ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
1-11037 | 06-1249050 | |
(Commission File Number) | (IRS Employer Identification No.) | |
10 Riverview Drive, DANBURY, CT | 06810-6268 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | ||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
INDEX | ||
PART I - FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Quarter Ended September 30, | |||||||
2018 | 2017 | ||||||
SALES | $ | 3,024 | $ | 2,922 | |||
Cost of sales, exclusive of depreciation and amortization | 1,714 | 1,652 | |||||
Selling, general and administrative | 294 | 300 | |||||
Depreciation and amortization | 306 | 298 | |||||
Research and development | 23 | 23 | |||||
Transaction costs and other charges | 31 | 14 | |||||
Other income (expense) - net | 13 | (3 | ) | ||||
OPERATING PROFIT | 669 | 632 | |||||
Interest expense - net | 40 | 41 | |||||
Net pension and OPEB cost (benefit), excluding service cost | 6 | 6 | |||||
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS | 623 | 585 | |||||
Income taxes | 156 | 162 | |||||
INCOME BEFORE EQUITY INVESTMENTS | 467 | 423 | |||||
Income from equity investments | 13 | 12 | |||||
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) | 480 | 435 | |||||
Less: noncontrolling interests | (19 | ) | (16 | ) | |||
NET INCOME - PRAXAIR, INC. | $ | 461 | $ | 419 | |||
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS | |||||||
Basic earnings per share | $ | 1.60 | $ | 1.46 | |||
Diluted earnings per share | $ | 1.58 | $ | 1.45 | |||
WEIGHTED AVERAGE SHARES OUTSTANDING (000’s): | |||||||
Basic shares outstanding | 288,093 | 286,467 | |||||
Diluted shares outstanding | 291,513 | 289,216 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
SALES | $ | 9,084 | $ | 8,484 | |||
Cost of sales, exclusive of depreciation and amortization | 5,114 | 4,800 | |||||
Selling, general and administrative | 911 | 895 | |||||
Depreciation and amortization | 928 | 877 | |||||
Research and development | 71 | 69 | |||||
Transaction costs and other charges | 74 | 35 | |||||
Other income (expense) - net | 25 | (3 | ) | ||||
OPERATING PROFIT | 2,011 | 1,805 | |||||
Interest expense - net | 130 | 120 | |||||
Net pension and OPEB cost (benefit), excluding service cost | 10 | (7 | ) | ||||
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS | 1,871 | 1,692 | |||||
Income taxes | 462 | 468 | |||||
INCOME BEFORE EQUITY INVESTMENTS | 1,409 | 1,224 | |||||
Income from equity investments | 42 | 35 | |||||
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) | 1,451 | 1,259 | |||||
Less: noncontrolling interests | (48 | ) | (45 | ) | |||
NET INCOME - PRAXAIR, INC. | $ | 1,403 | $ | 1,214 | |||
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS | |||||||
Basic earnings per share | $ | 4.87 | $ | 4.24 | |||
Diluted earnings per share | $ | 4.82 | $ | 4.21 | |||
WEIGHTED AVERAGE SHARES OUTSTANDING (000’s): | |||||||
Basic shares outstanding | 287,800 | 286,022 | |||||
Diluted shares outstanding | 291,275 | 288,524 |
Quarter Ended September 30, | |||||||
2018 | 2017 | ||||||
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) | $ | 480 | $ | 435 | |||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Translation adjustments: | |||||||
Foreign currency translation adjustments | (89 | ) | 204 | ||||
Income taxes | 2 | 19 | |||||
Translation adjustments | (87 | ) | 223 | ||||
Funded status - retirement obligations (Note 11): | |||||||
Retirement program remeasurements | 3 | (9 | ) | ||||
Reclassifications to net income | 22 | 19 | |||||
Income taxes | (5 | ) | (4 | ) | |||
Funded status - retirement obligations | 20 | 6 | |||||
Derivative instruments (Note 6): | |||||||
Current quarter unrealized gain (loss) | — | — | |||||
Reclassifications to net income | — | — | |||||
Income taxes | — | — | |||||
Derivative instruments | — | — | |||||
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | (67 | ) | 229 | ||||
COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS) | 413 | 664 | |||||
Less: noncontrolling interests | (12 | ) | (26 | ) | |||
COMPREHENSIVE INCOME (LOSS) - PRAXAIR, INC. | $ | 401 | $ | 638 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) | $ | 1,451 | $ | 1,259 | |||
OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Translation adjustments: | |||||||
Foreign currency translation adjustments | (623 | ) | 520 | ||||
Income taxes | 8 | 77 | |||||
Translation adjustments | (615 | ) | 597 | ||||
Funded status - retirement obligations (Note 11): | |||||||
Retirement program remeasurements | (5 | ) | (29 | ) | |||
Reclassifications to net income | 56 | 39 | |||||
Income taxes | (11 | ) | (4 | ) | |||
Funded status - retirement obligations | 40 | 6 | |||||
Derivative instruments (Note 6): | |||||||
Current period unrealized gain (loss) | — | — | |||||
Reclassifications to net income | — | — | |||||
Income taxes | — | — | |||||
Derivative instruments | — | — | |||||
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | (575 | ) | 603 | ||||
COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS) | 876 | 1,862 | |||||
Less: noncontrolling interests | (31 | ) | (73 | ) | |||
COMPREHENSIVE INCOME (LOSS) - PRAXAIR, INC. | $ | 845 | $ | 1,789 |
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 600 | $ | 617 | |||
Accounts receivable - net | 1,852 | 1,804 | |||||
Inventories | 622 | 614 | |||||
Prepaid and other current assets | 231 | 250 | |||||
TOTAL CURRENT ASSETS | 3,305 | 3,285 | |||||
Property, plant and equipment (less accumulated depreciation of $13,987 in 2018 and $13,819 in 2017) | 11,725 | 12,057 | |||||
Goodwill | 3,201 | 3,233 | |||||
Other intangible assets - net | 513 | 553 | |||||
Other long-term assets | 1,235 | 1,308 | |||||
TOTAL ASSETS | $ | 19,979 | $ | 20,436 | |||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 978 | $ | 972 | |||
Short-term debt | 115 | 238 | |||||
Current portion of long-term debt | 1,582 | 979 | |||||
Other current liabilities | 1,185 | 1,118 | |||||
TOTAL CURRENT LIABILITIES | 3,860 | 3,307 | |||||
Long-term debt | 6,615 | 7,783 | |||||
Other long-term liabilities | 2,754 | 2,824 | |||||
TOTAL LIABILITIES | 13,229 | 13,914 | |||||
Commitments and contingencies (Note 12) | |||||||
Redeemable noncontrolling interests (Note 14) | 15 | 11 | |||||
Praxair, Inc. Shareholders’ Equity: | |||||||
Common stock $0.01 par value, authorized - 800,000,000 shares, issued 2018 and 2017 - 383,230,625 shares | 4 | 4 | |||||
Additional paid-in capital | 4,088 | 4,084 | |||||
Retained earnings | 13,913 | 13,224 | |||||
Accumulated other comprehensive income (loss) (Note 14) | (4,656 | ) | (4,098 | ) | |||
Less: Treasury stock, at cost (2018 - 95,374,388 shares and 2017 - 96,453,634 shares) | (7,117 | ) | (7,196 | ) | |||
Total Praxair, Inc. Shareholders’ Equity | 6,232 | 6,018 | |||||
Noncontrolling interests | 503 | 493 | |||||
TOTAL EQUITY | 6,735 | 6,511 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 19,979 | $ | 20,436 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
OPERATIONS | |||||||
Net income - Praxair, Inc. | $ | 1,403 | $ | 1,214 | |||
Noncontrolling interests | 48 | 45 | |||||
Net income (including noncontrolling interests) | 1,451 | 1,259 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Transaction costs and other charges, net of payments | 35 | 27 | |||||
Depreciation and amortization | 928 | 877 | |||||
Deferred income taxes | (6 | ) | 22 | ||||
Share-based compensation | 40 | 44 | |||||
Working capital: | |||||||
Accounts receivable | (121 | ) | (83 | ) | |||
Inventory | (29 | ) | (11 | ) | |||
Prepaid and other current assets | 3 | (64 | ) | ||||
Payables and accruals | 101 | 11 | |||||
Pension contributions | (17 | ) | (14 | ) | |||
Long-term assets, liabilities and other | (36 | ) | 137 | ||||
Net cash provided by operating activities | 2,349 | 2,205 | |||||
INVESTING | |||||||
Capital expenditures | (1,056 | ) | (972 | ) | |||
Acquisitions, net of cash acquired | (6 | ) | (18 | ) | |||
Divestitures and asset sales | 77 | 22 | |||||
Net cash used for investing activities | (985 | ) | (968 | ) | |||
FINANCING | |||||||
Short-term debt borrowings (repayments) - net | (122 | ) | (353 | ) | |||
Long-term debt borrowings | 2 | 11 | |||||
Long-term debt repayments | (505 | ) | (160 | ) | |||
Issuances of common stock | 70 | 90 | |||||
Purchases of common stock | (2 | ) | (11 | ) | |||
Cash dividends - Praxair, Inc. shareholders | (712 | ) | (675 | ) | |||
Noncontrolling interest transactions and other | (33 | ) | (85 | ) | |||
Net cash provided by (used for) financing activities | (1,302 | ) | (1,183 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (79 | ) | 29 | ||||
Change in cash and cash equivalents | (17 | ) | 83 | ||||
Cash and cash equivalents, beginning-of-period | 617 | 524 | |||||
Cash and cash equivalents, end-of-period | $ | 600 | $ | 607 |
• | Revenue Recognition – In May 2014, the FASB issued updated guidance on the reporting and disclosure of revenue. Effective January 1, 2018, Praxair has adopted this guidance using the modified retrospective transition method. No material differences in revenue recognition accounting were identified under the new guidance compared with the Company's historic revenue recognition accounting (see Note 15). |
• | Classification of Certain Cash Receipts and Cash Payments – In August 2016, the FASB issued updated guidance on the classification of certain cash receipts and cash payments within the statement of cash flows. The update provides accounting guidance for specific cash flow issues with the objective of reducing diversity in practice. The adoption of this guidance did not have a material impact on the financial statements. |
• | Intra-Entity Asset Transfers – In October 2016, the FASB issued updated guidance for income tax accounting of intra-entity transfers of assets other than inventory. The update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory in the period when the transfer occurs. The adoption of this guidance did not have a material impact on the financial statements. |
• | Pension Costs - In March 2017, the FASB issued updated guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires the service cost component be reported in the same line item or items as other compensation costs arising from services rendered by employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and not included within operating profit. This guidance was adopted in the first quarter 2018. Accordingly, non-service related components of net periodic pension and postretirement benefit costs were reclassified out of "Operating Profit" to "Net pension and OPEB cost (benefit), excluding service cost" using the practical expedient to use the amounts disclosed in the retirement benefits note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements (see Note 11). |
• | Leases – In February 2016, the FASB issued updated guidance on the accounting and financial statement presentation of leases. The new guidance requires lessees to recognize a right-of-use asset and lease liability for all leases, except those that meet certain scope exceptions, and would require expanded quantitative and qualitative disclosures. This guidance will be effective for Praxair beginning in the first quarter 2019 and requires companies to transition using a modified retrospective approach. Praxair is in the process of implementing the new guidance and will provide updates on the expected impact to Praxair in future filings, as appropriate. |
• | Credit Losses on Financial Instruments – In June 2016, the FASB issued an update on the measurement of credit losses. The guidance introduces a new accounting model for expected credit losses on financial instruments, including trade receivables, based on estimates of current expected credit losses. This guidance will be effective for Praxair beginning in the first quarter 2020, with early adoption permitted beginning in the first quarter 2019 and requires companies to apply the change in accounting on a prospective basis. We are currently evaluating the impact this update will have on our consolidated financial statements. |
• | Simplifying the Test for Goodwill Impairment – In January 2017, the FASB issued updated guidance on the measurement of goodwill. The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The guidance will be effective for Praxair beginning in the first quarter 2020. Praxair does not expect this guidance to have a material impact. |
• | Derivatives and Hedging - In August 2017, the FASB issued updated guidance on accounting for hedging activities. The new guidance changes both the designation and measurement for qualifying hedging relationships and the presentation of hedge results. This guidance will be effective for Praxair beginning in the first quarter 2019, with early adoption optional. Praxair is currently evaluating the impact this update will have on our consolidated financial statements. |
• | Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income – In February 2018, the FASB issued updated guidance which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. This new guidance will be effective for Praxair beginning in the first quarter 2019 on a retrospective basis, with early adoption optional. Praxair is currently assessing the impact and timing of adoption. |
(Millions of dollars) | September 30, 2018 | December 31, 2017 | |||||
Inventories | |||||||
Raw materials and supplies | $ | 218 | $ | 224 | |||
Work in process | 54 | 57 | |||||
Finished goods | 350 | 333 | |||||
Total inventories | $ | 622 | $ | 614 |
(Millions of dollars) | September 30, 2018 | December 31, 2017 | |||||
SHORT-TERM | |||||||
Commercial paper and U.S. bank borrowings | $ | 83 | $ | 202 | |||
Other bank borrowings (primarily international) | 32 | 36 | |||||
Total short-term debt | 115 | 238 | |||||
LONG-TERM (a) | |||||||
U.S. borrowings (U.S. dollar denominated unless otherwise noted) | |||||||
1.20% Notes due 2018 (b) | — | 498 | |||||
1.25% Notes due 2018 (b, c) | 475 | 475 | |||||
1.90% Notes due 2019 | 500 | 500 | |||||
4.50% Notes due 2019 | 599 | 599 | |||||
1.50% Euro-denominated notes due 2020 | 694 | 717 | |||||
2.25% Notes due 2020 | 299 | 299 | |||||
4.05% Notes due 2021 | 499 | 498 | |||||
3.00% Notes due 2021 | 498 | 497 | |||||
2.45% Notes due 2022 | 598 | 598 | |||||
2.20% Notes due 2022 | 498 | 498 | |||||
2.70% Notes due 2023 | 498 | 498 | |||||
1.20% Euro-denominated notes due 2024 | 636 | 658 | |||||
2.65% Notes due 2025 | 398 | 397 | |||||
1.625% Euro-denominated notes due 2025 | 574 | 594 | |||||
3.20% Notes due 2026 | 725 | 725 | |||||
3.55% Notes due 2042 | 662 | 662 | |||||
Other | 10 | 12 | |||||
International bank borrowings | 31 | 33 | |||||
Obligations under capital leases | 3 | 4 | |||||
8,197 | 8,762 | ||||||
Less: current portion of long-term debt | (1,582 | ) | (979 | ) | |||
Total long-term debt | 6,615 | 7,783 | |||||
Total debt | $ | 8,312 | $ | 9,000 |
(a) | Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable. |
(b) | In March 2018, Praxair repaid $500 million of 1.20% notes that became due. On November 7, 2018, Praxair repaid $475 million of 1.25% notes that became due. |
(c) | September 30, 2018 and December 31, 2017 include a less than $1 million fair value decrease and a less than $1 million increase, respectively, related to hedge accounting. See Note 6 for additional information. |
Fair Value | |||||||||||||||||||||||
Notional Amounts | Assets | Liabilities | |||||||||||||||||||||
(Millions of dollars) | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | |||||||||||||||||
Derivatives Not Designated as Hedging Instruments: | |||||||||||||||||||||||
Currency contracts: | |||||||||||||||||||||||
Balance sheet items (a) | $ | 2,099 | $ | 2,693 | $ | 16 | $ | 16 | $ | 6 | $ | 16 | |||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||
Currency contracts: | |||||||||||||||||||||||
Balance sheet items (a) | $ | — | $ | 38 | $ | — | $ | — | $ | — | $ | 2 | |||||||||||
Forecasted purchases (a) | 6 | 4 | — | 1 | — | — | |||||||||||||||||
Interest rate contracts: | |||||||||||||||||||||||
Interest rate swaps (a, b) | 475 | 475 | — | — | — | — | |||||||||||||||||
Total Hedges | $ | 481 | $ | 517 | $ | — | $ | 1 | $ | — | $ | 2 | |||||||||||
Total Derivatives | $ | 2,580 | $ | 3,210 | $ | 16 | $ | 17 | $ | 6 | $ | 18 |
(a) | Assets are recorded in prepaid and other current assets, and liabilities are recorded in other current liabilities. |
(b) | On November 7, 2018, Praxair repaid $475 million of 1.25% notes that became due and the associated interest rate swap was settled. |
Year Terminated | Original Gain / (Loss) | Unrecognized Gain / (Loss) (a) | |||||||||||
(Millions of dollars) | September 30, 2018 | December 31, 2017 | |||||||||||
Treasury Rate Locks | |||||||||||||
Underlying debt instrument: | |||||||||||||
$500 million 2.20% fixed-rate notes that mature in 2022 (b) | 2012 | $ | (2 | ) | $ | — | $ | (1 | ) | ||||
$500 million 3.00% fixed-rate notes that mature in 2021 (b) | 2011 | (11 | ) | (3 | ) | (4 | ) | ||||||
$600 million 4.50% fixed-rate notes that mature in 2019 (b) | 2009 | 16 | 1 | 3 | |||||||||
Total - pre-tax | $ | (2 | ) | $ | (2 | ) | |||||||
Less: income taxes | 1 | 1 | |||||||||||
After- tax amounts | $ | (1 | ) | $ | (1 | ) |
(a) | The unrecognized gains / (losses) for the treasury rate locks are shown in accumulated other comprehensive income (“AOCI”) and are being recognized on a straight line basis to interest expense – net over the term of the underlying debt agreements. Refer to the table below summarizing the impact on the company’s consolidated statements of income and AOCI for current period gain (loss) recognition. |
(b) | The notional amount of the treasury rate lock contracts are equal to the underlying debt instrument with the exception of the treasury rate lock contract entered into to hedge the $600 million 4.50% fixed-rate notes that mature in 2019. The notional amount of this contract was $500 million. |
Amount of Pre-Tax Gain (Loss) Recognized in Earnings * | |||||||||||||||
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Millions of dollars) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Derivatives Not Designated as Hedging Instruments | |||||||||||||||
Currency contracts: | |||||||||||||||
Balance sheet items | |||||||||||||||
Debt-related | $ | 17 | $ | 19 | $ | (15 | ) | $ | 128 | ||||||
Other balance sheet items | 3 | (1 | ) | 4 | 1 | ||||||||||
Total | $ | 20 | $ | 18 | $ | (11 | ) | $ | 129 |
Quarter Ended | |||||||||||||||
Amount of Gain (Loss) Recognized in AOCI | Amount of Gain (Loss) Reclassified from AOCI to the Consolidated Statement of Income | ||||||||||||||
(Millions of dollars) | September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||
Currency contracts: | |||||||||||||||
Balance sheet items | $ | — | $ | (1 | ) | $ | — | $ | — | ||||||
Forecasted purchases | — | 1 | — | — | |||||||||||
Interest rate contracts: | |||||||||||||||
Treasury rate lock contracts | — | — | — | — | |||||||||||
Total - pre tax | $ | — | $ | — | $ | — | $ | — | |||||||
Less: income taxes | — | — | — | — | |||||||||||
Total - Net of Taxes | $ | — | $ | — | $ | — | $ | — |
Nine Months Ended | |||||||||||||||
Amount of Gain (Loss) Recognized in AOCI | Amount of Gain (Loss) Reclassified from AOCI to the Consolidated Statement of Income | ||||||||||||||
(Millions of dollars) | September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||
Currency contracts: | |||||||||||||||
Balance sheet items | $ | — | $ | (1 | ) | $ | — | $ | — | ||||||
Forecasted purchases | — | 1 | — | — | |||||||||||
Interest rate contracts: | |||||||||||||||
Treasury rate lock contracts | — | — | — | — | |||||||||||
Total - pre tax | $ | — | $ | — | $ | — | $ | — | |||||||
Less: income taxes | — | — | — | — | |||||||||||
Total - Net of Taxes | $ | — | $ | — | $ | — | $ | — |
Fair Value Measurements Using | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||
(Millions of dollars) | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | |||||||||||||
Assets | |||||||||||||||||||
Derivatives | — | — | $ | 16 | $ | 17 | — | — | |||||||||||
Liabilities | |||||||||||||||||||
Derivatives | — | — | $ | 6 | $ | 18 | — | — |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
Numerator (Millions of dollars) | ||||||||||||||
Net income - Praxair, Inc. | $ | 461 | $ | 419 | $ | 1,403 | $ | 1,214 | ||||||
Denominator (Thousands of shares) | ||||||||||||||
Weighted average shares outstanding | 287,752 | 286,103 | 287,465 | 285,654 | ||||||||||
Shares earned and issuable under compensation plans | 341 | 364 | 335 | 368 | ||||||||||
Weighted average shares used in basic earnings per share | 288,093 | 286,467 | 287,800 | 286,022 | ||||||||||
Effect of dilutive securities | ||||||||||||||
Stock options and awards | 3,420 | 2,749 | 3,475 | 2,502 | ||||||||||
Weighted average shares used in diluted earnings per share | 291,513 | 289,216 | 291,275 | 288,524 | ||||||||||
Basic Earnings Per Share | $ | 1.60 | $ | 1.46 | $ | 4.87 | $ | 4.24 | ||||||
Diluted Earnings Per Share | $ | 1.58 | $ | 1.45 | $ | 4.82 | $ | 4.21 |
(Millions of dollars) | North America | South America | Europe | Asia | Surface Technologies | Total | |||||||||||||||||
Balance, December 31, 2017 | $ | 2,202 | $ | 129 | $ | 698 | $ | 61 | $ | 143 | $ | 3,233 | |||||||||||
Acquisitions | 3 | — | — | — | — | 3 | |||||||||||||||||
Purchase adjustments & other | 12 | — | — | — | — | 12 | |||||||||||||||||
Foreign currency translation | — | (27 | ) | (16 | ) | (1 | ) | (3 | ) | (47 | ) | ||||||||||||
Balance, September 30, 2018 | $ | 2,217 | $ | 102 | $ | 682 | $ | 60 | $ | 140 | $ | 3,201 |
(Millions of dollars) | Customer & License/Use Agreements | Non-compete Agreements | Patents & Other | Total | |||||||||||
Cost: | |||||||||||||||
Balance, December 31, 2017 | $ | 772 | $ | 28 | $ | 52 | $ | 852 | |||||||
Additions | 1 | 1 | — | 2 | |||||||||||
Foreign currency translation | (9 | ) | — | (1 | ) | (10 | ) | ||||||||
Other* | (20 | ) | (5 | ) | — | (25 | ) | ||||||||
Balance, September 30, 2018 | $ | 744 | $ | 24 | $ | 51 | $ | 819 | |||||||
Less: Accumulated amortization | |||||||||||||||
Balance, December 31, 2017 | $ | (260 | ) | $ | (18 | ) | $ | (21 | ) | $ | (299 | ) | |||
Amortization expense | (28 | ) | (3 | ) | (3 | ) | (34 | ) | |||||||
Foreign currency translation | 3 | — | — | 3 | |||||||||||
Other* | 19 | 5 | — | 24 | |||||||||||
Balance, September 30, 2018 | $ | (266 | ) | $ | (16 | ) | $ | (24 | ) | $ | (306 | ) | |||
Net balance at September 30, 2018 | $ | 478 | $ | 8 | $ | 27 | $ | 513 |
(Millions of dollars) | |||
Remaining 2018 | $ | 11 | |
2019 | 43 | ||
2020 | 41 | ||
2021 | 39 | ||
2022 | 38 | ||
Thereafter | 341 | ||
$ | 513 |
Nine months ended September 30, | |||||
2018 | 2017 | ||||
Dividend yield | 2.1 | % | 2.7 | % | |
Volatility | 14.4 | % | 14.0 | % | |
Risk-free interest rate | 2.67 | % | 2.13 | % | |
Expected term years | 5 | 6 |
Number of Options (000’s) | Average Exercise Price | Average Remaining Life | Aggregate Intrinsic Value | |||||||||
Outstanding at January 1, 2018 | 10,787 | $ | 108.70 | |||||||||
Granted | 1,625 | 154.00 | ||||||||||
Exercised | (1,502 | ) | 94.50 | |||||||||
Cancelled or Expired | (63 | ) | 128.91 | |||||||||
Outstanding at September 30, 2018 | 10,847 | 117.34 | 6.2 | $ | 471 | |||||||
Exercisable at September 30, 2018 | 7,143 | $ | 110.46 | 5.0 | $ | 359 |
Performance-Based | Restricted Stock | ||||||||||||
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, 2018 | 665 | $ | 113.40 | 264 | $ | 107.56 | |||||||
Granted | — | — | 269 | 144.79 | |||||||||
Vested | (78 | ) | 119.98 | (89 | ) | 116.22 | |||||||
Cancelled and Forfeited | (151 | ) | 110.32 | (17 | ) | 100.23 | |||||||
Non-vested at September 30, 2018 | 436 | $ | 110.02 | 427 | $ | 129.52 |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
Pensions | OPEB | Pensions | OPEB | |||||||||||||||||||||||||||||
(Millions of dollars) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Amount recognized in Operating Profit | ||||||||||||||||||||||||||||||||
Service cost | $ | 12 | $ | 12 | $ | — | $ | — | $ | 36 | $ | 35 | $ | 1 | $ | 2 | ||||||||||||||||
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost | ||||||||||||||||||||||||||||||||
Interest cost | 25 | 25 | 1 | 2 | 76 | 76 | 3 | 4 | ||||||||||||||||||||||||
Expected return on plan assets | (42 | ) | (40 | ) | — | — | (125 | ) | (120 | ) | — | — | ||||||||||||||||||||
Net amortization and deferral | 18 | 17 | — | — | 54 | 51 | (2 | ) | (2 | ) | ||||||||||||||||||||||
Curtailment gain (a) | — | — | — | — | — | — | — | (18 | ) | |||||||||||||||||||||||
Settlement charge | 4 | 2 | $ | — | $ | — | 4 | 2 | $ | — | $ | — | ||||||||||||||||||||
$ | 5 | $ | 4 | $ | 1 | $ | 2 | $ | 9 | $ | 9 | $ | 1 | $ | (16 | ) | ||||||||||||||||
Net periodic benefit cost (benefit) | $ | 17 | $ | 16 | $ | 1 | $ | 2 | $ | 45 | $ | 44 | $ | 2 | $ | (14 | ) |
• | During May 2009, the Brazilian government published Law 11941/2009 instituting a new voluntary amnesty program (“Refis Program”) which allowed Brazilian companies to settle certain federal tax disputes at reduced amounts. During the 2009 third quarter, Praxair decided that it was economically beneficial to settle many of its outstanding federal tax disputes and such disputes were enrolled in the Refis Program, subject to final calculation and review by the Brazilian federal government. The Company recorded estimated liabilities based on the terms of the Refis Program. Since 2009, Praxair has been unable to reach final agreement on the calculations and initiated litigation against the government in an attempt to resolve certain items. Open issues relate to the following matters: (i) application of cash deposits and net operating loss carryforwards to satisfy obligations, and (ii) the amount of tax reductions available under the Refis Program. It is difficult to estimate the timing of resolution of legal matters in Brazil. |
• | At September 30, 2018 the most significant non-income and income tax claims in Brazil, after enrollment in the Refis Program, relate to state VAT tax matters and a federal income tax matter where the taxing authorities are challenging the tax rate that should be applied to income generated by a subsidiary company. The total estimated exposure relating to such claims, including interest and penalties, as appropriate, is approximately $205 million. Praxair has not recorded any liabilities 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 very difficult to estimate the timing of resolution of these matters; however, it is possible that certain of these matters may be resolved within the near term. The company is vigorously defending against the proceedings. |
• | On September 1, 2010, CADE (Brazilian Administrative Council for Economic Defense) announced alleged anticompetitive activity on the part of five industrial gas companies in Brazil and imposed fines on all five companies. Originally, CADE imposed a civil fine of R$2.2 billion Brazilian reais (US$550 million) against White Martins, the Brazil-based subsidiary of Praxair, Inc. In response to a motion for clarification, the fine was reduced to R$1.7 billion Brazilian reais (US$425 million) due to a calculation error made by CADE. The amount of the fine is subject to indexation using SELIC. On September 2, 2010, Praxair issued a press release and filed a report on Form 8-K rejecting all claims and stating that the fine represents a gross and arbitrary disregard of Brazilian law. |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Millions of dollars) | 2018 | 2017 | 2018 | 2017 | |||||||||||
SALES(a) | |||||||||||||||
North America | $ | 1,613 | $ | 1,518 | $ | 4,770 | $ | 4,481 | |||||||
Europe | 425 | 407 | 1,297 | 1,146 | |||||||||||
South America | 329 | 389 | 1,043 | 1,131 | |||||||||||
Asia | 487 | 451 | 1,465 | 1,268 | |||||||||||
Surface Technologies | 170 | 157 | 509 | 458 | |||||||||||
Total sales | $ | 3,024 | $ | 2,922 | $ | 9,084 | $ | 8,484 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Millions of dollars) | 2018 | 2017 | 2018 | 2017 | |||||||||||
OPERATING PROFIT | |||||||||||||||
North America | $ | 420 | $ | 386 | $ | 1,258 | $ | 1,121 | |||||||
Europe | 81 | 79 | 248 | 220 | |||||||||||
South America | 57 | 66 | 167 | 178 | |||||||||||
Asia | 110 | 88 | 321 | 243 | |||||||||||
Surface Technologies | 32 | 27 | 91 | 78 | |||||||||||
Segment operating profit | 700 | 646 | 2,085 | 1,840 | |||||||||||
Transaction costs and other charges (Note 2) | (31 | ) | (14 | ) | (74 | ) | (35 | ) | |||||||
Total operating profit | $ | 669 | $ | 632 | $ | 2,011 | $ | 1,805 |
(a) | Sales reflect external sales only. Intersegment sales, primarily from North America to other segments, were not material. |
Quarter Ended September 30, | |||||||||||||||||||||||
(Millions of dollars) | 2018 | 2017 | |||||||||||||||||||||
Activity | Praxair, Inc. Shareholders’ Equity | Noncontrolling Interests | Total Equity | Praxair, Inc. Shareholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||
Balance, beginning of period | $ | 6,027 | $ | 501 | $ | 6,528 | $ | 5,807 | $ | 453 | $ | 6,260 | |||||||||||
Net income (a) | 461 | 19 | 480 | 419 | 16 | 435 | |||||||||||||||||
Other comprehensive income (loss) | (60 | ) | (7 | ) | (67 | ) | 219 | 10 | 229 | ||||||||||||||
Noncontrolling interests: | |||||||||||||||||||||||
Additions (reductions) | — | — | — | — | 2 | 2 | |||||||||||||||||
Dividends and other capital changes | — | (10 | ) | (10 | ) | — | (6 | ) | (6 | ) | |||||||||||||
Redemption value adjustments | (1 | ) | — | (1 | ) | — | — | — | |||||||||||||||
Dividends to Praxair, Inc. common stock holders ($0.825 per share in 2018 and $0.7875 per share in 2017) | (238 | ) | — | (238 | ) | (225 | ) | — | (225 | ) | |||||||||||||
Issuances of common stock: | |||||||||||||||||||||||
For the dividend reinvestment and stock purchase plan | 2 | — | 2 | 2 | — | 2 | |||||||||||||||||
For employee savings and incentive plans | 23 | — | 23 | 18 | — | 18 | |||||||||||||||||
Purchases of common stock | (1 | ) | — | (1 | ) | — | — | — | |||||||||||||||
Share-based compensation | 19 | — | 19 | 16 | — | 16 | |||||||||||||||||
Balance, end of period | $ | 6,232 | $ | 503 | $ | 6,735 | $ | 6,256 | $ | 475 | $ | 6,731 |
Nine Months Ended September 30, | |||||||||||||||||||||||
(Millions of dollars) | 2018 | 2017 | |||||||||||||||||||||
Activity | Praxair, Inc. Shareholders’ Equity | Noncontrolling Interests | Total Equity | Praxair, Inc. Shareholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||
Balance, beginning of period | $ | 6,018 | $ | 493 | $ | 6,511 | $ | 5,021 | $ | 420 | $ | 5,441 | |||||||||||
Net income (a) | 1,403 | 46 | 1,449 | 1,214 | 44 | 1,258 | |||||||||||||||||
Other comprehensive income (loss) | (558 | ) | (17 | ) | (575 | ) | 575 | 28 | 603 | ||||||||||||||
Noncontrolling interests: | |||||||||||||||||||||||
Additions (reductions) | — | 7 | 7 | — | 9 | 9 | |||||||||||||||||
Dividends and other capital changes | — | (26 | ) | (26 | ) | — | (26 | ) | (26 | ) | |||||||||||||
Redemption value adjustments | (3 | ) | — | (3 | ) | — | — | — | |||||||||||||||
Dividends to Praxair, Inc. common stock holders ($2.475 per share in 2018 and $2.36 per share in 2017) | (712 | ) | — | (712 | ) | (675 | ) | — | (675 | ) | |||||||||||||
Issuances of common stock: | |||||||||||||||||||||||
For the dividend reinvestment and stock purchase plan | 5 | — | 5 | 5 | — | 5 | |||||||||||||||||
For employee savings and incentive plans | 41 | — | 41 | 72 | — | 72 | |||||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||||
Purchases of common stock | (2 | ) | — | (2 | ) | — | — | — | |||||||||||||||
Share-based compensation | 40 | — | 40 | 44 | — | 44 | |||||||||||||||||
Balance, end of period | $ | 6,232 | $ | 503 | $ | 6,735 | $ | 6,256 | $ | 475 | $ | 6,731 |
(a) | Net income for noncontrolling interests excludes Net income related to redeemable noncontrolling interests of $2 million for the nine months ended September 30, 2018 ($1 million for the same time period in 2017) which is not part of total equity (see redeemable noncontrolling interests section below). |
