Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

x ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934	For	the	fiscal	year	ended	30	September	2018

¨ TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934	For	the	transition	period	from 																	to

# AIR	PRODUCTS	AND	CHEMICALS,	INC.

Title	of	Each	Class:

Common	Stock,	par	value	$1.00	per	share

# Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Registered	on:

# New	York	Stock	Exchange

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act. YES ¨ NO x

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	every	Interactive	Data	File	required	to	be	submitted	pursuant	to	Rule	405	of

Regulation	S-T	(§232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	such files). YES x NO ¨

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§	229.405	of	this	chapter)	is	not	contained	herein,	and

will	not	be	contained,	to	the	best	of	registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this

Form	10-K	or	any	amendment	to	this	Form	10-K.

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

Large	accelerated	filer		x 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.

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act). YES ¨ NO x

The	aggregate	market	value	of	the	voting	stock	held	by	non-affiliates	of	the	registrant	on	31	March	2018	was	approximately	$34.8	billion.	For	purposes	of	the	foregoing	calculations, all	directors	and/or	executive	officers	have	been	deemed	to	be	affiliates,	but	the	registrant	disclaims	that	any	such	director	and/or	executive	officer	is	an	affiliate.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Portions	of	the	registrant's	definitive	Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019	are	incorporated	by	reference	into	Part	III.

# ANNUAL	REPORT	ON	FORM	10-K

# For	the	fiscal	year	ended	30	September	2018

| ITEM	1. | BUSINESS | 4 |
| :--- | :--- | :--- |
| ITEM\t1A. | RISK\tFACTORS | 8 |
| ITEM\t1B. | UNRESOLVED\tSTAFF\tCOMMENTS | 14 |
| ITEM\t2. | PROPERTIES | 14 |
| ITEM\t3. | LEGAL\tPROCEEDINGS | 15 |
| ITEM\t4. | MINE\tSAFETY\tDISCLOSURES | 16 |
|  | MARKET\tFOR\tREGISTRANT'S\tCOMMON\tEQUITY,\tRELATED\tSTOCKHOLDER\tMATTERS,\tAND\tISSUER |  |
| ITEM\t5. | PURCHASES\tOF\tEQUITY\tSECURITIES | 16 |
| ITEM\t6. | SELECTED\tFINANCIAL\tDATA | 18 |
| ITEM\t7. | MANAGEMENT'S\tDISCUSSION\tAND\tANALYSIS\tOF\tFINANCIAL\tCONDITION\tAND\tRESULTS\tOF\tOPERATIONS | 20 |
| ITEM\t7A. | QUANTITATIVE\tAND\tQUALITATIVE\tDISCLOSURES\tABOUT\tMARKET\tRISK | 55 |
| ITEM\t8. | FINANCIAL\tSTATEMENTS\tAND\tSUPPLEMENTARY\tDATA | 57 |
| ITEM\t9. | CHANGES\tIN\tAND\tDISAGREEMENTS\tWITH\tACCOUNTANTS\tON\tACCOUNTING\tAND\tFINANCIAL\tDISCLOSURE | 122 |
| ITEM\t9A. | CONTROLS\tAND\tPROCEDURES | 122 |
| ITEM\t9B. | OTHER\tINFORMATION | 123 |
| ITEM\t10. | DIRECTORS,\tEXECUTIVE\tOFFICERS\tAND\tCORPORATE\tGOVERNANCE | 123 |
| ITEM\t11. | EXECUTIVE\tCOMPENSATION | 123 |
|  | SECURITY\tOWNERSHIP\tOF\tCERTAIN\tBENEFICIAL\tOWNERS\tAND\tMANAGEMENT\tAND\tRELATED |  |
| ITEM\t12. | STOCKHOLDER\tMATTERS | 124 |
| ITEM\t13. | CERTAIN\tRELATIONSHIPS\tAND\tRELATED\tTRANSACTIONS,\tAND\tDIRECTOR\tINDEPENDENCE | 125 |
| ITEM\t14. | PRINCIPAL\tACCOUNTANT\tFEES\tAND\tSERVICES | 125 |
| ITEM\t15. | EXHIBITS\tAND\tFINANCIAL\tSTATEMENT\tSCHEDULES | 125 |
| ITEM\t16. | FORM\t10-K\tSUMMARY | 125 |
| INDEX\tTO\tEXHIBITS |  | 126 |
| SIGNATURES |  | 130 |

# FORWARD-LOOKING	STATEMENTS

This	Annual	Report	on	Form	10-K	contains	"forward-looking	statements"	within	the	safe	harbor	provisions	of	the	Private	Securities	Litigation	Reform	Act	of 1995.	Forward-looking	statements	include	all	statements	that	do	not	relate	solely	to	historical	or	current	facts	and	can	generally	be	identified	by	words such	as	"anticipate,"	"believe,"	"could,"	"estimate,"	"expect,"	"forecast,"	"goal,"	"intend,"	"may,"	"outlook,"	"plan,"	"positioned,"	"possible,"	"potential," "project,"	"should,"	"target,"	"will,"	"would,"	and	similar	expressions	or	variations	thereof,	or	the	negative	thereof,	but	these	terms	are	not	the	exclusive means	of	identifying	such	statements.	Forward-looking	statements	are	based	on	management's	expectations	and	assumptions	as	of	the	date	of	this report	and	are	not	guarantees	of	future	performance.	You	are	cautioned	not	to	place	undue	reliance	on	our	forward-looking	statements.

Forward-looking	statements	may	relate	to	a	number	of	matters,	including	expectations	regarding	revenue,	margins,	expenses,	earnings,	tax	provisions, cash	flows,	pension	obligations,	share	repurchases	or	other	statements	regarding	economic	conditions	or	our	business	outlook;	statements	regarding plans,	projects,	strategies	and	objectives	for	our	future	operations,	including	our	ability	to	win	new	projects	and	execute	the	projects	in	our	backlog;	and statements	regarding	our	expectations	with	respect	to	pending	legal	claims	or	disputes.	While	forward-looking	statements	are	made	in	good	faith	and based	on	assumptions,	expectations	and	projections	that	management	believes	are	reasonable	based	on	currently	available	information,	actual performance	and	financial	results	may	differ	materially	from	projections	and	estimates	expressed	in	the	forward-looking	statements	because	of	many factors,	including,	without	limitation:

•changes	in	global	or	regional	economic	conditions,	supply	and	demand	dynamics	in	the	market	segments	we	serve,	or	in	the	financial	markets;

•risks	associated	with	having	extensive	international	operations,	including	political	risks,	risks	associated	with	unanticipated	government	actions	and risks	of	investing	in	developing	markets;

•project	delays,	contract	terminations,	customer	cancellations,	or	postponement	of	projects	and	sales;

•future	financial	and	operating	performance	of	major	customers	and	joint	venture	partners;

•our	ability	to	develop,	implement,	and	operate	new	technologies,	or	to	execute	the	projects	in	our	backlog;

•tariffs,	economic	sanctions	and	regulatory	activities	in	jurisdictions	in	which	we	and	our	affiliates	and	joint	ventures	operate;

•the	impact	of	environmental,	tax	or	other	legislation,	as	well	as	regulations	affecting	our	business	and	related	compliance	requirements,	including regulations	related	to	global	climate	change;

•changes	in	tax	rates	and	other	changes	in	tax	law;

•the	timing,	impact,	and	other	uncertainties	relating	to	acquisitions	and	divestitures,	including	our	ability	to	integrate	acquisitions	and	separate	divested businesses,	respectively;

•risks	relating	to	cybersecurity	incidents,	including	risks	from	the	interruption,	failure	or	compromise	of	our	information	systems;

•catastrophic	events,	such	as	natural	disasters,	acts	of	war,	or	terrorism;

•the	impact	of	price	fluctuations	in	natural	gas	and	disruptions	in	markets	and	the	economy	due	to	oil	price	volatility;

•costs	and	outcomes	of	legal	or	regulatory	proceedings	and	investigations;

•asset	impairments	due	to	economic	conditions	or	specific	events;

•significant	fluctuations	in	interest	rates	and	foreign	currency	exchange	rates	from	those	currently	anticipated;

•damage	to	facilities,	pipelines	or	delivery	systems,	including	those	we	own	or	operate	for	third	parties;

•availability	and	cost	of	raw	materials;	and

•the	success	of	productivity	and	operational	improvement	programs.

In	addition	to	the	foregoing	factors,	forward-looking	statements	contained	herein	are	qualified	with	respect	to	the	risks	disclosed	elsewhere	in	this document,	including	in	Item	1A,	Risk	Factors,	Item	7,	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations,	and	Item 7A,	Quantitative	and	Qualitative	Disclosures	About	Market	Risk.	Any	of	these	factors,	as	well	as	those	not	currently	anticipated	by	management,	could cause	our	results	of	operations,	financial	condition	or	liquidity	to	differ	materially	from	what	is	expressed	or	implied	by	any	forward-looking	statement. Except	as	required	by	law,	we	disclaim	any	obligation	or	undertaking	to	update	or	revise	any	forward-looking	statements	contained	herein	to	reflect	any change	in	assumptions,	beliefs,	or	expectations	or	any	change	in	events,	conditions,	or	circumstances	upon	which	any	such	forward-looking	statements are	based.

# PART	I

Air	Products	and	Chemicals,	Inc.,	a	Delaware	corporation	originally	founded	in	1940,	serves	customers	globally	with	a	unique	portfolio	of	products, services,	and	solutions	that	include	atmospheric	gases,	process	and	specialty	gases,	equipment,	and	services.	The	Company	is	the	world's	largest supplier	of	hydrogen	and	has	built	leading	positions	in	growth	markets	such	as	helium	and	natural	gas	liquefaction.	As	used	in	this	report,	unless	the context	indicates	otherwise,	the	terms	"we,"	"our,"	"us,"	the	"Company,"	or	"registrant"	include	controlled	subsidiaries,	affiliates,	and	predecessors	of	Air Products	and	its	controlled	subsidiaries	and	affiliates.

During	its	fiscal	year	ended	30	September	2018	("fiscal	year	2018"),	the	Company	reported	its	continuing	operations	in	five	reporting	segments	under which	it	managed	its	operations,	assessed	performance,	and	reported	earnings:	Industrial	Gases	–	Americas;	Industrial	Gases	–	EMEA	(Europe,	Middle East,	and	Africa);	Industrial	Gases	–	Asia;	Industrial	Gases	–	Global;	and	Corporate	and	other.

Except	as	otherwise	noted,	the	description	of	the	Company's	business	below	reflects	the	Company's	continuing	operations.	Refer	to	Management's Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	and	Note	25,	Business	Segment	and	Geographic	Information,	and	Note	3, Discontinued	Operations,	to	the	consolidated	financial	statements	for	additional	details	on	our	reportable	business	segments	and	our	discontinued operations.

# Industrial	Gases	Business

The	Company's	Industrial	Gases	business	produces	atmospheric	gases	(oxygen,	nitrogen,	argon,	and	rare	gases);	process	gases	(hydrogen,	helium, carbon	dioxide,	carbon	monoxide,	syngas,	and	specialty	gases);	and	equipment	for	the	production	or	processing	of	gases,	such	as	air	separation	units and	non-cryogenic	generators.	Atmospheric	gases	are	produced	through	various	air	separation	processes	of	which	cryogenic	is	the	most	prevalent. Process	gases	are	produced	by	methods	other	than	air	separation.	For	example,	hydrogen,	carbon	monoxide	and	syngas	are	produced	by	steam methane	reforming	of	natural	gas	and	by	the	gasification	of	liquid	and	solid	hydrocarbons.	Hydrogen	is	also	produced	by	purifying	byproduct	sources obtained	from	the	chemical	and	petrochemical	industries;	and	helium	is	produced	as	a	byproduct	of	gases	extracted	from	underground	reservoirs, primarily	natural	gas,	but	also	carbon	dioxide	purified	before	resale.

The	Company's	Industrial	Gases	business	is	organized	and	operated	regionally.	The	regional	Industrial	Gases	segments	(Americas,	EMEA,	and	Asia) supply	gases	and	related	equipment	in	the	relevant	region	to	diversified	customers	in	many	industries,	including	those	in	refining,	chemical,	gasification, metals,	electronics,	manufacturing,	and	food	and	beverage.	Hydrogen	is	used	by	refiners	to	facilitate	the	conversion	of	heavy	crude	feedstock	and	lower the	sulfur	content	of	gasoline	and	diesel	fuels.	The	chemicals	industry	uses	hydrogen,	oxygen,	nitrogen,	carbon	monoxide,	and	syngas	as	feedstocks	in the	production	of	many	basic	chemicals.	The	energy	production	industry	uses	nitrogen	injection	for	enhanced	recovery	of	oil	and	natural	gas	and	oxygen for	gasification.	Oxygen	is	used	in	combustion	and	industrial	heating	applications,	including	in	the	gasification,	steel,	certain	nonferrous	metals,	glass,	and cement	industries.	Nitrogen	applications	are	used	in	food	processing	for	freezing	and	preserving	flavor	and	nitrogen	for	inerting	is	used	in	various	fields, including	the	metals,	chemical,	and	semiconductor	industries.	Helium	is	used	in	laboratories	and	healthcare	for	cooling	and	in	other	industries	for pressurizing,	purging,	and	lifting.	Argon	is	used	in	the	metals	and	other	industries	for	its	unique	inerting,	thermal	conductivity,	and	other	properties. Industrial	gases	are	also	used	in	welding	and	providing	healthcare	and	are	utilized	in	various	manufacturing	processes	to	make	them	more	efficient	and	to optimize	performance.

We	distribute	gases	to	our	customers	through	a	variety	of	supply	modes:

Liquid	Bulk—Product	is	delivered	in	bulk	(in	liquid	or	gaseous	form)	by	tanker	or	tube	trailer	and	stored,	usually	in	its	liquid	state,	in	equipment designed	and	installed	typically	by	the	Company	at	the	customer's	site	for	vaporizing	into	a	gaseous	state	as	needed.	Liquid	bulk	sales	are usually	governed	by	three-	to	five-year	contracts.

Packaged	Gases—Small	quantities	of	product	are	delivered	in	either	cylinders	or	dewars.	The	Company	operates	packaged	gas	businesses	in Europe,	Asia,	and	Latin	America.	In	the	United	States,	the	Company's	packaged	gas	business	sells	products	(principally	helium)	only	for	the electronics	and	magnetic	resonance	imaging	industries.

On-Site	Gases—Large	quantities	of	hydrogen,	nitrogen,	oxygen,	carbon	monoxide,	and	syngas	(a	mixture	of	hydrogen	and	carbon	monoxide)	are provided	to	customers,	principally	the	energy	production	and	refining,	chemical,	gasification,	and	metals	industries	worldwide,	that	require	large volumes	of	gases	and	have	relatively	constant	demand.	Gases	are	produced	at	large	facilities	located	adjacent	to	customers'	facilities	or	by pipeline	systems	from	centrally	located	production	facilities	and	are	generally	governed	by	15-	to	20-	year	contracts.	The	Company	also	delivers small	quantities	of	product	through	small	on-site	plants	(cryogenic	or	non-cryogenic	generators),	typically	either	via	a	10-	to	15-	year	sale	of	gas contract	or	through	the	sale	of	the	equipment	to	the	customer.

Electricity	is	the	largest	cost	component	in	the	production	of	atmospheric	gases.	Steam	methane	reformers	utilize	natural	gas	as	the	primary	raw	material and	gasifiers	use	liquid	and	solid	hydrocarbons	as	the	principal	raw	material	for	the	production	of	hydrogen,	carbon	monoxide	and	syngas.	We	mitigate electricity,	natural	gas,	and	hydrocarbon	price	fluctuations	contractually	through	pricing	formulas,	surcharges,	and	cost	pass-through	and	tolling arrangements.	During	fiscal	year	2018,	no	significant	difficulties	were	encountered	in	obtaining	adequate	supplies	of	power	and	natural	gas.

The	Company	obtains	helium	from	a	number	of	sources	globally,	including	crude	helium	for	purification	from	the	U.S.	Bureau	of	Land	Management's helium	reserve.

The	regional	Industrial	Gases	segments	also	include	our	share	of	the	results	of	several	joint	ventures	accounted	for	by	the	equity	method.	The	largest	of these	joint	ventures	operate	in	Mexico,	Italy,	South	Africa,	India,	Saudi	Arabia,	and	Thailand.

Each	of	the	regional	Industrial	Gases	segments	competes	against	two	global	industrial	gas	companies:	Air	Liquide	S.A.	and	Linde	plc	(the	successor	to Praxair,	Inc.	and	Linde	AG,	pursuant	to	a	combination	that	became	effective	on	31	October	2018),	as	well	as	regional	competitors.	Competition	in Industrial	Gases	is	based	primarily	on	price,	reliability	of	supply,	and	the	development	of	industrial	gas	applications.	In	locations	where	we	have	pipeline networks,	which	enable	us	to	provide	reliable	and	economic	supply	of	products	to	larger	customers,	we	derive	a	competitive	advantage.

Overall	regional	industrial	gases	sales	constituted	approximately	 94%	of	consolidated	sales	in	fiscal	year	 2018,	90%	in	fiscal	year	2017,	and	90%	in	fiscal year	2016.	Sales	of	tonnage	hydrogen	and	related	products	constituted	approximately	 25%	of	consolidated	sales	in	fiscal	year	 2018,	24%	in	fiscal	year 2017,	and	21%	in	fiscal	year	2016.	Sales	of	atmospheric	gases	constituted	approximately	 46%	of	consolidated	sales	in	fiscal	year	2018,	45%	in	fiscal year	2017,	and	46%	in	fiscal	year	2016.

# Industrial	Gases	Equipment

The	Company	designs	and	manufactures	equipment	for	air	separation,	hydrocarbon	recovery	and	purification,	natural	gas	liquefaction	("LNG"),	and	liquid helium	and	liquid	hydrogen	transport	and	storage.	The	Industrial	Gases	–	Global	segment	includes	activity	related	to	cryogenic	and	gas	processing equipment	for	air	separation.	The	equipment	is	sold	worldwide	to	customers	in	a	variety	of	industries,	including	chemical	and	petrochemical manufacturing,	oil	and	gas	recovery	and	processing,	and	steel	and	primary	metals	processing.	The	Corporate	and	other	segment	includes	three	global equipment	businesses:	our	LNG	equipment	business,	our	Gardner	Cryogenics	business	fabricating	helium	and	hydrogen	transport	and	storage containers,	and	our	Rotoflow	business	which	manufactures	turboexpanders	and	other	precision	rotating	equipment.	Steel,	aluminum,	and	capital equipment	subcomponents	(compressors,	etc.)	are	the	principal	raw	materials	in	the	manufacturing	of	equipment.	Adequate	raw	materials	for	individual projects	are	acquired	under	firm	purchase	agreements.	Equipment	is	produced	at	the	Company's	manufacturing	sites	with	certain	components	being procured	from	subcontractors	and	vendors.	Competition	in	the	equipment	business	is	based	primarily	on	technological	performance,	service,	technical know-how,	price,	and	performance	guarantees.	Sale	of	equipment	constituted	approximately	6%	of	consolidated	sales	in	fiscal	year	 2018,	10%	in	fiscal year	2017,	and	10%	in	fiscal	year	2016.

The	backlog	of	equipment	orders	was	approximately	 $.2	billion	on	30	September	2018	(as	compared	to	a	total	backlog	of	approximately	 $.5	billion	on	30 September	2017).	The	Company	estimates	that	approximately	 50%	of	the	total	sales	backlog	as	of	 30	September	2018	will	be	recognized	as	revenue during	fiscal	year	2019,	dependent	on	execution	schedules	of	the	relevant	projects.

# International	Operations

The	Company,	through	subsidiaries,	affiliates,	and	less-than-controlling	interests,	conducts	business	in	50	countries	outside	the	United	States.	Its international	businesses	are	subject	to	risks	customarily	encountered	in	foreign	operations,	including	fluctuations	in	foreign	currency	exchange	rates	and controls;	import	and	export	controls;	and	other	economic,	political,	and	regulatory	policies	of	local	governments	described	in	Item	1A,	Risk	Factors,	below.

The	Company	has	majority	or	wholly	owned	foreign	subsidiaries	that	operate	in	Canada;	16	European	countries	(including	the	United	Kingdom,	the Netherlands,	and	Spain);	eight	Asian	countries	(including	China,	South	Korea,	and	Taiwan);	seven	Latin	American	countries	(including	Chile	and	Brazil); four	countries	in	the	Middle	East,	and	two	African	countries.	The	Company	also	owns	less-than-controlling	interests	in	entities	operating	in	Europe,	Asia, Africa,	the	Middle	East,	and	Latin	America	(including	Italy,	Germany,	China,	India,	Saudi	Arabia,	Thailand,	Oman,	South	Africa,	and	Mexico).

Financial	information	about	the	Company's	foreign	operations	and	investments	is	included	in	Note	 8,	Summarized	Financial	Information	of	Equity Affiliates;	Note	22,	Income	Taxes;	and	Note	25,	Business	Segment	and	Geographic	Information,	to	the	consolidated	financial	statements	included	under Item	8,	below.	Information	about	foreign	currency	translation	is	included	under	"Foreign	Currency"	in	Note	1,	Major	Accounting	Policies,	and	information on	the	Company's	exposure	to	currency	fluctuations	is	included	in	Note	13,	Financial	Instruments,	to	the	consolidated	financial	statements,	included under	Item	8,	below,	and	in	"Foreign	Currency	Exchange	Rate	Risk,"	included	under	Item	7A,	below.	Export	sales	from	operations	in	the	United	States	to third-party	customers	amounted	to	$33.1	million,	$64.2	million,	and	$134.9	million	in	fiscal	years	 2018,	2017,	and	2016,	respectively.

# Technology	Development

The	Company	pursues	a	market-oriented	approach	to	technology	development	through	research	and	development,	engineering,	and	commercial development	processes.	It	conducts	research	and	development	principally	in	its	laboratories	located	in	the	United	States	(Trexlertown,	Pennsylvania), Canada	(Vancouver),	the	United	Kingdom	(Basingstoke	and	Carrington),	Spain	(Barcelona),	China	(Shanghai),	and	Saudi	Arabia	(Dhahran).	The Company	also	funds	and	cooperates	in	research	and	development	programs	conducted	by	a	number	of	major	universities	and	undertakes	research	work funded	by	others,	principally	the	United	States	government.

The	Company's	research	groups	are	aligned	with	and	support	the	research	efforts	of	various	businesses	throughout	the	Company.	Development	of technology	for	use	within	the	Industrial	Gases	business	focuses	primarily	on	new	and	improved	processes	and	equipment	for	the	production	and	delivery of	industrial	gases	and	new	or	improved	applications	for	industrial	gas	products.

During	fiscal	year	2018,	the	Company	owned	approximately	535	United	States	patents,	approximately	2,888	foreign	patents,	and	was	a	licensee	under certain	patents	owned	by	others.	While	the	patents	and	licenses	are	considered	important,	the	Company	does	not	consider	its	business	as	a	whole	to	be materially	dependent	upon	any	particular	patent,	patent	license,	or	group	of	patents	or	licenses.

# Environmental	Controls

The	Company	is	subject	to	various	environmental	laws	and	regulations	in	the	countries	in	which	it	has	operations.	Compliance	with	these	laws	and regulations	results	in	higher	capital	expenditures	and	costs.	In	the	normal	course	of	business,	the	Company	is	involved	in	legal	proceedings	under	the Comprehensive	Environmental	Response,	Compensation,	and	Liability	Act	(CERCLA:	the	federal	Superfund	law);	Resource	Conservation	and	Recovery Act	(RCRA);	and	similar	state	and	foreign	environmental	laws	relating	to	the	designation	of	certain	sites	for	investigation	or	remediation.	The	Company's accounting	policy	for	environmental	expenditures	is	discussed	in	Note	1,	Major	Accounting	Policies,	and	environmental	loss	contingencies	are	discussed in	Note	17,	Commitments	and	Contingencies,	to	the	consolidated	financial	statements,	included	under	Item	8,	below.

The	amounts	charged	to	income	from	continuing	operations	related	to	environmental	matters	totaled	 $12.8	million	in	fiscal	year	2018,	$11.4	million	in fiscal	year	2017,	and	$12.2	million	in	fiscal	year	2016.	These	amounts	represent	an	estimate	of	expenses	for	compliance	with	environmental	laws	and activities	undertaken	to	meet	internal	Company	standards.	Refer	to	Note	17,	Commitments	and	Contingencies,	to	the	consolidated	financial	statements for	additional	information.

The	Company	estimates	that	we	spent	approximately	 $3	million	in	fiscal	year	2018,	$7	million	in	fiscal	year	2017,	and	$3	million	in	fiscal	year	2016	on capital	projects	reflected	in	continuing	operations	to	control	pollution.	Capital	expenditures	to	control	pollution	are	estimated	to	be	approximately	$4 million	in	both	fiscal	years	2019	and	2020.

# Employees

On	30	September	2018,	the	Company	(including	majority-owned	subsidiaries)	had	approximately	 16,300	employees,	of	whom	approximately	16,000	were full-time	employees	and	of	whom	approximately	11,800	were	located	outside	the	United	States.	The	Company	has	collective	bargaining	agreements	with unions	at	various	locations	that	expire	on	various	dates	over	the	next	four	years.	The	Company	considers	relations	with	its	employees	to	be	satisfactory.

# Available	Information

All	periodic	and	current	reports,	registration	statements,	and	other	filings	that	the	Company	is	required	to	file	with	the	Securities	and	Exchange Commission	("SEC"),	including	the	Company's	annual	report	on	Form	10-K,	quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K,	and amendments	to	those	reports	filed	or	furnished	pursuant	to	Section	13(a)	of	the	Securities	Exchange	Act	of	1934	(the	"Exchange	Act"),	are	available	free of	charge	through	the	Company's	website	at	www.airproducts.com.	Such	documents	are	available	as	soon	as	reasonably	practicable	after	electronic	filing of	the	material	with	the	SEC.	All	such	reports	filed	during	the	period	covered	by	this	report	were	available	on	the	Company's	website	on	the	same	day	as filing.	In	addition,	our	filings	with	the	SEC	are	available	free	of	charge	on	the	SEC's	website,	www.sec.gov.

# Seasonality

The	Company's	businesses	are	not	subject	to	seasonal	fluctuations	to	any	material	extent.

# Inventories

The	Company	maintains	limited	inventory	where	required	to	facilitate	the	supply	of	products	to	customers	on	a	reasonable	delivery	schedule.	Inventory consists	primarily	of	crude	helium,	industrial	gas,	and	specialty	gas	inventories	supplied	to	customers	through	liquid	bulk	and	packaged	gases	supply modes.

# Customers

We	do	not	have	a	homogeneous	customer	base	or	end	market,	and	 no	single	customer	accounts	for	more	than	10%	of	our	consolidated	revenues .	We	do have	concentrations	of	customers	in	specific	industries,	primarily	refining,	chemicals,	and	electronics.	Within	each	of	these	industries,	the	Company	has several	large-volume	customers	with	long-term	contracts.	A	negative	trend	affecting	one	of	these	industries,	or	the	loss	of	one	of	these	major	customers, although	not	material	to	our	consolidated	revenue,	could	have	an	adverse	impact	on	our	financial	results.

# Governmental	Contracts

Our	business	is	not	subject	to	a	government	entity's	renegotiation	of	profits	or	termination	of	contracts	that	would	be	material	to	our	business	as	a	whole.

# Executive	Officers	of	the	Company

The	Company's	executive	officers	and	their	respective	positions	and	ages	on	 20	November	2018	follow.	Information	with	respect	to	offices	held	is	stated in	fiscal	years.

# ITEM	1A.				RISK	FACTORS

Our	operations	are	affected	by	various	risks,	many	of	which	are	beyond	our	control.	In	evaluating	investment	in	the	Company	and	the	forward-looking information	contained	in	this	Annual	Report	on	Form	10-K	or	presented	elsewhere	by	management	from	time	to	time,	you	should	consider	the	following risk	factors.	Any	of	the	following	risks	could	have	a	material	adverse	effect	on	our	business,	operating	results,	financial	condition,	and	the	actual	outcome of	matters	as	to	which	forward-looking	statements	are	made	and	could	adversely	affect	the	value	of	an	investment	in	our	common	stock	as	well.	While	we believe	we	have	identified	and	discussed	below	the	key	risk	factors	affecting	our	business,	there	may	be	additional	risks	and	uncertainties	that	adversely affect	our	business,	performance,	or	financial	condition	in	the	future	that	are	not	presently	known,	are	not	currently	believed	to	be	significant,	or	are	not identified	below	because	they	are	common	to	all	businesses.

# Changes	in	global	and	regional	economic	conditions,	the	markets	we	serve,	or	the	financial	markets	may	adversely	affect	our	results	of operations	and	cash	flows.

Unfavorable	conditions	in	the	global	economy	or	regional	economies,	the	markets	we	serve	or	financial	markets	may	decrease	the	demand	for	our	goods and	services	and	adversely	impact	our	revenues,	operating	results,	and	cash	flows.

Demand	for	our	products	and	services	depends	in	part	on	the	general	economic	conditions	affecting	the	countries	and	markets	in	which	we	do	business. Weak	economic	conditions	in	certain	geographies	and	changing	supply	and	demand	balances	in	the	markets	we	serve	have	negatively	impacted	demand for	our	products	and	services	in	the	past	and	may	do	so	in	the	future.	Reduced	demand	for	our	products	and	services	would	have	a	negative	impact	on our	revenues	and	earnings.	In	addition,	reduced	demand	could	depress	sales,	reduce	our	margins,	constrain	our	operating	flexibility	or	reduce	efficient utilization	of	our	manufacturing	capacity,	or	result	in	charges	which	are	unusual	or	nonrecurring.	Excess	capacity	in	our	manufacturing	facilities	or	those	of our	competitors	could	decrease	our	ability	to	maintain	pricing	and	generate	profits.

Our	operating	results	in	one	or	more	segments	may	also	be	affected	by	uncertain	or	deteriorating	economic	conditions	for	particular	customer	markets within	a	segment.	A	decline	in	the	industries	served	by	our	customers	or	adverse	events	or	circumstances	affecting	individual	customers	can	impair	the ability	of	such	customers	to	satisfy	their	obligations	to	the	Company,	resulting	in	uncollected	receivables,	unanticipated	contract	terminations,	project delays,	or	inability	to	recover	plant	investments,	any	of	which	may	negatively	impact	our	financial	results.

Weak	overall	demand	or	specific	customer	conditions	may	also	cause	customer	shutdowns	or	default,	or	other	inabilities	to	operate	facilities	profitably, and	may	force	sale	or	abandonment	of	facilities	and	equipment	or	prevent	projects	from	coming	on-stream.	These	or	other	events	associated	with	weak economic	conditions	or	specific	end	market,	product,	or	customer	events	may	require	us	to	record	an	impairment	on	tangible	assets,	such	as	facilities	and equipment,	or	intangible	assets,	such	as	intellectual	property	or	goodwill,	which	would	have	a	negative	impact	on	our	financial	results.

# Our	extensive	international	operations	can	be	adversely	impacted	by	operational,	economic,	political,	security,	legal,	and	currency	translation risks	that	could	decrease	profitability.

In	fiscal	year	2018,	over	60%	of	our	sales	were	derived	from	customers	outside	the	United	States	and	many	of	our	operations,	suppliers,	and	employees are	located	outside	the	United	States.	Our	operations	in	foreign	jurisdictions	may	be	subject	to	risks	including	exchange	control	regulations,	import	and trade	restrictions,	trade	policy	and	other	potentially	detrimental	domestic	and	foreign	governmental	practices	or	policies	affecting	U.S.	companies	doing business	abroad.	Changing	economic	and	political	conditions	within	foreign	jurisdictions,	strained	relations	between	countries,	or	the	imposition	of	tariffs or	international	sanctions	can	cause	fluctuations	in	demand,	price	volatility,	supply	disruptions,	or	loss	of	property.	The	occurrence	of	any	of	these	risks could	have	a	material	adverse	impact	on	our	financial	condition,	results	of	operation,	and	cash	flows.

Our	growth	strategies	depend	in	part	on	our	ability	to	further	penetrate	markets	outside	the	United	States,	particularly	in	higher-growth	markets,	and involve	larger	and	more	complex	projects,	including	world-scale	gasification	projects,	in	regions	where	there	is	the	potential	for	significant	economic	and political	disruptions,	including	Russia,	the	Middle	East	and	China.	We	are	actively	investing	significant	capital	and	other	resources,	in	some	cases	through joint	ventures,	in	developing	or	high	growth	markets,	which	present	special	risks.	Our	operations	in	these	markets	may	be	subject	to	greater	risks	than those	faced	by	our	operations	in	mature	economies,	including	political	and	economic	instability,	project	delay	or	abandonment	due	to	unanticipated government	actions,	inadequate	investment	in	infrastructure,	undeveloped	property	rights	and	legal	systems,	unfamiliar	regulatory	environments, relationships	with	local	partners,	language	and	cultural	differences	and	talent	risks.	Our	contracts	in	these	locations	may	be	subject	to	cancellation	without full	compensation	for	loss.	Successful	operation	of	particular	facilities	or	execution	of	projects	may	be	disrupted	by	civil	unrest,	acts	of	sabotage	or terrorism,	and	other	local	security	concerns.	Such	concerns	may	require	us	to	incur	greater	costs	for	security	or	require	us	to	shut	down	operations	for	a period	of	time.

Because	the	majority	of	our	revenue	is	generated	from	sales	outside	the	United	States,	we	are	exposed	to	fluctuations	in	foreign	currency	exchange	rates. Our	business	is	primarily	exposed	to	translational	currency	risk	as	the	results	of	our	foreign	operations	are	translated	into	U.S.	dollars	at	current	exchange rates	throughout	the	fiscal	period.	Our	policy	is	to	minimize	cash	flow	volatility	from	changes	in	currency	exchange	rates.	We	choose	not	to	hedge	the translation	of	our	foreign	subsidiaries'	earnings	into	dollars.	Accordingly,	reported	sales,	net	earnings,	cash	flows,	and	fair	values	have	been,	and	in	the future	will	be,	affected	by	changes	in	foreign	exchange	rates.	For	a	more	detailed	discussion	of	currency	exposure,	see	Item	7A,	Quantitative	and Qualitative	Disclosures	About	Market	Risk,	below.

# Operational	and	project	execution	risks	may	adversely	affect	our	operations	or	financial	results.

Some	of	our	projects,	including	some	of	our	largest	growth	projects,	involve	challenging	engineering,	procurement	and	construction	phases	that	may occur	in	more	risky	locations	and	over	extended	time	periods,	sometimes	up	to	several	years.	We	may	encounter	difficulties	in	engineering,	delays	in designs	or	materials	provided	by	the	customer	or	a	third	party,	equipment	and	materials	delivery	delays,	schedule	changes,	customer	scope	changes, delays	related	to	obtaining	regulatory	permits	and	rights-of-way,	inability	to	find	adequate	sources	of	labor	in	the	locations	where	we	are	building	new plants,	weather-related	delays,	delays	by	customers'	contractors	in	completing	their	portion	of	a	project,	technical	or	transportation	difficulties,	and	other factors,	some	of	which	are	beyond	our	control,	but	which	may	impact	our	ability	to	complete	a	project	within	the	original	delivery	schedule.	In	some	cases, delays	and	additional	costs	may	be	substantial,	and	we	may	be	required	to	cancel	a	project	and/or	compensate	the	customer	for	the	delay.	We	may	not be	able	to	recover	any	of	these	costs.	These	factors	could	also	negatively	impact	our	reputation	or	relationships	with	our	customers,	which	could adversely	affect	our	ability	to	secure	new	contracts	in	the	future,	and	these	risks	are	more	significant	as	we	take	on	larger	and	more	complex	projects, including	gasification	projects,	as	part	of	our	growth	strategy.

The	operation	of	our	facilities,	pipelines,	and	delivery	systems	inherently	entails	hazards	that	require	continuous	oversight	and	control,	such	as	pipeline leaks	and	ruptures,	fire,	explosions,	toxic	releases,	mechanical	failures,	or	vehicle	accidents.	If	operational	risks	materialize,	they	could	result	in	loss	of life,	damage	to	the	environment,	or	loss	of	production,	all	of	which	could	negatively	impact	our	ongoing	operations,	reputation,	financial	results,	and	cash flows.	In	addition,	our	operating	results	are	dependent	on	the	continued	operation	of	our	production	facilities	and	our	ability	to	meet	customer requirements,	which	depend,	in	part,	on	our	ability	to	properly	maintain	and	replace	aging	assets.

# We	are	subject	to	extensive	government	regulation	in	the	jurisdictions	in	which	we	do	business.	Regulations	addressing,	among	other	things, environmental	compliance,	import/export	restrictions,	anti-bribery	and	corruption,	and	taxes,	can	negatively	impact	our	financial	condition, results	of	operation,	and	cash	flows.

We	are	subject	to	government	regulation	in	the	United	States	and	in	the	foreign	jurisdictions	where	we	conduct	business.	The	application	of	laws	and regulations	to	our	business	is	sometimes	unclear.	Compliance	with	laws	and	regulations	may	involve	significant	costs	or	require	changes	in	business practices	that	could	result	in	reduced	profitability.	If	there	is	a	determination	that	we	have	failed	to	comply	with	applicable	laws	or	regulations,	we	may	be subject	to	penalties	or	sanctions	that	could	adversely	impact	our	reputation	and	financial	results.	Compliance	with	changes	in	laws	or	regulations	can result	in	increased	operating	costs	and	require	additional	capital	expenditures.	Export	controls	or	other	regulatory	restrictions	could	prevent	us	from shipping	our	products	to	and	from	some	markets	or	increase	the	cost	of	doing	so.	Changes	in	tax	laws	and	regulations	and	international	tax	treaties	could affect	the	financial	results	of	our	businesses.	Increasingly	aggressive	enforcement	of	anti-bribery	and	anti-corruption	requirements,	including	the	U.S. Foreign	Corrupt	Practices	Act,	the	United	Kingdom	Bribery	Act	and	the	China	Anti-Unfair	Competition	Law,	could	subject	us	to	criminal	or	civil	sanctions	if a	violation	is	deemed	to	have	occurred.	In	addition,	we	are	subject	to	laws	and	sanctions	imposed	by	the	U.S.	and	other	jurisdictions	where	we	do business	that	may	prohibit	us,	or	certain	of	our	affiliates,	from	doing	business	in	certain	countries,	or	restricting	the	kind	of	business	that	we	may	conduct. Such	restrictions	may	provide	a	competitive	advantage	to	competitors	who	are	not	subject	to	comparable	restrictions	or	prevent	us	from	taking	advantage of	growth	opportunities.

Further,	we	cannot	guarantee	that	our	internal	controls	and	compliance	systems	will	always	protect	us	from	acts	committed	by	employees,	agents, business	partners,	or	businesses	that	we	acquire	that	would	violate	U.S.	and/or	non-U.S.	laws,	including	the	laws	governing	payments	to	government officials,	bribery,	fraud,	kickbacks	and	false	claims,	pricing,	sales	and	marketing	practices,	conflicts	of	interest,	competition,	export	and	import	compliance, money	laundering,	and	data	privacy.	Any	such	improper	actions	or	allegations	of	such	acts	could	damage	our	reputation	and	subject	us	to	civil	or	criminal investigations	in	the	United	States	and	in	other	jurisdictions	and	related	shareholder	lawsuits,	could	lead	to	substantial	civil	and	criminal,	monetary	and non-monetary	penalties,	and	could	cause	us	to	incur	significant	legal	and	investigatory	fees.	In	addition,	the	government	may	seek	to	hold	us	liable	as	a successor	for	violations	committed	by	companies	in	which	we	invest	or	that	we	acquire.

# We	may	be	unable	to	successfully	identify,	execute	or	effectively	integrate	acquisitions,	or	effectively	disentangle	divested	businesses.

Our	ability	to	grow	revenue,	earnings,	and	cash	flow	at	anticipated	rates	depends	in	part	on	our	ability	to	identify,	successfully	acquire	and	integrate businesses	and	assets	at	appropriate	prices,	and	realize	expected	growth,	synergies,	and	operating	efficiencies.	We	may	not	be	able	to	complete transactions	on	favorable	terms,	on	a	timely	basis	or	at	all.	In	addition,	our	results	of	operations	and	cash	flows	may	be	adversely	impacted	by	the	failure of	acquired	businesses	or	assets	to	meet	expected	returns,	the	failure	to	integrate	acquired	businesses,	the	inability	to	dispose	of	non-core	assets	and businesses	on	satisfactory	terms	and	conditions,	and	the	discovery	of	unanticipated	liabilities	or	other	problems	in	acquired	businesses	or	assets	for which	we	lack	adequate	contractual	protections	or	insurance.	In	addition,	we	may	incur	asset	impairment	charges	related	to	acquisitions	that	do	not	meet expectations.

We	continually	assess	the	strategic	fit	of	our	existing	businesses	and	may	divest	businesses	that	are	deemed	not	to	fit	with	our	strategic	plan	or	are	not achieving	the	desired	return	on	investment.	These	transactions	pose	risks	and	challenges	that	could	negatively	impact	our	business	and	financial statements.	For	example,	when	we	decide	to	sell	or	otherwise	dispose	of	a	business	or	assets,	we	may	be	unable	to	do	so	on	satisfactory	terms	within	our anticipated	time	frame	or	at	all.	In	addition,	divestitures	or	other	dispositions	may	dilute	our	earnings	per	share,	have	other	adverse	financial	and accounting	impacts,	distract	management,	and	give	rise	to	disputes	with	buyers.	In	addition,	we	have	agreed,	and	may	in	the	future	agree,	to	indemnify buyers	against	known	and	unknown	contingent	liabilities.	Our	financial	results	could	be	impacted	adversely	by	claims	under	these	indemnities.

# The	security	of	our	information	technology	systems	could	be	compromised,	which	could	adversely	affect	our	ability	to	operate.

We	depend	on	information	technology	to	enable	us	to	operate	efficiently	and	interface	with	customers	as	well	as	to	maintain	financial	accuracy	and efficiency.	Our	information	technology	capabilities	are	delivered	through	a	combination	of	internal	and	external	services	and	service	providers.	If	we	do	not allocate	and	effectively	manage	the	resources	necessary	to	build	and	sustain	the	proper	technology	infrastructure,	we	could	be	subject	to	transaction errors,	processing	inefficiencies,	the	loss	of	customers,	business	disruptions,	or	the	loss	of	or	damage	to	our	confidential	business	information	due	to	a security	breach.	In	addition,	our	information	technology	systems	may	be	damaged,	disrupted	or	shut	down	due	to	attacks	by	computer	hackers,	computer viruses,	employee	error	or	malfeasance,	power	outages,	hardware	failures,	telecommunication	or	utility	failures,	catastrophes	or	other	unforeseen	events, and	in	any	such	circumstances	our	system	redundancy	and	other	disaster	recovery	planning	may	be	ineffective	or	inadequate.	Security	breaches	of	our systems	(or	the	systems	of	our	customers,	suppliers	or	other	business	partners)	could	result	in	the	misappropriation,	destruction	or	unauthorized disclosure	of	confidential	information	or	personal	data	belonging	to	us	or	to	our	employees,	partners,	customers	or	suppliers,	and	may	subject	us	to	legal liability.

