10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

PRAXAIR, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of incorporation)

1-11037	06-1249050
(Commission File Number)	(IRS Employer Identification No.)
39 OLD RIDGEBURY ROAD, DANBURY, CT	06810-5113
(Address of principal executive offices)	(Zip Code)

(203) 837-2000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x            Accelerated filer  ¨            Non-accelerated filer  ¨            Smaller reporting company  ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At June 30, 2009, 306,796,799 shares of common stock ($0.01 par value) of the Registrant were outstanding.

INDEX

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income - Praxair, Inc. and Subsidiaries Quarter Ended June 30, 2009 and 2008 (Unaudited)	3
	Consolidated Statements of Income - Praxair, Inc. and Subsidiaries Six Months Ended June 30, 2009 and 2008 (Unaudited)	4
	Condensed Consolidated Balance Sheets - Praxair, Inc. and Subsidiaries June 30, 2009 and December 31, 2008 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows - Praxair, Inc. and Subsidiaries Six Months Ended June 30, 2009 and 2008 (Unaudited)	6
	Consolidated Statement of Equity - Praxair, Inc. and Subsidiaries Six Months Ended June 30, 2009 (Unaudited)	7
	Consolidated Statement of Equity - Praxair, Inc. and Subsidiaries Six Months Ended June 30, 2008 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements - Praxair, Inc. and Subsidiaries (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Submission of Matters to a Vote of Security Holders	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
Signature		36

2

PRAXAIR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)

	Quarter Ended June 30,
	2009			2008
SALES	$	2,138		$	2,878
Cost of sales, exclusive of depreciation and amortization		1,190			1,748
Selling, general and administrative		265			341
Depreciation and amortization		207			216
Research and development		18			24
Other income (expense) - net		(11	)		(6	)
OPERATING PROFIT		447			543
Interest expense - net		33			52
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS		414			491
Income taxes		109			137
INCOME BEFORE EQUITY INVESTMENTS		305			354
Income from equity investments		6			8
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)		311			362
Less: noncontrolling interests		(12	)		(13	)
NET INCOME - PRAXAIR, INC.	$	299		$	349
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Basic earnings per share	$	0.97		$	1.11
Diluted earnings per share	$	0.96		$	1.08
Cash dividends per share	$	0.40		$	0.375
WEIGHTED AVERAGE SHARES OUTSTANDING (000’s):
Basic shares outstanding		307,957			315,312
Diluted shares outstanding		312,429			322,088

The accompanying notes are an integral part of these financial statements.

3

PRAXAIR, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)

	Six Months Ended June 30,
	2009			2008
SALES	$	4,261		$	5,541
Cost of sales, exclusive of depreciation and amortization		2,385			3,343
Selling, general and administrative		530			676
Depreciation and amortization		406			426
Research and development		36			48
Pension settlement charge		—			17
Other income (expense) - net		(15	)		(6	)
OPERATING PROFIT		889			1,025
Interest expense - net		68			99
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS		821			926
Income taxes		223			259
INCOME BEFORE EQUITY INVESTMENTS		598			667
Income from equity investments		11			17
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)		609			684
Less: noncontrolling interests		(20	)		(28	)
NET INCOME - PRAXAIR, INC.	$	589		$	656
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Basic earnings per share	$	1.91		$	2.09
Diluted earnings per share	$	1.89		$	2.04
Cash dividends per share	$	0.80		$	0.75
WEIGHTED AVERAGE SHARES OUTSTANDING (000’s):
Basic shares outstanding		307,887			314,624
Diluted shares outstanding		312,021			321,245

The accompanying notes are an integral part of these financial statements.

4

PRAXAIR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

(UNAUDITED)

	June 30, 2009		December 31, 2008
ASSETS
Cash and cash equivalents	$	33	$	32
Accounts receivable - net		1,555		1,604
Inventories		423		445
Prepaid and other current assets		181		220
TOTAL CURRENT ASSETS		2,192		2,301
Property, plant and equipment (less accumulated depreciation of $8,864 at June 30, 2009 and $8,341 at December 31, 2008)		8,435		7,922
Goodwill		1,953		1,909
Other intangible assets - net		119		121
Other long-term assets		887		801
TOTAL ASSETS	$	13,586	$	13,054
LIABILITIES AND EQUITY
Accounts payable	$	721	$	820
Short-term debt		393		642
Current portion of long-term debt		692		674
Other current liabilities		670		843
TOTAL CURRENT LIABILITIES		2,476		2,979
Long-term debt		4,022		3,709
Other long-term obligations		2,142		2,055
TOTAL LIABILITIES		8,640		8,743
Commitments and contingencies (Note 10)
EQUITY
Praxair, Inc. Shareholders’ equity		4,638		4,009
Noncontrolling interests		308		302
TOTAL EQUITY		4,946		4,311
TOTAL LIABILITIES AND EQUITY	$	13,586	$	13,054

The accompanying notes are an integral part of these financial statements.

5

PRAXAIR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)

(UNAUDITED)

	Six Months Ended June 30,
	2009			2008
OPERATIONS
Net income - Praxair, Inc.	$	589		$	656
Noncontrolling interests		20			28
Net income (including noncontrolling interests)	$	609		$	684
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		406			426
2008 Cost reduction program, payments		(28	)		—
Deferred income taxes		29			11
Share-based compensation		19			22
Accounts receivable		47			(269	)
Inventory		19			(33	)
Prepaid and other current assets		14			(25	)
Payables and accruals		(246	)		95
Pension contributions		(9	)		(13	)
Other		52			(130	)
Net cash provided by operating activities		912			768
INVESTING
Capital expenditures		(663	)		(724	)
Acquisitions		(11	)		(70	)
Divestitures and asset sales		13			46
Net cash used for investing activities		(661	)		(748	)
FINANCING
Short-term debt borrowings - net		(272	)		108
Long-term debt borrowings		833			918
Long-term debt repayments		(504	)		(670	)
Issuances of common stock		37			154
Purchases of common stock		(85	)		(332	)
Cash dividends - Praxair, Inc. shareholders		(246	)		(236	)
Excess tax benefit on stock option exercises		6			44
Noncontrolling interest transactions and other		(22	)		—
Net cash used for financing activities		(253	)		(14	)
Effect of exchange rate changes on cash and cash equivalents		3			4
Change in cash and cash equivalents		1			10
Cash and cash equivalents, beginning-of-period		32			17
Cash and cash equivalents, end-of-period	$	33		$	27

The accompanying notes are an integral part of these financial statements.

6

PRAXAIR, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(Millions of dollars, except per share data, shares in thousands)

(UNAUDITED)

	Praxair, Inc. Shareholders’ Equity																				Noncontrolling Interests			Total Equity
	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss) (b)			Treasury Stock					Praxair, Inc. Shareholders’ Equity
Activity	Shares	Amounts											Shares		Amounts
Balance, January 1, 2009	377,026	$	4	$	3,328		$	6,068		$	(1,768	)	70,165		$	(3,623	)	$	4,009		$	302		$	4,311
Net Income								589											589			20			609
Translation Adjustments											307								307			—			307
Derivative Instruments, net of $3 million taxes											7								7						7
Funded Status - retirement obligations, net of $1 million taxes											(2	)							(2	)					(2	)
Comprehensive income (a)																			901			20			921
Dividends to Praxair, Inc common stock ($0.80 per share)								(246	)										(246	)					(246	)
Dividends to noncontrolling interests																						(16	)		(16	)
Contributions from noncontrolling interests																						5			5
Purchases of noncontrolling interests					(8	)													(8	)		(5	)		(13	)
Sales of noncontrolling interests																						2			2
Issuances of common stock:
For the dividend reinvestment and stock purchase plan	54				4														4						4
For employee savings and incentive plans	895				25								(233	)		15			40						40
Purchases of common stock													1,246			(88	)		(88	)					(88	)
Tax benefit from stock options					7														7						7
Share-based compensation					19														19						19
Balance, June 30, 2009	377,975	$	4	$	3,375		$	6,411		$	(1,456	)	71,178		$	(3,696	)	$	4,638		$	308		$	4,946

(a) The components of comprehensive income are as follows:

	Quarter ended June 30, 2009
Net income (including noncontrolling interests)	$	311
Cumulative translation adjustments		461
Derivative instruments		1
Pension/OPEB funded status obligation		(8	)
		765
Less: noncontrolling interests		21
Comprehensive income - Praxair, Inc.	$	744

(b) The components of accumulated other comprehensive income (loss) are as follows:

	June 30, 2009			December 31, 2008
Cumulative translation adjustments (CTA)	$	(988	)	$	(1,295	)
Derivative instruments		4			(3	)
Pension/OPEB funded status obligation		(459	)		(457	)
		(1,443	)		(1,755	)
Less: noncontrolling interests (CTA)		13			13
AOCI - Praxair, Inc.	$	(1,456	)	$	(1,768	)

The accompanying notes are an integral part of these financial statements.

7

PRAXAIR, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(Millions of dollars, except per share data, shares in thousands)

(UNAUDITED)

Activity	Praxair, Inc. Shareholders’ Equity																			Noncontrolling Interests			Total Equity
	Common Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss) (b)			Treasury Stock					Praxair, Inc. Shareholders’ Equity
	Shares	Amounts										Shares		Amounts
Balance, January 1, 2008	373,145	$	4	$	3,074	$	5,325			($672	)	57,657			($2,589	)	$	5,142		$	321		$	5,463
Net Income							656											656			28			684
Translation Adjustments										229								229			13			242
Derivative Instruments, net of $2 million taxes										(5	)							(5	)					(5	)
Funded Status - retirement obligations, net of $9 million taxes										14								14						14
Comprehensive income (a)																		894			41			935
Dividends to Praxair, Inc common stock ($0.75 per share)							(236	)										(236	)					(236	)
Dividends to noncontrolling interests																					(19	)		(19	)
Purchases of noncontrolling interests																					(9	)		(9	)
Sales of noncontrolling interests																					(17	)		(17	)
Issuances of common stock:
For the dividend reinvestment and stock purchase plan	42				4													4						4
For employee savings and incentive plans	3,085				114							(717	)		40			154						154
Purchases of common stock												4,347			(359	)		(359	)					(359	)
Tax benefit from stock options					50													50						50
Share-based compensation					22													22						22
Balance, June 30, 2008	376,272	$	4	$	3,264	$	5,745		$	(434	)	61,287		$	(2,908	)	$	5,671		$	317		$	5,988

(a) The components of comprehensive income are as follows:

	Quarter ended June 30, 2008
Net income (including noncontrolling interests)	$	362
Cumulative translation adjustments		140
Derivative instruments		1
Pension/OPEB funded status obligation		7
		510
Less: noncontrolling interests		13
Comprehensive income - Praxair, Inc.	$	497

(b) The components of accumulated other comprehensive income (loss) are as follows:

	June 30, 2008			December 31, 2007
Cumulative translation adjustments (CTA)	$	(174	)	$	(416	)
Derivative instruments		(5	)		—
Pension/OPEB funded status obligation		(221	)		(235	)
		(400	)		(651	)
Less: noncontrolling interests (CTA)		34			21
AOCI - Praxair, Inc.	$	(434	)	$	(672	)

The accompanying notes are an integral part of these financial statements.

8

PRAXAIR, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Summary of Significant Accounting Policies

Presentation of Condensed Consolidated Financial Statements - In the opinion of Praxair, Inc. (Praxair) management, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods presented and such adjustments are of a normal recurring nature. The accompanying condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements of Praxair, Inc. and subsidiaries in Praxair’s 2008 Annual Report on Form 10-K. There have been no material changes to the company’s significant accounting policies during 2009. Praxair evaluated subsequent events up to July 29, 2009, the date the financial statements are issued.

Accounting Standards Implemented in 2009

The following standards were all effective for Praxair in 2009:

• SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” requires noncontrolling interests (previously referred to as minority interests) in subsidiaries to be classified as a separate component of equity in the consolidated financial statements. The new standard also requires the amounts of net income and comprehensive income attributable to the noncontrolling interests to be included in consolidated net income on the face of the statement of income and comprehensive income, respectively, and requires various additional disclosures related to noncontrolling interests. SFAS No. 160 requires changes in ownership interest that result either in consolidation or deconsolidation to be recorded at fair value through earnings, including the retained ownership interest, while changes that do not result in either consolidation or deconsolidation of a subsidiary are treated as equity transactions. Also, in accordance with the transition provisions, prior year’s presentations and disclosures have been retrospectively adjusted to conform with SFAS No.160. Effective in 2009, transactions with noncontrolling interests are accounted for and disclosed in accordance with SFAS No.160.

• SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133,” requires enhanced disclosures on the effect of derivatives on a company’s consolidated financial statements. See Note 5 for required disclosures.

• FSP FAS 107-1, “Interim Disclosures about Fair Value of Financial Instruments” an amendment of FASB Statement No. 107, requires disclosures about fair value of financial instruments in interim financial information for periods ending after June 15, 2009. See Note 5 for required disclosures. At the time Praxair adopted FSP FAS 107-1, the following standards, which did not have an impact, were also required to be adopted: FSP FAS 157-4, “Determining Whether a Market Is Not Active and a Transaction Is Not Distressed”, and FSP FAS 115-2, FAS 124-2, and EITF 99-20-2, “Recognition and Presentation of Other-Than-Temporary Impairments.”

