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Praxair Reports Record Full-Year 2012 Earnings and Cash Flow

  Praxair Reports Record Full-Year 2012 Earnings and Cash Flow

  *Full-year sales of $11.2 billion; adjusted diluted EPS of $5.57*
  *Record full-year operating cash flow of $2.8 billion
  *Fourth-quarter sales of $2.8 billion; diluted EPS of $1.38
  *$2.6 billion project backlog at year-end; project development activity
    remains solid
  *9% dividend increase; 20^th consecutive annual increase
  *Full-year 2013 EPS guidance of $5.85 to $6.10; up 5% - 10%*;
    First-quarter 2013 EPS guidance of $1.35 to $1.40

Business Wire

DANBURY, Conn. -- January 23, 2013

Praxair, Inc. (NYSE: PX) announced full-year 2012 reported net income of
$1,692 million and reported diluted earnings per share of $5.61. On an
adjusted basis, full-year net income was $1,681 million and diluted earnings
per share was $5.57, 3% above the prior year.*

Full-year sales were $11,224, 5% above 2011 excluding negative foreign
currency translation and cost pass-through effects.

Reported operating profit was $2,437 million. Adjusted operating profit was
$2,502 million, compared to $2,469 million in the prior year.* The increase
was driven by higher volumes, higher pricing and productivity, partially
offset by currency translation effects. Operating profit in North America grew
by 10%, but was largely offset by lower operating profit in Europe and South
America.

For the full year, cash flow from operations was a record $2,752 million, up
12% from 2011. Capital expenditures, primarily for new production plants under
long-term contracts with customers, were $2,180 million. The company invested
$280 million in acquisitions, for seventeen North American packaged gas
distributors and an industrial gas business in Russia. The company paid $655
million of dividends and repurchased $459 million of stock, net of issuances.

For the fourth quarter, net income and diluted earnings per share were $414
million and $1.38, as compared to adjusted amounts of $414 million and $1.36
in the prior-year quarter, respectively.*

Sales in the fourth quarter were $2,799 million, comparable to the prior-year,
as higher price and acquisitions were offset by negative currency effects.
Operating profit in the fourth quarter was $616 million versus $619 million in
the prior-year quarter.*

Commenting on the financial results and business outlook, chairman and chief
executive officer Steve Angel said, “In 2012, Praxair delivered record
operating cash flow of $2.8 billion, which represented 25% of sales. We also
achieved a record operating margin of 22.3%, which we achieved through global
productivity gains as well as price attainment in most operating segments. Our
industry-leading North American business achieved double-digit operating
profit growth with strength across most end markets. These strong results were
mitigated by recessions in Brazil and Europe, moderating growth in China, and
significant currency translation headwinds.

“As we enter 2013, Praxair remains committed to driving performance in an
uncertain economic environment. In addition, our backlog of large projects
remains strong at $2.6 billion and new proposal activity remains solid. This
backlog will contribute 4% to 6% growth in 2013, as the plants start up to
supply on-site customers under long-term contracts.”

For the full year of 2013, Praxair expects sales in the area of $12 billion.
The company expects diluted earnings per share to be in the range of $5.85 to
$6.10, up 5% to 10%.* Full-year capital expenditures are expected to be in the
range of $1.8 to $2.0 billion, and the effective tax rate is forecasted to
remain at about 28%.

For the first quarter of 2013, Praxair expects diluted earnings per share in
the range of $1.35 to $1.40.

Following is additional detail on fourth-quarter 2012 results by segment.

In North America, fourth-quarter sales were $1,416 million, up 2% from the
prior-year quarter. Sales grew to manufacturing, energy, and metals markets,
partially offset by declines in electronics. Operating profit of $367 million
grew 4% from the prior year due to price and productivity.

In Europe, fourth-quarter sales were $363 million, 5% below the prior-year
quarter primarily due to the negative impact of currency translation.
Operating profit was $60 million in the quarter, as compared to $64 million in
the prior-year quarter primarily due to negative currency effects.

In South America, fourth-quarter sales were $484 million, 9% below the
prior-year quarter. Operating profit was $92 million as compared to $118
million in the prior-year period. The lower sales and operating profit as
compared to the prior year were due primarily to negative currency effects.

Sales in Asia were $374 million in the quarter, up 12% from the prior year,
driven by strong volume growth in India, China, and Korea, including new plant
start-ups. Sales growth came primarily from metals and chemicals customers.
Operating profit was $69 million as compared to $60 million in the prior year,
due primarily to higher volumes.

Praxair Surface Technologies had fourth-quarter sales of $162 million,
compared to $160 million in the prior-year quarter. Sales grew 3%, excluding
negative currency effects, primarily from higher jet-engine and energy
coatings. Operating profit increased to $28 million from $24 million in the
quarter due primarily to price and productivity.