As	with	most	large	systems,	our	information	technology	systems	have	in	the	past	been,	and	in	the	future	likely	will	be	subject	to	computer	viruses, malicious	codes,	unauthorized	access	and	other	cyber-attacks,	and	we	expect	the	sophistication	and	frequency	of	such	attacks	to	continue	to	increase. To	date,	we	are	not	aware	of	any	significant	impact	on	our	operations	or	financial	results	from	such	attempts;	however,	unauthorized	access	could	disrupt our	business	operations,	result	in	the	loss	of	assets,	and	have	a	material	adverse	effect	on	our	business,	financial	condition,	or	results	of	operations.	Any of	the	attacks,	breaches	or	other	disruptions	or	damage	described	above	could:	interrupt	our	operations	at	one	or	more	sites;	delay	production	and shipments;	result	in	the	theft	of	our	and	our	customers'	intellectual	property	and	trade	secrets;	damage	customer	and	business	partner	relationships	and our	reputation;	result	in	defective	products	or	services,	legal	claims	and	proceedings,	liability	and	penalties	under	privacy	laws,	or	increased	costs	for security	and	remediation;	or	raise	concerns	regarding	our	accounting	for	transactions.	Each	of	these	consequences	could	adversely	affect	our	business, reputation	and	our	financial	statements.

Our	business	involves	the	use,	storage,	and	transmission	of	information	about	our	employees,	vendors,	and	customers.	The	protection	of	such information,	as	well	as	our	proprietary	information,	is	critical	to	us.	The	regulatory	environment	surrounding	information	security	and	privacy	is	increasingly demanding,	with	the	frequent	imposition	of	new	and	constantly	changing	requirements.	We	have	established	policies	and	procedures	to	help	protect	the security	and	privacy	of	this	information.	We	also,	from	time	to	time,	export	sensitive	customer	data	and	technical	information	to	recipients	outside	the United	States.	Breaches	of	our	security	measures	or	the	accidental	loss,	inadvertent	disclosure,	or	unapproved	dissemination	of	proprietary	information	or sensitive	or	confidential	data	about	us	or	our	customers,	including	the	potential	loss	or	disclosure	of	such	information	or	data	as	a	result	of	fraud,	trickery, or	other	forms	of	deception,	could	expose	us,	our	customers,	or	the	individuals	affected	to	a	risk	of	loss	or	misuse	of	this	information,	which	could ultimately	result	in	litigation	and	potential	legal	and	financial	liability.	These	events	could	also	damage	our	reputation	or	otherwise	harm	our	business.

# Interruption	in	ordinary	sources	of	raw	material	or	energy	supply	or	an	inability	to	recover	increases	in	energy	and	raw	material	costs	from customers	could	result	in	lost	sales	or	reduced	profitability.

Hydrocarbons,	including	natural	gas,	are	the	primary	feedstock	for	the	production	of	hydrogen,	carbon	monoxide,	and	syngas.	Energy,	including	electricity, natural	gas,	and	diesel	fuel	for	delivery	trucks	is	the	largest	cost	component	of	our	business.	Because	our	industrial	gas	facilities	use	substantial	amounts of	electricity,	energy	price	fluctuations	could	materially	impact	our	revenues	and	earnings.	A	disruption	in	the	supply	of	energy,	components,	or	raw materials,	whether	due	to	market	conditions,	legislative	or	regulatory	actions,	natural	events,	or	other	disruption,	could	prevent	us	from	meeting	our contractual	commitments	and	harm	our	business	and	financial	results.

Our	supply	of	crude	helium	for	purification	and	resale	is	largely	dependent	upon	natural	gas	production	by	crude	helium	suppliers.	Lower	natural	gas production	resulting	from	natural	gas	pricing	dynamics,	supplier	operating	or	transportation	issues	or	other	interruptions	in	sales	from	crude	helium suppliers,	can	reduce	our	supplies	of	crude	helium	available	for	processing	and	resale	to	customers.

We	typically	contract	to	pass-through	cost	increases	in	energy	and	raw	materials	to	customers,	but	cost	variability	can	still	have	a	negative	impact	on	our results.	We	may	be	unable	to	raise	prices	as	quickly	as	costs	rise,	or	competitive	pressures	may	prevent	full	recovery	of	such	costs.	Increases	in	energy or	raw	material	costs	that	cannot	be	passed	on	to	customers	for	competitive	or	other	reasons	may	negatively	impact	our	revenues	and	earnings.	Even where	costs	are	passed	through,	price	increases	can	cause	lower	sales	volume.

# Catastrophic	events	could	disrupt	our	operations	or	the	operations	of	our	suppliers	or	customers,	having	a	negative	impact	on	our	business, financial	results,	and	cash	flows.

Our	operations	could	be	impacted	by	catastrophic	events	outside	our	control,	including	severe	weather	conditions	such	as	hurricanes,	floods, earthquakes,	storms,	epidemics,	or	acts	of	war	and	terrorism.	Any	such	event	could	cause	a	serious	business	disruption	that	could	affect	our	ability	to produce	and	distribute	products	and	possibly	expose	us	to	third-party	liability	claims.	Additionally,	such	events	could	impact	our	suppliers	or	customers, which	could	cause	energy	and	raw	materials	to	be	unavailable	to	us,	or	our	customers	to	be	unable	to	purchase	or	accept	our	products	and	services.	Any such	occurrence	could	have	a	negative	impact	on	our	operations	and	financial	results.

# New	technologies	create	performance	risks	that	could	impact	our	financial	results	or	reputation.

We	are	continually	developing	and	implementing	new	technologies	and	product	offerings.	Existing	technologies	are	being	implemented	in	products	and designs	or	at	scales	beyond	our	experience	base.	These	technological	expansions	can	create	nontraditional	performance	risks	to	our	operations.	Failure of	the	technologies	to	work	as	predicted,	or	unintended	consequences	of	new	designs	or	uses,	could	lead	to	cost	overruns,	project	delays,	financial penalties,	or	damage	to	our	reputation.	Large	scale	gasification	projects	may	contain	processes	or	technologies	that	we	have	not	operated	at	the	same scale	or	in	the	same	combination,	and	although	such	projects	generally	include	technologies	and	processes	that	have	been	demonstrated	previously	by others,	such	technologies	or	processes	may	be	new	to	us	and	may	introduce	new	risks	to	our	operations.

# Legislative,	regulatory	and	societal	responses	to	global	climate	change	create	financial	risk.

We	are	the	world's	leading	supplier	of	hydrogen,	the	primary	use	of	which	is	the	production	of	ultra-low	sulfur	transportation	fuels	that	have	significantly reduced	transportation	emissions	and	helped	improve	human	health.	To	make	the	high	volumes	of	hydrogen	needed	by	our	customers,	we	use	steam methane	reforming,	which	releases	carbon	dioxide.	Some	of	our	operations	are	within	jurisdictions	that	have	or	are	developing	regulatory	regimes governing	emissions	of	greenhouse	gases	("GHG"),	including	carbon	dioxide.	These	include	existing	coverage	under	the	European	Union	Emission Trading	system,	the	California	cap	and	trade	schemes,	Alberta's	Carbon	Competitiveness	Incentive	Regulation,	China's	Emission	Trading	Scheme,	South Korea's	Emission	Trading	Scheme,	nation-wide	expansion	of	the	China	Emission	Trading	Scheme,	revisions	to	the	Alberta	regulation,	and	Environment Canada's	developing	Output	Based	Pricing	System.	In	addition,	the	U.S.	Environmental	Protection	Agency	("EPA")	requires	mandatory	reporting	of	GHG emissions	and	is	regulating	GHG	emissions	for	new	construction	and	major	modifications	to	existing	facilities.	Some	jurisdictions	have	various mechanisms	to	target	the	power	sector	to	achieve	emission	reductions,	which	often	result	in	higher	power	costs.

Increased	public	concern	may	result	in	more	international,	U.S.	federal,	and/or	regional	requirements	to	reduce	or	mitigate	the	effects	of	GHG.	Although uncertain,	these	developments	could	increase	our	costs	related	to	consumption	of	electric	power	and	hydrogen	production.	We	believe	we	will	be	able	to mitigate	some	of	the	increased	costs	through	contractual	terms,	but	the	lack	of	definitive	legislation	or	regulatory	requirements	prevents	an	accurate estimate	of	the	long-term	impact	these	measures	will	have	on	our	operations.	Any	legislation	that	limits	or	taxes	GHG	emissions	could	negatively	impact our	growth,	increase	our	operating	costs,	or	reduce	demand	for	certain	of	our	products.

# Our	financial	results	may	be	affected	by	various	legal	and	regulatory	proceedings,	including	those	involving	antitrust,	tax,	environmental,	or other	matters.

We	are	subject	to	litigation	and	regulatory	investigations	and	proceedings	in	the	normal	course	of	business	and	could	become	subject	to	additional	claims in	the	future,	some	of	which	could	be	material.	While	we	seek	to	limit	our	liability	in	our	commercial	contractual	arrangements,	there	are	no	guarantees	that each	contract	will	contain	suitable	limitations	of	liability	or	that	limitations	of	liability	will	be	enforceable.	Also,	the	outcome	of	existing	legal	proceedings may	differ	from	our	expectations	because	the	outcomes	of	litigation,	including	regulatory	matters,	are	often	difficult	to	predict	reliably.	Various	factors	or developments	can	lead	us	to	change	current	estimates	of	liabilities	and	related	insurance	receivables,	where	applicable,	or	make	such	estimates	for matters	previously	not	susceptible	to	reasonable	estimates,	such	as	a	significant	judicial	ruling	or	judgment,	a	significant	settlement,	significant	regulatory developments,	or	changes	in	applicable	law.	A	future	adverse	ruling,	settlement,	or	unfavorable	development	could	result	in	charges	that	could	have	a material	adverse	effect	on	our	financial	condition,	results	of	operations,	and	cash	flows	in	any	particular	period.

# Costs	and	expenses	resulting	from	compliance	with	environmental	regulations	may	negatively	impact	our	operations	and	financial	results.

We	are	subject	to	extensive	federal,	state,	local,	and	foreign	environmental	and	safety	laws	and	regulations	concerning,	among	other	things,	emissions	in the	air;	discharges	to	land	and	water;	and	the	generation,	handling,	treatment,	and	disposal	of	hazardous	waste	and	other	materials.	We	take	our environmental	responsibilities	very	seriously,	but	there	is	a	risk	of	environmental	impact	inherent	in	our	manufacturing	operations	and	in	the	transportation of	our	products.	Future	developments	and	more	stringent	environmental	regulations	may	require	us	to	make	additional	unforeseen	environmental expenditures.	In	addition,	laws	and	regulations	may	require	significant	expenditures	for	environmental	protection	equipment,	compliance,	and	remediation. These	additional	costs	may	adversely	affect	financial	results.	For	a	more	detailed	description	of	these	matters,	see	Item	1	-	Business	Environmental Controls,	above.

# Implementation	of	the	United	Kingdom's	("UK")	exit	from	European	Union	("EU")	membership	could	adversely	affect	our	European Operations.

The	UK's	exit	from	EU	membership	may	adversely	affect	customer	demand,	our	relationships	with	customers	and	suppliers	and	our	European	business. Although	it	is	unknown	what	the	terms	of	the	United	Kingdom's	future	relationship	with	the	EU	will	be,	it	is	possible	that	there	will	be	greater	restrictions	on imports	and	exports	between	the	United	Kingdom	and	EU	members	and	increased	regulatory	complexities.	Any	of	these	factors	could	adversely	affect customer	demand,	our	relationships	with	customers	and	suppliers,	and	our	European	business.

# Inability	to	compete	effectively	in	a	segment	could	adversely	impact	sales	and	financial	performance.

We	face	strong	competition	from	large	global	competitors	and	many	smaller	regional	ones	in	many	of	our	business	segments.	Introduction	by	competitors of	new	technologies,	competing	products,	or	additional	capacity	could	weaken	demand	for	or	impact	pricing	of	our	products,	negatively	impacting	financial results.	In	addition,	competitors'	pricing	policies	could	affect	our	profitability	or	market	share.

# A	change	of	tax	law	in	key	jurisdictions	could	result	in	a	material	increase	in	our	tax	expense.

The	multinational	nature	of	our	business	subjects	us	to	taxation	in	the	United	States	and	numerous	foreign	jurisdictions.	Due	to	economic	and	political conditions,	tax	rates	in	various	jurisdictions	may	be	subject	to	significant	change.	The	company's	future	effective	tax	rates	could	be	affected	by	changes	in the	mix	of	earnings	in	countries	with	differing	statutory	tax	rates,	changes	in	the	valuation	of	deferred	tax	assets	and	liabilities,	or	changes	in	tax	laws	or their	interpretation.

Changes	to	income	tax	laws	and	regulations	in	any	of	the	jurisdictions	in	which	we	operate,	or	in	the	interpretation	of	such	laws,	could	significantly increase	our	effective	tax	rate	and	adversely	impact	our	financial	condition,	results	of	operations	or	cash	flows.	In	December	2017,	the	U.S.	enacted	the Tax	Cuts	and	Jobs	Act	("the	Tax	Act"),	which	significantly	revised	the	U.S.	federal	corporate	income	tax	law	by,	among	other	things,	lowering	the corporate	income	tax	rate,	implementing	a	territorial	tax	system,	and	imposing	a	one-time	tax	on	unremitted	cumulative	non-U.S.	earnings	of	foreign subsidiaries.	As	a	result	of	the	Tax	Act,	we	recorded	a	discrete	net	tax	expense	of	$180.6	for	fiscal	2018,	including	a	reduction	in	the	deemed	repatriation tax	related	to	the	taxation	of	deemed	foreign	dividends	that	may	be	eliminated	by	future	legislation.	Various	levels	of	government	are	increasingly	focused on	tax	reform	and	other	legislative	action	to	increase	tax	revenue.	Further	changes	in	tax	laws	in	the	U.S.	or	foreign	jurisdictions	where	we	operate	could have	a	material	adverse	effect	on	our	business,	results	of	operations,	or	financial	condition.

# We	could	incur	significant	liability	if	the	distribution	of	Versum	common	stock	to	our	stockholders	is	determined	to	be	a	taxable	transaction.

We	have	received	an	opinion	from	outside	tax	counsel	to	the	effect	that	the	spin-off	of	Versum	qualifies	as	a	transaction	that	is	described	in	Sections 355(a)	and	368(a)(1)(D)	of	the	Internal	Revenue	Code.	The	opinion	relies	on	certain	facts,	assumptions,	representations	and	undertakings	from	Versum and	us	regarding	the	past	and	future	conduct	of	the	companies'	respective	businesses	and	other	matters.	If	any	of	these	facts,	assumptions, representations	or	undertakings	are	incorrect	or	not	satisfied,	our	shareholders	and	we	may	not	be	able	to	rely	on	the	opinion	of	tax	counsel	and	could	be subject	to	significant	tax	liabilities.	Notwithstanding	the	opinion	of	tax	counsel	we	have	received,	the	IRS	could	determine	on	audit	that	the	spin-off	is taxable	if	it	determines	that	any	of	these	facts,	assumptions,	representations	or	undertakings	are	not	correct	or	have	been	violated	or	if	it	disagrees	with the	conclusions	in	the	opinion.	If	the	spin-off	is	determined	to	be	taxable	for	U.S.	federal	income	tax	purposes,	our	shareholders	that	are	subject	to	U.S. federal	income	tax	and	we	could	incur	significant	U.S.	federal	income	tax	liabilities.

# ITEM	1B.				UNRESOLVED	STAFF	COMMENTS

We	have	not	received	any	written	comments	from	the	Commission	staff	that	remain	unresolved.

# ITEM	2.				PROPERTIES

Air	Products	and	Chemicals,	Inc.	owns	its	principal	administrative	offices,	which	are	the	Company's	headquarters	located	in	Trexlertown,	Pennsylvania, Hersham,	England,	and	Santiago,	Chile.	The	Company	leases	the	principal	administrative	office	in	Shanghai,	China.	The	Company	leases	administrative offices	in	the	United	States,	Spain,	Malaysia,	and	China	for	its	Global	Business	Support	organization.

The	following	is	a	description	of	the	properties	used	by	our	five	business	segments.	We	believe	that	our	facilities	are	suitable	and	adequate	for	our	current and	anticipated	future	levels	of	operation.

# Industrial	Gases	–	Americas

This	business	segment	currently	operates	from	over	400	production	and	distribution	facilities	in	North	and	South	America	(approximately	one-fourth	of which	are	located	on	owned	property),	and	10%	of	which	are	integrated	sites	that	serve	dedicated	customers	as	well	as	merchant	customers.	The Company	has	sufficient	property	rights	and	permits	for	the	ongoing	operation	of	our	pipeline	systems	in	the	Gulf	Coast,	California,	and	Arizona	in	the United	States	and	Alberta	and	Ontario,	Canada.	Management	and	sales	support	is	based	in	our	Trexlertown	and	Santiago	offices	referred	to	above,	and at	12	leased	properties	located	throughout	North	and	South	America.

Hydrogen	fueling	stations	built	by	the	Company	support	commercial	markets	in	California	and	Japan	as	well	as	demonstration	projects	in	Europe	and other	parts	of	Asia.

# Industrial	Gases	–	EMEA

This	business	segment	currently	operates	from	over	180	production	and	distribution	facilities	in	Europe,	the	Middle	East,	and	Africa	(approximately	one- third	of	which	are	on	owned	property).	The	Company	has	sufficient	property	rights	and	permits	for	the	ongoing	operation	of	our	pipeline	systems	in	the Netherlands,	the	United	Kingdom,	Belgium,	France,	and	Germany.	Management	and	sales	support	for	this	business	segment	is	based	in	Hersham, England,	referred	to	above,	Barcelona,	Spain	and	at	16	leased	regional	office	sites	and	at	least	15	leased	local	office	sites,	located	throughout	the	region.

# Industrial	Gases	–	Asia

Industrial	Gases	–	Asia	currently	operates	from	over	170	production	and	distribution	facilities	within	Asia	(approximately	one-fourth	of	which	are	on	owned property	or	long	duration	term	grants).	The	Company	has	sufficient	property	rights	and	permits	for	the	ongoing	operation	of	our	pipeline	systems	in	China, South	Korea,	Taiwan,	Malaysia,	Singapore,	and	Indonesia.	Management	and	sales	support	for	this	business	segment	is	based	in	Shanghai,	China	and Kuala	Lumpur,	Malaysia,	and	in	18	leased	office	locations	throughout	the	region.

# Industrial	Gases	–	Global

Management,	sales,	and	engineering	support	for	this	business	segment	is	based	in	our	principal	administrative	offices	noted	above,	and	an	office	in	India.

# Equipment	is	manufactured	in	Missouri,	Pennsylvania,	and	China.

Research	and	development	("R&D")	activities	for	this	business	segment	are	conducted	at	owned	locations	in	the	U.S.,	the	United	Kingdom,	and	Spain,

and	4	leased	locations	in	Canada,	Europe,	and	Asia.

Helium	is	processed	at	multiple	sites	in	the	U.S.	and	then	distributed	to/from	transfill	sites	globally.

# Corporate	and	other

Corporate	administrative	functions	are	based	in	the	Company's	administrative	offices	referred	to	above.

The	LNG	business	operates	a	manufacturing	facility	in	Florida	in	the	United	States	with	management,	engineering,	and	sales	support	based	in	the Trexlertown	offices	referred	to	above	and	a	nearby	leased	office.

The	Gardner	Cryogenic	business	operates	at	facilities	in	Pennsylvania	and	Kansas	in	the	United	States	and	in	France.

The	Rotoflow	business	operates	manufacturing	and	service	facilities	in	Texas	and	Pennsylvania	in	the	United	States	with	management,	engineering,	and sales	support	based	in	the	Trexlertown	offices	referred	to	above	and	a	nearby	leased	office.

# ITEM	3.				LEGAL	PROCEEDINGS

In	the	normal	course	of	business,	the	Company	and	its	subsidiaries	are	involved	in	various	legal	proceedings,	including	contract,	product	liability, intellectual	property,	insurance,	and	regulatory	matters.	Although	litigation	with	respect	to	these	matters	is	routine	and	incidental	to	the	conduct	of	our business,	such	litigation	could	result	in	large	monetary	awards,	especially	if	compensatory	and/or	punitive	damages	are	awarded.	However,	we	believe that	litigation	currently	pending	to	which	we	are	a	party	will	be	resolved	without	any	material	adverse	effect	on	our	financial	position,	earnings,	or	cash flows.

From	time	to	time,	we	are	also	involved	in	proceedings,	investigations,	and	audits	involving	governmental	authorities	in	connection	with	environmental, health,	safety,	competition,	and	tax	matters.

The	Company	is	a	party	to	proceedings	under	CERCLA,	the	RCRA,	and	similar	state	and	foreign	environmental	laws	relating	to	the	designation	of	certain sites	for	investigation	or	remediation.	Presently	there	are	32	sites	on	which	a	final	settlement	has	not	been	reached	where	the	Company,	along	with others,	has	been	designated	a	potentially	responsible	party	by	the	Environmental	Protection	Agency	or	is	otherwise	engaged	in	investigation	or remediation,	including	cleanup	activity	at	certain	of	its	current	and	former	manufacturing	sites.	We	do	not	expect	that	any	sums	we	may	have	to	pay	in connection	with	these	environmental	matters	would	have	a	material	adverse	impact	on	our	consolidated	financial	position.	Additional	information	on	the Company's	environmental	exposure	is	included	under	Item	1.	Business,	Environmental	Controls.

In	September	2010,	the	Brazilian	Administrative	Council	for	Economic	Defense	("CADE")	issued	a	decision	against	our	Brazilian	subsidiary,	Air	Products Brasil	Ltda.,	and	several	other	Brazilian	industrial	gas	companies	for	alleged	anticompetitive	activities.	CADE	imposed	a	civil	fine	of	R$179.2	million (approximately	$44	million	at	30	September	2018)	on	Air	Products	Brasil	Ltda.	This	fine	was	based	on	a	recommendation	by	a	unit	of	the	Brazilian	Ministry of	Justice,	whose	investigation	began	in	2003,	alleging	violation	of	competition	laws	with	respect	to	the	sale	of	industrial	and	medical	gases.	The	fines	are based	on	a	percentage	of	the	Company's	total	revenue	in	Brazil	in	2003.

We	have	denied	the	allegations	made	by	the	authorities	and	filed	an	appeal	in	October	2010	to	the	Brazilian	courts.	On	6	May	2014,	our	appeal	was granted	and	the	fine	against	Air	Products	Brasil	Ltda.	was	dismissed.	CADE	has	appealed	that	ruling	and	the	matter	remains	pending.	The	Company,	with advice	of	its	outside	legal	counsel,	has	assessed	the	status	of	this	matter	and	has	concluded	that,	although	an	adverse	final	judgment	after	exhausting	all appeals	is	possible,	such	a	judgment	is	not	probable.	As	a	result,	no	provision	has	been	made	in	the	consolidated	financial	statements.

Other	than	this	matter,	we	do	not	currently	believe	there	are	any	legal	proceedings,	individually	or	in	the	aggregate,	that	are	reasonably	possible	to	have	a material	impact	on	our	financial	condition,	results	of	operations,	or	cash	flows.	However,	a	future	charge	for	regulatory	fines	or	damage	awards	could	have a	significant	impact	on	our	net	income	in	the	period	in	which	it	is	recorded.

# ITEM	4.				MINE	SAFETY	DISCLOSURES

# Not	applicable

# PART	II

# ITEM	5.				MARKET	FOR	REGISTRANT'S	COMMON	EQUITY,	RELATED	STOCKHOLDER	MATTERS,

# AND	ISSUER	PURCHASES	OF	EQUITY	SECURITIES

Our	common	stock	(ticker	symbol	APD)	is	listed	on	the	New	York	Stock	Exchange.	Our	transfer	agent	and	registrar	is	Broadridge	Corporate	Issuer Solutions,	Inc.,	P.O.	Box	1342,	Brentwood,	New	York	11717,	telephone	(844)	318-0129	(U.S.)	or	(720)	358-3595	(all	other	locations);	website, http://shareholder.broadridge.com/airproducts;	and	e-mail	address,	shareholder@broadridge.com.	As	of	31	October	2018,	there	were	5,391	record holders	of	our	common	stock.

Cash	dividends	on	the	Company's	common	stock	are	paid	quarterly.	It	is	our	expectation	that	we	will	continue	to	pay	cash	dividends	in	the	future	at comparable	or	increased	levels.	The	Board	of	Directors	determines	whether	to	declare	dividends	and	the	timing	and	amount	based	on	financial	condition and	other	factors	it	deems	relevant.	Dividend	information	for	each	quarter	of	fiscal	years	2018	and	2017	is	summarized	below:

|  | 2018 | 2017 |
| :--- | :--- | :--- |
| First\tquarter | $.95 | $.86 |
| Second\tquarter | 1.10 | .95 |
| Third\tquarter | 1.10 | .95 |
| Fourth\tquarter | 1.10 | .95 |
| Total | $4.25 | $3.71 |

# Purchases	of	Equity	Securities	by	the	Issuer

On	15	September	2011,	the	Board	of	Directors	authorized	the	repurchase	of	up	to	 $1.0	billion	of	our	outstanding	common	stock.	This	program	does	not have	a	stated	expiration	date.	We	repurchase	shares	pursuant	to	Rules	10b5-1	and	10b-18	under	the	Securities	Exchange	Act	of	1934,	as	amended, through	repurchase	agreements	established	with	one	or	more	brokers.	There	were	no	purchases	of	stock	during	fiscal	year	2018.	At	30	September	2018, $485.3	million	in	share	repurchase	authorization	remained.	Additional	purchases	will	be	completed	at	the	Company's	discretion	while	maintaining sufficient	funds	for	investing	in	its	businesses	and	growth	opportunities.

# Performance	Graph

The	performance	graph	below	compares	the	five-year	cumulative	returns	of	the	Company's	common	stock	with	those	of	the	Standard	&	Poor's	500	Index (S&P	500	Index)	and	the	Standard	&	Poor's	500	Materials	Index	(S&P	500	Materials	Index).	The	figures	assume	an	initial	investment	of	$100	and	the reinvestment	of	all	dividends.

# COMPARISON	OF	FIVE	YEAR	CUMULATIVE	SHAREHOLDER	RETURN

# Air	Products,	S&P	500	Index,	and	S&P	500	Materials	Index

# Comparative	Growth	of	a	$100	Investment

# (Assumes	Reinvestment	of	All	Dividends)

|  | Sept	2013 | Sept	2014 | Sept	2015 | Sept	2016 | Sept	2017 | Sept	2018 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Air\tProducts | 100 | 128 | 122 | 149 | 168 | 191 |
| S&P\t500\tIndex | 100 | 120 | 116 | 137 | 161 | 191 |
| S&P\t500\tMaterials\tIndex | 100 | 122 | 96 | 120 | 146 | 152 |

# ITEM	6.				SELECTED	FINANCIAL	DATA

Unless	otherwise	indicated,	information	presented	is	on	a	continuing	operations	basis.

| (Millions	of	dollars,	except	for	share	and	per	share	data) | 2018(A) | 2017(A) | 2016(A) | 2015(A) | 2014(A) |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tResults |  |  |  |  |  |
| Sales | $8,930 | $8,188 | $7,504 | $7,824 | $8,384 |
| Cost\tof\tsales(B) | 6,190 | 5,752 | 5,177 | 5,584 | 6,178 |
| Selling\tand\tadministrative(B) | 761 | 714 | 684 | 765 | 876 |
| Research\tand\tdevelopment | 65 | 58 | 72 | 76 | 78 |
| Cost\treduction\tand\tasset\tactions | — | 151 | 35 | 180 | 11 |
| Operating\tincome(B) | 1,966 | 1,440 | 1,535 | 1,276 | 976 |
| Equity\taffiliates'\tincome(C) | 175 | 80 | 147 | 152 | 149 |
| Income\tfrom\tcontinuing\toperations\tattributable\tto\tAir\tProducts | 1,456 | 1,134 | 1,100 | 933 | 697 |
| Net\tincome\tattributable\tto\tAir\tProducts(D) | 1,498 | 3,000 | 631 | 1,278 | 992 |
| Basic\tearnings\tper\tcommon\tshare\tattributable\tto\tAir\tProducts: |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | 6.64 | 5.20 | 5.08 | 4.34 | 3.28 |
| Net\tincome(D) | 6.83 | 13.76 | 2.92 | 5.95 | 4.66 |
| Diluted\tearnings\tper\tcommon\tshare\tattributable\tto\tAir\tProducts: |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | 6.59 | 5.16 | 5.04 | 4.29 | 3.24 |
| Net\tincome(D) | 6.78 | 13.65 | 2.89 | 5.88 | 4.61 |
| Year-End\tFinancial\tPosition |  |  |  |  |  |
| Plant\tand\tequipment,\tat\tcost | $21,490 | $19,548 | $18,660 | $17,999 | $18,180 |
| Total\tassets(D) | 19,178 | 18,467 | 18,029 | 17,317 | 17,648 |
| Working\tcapital(D) | 2,744 | 3,388 | 1,034 | (851) | 199 |
| Total\tdebt(E) | 3,813 | 3,963 | 5,211 | 5,856 | 6,081 |
| Air\tProducts\tshareholders'\tequity(D) | 10,858 | 10,086 | 7,080 | 7,249 | 7,366 |
| Total\tequity(D) | 11,176 | 10,186 | 7,213 | 7,381 | 7,521 |
| Financial\tRatios |  |  |  |  |  |
| Return\ton\taverage\tAir\tProducts\tshareholders'\tequity(F) | 13.9% | 13.2% | 15.4% | 12.7% | 9.5% |
| Operating\tmargin(B) | 22.0% | 17.6% | 20.5% | 16.3% | 11.6% |
| Selling\tand\tadministrative\tas\ta\tpercentage\tof\tsales(B) | 8.5% | 8.7% | 9.1% | 9.8% | 10.4% |
| Total\tdebt\tto\ttotal\tcapitalization(E)(G) | 25.4% | 28.0% | 41.9% | 44.2% | 43.8% |
| Other\tData |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations\tincluding\tnoncontrolling\tinterests | $1,491 | $1,155 | $1,122 | $966 | $691 |
| Adjusted\tEBITDA(B)(H) | 3,116 | 2,799 | 2,622 | 2,422 | 2,322 |
| Adjusted\tEBITDA\tmargin(B) | 34.9% | 34.2% | 34.9% | 31.0% | 27.7% |
| Depreciation\tand\tamortization | 971 | 866 | 855 | 859 | 876 |
| Capital\texpenditures\ton\ta\tGAAP\tbasis(I) | 1,914 | 1,056 | 908 | 1,201 | 1,297 |
| Capital\texpenditures\ton\ta\tnon-GAAP\tbasis(I) | 1,934 | 1,066 | 935 | 1,575 | 1,498 |
| Cash\tprovided\tby\toperating\tactivities | 2,555 | 2,534 | 2,259 | 2,047 | 1,862 |
| Cash\tused\tfor\tinvesting\tactivities | (1,649) | (1,418) | (865) | (1,147) | (1,257) |
| Cash\tused\tfor\tfinancing\tactivities | (1,360) | (2,041) | (860) | (960) | (524) |
| Dividends\tdeclared\tper\tcommon\tshare | 4.25 | 3.71 | 3.39 | 3.20 | 3.02 |
| Weighted\tAverage\tCommon\tShares\t–\tBasic\t(in\tmillions) | 219 | 218 | 216 | 215 | 213 |
| Weighted\tAverage\tCommon\tShares\t–\tDiluted\t(in\tmillions) | 221 | 220 | 218 | 217 | 215 |
| Book\tvalue\tper\tcommon\tshare\tat\tyear-end | $49.46 | $46.19 | $32.57 | $33.66 | $34.49 |
| Shareholders\tat\tyear-end | 5,500 | 5,700 | 6,000 | 6,400 | 6,600 |
| Employees\tat\tyear-end(J) | 16,300 | 15,300 | 18,600 | 19,700 | 21,200 |

(A) Unless	otherwise	stated,	selected	financial	data	is	presented	in	accordance	with	U.S.	generally	accepted	accounting	principles	(GAAP).	The	Company	has	presented	certain financial	measures	on	a	non-GAAP	("adjusted")	basis	to	exclude	items	which	management	does	not	believe	to	be	indicative	of	ongoing	business	trends.	Refer	to	pages	33-39	for reconciliations	of	the	GAAP	to	non-GAAP	measures	for	fiscal	years	2018,	2017,	and	2016.	Descriptions	of	the	excluded	items	appear	on	pages	25-28.	For	fiscal	year	2015, these	items	include:	(i)	a	charge	to	operating	income	of	$8	($.03	per	share)	related	to	business	separation	costs,	(ii)	a	charge	to	operating	income	of	$180	($133	after-tax,	or	$.61 per	share)	related	to	business	restructuring	and	cost	reduction	actions,	(iii)	a	gain	of	$18	($11	after	tax,	or	$.05	per	share)	reflected	in	operating	income	related	to	the	gain	on previously	held	equity	interest	in	a	liquefied	atmospheric	industrial	gases	production	joint	venture,	(iv)	a	gain	of	$34	($28	after	tax,	or	$.13	per	share)	reflected	in	operating income	resulting	from	the	sale	of	two	parcels	of	land,	and	(v)	a	charge	to	other	non-operating	income	(expense),	net	related	to	pension	settlement	losses	of	$19	($12	after-tax,	or $.06	per	share).	For	fiscal	year	2014,	these	items	include:	(i)	a	charge	to	operating	income	of	$11	($7	after-tax,	or	$.03	per	share)	related	to	business	restructuring	and	cost reduction	actions,	(ii)	a	charge	to	operating	income	of	$310	($275	attributable	to	Air	Products,	after-tax,	or	$1.27	per	share)	related	to	the	impairment	of	goodwill	and	intangible assets,	and	(iii)	a	charge	to	other	non-operating	income	(expense),	net	related	to	pension	settlement	losses	of	$5	($3	after-tax,	or	$.02	per	share).

(B) Reflects	adoption	of	guidance	on	presentation	of	net	periodic	pension	and	postretirement	benefit	cost	on	a	retrospective	basis	during	the	first	quarter	of	fiscal	year	2018.	Refer	to Note	2,	New	Accounting	Guidance,	to	the	consolidated	financial	statements	for	additional	information.

(C) Fiscal	year	2017	includes	the	third	quarter	impact	of	an	other-than-temporary	noncash	impairment	charge	of	$79.5	($.36	per	share)	on	our	investment	in	Abdullah	Hashim Industrial	Gases	&	Equipment	Co.,	Ltd.	(AHG),	a	25%-owned	equity	affiliate	in	our	Industrial	Gases	–	EMEA	segment.

(D) Information	presented	on	a	total	company	basis,	which	includes	both	continuing	and	discontinued	operations.

(E) Total	debt	includes	long-term	debt,	including	debt	to	related	parties,	current	portion	of	long-term	debt,	and	short-term	borrowings	as	of	the	end	of	the	year	for	continuing operations.

(F) Calculated	using	income	from	continuing	operations	attributable	to	Air	Products	and	five-quarter	average	Air	Products	shareholders'	equity.

(G) Total	capitalization	includes	total	debt	for	continuing	operations	plus	total	equity	plus	redeemable	noncontrolling	interest	as	of	the	end	of	the	year.	Redeemable	noncontrolling interest	was	$287	as	of	30	September	2014.	There	was	no	redeemable	noncontrolling	interest	for	the	other	periods	presented.

(H) A	reconciliation	of	income	from	continuing	operations	on	a	GAAP	basis	to	adjusted	EBITDA	is	presented	on	pages	36-39.

(I) Capital	expenditures	presented	on	a	GAAP	basis	include	additions	to	plant	and	equipment,	acquisitions,	less	cash	acquired,	and	investment	in	and	advances	to	unconsolidated affiliates.	The	Company	utilizes	a	non-GAAP	measure	in	the	computation	of	capital	expenditures	and	includes	spending	associated	with	facilities	accounted	for	as	capital	leases and	purchases	of	noncontrolling	interests.	Refer	to	page	41	for	a	reconciliation	of	the	GAAP	to	non-GAAP	measures	for	fiscal	years	2018,	2017,	and	2016.	In	fiscal	year	2015, the	GAAP	measure	was	adjusted	by	$96	and	$278	for	spending	associated	with	facilities	accounted	for	as	capital	leases	and	purchases	of	noncontrolling	interests,	respectively. In	fiscal	year	2014,	the	GAAP	measure	was	adjusted	by	$200	for	spending	associated	with	facilities	accounted	for	as	capital	leases.

(J) Includes	full-	and	part-time	employees	from	continuing	and	discontinued	operations.

# ITEM	7.				MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS

# OF	OPERATIONS

| Business	Overview | 20 |
| :--- | :--- |
| 2018\tin\tSummary | 21 |
| 2019\tOutlook | 23 |
| Results\tof\tOperations | 23 |
| Reconciliation\tof\tNon-GAAP\tFinancial\tMeasures | 33 |
| Liquidity\tand\tCapital\tResources | 40 |
| Contractual\tObligations | 43 |
| Pension\tBenefits | 45 |
| Environmental\tMatters | 46 |
| Off-Balance\tSheet\tArrangements | 47 |
| Related\tParty\tTransactions | 48 |
| Inflation | 48 |
| Critical\tAccounting\tPolicies\tand\tEstimates | 48 |
| New\tAccounting\tGuidance | 55 |

This	Management's	Discussion	and	Analysis	contains	"forward-looking	statements"	within	the	safe	harbor	provisions	of	the	Private	Securities	Litigation Reform	Act	of	1995,	including	statements	about	business	outlook.	These	forward-looking	statements	are	based	on	management's	expectations	and assumptions	as	of	the	date	of	this	report	and	are	not	guarantees	of	future	performance.	Actual	performance	and	financial	results	may	differ	materially	from projections	and	estimates	expressed	in	the	forward-looking	statements	because	of	many	factors	not	anticipated	by	management,	including,	without limitation,	those	described	in	our	Forward-Looking	Statements	and	Part	I,	Item	1A.	Risk	Factors,	of	this	Annual	Report	on	Form	10-K.

The	following	discussion	should	be	read	in	conjunction	with	the	consolidated	financial	statements	and	the	accompanying	notes	contained	in	this	report. Unless	otherwise	indicated,	financial	information	is	presented	on	a	continuing	operations	basis.	All	comparisons	in	the	discussion	are	to	the	corresponding prior	year,	unless	otherwise	stated.	All	amounts	presented	are	in	accordance	with	U.S.	generally	accepted	accounting	principles	(GAAP),	except	as	noted. All	amounts	are	presented	in	millions	of	dollars,	except	for	per	share	data,	unless	otherwise	indicated.

Captions	such	as	income	from	continuing	operations	attributable	to	Air	Products,	net	income	attributable	to	Air	Products,	and	diluted	earnings	per	share attributable	to	Air	Products	are	simply	referred	to	as	"income	from	continuing	operations,"	"net	income,"	and	"diluted	earnings	per	share	(EPS)"	throughout this	Management's	Discussion	and	Analysis,	unless	otherwise	stated.

The	discussion	of	results	that	follows	includes	comparisons	to	certain	non-GAAP	("adjusted")	financial	measures.	The	presentation	of	non-GAAP measures	is	intended	to	provide	investors,	potential	investors,	securities	analysts,	and	others	with	useful	supplemental	information	to	evaluate	the performance	of	the	business	because	such	measures,	when	viewed	together	with	our	financial	results	computed	in	accordance	with	GAAP,	provide	a more	complete	understanding	of	the	factors	and	trends	affecting	our	historical	financial	performance	and	projected	future	results.	The	reconciliations	of reported	GAAP	results	to	non-GAAP	measures	are	presented	on	pages	33-39.	Descriptions	of	the	excluded	items	appear	on	pages	25-28.

# BUSINESS	OVERVIEW

Air	Products	and	Chemicals,	Inc.	is	a	world-leading	Industrial	Gases	company	in	operation	for	over	75	years.	The	Company's	core	industrial	gases business	provides	atmospheric,	process,	and	specialty	gases	and	related	equipment	to	many	industries	including	refining,	chemical,	gasification,	metals, electronics,	manufacturing,	and	food	and	beverage.	Air	Products	is	also	the	world's	leading	supplier	of	liquefied	natural	gas	(LNG)	process	technology	and equipment.	With	operations	in	50	countries,	in	fiscal	year	2018	we	had	sales	of	$8.9	billion,	assets	of	$19.2	billion,	and	a	worldwide	workforce	of approximately	16,300	full-	and	part-time	employees.

As	of	30	September	2018,	our	operations	were	organized	into	five	reportable	business	segments:	Industrial	Gases	–	Americas;	Industrial	Gases	–	EMEA (Europe,	Middle	East,	and	Africa);	Industrial	Gases	–	Asia;	Industrial	Gases	–	Global;	and	Corporate	and	other.	The	financial	statements	and	analysis	that follow	discuss	our	results	based	on	these	operations.	Refer	to	Note	25,	Business	Segment	and	Geographic	Information,	to	the	consolidated	financial statements	for	additional	details	on	our	reportable	business	segments.

In	fiscal	year	2018,	we	delivered	strong	safety	and	financial	results.	Sales	of	 $8.9	billion	increased	nine	percent	over	the	prior	year	primarily	driven	by higher	volumes	from	base	business	growth	and	new,	large	industrial	gas	project	onstreams.	The	higher	regional	volumes	were	partially	offset	by	lower sale	of	equipment	activity	on	our	Jazan	project	as	we	near	project	completion.	In	addition,	we	began	to	execute	our	gasification	strategy	with	the completion	and	onstream	of	the	Lu'An	acquisition	and	our	announcements	of	the	Jazan	gasifier/power	project	in	Jazan,	Saudi	Arabia,	the	Yankuang	coal- to-syngas	production	facility	in	Yulin	City,	Shaanxi	Province,	China,	and	the	Jiutai	coal-to-syngas	project	in	Hohhot,	China.