• SFAS No. 165, “Subsequent Events” establishes accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued and requires the disclosure of the date through which a company has evaluated subsequent events. This statement is effective for Praxair for the period ended June 30, 2009 and the adoption did not have an impact on the condensed consolidated financial statements. See the section captioned “Presentation of the Condensed Consolidated Financial Statements” for required disclosures.

9

The following standards were also effective for Praxair in 2009 and their adoption did not have an impact on the condensed consolidated financial statements. Refer to Note 1 to the consolidated financial statements of Praxair’s 2008 Annual Report on Form 10-K for a summary of these standards:

• SFAS No. 157, “Fair Value Measurements” as it relates to non-financial assets and liabilities that are recognized at fair value in the financial statements on a non-recurring basis.

• SFAS No. 141(R), “Business Combinations,”

• EITF 07-1, “Accounting for Collaborative Arrangements,” and;

• EITF 08-6, “Equity Method Investment Accounting Considerations.”

Accounting Standards to Be Implemented

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets,” which changes the way entities account for securitizations. The new standard is effective for Praxair on January 1, 2010 and the adoption is not expected to have a significant impact on the consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),” which changes the way entities account for special-purpose entities. The new standard is effective for Praxair on January 1, 2010 and the adoption is not expected to have a significant impact on the consolidated financial statements.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162.” The Codification is effective July 1, 2009 at which point all then-existing non-SEC accounting and reporting standards will be superseded. The references to the Codification will be reflected in Praxair’s third quarter 2009 consolidated financial statements. This will not have an impact to the consolidated financial statements.

Reclassifications – Certain prior years’ amounts have been reclassified to conform to the current year’s presentation. Such reclassifications relate primarily to the presentation of noncontrolling interests in the condensed consolidated financial statements, as required by SFAS No. 160.

2. 2008 Cost Reduction Program

In the fourth quarter 2008, Praxair recorded pre-tax charges totaling $118 million relating to severance for approximately 1,675 employees and other exit costs associated with a global cost reduction program which was initiated in response to the continuing economic downturn. At June 30, 2009, 1,486 of these positions have been eliminated. The remaining actions are planned to be completed in 2009 primarily as businesses are sold or shut down.

The following table summarizes the activity related to the company’s cost reduction program accrual for the six months ended June 30, 2009:

(Millions of dollars)	Severance Costs			Costs associated with Exit or Disposal Activities			Total Cost Reduction Program
Balance, January 1, 2009	$	42		$	7		$	49
Less: Cash payments		(26	)		(2	)		(28	)
Foreign currency translation & other		(1	)		(1	)		(2	)
Balance, June 30, 2009	$	15		$	4		$	19

For further details regarding the cost reduction program, refer to Note 2 to the consolidated financial statements of Praxair’s 2008 Annual Report on Form 10-K.

10

3. Inventories

The following is a summary of Praxair’s consolidated inventories:

(Millions of dollars)	June 30, 2009		December 31, 2008
Raw materials and supplies	$	152	$	141
Work in process		57		54
Finished goods		214		250
	$	423	$	445

11

4. Debt

The following is a summary of Praxair’s outstanding debt at June 30, 2009 and December 31, 2008:

(Millions of dollars)	June 30, 2009			December 31, 2008
SHORT-TERM
Commercial paper and U.S. bank borrowings	$	89		$	243
European borrowings		28			18
Canadian borrowings		78			194
South American borrowings		10			—
Asian borrowings		171			168
Other international borrowings		17			19
Total short-term debt		393			642
LONG-TERM
U.S. borrowings
Commercial Paper (c)		664			1,137
Floating Rate Notes due 2010 (c, e)		500			—
6.375% Notes due 2012 (a, b)		512			514
3.95% Notes due 2013 (a)		350			350
4.375% Notes due 2014 (a, d)		299			—
5.25% Notes due 2014 (a)		400			400
4.625% Notes due 2015 (a)		500			500
5.375% Notes due 2016 (a)		400			400
5.20% Notes due 2017 (a)		325			325
Other		8			8
European borrowings		637			642
South American borrowings		67			52
Asian borrowings		46			48
Obligations under capital lease		6			7
		4,714			4,383
Less: current portion of long-term debt		(692	)		(674	)
Total long-term debt		4,022			3,709
Total debt	$	5,107		$	5,025

(a) Amounts are net of unamortized discounts.

(b) June 30, 2009 and December 31, 2008 include a $13 million and $15 million fair value increase, respectively, related to SFAS 133 hedge accounting. See Note 5 for additional information.

(c) Classified as long-term because of the company’s intent to refinance this debt on a long-term basis and the availability of such financing under the terms of existing agreements.

(d) On March 26, 2009, Praxair issued $300 million of 4.375% notes due 2014. The proceeds were used to repay short-term debt and for general corporate purposes.

(e) On May 26, 2009, Praxair issued $500 million of floating rate notes due 2010. The notes bear interest at a rate of three-month LIBOR plus 0.09% (0.75% at June 30, 2009). The proceeds were used to repay short-term debt and for general corporate purposes.

12

5. Financial Instruments

In its normal operations, Praxair is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, energy costs and to a lesser extent precious metal prices. The objective of financial risk management at Praxair is to minimize the negative impact of such fluctuations on the company’s earnings and cash flows. To manage these risks, among other strategies, Praxair routinely enters into various derivative financial instruments (“derivatives”) including interest-rate swap and treasury rate lock agreements, currency-swap agreements, forward contracts, currency options, and commodity-swap agreements. These instruments are not entered into for trading purposes and Praxair only uses commonly traded and non-leveraged instruments.

There are two types of derivatives that the company enters into: (i) those relating to fair-value exposures, and (ii) those relating to cash-flow exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; while cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions.

When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge or a cash-flow hedge. Currently, Praxair designates all interest-rate, treasury rate lock and commodity-swap agreements as hedges for accounting purposes; however, currency contracts are generally not designated as hedges for accounting purposes unless they are related to forecasted transactions. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective, then hedge accounting will be discontinued prospectively.

Counterparties to Praxair’s derivatives are major banking institutions with credit ratings of investment grade or better and no collateral is required, and there are no significant risk concentrations. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any losses would be immaterial.

The following table is a summary of the notional amount and fair value of derivatives outstanding at June 30, 2009 and December 31, 2008 for consolidated subsidiaries (all maturities are within one year):

	Notional Amounts				Fair Value (a)
					Assets				Liabilities
(Millions of dollars)	June 30, 2009		December 31, 2008		June 30, 2009		December 31, 2008		June 30, 2009		December 31, 2008
Derivatives Not Designated as Hedging Instruments:
Currency contracts:
Balance sheet items	$	933	$	616	$	11	$	3	$	2	$	24
Anticipated net income		77		20		—		5		8		—
Total	$	1,010	$	636	$	11	$	8	$	10	$	24
Derivatives Designated as Hedging Instruments:
Currency contracts:
Forecasted purchases	$	9	$	—	$	—	$	—	$	—	$	—
Interest rate contracts:
Treasury rate locks		—		500		—		6		—		—
Total	$	9	$	500	$	—	$	6	$	—	$	—
Total Derivatives	$	1,019	$	1,136	$	11	$	14	$	10	$	24

(a) Assets are recorded in prepaid and other current assets, and liabilities are recorded in other current liabilities.

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Currency Contracts

Balance Sheet Items

Foreign currency contracts related to balance sheet items consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on recorded balance sheet assets and liabilities denominated in currencies other than the functional currency of the related operating unit. The fair value adjustments on these contracts are offset by the fair value adjustments recorded on the hedged assets and liabilities.

Anticipated Net Income

The anticipated net income hedge contracts consist of forward contracts and, at June 30, 2009 relate to anticipated net income in Brazil and Europe (at December 31, 2008 they relate to anticipated net income in Brazil). Over the term of the contracts, the fair value adjustments from net-income hedging contracts are largely offset by the impacts on reported net income resulting from the currency translation process. SFAS No. 133 does not allow hedges of anticipated net income to be designated as hedging instruments.

Forecasted Purchases

Foreign currency contracts related to forecasted purchases consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on forecasted purchases of capital-related equipment and services denominated in currencies other than the functional currency of the related operating units. These forward contracts were designated and accounted for as cash flow hedges in accordance with the provisions of SFAS No. 133.

Interest Rate Contracts

Treasury Rate Locks

In December 2008, Praxair entered into treasury rate lock contracts totaling $500 million notional amount to hedge the cash flow exposure attributable to the changes in the treasury rate portion of the interest rate on a forecasted debt issuance. The treasury rate locks were designated as and accounted for as cash flow hedges in accordance with the provisions of SFAS No. 133. In January 2009, the company settled the treasury rate locks and received a cash payment of $16 million ($10 million net of taxes) which was recorded as a gain in accumulated other comprehensive income (AOCI). The gain in AOCI will be reclassified to earnings over the term of the debt, once issued.

In February 2008, Praxair entered into a treasury rate lock to hedge the cash flow exposure attributable to the $500 million of 4.625% notes issued on March 7, 2008. The treasury rate lock was accounted for as a cash flow hedge with the resulting fair value adjustments recorded in AOCI. The treasury rate lock was settled at a loss of $7 million ($4 million net of taxes) which was recorded in AOCI and is currently being reclassified to earnings as an increase to interest expense over the remaining term of the underlying debt.

Interest Rate Swaps

During 2002, Praxair entered into and terminated $500 million notional amount of interest-rate swap agreements that effectively converted fixed-rate interest to variable-rate interest on the $500 million 6.375% notes that mature in April 2012. The termination resulted in a cash gain of $47 million, which Praxair recognized in earnings and was equally offset with a charge to earnings for the changes in the fair value of the underlying debt instrument. This debt increase of $47 million is being recognized in earnings as a reduction to interest expense over the remaining term of the underlying debt, or about ten years. In each of the quarters ended June 30, 2009 and 2008, $1 million was recognized as a reduction to interest expense and $13 million remains unrecognized at June 30, 2009 ($15 million at December 31, 2008) and is shown as an increase to long-term debt (not in the tables that follow).

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The following table summarizes the impacts of the Company’s derivatives on the consolidated statement of income and AOCI for the quarters ended June 30, 2009 and 2008:

	Amount of Pre-Tax Gain (Loss) Recognized in Earnings (a)
	Quarter ended June 30,						Six months ended June 30,
(Millions of dollars)	2009			2008			2009			2008
Derivatives Not Designated as Hedging Instruments
Currency contracts:
Balance sheet items
Debt-related	$	21		$	(11	)	$	1		$	(8	)
Other balance sheet items		2			(2	)		3			(3	)
Anticipated net income		(16	)		(4	)		(13	)		(7	)
Total	$	7		$	(17	)	$	(9	)	$	(18	)
	Amount of Pre-Tax Gain (Loss) Recognized in AOCI (b)
	Quarter ended June 30,						Six months ended June 30,
(Millions of dollars)	2009			2008			2009			2008
Derivatives Designated as Hedging Instruments
Currency contracts:
Forecasted purchases (c)	$	—		$	—		$	—		$	—
Interest rate contracts:
Treasury rate locks		—			—			10			(7	)
Interest rate swaps (d)		—			2			—			—
Total	$	—		$	2		$	10		$	(7	)

(a) Balance sheet items offset by gains (losses) recorded on the underlying hedged assets and liabilities. The gains (losses) for the derivatives and the underlying hedged assets and liabilities related to debt items are recorded in the consolidated statement of income as interest expense-net. Other balance sheet items and anticipated net income gains (losses) are recorded in the consolidated statement of income as other income (expense)-net.

(b) The gains (losses) for interest rate contracts are reclassified to earnings as interest expense-net. The amount of gains (losses) reclassified to earnings for the quarters and six-month periods ended June 30, 2009 and 2008 was less than $1 million. There was no ineffectiveness.

(c) The amount recognized in AOCI during the periods was less than $1 million.

(d) A Praxair joint venture in China which is accounted for as an equity investment has an interest rate swap totaling $60 million notional amount. A portion of the fair value adjustment on the interest rate swaps representing Praxair’s ownership interest in the joint venture has been recorded in AOCI.

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Fair Value Disclosures

SFAS No. 157 establishes a fair value hierarchy for disclosure of fair value measurements as follows:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

The following table summarizes assets and liabilities measured at fair value on a recurring basis at June 30, 2009:

	Fair Value Measurements Using					Total
(Millions of dollars)	Level 1		Level 2		Level 3
Assets
Derivative assets		—	$	11	—	$	11
Investments	$	6		—	—	$	6
Total	$	6	$	11	—	$	17
Liabilities
Derivative liabilities		—	$	10	—	$	10

The fair values of the derivative assets and liabilities are based on market prices obtained from independent brokers or determined using quantitative models that use as their basis readily observable market parameters that are actively quoted and can be validated through external sources, including third-party pricing services, brokers and market transactions. Investments are marketable securities traded on an exchange.

The fair values of cash and cash equivalents, short-term debt, accounts receivables-net, and accounts payable approximate carrying amounts because of the short maturities of these instruments. The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues. At June 30, 2009, the estimated fair value of Praxair’s long-term debt portfolio was $4,849 million versus a carrying value of $4,714 million. At December 31, 2008, the estimated fair value of Praxair’s long-term debt portfolio was $4,456 million versus a carrying value of $4,383 million. Differences from carrying amounts are attributable to interest-rate changes subsequent to when the debt was issued.