September 30, | December 31, | ||||||
(Millions of dollars) | 2018 | 2017 | |||||
Cumulative translation adjustment - net of taxes: | |||||||
North America | $ | (891 | ) | $ | (885 | ) | |
South America | (2,391 | ) | (2,004 | ) | |||
Europe | (427 | ) | (398 | ) | |||
Asia | (314 | ) | (151 | ) | |||
Surface Technologies | (30 | ) | (17 | ) | |||
(4,053 | ) | (3,455 | ) | ||||
Derivatives - net of taxes | (1 | ) | (1 | ) | |||
Pension / OPEB funded status obligation (net of $336 million and $347 million tax benefit in September 30, 2018 and December 31, 2017, respectively) | (602 | ) | (642 | ) | |||
$ | (4,656 | ) | $ | (4,098 | ) |
(Millions of dollars) | 2018 | 2017 | |||||
Balance, January 1 | $ | 11 | $ | 11 | |||
Net income | 2 | 1 | |||||
Distributions to noncontrolling interest and other | (1 | ) | (1 | ) | |||
Redemption value adjustments/accretion | 3 | — | |||||
Balance, September 30 | $ | 15 | $ | 11 |
Quarter Ended September 30, | |||||||||||||||||||||
(Dollars in Millions) | Industrial Gases | ||||||||||||||||||||
Sales | North America | Europe | South America | Asia | Surface Technologies | Total | % | ||||||||||||||
Merchant | $ | 604 | $ | 146 | $ | 125 | $ | 163 | $ | — | $ | 1,038 | 34 | % | |||||||
On-Site | 474 | 78 | 112 | 241 | — | 905 | 30 | % | |||||||||||||
Packaged Gas | 495 | 184 | 86 | 55 | — | 820 | 27 | % | |||||||||||||
Other | 40 | 17 | 6 | 28 | 170 | 261 | 9 | % | |||||||||||||
$ | 1,613 | $ | 425 | $ | 329 | $ | 487 | $ | 170 | $ | 3,024 | 100 | % |
Nine Months Ended September 30, | |||||||||||||||||||||
(Dollars in Millions) | Industrial Gases | ||||||||||||||||||||
Sales | North America | Europe | South America | Asia | Surface Technologies | Total | % | ||||||||||||||
Merchant | $ | 1,768 | $ | 446 | $ | 399 | $ | 474 | $ | — | $ | 3,087 | 34 | % | |||||||
On-Site | 1,392 | 235 | 343 | 737 | — | 2,707 | 30 | % | |||||||||||||
Packaged Gas | 1,496 | 564 | 277 | 166 | — | 2,503 | 28 | % | |||||||||||||
Other | 114 | 52 | 24 | 88 | 509 | 787 | 8 | % | |||||||||||||
$ | 4,770 | $ | 1,297 | $ | 1,043 | $ | 1,465 | $ | 509 | $ | 9,084 | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
(Dollar amounts in millions, except per share data) | 2018 | 2017 (c) | Variance | 2018 | 2017 (c) | Variance | |||||||||||||||
Reported Amounts | |||||||||||||||||||||
Sales | $ | 3,024 | $ | 2,922 | 3 | % | $ | 9,084 | $ | 8,484 | 7 | % | |||||||||
Cost of sales, exclusive of depreciation and amortization | $ | 1,714 | $ | 1,652 | 4 | % | $ | 5,114 | $ | 4,800 | 7 | % | |||||||||
Gross margin (a) | $ | 1,310 | $ | 1,270 | 3 | % | $ | 3,970 | $ | 3,684 | 8 | % | |||||||||
As a percent of sales | 43.3 | % | 43.5 | % | 43.7 | % | 43.4 | % | |||||||||||||
Selling, general and administrative | $ | 294 | $ | 300 | (2 | )% | $ | 911 | $ | 895 | 2 | % | |||||||||
As a percent of sales | 9.7 | % | 10.3 | % | 10.0 | % | 10.5 | % | |||||||||||||
Depreciation and amortization | $ | 306 | $ | 298 | 3 | % | $ | 928 | $ | 877 | 6 | % | |||||||||
Transaction costs and other charges (b) | $ | 31 | $ | 14 | $ | 74 | $ | 35 | |||||||||||||
Other income (expense) - net | $ | 13 | $ | (3 | ) | $ | 25 | $ | (3 | ) | |||||||||||
Operating profit | $ | 669 | $ | 632 | 6 | % | $ | 2,011 | $ | 1,805 | 11 | % | |||||||||
Operating margin | 22.1 | % | 21.6 | % | 22.1 | % | 21.3 | % | |||||||||||||
Interest expense - net | $ | 40 | $ | 41 | (2 | )% | $ | 130 | $ | 120 | 8 | % | |||||||||
Net pension and OPEB cost (benefit), excluding service cost | $ | 6 | $ | 6 | $ | 10 | $ | (7 | ) | ||||||||||||
Effective tax rate | 25.0 | % | 27.7 | % | 24.7 | % | 27.7 | % | |||||||||||||
Income from equity investments | $ | 13 | $ | 12 | 8 | % | $ | 42 | $ | 35 | 20 | % | |||||||||
Noncontrolling interests | $ | (19 | ) | $ | (16 | ) | 19 | % | $ | (48 | ) | $ | (45 | ) | 7 | % | |||||
Net income - Praxair, Inc. | $ | 461 | $ | 419 | 10 | % | $ | 1,403 | $ | 1,214 | 16 | % | |||||||||
Diluted earnings per share | $ | 1.58 | $ | 1.45 | 9 | % | $ | 4.82 | $ | 4.21 | 14 | % | |||||||||
Diluted shares outstanding | 291,513 | 289,216 | 1 | % | 291,275 | 288,524 | 1 | % | |||||||||||||
Number of employees | 26,714 | 26,531 | 26,714 | 26,531 | |||||||||||||||||
Adjusted Amounts (b) | |||||||||||||||||||||
Operating profit | $ | 700 | $ | 646 | 8 | % | $ | 2,085 | $ | 1,840 | 13 | % | |||||||||
Operating margin | 23.1 | % | 22.1 | % | 23.0 | % | 21.7 | % | |||||||||||||
Net pension and OPEB cost (benefit), excluding service cost | $ | 2 | $ | 4 | $ | 6 | $ | (9 | ) | ||||||||||||
Effective tax rate | 24.2 | % | 27.3 | % | 24.1 | % | 27.2 | % | |||||||||||||
Noncontrolling interests | $ | (19 | ) | $ | (16 | ) | 19 | % | $ | (47 | ) | $ | (45 | ) | 4 | % | |||||
Net income - Praxair, Inc. | $ | 493 | $ | 433 | 14 | % | $ | 1,474 | $ | 1,249 | 18 | % | |||||||||
Diluted earnings per share | $ | 1.69 | $ | 1.50 | 13 | % | $ | 5.06 | $ | 4.33 | 17 | % | |||||||||
Other Financial Data (b) | |||||||||||||||||||||
EBITDA | $ | 988 | $ | 942 | $ | 2,981 | $ | 2,717 | |||||||||||||
EBITDA Margin | 32.7 | % | 32.2 | % | 32.8 | % | 32.0 | % | |||||||||||||
Adjusted EBITDA | $ | 1,019 | $ | 956 | $ | 3,055 | $ | 2,752 | |||||||||||||
Adjusted EBITDA Margin | 33.7 | % | 32.7 | % | 33.6 | % | 32.4 | % |
(a) | Gross margin excludes depreciation and amortization expense. |
(b) | Adjusted amounts and other financial data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts and other financial data can be found in the "Non-GAAP Financial Measures" section of this MD&A. See Note 2 to the condensed consolidated financial statements. |
(c) | Prior period information has been reclassified to conform with current year presentation as a result of the adoption of new accounting guidance on the presentation of net periodic pension and postretirement benefit costs. See Note 1 to the condensed consolidation financial statements. |
Quarter Ended September 30, 2018 vs. 2017 | Nine Months Ended September 30, 2018 vs. 2017 | ||||||||||
% Change | % Change | ||||||||||
Sales | Operating Profit | Sales | Operating Profit | ||||||||
Factors Contributing to Changes | |||||||||||
Volume | 4 | % | 4 | % | 4 | % | 7 | % | |||
Price/Mix | 2 | % | 10 | % | 2 | % | 9 | % | |||
Cost pass-through | 1 | % | — | % | 1 | % | — | % | |||
Currency | (4 | )% | (4 | )% | — | % | — | % | |||
Acquisitions/divestitures | — | % | — | % | — | % | — | % | |||
Other | — | % | (4 | )% | — | % | (5 | )% | |||
Reported | 3 | % | 6 | % | 7 | % | 11 | % | |||
Add: Transaction costs and other charges | — | % | 2 | % | — | % | 2 | % | |||
Adjusted | 3 | % | 8 | % | 7 | % | 13 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
% of Sales | % Change* | % of Sales | % Change* | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Sales by End Markets | |||||||||||||||||
Manufacturing | 22 | % | 22 | % | 6 | % | 22 | % | 22 | % | 7 | % | |||||
Metals | 16 | % | 17 | % | 4 | % | 17 | % | 17 | % | 8 | % | |||||
Energy | 12 | % | 11 | % | 8 | % | 11 | % | 12 | % | 4 | % | |||||
Chemicals | 11 | % | 10 | % | 18 | % | 11 | % | 10 | % | 15 | % | |||||
Electronics | 9 | % | 9 | % | 6 | % | 9 | % | 9 | % | 7 | % | |||||
Healthcare | 8 | % | 8 | % | 6 | % | 8 | % | 8 | % | 6 | % | |||||
Food & Beverage | 10 | % | 10 | % | 7 | % | 9 | % | 9 | % | 6 | % | |||||
Aerospace | 4 | % | 3 | % | 15 | % | 4 | % | 3 | % | 13 | % | |||||
Other | 8 | % | 10 | % | (1 | )% | 9 | % | 10 | % | 1 | % | |||||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
% of Sales | % of Sales | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Sales by Distribution Method | |||||||||||
On-Site | 30 | % | 30 | % | 30 | % | 30 | % | |||
Merchant | 34 | % | 34 | % | 34 | % | 34 | % | |||
Packaged Gas | 27 | % | 27 | % | 28 | % | 28 | % | |||
Other | 9 | % | 9 | % | 8 | % | 8 | % | |||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
(Dollar amounts in millions) | 2018 | 2017* | Variance | 2018 | 2017* | Variance | |||||||||||||||
SALES | |||||||||||||||||||||
North America | $ | 1,613 | $ | 1,518 | 6 | % | $ | 4,770 | $ | 4,481 | 6 | % | |||||||||
Europe | 425 | 407 | 4 | % | 1,297 | 1,146 | 13 | % | |||||||||||||
South America | 329 | 389 | (15 | )% | 1,043 | 1,131 | (8 | )% | |||||||||||||
Asia | 487 | 451 | 8 | % | 1,465 | 1,268 | 16 | % | |||||||||||||
Surface Technologies | 170 | 157 | 8 | % | 509 | 458 | 11 | % | |||||||||||||
$ | 3,024 | $ | 2,922 | 3 | % | $ | 9,084 | $ | 8,484 | 7 | % | ||||||||||
OPERATING PROFIT | |||||||||||||||||||||
North America | $ | 420 | $ | 386 | 9 | % | $ | 1,258 | $ | 1,121 | 12 | % | |||||||||
Europe | 81 | 79 | 3 | % | 248 | 220 | 13 | % | |||||||||||||
South America | 57 | 66 | (14 | )% | 167 | 178 | (6 | )% | |||||||||||||
Asia | 110 | 88 | 25 | % | 321 | 243 | 32 | % | |||||||||||||
Surface Technologies | 32 | 27 | 19 | % | 91 | 78 | 17 | % | |||||||||||||
Segment operating profit | 700 | 646 | 8 | % | 2,085 | 1,840 | 13 | % | |||||||||||||
Transaction costs and other charges (Note 2) | (31 | ) | (14 | ) | (74 | ) | (35 | ) | |||||||||||||
Total operating profit | $ | 669 | $ | 632 | 6 | % | $ | 2,011 | $ | 1,805 | 11 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | Variance | 2018 | 2017 | Variance | |||||||||||||||||
Sales | $ | 1,613 | $ | 1,518 | 6 | % | $ | 4,770 | $ | 4,481 | 6 | % | ||||||||||
Cost of sales, exclusive of depreciation and amortization | 857 | 796 | 2,493 | 2,363 | ||||||||||||||||||
Gross margin | 756 | 722 | 2,277 | 2,118 | ||||||||||||||||||
Operating expenses | 171 | 180 | 525 | 530 | ||||||||||||||||||
Depreciation and amortization | 165 | 156 | 494 | 467 | ||||||||||||||||||
Operating profit | $ | 420 | $ | 386 | 9 | % | $ | 1,258 | $ | 1,121 | 12 | % | ||||||||||
Margin % | 26.0 | % | 25.4 | % | 26.4 | % | 25.0 | % |
Quarter Ended September 30, 2018 vs. 2017 | Nine Months Ended September 30, 2018 vs. 2017 | ||||||||||
% Change | % Change | ||||||||||
Sales | Operating Profit | Sales | Operating Profit | ||||||||
Factors Contributing to Changes | |||||||||||
Volume | 5 | % | 5 | % | 4 | % | 8 | % | |||
Price/Mix | 2 | % | 8 | % | 2 | % | 7 | % | |||
Cost pass-through | — | % | — | % | — | % | — | % | |||
Currency | (1 | )% | (1 | )% | — | % | — | % | |||
Acquisitions/divestitures | — | % | — | % | — | % | — | % | |||
Other | — | % | (3 | )% | — | % | (3 | )% | |||
6 | % | 9 | % | 6 | % | 12 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
% of Sales | % Change* | % of Sales | % Change* | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Sales by End Markets | |||||||||||||||||
Manufacturing | 28 | % | 28 | % | 6 | % | 29 | % | 29 | % | 6 | % | |||||
Metals | 11 | % | 12 | % | 3 | % | 12 | % | 12 | % | 5 | % | |||||
Energy | 17 | % | 17 | % | 4 | % | 17 | % | 18 | % | — | % | |||||
Chemicals | 11 | % | 9 | % | 31 | % | 10 | % | 9 | % | 24 | % | |||||
Electronics | 5 | % | 6 | % | — | % | 5 | % | 5 | % | 6 | % | |||||
Healthcare | 7 | % | 7 | % | 8 | % | 7 | % | 7 | % | 8 | % | |||||
Food & Beverage | 11 | % | 10 | % | 9 | % | 10 | % | 10 | % | 8 | % | |||||
Aerospace | 2 | % | 2 | % | 23 | % | 2 | % | 2 | % | 21 | % | |||||
Other | 8 | % | 9 | % | (1 | )% | 8 | % | 8 | % | (2 | )% | |||||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
% of Sales | % of Sales | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Sales by Distribution Method | |||||||||||
On- Site | 29 | % | 29 | % | 29 | % | 30 | % | |||
Merchant | 37 | % | 37 | % | 37 | % | 37 | % | |||
Packaged Gas | 31 | % | 31 | % | 31 | % | 31 | % | |||
Other | 3 | % | 3 | % | 3 | % | 2 | % | |||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | Variance % | 2018 | 2017 | Variance % | |||||||||||||||||
Sales | $ | 425 | $ | 407 | 4 | % | $ | 1,297 | $ | 1,146 | 13 | % | ||||||||||
Cost of sales, exclusive of depreciation and amortization | 252 | 235 | 761 | 655 | ||||||||||||||||||
Gross margin | 173 | 172 | 536 | 491 | ||||||||||||||||||
Operating expenses | 48 | 49 | 154 | 146 | ||||||||||||||||||
Depreciation and amortization | 44 | 44 | 134 | 125 | ||||||||||||||||||
Operating profit | $ | 81 | $ | 79 | 3 | % | $ | 248 | $ | 220 | 13 | % | ||||||||||
Margin % | 19.1 | % | 19.4 | % | 19.1 | % | 19.2 | % |
Quarter Ended September 30, 2018 vs. 2017 | Nine Months Ended September 30, 2018 vs. 2017 | ||||||||||
% Change | % Change | % Change | % Change | ||||||||
Sales | Operating Profit | Sales | Operating Profit | ||||||||
Factors Contributing to Changes | |||||||||||
Volume | 1 | % | (2 | )% | 1 | % | 1 | % | |||
Price/Mix | 3 | % | 14 | % | 2 | % | 12 | % | |||
Cost pass-through | 2 | % | — | % | 3 | % | — | % | |||
Currency | (2 | )% | (2 | )% | 7 | % | 8 | % | |||
Acquisitions/divestitures | — | % | — | % | — | % | — | % | |||
Other | — | % | (7 | )% | — | % | (8 | )% | |||
4 | % | 3 | % | 13 | % | 13 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
% of Sales | % Change* | % of Sales | % Change* | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Sales by End Markets | |||||||||||||||||
Manufacturing | 20 | % | 20 | % | 7 | % | 21 | % | 20 | % | 9 | % | |||||
Metals | 16 | % | 16 | % | 9 | % | 16 | % | 16 | % | 11 | % | |||||
Energy | 5 | % | 5 | % | (2 | )% | 4 | % | 5 | % | (3 | )% | |||||
Chemicals | 12 | % | 12 | % | 10 | % | 12 | % | 12 | % | 8 | % | |||||
Electronics | 7 | % | 7 | % | 10 | % | 7 | % | 7 | % | 3 | % | |||||
Healthcare | 12 | % | 12 | % | 5 | % | 12 | % | 12 | % | 8 | % | |||||
Food & Beverage | 16 | % | 15 | % | 8 | % | 14 | % | 14 | % | 5 | % | |||||
Aerospace | — | % | 1 | % | (19 | )% | 1 | % | 1 | % | (12 | )% | |||||
Other | 12 | % | 12 | % | (3 | )% | 13 | % | 13 | % | 1 | % | |||||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
% of Sales | % of Sales | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Sales by Distribution Method | |||||||||||
On- Site | 19 | % | 18 | % | 18 | % | 18 | % | |||
Merchant | 34 | % | 36 | % | 34 | % | 35 | % | |||
Packaged Gas | 43 | % | 43 | % | 43 | % | 42 | % | |||
Other | 4 | % | 3 | % | 5 | % | 5 | % | |||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2018 | 2017 | Variance | 2018 | 2017 | Variance | ||||||||||||||||
Sales | $ | 329 | $ | 389 | (15 | )% | $ | 1,043 | $ | 1,131 | (8 | )% | |||||||||
Cost of sales, exclusive of depreciation and amortization | 195 | 231 | 623 | 675 | |||||||||||||||||
Gross margin | 134 | 158 | 420 | 456 | |||||||||||||||||
Operating expenses | 42 | 51 | 140 | 160 | |||||||||||||||||
Depreciation and amortization | 35 | 41 | 113 | 118 | |||||||||||||||||
Operating profit | $ | 57 | $ | 66 | (14 | )% | $ | 167 | $ | 178 | (6 | )% | |||||||||
Margin % | 17.3 | % | 17.0 | % | 16.0 | % | 15.7 | % |
Quarter Ended September 30, 2018 vs. 2017 | Nine Months Ended September 30, 2018 vs. 2017 | ||||||||||
% Change | % Change | % Change | % Change | ||||||||
Sales | Operating Profit | Sales | Operating Profit | ||||||||
Factors Contributing to Changes | |||||||||||
Volume | (1 | )% | (14 | )% | 1 | % | (3 | )% | |||
Price/Mix | 3 | % | 19 | % | 2 | % | 10 | % | |||
Cost pass-through | 1 | % | — | % | — | % | — | % | |||
Currency | (18 | )% | (24 | )% | (11 | )% | (16 | )% | |||
Acquisitions/divestitures | — | % | — | % | — | % | — | % | |||
Other | — | % | 5 | % | — | % | 3 | % | |||
(15 | )% | (14 | )% | (8 | )% | (6 | )% |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
% of Sales | % Change* | % of Sales | % Change* | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Sales by End Markets | |||||||||||||||||
Manufacturing | 16 | % | 17 | % | (6 | )% | 16 | % | 17 | % | (4 | )% | |||||
Metals | 32 | % | 33 | % | — | % | 32 | % | 31 | % | 6 | % | |||||
Energy | 2 | % | 2 | % | 10 | % | 2 | % | 2 | % | 2 | % | |||||
Chemicals | 10 | % | 9 | % | 14 | % | 10 | % | 10 | % | 5 | % | |||||
Electronics | — | % | — | % | — | % | — | % | — | % | — | % | |||||
Healthcare | 19 | % | 18 | % | 3 | % | 19 | % | 19 | % | 2 | % | |||||
Food & Beverage | 12 | % | 12 | % | 6 | % | 12 | % | 13 | % | 2 | % | |||||
Aerospace | — | % | — | % | — | % | — | % | — | % | — | % | |||||
Other | 9 | % | 9 | % | 9 | % | 9 | % | 8 | % | 10 | % | |||||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
% of Sales | % of Sales | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Sales by Distribution Method | |||||||||||
On- Site | 34 | % | 35 | % | 33 | % | 33 | % | |||
Merchant | 38 | % | 37 | % | 38 | % | 38 | % | |||
Packaged Gas | 26 | % | 26 | % | 27 | % | 27 | % | |||
Other | 2 | % | 2 | % | 2 | % | 2 | % | |||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2018 | 2017 | Variance | 2018 | 2017 | Variance | ||||||||||||||||
Sales | $ | 487 | $ | 451 | 8 | % | $ | 1,465 | $ | 1,268 | 16 | % | |||||||||
Cost of sales, exclusive of depreciation and amortization | 299 | 287 | 905 | 804 | |||||||||||||||||
Gross margin | 188 | 164 | 560 | 464 | |||||||||||||||||
Operating expenses | 27 | 29 | 84 | 84 | |||||||||||||||||
Depreciation and amortization | 51 | 47 | 155 | 137 | |||||||||||||||||
Operating profit | $ | 110 | $ | 88 | 25 | % | $ | 321 | $ | 243 | 32 | % | |||||||||
Margin % | 22.6 | % | 19.5 | % | 21.9 | % | 19.2 | % |
Quarter Ended September 30, 2018 vs. 2017 | Nine Months Ended September 30, 2018 vs. 2017 | ||||||||||
% Change | % Change | % Change | % Change | ||||||||
Sales | Operating Profit | Sales | Operating Profit | ||||||||
Factors Contributing to Changes | |||||||||||
Volume | 7 | % | 14 | % | 9 | % | 15 | % | |||
Price/Mix | 2 | % | 13 | % | 3 | % | 15 | % | |||
Cost pass-through | 1 | % | — | % | 1 | % | — | % | |||
Currency | (2 | )% | (2 | )% | 3 | % | 3 | % | |||
Acquisitions/divestitures | — | % | — | % | — | % | — | % | |||
Other | — | % | — | % | — | % | (1 | )% | |||
8 | % | 25 | % | 16 | % | 32 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
% of Sales | % Change* | % of Sales | % Change* | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Sales by End Markets | |||||||||||||||||
Manufacturing | 10 | % | 9 | % | 19 | % | 9 | % | 9 | % | 20 | % | |||||
Metals | 26 | % | 27 | % | 9 | % | 27 | % | 27 | % | 15 | % | |||||
Energy | 5 | % | 2 | % | 117 | % | 5 | % | 3 | % | — | % | |||||
Chemicals | 14 | % | 15 | % | 1 | % | 15 | % | 15 | % | 7 | % | |||||
Electronics | 34 | % | 33 | % | 7 | % | 33 | % | 34 | % | 8 | % | |||||
Healthcare | 1 | % | 1 | % | 28 | % | 1 | % | 1 | % | 10 | % | |||||
Food & Beverage | 2 | % | 2 | % | (11 | )% | 2 | % | 2 | % | (10 | )% | |||||
Aerospace | — | % | — | % | — | % | — | % | — | % | — | % | |||||
Other | 8 | % | 11 | % | (5 | )% | 8 | % | 9 | % | 2 | % | |||||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||
% of Sales | % of Sales | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Sales by Distribution Method | |||||||||||
On- Site | 50 | % | 50 | % | 50 | % | 50 | % | |||
Merchant | 33 | % | 31 | % | 32 | % | 30 | % | |||
Packaged Gas | 11 | % | 13 | % | 11 | % | 13 | % | |||
Other | 6 | % | 6 | % | 7 | % | 7 | % | |||
100 | % | 100 | % | 100 | % | 100 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | Variance | 2018 | 2017 | Variance | |||||||||||||||||
Sales | $ | 170 | $ | 157 | 8 | % | $ | 509 | $ | 458 | 11 | % | ||||||||||
Cost of sales, exclusive of depreciation and amortization | 111 | 103 | 331 | 298 | ||||||||||||||||||
Gross margin | 59 | 54 | 178 | 160 | ||||||||||||||||||
Operating expenses | 16 | 17 | 55 | 52 | ||||||||||||||||||
Depreciation and amortization | 11 | 10 | 32 | 30 | ||||||||||||||||||
Operating profit | $ | 32 | $ | 27 | 19 | % | $ | 91 | $ | 78 | 17 | % | ||||||||||
Margin % | 18.8 | % | 17.2 | % | 17.9 | % | 17.0 | % |
Quarter Ended September 30, 2018 vs. 2017 | Nine Months Ended September 30, 2018 vs. 2017 | ||||||||||
% Change | % Change | % Change | % Change | ||||||||
Sales | Operating Profit | Sales | Operating Profit | ||||||||
Factors Contributing to Changes | |||||||||||
Volume/Price | 8 | % | 20 | % | 8 | % | 19 | % | |||
Cost pass-through | 1 | % | — | % | 1 | % | — | % | |||
Currency | (1 | )% | — | % | 2 | % | 2 | % | |||
Acquisitions/divestitures | — | % | — | % | — | % | — | % | |||
Other | — | % | (1 | )% | — | % | (4 | )% | |||
8 | % | 19 | % | 11 | % | 17 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
% of Sales | % Change* | % of Sales | % Change* | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Sales by End Markets | |||||||||||||||||
Manufacturing | 13 | % | 11 | % | 31 | % | 12 | % | 11 | % | 23 | % | |||||
Metals | 8 | % | 8 | % | 1 | % | 8 | % | 9 | % | (2 | )% | |||||
Energy | 18 | % | 19 | % | 4 | % | 19 | % | 19 | % | 5 | % | |||||
Chemicals | 2 | % | 2 | % | (18 | )% | 2 | % | 2 | % | (2 | )% | |||||
Electronics | 1 | % | 1 | % | 66 | % | 1 | % | 1 | % | 51 | % | |||||
Healthcare | — | % | — | % | — | % | — | % | — | % | — | % | |||||
Food & Beverage | 3 | % | 3 | % | (11 | )% | 3 | % | 3 | % | (1 | )% | |||||
Aerospace | 45 | % | 44 | % | 13 | % | 44 | % | 44 | % | 10 | % | |||||
Other | 10 | % | 12 | % | (2 | )% | 11 | % | 11 | % | 3 | % | |||||
100 | % | 100 | % | 100 | % | 100 | % |
Percentage of YTD 2018 Consolidated Sales | Exchange Rate for Income Statement | Exchange Rate for Balance Sheet | ||||||||||||
Year-To-Date Average | September 30, | December 31, | ||||||||||||
Currency | 2018 | 2017 | 2018 | 2017 | ||||||||||
Euro | 14 | % | 0.84 | 0.90 | 0.86 | 0.83 | ||||||||
Brazilian real | 9 | % | 3.58 | 3.17 | 4.00 | 3.31 | ||||||||
Canadian dollar | 7 | % | 1.29 | 1.31 | 1.29 | 1.26 | ||||||||
Chinese yuan | 7 | % | 6.51 | 6.81 | 6.87 | 6.51 | ||||||||
Mexican peso | 5 | % | 19.00 | 18.82 | 18.72 | 19.66 | ||||||||
Korean won | 4 | % | 1,091 | 1,139 | 1,109 | 1,067 | ||||||||
India rupee | 3 | % | 67.07 | 65.22 | 72.49 | 63.87 | ||||||||
Argentine peso (a) | 1 | % | 23.86 | 16.19 | 41.25 | 18.65 | ||||||||
British pound | 1 | % | 0.74 | 0.78 | 0.77 | 0.74 | ||||||||
Norwegian krone | 1 | % | 8.03 | 8.29 | 8.15 | 8.20 |
(Millions of dollars) | Nine months ended September 30, | ||||||
2018 | 2017 | ||||||
NET CASH PROVIDED BY (USED FOR): | |||||||
OPERATING ACTIVITIES | |||||||
Net income (including noncontrolling interests) | $ | 1,451 | $ | 1,259 | |||
Non-cash charges (credits): | |||||||
Add: Depreciation and amortization | 928 | 877 | |||||
Add: Deferred income taxes | (6 | ) | 22 | ||||
Add: Share-based compensation | 40 | 44 | |||||
Add: Transaction costs and other charges, net of payments (a) | 35 | 27 | |||||
Net income adjusted for non-cash charges | 2,448 | 2,229 | |||||
Less: Working capital | (46 | ) | (147 | ) | |||
Less: Pension contributions | (17 | ) | (14 | ) | |||
Other | (36 | ) | 137 | ||||
Net cash provided by operating activities | $ | 2,349 | $ | 2,205 | |||
INVESTING ACTIVITIES | |||||||
Capital expenditures | (1,056 | ) | (972 | ) | |||
Acquisitions, net of cash acquired | (6 | ) | (18 | ) | |||
Divestitures and asset sales | 77 | 22 | |||||
Net cash used for investing activities | $ | (985 | ) | $ | (968 | ) | |
FINANCING ACTIVITIES | |||||||
Debt increase (decrease) - net | (625 | ) | (502 | ) | |||
Issuances (purchases) of common stock - net | 68 | 79 | |||||
Cash dividends - Praxair, Inc. shareholders | (712 | ) | (675 | ) | |||
Noncontrolling interest transactions and other | (33 | ) | (85 | ) | |||
Net cash provided by (used for) financing activities | $ | (1,302 | ) | $ | (1,183 | ) | |
Effect of exchange rate changes on cash and cash equivalents | $ | (79 | ) | $ | 29 | ||
Cash and cash equivalents, end-of-period | $ | 600 | $ | 607 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollar amounts in millions, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Adjusted Operating Profit | |||||||||||||||
Reported operating profit | $ | 669 | $ | 632 | $ | 2,011 | $ | 1,805 | |||||||
Add: Argentina currency devaluation | 10 | — | 10 | — | |||||||||||
Add: Transaction costs and other charges | 21 | 14 | 64 | 35 | |||||||||||
Total adjustments | 31 | 14 | 74 | 35 | |||||||||||
Adjusted operating profit | $ | 700 | $ | 646 | $ | 2,085 | $ | 1,840 | |||||||
Reported percent change | 6 | % | 11 | % | |||||||||||
Adjusted percent change | 8 | % | 13 | % | |||||||||||
Adjusted Net Pension and OPEB cost (benefit), excluding service cost | |||||||||||||||
Reported net pension and OPEB cost (benefit), excluding service cost | $ | 6 | $ | 6 | $ | 10 | $ | (7 | ) | ||||||
Less: Pension settlement charge | (4 | ) | (2 | ) | (4 | ) | (2 | ) | |||||||
Adjusted net Pension and OPEB cost (benefit), excluding service cost | 2 | 4 | 6 | (9 | ) | ||||||||||
Adjusted Income Taxes | |||||||||||||||
Reported income taxes | $ | 156 | $ | 162 | $ | 462 | $ | 468 | |||||||
Add: Cost reduction program | — | — | — | — | |||||||||||
Add: Pension settlement charge | 1 | 1 | 1 | 1 | |||||||||||
Add: Tax reform | — | — | — | — | |||||||||||
Add: Transaction costs | 2 | 1 | 7 | 1 | |||||||||||
Total adjustments | 3 | 2 | 8 | 2 | |||||||||||
Adjusted income taxes | $ | 159 | $ | 164 | $ | 470 | $ | 470 |
Adjusted Effective Tax Rate | |||||||||||||||
Reported income before income taxes and equity investments | $ | 623 | $ | 585 | $ | 1,871 | $ | 1,692 | |||||||
Add: Pension settlement charge | 4 | 2 | 4 | 2 | |||||||||||
Add: Argentina currency devaluation | 10 | — | 10 | — | |||||||||||
Add: Transaction costs | 21 | 14 | 64 | 35 | |||||||||||
Total adjustments | 35 | 16 | 78 | 37 | |||||||||||
Adjusted income before income taxes and equity investments | $ | 658 | $ | 601 | $ | 1,949 | $ | 1,729 | |||||||
Reported effective tax rate | 25.0 | % | 27.7 | % | 24.7 | % | 27.7 | % | |||||||
Adjusted effective tax rate | 24.2 | % | 27.3 | % | 24.1 | % | 27.2 | % | |||||||
Adjusted Noncontrolling Interests | |||||||||||||||
Reported noncontrolling interests | $ | 19 | $ | 16 | $ | 48 | $ | 45 | |||||||
Add: Cost reduction program | — | — | (1 | ) | — | ||||||||||
Adjusted Noncontrolling Interests | $ | 19 | $ | 16 | $ | 47 | $ | 45 | |||||||
Adjusted Net Income - Praxair, Inc. | |||||||||||||||
Reported net income - Praxair, Inc. | $ | 461 | $ | 419 | $ | 1,403 | $ | 1,214 | |||||||
Add: Cost reduction program | — | — | 1 | — | |||||||||||
Add: Pension settlement charge | 3 | 1 | 3 | 1 | |||||||||||
Add: Argentina currency devaluation | 10 | — | 10 | — | |||||||||||
Add: Transaction costs | 19 | 13 | 57 | 34 | |||||||||||
Total adjustments | 32 | 14 | 71 | 35 | |||||||||||
Adjusted net income - Praxair, Inc. | $ | 493 | $ | 433 | $ | 1,474 | $ | 1,249 | |||||||
Reported percent change | 10 | % | 16 | % | |||||||||||
Adjusted percent change | 14 | % | 18 | % |
Adjusted Diluted Earnings Per Share | |||||||||||||||
Reported diluted EPS | $ | 1.58 | $ | 1.45 | $ | 4.82 | $ | 4.21 | |||||||
Add: Cost reduction program | — | — | — | — | |||||||||||
Add: Pension settlement charge | 0.01 | — | 0.01 | — | |||||||||||
Add: Tax reform | — | — | — | — | |||||||||||
Add: Argentina currency devaluation | 0.03 | — | 0.03 | — | |||||||||||
Add: Transaction costs | 0.07 | 0.05 | 0.20 | 0.12 | |||||||||||
Total adjustments | $ | 0.11 | $ | 0.05 | $ | 0.24 | $ | 0.12 | |||||||
Adjusted diluted EPS | $ | 1.69 | $ | 1.50 | $ | 5.06 | $ | 4.33 | |||||||
Reported percent change | 9 | % | 14 | % | |||||||||||
Adjusted percent change | 13 | % | 17 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Dollar amounts in millions) | |||||||||||||||
Reported net income - Praxair, Inc. | $ | 461 | $ | 419 | $ | 1,403 | $ | 1,214 | |||||||
Add: noncontrolling interest | 19 | 16 | 48 | 45 | |||||||||||
Add: interest expense - net | 40 | 41 | 130 | 120 | |||||||||||
Add: net pension and OPEB cost (benefit), excluding service cost | 6 | 6 | 10 | (7 | ) | ||||||||||
Add: income taxes | 156 | 162 | 462 | 468 | |||||||||||
Add: depreciation and amortization | 306 | 298 | 928 | 877 | |||||||||||
EBITDA | $ | 988 | $ | 942 | $ | 2,981 | $ | 2,717 | |||||||
Adjustments: | |||||||||||||||
Add: Argentina currency devaluation | $ | 10 | $ | — | $ | 10 | $ | — | |||||||
Add: Transaction costs | 21 | 14 | 64 | 35 | |||||||||||
ADJUSTED EBITDA | $ | 1,019 | $ | 956 | $ | 3,055 | $ | 2,752 | |||||||
Reported Sales | $ | 3,024 | $ | 2,922 | $ | 9,084 | $ | 8,484 | |||||||
EBITDA Margin | 32.7 | % | 32.2 | % | 32.8 | % | 32.0 | % | |||||||
Adjusted EBITDA Margin | 33.7 | % | 32.7 | % | 33.6 | % | 32.4 | % |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(Dollar amounts in millions) | |||||||
Debt | $ | 8,312 | $ | 9,237 | |||
Less: cash and cash equivalents | (600 | ) | (607 | ) | |||
Net debt | 7,712 | 8,630 | |||||
Equity and redeemable noncontrolling interests | |||||||
Redeemable noncontrolling interests | 15 | 11 | |||||
Praxair, Inc. shareholders’ equity | 6,232 | 6,256 | |||||
Noncontrolling interests | 503 | 475 | |||||
Total equity and redeemable noncontrolling interests | 6,750 | 6,742 | |||||
Capital | $ | 14,462 | $ | 15,372 | |||
DEBT-TO-CAPITAL RATIO | 53.3 | % | 56.1 | % |
(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. |
Period | Total Number of Shares Purchased (Thousands) | Average Price Paid Per Share | Total Numbers of Shares Purchased as Part of Publicly Announced Program (1) (Thousands) | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (2) (Millions) | |||||||||
July 2018 | — | $ | — | — | $ | 1,579 | |||||||
August 2018 | 2 | $ | 151.89 | 2 | $ | 1,579 | |||||||
September 2018 | — | $ | — | — | $ | 1,579 | |||||||
Third Quarter 2018 | 2 | $ | 151.89 | 2 | $ | 1,579 |
(1) | On January 28, 2014, the Company's board of directors approved the repurchase of $1.5 billion of its common stock ("2014 program") 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, 2018, the Company purchased $1,421 million of its common stock pursuant to the 2014 program, leaving an additional $79 million remaining authorized under the 2014 program. The 2014 program does not have any stated expiration date. In addition, on July 28, 2015, the Company’s board of directors approved the repurchase of $1.5 billion of its common stock (“2015 program”) which could take place from time to time on the open market (which could include the use of 10b5-1 trade plans) or through negotiated transactions, subject to market and business conditions. The 2015 program does not have any stated expiration date. The 2015 program is in addition to the 2014 program. |
(a) | Exhibits | ||
**2.1 | |||
31.01 | |||
31.02 | |||
32.01 | |||
32.02 | |||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase |
** | Certain schedules or similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplemental copies of any of the omitted schedules or attachments upon request by the SEC. |
PRAXAIR, INC. | |||
(Registrant) | |||
Date: November 9, 2018 | By: /s/ Matthew J. White | ||
Matthew J. White | |||
Chief Financial Officer | |||
(On behalf of the Registrant | |||
and as principal financial officer) |
1. | Definitions, Interpretation 6 |
2. | Sale and Purchase 21 |
3. | Intentionally Left Blank 22 |
4. | Purchase Price, Payments 22 |
5. | Settlement of Inter-Company Relations 24 |
6. | Closing Statement, Estimated Closing Statement and Adjustment Payments 26 |
7. | Replacement of Third Party Assurances 29 |
8. | Closing Conditions 30 |
9. | Changes to Perimeter 35 |
10. | Closing, Closing Actions 37 |
11. | Seller's Warranties 39 |
12. | Seller's Indemnities 40 |
13. | Taxes 42 |
14. | Purchaser's Warranties 56 |
15. | Intellectual Property, Branding 58 |
16. | Pre-Closing Covenants 63 |
17. | Post-Closing Covenants 68 |
18. | PLC Guarantee 69 |
19. | Conflict with other Agreements 70 |
20. | Responsibility after Closing 71 |
21. | Announcements, Confidentiality 71 |
22. | Non-Solicit 74 |
23. | Notices, Agent for Service of Process 75 |
24. | Whole Agreement, Remedies 78 |
25. | Miscellaneous 80 |
26. | Invalidity 81 |
27. | Governing Law, Jurisdiction 82 |
Schedule 1 | Target Companies and Ownership Structure |
Schedule 2 | Financial Line Items |
Schedule 3 | Apportioning between DivestCo Shares |
Schedule 4 | Principles of Closing Statement |
Schedule 5 | Form of (Estimated) Closing Statement |
Schedule 6 | Closing Actions |
Schedule 7 | Seller's Warranties |
Schedule 8 | Remedies and Limitations |
Schedule 9 | Third Party Assurances Seller's Group |
Schedule 10 | Target Company Third Party Assurances |
Schedule 11 | Seller Pre-Closing Steps |