We	delivered	operating	margin	of	22.0%	and	adjusted	EBITDA	margin	of	34.9%.	Diluted	EPS	of	$6.59	increased	28%	from	the	prior	year.	On	a	non- GAAP	basis,	adjusted	diluted	EPS	of	$7.45	increased	18%.

# Highlights	for	2018

•Sales	of	$8,930.2	increased	9%,	or	$742.6,	from	underlying	sales	growth	of	 7%	and	favorable	currency	impacts	of	 2%.	The	underlying	sales	growth was	primarily	driven	by	higher	volumes	across	all	regional	Industrial	Gases	segments,	partially	offset	by	lower	sale	of	equipment	activity	in	the Industrial	Gases	–	Global	segment.

•We	completed	the	formation	of	a	syngas	supply	joint	venture	with	Lu'An,	including	the	acquisition	of	Lu'An's	gasification	and	syngas	purification assets.

•We	increased	our	quarterly	dividend	by	 16%	from	$.95	to	$1.10	per	share,	or	$4.40	per	share	annually,	the	largest	increase	in	Company	history.	This represents	the	36th	consecutive	year	that	we	have	increased	our	dividend	payment.

# Changes	in	Diluted	Earnings	per	Share	Attributable	to	Air	Products

|  | 2018 | 2017 | Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
| Diluted\tEarnings\tper\tShare |  |  |  |
| Net\tincome | $6.78 | $13.65 | ($6.87) |
| Income\tfrom\tdiscontinued\toperations | .19 | 8.49 | (8.30) |
| Income\tfrom\tContinuing\tOperations\t–\tGAAP | $6.59 | $5.16 | $1.43 |
| Operating\tIncome\tImpact\t(after-tax) |  |  |  |
| Underlying\tbusiness |  |  |  |
| Volume |  |  | $.71 |
| Price/raw\tmaterials |  |  | .16 |
| Costs |  |  | (.45) |
| Currency |  |  | .16 |
| Change\tin\tinventory\tvaluation\tmethod |  |  | .08 |
| Business\tseparation\tcosts |  |  | .12 |
| Cost\treduction\tand\tasset\tactions |  |  | .49 |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge |  |  | .70 |
| Gain\ton\tland\tsale |  |  | (.03) |
| Total\tOperating\tIncome\tImpact\t(after-tax) |  |  | $1.94 |
| Other\tImpact\t(after-tax) |  |  |  |
| Equity\taffiliates'\tincome |  |  | .15 |
| Equity\tmethod\tinvestment\timpairment\tcharge |  |  | .36 |
| Interest\texpense |  |  | (.03) |
| Other\tnon-operating\tincome\t(expense),\tnet |  |  | (.04) |
| Income\ttax |  |  | .44 |
| Tax\treform\trepatriation |  |  | (2.16) |
| Tax\treform\tbenefit\trelated\tto\tdeemed\tforeign\tdividends |  |  | .25 |
| Tax\treform\trate\tchange\tand\tother |  |  | .96 |
| Tax\trestructuring |  |  | .16 |
| Tax\tbenefit\tassociated\twith\tbusiness\tseparation |  |  | (.02) |
| Tax\telection\tbenefit |  |  | (.50) |
| Noncontrolling\tinterests |  |  | (.05) |
| Weighted\taverage\tdiluted\tshares |  |  | (.03) |
| Total\tOther\tImpact\t(after-tax) |  |  | ($.51) |
| Total\tChange\tin\tDiluted\tEarnings\tper\tShare\tfrom\tContinuing\tOperations\t–\nGAAP\tMeasure |  |  | $1.43 |

|  |  |  | Increase |
| :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | (Decrease) |
| Income\tfrom\tContinuing\tOperations\t–\tGAAP\tBasis | $6.59 | $5.16 | $1.43 |
| Change\tin\tinventory\tvaluation\tmethod | (.08) | — | ($.08) |
| Business\tseparation\tcosts | — | .12 | (.12) |
| Tax\tbenefit\tassociated\twith\tbusiness\tseparation | — | (.02) | .02 |
| Cost\treduction\tand\tasset\tactions | — | .49 | (.49) |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge | — | .70 | (.70) |
| Gain\ton\tland\tsale | — | (.03) | .03 |
| Equity\tmethod\tinvestment\timpairment\tcharge | — | .36 | (.36) |
| Pension\tsettlement\tloss | .15 | .03 | .12 |
| Tax\treform\trepatriation | 2.16 | — | 2.16 |
| Tax\treform\tbenefit\trelated\tto\tdeemed\tforeign\tdividends | (.25) | — | (.25) |
| Tax\treform\trate\tchange\tand\tother | (.96) | — | (.96) |
| Tax\trestructuring | (.16) | — | (.16) |
| Tax\telection\tbenefit | — | (.50) | .50 |
| Income\tfrom\tContinuing\tOperations\t–\tNon-GAAP\tMeasure | $7.45 | $6.31 | $1.14 |

In	fiscal	year	2019,	we	intend	to	grow	our	earnings	by	continuing	to	improve	our	base	businesses	and	by	bringing	new,	large	projects	onstream.	We expect	the	full	year	impact	of	the	Lu'An	project	to	be	a	large	contributor	to	our	earnings	growth.	Backed	by	our	strong	financial	position,	we	will	strive	to continue	to	win	and	invest	in	key	growth	projects,	including	large	gasification	projects	that	are	consistent	with	our	onsite	business	model.	In	addition,	we expect	lower	sale	of	equipment	activity	from	our	Jazan	project	as	it	nears	completion.

The	above	guidance	should	be	read	in	conjunction	with	the	section	entitled	"Forward-Looking	Statements"	of	this	Annual	Report	on	Form	10-K.

# RESULTS	OF	OPERATIONS

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales | $8,930.2 | $8,187.6 | $7,503.7 |
| Operating\tincome | 1,965.6 | 1,440.0 | 1,535.1 |
| Operating\tmargin | 22.0% | 17.6% | 20.5% |
| Equity\taffiliates'\tincome | 174.8 | 80.1 | 147.0 |
| Income\tfrom\tcontinuing\toperations | 1,455.6 | 1,134.4 | 1,099.5 |
| Non-GAAP\tMeasures |  |  |  |
| Adjusted\tEBITDA | $3,115.5 | $2,799.2 | $2,621.8 |
| Adjusted\tEBITDA\tmargin | 34.9% | 34.2% | 34.9% |
| Adjusted\toperating\tincome | 1,941.5 | 1,773.8 | 1,620.2 |
| Adjusted\toperating\tmargin | 21.7% | 21.7% | 21.6% |
| Adjusted\tequity\taffiliates'\tincome | 203.3 | 159.6 | 147.0 |

|  | %	Change	from	Prior	Year |  |
| :--- | :--- | :--- |
| Sales | 2018 | 2017 |
| Underlying\tbusiness |  |  |
| Volume | 6% | 6\t% |
| Price | 1% | 1\t% |
| Energy\tand\traw\tmaterial\tcost\tpass-through | —% | 3\t% |
| Currency | 2% | (1)% |
| Total\tConsolidated\tSales\tChange | 9% | 9\t% |

Sales	of	$8,930.2	increased	9%,	or	$742.6.	Underlying	sales	increased	7%	from	higher	volumes	of	6%	and	higher	pricing	of	1%.	Volumes	were	higher across	all	regional	Industrial	Gases	segments	driven	by	new	project	onstreams,	primarily	in	the	Industrial	Gases	–	Asia	and	Industrial	Gases	–	EMEA segments,	underlying	base	business	growth,	and	an	equipment	sale	resulting	from	the	termination	of	a	contract	in	the	Industrial	Gases	–	Asia	segment. The	regional	volume	increase	was	partially	offset	by	lower	sale	of	equipment	activity	in	the	Industrial	Gases	–	Global	segment.	The	pricing	improvement was	primarily	attributable	to	the	China	and	Europe	merchant	businesses.	Energy	and	natural	gas	cost	pass-through	to	customers	was	flat	versus	the	prior year.	Favorable	currency	impacts,	primarily	from	the	Euro,	the	British	Pound	Sterling,	and	the	Chinese	Renminbi,	increased	sales	by	2%.

Sales	of	$8,187.6	increased	9.0%,	or	$683.9.	Underlying	sales	increased	7%	from	higher	volumes	of	6%	and	higher	pricing	of	1%.	Higher	volumes, primarily	due	to	new	project	onstreams,	underlying	base	business	growth	across	the	Industrial	Gases	regions,	and	continued	progress	on	the	Jazan project	within	our	Industrial	Gases	–	Global	segment,	were	partially	offset	by	lower	LNG	project	activity	in	the	Corporate	and	other	segment.	The	pricing improvement	was	primarily	attributable	to	the	Industrial	Gases	–	Asia	segment.	Higher	energy	and	natural	gas	cost	pass-through	to	customers	increased sales	by	3%,	and	unfavorable	currency	effects	reduced	sales	by	1%.

# Operating	Income	and	Margin

Operating	income	of	$1,965.6	increased	37%,	or	$525.6,	due	to	higher	volumes	of	$204,	a	prior	year	goodwill	and	intangible	asset	impairment	charge	of $162,	prior	year	cost	reduction	and	asset	actions	of	$151,	favorable	currency	impacts	of	$47,	favorable	pricing,	net	of	energy,	fuel,	and	raw	material	costs, of	$47,	prior	year	business	separation	costs	of	$33,	and	a	favorable	impact	from	the	change	in	inventory	valuation	method	of	 $24,	partially	offset	by unfavorable	net	operating	costs	of	$130	and	a	prior	year	gain	on	land	sale	of	$12.	The	increase	in	net	operating	costs	was	primarily	driven	by	higher planned	maintenance	costs,	lower	cost	reimbursement,	including	costs	for	transitions	services,	and	higher	costs	to	support	growth	opportunities. Operating	margin	of	22.0%	increased	440	bp,	primarily	due	to	the	goodwill	and	intangible	asset	impairment	charge,	cost	reduction	and	asset	actions,	and business	separation	costs	in	the	prior	year.

On	a	non-GAAP	basis,	adjusted	operating	income	of	 $1,941.5	increased	9%,	or	$167.7,	primarily	due	to	higher	volumes,	favorable	currency	impacts,	and favorable	pricing,	net	of	energy,	fuel,	and	raw	material	costs,	partially	offset	by	unfavorable	net	operating	costs.	Adjusted	operating	margin	of	21.7%	was flat	as	higher	volumes	and	favorable	pricing,	net	of	power	costs,	were	mostly	offset	by	higher	costs.

Operating	income	of	$1,440.0	decreased	6%,	or	$95.1,	as	a	goodwill	and	intangible	asset	impairment	charge	of	 $162,	higher	cost	reduction	and	asset actions	of	$117,	and	unfavorable	currency	impacts	of	$9	were	partially	offset	by	favorable	volumes	of	$83,	favorable	net	operating	costs	of	$73,	 lower business	separation	costs	of	$18,	a	gain	on	sale	of	land	of	 $12,	and	favorable	pricing,	net	of	energy,	fuel,	and	raw	material	costs	of	$7.	Operating	margin of	17.6%	decreased	290	bp,	primarily	due	to	the	goodwill	and	intangible	asset	impairment	charge	and	higher	cost	reduction	and	asset	actions.

On	a	non-GAAP	basis,	adjusted	operating	income	of	 $1,773.8	increased	9%,	or	$153.6,	primarily	due	to	higher	volumes	and	favorable	cost	performance. Adjusted	operating	margin	of	21.7%	increased	10	bp	as	lower	costs	were	partially	offset	by	higher	energy	and	natural	gas	pass-through	to	customers.

# Adjusted	EBITDA

We	define	Adjusted	EBITDA	as	income	from	continuing	operations	(including	noncontrolling	interests)	excluding	certain	disclosed	items,	which	the Company	does	not	believe	to	be	indicative	of	underlying	business	trends,	before	interest	expense,	other	non-operating	income	(expense),	net,	income	tax provision,	and	depreciation	and	amortization	expense.	Adjusted	EBITDA	provides	a	useful	metric	for	management	to	assess	operating	performance.

Adjusted	EBITDA	of	$3,115.5	increased	11%,	or	$316.3,	primarily	due	to	higher	volumes,	favorable	currency,	positive	pricing,	and	income	from	regional industrial	gases	equity	affiliates,	partially	offset	by	higher	costs.	Adjusted	EBITDA	margin	of	34.9%	increased	70	bp,	primarily	due	to	higher	volumes	and income	from	regional	industrial	gases	equity	affiliates,	partially	offset	by	higher	costs.

Adjusted	EBITDA	of	$2,799.2	increased	7%,	or	$177.4,	primarily	due	to	higher	volumes	and	favorable	cost	performance.	Adjusted	EBITDA	margin	of 34.2%	decreased	70	bp,	primarily	due	to	a	90	bp	impact	from	higher	energy	pass-through	to	customers.

# Equity	Affiliates'	Income

Income	from	equity	affiliates	of	 $174.8	increased	$94.7.	The	fiscal	year	2017	income	included	a	noncash	impairment	charge	of	$79.5	($.36	per	share)	on our	investment	in	Abdullah	Hashim	Industrial	Gases	&	Equipment	Co.,	Ltd.	(AHG),	a	25%-owned	equity	affiliate	in	our	Industrial	Gases	–	EMEA	segment. This	charge	has	been	excluded	from	segment	results.	Refer	to	Note	8,	Summarized	Financial	Information	of	Equity	Affiliates,	to	the	consolidated	financial statements	for	additional	information.	Fiscal	year	2018	included	an	expense	of	$28.5	resulting	from	the	U.S.	Tax	Cuts	and	Jobs	Act.	Refer	to Note	22,	Income	Taxes,	to	the	consolidated	financial	statements	for	additional	information.	On	a	non-GAAP	basis,	adjusted	equity	affiliates'	income	of $203.3	increased	27%,	or	$43.7,	primarily	driven	by	Industrial	Gases	–	Americas	and	Industrial	Gases	–	EMEA	affiliates.

Income	from	equity	affiliates	of	 $80.1	decreased	$66.9,	primarily	due	to	a	noncash	impairment	charge	of	$79.5	($.36	per	share)	on	our	investment	in	AHG in	fiscal	year	2017.	On	a	non-GAAP	basis,	adjusted	equity	affiliates'	income	of	$159.6	increased	9%,	or	$12.6.

# Cost	of	Sales	and	Gross	Margin

Cost	of	sales	of	$6,189.5	increased	8%,	or	$438.0,	primarily	due	to	higher	costs	attributable	to	sales	volumes	of	$225,	unfavorable	currency	impacts	of $133,	and	higher	other	costs,	including	maintenance	costs,	of	$97,	partially	offset	by	the	benefit	from	the	change	in	inventory	valuation	method	from	a last-in,	first-out	(LIFO)	basis	to	a	first-in,	first-out	(FIFO)	basis	of	$24	in	fiscal	year	2018.	For	additional	information	on	the	change	in	inventory	valuation method,	refer	to	Note	1,	Major	Accounting	Policies,	and	Note	7,	Inventories,	to	the	consolidated	financial	statements.

Gross	margin	of	30.7%	increased	90	bp,	primarily	due	to	higher	volumes,	favorable	pricing,	net	of	raw	materials,	and	the	benefit	from	the	change	in inventory	valuation	adjustment,	partially	offset	by	higher	other	costs.

Cost	of	sales	of	$5,751.5	increased	11%,	or	$574.2,	due	to	higher	costs	attributable	to	sales	volumes	of	$418,	higher	energy	and	natural	gas	cost	pass- through	to	customers	of	$218,	and	higher	other	costs	of	$21,	partially	offset	by	favorable	currency	impacts	of	$83.

Gross	margin	of	29.8%	decreased	120	bp,	primarily	due	to	higher	energy	and	natural	gas	cost	pass-through	to	customers	and	unfavorable	volume	mix.

# Selling	and	Administrative	Expense

Selling	and	administrative	expense	of	$760.8	increased	7%,	or	$47.3,	primarily	driven	by	unfavorable	currency	impacts	and	higher	costs	to	support growth	opportunities,	partially	offset	by	cost	reductions	associated	with	the	completion	of	transition	services	agreements	with	Versum	and	Evonik.	Selling and	administrative	expense	as	a	percent	of	sales	decreased	to	8.5%	in	fiscal	year	2018	from	8.7%	in	fiscal	year	2017.

Selling	and	administrative	expense	of	$713.5	increased	4%,	or	$29.7,	primarily	due	to	costs	in	support	of	transition	services	agreements	with	Versum	and Evonik,	for	which	the	reimbursement	is	reflected	in	"Other	income	(expense),	net."	Selling	and	administrative	expense	as	a	percent	of	sales	decreased	to 8.7%	in	fiscal	year	2017	from	9.1%	in	fiscal	year	2016.

# Research	and	Development

Research	and	development	expense	of	$64.5	increased	12%,	or	$6.9.	Research	and	development	expense	as	a	percent	of	sales	in	fiscal	years	2018	and 2017	was	.7%.

Research	and	development	expense	of	$57.6	decreased	20%,	or	$14.2.	Research	and	development	expense	as	a	percent	of	sales	 decreased	to	.7%	in fiscal	year	2017	from	1.0%	in	fiscal	year	2016.

# Business	Separation	Costs

In	fiscal	year	2017,	we	completed	the	separation	of	the	divisions	comprising	the	former	Materials	Technologies	segment	through	the	spin-off	of	the Electronics	Materials	Division	(EMD)	as	Versum	Materials,	Inc.	(Versum)	and	the	sale	of	the	Performance	Materials	Division	(PMD)	to	Evonik	Industries AG	(Evonik).	For	additional	information	on	the	dispositions,	refer	to	Note	3,	Discontinued	Operations,	to	the	consolidated	financial	statements.

In	connection	with	the	dispositions,	we	incurred	net	separation	costs	of	 $30.2	($26.5	after-tax,	or	$.12	per	share)	in	fiscal	year	2017.	The	net	costs	include legal	and	advisory	fees	of	$32.5,	which	are	reflected	on	the	consolidated	income	statements	as	"Business	separation	costs,"	and	a	pension	settlement benefit	of	$2.3	presented	within	"Other	non-operating	income	(expense),	net."	Our	fiscal	year	2017	income	tax	provision	includes	net	tax	benefits	of $5.5 ($.02	per	share),	primarily	related	to	changes	in	tax	positions	on	business	separation	activities.

In	fiscal	year	2016,	we	incurred	business	separation	costs	of	 $50.6	($46.7	after-tax,	or	$.21	per	share)	for	legal	and	advisory	fees.	Our	fiscal	year	2016 income	tax	provision	includes	additional	tax	expense	related	to	the	separation	of	$51.8	($.24	per	share),	of	which	$45.7	resulted	from	a	dividend	to repatriate	$443.8	from	a	subsidiary	in	South	Korea	to	the	U.S.	in	anticipation	of	the	separation	of	EMD	from	the	industrial	gases	business	in	South	Korea.

# Cost	Reduction	and	Asset	Actions

In	fiscal	year	2017,	we	recognized	a	net	expense	of	$ 151.4	($109.3	attributable	to	Air	Products,	after-tax,	or	$.49	per	share)	for	cost	reduction	and	asset actions.	The	year-to-date	net	expense	included	a	charge	of	$154.8	for	actions	taken	during	fiscal	year	2017,	partially	offset	by	the	favorable	settlement	of the	remaining	$3.4	accrued	balance	associated	with	business	restructuring	actions	taken	in	2015.	The	charge	included	asset	actions	of	 $88.5	and severance	actions	of	$66.3.

The	charges	we	record	for	cost	reduction	and	asset	actions	have	been	excluded	from	segment	operating	income.	Refer	to	Note	 5,	Cost	Reduction	and Asset	Actions,	to	the	consolidated	financial	statements	for	additional	details	on	these	actions.

# Goodwill	and	Intangible	Asset	Impairment	Charge

During	the	third	quarter	of	fiscal	year	2017,	we	determined	that	the	goodwill	and	indefinite-lived	intangible	assets	(primarily	acquired	trade	names) associated	with	our	Latin	America	reporting	unit	of	our	Industrial	Gases	–	Americas	segment	were	impaired.	We	recorded	a	noncash	impairment	charge of	$162.1	($154.1	attributable	to	Air	Products,	after-tax,	or	$.70	per	share),	which	was	driven	by	lower	economic	growth	and	profitability	in	the	region.	This impairment	charge	has	been	excluded	from	segment	results.	Refer	to	Note	10,	Goodwill,	and	Note	11,	Intangible	Assets,	to	the	consolidated	financial statements	for	additional	information.

# Other	Income	(Expense),	Net

Items	recorded	to	"Other	income	(expense),	net"	arise	from	transactions	and	events	not	directly	related	to	our	principal	income	earning	activities.	The detail	of	"Other	income	(expense),	net"	is	presented	in	Note	23,	Supplemental	Information,	to	the	consolidated	financial	statements.

Other	income	(expense),	net	of	$50.2	decreased	$70.8,	primarily	due	to	lower	income	from	the	transition	services	agreements	with	Versum	and	Evonik, lower	income	from	the	sale	of	assets	and	investments,	lower	favorable	contract	settlements,	and	an	unfavorable	foreign	exchange	impact.

Other	income	(expense),	net	of	$121.0	increased	$71.6,	primarily	due	to	income	from	transition	services	agreements	with	Versum	and	Evonik,	income from	the	sale	of	assets	and	investments,	including	a	gain	of	$12.2	($7.6	after-tax,	or	$.03	per	share)	resulting	from	the	sale	of	a	parcel	of	land,	and	a favorable	foreign	exchange	impact.

# Interest	Expense

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Interest\tincurred | $150.0 | $139.6 | $147.9 |
| Less:\tCapitalized\tinterest | 19.5 | 19.0 | 32.7 |
| Interest\tExpense | $130.5 | $120.6 | $115.2 |

Interest	incurred	increased	$10.4	as	project	financing	associated	with	the	Lu'An	joint	venture	and	a	higher	average	interest	rate	on	the	debt	portfolio	were partially	offset	by	the	impact	from	a	lower	average	debt	balance.	The	change	in	capitalized	interest	was	driven	by	an	increase	in	the	carrying	value	of projects	under	construction.

Interest	incurred	decreased	$8.3	as	the	impact	from	a	lower	average	debt	balance	of	$26	was	partially	offset	by	the	impact	from	a	higher	average	interest rate	on	the	debt	portfolio	of	$19.	The	change	in	capitalized	interest	was	driven	by	a	decrease	in	the	carrying	value	of	projects	under	construction,	primarily as	a	result	of	our	decision	to	exit	from	the	EfW	business.

# Other	Non-Operating	Income	(Expense),	Net

Other	non-operating	income	(expense),	net	of	$5.1	decreased	$11.5.	During	the	fourth	quarter	of	fiscal	year	2018,	we	recognized	a	pension	settlement loss	of	$43.7	($33.2	after-tax,	or	$.15	per	share)	that	primarily	resulted	from	the	transfer	of	certain	pension	payment	obligations	to	an	insurer	for	our	U.S. salaried	and	hourly	plans	through	the	purchase	of	an	irrevocable,	nonparticipating	group	annuity	contract	with	plan	assets.	For	additional	information,	refer to	Note	16,	Retirement	Benefits,	to	the	consolidated	financial	statements.	This	loss	was	partially	offset	by	higher	interest	income	on	cash	and	cash	items and	short-term	investments	and	lower	other	non-service	pension	expense.	The	prior	year	pension	expense	included	a	settlement	loss	of	$10.5	($6.6 after-tax,	or	$.03	per	share)	associated	with	the	U.S.	Supplementary	Pension	Plan	and	a	settlement	benefit	of	$2.3	related	to	the	disposition	of	EMD	and PMD.

Other	non-operating	income	of	$16.6	increased	$22.0	from	an	expense	of	$5.4	in	fiscal	year	2016,	primarily	due	to	interest	income	on	cash	and	time deposits,	which	are	comprised	primarily	of	proceeds	from	the	sale	of	PMD.	Fiscal	year	2016	included	a	pension	settlement	loss	of	$5.1	($3.3	after-tax,	or $.02	per	share)	to	accelerate	recognition	of	a	portion	of	actuarial	losses	deferred	in	accumulated	other	comprehensive	loss,	primarily	associated	with	the U.S.	Supplementary	Pension	Plan.	In	fiscal	year	2016,	interest	income	was	included	in	"Other	income	(expense),	net"	and	was	not	material.

# Loss	on	Extinguishment	of	Debt

On	30	September	2016,	in	anticipation	of	the	spin-off	of	EMD,	Versum	issued	 $425.0	of	notes	to	Air	Products,	who	then	exchanged	these	notes	with certain	financial	institutions	for	$418.3	of	Air	Products'	outstanding	commercial	paper.	This	noncash	exchange,	which	was	excluded	from	the	consolidated statements	of	cash	flows,	resulted	in	a	loss	of	$6.9	($4.3	after-tax,	or	$.02	per	share).	This	loss	was	deductible	for	tax	purposes.

# Effective	Tax	Rate

The	effective	tax	rate	equals	the	income	tax	provision	divided	by	income	from	continuing	operations	before	taxes.	Refer	to	Note 22,	Income	Taxes,	to	the consolidated	financial	statements	for	details	on	factors	affecting	the	effective	tax	rate.

The	effective	tax	rate	was	26.0%	and	18.4%	in	fiscal	years	2018	and	2017,	respectively.	The	current	year	rate	was	higher	primarily	due	to	the	enactment of	the	U.S.	Tax	Cuts	and	Jobs	Act	("the	Tax	Act")	in	the	first	quarter	of	fiscal	year	2018,	which	significantly	changed	existing	U.S.	tax	laws,	including	a reduction	in	the	federal	corporate	income	tax	rate	from	35%	to	21%	that	became	effective	1	January	2018,	a	deemed	repatriation	tax	on	unremitted foreign	earnings,	as	well	as	other	changes.	As	a	result	of	the	Tax	Act,	our	income	tax	provision	for	fiscal	year	2018	reflects	a	discrete	net	income	tax expense	of	$180.6.	This	included	a	deemed	repatriation	tax	on	accumulated	unremitted	foreign	earnings	and	adjustments	to	the	future	cost	of	repatriation from	foreign	investments	of	$448.6,	partially	offset	by	a	benefit	of	 $56.2	related	to	the	U.S.	taxation	of	deemed	foreign	dividends	under	the	Tax	Act.	This benefit	may	be	eliminated	by	future	legislation.	Fiscal	year	2018	tax	expense	also	includes	a	benefit	of	$211.8,	primarily	from	the	re-measurement	of	our net	U.S.	deferred	tax	liabilities	at	the	lower	corporate	tax	rate.	In	fiscal	year	2018,	we	also	recorded	a	tax	benefit	of	$35.7	from	the	restructuring	of	foreign subsidiaries.

The	income	tax	provision	in	fiscal	year	2017	included	a	net	income	tax	benefit	of	 $111.4	resulting	from	a	tax	election	related	to	a	non-U.S.	subsidiary.	The effective	tax	rate	in	the	prior	year	was	also	impacted	by	a	goodwill	impairment	charge	of	$145.3	in	our	Latin	America	reporting	unit	and	an	impairment	of $79.5	of	an	equity	method	investment	for	which	no	tax	benefits	were	available.

On	a	non-GAAP	basis,	the	adjusted	effective	tax	rate	decreased	from	23.2%	in	fiscal	year	2017	to	18.6%	in	fiscal	year	2018.	We	estimate	that	the	lower U.S.	federal	statutory	rate	and	other	impacts	of	the	Tax	Act	reduced	our	fiscal	year	2018	adjusted	effective	tax	rate	by	approximately	3.5%.	The	current year	rate	was	also	lower	due	to	a	benefit	of	$9.1	related	to	a	final	foreign	tax	audit	settlement.

We	are	reporting	the	impacts	of	the	Tax	Act	provisionally	based	upon	reasonable	estimates	as	of	 30	September	2018.	The	impacts	are	not	yet	finalized	as they	are	dependent	on	factors	and	analysis	not	yet	known	or	fully	completed,	including	but	not	limited	to,	further	book	to	U.S.	tax	adjustments	for	the earnings	of	foreign	entities,	the	issuance	of	additional	guidance,	as	well	as	our	ongoing	analysis	of	the	Tax	Act.

As	a	fiscal	year-end	taxpayer,	certain	provisions	of	the	Tax	Act	became	effective	in	our	fiscal	year	2018,	while	other	provisions	do	not	become	effective until	fiscal	year	2019.	The	corporate	tax	rate	reduction	is	effective	as	of	1	January	2018	and,	accordingly,	reduces	our	2018	fiscal	year	U.S.	federal statutory	rate	to	a	blended	rate	of	approximately	24.5%.

The	effective	tax	rate	was	18.4%	and	27.8%	in	fiscal	years	2017	and	2016,	respectively.	The	2017	rate	included	an	impact	of	approximately	700	bp	from a	net	income	tax	benefit	resulting	from	a	tax	election	related	to	a	non-U.S.	subsidiary	and	an	impact	of	approximately	100	bp	from	excess	tax	benefits	on share-based	compensation	resulting	from	the	adoption	of	new	accounting	guidance	in	the	first	quarter	of	fiscal	year	2017.	These	impacts	were	partially offset	by	an	increase	of	approximately	200	bp	due	to	both	a	goodwill	impairment	charge	in	our	Latin	America	reporting	unit	and	an	impairment	of	an	equity method	investment	for	which	no	tax	benefits	were	available.	The	2016	rate	included	a	330	bp	impact	from	tax	costs	associated	with	business	separation, primarily	resulting	from	a	dividend	declared	in	2016	to	repatriate	cash	from	a	foreign	subsidiary	as	discussed	above	under	Business	Separation	Costs. The	remaining	change	was	primarily	due	to	the	impact	of	business	separation	costs	for	which	a	tax	benefit	was	estimated	to	not	be	available.	On	a	non- GAAP	basis,	the	adjusted	effective	tax	rate	decreased	from	24.2%	in	fiscal	year	2016	to	23.2%	in	fiscal	year	2017,	primarily	due	to	excess	tax	benefits	on share-based	compensation.

# Discontinued	Operations

In	fiscal	year	2018,	income	from	discontinued	operations,	net	of	tax,	of	 $42.2	includes	an	income	tax	benefit	of	$25.6	resulting	from	the	resolution	of uncertain	tax	positions	taken	in	conjunction	with	the	disposition	of	our	former	European	Homecare	business	in	fiscal	year	2012.	In	addition,	we	recorded an	after-tax	benefit	of	$17.6	resulting	from	the	resolution	of	certain	post-closing	adjustments	associated	with	the	sale	of	PMD.	Refer	to	Note 22,	Income Taxes,	to	the	consolidated	financial	statements	for	additional	information.	These	benefits	were	partially	offset	by	an	after-tax	loss	of	$1.0	related	to	EfW project	exit	activities,	which	were	completed	during	the	first	quarter	of	fiscal	year	2018.

In	fiscal	year	2017,	income	from	discontinued	operations,	net	of	tax,	of	 $1,866.0	includes	a	gain	of	 $2,870	($1,828	after-tax,	or	$8.32	per	share)	for	the sale	of	PMD	to	Evonik.	The	sale	closed	on	3	January	2017	for	$3.8	billion	in	cash.	In	addition,	we	recorded	a	loss	on	the	disposal	of	EfW of	$59.3	($47.1	after-tax)	during	the	first	quarter	of	2017,	primarily	for	land	lease	obligations	and	to	update	our	estimate	of	the	net	realizable	value	of	the plant	assets.

In	fiscal	year	2016,	the	loss	from	discontinued	operations,	net	of	tax,	of	 $460.5	includes	a	loss	of	$945.7	($846.6	after-tax)	from	the	write	down	of	EfW plant	assets	to	their	estimated	net	realizable	value	and	a	liability	recorded	for	plant	disposition	and	other	costs.	This	loss	was	partially	offset	by	the	results of	PMD	and	EMD.

Refer	to	Note	3,	Discontinued	Operations,	to	the	consolidated	financial	statements	for	additional	information.

# Segment	Analysis

Sales	of	$3,758.8	increased	3%,	or	$121.8.	Underlying	sales	were	up	4%	from	higher	volumes,	primarily	in	our	onsite	and	merchant	businesses, as	pricing	was	flat.	The	onsite	increase	was	primarily	driven	by	higher	hydrogen	volumes	in	North	America.	Lower	energy	and	natural	gas	cost	pass- through	to	customers	decreased	sales	by	1%.	Currency	was	flat	versus	the	prior	year.

Operating	income	of	$927.9	decreased	2%,	or	$18.2,	primarily	due	to	higher	costs	of	$84	and	lower	pricing,	net	of	power	and	fuel	costs,	of	$13,	partially offset	by	higher	volumes	of	$76	and	favorable	currency	impacts	of	$3.	The	higher	costs	included	higher	maintenance	and	supply	chain	costs.	Operating margin	of	24.7%	decreased	130	bp	from	the	prior	year,	primarily	due	to	higher	costs,	partially	offset	by	favorable	volumes.

Equity	affiliates'	income	of	$82.0	increased	41%,	or	$23.9,	primarily	due	to	volume	growth.

Underlying	sales	were	up	2%	from	stronger	hydrogen	volumes	and	a	new	hydrogen	plant	in	Canada.	Higher	energy	and	natural	gas	cost	pass-through	to customers	increased	sales	by	6%.	Favorable	currency	effects,	primarily	from	the	Chilean	Peso,	increased	sales	by	1%.

Operating	income	of	$946.1	increased	6%,	or	$54.8,	primarily	due	to	lower	operating	costs	of	$35	and	higher	volumes	of	$18.	Operating	costs	were	lower due	to	benefits	from	productivity	improvements.	Operating	margin	decreased	70	bp	from	the	prior	year	primarily	due	to	higher	energy	and	natural	gas pass-through	to	customers,	partially	offset	by	favorable	cost	performance.

Equity	affiliates'	income	of	$58.1	increased	$5.4,	primarily	due	to	lower	maintenance	expense	and	a	new	plant	onstream.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales | $2,193.3 | $1,780.4 | $1,704.4 |
| Operating\tincome | 445.8 | 395.5 | 387.0 |
| Operating\tmargin | 20.3% | 22.2% | 22.7% |
| Equity\taffiliates'\tincome | 61.1 | 47.1 | 36.5 |
| Adjusted\tEBITDA | 705.5 | 619.7 | 609.2 |
| Adjusted\tEBITDA\tmargin | 32.2% | 34.8% | 35.7% |

|  | %	Change	from	Prior	Year |  |
| :--- | :--- | :--- |
| Sales | 2018 | 2017 |
| Underlying\tbusiness |  |  |
| Volume | 12% | 6\t% |
| Price | 1% | —\t% |
| Energy\tand\traw\tmaterial\tcost\tpass-through | 3% | 1\t% |
| Currency | 7% | (3)% |
| Total\tIndustrial\tGases\t–\tEMEA\tSales\tChange | 23% | 4\t% |

Sales	of	$2,193.3	increased	23%,	or	$412.9.	Underlying	sales	were	up	13%	from	higher	volumes	of	12%	and	higher	pricing	of	1%.	The	volume	increase was	primarily	driven	by	a	hydrogen	plant	in	India	and	higher	merchant	volumes.	Higher	energy	and	natural	gas	cost	pass-through	to	customers	increased sales	by	3%.	Favorable	currency	impacts,	primarily	from	the	Euro	and	British	Pound	Sterling,	 increased	sales	by	7%.

Operating	income	of	$445.8	increased	13%,	or	$50.3,	due	to	higher	volumes	of	$38,	favorable	currency	impacts	of	$26,	and	higher	pricing,	net	of	power and	fuel	costs,	of	$4,	partially	offset	by	unfavorable	costs	$18.	Operating	margin	of	20.3%	decreased	190	bp	from	the	prior	year,	primarily	due	to unfavorable	costs	and	lower	margins	on	the	hydrogen	volumes	in	India.

Equity	affiliates'	income	of	$61.1	increased	30%,	or	$14.0,	primarily	due	to	volume	growth,	lower	costs,	and	favorable	currency.

Underlying	sales	were	up	6%	from	higher	volumes	as	pricing	was	flat.	Volumes	increased	primarily	due	to	a	new	plant	onstream	in	India.	Higher	energy and	natural	gas	cost	pass-through	to	customers	increased	sales	by	1%.	Unfavorable	currency	effects,	primarily	from	the	British	Pound	Sterling,	reduced sales	by	3%.

Operating	income	of	$395.5	increased	2%,	or	$8.5,	primarily	due	to	lower	operating	costs	of	$27	and	higher	volumes,	including	a	new	plant	onstream,	of $15,	partially	offset	by	lower	price	net	of	power	costs	of	$18	and	unfavorable	currency	impacts	of	$15.	Operating	costs	were	lower	primarily	due	to	benefits from	operational	improvements.	Operating	margin	decreased	50	bp	from	the	prior	year,	as	lower	price	net	of	power	costs,	higher	energy	and	natural	gas pass-through	to	customers,	and	unfavorable	currency	impacts	were	partially	offset	by	favorable	cost	performance.

Equity	affiliates'	income	of	$47.1	increased	$10.6,	primarily	due	to	higher	volumes.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales | $2,458.0 | $1,964.7 | $1,720.4 |
| Operating\tincome | 689.9 | 532.6 | 452.8 |
| Operating\tmargin | 28.1% | 27.1% | 26.3% |
| Equity\taffiliates'\tincome | 58.3 | 53.5 | 57.8 |
| Adjusted\tEBITDA | 1,014.0 | 789.3 | 708.5 |
| Adjusted\tEBITDA\tmargin | 41.3% | 40.2% | 41.2% |

|  | %	Change	from	Prior	Year |  |
| :--- | :--- | :--- |
| Sales | 2018 | 2017 |
| Underlying\tbusiness |  |  |
| Volume | 17% | 14\t% |
| Price | 4% | 1\t% |
| Energy\tand\traw\tmaterial\tcost\tpass-through | —% | —\t% |
| Currency | 4% | (1)% |
| Total\tIndustrial\tGases\t–\tAsia\tSales\tChange | 25% | 14\t% |

Sales	of	$2,458.0	increased	25%,	or	$493.3.	Underlying	sales	were	up	21%	from	higher	volumes	of	17%	and	higher	pricing	of	4%.	The	volume	increase was	primarily	driven	by	new	plant	onstreams,	including	the	Lu'An	project,	an	equipment	sale	resulting	from	the	termination	of	a	contract	in	the	first	quarter of	fiscal	year	2018,	and	higher	merchant	volumes,	partially	offset	by	the	impact	of	short-term	sale	of	equipment	activity	in	fiscal	year	2017.	Pricing improved	across	Asia	driven	primarily	by	the	China	merchant	market.	Energy	and	natural	gas	cost	pass-through	to	customers	was	flat	versus	the	prior year.	Favorable	currency	impacts,	primarily	from	the	Chinese	Renminbi,	South	Korean	Won,	and	Taiwan	Dollar,	increased	sales	by	4%.

Operating	income	of	$689.9	increased	30%,	or	$157.3,	due	to	higher	volumes	of	$107,	favorable	price,	net	of	power	costs,	of	$53,	and	favorable	currency impacts	of	$21,	partially	offset	by	higher	operating	costs	of	$24.	Operating	margin	of	28.1%	increased	100	bp	as	favorable	price,	net	of	power	costs,	and higher	volumes	were	partially	offset	by	unfavorable	cost	performance.

Equity	affiliates'	income	of	$58.3	increased	9%,	or	$4.8,	primarily	due	to	higher	volumes.

Underlying	sales	were	up	15%	from	higher	volumes	of	14%	and	higher	pricing	of	1%.	Volumes	increased	primarily	due	to	new	plant	onstreams,	sale	of equipment	activity,	and	base	business	growth	driven	by	higher	merchant	volumes	across	Asia.	Pricing	was	up	1%	primarily	due	to	increases	in	China wholesale,	spot,	and	underlying	prices	during	the	second	half	of	the	year	across	all	merchant	liquid	product	lines.	Unfavorable	currency	effects	reduced sales	by	1%,	primarily	from	the	Chinese	Renminbi,	partially	offset	by	strengthening	of	the	South	Korean	Won	and	Taiwan	Dollar.

Operating	income	of	$532.6	increased	18%,	or	$79.8,	due	to	higher	volumes	of	$68	and	higher	price	net	of	power	costs	of	$24,	partially	offset	by	higher operating	costs	of	$8	and	an	unfavorable	currency	impact	of	$4.	Operating	margin	increased	80	bp,	primarily	due	to	higher	price	net	of	power	costs	and favorable	volumes	partially	offset	by	unfavorable	cost	performance.

Equity	affiliates'	income	of	$53.5	decreased	$4.3,	primarily	due	to	favorable	contract	and	insurance	settlements	in	fiscal	year	2016.

The	Industrial	Gases	–	Global	segment	includes	sales	of	cryogenic	and	gas	processing	equipment	for	air	separation	and	centralized	global	costs associated	with	management	of	all	the	Industrial	Gases	segments.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales | $436.1 | $722.9 | $498.8 |
| Operating\tincome\t(loss) | 53.9 | 71.1 | (21.5) |
| Adjusted\tEBITDA | 63.9 | 80.9 | (13.6) |

Sales	of	$436.1	decreased	40%,	or	$286.8.	The	decrease	in	sales	was	primarily	driven	by	lower	sale	of	equipment	activity	on	the	multiple	air	separation units	that	will	serve	Saudi	Aramco's	Jazan	oil	refinery	and	power	plant	in	Saudi	Arabia.	We	expect	to	complete	this	project	in	2019.

Operating	income	of	$53.9	decreased	24%,	or	$17.2,	primarily	due	to	the	lower	sale	of	equipment	activity.

Sales	of	$722.9	increased	$224.1,	or	45%.	The	increase	in	sales	was	primarily	driven	by	higher	sales	activity	for	our	Jazan	sale	of	equipment	project.

Operating	income	of	$71.1	increased	$92.6	from	an	operating	loss	in	fiscal	year	2016,	primarily	from	income	on	the	Jazan	project	and	productivity improvements.

The	Corporate	and	other	segment	includes	our	LNG	and	helium	storage	and	distribution	sale	of	equipment	businesses	and	corporate	support	functions that	benefit	all	segments.	The	results	of	the	Corporate	and	other	segment	also	include	income	and	expense	that	is	not	directly	associated	with	the	other segments,	such	as	foreign	exchange	gains	and	losses	and	stranded	costs	related	to	the	former	Materials	Technologies	segment,	which	is	presented within	discontinued	operations.	Stranded	costs	primarily	relate	to	costs	in	support	of	transition	services	agreements	with	Versum	and	Evonik,	the	majority of	which	were	reimbursed	to	Air	Products.	All	transition	services	were	completed	during	fiscal	year	2018.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales | $84.0 | $82.6 | $236.0 |
| Operating\tloss | (176.0) | (171.5) | (89.4) |
| Adjusted\tEBITDA | (163.1) | (159.3) | (69.9) |

Sales	of	$82.6	decreased	$153.4,	primarily	due	to	lower	LNG	activity.	Operating	loss	of	 $171.5	increased	$82.1	due	to	lower	LNG	activity,	partially	offset by	productivity	improvements	and	income	from	transition	service	agreements	with	Versum	and	Evonik.