Praxair is the largest industrial gases company in North and South America,
and one of the largest worldwide. The company produces, sells and distributes
atmospheric and process gases, and high-performance surface coatings. Praxair
products, services and technologies are making the planet more productive by
bringing efficiency and environmental benefits to a wide variety of
industries, including aerospace, chemicals, food and beverage, electronics,
energy, healthcare, manufacturing, metals and others. More information on
Praxair is available on the Internet at www.praxair.com.

*See the attachments for calculations of non-GAAP measures. Full-year 2012
results are adjusted to exclude cost reduction charges, a pension settlement
charge and an income tax benefit. Fourth-quarter and full-year 2011 results
are adjusted to exclude the Yara acquisition net gain and restructuring
charges.

Attachments: Non-GAAP Reconciliations, Statements of Income, Balance Sheets,
Statements of Cash Flows, Segment Information, Quarterly Financial Summary,
and Appendix: Non-GAAP Measures.

A teleconference on Praxair’s fourth-quarter results is being held this
morning, January 23, at 11:00 am Eastern Time. The number is (617) 597-5346 --
Passcode: 52650064. The call also is available as a web cast at
www.praxair.com/investors. Materials to be used in the teleconference are also
available.

This document contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based
on management’s reasonable expectations and assumptions as of the date the
statements are made but involve risks and uncertainties. These risks and
uncertainties include, without limitation: the performance of stock markets
generally; developments in worldwide and national economies and other
international events and circumstances; changes in foreign currencies and in
interest rates; the cost and availability of electric power, natural gas and
other raw materials; the ability to achieve price increases to offset cost
increases; catastrophic events including natural disasters, epidemics and acts
of war and terrorism; the ability to attract, hire, and retain qualified
personnel; the impact of changes in financial accounting standards; the impact
of changes in pension plan liabilities; the impact of tax, environmental,
healthcare and other legislation and government regulation in jurisdictions in
which the company operates; the cost and outcomes of investigations,
litigation and regulatory proceedings; continued timely development and market
acceptance of new products and applications; the impact of competitive
products and pricing; future financial and operating performance of major
customers and industries served; the impact of information technology system
failures, network disruptions and breaches in data security; and the
effectiveness and speed of integrating new acquisitions into the business.
These risks and uncertainties may cause actual future results or circumstances
to differ materially from the projections or estimates contained in the
forward-looking statements. Additionally, financial projections or estimates
exclude the impact of special items which the company believes are not
indicative of ongoing business performance. The company assumes no obligation
to update or provide revisions to any forward-looking statement in response to
changing circumstances. The above listed risks and uncertainties are further
described in Item 1A (Risk Factors) in the company’s Form 10-K and 10-Q
reports filed with the SEC which should be reviewed carefully. Please consider
the company’s forward-looking statements in light of those risks.



PRAXAIR, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(UNAUDITED)

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


(Millions of dollars, except per share amounts)
                                                                                       
                   Operating Profit        Income Taxes        Net Income - Praxair,     Diluted EPS
                                                               Inc.
                   2012      2011          2012    2011        2012        2011          2012        2011
                                                                                                               
Quarter
Ended
December 31,
Reported           $ 616     $ 618         $ 162   $ 156       $ 414       $ 420         $ 1.38      $ 1.38
GAAP amounts
Non-GAAP
adjustments:
Gain on
acquisition          -         (39   )       -       (3  )       -           (37   )       -           (0.12 )
(a)
Cost
reduction           -       40          -     9         -        31          -        0.10  
program (b)
Total               -       1           -     6         -        (6    )      -        (0.02 )
adjustments
Adjusted           $ 616    $ 619        $ 162  $ 162      $ 414     $ 414        $ 1.38    $ 1.36  
amounts
                                                                                                               
Year Ended
December 31,
Reported           $ 2,437   $ 2,468       $ 586   $ 641       $ 1,692     $ 1,672       $ 5.61      $ 5.45
GAAP amounts
Non-GAAP
adjustments:
Gain on
acquisition          -         (39   )       -       (3  )       -           (37   )       -           (0.12 )
(a)
Cost
reduction            56        40            16      9           38          31            0.12        0.10
programs (b)
Pension
settlement           9         -             3       -           6           -             0.02        -
charge (c)
Income tax          -       -           55    -         (55   )   -           (0.18 )   -     
benefit (d)
Total               65      1           74    6         (11   )   (6    )      (0.04 )   (0.02 )
adjustments
Adjusted           $ 2,502  $ 2,469      $ 660  $ 647      $ 1,681   $ 1,666      $ 5.57    $ 5.43  
amounts


(a) Net gain on Praxair's acquisition of an additional 16% of Yara Praxair AS
and consolidation effective October 2011. Accounting rules require Praxair to
fair value its prior 50% ownership interest.

(b) Charges in the third quarter 2012 and fourth quarter 2011 related to
severance and business restructuring actions primarily in Europe within the
industrial gases and surface technologies businesses.

(c) A pension settlement charge was recorded in the 2012 third quarter related
to lump sum benefit payments made from the U.S. supplemental pension plan to a
number of recently retired senior managers.

