3.3 %

Table of Conte n t s

The projected benefit obligation ("PBO") is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future salary increases.

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Actuarial (gain) loss ( 68.3 ) ( 80.1 ) ( 793.8 ) ( 575.2 )

Curtailments — ( 14.8 ) — —

Settlements ( 4.7 ) ( 3.4 ) ( 19.2 ) ( 0.9 )

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Actual return on plan assets 61.4 ( 52.7 ) ( 778.3 ) ( 498.5 )

Settlements ( 4.7 ) ( 3.4 ) ( 19.2 ) ( 0.9 )

Company contributions 8.4 24.2 23.0 21.7

1 unchanged sentence

Benefits paid ( 170.1 ) ( 52.8 ) ( 165.2 ) ( 53.0 )

Settlements ( 19.2 ) ( 0.9 ) ( 3.0 ) ( 1.8 )

Currency translation and other — 95.9 — ( 253.5 )

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Noncurrent liabilities 80.7 111.6 77.4 112.6

Net Asset (Liability) Recognized ($ 46.8 ) ($ 15.5 ) $ 8.4 ($ 64.6 )

Net Liability Recognized

($ 49.8 ) ($ 28.4 ) ($ 46.8 ) ($ 15.5 )

Table of Conte n t s

The changes in plan assets and benefit obligation that have been recognized in other comprehensive income on a pretax basis during fiscal years 2023 and 2022 consist of the following:

4 unchanged sentences

Prior service cost arising during the period 0.3 7.0 1.5 0.1

Amortization of prior service cost ( 1.3 ) — ( 1.2 ) —

Amortization of prior service (cost) credit ( 1.2 ) 1.2 ( 1.3 ) —

Total ($ 64.6 ) $ 3.0 $ 81.0 ($ 24.1 )

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The ABO and PBO related to these plans as of 30 September 2023 were $ 54.5 and $ 58.7 , respectively.

As of 30 September 2022, the U.S.

salaried pension plan had a PBO in excess of plan assets, which resulted in an increase to the U.S.

balances presented above.

As of 30 September 2021, the U.S.

salaried pension plan had plan assets in excess of both PBO and ABO.

Table of Conte n t s

Pension Plan Assets

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plan, which represents approximately 80 % of the assets of our International plans, was 4.3 % and was derived from expected equity and debt security returns.

Table of Conte n t s

The table below summarizes pension plan assets measured at fair value by asset class (see Note 15, Fair Value Measurements , for definition of the levels):

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or international exchange where the security is actively traded and are therefore classified as Level 1 assets.

Equity Mutual and Pooled Funds

Equity Mutual Funds

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

1 unchanged sentence

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

Table of Conte n t s

Equity Pooled Funds

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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Actual benefit payments may vary significantly from these estimates.

Table of Conte n t s

Defined Contribution Plans

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We recognize changes in other postretirement benefit plan obligations in other comprehensive income on a pretax basis.

During fiscal years 2022 and 2021 we recognized a loss of $ 0.5 and a gain of $ 5.4 , respectively, that arose during the period, and $ 1.6 and $ 1.8 of net actuarial gain amortization, respectively.

During fiscal years 2023 and 2022 we recognized a loss of $ 0.1 and $ 0.5 , respectively, that arose during the period, and $ 2.0 and $ 1.6 of net actuarial gain amortization, respectively.

The net actuarial gain recognized in accumulated other comprehensive loss on a pretax basis was $ 2.4 and $ 4.5 as of 30 September 2023 and 2022, respectively.

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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 $ 36 at 30 September 2023) 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 remain in litigation of a dispute regarding energy management services related to the impact of this 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.

Additionally, in April 2023, we received a favorable ruling from a Texas state court in litigation involving disputed energy management charges related to Winter Storm Uri, a severe winter weather storm that impacted the U.S.

Gulf Coast in February 2021.

The ruling is subject to appeal and had no impact on our consolidated financial statements for the twelve months ended 30 September 2023.