Annex A to Schedule 11 | ISO Helium Containers |
1. | Praxair, Inc., a corporation organised under the laws of Delaware, USA, having its registered address at 10 Riverview Drive, Danbury, Connecticut, CT06810, United States of America, |
2. | Taiyo Nippon Sanso Corporation, a corporation organised under the laws of Japan, having its registered address at 1-3-26 Koyama, Shinagawa-ku, Tokyo, 142-8558 Japan, |
3. | Linde Public Limited Company, a public limited company organised under the laws of Ireland, having its business address at The Priestley Centre, 10 Priestley Road, The Surrey Research Park, Guildford, Surrey GU2 7XY, United Kingdom, |
(A) | Whereas, inter alia, Linde, Praxair and PLC have entered into a business combination agreement as of 1 June 2017, as amended, to effect a strategic combination of the businesses of Linde and Praxair ("BCA" and the transactions contemplated by the BCA the "Business Combination"). |
(B) | WHEREAS, in connection with the Business Combination, Praxair wishes to procure the sale and transfer of the DivestCos from Local Sellers to Purchaser and Purchaser wishes to acquire the DivestCos from the Local Sellers in each case in accordance with the terms and conditions of this |
(C) | WHEREAS, PLC is willing to guarantee as of the completion of the Business Combination the performance of any obligations which Praxair has under this Agreement. |
1. | Definitions, Interpretation |
1. | Definitions |
(b) | the production, generation, manufacture, processing, handling, presence, use (including as a building material), treatment, supply, sale, purchase, transport, disposal, release, spillage, discharge, leak, emission, leaching or migration of Hazardous Materials or waste; |
(c) | exposure of any human or any other living organism to Hazardous Materials or waste or other matters relating to human health and safety; |
(a) | any agreement between any Target Company on the one hand and a customer or supplier on the other hand for the provision of products or services by or to any of the Target Companies with annual expenditures or annual revenues in excess of two million (2,000,000) EUR; |
(b) | any agreement under which any Target Company has sold or disposed of any company or business where it remains subject to any liability (whether contingent or otherwise) which exceeds, or is likely to exceed, two million (2,000,000) EUR; and |
(c) | any agreement which is a partnership or profit (or loss) sharing agreement to which a Target Company or Controlled JVCo is a party, which relates to the Business; |
(d) | any agreement to which any Target Company is a party which is not in the ordinary course of business or is not on arm's length terms and which, in each case, has a contractual volume (revenue, expenditure, consideration etc.) in excess of five million (5,000,000) EUR in the aggregate or per year; or |
(e) | any agreement to which a Target Company or Controlled JVCo is a party which restricts or is likely to restrict any Target Company or Controlled JVCo's freedom to carry on the whole, or any part, of the Business in a country in which the Business is not currently conducted. |
(a) | event that occurred after the Financial Closing Date if and to the extent the underlying Tax is a Tax which is specifically assessed as a result and in respect of such taxable event and not on an on-going basis in respect of a Tax assessment period (e.g., transfer Taxes); or |
(b) | period of time ending after the Financial Closing Date (in the case of any Tax based on income, profit, gain, turnover, sales, gross receipts, wage, capital expenditure, expense or any similar Tax base); |
(a) | Accounts Relief; |
(b) | Post-Closing Relief; or |
(c) | Relief arising to any member of Purchaser's Tax Group (other than the Target Companies) at any time if and to the extent such Relief does not relate to any Tax Liability of Seller's Group; |
(a) | any reference to the use or set-off of a Relief shall be construed accordingly and shall include use or set-off in part; and |
(b) | any reference to the loss of a Relief (including the loss of any Accounts Relief, Post-Closing Relief and any other defined Relief) shall include the absence, failure to obtain, non-existence, non-availability, disallowance, withdrawal, claw-back or cancellation of any Relief, or its utilisation or set-off by any person other than a member of Purchaser's Tax Group and shall |
(a) | a liability to make an actual payment or increased payment of, or in respect of, or on account of, Tax (including making a payment in settlement of a Tax liability) ("Actual Tax Liability"), in which case the amount of the Tax Liability shall be the amount of the actual payment or increased payment; |
(b) | the loss (otherwise than, for the avoidance of doubt, by utilisation or set off) of an Accounts Relief, in which case the amount of the Tax Liability shall be the amount of Tax that would have been saved but for such loss (assuming that each Target Company had used the Relief in full and that, to the extent that there is an Actual Tax Liability as a result of the loss, the Tax would have been charged at the Tax rates applying to that period and, where there is no Actual Tax Liability, the Tax that would have been saved would have been charged at the Tax rates current at Closing) or, where the Relief is a right to repayment of Tax, the amount of the repayment; |
(c) | the use or setting off of any Purchaser's Relief in circumstances where, but for such use or setting off, a Target Company would have had an Actual Tax Liability in respect of which Seller would have been liable under clause 13, in which case the amount of the Tax Liability shall be the amount for which Seller would have been liable under clause 13 but for such set-off or utilisation; |
2. | Interpretation |
(a) | references to a person include any individual, firm, body corporate (wherever incorporated), government, state or agency of a state or any joint venture, association, partnership, works council or employee representative body (whether or not having separate legal personality); |
(b) | headings do not affect the interpretation of this Agreement; the singular shall include the plural and vice versa; and references to one gender include all genders; |
(c) | references to any English legal term or concept shall, in respect of any jurisdiction other than England, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction; |
(d) | references to "EUR" are references to the single currency of the member states of the European Union that have a single currency as their lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union; |
(e) | references to a time of day shall be construed as references to London time unless set out otherwise explicitly herein; |
(f) | references to a document shall be construed as references to that document as amended, varied or novated from time to time; |
(g) | references to the words "herein", "hereof", "hereto" and "hereunder" and words of similar meaning when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; |
(h) | references to any statute or statutory provision shall, unless stated otherwise herein, be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted; and |
(i) | any phrase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms. |
3. | Schedules |
2. | Sale and Purchase |
1. | Sales Procurement |
2. | Purchaser's Purchase Undertaking |
3. | Scope of Sale and Transfer |
3. | Intentionally Left Blank |
4. | Purchase Price, Payments |
1. | Final Purchase Price |
(a) | subtracting the aggregate of the Financial Debt as at the Financial Closing Date; and |
(b) | adding the aggregate of the Cash as at the Financial Closing Date; and |
(c) | subtracting the amount, if any, by which the aggregate of the Working Capital as at the Financial Closing Date falls short of the Target Working Capital; or |
(d) | adding the amount, if any, by which the aggregate of the Working Capital as at the Financial Closing Date exceeds the Target Working Capital. |
2. | Initial Purchase Price |
3. | Adjustment Payments to the Initial Purchase Price |
(a) | If a payment is specifically referable to any particular DivestCo Shares (or to any DivestCo or DivestCo Subsidiary), it shall so far as possible adjust the price paid for the relevant DivestCo Shares; or |
(b) | otherwise, it shall adjust the price for the DivestCo Shares on a basis pro rata to the allocation thereof in the calculation of the Initial Purchase Price unless Seller and Purchaser agree otherwise both acting reasonably. |
4. | Allocation of Purchase Price and Negative Components |
(a) | the price of those particular DivestCo Shares shall be reduced to one (1) EUR; and |
(b) | the balance shall adjust the price for the other DivestCo Shares on a pro rata basis unless Seller and Purchaser agree otherwise both acting reasonably. |
5. | Settlement of Inter-Company Relations |
1. | Efforts to Reduce Inter-Company Payables and Inter-Company Receivables |
2. | Termination of Cash Pooling Agreements |
3. | Termination of Foreign Exchange and Commodity Hedges |
4. | Final Inter-Company Payment Amount |
5. | Initial Inter-Company Payment Amount |
6. | Adjustment Payments to the Initial Inter-Company Payment Amount |
7. | Acknowledgement and Novation |
(a) | Seller and Purchaser agree that the settlement of the Inter-Company Payables and Inter-Company Receivables in accordance with the provisions of clauses 5.4 through 5.6 shall: |
(i) | constitute a settlement and discharge on behalf of the members of Seller's Group of the Inter-Company Receivables with effect from Closing, which will be acknowledged by the Target Companies at Closing; and |
(ii) | constitute a settlement and discharge of the Inter-Company Payables on behalf of the Target Companies with effect from Closing, which will be acknowledged by the relevant members of Seller's Group at Closing. |
(b) | With effect from Closing, as a consequence of the settlement on behalf of the respective debtor, by way of novation: |
(i) | the respective Target Companies that held the Inter-Company Receivables shall hold against Purchaser a receivable on the same economic terms and conditions as were applicable to the settled Inter-Company Receivable; and |
(ii) | the respective Target Companies that owed the Inter-Company Payables shall owe to Purchaser a payable on the same economic terms and conditions as were applicable to the settled Inter-Company Payable. |
6. | Closing Statement, Estimated Closing Statement and Adjustment Payments |
1. | Closing Statement |
2. | Estimated Closing Statement |
3. | Adjustment Payments |
4. | VAT |
5. | Payments under this Agreement |
7. | Replacement of Third Party Assurances |
1. | Release of Seller's Group from Third Party Assurances |
2. | Release of Target Companies and JVCos from Third Party Assurances |
3. | Assistance for Releases |
8. | Closing Conditions |
1. | Closing Conditions |
(a) | Completion of the Business Combination having occurred; |
(b) | Seller having received confirmation from the European Commission in writing that the European Commission (i) approves Purchaser as a suitable purchaser of the Business or does not object to the identity of Purchaser and (ii) approves the sale of the Target Companies pursuant to this SPA as an adequate remedy to concerns that the Business Combination could impede competition in the EEA (together "BCA Clearance Condition"); and |
(c) | The Transaction having received competition approvals or expiry of the statutory waiting periods in the following jurisdictions: EU (EU Commission) and Brazil ("SPA Clearance Condition"). |
2. | Commitments and Processes regarding Closing Conditions |
(a) | Commitments and Process regarding BCA Clearance Condition |
(b) | Commitments and Process regarding SPA Clearance Condition |
3. | Waiver of Closing Conditions |
4. | Unconditional Date |
5. | Termination |
6. | No Solicitation |
(a) | Subject to clause 8.6(b) below, Seller shall, and shall procure that Seller's Representatives and Affiliates shall, (i) promptly cease and cause to be terminated any and all existing discussions or negotiations with any persons conducted prior to or on the date of this Agreement in respect of an Acquisition Proposal by such person (ii) not directly or indirectly encourage, solicit, initiate, facilitate, engage in, accept, or continue or conduct discussions or negotiations regarding an Acquisition Proposal or provide any additional information to any person (other than Purchaser and its Affiliates) concerning a possible Acquisition Proposal from such person and (iii) not propose to the European Commission any prospective purchaser for the DivestCo Shares and/or the Business other than Purchaser. |
(b) | The obligations of Seller contained in 8.6(a) above shall cease to apply if Purchaser fails to perform any of its material obligations under this Agreement. |
7. | No Right of Termination or Rescission |
(a) | The Parties agree that, following the date of this Agreement, no Party will have a right (including any right under common law, tort, statute (including under the Misrepresentation Act 1967), equity, or otherwise) to terminate or rescind this Agreement, except (i) in respect of fraud or fraudulent misrepresentation committed by the other Party (provided that Seller and PLC shall be considered to be one party for purposes of this clause 8.6), or (ii) the contractual termination right provided in clause 8.5. |
(b) | If this Agreement is terminated by Seller and PLC acting jointly in accordance with clause 8.5 or by any Party in respect of fraud or fraudulent misrepresentation committed by the other Party, (i) any such termination shall have effect for all Parties and (ii) no Party (nor any of their respective Affiliates) shall have any claim under this Agreement of any nature whatsoever against any other Party (or any of their respective Affiliates) except in respect of any rights, liabilities or obligations which have accrued before termination or under any of the Surviving Provisions. |
9. | Changes to Perimeter |
1. | The parties acknowledge and agree that the European Commission may determine that it is necessary for further divestments of assets or shares directly or indirectly controlled by Seller to be transferred to Purchaser for the BCA Clearance Condition to be satisfied (each a "Further Divestment", together the "Further Divestments"). |
2. | Purchaser hereby irrevocably grants to Seller an option to require Purchaser (or a Designated Purchaser) to acquire each Further Divestment on the terms and subject to the conditions of this Agreement (each a "Put Option", together the "Put Options"). The consideration for the grant of the |
3. | A Put Option may be exercised by Seller by way of notice in writing to Purchaser sent as soon as reasonably practicable after the date on which the European Commission informs Seller that a Further Divestment is required (a "Put Option Exercise Notice"). |
4. | A Put Option Exercise Notice shall set out reasonable details of the assets and/or shares comprising the Further Divestment and a date which is no less than five (5) and no more than ten (10) Business Days after the date of the Put Option Exercise Notice on which the Put Option shall become effective ("Put Option Effective Date"). |
5. | From the Put Option Effective Date, the provisions of this Agreement shall apply to the Further Divestment with such Further Divestment being included in the scope of interests to be transferred from Seller to Purchaser, provided that: |
(a) | rights, liabilities, obligations and undertakings under the Agreement shall apply from the Put Option Effective Date in respect of such Further Divestment (not from the date of this Agreement), such that the Warranties shall be given in respect of such Further Divestment on the Put Option Effective Date and disclosures against such Warranties shall be included in a disclosure letter of the same date; and |
(b) | the mechanisms contained in the Agreement in relation to purchase price and adjustments to the purchase price, shall not apply to the Further Divestment (the price payable for the Further Divestments being calculated as set out in clause 9.6 below). |
6. | At Closing: |
(a) | in addition to the payment of the Initial Purchase Price, Purchaser shall pay to Seller an amount equal to the fair market value of the Further Divestments, where: |
(i) | the Further Divestment is priced on the basis of turnover, the fair market value shall be calculated by applying the same valuation methodology as Purchaser applied in the final bid submitted by Purchaser on 11 June 2018; and |
(ii) | the Further Divestment is not priced on the basis of turnover, the fair market value shall be calculated by reference to an asset valuation report prepared by an independent third party, |
(b) | if, thirty (30) Business Days prior to Closing, Purchaser and Seller fail to reach agreement on the fair market value of the Further Divestment, the Parties shall refer the matter in dispute to an independent third party expert for determination; and |
(c) | Seller shall procure that the interests comprised in the Further Divestments shall be transferred to Purchaser or a Designated Purchaser, in accordance with the terms of this Agreement. |
10. | Closing, Closing Actions |
1. | Closing Date and Place |
(a) | on the first Business Day of the calendar month immediately following the Unconditional Date; |
(b) | if the Unconditional Date falls less than five (5) Business Days before the first day of such immediately following calendar month, on the first Business Day of the next calendar month; or |
(c) | such other day as may be mutually agreed by Seller and Purchaser in writing; |
2. | Closing Date and Conditions |
3. | Closing Actions |
(a) | Seller shall perform the actions assigned to it in Schedule 6; and |
(b) | Purchaser shall perform the actions assigned to it in Schedule 6, |
4. | Closing Preparation and Support |
5. | Designated Purchasers |
(a) | Purchaser shall be entitled to designate in writing within 20 (twenty) Business Days of the date hereof one or more of its (directly or indirectly) wholly owned Affiliates as designees which shall, instead of Purchaser, acquire the DivestCo Shares (each such entity a "Designated Purchaser"). Purchaser shall procure that it is entitled to make any payment of a portion of the Initial Purchase Price and the Final Purchase Price owed to Seller on behalf of the Designated Purchasers as paying agent. Purchaser shall, furthermore, procure that it is entitled and/or authorised to receive any Adjustment Payment and any other payment owed to any of the Designated Purchasers under or in connection with this Agreement on behalf of such Designated Purchaser. Each Designated Purchaser shall be deemed to be included in the term "Purchaser" hereunder. |
(b) | Any designation of a Designated Purchaser in accordance with this clause 10.5 shall not release Purchaser from its obligations under this Agreement. |
(c) | Any Designated Purchaser shall be notified to the respective Governmental Entity for clearance in the course of obtaining the BCA Clearance Condition and the SPA Clearance Condition and shall not be changed or exchanged by Purchaser once approved by the Governmental Entity. |
11. | Seller's Warranties |
1. | Warranties |
(a) | as at the date of this Agreement, the warranties set out in Schedule 7 ("Warranties") are true and accurate in all respects by reference to the matters, events and circumstances existing at the date hereof; and |
(b) | immediately before Closing, the Repeated Warranties will be true and accurate in all respects by reference to the existing matters, events and circumstances at the Closing Date. |
2. | Basis of Claim |
(a) | Intellectual Property Rights and information technology or any related claims or liabilities are set out in paragraph 1.12 (IP/IT/Data Protection) of Schedule 7, and no other Warranty in this regard is given; |
(b) | real estate and planning and zoning matters or any related claims, liabilities or other matters are those set out in paragraph 1.13 (Real Estate) of Schedule 7 and no other Warranty in this regard is given; |
(c) | Environmental Matters are those set out in paragraph 1.14 (Environmental Matters) of Schedule 7, and no other Warranty in this regard is given; and |
(d) | the employment of any past or present employee of any Target Company or any member of Seller's Group or any related claims, liabilities or other matters are set out in paragraph 1.15 (Employment) of Schedule 7 and no other Warranty in this regard is given. |
3. | No Further Warranties |
12. | Seller's Indemnities |
1. | Spanish Contractor Indemnity |
2. | Uerdingen Indemnity |
(a) | Subject to paragraph (b), Seller shall indemnify and hold harmless Purchaser and each member of Purchaser Group, from and against any and all claims, actions, proceedings, losses and any other Costs arising or incurred by any and all members of Purchaser Group in relation to the explosion of a nitrogen tank operated by Venator on 5 August 2015 in Krefeld-Uerdingen, Germany and the dispute between Venator and DivestCo 2 Subsidiary 8 in respect of the same (the "Uerdingen Indemnity"); |
(b) | The liability of the Seller under the Uerdingen Indemnity shall not exceed 35,000,000 EUR. |
3. | Rivoira Share Swap |
4. | Third Party Indemnity Claim |
(a) | Purchaser shall and shall procure that each member of Purchaser Group takes such action to assess, contest, dispute, defend, appeal or compromise the Third Party Indemnity Claim as Seller may reasonably request and does not make any admission of liability, agreement, |
(b) | Seller may, at any time before final compromise, agreement, expert determination or non-appealable decision of a court or tribunal of competent jurisdiction is made in respect of the Third Party Indemnity Claim or the Third Party Indemnity Claim is otherwise disposed of, give notice to Purchaser that it elects to assume the conduct of any dispute, compromise, defence or appeal of the Third Party Indemnity Claim; |
(c) | In the case of 12.4(a) and, subject to the requirement to maintain privilege, Purchaser shall keep Seller reasonably informed of the progress of the Third Party Indemnity Claim and provide Seller with copies of all relevant documents and such other information in its possession as may be requested by Seller (acting reasonably). |
(d) | Subject to the requirement to maintain privilege, Purchaser shall and shall procure that each member of Purchaser Group makes available to Seller such persons during Working Hours and all such information as Seller may reasonably request for assessing, contesting, disputing, defending, appealing or compromising any Third Party Indemnity Claim. |
(e) | Seller shall indemnify Purchaser and each relevant member of Purchaser Group against all liabilities, charges, Costs and expenses which they may incur in taking any such action as Seller may request pursuant to paragraphs (a) and (d), above; and |
(f) | In the case of 12.4(b), Seller shall keep Purchaser reasonably informed of the progress of the Third Party Indemnity Claim and provide Purchaser with copies of all relevant documents and such other information in its possession as may be requested by Purchaser (acting reasonably). |
13. | Taxes |
1. | Tax Covenant |
(a) | any Tax Liability of the Target Companies: |
(i) | that arises in respect of or by reference to an event that occurred on or before the Financial Closing Date if and to the extent the underlying Tax is a Tax which is specifically assessed as a result and in respect of such taxable event and not on an on-going basis in respect of a Tax assessment period (e.g., transfer Taxes); for the purposes of this clause 13.1(a)(i) any stamp duty or transfer or registration tax that would be payable on any document, provided such document is either necessary to establish the title of a Target Company to any asset or is a document in the enforcement or production of which a Target Company is interested, will be deemed to be a Tax Liability of a Target Company arising in consequence of an event occurring on the date of execution of such document and any interest, fine or penalty relating to any such duty or tax, will be deemed to be an Actual Tax Liability of a Target Company arising in consequence of an event occurring on the last date it would have been necessary to pay such duty or tax to avoid any liability to interest or penalties on paying it; or |
(ii) | in respect of any Tax based upon or related to income, profit, gains, turnovers, sales, gross receipts, wages, capital expenditures, expenses or any similar Tax, if and to the extent that such Tax Liability relates to any period of time ending on or before the Financial Closing Date; or |
(b) | any Tax Liability that is the liability of another person (other than a member of Purchaser Group) ("Primary Person") and for which any of the Target Companies is liable in consequence of: |
(i) | the Primary Person failing to discharge such Tax Liability; or |
(ii) | a Target Company at any time before the Financial Closing Date being a member of the same Tax Group as, or otherwise connected for any Tax purpose with, the Primary Person. |
2. | Exclusions |
(a) | Seller shall not be liable under clause 13.1 if and to the extent that: |
(i) | the aggregate amount of all Tax Claims (after having taken into account all exclusions and limitations applicable to such Tax Claims under this Agreement) does not exceed the aggregate amount of all liabilities, provisions or reserves for Taxes which have been taken into account in calculating Working Capital in the Closing Statement, meaning that Seller's liability is limited to the excess of the aggregate amount of all Tax Claims over the aggregate amount of all |
(ii) | a saving (being a reduction of cash Tax otherwise payable or a cash refund of Tax, and excluding in each case any Purchaser's Relief and any saving which results from the use of a Purchaser's Relief) arises to or for the benefit of any member of Purchaser Group or Purchaser's Tax Group within a period of seven (7) years as a consequence of the Tax Liability (other than a Tax Liability associated with any carve-out and any and all restructurings by or within Seller or Seller's Group or any Target Company on or before the Closing Date) (for example, due to the lengthening of any amortization or depreciation periods or higher depreciation allowances, a credit or allowance, a shift of any item relevant for Tax purposes to another period, or the deductibility of certain Taxes or non-recoverable input VAT for income Tax purposes, however, for the avoidance of doubt, not including any step-up in the Tax basis which does not allow for a higher Tax depreciation and in any case reduced by any Tax charges resulting therefrom) (the "Tax Saving"). The Tax Saving shall be taken into account in this context: (i) in the full nominal amount if and to the extent the Tax Saving arises in any period prior to and including the date on which the Tax Claim pursuant to clause 13.1 becomes due and payable (or would have become due and payable save for this clause 13.2(a)(ii)) and/or (ii) in the amount of the net present value of the Tax Saving if and to the extent the Tax Saving will arise in any period after such date; the net present value within the meaning of the preceding (ii) shall be calculated on a lump-sum basis (x) by applying the Tax rate applicable at the time the respective Tax Claim pursuant to clause 13.1 becomes due and payable and (y) by applying a discount factor of three per cent (3 %) p.a. and (z) discounted over the shorter of the anticipated period of time during which the Tax Saving is estimated to arise or seven (7) years; |
(iii) | the Tax Liability results from any increase in rates of Tax that comes into force after the Financial Closing Date, or of any change in law, administrative guidelines or regulations that comes into force after the Financial Closing Date; |
(iv) | the Tax Liability arises or is increased by an act, omission or transaction (including the change in the exercise of any Tax election right, the approval or implementation of any reorganization measure or the sale of any asset) of any |
(v) | the Tax Liability arises or is increased by a change after Closing in the accounting reference date of any Target Company or in the taxation or accounting principles of the Target Company (other than a change made in order to comply with mandatory law, administrative guidelines or final case law); |
(vi) | payment or discharge of the Tax Liability has been made prior to or on the Financial Closing Date; |
(vii) | the Tax Liability arises or is increased as a consequence of a failure of Purchaser to comply with or procure the compliance of the Target Companies with any of their obligations under this clause 13; |
(viii) | except to the extent taken into account under sub-paragraph (ii) above, a Relief (other than an Accounts Relief or Purchaser's Relief) is available (or is made available by Seller at no Cost to Purchaser and the members of Purchaser Group) to offset the Tax Liability; |
(ix) | the Tax Liability has been recovered or can be recovered in cash or by way of set-off from a third party; |
(x) | the Tax Liability arises or is increased by reason of a failure by Purchaser to make an election which has been taken into account in the Closing Statement, unless such failure occurs with the consent or at the request or direction of Seller; |
(xi) | the Tax Liability arises or is increased by the making of any election or claim by a Target Company or Purchaser after the Closing Date, the effect of which was not taken into account in the Closing Statement, other than with Seller's consent or at Seller's request or direction; |
(xii) | the Tax Liability arises or is increased by the disclaimer after the Closing Date of any election, claim or relief validly claimed by the Target Company before the Closing Date in respect of any period ending on or before the Financial Closing Date, where such election, claim or relief was taken into account in the Closing Statement; |
(xiii) | the Tax Liability arises or is increased by the cessation of, or any major change in, the trade or business carried on by a Target Company, in each case occurring after the Closing Date; |
(xiv) | recovery in respect of the Tax Liability has been or can be made under any other provision of the Agreement or any other Transaction Document; |
(xv) | the Tax Liability results from an election under (x) section 336 or section 338 of the U.S. Internal Revenue Code (or any comparable applicable provision of state, local or non-US law) with respect to the acquisition of a Target Company or (y) section 301.7701-3 of the U.S. Treasury Regulations with respect to any Target Company filed by any member of Purchaser Group (other than at the request or direction of Seller) on or after Closing; or |
(xvi) | the Tax Liability is expressly required to be borne by Purchaser pursuant to any other provision of this Agreement (e.g. clause 6.4 or clause 25.1). |
(b) | Purchaser may raise a Tax Claim pursuant to clause 13.1 by delivering to Seller a written claim notice ("Tax Claim Notice"). In the Tax Claim Notice Purchaser shall specify the amount of the Tax Claim and describe the underlying facts and circumstances in reasonable detail. The Tax Claim Notice shall include a copy of the relevant Tax assessment (if any) and related documents to the extent necessary to understand and evaluate the claim. |
(c) | The Tax Claim pursuant to clause 13.1 becomes due and payable within ten (10) Business Days after Seller has received the Tax Claim Notice, provided, however, that Seller shall not be obliged to make any payment earlier than five (5) Business Days before the respective Tax becomes due and payable to the competent Tax Authority. In case of an appeal and/or lawsuit being filed against the relevant Tax assessment, the Tax Claim does not become due and payable by Seller before the assessment of the relevant Tax has become unappealable, provided that the Tax Authority or Tax court has granted a preliminary relief from the assessed Tax payment obligation by way of suspension of payment until the final assessment. Unless explicitly requested by Seller Purchaser is under no obligation to apply for any preliminary relief (e.g. a suspension of payment) and in case of an application upon the request of Seller, any collateral potentially requested by the Tax Authorities shall be provided by Seller. |