# RECONCILIATION	OF	NON-GAAP	FINANCIAL	MEASURES

(Millions	of	dollars	unless	otherwise	indicated,	except	for	per	share	data)

The	Company	has	presented	certain	financial	measures	on	a	non-GAAP	("adjusted")	basis	and	has	provided	a	reconciliation	to	the	most	directly comparable	financial	measure	calculated	in	accordance	with	GAAP.	These	financial	measures	are	not	meant	to	be	considered	in	isolation	or	as	a substitute	for	the	most	directly	comparable	financial	measure	calculated	in	accordance	with	GAAP.	The	Company	believes	these	non-GAAP	measures provide	investors,	potential	investors,	securities	analysts,	and	others	with	useful	information	to	evaluate	the	performance	of	the	business	because	such measures,	when	viewed	together	with	our	financial	results	computed	in	accordance	with	GAAP,	provide	a	more	complete	understanding	of	the	factors and	trends	affecting	our	historical	financial	performance	and	projected	future	results.

In	many	cases,	our	non-GAAP	measures	are	determined	by	adjusting	the	most	directly	comparable	GAAP	financial	measure	to	exclude	certain	disclosed items	("non-GAAP	adjustments")	that	we	believe	are	not	representative	of	the	underlying	business	performance.	For	example,	in	fiscal	years	2017	and 2016,	we	restructured	the	Company	to	focus	on	its	core	Industrial	Gases	business.	This	resulted	in	significant	cost	reduction	and	asset	actions	that	we believe	were	important	for	investors	to	understand	separately	from	the	performance	of	the	underlying	business.	Additionally,	in	fiscal	year	2018,	we recorded	discrete	impacts	associated	with	the	Tax	Act.	The	reader	should	be	aware	that	we	may	incur	similar	expenses	in	the	future.

The	tax	impact	on	our	pre-tax	non-GAAP	adjustments	reflects	the	expected	current	and	deferred	income	tax	expense	impact	of	the	transactions	and	is impacted	primarily	by	the	statutory	tax	rate	of	the	various	relevant	jurisdictions	and	the	taxability	of	the	adjustments	in	those	jurisdictions.	Investors	should also	consider	the	limitations	associated	with	these	non-GAAP	measures,	including	the	potential	lack	of	comparability	of	these	measures	from	one company	to	another.

During	the	first	quarter	of	fiscal	year	2018,	we	adopted	accounting	guidance	on	the	presentation	of	net	periodic	pension	and	postretirement	benefit	cost. Certain	prior	year	information	has	been	reclassified	to	conform	to	the	fiscal	year	2018	presentation.	Refer	to	Note	2,	New	Accounting	Guidance,	to	the consolidated	financial	statements	for	additional	information.

Presented	below	are	reconciliations	of	the	reported	GAAP	results	to	the	non-GAAP	measures:

# CONSOLIDATED	RESULTS

|  |  |  | Continuing	Operations |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Operating\nIncome | Operating\nMargin(A) | Equity\tAffiliates'\nIncome | Income\tTax\nProvision | Net\nIncome | Diluted\nEPS |
| 2018\tGAAP | $1,965.6 | 22.0\t% | $174.8 | $524.3 | $1,455.6 | $6.59 |
| 2017\tGAAP | 1,440.0 | 17.6\t% | 80.1 | 260.9 | 1,134.4 | 5.16 |
| Change\tGAAP | $525.6 | 440bp | $94.7 | $263.4 | $321.2 | $1.43 |
| %\tChange\tGAAP | 37% |  | 118% | 101\t% | 28% | 28% |
| 2018\tGAAP | $1,965.6 | 22.0\t% | $174.8 | $524.3 | $1,455.6 | $6.59 |
| Change\tin\tinventory\tvaluation\tmethod | (24.1) | (.3)% | — | (6.6) | (17.5) | (.08) |
| Pension\tsettlement\tloss(B) | — | —\t% | — | 10.5 | 33.2 | .15 |
| Tax\treform\trepatriation | — | —\t% | 28.5 | (448.6) | 477.1 | 2.16 |
| Tax\treform\tbenefit\trelated\tto\tdeemed\tforeign\tdividends | — | —\t% | — | 56.2 | (56.2) | (.25) |
| Tax\treform\trate\tchange\tand\tother | — | —\t% | — | 211.8 | (211.8) | (.96) |
| Tax\trestructuring | — | —\t% | — | 35.7 | (35.7) | (.16) |
| 2018\tNon-GAAP\tMeasure | $1,941.5 | 21.7\t% | $203.3 | $383.3 | $1,644.7 | $7.45 |
| 2017\tGAAP | $1,440.0 | 17.6\t% | $80.1 | $260.9 | $1,134.4 | $5.16 |
| Business\tseparation\tcosts | 32.5 | .4\t% | — | 3.7 | 26.5 | .12 |
| Tax\tbenefit\tassociated\twith\tbusiness\tseparation | — | —\t% | — | 5.5 | (5.5) | (.02) |
| Cost\treduction\tand\tasset\tactions(C) | 151.4 | 1.8\t% | — | 41.6 | 109.3 | .49 |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge(D) | 162.1 | 2.0\t% | — | 4.6 | 154.1 | .70 |
| Gain\ton\tland\tsale | (12.2) | (.1)% | — | (4.6) | (7.6) | (.03) |
| Equity\tmethod\tinvestment\timpairment\tcharge | — | —\t% | 79.5 | — | 79.5 | .36 |
| Pension\tsettlement\tloss(B) | — | —\t% | — | 3.9 | 6.6 | .03 |
| Tax\telection\tbenefit | — | —\t% | — | 111.4 | (111.4) | (.50) |
| 2017\tNon-GAAP\tMeasure | $1,773.8 | 21.7\t% | $159.6 | $427.0 | $1,385.9 | $6.31 |
| Change\tNon-GAAP\tMeasure | $167.7 | — | $43.7 | ($43.7) | $258.8 | $1.14 |
| %\tChange\tNon-GAAP\tMeasure | 9% |  | 27% | (10)% | 19% | 18% |

# Continuing	Operations

|  |  |  | Continuing	Operations |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Operating\nIncome | Operating\nMargin(A) | Equity\tAffiliates'\nIncome | Income\tTax\nProvision | Net\nIncome | Diluted\nEPS |
| 2017\tGAAP | $1,440.0 | 17.6\t% | $80.1 | $260.9 | $1,134.4 | $5.16 |
| 2016\tGAAP | 1,535.1 | 20.5\t% | 147.0 | 432.6 | 1,099.5 | 5.04 |
| Change\tGAAP | ($95.1) | (290)bp | ($66.9) | ($171.7) | $34.9 | $.12 |
| %\tChange\tGAAP | (6)% |  | (46)% | (40)% | 3% | 2% |
| 2017\tGAAP | $1,440.0 | 17.6\t% | $80.1 | $260.9 | $1,134.4 | $5.16 |
| Business\tseparation\tcosts | 32.5 | .4\t% | — | 3.7 | 26.5 | .12 |
| Tax\tbenefit\tassociated\twith\tbusiness\tseparation | — | —\t% | — | 5.5 | (5.5) | (.02) |
| Cost\treduction\tand\tasset\tactions(C) | 151.4 | 1.8\t% | — | 41.6 | 109.3 | .49 |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge(D) | 162.1 | 2.0\t% | — | 4.6 | 154.1 | .70 |
| Gain\ton\tland\tsale | (12.2) | (.1)% | — | (4.6) | (7.6) | (.03) |
| Equity\tmethod\tinvestment\timpairment\tcharge | — | —\t% | 79.5 | — | 79.5 | .36 |
| Pension\tsettlement\tloss(B) | — | —\t% | — | 3.9 | 6.6 | .03 |
| Tax\telection\tbenefit | — | —\t% | — | 111.4 | (111.4) | (.50) |
| 2017\tNon-GAAP\tMeasure | $1,773.8 | 21.7\t% | $159.6 | $427.0 | $1,385.9 | $6.31 |
| 2016\tGAAP | $1,535.1 | 20.5\t% | $147.0 | $432.6 | $1,099.5 | $5.04 |
| Business\tseparation\tcosts | 50.6 | .7\t% | — | 3.9 | 46.7 | .21 |
| Tax\tcosts\tassociated\twith\tbusiness\tseparation | — | —\t% | — | (51.8) | 51.8 | .24 |
| Cost\treduction\tand\tasset\tactions | 34.5 | .4\t% | — | 9.8 | 24.7 | .11 |
| Pension\tsettlement\tloss(B) | — | —\t% | — | 1.8 | 3.3 | .02 |
| Loss\ton\textinguishment\tof\tdebt(E) | — | —\t% | — | 2.6 | 4.3 | .02 |
| 2016\tNon-GAAP\tMeasure | $1,620.2 | 21.6\t% | $147.0 | $398.9 | $1,230.3 | $5.64 |
| Change\tNon-GAAP\tMeasure | $153.6 | 10bp | $12.6 | $28.1 | $155.6 | $.67 |
| %\tChange\tNon-GAAP\tMeasure | 9\t% |  | 9\t% | 7\t% | 13% | 12% |

(A) Operating	margin	is	calculated	by	dividing	operating	income	by sales.

(B) Reflected	on	the	consolidated	income	statements	in	"Other	non-operating	income	(expense),	net."	Fiscal	year	2018	includes	a	before-tax	impact	of	$43.7 primarily	resulting	from	the	transfer	of	certain	pension	payment	obligations	to	an	insurer	through	the	purchase	of	an	irrevocable,	nonparticipating	group	annuity contract	during	the	fourth	quarter.

(C) Noncontrolling	interests	impact	of	$.5	in	fiscal	year 2017.

(D) Noncontrolling	interests	impact	of	$3.4	in	fiscal	year 2017.

(E) Income	from	continuing	operations	before	taxes	impact	of	$6.9	in	fiscal	year 2016.

Below	is	a	reconciliation	of	income	from	continuing	operations	on	a	GAAP	basis	to	adjusted	EBITDA:

|  | 2018 | 2017 | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Income\tFrom\tContinuing\tOperations(A) | $1,490.7 | $1,155.2 | $1,122.0 | $965.9 | $691.0 |
| Less:\tChange\tin\tinventory\tvaluation\tmethod | 24.1 | — | — | — | — |
| Add:\tInterest\texpense | 130.5 | 120.6 | 115.2 | 102.8 | 124.0 |
| Less:\tOther\tnon-operating\tincome\t(expense),\tnet | 5.1 | 16.6 | (5.4) | (42.3) | (51.7) |
| Add:\tIncome\ttax\tprovision | 524.3 | 260.9 | 432.6 | 300.2 | 258.1 |
| Add:\tDepreciation\tand\tamortization | 970.7 | 865.8 | 854.6 | 858.5 | 875.6 |
| Add:\tBusiness\tseparation\tcosts | — | 32.5 | 50.6 | 7.5 | — |
| Add:\tCost\treduction\tand\tasset\tactions | — | 151.4 | 34.5 | 180.1 | 11.1 |
| Add:\tGoodwill\tand\tintangible\tasset\timpairment\tcharge | — | 162.1 | — | — | 310.1 |
| Less:\tGain\ton\tpreviously\theld\tequity\tinterest | — | — | — | 17.9 | — |
| Less:\tGain\ton\tland\tsales | — | 12.2 | — | 33.6 | — |
| Add:\tEquity\tmethod\tinvestment\timpairment\tcharge | — | 79.5 | — | — | — |
| Add:\tLoss\ton\textinguishment\tof\tdebt | — | — | 6.9 | 16.6 | — |
| Add:\tTax\treform\trepatriation\t-\tequity\tmethod\tinvestment | 28.5 | — | — | — | — |
| Adjusted\tEBITDA | $3,115.5 | $2,799.2 | $2,621.8 | $2,422.4 | $2,321.6 |
| Adjusted\tEBITDA\tmargin | 34.9% | 34.2% | 34.9% | 31.0% | 27.7% |
| Change\tGAAP |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations\tchange | $335.5 | $33.2 | $156.1 | $274.9 |  |
| Income\tfrom\tcontinuing\toperations\t%\tchange | 29% | 3% | 16% | 40% |  |
| Change\tNon-GAAP |  |  |  |  |  |
| Adjusted\tEBITDA\tchange | $316.3 | $177.4 | $199.4 | $100.8 |  |
| Adjusted\tEBITDA\t%\tchange | 11% | 7% | 8% | 4% |  |
| Adjusted\tEBITDA\tmargin\tchange | 70\tbp | (70)\tbp | 390\tbp | 330\tbp |  |

# Below	is	a	summary	of	segment	operating	income:

|  | Industrial<br>Gases–<br>Americas | Industrial<br>Gases–<br>EMEA | Industrial<br>Gases–<br>Asia | Industrial<br>Gases–<br>Global | Corporate<br>and	other | Segment<br>Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| GAAP\tMeasure |  |  |  |  |  |  |
| Twelve\tMonths\tEnded\t30\tSeptember\t2018 |  |  |  |  |  |  |
| Operating\tincome\t(loss) | $927.9 | $445.8 | $689.9 | $53.9 | ($176.0) | $1,941.5 |
| Operating\tmargin | 24.7\t% | 20.3% | 28.1% |  |  | 21.7% |
| Twelve\tMonths\tEnded\t30\tSeptember\t2017 |  |  |  |  |  |  |
| Operating\tincome\t(loss) | $946.1 | $395.5 | $532.6 | $71.1 | ($171.5) | $1,773.8 |
| Operating\tmargin | 26.0\t% | 22.2% | 27.1% |  |  | 21.7% |
| Twelve\tMonths\tEnded\t30\tSeptember\t2016 |  |  |  |  |  |  |
| Operating\tincome\t(loss) | $891.3 | $387.0 | $452.8 | ($21.5) | ($89.4) | $1,620.2 |
| Operating\tmargin | 26.7\t% | 22.7% | 26.3% |  |  | 21.6% |
| 2018\tvs.\t2017 |  |  |  |  |  |  |
| Operating\tincome\t(loss)\tchange | ($18.2) | $50.3 | $157.3 | ($17.2) | ($4.5) | $167.7 |
| Operating\tincome\t(loss)\t%\tchange | (2)% | 13% | 30% | (24)% | (3)% | 9% |
| Operating\tmargin\tchange | (130)\tbp | (190)\tbp | 100\tbp |  |  | — |
| 2017\tvs.\t2016 |  |  |  |  |  |  |
| Operating\tincome\t(loss)\tchange | $54.8 | $8.5 | $79.8 | $92.6 | ($82.1) | $153.6 |
| Operating\tincome\t(loss)\t%\tchange | 6\t% | 2% | 18% | 431\t% | (92)% | 9% |
| Operating\tmargin\tchange | (70)\tbp | (50)\tbp | 80\tbp |  |  | 10\tbp |

# Below	is	a	reconciliation	of	segment	operating	income	to	adjusted	EBITDA:

|  | Industrial<br>Gases–<br>Americas | Industrial<br>Gases–<br>EMEA | Industrial<br>Gases–<br>Asia | Industrial<br>Gases–<br>Global | Corporate<br>and	other | Segment<br>Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Non-GAAP\tMeasure |  |  |  |  |  |  |
| Twelve\tMonths\tEnded\t30\tSeptember\t2018 |  |  |  |  |  |  |
| Operating\tincome\t(loss) | $927.9 | $445.8 | $689.9 | $53.9 | ($176.0) | $1,941.5 |
| Add:\tDepreciation\tand\tamortization | 485.3 | 198.6 | 265.8 | 8.1 | 12.9 | 970.7 |
| Add:\tEquity\taffiliates'\tincome | 82.0 | 61.1 | 58.3 | 1.9 | — | 203.3 |
| Adjusted\tEBITDA | $1,495.2 | $705.5 | $1,014.0 | $63.9 | ($163.1) | $3,115.5 |
| Adjusted\tEBITDA\tmargin(A) | 39.8% | 32.2% | 41.3% |  |  | 34.9% |
| Twelve\tMonths\tEnded\t30\tSeptember\t2017 |  |  |  |  |  |  |
| Operating\tincome\t(loss) | $946.1 | $395.5 | $532.6 | $71.1 | ($171.5) | $1,773.8 |
| Add:\tDepreciation\tand\tamortization | 464.4 | 177.1 | 203.2 | 8.9 | 12.2 | 865.8 |
| Add:\tEquity\taffiliates'\tincome | 58.1 | 47.1 | 53.5 | .9 | — | 159.6 |
| Adjusted\tEBITDA | $1,468.6 | $619.7 | $789.3 | $80.9 | ($159.3) | $2,799.2 |
| Adjusted\tEBITDA\tmargin(A) | 40.4% | 34.8% | 40.2% |  |  | 34.2% |
| Twelve\tMonths\tEnded\t30\tSeptember\t2016 |  |  |  |  |  |  |
| Operating\tincome\t(loss) | $891.3 | $387.0 | $452.8 | ($21.5) | ($89.4) | $1,620.2 |
| Add:\tDepreciation\tand\tamortization | 443.6 | 185.7 | 197.9 | 7.9 | 19.5 | 854.6 |
| Add:\tEquity\taffiliates'\tincome | 52.7 | 36.5 | 57.8 | — | — | 147.0 |
| Adjusted\tEBITDA | $1,387.6 | $609.2 | $708.5 | ($13.6) | ($69.9) | $2,621.8 |
| Adjusted\tEBITDA\tmargin(A) | 41.5% | 35.7% | 41.2% |  |  | 34.9% |
| 2018\tvs.\t2017 |  |  |  |  |  |  |
| Adjusted\tEBITDA\tchange | $26.6 | $85.8 | $224.7 | ($17.0) | ($3.8) | $316.3 |
| Adjusted\tEBITDA\t%\tchange | 2% | 14% | 28% | (21)% | (2)% | 11% |
| Adjusted\tEBITDA\tmargin\tchange | (60)\tbp | (260)\tbp | 110\tbp |  |  | 70\tbp |
| 2017\tvs.\t2016 |  |  |  |  |  |  |
| Adjusted\tEBITDA\tchange | $81.0 | $10.5 | $80.8 | $94.5 | ($89.4) | $177.4 |
| Adjusted\tEBITDA\t%\tchange | 6% | 2% | 11% | 695\t% | (128)% | 7% |
| Adjusted\tEBITDA\tmargin\tchange | (110)\tbp | (90)\tbp | (100)\tbp |  |  | (70)\tbp |

(A) Adjusted	EBITDA	margin	is	calculated	by	dividing	Adjusted	EBITDA	by sales.

Below	is	a	reconciliation	of	segment	total	operating	income	to	consolidated	operating	income:

| Operating	Income | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Segment\ttotal | $1,941.5 | $1,773.8 | $1,620.2 |
| Change\tin\tinventory\tvaluation\tmethod | 24.1 | — | — |
| Business\tseparation\tcosts | — | (32.5) | (50.6) |
| Cost\treduction\tand\tasset\tactions | — | (151.4) | (34.5) |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge | — | (162.1) | — |
| Gain\ton\tland\tsale | — | 12.2 | — |
| Consolidated\tTotal | $1,965.6 | $1,440.0 | $1,535.1 |

Below	is	a	reconciliation	of	segment	total	 equity	affiliates'	income	to	consolidated	equity	affiliates'	income:

| Equity	Affiliates'	Income | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Segment\ttotal | $203.3 | $159.6 | $147.0 |
| Equity\tmethod\tinvestment\timpairment\tcharge | — | (79.5) | — |
| Tax\treform\trepatriation\t-\tequity\tmethod\tinvestment | (28.5) | — | — |
| Consolidated\tTotal | $174.8 | $80.1 | $147.0 |

# INCOME	TAXES

The	tax	impact	of	our	pre-tax	non-GAAP	adjustments	reflects	the	expected	current	and	deferred	income	tax	expense	impact	of	the	transactions	and	is impacted	primarily	by	the	statutory	tax	rate	of	the	various	relevant	jurisdictions	and	the	taxability	of	the	adjustments	in	those	jurisdictions.	For	additional discussion	on	the	fiscal	year	2018	non-GAAP	tax	adjustments,	including	the	impact	of	the	U.S.	Tax	Cuts	and	Jobs	Act ,	refer	to	Note	22,	Income	Taxes,	to the	consolidated	financial	statements.

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Income\tTax\tProvision—GAAP | $524.3 | $260.9 | $432.6 |
| Income\tFrom\tContinuing\tOperations\tBefore\tTaxes—GAAP | $2,015.0 | $1,416.1 | $1,554.6 |
| Effective\tTax\tRate—GAAP | 26.0% | 18.4% | 27.8% |
| Income\tTax\tProvision—GAAP | $524.3 | $260.9 | $432.6 |
| Change\tin\tinventory\tvaluation\tmethod | (6.6) | — | — |
| Business\tseparation\tcosts | — | 3.7 | 3.9 |
| Tax\tbenefit\t(costs)\tassociated\twith\tbusiness\tseparation | — | 5.5 | (51.8) |
| Cost\treduction\tand\tasset\tactions | — | 41.6 | 9.8 |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge | — | 4.6 | — |
| Gain\ton\tland\tsale | — | (4.6) | — |
| Pension\tsettlement\tloss | 10.5 | 3.9 | 1.8 |
| Loss\ton\textinguishment\tof\tdebt | — | — | 2.6 |
| Tax\treform\trepatriation | (448.6) | — | — |
| Tax\treform\tbenefit\trelated\tto\tdeemed\tforeign\tdividends | 56.2 | — | — |
| Tax\treform\trate\tchange\tand\tother | 211.8 | — | — |
| Tax\trestructuring | 35.7 | — | — |
| Tax\telection\tbenefit | — | 111.4 | — |
| Income\tTax\tProvision—Non-GAAP\tMeasure | $383.3 | $427.0 | $398.9 |
| Income\tfrom\tContinuing\tOperations\tbefore\tTaxes—GAAP | $2,015.0 | $1,416.1 | $1,554.6 |
| Change\tin\tinventory\tvaluation\tmethod | (24.1) | — | — |
| Business\tseparation\tcosts | — | 30.2 | 50.6 |
| Cost\treduction\tand\tasset\tactions | — | 151.4 | 34.5 |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge | — | 162.1 | — |
| Gain\ton\tland\tsale | — | (12.2) | — |
| Equity\tmethod\tinvestment\timpairment\tcharge | — | 79.5 | — |
| Pension\tsettlement\tloss | 43.7 | 10.5 | 5.1 |
| Loss\ton\textinguishment\tof\tdebt | — | — | 6.9 |
| Tax\treform\trepatriation\t-\tequity\tmethod\tinvestment | 28.5 | — | — |
| Income\tFrom\tContinuing\tOperations\tBefore\tTaxes—Non-GAAP\tMeasure | $2,063.1 | $1,837.6 | $1,651.7 |
| Effective\tTax\tRate—Non-GAAP\tMeasure | 18.6% | 23.2% | 24.2% |

# LIQUIDITY	AND	CAPITAL	RESOURCES

We	maintained	a	strong	financial	position	throughout	 2018	and	as	of	30	September	 2018	our	consolidated	balance	sheet	included	cash	and	cash	items	of $2,791.3.	We	continue	to	have	consistent	access	to	commercial	paper	markets,	and	cash	flows	from	operating	and	financing	activities	are	expected	to meet	liquidity	needs	for	the	foreseeable	future.

As	of	30	September	2018,	we	had	$995.1	of	foreign	cash	and	cash	items	compared	to	a	total	amount	of	cash	and	cash	items	of	 $2,791.3.	As	a	result	of the	Tax	Act,	we	currently	do	not	expect	that	a	significant	portion	of	the	earnings	of	our	foreign	subsidiaries	and	affiliates	will	be	subject	to	U.S.	income	tax upon	subsequent	repatriation	to	the	United	States.	Depending	on	the	country	in	which	the	subsidiaries	and	affiliates	reside,	the	repatriation	of	these earnings	may	be	subject	to	foreign	withholding	and	other	taxes.	However,	since	we	have	significant	current	investment	plans	outside	the	U.S.,	it	is	our intent	to	permanently	reinvest	the	majority	of	our	foreign	cash	and	cash	items	that	would	be	subject	to	additional	taxes	outside	the	U.S.	Refer	to	Note	22, Income	Taxes,	for	additional	information.

Our	cash	flows	from	operating,	investing,	and	financing	activities	from	continuing	operations,	as	reflected	in	the	consolidated	statements	of	cash	flows,	are summarized	in	the	following	table:

| Cash	provided	by	(used	for) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Operating\tactivities | $2,554.7 | $2,534.1 | $2,258.8 |
| Investing\tactivities | (1,649.1) | (1,417.7) | (864.8) |
| Financing\tactivities | (1,359.8) | (2,040.9) | (860.2) |

# Operating	Activities

For	the	year	ended	2018,	cash	provided	by	operating	activities	was	 $2,554.7.	Income	from	continuing	operations	of	 $1,455.6	was	adjusted	for	items including	depreciation	and	amortization,	deferred	income	taxes,	impacts	from	the	Tax	Act,	undistributed	earnings	of	unconsolidated	affiliates,	share-based compensation,	and	noncurrent	capital	lease	receivables.	Other	adjustments	of	$131.6	include	a	$54.9	net	impact	from	the	remeasurement	of intercompany	transactions.	The	related	hedging	instruments	that	eliminate	the	earnings	impact	are	included	as	a	working	capital	adjustment	in	other receivables	or	payables	and	accrued	liabilities.	In	addition,	other	adjustments	were	impacted	by	cash	received	from	the	early	termination	of	a	cross currency	swap	of	$54.4,	as	well	as	the	excess	of	pension	expense	over	pension	contributions	of	$23.5.	The	working	capital	accounts	were	a	use	of	cash of	$265.4,	primarily	driven	by	payables	and	accrued	liabilities,	inventories,	and	trade	receivables,	partially	offset	by	other	receivables.	The	use	of	cash	in payables	and	accrued	liabilities	of	$277.7	includes	a	decrease	in	customer	advances	of	$145.7	primarily	related	to	sale	of	equipment	activity	and	$67.1	for maturities	of	forward	exchange	contracts	that	hedged	foreign	currency	exposures.	The	use	of	cash	in	inventories	primarily	resulted	from	the	purchase	of helium	molecules.	In	addition,	inventories	reflect	the	noncash	impact	of	our	change	in	accounting	for	U.S.	inventories	from	LIFO	to	FIFO.	The	source	of cash	from	other	receivables	of	$123.6	was	primarily	due	to	the	maturities	of	forward	exchange	contracts	that	hedged	foreign	currency	exposures

For	the	year	ended	2017,	cash	provided	by	operating	activities	was	$2,534.1.	Income	from	continuing	operations	of	$1,134.4	included	a	goodwill	and intangible	asset	impairment	charge	of	$162.1,	an	equity	method	investment	impairment	charge	of	$79.5,	and	a	write-down	of	long-lived	assets	associated with	restructuring	of	$69.2.	Refer	to	Note	5,	Cost	Reduction	and	Asset	Actions;	Note	8,	Summarized	Financial	Information	of	Equity	Affiliates;	Note	10, Goodwill;	and	Note	11,	Intangible	Assets,	of	the	consolidated	financial	statements	for	additional	information	on	these	charges.	Other	adjustments of	$165.4	included	changes	in	uncertain	tax	positions	and	the	fair	value	of	foreign	exchange	contracts	that	hedge	intercompany	loans	as	well	as	pension contributions	and	expense.	The	working	capital	accounts	were	a	source	of	cash	of	$48.0	that	were	primarily	driven	by	payables	and	accrued	liabilities	and other	receivables,	partially	offset	by	other	working	capital	and	trade	receivables.	The	increase	in	payables	and	accrued	liabilities	of	$163.8	was	primarily due	to	timing	differences	related	to	payables	and	accrued	liabilities	and	an	increase	in	customer	advances	of	$52.8	primarily	related	to	sale	of	equipment activity.		The	source	of	cash	from	other	receivables	of	$124.7	was	primarily	due	to	the	maturities	of	forward	exchange	contracts	that	hedged	foreign currency	exposures.		Other	working	capital	was	a	use	of	cash	of	$154.0,	primarily	driven	by	payments	for	income	taxes.		Trade	receivables	was	a	use	of cash	of	$73.6	which	is	primarily	due	to	timing	differences.

For	the	year	ended	2016,	cash	provided	by	operating	activities	was	$2,258.8.	Income	from	continuing	operations	of	$1,099.5	included	a	loss	on extinguishment	of	debt	of	$6.9.	Other	adjustments	of	$156.7	were	primarily	driven	by	the	remeasurement	of	intercompany	transactions	as	the	related hedging	instruments	that	eliminate	the	earnings	impact	are	included	in	other	receivables	and	payables	and	accrued	liabilities.	The	working	capital accounts	were	a	source	of	cash	of	$21.2	that	were	primarily	driven	by	payables	and	accrued	liabilities	and	inventory	partially	offset	by	trade	receivables and	other	working	capital.	The	increase	in	payables	and	accrued	liabilities	of	$60.1	was	primarily	related	to	an	increase	in	customer	advances	which includes	payment	from	our	joint	venture	in	Jazan,	Saudi	Arabia	and	was	partially	offset	by	the	changes	in	the	fair	value	of	foreign	exchange	contracts	that hedge	intercompany	loans.	The	use	of	cash	from	other	working	capital	of	$47.8	was	primarily	driven	by	advances	associated	with	the	purchase	of	helium partially	offset	by	an	increase	in	accrued	income	taxes,	including	the	impacts	of	higher	income.

# Investing	Activities

For	the	year	ended	30	September	2018,	cash	used	for	investing	activities	was	$1,649.1.	Capital	expenditures	for	plant	and	equipment	was	 $1,568.4. Cash	paid	for	acquisitions,	net	of	cash	acquired	was	$345.4.	Refer	to	Note	6,

Acquisitions,	to	the	consolidated	financial	statements	for	further	details.	Purchases	of	investments	of	 $530.3	include	short-term	instruments	with	original maturities	greater	than	three	months	and	less	than	one	year.	Proceeds	from	investments	of	$748.2	resulted	from	maturities	of	short-term	instruments	with original	maturities	greater	than	three	months	and	less	than	one	year.

For	the	year	ended	30	September	2017,	cash	used	for	investing	activities	was	$1,417.7.	Capital	expenditures	for	plant	and	equipment	was	$1,039.7. Purchases	of	investments	of	$2,692.6	exceeded	our	proceeds	from	investments	of	$2,290.7.

For	the	year	ended	30	September	2016,	cash	used	for	investing	activities	was	$864.8,	driven	by	capital	expenditures	for	plant	and	equipment	of	$907.7. Proceeds	from	the	sale	of	assets	and	investments	of	$44.6	was	primarily	driven	by	the	receipt	of	$30.0	for	our	rights	to	a	corporate	aircraft	that	was	under construction.

# Capital	Expenditures

Capital	expenditures	are	detailed	in	the	following	table:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Additions\tto\tplant\tand\tequipment | $1,568.4 | $1,039.7 | $907.7 |
| Acquisitions,\tless\tcash\tacquired | 345.4 | 8.2 | — |
| Investments\tin\tand\tadvances\tto\tunconsolidated\taffiliates | — | 8.1 | — |
| Capital\tExpenditures\ton\ta\tGAAP\tBasis | $1,913.8 | $1,056.0 | $907.7 |
| Capital\tlease\texpenditures(A) | 20.2 | 9.9 | 27.2 |
| Capital\tExpenditures\ton\ta\tNon-GAAP\tBasis | $1,934.0 | $1,065.9 | $934.9 |

(A) We	utilize	a	non-GAAP	measure	in	the	computation	of	capital	expenditures	and	include	spending	associated	with	facilities	accounted	for	as	capital	leases. Certain	contracts	associated	with	facilities	that	are	built	to	provide	product	to	a	specific	customer	are	required	to	be	accounted	for	as	leases,	and	such	spending is	reflected	as	a	use	of	cash	in	the	consolidated	statements	of	cash	flows	within	"Cash	Provided	by	Operating	Activities"	if	the	arrangement	qualifies	as	a	capital lease.	The	presentation	of	this	non-GAAP	measure	is	intended	to	enhance	the	usefulness	of	information	by	providing	a	measure	that	our	management	uses internally	to	evaluate	and	manage	our	expenditures.

Capital	expenditures	on	a	GAAP	basis	in	fiscal	year	2018	totaled	$1,913.8,	compared	to	$1,056.0	in	fiscal	year	2017.	The	increase	of	$857.8	was primarily	due	to	major	project	spending	and	higher	business	combination	activity,	including	the	purchase	of	gasification	and	syngas	clean	up	assets	from Lu'An.	Refer	to	Note	6,	Acquisitions,	to	the	consolidated	financial	statements	for	additional	information.	Additions	to	plant	and	equipment	also	included support	capital	of	a	routine,	ongoing	nature,	including	expenditures	for	distribution	equipment	and	facility	improvements.

Capital	expenditures	on	a	non-GAAP	basis	in	fiscal	year	2018	totaled	$1,934.0	compared	to	$1,065.9	in	fiscal	year	2017.	The	increase	of	$868.1	was primarily	due	to	higher	major	project	spending	and	higher	business	combination	activity.

On	19	April	2015,	a	joint	venture	between	Air	Products	and	ACWA	Holding	entered	into	a	20-year	oxygen	and	nitrogen	supply	agreement	to	supply	Saudi Aramco's	oil	refinery	and	power	plant	being	built	in	Jazan,	Saudi	Arabia.	Air	Products	owns	25%	of	the	joint	venture.	During	2016,	we	recorded	a	noncash transaction	of	$26.9	to	our	investment	in	net	assets	of	and	advances	to	equity	affiliates	to	increase	our	obligation	to	invest	in	the	joint	venture	to	$94.4. This	noncash	transaction	was	excluded	from	the	consolidated	statements	of	cash	flows.	We	expect	to	invest	approximately	$100	in	this	joint	venture.

Sales	backlog	represents	our	estimate	of	revenue	to	be	recognized	in	the	future	on	our	share	of	Air	Products'	sale	of	equipment	orders	and	related process	technologies	that	are	under	firm	contracts.	The	sales	backlog	for	the	Company	at	30	September	2018	was	$204	compared	to	$481	at	 30 September	2017.

Capital	expenditures	for	new	plant	and	equipment	in	fiscal	year	 2019	are	expected	to	be	approximately	 $2,300	to	$2,500.	A	majority	of	the	total	capital expenditures	are	expected	to	be	for	new	plants	that	are	currently	under	construction	or	expected	to	start	construction.	It	is	anticipated	that	capital expenditures	will	be	funded	principally	with	our	current	cash	balance	and	cash	generated	from	continuing	operations.	In	addition,	we	intend	to	continue	to evaluate	acquisitions	of	small	and	medium	size	industrial	gas	companies	or	assets	from	other	industrial	gas	companies;	the	purchase	of	existing	industrial gas	facilities	from	our	customers	to	create	long-term	contracts	where	we	own	and	operate	the	plant	and	sell	industrial	gases	to	the	customer	based	on	a fixed	fee;	and	investment	in	very	large	industrial	gas	projects	driven	by	demand	for	more	energy,	cleaner	energy,	and	emerging	market	growth.

# Financing	Activities

For	the	year	ended	2018,	cash	used	for	financing	activities	was	$1,359.8.	This	consisted	primarily	of	dividend	payments	to	shareholders	of	$897.8	and payments	on	long-term	debt	of	$418.7.	Payments	on	long-term	debt	primarily	related	to	the	repayment	of	a	1.2%	U.S.	Senior	Note	of	$400.0	that	matured on	16	October	2017.

For	the	year	ended	2017,	cash	used	for	financing	activities	was	$2,040.9.	This	consisted	primarily	of	repayments	of	commercial	paper	and	short-term borrowings	of	$798.6,	dividend	payments	to	shareholders	of	$787.9	and	payments	on	long-term	debt	of	$483.9.	Payments	on	long-term	debt	primarily consisted	of	the	repayment	of	a	4.625%	Eurobond	of	€300	million	($317.2)	that	matured	on	15	March	2017	and	$138.0	for	the	repayment	of	industrial revenue	bonds.

For	the	year	ended	2016,	cash	used	for	financing	activities	was	$860.2.	Our	borrowings	(short-	and	long-term	proceeds,	net	of	repayments)	were	a	net use	of	cash	of	$237.7	and	included	the	repayment	of	the	2.0%	Senior	Note	of	$350.0	million	on	2	August	2016,	and	a	$144.2	use	of	cash	for	net commercial	paper	and	other	short-term	debt	borrowings	which	were	partially	offset	by	debt	proceeds	from	the	issuance	of	a	.375%	Eurobond	of	€350 million	($386.9)	on	1	June	2016.	Versum	distributed	in-kind	notes	with	an	aggregate	principal	amount	of	$425.0	to	Air	Products.	However,	since	Air Products	exchanged	these	notes	with	certain	financial	institutions	for	$418.3	of	Air	Products'	outstanding	commercial	paper,	this	noncash	debt	for	debt exchange	was	excluded	from	the	consolidated	statements	of	cash	flows.	Refer	to	Note	4,	Materials	Technologies	Separation,	to	the	consolidated	financial statements	for	additional	details.	We	also	used	cash	to	pay	dividends	of	$721.2	and	received	proceeds	from	stock	option	exercises	of	$141.3.

For	the	year	ended	2018,	cash	flows	of	discontinued	operations	were	not	material.

For	the	year	ended	2017,	cash	flows	of	discontinued	operations	primarily	included	impacts	associated	with	the	spin-off	of	EMD	as	Versum	on	1	October 2016	and	the	sale	of	PMD	to	Evonik	on	3	January	2017.	Cash	used	for	operating	activities	of	$966.2	was	primarily	driven	by	taxes	paid	on	the	gain	on	the sale	of	PMD.	Cash	provided	by	investing	activities	of	$3,750.6	primarily	resulted	from	the	proceeds	on	the	sale	of	PMD.	Cash	provided	by	financing activities	resulted	from	a	$69.5	receipt	of	cash	from	Versum	related	to	finalization	of	the	spin-off.

For	the	year	ended	2016,	discontinued	operations	primarily	includes	the	Energy-from-Waste	business,	which	the	Company	decided	to	exit	in	the	second quarter	of	2016,	and	the	Materials	Technologies	business	which	contained	two	divisions,	EMD	and	PMD.	Cash	provided	by	discontinued	operations	was $753.6	primarily	driven	by	income	from	operations	of	discontinued	operations,	which	excludes	the	noncash	impairment	charge,	of	$386.1	and	long-term debt	proceeds	from	Versum's	Term	Loan	B	of	$575.0,	partially	offset	by	capital	expenditures	for	plant	and	equipment	of	$245.1.	Refer	to	Note	3, Discontinued	Operations,	to	the	consolidated	financial	statements	for	additional	information.

# Financing	and	Capital	Structure

On	31	March	2017,	we	entered	into	a	 five-year	$2,500.0	revolving	credit	agreement	maturing	31	 March	2022	with	a	syndicate	of	banks	(the	"2017	Credit Agreement"),	under	which	senior	unsecured	debt	is	available	to	both	the	Company	and	certain	of	its	subsidiaries.	On	28	September	2018,	we	amended the	2017	Credit	Agreement	to	reduce	the	maximum	borrowing	capacity	to	$2,300.0.	No	other	terms	were	impacted	by	the	amendment.

The	2017	Credit	Agreement	provides	a	source	of	liquidity	for	the	Company	and	supports	its	commercial	paper	program.	The	Company's	only	financial covenant	under	the	2017	Credit	Agreement	is	a	maximum	ratio	of	total	debt	to	total	capitalization	(total	debt	plus	total	equity)	no	greater	than	70%.	Total debt	at	30	September	2018	and	2017	expressed	as	a	percentage	of	total	capitalization	was	 25.4%	and	28.0%,	respectively.	No	borrowings	were outstanding	under	the	2017	Credit	Agreement	as	of	30	September	2018.

Commitments	totaling	$7.0	are	maintained	by	our	foreign	subsidiaries,	all	of	which	was	borrowed	and	outstanding	at 30	September	2018.

As	of	30	September	2018,	we	are	in	compliance	with	all	of	the	financial	and	other	covenants	under	our	debt	agreements.

On	15	September	2011,	the	Board	of	Directors	authorized	the	repurchase	of	up	to	 $1,000	of	our	outstanding	common	stock.	We	did	not	purchase	any	of our	outstanding	shares	during	fiscal	years	2018,	2017	or	2016.	At	30	September	2018,	$485.3	in	share	repurchase	authorization	remains.

Cash	flows	from	operations	and	financing	activities	are	expected	to	meet	liquidity	needs	for	the	foreseeable	future	and	our	working	capital	balance	was $2,743.9	at	30	September	2018.	We	expect	that	we	will	continue	to	be	in	compliance	with	all	of	our	financial	covenants.

# Dividends

Dividends	are	declared	by	the	Board	of	Directors	and	are	usually	paid	during	the	sixth	week	after	the	close	of	the	fiscal	quarter.	During 2018,	the	Board	of Directors	increased	the	quarterly	dividend	from	$.95	per	share	to	$1.10	per	share,	or	$4.40	per	share	annually.

# CONTRACTUAL	OBLIGATIONS

We	are	obligated	to	make	future	payments	under	various	contracts,	such	as	debt	agreements,	lease	agreements,	unconditional	purchase	obligations,	and other	long-term	obligations.	The	following	table	summarizes	our	obligations	on	a	continuing	operations	basis	as	of	30	September	2018:

|  | Total | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Debt\tmaturities | $3,774 | $407 | $381 | $474 | $448 | $449 | $1,615 |
| Contractual\tinterest\ton\tdebt | 589 | 101 | 81 | 71 | 57 | 46 | 233 |
| Capital\tleases | 23 | 2 | 2 | 3 | 1 | 1 | 14 |
| Operating\tleases | 334 | 66 | 50 | 41 | 31 | 23 | 123 |
| Pension\tobligations | 310 | 53 | 40 | 41 | 41 | 41 | 94 |
| Unconditional\tpurchase\tobligations | 7,660 | 851 | 362 | 342 | 318 | 326 | 5,461 |
| Deemed\trepatriation\ttax\trelated\tto\tthe\tTax\tAct | 184 | — | 14 | 16 | 16 | 16 | 122 |
| Obligation\tfor\tfuture\tcontribution\tto\tan\tequity\naffiliate | 100 | — | 100 | — | — | — | — |
| Total\tContractual\tObligations | $12,974 | $1,480 | $1,030 | $988 | $912 | $902 | $7,662 |

# Debt	Obligations

Our	debt	obligations	include	the	maturity	payments	of	the	principal	amount	of	long-term	debt,	including	the	current	portion	and	amounts	owed	to	related parties,	and	the	related	contractual	interest	obligations.	Refer	to	Note	15,	Debt,	to	the	consolidated	financial	statements	for	additional	information	on	our debt	obligations.