(d) Income tax benefit related to a loss on a liquidated subsidiary as a
result of the divestiture of the U.S. Homecare business.

                                                                                     
                                                                                     
PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)
                                                             
                       Quarter Ended                     Year to Date
                       December 31,                      December 31,
                       2012            2011              2012            2011
                                                                                     
SALES                  $ 2,799         $ 2,796           $ 11,224        $ 11,252
Cost of sales            1,583           1,598             6,396           6,458
Selling,
general and              319             315               1,270           1,239
administrative
Depreciation
and                      254             249               1,001           1,003
amortization
Research and             25              23                98              90
development
Cost reduction
programs and             -               1                 65              1
other charges
Other income
(expense) -             (2      )      8               43            7       
net
OPERATING                616             618               2,437           2,468
PROFIT
Interest                35            38              141           145     
expense - net
INCOME BEFORE
INCOME TAXES             581             580               2,296           2,323
AND EQUITY
INVESTMENTS
Income taxes            162           156             586           641     
INCOME BEFORE
EQUITY                   419             424               1,710           1,682
INVESTMENTS
Income from
equity                  9             7               34            40      
investments
NET INCOME
(INCLUDING               428             431               1,744           1,722
NONCONTROLLING
INTERESTS)
Less:
noncontrolling          (14     )      (11     )        (52     )      (50     )
interests
NET INCOME -           $ 414          $ 420            $ 1,692        $ 1,672   
PRAXAIR, INC.
                                                                                     
PER SHARE DATA
- PRAXAIR,
INC.
SHAREHOLDERS
                                                                                     
Basic earnings         $ 1.40          $ 1.40            $ 5.67          $ 5.53
per share
                                                                                     
Diluted
earnings per           $ 1.38          $ 1.38            $ 5.61          $ 5.45
share
                                                                                     
Cash dividends         $ 0.55          $ 0.50            $ 2.20          $ 2.00
                                                                                     
WEIGHTED
AVERAGE SHARES
OUTSTANDING
Basic shares
outstanding              296,887         299,575           298,316         302,237
(000's)
Diluted shares
outstanding              300,224         303,700           301,845         306,722
(000's)

                                                                          
                                                                             
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(UNAUDITED)
                                                   
                                         December 31,       December 31,
                                         2012               2011
ASSETS
Cash and cash equivalents                $   157            $   90
Accounts receivable - net                    1,834              1,795
Inventories                                  476                456
Prepaid and other current                   325               266
assets
TOTAL CURRENT ASSETS                         2,792              2,607
                                                                             
Property, plant and equipment                11,453             10,131
- net
Goodwill                                     2,507              2,372
Other intangibles - net                      173                167
Other long-term assets                      1,165             1,079
TOTAL ASSETS                             $   18,090         $   16,356
                                                                             
LIABILITIES AND EQUITY
Accounts payable                         $   928            $   896
Short-term debt                              638                337
Current portion of long-term                 39                 387
debt
Other current liabilities                   874               915
TOTAL CURRENT LIABILITIES                    2,479              2,535
                                                                             
Long-term debt                               6,685              5,838
Other long-term liabilities                 2,253             1,966
TOTAL LIABILITIES                            11,417             10,339
                                                                             
REDEEMABLE NONCONTROLLING                    252                220
INTERESTS
                                                                             
EQUITY
Praxair, Inc. shareholders'                  6,064              5,488
equity
Noncontrolling interests                    357               309
TOTAL EQUITY                                6,421             5,797
                                                                             
TOTAL LIABILITIES AND EQUITY             $   18,090         $   16,356

                                                                               
                                                                                  
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
                                                         
                        Quarter Ended               Year to Date
                        December 31,                December 31,
                        2012         2011           2012           2011
OPERATIONS
Net income -            $ 414        $ 420          $ 1,692        $ 1,672
Praxair, Inc.
Noncontrolling           14         11           52           50     
interests
Net income
(including                428          431            1,744          1,722
noncontrolling
interests)
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Cost reduction
programs and other        (9   )       (5   )         43             (5     )
charges, net of
payments
Deferred income           56           (36  )         258            (3     )
taxes
Depreciation and          254          249            1,001          1,003
amortization
Accounts receivable       71           94             (36    )       (108   )
Inventory                 12           12             (18    )       (31    )
Payables and              41           92             (34    )       44
accruals
Pension                   (72  )       (7   )         (184   )       (94    )
contributions
Other                    98         (39  )        (22    )      (73    )
Net cash provided
by operating             879        791          2,752        2,455  
activities
                                                                                  
INVESTING
Capital                   (586 )       (572 )         (2,180 )       (1,797 )
expenditures
Acquisitions, net         (171 )       (195 )         (280   )       (294   )
of cash acquired
Divestitures and         5          46           82           86     
asset sales
Net cash used for
investing                (752 )      (721 )        (2,378 )      (2,005 )
activities
                                                                                  