6. Earnings Per Share

Basic earnings per share is computed by dividing Net Income - Praxair, Inc. for the period by the weighted average number of Praxair common shares outstanding. Diluted earnings per share is computed by dividing Net Income - Praxair, Inc. for the period by the weighted average number of Praxair common shares outstanding and dilutive common stock equivalents, as follows:

	Quarter Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
NUMERATOR (Millions of dollars)
Net Income - Praxair, Inc.	$	299	$	349	$	589	$	656
DENOMINATOR (Thousands of shares)
Weighted average shares outstanding		307,269		314,504		307,205		313,809
Shares earned and issuable under compensation plans		688		808		682		815
Weighted average shares used in basic earnings per share		307,957		315,312		307,887		314,624
Effect of dilutive securities
Performance-based and restricted stock awards		110		200		131		177
Employee stock options		4,362		6,576		4,003		6,444
Weighted average shares used in diluted earnings per share		312,429		322,088		312,021		321,245
BASIC EARNINGS PER COMMON SHARE	$	0.97	$	1.11	$	1.91	$	2.09
DILUTED EARNINGS PER COMMON SHARE	$	0.96	$	1.08	$	1.89	$	2.04

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Stock options of 3,246,115 were antidilutive and therefore excluded in the computation of diluted earnings per share for the quarter and six months ended June 30, 2009. No stock options were excluded in the computation for the quarter and six months ended June 30, 2008.

7. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the six months ended June 30, 2009 were as follows:

(Millions of dollars)	North America			South America		Europe			Asia		Surface Technologies			Total
Balance, December 31, 2008	$	1,272		$	165	$	357		$	30	$	85		$	1,909
Acquisitions		2			—		—			—		—			2
Purchase adjustments & other		(3	)		—		4			—		(5	)		(4	)
Foreign currency translation		10			38		(3	)		—		1			46
Balance, June 30, 2009	$	1,281		$	203	$	358		$	30	$	81		$	1,953

SFAS No. 142, “Goodwill and Other Intangible Assets,” requires the company to perform an assessment at least annually as to whether there is an indication that the carrying value of goodwill is impaired at the reporting unit level. The annual impairment tests for 2009 and 2008 were performed during the second quarter of each year and no impairments were indicated.

Changes in the carrying amounts of other intangibles for the six months ended June 30, 2009 were as follows:

(Millions of dollars)	Customer & License/Use Agreements			Non-compete Agreements			Patents & Other			Total
Cost:
Balance, December 31, 2008	$	141		$	37		$	10		$	188
Additions		5			1			—			6
Foreign currency translation		1			—			—			1
Other		(2	)		(5	)		—			(7	)
Balance, June 30, 2009	$	145		$	33		$	10		$	188
Less: Accumulated amortization
Balance, December 31, 2008	$	(40	)	$	(21	)	$	(6	)	$	(67	)
Amortization expense		(7	)		(2	)		—			(9	)
Other		2			5			—			7
Balance, June 30, 2009	$	(45	)	$	(18	)	$	(6	)	$	(69	)
Net balance at June 30, 2009	$	100		$	15		$	4		$	119

There are no expected residual values related to these intangible assets. The remaining weighted-average amortization period for intangible assets is approximately 10 years. Total estimated annual amortization expense is $10 million for the remainder of 2009; $17 million, $15 million, $14 million and $12 million for the years ended December 31, 2010, 2011, 2012 and 2013, respectively; and $51 million thereafter.

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8. Share-Based Compensation

The company accounts for share-based compensation under the provisions of Statement of Financial Accounting Standard No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R). Share-based compensation of $10 million ($7 million after tax) and $11 million ($8 million after tax) was recognized during the quarters ended June 30, 2009 and 2008, respectively. Share-based compensation of $19 million ($13 million after tax) and $22 million ($16 million after tax) was recognized for the six months ended June 30, 2009 and 2008, respectively. The expense was primarily recorded in selling, general and administrative expenses. There was no share-based compensation cost that was capitalized. For further details regarding Praxair’s share-based compensation arrangements and prior year grants, refer to Note 16 to the consolidated financial statements of Praxair’s 2008 Annual Report on Form 10-K.

Beginning in 2009, the company changed the composition of its long-term incentives awarded to employees. The company increased the amount of restricted and performance-based stock and decreased the amount of stock options granted to employees.

Stock Options

The weighted-average fair value of options granted during the six months ended June 30, 2009 and 2008 was $8.05 and $11.53, respectively, based on the Black-Scholes Options-Pricing model. The following weighted-average assumptions were used for grants in 2009 and 2008:

	Six Months Ended June 30,
	2009		2008
Dividend yield	2.6	%	1.8	%
Volatility	18.7	%	13.9	%
Risk-free interest rate	1.9	%	3.0	%
Expected term in years	5		5

The following table summarizes option activity under the plans as of June 30, 2009 and changes during the six-month period then ended (averages are calculated on a weighted basis; life in years; intrinsic value expressed in millions):

Activity	Number of Options (000’s)		Average Exercise Price		Average Remaining Life	Aggregate Intrinsic Value
Outstanding at January 1, 2009	18,927		$	50.68
Granted	2,194			60.92
Exercised	(833	)		34.35
Cancelled or expired	(98	)		68.77
Outstanding at June 30, 2009	20,190			52.37	6.3	$	378
Exercisable at June 30, 2009	14,514		$	45.41	5.3	$	372

The aggregate intrinsic value represents the difference between the company’s closing stock price of $71.07 as of June 30, 2009 and the exercise price multiplied by the number of options outstanding as of that date. The total intrinsic value of stock options exercised during the quarter and six months ended June 30, 2009 was $16 million and $30 million, respectively ($141 million and $174 million for the same time periods in 2008, respectively).

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Cash received from option exercises under all share-based payment arrangements for the quarter and six months ended June 30, 2009 was $17 million and $28 million, respectively ($84 million and $106 million for the same time periods in 2008, respectively). The cash tax benefit realized from stock option exercises totaled $4 million and $8 million for the quarter and six months ended June 30, 2009, of which $6 million in excess tax benefits was classified as financing cash flows ($43 million and $50 million for the same time periods in 2008, respectively).

As of June 30, 2009, $38 million of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 1.5 years.

Performance- Based and Restricted Stock Awards

During February 2009, the company granted 69,900 restricted stock units and 412,240 performance-based stock units to employees, which vest at the end of a three-year service period. For the performance-based stock units the actual number of shares issued can range from zero to 150 percent of the units granted based on the actual performance levels achieved.

Compensation expense related to the restricted stock and performance-based stock units is recognized on a straight-line basis over the three-year vesting period. Compensation expense related to performance-based stock units will be adjusted during the performance period based upon the estimated performance levels that will be achieved. The fair value of restricted stock and performance-based stock units granted in February 2009 was $56.31. This is based on the closing market price of the Company’s common stock on the date of grant adjusted for dividends that will not be paid during the vesting period.

The following table summarizes non-vested performance-based and restricted stock award activity as of June 30, 2009 and changes during the period then ended (shares based on target amounts, averages are calculated on a weighted basis):

	Performance-Based				Restricted Stock
Performance-Based and Restricted Stock Activity	Number of Shares (000’s)		Average Grant Date Fair Value		Number of Shares (000’s)	Average Grant Date Fair Value
Non-vested at January 1, 2009	115		$	70.07	23	$	28.17
Granted	412			56.31	70		56.31
Cancelled	(6	)		72.29	—		—
Non-vested at June 30, 2009	521		$	59.14	93	$	49.34

As of June 30, 2009, based on current estimates of future performance, $20 million of unrecognized compensation cost related to performance-based awards is expected to be recognized through the first quarter of 2012 and $3 million of unrecognized compensation cost related to the restricted stock awards is expected to be recognized on a straight-line basis through the first quarter of 2012.

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9. Retirement Programs

The components of net pension and postretirement benefits other than pensions (OPEB) costs for the quarters and six-month periods ended June 30, 2009 and 2008 are shown below:

	Quarter Ended June 30,										Six Months Ended June 30,
	Pensions						OPEB				Pensions						OPEB
(Millions of dollars)	2009			2008			2009		2008		2009			2008			2009		2008
Service cost	$	9		$	11		$	1	$	1	$	18		$	22		$	2	$	2
Interest cost		29			30			4		4		57			59			8		8
Expected return on plan assets		(32	)		(34	)		—		—		(63	)		(68	)		—		—
Net amortization and deferral		4			5			—		—		8			10			—		—
Net periodic benefit cost before pension settlement charge		10			12			5		5		20			23			10		10
Pension settlement charge		—			—			—		—		—			17			—		—
Net periodic benefit cost	$	10		$	12		$	5	$	5	$	20		$	40		$	10	$	10

Praxair estimates that 2009 contributions to its pension plans will be in the range of $135 million to $145 million, of which $9 million have been made through June 30, 2009. On July 28, 2009, Praxair made cash contributions totaling $113 million to its U.S. pension plans.

A pension settlement charge of $17 million ($11 million after-tax) was recorded in the first quarter of 2008 for net unrecognized actuarial losses related to lump sum benefit payments made from the U.S. supplemental pension plan to a number of recently retired senior managers, including Praxair’s former chairman and chief executive officer.

10. Commitments and Contingencies

Praxair is subject to various lawsuits and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others. Praxair has strong defenses in these cases and intends to defend itself vigorously. It is possible that the company may incur losses in connection with some of these actions in excess of accrued liabilities. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a significant impact on the company’s reported results of operations in any given period (see Note 18 of the 2008 Annual Report on Form 10-K).

Among such matters are:

• Claims brought by welders alleging that exposure to manganese contained in welding fumes caused neurological injury. Praxair has never manufactured welding consumables. Such products were manufactured prior to 1985 by a predecessor company of Praxair. As of June 30, 2009, Praxair was a co-defendant with many other companies in lawsuits alleging personal injury caused by manganese contained in welding fumes. There were a total of 1,775 individual claimants in these cases. The cases were pending in several state and federal courts. The federal cases have been transferred to the U.S. District Court for the Northern District of Ohio for coordinated pretrial proceedings. The plaintiffs seek unspecified compensatory and, in most instances, punitive damages. In the past, Praxair has either been dismissed from the cases with no payment or has settled a few cases for nominal amounts. These claims raise numerous, individual issues that make them generally unsuited for class action status. Separately, various class actions for medical monitoring have been proposed but none have been certified. No reserves have been recorded for these cases as management does not believe that a loss from them is probable or reasonably estimable.

• An investigation by Spanish prosecutors relating to income tax credits generated by certain of the company’s Spanish subsidiaries prior to 2002 totaling approximately $168 million. These tax positions relate to statutory interpretation matters and are under criminal investigation, although some have previously been the subject of civil tax proceedings. In accordance with the requirements of FIN 48, Praxair had previously recorded a full liability, including interest, for these tax positions and management does not believe penalties are likely or reasonably estimable at this time. The company believes it has strong defenses and is vigorously defending against the proceeding.

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• Claims brought by the Brazilian taxing authorities against several of the company’s Brazilian subsidiaries primarily relating to various social and value-added (VAT) taxes. Most of the social tax cases originated from 1988 to 1999 which was a period of hyperinflation in Brazil. During this period, the company, along with other taxpayers, challenged the legality of various Brazilian tax law changes that were designed to increase tax revenues by various means, including modifying the basis upon which a tax was levied, increasing the tax rates, and shortening payment due dates. These cases are primarily associated with disagreements on the amount of taxes assessed and the appropriate index that should be used to inflation-adjust amounts that were over or under paid during this period. The VAT tax matters are associated with issues such as documentation, establishment and process, among others. The total estimated potential liability for such claims, including interest and penalties, as appropriate, is approximately $468 million. In accordance with SFAS 5 and FIN 48, Praxair has recorded liabilities totaling $261 million related to such claims based on management judgments, after considering judgments and opinions of outside counsel. Because litigation in Brazil historically takes many years to resolve, it is difficult to estimate the timing of resolution of these matters, however, it is possible that certain of these matters could be resolved within the next few years. The company is vigorously defending against the proceedings. On May 28, 2009, the Brazilian government published Law 11941/09 instituting a new voluntary amnesty program which allows Brazilian companies to settle certain Federal tax disputes by November 30, 2009 at reduced amounts. Under the program it may also be possible to utilize net operating loss carryforwards to settle a portion of the tax disputes. Praxair is currently evaluating this program including any impact on its existing valuation allowances on deferred tax assets. The company will record the impact, if any, when decisions are made.

11. Segments

Sales and operating profit by segment for the quarters and six-month periods ended June 30, 2009 and 2008 are shown below. For a description of Praxair’s operating segments, refer to Note 19 to the consolidated financial statements of Praxair’s financial statements of Praxair’s 2008 Annual Report on Form 10-K.

	Quarter Ended June 30,				Six Months Ended June 30,
(Millions of dollars)	2009		2008		2009		2008
SALES(a)
North America	$	1,120	$	1,573	$	2,284	$	3,027
Europe(b)		306		406		609		796
South America		395		514		748		980
Asia		199		232		379		443
Surface Technologies		118		153		241		295
	$	2,138	$	2,878	$	4,261	$	5,541
OPERATING PROFIT
North America	$	264	$	275	$	520	$	537
Europe		61		99		124		186
South America		70		102		145		191
Asia		33		40		59		77
Surface Technologies		19		27		41		51
Segment operating profit		447		543		889		1,042
Pension settlement charge (Note 9)		—		—		—		(17	)
Total operating profit	$	447	$	543	$	889	$	1,025

(a) Intersegment sales, primarily from North America to other segments, were not significant for the quarters and six-month periods ended June 30, 2009 and 2008.