Table of Conte n t s

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 30 sites on which a final settlement or remediation has not been achieved where we, along with others in some cases, 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.

Presently, there are 27 sites on which a final settlement or remediation has not been achieved where we, usually 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.

Accruals for environmental loss contingencies are recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

The consolidated balance sheets at 30 September 2022 and 2021 included an accrual of $ 71.3 and $ 76.7 , respectively, primarily as part of other noncurrent liabilities .

The consolidated balance sheets at 30 September 2023 and 30 September 2022 included an accrual of $ 64.5 and $ 71.3 , respectively, primarily as part of other noncurrent liabilities .

The environmental liabilities will be paid over a period of up to 26 years .

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We continue to review alternative remedial approaches with the FDEP and completed additional field work during 2021 to support the design of an improved groundwater recovery network with the objective of targeting areas of higher contaminant concentration and avoiding areas of high groundwater iron which has proven to be a significant operability issue for the project.

The design of the optimized recovery system will likely be finalized in fiscal year 2023 with construction to begin thereafter.

In the first quarter of 2015, we entered into a new Consent Order with the FDEP requiring us to continue our remediation efforts at the Pace facility, along with the completion of a cost review every five years.

The design of the optimized recovery system was initiated in fiscal year 2023 with construction expected to begin in fiscal year 2025.

Table of Conte n t s

At 30 September 2023, $ 4.5 of the environmental accrual was related to the Piedmont site.

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

Remediation has started in accordance with the design, which includes in-situ chemical oxidation treatment, as well as soil vapor extraction 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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In shutting down and dismantling the facility, we have undertaken certain obligations related to soil and groundwater contaminants.

We have been pumping and treating groundwater to control off-site contaminant migration in compliance with regulatory requirements and under the approval of the Texas Commission on Environmental Quality.

We estimate that the pump and treat system will continue to operate until 2042.

We continue to progress on additional work to address other environmental obligations at the site.

We continue 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, continuing post closure care for two closed RCRA surface impoundment units, and maintaining engineering controls.

Additionally, a chemical reduction pilot test to evaluate treating source material was conducted, and is currently undergoing performance monitoring.

Additionally, we have conducted an interim corrective action to treat impacted soils as recommended in the TCEQ 2019 Annual Report.

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

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Balance at 30 September 2023 $ 297.3

Table of Conte n t s

Warranties and Guarantees

5 unchanged sentences

The fair value of these guarantees is not material.

We issued performance guarantees as a condition of project financing associated with the NEOM Green Hydrogen Project that would require us to pay up to approximately $ 1.2 billion in the event of nonperformance in our role as EPC contractor.

Our exposure will decline over time before expiring in November 2028.

Refer to Note 3, Variable Interest Entities, for additional information regarding 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 2023, maximum potential payments under joint and several guarantees were $ 22.0 .

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

Exposures under the guarantees will be completely extinguished by 2024.

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

5 unchanged sentences

Total $ 16,118

Approximately $ 8.8 billion of our unconditional purchase obligations relate to open purchase orders for plant and equipment, of which approximately $ 5 billion relates to the NEOM Green Hydrogen Project.

Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to reschedule, cancel, or otherwise modify based on our business needs.

We have estimated the timing of these payments in the table above;

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

Approximately $ 6.4 billion of our unconditional purchase obligations relate to helium and rare gases.

The majority of our obligations occur after fiscal year 2027.

The majority of these obligations occur after fiscal year 2028.

Helium purchases include crude feedstock supply to helium refining plants in North America as well as refined helium purchases from sources around the world.

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While contract terms in our helium sourcing contracts are generally longer than our customer sales contracts, helium is a rare gas used in applications with few or no substitutions because of its unique physical and chemical properties.

We estimate our maximum obligation for future purchases of plant and equipment to be approximately $ 3.1 billion based on open purchase orders as of 30 September 2022.

Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to reschedule, cancel, or otherwise modify based on our business needs.