FINANCING
Debt increase             224          189            807            914
(decrease) - net
Issuances of common       38           31             164            195
stock
Purchases of common       (185 )       (179 )         (623   )       (937   )
stock
Cash dividends -
Praxair, Inc.             (163 )       (149 )         (655   )       (602   )
shareholders
Excess tax benefit
on stock option           10           6              60             53
exercises
Noncontrolling
interest                 (1   )      1            (56    )      (3     )
transactions and
other
Net cash provided
by (used for)             (77  )       (101 )         (303   )       (380   )
financing
activities
                                                                                  
Effect of exchange
rate changes on          (1   )      (4   )        (4     )      (19    )
cash and cash
equivalents
                                                                                  
Change in cash and        49           (35  )         67             51
cash equivalents
Cash and cash
equivalents,             108        125          90           39     
beginning-of-period
                                                                                  
Cash and cash
equivalents,            $ 157       $ 90          $ 157         $ 90     
end-of-period

 
                                                                               
    PRAXAIR, INC. AND SUBSIDIARIES
    SEGMENT INFORMATION
    (Millions of dollars)
    (UNAUDITED)
                                                        
                         Quarter Ended               Year to Date
                         December 31,                December 31,
                         2012        2011 (a)        2012           2011 (a)
    SALES
    North                $ 1,416     $ 1,388         $ 5,598        $ 5,490
    America
    Europe                 363         382             1,474          1,458
    South                  484         532             2,082          2,308
    America
    Asia                   374         334             1,414          1,348
    Surface               162        160           656          648    
    Technologies
    Total sales          $ 2,799     $ 2,796        $ 11,224      $ 11,252 
                                                                               
    OPERATING
    PROFIT
    North                $ 367       $ 353           $ 1,465        $ 1,331
    America
    Europe                 60          64              256            272
    South                  92          118             429            530
    America
    Asia                   69          60              246            234
    Surface               28         24            106          102    
    Technologies
    Segment
    operating              616         619             2,502          2,469
    profit
                                                                               
    Cost
    reduction
    programs and          -          (1    )        (65    )      (1     )
    other
    charges
    Total
    operating            $ 616       $ 618          $ 2,437       $ 2,468  
    profit

    
      Effective with the 2012 first quarter, Praxair changed the measurement
      of its segment sales and operating profit. These changes primarily
      relate to helium and specialty gas sales and result in slightly higher
(a)   sales and operating profit in the Europe and Asia segments with
      offsetting declines in the North America segment. Prior-period amounts
      have been reclassified to conform to the current presentation. See the
      Investors section of Praxair's website for a summary of the
      remeasurement adjustments for 2011 and 2010.

                                                                                                              

PRAXAIR, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL SUMMARY
(Millions of dollars, except per share data)
(UNAUDITED)
                                                                                                                                     
                     2012                                                      2011
                     Q4            Q3 (b)        Q2            Q1              Q4 (b)        Q3            Q2            Q1
FROM THE INCOME
STATEMENT
Sales                $ 2,799       $ 2,774       $ 2,811       $ 2,840         $ 2,796       $ 2,896       $ 2,858       $ 2,702
Cost of sales          1,583         1,595         1,602         1,616           1,598         1,684         1,640         1,536
Selling, general
and                    319           306           310           335             315           307           309           308
administrative
Depreciation and       254           248           247           252             249           256           254           244
amortization
Research and           25            24            25            24              23            22            23            22
development
Cost reduction
programs and           -             65            -             -               1             -             -             -
other charges -
net
Other income          (2      )   22         9          14            8          5          (5      )   (1      )
(expenses) - net
Operating profit       616           558           636           627             618           632           627           591
Interest expense       35            36            33            37              38            36            36            35
- net
Income taxes           162           90            169           165             156           166           163           156
Income from
equity                9          8          10         7             7          13         11         9       
investments
Net income
(including             428           440           444           432             431           443           439           409
noncontrolling
interests)
Less:
noncontrolling        (14     )   (10     )   (15     )   (13     )      (11     )   (14     )   (14     )   (11     )
interests
Net income -         $ 414       $ 430       $ 429       $ 419          $ 420       $ 429       $ 425       $ 398     
Praxair, Inc.
                                                                                                                                     
PER SHARE DATA -
PRAXAIR, INC.
SHAREHOLDERS
Diluted earnings     $ 1.38        $ 1.43        $ 1.42        $ 1.38          $ 1.38        $ 1.40        $ 1.38        $ 1.29
per share
Cash dividends       $ 0.55        $ 0.55        $ 0.55        $ 0.55          $ 0.50        $ 0.50        $ 0.50        $ 0.50
per share
Diluted weighted
average shares         300,224       301,731       302,492       302,876         303,700       305,623       308,253       308,595
outstanding
(000's)
                                                                                                                                     