(b) On April 1, 2008, Praxair completed the sale of its majority interest in Maxima Air Separation Center Ltd. with operations in Israel, which contributed approximately $9 million to sales for the six months ended June 30, 2008.

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12. Noncontrolling interests

During the 2009 second quarter, Praxair increased its ownership in a consolidated U.S. packaged gas subsidiary. In accordance with SFAS No. 160, the difference between the purchase price and the related noncontrolling interests of $8 million was recorded as a decrease in Praxair’s additional paid-in capital. Refer to the consolidated statement of equity under the caption “purchases of noncontrolling interests” for a summary of the impact on Praxair, Inc.’s shareholders’ equity from this transaction.

13. Subsequent Events

On July 1, 2009, Praxair acquired Sermatech International Holdings Corp. (Sermatech), a global supplier of protective coatings and advanced processes used on industrial and aviation gas turbines with operations in the U.S., Canada, United Kingdom, Germany and South Korea. The business had sales of $116 million in 2008. Sermatech’s results of operations will be included in Praxair’s consolidated financial statements within the Surface Technologies segment effective July 1, 2009.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results

The following table provides summary data for the quarters and six-month periods ended June 30, 2009 and 2008:

	Quarter Ended June 30,								Six Months Ended June 30,
(Dollar amounts in millions)	2009			2008			Variance		2009			2008			Variance
Sales	$	2,138		$	2,878		(26	)%	$	4,261		$	5,541		(23	)%
Gross margin (a)	$	948		$	1,130		(16	)%	$	1,876		$	2,198		(15	)%
As a percent of sales		44.3	%		39.3	%				44.0	%		39.7	%
Selling, general and administrative	$	265		$	341		(22	)%	$	530		$	676		(22	)%
As a percent of sales		12.4	%		11.8	%				12.4	%		12.2	%
Depreciation and amortization	$	207		$	216		(4	)%	$	406		$	426		(5	)%
Pension settlement charge (b)	$	—		$	—				$	—		$	17
Other income (expense) - net	$	(11	)	$	(6	)			$	(15	)	$	(6	)
Operating profit	$	447		$	543		(18	)%	$	889		$	1,025		(13	)%
As a percent of sales		20.9	%		18.9	%				20.9	%		18.5	%
Interest expense - net	$	33		$	52		(37	)%	$	68		$	99		(31	)%
Effective tax rate		26.3	%		27.9	%				27.2	%		28.0	%
Net income - Praxair, Inc.	$	299		$	349		(14	)%	$	589		$	656		(10	)%
Diluted earnings per share	$	0.96		$	1.08		(11	)%	$	1.89		$	2.04		(7	)%
Diluted shares outstanding		312,429			322,088		(3	)%		312,021			321,245		(3	)%

(a) Gross margin excludes depreciation and amortization expense.

(b) See Note 9 to the condensed consolidated financial statements.

	Quarter Ended June 30, 2009 vs. 2008		Six Months Ended June 30, 2009 vs. 2008
	% Change		% Change
Sales
Volume	(14	)%	(13	)%
Price/Mix/Other	2	%	3	%
Cost pass-through	(5	)%	(4	)%
Currency	(9	)%	(9	)%
Total sales change	(26	)%	(23	)%

Sales decreased $740 million, or 26%, for the second quarter and decreased $1,280 million, or 23%, for the six months ended June 30, 2009 versus the respective 2008 periods. The underlying decline in sales of 12% and 10% for the quarter and year-to-date periods, respectively, reflects significantly lower volumes in most geographies due to lower demand consistent with the global economic slowdown. The unfavorable impact of currency, primarily in South America, Europe, Mexico and Canada decreased sales by 9% for both the quarter and year-to-date periods. Lower cost pass-through decreased sales by $144 million, or 5% for the quarter and $203 million, or 4% for the year-to-date period, with a negligible impact on operating profit.

Gross margin in 2009 decreased $182 million, or 16%, for the second quarter and decreased $322 million, or 15%, for the six months ended June 30, 2009 versus the respective 2008 periods. The increase in the gross margin percentage for the quarter and year-to-date periods to 44.3% and 44.0%, respectively, was due to higher pricing, cost reductions and the impact from lower cost pass-through.

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Selling, general and administrative (SG&A) expenses decreased $76 million, or 22%, for the second quarter period and decreased $146 million, or 22%, for the six months ended June 30, 2009 versus the respective 2008 periods. The decrease in SG&A expenses was due to cost savings resulting from the cost reduction program initiated in 2008, ongoing productivity programs and currency impacts. SG&A expenses as a percentage of sales increased slightly in both the quarter and year-to-date periods due to the decrease in sales from lower cost pass-through.

Depreciation and amortization expense decreased $9 million, or 4%, for the second quarter and decreased $20 million, or 5%, for the six months ended June 30, 2009 versus the respective 2008 periods. The decrease was due to currency effects partially offset by the increased depreciation associated with project start-ups.

Other income (expense) – net was an $11-million expense and $15-million expense for the quarter and six months ended June 30, 2009, respectively. The 2009 quarter and six-month periods included $16 million and $15 million of currency related net losses, respectively, primarily related to net income hedges (see Note 5 to the condensed consolidated financial statements).

Operating profit decreased $96 million, or 18%, for the second quarter and decreased $136 million, or 13%, for the six months ended June 30, 2009 versus the respective 2008 periods. Excluding the $17 million pension settlement charge in the six month period of 2008, operating profit decreased $ 153 million, or 15%. This decrease was driven by the negative impact of currency and lower sales volumes partially offset by cost savings. Operating profit as a percentage of sales improved to 20.9% in both the quarter and year-to-date periods as a result of significant cost reductions and pricing.

Interest expense – net decreased $19 million, or 37% for the second quarter and decreased $31 million, or 31% for the six months ended June 30, 2009 versus the respective periods in 2008 due to lower interest rates on commercial paper and international bank borrowings.

The effective tax rate was 26.3% for the second quarter and 27.2% for the six month period versus 27.9% and 28.0%, respectively, for the same periods in 2008. The 2009 periods include a $7 million tax benefit primarily related to tax incentives in Italy. Excluding this tax benefit, the underlying effective tax rate for the quarter and six month periods was 28% in 2009.

Net income – Praxair, Inc. decreased $50 million, or 14%, for the second quarter and decreased $67 million, or 10%, for the six months ended June 30, 2009 versus the respective 2008 periods. The 2008 six month period included the pension settlement charge of $11 million after tax. Excluding the impact of this charge in the six month period, net income – Praxair, Inc. decreased $ 78 million, or 12%. The decrease in both periods was due to lower operating profit partially offset by lower interest expense.

Diluted earnings per share (EPS) decreased $0.12 per diluted share, or 11% for the second quarter and decreased $0.15 per diluted share, or 7% for the six months ended June 30, 2009 versus the respective 2008 periods. Excluding the impact of the pension settlement charge of $0.03 per diluted share in the 2008 six-month period, EPS decreased 9% versus 2008. The underlying decrease in EPS is in line with the decrease in net income – Praxair, Inc. partially offset by the impact of the company’s net repurchases of common stock during 2008.

The number of employees at June 30, 2009 was 26,139, reflecting a decrease of 797 employees from December 31, 2008 primarily related to the 2008 cost reduction program.

24

Segment Discussion

The following summary of sales and operating profit by segment provides a basis for the discusssion that follows:

	Quarter ended June 30,						Six Months Ended June 30,
(Dollar amounts in millions)	2009		2008		Variance		2009		2008			Variance
SALES
North America	$	1,120	$	1,573	(29	)%	$	2,284	$	3,027		(25	)%
Europe		306		406	(25	)%		609		796		(23	)%
South America		395		514	(23	)%		748		980		(24	)%
Asia		199		232	(14	)%		379		443		(14	)%
Surface Technologies		118		153	(23	)%		241		295		(18	)%
	$	2,138	$	2,878	(26	)%	$	4,261	$	5,541		(23	)%
OPERATING PROFIT
North America	$	264	$	275	(4	)%	$	520	$	537		(3	)%
Europe		61		99	(38	)%		124		186		(33	)%
South America		70		102	(31	)%		145		191		(24	)%
Asia		33		40	(18	)%		59		77		(23	)%
Surface Technologies		19		27	(30	)%		41		51		(20	)%
Segment operating profit		447		543	(18	)%		889		1,042		(15	)%
Pension settlement charge (a)		—		—				—		(17	)
Total operating profit	$	447	$	543			$	889	$	1,025

(a) See Note 9 to the condensed consolidated financial statements.

North America

	Quarter Ended June 30, 2009 vs. 2008		Six Months Ended June 30, 2009 vs. 2008
	% Change		% Change
Sales
Volume	(17	)%	(15	)%
Price/Mix/Other	2	%	2	%
Cost pass-through	(9	)%	(7	)%
Currency	(5	)%	(5	)%
Total sales change	(29	)%	(25	)%

Sales decreased $453 million, or 29%, for the second quarter and decreased $743 million, or 25%, for the six months ended June 30, 2009 versus the respective 2008 periods. The underlying decline in sales of 15% and 13% in the quarter and year-to-date periods, respectively, is due to lower volumes partially offset by higher pricing. Higher sales to the energy markets were offset by sharply lower volumes to the chemicals, metals, electronics and manufacturing end-markets. Currency depreciation, primarily in Canada and Mexico, reduced sales by 5% in both the quarter and year-to-date periods. Lower cost pass-through decreased sales by $145 million, or 9%, for the quarter and $209 million, or 7% for the year-to-date period with a minimal impact on operating profit.

Operating profit decreased $11 million, or 4%, for the second quarter and decreased $17 million, or 3%, for the six months ended June 30, 2009 versus the respective 2008 periods. Excluding the negative impact of currency, underlying operating profit grew as cost savings from the cost reduction program and ongoing productivity initiatives more than offset the impact of sharply lower volumes.

Europe

	Quarter ended June 30, 2009 vs. 2008		Six Months Ended June 30, 2009 vs. 2008
	% Change		% Change
Sales
Volume	(14	)%	(13	)%
Price/Mix/Other	3	%	3	%
Cost pass-through	—	%	(1	)%
Currency	(14	)%	(12	)%
Total sales change	(25	)%	(23	)%

25

Sales decreased $100 million, or 25%, for the second quarter and decreased $187 million, or 23%, for the six months ended June 30, 2009 versus the respective 2008 periods. Unfavorable currency reduced sales by 14% and 12% in the quarter and year-to-date periods, respectively. The underlying decline in sales of 11% and 10% for the quarter and year-to-date periods, respectively, was due primarily to sharply lower volumes in the chemicals, metals and electronics end-markets. Cost pass-through to customers was minimal for the 2009 second quarter and decreased sales by $5 million, or 1% for the year-to-date period, with a minimal impact on operating profit.

Operating profit decreased $38 million, or 38%, for the second quarter and decreased $62 million, or 33%, for the six months ended June 30, 2009 versus the respective 2008 periods. Operating profit for the 2009 quarter and six-month periods included net income hedge losses of $4 million and $2 million, respectively (see Note 5 to the condensed consolidated financial statements). The underlying decrease in operating profit was due to sharply lower volumes and currency depreciation, partially offset by cost reductions.

South America

	Quarter ended June 30, 2009 vs. 2008		Six Months Ended June 30, 2009 vs. 2008
	% Change		% Change
Sales
Volume	(10	)%	(9	)%
Price/Mix/Other	5	%	6	%
Cost pass-through	1	%	1	%
Currency	(19	)%	(22	)%
Total sales change	(23	)%	(24	)%

Sales decreased $119 million, or 23%, for the second quarter and decreased $232 million, or 24%, for the six months ended June 30, 2009 versus the respective 2008 periods. Excluding the impact of currency and cost pass-through, sales decreased 5% for the quarter and 3% for the year-to-date period. The decrease was primarily due to lower volumes to metals and manufacturing customers, partially offset by higher sales to the food and beverage and healthcare end-markets. Cost pass-through to customers increased sales by $3 million, or 1% for the quarter and $6 million, or 1% for the year-to-date period, with a minimal impact on operating profit.

Operating profit decreased $32 million, or 31%, for the second quarter and decreased $46 million, or 24%, for the six months ended June 30, 2009 versus the respective 2008 periods. Operating profit for the 2009 quarter and six-month periods included currency related net losses of $11 million and $12 million, respectively, which primarily consisted of net income hedge losses (see Note 5 to the condensed consolidated financial statements). Excluding the negative impact of currency and net income hedge losses, underlying operating profit grew as cost savings from productivity initiatives and cost reduction programs and higher pricing more than offset lower volumes.