Contractual	interest	is	the	interest	we	are	contracted	to	pay	on	our	debt	obligations	without	taking	into	account	the	interest	impact	of	interest	rate	swaps related	to	any	of	this	debt,	which	at	current	interest	rates	would	slightly	decrease	contractual	interest.	We	had	approximately	$640	of	long-term	debt subject	to	variable	interest	rates	at	30	September	2018,	excluding	fixed-rate	debt	that	has	been	swapped	to	variable-rate	debt.	The	rate	assumed	for	the variable	interest	component	of	the	contractual	interest	obligation	was	the	rate	in	effect	at	30	September	2018.	Variable	interest	rates	are	primarily determined	by	U.S.	short-term	tax-exempt	interest	rates	and	by	interbank	offer	rates.

# Leases

Refer	to	Note	12,	Leases,	to	the	consolidated	financial	statements	for	additional	information	on	capital	and	operating	leases.

# Pension	Obligations

The	amounts	in	the	table	above	represent	the	current	estimated	cash	payments	to	be	made	by	us	that,	in	total,	equal	the	recognized	pension	liabilities	for our	U.S.	and	international	pension	plans.	For	additional	information,	refer	to	Note	16,	Retirement	Benefits,	to	the	consolidated	financial	statements.	These payments	are	based	upon	the	current	valuation	assumptions	and	regulatory	environment.

The	total	accrued	liability	for	pension	benefits	may	be	impacted	by	interest	rates,	plan	demographics,	actual	return	on	plan	assets,	continuation	or modification	of	benefits,	and	other	factors.	Such	factors	can	significantly	impact	the	amount	of	the	liability	and	related	contributions.

# Unconditional	Purchase	Obligations

Approximately	$6,800	of	our	unconditional	purchase	obligations	relate	to	helium	purchases.	The	majority	of	these	obligations	occur	after	fiscal	year	2023. Helium	purchases	include	crude	feedstock	supply	to	multiple	helium	refining	plants	in	North	America	as	well	as	refined	helium	purchases	from	sources around	the	world.	As	a	rare	byproduct	of	natural	gas	production	in	the	energy	sector,	these	helium	sourcing	agreements	are	medium-	to	long-term	and contain	take-if-tendered	provisions.	The	refined	helium	is	distributed	globally	and	sold	as	a	merchant	gas,	primarily	under	medium-term	requirements contracts.	While	contract	terms	in	the	energy	sector	are	longer	than	those	in	merchant,	helium	is	a	rare	gas	used	in	applications	with	few	or	no substitutions	because	of	its	unique	physical	and	chemical	properties.

Approximately	$210	of	our	long-term	unconditional	purchase	obligations	relate	to	feedstock	supply	for	numerous	HyCO	(hydrogen,	carbon	monoxide,	and syngas)	facilities.	The	price	of	feedstock	supply	is	principally	related	to	the	price	of	natural	gas.	However,	long-term	take-or-pay	sales	contracts	to	HyCO customers	are	generally	matched	to	the	term	of	the	feedstock	supply	obligations	and	provide	recovery	of	price	increases	in	the	feedstock	supply.	Due	to the	matching	of	most	long-term	feedstock	supply	obligations	to	customer	sales	contracts,	we	do	not	believe	these	purchase	obligations	would	have	a material	effect	on	our	financial	condition	or	results	of	operations.

The	unconditional	purchase	obligations	also	include	other	product	supply	and	purchase	commitments	and	electric	power	and	natural	gas	supply	purchase obligations,	which	are	primarily	pass-through	contracts	with	our	customers.

Purchase	commitments	to	spend	approximately	$455	for	additional	plant	and	equipment	are	included	in	the	unconditional	purchase	obligations	in 2019.

We	also	purchase	materials,	energy,	capital	equipment,	supplies,	and	services	as	part	of	the	ordinary	course	of	business	under	arrangements	that	are	not unconditional	purchase	obligations.	The	majority	of	such	purchases	are	for	raw	materials	and	energy,	which	are	obtained	under	requirements-type contracts	at	market	prices.

# Income	Tax	Liabilities

Tax	liabilities	related	to	unrecognized	tax	benefits	as	of	 30	September	2018	were	$233.6.	These	tax	liabilities	were	excluded	from	the	Contractual Obligations	table	as	it	is	impractical	to	determine	a	cash	impact	by	year	given	that	payments	will	vary	according	to	changes	in	tax	laws,	tax	rates,	and	our operating	results.	In	addition,	there	are	uncertainties	in	timing	of	the	effective	settlement	of	our	uncertain	tax	positions	with	respective	taxing	authorities. However,	the	Contractual	Obligations	table	above	includes	our	accrued	liability	of	approximately	$184	for	deemed	repatriation	tax	that	is	payable	over eight	years	related	to	the	Tax	Act.	Refer	to	Note	22,	Income	Taxes,	to	the	consolidated	financial	statements	for	additional	information.

# Obligation	for	Future	Contribution	to	an	Equity	Affiliate

On	19	April	2015,	a	joint	venture	between	Air	Products	and	ACWA	Holding	entered	into	a	20-year	oxygen	and	nitrogen	supply	agreement	to	supply	Saudi Aramco's	oil	refinery	and	power	plant	being	built	in	Jazan,	Saudi	Arabia.	Air	Products	owns	25%	of	the	joint	venture	and	guarantees	the	repayment	of	its share	of	an	equity	bridge	loan.	In	total,	we	expect	to	invest	approximately	$100	in	this	joint	venture.	As	of	 30	September	2018,	we	recorded	a	noncurrent liability	of	$94.4	for	our	obligation	to	make	future	equity	contributions	in	2020	based	on	our	proportionate	share	of	the	advances	received	by	the	joint venture	under	the	loan.

# Expected	Investment	in	Joint	Venture

On	12	August	2018,	Air	Products	entered	an	agreement	to	form	a	gasification/power	joint	venture	("JV")	with	Saudi	Aramco	and	ACWA	in	Jazan,	Saudi Arabia.	Air	Products	will	own	at	least	55%	of	the	JV,	with	Saudi	Aramco	and	ACWA	Power	owning	the	balance.	The	JV	will	purchase	the	gasification assets,	power	block,	and	the	associated	utilities	from	Saudi	Aramco	for	approximately	$8	billion.	Our	expected	investment	has	been	excluded	from	the contractual	obligations	table	above	pending	closing,	which	is	currently	expected	in	fiscal	year	2020.

The	JV	will	own	and	operate	the	facility	under	a	25-year	contract	for	a	fixed	monthly	fee.	Saudi	Aramco	will	supply	feedstock	to	the	JV,	and	the	JV	will produce	power,	hydrogen	and	other	utilities	for	Saudi	Aramco.

# PENSION	BENEFITS

The	Company	and	certain	of	its	subsidiaries	sponsor	defined	benefit	pension	plans	and	defined	contribution	plans	that	cover	a	substantial	portion	of	its worldwide	employees.	The	principal	defined	benefit	pension	plans	are	the	U.S.	salaried	pension	plan	and	the	U.K.	pension	plan.	These	plans	were	closed to	new	participants	in	2005,	after	which	defined	contribution	plans	were	offered	to	new	employees.	The	shift	to	defined	contribution	plans	is	expected	to continue	to	reduce	volatility	of	both	plan	expense	and	contributions.

The	fair	market	value	of	plan	assets	for	our	defined	benefit	pension	plans	as	of	the	 30	September	2018	measurement	date	decreased	to	$4,273.1	from $4,409.2	at	the	end	of	fiscal	year	2017.	The	projected	benefit	obligation	for	these	plans	was	$4,583.3	and	$5,107.2	at	the	end	of	fiscal	years	 2018	and 2017,	respectively.	The	net	unfunded	liability	decreased	$387.8	from	$698.0	to	$310.2,	primarily	due	to	higher	discount	rates	and	favorable	asset experience.	Refer	to	Note	16,	Retirement	Benefits,	to	the	consolidated	financial	statements	for	comprehensive	and	detailed	disclosures	on	our postretirement	benefits.

# Pension	Expense

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Pension\texpense\t–\tContinuing\toperations | $91.8 | $72.0 | $55.8 |
| Settlements,\ttermination\tbenefits,\tand\tcurtailments\t(included\tabove) | 48.9 | 15.0 | 6.0 |
| Weighted\taverage\tdiscount\trate\t–\tService\tcost | 3.2% | 2.9% | 4.1% |
| Weighted\taverage\tdiscount\trate\t–\tInterest\tcost | 2.9% | 2.5% | 3.4% |
| Weighted\taverage\texpected\trate\tof\treturn\ton\tplan\tassets | 6.9% | 7.4% | 7.5% |
| Weighted\taverage\texpected\trate\tof\tcompensation\tincrease | 3.5% | 3.5% | 3.5% |

Pension	expense,	excluding	settlements,	termination	benefits,	and	curtailments	("special	items"),	decreased	from	the	prior	year	primarily	due	to recognition	of	favorable	asset	experience,	partially	offset	by	lower	expected	returns	on	assets.	In	fiscal	year	2018,	special	items	of	$48.9	included	a pension	settlement	loss	of	$43.7	primarily	resulting	from	the	transfer	of	certain	U.S.	pension	payment	obligations	to	an	insurer	during	the	fourth	quarter, $4.8	of	pension	settlement	losses	related	to	lump	sum	payouts	from	the	U.S.	Supplemental	Pension	Plan,	and	$.4	of	termination	benefits,	all	of	which	are reflected	in	"Other	non-operating	income	(expense),	net"	on	the	consolidated	income	statements.

Pension	expense,	excluding	special	items,	increased	from	fiscal	year	2016	primarily	due	to	a	decrease	in	the	discount	rate	offset	by	favorable	asset experience.	Special	items	of	$15.0	included	pension	settlement	losses	of	$10.5	related	to	the	U.S.	Supplementary	Pension	Plan,	as	well	as	curtailment and	termination	benefits	of	$4.5.

In	fiscal	year	2019,	pension	expense,	excluding	special	items,	is	expected	to	be	approximately	$20	to	$30.	This	results	from	lower	loss	amortization primarily	due	to	favorable	asset	experience	and	the	impact	of	higher	discount	rates,	partially	offset	by	lower	expected	returns	on	assets.	Pension settlement	losses	of	$10	to	$15	are	expected,	depending	on	the	timing	of	retirements.	In	fiscal	year	2019,	we	expect	pension	expense	to	include approximately	$75	for	amortization	of	actuarial	losses.	In	fiscal	year	2018,	pension	expense	included	amortization	of	actuarial	losses	of	$128.	Net actuarial	gains	of	$232	were	recognized	in	accumulated	other	comprehensive	income	in	fiscal	year	2018.	Actuarial	gains/losses	are	amortized	into pension	expense	over	prospective	periods	to	the	extent	they	are	not	offset	by	future	gains	or	losses.	Future	changes	in	the	discount	rate	and	actual returns	on	plan	assets	different	from	expected	returns	would	impact	the	actuarial	gains/losses	and	resulting	amortization	in	years	beyond	fiscal	year	2019.

# Subsequent	Event	–	GMP	Equalization

On	26	October	2018,	the	United	Kingdom	High	Court	issued	a	ruling	in	a	case	relating	to	equalization	of	pension	plan	participants'	benefits	for	the	gender effects	of	Guaranteed	Minimum	Pensions	("GMP	equalization").	The	ruling	relates	to	the	Lloyds	Banking	Group	pension	plans	but	impacts	other	U.K. defined	benefit	pension	plans.	We	are	still	assessing	the	impact	of	this	ruling.	If	we	determine	that	the	ruling	impacts	our	U.K.	pension	plan,	the	approach to	achieve	GMP	equalization	may	retroactively	increase	our	benefit	obligation	for	some	participants	in	the	plan	and	may	impact	funding	requirements.

# Pension	Funding

Pension	funding	includes	both	contributions	to	funded	plans	and	benefit	payments	for	unfunded	plans,	which	are	primarily	non-qualified	plans.	With respect	to	funded	plans,	our	funding	policy	is	that	contributions,	combined	with	appreciation	and	earnings,	will	be	sufficient	to	pay	benefits	without	creating unnecessary	surpluses.

In	addition,	we	make	contributions	to	satisfy	all	legal	funding	requirements	while	managing	our	capacity	to	benefit	from	tax	deductions	attributable	to	plan contributions.	With	the	assistance	of	third	party	actuaries,	we	analyze	the	liabilities	and	demographics	of	each	plan,	which	help	guide	the	level	of contributions.	During	2018	and	2017,	our	cash	contributions	to	funded	plans	and	benefit	payments	for	unfunded	plans	were	$68.3	and	$64.1, respectively.

For	fiscal	year	2019,	cash	contributions	to	defined	benefit	plans	are	estimated	to	be	$45	to	$65.	The	estimate	is	based	on	expected	contributions	to certain	international	plans	and	anticipated	benefit	payments	for	unfunded	plans,	which	are	dependent	upon	the	timing	of	retirements.	Actual	future contributions	will	depend	on	future	funding	legislation,	discount	rates,	investment	performance,	plan	design,	and	various	other	factors.	Refer	to	the Contractual	Obligations	discussion	on	pages	43-44	for	a	projection	of	future	contributions.

# ENVIRONMENTAL	MATTERS

We	are	subject	to	various	environmental	laws	and	regulations	in	the	countries	in	which	we	have	operations.	Compliance	with	these	laws	and	regulations results	in	higher	capital	expenditures	and	costs.	In	the	normal	course	of	business,	we	are	involved	in	legal	proceedings	under	the	Comprehensive Environmental	Response,	Compensation,	and	Liability	Act	(CERCLA:	the	federal	Superfund	law);	Resource	Conservation	and	Recovery	Act	(RCRA);	and similar	state	and	foreign	environmental	laws	relating	to	the	designation	of	certain	sites	for	investigation	or	remediation.	Our	accounting	policy	for environmental	expenditures	is	discussed	in	Note	1,	Major	Accounting	Policies,	to	the	consolidated	financial	statements,	and	environmental	loss contingencies	are	discussed	in	Note	17,	Commitments	and	Contingencies,	to	the	consolidated	financial	statements.

The	amounts	charged	to	income	from	continuing	operations	related	to	environmental	matters	totaled	 $12.8,	$11.4,	and	$12.2	in	fiscal	years	2018,	2017, and	2016,	respectively.	These	amounts	represent	an	estimate	of	expenses	for	compliance	with	environmental	laws	and	activities	undertaken	to	meet internal	Company	standards.	Refer	to	Note	17,	Commitments	and	Contingencies,	to	the	consolidated	financial	statements	for	additional	information.

Although	precise	amounts	are	difficult	to	determine,	we	estimate	that	we	spent	 $3,	$7,	and	$3	in	fiscal	years	2018,	2017,	and	2016,	respectively,	on capital	projects	to	control	pollution.	Capital	expenditures	to	control	pollution	are	estimated	to	be	approximately	$4	in	both	fiscal	years	2019	and	2020.

We	accrue	environmental	investigatory	and	remediation	costs	for	identified	sites	when	it	is	probable	that	a	liability	has	been	incurred	and	the	amount	of loss	can	be	reasonably	estimated.	The	potential	exposure	for	such	costs	is	estimated	to	range	from	$76	to	a	reasonably	possible	upper	exposure	of	 $90 as	of	30	September	2018.	The	consolidated	balance	sheets	at	30	September	2018	and	2017	included	an	accrual	of	$76.8	and	$83.6,	respectively, primarily	as	part	of	other	noncurrent	liabilities.	The	accrual	for	the	environmental	obligations	includes	amounts	for	the	Pace,	Florida;	Piedmont,	South Carolina;	and	Pasadena,	Texas,	locations	which	were	a	part	of	previously	divested	chemicals	businesses.	Refer	to	Note	17,	Commitments	and Contingencies,	to	the	consolidated	financial	statements	for	further	details	on	these	facilities.

Actual	costs	to	be	incurred	at	identified	sites	in	future	periods	may	vary	from	the	estimates,	given	inherent	uncertainties	in	evaluating	environmental exposures.	Subject	to	the	imprecision	in	estimating	future	environmental	costs,	we	do	not	expect	that	any	sum	we	may	have	to	pay	in	connection	with environmental	matters	in	excess	of	the	amounts	recorded	or	disclosed	above	would	have	a	material	adverse	impact	on	our	financial	position	or	results	of operations	in	any	one	year.

Some	of	our	operations	are	within	jurisdictions	that	have	or	are	developing	regulatory	regimes	governing	emissions	of	greenhouse	gases	("GHG"), including	carbon	dioxide.	These	include	existing	coverage	under	the	European	Union	Emission	Trading	system,	the	California	cap	and	trade	schemes, Alberta's	Carbon	Competitiveness	Incentive	Regulation,	China's	Emission	Trading	Scheme,	South	Korea's	Emission	Trading	Scheme,	nation-wide expansion	of	the	China	Emission	Trading	Scheme,	revisions	to	the	Alberta	regulation,	and	Environment	Canada's	developing	Output	Based	Pricing System.	In	addition,	the	U.S.	Environmental	Protection	Agency	("EPA")	requires	mandatory	reporting	of	GHG	emissions	and	is	regulating	GHG	emissions for	new	construction	and	major	modifications	to	existing	facilities.	Some	jurisdictions	have	various	mechanisms	to	target	the	power	sector	to	achieve emission	reductions,	which	often	result	in	higher	power	costs.

Regulation	of	GHG	may	also	produce	new	opportunities	for	us.	We	continue	to	develop	technologies	to	help	our	facilities	and	our	customers	lower	energy consumption,	improve	efficiency,	and	lower	emissions.	We	also	have	developed	a	portfolio	of	technologies	that	capture	carbon	dioxide	from	steam methane	reforming,	enable	cleaner	transportation	fuels,	and	facilitate	alternate	fuel	source	development.	In	addition,	the	potential	demand	for	clean	coal could	increase	demand	for	oxygen,	one	of	our	main	products,	and	our	proprietary	technology	for	delivering	low-cost	oxygen.

# OFF-BALANCE	SHEET	ARRANGEMENTS

We	have	entered	into	certain	guarantee	agreements	as	discussed	in	Note	 17,	Commitments	and	Contingencies,	to	the	consolidated	financial	statements. In	addition,	we	are	not	a	primary	beneficiary	in	any	material	variable	interest	entity.	Our	off-balance	sheet	arrangements	are	not	reasonably	likely	to	have a	material	impact	on	financial	condition,	changes	in	financial	condition,	results	of	operations,	or	liquidity.

# RELATED	PARTY	TRANSACTIONS

We	have	related	party	sales	to	some	of	our	equity	affiliates	and	joint	venture	partners.	Sales	to	related	parties	totaled	approximately	 $340,	$580,	and	$320 during	fiscal	years	2018,	2017,	and	2016,	respectively,	and	primarily	related	to	Jazan	sale	of	equipment	activity.	Agreements	with	related	parties	include terms	that	are	consistent	with	those	that	we	believe	would	have	been	negotiated	at	an	arm's	length	with	an	independent	party.

In	addition,	we	completed	the	formation	of	Air	Products	Lu	An	(Changzhi)	Co.,	Ltd.,	a	60%-owned	JV	with	Lu'An	Clean	Energy	Company	("Lu'An"),	and the	JV	acquired	gasification	and	syngas	clean-up	assets	from	Lu'An	during	the	third	quarter	of	2018.	In	connection	with	the	acquisition,	Lu'An	made	a	loan of	2.6	billion	RMB	to	the	JV,	and	we	established	a	liability	of	 2.3	billion	RMB	for	cash	payments	expected	to	be	made	to	or	on	behalf	of	Lu'An	in	fiscal	year 2019.	As	of	30	September	2018,	long-term	debt	payable	to	Lu'An	of	2.6	billion	RMB	($384)	is	presented	on	the	consolidated	balance	sheets	as	" Long-term debt	–	related	party,"	and	our	expected	remaining	cash	payments	of	approximately	 2.2	billion	RMB	($330)	are	presented	within	"Payables	and	accrued liabilities."

# INFLATION

We	operate	in	many	countries	that	experience	volatility	in	inflation	and	foreign	exchange	rates.	The	ability	to	pass	on	inflationary	cost	increases	is	an uncertainty	due	to	general	economic	conditions	and	competitive	situations.	It	is	estimated	that	the	cost	of	replacing	our	plant	and	equipment	today	is greater	than	its	historical	cost.	Accordingly,	depreciation	expense	would	be	greater	if	the	expense	were	stated	on	a	current	cost	basis.

# CRITICAL	ACCOUNTING	POLICIES	AND	ESTIMATES

Note	1,	Major	Accounting	Policies,	to	the	consolidated	financial	statements	describes	our	major	accounting	policies.	Judgments	and	estimates	of uncertainties	are	required	in	applying	our	accounting	policies	in	many	areas.	However,	application	of	the	critical	accounting	policies	discussed	below requires	management's	significant	judgments,	often	as	the	result	of	the	need	to	make	estimates	of	matters	that	are	inherently	uncertain.	If	actual	results were	to	differ	materially	from	the	estimates	made,	the	reported	results	could	be	materially	affected.	Our	management	has	reviewed	these	critical accounting	policies	and	estimates	and	related	disclosures	with	our	audit	committee.

# Depreciable	Lives	of	Plant	and	Equipment

Net	plant	and	equipment	at	30	September	2018	totaled	$9,923.7,	and	depreciation	expense	totaled	 $940.7	during	fiscal	year	2018.	Plant	and	equipment is	recorded	at	cost	and	depreciated	using	the	straight-line	method,	which	deducts	equal	amounts	of	the	cost	of	each	asset	from	earnings	every	year	over its	estimated	economic	useful	life.

Economic	useful	life	is	the	duration	of	time	an	asset	is	expected	to	be	productively	employed	by	us,	which	may	be	less	than	its	physical	life.	Assumptions on	the	following	factors,	among	others,	affect	the	determination	of	estimated	economic	useful	life:	wear	and	tear,	obsolescence,	technical	standards, contract	life,	market	demand,	competitive	position,	raw	material	availability,	and	geographic	location.

The	estimated	economic	useful	life	of	an	asset	is	monitored	to	determine	its	appropriateness,	especially	in	light	of	changed	business	circumstances.	For example,	changes	in	technology,	changes	in	the	estimated	future	demand	for	products,	or	excessive	wear	and	tear	may	result	in	a	shorter	estimated useful	life	than	originally	anticipated.	In	these	cases,	we	would	depreciate	the	remaining	net	book	value	over	the	new	estimated	remaining	life,	thereby increasing	depreciation	expense	per	year	on	a	prospective	basis.	Likewise,	if	the	estimated	useful	life	is	increased,	the	adjustment	to	the	useful	life decreases	depreciation	expense	per	year	on	a	prospective	basis.

The	regional	Industrial	Gases	segments	have	numerous	long-term	customer	supply	contracts	for	which	we	construct	an	on-site	plant	adjacent	to	or	near the	customer's	facility.	These	contracts	typically	have	initial	contract	terms	of	10	to	20	years.	Depreciable	lives	of	the	production	assets	related	to	long- term	contracts	are	matched	to	the	contract	lives.	Extensions	to	the	contract	term	of	supply	frequently	occur	prior	to	the	expiration	of	the	initial	term.	As contract	terms	are	extended,	the	depreciable	life	of	the	remaining	net	book	value	of	the	production	assets	is	adjusted	to	match	the	new	contract	term,	as long	as	it	does	not	exceed	the	remaining	physical	life	of	the	asset.

Our	regional	Industrial	Gases	segments	also	have	contracts	for	liquid	or	gaseous	bulk	supply	and,	for	smaller	customers,	packaged	gases.	The depreciable	lives	of	production	facilities	associated	with	these	contracts	are

generally	15	years.	These	depreciable	lives	have	been	determined	based	on	historical	experience	combined	with	judgment	on	future	assumptions	such as	technological	advances,	potential	obsolescence,	competitors'	actions,	etc.

In	addition,	we	may	purchase	assets	through	transactions	accounted	for	as	either	an	asset	acquisition	or	a	business	combination.	Depreciable	lives	are assigned	to	acquired	assets	based	on	our	historical	experience	with	similar	assets.	Management	monitors	its	assumptions	and	may	potentially	need	to adjust	depreciable	life	as	circumstances	change.

A	change	in	the	weighted	average	remaining	depreciable	life	by	one	year	for	assets	associated	with	our	regional	Industrial	Gases	segments	would	impact annual	depreciation	expense	as	summarized	below:

# Impairment	of	Assets

# Plant	and	Equipment

Plant	and	equipment	meeting	the	held	for	sale	criteria	are	reported	at	the	lower	of	carrying	amount	or	fair	value	less	cost	to	sell.	Plant	and	equipment	held for	use	is	grouped	for	impairment	testing	at	the	lowest	level	for	which	there	is	identifiable	cash	flows.	Impairment	testing	of	the	asset	group	occurs whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	the	assets	may	not	be	recoverable.	Such	circumstances	would	include a	significant	decrease	in	the	market	value	of	a	long-lived	asset	grouping,	a	significant	adverse	change	in	the	manner	in	which	the	asset	grouping	is	being used	or	in	its	physical	condition,	an	accumulation	of	costs	significantly	in	excess	of	the	amount	originally	expected	for	the	acquisition	or	construction	of	the long-lived	asset,	a	history	of	operating	or	cash	flow	losses	associated	with	the	use	of	the	asset	grouping,	or	changes	in	the	expected	useful	life	of	the long-lived	assets.

If	such	circumstances	are	determined	to	exist,	an	estimate	of	undiscounted	future	cash	flows	produced	by	that	asset	group	is	compared	to	the	carrying value	to	determine	whether	impairment	exists.	If	an	asset	group	is	determined	to	be	impaired,	the	loss	is	measured	based	on	the	difference	between	the asset	group's	fair	value	and	its	carrying	value.	An	estimate	of	the	asset	group's	fair	value	is	based	on	the	discounted	value	of	its	estimated	cash	flows.

The	assumptions	underlying	the	undiscounted	future	cash	flow	projections	require	significant	management	judgment.	Factors	that	management	must estimate	include	industry	and	market	conditions,	sales	volume	and	prices,	costs	to	produce,	inflation,	etc.	The	assumptions	underlying	the	cash	flow projections	represent	management's	best	estimates	at	the	time	of	the	impairment	review.	Changes	in	key	assumptions	or	actual	conditions	that	differ	from estimates	could	result	in	an	impairment	charge.	We	use	reasonable	and	supportable	assumptions	when	performing	impairment	reviews	and	cannot predict	the	occurrence	of	future	events	and	circumstances	that	could	result	in	impairment	charges.

In	fiscal	year	2018,	there	was	no	need	to	test	for	impairment	on	any	of	our	asset	groupings	as	no	events	or	changes	in	circumstances	indicated	that	the carrying	amount	of	the	asset	groupings	may	not	be	recoverable.

In	fiscal	year	2017,	we	performed	interim	impairment	testing	of	our	Latin	America	reporting	unit	(LASA)	long-lived	assets	and	indefinite-lived	intangible assets,	including	goodwill,	as	of	30	June	2017.	See	the	2017	Impairment	Testing	discussions	under	the	Goodwill	and	Intangible	Assets	sections	below . We	also	tested	the	recoverability	of	LASA's	long-lived	assets,	including	finite-lived	intangible	assets	subject	to	amortization,	and	concluded	that	they	were recoverable	from	expected	future	undiscounted	cash	flows.

In	fiscal	year	2016,	the	Board	of	Directors	approved	the	Company's	exit	of	its	EfW	business.	We	assessed	the	recoverability	of	capital	costs	for	the	two projects	associated	with	this	business	and	recorded	an	impairment	charge	of	$913.5	to	reduce	the	carrying	values	of	plant	assets	to	their	estimated	net realizable	value.	We	estimated	the	net	realizable	value	of	the	projects	assuming	an	orderly	liquidation	of	assets	capable	of	being	marketed	on	a secondary	equipment	market	based	on	market	quotes	and	our	experience	with	selling	similar	equipment.	An	asset's	orderly	liquidation	value	is	the amount	that	could	be	realized	from	a	liquidation	sale,	given	a	reasonable	period	of	time	to	find	a	buyer,	selling	the	asset	in	the	existing	condition	where	it is	located,	and	assuming	the	highest	and	best	use	of	the	asset	by	market	participants.	The	loss	was	measured	as	the	difference	between	the	orderly liquidation	value	of	the	assets	and	the	net	book	value	of	the	assets.	The	loss	was	recorded	in	the	results	of	discontinued	operations.

During	the	first	quarter	of	fiscal	year	2017,	we	recorded	an	additional	loss	of	$6.3	to	update	our	estimate	of	the	net	realizable	value	of	the	plant	assets. The	loss	was	recorded	in	the	results	of	discontinued	operations.	In	fiscal	year	2017,	we	also	recorded	a	charge	of	$45.7	to	write-down	the	air	separation unit	in	the	Industrials	Gases	–	EMEA	segment	that	was	constructed	mainly	to	provide	oxygen	to	one	of	the	EfW	plants	to	its	net	realizable	value	of	$1.4. The	charge	was	recorded	in	the	results	of	continuing	operations.	The	remaining	assets	associated	with	EfW	were	liquidated	during	fiscal	year	2018	with no	value	remaining	as	of	30	September	2018.

Refer	to	Note	3,	Discontinued	Operations,	and	Note	5,	Cost	Reduction	and	Asset	Actions,	to	the	consolidated	financial	statements	for	additional information.

# Goodwill

The	acquisition	method	of	accounting	for	business	combinations	requires	us	to	make	use	of	estimates	and	judgments	to	allocate	the	purchase	price	paid for	acquisitions	to	the	fair	value	of	the	net	tangible	and	identifiable	intangible	assets.	Goodwill	represents	the	excess	of	the	aggregate	purchase	price	(plus the	fair	value	of	any	noncontrolling	interest	and	previously	held	equity	interest	in	the	acquiree)	over	the	fair	value	of	identifiable	net	assets	of	an	acquired entity.	Goodwill	was	$788.9	as	of	30	September	2018.	Disclosures	related	to	goodwill	are	included	in	Note	 10,	Goodwill,	to	the	consolidated	financial statements.

We	review	goodwill	for	impairment	annually	in	the	fourth	quarter	of	the	fiscal	year	and	whenever	events	or	changes	in	circumstances	indicate	that	the carrying	value	of	goodwill	might	not	be	recoverable.	The	tests	are	done	at	the	reporting	unit	level,	which	is	defined	as	being	equal	to	or	one	level	below	the operating	segment	for	which	discrete	financial	information	is	available	and	whose	operating	results	are	reviewed	by	segment	managers	regularly.	We have	five	business	segments	that	are	comprised	of	ten	reporting	units	within	seven	operating	segments.	Refer	to	Note	25,	Business	Segment	and Geographic	Information,	for	additional	information.	Reporting	units	are	primarily	based	on	products	and	subregions	within	each	reportable	segment.	The majority	of	our	goodwill	is	assigned	to	reporting	units	within	our	regional	Industrial	Gases	segments.

As	part	of	the	goodwill	impairment	testing,	we	have	the	option	to	first	assess	qualitative	factors	to	determine	whether	it	is	more	likely	than	not	that	the	fair value	of	a	reporting	unit	is	less	than	its	carrying	value.	If	we	choose	not	to	complete	a	qualitative	assessment	for	a	given	reporting	unit,	or	if	the	initial assessment	indicates	that	it	is	more	likely	than	not	that	the	carrying	value	of	a	reporting	unit	exceeds	its	estimated	fair	value,	a	quantitative	test	is required.	We	choose	to	bypass	the	qualitative	assessment	and	conduct	quantitative	testing	to	determine	if	the	carrying	value	of	the	reporting	unit	exceeds its	fair	value.	An	impairment	loss	will	be	recognized	for	the	amount	by	which	the	carrying	value	of	the	reporting	unit	exceeds	its	fair	value,	not	to	exceed the	total	amount	of	goodwill	allocated	to	that	reporting	unit.

To	determine	the	fair	value	of	a	reporting	unit,	we	initially	use	an	income	approach	valuation	model,	representing	the	present	value	of	estimated	future cash	flows.	Our	valuation	model	uses	a	discrete	growth	period	and	an	estimated	exit	trading	multiple.	The	income	approach	is	an	appropriate	valuation method	due	to	our	capital-intensive	nature,	the	long-term	contractual	nature	of	our	business,	and	the	relatively	consistent	cash	flows	generated	by	our reporting	units.	The	principal	assumptions	utilized	in	our	income	approach	valuation	model	include	revenue	growth	rates,	operating	profit	and/or	EBITDA margins,	discount	rate,	and	exit	multiple.	Projected	revenue	growth	rates	and	operating	profit	and/or	EBITDA	assumptions	are	consistent	with	those utilized	in	our	operating	plan	and/or	revised	forecasts	and	long-term	financial	planning	process.	The	discount	rate	assumption	is	calculated	based	on	an estimated	market-participant	risk-adjusted	weighted-average	cost	of	capital,	which	includes	factors	such	as	the	risk-free	rate	of	return,	cost	of	debt,	and expected	equity	premiums.	The	exit	multiple	is	determined	from	comparable	industry	transactions	and	where	appropriate,	reflects	expected	long-term growth	rates.

If	our	initial	review	under	the	income	approach	indicates	there	may	be	impairment,	we	incorporate	results	under	the	market	approach	to	further	evaluate the	existence	of	impairment.	When	the	market	approach	is	utilized,	fair	value	is	estimated	based	on	market	multiples	of	revenue	and	earnings	derived from	comparable	publicly-traded	industrial	gases	companies	and/or	regional	manufacturing	companies	engaged	in	the	same	or	similar	lines	of	business	as the	reporting	unit,	adjusted	to	reflect	differences	in	size	and	growth	prospects.	When	both	the	income	and	market	approach	are	utilized,	we	review relevant	facts	and	circumstances	and	make	a	qualitative	assessment	to	determine	the	proper	weighting.	Management	judgment	is	required	in	the determination	of	each	assumption	utilized	in	the	valuation	model,	and	actual	results	could	differ	from	the	estimates.

# 2018	Impairment	Testing

During	the	fourth	quarter	of	fiscal	year	2018,	we	conducted	our	annual	goodwill	impairment	test.	We	determined	that	the	fair	value	of	all	our	reporting units	substantially	exceeded	their	carrying	value	except	LASA,	for	which	the	fair	value	exceeded	the	carrying	value	by	8%.

The	excess	of	fair	value	over	carrying	value	for	our	reporting	units	other	than	LASA	ranged	from	approximately	110%	to	approximately	280%. Management	judgment	is	required	in	the	determination	of	each	assumption	utilized	in	the	valuation	model,	and	actual	results	could	differ	from	the estimates.	In	order	to	evaluate	the	sensitivity	of	the	fair	value	calculation	on	the	goodwill	impairment	test,	we	applied	a	hypothetical	10%	decrease	to	the fair	value	of	these	reporting	units.	In	this	scenario,	the	fair	value	of	our	reporting	units	other	than	LASA	continued	to	exceed	their	carrying	value	by	a	range of	approximately	90%	to	240%.

As	of	30	September	2018,	the	carrying	value	of	LASA	goodwill	was	$65.6,	or	less	than	1%	of	consolidated	total	assets.	Further	events	that	could	have	a negative	impact	on	the	level	of	excess	fair	value	over	carrying	value	of	the	reporting	unit	include	but	are	not	limited	to	a	decline	in	market	share,	pricing pressures,	and	further	economic	weakening	in	the	markets	we	serve.	Revenue	growth	and	EBITDA	margin	assumptions	are	two	primary	drivers	of	the fair	value	of	LASA.	We	determined	that,	with	other	assumptions	held	constant,	a	decrease	in	revenue	rates	of	approximately	230	basis	points	or	a decrease	in	EBITDA	margin	of	approximately	210	basis	points	would	result	in	an	impairment	of	the	remaining	goodwill	balance.	The	carrying	value	of LASA's	other	material	assets	at	30	September	2018	included:	Plant	and	equipment,	net	of	$341.1;	customer	relationships	of	$152.1;	and	trade	names	and trademarks	of	$48.4.	The	trade	names	and	trademarks	are	classified	as	indefinite-lived	intangible	assets.

Future	events	that	could	have	a	negative	impact	on	the	level	of	excess	fair	value	over	carrying	value	of	the	reporting	units	include,	but	are	not	limited	to: long-term	economic	weakness,	decline	in	market	share,	pricing	pressures,	inability	to	successfully	implement	cost	improvement	measures,	increases	to our	cost	of	capital,	and	changes	to	the	structure	of	our	business	as	a	result	of	future	reorganizations	or	divestitures	of	assets	or	businesses.	Negative changes	in	one	or	more	of	these	factors,	among	others,	could	result	in	impairment	charges.

For	the	first	nine	months	of	fiscal	year	2017,	volumes	declined	in	our	LASA	reporting	unit,	and	overall	revenue	growth	did	not	meet	expectations.	Due	to weak	economic	conditions	in	Latin	America	and	expectations	for	continued	volume	weakness	in	the	Latin	American	countries	and	markets	in	which	we operate,	we	lowered	our	long-term	growth	projections	for	LASA	by	more	than	200	basis	points,	which	also	unfavorably	impacted	our	EBITDA	margin. Management	considered	the	revised	projections	for	LASA	to	be	indicators	of	potential	impairment	and,	accordingly,	performed	interim	impairment	testing of	our	long-lived	assets	and	indefinite-lived	intangible	assets,	including	goodwill,	as	of	30	June	2017	utilizing	the	revised	projections.	LASA	represented approximately	6%	of	the	Company's	total	revenue	in	2017	with	business	units	in	Chile,	Colombia,	and	other	Latin	America	countries.

We	estimated	the	fair	value	of	LASA	as	of	30	June	2017	based	on	two	valuation	approaches,	the	income	approach	and	the	market	approach,	as described	above.	We	reviewed	relevant	facts	and	circumstances	in	determining	the	weighting	of	the	approaches.	Under	the	income	approach,	we estimated	the	fair	value	of	LASA	based	on	management's	estimates	of	revenue	growth	rates	and	EBITDA	margins,	taking	into	consideration	business	and market	conditions	for	the	Latin	American	countries	and	markets	in	which	we	operate.	These	estimates	were	consistent	with	our	revised	forecast	and	long- term	financial	planning	processes,	which	included	a	reduction	in	sales	growth	by	more	than	200	basis	points	from	that	previously	identified.	We	calculated the	discount	rate	based	on	a	market-participant,	risk-adjusted	weighted	average	cost	of	capital,	which	considers	industry-specific	rates	of	return	on	debt and	equity	capital	for	a	target	industry	capital	structure,	adjusted	for	risks	associated	with	business	size	and	geography.	Under	the	market	approach,	we estimated	fair	value	based	on	market	multiples	of	revenue	and	earnings	derived	from	publicly-traded	industrial	gases	companies	and	regional manufacturing	companies,	adjusted	to	reflect	differences	in	size	and	growth	prospects.

Based	on	the	results	of	the	valuations,	we	determined	that	the	goodwill	associated	with	LASA	was	impaired	and	recorded	a	noncash	impairment	charge of	$145.3,	the	amount	by	which	the	carrying	value	of	the	reporting	unit	exceeded	its	fair	value,	during	the	third	quarter	of	2017.	This	impairment	is reflected	on	our	consolidated	income	statements	within	"Goodwill	and	intangible	asset	impairment	charge."	This	charge	was	not	deductible	for	tax purposes	and	is	excluded	from	segment	operating	income.

# Intangible	Assets

Intangible	assets,	net	with	determinable	lives	at	30	September	2018	totaled	$387.3	and	consisted	primarily	of	customer	relationships,	purchased	patents and	technology,	and	land	use	rights.	These	intangible	assets	are	tested	for	impairment	as	part	of	the	long-lived	asset	grouping	impairment	tests. Impairment	testing	of	the	asset	group	occurs	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	value	of	the	assets	may	not	be recoverable.	See	the	impairment	discussion	above	under	Plant	and	Equipment	for	a	description	of	how	impairment	losses	are	determined.

Indefinite-lived	intangible	assets	at	 30	September	2018	totaled	$51.2	and	consisted	of	trade	names	and	trademarks.	Indefinite-lived	intangibles	are subject	to	impairment	testing	at	least	annually	or	more	frequently	if	events	or	changes	in	circumstances	indicate	that	potential	impairment	exists.	The impairment	test	for	indefinite-lived	intangible	assets	involves	calculating	the	fair	value	of	the	indefinite-lived	intangible	assets	and	comparing	the	fair	value to	their	carrying	value.	If	the	fair	value	is	less	than	the	carrying	value,	the	difference	is	recorded	as	an	impairment	loss.	To	determine	fair	value,	we	utilize the	royalty	savings	method,	a	form	of	the	income	approach.	This	method	values	an	intangible	asset	by	estimating	the	royalties	avoided	through	ownership of	the	asset.

Disclosures	related	to	intangible	assets	other	than	goodwill	are	included	in	Note 11,	Intangible	Assets,	to	the	consolidated	financial	statements.

In	the	fourth	quarter	of	2018,	we	conducted	our	annual	impairment	test	of	indefinite-lived	intangibles	which	resulted	in	no	impairment.

During	the	third	quarter	of	fiscal	year	2017,	we	conducted	an	interim	impairment	test	of	the	indefinite-lived	intangible	assets	associated	with	LASA.	We determined	that	the	carrying	value	of	trade	names	and	trademarks	was	in	excess	of	fair	value,	and	as	a	result,	we	recorded	a	noncash	impairment	charge of	$16.8	to	reduce	these	indefinite-lived	intangible	assets	to	their	fair	value.	This	impairment	charge	has	been	excluded	from	segment	operating	income and	is	reflected	on	our	consolidated	income	statements	within	"Goodwill	and	intangible	asset	impairment	charge."

# Equity	Investments

Investments	in	and	advances	to	equity	affiliates	totaled	 $1,277.2	at	30	September	2018.	The	majority	of	our	investments	are	non-publicly	traded	ventures with	other	companies	in	the	industrial	gas	business.	Summarized	financial	information	of	equity	affiliates	is	included	in	Note	8,	Summarized	Financial Information	of	Equity	Affiliates,	to	the	consolidated	financial	statements.	Equity	investments	are	reviewed	for	impairment	whenever	events	or	changes	in circumstances	indicate	that	the	carrying	amount	of	the	investment	may	not	be	recoverable.