FROM THE BALANCE
SHEET
Net debt (a)         $ 7,205       $ 7,028       $ 6,891       $ 6,749         $ 6,472       $ 6,185       $ 6,039       $ 5,752
Capital (a)          $ 13,878      $ 13,617      $ 13,017      $ 13,248        $ 12,489      $ 12,306      $ 12,809      $ 12,289
Debt-to-capital        51.9    %     51.6    %     52.9    %     50.9    %       51.8    %     50.3    %     47.1    %     46.8    %
ratio (a)
                                                                                                                                     
FROM THE
STATEMENT OF
CASH FLOWS
Cash flow from       $ 879         $ 746         $ 725         $ 402           $ 791         $ 732         $ 573         $ 359
operations
Capital                586           547           564           483             572           458           433           334
expenditures
Acquisitions           171           58            39            12              195           19            80            -
Cash dividends         163           164           164           164             149           150           151           152
                                                                                                                                     
OTHER
INFORMATION
After-tax return
on capital (ROC)       13.9    %     14.2    %     14.5    %     14.6    %       14.8    %     14.8    %     14.7    %     14.6    %
(a)
Return on
Praxair, Inc.          28.9    %     29.2    %     29.0    %     28.4    %       28.1    %     27.2    %     26.6    %     26.6    %
shareholders'
equity (ROE) (a)
Adjusted
earnings before
interest, taxes,
depreciation and     $ 879         $ 879         $ 893         $ 886           $ 875         $ 901         $ 892         $ 844
amortization
(adjusted
EBITDA) (a)
Debt-to-adjusted       1.9           1.9           1.8           1.8             1.7           1.7           1.6           1.6
EBITDA ratio (a)
Number of              26,539        26,215        26,353        26,259          26,184        25,793        25,678        25,482
employees
                                                                                                                                     
SEGMENT DATA (c)
SALES
North America        $ 1,416       $ 1,391       $ 1,393       $ 1,398         $ 1,388       $ 1,416       $ 1,361       $ 1,325
Europe                 363           352           382           377             382           361           370           345
South America          484           516           520           562             532           607           611           558
Asia                   374           358           348           334             334           349           348           317
Surface               162        157        168        169           160        163        168        157     
Technologies
Total sales          $ 2,799     $ 2,774     $ 2,811     $ 2,840        $ 2,796     $ 2,896     $ 2,858     $ 2,702   
OPERATING PROFIT
North America        $ 367         $ 374         $ 363         $ 361           $ 353         $ 340         $ 326         $ 312
Europe                 60            60            68            68              64            68            72            68
South America          92            112           110           115             118           140           139           133
Asia                   69            52            68            57              60            58            63            53
Surface               28         25         27         26            24         26         27         25      
Technologies
Segment                616           623           636           627             619           632           627           591
operating profit
Cost reduction
programs and          -          (65     )   -          -             (1      )   -          -          -       
other charges -
net
Total operating      $ 616       $ 558       $ 636       $ 627          $ 618       $ 632       $ 627       $ 591     
profit
                                                                                                                                     

(a)  Non-GAAP measure, see Appendix.
      
      The third quarter 2012 includes: (i)a pre-tax charge of $56 million ($38
      million after-tax and non-controlling interests, or $0.12 per diluted
      share) related to the 2012 cost reduction program; (ii) a pre-tax charge
      of $9 million ($6 million after-tax, or $0.02 per diluted share) related
      to pension settlement; and (iii) an income tax benefit of $55 million,
      or $0.18 per diluted share, related to a loss on a liquidated subsidiary
(b)   as a result of the divestiture of the U.S. Homecare business. The fourth
      quarter 2011 includes: (i) a pre-tax gain of $39 million ($37 million
      after-tax and noncontrolling interests, or $0.12 per diluted share)
      related to a gain on acquisition; and (ii) a pre-tax charge of $40
      million ($31 million after-tax, or $0.10 per diluted share) related to
      the 2011 cost reduction program. Also, see the Appendix - Non-GAAP
      Measures which provides Non-GAAP amounts that exclude the impact of
      these items.
      
      Effective with the 2012 first quarter, Praxair changed the measurement
(c)   of its segment sales and operating profit. Prior period amounts have
      been reclassified to conform to the current presentation. See segment
      information.



PRAXAIR, INC. AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES
(Millions of dollars, except per share data)

The following non-GAAP measures are intended to supplement an understanding of
the company’s financial information by providing measures which investors,
financial analysts and management use to help evaluate the company’s financing
leverage, return on net assets employed and operating performance. Items which
the company does not believe to be indicative of on-going business trends are
excluded from these calculations so that investors can better evaluate and
analyze historical and future business trends on a consistent basis.
Definitions of these non-GAAP measures may not be comparable to similar
definitions used by other companies and are not a substitute for similar GAAP
measures. Adjusted amounts exclude the impact of the 2012 third-quarter cost
reduction program, pension settlement charge, and an income tax benefit; the
2011 fourth-quarter gain on acquisition and cost reduction program; and the
2010 first-quarter loss on Venezuela currency devaluation and the 2010
fourth-quarter loss on the U.S. Homecare divestiture, Spanish income tax
settlement and repatriation tax benefit.
                                        