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Asia

	Quarter ended June 30, 2009 vs. 2008		Six Months Ended June 30, 2009 vs. 2008
	% Change		% Change
Sales
Volume	(3	)%	(5	)%
Price/Mix/Other	(2	)%	(1	)%
Cost pass-through	—	%	1	%
Currency	(9	)%	(9	)%
Total sales change	(14	)%	(14	)%

Sales decreased $33 million, or 14%, for the second quarter and decreased $64 million, or 14%, for the six months ended June 30, 2009 versus the respective 2008 periods. Unfavorable currency decreased sales by 9% for both the quarter and year-to-date periods. Underlying sales decreased 5% and 6% for the quarter and year-to-date periods, respectively, due primarily to lower sales to the electronics, metals and manufacturing end-markets. Cost pass-through to customers was minimal for the 2009 second quarter, and increased sales by $5 million, or 1% for the year-to-date period, with a minimal impact on operating profit.

Operating profit decreased $7 million, or 18%, for the second quarter and decreased $18 million, or 23%, for the six months ended June 30, 2009 versus the respective 2008 periods, primarily as the result of lower sales volumes and currency depreciation.

Surface Technologies

	Quarter ended June 30, 2009 vs. 2008		Six Months Ended June 30, 2009 vs. 2008
	% Change		% Change
Sales
Volume/Price/Other	(14	)%	(10	)%
Currency	(9	)%	(8	)%
Total sales change	(23	)%	(18	)%

Sales decreased $35 million, or 23%, for the second quarter and decreased $54 million, or 18%, for the six months ended June 30, 2009 versus the respective 2008 periods. Excluding the impact of negative currency translation, underlying sales decreased 14% and 10% for the quarter and year-to-date periods, respectively. Growth from higher coatings for industrial gas turbines was more than offset by lower coatings for the aerospace and general manufacturing end markets.

Operating profit decreased $8 million, or 30%, for the second quarter and decreased $10 million, or 20%, for the six months ended June 30, 2009 versus the respective 2008 periods. The decrease was principally driven by lower volumes and the negative impact of currency partially offset by productivity and cost reduction initiatives.

On July 1, 2009, Praxair acquired Sermatech International Holdings Corp. (Sermatech), a global supplier of protective coatings and advanced processes used on industrial and aviation gas turbines with operations in the U.S., Canada, United Kingdom, Germany and South Korea. The business had sales of $116 million in 2008. Sermatech’s results of operations will be included in Praxair’s consolidated financial statements within the Surface Technologies segment effective July 1, 2009.

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Currency

The results of Praxair’s non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies used in the countries in which the company operates. For most foreign operations, Praxair uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Praxair’s results of operations in any given period.

To help understand the reported results, the following is a summary of the significant currencies underlying Praxair’s consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):

	Percent of YTD 2009 Consolidated Sales (a)		Exchange Rate for Income Statement
Currency			Year-To-Date Average		Exchange Rate for Balance Sheet
			2009	2008	June 30, 2009	December 31, 2008
Euro	17	%	0.75	0.66	0.71	0.71
Brazil real	15	%	2.19	1.70	1.95	2.34
Canada dollar	8	%	1.21	1.00	1.15	1.22
Mexico peso	6	%	14.01	10.65	13.18	13.53
China RMB	3	%	6.83	7.10	6.83	6.84
India rupee	2	%	49.35	40.23	48.45	48.50
Korea won	2	%	1,355	973	1,286	1,259
Argentina peso	1	%	3.64	3.14	3.80	3.45
Colombia peso	1	%	2,321	1,834	2,145	2,243
Singapore dollar	1	%	1.49	1.39	1.45	1.44
Taiwan dollar	1	%	33.55	31.15	32.94	33.01
Thailand bhat	1	%	35.15	31.06	34.07	35.00
Venezuela bolivar	1	%	2.15	2.15	2.15	2.15

(a) Certain Surface technologies segment sales are included in European, Brazilian and Indian sales.

28

Liquidity, Capital Resources and Other Financial Data

The following selected cash flow information provides a basis for the discussion that follows:

	Six Months Ended June 30,
(Millions of dollars)	2009			2008
NET CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net income - Praxair, Inc.	$	589		$	656
Noncontrolling interests		20			28
Net income (including noncontrolling interests)		609			684
Depreciation and amortization		406			426
2008 Cost reduction program, payments		(28	)		—
Accounts receivable		47			(269	)
Inventory		19			(33	)
Payables and accruals		(246	)		95
Pension contributions		(9	)		(13	)
Other - net		114			(122	)
Net cash provided by operating activities	$	912		$	768
INVESTING ACTIVITIES
Capital expenditures		(663	)		(724	)
Acquisitions		(11	)		(70	)
Divestitures and asset sales		13			46
Net cash used for investing activities	$	(661	)	$	(748	)
FINANCING ACTIVITIES
Debt increases (reductions) - net		57			356
Issuances of common stock		37			154
Purchases of common stock		(85	)		(332	)
Cash dividends - Praxair, Inc. shareholders		(246	)		(236	)
Excess tax benefit on stock option exercises		6			44
Noncontrolling interest transactions and other		(22	)		—
Net cash used for financing activities	$	(253	)	$	(14	)

Cash Flow from Operations

Cash provided by operations of $ 912 million for the six months ended June 30, 2009 increased $ 144 million versus 2008. The increase was primarily due to lower tax payments in the current quarter partially offset by lower net income – Praxair, Inc. and cash payments related to the 2008 cost reduction program. The net working capital impact was not significant.

Praxair estimates that 2009 contributions to its pension plans will be in the range of $135 million to $145 million. On July 28, 2009, Praxair made cash contributions totaling $113 million to its U.S. pension plans.

29

Investing

Net cash used for investing of $661 million for the six months ended June 30, 2009 decreased $ 87 million versus 2008 levels primarily due to decreased capital expenditures and acquisition spending. Capital expenditures of $663 million relate largely to new production plants under contract for customers in North and South America, China and India.

Financing

The current United States credit environment has not had, and at this time is not expected to have, a significant adverse impact on the company’s liquidity. The company continues to have access to the commercial paper and long-term debt markets, and expects to continue to generate strong operating cash flows. While the impact of continued volatility in the global credit markets cannot be predicted with certainty, the company believes that it has sufficient operating flexibility, cash reserves, and funding sources to maintain adequate amounts of liquidity to meet its business needs around the world.

Actual returns for the company’s U.S pension plans may vary from the expected long-term rate of return of 8.25 percent due to the current adverse conditions in the global securities markets. Actual returns below this expected rate may impact the amount and timing of future contributions to these plans. The actual amounts will depend on actual returns and discount rates.

Cash used for financing activities was $253 million in 2009 versus $14 million in 2008. This increase was primarily due to lower debt issuances in 2009 partially offset by lower net stock repurchases. Cash dividends of $246 million increased $10 million from the year ago period to $0.80 per share ($0.75 per share for 2008).

At June 30, 2009, Praxair’s total debt outstanding was $5,107 million, an increase of $82 million from December 31, 2008. On March 26, 2009, Praxair issued $300 million of 4.375% notes due 2014. On May 26, 2009, Praxair issued $500 million of floating rate notes due 2010 that bear interest at a rate of three-month LIBOR plus 0.09% (0.75% at June 30, 2009). The proceeds of both issuances were used to repay short-term debt and for general corporate purposes.

Legal Proceedings

See Note 10 to the condensed consolidated financial statements for a description of current legal proceedings.

Other Financial Data

The following non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s financing leverage, return on net assets employed and operating performance. Special items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.

Debt-to-Capital Ratio

The debt-to-capital ratio is a measure used by investors, financial analysts and management to provide a measure of financial leverage and insights into how the company is financing its operations.

(Dollar amounts in millions)	June 30, 2009			December 31, 2008
TOTAL CAPITAL
Total debt	$	5,107		$	5,025
Equity
Praxair, Inc. shareholders’ equity		4,638			4,009
Noncontrolling interests		308			302
Total equity		4,946			4,311
	$	10,053		$	9,336
DEBT-TO-CAPITAL RATIO		50.8	%		53.8	%

30

After-tax Return on Capital (ROC)

After-tax return on capital is a measure used by investors, financial analysts and management to evaluate the return on net assets employed in the business. ROC measures the after-tax operating profit that the company was able to generate with the investments made by all parties in the business (debt, noncontrolling interests and Praxair, Inc. shareholders’ equity).

	Quarter Ended June 30,
(Dollar amounts in millions)	2009			2008
Reported operating profit	$	447		$	543
Less: reported taxes		(109	)		(137	)
Less: tax benefit on interest expense (a)		(9	)		(15	)
Add: equity income		6			8
Net operating profit after-tax (NOPAT)	$	335		$	399
Beginning capital	$	9,420		$	10,127
Ending capital	$	10,053		$	10,584
Average capital	$	9,737		$	10,356
ROC%		3.4	%		3.9	%
ROC% (annualized)		13.8	%		15.4	%

(a) Tax benefit on interest expense is based on Praxair’s underlying effective tax rate of 28% for 2009 and 2008.

Return on Praxair, Inc. Shareholders’ Equity (ROE)

Return on Praxair, Inc. shareholders’ equity is a measure used by investors, financial analysts and management to evaluate operating performance from a Praxair shareholder perspective. ROE measures the net income attributable to Praxair, Inc. that the company was able to generate with the money shareholders have invested.

	Quarter Ended June 30,
(Dollar amounts in millions)	2009			2008
Reported net income - Praxair, Inc.	$	299		$	349
Beginning Praxair, Inc. shareholders’ equity	$	4,073		$	5,209
Ending Praxair, Inc. shareholders’ equity	$	4,638		$	5,671
Average Praxair, Inc. shareholders’ equity	$	4,356		$	5,440
ROE%		6.9	%		6.4	%
ROE% (annualized)		27.5	%		25.7	%

31

Contractual Obligations Update

The following table sets forth an update to Praxair’s material unconditional purchase obligations as of June 30, 2009:

(millions of dollars)	Due or expiring by December 31,
	2009 remaining		2010		2011		2012		2013		Thereafter		Total
Unconditional purchase obligations	$	351	$	395	$	305	$	277	$	258	$	1,924	$	3,510

Unconditional purchase obligations of $3,510 million represent contractual commitments under various long- and short-term arrangements with suppliers. These obligations are primarily minimum-purchase commitments for electricity, natural gas, helium and feedstock used to produce atmospheric and process gases. The increase in unconditional purchase obligations from December 31, 2008 primarily relates to power purchase commitments. A significant portion of these obligations is passed on to customers through similar take-or-pay contractual arrangements. Purchase obligations that are not passed along to customers do not represent a significant risk to Praxair.

Praxair’s other contractual obligations and commercial commitments are not included in the table above because there were no material changes from what was reported on the 2008 Annual Report on Form 10-K.

New Accounting Standards

Refer to Note 1 of the condensed consolidated financial statements for information regarding new accounting standards.

Fair Value Measurements

Praxair does not expect changes in the aggregate fair value of its financial assets and liabilities to have a material impact on the consolidated financial statements. See Note 5 to the condensed consolidated financial statements.

Outlook

For the third quarter of 2009, diluted earnings per share are expected to be in the range of $0.95 to $1.00.

For the full year of 2009, Praxair expects sales in the area of $9 billion. Diluted earnings per share are expected to be in the range of $3.85 to $4.05. Full-year capital expenditures are expected to be in the area of $1.4 billion supporting the current backlog of projects under contract with customers, which will come on stream in 2009 through 2011. Praxair expects an effective tax rate of about 28% for 2009.

Praxair provides quarterly updates on operating results, material trends that may affect financial performance, and financial earnings guidance via quarterly earnings releases and investor teleconferences. These updates are available on the company’s website, www.praxair.com, but are not incorporated herein.

Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of tax, environmental, home healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; continued timely

32

development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1a (Risk Factors) in the company’s latest Annual Report on Form 10-K filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Refer to Item 7A. to Part II of Praxair’s 2008 Annual Report on Form 10-K for discussion.

Item 4. Controls and Procedures

(a) Based on an evaluation of the effectiveness of Praxair’s disclosure controls and procedures, which was made under the supervision and with the participation of management, including Praxair’s principal executive officer and principal financial officer, the principal executive officer and principal financial officer have each concluded that, as of the end of the quarterly period covered by this report, such disclosure controls and procedures are effective in ensuring that information required to be disclosed by Praxair in reports that it files under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and accumulated and communicated to management including Praxair’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

(b) There were no changes in Praxair’s internal control over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, Praxair’s internal control over financial reporting.

33

PART II - OTHER INFORMATION

Praxair, Inc. and Subsidiaries

Item 1. Legal Proceedings

See Note 10 to the condensed consolidated financial statements for a description of current legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1a to Part I of Praxair’s 2008 Annual Report on Form 10-K .

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities- Certain information regarding purchases made by or on behalf of the company or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of its common stock during the quarter ended June 30, 2009 is provided below:

Period	Total Number of Shares Purchased (Thousands)	Average Price Paid Per Share		Total Numbers of Shares Purchase as Part of Publicly Announced Plans or Programs (1) (Thousands)	Maximum Number (or approximate dollar value) of Shares that May Yet be Purchased Under the Program(2) (Millions)
April 2009	—		—	—	$	378
May 2009	794	$	71.76	794	$	321
June 2009	400		70.49	400	$	293
Second Quarter 2009	1,194	$	71.33	1,194	$	293

(1) On July 23, 2008, the company’s board of directors approved the repurchase of an additional $1 billion of its common stock which could take place from time to time on the open market (which could include the use of 10b5-1 trading plans) or through negotiated transactions, subject to market and business conditions.