We have disclosed this obligation in fiscal year 2023;

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 for numerous HyCO (hydrogen, carbon monoxide, and syngas) facilities.

1 unchanged sentence

As a result, we do not believe these purchase obligations would have a material effect on our financial condition or results of operations.

Table of Conte n t s

CAPITAL STOCK

2 unchanged sentences

On 15 September 2011, the Board of Directors authorized the repurchase of up to $ 1.0 billion of our outstanding common stock.

We repurchase shares pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended, through repurchase agreements established with several brokers.

We did no t purchase any of our outstanding shares during fiscal year 2022.

This program does not have a stated expiration date.

If we repurchase shares pursuant to this authorization, we may do so under Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended, through repurchase agreements established with one or more brokers.

We did not purchase any of our outstanding shares during fiscal year 2023.

At 30 September 2023, $ 485.3 in share repurchase authorization remained available.

5 unchanged sentences

Preferred Stock

Authorized preferred stock consisted of 25 million shares with a par value of $ 1 per share, of which 2.5 million were designated as Series A Junior Participating Preferred Stock.

Authorized preferred stock consisted of 25 million shares with a par value of $ 1 per share.

There were no preferred shares issued or outstanding as of 30 September 2023 and 2022.

3 unchanged sentences

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.

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 and the exercise of stock options.

As of 30 September 2023, there were 1.3 million shares available for future grant under our Long-Term Incentive Plan ("LTIP"), which is shareholder approved.

4 unchanged sentences

After-tax share-based compensation cost $ 46.1 $ 37.4 $ 33.5

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

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

The amount of share-based compensation cost capitalized in fiscal years 2023, 2022, and 2021 was not material.

3 unchanged sentences

We grant deferred stock unit awards with a two - to five -year deferral period that are subject to payout upon death, disability, or retirement.

Deferred stock units issued to outside directors are paid after service on the Board of Directors ends at the time elected by the director (not to exceed 10 years after service ends).

Deferred stock units issued to outside directors are paid after service on the Board of Directors ends at the time elected by the director (not to exceed ten years after service ends).

We generally expense the grant-date fair value of these awards on a straight-line basis over the vesting period;

2 unchanged sentences

Forfeitures have not been significant historically.

Table of Conte n t s

Market-based deferred stock units vest as long as the employee continues to be employed by the Company and upon the achievement of the performance target.

The performance target, which is approved by the Compensation Committee, is our share price appreciation and dividends paid, or "total shareholder return," in relation to the S&P 500 Index (for fiscal year 2022 awards) or a defined peer group (for awards granted prior to fiscal year 2022) over a three-year performance period beginning 1 October of the fiscal year of grant.

The performance target, which is approved by the Compensation Committee, is our share price appreciation and dividends paid, or "total shareholder return," in relation to the S&P 500 Index (for fiscal year 2022 and 2023 awards) or a defined peer group (for awards granted prior to fiscal year 2022) over a three-year performance period beginning 1 October of the fiscal year of grant.

We granted 85,612 , 74,364 , and 77,251 market-based deferred stock units in fiscal years 2023, 2022, and 2021, respectively.

3 unchanged sentences

The estimated grant-date fair value of market-based deferred stock units was $ 502.03 , $ 427.23 , and $ 235.48 per unit in fiscal years 2023, 2022, and 2021, respectively.

The calculation of the fair value of these market-based deferred stock units used the following assumptions:

The calculation of the fair value of market-based deferred stock units used the following assumptions:

2023 2022 2021

28 unchanged sentences

The weighted average remaining contractual term of stock options outstanding and exercisable at 30 September 2023 was 0.7 years.

The aggregate intrinsic value of these stock options was $ 71.3 , which represents the amount by which our closing stock price of $ 232.73 as of 30 September 2022 exceeds the exercise price multiplied by the number of in-the-money options outstanding or exercisable.

The aggregate intrinsic value of these stock options was $ 47.9 , which represents the amount by which our closing stock price of $ 283.40 per share as of 30 September 2023 exceeds the exercise price multiplied by the number of in-the-money options outstanding or exercisable.