To be more consistent with the methodology used for annual reporting and to
improve comparability, effective in the third quarter 2012 the company changed
the methodology that it uses for calculating the following non-GAAP measures:
Debt to capital, After-tax ROC, ROE, Debt-to-Adjusted EBITDA. These
calculations are now based on a rolling four quarters approach for the
earnings component of the calculations (NOPAT, Net income- Praxair, Inc.,
Adjusted EBITDA) and a five quarter average for the balance sheet component of
the calculation (capital, equity, debt). In addition, the company decided to
use net debt instead of debt in the new calculations. Net debt is defined as
debt less cash and cash equivalents. Prior-period amounts have been adjusted
to conform to the current methodology.

                                                                                                                                                                                                       
                     2012                                                               2011                                                               2010
                     Year        Q4          Q3          Q2          Q1             Year        Q4          Q3          Q2          Q1             Q4          Q3          Q2          Q1
                                                                                                                                                                                                               
Debt to Capital Ratio - The debt-to-capital ratio is a measure used by investors, financial analysts and management to provide a measure of financial leverage and insights into how the company is
financing its operations.
                                                                                                                                                                                                               
Debt                              $ 7,362      $ 7,136      $ 6,995      $ 6,856                     $ 6,562      $ 6,310      $ 6,119      $ 5,838        $ 5,557      $ 5,077      $ 5,026      $ 5,404
Less: cash and                     (157   )   (108   )   (104   )   (107   )                   (90    )   (125   )   (80    )   (86    )    (39    )   (71    )   (48    )   (376   )
cash equivalents
Net debt                            7,205        7,028        6,891        6,749                       6,472        6,185        6,039        5,752          5,518        5,006        4,978        5,028
Equity and
redeemable
noncontrolling
interests:
Redeemable
noncontrolling                      252          243          232          232                         220          -            -            -              -            -            -            -
interests
Praxair, Inc.
shareholders'                       6,064        6,015        5,615        5,940                       5,488        5,753        6,400        6,165          5,792        5,991        5,452        5,398
equity
Noncontrolling                     357       331       279       327                       309       368       370       372        353       339       315       332    
interests
Total equity and
redeemable                         6,673     6,589     6,126     6,499                     6,017     6,121     6,770     6,537      6,145     6,330     5,767     5,730  
noncontrolling
interests
Capital                           $ 13,878   $ 13,617   $ 13,017   $ 13,248                   $ 12,489   $ 12,306   $ 12,809   $ 12,289    $ 11,663   $ 11,336   $ 10,745   $ 10,758 
                                                                                                                                                                                                               
Debt-to-capital                    51.9   %   51.6   %   52.9   %   50.9   %                   51.8   %   50.3   %   47.1   %   46.8   %    47.3   %   44.2   %   46.3   %   46.7   %
                                                                                                                                                                                                               
After -tax return on Capital (ROC) - After-tax return on capital is a measure used by investors, financial analysts and management to evaluate the return on net assets employed in the business. ROC
measures the after-tax operating profit that the company was able to generate with the investments made by all parties in the business (debt, noncontrolling interests and Praxair, Inc. shareholders’
equity).
                                                                                                                                                                                                               
Adjusted
operating profit     $ 2,502      $ 616        $ 623        $ 636        $ 627          $ 2,469      $ 619        $ 632        $ 627        $ 591          $ 563        $ 551        $ 547        $ 506
(a)
Less: adjusted         (660   )     (162   )     (164   )     (169   )     (165   )       (647   )     (162   )     (166   )     (163   )     (156   )       (149   )     (146   )     (145   )     (132   )
income taxes (a)
Less: tax
benefit on             (39    )     (10    )     (10    )     (9     )     (10    )       (41    )     (11    )     (10    )     (10    )     (10    )       (8     )     (8     )     (8     )     (9     )
interest expense
Add: income from
equity                34         9          8         10        7            40         7         13        11        9            11         12         8          7      
investments
Adjusted net
operating profit     $ 1,837      $ 453        $ 457        $ 468        $ 459          $ 1,821      $ 453        $ 469        $ 465        $ 434          $ 417        $ 409        $ 402        $ 372
after-tax
(NOPAT)
4-quarter
trailing                          $ 1,837      $ 1,837      $ 1,849      $ 1,846                     $ 1,821      $ 1,785      $ 1,725      $ 1,662
adjusted NOPAT
                                                                                                                                                                                                               
Ending capital       $ 13,878     $ 13,878     $ 13,617     $ 13,017     $ 13,248       $ 12,489     $ 12,489     $ 12,306     $ 12,809     $ 12,289       $ 11,663     $ 11,336     $ 10,745     $ 10,758
(see above)
5-quarter
average ending       $ 13,250     $ 13,250     $ 12,935     $ 12,774     $ 12,628       $ 12,311     $ 12,311     $ 12,081     $ 11,768     $ 11,358
capital
                                                                                                                                                                                                               