(2) As of June 30, 2009, the Company had purchased $707 million of its common stock, pursuant to the 2008 program, leaving an additional $293 million remaining authorized for purchase under the 2008 program. The 2008 program does not have any stated expiration date.

Item 3. Defaults Upon Senior Securities

None.

34

Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders of Praxair, Inc. was held on April 28, 2009. The results of the matters submitted to a vote of security holders were disclosed in Item 4 of the company’s Form 10-Q for the quarter ended March 31, 2009 and are incorporated herein by reference.

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits:

*10.01	The 2009 Praxair, Inc. Long Term Incentive Plan is filed herewith.
12.01	Computation of Ratio of Earnings to Fixed Charges.
31.01	Rule 13a-14(a) Certification
31.02	Rule 13a-14(a) Certification
32.01	Section 1350 Certification (such certifications are furnished for the information of the Commission and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act).
32.02	Section 1350 Certification (such certifications are furnished for the information of the Commission and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act).
101	The following financial statements from Praxair, Inc’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on July 29, 2009, formatted in XBRL: (i) Consolidated Statements of Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Equity, (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

* Management contract or compensatory plan or agreement

35

SIGNATURE

Praxair, Inc. and Subsidiaries

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PRAXAIR, INC.
	(Registrant)
Date: July 29, 2009	By:	/s/ Matthew J. White
		Matthew J. White Vice President and Controller (On behalf of the Registrant and as Chief Accounting Officer)

36

EX-10.01

Exhibit 10.01

2009 Praxair, Inc.

Long Term Incentive Plan

Effective April 28, 2009

Contents

Article 1. Establishment, Purpose, and Duration	2
Article 2. Definitions	2
Article 3. Administration	8
Article 4. Shares Subject to this Plan and Maximum Awards	9
Article 5. Eligibility and Participation	11
Article 6. Stock Options	11
Article 7. Stock Appreciation Rights	13
Article 8. Restricted Stock Grants	14
Article 9. Performance Units	16
Article 10. Other Stock-Based Awards	17
Article 11. Transferability of Awards	18
Article 12. Performance Measures	19
Article 13. Dividend Equivalents	20
Article 14. Beneficiary Designation	21
Article 15. Rights of Participants	21
Article 16. Change in Control	21
Article 17. Amendment, Modification, Suspension, and Termination	23
Article 18. Withholding	23
Article 19. Successors	24
Article 20. General Provisions	24

2009 Praxair, Inc.

Long Term Incentive Plan

Article 1. Establishment, Purpose, and Duration

1.1 Establishment. Praxair, Inc., a Delaware corporation (hereinafter referred to as the “Company”), establishes an incentive compensation plan to be known as the 2009 Praxair, Inc. Long Term Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document.

This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock, Restricted Stock Units, Performance Units, and Other Stock-Based Awards.

This Plan was adopted by the Board on February 24, 2009. This Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

1.2 Purpose of this Plan. The purpose of this Plan is to provide a means whereby Employees develop personal involvement in the financial success of the Company, and to encourage them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its shareholders. A further purpose of this Plan is to provide a means through which the Company may attract and retain able Employees and to provide a means whereby those individuals can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company.

1.3 Duration of this Plan. Unless sooner terminated as provided herein, this Plan shall terminate February 24, 2019. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms and conditions.

Article 2. Definitions

Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

2.1 “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units, or Other Stock-Based Awards, in each case subject to the terms of this Plan.

2.2 “Award Agreement” means either (a) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (b) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award,

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including any amendment or modification thereof. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.

2.3 “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

2.4 “Board” means the Board of Directors of the Company.

2.5 “Change in Control” means the occurrence of any one of the following events with respect to the Company:

(a) individuals who, on January 1, 2009, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to January 1, 2009, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the Company proxy statement in which such person is named as a nominee for director, without objection to such nomination) shall be an Incumbent Director; provided, however, that no individual elected or nominated as a director of the Company initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed an Incumbent Director;

(b) any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Praxair Voting Securities”); provided, however, that the event described in this Subsection 2.5(b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any of its subsidiaries; (B) by any employee benefit plan sponsored or maintained by the Company or any of its subsidiaries; (C) by any underwriter temporarily holding securities pursuant to an offering of such securities; or (D) pursuant to a Non-Qualifying Transaction (as defined in Subsection 2.5(c));

(c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A)

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more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has Beneficial Ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Praxair Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, shares into which such Praxair Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Praxair Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the Beneficial Owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or

(d) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale or disposition of all or substantially all of the Company’s assets.

Notwithstanding the foregoing, to the extent an Award is subject to Code Section 409A, the Committee shall have the discretion to define Change in Control for such Award in a manner which complies with such Code Section.

2.6 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

2.7 “Committee” means the Compensation and Management Development Committee of the Board, or any other committee designated by the Board to administer this Plan. The Committee shall consist of not less than two directors. However, if a member of the Committee is not an “outside director” within the meaning of Code Section 162(m) or is not a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, the Committee may from time to time delegate some or all of its functions under the Plan to a committee or subcommittee composed of members that meet the relevant requirements. The term “Committee” includes any such committee or subcommittee, to the extent of the Compensation and Management Development

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Committee’s delegation. If the Committee does not exist or cannot function for any reason, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee, other than any actions required to be carried out by a committee of at least two “outside directors” or “non-employee directors”.

2.8 “Company” means Praxair, Inc., a Delaware corporation, and any successor thereto as provided in Article 19 herein.

2.9 “Covered Employee” means any Employee who is or may become a “Covered Employee,” as defined in Code Section 162(m), and who is designated, either as an individual Employee or class of Employees, by the Committee within the shorter of (a) ninety (90) days after the beginning of the Performance Period, or (b) the period prior to the date twenty-five percent (25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable Performance Period.

2.10 “Effective Date” has the meaning set forth in Section 1.1.

2.11 “Employee” means any individual performing services for the Company or a Subsidiary and designated as an employee of the Company or its Subsidiaries on the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company or its Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company or its Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company or its Subsidiary during such period.

2.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

2.13 “Fair Market Value” or “FMV” means, in respect of any date on or as of which a determination thereof is being or to be made, the closing market price of a Share reported on the New York Stock Exchange Composite Transactions tape on such date, or, if no Shares were traded on such date, on the next preceding day on which sales of Shares were reported on the New York Stock Exchange Composite Transactions tape.

2.14 “Grant Date” means the date an Award is granted to a Participant pursuant to the Plan.

2.15 “Grant Price” means the price established at the time of grant of a SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

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2.16 “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 to an Employee that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision.

2.17 “Insider” shall mean an individual who is, on the relevant date, an executive officer of the Company or a more than ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

2.18 “Market Price” means, in respect of any date on or as of which a determination thereof is being or to be made, the average of the high and low prices of a Share reported on the New York Stock Exchange Composite Transactions tape on such date, or, if no Shares were traded on such date, on the next preceding day on which sales of Shares were reported on the New York Stock Exchange Composite Transactions tape.

2.19 “Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.

2.20 “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.

2.21 “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

2.22 “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.

2.23 “Participant” means any Employee to whom an Award is granted.

2.24 “Performance-Based Compensation” means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for certain performance-based compensation paid to Covered Employees. Any Award granted hereunder that is intended to be Performance-Based Compensation within the meaning of Code Section 162(m) shall be subject to the terms and provisions of this Plan and not the Praxair, Inc. Plan for Determining Performance-Based Awards Under Section 162(m).

2.25 “Performance Goal” means, with respect to any applicable Award, the one or more targets, goals or levels of attainment required to be achieved in terms of the specified Performance Measures during the specified Performance Period, as set forth in the related Award Agreement.

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2.26 “Performance Measures” means: (a) with respect to any Award intended to qualify as Performance-Based Compensation, any one or more of the measures described in Article 12 on which the Performance Goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation; and (b) with respect to any other Award, such performance measures as determined by the Committee in its sole discretion and set forth in the applicable Award Agreement for purposes of determining the applicable Performance Goal.

2.27 “Performance Period” means the period of time during which the Performance Goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

2.28 “Performance Unit” means an Award under Article 9 herein and subject to the terms of this Plan, denominated in Units, the value of which at the time it is payable is determined as a function of the extent to which corresponding Performance Goal(s) has been achieved during the applicable Performance Period.

2.29 “Plan” means this 2009 Praxair, Inc. Long Term Incentive Plan.

2.30 “Restricted Stock” means Shares issued pursuant to a Restricted Stock Grant under Article 8 so long as the Shares remain subject to the restrictions and conditions specified in the Award Agreement pursuant to which such Restricted Stock Grant is made.

2.31 “Restricted Stock Grant” means an Award of Restricted Stock or Restricted Stock Units made pursuant to the provisions of Article 8.

2.32 “Restricted Stock Unit” means a Unit issued pursuant to a Restricted Stock Grant under Article 8 so long as the Units remain subject to the restrictions and conditions specified in the Award Agreement.

2.33 “Restriction Period” means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.

2.34 “Share” means a share of common stock of the Company, $0.01 par value per share or any security issued by the Company in substitution or exchange therefor or in lieu thereof.

2.35 “Share Equivalent” means a Unit (or fraction thereof, if authorized by the Committee) substantially equivalent to a hypothetical Share, credited to the Participant and having a value at any time equal to the FMV of a Share (or fraction thereof) at such time.

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2.36 “Stock Appreciation Right” or “SAR” means an Award, designated as a SAR, pursuant to the terms of Article 7 herein.

2.37 “Subsidiary” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of fifty percent (50%) or greater by reason of stock ownership or otherwise; provided, however, that (a) for purposes of determining whether any Employee can be a Participant with respect to any Award of Incentive Stock Option, the term “Subsidiary” has the meaning given to such term in Code Section 424, as interpreted by the regulations thereunder and applicable law; and (b) for purposes of determining whether any individual may be a Participant with respect to any Award of Options or SARs that are intended to be exempt from Code Section 409A, the term “Subsidiary” means any corporation or other entity to which the Company is an “eligible issuer of service recipient stock” within the meaning of Code Section 409A.

2.38 “Unit” means a bookkeeping entry used by the Company to record and account for the grant or settlement of an Award until such time as the Award is paid, canceled, forfeited or terminated, as the case may be, which, except as otherwise specified by the Committee, shall be equal to one Share Equivalent.

Article 3. Administration

3.1 General. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested individuals.

3.2 Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to, or in connection with, this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Participants, establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements, granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of the Plan or any Award Agreement, and, subject to Article 17, adopting modifications and amendments to this Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company and/or its Subsidiaries operate.

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3.3 Delegation. The Committee may delegate to one or more of its members or to one or more officers of the Company, and/or its Subsidiaries or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may, by resolution, authorize the Chief Executive Officer of the Company (the “CEO”) or any other officer of the Company, to do one or both of the following on the same basis as can the Committee: (a) designate Employees to be recipients of Awards and (b) determine the size of any such Awards; provided, however, (i) the Committee shall not delegate such responsibilities for any Awards to be granted to an Employee who is considered an Insider; (ii) the resolution providing such authorization sets forth the total number of Awards the CEO or officer may grant; and (iii) the CEO or officer, as applicable, shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.

Article 4. Shares Subject to this Plan and Maximum Awards

4.1 Number of Shares Available for Awards. Subject to adjustment as provided in Section 4.4, the maximum number of Shares which may be issued pursuant to Awards under this Plan on or after the Effective Date shall be 12,000,000 Shares (the “Share Authorization”). The Shares available for issuance under this Plan may be authorized and unissued Shares or treasury Shares. The maximum number of Shares of the Share Authorization that may be issued pursuant to ISOs under this Plan shall be 12,000,000 Shares. The maximum number of Shares of the Share Authorization that may be issued under this Plan pursuant to Awards other than Options or SARs shall be 4,000,000 Shares.

4.2 Share Usage. Shares subject to an Award that expires according to its terms or is forfeited, terminated, canceled or surrendered, in each case, without having been exercised or settled, or can be paid only in cash, will be available again for grant under the Plan, without reducing the number of Shares that are available for Awards under the Plan. In no event shall (a) any Shares subject to an Option that is cancelled upon the exercise of a tandem SAR; (b) any Shares subject to an Award that are surrendered in payment of the exercise price of an Option or in payment of the taxes associated with an Award; or (c) any Shares subject to a SAR that are not issued in connection with the stock settlement of the SAR upon exercise thereof become available for grant under the Plan pursuant to this Section.

4.3 Annual Award Limits. Unless and until the Committee determines that an Award to a Covered Employee shall not be designed to qualify as Performance-Based Compensation, the following limits (each an “Annual Award Limit” and, collectively, “Annual Award Limits”), as adjusted pursuant to Sections 4.4, shall apply to grants of such Awards under this Plan:

(a) Options: The maximum aggregate number of Shares subject to Options granted in any one calendar year to any one Participant shall be 1,000,000.

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(b) SARs: The maximum number of Shares subject to SARs granted in any one calendar year to any one Participant shall be 1,000,000.

(c) Restricted Stock or Restricted Stock Units: The maximum aggregate Restricted Stock Grant in any one calendar year to any one Participant shall be 300,000 Shares, or equal to the Fair Market Value of 300,000 Shares, determined as of the date of vesting or payout, as applicable.

(d) Performance Units: The maximum aggregate Award of Performance Units that a Participant may receive in any one calendar year shall be 300,000 Shares, or equal to the Fair Market Value of 300,000 Shares, determined as of the date of vesting or payout, as applicable.