The intrinsic value of stock options exercised during fiscal years 2023, 2022, and 2021 was $ 53.5 , $ 20.2 , and $ 29.0 , respectively.

Table of Conte n t s

Compensation cost is generally recognized over the stated vesting period consistent with the terms of the arrangement, which is either on a straight-line or graded-vesting basis.

9 unchanged sentences

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

Other comprehensive income (loss) before reclassifications 43.5 233.4 ( 68.2 ) 208.7

Amounts reclassified from AOCL ( 57.7 ) — 82.5 24.8

Net current period other comprehensive (loss) income ($ 14.2 ) $ 233.4 $ 14.3 $ 233.5

Amount attributable to noncontrolling interests ( 21.1 ) 19.3 ( 0.2 ) ( 2.0 )

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

1 unchanged sentence

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

Amount attributable to noncontrolling interests 20.6 18.3 ( 0.1 ) 38.8

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

4 unchanged sentences

Balance at 30 September 2022 ($ 71.9 ) ($ 2,072.4 ) ($ 641.8 ) ($ 2,786.1 )

Other comprehensive income (loss) before reclassifications 369.2 151.1 ( 8.9 ) 511.4

Amounts reclassified from AOCL ( 43.9 ) ( 0.3 ) 53.8 9.6

Net current period other comprehensive income $ 325.3 $ 150.8 $ 44.9 $ 521.0

Amount attributable to noncontrolling interest 192.3 ( 8.3 ) 0.3 184.3

Balance at 30 September 2023 $ 61.1 ($ 1,913.3 ) ($ 597.2 ) ($ 2,449.4 )

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

1 unchanged sentence

2023 2022 2021

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

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

Sales ($ 0.5 ) $ 0.5 ($ 0.6 )

2 unchanged sentences

Other non-operating income (expense), net ( 50.6 ) 87.7 40.9

Total Loss (Gain) on Cash Flow Hedges, net of tax $ 91.4 $ 43.5 ($ 57.7 )

Total (Gain) Loss on Cash Flow Hedges, net of tax ($ 43.9 ) $ 91.4 $ 43.5

Currency Translation Adjustment

4 unchanged sentences

$ 53.8 $ 64.8 $ 74.6

(A) 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.

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

Refer to Note 17, Retirement Benefits , for additional information.

Table of Conte n t s

EARNINGS PER SHARE

2 unchanged sentences

Net income from continuing operations $ 2,292.8 $ 2,243.5 $ 2,028.8

Net income (loss) from discontinued operations 12.6 70.3 ( 14.3 )

Net income from discontinued operations 7.4 12.6 70.3

Net Income attributable to Air Products

$ 2,300.2 $ 2,256.1 $ 2,099.1

Denominator ( in millions )

3 unchanged sentences

Weighted average common shares — Diluted 222.7 222.5 222.5

Per Share Data*

Per Share Data (A) (U.S.

Dollars per share)

Basic EPS from continuing operations

$ 10.31 $ 10.11 $ 9.16

Basic EPS from discontinued operations

0.03 0.06 0.32

Basic EPS attributable to Air Products

$ 10.35 $ 10.16 $ 9.47

Diluted EPS from continuing operations

$ 10.30 $ 10.08 $ 9.12

Diluted EPS from discontinued operations

0.03 0.06 0.32

Diluted EPS attributable to Air Products

*EPS is calculated independently for each component and may not sum to total EPS due to rounding.

$ 10.33 $ 10.14 $ 9.43

(A) EPS is calculated independently for each component and may not sum to total EPS due to rounding.

Diluted EPS attributable to Air Products reflects the potential dilution that could occur if stock options or other share-based awards were exercised or converted into common stock.

1 unchanged sentence

To the extent they would have been dilutive, the incremental shares, or the difference between shares assumed to be issued versus purchased, are included in the denominator of the diluted EPS calculation.