3. | Tax Refunds |
(a) | Subject to Closing, Purchaser shall pay to Seller an amount equal to any Tax Refund plus any interest thereon which is received by any Target Company after the Financial Closing Date for amounts paid in respect of any Tax or Taxes paid or otherwise settled by such Target Company prior to or on the Financial Closing Date (including by way of a prepayment), |
(b) | Subject to the Closing, Purchaser shall pay to Seller an amount equal to any Tax Saving to the extent such Tax Saving has not excluded or reduced a Tax Claim pursuant to clause 13.2(a)(ii). |
(c) | Purchaser shall use, and shall procure that the Target Companies will use, reasonable endeavours to comply with any formal requirements to be met after the Closing Date for the recovery of any Tax Refund (but, for the avoidance of doubt, Purchaser shall not be required to take or procure that any Target Company takes any action which would involve the use of a Purchaser's Relief). Purchaser shall promptly notify Seller in writing of the receipt of the Tax Refund. Any amount payable to Seller pursuant to this clause 13.3 shall be due and payable within ten (10) Business Days after the Tax Refund has been received by the relevant Target Company. Purchaser shall deliver, for the next ten (10) calendar years following the Financial Closing Date, to Seller within six (6) months following the end of a calendar year a written statement stating whether and to what extent payment obligations of Purchaser pursuant to this clause 13.3 have arisen during the previous calendar year. Seller shall be entitled to review such statement and Purchaser shall, and shall procure that the Target Companies will, provide to Seller upon Seller's request all information and documentation reasonably requested by Seller for such review. |
4. | Overprovisions |
(a) | If any member of Purchaser Group becomes aware that any liability, provision or reserve for Taxes which have been taken into account in calculating Working Capital in the Closing Statement is likely to be an Overprovision (other than to the extent the Overprovision would arise or be increased as a result of any retrospective change in the law after the Financial Closing Date or any Purchaser's Relief) Purchaser shall promptly give details of such Overprovision by written notice to Seller. |
(b) | Seller may at any time (but not more than twice in any calendar year) instruct the relevant Target Company's Auditors to determine in writing the extent of any Overprovision referred to in clause 13.4(a). Half of the professional fees and expenses charged by the Auditors in consideration for making such determination shall be paid promptly by Seller and the other half of such fees and expenses shall be paid promptly by Purchaser (or, if Purchaser so designates, by the relevant Target Company). If such Auditors determine that an Overprovision has arisen such amount shall be: |
(i) | set off against any payment then due from Seller to Purchaser under this clause 13; and |
(ii) | (to the extent there is any excess) promptly paid by Purchaser to Seller. |
5. | Tax Covenants of Purchaser; Reverse Tax Indemnification |
(a) | Purchaser shall - without Seller's prior written approval - not take, and shall procure that no member of Purchaser Group will take, after the Closing Date, any action, including the making of any Tax elections, the effect of which could give rise to any Tax Liability (including any Tax Claim pursuant to clause 13.1) of any member of Seller's Group, or result in any increase thereof, or in the reduction of any Tax Saving, including any action |
(i) | performed after the Closing Date which has retroactive effect to a period prior to the Financial Closing Date; and |
(ii) | is not consistent with Seller's Group's Tax accounting methods practiced prior to the Closing Date; |
(b) | Purchaser shall indemnify Seller from any Tax in respect of any of the Target Companies with respect to any periods after the Financial Closing Date that constitutes a Tax Liability for which any member of Seller's Group are held liable secondarily by the Tax Authority. |
(c) | If and to the extent Purchaser fails to comply with any of its obligations under this clause 13, and such failure has the effect that a Tax Liability arises or is increased or that the position of |
(i) | any and all claims of Purchaser under this clause 13 in respect of the specific Tax item shall be expressly excluded, if and to the extent Seller provides evidence that such claims are caused or increased by such failure, and |
(ii) | Purchaser shall indemnify Seller for all and any direct damages of any member of Seller's Group and their reasonable Costs incurred in connection with such Tax Liability, if and to the extent Seller can demonstrate that any such damages results from such failure. Any amount payable to Seller pursuant to this clause 13.5(c)(ii) shall be due and payable within ten (10) Business Days after Purchaser has received Seller's notice, provided that Purchaser shall not be required to make any payment earlier than five (5) Business Days before the relevant Tax becomes due. Clause 13.2(a) shall apply mutatis mutandis. |
6. | As-if Assessment |
(a) | In case of any Taxes based upon or related to income, gains, sales, gross receipts, wages, capital expenditures, expenses or any similar Tax base, the amount of such Taxes shall be deemed to be the amount that would be assessed under the applicable Tax laws of the relevant jurisdiction if the relevant Tax assessment period and the relevant fiscal year of the Target Company ended on the Financial Closing Date (including the amount of Income, Profits or Gains that under such laws is deemed to be earned, accrued or received in such a notional Tax assessment period). Facts and circumstances reducing or increasing the amount of Tax payable that can be exclusively allocated to the time period before or after the Financial Closing Date, under the applicable Tax laws, shall be attributed accordingly, while other amounts which cannot be exclusively attributed to the time period before or after the Financial Closing Date, e.g., periodic Tax allowances like ordinary depreciations, shall be split up on the basis of an appropriate allocation key, being generally understood, |
(b) | In case of any other Taxes, the amount of such Taxes shall be deemed to be the amount that would be assessed under the applicable Tax laws of the relevant jurisdiction for the entire Tax assessment period multiplied by a fraction, the denominator of which is the number of days of the entire Tax assessment period and the numerator of which is the number of days of the portion of such Tax assessment period ending on the Financial Closing Date. |
(c) | Notwithstanding clauses 13.6(a) and 13.6(b) above, any Taxes based upon or related to any and all actions initiated by Seller or any member of Seller's Group prior to or on the Closing Date with regard to the BCA or the actions pursuant to clause 5 or changes of the legal form of Seller or any other member of Seller's Group or any Target Company shall be allocated and attributed to the period ending on the Financial Closing Date, irrespective of when the respective measure becomes effective and/or the Tax arises. |
7. | Time Limitations |
8. | Cooperation on Tax Matters |
(a) | The Parties shall fully cooperate, and shall cause their representatives to fully cooperate, with each other in connection with all Tax matters relating to any Pre-Financial Closing Date Tax Period, the Straddle Period and/or which could reasonably be expected to give rise to a Tax Liability of any member of Seller's Group or Purchaser Group, including the preparation and |
(b) | Seller undertakes to pay the amount of Tax becoming due with regard to the transformation of Praxair Deutschland Holding GmbH & Co. KG into a limited liability company (and the subsequent sale of the shares in DivestCo 2 under this Agreement) when becoming due (if and to the extent that clause 13.1 applies or would, but for such payment, apply to such Tax) and to provide Purchaser with evidence of such payment. |
(c) | After Closing, Purchaser shall prepare and file, or cause to be prepared and filed, when due all Tax Returns required to be filed on an individual or consolidated basis by any of the Target Companies for any Pre-Financial Closing Date Tax Period or the Straddle Period, provided, however, that any Tax Returns relating to any Relevant Tax Matter ("Relevant Tax Return") shall be subject to the review and instructions of Seller. Relevant Tax Returns shall be consistent with the policies, procedures, practices and election rights adopted in the financial statements of the relevant Tax period as well as the Tax Returns for previous Tax periods of the relevant Target Company submitting such Relevant Tax Return, unless in the reasonable and good faith opinion of Purchaser there is a significant risk that the adopted policies, procedures, practices and election rights are not in compliance with mandatory law or involve or will give rise to an incorrect or misleading statement or presentation of the relevant facts (in which case Purchaser shall notify Seller reasonably promptly that it has reached such opinion together with reasonable details of such opinion, which notification may therefore be required to be given, for the avoidance of doubt, before the date on which the applicable Relevant Tax Returns are furnished to Seller pursuant to the next sentence of this sub-clause). Purchaser shall ensure that any Relevant Tax Returns to be reviewed by Seller will be furnished to Seller, in case of Tax Returns to be filed on a monthly basis not later than five (5) Business Days, and all other Tax Returns not later than thirty (30) Business Days prior to the due date of the Relevant Tax Return, that any changes and amendments to such Relevant Tax Returns requested by Seller, unless they are not in line with the requirements of the preceding sentence or are not provided to Purchaser at least three (3) Business Days prior to the due date for Tax Returns to be filed on a monthly basis and all other Tax Returns no later than fifteen (15) Business Days prior to the due date of the Relevant Tax Return, are made prior to filing and that all Taxes payable under such Relevant Tax Returns shall be timely paid. If Seller and Purchaser fail to reach |
(d) | Notwithstanding any to the contrary in clause 13.8(c), Seller shall be entitled to (i) file (or cause to be filed) the initial consolidated, combined, and unitary U.S. Federal, state, or local income Tax Returns which are due following Closing but which reflect any Target Company's operations for a Relevant Tax Matter, (ii) file (or cause to be filed) any amended consolidated, combined, or unitary U.S. Federal, state, or local income Tax Returns for any Relevant Tax Matter, and (iii) control any audits of U.S. Federal, state or local income Tax Returns for any Relevant Tax Matter, including extending the applicable statute of limitations and settling or litigating claims. |
(e) | If, after the Closing, any Tax Authority informs any member of Purchaser Group in written form of a proposed audit, assessment, dispute or other material circumstance relating to any Relevant Tax Matter ("Relevant Tax Proceeding"), Purchaser shall notify Seller of such Relevant Tax Proceeding in reasonable detail and make available to Seller copies of the received documents and upon written request other relevant documents of the Target Companies reasonably pertaining thereto. Purchaser shall, or shall procure that the relevant Target Company shall give such notice and deliver such documents without undue delay, at the latest within five (5) Business Days in the case of Tax issues which a statutory limitation period is connected to, and within ten (10) Business Days if no statutory limitation period is connected therewith, after any member of Purchaser Group has received knowledge of such information. |
(f) | Purchaser shall not, and shall cause any member of Purchaser Group not to, apply for or initiate any audits, disputes, administrative, judicial or other proceedings related to any Relevant Tax Proceeding without the prior written consent of Seller (not to be unreasonably withheld or delayed), unless any such action is required to be taken by law. Purchaser agrees, and shall cause any member of Purchaser Group: |
(i) | to give Seller the opportunity to participate in any audits, disputes, administrative, judicial or other proceedings related to any Relevant Tax Proceeding; |
(ii) | to comply with any reasonable instructions given by Seller in relation to the conducting of such proceedings; |
(iii) | not to settle any Relevant Tax Proceeding without Seller's written consent (not to be unreasonably withheld or delayed); |
(iv) | to challenge and litigate in cooperation with Seller any Tax assessment or other decision of any Tax Authority related to such Relevant Tax Proceeding if reasonably requested and as instructed by Seller. |
9. | No additional rights or remedies |
(a) | Unless explicitly provided otherwise in this Agreement, Taxes shall be exclusively governed by clause 13. |
(b) | If any Target Company has any claim for or in respect of Taxes against any member of Seller's Group other than by virtue of this Agreement (for instance, based on the Transitional Services Agreements, the IP Agreement or the Product Supply Agreements) and such claims go beyond Purchaser's claims under this Agreement, Purchaser shall put Seller economically in the same position as if the relevant Target Company had only the same claims and rights Purchaser has under this Agreement. Conversely, if any member of Seller's Group has any claim for or in respect of Taxes against any Target Company other than by virtue of this Agreement (for instance, based on the Transitional Services Agreements, the IP Agreement or the Product Supply Agreements) and such claims go beyond the claims of any member of Seller's Group under this Agreement, Seller shall put Purchaser economically in the same position as if the members of Seller's Group had only the same claims and rights the members of Seller's Group have under this Agreement. Without prejudice to the rights and obligations under this clause 13.9, any claims for the consideration to be paid under the Transitional Services Agreements, the IP Agreement or the Product Supply Agreements shall remain unaffected by this clause 13.9. For the avoidance of doubt, this clause 13.9(a) shall not limit or prejudice the Tax Warranties or clauses 6.4, 6.5 or 25.1. |
10. | Miscellaneous |
(a) | The determination and calculation of any claims under clause 13 is to be made in a manner which avoids any economic double-counting effect that could lead to an overcompensation or undercompensation for Taxes, Tax Savings, Tax Refunds, Overprovisions or any other points of reference for such payment claims (which may, for instance, result from the interaction with the calculation of the Final Purchase Price and/or Final Inter-Company |
(b) | Any claims under clause 13 shall be calculated on a pro rata-basis which reflects, as the case may be on a look through basis, the percentage of the direct or indirect ownership in the respective Target Company as it is acquired by Purchaser under this Agreement. |
(c) | Nothing in this Agreement constitutes an express or implied guarantee or creates any liability of Seller of or for any future Tax treatment of a Target Company or the existence of any Tax attribute available to any Target Company, for instance, the application of a preferential Tax rate, the availability or amount of any Tax loss carry forwards, the Tax basis of any asset, the volume of depreciation (but without liability to Seller's payment obligations under this Agreement including this clause 13). |
(d) | If, after any Party has made a payment to the other Party on account of any claim under clause 13, it turns out that such payment was an overpayment (e.g., on the basis of a subsequent reassessment of the relevant Tax or a Tax Refund underlying such claim), the payee shall pay to the payer an amount equal to the overpayment (plus an amount equal to any interest received) promptly after receipt of the corresponding refund (except to the extent taken into account under clause 13.2(a)(ii) or 13.3). |
14. | Purchaser's Warranties |
1. | Incorporation |
2. | Corporate Authorisations |
(a) | Purchaser has obtained all corporate authorisations and (other than to the extent relevant to the Closing Conditions) all other governmental, statutory, regulatory or other consents, licences and authorisations required to empower it to enter into and perform its obligations under this Agreement where failure to obtain them would adversely affect to material extent its ability to enter into and perform its obligations under this Agreement. |
(b) | This Agreement and each of the Transaction Documents to which Purchaser is or will be a party will, when executed, constitute legal, valid and binding obligations of Purchaser in accordance with their terms. |
3. | No Breach |
4. | Insolvency |
5. | No Delay regarding Closing Conditions |
6. | Available Funds |
15. | Intellectual Property, Branding |
1. | No Rights in Seller's Trademarks |
2. | Restrictions on Use of Seller's Trademarks and Seller's Images by Purchaser |
(a) | From the Closing Date, Purchaser shall, and shall procure that each member of Purchaser Group will, |
(i) | subject to the remaining provisions of this clause 15.2, in any form and manner refrain from |
1. | using and displaying and, if used prior to the Closing Date, cease to use and display, and remove, (i) any Names which include (in whole or in part) any of Seller's Trademarks, including as corporate mark, business name or as name affix, and (ii) any Seller's Images; |
2. | using the custom fonts used by Seller at Closing other than in the context of informational, promotional or marketing materials of the Business existing on the Closing Date (for which clause 15.2(a)(ii) shall apply); or |
3. | holding itself out as having any current affiliation with any member of Seller's Group; and |
(ii) | take, at its own Cost, all actions reasonably necessary to ensure the discontinuation of the use of the Names including (in whole or in part) any of Seller's Trademarks, as well as any Seller's Images, for, or in relation to, the operations of the Business without undue delay, including any actions necessary to eliminate the use of such |
1. | stationery (including letterhead, business cards, schedules, inventories, agreements, customer agreements, publicity releases and forms), informational, promotional or marketing materials, websites, e-mails and any other communication or documents (print or electronic) of, used in connection with, or related to, the Business; |
2. | buildings, interior décor items, fixtures and furnishings, displays, signs and signage on or at buildings and on street signs providing directions to the sites of the Business; and |
3. | tools and products relating to the Business and any materials (print or electronic) used in connection with, or related to, any products or services of the Business, provided that any Names including (in whole or in part) any of Seller's Trademarks, if any, on |
(A) | any cylinders being part of the Business, but on the Closing Date not located at a site of the Business, shall as soon as reasonably practicable following the Closing Date, be removed or permanently concealed by, or on behalf of, any member of Purchaser Group; and |
(B) | any freezers, tanks or other installations being part of the Business, but not located at a site of the Business on the Closing Date, shall have to be removed by any member of Purchaser Group within eighteen (18) months of the Closing Date. |
(b) | Subject to Purchaser's compliance with clause 15.2(f), Seller acknowledges and agrees that: |
(i) | Purchaser is permitted to continue making use of Shared Seller's Trademarks (excluding any logos, designs or stylised versions of Seller's Trademarks) and Shared Seller's Images: |
1. | with respect to such Shared Seller's Trademarks and Shared Seller's Images, when accurately describing any products or services as having been originated by any member of Seller's Group in its operation of the Business prior to Closing; |
2. | with respect to such Shared Seller's Trademarks and Shared Seller's Images, in the framework of Purchaser Group being allowed to sell out or otherwise dispose of any branded inventory of Seller's private label hard goods (in line |
3. | with respect to such Shared Seller's Trademarks and Shared Seller's Images contained in URLs, to the extent Purchaser is not in a position to procure, by the Closing Date, the availability of an alternative URL that does not include (in whole or in part) any of Shared Seller's Trademarks and Shared Seller's Images, during a reasonable period of time (which shall in no case exceed twelve (12) months) from the Closing Date; and |
(ii) | no member of Purchaser Group shall be obliged to remove or obliterate any Shared Seller's Trademarks: |
1. | from any executed agreements or copies thereof, in existence prior to the Closing Date; or |
2. | from any internal documents, not customer-facing, in existence prior to the Closing Date that are used for internal purposes only. |
(c) | Purchaser shall, and shall procure that each member of Purchaser Group will, to the extent not effected before the Closing Date, transfer with effect as of the Closing Date to Seller for no consideration any rights the Business might have acquired by its use of a Name or otherwise in any of Seller's Trademarks. |
(d) | Purchaser shall, in exercising any of its rights under this clause 15.2 always act in accordance with fair market practices and considering to the fullest extent the good name, reputation and goodwill of any member of Seller's Group, their products and services. |
(e) | Purchaser recognises the value of the publicity and goodwill associated with Seller's Trademarks, acknowledges that Seller's Trademarks have acquired secondary meaning, and that all related rights and goodwill belong exclusively to the relevant member of Seller's Group. |
(f) | Purchaser shall, and shall procure that each member of Purchaser Group will, only use Shared Seller's Trademarks in accordance with the trademark policies established by the relevant member of Seller's Group, which policies may be amended from time to time and about which Seller will inform Purchaser promptly following Closing and thereafter following any amendment thereof. Purchaser shall not use, display, advertise or promote any other mark, brand name, trade name, label, seal or symbol in any manner that, in the opinion of the relevant member of Seller's Group, may be confusingly similar to or an imitation of Seller's Trademarks. |
(g) | Upon reasonable notice, Seller may make inspections during Working Hours of all Purchaser Group's records regarding use of Seller's Trademarks and may inspect all operations and |
3. | Ownership; No Further Obligations |
(a) | as between Seller and its Affiliates on the one hand, and Purchaser and its Affiliates on the other hand, Seller (or any member of Seller's Group) owns Seller's Trademarks and Seller's Images, and neither Purchaser nor any of its Affiliates shall contest such ownership allocation as between Seller and Purchaser (and their respective Affiliates); |
(b) | Seller and its Affiliates have no obligation to maintain or enforce any of Seller's Trademarks; and |
(c) | Seller and its Affiliates have no obligation to provide to Purchaser: |
(i) | any assistance, training, advice, maintenance or services of any kind with respect to Seller's Trademarks or Seller's Images; or |
(ii) | any physical or tangible materials in any form or media containing any of Seller's Trademarks or Seller's Images. |
4. | Specific Indemnification |
5. | Joint Notice |
6. | No Use of Shared Seller's Trademarks by Seller |
16. | Pre-Closing Covenants |
1. | Conduct of Business |
(a) | From the date of this Agreement until Closing, Seller shall procure that the Business is carried on, in all material respects, in the ordinary and usual course, except (i) for the actions, agreements, commitments, payments, transactions or other measures foreseen, permitted or reflected under this Agreement, the Transaction Documents or the Rivoira Share Swap (ii) any measures, actions or omissions to act aimed at, in connection with or relating to the separation of the Target Companies or JVCos from Seller's Group in the context of the Transaction, including, but not limited to, the carve in/carve out steps described in Schedule 11 or the re-allocation or transfer of certain employees between Seller's Group and Target Companies or JVCos (described in the document entitled "Transfer of European Employees" and identified with number 4.5 of the Global/Corporate folder in the Data Room, the "Pre-Closing Steps") (which shall be completed in such a way as to create no residual liabilities for Target Companies or JVCos, provided that Purchaser’s sole remedy in respect of any residual Tax liabilities created shall be under clause 13 of this Agreement), or (iii) any action or measure pursuant to requirements or requests of a Governmental Entity in connection with obtaining the BCA Clearance Condition or the SPA Clearance Condition (iv) any action, measure, omission to act, requirement or request by any monitoring trustee (or similar) appointed in connection with obtaining the BCA Clearance Condition or the SPA Clearance Condition, or (v) for decisions outside the ordinary business course, with the prior consent in writing by Purchaser, such consent not to be unreasonably withheld, conditioned or delayed, and deemed to be granted if Purchaser has not responded to a request from Seller for consent within ten (10) Business Days following the receipt of such request ((i) through (v) the "Permitted Actions"), it being understood that Seller shall keep Purchaser reasonably informed in relation to the completion of the Pre-Closing Steps. |
(b) | From the date of this Agreement until Closing, Seller shall further procure that except for Permitted Actions: |
(i) | the Business shall be run in the ordinary course and in accordance with prudent business practice in the manner a prudent business operator with sufficient resources would do so; |
(ii) | except for any dividends or distributions provided for in the Combined Carve Out Financial Statements, no Target Company declares, pays or makes any dividend or other distribution; |
(iii) | no Target Company repays, repurchases or reduces any of its issued share capital; |
(iv) | no share or loan capital is being issued or agreed to be issued by a Target Company; |
(v) | there is no change of the articles of association of a Target Company; |
(vi) | there is no merger, spin-off, change of legal form or similar measures involving or otherwise directly affecting any Target Company; |
(vii) | no Target Company creates any Third Party Rights over share capital held by it (other than for the benefit of another Target Company); |
(viii) | no Target Company sells or purchases or disposes of (other than to another Target Company) any interest in any share or loan capital or other security or interest in a company or business with a value in excess of two million (2,000,000) EUR; |
(ix) | all agreements between a Target Company or Controlled JVCo and members of Seller's Group take place on arm's length terms; |
(x) | other than in relation to an onsite plant or participation in a tender in relation to an onsite plant, no Target Company enters into or terminates any contract or incurs any commitment (either as a result of a single transaction or of a series of connected transactions), including without limitation any borrowing or indebtedness in the nature of borrowing, which has a value or is likely to involve expenditure in excess of ten million (10,000,000) EUR per annum (excluding VAT) which cannot be terminated or performed within its terms within one (1) year after the date on which it is entered into; |
(xi) | no Target Company enters into a contract in respect of a new on-site plant where such contract is likely to involve capital expenditures in excess of ten million (10,000,000) EUR; |
(xii) | no Target Company participates in a tender for an onsite plant which is likely to involve capital expenditure in excess of thirty million (30,000,000) EUR |
(xiii) | no Target Company enters into any guarantee, indemnity or other agreement to secure any obligation of a third party, including any member of Seller's Group (other than another Target Company); |
(xiv) | no Target Company (i) institutes or settles any litigation where that action is likely to result in a payment to or by a Target Company of two million (2,000,000) EUR or more (except for collection in the ordinary course of trading debts) (ii) settles an insurance claim in excess of two million (2,000,000) EUR materially below the amount claimed; |
(xv) | in connection with the Properties, no Target Company (i) terminates or serves any notice to terminate, surrenders or accepts any surrender of any lease, tenancy or licence; or (ii) enters into or prolongs the term of any lease, tenancy or licence by more than twelve (12) months, in each case which is material for the Business; |
(xvi) | no Target Company enters into or modifies materially any agreement with any Key Employee, including any off-cycle increase or amendment of salaries, benefits, bonus payment or other remuneration and on-cycle increases of more than 3% per annum as well as the termination of employment by termination notice or termination agreement; |
(xvii) | no Target Company: (x) assigns or otherwise transfers any Business Intellectual Property; or (y) except as required by applicable law or in accordance with the ordinary course of business, grants, modifies, agrees to terminate or permit the lapse of, or enters into any licence, agreement or arrangement concerning any Business Intellectual Property; |
(xviii) | no Target Company other than in the ordinary course of business makes any change to its accounting practices or policies, except as required by applicable law or applicable generally accepted accounting principles; and |
(xix) | no Target Company or Controlled JVCo changes its place of Tax residence. |
(c) | For the purposes of applying a reference to a monetary threshold expressed in EUR with respect to clause 16.1, an amount in a different currency shall be deemed to be an amount in EUR translated at the Exchange Rate at the relevant date on which the respective action is taken. |
2. | Regulatory Permits |
3. | Insurance |
4. | Finalising Transaction Documents |
(a) | The Parties acknowledge and agree that whilst the main body of each of the Transitional Services Agreement, Product Supply Agreement and IP Covenant Agreement are in Agreed Form, as at the date of this Agreement certain schedules and riders to these documents are not in Agreed Form. |
(b) | Seller and Purchaser agree to use their reasonable endeavours to (i) negotiate, agree and finalise the NoxBox Agreement and the Storage Agreements; (ii) agree the final form of the schedules referred to in paragraph (a) above and Schedule 3; and (iii) reach agreement in respect of any |
5. | Clean-ups regarding Conversion of DivestCo 2 |
6. | Rivoira Share Swap |
17. | Post-Closing Covenants |
1. | Access to Information of Target Companies |