(e) Other Stock-Based Awards: The maximum aggregate grant with respect to Other Stock-Based Awards pursuant to Section 10.1 in any one calendar year to any one Participant shall be 300,000 Shares.

4.4 Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of outstanding Shares or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards.

To further reflect any of the foregoing events, transactions or adjustments, the Committee, in its sole discretion, may also make adjustments in the terms of any Awards under this Plan and may modify any other terms of outstanding Awards, including modifications of Performance Goals and changes in the length of Performance Periods, as it deems necessary or appropriate. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

Subject to the provisions of Article 17 and notwithstanding anything else herein to the contrary, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate (including, but not limited to, a conversion of equity awards into Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44), subject to compliance with the rules under Code Sections 422 and 424, as and where applicable.

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Article 5. Eligibility and Participation

Only Employees shall be eligible to participate in this Plan. Subject to the provisions of this Plan, the Committee may, from time to time, select those Employees to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award.

Article 6. Stock Options

6.1 Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Options may be granted in addition to, or in tandem with or independent of, SARs or any other Awards under the Plan.

6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the term of the Option, the number of Shares to which the Option pertains, the conditions, including any Performance Goals, upon which an Option shall become vested and exercisable, and such other terms and conditions as the Committee shall determine which are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.

6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least equal to 100% of the FMV of the Shares as determined on the Grant Date.

6.4 Term of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the day before the tenth (10^th) anniversary of its Grant Date.

6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant. Except upon a Change in Control and in certain limited situations (including, but not limited to, the death or disability of the Participant): (a) Awards of Options subject solely to the continued service of the Participant shall become exercisable no earlier than three (3) years after the Grant Date provided that such Option may partially vest after no less than one year following such Grant Date; and (b) any other Award of Options shall become exercisable no earlier than one (1) year after the Grant Date.

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6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Market Price at the time of exercise equal to the Option Price (provided that except as otherwise determined by the Committee, the Shares that are tendered must have been held by the Participant for at least six (6) months (or such other period, if any, as the Committee may permit) prior to their tender to satisfy the Option Price if acquired under this Plan or any other compensation plan maintained by the Company or have been purchased on the open market); (c) by having the Company withhold Shares that otherwise would be delivered to the exerciser pursuant to the exercise of the Option having a value equaling the aggregate Option Price due; (d) by a cashless (broker-assisted) exercise; (e) by a combination of (a), (b), (c) and/or (d); or (f) any other method approved or accepted by the Committee in its sole discretion.

Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.

6.8 Termination of Employment. Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or provision of services to the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

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6.9 Notification of Disqualifying Disposition. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten (10) days thereof.

Article 7. Stock Appreciation Rights

7.1 Grant of SARs. Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee, in its sole discretion. Subject to the terms and conditions of this Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to such SARs. SARs may be granted under the Plan alone, in tandem with, in addition to or independent of, Options or any other Awards under the Plan.

7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, the number of Shares to which the SAR pertains, the conditions, including any Performance Goals, upon which the SAR shall become vested and exercisable, and such other terms and conditions as the Committee shall determine which are not inconsistent with the terms of this Plan.

7.3 Term of SAR. The term of a SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and specified in the SAR Award Agreement; provided, however, no SAR shall be exercisable later than the tenth (10^th) anniversary of its Grant Date.

7.4 Grant Price. The Grant Price for each Award of a SAR shall be determined by the Committee and shall be specified in the Award Agreement; provided, however, the Grant Price must be at least equal to 100% of the FMV of the Shares as determined on the Grant Date.

7.5 Exercise of SARs. SARs granted under this Article 7 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant. Except upon a Change in Control and in certain limited situations (including, but not limited to, the death or disability of the Participant): (a) Awards of SARs subject solely to the continued service of the Participant shall become exercisable no earlier than three (3) years after the Grant Date provided that such SAR may partially vest after no less than one year following such Grant Date; and (b) any other Award of SARs shall become exercisable no earlier than one (1) year after the Grant Date. The Committee may provide that a SAR shall be automatically exercised on one or more specified dates.

7.6 Settlement of SARs. Upon the exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

(a) The excess of the FMV of a Share on the date of exercise over the Grant Price; by

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(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon exercise of a SAR may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.

7.7 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

7.8 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of a SAR granted pursuant to this Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of a SAR for a specified period of time.

Article 8. Restricted Stock Grants

8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Restricted Stock Grants to Participants in such amounts as the Committee shall determine. A Restricted Stock Grant is the issue of Shares or Units in the name of a Participant subject to such terms and conditions as the Committee shall deem appropriate, including, without limitation, restrictions on the sale, assignment, transfer or other disposition of such Shares or Units and the requirement that the Participant forfeit such Shares or Units back to the Company (a) upon termination of employment for specified reasons within a specified period of time; (b) if any specified Performance Goals are not achieved during a specified Performance Period; or (c) if such other conditions as the Committee may specify are not satisfied.

8.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock Grant shall be evidenced by an Award Agreement that shall specify the Restriction Period(s), the number of Shares of Restricted Stock and/or Restricted Stock Units granted, the conditions and restrictions imposed upon the Restricted Stock Grant, and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan.

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8.3 Restriction Period. Each Restricted Stock Grant shall provide that in order for a Participant to receive unrestricted Shares or payment in settlement of a Restricted Stock Unit, the Participant must remain an Employee for a period of time specified by the Committee in the Award Agreement. The Committee may also establish one or more Performance Goals that are required to be achieved during one or more Performance Periods within the Restriction Period as a condition to the lapse of restrictions. Except upon a Change in Control and in certain limited situations (including, but not limited to, the death or disability of the Participant): (a) Awards of Restricted Stock and/or Restricted Stock Units subject solely to the continued service of the Participant shall have a Restriction Period of not less than three (3) years from the Grant Date; and (b) Awards of Restricted Stock and/or Restricted Stock Units subject to the achievement of one or more Performance Goals shall have a minimum Restriction Period of one (1) year. The Committee may provide for the pro rata lapse of restrictions in installments during the Restriction Period.

8.4 Restrictions. The following restrictions and conditions shall apply to each Restricted Stock Grant during the Restriction Period: (a) the Participant may not sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of or realize on the Shares or Units subject to the Restricted Stock Grant; and (b) the Shares issued as Restricted Stock or the Restricted Stock Units shall be forfeited to the Company if the Participant for any reason ceases to be an Employee prior to the end of the Restriction Period, except due to circumstances specified in the related Award Agreement or otherwise approved by the Committee. Unless otherwise directed by the Committee, (i) all certificates representing Shares of Restricted Stock will be held in custody by the Company until all restrictions thereon have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Shares, or (ii) all uncertificated Shares of Restricted Stock will be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Shares of Restricted Stock. The Committee may, in its sole discretion, include such other restrictions and conditions as it may deem appropriate.

The Committee may, in its sole discretion, impose such other conditions and/or restrictions on any Restricted Stock Grant awarded pursuant to this Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

8.5 Payment. Upon expiration of the Restriction Period and if all conditions have been satisfied and any applicable Performance Goals attained, the Shares of Restricted Stock will be made available to the Participant or the Restricted Stock Units will be vested in the account of the Participant, free of all restrictions; provided, that the Committee may, in its discretion, require (a) the further deferral of any Restricted Stock Grant beyond the initially specified Restriction Period; (b) that the Restricted Stock or Restricted Stock Units be retained by the Company; and (c) that the Participant receive a cash payment in lieu of unrestricted Shares or Units.

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8.6 Rights as a Shareholder. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, the Participant shall have, with respect to shares of Restricted Stock, all of the rights of a shareholder of the Company, including the right to vote the shares and receive any dividends paid thereon. Any such dividends shall be reinvested on the dividend payment date in additional Shares of Restricted Stock under the Restricted Stock Grant and shall be subject to the restrictions and other terms and conditions set forth therein. A Participant shall not have, with respect to Restricted Stock Units, any voting or other rights of a shareholder of the Company; provided, however, that if determined by the Committee and set forth in the Participant’s Award Agreement, the Participant shall have the right to receive Dividend Equivalents in accordance with the provisions of Article 13.

8.7 Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.

Article 9. Performance Units

9.1 Grant of Performance Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant Performance Units to Participants in such amounts and upon such terms as the Committee shall determine. Each Performance Unit shall represent the prospective contingent right to receive payment based upon Company and/or Subsidiary performance over a specified Performance Period. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant and need not be equivalent to the value of a Share Equivalent. At the time of grant, the Committee, in its sole discretion, shall establish the Performance Period, Performance Measures, Performance Goals and such other terms and conditions applicable to such Award. The number of Shares and/or the amount of cash or other consideration earned in settlement of a Performance Unit shall be determined at the end of the Performance Period.

9.2 Earning of Performance Units. Each Performance Unit Award Agreement shall provide that in order for a Participant to receive a payment in settlement of the Award, the Company must achieve certain Performance Goals over a designated Performance Period, with attainment of one or more Performance Goals determined using one or more specific Performance Measures. The Performance Goals and the Performance Period shall be established by the Committee in its sole discretion; provided, however that except upon a Change in Control and in certain limited situations (including, but not limited to, the death or disability of the Participant), the Performance Period must have a minimum duration of one (1) year. The Committee shall establish one or more Performance Measures for each Performance Period for determining the portion of the Performance Unit Award which will be earned or forfeited based on the extent to which the Performance Goals are achieved or exceeded. Such Performance Goals may include minimum, maximum and target levels of performance, with the size of the payment payable in settlement of the Performance Unit Award based on the level attained.

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9.3 Form of Performance Unit Award. Performance Unit Awards shall be made on such terms and conditions not inconsistent with the Plan, and in such form or forms, as the Committee may from time to time approve. Performance Units may be awarded alone, in addition to, or independent of other Awards under the Plan. Subject to the terms of the Plan, the Committee shall, in its discretion, determine the number of Units subject to each Performance Unit Award made to a Participant and may impose different terms and conditions on any particular Performance Unit Award made to any Participant. The Performance Goals, Performance Period or Periods, Performance Measures and other terms and conditions applicable to any Performance Unit Award shall be set forth in the relevant Award Agreement.

9.4 Termination of Employment. Each Performance Unit Award Agreement shall set forth the extent to which the Participant shall have the right to retain Performance Units following termination of the Participant’s employment with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Units, and may reflect distinctions based on the reasons for termination. Notwithstanding the foregoing, to the extent a Performance Unit is intended to be Performance-Based Compensation, the termination provisions in the Award Agreement shall comply with the requirements of Code Section 162(m) (including any regulations, rulings, notices and procedures thereunder).

9.5 Payment of Performance Units. Subject to the terms of this Plan and the applicable Award Agreement, after the later of the date the applicable Performance Period has ended or the date on which any other terms and conditions applicable to such Performance Unit Award have been satisfied, the holder of Performance Units shall be entitled to receive payout of the value and number of Performance Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved. Subject to Section 12.3 below, such payment shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units in the form of Shares, cash, any combination thereof, or any other form as designated by the Committee in its sole discretion, equal to the value of the earned Performance Units at the close of the applicable Performance Period, or at such other time as specified in the Award Agreement. Any Shares paid in settlement of such Performance Units may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the applicable Award Agreement.

Article 10. Other Stock-Based Awards

10.1 Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including, subject to the limitations below, the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts

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based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States. Notwithstanding any provision in this Plan to the contrary, Awards of unrestricted Shares shall only be made in lieu of salary and/or cash bonuses/variable compensation.

10.2 Value of Other Stock-Based Awards. Each Other Stock-Based Award shall be expressed in terms of Shares or Units, as determined by the Committee. The Committee may, in its discretion, establish Performance Goals with respect to any Other Stock-Based Awards. If the Committee exercises its discretion to establish Performance Goals, the number and/or value of Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the Performance Goals are met.

10.3 Payment of Other Stock-Based Awards. Payment, if any, with respect to an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines.

10.4 Termination of Employment. The Committee shall determine the extent to which the Participant shall have the right to receive Other Stock-Based Awards following termination of the Participant’s employment with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, such provisions shall be included in the applicable Award Agreement, but need not be uniform among all Other Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

Article 11. Transferability of Awards

No Award under the Plan, and no right or interest therein, shall be (a) assignable, alienable or transferable by a Participant, except by will or the laws of descent and distribution, or (b) subject to any obligation, or the lien or claims of any creditor, of any Participant, or (c) subject to any lien, encumbrance or claim of any party made in respect of or through any Participant, however arising. During the lifetime of a Participant, Options and SARs are exercisable only by, Shares issued upon the exercise of Options and SARs or in settlement of other Awards will be issued only to, and other payments in settlement of any Award will be payable only to, the Participant or his or her legal representative. A Participant may designate a beneficiary or beneficiaries in accordance with Article 14. Notwithstanding the foregoing, the Committee may, in its sole discretion and on and subject to such terms and conditions as it shall deem appropriate, which terms and conditions shall be set forth in the related Award Agreement: (i) authorize a Participant to transfer all or a portion of any Nonqualified Stock Option or SAR, as the case may be, granted to such Participant; provided, that in no event shall any transfer be made to any person or persons other than such Participant’s spouse, children or grandchildren, or a trust or partnership for the exclusive benefit of one or more such persons, which transfer must be made as a gift and without any consideration; and (ii) provide for the transferability of a particular grant or Award pursuant to a domestic relations order. All other transfers and any retransfer by any permitted transferee are prohibited and any such purported transfer shall be null and void. Each Nonqualified Stock Option or SAR which becomes the subject of a permitted transfer (and

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the Participant to whom it was granted by the Company) shall continue to be subject to the same terms and conditions as were in effect immediately prior to such permitted transfer. The Participant shall remain responsible to the Company for the payment of all withholding taxes incurred as a result of any exercise of such Option or SAR. In no event shall any permitted transfer of an Option, SAR or other grant or Award create any right in any party in respect of any Option, SAR or other grant or Award, other than the rights of the qualified transferee in respect of such Option, SAR or other Award specified in the related Award Agreement.