There were no antidilutive outstanding share-based awards in fiscal years 2022, 2021 and 2020.

Antidilutive outstanding share-based awards were not material in fiscal years 2023, 2022 and 2021.

Table of Conte n t s

The table below summarizes income from U.S.

12 unchanged sentences

Total current tax provision 575.9 468.5 368.8

Deferred Tax Provision

Deferred Tax (Benefit) Provision

Federal ( 12.5 ) 15.6 54.7

1 unchanged sentence

Foreign ( 6.4 ) 18.6 39.4

Total deferred tax provision 32.3 94.0 165.0

Total Deferred Tax (Benefit) Provision

( 24.7 ) 32.3 94.0

Total Income Tax Provision

$ 551.2 $ 500.8 $ 462.8

Cash Paid for Taxes (Net of Cash Refunds)

1 unchanged sentence

Fiscal year 2023, 2022, and 2021 reflect income tax refunds associated with discontinued operations of $ 0.6 , $ 59.6 , and $ 6.7 , respectively.

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 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

3 unchanged sentences

As of 30 September 2023, our outstanding liability for the deemed repatriation tax was $ 131.1 , of which $ 109.4 is presented within noncurrent liabilities on our consolidated balance sheets.

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

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

Inflation Reduction Act and CHIPS and Science Act of 2022

2 unchanged sentences

These acts include, among other provisions, a corporate alternative minimum tax of 15%, an excise tax on the repurchase of corporate stock, various climate and energy provisions, and incentives for investment in semiconductor manufacturing.

We are evaluating the impact these acts could have on our financial statements, including the impact of tax incentives for carbon sequestration and clean hydrogen production once our new projects in these areas come on-stream in the U.S.

We expect to realize benefits for carbon sequestration and clean hydrogen production once our new projects in these areas come on-stream in the U.S.

Table of Conte n t s

Effective Tax Rate

8 unchanged sentences

Share-based compensation ( 0.3 ) ( 0.7 ) ( 0.7 )

Business and asset actions

Other ( 0.7 ) ( 1.0 ) ( 1.4 )

Effective Tax Rate 19.1 % 18.2 % 18.5 %

Equity affiliates’ income, which is primarily presented net of income taxes on our consolidated income statements, favorably impacts our effective tax rate.

This impact increased over the years presented primarily due to our phased investment in the JIGPC joint venture.

See Note 9, Equity Affiliates , for additional information.

Foreign tax differentials represent the differences between foreign earnings subject to foreign tax rates that are different than the U.S.

federal statutory rate and include tax holidays and incentives.

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 in 2020 due to an extension of the holiday period in China.

The impact of tax holidays in fiscal years 2022 and 2021 was not material.

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

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

Our income tax holidays relate to operations in jurisdictions that provide reduced income tax rates for certain qualifying activities and are conditioned upon us satisfying certain requirements.

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

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

benefit for related foreign tax credits.

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.

Equity affiliates’ income, which is primarily presented net of income taxes on our consolidated income statements, favorably impacts our effective tax rate.

The increase in the impact for fiscal year 2022 is primarily due to the results of the new JIGPC joint venture as well as recognition of the remaining deferred profit associated with air separation units previously sold to Jazan Gas Project Company, net of other project finalization costs.

Share-based compensation reflects the impact from recognition of $ 10.2 , $ 18.3 , and $ 17.0 of excess tax benefits in our provision for income taxes during fiscal years 2023, 2022, and 2021, respectively.

During fiscal year 2023, we recorded a charge to net income for business and asset actions of $ 244.6 ($ 204.9 attributable to Air Products after tax).

Refer to Note 4, Business and Asset Actions , for additional information.

The charge included certain losses for which we could not recognize an income tax benefit and were subject to a valuation allowance of $ 36.0 .

Partially offsetting the valuation allowance cost was a $ 15.9 income tax benefit from a tax election related to a non-U.S.

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.