After-tax ROC
(4-quarter
trailing NOPAT /      13.9   %   13.9   %   14.2   %   14.5   %   14.6   %    14.8   %   14.8   %   14.8   %   14.7   %   14.6   %                                    

5-quarter
average capital)
                                                                                                                                                                                                               
Return on Praxair, Inc. Shareholder's equity (ROE) - Return on Praxair, Inc. shareholders' equity is a measure used by investors, financial analysts and management to evaluate operating performance from a
Praxair shareholder perspective. ROE measures the net income attributable to Praxair, Inc. that the company was able to generate with the money shareholders have invested.
                                                                                                                                                                                                               
Adjusted net
income -             $ 1,681      $ 414        $ 419        $ 429        $ 419          $ 1,666      $ 414        $ 429        $ 425        $ 398          $ 388        $ 377        $ 371        $ 340
Praxair, Inc.
(a)
4-quarter
trailing
adjusted net                      $ 1,681      $ 1,681      $ 1,691      $ 1,687                     $ 1,666      $ 1,640      $ 1,588      $ 1,534
income -
Praxair, Inc.
(a)
                                                                                                                                                                                                               
Ending Praxair,
Inc.                 $ 6,064      $ 6,064      $ 6,015      $ 5,615      $ 5,940        $ 5,488      $ 5,488      $ 5,753      $ 6,400      $ 6,165        $ 5,792      $ 5,991      $ 5,452      $ 5,398
shareholders'
equity
5-quarter
average Praxair      $ 5,824      $ 5,824      $ 5,762      $ 5,839      $ 5,949        $ 5,920      $ 5,920      $ 6,020      $ 5,960      $ 5,760
shareholders'
equity
                                                                                                                                                                                                               
ROE (4-quarter
trailing
adjusted net
income -
Praxair, Inc. /       28.9   %   28.9   %   29.2   %   29.0   %   28.4   %    28.1   %   28.1   %   27.2   %   26.6   %   26.6   %                                    
5-quarter
average Praxair
shareholders'
equity)
                                                                                                                                                                                                               
Adjusted EBITDA and Debt-to-Adjusted EBITDA Ratio  - These measures are used by investors, financial analysts and management to assess a company's ability to meet it's financial obligations.
                                                                                                                                                                                                               
                                                                                                                                                                                                               
Adjusted net
income -             $ 1,681      $ 414        $ 419        $ 429        $ 419          $ 1,666      $ 414        $ 429        $ 425        $ 398          $ 388        $ 377        $ 371        $ 340
Praxair, Inc.
(a)
                                                                                                                                                                                                               
Add: adjusted
noncontrolling         54           14           12           15           13             51           12           14           14           11             9            11           10           9
interests (a)
Add: interest          141          35           36           33           37             145          38           36           36           35             28           29           29           32
expense - net
Add: adjusted          660          162          164          169          165            647          162          166          163          156            149          146          145          132
income taxes (a)
Add:
depreciation and      1,001     254       248       247       252        1,003     249       256       254       244        240       227       230       228    
amortization
Adjusted EBITDA      $ 3,537      $ 879        $ 879        $ 893        $ 886          $ 3,512      $ 875        $ 901        $ 892        $ 844          $ 814        $ 790        $ 785        $ 741
4-quarter
trailing                          $ 3,537      $ 3,533      $ 3,555      $ 3,554                     $ 3,512      $ 3,451      $ 3,340      $ 3,233
adjusted EBITDA
                                                                                                                                                                                                               
Ending net debt      $ 7,205      $ 7,205      $ 7,028      $ 6,891      $ 6,749        $ 6,472      $ 6,472      $ 6,185      $ 6,039      $ 5,752        $ 5,518      $ 5,006      $ 4,978      $ 5,028
(see above)
5-quarter            $ 6,869      $ 6,869      $ 6,665      $ 6,467      $ 6,239        $ 5,993      $ 5,993      $ 5,700      $ 5,459      $ 5,256
average net debt
                                                                                                                                                                                                               
Debt-to-adjusted
EBITDA ratio
(5-quarter
average net debt      1.9       1.9       1.9       1.8       1.8        1.7       1.7       1.7       1.6       1.6                                        
/ 4-quarter
trailing
adjusted EBITDA)



APPENDIX - Cont'd
    
      The following table presents adjusted amounts for Operating Profit and
      Operating Profit Margin, Income Taxes, Effective Tax Rate,
      Noncontrolling Interests, Net income - Praxair, Inc., and Diluted EPS
(a)   for the Third Quarter and full year 2012, the Fourth Quarter and full
      year 2011 and the First Quarter, Fourth Quarter and full year 2010.
      Additionally, this table presents the percentage change in Diluted EPS
      Guidance for the full year 2012.