(a) | The Target Companies shall provide, subject to applicable laws, Seller and Local Sellers (at Seller's or Local Sellers' Cost) with reasonable access during Working Hours to (and the right to take copies of) the books and accounts and all other data held by them after Closing to the extent that they relate to the Business, or Seller's Group business (if any), in the period up to |
(b) | The members of Purchaser Group shall (at Seller's Cost) also give such assistance to any member of Seller's Group as Seller may reasonably request in relation to any third party proceedings by or against any member of Seller's Group so far as they relate to the Business, including proceedings relating to employees' claims or Taxes. No member of Purchaser Group shall be under the obligation to become a party to such proceedings. |
2. | Access to Information of Seller |
(a) | The members of Seller's Group shall provide, subject to applicable laws, Purchaser with reasonable access during Working Hours to (and the right to take copies of) the books and accounts and all other data held by them after Closing to the extent that they relate to the Business in the period up to Closing and are required for formal third party investigations and reviews such as Tax or regulatory investigations or for preparation of accounts or Tax Returns or in connection with third party proceedings ("Seller's Records"). |
(b) | The members of Seller's Group shall (at Purchaser's Cost) also give such assistance to any Target Company as Purchaser may reasonably request in relation to any third party proceedings by or against any Target Company so far as they relate to the Business in the period up to Closing, including proceedings relating to employees' claims or Taxes. No member of Seller's Group shall be under the obligation to become a party to such proceedings. |
3. | Cooperation |
18. | PLC Guarantee |
19. | Conflict with other Agreements |
1. | Conflict |
2. | No Conflicting Claims |
20. | Responsibility after Closing |
1. | Assumption of Responsibility |
2. | Indemnification of Members of Seller's Group and Seller's Representatives |
(a) | of any Target Company; |
(b) | as a result of Seller's or other members of Seller's Group's shareholding or ownership interest in any Target Company; or |
(c) | any claims relating to Inter-Company Payables and Inter-Company Receivables, |
21. | Announcements, Confidentiality |
1. | Announcements |
2. | Confidentiality |
(a) | The confidentiality agreement concluded between Seller, Linde and Purchaser as of 6 March 2018 (the "Confidentiality Agreement") shall remain in full force and effect in accordance with its terms. If there is a conflict between the terms of the Confidentiality Agreement and the terms of this Agreement, the provisions of this Agreement shall prevail. |
(b) | Subject to clauses 21.2(d) and 21.2(e), Seller shall (and shall procure that each member of Seller's Group, and, in respect of the period up to the Closing, each Target Company, and each such person's advisers and connected persons, shall) and Purchaser shall (and shall procure that each member of Purchaser Group, including, in respect of the period from the Closing, each Target Company, and each such person's advisers and connected persons, shall) keep confidential the provisions and subject matter of, and the negotiations relating to, each Transaction Document. |
(c) | Purchaser: |
(i) | shall, and shall procure that each other member of Purchaser Group for the time being shall, keep confidential all information provided to it by or on behalf of Seller or otherwise obtained by it in connection with this Agreement which relates to Seller or any other member of Seller's Group; and |
(ii) | shall procure that, if after Closing any Target Company holds confidential information relating to Seller or any other member of Seller's Group, that Target Company shall after Closing keep that information confidential and, shall upon request return that information to Seller or destroy it without retaining copies to the extent technically feasible. |
(d) | Nothing in clauses 21.2(b) or 21.2(c) prevents any confidential information being disclosed: |
(i) | where such confidential information disclosed comprises only information set out in an announcement in the Agreed Form; |
(ii) | with the written approval of the other Parties; or |
(iii) | to the extent required by law, by any stock exchange or any regulatory or supervisory body or authority of competent jurisdiction, whether or not the requirement has the force of law, but if a person is so required to disclose any confidential information, the relevant party shall promptly notify the other Parties, where practicable and lawful to do so, before the disclosure occurs (as the case may be) and shall co-operate with the other Parties regarding the timing and content of such disclosure (as the case may be) or any action which the other parties may reasonably elect to take to challenge the validity of such requirement. |
(e) | Nothing in clauses 21.2(b) or 21.2(c) prevents any confidential information being disclosed to the extent: |
(i) | required to enable any person to enforce its rights under any Transaction Document or for the purpose of any judicial proceedings; |
(ii) | that the information is disclosed on a strictly confidential basis by a person to its professional advisers, auditors or bankers; |
(iii) | that the information is disclosed by Seller on a strictly confidential and need to know basis to another member of Seller's Group or by Purchaser on a strictly confidential and need to know basis to another member of Purchaser Group; or |
(iv) | that the information is in or comes into the public domain except through breach of the provisions of this Agreement or through breach of any other duty of confidentiality relating to that information. |
(f) | Seller shall implement, or shall procure the implementation by each member of Seller's Group of, all necessary measures to ensure that, after the Closing Date, neither Seller nor any member of Seller's Group obtains any customer information used in the Business and that any such |
(g) | Seller undertakes to procure that the customer information referred to in paragraph (f) above will not, from Closing, be accessible to employees of Seller or members of Seller's Group working in sales, marketing, products, customer relations, research and development or pricing. |
22. | Non-Solicit |
1. | Seller's Non-Solicit Undertaking |
2. | Purchaser Non-Solicit Undertaking |
3. | Exemptions |
23. | Notices, Agent for Service of Process |
1. | Notices |
(a) | If to Praxair, to: |
(b) | If to PLC, to: |
(c) | If to Purchaser, to: |
2. | Service of Process Agent for Purchaser |
3. | Service of Process Agent for Seller |
24. | Whole Agreement, Remedies |
1. | Whole Agreement |
2. | Remedies |
(a) | no Party shall have any claim or remedy in respect of any statement, representation, warranty or undertaking made by or on behalf of any other Party or Parties (or any of the members of Seller's Group or Seller's Representatives or members of Purchaser Group or Purchaser's Representatives (as the case may be)) in relation to the Transaction which is not expressly set out in this Agreement or any other Transaction Document; |
(b) | in entering into this Agreement and the Transaction Documents, Purchaser has not relied and is not relying upon any express or implied representation, statement, assurance, or warranty whether oral or written of any person (whether Party to this Agreement or not) other than the Warranties or as expressly set out in the Transaction Documents and neither the members of Seller's Group, nor Seller's Representatives have given or made any express or implied representation, warranty, statement, assurance or undertaking in relation to the Target Companies, JVCos, or Target Companies' or JVCos' businesses, assets, liabilities, operations, prospects, or condition (financial or otherwise), including with respect to merchantability or fitness for any particular purpose of any assets, the nature or extent of any liabilities, the prospects of its business, the effectiveness or the success of any operations, other than as expressly set out in the Warranties; |
(c) | any terms or conditions implied by law in any jurisdiction in relation to the Transaction (including any right under common law, tort, statute (including under the Misrepresentation Act 1967), equity, or otherwise) are excluded to the fullest extent permitted by law or, if incapable of exclusion, any right, or remedies in relation to them are irrevocably waived; |
(d) | except for any liability in respect of a breach of this Agreement or any other Transaction Document, no Party (or any of the members of Seller's Group or Seller's Representatives or members of Purchaser Group or Purchaser's Representatives (as the case may be)) shall owe any duty of care or have any liability in tort or otherwise to any other Party or Parties (or any of the members of Seller's Group or Seller's Representatives or members of Purchaser Group or Purchaser's Representatives (as the case may be)) in relation to the Transaction; |
(e) | the only right or remedy of a relevant Party in relation to the Transaction, any provision of this Agreement or any other Transaction Document shall be, unless specifically stated otherwise herein, be for breach of this Agreement or the relevant Transaction Document; |
(f) | no member of Seller's Group, nor Seller's Representatives (having only a right but not an obligation to make certain disclosures hereunder) have given or made any representation or warranty as to the accuracy or completeness of the Disclosure Letter, the contents of the Data Room, any management presentations, any management accounts or financial statements (other than the Combined Carve Out Financial Statements), any financial fact book, tax fact book, legal fact book, environmental fact book, information memorandum and any other information, or of the forecasts, estimates, projections, statements of intent or statements of opinion provided to Purchaser or Purchaser's Representatives on or prior to the date of this Agreement, including anything contained in or derived from any of the foregoing; |
25. | Miscellaneous |
1. | Costs |
(a) | Except as otherwise provided in this Agreement or any other Transaction Document, each Party shall be responsible for its own Costs (including those of its Affiliates) incurred in connection with the Transaction. |
(b) | Seller shall bear all fees of Governmental Entities in relation to obtaining the BCA Clearance Condition, and Purchaser shall bear all fees of Governmental Entities in relation to obtaining the SPA Clearance Condition, whereas each Party shall bear its own Costs incurred with these proceedings. |
(c) | Except as otherwise provided for in this Agreement or any other Transaction Document, Purchaser shall bear all notarisation fees, stamp duties and similar transfer Taxes and any fees of courts or Governmental Entities or regulatory authorities with respect to notifications, filings or regulatory proceedings arising in respect of the purchase of the DivestCo Shares pursuant to this Agreement. |
2. | Assignment |
3. | Contract (Rights of Third Parties) Act 1999 |
4. | Waivers, Rights and Remedies |
5. | Counterparts |
6. | Variations |
26. | Invalidity |
27. | Governing Law, Jurisdiction |
1. | Governing Law |
2. | Arbitration |
3. | Interim Relief |
1. | Corporate Authorisations, No-Breach, Incorporation, Seller's Group and Shares |
(a) | Seller has obtained and as of the Closing Date each Local Seller will have obtained all corporate authorisations (other than to the extent relevant to the Closing Conditions) required to empower it to enter into and perform its obligations under this Agreement and any other Transaction Document, where failure to obtain them would adversely affect its ability to enter into or perform its obligations thereunder. |
(b) | As of the Closing Date, Seller will have obtained all governmental, statutory and regulatory authorisations required to empower it to perform its obligations under this Agreement and any other Transaction Document, where failure to obtain them would adversely affect its ability to perform its obligations thereunder. |
(c) | Entry into and performance by each member of Seller's Group of this Agreement and/or any Transaction Document to which it is a party will not breach any provision of its memorandum and articles of association, by-laws or equivalent constitutional documents. |
(d) | Subject to fulfilment of the Closing Conditions, entry into and performance by each member of Seller's Group of this Agreement and/or any Transaction Document to which it is a party will not result in a breach of any laws or regulations or of any order, decree or judgment of any court or any Governmental Entity or regulatory authority, where (in either case) the |
(e) | This Agreement and each of the other Transaction Documents to which Seller is or will be party will, when executed, constitute legal, valid and binding obligations of Seller in accordance with their terms. |
(f) | The particulars relating to all Target Companies and JVCos in Schedule 1 will as of the Closing Date be true and accurate in all respects. |
(g) | Seller, each Local Seller, each Target Company and each JVCo is validly incorporated, in existence and duly registered under the laws of its jurisdiction of incorporation and has full power to conduct its business as conducted at the date of this Agreement. |
(h) | Seller has made available in the Data Room copies of the constitutional documents of each of the Target Companies and JVCos, and no action has been taken to amend any of them. |
(i) | Seller will at Closing be entitled to transfer (or procure the transfer of) the DivestCo Shares on the terms of this Agreement. |
(j) | The DivestCo Shares constitute the whole of the paid-up share capital of the DivestCos, and the shares in the DivestCo Subsidiaries held by the DivestCos constitute the whole of the paid-up share capital of the DivestCo Subsidiaries. All the DivestCo Shares and the shares in the DivestCo Subsidiaries are fully paid and free of additional payment obligations, and each Local Seller will at Closing be the sole legal and beneficial owner of the number of shares in the capital of the relevant Target Company and the relevant JVCo set out for it in Schedule 1 free from any Third Party Rights. |
(k) | No member of Seller's Group nor any of the Target Companies or Controlled JVCos has entered into any agreement whereby any person (other than a Target Company or a Controlled JVCo) has the right to call for the issue of any share or loan capital in any Target Company or Controlled JVCo. |
(l) | Other than as set out in Schedule 1, no Target Company or Controlled JVCo holds any ownership interests in any other legal entity. |
2. | Financial Matters |
(a) | The Combined Carve Out Financial Statements were prepared in accordance with the requirements of all relevant laws and US-GAAP then in force and applied on a consistent basis throughout the period involved save as disclosed therein and, subject to the basis of preparation and the assumptions made therein to reflect the separation of the respective business, present fairly, in all material respects, the combined carve-out financial position of the respective Target Companies as of the date to which they relate, and the respective |
(b) | From 31 March 2018 until the date of this Agreement and except for Permitted Actions: |
(i) | each Target Company has carried on business in the ordinary course; |
(ii) | there has been no material adverse change in the financial or trading position of any Target Company; |
(iii) | except for any dividends or distributions provided for in the Combined Carve Out Financial Statements, no Target Company has declared, paid or made any dividend or other distribution; |
(iv) | no Target Company has repaid, repurchased or reduced any of its issued share capital; |
(v) | no share or loan capital has been issued or agreed to be issued by a Target Company; and |
(vi) | other than in the ordinary course of business: (A) no capital commitment has been entered or agreed to be entered into by a Target Company to spend monies in excess of five million (5,000,000) EUR (in respect of each individual commitment) and (B) no Target Company has acquired or disposed of or agreed to acquire or dispose of any fixed asset with a value in excess of five million (5,000,000) EUR. |
(c) | The statutory books of each Target Company as well as other material books and records relating to the Business have been maintained in all material respects in accordance with laws of the relevant jurisdiction. |
3. | Financial Debt |
4. | Licences and Permits |
5. | Compliance with Law |
(a) | Each Target Company and each Controlled JVCo has, in the last three (3) years prior to the date of this Agreement conducted and is continuing to conduct its respective business in material compliance with all applicable laws and regulations, including Data Protection Legislation and, to Seller's Knowledge, no matter, event or circumstance exists which might lead to a Target Company or Controlled JVCo failing to materially comply with all applicable laws and regulations, including Data Protection Legislation. |
(b) | There has in the last three (3) years prior to the date of this Agreement been no material default by any Target Company or Controlled JVCo under any order, decree or judgment of any court or any Governmental Entity or regulatory authority in the jurisdiction in which it is incorporated which applies to the Business. |
(c) | Each Target Company or Controlled JVCo has conducted its business and corporate affairs in all material respects in accordance with its memorandum and articles of association, by-laws or other equivalent constitutional documents. |
6. | Special Regulatory Matters |
(a) | No Controlled JVCo has engaged in any activity or conduct that has resulted or will result in a material breach of: |
(i) | any applicable laws relating to money laundering and the combat of terrorism financing; |
(ii) | any Anti-Corruption Laws; or |
(iii) | any applicable laws relating to economic or trade sanctions. |
(b) | No Target Company nor, to Seller's Knowledge any of their respective directors, officers, employees or other persons for whom they could be liable nor any other person acting on a Target Company's behalf has engaged in any activity or conduct that has resulted or will result in a material breach of: |
(i) | any applicable laws relating to money laundering and the combat of terrorism financing; |
(ii) | any Anti-Corruption Laws; or |
(iii) | any applicable laws relating to economic or trade sanctions. |
(c) | Target Companies have in place a monitoring and compliance system to ensure compliance with the relevant laws and regulations set out in paragraph 1.6(b)(i) through (b)(iii). |
7. | Material Assets |
(a) | Target Companies own or are entitled, or will at Closing own or be entitled, except for Permitted Encumbrances, to use all the respective material assets reflected in the Combined Carve Out Financial Statements prepared as of 31 March 2018 other than those disposed of or replaced in the ordinary course of business, and such material assets are all of the material assets required to carry on the Business as currently conducted. |
(b) | The material assets of the Business are, except for Permitted Encumbrances, in the possession or under the control of the respective Target Companies (save where in the possession or under the control of a third party in the normal course of business). |
(c) | All material plant, machinery and equipment used by a Target Company for the Business are in a good state of repair (subject to normal wear and tear) and can be efficiently and properly used for the purposes for which they were acquired or retained other than where the foregoing was not the case, it would not have a material adverse impact on the Business as a whole. |
(d) | The material assets of the Target Companies, together with the services and assets to be provided under the Transitional Services Agreement comprise all the material assets and services that are sufficient to operate the Business substantially in the manner in which it was operated in the twelve (12) months prior to the Closing Date. |
8. | Insurances |
9. | Contractual Matters |
(a) | There are no material unremedied breaches by Target Companies of Material Agreements or, to Seller's Knowledge, by the counterparties to the Material Agreements and, to Seller's Knowledge, all Material Agreements are in full force and effect. |
(b) | No Material Agreement contains terms, whereby as a direct result of the entry into and performance of this Agreement or any other Transaction Documents, (x) any other party will be entitled to be relieved of any material obligation or become entitled to exercise any material right (including any termination or pre-emption right or other option) or (y) any Target Company will be in material default. |
(c) | During the 12 (twelve) months preceding the date of this Agreement, no major customer or supplier to any Target Company and/or to the Business has given written notice to any Target Company of its intention to take any action that would adversely impact its ongoing commercial relationship with the Target Company which written notice shall not include termination of agreements in the ordinary course of business or at the end of a term of an agreement. |
10. | Litigation and Investigations |
(a) | No Target Company is involved, as a party in any civil, criminal or administrative litigation, arbitration or administrative proceedings or any other dispute resolution process and to Seller's Knowledge, no such proceedings have been threatened in writing by or against a Target Company, where the proceedings (if successful) are likely to result in a Cost, benefit or value to the Business of ten million (10,000,000) EUR or more ("Material Litigation"). To Seller's Knowledge, there is no matter, event or circumstance which can reasonably be expected to give rise to any Material Litigation. |
(b) | No Target Company has received written notice in the two (2) years prior to the date of this Agreement or is to, Seller's Knowledge, otherwise aware of any current or pending material investigation by a Governmental Entity concerning any Target Company or any person for whom it would be liable. |
11. | Insolvency |
(a) | Neither Seller, nor Local Seller or any Target Company or Controlled JVCo is insolvent or bankrupt under the laws of its respective jurisdiction of incorporation, unable to pay its debts as they fall due or has proposed or entered into any arrangement (whether by court process or otherwise) with their creditors or any class of its creditors. |
(b) | Neither Seller, nor Local Seller or any Target Company or Controlled JVCo has received any written notice concerning or is otherwise aware of the appointment of an administrator or a receiver (including any administrative receiver or the equivalent to a receiver or administrative receiver in the relevant jurisdiction) in respect of the whole or any material part of the property, assets and/or undertakings of the Business. |
(c) | No order has been made and no resolution has been passed for the winding-up of Seller, any Local Seller or any Target Company or Controlled JVCo and, to Seller's Knowledge, no petition has been presented for that purpose. |
12. | IP/IT/Data Protection |
(a) | The Target Companies own or have licensed to them or may legally use all material Intellectual Property Rights necessary to carry on the Business as currently carried on ("Business Intellectual Property"). The licences of Intellectual Property Rights granted to, or by, any Target Company are (other than licenses to rights in computer software which are not material to the Business) Disclosed in the Data Room. To Seller's Knowledge, the Business Intellectual Property has not been and is not being violated by any third party. |
(b) | To Seller's Knowledge, there is no actual, pending or threatened action or proceeding or other dispute resolution process regarding the validity, subsistence or enforceability of the Business Intellectual Property that is material to the Business. |
(c) | To Seller's Knowledge, in the two (2) years prior to the date of this Agreement, Target Companies have not violated and do not violate third parties' Intellectual Property Rights by the production, marketing, sale or distribution of their current products or by any other actions in the conduct of the Business as currently carried on. |
(d) | All licences (other than off-the-shelf licenses) and leases relating to the material IT Systems being available to the Business after Closing have been Disclosed in the Data Room, unless such IT Systems are only licensed or leased after the date of this Agreement. |
13. | Real Estate |
(a) | Details in respect of the Properties are contained in the Data Room. |
(b) | A Target Company has valid legal title or a right to use each of the Properties and there is no Third Party Right in or over or affecting any of the owned Properties. |
(c) | Each Target Company in which title to a Property is vested has performed, observed and/or complied with (as the case may be) all covenants (whether in relation to freehold or leasehold land), conditions, agreements, statutory requirements, planning consents, by-laws, orders and regulations affecting such Property where failure to do so would be material to the Target Company and no written notice of any breach of any of these matters has been received. |
14. | Environmental Matters |
(a) | (i) No Target Company or Controlled JVCo is in material breach of any Environmental Laws relating to the operations carried on at any Property owned or used by any Target Company in relation to the Business, nor is there any pollution or contamination of the |
(b) | Each Target Company has all requisite Environmental Licences necessary to carry on its business as currently carried on (all of which are valid and subsisting) and no Target Company has received written notice that it is materially in default under any Environmental Licence. To Seller's Knowledge, no events have occurred as a result of which any Environmental Licence may be revoked or suspended (in whole or in part) or any material conditions may be imposed on any Target Company. |
(c) | No Target Company is engaged in any material litigation, arbitration or administrative proceedings concerning any Environmental Law or Environmental Matter. |
15. | Employment |
(a) | The Disclosure Letter contains an anonymised, true and accurate list of the Employees employed by each Target Company. Such list provides information in respect of material remuneration entitlements such as salary, bonus, profit participation or other variable remuneration elements, and stock options, stock appreciation rights or similar rights, as well as pensions and the country or territory in which they usually work. Except as set out in such list, no obligations of the Target Companies exist to increase and/or amend any Employee's salary, benefits, bonus payment or other remuneration by more than 5% per annum. |
(b) | The Disclosure Letter contains copies of the contracts of employment as well as any material amendment agreements or side letters to those contracts of employment, if any for all Key Employees. |
(c) | Neither the Target Companies nor, to Seller's Knowledge, the Key Employees are in material breach of the contracts referred to in paragraph 1.15(b) of this Schedule 7 and all Target Companies have, in all material respects, on the due date and in compliance with applicable law, paid any sums which have become due and payable in respect of Employees, including in relation to their pension and benefit arrangements. |
(d) | The Data Room contains template copies of the standard terms and conditions of employment typically applicable to Employees of the relevant Target Companies. The principal terms and conditions of the contracts of employment of the Employees do not materially deviate from said standard terms and conditions contained in the Data Room. |
(e) | No Key Employee has given or received notice of termination of his/her employment or has entered into a termination agreement with any of the Target Companies. |
(f) | No offer of employment has been made by a relevant Target Company to an individual who would be entitled to a fixed salary of greater than one hundred and fifty thousand (150,000) EUR if such offer were accepted, which has not yet been accepted or which has been accepted but where the employment has not yet started. |
(g) | No Key Employee is entitled to any bonus payments by any of the Target Companies as a result of the consummation of this Agreement, and no Key Employee has received an offer of employment or offer to otherwise enter into a contract for their services from any member of Seller's Group, Seller's Representatives or Representatives of any member of Seller's Group (for as long as it is a member of Seller's Group). |
(h) | The Data Room contains a complete list of all deferred and variable remuneration schemes in which the Employees participate as at the date of this Agreement. |
(i) | The Data Room contains complete copies of all material collective agreements (other than those entered into by the relevant employer's association or binding on any Target Company by operation of law) with trade unions, worker's councils or similar organisations or bodies of employee representatives to which any relevant Target Company is bound, which provide for material payment obligations of a Target Company or impose any restriction as to the future closure of plants or other restructurings affecting the workforce, in particular, there are no reconciliation of interest agreements or social plans beyond what is in the Data Room. |
(j) | No Target Company is experiencing (i) any strike or lockout of its employees or (ii) any dispute with any union, workers' council or other body of employee representatives pending before any court, Governmental Entity or arbitrator which relates to an alleged material breach of any of the agreements described in paragraph 1.15(i) or to any labour relations or employment matters of a general and significant nature (including mass lay-offs or unfair labour practices). |
(k) | No Target Company is bound by any pension or retirement plan or commitment which obligates it to pay any pension or retirement (including early retirement) benefit to any of its current or former employees (other than any defined contribution plans and employer's contributions to statutory pension schemes), except for the pension or retirement plans or commitments copies of which are contained in the Data Room. All such applicable pension plans currently materially comply with their governing documents and have been duly funded as far as necessary under applicable law. |
16. | Finders' Fee |
17. | Tax Warranties |
(a) | The information provided in the Tax Fact Book is true and accurate in all material respects and is not misleading in any material respect and, with regard to contingency reserves, audits and examinations, is still true and accurate as of the Financial Closing Date. |
(b) | All Tax Returns required to have been filed by each Target Company have been filed on time. Such Tax Returns are true and accurate in all material respects. |
(c) | All Taxes which are or have been due and owing by each Target Company (whether or not shown on any Tax Return) have been paid on time. |
(d) | The Combined Carve Out Financial Statements contain any provision, reserve or allowance in respect of Tax required by all relevant laws and US-GAAP to have been contained therein and present fairly, in all material respects, the Tax position of the Target Companies as of the date to which they relate. If all relevant facts now known to Seller, Target Companies and/or their auditors had been known by Target Companies and their auditors when the Combined Carve Out Financial Statements were prepared, any provision, reserve or allowance in respect of Tax that would have been shown in the Combined Carve Out Financial Statements in those circumstances would have been the same as the provision, reserve or allowance which was in fact shown therein. |