Table of Conte n t s

Deferred Tax Assets and Liabilities

6 unchanged sentences

Reserves and accruals 65.2 55.4

Currency losses — 30.4

Other 81.3 68.3

16 unchanged sentences

Net Deferred Income Tax Liability $ 1,106.4 $ 1,111.7

Deferred tax assets for "Reserves and accruals" and "Other" were impacted by changes in tax deferred deductions related to the timing of recognizing accruals for local tax and accounting purposes as well as foreign currency movement.

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

dollar in fiscal year 2022.

Deferred tax liabilities related to "Intangible assets" decreased primarily due to the impact of capitalizing research and development expenditures for U.S tax purposes.

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.

Deferred tax liabilities related to Intangible assets decreased primarily due to amortization deductions for book purposes being in excess of that for tax purposes as well as foreign currency movement.

The increase was partially offset with book charges in excess of tax related to our business and asset actions that included certain costs for which we could not recognize an income tax benefit and were subject to a valuation allowance.

Deferred tax assets for "Tax loss carryforwards" increased primarily due to losses in certain Chinese subsidiaries.

A portion of these losses were subject to a valuation allowance for which we could not recognize an income tax benefit.

The deferred tax components for "Reserves and accruals" and "Other" were impacted by changes in tax deferred deductions and the timing of revenue recognition for local tax and accounting purposes.

As of 30 September 2023, we had the following deferred tax assets for certain tax credits:

4 unchanged sentences

Of the $ 17.7 credits in foreign jurisdictions, $ 16.0 have indefinite carryforward periods.

Table of Conte n t s

As of 30 September 2023, we had the following loss carryforwards:

8 unchanged sentences

As of 30 September 2023, the balance primarily related to $ 33.6 of foreign credits and loss carryforwards, $ 18.7 of U.S.

federal foreign income tax credits, and $ 45.3 related to foreign capital losses that were generated from the loss recorded on the exit from the Energy-from-Waste project in 2016.

federal foreign income tax credits, $ 49.4 related to foreign capital losses, and $ 34.7 related to other charges from our Business and Asset Actions.

If events warrant the reversal of the valuation allowance, it would result in a reduction of tax expense.

24 unchanged sentences

The PMD reserve was net of related deferred tax assets of $ 2.4 .

In fiscal year 2023 we released an additional $ 5.2 of reserves related to the sale of PMD.

Fiscal year 2022 also reflects a $ 15.4 reduction for tax positions of prior years.

This was primarily due to a $ 10.6 reduction caused by changes to income tax rates.

Table of Conte n t s

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

5 unchanged sentences

Interest and penalties related to unrecognized tax benefits are recorded as a component of income tax expense and totaled $ 5.0 , $ 1.2 , and ($ 0.2 ) in fiscal years 2023, 2022, and 2021, respectively.

Our 2022 and 2021 expense reflects a benefit from the reversal of accrued interest on reserves released during the period.

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 $ 26.3 and $ 22.6 as of 30 September 2023 and 2022, respectively.

10 unchanged sentences

France 2020 - 2023

Germany 2017 - 2022

Netherlands 2018 - 2023

6 unchanged sentences

Chile 2019 - 2023

Table of Conte n t s

SUPPLEMENTAL INFORMATION

NEOM Green Hydrogen Project

In the fourth quarter of fiscal year 2020, we announced the NEOM Green Hydrogen Project (the "NEOM project”), a multi-billion dollar green hydrogen-based ammonia production facility powered by renewable energy located in the NEOM city of the Kingdom of Saudi Arabia.

We, along with our joint venture partners, ACWA Power and NEOM Company, are equal owners in the newly formed NEOM Green Hydrogen Company joint venture (“NGHC”) that will develop, construct, own, operate, and finance the NEOM project.

The NEOM project is expected to be financed through non-recourse project financing and the partners’ investments.

During the third quarter of fiscal year 2022, we entered into an agreement with NGHC under which we commenced construction of the NEOM project.

In addition, we executed an agreement with NGHC under which we will be the exclusive offtaker of green ammonia produced by the NEOM project under a long-term take-if-tendered agreement.

