
3.	DISCONTINUED OPERATIONS

Materials Technologies

On 16 September 2015, we announced plans to separate our Materials Technologies business, which contained two divisions, Electronic Materials Division (EMD) and Performance Materials Division (PMD). As further discussed below, we completed the separation of EMD through the spin-off of Versum on 1 October 2016. In addition, we completed the sale of PMD to Evonik Industries AG on 3 January 2017. As a result, these divisions are reflected in our consolidated financial statements as discontinued operations for all periods presented.

Spin-off of Electronic Materials

On 1 October 2016 (the distribution date), Air Products completed the spin-off of Versum into a separate and independent public company by way of a distribution to the Air Products’ stockholders of all of the then issued and outstanding shares of common stock of Versum on the basis of one share of Versum common stock for every two shares of Air Products’ common stock held as of the close of business on 21 September 2016 (the record date for the distribution). Fractional shares of Versum common stock were not distributed to Air Products common stockholders. Air Products’ stockholders received cash in lieu of fractional shares. As a result of the distribution, Versum Materials, Inc. is now an independent public company and its common stock is listed under the symbol “VSM” on the New York Stock Exchange.

In connection with the spin-off, we entered into various agreements necessary to effect the spin-off and to govern the ongoing relationships between Air Products and Versum after the separation, including a transition services agreement by which we provide certain transition services to Versum, generally for no longer than 12 to 24 months. Balances due to/from Versum as of 31 December 2016 primarily related to the transition services agreement and were immaterial. In addition, Seifi Ghasemi, chairman, president and chief executive officer of Air Products, is serving as non-executive chairman of the Versum Board of Directors.

Sale of Performance Materials (Subsequent Event)

On 3 January 2017, we completed the sale of PMD to Evonik Industries AG for $3.8 billion in cash subject to customary post-closing adjustments, including working capital.

Energy-from-Waste

On 29 March 2016, the Board of Directors approved the Company’s exit of its Energy-from-Waste (EfW) business. As a result, efforts to start up and operate the two EfW projects located in Tees Valley, United Kingdom, were discontinued. The decision to exit the business and stop development of the projects was based on continued difficulties encountered and the Company’s conclusion, based on testing and analysis completed during the second quarter of fiscal year 2016, that significant additional time and resources would be required to make the projects operational. Since that time, the EfW segment has been presented as a discontinued operation. During the second quarter of fiscal year 2016, a loss of $945.7 ($846.6 after-tax) was recorded to write down plant assets to their estimated net realizable value and record a liability for plant disposition and other costs. Income tax benefits related only to one of the projects, as the other did not qualify for a local tax deduction.

During the first quarter of fiscal year 2017, we determined that it is unlikely for a buyer to assume the remaining assets and contract obligations, including the related land lease. As a result, we recorded an additional loss of $59.3 ($47.1 after-tax), of which $53.0 was recorded primarily for land lease obligations and $6.3 was recorded to update our estimate of the net realizable value of the plant assets as of 31 December 2016. We may incur additional exit costs in future periods related to other outstanding commitments.

The following table summarizes the carrying amount of the accrual for our actions to dispose of the EfW business at 31 December 2016:



	Asset Actions			Contract Actions/Other			Total
Loss on disposal of business	$	913.5		$	32.2		$	945.7
Noncash expenses	(913.5		)	—			(913.5		)
Cash expenditures	—			(18.6		)	(18.6		)
Currency translation adjustment	—			(1.4		)	(1.4		)
30 September 2016	$	—		$	12.2		$	12.2
Loss on disposal of business	6.3			53.0			59.3
Noncash expenses	(6.3		)	—			(6.3		)
31 December 2016	$	—		$	65.2		$	65.2

The loss on disposal was recorded as a component of discontinued operations. Of the remaining accrual, approximately $60 is included in other noncurrent liabilities of continuing operations and primarily relates to land leases and $5 is included in current liabilities of discontinued operations.

The following table details the businesses and major line items that comprise income from discontinued operations, net of tax, on the consolidated income statements for the three months ended 31 December 2016:



	Three Months Ended
	31 December 2016
							Total
	Performance			Energy-			Discontinued
	Materials			from-Waste^(A)			Operations
Sales	$	254.8		$	—		$	254.8
Cost of sales	179.0			—			179.0
Selling and administrative	20.4			—			20.4
Research and development	5.1			—			5.1
Other income (expense), net	(.4		)	(6.5		)	(6.9		)
Operating Income (Loss)	49.9			(6.5		)	43.4
Equity affiliates’ income	.3			—			.3
Income (Loss) Before Taxes	50.2			(6.5		)	43.7
Income tax provision^(B)	(50.5		)	(1.1		)	(51.6		)
Income (Loss) From Operations of Discontinued Operations, net of tax	100.7			(5.4		)	95.3
Loss on Disposal, net of tax	—			(47.1		)	(47.1		)
Income (Loss) from Discontinued Operations, net of tax	$	100.7		$	(52.5	)	$	48.2


^(A)	The loss from operations of discontinued operations for EfW primarily relates to land leases, administrative costs, and costs incurred for ongoing project exit activities.