(a) | Each Target Company is and has at all times been resident for Tax purposes in its place of incorporation and is not and has not at any time been treated as resident in any other jurisdiction for any Tax purposes. No Target Company is subject to Tax in any jurisdiction other than its place of incorporation other than Disclosed by Seller in the Tax Fact Book. |
(b) | No Target Company is involved in any current dispute or action with a Tax Authority or is or has in the last five years been the subject of any investigation, enquiry, audit or non-routine visit by any Tax Authority other than Disclosed by Seller in the Tax Fact Book. Seller is not aware that in relation to any of the Target Companies an investigation, enquiry, audit or non-routine visit by any Tax Authority is planned. |
(c) | No Tax Authority has operated or agreed to operate any special arrangements (being an arrangement which is not based on relevant legislation or any published practice) in relation to any Target Company's Tax affairs. |
(d) | There are no encumbrances for Taxes upon the assets of any Target Company. |
(e) | No Target Company is a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement other than as described in the Tax Fact Book. |
(f) | No Target Company is a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for federal income Tax purposes other than as described in the Tax Fact Book. |
1. | General Remedy |
(a) | Subject to paragraph (b) below, the only remedy of Purchaser in respect of a Claim shall be damages for breach of contract and in respect of a Warranty Claim shall be damages for breach of the Warranties. |
(b) | Purchaser shall not be prohibited from seeking specific performance or other similar equitable relief in respect of the obligations contained in clause 2.1 of this Agreement if: (i) the Business Combination has completed; and (ii) Purchaser is ready and able to perform its obligations pursuant to clause 10 of this Agreement. |
2. | Specific Limitations |
(a) | punitive, special, exemplary, incidental, indirect or consequential losses or damages; |
(b) | loss of goodwill or possible business after Closing, whether actual or prospective; |
(c) | pure economic loss; |
(d) | penalties, charges or interest arising directly or indirectly from any act, transaction or omission of Purchaser or any other member of Purchaser Group after Closing; and |
(e) | legal or other professional fees, costs and expenses unless reasonably and properly incurred and evidenced, provided that this paragraph (e) shall not apply in respect of any claim made by Purchaser pursuant to clause 12 (Seller's Indemnities) or clause 13.1 (Taxes) of this Agreement. |
3. | Knowledge |
(a) | has been fairly disclosed to Purchaser or any of Purchaser's Representatives in the Disclosure Letter or any document or other information in the Data Room on or before the date of this Agreement in sufficient detail to enable a reasonable purchaser to identify and make a reasonably informed assessment of the nature of the fact, matter or circumstance so disclosed ("Disclosed"); or |
(b) | is within the actual knowledge of the following specified Purchaser's Representatives at the date hereof ("Known"): Scott Kallman, Steve Foster, Stephen Stroud, John Molnar and Ron Wettig. |
4. | Reserves in Accounts |
5. | Recovery |
6. | Legislative Changes |
7. | No Double Recovery |
8. | Accounting, and Business Changes |
(a) | any change after Closing of the date to which any Target Company or JVCo prepares its accounts or in the bases, methods, principles or policies or accounting of any Target Company or JVCo other than a change which is required because such bases, methods, principles or policies of accounting as at the date of Closing are materially not in accordance with applicable law or any published accounting practice or principle then current; or |
(b) | a cessation, or any change in the nature or conduct, of any trade carried on by any Target Company or JVCo at Closing, being a cessation or change occurring on or after Closing. |
9. | Contingent Liabilities |
10. | Cure of Breach |
11. | Mitigation |
12. | Thresholds |
(a) | unless the amount of the liability pursuant to that Warranty Claim exceeds an amount of one million (1,000,000) EUR (provided that all Warranty Claims arising from a series of connected acts, transactions or events or arising from or relating to any extent to the same or similar facts or circumstances shall be deemed to be aggregated and taken together and, so aggregated and taken together, shall be treated as a single Warranty Claim, solely for the purposes of this sub-paragraph 12(a)); |
(b) | unless the amount of the liability pursuant to that Tax Claim exceeds an amount of fifty thousand (50,000) EUR (provided that all Tax Claims arising from a series of connected acts, transactions or events or arising from or relating to any extent to the same or similar facts or circumstances shall be deemed to be aggregated and taken together and, so |
(c) | unless and to the extent the aggregate amount of the liability of Seller for all Warranty Claims not excluded by sub-paragraphs (a) and (b) exceeds thirty million (30,000,000) EUR (in which case Purchaser shall be entitled to claim only the amount in excess of ten million (10,000,000) EUR). |
13. | Maximum Liability |
(a) | The aggregate amount of the liability of Seller for all Warranty Claims (other than Fundamental Warranty Claims) shall not exceed an amount equal to 20% of the Final Purchase Price. |
(b) | Without prejudice to sub-paragraph 13(a) above, the aggregate amount of the liability of Seller for all Claims and Tax Claims (other than Tax Claims pursuant to clause 13.1(b)) under or in connection with this Agreement (including Fundamental Warranty Claims shall not exceed the Final Purchase Price (including any amounts paid by Seller to Purchaser for any other Claims or Tax Claims other than Tax Claims pursuant to clause 13.1(b) under this Agreement). |
(c) | Any amounts paid by Seller pursuant to a Claim or Tax Claim and subsequently paid or repaid to, or set off or otherwise applied or taken into account for the benefit of, Seller pursuant to clause 13.3 (Tax Refunds), clause 13.4 (Overprovisions), clause 13.5 (Tax Covenant of Purchaser: Reverse Tax Indemnification) or paragraph 18 of this Schedule (Recovery from Third Parties) shall be disregarded to the extent of such payment, repayment, set-off, application or benefit for the purposes of paragraph 13(b). |
14. | Time Limitations |
(a) | two (2) years of the Closing Date, in respect of Warranty Claims (other than Fundamental Warranty Claims, Environmental Warranty Claims and Tax Warranty Claims); and |
(b) | three (3) years of the Closing Date, in respect of Fundamental Warranty Claims; |
(c) | five (5) years of the Closing Date, in respect of Environmental Warranty Claims; and |
(d) | seven (7) years of the Closing Date, in respect of Tax Warranty Claims. |
15. | Exchange Rate |
16. | Adjustment of Purchase Price |
17. | Third Party Claims |
1. | If a Warranty Claim arises as a result of, or in connection with, a liability or alleged liability of a Target Company to a third party (a "Third Party Claim"), then Seller may, at any time before any final compromise, agreement, expert determination or non-appealable decision of a court or tribunal of competent jurisdiction is made in respect of the Third Party Claim or the Third Party Claim is otherwise disposed of, give notice to Purchaser that Seller elects to assume the conduct of any dispute, compromise, defence or appeal or the Third Party Claim and of any incidental negotiations on the following terms: |
(a) | Seller shall indemnify Purchaser and all Designated Purchasers and each relevant Target Company against all Costs and liabilities which they may incur in taking any such action as Seller may request pursuant to sub-paragraphs (b) and (c) below; |
(b) | subject to the requirement to maintain privilege, Purchaser shall procure that each relevant Target Company makes available to Seller such persons during Working Hours |
(c) | Purchaser shall procure that each relevant Target Company takes such action to assess, contest, dispute, defend, appeal or compromise the Third Party Claim as Seller may request and does not make any admission of liability, agreement, settlement or compromise in relation to the Third Party Claim without the prior written approval of Seller, such approval not to be unreasonably withheld or delayed; and |
(d) | Seller shall keep Purchaser informed of the progress of the Third Party Claim and provide Purchaser with copies of all relevant documents and such other information in its possession as may be requested by Purchaser (acting reasonably). |
2. | If a Warranty Claim arises as a result of, or in connection with a Third Party Claim, Purchaser shall, until the earlier of such time as Seller shall give any notice as contemplated by paragraph 17.1 and such time as any final compromise, agreement, expert determination or non-appealable decision of a court or tribunal of competent jurisdiction is made in respect of the Third Party Claim or the Third Party Claim is otherwise finally disposed of: |
(a) | procure that each relevant Target Company consults with Seller, and takes account of the requirements of Seller, in relation to the conduct of any dispute, defence, compromise or appeal or the Third Party Claim; |
(b) | subject to the requirement to maintain privilege, keep, or procure that each relevant Target Company keeps, Seller promptly informed of the progress of the Third Party Claim and provide, or procure that each relevant Target Company provides Seller with copies of all relevant documents and such other information in Purchaser's or Target Company’s possession as may be requested by Seller (acting reasonably); and |
(c) | procure that no relevant Target Company shall cease to defend the Third Party Claim or make any admission of liability, agreement or compromise in relation to the Third Party Claim without the prior written consent of Seller not to be unreasonably withheld or delayed. |
3. | Nothing in this paragraph 17 shall require the provision by any person of any information to the extent such provision would contravene any applicable law or regulation or would breach any duty of |
(a) | that information shall only be used by the Recipient in connection with the Third Party Claim and clause 21.2 shall in all other respects apply to that information; and |
(b) | to the extent that information is privileged: |
(i) | no privilege shall be waived by reason of or as a result of its being provided to the Recipient; and |
(ii) | if a third party requests disclosure by the Recipient in relation to that information, if the Recipient is Seller or Purchaser, the Recipient shall or, if the Recipient is a Target Company, Purchaser shall procure that the Recipient shall promptly notify the Provider and, to the extent it can do so, itself assert privilege in opposition to that disclosure request. |
18. | Recovery from third parties |
(a) | Seller makes a payment in respect of a Claim or a Tax Claim (the "Damages Payment"); |
(b) | at any time after the making of such payment any Target Company or Purchaser received any sum other than from Seller or any Tax Authority which would not have been received but for the matter or circumstances giving rise to that Claim or Tax Claim (the "Third Party Sum"); |
(c) | the receipt of the Third Party Sum was not taken into account in calculating the Damages Payment; and |
(d) | the aggregate of the Third Party Sum and the Damages Payment (in both cases, less any Costs reasonably incurred by any member of Purchaser Group in recovering the same, to the extent not reimbursed by Seller, and any Tax suffered by any member of Purchaser Group in respect of the recovery of the same) exceeds the amount required to compensate Purchaser in full for the loss or liability which gave rise to the Claim or Tax Claim in question (such excess being the "Excess Recovery") |
1. | I have reviewed this Quarterly Report on Form 10-Q of Praxair, Inc.; |
2. | Based on my knowledge, this 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. |
November 9, 2018 | By: /s/ Stephen F. Angel | ||
Stephen F. Angel | |||
Chairman, President | |||
Chief Executive Officer | |||
(principal executive officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Praxair, Inc.; |
2. | Based on my knowledge, this 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. |
November 9, 2018 | By: /s/ Matthew J. White | ||
Matthew J. White | |||
Senior Vice President and | |||
Chief Financial Officer | |||
(principal financial officer) |
November 9, 2018 | By: /s/ Stephen F. Angel | ||
Stephen F. Angel | |||
Chairman, President | |||
Chief Executive Officer | |||
(principal executive officer) |
November 9, 2018 | By: /s/ Matthew J. White | ||
Matthew J. White | |||
Senior Vice President and | |||
Chief Financial Officer | |||
(principal financial officer) |
Document and Entity Information |
9 Months Ended |
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Sep. 30, 2018
shares
| |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2018 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | PX |
Entity Registrant Name | PRAXAIR INC |
Entity Central Index Key | 0000884905 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 287,856,237 |
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Millions |
3 Months Ended | 9 Months Ended | |||||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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SALES | [1] | $ 3,024 | $ 2,922 | $ 9,084 | $ 8,484 | ||||||
Cost of sales, exclusive of depreciation and amortization | 1,714 | 1,652 | 5,114 | 4,800 | |||||||
Selling, general and administrative | 294 | 300 | 911 | 895 | |||||||
Depreciation and amortization | 306 | 298 | 928 | 877 | |||||||
Research and development | 23 | 23 | 71 | 69 | |||||||
Transaction costs and other charges | 31 | 14 | 74 | 35 | |||||||
Other income (expense) - net | 13 | (3) | 25 | (3) | |||||||
OPERATING PROFIT | 669 | 632 | 2,011 | 1,805 | |||||||
Interest expense - net | 40 | 41 | 130 | 120 | |||||||
Net pension and OPEB cost (benefit), excluding service cost | 6 | 6 | 10 | (7) | |||||||
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS | 623 | 585 | 1,871 | 1,692 | |||||||
Income taxes | 156 | 162 | 462 | 468 | |||||||
INCOME BEFORE EQUITY INVESTMENTS | 467 | 423 | 1,409 | 1,224 | |||||||
Income from equity investments | 13 | 12 | 42 | 35 | |||||||
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) | 480 | 435 | 1,451 | 1,259 | |||||||
Less: noncontrolling interests | $ (19) | $ (16) | (48) | (45) | |||||||
NET INCOME - PRAXAIR, INC. | $ 1,403 | $ 1,214 | |||||||||
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS | |||||||||||
Basic earnings per share (usd per share) | $ 1.60 | $ 1.46 | $ 4.87 | $ 4.24 | |||||||
Diluted earnings per share (usd per share) | $ 1.58 | $ 1.45 | $ 4.82 | $ 4.21 | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING (000’s): | |||||||||||
Basic shares outstanding (in shares) | 288,093 | 286,467 | 287,800 | 286,022 | |||||||
Diluted shares outstanding (in shares) | 291,513 | 289,216 | 291,275 | 288,524 | |||||||
Parent [Member] | |||||||||||
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest | $ 461 | $ 419 | [2] | $ 1,403 | [2] | $ 1,214 | [2] | ||||
NET INCOME - PRAXAIR, INC. | $ 419 | ||||||||||
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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Property, plant and equipment, accumulated depreciation | $ 13,987 | $ 13,819 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, issued (in shares) | 383,230,625 | 383,230,625 |
Treasury stock, shares (in shares) | 95,374,388 | 96,453,634 |
Summary of Significant Accounting Policies |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | 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 2017 Annual Report on Form 10-K. There have been no material changes to the company’s significant accounting policies during 2018. Accounting Standards Implemented in 2018
Accounting Standards to be Implemented
Reclassifications – Certain prior years’ amounts have been reclassified to conform to the current year’s presentation including reclassifications on the consolidated statements of income and segment operating profit relating to the adoption of accounting guidance on the presentation of net periodic pension and postretirement benefit costs. |
Transaction Costs and Other Charges |
9 Months Ended |
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Sep. 30, 2018 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Transaction Costs and Other Charges | Transaction Costs and Other Charges Transaction costs and other charges were $31 million and $74 million ($29 million and $67 million after-tax and noncontrolling interest, or $0.10 and $0.23 per diluted share) for the quarter and nine months ended September 30, 2018, respectively. Transaction costs and other charges were $14 million and $35 million ($13 million and $34 million after-tax or $0.05 and $0.12 per diluted share) for the quarter and nine months ended September 30, 2017. On October 31, 2018, Praxair and Linde AG combined under Linde plc, as contemplated by the Business Combination Agreement (see Note 17). Praxair incurred transaction costs and other charges primarily in connection with the intended business combination totaling $21 million and $64 million for the quarter and nine months ended September 30, 2018 ($19 million and $57 million after-tax and noncontrolling interests, or $0.07 and $0.20 per diluted share), respectively. Praxair incurred transaction costs which totaled $14 million and $35 million for the quarter and nine months ended September 30, 2017 ($13 million and $34 million after-tax, or $0.05 and $0.12 per diluted share), respectively. Effective July 1, 2018, Argentina was deemed a highly inflationary economy. As a result, the third quarter of 2018 includes a $10 million charge ($10 million after-tax, or $0.03 per diluted share) associated with the transition to hyper-inflationary accounting in Argentina. Classification in the condensed consolidated financial statements The costs are shown within operating profit in a separate line item on the consolidated statements of income. On the condensed consolidated statement of cash flows, the impact of these costs, net of cash payments, is shown as an adjustment to reconcile net income to net cash provided by operating activities. In Note 13 - Segments, Praxair excluded these costs from its management definition of segment operating profit; a reconciliation of segments operating profit to consolidated operating profit is shown within the segment operating profit table. |
Acquisitions |
9 Months Ended |
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Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions During the nine months ended September 30, 2018 and 2017, Praxair had acquisitions totaling $6 million and $18 million, respectively, related primarily to acquisitions of packaged gas businesses in North America. |
Supplemental Information |
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Supplemental Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information | Supplemental Information Inventories The following is a summary of Praxair’s consolidated inventories:
Long-term receivables Long-term receivables are not material and are largely reserved. Such long-term receivables are included within other long-term assets in the condensed consolidated balance sheets and totaled $31 million and $54 million at September 30, 2018 and December 31, 2017, respectively. These amounts are net of reserves of $45 million and $51 million, respectively. The amounts in both periods relate primarily to government receivables in Brazil and other long-term notes receivable from customers. Collectability is reviewed regularly and uncollectible amounts are written off as appropriate. |
Debt |
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Debt | Debt The following is a summary of Praxair’s outstanding debt at September 30, 2018 and December 31, 2017:
In June 2018, the company's $500 million 364-day revolving credit facility with a syndicate of banks expired and was not renewed. |
Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | 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 three types of derivatives that the company enters into: (i) those relating to fair-value exposures, (ii) those relating to cash-flow exposures, and (iii) those relating to foreign currency net investment exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions; and net investment exposures relate to the impact of foreign currency exchange rate changes on the carrying value of net assets denominated in foreign currencies. When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge, cash-flow hedge, or a net investment hedge. Currently, Praxair designates all interest-rate and treasury-rate locks 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 September 30, 2018 and December 31, 2017 for consolidated subsidiaries:
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. Certain forward currency contracts are entered into to protect underlying monetary assets and liabilities denominated in foreign currencies from foreign exchange risk and are not designated as hedging instruments. The fair value adjustments on these contracts are offset by the fair value adjustments recorded on the underlying monetary assets and liabilities. Praxair also enters into forward currency contracts, which are designated as hedging instruments, to limit the cash flow exposure on certain foreign-currency denominated intercompany loans. The fair value adjustments on these contracts are recorded to AOCI, with the effective portion immediately reclassified to earnings to offset the fair value adjustments on the underlying debt instrument. 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. Net Investment Hedge As of September 30, 2018, the Company has €1.65 billion ($1.92 billion) of Euro-denominated notes, of which €1.63 billion ($1.89 billion) is designated as a hedge of the net investment position in its European operations. These Euro-denominated debt instruments reduce the company's exposure to changes in the currency exchange rate on investments in foreign subsidiaries with Euro functional currencies. Since hedge inception, exchange rate movements have reduced long-term debt by $162 million (long-term debt decreased by $65 million during the first nine months of 2018), with the offsetting gain shown within the cumulative translation component of AOCI in the condensed consolidated balance sheets and the consolidated statements of comprehensive income. Interest Rate Contracts Outstanding Interest Rate Swaps At September 30, 2018, Praxair had one outstanding interest rate swap agreement with a $475 million notional amount related to the $475 million 1.25% notes that matured on November 7, 2018. The interest rate swap effectively converts fixed-rate interest to variable-rate interest and is designated as a fair value hedge. Fair value adjustments are recognized in earnings along with an equally offsetting charge / benefit to earnings for the changes in the fair value of the underlying debt instrument. At September 30, 2018, less than $1 million was recognized as a decrease in the fair value of these notes (increase in the fair value of less than $1 million at December 31, 2017). Terminated Treasury Rate Locks The following table summarizes the unrecognized gains (losses) related to terminated treasury rate lock contracts:
The following table summarizes the impact of the company’s derivatives on the consolidated statements of income:
* The gains (losses) on balance sheet items are offset by gains (losses) recorded on the underlying hedged assets and liabilities. Accordingly, the gains (losses) for the derivatives and the underlying hedged assets and liabilities related to debt items are recorded in the consolidated statements of income as interest expense-net. Other balance sheet items and anticipated net income gains (losses) are recorded in the consolidated statements of income as other income (expenses)-net. The following table summarizes the impacts of the company's derivatives designated as hedging instruments that impact AOCI: Derivatives Designated as Hedging Instruments **
**The gains (losses) on net investment hedges are recorded as a component of AOCI within foreign currency translation adjustments in the condensed consolidated balance sheets and the condensed consolidated statements of comprehensive income. The gains (losses) on treasury rate locks are recorded as a component of AOCI within derivative instruments in the condensed consolidated balance sheets and the condensed consolidated statements of comprehensive income. There was no ineffectiveness for these instruments during 2018 or 2017. The gains (losses) on net investment hedges are reclassified to earnings only when the related currency translation adjustments are required to be reclassified, usually upon sale or liquidation of the investment. The gains (losses) for interest rate contracts are reclassified to earnings as interest expense –net on a straight-line basis over the remaining maturity of the underlying debt. Net losses of $1 million are expected to be reclassified to earnings during the next twelve months. |
Fair Value Disclosures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Fair Value Disclosures The fair value hierarchy prioritizes the input to valuation techniques used to measure fair value into three broad levels 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) Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes assets and liabilities measured at fair value on a recurring basis:
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 receivable-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 similar issues, which is deemed a level 2 measurement. At September 30, 2018, the estimated fair value of Praxair’s long-term debt portfolio was $8,164 million versus a carrying value of $8,197 million. At December 31, 2017, the estimated fair value of Praxair’s long-term debt portfolio was $8,969 million versus a carrying value of $8,762 million. Differences from carrying amounts are attributable to interest-rate changes subsequent to when the debt was issued. |
Earnings Per Share - Praxair, Inc. Shareholders |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share - Praxair, Inc. Shareholders | Earnings Per Share – Praxair, Inc. Shareholders 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:
There were no antidilutive shares for the quarter and nine months ended September 30, 2018. There were no antidilutive shares for the quarter ended September 30, 2017. Stock options of 2,439,499 for nine months ended September 30, 2017 were antidilutive and therefore excluded in the computation of diluted earnings per share. |
Goodwill and Other Intangible Assets (Notes) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill for the nine months ended September 30, 2018 were as follows:
Praxair has performed its goodwill impairment tests annually during the second quarter of each year, and historically has determined that the fair value of each of its reporting units was substantially in excess of its carrying value. For the 2018 test completed last quarter, Praxair applied the FASB's accounting guidance which allows the Company to first assess qualitative factors to determine the extent of additional quantitative analysis, if any, that may be required to test goodwill for impairment (refer to Note 1 to the consolidated financial statements of Praxair's 2017 Annual Report on Form 10-K). Based on the qualitative assessments performed in the second quarter of 2018, Praxair concluded that it was more likely than not that the fair value of each reporting unit substantially exceeded its carrying value and therefore, further quantitative analysis was not required. As a result, no impairment was recorded. There were no indicators of impairment through September 30, 2018. Changes in the carrying amounts of other intangibles for the nine months ended September 30, 2018 were as follows:
* Other primarily relates to the write-off of fully amortized assets. There are no expected residual values related to these intangible assets. The remaining weighted-average amortization period for intangible assets is approximately 16 years. Total estimated annual amortization expense is as follows:
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Share-Based Compensation |
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Share-Based Compensation | Share-Based Compensation Share-based compensation expense of $19 million and $16 million was recognized during the quarters ended September 30, 2018 and 2017, respectively. Share-based compensation of $40 million and $44 million was recognized during the nine months ended September 30, 2018 and 2017, respectively. The expense was recorded primarily 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 15 to the consolidated financial statements of Praxair’s 2017 Annual Report on Form 10-K. Stock Options The weighted-average fair value of options granted during the nine months ended September 30, 2018 was $19.29 ($12.40 in 2017) based on the Black-Scholes Options-Pricing model. The increase in grant date fair value year-over-year was primarily attributable to an increase in the company's stock price. The following weighted-average assumptions were used to value the grants in 2018 and 2017:
The following table summarizes option activity under the plans as of September 30, 2018 and changes during the nine-month period then ended (averages are calculated on a weighted basis; life in years; intrinsic value expressed in millions):
The aggregate intrinsic value represents the difference between the company’s closing stock price of $160.73 as of September 30, 2018 and the exercise price multiplied by the number of in the money options outstanding as of that date. The total intrinsic value of stock options exercised during the quarter and nine months ended September 30, 2018 was $19 million and $96 million, respectively ($17 million and $80 million during the same periods in 2017, respectively). Cash received from option exercises under all share-based payment arrangements for the quarter and nine months ended September 30, 2018 was $21 million and $59 million, respectively ($18 million and $81 million for the same periods in 2017). The cash tax benefit realized from share-based compensation totaled $9 million and $28 million for the quarter and nine months ended September 30, 2018, respectively ($5 million and $31 million for the same periods in 2017, respectively). As of September 30, 2018, $26 million of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 1 year. Performance-Based and Restricted Stock Awards During the nine months ended September 30, 2018, the company granted restricted stock units to employees of 269,433 shares. There were no performance-based stock awards granted to employees during the nine months ended September 30, 2018 as restricted stock units were granted in place of performance-based stock awards. Compensation expense related to the restricted stock units is recognized over the vesting period, which is up to three years, based on the grant date fair value. As of September 30, 2018 the company had performance-based stock awards outstanding, tied to either return on capital ("ROC") performance or relative total shareholder return ("TSR") performance versus that of the S&P 500. The actual number of shares issued in settlement of a vested award can range from zero to 200 percent of the target number of shares granted based upon the company’s attainment of specified performance targets at the end of a three-year period. Compensation expense related to these awards is recognized over the three-year performance period based on the fair value of the closing market price of the company’s common stock on the date of the grant and the estimated performance that will be achieved. Compensation expense for ROC awards will be adjusted during the three-year performance period based upon the estimated performance levels that will be achieved. TSR awards are measured at their grant date fair value and not subsequently re-measured. The weighted-average fair value of restricted stock units granted during the nine months ended September 30, 2018 was $144.79 ($111.70 for the same period in 2017). These fair values are based on the closing market price of Praxair’s common stock on the grant date adjusted for dividends that will not be paid during the vesting period. The weighted-average fair value of ROC performance-based stock awards granted during the nine months ended September 30, 2017 was $109.68. The weighted-average fair value of performance-based stock tied to relative TSR performance granted during nine months ended September 30, 2017 was $124.12 and was estimated using a Monte Carlo simulation performed as of the grant date. The following table summarizes non-vested performance-based and restricted stock award activity as of September 30, 2018 and changes during the nine months then ended (shares based on target amounts, averages are calculated on a weighted basis):