The NEOM project is expected to be on-stream in 2026.

We intend to transport green ammonia around the world to be dissociated to produce green hydrogen, primarily for the transportation market.

Air Products has one-third of the voting interests in the NGHC joint venture;

however, substantially all the activities of the joint venture involve or are conducted on behalf of Air Products.

Since we have disproportionately few voting rights relative to our economic interests in the joint venture, we determined that NGHC is a variable interest entity.

Therefore, we consolidated NGHC within the Middle East and India segment beginning in the third quarter of fiscal year 2022.

As of 30 September 2022, our consolidated balance sheet includes the following balances attributable to NGHC:

$ 275 in "Cash and cash items," $ 23 in "Other receivables and current assets," $ 219 in "Plant and equipment, net," $ 58 in "Payables and accrued liabilities," $ 447 in "Long-term debt – related party," and $ 30 in "Noncontrolling interests."

Business and Asset Actions

During the fourth quarter of fiscal year 2022, we divested our small industrial gas business in Russia due to Russia's invasion of Ukraine.

As a result, we recorded a noncash charge of $ 73.7 , which included transaction costs and cumulative currency translation losses.

This charge is reflected as "Business and asset actions" on our consolidated income statements and was not recorded in the results of our Europe segment.

Related Party Transactions

3 unchanged sentences

As of 30 September 2023 and 2022, our consolidated balance sheets included related party trade receivables of approximately $ 80 and $ 55 , respectively.

In addition, refer to Note 14, Debt , for information concerning debt owed to related parties.

Refer to Note 16, Debt , for information concerning debt owed to related parties.

Facility Closure

1 unchanged sentence

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 the results of the Americas segment.

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.

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.

Supplemental Balance Sheet Information

2 unchanged sentences

Derivative instruments $ 73.5 $ 114.4

Value added tax receivable 209.6 94.2

Contract fulfillment costs 89.0 84.1

1 unchanged sentence

Current lease receivables 78.0 77.8

Current financing receivables 50.0 —

Other 97.3 76.3

2 unchanged sentences

30 September 2023 2022

Operating lease right-of-use assets $ 694.7 $ 566.2

Pension benefits $ 120.0 $ 133.9

3 unchanged sentences

Investments other than equity method 66.9 66.7

Deferred financing fees 58.8 —

Derivative instruments 320.6 74.7

1 unchanged sentence

Other noncurrent assets $ 1,229.9 $ 947.0

Table of Conte n t s

Payables and Accrued Liabilities

4 unchanged sentences

Accrued payroll and employee benefits 284.4 249.1

Obligation for future contribution to an equity affiliate — 150.0

Accrued interest 106.4 64.7

Current lease obligations 94.7 90.0

5 unchanged sentences

30 September 2023 2022

Operating lease liabilities $ 592.1 $ 503.4

Asset retirement obligations $ 285.1 $ 265.0

9 unchanged sentences

Other noncurrent liabilities $ 1,118.0 $ 1,099.1

Table of Conte n t s

BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

During the fiscal year ended 30 September 2022, we managed our operations, assessed performance, and reported earnings under the following reporting segments:

During the fiscal year ended 30 September 2023, we managed our operations, assessed performance, and reported earnings under the following reportable segments:

• Middle East and India;

• Corporate and other

Our reporting segments reflect the manner in which our chief operating decision maker reviews results and allocates resources.

We evaluate the performance of our segments based upon reported segment operating income.

Except for the Corporate and other segment, each reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

Our reportable segments reflect the manner in which our chief operating decision maker reviews results and allocates resources.

We evaluate the performance of our segments based upon segment operating income.

Except for the Corporate and other segment, each reportable segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

Our Corporate and other segment includes the aggregation of three operating segments that meet the aggregation criteria under GAAP.

3 unchanged sentences

Our industrial gas portfolio includes atmospheric gases such as oxygen, nitrogen, and argon;

process gases such as hydrogen, helium, carbon dioxide (CO 2 ), and carbon monoxide, as well as a mixture of hydrogen and carbon monoxide, or "syngas;" and specialty gases.