^(B)	As a result of the expected gain on sale of PMD that closed in the second quarter of 2017, we released valuation allowances related to capital loss and net operating loss carryforwards that favorably impacted our income tax provision within discontinued operations by approximately $66 during the first quarter of 2017.

The following table details the businesses and major line items that comprise income from discontinued operations, net of tax on the consolidated income statements for the three months ended 31 December 2015:



	Three Months Ended
	31 December 2015
									Total
	Electronic		Performance			Energy-			Discontinued
	Materials		Materials			from-Waste^(A)			Operations
Sales	$	242.6	$	246.9		$	—		$	489.5
Cost of sales	127.3		172.6			—			299.9
Selling and administrative	18.4		19.0			—			37.4
Research and development	10.1		5.0			—			15.1
Other income (expense), net	2.2		(1.2		)	(17.6		)	(16.6		)
Operating Income (Loss)	89.0		49.1			(17.6		)	120.5
Equity affiliates’ income	.2		.2			—			.4
Income (Loss) Before Taxes^(B)	89.2		49.3			(17.6		)	120.9
Income tax provision	24.9		14.5			(3.3		)	36.1
Income (Loss) from Operations of Discontinued Operations, net of tax	64.3		34.8			(14.3		)	84.8
Net Income Attributable to Noncontrolling Interests of Discontinued Operations	2.1		—			—			2.1
Net Income (Loss) From Discontinued Operations, net of tax	$	62.2	$	34.8		$	(14.3	)	$	82.7


^(A)	The loss from operations of discontinued operations for EfW primarily relates to project suspension costs, land leases, and administrative costs.


^(B)	For the three months ended 31 December 2015, income before taxes from operations of discontinued operations attributable to Air Products was $118.4.

The following table details the major line items that comprise total assets and total liabilities of discontinued operations on the consolidated balance sheets as of 31 December 2016:



	31 December 2016
					Total
	Performance		Energy-		Discontinued
	Materials		from-Waste		Operations
Assets
Current Assets
Cash and cash items	$	11.3	$	—	$	11.3
Trade receivables, net	149.5		—		149.5
Inventories	222.2		—		222.2
Plant and equipment, net	306.8		11.0		317.8
Goodwill, net	122.4		—		122.4
Intangible assets, net	23.1		—		23.1
Other receivables and current assets	12.5		1.4		13.9
Total Current Assets	847.8		12.4		860.2
Total Assets	$	847.8	$	12.4	$	860.2
Liabilities
Current Liabilities
Payables and accrued liabilities	$	59.3	$	10.9	$	70.2
Accrued income taxes	11.2		—		11.2
Other current liabilities	7.8		—		7.8
Total Current Liabilities	78.3		10.9		89.2
Total Liabilities	$	78.3	$	10.9	$	89.2

The following table details the major line items that comprise total assets and total liabilities of discontinued operations on the consolidated balance sheets as of 30 September 2016:



	30 September 2016
							Total
	Electronic		Performance		Energy-		Discontinued
	Materials		Materials		from-Waste		Operations
Assets
Current Assets
Cash and cash items	$	170.6	$	37.5	$	—	$	208.1
Trade receivables, net	134.7		159.0		—		293.7
Inventories	138.1		226.8		—		364.9
Plant and equipment, net	—		—		18.2		18.2
Other receivables and current assets	34.5		5.6		1.2		41.3
Total Current Assets	477.9		428.9		19.4		926.2
Plant and equipment, net	296.5		296.5		—		593.0
Goodwill, net	180.0		125.0		—		305.0
Intangible assets, net	75.1		25.0		—		100.1
Other noncurrent assets	37.5		6.7		—		44.2
Total Noncurrent Assets	589.1		453.2		—		1,042.3
Total Assets	$	1,067.0	$	882.1	$	19.4	$	1,968.5
Liabilities
Current Liabilities
Payables and accrued liabilities	$	85.8	$	72.5	$	19.0	$	177.3
Accrued income taxes	22.7		6.0		—		28.7
Current portion of long-term debt	5.8		—		—		5.8
Total Current Liabilities	114.3		78.5		19.0		211.8
Long-term debt	981.8		—		—		981.8
Deferred income taxes	50.3		6.4		—		56.7
Other noncurrent liabilities	47.4		9.6		—		57.0
Total Noncurrent Liabilities	1,079.5		16.0		—		1,095.5
Total Liabilities	$	1,193.8	$	94.5	$	19.0	$	1,307.3