Article 12. Performance Measures

12.1 Performance Measures. The Performance Goals upon which the payment or vesting of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures:

(a) Net earnings or net income (before or after taxes);

(b) Earnings per share (basic or diluted);

(c) Net sales;

(d) Revenue growth;

(e) Operating profit;

(f) Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);

(g) Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);

(h) Earnings before or after taxes, interest, depreciation, and/or amortization;

(i) Gross or operating margins;

(j) Productivity ratios;

(k) Share price (including, but not limited to, growth measures and total shareholder return);

(l) Expense targets;

(m) Margins;

(n) Operating efficiency;

(o) Market share;

(p) Working capital targets;

(q) Economic value added or EVA (net operating profit after tax minus the sum of capital multiplied by the cost of capital); and

(r) Objective safety measures.

Any Performance Measure(s) may be used to measure the performance of the Company and/or its Subsidiary as a whole or any business unit of the Company and/or its Subsidiary or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may select Share price as a Performance Measure as compared to various stock market indices. The Committee also has the authority to provide in an Award Agreement for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Measures specified in this Article 12.

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12.2 Evaluation of Performance. The Committee may provide at the time of any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs and impairments; (b) gain/loss on sale of assets; (c) litigation or claim judgments or settlements (including insurance proceeds); (d) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (e) any reorganization and restructuring programs; (f) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders and/or other public filings for the applicable year; (g) acquisitions or divestitures; (h) foreign exchange gains and losses; and (i) the effect of any materially adverse and unforeseen market conditions beyond the control of the Company and its Subsidiaries, Employees, officers and directors. To the extent such inclusions or exclusions affect Awards to Covered Employees that are intended to be Performance-Based Compensation, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.

12.3 Adjustment of Performance-Based Compensation. Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward. The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.

12.4 Committee Discretion. In the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 12.1.

Article 13. Dividend Equivalents

Any Participant selected by the Committee may be granted dividend equivalents based on the dividends declared on Shares or Share Equivalents that are subject to any Award (other than Options and SARs), to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests, settled or expires, as determined by the Committee (“Dividend Equivalents”). Except as otherwise provided in the Plan or the applicable Award Agreement, such Dividend Equivalents shall be converted to cash or additional Shares or Share Equivalents by such formula, at such time and subject to such limitations as may be determined by the Committee; provided, however, that in no event shall any Dividend Equivalents become payable earlier than the date on which the underlying Award becomes vested and payable.

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Article 14. Beneficiary Designation

Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of the Participant’s death before receiving any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or exercised by the Participant’s executor, administrator, or legal representative.

Article 15. Rights of Participants

15.1 Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company and/or its Subsidiaries, to terminate any Participant’s employment at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment for any specified period of time.

Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company and/or its Subsidiaries and, accordingly, subject to Article 17, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company and/or its Subsidiaries.

15.2 Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

15.3 Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

Article 16. Change in Control

16.1 Change in Control of the Company. Notwithstanding any other provision of this Plan to the contrary, the provisions of this Article 16 shall apply in the event of a Change in Control, unless otherwise determined by the Committee in connection with the grant of an Award as reflected in the applicable Award Agreement.

Upon a Change in Control, except to the extent that another Award meeting the requirements of Section 16.2 (a “Replacement Award”) is provided to the Participant to replace such Award (the “Replaced Award”), all then-outstanding Options and SARs shall immediately become fully vested and exercisable, and all other then-outstanding Awards subject solely to the satisfaction of a service obligation by a Participant to the Company and/or its Subsidiary shall vest in full and be free of restrictions related to the vesting of such Awards. The treatment of any other Awards shall be as determined by the Committee in connection with the grant thereof, as reflected in the applicable Award Agreement.

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Except to the extent that a Replacement Award is provided to the Participant, the Committee may, in its sole discretion, determine that any or all outstanding Awards granted under the Plan, whether or not exercisable, will be canceled and terminated and that in connection with such cancellation and termination the holder of such Award may receive for each Share subject to such Awards a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash payment) equal to the difference, if any, between the consideration received by shareholders of the Company in respect of a Share in connection with such transaction and the purchase price per share, if any, under the Award multiplied by the number of Shares subject to such Award; provided that if such product is zero or less or to the extent that the Award is not then exercisable, the Award will be canceled and terminated without payment therefor.

16.2 Replacement Awards. An Award shall meet the conditions of this Section 16.2 (and hence qualify as a Replacement Award) if: (a) it has a value at least equal to the value of the Replaced Award as determined by the Committee in its sole discretion; (b) it relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control; and (c) its other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 16.2 are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.

16.3 Termination of Employment. Upon a termination of employment of a Participant occurring in connection with or during the period of two (2) years immediately after such Change in Control, other than for cause, (a) all Replacement Awards held by the Participant shall become fully vested and (if applicable) exercisable and free of restrictions, and (b) all Options and SARs held by the Participant immediately before the termination of employment that the Participant held as of the date of the Change in Control or that constitute Replacement Awards shall remain exercisable for not less than one (1) year following such termination or until the expiration of the stated term of such Option or SAR, whichever period is shorter; provided, that if the applicable Award Agreement provides for a longer period of exercisability, that provision shall control.

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Article 17. Amendment, Modification, Suspension, and Termination

17.1 Amendment, Modification, Suspension, and Termination. Subject to Section 17.2, the Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part without approval of the Company’s shareholders, unless such approval is necessary to comply with applicable laws, including the Exchange Act and the Code, or the rules and regulations of any securities exchange on which the Shares are listed. In no event may the Board amend the Plan without the prior approval of the Company’s shareholders to (a) increase the maximum number of Shares which may be issued pursuant to the Plan; (b) increase any limitation set forth in the Plan on the number of Shares which may be issued, or the aggregate value of Awards which may be made, in respect of any type of Award to any single Participant during any specified period; (c) except as provided in Section 4.4, lower the Option Price of a previously granted Option or the Grant Price of a previously granted SAR, whether by repricing, replacing, or regranting through cancellation; (d) change the class of individuals eligible to participate in the Plan; (e) reduce the minimum Option Price or the minimum SAR Grant Price as set forth in Sections 6.3 and 7.4; or (f) reduce the minimum vesting period, Restriction Period or Performance Period requirements applicable to Awards under the Plan.

17.2 Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary (other than Section 17.3), no termination, amendment, suspension, or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.

17.3 Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Board may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 17.3 to any Award granted under the Plan without further consideration or action.

Article 18. Withholding

All Awards under the Plan will be made subject to any applicable withholding for taxes of any kind. The Company shall have the right to deduct from any amount payable under the Plan, including delivery of Shares to be made under the Plan, all federal, state, city, local or foreign taxes of any kind required by law to be withheld with respect to such payment and to take such other actions as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. If Shares are used to satisfy withholding taxes, such shares shall be valued based on the Market Value thereof on the date when the withholding for taxes is required to be made and shall be withheld only up to the minimum required tax withholding rates or such other rate that will not trigger a negative accounting impact on the Company. The Company shall have the right to require a Participant to pay cash to satisfy withholding taxes as a condition to the payment of any amount (whether in cash or Shares) under the Plan.

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Article 19. Successors

All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

Article 20. General Provisions

20.1 Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, any Participant’s fraud resulting in the restatement of the Company’s published earnings, termination of employment for cause, termination of the Participant’s provision of services to the Company and/or its Subsidiary, violation of material Company and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Subsidiaries.

20.2 Legend. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

20.3 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

20.4 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

20.5 Requirements of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

20.6 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:

(a) Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

(b) Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

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20.7 Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

20.8 Investment Representations. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.

20.9 Employees Based Outside of the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company and/or its Subsidiaries operate or have Employees, the Committee, in its sole discretion, shall have the power and authority to:

(a) Determine which Subsidiaries shall be covered by this Plan;

(b) Determine which Employees outside the United States are eligible to participate in this Plan;

(c) Modify the terms and conditions of any Award granted to Employees outside the United States to comply with applicable foreign laws;

(d) Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 20.9 by the Committee shall be attached to this Plan document as appendices; and

(e) Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.

20.10 Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

20.11 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its

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provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent that any individual acquires a right to receive payments from the Company and/or its Subsidiaries under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company or a Subsidiary, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company or a Subsidiary, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.

20.12 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

20.13 Deferrals. To the extent permitted by Code Section 409A, the Committee may, whether at the time of grant or at any time thereafter prior to payment or settlement, require a Participant to defer, or permit (subject to such conditions as the Committee may from time to time establish) a Participant to elect to defer, receipt of all or any portion of any payment of cash or Shares that would otherwise be due to such Participant in payment or settlement of any Award under the Plan. If any such deferral is required by the Committee (or is elected by the Participant with the permission of the Committee), the Committee shall establish rules and procedures for payment of such deferrals. The Committee may provide for the payment or crediting of interest, at such rate or rates as it shall in its discretion deem appropriate, on such deferred amounts credited in cash and the payment or crediting of Dividend Equivalents in respect of deferred amounts credited in Share Equivalents or Restricted Stock Units. Deferred amounts may be paid in a lump sum or in installments in the manner and to the extent permitted, and in accordance with rules and procedures established, by the Committee. This Section shall not apply to any grant of Options or SARs that are intended to be exempt from Code Section 409A.

20.14 Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant or Participants.

20.15 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Company’s or a Subsidiary’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company or a Subsidiary to take any action which such entity deems to be necessary or appropriate.

20.16 Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Connecticut, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Connecticut, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.

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EX-12.01

Exhibit 12.01

RATIO OF EARNINGS TO FIXED CHARGES

Praxair, Inc. and Subsidiaries

	Six Months Ended June 30,			Year Ended December 31,
(Dollar amounts in millions, except ratios)	2009			2008			2007			2006			2005			2004
Pre-tax income from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or income or loss from equity investees	$	821		$	1,685		$	1,613		$	1,364		$	1,130		$	948
Capitalized interest		(24	)		(44	)		(35	)		(21	)		(11	)		(7	)
Depreciation of capitalized interest		8			17			15			14			14			13
Dividends from less than 50%-owned companies carried at equity		4			24			8			9			17			11
Adjusted pre-tax income from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or income or loss from equity investees	$	809		$	1,682		$	1,601		$	1,366		$	1,150		$	965
Fixed charges
Interest on long-term and short-term debt	$	68		$	198		$	173		$	155		$	163		$	155
Capitalized interest		24			44			35			21			11			7
Rental expenses representative of an interest factor		17			37			34			32			32			29
Preferred stock dividend requirements of consolidated subsidiaries		—			—			—			—			—			1
Total fixed charges		109			279			242			208			206			192
Less: preferred stock dividend requirements of consolidated subsidiaries		—			—			—			—			—			(1	)
Total fixed charges less preferred stock dividends	$	109		$	279		$	242		$	208		$	206		$	191
Adjusted pre-tax income from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or income or loss from equity investees plus total fixed charges less preferred stock dividends	$	918		$	1,961		$	1,843		$	1,574		$	1,356		$	1,157
Less: preferred stock dividend requirements of consolidated subsidiaries		—			—			—			—			—			(1	)
Total earnings less preferred stock dividends	$	918		$	1,961		$	1,843		$	1,574		$	1,356		$	1,156
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS		8.4			7.0			7.6			7.6			6.6			6.0
RATIO OF EARNINGS TO FIXED CHARGES		8.4			7.0			7.6			7.6			6.6			6.1

EX-31.01

EXHIBIT 31.01

RULE 13a-14(a) CERTIFICATIONS

Praxair, Inc. and Subsidiaries

I, Stephen F. Angel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Praxair, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2009	By:	/s/ Stephen F. Angel
		Stephen F. Angel
		Chairman, President
		Chief Executive Officer
		(principal executive officer)

EX-31.02

EXHIBIT 31.02

RULE 13a-14(a) CERTIFICATIONS

Praxair, Inc. and Subsidiaries

I, James S. Sawyer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Praxair, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: July 29, 2009	By:	/s/ James S. Sawyer
		James S. Sawyer
		Executive Vice President and
		Chief Financial Officer
		(principal financial officer)

EX-32.01

EXHIBIT 32.01

SECTION 1350 CERTIFICATION

Praxair, Inc. and Subsidiaries

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Praxair, Inc. (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 29, 2009	By:	/s/ Stephen F. Angel
		Stephen F. Angel
		Chairman, President
		Chief Executive Officer
		(principal executive officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.02

EXHIBIT 32.02

SECTION 1350 CERTIFICATION

Praxair, Inc. and Subsidiaries

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Praxair, Inc. (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 29, 2009	By:	/s/ James S. Sawyer
		James S. Sawyer
		Executive Vice President and
		Chief Financial Officer
		(principal financial officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.