There are approximately 6 thousand performance-based shares and 3 thousand restricted stock shares that are non-vested at September 30, 2018 which will be settled in cash due to foreign regulatory limitations. The liability related to these grants reflects the current estimate of performance that will be achieved and the current common stock price. As of September 30, 2018, based on current estimates of future performance, $9 million of unrecognized compensation cost related to performance-based awards is expected to be recognized through the first quarter of 2020 and $30 million of unrecognized compensation cost related to the restricted stock awards is expected to be recognized primarily through the first quarter of 2021. |
Retirement Programs |
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Retirement Programs | Retirement Programs The components of net pension and postretirement benefits other than pensions (“OPEB”) costs for the quarter and nine months ended September 30, 2018 and 2017 are shown below:
(a) The curtailment gain recorded in the first quarter of 2017 resulted from the termination of an OPEB plan in South America. In the third quarters of 2018 and 2017, a series of lump sum benefit payments made from the U.S. supplemental pension plan and an international pension plan, respectively, triggered settlements of the related pension obligations. Accordingly, Praxair recorded pension settlement charges of $4 million ($3 million after-tax or $0.01 per diluted share) and $2 million ($1 million after-tax or less than $0.01 per diluted share) in 2018 and 2017, respectively. Praxair estimates that 2018 required contributions to its pension plans will be in the range of $20 million to $25 million, of which $17 million have been made through September 30, 2018. |
Commitments and Contingencies |
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Commitments And Contingencies | Commitments and Contingencies Contingent Liabilities 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 17 to the consolidated financial statements of Praxair’s 2017 Annual Report on Form 10-K). Significant matters are:
On October 19, 2010, White Martins filed an annulment petition (“appeal”) with the Federal Court in Brasilia seeking to have the fine against White Martins entirely overturned. In order to suspend payment of the fine pending the completion of the appeal process, Brazilian law required that the company tender a form of guarantee in the amount of the fine as security. Initially, 50% of the guarantee was satisfied by letters of credit with a financial institution and 50% by equity of a Brazilian subsidiary. On April 15, 2016, the Ninth Federal Court in Brasilia allowed White Martins to withdraw and cancel the letters of credit. Accordingly, the guarantee is currently satisfied solely by equity of a Brazilian subsidiary. On September 14, 2015, the Ninth Federal Court of Brasilia overturned the fine against White Martins and declared the original CADE administrative proceeding to be null and void. On June 30, 2016, CADE filed an appeal against this decision with the Federal Circuit Court in Brasilia. Praxair strongly believes that the allegations are without merit and that the fine will be entirely overturned during the appeal process. The company further believes that it has strong defenses and will vigorously defend against the allegations and related fine up to such levels of the Federal Courts in Brazil as may be necessary. Because appeals in Brazil historically take many years to resolve, it is very difficult to estimate when the appeal will be finally decided. Based on management judgments, after considering judgments and opinions of outside counsel, no reserve has been recorded for this proceeding as management does not believe that a loss is probable. |
Segments |
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Segments | Segments For a description of Praxair’s operating segments, refer to Note 18 to the consolidated financial statements of Praxair’s 2017 Annual Report on Form 10-K. Sales and operating profit by segment for the quarters and nine months ended September 30, 2018 and 2017 are shown below. 2017 segment operating profit has been reclassified to conform with current year presentation as a result of the adoption of new accounting guidance on the presentation of net periodic pension and postretirement benefit costs (see Note 1).
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Equity and Redeemable Noncontrolling Interests |
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Equity and Redeemable Noncontrolling Interests | Equity and Redeemable Noncontrolling Interests Equity A summary of the changes in total equity for the quarters and nine months ended September 30, 2018 and 2017 is provided below:
The components of AOCI are as follows:
Redeemable Noncontrolling Interests Noncontrolling interests with redemption features, such as put/sell options, that are not solely within the Company’s control (“redeemable noncontrolling interests”) are reported separately in the consolidated balance sheets at the greater of carrying value or redemption value. For redeemable noncontrolling interests that are not yet exercisable, Praxair calculates the redemption value by accreting the carrying value to the redemption value over the period until exercisable. If the redemption value is greater than the carrying value, any increase is adjusted directly to equity and does not impact net income. At September 30, 2018 and 2017, redeemable noncontrolling interests includes one packaged gas distributor in the United States where the noncontrolling shareholder has a put option. Following is a summary of the changes in redeemable noncontrolling interests for the nine months ended September 30, 2018 and 2017:
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Revenue Recognition (Notes) |
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Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | 15. Revenue Recognition Effective January 1, 2018, Praxair adopted the FASB's Accounting Standards Update No. 2014-09 ("ASC 606") relating to Revenue Recognition using the modified retrospective transition method. The new accounting standard requires revenue to be recognized as control of goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled to receive in exchange for the goods or services. No material differences in revenue recognition were identified as compared to the Company's historical revenue recognition accounting; accordingly, there is no adjustment to opening retained earnings at January 1, 2018 and therefore no need to present comparable revenue in accordance with the prior accounting policy. The following sections include updated accounting policies and disclosures required by ASC 606. Praxair's significant accounting policies for periods through December 31, 2017 are summarized in Note 1 to its 2017 Annual Report on Form 10-K. Contracts with Customers Approximately 94% of Praxair’s consolidated sales are generated from industrial gases and related products in four geographic segments (North America, Europe, South America and Asia) and the remaining 6% is related to the global surface technologies segment. Praxair serves a diverse group of industries including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment. Industrial Gases Within each of the Company’s geographic segments for industrial gases, there are three basic distribution methods: (i) on-site or tonnage; (ii) merchant or bulk liquid; and (iii) packaged or cylinder gases. The distribution method used by Praxair to supply a customer is determined by many factors, including the customer’s volume requirements and location. The distribution method generally determines the contract terms with the customer and, accordingly, the revenue recognition accounting practices. Praxair’s primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). These products are generally sold through one of the three distribution methods. Following is a description of each of the three industrial gases distribution methods and the respective revenue recognition policies: On-site. Customers that require the largest volumes of product and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Praxair constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. Where there are large concentrations of customers, a single pipeline may be connected to several plants and customers. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and contain minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. Therefore, plants are typically not dedicated to a single customer. Additionally, Praxair is responsible for the design, construction, operations and maintenance of the plants and our customers typically have no involvement in these activities. Advanced air separation processes also allow on-site delivery to customers with smaller volume requirements. The Company’s performance obligations related to on-site customers are satisfied over time as customers receive and obtain control of the product. Praxair has elected to apply the practical expedient for measuring progress towards the completion of a performance obligation and recognizes revenue as the company has the right to invoice each customer, which generally corresponds with product delivery. Accordingly, revenue is recognized when product is delivered to the customer and the Company has the right to invoice the customer in accordance with the contract terms. Consideration in these contracts is generally based on pricing which fluctuates with various price indices. Variable components of consideration exist within on-site contracts but are considered constrained. Merchant. Merchant deliveries generally are made from Praxair’s plants by tanker trucks to storage containers at the customer's site. Due to the relatively high distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The customer agreements used in the merchant business are usually three-to seven-year supply agreements based on the requirements of the customer. These contracts generally do not contain minimum purchase requirements or volume commitments. The Company’s performance obligations related to merchant customers are generally satisfied at a point in time as the customers receive and obtain control of the product. Revenue is recognized when product is delivered to the customer and the Company has the right to invoice the customer in accordance with the contract terms. Any variable components of consideration within merchant contracts are constrained however this consideration is not significant. Packaged Gases. Customers requiring small volumes are supplied products in containers called cylinders, under medium to high pressure. Praxair distributes merchant gases from its production plants to Company-owned cylinder filling plants where cylinders are then filled for distribution to customers. Cylinders may be delivered to the customer’s site or picked up by the customer at a packaging facility or retail store. Praxair invoices the customer for the industrial gases and the use of the cylinder container(s). The Company also sells hardgoods and welding equipment purchased from independent manufacturers. Packaged gases are generally sold under one to three-year supply contracts and purchase orders and do not contain minimum purchase requirements or volume commitments. The Company’s performance obligations related to packaged gases are satisfied at a point in time. Accordingly, revenue is recognized when product is delivered to the customer or when the customer picks up product from a packaged gas facility or retail store, and the Company has the right to payment from the customer in accordance with the contract terms. Any variable consideration is constrained and will be recognized when the uncertainty related to the consideration is resolved. Surface Technologies The company’s surface technologies segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders. Praxair Surface Technologies is a leading global supplier of coatings services and thermal spray consumables to customers in the aircraft, energy, printing, primary metals, petrochemical, textile, and other industries. Its coatings are used to provide wear resistance, corrosion protection, thermal insulation, and many other surface-enhancing functions which serve to extend component life, enable optimal performance, and reduce operating costs. It also manufactures a complete line of electric arc, plasma and wire spray, and high-velocity oxy-fuel ("HVOF") equipment. The Company’s performance obligation related to surface technologies customers are generally satisfied at a point in time when the customer receives and takes control of product. Accordingly, revenue is recognized when product is delivered to the customer or when the customer picks up the product from the Company’s facility, and the Company has the right to invoice the customer in accordance with the contract terms. Payment Terms and Other Praxair generally receives payment after performance obligations are satisfied, and customer prepayments are not typical. Payment terms vary based on the country where sales originate and local customary payment practices. Praxair does not offer extended financing outside of customary payment terms. Contract asset and liability balances and the changes in these balances are not material. Amounts billed for sales and use taxes, value-added taxes, and certain excise and other specific transactional taxes imposed on revenue producing transactions are presented on a net basis and are not included in sales within the consolidated statement of income. Additionally, sales returns and allowances are not a normal practice in the industry and are not significant. Disaggregated Revenue Information As described above and in Note 18 of the 2017 10-K, the Company manages its industrial gases business on a geographic basis, while the surface technologies business is managed on a global basis. Further, the Company believes that reporting sales by distribution method by reportable geographic segment best illustrates the nature, timing, type of customer, and contract terms for its revenues, including terms and pricing. The following table shows sales by distribution method for each reportable segment and at the consolidated level for the quarter and nine months ended September 30, 2018.
Remaining Performance Obligations As described above, Praxair’s contracts with on-site customers are under long-term supply arrangements which generally require the customer to purchase their requirements from Praxair and also have minimum purchase requirements. The Company estimates the consideration related to minimum purchase requirements is approximately $19 billion. This amount excludes all sales above minimum purchase requirements, which can be significant depending on customer needs. In the future, actual amounts will be different due to impacts from several factors, many of which are beyond the Company’s control including, but not limited to, timing of newly signed, terminated and renewed contracts, inflationary price escalations, currency exchange rates, and pass-through costs related to natural gas and electricity. The actual duration of long-term supply contracts ranges up to twenty years. The Company estimates that approximately half of the revenue related to minimum purchase requirements are estimated to be earned in the next six years and the remaining thereafter. |
Income Tax Disclosure (Notes) |
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Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 16. Income Taxes U.S. Tax Cuts and Jobs Act (Tax Act) On December 22, 2017 the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). This comprehensive tax legislation significantly revises the U.S. corporate income tax rules by, among other things, lowering the corporate income tax rate from 35% to 21%, implementing a territorial tax system and imposing a one-time tax on accumulated earnings of foreign subsidiaries. Given the substantial uncertainties surrounding the Tax Act and the short period of time between December 22, 2017 and December 31, 2017 to calculate the U.S. Federal, U.S. state, and non-U.S. tax impacts of the Tax Act, the Company is accounting for its income tax charge on a provisional (estimated) basis as allowed by SEC Staff Accounting Bulletin No. 118. In 2017, the Company recorded a net provisional income tax charge of $394 million with three main components: (i) an estimated $467 million U.S. federal and state tax charge for deemed repatriation of accumulated foreign earnings; (ii) an estimated $260 million charge for foreign withholding taxes related to anticipated future repatriation of foreign earnings; and (iii) an estimated $333 million deferred tax benefit for the revaluation of net deferred tax liabilities from 35% to the new 21% tax rate. Refer to Note 5 to the consolidated financial statements of Praxair's 2017 Annual Report on Form 10-K. The Company continues to evaluate the Tax Act, additional guidance from the Internal Revenue Service, its historical foreign earnings and taxes and other items that could impact its net provisional tax charge. As of September 30, 2018, there have been no adjustments to the net provisional income tax charge recognized in 2017. In October 2018, the Company completed and filed its U.S. federal income tax return including the tax on deemed repatriation. During the fourth quarter, the Company will continue to evaluate the tax impacts related to the Tax Act and will complete its accounting as required under SEC Staff Accounting Bulletin 118. Any changes to the net provisional estimate will be recorded to income tax expense at that time. |
Business Combination with Linde AG (Notes) |
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Business Combination with Linde AG [Abstract] | |
Business Combination with Linde AG [Text Block] | Business Combination with Linde AG Completion of the Business Combination On October 31, 2018, Praxair and Linde AG combined under Linde plc., as contemplated by the business combination agreement, dated June 1, 2017, as amended on August 10, 2017 (the “Business Combination Agreement”), by and among Praxair, Linde AG, Linde plc, Zamalight Holdco LLC and Zamalight Subco, Inc. (the “Business Combination”). Pursuant to the Business Combination Agreement, (i) Praxair became an indirect wholly-owned subsidiary of Linde plc through the merger of Zamalight Subco, Inc., an indirect wholly-owned Delaware subsidiary of Linde plc with and into Praxair (the “Merger”), and (ii) Linde AG became an indirect subsidiary of Linde plc through an exchange offer by Linde plc for each issued and outstanding bearer share of Linde AG (the “Exchange Offer”). In the Merger, each issued and outstanding share of common stock of Praxair, par value $0.01 per share (the “Praxair Shares”), was converted into the right to receive one ordinary share, nominal value€0.001 per share, of Linde plc (the “Linde plc Shares”). Each issued and outstanding ordinary bearer share, without par value, of Linde AG (the “Linde AG Shares”) that was validly tendered in the Exchange Offer was exchanged for 1.540 Linde plc Shares. The issuance of Linde plc Shares in connection with the Business Combination, as described above, was registered under the Securities Act of 1933, as amended, pursuant to a registration statement on Form S-4 (the “Registration Statement”) (File No. 333-218485), which was declared effective by the Securities and Exchange Commission (the “SEC”) on August 14, 2017. Pursuant to Rule 12g-3(a) under the Exchange Act, as of October 31, 2018, Linde plc is the successor issuer to Praxair, the Linde plc Shares are deemed to be registered under Section 12(b) of the Exchange Act, and Linde plc is subject to the informational requirements of the Exchange Act and the rules and regulations promulgated thereunder. The Linde plc Shares trade on the New York Stock Exchange (“NYSE”) and the Frankfurt Stock Exchange under the ticker symbol “LIN”. Prior to the Business Combination, the Praxair Shares were registered pursuant to Section 12(b) of the Exchange Act and listed on the NYSE. In connection with the completion of the Business Combination, the Praxair Shares were suspended from trading on the NYSE as of close of business (New York Time) on October 30, 2018. On November 1, 2018, Praxair filed a Form 25 to delist and deregister its three series of Euro-denominated notes (the “Euro Notes”), including its 1.50% Notes due 2020, 1.20% Notes due 2024 and 1.625% Notes due 2025, that are currently listed on the NYSE. Trading in the Euro Notes on the NYSE is expected to be suspended as of close of business (New York Time) on November 9, 2018. Praxair expects to file a Form 15 with the SEC to terminate the registration under the Exchange Act of the Praxair Shares and its Euro Notes and to suspend the Company’s reporting obligations under Section 15(d) of the Exchange Act on November 12, 2018. Linde plc, as the new holding company of the combined group, will file reports under the Exchange Act. Divestitures On July 5, 2018, Praxair entered into a sale and purchase agreement to sell the majority of its businesses in Europe to Taiyo Nippon Sanso Corporation, an affiliate of Mitsubishi Chemical Holdings Corporation (the “Praxair Europe SPA”). The Praxair Europe SPA was entered into as part of the commitments in connection with the merger control review of the Business Combination by the European Commission. The assets to be sold include Praxair’s industrial gases businesses in Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom with approximately 2,500 employees. The businesses generated annual sales of approximately €1.3 billion in 2017. The purchase price for this transaction is €5.0 billion in cash consideration and is subject to customary adjustments at closing. Under the Praxair Europe SPA, Linde plc has given an independent guarantee as of the completion of the Business Combination for the full, due and timely performance and observance of all obligations of Praxair and its local subsidiaries holding shares in the companies operating the businesses to be sold. The Praxair Europe SPA contains representations, warranties and covenants that are customary for a transaction of this nature. Following the closing of the Praxair Europe SPA and the closing of another agreement dated December 5, 2017 (the “SIAD SPA”) under which Praxair, inter alia, agreed to sell its participation in its Italian joint venture Società Italiana Acetilene e Derivati S.p.A. (“SIAD”) to its joint venture partner Flow Fin S.p.A. (“Flow Fin”) in exchange for Flow Fin’s participation in another Italian joint venture, Rivoira S.p.A., and a net purchase price of approximately €90 million payable by Praxair to Flow Fin, Praxair will have minor remaining operations in Europe which will be outside of the industrial gases business and mainly related to coatings. In the course of the merger control proceedings in the United States, Linde plc, Praxair and Linde AG entered into an agreement with the U.S. Federal Trade Commission dated October 1, 2018 which provides for the divestitures under the Americas SPA and provides for certain additional divestiture commitments in the United States. Under the agreement, Linde plc, Praxair and Linde AG will (i) continue to operate The Linde Group and Praxair as independent, ongoing, economically viable, competitive businesses held separate, distinct, and apart from each other’s operations; (ii) not coordinate any aspect of the operations of The Linde Group and Praxair, including the marketing or sale of any products; and (iii) maintain separate financial ledgers, books, and records that report on a periodic basis, consistent with past practices, the assets, liabilities, expenses, revenues, and income of each, until certain divestitures have been completed. In addition, in connection with the merger control proceedings in China, India and South Korea, Praxair and Linde AG have made certain divestiture commitments to the relevant antitrust authorities to divest certain assets in the those jurisdictions. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Standards Implemented in 2017 | Accounting Standards Implemented in 2018
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Accounting Standards to be Implemented | Accounting Standards to be Implemented
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Supplemental Information (Tables) |
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Schedule Of Inventories Table | The following is a summary of Praxair’s consolidated inventories:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term And Short-term Debt Table | The following is a summary of Praxair’s outstanding debt at September 30, 2018 and December 31, 2017:
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Financial Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments Fair Value and Notional Amounts Table | The following table is a summary of the notional amount and fair value of derivatives outstanding at September 30, 2018 and December 31, 2017 for consolidated subsidiaries:
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Schedule Of Treasury Rate Lock Contracts Table Text Block | The following table summarizes the unrecognized gains (losses) related to terminated treasury rate lock contracts:
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Schedule of Derivative Instruments Not Designated as Hedging Instruments Table | The following table summarizes the impact of the company’s derivatives on the consolidated statements of income:
* The gains (losses) on balance sheet items are offset by gains (losses) recorded on the underlying hedged assets and liabilities. Accordingly, the gains (losses) for the derivatives and the underlying hedged assets and liabilities related to debt items are recorded in the consolidated statements of income as interest expense-net. Other balance sheet items and anticipated net income gains (losses) are recorded in the consolidated statements of income as other income (expenses)-net. |
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Schedule of Derivative Instruments Designated As Hedging Instruments Table | The following table summarizes the impacts of the company's derivatives designated as hedging instruments that impact AOCI: Derivatives Designated as Hedging Instruments **
**The gains (losses) on net investment hedges are recorded as a component of AOCI within foreign currency translation adjustments in the condensed consolidated balance sheets and the condensed consolidated statements of comprehensive income. The gains (losses) on treasury rate locks are recorded as a component of AOCI within derivative instruments in the condensed consolidated balance sheets and the condensed consolidated statements of comprehensive income. There was no ineffectiveness for these instruments during 2018 or 2017. The gains (losses) on net investment hedges are reclassified to earnings only when the related currency translation adjustments are required to be reclassified, usually upon sale or liquidation of the investment. The gains (losses) for interest rate contracts are reclassified to earnings as interest expense –net on a straight-line basis over the remaining maturity of the underlying debt. Net losses of $1 million are expected to be reclassified to earnings during the next twelve months. |
Fair Value Disclosures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Table | The following table summarizes assets and liabilities measured at fair value on a recurring basis:
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Earnings Per Share - Praxair, Inc. Shareholders (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Table - Praxair, Inc. Shareholders - Table | 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:
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Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill Table | Changes in the carrying amount of goodwill for the nine months ended September 30, 2018 were as follows:
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Schedule of Other Intangible Assets Table | Changes in the carrying amounts of other intangibles for the nine months ended September 30, 2018 were as follows:
* Other primarily relates to the write-off of fully amortized assets. |
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Schedule of Estimated Future Amortization Expense Table | Total estimated annual amortization expense is as follows:
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Share-Based Compensation (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following weighted-average assumptions were used to value the grants in 2018 and 2017:
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Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes option activity under the plans as of September 30, 2018 and changes during the nine-month period then ended (averages are calculated on a weighted basis; life in years; intrinsic value expressed in millions):
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Performance Based and Restricted Stock Activity | The following table summarizes non-vested performance-based and restricted stock award activity as of September 30, 2018 and changes during the nine months then ended (shares based on target amounts, averages are calculated on a weighted basis):
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Retirement Programs (Tables) |
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Retirement Benefits, Description [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Pension and OPEB Net Periodic Benefit Costs Table | The components of net pension and postretirement benefits other than pensions (“OPEB”) costs for the quarter and nine months ended September 30, 2018 and 2017 are shown below:
(a) The curtailment gain recorded in the first quarter of 2017 resulted from the termination of an OPEB plan in South America. |
Segments (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, Sales Table |
Sales and operating profit by segment for the quarters and nine months ended September 30, 2018 and 2017 are shown below. 2017 segment operating profit has been reclassified to conform with current year presentation as a result of the adoption of new accounting guidance on the presentation of net periodic pension and postretirement benefit costs (see Note 1).