An	impairment	loss	is	recognized	in	the	event	that	an	other-than-temporary	decline	in	fair	value	of	an	investment	occurs.	Management's	estimate	of	fair value	of	an	investment	is	based	on	the	income	approach	and/or	market	approach.	We	utilize	estimated	discounted	future	cash	flows	expected	to	be generated	by	the	investee	under	the	income	approach.	For	the	market	approach,	we	utilize	market	multiples	of	revenue	and	earnings	derived	from comparable	publicly-traded	industrial	gases	companies.	Changes	in	key	assumptions	about	the	financial	condition	of	an	investee	or	actual	conditions	that differ	from	estimates	could	result	in	an	impairment	charge.

During	the	third	quarter	of	fiscal	year	2017,	Abdullah	Hashim	Industrial	Gases	&	Equipment	Co.,	Ltd.	(AHG),	a	 25%-owned	equity	affiliate	in	our	Industrial Gases	–	EMEA	segment,	completed	a	review	of	its	business	plan	and	outlook.	As	a	result	of	the	revised	business	plan,	we	determined	there	was	an other-than-temporary	impairment	of	our	investment	in	AHG	and	recorded	a	noncash	impairment	charge	of	$79.5	to	reduce	the	carrying	value	of	our investment.	The	impairment	charge	is	reflected	on	our	consolidated	income	statements	within	"Equity	affiliates'	income."	This	charge	was	not	deductible for	tax	purposes	and	has	been	excluded	from	segment	results.

The	decline	in	value	resulted	from	expectations	for	lower	future	cash	flows	to	be	generated	by	AHG,	primarily	due	to	challenging	economic	conditions	in Saudi	Arabia,	including	the	impacts	of	lower	prices	in	the	oil	and	gas	industry,	increased	competition,	and	capital	project	growth	opportunities	not materializing	as	anticipated.

The	AHG	investment	was	valued	based	on	the	results	of	the	income	and	market	valuation	approaches.	The	income	approach	utilized	a	discount	rate based	on	a	market-participant,	risk-adjusted	weighted	average	cost	of	capital,	which	considers	industry	required	rates	of	return	on	debt	and	equity	capital for	a	target	industry	capital	structure	adjusted	for	risks	associated	with	size	and	geography.	Other	significant	estimates	and	assumptions	that	drove	our updated	valuation	of	AHG	included	revenue	growth	rates	and	profit	margins	that	were	lower	than	those	upon	acquisition	and	our	assessment	of	AHG's business	improvement	plan	effectiveness.	Under	the	market	approach,	we	estimated	fair	value	based	on	market	multiples	of	revenue	and	earnings derived	from	publicly-traded	industrial	gases	companies	engaged	in	similar	lines	of	business,	adjusted	to	reflect	differences	in	size	and	growth	prospects.

# Revenue	Recognition	–	Percentage-of-Completion	Method

Revenue	from	equipment	sale	contracts	is	recorded	primarily	using	the	percentage-of-completion	method.	Under	this	method,	revenue	from	the	sale	of major	equipment,	such	as	LNG	heat	exchangers	and	large	air	separation	units,	is	primarily	recognized	based	on	costs	incurred	to	date	compared	with total	estimated	costs	to	be	incurred.	We	estimate	the	profit	on	a	contract	as	the	difference	between	the	total	estimated	revenue	and	expected	costs	to complete	the	contract	and	recognize	the	profit	over	the	life	of	the	contract.

Accounting	for	contracts	using	the	percentage-of-completion	method	requires	management	judgment	relative	to	assessing	risks	and	their	impact	on	the estimate	of	revenues	and	costs.	Our	estimates	are	impacted	by	factors	such	as	the	potential	for	incentives	or	penalties	on	performance,	schedule	and technical	issues,	labor	productivity,	the	complexity	of	work	performed,	the	cost	and	availability	of	materials,	and	performance	of	subcontractors.	When adjustments	in	estimated	total	contract	revenues	or	estimated	total	costs	are	required,	any	changes	in	the	estimated	profit	from	prior	estimates	are recognized	in	the	current	period	for	the	inception-to-date	effect	of	such	change.	When	estimates	of	total	costs	to	be	incurred	on	a	contract	exceed estimates	of	total	revenues	to	be	earned,	a	provision	for	the	entire	estimated	loss	on	the	contract	is	recorded	in	the	period	in	which	the	loss	is determined.

In	addition	to	the	typical	risks	associated	with	underlying	performance	of	project	procurement	and	construction	activities,	our	Jazan	large	air	separation unit	sale	of	equipment	project	within	our	Industrial	Gases	–	Global	segment	requires	monitoring	of	risks	associated	with	schedule,	geography,	and	other aspects	of	the	contract	and	their	effects	on	our	estimates	of	total	revenues	and	total	costs	to	complete	the	contract.

Changes	in	estimates	on	projects	accounted	for	under	the	percentage-of-completion	method,	including	the	Jazan	project,	favorably	impacted	operating income	by	approximately	$38,	$27,	and	$20	in	fiscal	years	2018,	2017,	and	2016,	respectively.	Our	changes	in	estimates	would	not	have	significantly impacted	amounts	recorded	in	prior	years.

We	assess	the	performance	of	our	sale	of	equipment	projects	as	they	progress.	Our	earnings	could	be	positively	or	negatively	impacted	by	changes	to	our forecast	of	revenues	and	costs	on	these	projects.

We	account	for	income	taxes	under	the	asset	and	liability	method.	Under	this	method,	deferred	tax	assets	and	liabilities	are	recognized	for	the	tax	effects of	temporary	differences	between	the	financial	reporting	and	tax	bases	of	assets	and	liabilities	measured	using	enacted	tax	rates	in	effect	for	the	year	in which	the	differences	are	expected	to	be	recovered	or	settled.	At	30	September	2018,	accrued	income	taxes,	including	the	amount	recorded	in noncurrent,	was	$244.0	and	net	deferred	tax	liabilities	was	$653.7.	Tax	liabilities	related	to	uncertain	tax	positions	as	of	 30	September	2018	were	$233.6, excluding	interest	and	penalties.	Income	tax	expense	for	the	year	ended	30	September	2018	was	$524.3	and	includes	a	discrete	net	income	tax	expense of	$180.6	related	to	the	Tax	Act.	The	net	expense	was	recorded	based	on	provisional	estimates	pursuant	to	the	SEC	Staff	Accounting	Bulletin	No.	118. Subsequent	adjustments,	if	any,	will	be	accounted	for	in	the	period	such	adjustments	are	identified.	Disclosures	related	to	income	taxes	are	included	in Note	22,	Income	Taxes,	to	the	consolidated	financial	statements.

Management	judgment	is	required	concerning	the	ultimate	outcome	of	tax	contingencies	and	the	realization	of	deferred	tax	assets.

Actual	income	taxes	paid	may	vary	from	estimates,	depending	upon	changes	in	income	tax	laws,	actual	results	of	operations,	and	the	final	audit	of	tax returns	by	taxing	authorities.	Tax	assessments	may	arise	several	years	after	tax	returns	have	been	filed.	We	believe	that	our	recorded	tax	liabilities adequately	provide	for	these	assessments.

Deferred	tax	assets	are	recorded	for	operating	losses	and	tax	credit	carryforwards.	However,	when	we	do	not	expect	sufficient	sources	of	future	taxable income	to	realize	the	benefit	of	the	operating	losses	or	tax	credit	carryforwards,	these	deferred	tax	assets	are	reduced	by	a	valuation	allowance.	A valuation	allowance	is	recognized	if,	based	on	the	weight	of	available	evidence,	it	is	considered	more	likely	than	not	that	some	portion	or	all	of	the	deferred tax	asset	will	not	be	realized.	The	factors	used	to	assess	the	likelihood	of	realization	include	forecasted	future	taxable	income	and	available	tax	planning strategies	that	could	be	implemented	to	realize	or	renew	net	deferred	tax	assets	in	order	to	avoid	the	potential	loss	of	future	tax	benefits.	The	effect	of	a change	in	the	valuation	allowance	is	reported	in	the	income	tax	expense.

A	1%	point	increase/decrease	in	our	effective	tax	rate	would	decrease/increase	net	income	by	approximately $20.

# Pension	and	Other	Postretirement	Benefits

The	amounts	recognized	in	the	consolidated	financial	statements	for	pension	and	other	postretirement	benefits	are	determined	on	an	actuarial	basis utilizing	numerous	assumptions.	The	discussion	that	follows	provides	information	on	the	significant	assumptions	and	expense	associated	with	the	defined benefit	plans.

Actuarial	models	are	used	in	calculating	the	expense	and	liability	related	to	the	various	defined	benefit	plans.	These	models	have	an	underlying assumption	that	the	employees	render	service	over	their	service	lives	on	a	relatively	consistent	basis;	therefore,	the	expense	of	benefits	earned	should follow	a	similar	pattern.

Several	assumptions	and	statistical	variables	are	used	in	the	models	to	calculate	the	expense	and	liability	related	to	the	plans.	We	determine	assumptions about	the	discount	rate,	the	expected	rate	of	return	on	plan	assets,	and	the	rate	of	compensation	increase.	Note	16,	Retirement	Benefits,	to	the consolidated	financial	statements	includes	disclosure	of	these	rates	on	a	weighted-average	basis	for	both	the	U.S.	and	international	plans.	The	actuarial models	also	use	assumptions	about	demographic	factors	such	as	retirement	age,	mortality,	and	turnover	rates.	Mortality	rates	are	based	on	the	most recent	U.S.	and	international	mortality	tables.	We	believe	the	actuarial	assumptions	are	reasonable.	However,	actual	results	could	vary	materially	from these	actuarial	assumptions	due	to	economic	events	and	different	rates	of	retirement,	mortality,	and	turnover.

One	of	the	assumptions	used	in	the	actuarial	models	is	the	discount	rate	used	to	measure	benefit	obligations.	This	rate	reflects	the	prevailing	market	rate for	high-quality,	fixed-income	debt	instruments	with	maturities	corresponding	to	the	expected	timing	of	benefit	payments	as	of	the	annual	measurement date	for	each	of	the	various	plans.	The	Company	measures	the	service	cost	and	interest	cost	components	of	pension	expense	by	applying	spot	rates along	the	yield	curve	to	the	relevant	projected	cash	flows.	The	rates	along	the	yield	curve	are	used	to	discount	the	future	cash	flows	of	benefit	obligations back	to	the	measurement	date.	These	rates	change	from	year	to	year	based	on	market	conditions	that	affect	corporate	bond	yields.	A	higher	discount	rate decreases	the	present	value	of	the	benefit	obligations	and	results	in	lower	pension	expense.	A	50	bp	increase/decrease	in	the	discount	rate decreases/increases	pension	expense	by	approximately	$32	per	year.

The	expected	rate	of	return	on	plan	assets	represents	an	estimate	of	the	average	rate	of	return	to	be	earned	by	plan	assets	over	the	period	that	the benefits	included	in	the	benefit	obligation	are	to	be	paid.	The	expected	return	on	plan	assets	assumption	is	based	on	a	weighted	average	of	estimated long-term	returns	of	major	asset	classes	and	the	historical	performance	of	plan	assets.	In	determining	estimated	asset	class	returns,	we	take	into	account historical	and	future	expected	long-term	returns	and	the	value	of	active	management,	as	well	as	the	interest	rate	environment.	Asset	allocation	is determined	based	on	long-term	return,	volatility	and	correlation	characteristics	of	the	asset	classes,	the	profiles	of	the	plans'	liabilities,	and	acceptable levels	of	risk.	Lower	returns	on	the	plan	assets	result	in	higher	pension	expense.	A	50	bp	increase/decrease	in	the	estimated	rate	of	return	on	plan	assets decreases/increases	pension	expense	by	approximately	$21	per	year.

We	use	a	market-related	valuation	method	for	recognizing	certain	investment	gains	or	losses	for	our	significant	pension	plans.	Investment	gains	or	losses are	the	difference	between	the	expected	return	and	actual	return	on	plan	assets.	The	expected	return	on	plan	assets	is	determined	based	on	a	market- related	value	of	plan	assets.	For	equities,	this	is	a	calculated	value	that	recognizes	investment	gains	and	losses	in	fair	value	related	to	equities	over	a	five- year	period	from	the	year	in	which	they	occur	and	reduces	year-to-year	volatility.	The	market-related	value	for	fixed	income	investments	equals	the	actual fair	value.	Expense	in	future	periods	will	be	impacted	as	gains	or	losses	are	recognized	in	the	market-related	value	of	assets.

The	expected	rate	of	compensation	increase	is	another	key	assumption.	We	determine	this	rate	based	on	review	of	the	underlying	long-term	salary increase	trend	characteristic	of	labor	markets	and	historical	experience,	as	well	as	comparison	to	peer	companies.	A	50	bp	increase/decrease	in	the expected	rate	of	compensation	increases/decreases	pension	expense	by	approximately	$11	per	year.

# Loss	Contingencies

In	the	normal	course	of	business,	we	encounter	contingencies,	or	situations	involving	varying	degrees	of	uncertainty	as	to	the	outcome	and	effect	on	the Company.	We	accrue	a	liability	for	loss	contingencies	when	it	is	considered	probable	that	a	liability	has	been	incurred	and	the	amount	of	loss	can	be reasonably	estimated.	When	only	a	range	of	possible	loss	can	be	established,	the	most	probable	amount	in	the	range	is	accrued.	If	no	amount	within this	range	is	a	better	estimate	than	any	other	amount	within	the	range,	the	minimum	amount	in	the	range	is	accrued.

Contingencies	include	those	associated	with	litigation	and	environmental	matters,	for	which	our	accounting	policy	is	discussed	in	Note 1,	Major Accounting	Policies,	to	the	consolidated	financial	statements,	and	details	are	provided	in	Note	 17,	Commitments	and	Contingencies,	to	the	consolidated financial	statements.	Significant	judgment	is	required	to	determine	both	the	probability	and	whether	the	amount	of	loss	associated	with	a	contingency	can be	reasonably	estimated.	These	determinations	are	made	based	on	the	best	available	information	at	the	time.	As	additional	information	becomes available,	we	reassess	probability	and	estimates	of	loss	contingencies.	Revisions	to	the	estimates	associated	with	loss	contingencies	could	have	a significant	impact	on	our	results	of	operations	in	the	period	in	which	an	accrual	for	loss	contingencies	is	recorded	or	adjusted.	For	example,	due	to	the inherent	uncertainties	related	to	environmental	exposures,	a	significant	increase	to	environmental	liabilities	could	occur	if	a	new	site	is	designated,	the scope	of	remediation	is	increased,	a	different	remediation	alternative	is	identified,	or	our	proportionate	share	is	increased.	Similarly,	a	future	charge	for regulatory	fines	or	damage	awards	associated	with	litigation	could	have	a	significant	impact	on	our	net	income	in	the	period	in	which	it	is	recorded.

# NEW	ACCOUNTING	GUIDANCE

See	Note	2,	New	Accounting	Guidance,	to	the	consolidated	financial	statements	for	information	concerning	the	implementation	and	impact	of	new accounting	guidance.

# ITEM	7A.				QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT	MARKET	RISK

Our	earnings,	cash	flows,	and	financial	position	are	exposed	to	market	risks	relating	to	fluctuations	in	interest	rates	and	foreign	currency	exchange	rates.	It is	our	policy	to	minimize	our	cash	flow	exposure	to	adverse	changes	in	currency	exchange	rates	and	to	manage	the	financial	risks	inherent	in	funding	with debt	capital.

We	address	these	financial	exposures	through	a	controlled	program	of	risk	management	that	includes	the	use	of	derivative	financial	instruments.	We	have established	counterparty	credit	guidelines	and	generally	enter	into

transactions	with	financial	institutions	of	investment	grade	or	better,	thereby	minimizing	the	risk	of	credit	loss.	All	instruments	are	entered	into	for	other than	trading	purposes.	For	details	on	the	types	and	use	of	these	derivative	instruments	and	the	major	accounting	policies,	see	Note	1,	Major	Accounting Policies,	and	Note	13,	Financial	Instruments,	to	the	consolidated	financial	statements,	for	additional	information.	Additionally,	we	mitigate	adverse	energy price	impacts	through	our	cost	pass-through	contracts	with	customers	and	price	increases.

Our	derivative	and	other	financial	instruments	consist	of	long-term	debt	(including	current	and	related	party	portions),	interest	rate	swaps,	cross	currency interest	rate	swaps,	and	foreign	exchange-forward	contracts.	The	net	market	value	of	these	financial	instruments	combined	is	referred	to	below	as	the	net financial	instrument	position	and	is	disclosed	in	Note	14,	Fair	Value	Measurements,	to	the	consolidated	financial	statements.	At	30	September	2018	and 2017,	the	net	financial	instrument	position	was	a	liability	of	$3,736.2	and	$3,832.3,	respectively.

The	analysis	below	presents	the	sensitivity	of	the	market	value	of	our	financial	instruments	to	selected	changes	in	market	rates	and	prices.	Market	values are	the	present	value	of	projected	future	cash	flows	based	on	the	market	rates	and	prices	chosen.	The	market	values	for	interest	rate	risk	and	foreign currency	risk	are	calculated	by	us	using	a	third-party	software	model	that	utilizes	standard	pricing	models	to	determine	the	present	value	of	the instruments	based	on	market	conditions	(interest	rates,	spot	and	forward	exchange	rates,	and	implied	volatilities)	as	of	the	valuation	date.

# Interest	Rate	Risk

Our	debt	portfolio	as	of	30	September	2018,	including	the	effect	of	currency	and	interest	rate	swap	agreements,	was	composed	of	66%	fixed-rate	debt and	34%	variable-rate	debt.	Our	debt	portfolio	as	of	30	September	2017,	including	the	effect	of	currency	and	interest	rate	swap	agreements,	was composed	of	65%	fixed-rate	debt	and	35%	variable-rate	debt.

The	sensitivity	analysis	related	to	the	interest	rate	risk	on	the	fixed	portion	of	our	debt	portfolio	assumes	an	instantaneous	100	bp	move	in	interest	rates from	the	level	at	30	September	2018,	with	all	other	variables	held	constant.	A	100	bp	increase	in	market	interest	rates	would	result	in	a	decrease	of	$96 and	$112	in	the	net	liability	position	of	financial	instruments	at	30	September	2018	and	2017,	respectively.	A	100	bp	decrease	in	market	interest	rates would	result	in	an	increase	of	$101	and	$119	in	the	net	liability	position	of	financial	instruments	at	30	September	2018	and	2017,	respectively.

Based	on	the	variable-rate	debt	included	in	our	debt	portfolio,	including	the	interest	rate	swap	agreements,	a	100	bp	increase	in	interest	rates	would	result in	an	additional	$13	and	$14	of	interest	incurred	per	year	at	the	end	of	30	September	2018	and	2017,	respectively.	A	100	bp	decline	in	interest	rates	would lower	interest	incurred	by	$13	and	$14	per	year	at	30	September	2018	and	2017,	respectively.

# Foreign	Currency	Exchange	Rate	Risk

The	sensitivity	analysis	related	to	foreign	currency	exchange	rates	assumes	an	instantaneous	10%	change	in	the	foreign	currency	exchange	rates	from their	levels	at	30	September	2018	and	2017,	with	all	other	variables	held	constant.	A	10%	strengthening	or	weakening	of	the	functional	currency	of	an entity	versus	all	other	currencies	would	result	in	a	decrease	or	increase,	respectively,	of	$329	and	$312	in	the	net	liability	position	of	financial	instruments at	30	September	2018	and	2017,	respectively.

The	primary	currency	pairs	for	which	we	have	exchange	rate	exposure	are	the	Euro	and	U.S.	Dollar	and	Chinese	Renminbi	and	U.S.	Dollar.	Foreign currency	debt,	cross	currency	interest	rate	swaps,	and	foreign	exchange-forward	contracts	are	used	in	countries	where	we	do	business,	thereby	reducing our	net	asset	exposure.	Foreign	exchange-forward	contracts	and	cross	currency	interest	rate	swaps	are	also	used	to	hedge	our	firm	and	highly	anticipated foreign	currency	cash	flows.	Thus,	there	is	either	an	asset/liability	or	cash	flow	exposure	related	to	all	of	the	financial	instruments	in	the	above	sensitivity analysis	for	which	the	impact	of	a	movement	in	exchange	rates	would	be	in	the	opposite	direction	and	materially	equal	to	the	impact	on	the	instruments	in the	analysis.

The	majority	of	the	Company's	sales	are	derived	from	outside	of	the	United	States	and	denominated	in	foreign	currencies.	Financial	results	therefore	will be	affected	by	changes	in	foreign	currency	rates.	The	Chinese	Renminbi	and	the	Euro	represent	the	largest	exposures	in	terms	of	our	foreign	earnings. We	estimate	that	a	10%	reduction	in	either	the	Chinese	Renminbi	or	the	Euro	versus	the	U.S.	Dollar	would	lower	our	annual	operating	income	by approximately	$30	and	$25,	respectively.

# ITEM	8.				FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

# MANAGEMENT'S	REPORT	ON	INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

Air	Products'	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting.	Our	internal	control	over financial	reporting,	which	is	defined	in	the	following	sentences,	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	our financial	reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	U.S.	generally	accepted	accounting	principles	and includes	those	policies	and	procedures	that:

(i) pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the Company;

(ii) provide	reasonable	assurance	that	the	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with U.S.	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	Company	are	being	made	only	in	accordance	with authorizations	of	management	and	directors	of	the	Company;	and

(iii) provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use	or	disposition	of	the	Company's	assets	that could	have	a	material	effect	on	the	financial	statements.

Because	of	inherent	limitations,	internal	control	over	financial	reporting	can	only	provide	reasonable	assurance	and	may	not	prevent	or	detect misstatements.	Further,	because	of	changes	in	conditions,	the	effectiveness	of	our	internal	control	over	financial	reporting	may	vary	over	time.	Our processes	contain	self-monitoring	mechanisms,	and	actions	are	taken	to	correct	deficiencies	as	they	are	identified.

Management	has	evaluated	the	effectiveness	of	its	internal	control	over	financial	reporting	based	on	criteria	established	in	Internal	Control—Integrated Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	Based	on	this	evaluation,	management concluded	that,	as	of	30	September	2018,	the	Company's	internal	control	over	financial	reporting	was	effective.

KPMG	LLP,	an	independent	registered	public	accounting	firm,	has	issued	its	opinion	on	the	Company's	internal	control	over	financial	reporting	as	of 30 September	2018	as	stated	in	its	report	which	appears	herein.

/s/	Seifi	Ghasemi /s/	M.	Scott	Crocco Seifi	Ghasemi M.	Scott	Crocco Chairman,	President,	and Executive	Vice	President	and Chief	Executive	Officer Chief	Financial	Officer 20	November	2018 20	November	2018

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

To	the	Shareholders	and	Board	of	Directors	of	Air	Products	and	Chemicals,	Inc.:

# Opinions	on	the	Consolidated	Financial	Statements	and	Internal	Control	Over	Financial	Reporting

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Air	Products	and	Chemicals,	Inc.	and	Subsidiaries	(the	Company)	as	of	30	September	2018	and 2017,	the	related	consolidated	income	statements,	consolidated	comprehensive	income	statements,	consolidated	statements	of	cash	flows	and	consolidated statements	of	equity	for	each	of	the	years	in	the	three-year	period	ended	30	September	2018,	and	the	related	notes	and	the	financial	statement	schedule	referred	to	in Item	15(a)(2)	in	this	Form	10-K	(collectively,	the	consolidated	financial	statements).	We	also	have	audited	the	Company's	internal	control	over	financial	reporting	as	of 30	September	2018,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the Treadway	Commission.

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	the	Company	as	of	30	September 2018	and	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	each	of	the	years	in	the	three-year	period	ended	30	September	2018,	in	conformity	with	U.S. generally	accepted	accounting	principles.	Also	in	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of 30	September	2018,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the Treadway	Commission.

# Basis	for	Opinions

The	Company's	management	is	responsible	for	these	consolidated	financial	statements,	for	maintaining	effective	internal	control	over	financial	reporting,	and	for	its assessment	of	the	effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying	"Management's	Report	on	Internal	Control	over	Financial Reporting".	Our	responsibility	is	to	express	an	opinion	on	the	Company's	consolidated	financial	statements	and	an	opinion	on	the	Company's	internal	control	over financial	reporting	based	on	our	audits.	We	are	a	public	accounting	firm	registered	with	the	Public	Company	Accounting	Oversight	Board	(United	States)	(PCAOB)	and are	required	to	be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S.	federal	securities	laws	and	the	applicable	rules	and	regulations	of	the Securities	and	Exchange	Commission	and	the	PCAOB.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audits	to	obtain	reasonable assurance	about	whether	the	consolidated	financial	statements	are	free	of	material	misstatement,	whether	due	to	error	or	fraud,	and	whether	effective	internal	control over	financial	reporting	was	maintained	in	all	material	respects.

Our	audits	of	the	consolidated	financial	statements	included	performing	procedures	to	assess	the	risks	of	material	misstatement	of	the	consolidated	financial statements,	whether	due	to	error	or	fraud,	and	performing	procedures	that	respond	to	those	risks.	Such	procedures	included	examining,	on	a	test	basis,	evidence regarding	the	amounts	and	disclosures	in	the	consolidated	financial	statements.	Our	audits	also	included	evaluating	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	presentation	of	the	consolidated	financial	statements.	Our	audit	of	internal	control	over	financial reporting	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and	evaluating the	design	and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk.	Our	audits	also	included	performing	such	other	procedures	as	we	considered necessary	in	the	circumstances.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinions.

# Definition	and	Limitations	of	Internal	Control	Over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	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.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions and	dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial statements	in	accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with authorizations	of	management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized acquisition,	use,	or	disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

# /s/	KPMG	LLP

We	have	served	as	the	Company's	auditor	since	2002.

Philadelphia,	Pennsylvania

# The	Consolidated	Financial	Statements

Air	Products	and	Chemicals,	Inc.	and	Subsidiaries

# CONSOLIDATED	INCOME	STATEMENTS

| Year	ended	30	September	(Millions	of	dollars,	except	for	share	and	per	share	data) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Sales | $8,930.2 | $8,187.6 | $7,503.7 |
| Cost\tof\tsales | 6,189.5 | 5,751.5 | 5,177.3 |
| Selling\tand\tadministrative | 760.8 | 713.5 | 683.8 |
| Research\tand\tdevelopment | 64.5 | 57.6 | 71.8 |
| Business\tseparation\tcosts | — | 32.5 | 50.6 |
| Cost\treduction\tand\tasset\tactions | — | 151.4 | 34.5 |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge | — | 162.1 | — |
| Other\tincome\t(expense),\tnet | 50.2 | 121.0 | 49.4 |
| Operating\tIncome | 1,965.6 | 1,440.0 | 1,535.1 |
| Equity\taffiliates'\tincome | 174.8 | 80.1 | 147.0 |
| Interest\texpense | 130.5 | 120.6 | 115.2 |
| Other\tnon-operating\tincome\t(expense),\tnet | 5.1 | 16.6 | (5.4) |
| Loss\ton\textinguishment\tof\tdebt | — | — | 6.9 |
| Income\tFrom\tContinuing\tOperations\tBefore\tTaxes | 2,015.0 | 1,416.1 | 1,554.6 |
| Income\ttax\tprovision | 524.3 | 260.9 | 432.6 |
| Income\tFrom\tContinuing\tOperations | 1,490.7 | 1,155.2 | 1,122.0 |
| Income\t(Loss)\tFrom\tDiscontinued\tOperations,\tnet\tof\ttax | 42.2 | 1,866.0 | (460.5) |
| Net\tIncome | 1,532.9 | 3,021.2 | 661.5 |
| Net\tIncome\tAttributable\tto\tNoncontrolling\tInterests\tof\tContinuing\tOperations | 35.1 | 20.8 | 22.5 |
| Net\tIncome\tAttributable\tto\tNoncontrolling\tInterests\tof\tDiscontinued\tOperations | — | — | 7.9 |
| Net\tIncome\tAttributable\tto\tAir\tProducts | $1,497.8 | $3,000.4 | $631.1 |
| Net\tIncome\tAttributable\tto\tAir\tProducts |  |  |  |
| Income\tfrom\tcontinuing\toperations | $1,455.6 | $1,134.4 | $1,099.5 |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | 42.2 | 1,866.0 | (468.4) |
| Net\tIncome\tAttributable\tto\tAir\tProducts | $1,497.8 | $3,000.4 | $631.1 |
| Basic\tEarnings\tPer\tCommon\tShare\tAttributable\tto\tAir\tProducts |  |  |  |
| Income\tfrom\tcontinuing\toperations | $6.64 | $5.20 | $5.08 |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | .19 | 8.56 | (2.16) |
| Net\tIncome\tAttributable\tto\tAir\tProducts | $6.83 | $13.76 | $2.92 |
| Diluted\tEarnings\tPer\tCommon\tShare\tAttributable\tto\tAir\tProducts |  |  |  |
| Income\tfrom\tcontinuing\toperations | $6.59 | $5.16 | $5.04 |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | .19 | 8.49 | (2.15) |
| Net\tIncome\tAttributable\tto\tAir\tProducts | $6.78 | $13.65 | $2.89 |
| Weighted\tAverage\tCommon\tShares\t—\tBasic\t(in\tmillions) | 219.3 | 218.0 | 216.4 |
| Weighted\tAverage\tCommon\tShares\t—\tDiluted\t(in\tmillions) | 220.8 | 219.8 | 218.3 |

The	accompanying	notes	are	an	integral	part	of	these	statements.

# CONSOLIDATED	COMPREHENSIVE	INCOME	STATEMENTS

| Year	ended	30	September	(Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tIncome | $1,532.9 | $3,021.2 | $661.5 |
| Other\tComprehensive\tIncome\t(Loss),\tnet\tof\ttax: |  |  |  |
| Translation\tadjustments,\tnet\tof\ttax\tof\t$1.1,\t($19.3),\tand\t($19.8) | (244.6) | 101.9 | 9.9 |
|  | 45.9 | (12.6) | 13.7 |
|  | 179.4 | 251.6 | (335.1) |
| Reclassification\tadjustments: |  |  |  |
| Currency\ttranslation\tadjustment | 3.1 | 57.3 | 2.7 |
| Derivatives,\tnet\tof\ttax\tof\t($9.2),\t$11.7,\tand\t($9.4) | (30.4) | 24.2 | (36.0) |
|  | 133.1 | 110.7 | 87.2 |
| Total\tOther\tComprehensive\tIncome\t(Loss) | 86.5 | 533.1 | (257.6) |
| Comprehensive\tIncome | 1,619.4 | 3,554.3 | 403.9 |
| Net\tIncome\tAttributable\tto\tNoncontrolling\tInterests | 35.1 | 20.8 | 30.4 |
| Other\tComprehensive\tIncome\t(Loss)\tAttributable\tto\tNoncontrolling\tInterests | (19.0) | 3.7 | 4.8 |
| Comprehensive\tIncome\tAttributable\tto\tAir\tProducts | $1,603.3 | $3,529.8 | $368.7 |

# CONSOLIDATED	BALANCE	SHEETS

| 30	September	(Millions	of	dollars,	except	for	share	and	per	share	data) | 2018 | 2017 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tAssets |  |  |
| Cash\tand\tcash\titems | $2,791.3 | $3,273.6 |
| Short-term\tinvestments | 184.7 | 404.0 |
| Trade\treceivables,\tnet | 1,207.2 | 1,174.0 |
| Inventories | 396.1 | 335.4 |
| Contracts\tin\tprogress,\tless\tprogress\tbillings | 77.5 | 84.8 |
| Prepaid\texpenses | 129.6 | 191.4 |
| Other\treceivables\tand\tcurrent\tassets | 295.8 | 403.3 |
| Current\tassets\tof\tdiscontinued\toperations | — | 10.2 |
| Total\tCurrent\tAssets | 5,082.2 | 5,876.7 |
| Investment\tin\tnet\tassets\tof\tand\tadvances\tto\tequity\taffiliates | 1,277.2 | 1,286.9 |
| Plant\tand\tequipment,\tnet | 9,923.7 | 8,440.2 |
| Goodwill,\tnet | 788.9 | 721.5 |
| Intangible\tassets,\tnet | 438.5 | 368.3 |
| Noncurrent\tcapital\tlease\treceivables | 1,013.3 | 1,131.8 |
| Other\tnoncurrent\tassets | 654.5 | 641.8 |
| Total\tNoncurrent\tAssets | 14,096.1 | 12,590.5 |
| Total\tAssets | $19,178.3 | $18,467.2 |
| Liabilities\tand\tEquity |  |  |
| Current\tLiabilities |  |  |
| Payables\tand\taccrued\tliabilities | $1,817.8 | $1,814.3 |
| Accrued\tincome\ttaxes | 59.6 | 98.6 |
| Short-term\tborrowings | 54.3 | 144.0 |
| Current\tportion\tof\tlong-term\tdebt | 406.6 | 416.4 |
| Current\tliabilities\tof\tdiscontinued\toperations | — | 15.7 |
| Total\tCurrent\tLiabilities | 2,338.3 | 2,489.0 |
| Long-term\tdebt | 2,967.4 | 3,402.4 |
| Long-term\tdebt\t–\trelated\tparty | 384.3 | — |
| Other\tnoncurrent\tliabilities | 1,536.9 | 1,611.9 |
| Deferred\tincome\ttaxes | 775.1 | 778.4 |
| Total\tNoncurrent\tLiabilities | 5,663.7 | 5,792.7 |
| Total\tLiabilities | 8,002.0 | 8,281.7 |
| Commitments\tand\tContingencies\t–\tSee\tNote\t17 |  |  |
| Air\tProducts\tShareholders'\tEquity |  |  |
| Common\tstock\t(par\tvalue\t$1\tper\tshare;\tissued\t2018\tand\t2017\t-\t249,455,584\tshares) | 249.4 | 249.4 |
| Capital\tin\texcess\tof\tpar\tvalue | 1,029.3 | 1,001.1 |
| Retained\tearnings | 13,409.9 | 12,846.6 |
| Accumulated\tother\tcomprehensive\tloss | (1,741.9) | (1,847.4) |
| Treasury\tstock,\tat\tcost\t(2018\t-\t29,940,339\tshares;\t2017\t-\t31,109,510\tshares) | (2,089.2) | (2,163.5) |
| Total\tAir\tProducts\tShareholders'\tEquity | 10,857.5 | 10,086.2 |
| Noncontrolling\tInterests | 318.8 | 99.3 |
| Total\tEquity | 11,176.3 | 10,185.5 |
| Total\tLiabilities\tand\tEquity | $19,178.3 | $18,467.2 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

| Year	ended	30	September	(Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Operating\tActivities |  |  |  |
| Net\tincome | $1,532.9 | $3,021.2 | $661.5 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterests\tof\tcontinuing\toperations | 35.1 | 20.8 | 22.5 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterests\tof\tdiscontinued\toperations | — | — | 7.9 |
| Net\tincome\tattributable\tto\tAir\tProducts | 1,497.8 | 3,000.4 | 631.1 |
| (Income)\tLoss\tfrom\tdiscontinued\toperations | (42.2) | (1,866.0) | 468.4 |
| Income\tfrom\tcontinuing\toperations\tattributable\tto\tAir\tProducts | 1,455.6 | 1,134.4 | 1,099.5 |
| Adjustments\tto\treconcile\tincome\tto\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 970.7 | 865.8 | 854.6 |
| Deferred\tincome\ttaxes | (55.4) | (38.0) | 61.8 |
| Loss\ton\textinguishment\tof\tdebt | — | — | 6.9 |
| Tax\treform\trepatriation | 240.6 | — | — |
| Undistributed\tearnings\tof\tunconsolidated\taffiliates | (52.3) | (60.1) | (51.1) |
| Gain\ton\tsale\tof\tassets\tand\tinvestments | (6.9) | (24.3) | (7.3) |
| Share-based\tcompensation | 38.8 | 39.9 | 31.0 |
| Noncurrent\tcapital\tlease\treceivables | 97.4 | 92.2 | 85.5 |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge | — | 162.1 | — |
| Equity\tmethod\tinvestment\timpairment\tcharge | — | 79.5 | — |
| Write-down\tof\tlong-lived\tassets\tassociated\twith\tcost\treduction\tactions | — | 69.2 | — |
| Other\tadjustments | 131.6 | 165.4 | 156.7 |
| Working\tcapital\tchanges\tthat\tprovided\t(used)\tcash,\texcluding\teffects\tof\tacquisitions\tand\tdivestitures: |  |  |  |
| Trade\treceivables | (42.8) | (73.6) | (44.8) |
| Inventories | (64.2) | 6.4 | 32.2 |
| Contracts\tin\tprogress,\tless\tprogress\tbillings | 4.7 | (19.3) | 28.2 |
| Other\treceivables | 123.6 | 124.7 | (6.7) |
| Payables\tand\taccrued\tliabilities | (277.7) | 163.8 | 60.1 |
| Other\tworking\tcapital | (9.0) | (154.0) | (47.8) |
| Cash\tProvided\tby\tOperating\tActivities | 2,554.7 | 2,534.1 | 2,258.8 |
| Investing\tActivities |  |  |  |
| Additions\tto\tplant\tand\tequipment | (1,568.4) | (1,039.7) | (907.7) |
| Acquisitions,\tless\tcash\tacquired | (345.4) | (8.2) | — |
| Investment\tin\tand\tadvances\tto\tunconsolidated\taffiliates | — | (8.1) | — |
| Proceeds\tfrom\tsale\tof\tassets\tand\tinvestments | 48.8 | 42.5 | 44.6 |
| Purchases\tof\tinvestments | (530.3) | (2,692.6) | — |
| Proceeds\tfrom\tinvestments | 748.2 | 2,290.7 | — |
| Other\tinvesting\tactivities | (2.0) | (2.3) | (1.7) |
| Cash\tUsed\tfor\tInvesting\tActivities | (1,649.1) | (1,417.7) | (864.8) |
| Financing\tActivities |  |  |  |
| Long-term\tdebt\tproceeds | .5 | 2.4 | 386.9 |
| Payments\ton\tlong-term\tdebt | (418.7) | (483.9) | (480.4) |
| Net\tdecrease\tin\tcommercial\tpaper\tand\tshort-term\tborrowings | (78.5) | (798.6) | (144.2) |
| Dividends\tpaid\tto\tshareholders | (897.8) | (787.9) | (721.2) |
| Proceeds\tfrom\tstock\toption\texercises | 76.2 | 68.4 | 141.3 |
| Other\tfinancing\tactivities | (41.5) | (41.3) | (42.6) |
| Cash\tUsed\tfor\tFinancing\tActivities | (1,359.8) | (2,040.9) | (860.2) |
| Discontinued\tOperations |  |  |  |
| Cash\t(used\tfor)\tprovided\tby\toperating\tactivities | (12.8) | (966.2) | 401.9 |
| Cash\t(used\tfor)\tprovided\tby\tinvesting\tactivities | 18.6 | 3,750.6 | (204.2) |
| Cash\tprovided\tby\tfinancing\tactivities | — | 69.5 | 555.9 |
| Cash\tProvided\tby\tDiscontinued\tOperations | 5.8 | 2,853.9 | 753.6 |
| Effect\tof\tExchange\tRate\tChanges\ton\tCash | (33.9) | 13.4 | 7.5 |
| (Decrease)\tIncrease\tin\tcash\tand\tcash\titems | (482.3) | 1,942.8 | 1,294.9 |
| Cash\tand\tCash\titems\t–\tBeginning\tof\tYear | 3,273.6 | 1,330.8 | 206.4 |
| Cash\tand\tCash\tItems\t–\tEnd\tof\tPeriod | $2,791.3 | $3,273.6 | $1,501.3 |
| Less:\tCash\tand\tCash\tItems\t–\tDiscontinued\tOperations | $— | $— | $208.1 |
| Cash\tand\tCash\tItems\t–\tContinuing\tOperations | $2,791.3 | $3,273.6 | $1,293.2 |

# CONSOLIDATED	STATEMENTS	OF	EQUITY

| Year	ended	30	September<br>(Millions	of	dollars) | Common<br>Stock | Capital<br>in	Excess<br>of	Par<br>Value | Retained<br>Earnings | Accumulated<br>Other<br>Comprehensive<br>Income	(Loss) | Treasury<br>Stock | Air	Products<br>Shareholders'<br>Equity | Non-<br>controlling<br>Interests | Total<br>Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\t30\tSeptember\t2015 | $249.4 | $904.7 | $10,580.4 | ($2,125.9) | ($2,359.6) | $7,249.0 | $132.1 | $7,381.1 |
| Net\tincome | — | — | 631.1 | — | — | 631.1 | 30.4 | 661.5 |
| Other\tcomprehensive\tincome\t(loss) | — | — | — | (262.4) | — | (262.4) | 4.8 | (257.6) |
| Dividends\ton\tcommon\tstock\t(per\tshare\t$3.39) | — | — | (733.7) | — | — | (733.7) | — | (733.7) |
| Dividends\tto\tnoncontrolling\tinterests | — | — | — | — | — | — | (33.6) | (33.6) |
| Share-based\tcompensation | — | 37.6 | — | — | — | 37.6 | — | 37.6 |
| Issuance\tof\ttreasury\tshares\tfor\tstock\toption\tand\naward\tplans | — | (5.5) | — | — | 132.6 | 127.1 | — | 127.1 |
| Tax\tbenefit\tof\tstock\toption\tand\taward\tplans | — | 33.2 | — | — | — | 33.2 | — | 33.2 |
| Other\tequity\ttransactions | — | — | (2.3) | — | — | (2.3) | .1 | (2.2) |
| Balance\t30\tSeptember\t2016 | $249.4 | $970.0 | $10,475.5 | ($2,388.3) | ($2,227.0) | $7,079.6 | $133.8 | $7,213.4 |
| Net\tincome | — | — | 3,000.4 | — | — | 3,000.4 | 20.8 | 3,021.2 |
| Other\tcomprehensive\tincome | — | — | — | 529.4 | — | 529.4 | 3.7 | 533.1 |
| Dividends\ton\tcommon\tstock\t(per\tshare\t$3.71) | — | — | (808.5) | — | — | (808.5) | — | (808.5) |
| Dividends\tto\tnoncontrolling\tinterests | — | — | — | — | — | — | (28.0) | (28.0) |
| Share-based\tcompensation | — | 40.7 | — | — | — | 40.7 | — | 40.7 |
| Issuance\tof\ttreasury\tshares\tfor\tstock\toption\tand\naward\tplans | — | (9.6) | — | — | 63.5 | 53.9 | — | 53.9 |
| Spin-off\tof\tVersum | — | — | 175.0 | 11.5 | — | 186.5 | (33.9) | 152.6 |
| Cumulative\tchange\tin\taccounting\tprinciple | — | — | 8.8 | — | — | 8.8 | — | 8.8 |
| Other\tequity\ttransactions | — | — | (4.6) | — | — | (4.6) | 2.9 | (1.7) |
| Balance\t30\tSeptember\t2017 | $249.4 | $1,001.1 | $12,846.6 | ($1,847.4) | ($2,163.5) | $10,086.2 | $99.3 | $10,185.5 |
| Net\tincome | — | — | 1,497.8 | — | — | 1,497.8 | 35.1 | 1,532.9 |
| Other\tcomprehensive\tincome\t(loss) | — | — | — | 105.5 | — | 105.5 | (19.0) | 86.5 |
| Dividends\ton\tcommon\tstock\t(per\tshare\t$4.25) | — | — | (931.8) | — | — | (931.8) | — | (931.8) |
| Dividends\tto\tnoncontrolling\tinterests | — | — | — | — | — |  | (29.9) | (29.9) |
| Share-based\tcompensation | — | 38.1 | — | — | — | 38.1 | — | 38.1 |
| Issuance\tof\ttreasury\tshares\tfor\tstock\toption\tand\naward\tplans | — | (11.3) | — | — | 74.3 | 63.0 | — | 63.0 |
| Lu'An\tjoint\tventure | — | — | — | — | — | — | 227.4 | 227.4 |
| Other\tequity\ttransactions | — | 1.4 | (2.7) | — | — | (1.3) | 5.9 | 4.6 |
| Balance\t30\tSeptember\t2018 | $249.4 | $1,029.3 | $13,409.9 | ($1,741.9) | ($2,089.2) | $10,857.5 | $318.8 | $11,176.3 |

# NOTES	TO	THE	CONSOLIDATED	FINANCIAL	STATEMENTS

(Millions	of	dollars,	except	for	share	and	per	share	data)

| 1. | Major	Accounting	Policies | 65 |
| :--- | :--- | :--- |
| 2. | New\tAccounting\tGuidance | 71 |
| 3. | Discontinued\tOperations | 74 |
| 4. | Materials\tTechnologies\tSeparation | 77 |
| 5. | Cost\tReduction\tand\tAsset\tActions | 77 |
| 6. | Acquisitions | 78 |
| 7. | Inventories | 79 |
| 8. | Summarized\tFinancial\tInformation\tof\tEquity\tAffiliates | 79 |
| 9. | Plant\tand\tEquipment,\tnet | 81 |
| 10. | Goodwill | 81 |
| 11. | Intangible\tAssets | 82 |
| 12. | Leases | 83 |
| 13. | Financial\tInstruments | 85 |
| 14. | Fair\tValue\tMeasurements | 89 |
| 15. | Debt | 91 |
| 16. | Retirement\tBenefits | 93 |
| 17. | Commitments\tand\tContingencies | 101 |
| 18. | Capital\tStock | 104 |
| 19. | Share-Based\tCompensation | 105 |
| 20. | Accumulated\tOther\tComprehensive\tLoss | 108 |
| 21. | Earnings\tper\tShare | 109 |
| 22. | Income\tTaxes | 110 |
| 23. | Supplemental\tInformation | 115 |
| 24. | Summary\tby\tQuarter\t(Unaudited) | 117 |
| 25. | Business\tSegment\tand\tGeographic\tInformation | 119 |

# 1.		MAJOR	ACCOUNTING	POLICIES

# Basis	of	Presentation	and	Consolidation	Principles

The	accompanying	consolidated	financial	statements	of	Air	Products	and	Chemicals,	Inc.	were	prepared	in	accordance	with	accounting	principles generally	accepted	in	the	United	States	of	America	("GAAP")	and	include	the	accounts	of	Air	Products	and	Chemicals,	Inc.	and	those	of	its	controlled subsidiaries	("we,"	"our,"	"us,"	the	"Company,"	"Air	Products,"	or	"registrant"),	which	are	generally	majority	owned.	Intercompany	transactions	and balances	are	eliminated	in	consolidation.