Our regional industrial gas businesses also develop, build, and operate equipment such as air separation units and non-cryogenic generators for the production or processing of gases.

process gases such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas (a mixture of hydrogen and carbon monoxide), and specialty gases.

We offer our industrial gas products through a variety of supply modes as described in Note 6, Revenue Recognition .

The industrial gases business develops, builds, and operates equipment for the production or processing of gases.

Electricity is the largest cost component in the production of atmospheric gases.

Steam methane reformers utilize natural gas as the primary raw material, and gasifiers use liquid and solid hydrocarbons as the principal raw material for the production of hydrogen, carbon monoxide, and syngas.

We mitigate energy, natural gas, and hydrocarbon price fluctuations contractually through pricing formulas, surcharges, and cost pass-through and tolling arrangements.

Our regional industrial gas segments also include our share of the results of several joint ventures accounted for by the equity method.

To produce hydrogen, carbon monoxide, and syngas, steam methane reformers use natural gas as the primary raw material, while gasifiers use liquid and solid hydrocarbons as the primary raw material.

We mitigate electricity, natural gas, and hydrocarbon price fluctuations contractually through pricing formulas, surcharges, cost pass-through provisions, and tolling arrangements.

Our regional industrial gas segments include our share of the results of several joint ventures accounted for under the equity method.

The largest of these joint ventures operate in China, India, Italy, Mexico, Saudi Arabia, South Africa, and Thailand.

Each of the regional industrial gases segments competes against global industrial gas companies as well as regional competitors.

Competition is based primarily on price, reliability of supply, and the development of industrial gas applications.

We derive a competitive advantage in locations where we have pipeline networks, which enable us to provide reliable and economic supply of products to larger customers.

Competition in industrial gases is based primarily on price, reliability of supply, and the development of industrial gas applications.

We derive a competitive advantage in locations where we have pipeline networks, which enable us to provide reliable and economic supply of products to our larger customers.

Corporate and other

7 unchanged sentences

We do not have a homogeneous customer base or end market, and no single customer accounts for more than 10% of our consolidated sales.

Table of Conte n t s

Business Segment Information

Americas Asia Europe Middle East

and India Corporate

and other Total

Americas Asia Europe Middle East and India Corporate and other Total

Sales $ 5,369.3 $ 3,216.1 $ 2,963.1 $ 162.5 $ 889.0 $ 12,600.0 (A)

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(B) Refer to the Reconciliations to Consolidated Results section below.

(C) Segment information presented for fiscal years 2021 and 2020 has been updated to reflect the reorganization of our reporting segments effective 1 October 2021.

The reorganization included the separation of our former Industrial Gases – EMEA (Europe, Middle East, and Africa) segment into two separate reporting segments:

(1) Europe and (2) Middle East and India.

The results of an affiliate formerly reflected in the Asia segment are now reported in the Middle East and India segment.

Additionally, the results of our Industrial Gases – Global operating segment are reflected in the Corporate and other segment.

The reorganization did not impact the Americas segment.

Reconciliations to Consolidated Results

7 unchanged sentences

Gain on exchange with joint venture partner — — 36.8

Company headquarters relocation income (expense) — — 33.8

Consolidated Operating Income $ 2,494.6 $ 2,338.8 $ 2,281.4

5 unchanged sentences

Equity method investment impairment charge — ( 14.8 ) —

India Finance Act 2020 — — 33.8

Consolidated Equity Affiliates' Income $ 604.3 $ 481.5 $ 294.1

Table of Conte n t s

Geographic Information

11 unchanged sentences

China 3,744.7 3,886.0 4,137.7

Saudi Arabia 1,818.1 595.7 29.0

Other foreign operations 4,478.3 3,656.8 3,900.1

1 unchanged sentence

(A) "Long-lived assets" represents plant and equipment, net.

Table of Conte n t s

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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