                                                                                            
                                  Third                         Fourth                     Fourth      First
                     Year                          Year                       Year
                                  Quarter                       Quarter                    Quarter     Quarter
                     2012         2012             2011         2011          2010         2010        2010
Adjusted
Operating
Profit and
Operating
Profit Margin
Reported
operating            $ 2,437      $ 558            $ 2,468      $ 618         $ 2,082      $ 505       $ 479
profit
Add: Pension
settlement             9            9                -            -             -            -           -
charge
Add: Cost
reduction              56           56               40           40            -            -           -
programs
Less: Gain on          -            -                (39    )     (39   )       -            -           -
acquisition
Add: U.S.
Homecare               -            -                -            -             58           58          -
divestiture
Add: Venezuela
currency              -          -              -          -           27         -         27    
devaluation
Total                 65         65             1          1           85         58        27    
adjustments
Adjusted
operating            $ 2,502     $ 623           $ 2,469     $ 619        $ 2,167     $ 563      $ 506   
profit
                                                                                                                 
Reported sales       $ 11,224     $ 2,774          $ 11,252     $ 2,796       $ 10,116     $ 2,623     $ 2,428
Adjusted
operating              22.3   %     22.5  %          21.9   %     22.1  %       21.4   %     21.5  %     20.8  %
profit margin
                                                                                                                 
Adjusted
Income Taxes
Reported             $ 586        $ 90             $ 641        $ 156         $ 768        $ 346       $ 131
income taxes
Add: Pension
settlement             3            3                -            -             -            -           -
charge
Add: Income            55           55               -            -             -            -           -
tax benefit
Add: Cost
reduction              16           16               9            9             -            -           -
programs
Less: Gain on          -            -                (3     )     (3    )       -            -           -
acquisition
Less: Spanish
income tax             -            -                -            -             (250   )     (250  )     -
settlement
Add: U.S.
Homecare               -            -                -            -             18           18          -
divestiture
Add:
Repatriation           -            -                -            -             35           35          -
tax benefit
Add: Venezuela
currency              -          -              -          -           1          -         1     
devaluation
Total                 74         74             6          6           (196   )    (197  )    1     
adjustments
Adjusted             $ 660       $ 164           $ 647       $ 162        $ 572       $ 149      $ 132   
income taxes
                                                                                                                 
Adjusted
Effective Tax
Rate
Reported
income before
income taxes         $ 2,296      $ 522            $ 2,323      $ 580         $ 1,964      $ 477       $ 447
and equity
investments
Add: Pension
settlement             9            9                -            -             -            -           -
charge
Add: Cost
reduction              56           56               40           40            -            -           -
programs
Less: Gain on          -            -                (39    )     (39   )       -            -           -
acquisition
Add: U.S.
Homecare               -            -                -            -             58           58          -
divestiture
Add: Venezuela
currency              -          -              -          -           27         -         27    
devaluation
Total                 65         65             1          1           85         58        27    
adjustments
Adjusted
income before
income taxes         $ 2,361     $ 587           $ 2,324     $ 581        $ 2,049     $ 535      $ 474   
and equity
investments
                                                                                                                 
Adjusted
income taxes         $ 660        $ 164            $ 647        $ 162         $ 572        $ 149       $ 132
(above)
Adjusted
effective tax          28     %     28    %          28     %     28    %       28     %     28    %     28    %
rate
                                                                                                                 
Adjusted
Noncontrolling
interest
Reported
noncontrolling       $ 52         $ 10             $ 50         $ 11
interest
Add: Cost
reduction              2            2                -            -
programs
Add: Gain on          -          -              1          1     
acquisition
Total                 2          2              51         12    
adjustments
Adjusted
noncontrolling       $ 54        $ 12            $ 51        $ 12    
interest
                                                                                                                 
Adjusted Net
Income -
Praxair, Inc.
Reported net
income -             $ 1,692      $ 430            $ 1,672      $ 42          $ 1,195      $ 133       $ 314
Praxair, Inc.
Add: Pension
settlement             6            6                -            -             -            -           -
charge
Less: Income           (55    )     (55   )          -            -             -            -           -
tax benefit
Add: Cost
reduction              38           38               31           31            -            -           -
programs
Less: Gain on          -            -                (37    )     (37   )       -            -           -
acquisition
Add: Spanish
income tax             -            -                -            -             250          250         -
settlement
Add: U.S.
Homecare               -            -                -            -             40           40          -
divestiture
Less:
Repatriation           -            -                -            -             (35    )     (35   )     -
tax benefit
Add: Venezuela
currency              -          -              -          -           26         -         26    
devaluation
Total                 (11    )    (11   )         (6     )    (6    )      281        255       26    
adjustments
Adjusted net
income -             $ 1,681     $ 419           $ 1,666     $ 414        $ 1,476     $ 388      $ 340   
Praxair, Inc.
                                                                                                                 
Adjusted
Diluted EPS
Reported                                  *Story
diluted EPS          $ 5.61       $ 1.43  too
                                          large*

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