We	consolidate	all	entities	that	we	control.	The	general	condition	for	control	is	ownership	of	a	majority	of	the	voting	interests	of	an	entity.	Control	may	also exist	in	arrangements	where	we	are	the	primary	beneficiary	of	a	variable	interest	entity	(VIE).	An	entity	that	has	both	the	power	to	direct	the	activities	that most	significantly	impact	the	economic	performance	of	a	VIE	and	the	obligation	to	absorb	losses	or	receive	benefits	significant	to	the	VIE	is	considered the	primary	beneficiary	of	that	entity.	We	have	determined	that	we	are	not	a	primary	beneficiary	in	any	material	VIE.

The	results	of	operations	and	cash	flows	for	our	discontinued	operations	have	been	segregated	from	the	results	of	continuing	operations	and	segment results	for	all	periods	presented.	The	assets	and	liabilities	of	the	discontinued	operations	are	segregated	in	the	consolidated	balance	sheets.	The comprehensive	income	related	to	discontinued	operations	has	not	been	segregated	and	is	included	in	the	consolidated	comprehensive	income	statement for	all	periods	presented.	Refer	to	Note	3,	Discontinued	Operations,	for	detail	of	the	businesses	presented	in	discontinued	operations.

The	notes	to	the	consolidated	financial	statements,	unless	otherwise	indicated,	are	on	a	continuing	operations	basis.	The	term	"total	company"	includes both	continuing	and	discontinued	operations.

# Reclassifications

The	consolidated	financial	statements	and	accompanying	notes	reflect	accounting	guidance	that	was	adopted	during	fiscal	year	 2018.	Refer	to	Note	2,

New	Accounting	Guidance,	for	additional	information.	Certain	prior	year	information	has	been	reclassified	to	conform	to	the	fiscal	year	 2018	presentation.

# Estimates	and	Assumptions

The	preparation	of	the	financial	statements	in	conformity	with	GAAP	requires	management	to	make	estimates	and	assumptions	that	affect	amounts reported	in	the	financial	statements	and	accompanying	notes.	Actual	results	could	differ	from	those	estimates.

# Revenue	Recognition

Revenue	from	product	sales	is	recognized	as	risk	and	title	to	the	product	transfer	to	the	customer	(which	generally	occurs	at	the	time	shipment	is	made), the	sales	price	is	fixed	or	determinable,	and	collectability	is	reasonably	assured.	Sales	returns	and	allowances	are	not	a	business	practice	in	the	industry.

Revenue	from	equipment	sale	contracts	is	recorded	primarily	using	the	percentage-of-completion	method.	Under	this	method,	revenue	from	the	sale	of major	equipment,	such	as	liquefied	natural	gas	(LNG)	heat	exchangers	and	large	air	separation	units,	is	primarily	recognized	based	on	costs	incurred	to date	compared	with	total	estimated	costs	to	be	incurred.	When	adjustments	in	estimated	total	contract	revenues	or	estimated	total	costs	are	required,	any changes	in	the	estimated	profit	from	prior	estimates	are	recognized	in	the	current	period	for	the	inception-to-date	effect	of	such	change.	Changes	in estimates	on	projects	accounted	for	under	the	percentage-of-completion	method	favorably	impacted	operating	income	by	approximately	$38,	$27,	and $20	in	fiscal	years	2018,	2017,	and	2016,	respectively.	Our	changes	in	estimates	would	not	have	significantly	impacted	amounts	recorded	in	prior	years.

Certain	contracts	associated	with	facilities	that	are	built	to	provide	product	to	a	specific	customer	are	required	to	be	accounted	for	as	leases.	In	cases where	operating	lease	treatment	is	appropriate,	there	is	no	difference	in	revenue	recognition	over	the	life	of	the	contract	as	compared	to	accounting	for the	contract	as	product	sales.	In	cases	where	capital	lease	treatment	is	appropriate,	the	timing	of	revenue	and	expense	recognition	is	impacted.	Revenue and	expense	are	recognized	up	front	for	the	sale	of	equipment	component	of	the	contract	as	compared	to	revenue	recognition	over	the	life	of	the arrangement	under	contracts	not	qualifying	as	capital	leases.	Additionally,	a	portion	of	the	revenue	representing	interest	income	from	the	financing component	of	the	lease	receivable	is	reflected	as	sales	over	the	life	of	the	contract.	Allowances	for	credit	losses	associated	with	capital	lease	receivables are	recorded	using	the	specific	identification	method.	As	of	30	September	2018	and	2017,	the	credit	quality	of	capital	lease	receivables	did	not	require	a material	allowance	for	credit	losses.

If	an	arrangement	involves	multiple	deliverables,	the	delivered	items	are	considered	separate	units	of	accounting	if	the	items	have	value	on	a	stand-alone basis.	Revenues	are	allocated	to	each	deliverable	based	upon	relative	selling	prices	derived	from	company	specific	evidence.

Amounts	billed	for	shipping	and	handling	fees	are	classified	as	sales	in	the	consolidated	income	statements.

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	excluded	from	sales	in	the	consolidated	income	statements.	We	record	a	liability	until	remitted	to	the respective	taxing	authority.

# Cost	of	Sales

Cost	of	sales	predominantly	represents	the	cost	of	tangible	products	sold.	These	costs	include	labor,	raw	materials,	plant	engineering,	power, depreciation,	production	supplies	and	materials	packaging	costs,	and	maintenance	costs.	Costs	incurred	for	shipping	and	handling	are	also	included	in cost	of	sales.

# Depreciation

Depreciation	is	recorded	using	the	straight-line	method,	which	deducts	equal	amounts	of	the	cost	of	each	asset	from	earnings	every	year	over	its expected	economic	useful	life.	The	principal	lives	for	major	classes	of	plant	and	equipment	are	summarized	in	Note	9,	Plant	and	Equipment,	net.

# Selling	and	Administrative

The	principal	components	of	selling	and	administrative	expenses	are	compensation,	advertising,	and	promotional	costs.	Selling	and	administrative expenses	also	include	costs	for	functional	support	previously	provided	to	the	former	Electronic	Materials	and	Performance	Materials	Divisions	and	in support	of	transition	services	agreements	with	Versum	and	with	Evonik,	for	which	the	reimbursement	is	reflected	in	"Other	income	(expense),	net"	on	our consolidated	income	statements.

# Postemployment	Benefits

We	provide	termination	benefits	to	employees	as	part	of	ongoing	benefit	arrangements	and	record	a	liability	for	termination	benefits	when	probable	and estimable.	These	criteria	are	met	when	management,	with	the	appropriate	level	of	authority,	approves	and	commits	to	its	plan	of	action	for	termination;	the plan	identifies	the	employees	to	be	terminated	and	their	related	benefits;	and	the	plan	is	to	be	completed	within	one	year.	We	do	not	provide	material	one- time	benefit	arrangements.

# Fair	Value	Measurements

We	are	required	to	measure	certain	assets	and	liabilities	at	fair	value,	either	upon	initial	measurement	or	for	subsequent	accounting	or	reporting.	For example,	fair	value	is	used	in	the	initial	measurement	of	assets	and	liabilities	acquired	in	a	business	combination;	on	a	recurring	basis	in	the measurement	of	derivative	financial	instruments;	and	on	a	nonrecurring	basis	when	long-lived	assets	are	written	down	to	fair	value	when	held	for	sale	or determined	to	be	impaired.	Refer	to	Note	14,	Fair	Value	Measurements,	and	Note	16,	Retirement	Benefits,	for	information	on	the	methods	and assumptions	used	in	our	fair	value	measurements.

# Financial	Instruments

We	address	certain	financial	exposures	through	a	controlled	program	of	risk	management	that	includes	the	use	of	derivative	financial	instruments.	The types	of	derivative	financial	instruments	permitted	for	such	risk	management	programs	are	specified	in	policies	set	by	management.	Refer	to	Note	13, Financial	Instruments,	for	further	detail	on	the	types	and	use	of	derivative	instruments	into	which	we	enter.

Major	financial	institutions	are	counterparties	to	all	of	these	derivative	contracts.	We	have	established	counterparty	credit	guidelines	and	generally	enter into	transactions	with	financial	institutions	of	investment	grade	or	better.	Management	believes	the	risk	of	incurring	losses	related	to	credit	risk	is	remote, and	any	losses	would	be	immaterial	to	the	consolidated	financial	results,	financial	condition,	or	liquidity.

We	recognize	derivatives	on	the	balance	sheet	at	fair	value.	On	the	date	the	derivative	instrument	is	entered	into,	we	generally	designate	the	derivative	as either	(1)	a	hedge	of	a	forecasted	transaction	or	of	the	variability	of	cash	flows	to	be	received	or	paid	related	to	a	recognized	asset	or	liability	(cash	flow hedge),	(2)	a	hedge	of	a	net	investment	in	a	foreign	operation	(net	investment	hedge),	or	(3)	a	hedge	of	the	fair	value	of	a	recognized	asset	or	liability	(fair value	hedge).

The	following	details	the	accounting	treatment	of	our	cash	flow,	fair	value,	net	investment,	and	non-designated	hedges:

•Changes	in	the	fair	value	of	a	derivative	that	is	designated	as	and	meets	the	cash	flow	hedge	criteria	are	recorded	in	accumulated	other comprehensive	loss	(AOCL)	to	the	extent	effective	and	then	recognized	in	earnings	when	the	hedged	items	affect	earnings.

•Changes	in	the	fair	value	of	a	derivative	that	is	designated	as	and	meets	all	the	required	criteria	for	a	fair	value	hedge,	along	with	the	gain	or	loss	on the	hedged	asset	or	liability	that	is	attributable	to	the	hedged	risk,	are	recorded	in	current	period	earnings.

•Changes	in	the	fair	value	of	a	derivative	and	foreign	currency	debt	that	are	designated	as	and	meet	all	the	required	criteria	for	a	hedge	of	a	net investment	are	recorded	as	translation	adjustments	in	AOCL.

•Changes	in	the	fair	value	of	a	derivative	that	is	not	designated	as	a	hedge	are	recorded	immediately	in	earnings.

We	formally	document	the	relationships	between	hedging	instruments	and	hedged	items,	as	well	as	our	risk	management	objective	and	strategy	for undertaking	various	hedge	transactions.	This	process	includes	relating	derivatives	that	are	designated	as	fair	value	or	cash	flow	hedges	to	specific	assets and	liabilities	on	the	balance	sheet	or	to	specific	firm	commitments	or	forecasted	transactions.	We	also	formally	assess,	at	the	inception	of	the	hedge	and on	an	ongoing	basis,	whether	derivatives	are	highly	effective	in	offsetting	changes	in	fair	values	or	cash	flows	of	the	hedged	item.	If	it	is	determined	that	a derivative	is	not	highly	effective	as	a	hedge,	or	if	a	derivative	ceases	to	be	a	highly	effective	hedge,	we	will	discontinue	hedge	accounting	with	respect	to that	derivative	prospectively.

# Foreign	Currency

Since	we	do	business	in	many	foreign	countries,	fluctuations	in	currency	exchange	rates	affect	our	financial	position	and	results	of	operations.

In	most	of	our	foreign	operations,	the	local	currency	is	considered	the	functional	currency.	Foreign	subsidiaries	translate	their	assets	and	liabilities	into U.S.	dollars	at	current	exchange	rates	in	effect	at	the	end	of	the	fiscal	period.	The	gains	or	losses	that	result	from	this	process	are	shown	as	translation adjustments	in	AOCL	in	the	equity	section	of	the	balance	sheet.

The	revenue	and	expense	accounts	of	foreign	subsidiaries	are	translated	into	U.S.	dollars	at	the	average	exchange	rates	that	prevail	during	the	period. Therefore,	the	U.S.	dollar	value	of	these	items	on	the	consolidated	income	statements	fluctuates	from	period	to	period,	depending	on	the	value	of	the dollar	against	foreign	currencies.	Some	transactions	are	made	in	currencies	different	from	an	entity's	functional	currency.	Gains	and	losses	from	these foreign	currency	transactions	are	generally	reflected	in	"Other	income	(expense),	net"	on	our	consolidated	income	statements	as	they	occur.

# Environmental	Expenditures

Accruals	for	environmental	loss	contingencies	are	recorded	when	it	is	probable	that	a	liability	has	been	incurred	and	the	amount	of	loss	can	be reasonably	estimated.	Remediation	costs	are	capitalized	if	the	costs	improve	the	Company's	property	as	compared	with	the	condition	of	the	property when	originally	constructed	or	acquired,	or	if	the	costs	prevent	environmental	contamination	from	future	operations.	We	expense	environmental	costs related	to	existing	conditions	resulting	from	past	or	current	operations	and	from	which	no	current	or	future	benefit	is	discernible.	The	amounts	charged	to income	from	continuing	operations	related	to	environmental	matters	totaled	$12.8,	$11.4,	and	$12.2	in	fiscal	years	2018,	2017,	and	2016,	respectively.

The	measurement	of	environmental	liabilities	is	based	on	an	evaluation	of	currently	available	information	with	respect	to	each	individual	site	and	considers factors	such	as	existing	technology,	presently	enacted	laws	and	regulations,	and	prior	experience	in	remediation	of	contaminated	sites.	An	environmental liability	related	to	cleanup	of	a	contaminated	site	might	include,	for	example,	a	provision	for	one	or	more	of	the	following	types	of	costs:	site	investigation and	testing	costs,	remediation	costs,	post-remediation	monitoring	costs,	natural	resource	damages,	and	outside	legal	fees.	These	liabilities	include	costs related	to	other	potentially	responsible	parties	to	the	extent	that	we	have	reason	to	believe	such	parties	will	not	fully	pay	their	proportionate	share.	They do	not	consider	any	claims	for	recoveries	from	insurance	or	other	parties	and	are	not	discounted.

As	assessments	and	remediation	progress	at	individual	sites,	the	amount	of	projected	cost	is	reviewed,	and	the	liability	is	adjusted	to	reflect	additional technical	and	legal	information	that	becomes	available.	Management	has	an	established	process	in	place	to	identify	and	monitor	the	Company's environmental	exposures.	An	environmental	accrual	analysis	is	prepared	and	maintained	that	lists	all	environmental	loss	contingencies,	even	where	an accrual	has	not	been	established.	This	analysis	assists	in	monitoring	the	Company's	overall	environmental	exposure	and	serves	as	a	tool	to	facilitate ongoing	communication	among	the	Company's	technical	experts,	environmental	managers,	environmental	lawyers,	and	financial	management	to	ensure that	required	accruals	are	recorded	and	potential	exposures	disclosed.

Given	inherent	uncertainties	in	evaluating	environmental	exposures,	actual	costs	to	be	incurred	at	identified	sites	in	future	periods	may	vary	from	the estimates.	Refer	to	Note	17,	Commitments	and	Contingencies,	for	additional	information	on	the	Company's	environmental	loss	contingencies.

The	accruals	for	environmental	liabilities	are	reflected	in	the	consolidated	balance	sheets,	primarily	as	part	of	other	noncurrent	liabilities.

# Litigation

In	the	normal	course	of	business,	we	are	involved	in	legal	proceedings.	We	accrue	a	liability	for	such	matters	when	it	is	probable	that	a	liability	has	been incurred	and	the	amount	of	loss	can	be	reasonably	estimated.	When	only	a	range	of	possible	loss	can	be	established,	the	most	probable	amount	in	the range	is	accrued.	If	no	amount	within	this	range	is	a	better	estimate	than	any	other	amount	within	the	range,	the	minimum	amount	in	the	range	is	accrued. The	accrual	for	a	litigation	loss	contingency	includes	estimates	of	potential	damages	and	other	directly	related	costs	expected	to	be	incurred.	Refer	to	Note 17,	Commitments	and	Contingencies,	for	additional	information	on	our	current	legal	proceedings.

# Share-Based	Compensation

We	have	various	share-based	compensation	programs,	which	include	deferred	stock	units,	stock	options,	and	restricted	stock.	We	expense	the	grant-date fair	value	of	these	awards	over	the	vesting	period	during	which	employees	perform	related	services.	Expense	recognition	is	accelerated	for	retirement- eligible	individuals	who	would	meet	the	requirements	for	vesting	of	awards	upon	their	retirement.	Refer	to	Note	19,	Share-Based	Compensation,	for additional	information	regarding	these	awards	and	the	models	and	assumptions	used	to	determine	the	grant-date	fair	value	of	our	awards.

We	account	for	income	taxes	under	the	asset	and	liability	method.	Under	this	method,	deferred	tax	assets	and	liabilities	are	recognized	for	the	tax	effects of	temporary	differences	between	the	financial	reporting	and	tax	bases	of	assets	and	liabilities	using	enacted	tax	rates	in	effect	for	the	year	in	which	the differences	are	expected	to	be	recovered	or	settled.	A	principal	temporary	difference	results	from	the	excess	of	tax	depreciation	over	book	depreciation because	accelerated	methods	of	depreciation	and	shorter	useful	lives	are	used	for	income	tax	purposes.	The	cumulative	impact	of	a	change	in	tax	rates or	regulations	is	included	in	income	tax	expense	in	the	period	that	includes	the	enactment	date.	We	recognize	deferred	tax	assets	net	of	existing	valuation allowances	to	the	extent	we	believe	that	these	assets	are	more	likely	than	not	to	be	realized	considering	all	available	evidence.

A	tax	benefit	for	an	uncertain	tax	position	is	recognized	when	it	is	more	likely	than	not	that	the	position	will	be	sustained	upon	examination	based	on	its technical	merits.	This	position	is	measured	as	the	largest	amount	of	tax	benefit	that	is	greater	than	50%	likely	of	being	realized.	Interest	and	penalties related	to	unrecognized	tax	benefits	are	recognized	as	a	component	of	income	tax	expense.	For	additional	information	regarding	our	income	taxes,	refer	to Note	22,	Income	Taxes.

Beginning	in	the	second	quarter	of	fiscal	year	2017,	other	non-operating	income	(expense),	net	includes	interest	income	associated	with	our	cash	and cash	items	and	short-term	investments.	Interest	income	in	previous	periods	was	included	in	"Other	income	(expense),	net."	In	addition,	other	non- operating	income	(expense),	net	includes	non-service	cost	components	of	net	periodic	pension	and	postretirement	benefit	cost.	Our	non-service	costs primarily	include	interest	cost,	expected	return	on	plan	assets,	amortization	of	actuarial	gains	and	losses,	and	settlements.

# Cash	and	Cash	Items

Cash	and	cash	items	include	cash,	time	deposits,	treasury	securities,	and	certificates	of	deposit	acquired	with	an	original	maturity	of	three	months	or	less.

# Short-term	Investments

Short-term	investments	include	time	deposits	and	certificates	of	deposit	with	original	maturities	greater	than	three	months	and	less	than	one	year.

# Trade	Receivables,	net

Trade	receivables	comprise	amounts	owed	to	us	through	our	operating	activities	and	are	presented	net	of	allowances	for	doubtful	accounts.	The allowances	for	doubtful	accounts	represent	estimated	uncollectible	receivables	associated	with	potential	customer	defaults	on	contractual	obligations.	A provision	for	customer	defaults	is	made	on	a	general	formula	basis	when	it	is	determined	that	the	risk	of	some	default	is	probable	and	estimable	but cannot	yet	be	associated	with	specific	customers.	The	assessment	of	the	likelihood	of	customer	defaults	is	based	on	various	factors,	including	the	length of	time	the	receivables	are	past	due,	historical	experience,	and	existing	economic	conditions.	The	allowance	also	includes	amounts	for	certain	customers where	a	risk	of	default	has	been	specifically	identified,	considering	factors	such	as	the	financial	condition	of	the	customer	and	customer	disputes	over contractual	terms	and	conditions.	Allowances	for	doubtful	accounts	were	$91.3	and	$93.5	as	of	30	September	2018	and	2017,	respectively.	Provisions	to the	allowance	for	doubtful	accounts	charged	against	income	were	$24.0,	$45.8,	and	$21.8	in	fiscal	years	2018,	2017,	and	2016,	respectively.

We	carry	inventory	on	our	consolidated	balance	sheets	that	is	comprised	of	finished	goods,	work-in-process,	raw	materials	and	supplies.	Inventories	are stated	at	the	lower	of	cost	or	net	realizable	value.	We	write	down	our	inventories	for	estimated	obsolescence	or	unmarketable	inventory	based	upon assumptions	about	future	demand	and	market	conditions.

Effective	1	July	2018,	we	changed	our	accounting	method	for	U.S.	industrial	gases	inventories	from	a	last-in,	first-out	basis	(LIFO)	to	a	first-in,	first-out basis	(FIFO).	Previously,	the	LIFO	method	was	used	to	determine	the	cost	of	industrial	gases	inventories	in	the	United	States.	We	believe	this	change	in accounting	method	is	preferable	as	it	is	consistent	with	how	we	manage	our	business,	results	in	a	uniform	method	to	value	our	inventory	across	all regions	of	our	business,	improves	comparability	with	our	peers,	and	is	expected	to	better	reflect	the	current	value	of	inventory	on	the	consolidated	balance sheets.	We	applied	this	accounting	change	as	a	cumulative	effect	adjustment	to	cost	of	sales	in	the	fourth	quarter	of	fiscal	year	2018	and	did	not	restate prior	period	financial	statements	because	the	impact	was	not	material.	Refer	to	Note	7,	Inventories,	for	additional	information.

The	equity	method	of	accounting	is	used	when	we	exercise	significant	influence	but	do	not	have	operating	control,	generally	assumed	to	be	20%	–	50% ownership.	Under	the	equity	method,	original	investments	are	recorded	at	cost	and	adjusted	by	our	share	of	undistributed	earnings	or	losses	of	these companies.	Equity	investments	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	the investment	may	not	be	recoverable.

# Plant	and	Equipment,	Net

Plant	and	equipment,	net	is	stated	at	cost	less	accumulated	depreciation.	Construction	costs,	labor,	and	applicable	overhead	related	to	installations	are capitalized.	Expenditures	for	additions	and	improvements	that	extend	the	lives	or	increase	the	capacity	of	plant	assets	are	capitalized.	The	costs	of maintenance	and	repairs	of	plant	and	equipment	are	charged	to	expense	as	incurred.

Fully	depreciated	assets	are	retained	in	the	gross	plant	and	equipment	and	accumulated	depreciation	accounts	until	they	are	removed	from	service.	In	the case	of	disposals,	assets,	and	related	depreciation	are	removed	from	the	accounts,	and	the	net	amounts,	less	proceeds	from	disposal,	are	included	in income.	Refer	to	Note	9,	Plant	and	Equipment,	net,	for	further	detail.

# Computer	Software

We	capitalize	costs	incurred	to	purchase	or	develop	software	for	internal	use.	Capitalized	costs	include	purchased	computer	software	packages, payments	to	vendors/consultants	for	development	and	implementation	or	modification	to	a	purchased	package	to	meet	our	requirements,	payroll	and related	costs	for	employees	directly	involved	in	development,	and	interest	incurred	while	software	is	being	developed.	Capitalized	computer	software costs	are	reflected	in	"Plant	and	equipment,	net"	on	the	consolidated	balance	sheets	and	are	depreciated	over	the	estimated	useful	life	of	the	software, generally	a	period	of	three	to	five	years.

# Capitalized	Interest

As	we	build	new	plant	and	equipment,	we	include	in	the	cost	of	these	assets	a	portion	of	the	interest	payments	we	make	during	the	year.	The	amount	of capitalized	interest	was	$19.5,	$19.0,	and	$32.7	in	fiscal	years	2018,	2017,	and	2016,	respectively.

# Impairment	of	Long-Lived	Assets

Long-lived	assets	are	grouped	for	impairment	testing	at	the	lowest	level	for	which	there	are	identifiable	cash	flows	that	are	largely	independent	of	the	cash flows	of	other	assets	and	liabilities	and	are	evaluated	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of an	asset	group	may	not	be	recoverable.	We	assess	recoverability	by	comparing	the	carrying	amount	of	the	asset	group	to	estimated	undiscounted	future cash	flows	expected	to	be	generated	by	the	asset	group.	If	an	asset	group	is	considered	impaired,	the	impairment	loss	to	be	recognized	is	measured	as the	amount	by	which	the	asset	group's	carrying	amount	exceeds	its	fair	value.	Long-lived	assets	meeting	the	held	for	sale	criteria	are	reported	at	the lower	of	carrying	amount	or	fair	value	less	cost	to	sell.

# Asset	Retirement	Obligations

The	fair	value	of	a	liability	for	an	asset	retirement	obligation	is	recognized	in	the	period	in	which	it	is	incurred.	The	fair	value	of	the	liability	is	measured using	discounted	estimated	cash	flows	and	is	adjusted	to	its	present	value	in	subsequent	periods	as	accretion	expense	is	recorded.	The	corresponding asset	retirement	costs	are	capitalized	as	part	of	the	carrying	amount	of	the	related	long-lived	asset	and	depreciated	over	the	asset's	useful	life.	Our	asset retirement	obligations	are	primarily	associated	with	on-site	long-term	supply	contracts	under	which	we	have	built	a	facility	on	land	owned	by	the	customer and	are	obligated	to	remove	the	facility	at	the	end	of	the	contract	term.	Our	asset	retirement	obligations	totaled	$190.4	and	$144.7	at	30	September	2018 and	2017,	respectively.

Business	combinations	are	accounted	for	using	the	acquisition	method.	The	purchase	price	is	allocated	to	the	assets	acquired	and	liabilities	assumed based	on	their	estimated	fair	values.	Any	excess	purchase	price	(plus	the	fair	value	of	any	noncontrolling	interest	and	previously	held	equity	interest	in	the acquiree)	over	the	fair	market	value	of	the	net	assets	acquired,	including	identified	intangibles,	is	recorded	as	goodwill.	Preliminary	purchase	price allocations	are	made	at	the	date	of	acquisition	and	finalized	when	information	about	facts	and	circumstances	that	existed	as	of	the	acquisition	date needed	to	finalize	underlying	estimates	is	obtained	or	when	we	determine	that	such	information	is	not	obtainable,	within	a	maximum	allocation	period	of one	year.

Goodwill	is	subject	to	impairment	testing	at	least	annually.	In	addition,	goodwill	is	tested	more	frequently	if	a	change	in	circumstances	or	the	occurrence	of events	indicates	that	potential	impairment	exists.	Refer	to	Note	10,	Goodwill,	for	further	detail.

Intangible	assets	with	determinable	lives	primarily	consist	of	customer	relationships,	purchased	patents	and	technology,	and	land	use	rights.	The	cost	of intangible	assets	with	determinable	lives	is	amortized	on	a	straight-line	basis	over	the	estimated	period	of	economic	benefit.	No	residual	value	is estimated	for	these	intangible	assets.	Indefinite-lived	intangible	assets	consist	of	trade	names	and	trademarks.	Indefinite-lived	intangibles	are	subject	to impairment	testing	at	least	annually.	In	addition,	intangible	assets	are	tested	more	frequently	if	a	change	in	circumstances	or	the	occurrence	of	events indicates	that	potential	impairment	exists.

Customer	relationships	are	generally	amortized	over	periods	of	 five	to	twenty-five	years.	Purchased	patents	and	technology	and	other	are	generally amortized	over	periods	of	five	to	fifteen	years.	Land	use	rights,	which	are	included	in	other	intangibles,	are	generally	amortized	over	a	period	of	 fifty	years. Amortizable	lives	are	adjusted	whenever	there	is	a	change	in	the	estimated	period	of	economic	benefit.	Refer	to	Note	11,	Intangible	Assets,	for	further detail.

# Retirement	Benefits

The	cost	of	pension	benefits	is	recognized	over	the	employees'	service	period.	We	use	actuarial	methods	and	assumptions	in	the	valuation	of	defined benefit	obligations	and	the	determination	of	expense.	Differences	between	actual	and	expected	results	or	changes	in	the	value	of	obligations	and	plan assets	are	not	recognized	in	earnings	as	they	occur	but,	rather,	systematically	and	gradually	over	subsequent	periods.	Refer	to	Note	16,	Retirement Benefits,	for	disclosures	related	to	our	pension	and	other	postretirement	benefits.

# Accounting	Guidance	Implemented	in	Fiscal	Year	2018

# Disclosure	Simplification

In	August	2018,	the	SEC	issued	a	final	rule	on	disclosure	update	and	simplification,	amending	certain	disclosure	requirements	that	were	redundant, duplicative,	overlapping,	outdated	or	superseded.	This	rule	was	effective	on	5	November	2018.	We	adopted	the	amended	guidance,	which	reduced	or eliminated	certain	annual	disclosure	requirements	outside	the	consolidated	financial	statements,	including	the	elimination	of	the	ratio	of	earnings	to	fixed charges	previously	filed	under	Exhibit	12.	However,	the	amendments	expanded	interim	disclosure	requirements	that	will	be	adopted	in	our	Form	10-Q	for our	first	fiscal	quarter	ended	31	December	2018,	including	those	related	to	the	analysis	of	shareholders'	equity.

In	March	2018,	the	Financial	Accounting	Standards	Board	(FASB)	issued	an	update	for	Staff	Accounting	Bulletin	(SAB)	No.	118	issued	by	the	SEC	in December	2017	related	to	the	U.S.	Tax	Cuts	and	Jobs	Act	("the	Tax	Act").	We	adopted	the	SEC	guidance	under	SAB	No.	118	in	the	first	quarter	of	fiscal year	2018.	We	continue	to	report	the	impacts	of	the	Tax	Act	as	provisional	based	on	reasonable	estimates	as	of	30	September	2018.	We	are	continuing	to gather	additional	information	and	expect	to	complete	our	accounting	by	the	first	quarter	of	fiscal	year	2019,	within	the	prescribed	one-year	measurement period.	For	additional	details,	see	Note	22,	Income	Taxes.

# Presentation	of	Net	Periodic	Pension	and	Postretirement	Benefit	Cost

In	March	2017,	the	FASB	issued	guidance	for	improving	the	presentation	of	net	periodic	pension	cost	and	net	periodic	postretirement	benefit	cost.	The amendments	require	the	service	cost	component	of	net	periodic	benefit	cost	to	be	presented	in	the	same	operating	income	line	items	as	other compensation	costs	arising	from	services	rendered	by	employees	during	the	period.	The	non-service	costs	(e.g.,	interest	cost,	expected	return	on	plan assets,	amortization	of	actuarial	gains/losses,	settlements)	should	be	presented	in	the	consolidated	income	statements	outside	of	operating	income.	The amendments	also	allow	only	the	service	cost	component	to	be	eligible	for	capitalization	when	applicable.	We	early	adopted	this	guidance	during	the	first quarter	of	fiscal	year	2018.	The	amendments	have	been	applied	retrospectively	for	the	income	statement	presentation	requirements	and	prospectively	for the	limit	on	costs	eligible	for	capitalization.	We	applied	the	practical	expedient	to	use	the	amounts	disclosed	in	our	retirement	benefits	note	for	the	prior comparative	periods	as	the	estimation	basis	for	applying	the	retrospective	presentation	requirements.

Prior	to	adoption	of	the	guidance,	we	classified	all	net	periodic	benefit	costs	within	operating	costs,	primarily	within	"Cost	of	sales"	and	"Selling	and administrative"	on	the	consolidated	income	statements.	The	line	item	classification	changes	required	by	the	new	guidance	did	not	impact	our	pre-tax earnings	or	net	income;	however,	"Operating	income"	and	"Other	non-operating	income	(expense),	net"	changed	by	immaterial	offsetting	amounts.

# Derivative	Contract	Novations

In	March	2016,	the	FASB	issued	guidance	to	clarify	that	a	change	in	the	counterparty	to	a	derivative	instrument	that	has	been	designated	as	a	hedging instrument	does	not,	in	and	of	itself,	require	re-designation	of	that	hedging	relationship	provided	that	all	other	hedge	accounting	criteria	continue	to	be	met. We	adopted	this	guidance	in	the	first	quarter	of	fiscal	year	2018.	This	guidance	did	not	have	an	impact	on	our	consolidated	financial	statements	upon adoption.

# New	Accounting	Guidance	to	be	Implemented

In	May	2014,	the	FASB	issued	guidance	based	on	the	principle	that	revenue	is	recognized	in	an	amount	expected	to	be	collected	and	to	which	the	entity expects	to	be	entitled	in	exchange	for	the	transfer	of	goods	or	services.	We	will	adopt	this	guidance	in	fiscal	year	2019	under	the	modified	retrospective approach.	Upon	adoption,	we	will	no	longer	present	"Contracts	in	progress,	less	progress	billings"	on	our	consolidated	balance	sheets	and	will	have expanded	disclosure	requirements.	Otherwise,	we	do	not	expect	adoption	of	this	guidance	to	have	a	material	impact	on	our	consolidated	financial statements.

The	expected	balance	sheet	impacts	of	no	longer	presenting	"Contracts	in	progress,	less	progress	billings"	are	summarized	below:

|  | 30	September	2018 | New	Revenue<br>Standard	Adjustments | 1	October	2018 |
| :--- | :--- | :--- | :--- |
| Assets |  |  |  |
| Current\tAssets |  |  |  |
| Cash\tand\tcash\titems | $2,791.3 | $— | $2,791.3 |
| Short-term\tinvestments | 184.7 | — | 184.7 |
| Trade\treceivables,\tnet | 1,207.2 | — | 1,207.2 |
| Inventories | 396.1 | — | 396.1 |
| Contracts\tin\tprogress,\tless\tprogress\tbillings | 77.5 | (77.5) | — |
| Prepaid\texpenses | 129.6 | — | 129.6 |
| Other\treceivables\tand\tcurrent\tassets | 295.8 | 103.7 | 399.5 |
| Total\tCurrent\tAssets | 5,082.2 | 26.2 | 5,108.4 |
| Total\tNoncurrent\tAssets | 14,096.1 | — | 14,096.1 |
| Total\tAssets | $19,178.3 | $26.2 | $19,204.5 |
| Liabilities\tand\tEquity |  |  |  |
| Current\tLiabilities |  |  |  |
| Payables\tand\taccrued\tliabilities | $1,817.8 | $26.2 | $1,844.0 |
| Accrued\tincome\ttaxes | 59.6 | — | 59.6 |
| Short-term\tborrowings | 54.3 | — | 54.3 |
| Current\tportion\tof\tlong-term\tdebt | 406.6 | — | 406.6 |
| Total\tCurrent\tLiabilities | 2,338.3 | 26.2 | 2,364.5 |
| Total\tNoncurrent\tLiabilities | 5,663.7 | — | 5,663.7 |
| Total\tLiabilities | 8,002.0 | 26.2 | 8,028.2 |
| Total\tEquity | 11,176.3 | — | 11,176.3 |
| Total\tLiabilities\tand\tEquity | $19,178.3 | $26.2 | $19,204.5 |

Our	expanded	disclosure	requirements	will	include	the	disaggregation	of	revenue	and	disclosure	of	the	fixed	transaction	price	allocated	to	remaining performance	obligations.	We	intend	to	disaggregate	our	revenue	by	supply	mode.	Our	fixed	transaction	price	allocated	to	remaining	performance obligations	will	primarily	relate	to	our	onsite	gases	business.

In	February	2016,	the	FASB	issued	guidance	that	requires	lessees	to	recognize	a	right-of-use	asset	and	lease	liability	on	the	balance	sheet	for	all	leases, including	operating	leases,	with	a	term	in	excess	of	12	months.	The	guidance	also	expands	the	quantitative	and	qualitative	disclosure	requirements.	The guidance	is	effective	in	fiscal	year	2020,	with	early	adoption	permitted.	The	guidance	must	be	applied	using	a	modified	retrospective	approach	with	the option	to	apply	either	at	the	adoption	date	or	at	the	earliest	comparative	period	presented	in	the	consolidated	financial	statements.

The	Company	is	the	lessee	under	various	agreements	for	real	estate,	distribution	equipment,	aircraft,	and	vehicles	that	are	currently	accounted	for	as operating	leases.	The	new	guidance	will	require	the	Company	to	record	all	leases,	including	operating	leases,	on	the	balance	sheet	with	a	right-of-use asset	and	corresponding	liability	for	future	payment	obligations.

We	will	adopt	this	guidance	in	fiscal	year	2020	and	are	currently	evaluating	the	impact	it	will	have	on	our	consolidated	financial	statements,	including	the assessment	of	our	current	lease	population	under	the	revised	definition	of	what	qualifies	as	a	leased	asset.	In	addition,	we	are	implementing	a	new application	to	administer	the	accounting	and	disclosure	requirements	under	the	new	guidance.

# Credit	Losses	on	Financial	Instruments

In	June	2016,	the	FASB	issued	guidance	on	the	measurement	of	credit	losses,	which	requires	measurement	and	recognition	of	expected	credit	losses	for financial	assets,	including	trade	receivables	and	capital	lease	receivables,	held	at	the	reporting	date	based	on	historical	experience,	current	conditions, and	reasonable	and	supportable	forecasts.	The	method	to	determine	a	loss	is	different	from	the	existing	guidance,	which	requires	a	credit	loss	to	be recognized	when	it	is	probable.	The	guidance	is	effective	beginning	in	fiscal	year	2021,	with	early	adoption	permitted	beginning	in	fiscal	year	2020.	We are	currently	evaluating	the	impact	this	guidance	will	have	on	our	consolidated	financial	statements.

# Cash	Flow	Statement	Classification

In	August	2016,	the	FASB	issued	guidance	to	reduce	diversity	in	practice	on	how	certain	cash	receipts	and	cash	payments	are	classified	in	the	statement of	cash	flows.	The	guidance	is	effective	beginning	in	fiscal	year	2019,	with	early	adoption	permitted,	and	should	be	applied	retrospectively.	We	plan	to adopt	this	guidance	in	fiscal	year	2019	and	do	not	expect	adoption	to	have	a	significant	impact	on	our	consolidated	financial	statements.

# Intra-Entity	Asset	Transfers

In	October	2016,	the	FASB	issued	guidance	on	accounting	for	the	income	tax	effects	of	intra-entity	transfers	of	assets	other	than	inventory.	Current guidance	prohibits	the	recognition	of	current	and	deferred	income	taxes	for	an	intra-entity	asset	transfer	until	the	asset	has	been	sold	to	an	outside	party. Under	the	new	guidance,	the	income	tax	consequences	of	an	intra-entity	asset	transfer	are	recognized	when	the	transfer	occurs.	The	guidance	is	effective beginning	in	fiscal	year	2019,	with	early	adoption	permitted	as	of	the	beginning	of	an	annual	reporting	period.	The	guidance	must	be	applied	on	a	modified retrospective	basis	through	a	cumulative-effect	adjustment	to	retained	earnings	as	of	the	date	of	adoption.	We	will	adopt	the	guidance	in	fiscal	year	2019 and	do	not	expect	adoption	of	this	guidance	to	have	a	significant	impact	on	our	consolidated	financial	statements.