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Schedule Of Segment Reporting Information, Operating Profit |
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Equity and Redeemable Noncontrolling Interests (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity And Noncontrolling Interests Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | A summary of the changes in total equity for the quarters and nine months ended September 30, 2018 and 2017 is provided below:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of AOCI are as follows:
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Redeemable Noncontrolling Interest | Following is a summary of the changes in redeemable noncontrolling interests for the nine months ended September 30, 2018 and 2017:
|
Revenue Recognition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Distribution Method, by Reportable Segments [Table Text Block] | The following table shows sales by distribution method for each reportable segment and at the consolidated level for the quarter and nine months ended September 30, 2018.
|
Supplemental Information (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Prepaid Expense and Other Assets, Noncurrent [Abstract] | ||
Long-term receivables, net | $ 31 | $ 54 |
Long-term receivables reserve | 45 | 51 |
Inventory, Finished Goods and Work in Process, Gross [Abstract] | ||
Raw materials and supplies | 218 | 224 |
Work in process | 54 | 57 |
Finished goods | 350 | 333 |
Total inventories | $ 622 | $ 614 |
Financial Instruments (Details) € in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 07, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2012
USD ($)
|
Dec. 31, 2011
USD ($)
|
Dec. 31, 2009
USD ($)
|
Sep. 30, 2018
EUR (€)
|
Sep. 30, 2018
USD ($)
|
Jul. 31, 2012
USD ($)
|
Aug. 31, 2011
USD ($)
|
Dec. 31, 2008
USD ($)
|
||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Repayments of Long-term Debt | $ 505 | $ 160 | ||||||||||||||||||||||||||||||
Notional Amount of Derivatives | $ 3,210 | $ 2,580 | ||||||||||||||||||||||||||||||
Derivatives Assets | 17 | 16 | ||||||||||||||||||||||||||||||
Derivative Liabilities | 18 | 6 | ||||||||||||||||||||||||||||||
Amount of Gain (Loss) Recognized in AOCI, Before Tax | $ 0 | $ 0 | ||||||||||||||||||||||||||||||
Amount of Gain (Loss) Reclassified from AOCI to the Consolidated Statement of Income, Before Tax | 0 | 0 | ||||||||||||||||||||||||||||||
Derivative Instruments, Tax Impact of Net Change in AOCI | 0 | 0 | ||||||||||||||||||||||||||||||
Net gains (losses) to be recognized over next 12 months (approximately $1 million) | (1) | |||||||||||||||||||||||||||||||
Jul 2012 Treasury Lock [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Debt instrument, face value | [1] | $ 500 | ||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.20% | |||||||||||||||||||||||||||||||
Aug 2011Treasury Lock [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Debt instrument, face value | [1] | $ 500 | ||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.00% | |||||||||||||||||||||||||||||||
December 2008 Treasury Lock [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Debt instrument, face value | [1] | $ 600 | ||||||||||||||||||||||||||||||
Notional Amount of Derivatives | $ 500 | |||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | |||||||||||||||||||||||||||||||
Not Designated as Hedging Instrument [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Amount of Pre-Tax Gain (Loss) Recognized in Earnings | [2] | 20 | 18 | (11) | 129 | |||||||||||||||||||||||||||
Not Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Notional Amount of Derivatives | [3] | 2,693 | 2,099 | |||||||||||||||||||||||||||||
Derivatives Assets | [3] | 16 | 16 | |||||||||||||||||||||||||||||
Derivative Liabilities | [3] | 16 | 6 | |||||||||||||||||||||||||||||
Not Designated as Hedging Instrument [Member] | Debt-Related [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Amount of Pre-Tax Gain (Loss) Recognized in Earnings | [2] | 17 | 19 | (15) | 128 | |||||||||||||||||||||||||||
Not Designated as Hedging Instrument [Member] | Other Balance Sheet Items [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Amount of Pre-Tax Gain (Loss) Recognized in Earnings | [2] | 3 | (1) | 4 | 1 | |||||||||||||||||||||||||||
Cash Flow Hedging [Member] | Interest Rate Lock Commitments [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Original deferred loss on settlement of derivative instruments - gross | $ (2) | $ (11) | ||||||||||||||||||||||||||||||
Original deferred gain on settlement of derivative instruments - gross | $ 16 | |||||||||||||||||||||||||||||||
Cash Flow Hedging [Member] | Treasury Lock [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Deferred Gain (Loss) on Hedge, Gross | [4] | (2) | (2) | |||||||||||||||||||||||||||||
Derivative Instruments, Tax Impact of Net Change in AOCI | [4] | 1 | 1 | |||||||||||||||||||||||||||||
Derivative Instrument Gain Loss Recognized In Other Comprehensive Income Effective Portion Net Of Tax | [4] | (1) | (1) | |||||||||||||||||||||||||||||
Cash Flow Hedging [Member] | Jul 2012 Treasury Lock [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Deferred Gain (Loss) on Hedge, Gross | [4] | (1) | 0 | |||||||||||||||||||||||||||||
Cash Flow Hedging [Member] | Aug 2011Treasury Lock [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Deferred Gain (Loss) on Hedge, Gross | [4] | (4) | (3) | |||||||||||||||||||||||||||||
Cash Flow Hedging [Member] | December 2008 Treasury Lock [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Deferred Gain (Loss) on Hedge, Gross | [4] | 3 | 1 | |||||||||||||||||||||||||||||
Net Investment Hedging [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Euro-denominated notes notional value | € 1,650 | 1,920 | ||||||||||||||||||||||||||||||
Euro-denominated notes designated as hedging instrument | € 1,630 | 1,890 | ||||||||||||||||||||||||||||||
Derivatives used in Net Investment Hedge, Increase (Decrease), Gross of Tax | 65 | |||||||||||||||||||||||||||||||
Derivatives used in Net Investment Hedge Increase (Decrease) since inception, Gross of Tax | 162 | |||||||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments - Fair Value | Interest Rate Swap | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Debt instrument, face value | 475 | |||||||||||||||||||||||||||||||
Notional Amount of Derivatives | [3] | 475 | $ 475 | |||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.25% | 1.25% | ||||||||||||||||||||||||||||||
Designated as Hedging Instrument | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Notional Amount of Derivatives | 517 | $ 481 | ||||||||||||||||||||||||||||||
Derivatives Assets | 1 | 0 | ||||||||||||||||||||||||||||||
Derivative Liabilities | 2 | 0 | ||||||||||||||||||||||||||||||
Amount of Gain (Loss) Recognized in AOCI, Net of Taxes | [5] | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Amount of Gain (Loss) Reclassified from AOCI to the Consolidated Statement of Income, Before Tax | [5] | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | [5] | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, Net of Tax | [5] | $ 0 | 0 | $ 0 | 0 | |||||||||||||||||||||||||||
Designated as Hedging Instrument | Balance Sheet Items [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Amount of Gain (Loss) Recognized in AOCI, Before Tax | [5] | (1) | (1) | |||||||||||||||||||||||||||||
Designated as Hedging Instrument | Foreign Exchange Contract [Member] | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Notional Amount of Derivatives | [3] | 38 | 0 | |||||||||||||||||||||||||||||
Derivative Liabilities | [3] | 2 | ||||||||||||||||||||||||||||||
Designated as Hedging Instrument | Forecasted Purchases | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Notional Amount of Derivatives | [3] | 4 | 6 | |||||||||||||||||||||||||||||
Derivatives Assets | [3] | 1 | ||||||||||||||||||||||||||||||
Amount of Gain (Loss) Recognized in AOCI, Before Tax | [5] | $ 1 | $ 1 | |||||||||||||||||||||||||||||
US Long-term 1.25% Notes due 2018 | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Senior Notes | [6],[7] | $ 475 | $ 475 | |||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.25% | 1.25% | 1.25% | |||||||||||||||||||||||||||||
Subsequent Event [Member] | US Long-term 1.25% Notes due 2018 | ||||||||||||||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||||||||||||||
Repayments of Long-term Debt | [6],[8] | $ 475 | $ 475 | |||||||||||||||||||||||||||||
|
Fair Value Disclosures (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets and Liabilities Measured on a Recurring Basis | ||
Derivative assets | $ 16 | $ 17 |
Derivative liabilities | 6 | 18 |
Fair Value Additional Information [Abstract] | ||
Carrying value of long-term debt including current portion | 8,197 | 8,762 |
Level 2 Member | ||
Fair Value Additional Information [Abstract] | ||
Fair value of long-term debt | 8,164 | 8,969 |
Level 2 Member | Fair Value, Measurements, Recurring | ||
Assets and Liabilities Measured on a Recurring Basis | ||
Derivative assets | 16 | 17 |
Derivative liabilities | $ 6 | $ 18 |
Earnings Per Share - Praxair, Inc. Shareholders (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Net Income (Loss) Attributable to Parent [Abstract] | ||||
Net income – Praxair, Inc. | $ 1,403 | $ 1,214 | ||
Denominator (Details) [Abstract] | ||||
Weighted average shares outstanding | 287,752,000 | 286,103,000 | 287,465,000 | 285,654,000 |
Shares earned and issuable under compensation plans | 341,000 | 364,000 | 335,000 | 368,000 |
Weighted average shares used in basic earnings per share | 288,093,000 | 286,467,000 | 287,800,000 | 286,022,000 |
Stock options and awards | 3,420,000 | 2,749,000 | 3,475,000 | 2,502,000 |
Weighted average shares used in diluted earnings per share | 291,513,000 | 289,216,000 | 291,275,000 | 288,524,000 |
Basic Earnings Per Common Share | $ 1.60 | $ 1.46 | $ 4.87 | $ 4.24 |
Diluted earnings per share (usd per share) | $ 1.58 | $ 1.45 | $ 4.82 | $ 4.21 |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Antidilutive excluded from the computation of Earnings Per Share | 2,439,499 |
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | $ 3,233 |
Goodwill, Acquired During Period | 3 |
Purchase adjustments & other | 12 |
Foreign currency translation | (47) |
Goodwill, Ending Balance | 3,201 |
North America Segment | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 2,202 |
Goodwill, Acquired During Period | 3 |
Purchase adjustments & other | 12 |
Goodwill, Ending Balance | 2,217 |
South America Segment | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 129 |
Goodwill, Acquired During Period | 0 |
Foreign currency translation | (27) |
Goodwill, Ending Balance | 102 |
Europe Segment | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 698 |
Goodwill, Acquired During Period | 0 |
Foreign currency translation | (16) |
Goodwill, Ending Balance | 682 |
Asia Segment | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 61 |
Goodwill, Acquired During Period | 0 |
Foreign currency translation | (1) |
Goodwill, Ending Balance | 60 |
Surface Technologies Segment | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 143 |
Goodwill, Acquired During Period | 0 |
Foreign currency translation | (3) |
Goodwill, Ending Balance | $ 140 |
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
| ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning Period Cost | $ 852 | |||
Additions (primarily acquisitions) | 2 | |||
Foreign currency translation | (10) | |||
Other | (25) | [1] | ||
Ending Period Cost | 819 | |||
Beginning Accumulated Amortization | (299) | |||
Amortization expense | (34) | |||
Foreign currency translation | (3) | |||
Other | 24 | [1] | ||
Ending Accumulated Amortization | (306) | |||
Net balance finite lived intangibles | $ 513 | |||
Additional Finite Lived Intangible Asset Information (Details) [Abstract] | ||||
Finite-lived intangible asset, useful life | 16 years | |||
Remaining 2018 | $ 11 | |||
2019 | 43 | |||
2020 | 41 | |||
2021 | 39 | |||
2022 | 38 | |||
Thereafter | 341 | |||
Customer & License/Use Agreements | ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning Period Cost | 772 | |||
Additions (primarily acquisitions) | 1 | |||
Foreign currency translation | (9) | |||
Other | (20) | [1] | ||
Ending Period Cost | 744 | |||
Beginning Accumulated Amortization | (260) | |||
Amortization expense | (28) | |||
Foreign currency translation | (3) | |||
Other | 19 | [1] | ||
Ending Accumulated Amortization | (266) | |||
Net balance finite lived intangibles | 478 | |||
Non-compete Agreements | ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning Period Cost | 28 | |||
Additions (primarily acquisitions) | 1 | |||
Other | (5) | [1] | ||
Ending Period Cost | 24 | |||
Beginning Accumulated Amortization | (18) | |||
Amortization expense | (3) | |||
Other | 5 | [1] | ||
Ending Accumulated Amortization | (16) | |||
Net balance finite lived intangibles | 8 | |||
Patents & Other | ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning Period Cost | 52 | |||
Additions (primarily acquisitions) | 0 | |||
Foreign currency translation | (1) | |||
Ending Period Cost | 51 | |||
Beginning Accumulated Amortization | (21) | |||
Amortization expense | (3) | |||
Ending Accumulated Amortization | (24) | |||
Net balance finite lived intangibles | $ 27 | |||
|
Share-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Closing Share Price | $ 160.73 | $ 160.73 | ||
Additional Company Information [Abstract] | ||||
Share-based Compensation Expense | $ 19 | $ 16 | $ 40 | $ 44 |
Stock Options | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 6 years 2 months | |||
Unrecognized compensation expense | $ 26 | $ 26 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Dividend yield | 2.10% | 2.70% | ||
Volatility | 14.40% | 14.00% | ||
Risk-free interest rate | 2.67% | 2.13% | ||
Expected term years | 5 years | 6 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Stock Options Outstanding at January 1, 2018 | 10,787 | |||
Stock Options Granted | 1,625 | |||
Stock Options Exercised | (1,502) | |||
Stock Options Cancelled or Expired | (63) | |||
Stock Options Outstanding at March 31, 2018 | 10,847 | 10,847 | ||
Stock Options Exercisable at March 31, 2018 | 7,143 | 7,143 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||||
Outstanding at January 1, 2018 - average exercise price | $ 108.70 | |||
Granted - average exercise price | 154.00 | |||
Exercised - average exercise price | 94.50 | |||
Cancelled or Expired - average exercise price | 128.91 | |||
Outstanding at March 31, 2018 - average exercise price | $ 117.34 | 117.34 | ||
Exercisable at March 31, 2018 - average exercise price | $ 110.46 | $ 110.46 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 5 years | |||
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | ||||
Weighted-average fair values of options granted | $ 19.29 | $ 12.40 | ||
Total intrinsic value of stock options exercised | $ 19 | 17 | $ 96 | $ 80 |
Cash received from option exercises | 21 | 18 | 59 | 81 |
Total cash tax benefit | 9 | $ 5 | $ 28 | $ 31 |
Total compensation cost not yet recognized, period for recognition | 1 year | |||
Aggregate Intrinsic Value [Abstract] | ||||
Outstanding at September 30, 2018 - intrinsic value | 471 | $ 471 | ||
Exercisable at September 30, 2018 - intrinsic value | $ 359 | $ 359 |
Share-Based Compensation (PSU and RSU) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
PX Performance Based Awards | |||
Additional Company Information [Abstract] | |||
Performance based awards vesting, as a percentage of the target, low end of range | 0.00% | ||
Performance based awards vesting, as a percentage of the target, high end of range | 200.00% | ||
Total compensation cost not yet recognized, period for recognition | 3 years | ||
Cash-based Liability awards | 6,000 | 6,000 | |
Unrecognized compensation expense | $ 9 | $ 9 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Non-vested at January 1, 2018 | 665,000 | ||
Granted | 0 | ||
Vested | (78,000) | ||
Cancelled | (151,000) | ||
Non-vested at March 31, 2018 | 436,000 | 436,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |||
Non-vested at January 1, 2018, grant date fair value | $ 113.40 | ||
Granted - average grant date fair value | 0.00 | ||
Vested - average grant date fair value | 119.98 | ||
Cancelled - average grant date fair value | 110.32 | ||
Non-vested at March 31, 2018, grant date fair value | $ 110.02 | $ 110.02 | |
Restricted Stock | |||
Additional Company Information [Abstract] | |||
Cash-based Liability awards | 3,000 | 3,000 | |
Unrecognized compensation expense | $ 30 | $ 30 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Non-vested at January 1, 2018 | 264,000 | ||
Granted | 269,433 | ||
Vested | (89,000) | ||
Cancelled | (17,000) | ||
Non-vested at March 31, 2018 | 427,000 | 427,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |||
Non-vested at January 1, 2018, grant date fair value | $ 107.56 | ||
Granted - average grant date fair value | 144.79 | $ 111.70 | |
Vested - average grant date fair value | 116.22 | ||
Cancelled - average grant date fair value | 100.23 | ||
Non-vested at March 31, 2018, grant date fair value | $ 129.52 | 129.52 | |
Performance Shares ROC | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |||
Granted - average grant date fair value | $ 109.68 | ||
Performance Shares TSR | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |||
Granted - average grant date fair value | $ 124.12 | ||
Maximum [Member] | PX Performance Based Awards | |||
Additional Company Information [Abstract] | |||
Award vesting period | 1 year 9 months | ||
Maximum [Member] | Restricted Stock | |||
Additional Company Information [Abstract] | |||
Award vesting period | 2 years 9 months |
Retirement Programs (Net Pension and OPEB costs) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Net pension and OPEB cost (benefit), excluding service cost | $ 6 | $ 6 | $ 10 | $ (7) | ||||
Pension Plans Defined Benefit Member | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Service cost | 12 | 12 | 36 | 35 | ||||
Interest cost | 25 | 25 | 76 | 76 | ||||
Expected return on plan assets | (42) | (40) | (125) | (120) | ||||
Net amortization and deferral | 18 | 17 | 54 | 51 | ||||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Settlement | 4 | 2 | 4 | 2 | ||||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) due to Settlement, after tax | $ 3 | 1 | ||||||
Income (Loss) from Pension Settlement, Per Diluted Share | $ (0.01) | |||||||
Net pension and OPEB cost (benefit), excluding service cost | $ 5 | 4 | 9 | 9 | ||||
Net periodic benefit cost | 17 | 16 | 45 | 44 | ||||
Other Postretirement Benefit Plans Defined Benefit | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Service cost | 1 | 2 | ||||||
Interest cost | 1 | 2 | 3 | 4 | ||||
Net amortization and deferral | (2) | (2) | ||||||
Curtailment gain (a) | 0 | [1] | 0 | (18) | [1] | |||
Net pension and OPEB cost (benefit), excluding service cost | 1 | 2 | 1 | (16) | ||||
Net periodic benefit cost | $ 1 | $ 2 | $ 2 | $ (14) | ||||
|
Retirement Programs (Contributions and Future Estimated Payments) (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Pension contributions | $ 17 | $ 14 |
Minimum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year | 20 | |
Maximum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year | $ 25 |
Commitments and Contingencies (Lawsuits and Goverment Investigations) (Details) - 9 months ended Sep. 30, 2018 $ in Millions, R$ in Billions |
USD ($) |
BRL (R$) |
---|---|---|
Gain And Loss Contingencies [Abstract] | ||
Brazil tax matters estimated exposure | $ 205 | |
Initial CADE civil fine imposed | 550 | R$ 2.2 |
Revised CADE civil fine | $ 425 | R$ 1.7 |
Percentage of guarantees to Brazilian Court initially satisfied by letters of credit | 50.00% | |
Percentage of guarantees to Brazilian Court initially satisfied by equity | 50.00% |
Segments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||
Segment Reporting Information [Line Items] | |||||||
Sales | [1] | $ 3,024 | $ 2,922 | $ 9,084 | $ 8,484 | ||
Operating profit (loss) | 669 | 632 | 2,011 | 1,805 | |||
Transaction costs and other charges (Note 2) | (31) | (14) | (74) | (35) | |||
North America Segment | |||||||
Segment Reporting Information [Line Items] | |||||||
Sales | [1] | 1,613 | 1,518 | 4,770 | 4,481 | ||
Operating profit (loss) | 420 | 386 | 1,258 | 1,121 | |||
Europe Segment | |||||||
Segment Reporting Information [Line Items] | |||||||
Sales | [1] | 425 | 407 | 1,297 | 1,146 | ||
Operating profit (loss) | 81 | 79 | 248 | 220 | |||
South America Segment | |||||||
Segment Reporting Information [Line Items] | |||||||
Sales | [1] | 329 | 389 | 1,043 | 1,131 | ||
Operating profit (loss) | 57 | 66 | 167 | 178 | |||
Asia Segment | |||||||
Segment Reporting Information [Line Items] | |||||||
Sales | [1] | 487 | 451 | 1,465 | 1,268 | ||
Operating profit (loss) | 110 | 88 | 321 | 243 | |||
Surface Technologies Segment | |||||||
Segment Reporting Information [Line Items] | |||||||
Sales | [1] | 170 | 157 | 509 | 458 | ||
Operating profit (loss) | 32 | 27 | 91 | 78 | |||
Total Segments | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating profit (loss) | 700 | 646 | 2,085 | 1,840 | |||
Transaction costs and other charges (Note 2) | $ (31) | $ (14) | $ (74) | $ (35) | |||
|
Equity and Redeemable Noncontrolling Interests Equity (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
|||||||
Funded Status Obligations, Taxes | $ (602) | $ (642) | ||||||||||||
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest | 2 | 1 | ||||||||||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ (4,053) | (4,053) | $ (3,455) | |||||||||||
Derivatives - net of taxes | (1) | (1) | (1) | |||||||||||
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax | 602 | 602 | 642 | |||||||||||
Accumulated other comprehensive income (loss) | (4,656) | (4,656) | (4,098) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Total Praxair, Inc. Shareholders’ Equity | 6,232 | 6,232 | 6,018 | |||||||||||
Noncontrolling interests | 503 | 503 | 493 | |||||||||||
Total Equity | 6,735 | 6,735 | 6,511 | |||||||||||
Other comprehensive income (loss) | $ (67) | $ 229 | (575) | $ 603 | ||||||||||
Redemption value adjustments | $ (3) | |||||||||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.8250 | $ 0.7875 | $ 2.475 | $ 2.360 | ||||||||||
Praxair, Inc. Shareholders' Equity | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Total Praxair, Inc. Shareholders’ Equity | $ 6,232 | $ 6,256 | $ 6,232 | $ 6,256 | $ 6,027 | $ 5,807 | $ 5,021 | |||||||
Net income | 461 | 419 | [1] | 1,403 | [1] | 1,214 | [1] | |||||||
Other comprehensive income (loss) | (60) | 219 | (558) | 575 | ||||||||||
Dividends to Praxair, Inc. common stock holders | (238) | (225) | (712) | (675) | ||||||||||
For the dividend reinvestment and stock purchase plan | 2 | 2 | 5 | 5 | ||||||||||
Redemption value adjustments | (1) | (3) | ||||||||||||
For employee savings and incentive plans | 23 | 18 | 41 | 72 | ||||||||||
Purchases of common stock | (1) | (2) | ||||||||||||
Share-based compensation | 19 | 16 | 40 | 44 | ||||||||||
Noncontrolling Interests | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Noncontrolling interests | 503 | 475 | 503 | 475 | 501 | 493 | 453 | 420 | ||||||
Net income | [1] | 19 | 16 | 46 | 44 | |||||||||
Other comprehensive income (loss) | (7) | 10 | (17) | 28 | ||||||||||
Dividends and Other Capital Changes to Noncontrolling Interests | (10) | (6) | (26) | (26) | ||||||||||
Additions (reductions) to noncontrolling interests | 2 | 7 | 9 | |||||||||||
Total Equity | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Total Equity | 6,735 | 6,731 | 6,735 | 6,731 | $ 6,528 | $ 6,260 | $ 5,441 | |||||||
Net income | [1] | 480 | 435 | 1,449 | 1,258 | |||||||||
Other comprehensive income (loss) | (67) | 229 | (575) | 603 | ||||||||||
Dividends and Other Capital Changes to Noncontrolling Interests | (10) | (6) | (26) | (26) | ||||||||||
Dividends to Praxair, Inc. common stock holders | (238) | (225) | (712) | (675) | ||||||||||
Additions (reductions) to noncontrolling interests | 2 | 7 | 9 | |||||||||||
For the dividend reinvestment and stock purchase plan | 2 | 2 | 5 | 5 | ||||||||||
Redemption value adjustments | (1) | (3) | ||||||||||||
For employee savings and incentive plans | 23 | 18 | 41 | 72 | ||||||||||
Purchases of common stock | (1) | 0 | (2) | |||||||||||
Share-based compensation | 19 | $ 16 | 40 | $ 44 | ||||||||||
North America Segment | ||||||||||||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (891) | (891) | (885) | |||||||||||
South America Segment | ||||||||||||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (2,391) | (2,391) | (2,004) | |||||||||||
Europe Segment | ||||||||||||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (427) | (427) | (398) | |||||||||||
Asia Segment | ||||||||||||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (314) | (314) | (151) | |||||||||||
Surface Technologies Segment | ||||||||||||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ (30) | $ (30) | $ (17) | |||||||||||
|
Equity and Redeemable Noncontrolling Interests (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Balance, January 1 | $ 11 | $ 11 |
Net income | 2 | 1 |
Distributions to noncontrolling interest and other | (1) | (1) |
Redemption value adjustments/accretion | 3 | |
Balance, September 30 | $ 15 | $ 11 |
Revenue Recognition (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Percentage of Total Sales, All Segments excluding Surface Technologies | 94.00% | ||||||
Percentage of Total Sales, Surface Technologies Segment | 6.00% | ||||||
Estimated Consideration related to Unsatisfied Performance Obligations | $ 19,000 | $ 19,000 | |||||
Sales | [1] | $ 3,024 | $ 2,922 | $ 9,084 | $ 8,484 | ||
Percentage of Total Sales, Distribution Method | 100.00% | 100.00% | |||||
Merchant [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | $ 1,038 | $ 3,087 | |||||
Percentage of Total Sales, Distribution Method | 34.3254% | 33.98283% | |||||
On-Site [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | $ 905 | $ 2,707 | |||||
Percentage of Total Sales, Distribution Method | 29.92725% | 29.79965% | |||||
Packaged Gas [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | $ 820 | $ 2,503 | |||||
Percentage of Total Sales, Distribution Method | 27.1164% | 27.55394% | |||||
Other Distribution Methods [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | $ 261 | $ 787 | |||||
Percentage of Total Sales, Distribution Method | 8.63095% | 7.66358% | |||||
North America Segment | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | [1] | $ 1,613 | 1,518 | $ 4,770 | 4,481 | ||
North America Segment | Merchant [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 604 | 1,768 | |||||
North America Segment | On-Site [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 474 | 1,392 | |||||
North America Segment | Packaged Gas [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 495 | 1,496 | |||||
North America Segment | Other Distribution Methods [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 40 | 114 | |||||
Europe Segment | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | [1] | 425 | 407 | 1,297 | 1,146 | ||
Europe Segment | Merchant [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 146 | 446 | |||||
Europe Segment | On-Site [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 78 | 235 | |||||
Europe Segment | Packaged Gas [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 184 | 564 | |||||
Europe Segment | Other Distribution Methods [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 17 | 52 | |||||
South America Segment | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | [1] | 329 | 389 | 1,043 | 1,131 | ||
South America Segment | Merchant [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 125 | 399 | |||||
South America Segment | On-Site [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 112 | 343 | |||||
South America Segment | Packaged Gas [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 86 | 277 | |||||
South America Segment | Other Distribution Methods [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 6 | 24 | |||||
Asia Segment | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | [1] | 487 | 451 | 1,465 | 1,268 | ||
Asia Segment | Merchant [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 163 | 474 | |||||
Asia Segment | On-Site [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 241 | 737 | |||||
Asia Segment | Packaged Gas [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 55 | 166 | |||||
Asia Segment | Other Distribution Methods [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | 28 | 88 | |||||
Surface Technologies Segment | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | [1] | 170 | $ 157 | 509 | $ 458 | ||
Surface Technologies Segment | Other Distribution Methods [Member] | |||||||
Schedule of Revenue by Distribution Method, by Reportable Segment [Line Items] | |||||||
Sales | $ 170 | $ 509 | |||||
|
Income Tax Disclosure (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | |
Federal Statutory Tax Rate following enactment of Tax Act, Percent | 21.00% | |
Net Provisional Income Tax Charge, enactment of Tax Act | $ 394 | |
Estimated Charge on Deemed Repatriation of Accumulated Foreign Earnings, enactment of Tax Act | 467 | |
Estimated Foreign Withholding Taxes on Anticipated Repatriation, enactment of Tax Act | 260 | |
Estimated Federal Tax Benefit, Deferred Tax Revaluation, enactment of Tax Act | $ (333) |
Business Combination with Linde AG (Details) - EUR (€) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Business Combination with Linde AG [Abstract] | ||||
Common Stock, Value, Outstanding | € 0.01 | € 0.01 | ||
Ordinary Shares, par value | 0.00 | 0.00 | ||
Number of ordinary shares issued, per share | 1.540 | |||
Annual sales, divested European businesses | € 1,000,000,000 | |||
Cash consideration, sale of European businesses | € 5,000,000,000 | |||
Net purchase price, Italian Joint Venture | € 100,000,000 |
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