SEGMENT INFORMATION

Effective October 31, 2018, Praxair and Linde AG completed the previously announced merger of equals transaction pursuant to the business combination agreement, resulting in a newly formed corporation named Linde plc. See Notes 1,3 and 4 for additional information on the merger. Although it is the company’s intention to create new operating segments that will be used by management to allocate company resources and assess performance, due to the hold separate order with the U.S. Federal Trade Commission (see Note 1) it was not possible to implement this new management organization structure in calendar 2018. Therefore, the company has added Linde AG as a separate segment for 2018 reporting purposes effective with the merger date, which is consistent with the way the company was managed and results reviewed by the Chief Operating Decision Maker. As the restrictions under the hold separate order was lifted effective March 1, 2019, the company implemented a new operating segment structure effective for 2019 reporting periods, as follows: Americas; EMEA (Europe/Middle East/Africa); APAC (Asia/Pacific), Engineering and Other.

Accordingly, during 2018 the company’s operations were organized into five reportable segments, four of which have been determined on a geographic basis of segmentation: North America, Europe, South America and Asia. The company’s worldwide surface technologies business represents the fifth reportable segment. As discussed above, Linde AG became a sixth reportable segment effective with the merger on October 31, 2018.

Linde’s operations consist of two major product lines: industrial gases and surface technologies. The industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). Many of these products are co-products of the same manufacturing process. Linde manufactures and distributes nearly all of its products and manages its customer relationships on a regional basis. Linde’s industrial gases are distributed to various end-markets within a regional segment through one of three basic distribution methods: on-site or tonnage; merchant or bulk; and packaged or cylinder gases. The distribution methods are generally integrated in order to best meet the customer’s needs and very few of its products can be economically transported outside of a region. Therefore, the distribution economics are specific to the various geographies in which the company operates and are consistent with how management assesses performance.

Linde evaluates the performance of its reportable segments based primarily on operating profit, excluding purchase accounting impacts of Linde AG, inter-company royalties and items not indicative of ongoing business trends. Corporate and globally managed expenses, and research and development costs relating to Praxair’s global industrial gases business, are allocated to operating segments based on sales.

The table below presents information about reportable segments for the years ended December 31, 2018, 2017 and 2016.



(Millions of dollars)	2018		2017		2016
Sales (a)
North America	$	6,420	$	6,023	$	5,592
Europe	1,592		1,558		1,392
South America	1,369		1,501		1,399
Asia	1,964		1,738		1,555
Surface Technologies	682		617		596
Linde AG	2,873		$	—	$	—
	$	14,900	$	11,437	$	10,534



	2018			2017			2016
Operating Profit
North America	$	1,648		$	1,517		$	1,431
Europe	316			301			274
South America	215			239			263
Asia	427			333			276
Surface Technologies	118			106			99
Linde AG	252			—			—
Segment operating profit	2,976			2,496			2,343
Transaction costs and other charges	(309		)	(52		)	(96		)
Net gain on sale of business	3,294			—			—
Purchase accounting impacts - Linde AG	(714		)	—			—
Total operating profit	$	5,247		$	2,444		$	2,247



	2018		2017		2016
Total Assets (b)
North America	$	11,643	$	10,419	$	10,019
Europe	769		3,282		2,928
South America	2,675		2,738		2,748
Asia	3,518		3,252		2,984
Surface Technologies	940		745		653
Linde AG	73,841		—		—
	$	93,386	$	20,436	$	19,332



	2018		2017		2016
Depreciation and Amortization
North America	$	660	$	631	$	614
Europe	146		169		155
South America	148		159		133
Asia	204		185		179
Surface Technologies	44		40		41
Linde AG	282		—		—
Segment depreciation and amortization	1,484		1,184		1,122
Purchase accounting impacts - Linde AG	346		—		—
Total depreciation and amortization	$	1,830	$	1,184	$	1,122



	2018		2017		2016
Capital Expenditures and Acquisitions
North America	$	916	$	779	$	989
Europe	157		141		402
South America	97		129		232
Asia	248		209		165
Surface Technologies	93		86		40
Linde AG	397		—		—
	$	1,908	$	1,344	$	1,828



	2018		2017		2016
Sales by Product Group
Atmospheric gases and related	$	8,375	$	7,938	$	7,329
Process gases and other	2,970		2,882		2,609
Surface technologies	682		617		596
Linde AG	2,873		—		—
	$	14,900	$	11,437	$	10,534



	2018		2017		2016
Sales by Major Country
United States	$	5,942	$	4,973	$	4,623
Europe, excluding Germany	2,435		1,372		1,240
Brazil	1,067		1,179		1,091
China	1,032		735		613
Germany	868		401		373
Other – foreign	3,556		2,777		2,594
	$	14,900	$	11,437	$	10,534



	2018		2017		2016
Long-lived Assets by Major Country (c)
United States	$	7,189	$	4,979	$	4,779
Europe, excluding Germany	7,754		1,318		1,170
Germany	2,411		413		379
China	2,237		1,060		975
Brazil	1,012		1,204		1,240
Other – foreign	9,114		2,851		2,706
Total long-lived assets	$	29,717	$	11,825	$	11,249

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(a)	Sales reflect external sales only and include two months of Linde AG sales from the merger date of October 31, 2018 to year end. Intersegment sales, primarily from North America to other segments, were not material.


(b)	Includes equity investments as of December 31, as follows:



(Millions of dollars)	2018		2017		2016
North America	$	118	$	115	$	121
Europe (i)	34		287		243
Asia	306		325		353
Linde AG (ii)	1,380		—		—
	$	1,838	$	727	$	717

(i) The reduction in European equity investments relates primarily to the sale of Praxair's 34% non-controlling interest participation in its Italian joint venture - refer to Note 4, Divestitures, for additional information. Other fluctuations relate to equity investment earnings, dividends, and foreign currency impacts.

(ii) Linde AG equity investments relate primarily to Asia.


(c)	Long-lived assets include property, plant and equipment – net and reflect the impact of the merger with Linde AG (refer to Note 3).