# Derecognition	of	Nonfinancial	Assets

In	February	2017,	the	FASB	issued	an	update	to	clarify	the	scope	of	guidance	on	gains	and	losses	from	the	derecognition	of	nonfinancial	assets	and	to add	guidance	for	partial	sales	of	nonfinancial	assets.	We	will	adopt	this	guidance	in	fiscal	year	2019	under	the	modified	retrospective	approach.	We	do not	expect	this	update	to	have	a	significant	impact	on	our	consolidated	financial	statements.

# Hedging	Activities

In	August	2017,	the	FASB	issued	guidance	on	hedging	activities	to	expand	the	related	presentation	and	disclosure	requirements,	change	how	companies assess	effectiveness,	and	eliminate	the	separate	measurement	and	reporting	of	hedge	ineffectiveness.	The	guidance	also	enables	more	financial	and nonfinancial	hedging	strategies	to	become	eligible	for	hedge	accounting.	The	guidance	is	effective	in	fiscal	year	2020,	with	early	adoption	permitted.	For cash	flow	and	net	investment	hedges	existing	at	the	date	of	adoption,	an	entity	should	apply	a	cumulative-effect	adjustment	to	eliminate	the	separate measurement	of	ineffectiveness	within	equity	as	of	the	beginning	of	the	fiscal	year	the	guidance	is	adopted.	The	amended	presentation	and	disclosure guidance	is	applied	prospectively.	We	are	currently	evaluating	the	impact	this	guidance	will	have	on	our	consolidated	financial	statements.

# Reclassification	of	Certain	Tax	Effects	from	Accumulated	Other	Comprehensive	Income

In	February	2018,	the	FASB	issued	guidance	allowing	a	reclassification	from	accumulated	other	comprehensive	income	to	retained	earnings	for	stranded tax	effects	resulting	from	the	Tax	Act.	The	guidance	is	effective	in	fiscal	year	2020,	with	early	adoption	permitted,	including	adoption	in	any	interim	period. If	elected,	the	reclassification	can	be	applied	in	either	the	period	of	adoption	or	retrospectively	to	the	period	of	the	Tax	Act's	enactment	(i.e.,	our	first quarter	of	fiscal	year	2018).	We	are	currently	evaluating	the	adoption	alternatives	and	the	impact	this	guidance	will	have	on	our	consolidated	financial statements.

# Fair	Value	Measurement	Disclosures

In	August	2018,	the	FASB	issued	guidance	which	modifies	the	disclosure	requirements	for	fair	value	measurements.	The	guidance	is	effective	in	fiscal year	2021,	with	early	adoption	permitted.	Certain	amendments	must	be	applied	prospectively	and	other	amendments	retrospectively.	We	are	currently evaluating	the	impact	this	guidance	will	have	on	the	disclosures	in	the	notes	to	our	consolidated	financial	statements.

# Retirement	Benefit	Disclosures

In	August	2018,	the	FASB	issued	guidance	which	modifies	the	disclosure	requirements	for	employers	that	sponsor	defined	benefit	pension	or	other postretirement	plans.	The	guidance	is	effective	in	fiscal	year	2021,	with	early	adoption	permitted,	and	must	be	applied	on	a	retrospective	basis.	We	are currently	evaluating	the	impact	this	guidance	will	have	on	the	disclosures	in	the	notes	to	our	consolidated	financial	statements.

# Cloud	Computing	Implementation	Costs

In	August	2018,	the	FASB	issued	guidance	which	aligns	the	capitalization	requirements	for	implementation	costs	incurred	in	a	hosting	arrangement	that	is a	service	contract	with	the	existing	capitalization	requirements	for	implementation	costs	incurred	to	develop	or	obtain	internal-use	software.	The	guidance is	effective	in	fiscal	year	2021,	with	early	adoption	permitted,	and	may	be	applied	either	prospectively	or	retrospectively.	We	are	currently	evaluating	the impact	this	guidance	will	have	on	our	consolidated	financial	statements.

# Related	Party	Guidance	for	Variable	Interest	Entities

In	October	2018,	the	FASB	issued	an	update	which	amends	the	guidance	for	determining	whether	a	decision-making	fee	is	a	variable	interest.	The amendments	require	consideration	of	indirect	interests	held	through	related	parties	under	common	control	on	a	proportional	basis	rather	than	as	the equivalent	of	a	direct	interest	in	its	entirety	as	currently	required.	The	guidance	is	effective	in	fiscal	year	2021,	with	early	adoption	permitted.	The amendments	must	be	applied	retrospectively	with	a	cumulative-effect	adjustment	to	retained	earnings	at	the	beginning	of	the	earliest	period	presented. We	are	currently	evaluating	the	impact	this	guidance	will	have	on	our	consolidated	financial	statements.

In	fiscal	year	2018,	income	from	discontinued	operations,	net	of	tax,	of	 $42.2	includes	an	income	tax	benefit	of	$25.6	resulting	from	the	resolution	of uncertain	tax	positions	taken	in	conjunction	with	the	disposition	of	our	former	European	Homecare	business	in	fiscal	year	2012.	In	addition,	we	recorded an	after-tax	benefit	of	$17.6	resulting	from	the	resolution	of	certain	post-closing	adjustments	associated	with	the	sale	of	our	former	Performance	Materials Division	(PMD).	Refer	to	Note	22,	Income	Taxes,	for	additional	information.	These	benefits	were	partially	offset	by	an	after-tax	loss	of	 $1.0	related	to Energy-from-Waste	(EfW)	project	exit	activities,	which	were	completed	during	the	first	quarter	of	fiscal	year	2018.

There	were	no	assets	or	liabilities	presented	in	discontinued	operations	on	the	consolidated	balance	sheets	as	of	30	September	2018.	As	of	30 September	2017,	current	assets	of	discontinued	operations	of	$10.2	related	to	EfW	and	current	liabilities	of	discontinued	operations	of $15.7	primarily related	to	reserves	associated	with	the	disposition	of	PMD.

The	following	table	details	income	from	discontinued	operations,	net	of	tax,	on	the	consolidated	income	statements	for	fiscal	year	2017:

|  |  |  | Total |
| :--- | :--- | :--- | :--- |
|  | Performance | Energy-from- | Discontinued |
| Year\tEnded\t30\tSeptember\t2017 | Materials | Waste(A) | Operations |
| Sales | $254.8 | $— | $254.8 |
| Cost\tof\tsales | 182.3 | 13.8 | 196.1 |
| Selling\tand\tadministrative | 22.5 | .7 | 23.2 |
| Research\tand\tdevelopment | 5.1 | — | 5.1 |
| Other\tincome\t(expense),\tnet | .3 | (2.0) | (1.7) |
| Operating\tIncome\t(Loss) | 45.2 | (16.5) | 28.7 |
| Equity\taffiliates'\tincome | .3 | — | .3 |
| Income\t(Loss)\tBefore\tTaxes | 45.5 | (16.5) | 29.0 |
| Income\ttax\tbenefit(B) | (50.8) | (5.7) | (56.5) |
| Income\t(Loss)\tFrom\tOperations\tof\tDiscontinued\tOperations,\tnet\tof\ttax | 96.3 | (10.8) | 85.5 |
| Gain\t(Loss)\ton\tdisposal\tof\tbusiness,\tnet\tof\ttax (C) | 1,827.6 | (47.1) | 1,780.5 |
| Income\t(Loss)\tFrom\tDiscontinued\tOperations,\tnet\tof\ttax | $1,923.9 | ($57.9) | $1,866.0 |

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

(B) As	a	result	of	the	expected	gain	on	the	sale	of	PMD,	we	released	valuation	allowances	related	to	capital	loss	and	net	operating	loss	carryforwards	primarily	during	the	first quarter	of	2017	that	favorably	impacted	our	income	tax	provision	within	discontinued	operations	by	approximately	$69.

(C) After-tax	gain	on	sale	of	$1,827.6	includes	expense	for	income	tax	reserves	for	uncertain	tax	positions	of	$28.0	gross	($21.0	net)	in	various	jurisdictions.

In	fiscal	year	2017,	income	from	discontinued	operations,	net	of	tax,	of	 $1,866.0	includes	a	gain	of	$2,870	($1,828	after-tax,	or	$8.32	per	share)	for	the sale	of	PMD	to	Evonik	Industries	AG	(Evonik).	The	sale	closed	on	3	January	2017	for	$3.8	billion	in	cash.	In	addition,	we	recorded	a	loss	on	the	disposal of	EfW	of	$59.3	($47.1	after-tax)	during	the	first	quarter	of	2017,	primarily	for	land	lease	obligations	and	to	update	our	estimate	of	the	net	realizable	value of	the	plant	assets.	The	loss	on	disposal	was	recorded	as	a	component	of	discontinued	operations	while	the	liability	associated	with	land	lease obligations	was	and	continues	to	be	recorded	in	continuing	operations.	As	of	30	September	2018,	liabilities	associated	with	EfW	recorded	in	continuing operations	were	approximately	$63	and	primarily	related	to	the	land	lease	obligations.

On	1	October	2016	(the	distribution	date),	Air	Products	completed	the	spin-off	of	its	Electronic	Materials	Division	(EMD)	as	Versum	Materials,	Inc. (Versum),	a	separate	and	independent	public	company.	The	spin-off	was	completed	by	way	of	a	distribution	to	Air	Products'	stockholders	of	all	of	the	then issued	and	outstanding	shares	of	common	stock	of	Versum	on	the	basis	of	one	share	of	Versum	common	stock	for	every	two	shares	of	Air	Products' common	stock	held	as	of	the	close	of	business	on	21	September	2016	(the	record	date	for	the	distribution).	Fractional	shares	of	Versum	common	stock were	not	distributed	to	Air	Products'	common	stockholders.	Air	Products'	stockholders	received	cash	in	lieu	of	fractional	shares.	Subsequent	to	the distribution,	Versum	became	an	independent	public	company,	and	its	common	stock	is	listed	under	the	symbol	"VSM"	on	the	New	York	Stock	Exchange. The	spin-off	of	Versum	was	treated	as	a	noncash	transaction	in	the	consolidated	statements	of	cash	flows	in	fiscal	year	2017.	Seifi	Ghasemi,	Director, Chairman,	President,	and	Chief	Executive	Officer	of	Air	Products,	continues	to	serve	as	non-executive	chairman	of	the	Versum	Board	of	Directors.

The	following	table	details	the	loss	from	discontinued	operations,	net	of	tax,	on	the	consolidated	income	statements	for	fiscal	year	2016:

|  |  |  |  | Total |
| :--- | :--- | :--- | :--- | :--- |
|  | Electronic | Performance | Energy-from- | Discontinued |
| Year\tEnded\t30\tSeptember\t2016 | Materials | Materials | Waste(A) | Operations |
| Sales | $961.6 | $1,059.1 | $— | $2,020.7 |
| Cost\tof\tsales | 521.6 | 704.5 | 24.6 | 1,250.7 |
| Selling\tand\tadministrative | 87.7 | 76.6 | 2.8 | 167.1 |
| Research\tand\tdevelopment | 40.8 | 19.6 | .9 | 61.3 |
| Other\tincome\t(expense),\tnet | 2.2 | 4.2 | (12.7) | (6.3) |
| Operating\tIncome\t(Loss) | 313.7 | 262.6 | (41.0) | 535.3 |
| Equity\taffiliates'\tincome | .2 | 1.4 | — | 1.6 |
| Interest\texpense | .3 | — | — | .3 |
| Income\t(Loss)\tBefore\tTaxes(B) | 313.6 | 264.0 | (41.0) | 536.6 |
| Income\ttax\tprovision\t(benefit) | 73.4 | 80.5 | (3.4) | 150.5 |
| Income\t(Loss)\tFrom\tOperations\tof\tDiscontinued\tOperations,\tnet\tof\ttax | 240.2 | 183.5 | (37.6) | 386.1 |
| Loss\ton\tdisposal\tof\tbusiness,\tnet\tof\ttax | — | — | (846.6) | (846.6) |
| Income\t(Loss)\tFrom\tDiscontinued\tOperations,\tnet\tof\ttax | 240.2 | 183.5 | (884.2) | (460.5) |
| Net\tIncome\tAttributable\tto\tNoncontrolling\tInterests\tof\tDiscontinued\nOperations | 7.9 | — | — | 7.9 |
| Net\tIncome\t(Loss)\tFrom\tDiscontinued\tOperations | $232.3 | $183.5 | ($884.2) | ($468.4) |

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

(B) In	fiscal	year	2016,	income	before	taxes	from	operations	of	discontinued	operations	attributable	to	Air	Products	was	$527.1.

In	fiscal	year	2016,	the	Company's	Board	of	Directors	approved	the	exit	of	the	EfW	business,	and	efforts	to	start	up	the	two	EfW	projects	located	in	Tees Valley,	United	Kingdom,	were	discontinued.	The	loss	from	discontinued	operations,	net	of	tax,	of	$460.5	includes	a	loss	of	$945.7	($846.6	after-tax)	from the	write	down	of	the	EfW	plant	assets	to	their	estimated	net	realizable	value	and	a	liability	recorded	for	plant	disposition	and	other	costs.	Income	tax benefits	related	only	to	one	of	the	projects	as	the	other	did	not	qualify	for	a	local	tax	deduction.	We	estimated	the	net	realizable	value	of	the	projects assuming	an	orderly	liquidation	of	assets	capable	of	being	marketed	on	a	secondary	equipment	market	based	on	market	quotes	and	our	experience	with selling	similar	equipment.	An	asset's	orderly	liquidation	value	is	the	amount	that	could	be	realized	from	a	liquidation	sale,	given	a	reasonable	period	of time	to	find	a	buyer,	selling	the	asset	in	the	existing	condition	where	it	is	located,	and	assuming	the	highest	and	best	use	of	the	asset	by	market participants.	A	valuation	allowance	of	$58.0	and	unrecognized	tax	benefits	of	$7.9	were	recorded	relating	to	deferred	tax	assets	on	capital	assets generated	from	the	loss.

Fiscal	year	2016	also	includes	the	results	of	PMD	and	EMD	prior	to	their	dispositions.

# 4.		MATERIALS	TECHNOLOGIES	SEPARATION

In	fiscal	year	2017,	we	completed	the	separation	of	the	divisions	comprising	the	former	Materials	Technologies	segment	through	the	spin-off	of	EMD	as Versum	and	the	sale	of	PMD	to	Evonik.	For	additional	information	on	the	dispositions,	refer	to	Note	3,	Discontinued	Operations.

In	connection	with	the	dispositions	of	EMD	and	PMD,	we	incurred	net	separation	costs	of	 $30.2	in	fiscal	year	2017.	The	net	costs	include	legal	and advisory	fees	of	$32.5,	which	are	reflected	on	the	consolidated	income	statements	as	"Business	separation	costs,"	and	a	pension	settlement	benefit	of $2.3	presented	within	"Other	non-operating	income	(expense),	net."	Our	fiscal	year	2017	income	tax	provision	includes	net	tax	benefits	of $5.5,	primarily related	to	changes	in	tax	positions	on	business	separation	activities.

In	fiscal	year	2016,	we	incurred	business	separation	costs	of	 $50.6	for	legal	and	advisory	fees.	Our	fiscal	year	2016	income	tax	provision	includes additional	tax	expense	related	to	the	separation	of	$51.8,	of	which	$45.7	resulted	from	a	dividend	that	was	declared	in	June	2016	to	repatriate $443.8 from	a	subsidiary	in	South	Korea	to	the	U.S.	in	anticipation	of	the	separation	of	EMD	from	the	industrial	gases	business	in	South	Korea.

# Transition	Services	Agreements

We	entered	into	transition	services	agreements	by	which	we	provided	certain	transition	services	to	Versum	for	EMD	and	to	Evonik	for	PMD	subsequent	to their	respective	separation	dates.	The	reimbursement	for	costs	in	support	of	the	agreements	has	been	reflected	on	the	consolidated	income	statements within	"Other	income	(expense),	net."	All	transition	services	were	completed	during	fiscal	year	2018.

On	30	September	2016,	in	anticipation	of	the	spin-off,	Versum	entered	into	certain	financing	transactions	to	allow	for	a	cash	distribution	of	 $550.0	and	a distribution	in-kind	of	senior	unsecured	notes	(the	"Notes")	issued	by	Versum	with	an	aggregate	principal	amount	of	$425.0	to	Air	Products.	Air	Products then	exchanged	these	Notes	with	certain	financial	institutions	for	$418.3	of	Air	Products'	outstanding	commercial	paper.	This	noncash	exchange,	which was	excluded	from	the	consolidated	statements	of	cash	flows,	resulted	in	a	loss	of	$6.9	that	has	been	reflected	on	the	consolidated	income	statements	as "Loss	on	extinguishment	of	debt."	This	loss	was	deductible	for	tax	purposes.

In	fiscal	year	2017,	we	recognized	a	net	expense	of	$ 151.4.	The	year-to-date	net	expense	included	a	charge	of	 $154.8	for	actions	taken	during	fiscal	year 2017,	partially	offset	by	the	favorable	settlement	of	the	remaining	$3.4	accrued	balance	associated	with	business	restructuring	actions	taken	in	2015.	The charge	included	asset	actions	of	$88.5	and	severance	actions	of	$66.3.	The	asset	actions	included	charges	resulting	from	the	write-down	of	an	air separation	unit	in	the	Industrial	Gases	–	EMEA	segment	that	was	constructed	mainly	to	provide	oxygen	to	one	of	the	Energy-from-Waste	plants,	the planned	sale	of	a	non-industrial	gas	hardgoods	business	in	the	Industrial	Gases	–	Americas	segment,	and	the	closure	of	a	facility	in	the	Corporate	and other	segment	that	manufactured	LNG	heat	exchangers.	The	severance	actions	related	to	the	elimination	or	planned	elimination	of	approximately	625 positions,	primarily	in	the	Corporate	and	other	segment	and	in	the	Industrial	Gases	–	EMEA	segment.	The	actions	in	the	Corporate	and	other	segment were	driven	by	the	reorganization	of	our	engineering,	manufacturing,	and	technology	functions.

The	2017	charge	related	to	the	segments	as	follows:	$ 39.3	in	Industrial	Gases	–	Americas,	$ 77.9	in	Industrial	Gases	–	EMEA,	$.9	in	Industrial	Gases	– Asia,	$2.5	in	Industrial	Gases	–	Global,	and	$ 34.2	in	Corporate	and	other.

In	fiscal	year	2016,	we	recognized	an	expense	of	 $34.5	for	severance	and	other	benefits	related	to	cost	reduction	actions	which	resulted	in	the	elimination of	approximately	610	positions.	The	expenses	related	primarily	to	the	Industrial	Gases	–	Americas	segment	and	the	Industrial	Gases	–	EMEA	segment.

The	charges	we	record	for	cost	reduction	and	asset	actions	have	been	excluded	from	segment	operating	income.

The	following	table	summarizes	the	carrying	amount	of	the	accrual	for	cost	reduction	actions	at	 30	September	2018:

|  | Severance	and<br>Other	Benefits | Asset<br>Actions/Other | Total |
| :--- | :--- | :--- | :--- |
| 2016\tCharge | $34.5 | $— | $34.5 |
| Cash\texpenditures | (21.6) | — | (21.6) |
| Amount\treflected\tin\tpension\tliability | (.9) | — | (.9) |
| Currency\ttranslation\tadjustment | .3 | — | .3 |
| 30\tSeptember\t2016 | $12.3 | $— | $12.3 |
| 2017\tCharge | 66.3 | 88.5 | 154.8 |
| Noncash\texpenses | — | (84.2) | (84.2) |
| Cash\texpenditures | (35.7) | (1.2) | (36.9) |
| Amount\treflected\tin\tpension\tliability | (2.0) | — | (2.0) |
| Amount\treflected\tin\tother\tnoncurrent\tliabilities | — | (2.2) | (2.2) |
| Currency\ttranslation\tadjustment | (.3) | — | (.3) |
| 30\tSeptember\t2017 | $40.6 | $.9 | $41.5 |
| Cash\texpenditures | (30.3) | (.9) | (31.2) |
| Amount\treflected\tin\tpension\tliability | (.4) | — | (.4) |
| 30\tSeptember\t2018 | $9.9 | $— | $9.9 |

# 6.		ACQUISITIONS

# Asset	Acquisition

On	9	September	2017,	Air	Products	signed	an	agreement	to	form	a	joint	venture,	Air	Products	Lu	An	(Changzhi)	Co.,	Ltd.	("the	JV")	with	Lu'An	Clean Energy	Company	("Lu'An").	On	26	April	2018	("the	acquisition	date"),	we	completed	the	formation	of	the	JV,	of	which	Air	Products	owns	60%	and	Lu'An owns	40%.	The	JV	receives	coal,	steam	and	power	from	Lu'An	and	supplies	syngas	to	Lu'An	under	a	long-term	onsite	contract.	The	JV	is	consolidated within	the	results	of	the	Industrial	Gases	–	Asia	segment.

Air	Products	contributed	four	large	air	separation	units	to	the	JV	with	a	carrying	value	of	approximately	 $300,	and	the	JV	acquired	gasification	and	syngas clean-up	assets	from	Lu'An	for	7.9	billion	RMB	(approximately	$1.2	billion).	As	a	result,	the	carrying	value	of	the	plant	and	equipment	of	the	JV	was approximately	$1.5	billion	at	the	acquisition	date.

We	accounted	for	the	acquisition	of	the	gasification	and	syngas	clean-up	assets	as	an	asset	acquisition.	In	connection	with	closing	the	acquisition,	we paid	net	cash	of	approximately	1.5	billion	RMB	($235)	and	issued	equity	of	 1.4	billion	RMB	($227)	to	Lu'An	for	their	noncontrolling	interest	in	the	JV.

In	addition,	Lu'An	made	a	loan	of	 2.6	billion	RMB	to	the	JV	with	regularly	scheduled	principal	and	interest	payments	at	a	fixed	interest	rate	of 5.5%,	and we	established	a	liability	of	2.3	billion	RMB	for	cash	payments	expected	to	be	made	to	or	on	behalf	of	Lu'An	in	fiscal	year	2019.

As	of	30	September	2018,	long-term	debt	payable	to	Lu'An	of	 2.6	billion	RMB	($384)	is	presented	on	the	consolidated	balance	sheets	as	" Long-term	debt –	related	party,"	and	our	expected	remaining	cash	payments	of	approximately	 2.2	billion	RMB	($330)	are	presented	within	"Payables	and	accrued liabilities."

The	issuance	of	equity	to	Lu'An	for	their	noncontrolling	interest,	the	long-term	debt,	and	the	liability	for	the	remaining	cash	payments	were	noncash transactions;	therefore,	they	have	been	excluded	from	the	consolidated	statement	of	cash	flows	for	the	fiscal	year	ended	30	September	2018.

# Business	Combinations

In	fiscal	year	2018,	we	completed	 eight	acquisitions	that	were	accounted	for	as	business	combinations.	These	acquisitions	had	an	aggregate	purchase price,	net	of	cash	acquired,	of	$355.4.	The	largest	of	the	acquisitions	was	completed	during	the	first	quarter	of	fiscal	year	2018	and	consisted	primarily of	three	air	separation	units	serving	onsite	and	merchant	customers	in	China.	This	acquisition	is	expected	to	strengthen	our	position	in	the	region.	The results	of	this	business	are	consolidated	within	our	Industrial	Gases	–	Asia	segment.

Our	fiscal	year	2018	business	combinations	resulted	in	the	recognition	of	 $178.4	of	plant	and	equipment,	$78.0	of	goodwill,	$17.7	of	which	is	deductible for	tax	purposes,	and	$105.8	of	intangible	assets,	primarily	customer	relationships,	having	a	weighted-average	useful	life	of	 twelve	years.	The	goodwill recognized	on	the	transactions	is	attributable	to	expected	growth	and	cost	synergies	and	was	primarily	recorded	in	the	Industrial	Gases	–	Asia	and	the Industrial	Gases	–	EMEA	segments.

Our	2018	business	combinations	did	not	materially	impact	our	consolidated	income	statements	for	the	periods	presented.

The	components	of	inventories	are	as	follows:

| 30	September | 2018 | 2017 |
| :--- | :--- | :--- |
| Finished\tgoods | $125.4 | $120.0 |
| Work\tin\tprocess | 21.2 | 15.7 |
| Raw\tmaterials,\tsupplies\tand\tother | 249.5 | 223.0 |
| Total\tFIFO\tCost | 396.1 | 358.7 |
| Less:\tExcess\tof\tFIFO\tcost\tover\tLIFO\tcost | — | (23.3) |
| Inventories | $396.1 | $335.4 |

As	discussed	in	Note	1,	Major	Accounting	Policies,	we	changed	our	accounting	method	for	U.S.	inventories	from	a	LIFO	basis	to	a	FIFO	basis	effective	1 July	2018.	As	of	30	September	2017,	inventories	valued	using	the	LIFO	method	comprised	approximately	49%	of	consolidated	inventories	before	LIFO adjustment.	Liquidation	of	LIFO	inventory	layers	prior	to	our	change	in	accounting	policy	in	fiscal	year	2018	and	in	fiscal	years	2017	and	2016	did	not materially	affect	the	results	of	operations.

We	did	not	restate	prior	period	financial	statements	for	the	change	in	U.S.	inventories	as	the	impact	was	not	material.	Instead,	the	Company	applied	the accounting	change	as	a	cumulative	effect	adjustment	to	cost	of	sales	in	the	fourth	quarter	of	fiscal	year	2018.	This	change	increased	inventories	by	$24.1 at	1	July	2018	and	increased	pre-tax	income	from	continuing	operations	by	$24.1	for	the	quarter	and	fiscal	year	ended	30	September	2018.

# 8.	SUMMARIZED	FINANCIAL	INFORMATION	OF	EQUITY	AFFILIATES

The	summarized	financial	information	below	is	on	a	combined	100%	basis	and	has	been	compiled	based	on	financial	statements	of	the	companies accounted	for	by	the	equity	method.	The	amounts	presented	include	the	accounts	of	the	following	equity	affiliates:

Abdullah	Hashim	Industrial	Gases	&	Equipment	Co.,	Ltd.	(25%);

INOX	Air	Products	Limited	(50%);

The	investment	in	net	assets	of	and	advances	to	equity	affiliates	as	of 30	September	2018	and	2017	included	investment	in	foreign	affiliates	of	 $1,276.0 and	$1,285.1,	respectively.

As	of	30	September	2018	and	2017,	the	amount	of	investment	in	companies	accounted	for	by	the	equity	method	included	equity	method	goodwill	of $42.4 and	$45.8,	respectively.

# U.S.	Tax	Cuts	and	Jobs	Act

For	the	year	ended	30	September	2018,	equity	affiliates'	income	includes	an	expense	of	 $28.5	for	our	proportionate	share	of	the	impact	of	the	U.S.	Tax Cuts	and	Jobs	Act	primarily	recorded	during	the	first	quarter	of	fiscal	year	2018.	This	expense	is	included	in	the	fiscal	year	2018	net	income	on	a	100% basis	in	the	table	above.	Refer	to	Note	22,	Income	Taxes,	for	additional	information.

# Equity	Affiliate	Impairment	Charge

During	the	third	quarter	of	fiscal	year	2017,	we	recorded	an	other-than-temporary	impairment	charge	of	 $79.5	on	our	investment	in	Abdullah	Hashim Industrial	Gases	&	Equipment	Co.,	Ltd.	(AHG),	a	25%-owned	equity	affiliate	in	our	Industrial	Gases	–	EMEA	segment.	The	impairment	charge	is	reflected on	our	consolidated	income	statements	within	"Equity	affiliates'	income."	This	charge	was	not	deductible	for	tax	purposes	and	has	been	excluded	from segment	results.

# Jazan

On	19	April	2015,	a	joint	venture	between	Air	Products	and	ACWA	Holding	entered	into	a	 20-year	oxygen	and	nitrogen	supply	agreement	to	supply	Saudi Aramco's	oil	refinery	and	power	plant	being	built	in	Jazan,	Saudi	Arabia.	Air	Products	owns	25%	of	the	joint	venture	and	guarantees	the	repayment	of	its share	of	an	equity	bridge	loan.	ACWA	also	guarantees	their	share	of	the	loan.	We	determined	that	the	joint	venture	is	a	variable	interest	entity,	for	which we	are	not	the	primary	beneficiary.

As	of	30	September	2018	and	2017,	other	noncurrent	liabilities	included	$94.4	for	our	obligation	to	make	future	equity	contributions	in	2020	based	on	our proportionate	share	of	the	advances	received	by	the	joint	venture	under	the	loan.	During	fiscal	year	2016,	we	recorded	a	noncash	transaction	that resulted	in	an	increase	of	$26.9	to	our	investment	in	net	assets	of	and	advances	to	equity	affiliates.	This	noncash	transaction	has	been	excluded	from	the consolidated	statement	of	cash	flows.	In	total,	we	expect	to	invest	approximately	$100	in	this	joint	venture.	There	has	been	 no	change	to	our	investment during	fiscal	years	2018	and	2017.

The	major	classes	of	plant	and	equipment	are	as	follows:

| 30	September |  | Useful	Life | in	years | 2018 | 2017 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Land |  |  |  | $269.4 | $231.0 |
| Buildings |  |  | 30 | 988.6 | 977.8 |
| Production\tfacilities(A) | 10 | to | 20 | 15,082.8 | 13,577.1 |
| (B)\nDistribution\tand\tother\tmachinery\tand\tequipment | 5 | to | 25 | 4,400.9 | 3,944.0 |
| Construction\tin\tprogress |  |  |  | 748.5 | 817.9 |
| Plant\tand\tequipment,\tat\tcost |  |  |  | 21,490.2 | 19,547.8 |
| Less:\tAccumulated\tdepreciation |  |  |  | 11,566.5 | 11,107.6 |
| Plant\tand\tequipment,\tnet |  |  |  | $9,923.7 | $8,440.2 |

(A) Depreciable	lives	of	production	facilities	related	to	long-term	customer	supply	contracts	are	matched	to	the	contract lives.

(B) The	depreciable	lives	for	various	types	of	distribution	equipment	are	10	to	25	years	for	cylinders,	depending	on	the	nature	and	properties	of	the	product;	20	years for	tanks;	7.5	years	for	customer	stations;	and	5	to	15	years	for	tractors	and	trailers.

The	increase	in	our	production	facilities	during	fiscal	year	2018	primarily	relates	to	the	Lu'An	asset	acquisition	completed	in	April	2018.	Refer	to	Note 6, Acquisitions,	for	additional	information.

Changes	to	the	carrying	amount	of	consolidated	goodwill	by	segment	are	as	follows:

(A) Accumulated	impairment	losses	include	the	impacts	of	currency	translation.	These	losses	are	attributable	to	our	Latin	America	reporting	unit	(LASA)	within	the Industrial	Gases	–	Americas	segment.

We	review	goodwill	for	impairment	annually	in	the	fourth	quarter	of	the	fiscal	year	and	whenever	events	or	changes	in	circumstances	indicate	that	the carrying	value	of	goodwill	might	not	be	recoverable.	The	impairment	test	for	goodwill	involves	calculating	the	fair	value	of	each	reporting	unit	and comparing	that	value	to	the	carrying	value.	If	the	fair	value	of	the	reporting	unit	is	less	than	its	carrying	value,	the	difference	is	recorded	as	a	goodwill impairment	charge,	not	to	exceed	the	total	amount	of	goodwill	allocated	to	that	reporting	unit.	During	the	fourth	quarter	of	fiscal	year	2018,	we	conducted our	annual	goodwill	impairment	test	and	determined	that	the	fair	value	of	all	our	reporting	units	exceeded	their	carrying	value.

During	the	third	quarter	of	fiscal	year	2017,	we	conducted	an	interim	impairment	test	of	the	goodwill	associated	with	our	Latin	America	Reporting	unit (LASA)	within	the	Industrial	Gases	–	Americas	segment.	This	was	driven	by	Management's	decision	to	lower	long-term	growth	projections	in	response	to declining	volumes	and	weak	economic	conditions	in	Latin	America	during	fiscal	year	2017.	We	determined	that	the	fair	value	of	LASA	was	less	than	its carrying	value	and	recorded	a	noncash	impairment	charge	of	$145.3,	which	is	reflected	on	our	consolidated	income	statements	within	"Goodwill	and intangible	asset	impairment	charge."	This	charge	was	not	deductible	for	tax	purposes	and	has	been	excluded	from	segment	operating	income.

LASA	includes	assets	and	goodwill	associated	with	operations	in	Chile	and	other	Latin	American	countries.	We	estimated	the	fair	value	of	LASA	based	on two	valuation	approaches,	the	income	approach	and	the	market	approach.	We	reviewed	relevant	facts	and	circumstances	in	determining	the	weighting	of the	approaches.

Under	the	income	approach,	we	estimated	the	fair	value	of	LASA	based	on	the	present	value	of	estimated	future	cash	flows.	Cash	flow	projections	were based	on	management's	estimates	of	revenue	growth	rates	and	EBITDA	margins,	taking	into	consideration	business	and	market	conditions	for	the	Latin American	countries	and	markets	in	which	we	operate.	We	calculated	the	discount	rate	based	on	a	market-participant,	risk-adjusted	weighted	average	cost of	capital,	which	considers	industry-specific	rates	of	return	on	debt	and	equity	capital	for	a	target	industry	capital	structure,	adjusted	for	risks	associated with	business	size	and	geography.

Under	the	market	approach,	we	estimated	fair	value	based	on	market	multiples	of	revenue	and	earnings	derived	from	publicly-traded	industrial	gases companies	and	regional	manufacturing	companies,	adjusted	to	reflect	differences	in	size	and	growth	prospects.

Management	judgment	is	required	in	the	determination	of	each	assumption	utilized	in	the	valuation	model,	and	actual	results	could	differ	from	our estimates.

The	table	below	provides	details	of	acquired	intangible	assets:

|  |  | 30	September	2018 |  |  | 30	September	2017 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross | Accumulated\nAmortization/\nImpairment | Net | Gross | Accumulated\nAmortization/\nImpairment | Net |
| Customer\trelationships | $491.9 | ($165.5) | $326.4 | $424.1 | ($142.3) | $281.8 |
| Patents\tand\ttechnology | 34.0 | (11.9) | 22.1 | 13.4 | (10.6) | 2.8 |
| Other | 72.6 | (33.8) | 38.8 | 73.4 | (36.6) | 36.8 |
| Total\tfinite-lived\tintangibles | 598.5 | (211.2) | 387.3 | 510.9 | (189.5) | 321.4 |
| Trade\tnames\tand\ttrademarks,\tindefinite-\nlived | 64.8 | (13.6) | 51.2 | 67.8 | (20.9) | 46.9 |
| Total\tIntangible\tAssets | $663.3 | ($224.8) | $438.5 | $578.7 | ($210.4) | $368.3 |

The	increase	in	net	intangible	assets	during	fiscal	year	 2018	is	primarily	attributable	to	intangible	assets	acquired	through	business	combinations,	partially offset	by	amortization.	For	additional	information	on	intangible	assets	acquired,	refer	to	Note	6,	Acquisitions.

Amortization	expense	for	intangible	assets	was	 $30.0,	$22.6,	and	$22.3	in	fiscal	years	2018,	2017,	and	2016,	respectively.	Refer	to	Note	1,	Major Accounting	Policies,	for	amortization	periods	associated	with	our	intangible	assets.

# Projected	annual	amortization	expense	for	intangible	assets	as	of 30	September	2018	is	as	follows:

| Projected	annual	amortization	expense	for	intangible	assets	as	of<br>30	September	2018	is	as	follows: |  |
| :--- | :--- |
| 2019 | $32.7 |
| 2020 | 32.4 |
| 2021 | 30.5 |
| 2022 | 27.8 |
| 2023 | 27.3 |
| Thereafter | 236.6 |
| Total | $387.3 |

Indefinite-lived	intangible	assets	are	subject	to	impairment	testing	at	least	annually	or	more	frequently	if	events	or	changes	in	circumstances	indicate	that potential	impairment	exists.	The	impairment	test	for	indefinite-lived	intangible	assets	involves	calculating	the	fair	value	of	the	indefinite-lived	intangible assets	and	comparing	the	fair	value	to	their	carrying	value.	If	the	fair	value	is	less	than	the	carrying	value,	the	difference	is	recorded	as	an	impairment loss.	During	the	fourth	quarter	of	fiscal	year	2018,	we	conducted	our	annual	impairment	test	of	indefinite-lived	intangible	assets	and	determined	that	the fair	value	of	all	our	intangible	assets	exceeded	their	carrying	value.

During	the	third	quarter	of	fiscal	year	2017,	we	conducted	an	interim	impairment	test	of	the	indefinite-lived	intangible	assets	associated	with	LASA	within the	Industrial	Gases	–	Americas	segment	and	recorded	a	noncash	impairment	charge	of	$16.8	to	write	down	the	carrying	value	of	the	trade	names	and trademarks	to	their	fair	value.	The	impairment	charge	has	been	excluded	from	segment	operating	income	and	is	reflected	on	our	consolidated	income statements	within	"Goodwill	and	intangible	asset	impairment	charge."	As	discussed	in	Note	10,	Goodwill,	the	reduction	in	value	resulted	from	lowered long-term	growth	projections.	We	estimated	the	fair	value	of	the	indefinite-lived	intangibles	associated	with	LASA	utilizing	the	royalty	savings	method,	a form	of	the	income	approach.

In	addition,	we	tested	the	recoverability	of	LASA	long-lived	assets,	including	finite-lived	intangible	assets	subject	to	amortization,	in	fiscal	year	2017	and concluded	that	they	were	recoverable	from	expected	future	undiscounted	cash	flows.

# Lessee	Accounting

Capital	leases,	primarily	for	the	right	to	use	machinery	and	equipment,	are	included	with	owned	plant	and	equipment	within	"Plant	and	Equipment,	net"	on the	consolidated	balance	sheets	in	the	amount	of	$21.6	and	$22.3	at	30	September	2018	and	2017,	respectively.	Related	amounts	of	accumulated depreciation	are	$6.1	and	$5.3,	respectively.

Operating	leases	principally	relate	to	real	estate	and	also	include	aircraft,	distribution	equipment,	and	vehicles.	Certain	leases	include	escalation	clauses, renewal,	and/or	purchase	options.	Rent	expense	is	recognized	on	a	straight-line	basis	over	the	minimum	lease	term.	Rent	expense	under	operating leases,	including	month-to-month	agreements,	was	$82.7,	$65.8,	and	$67.6	in	fiscal	years	2018,	2017,	and	2016,	respectively.

At	30	September	2018,	minimum	payments	due	under	leases	associated	with	continuing	operations	are	as	follows:

|  | Capital<br>Leases | Operating<br>Leases |
| :--- | :--- | :--- |
| 2019 | $1.7 | $65.9 |
| 2020 | 1.4 | 50.4 |
| 2021 | 2.9 | 41.4 |
| 2022 | 1.3 | 30.4 |
| 2023 | 1.2 | 23.3 |
| Thereafter | 14.3 | 123.0 |
| Total | $22.8 | $334.4 |

The	present	value	of	the	above	future	capital	lease	payments	totaled	 $10.5.	Refer	to	Note	15,	Debt.

Included	in	the	operating	lease	payments	disclosed	above	are	future	minimum	payments	due	under	leases	related	to	the	Energy-from-Waste discontinued	operations	(i.e.,	Tees	Valley,	United	Kingdom)	of	approximately	$2	in	each	of	the	next	 five	years	and	$40	thereafter,	for	a	total	lease commitment	of	approximately	$50.	As	discussed	in	Note	3,	Discontinued	Operations,	during	the	first	quarter	of	2017,	we	recorded	an	accrual	for	these lease	obligations	to	other	noncurrent	liabilities	in	continuing	operations.

# Lessor	Accounting

As	discussed	under	Revenue	Recognition	in	Note	 1,	Major	Accounting	Policies,	certain	contracts	associated	with	facilities	that	are	built	to	provide	product to	a	specific	customer	are	required	to	be	accounted	for	as	leases.

# Operating	Leases

Assets	subject	to	operating	lease	treatment	in	which	we	are	the	lessor	are	recorded	within	"Plant	and	equipment,	net"	on	the	consolidated	balance	sheets. As	of	30	September	2018,	plant	and	equipment,	at	cost,	was	$2.4	billion,	and	accumulated	depreciation	was	 $.4	billion.	Assets	subject	to	operating	leases include	those	of	the	Lu'An	joint	venture,	which	is	discussed	in	Note	6,	Acquisitions.

At	30	September	2018,	minimum	lease	payments	expected	to	be	collected	are	as	follows:

| 2019 | $261.5 |
| :--- | :--- |
| 2020 | 259.1 |
| 2021 | 255.8 |
| 2022 | 251.5 |
| 2023 | 244.9 |
| Thereafter | 2,904.8 |
| Total | $4,177.6 |

# Capital	Leases

Lease	receivables,	net,	are	primarily	included	within	"Noncurrent	capital	lease	receivables"	on	our	consolidated	balance	sheets,	with	the	remaining balance	in	"Other	receivables	and	current	assets."

The	components	of	lease	receivables	were	as	follows:

| receivable	balance	by	$97.4,	$92.2,	and	$85.5	in	fiscal	years	2018,	2017,	and	2016,	respectively. |  |
| :--- | :--- |
| At\t30\tSeptember\t2018,\tminimum\tlease\tpayments\texpected\tto\tbe\tcollected\tare\tas\tfollows: |  |
| 2019 | $172.5 |
| 2020 | 167.8 |
| 2021 | 161.9 |
| 2022 | 150.6 |
| 2023 | 144.3 |
| Thereafter | 876.6 |
| Total | $1,673.7 |

# Currency	Price	Risk	Management

Our	earnings,	cash	flows,	and	financial	position	are	exposed	to	foreign	currency	risk	from	foreign	currency-denominated	transactions	and	net	investments in	foreign	operations.	It	is	our	policy	to	minimize	our	cash	flow	volatility	from	changes	in	currency	exchange	rates.	This	is	accomplished	by	identifying	and evaluating	the	risk	that	our	cash	flows	will	change	in	value	due	to	changes	in	exchange	rates	and	by	executing	the	appropriate	strategies	necessary	to manage	such	exposures.	Our	objective	is	to	maintain	economically	balanced	currency	risk	management	strategies	that	provide	adequate	downside protection.

# Forward	Exchange	Contracts

We	enter	into	forward	exchange	contracts	to	reduce	the	cash	flow	exposure	to	foreign	currency	fluctuations	associated	with	highly	anticipated	cash	flows and	certain	firm	commitments,	such	as	the	purchase	of	plant	and	equipment.	We	also	enter	into	forward	exchange	contracts	to	hedge	the	cash	flow exposure	on	intercompany	loans.	This	portfolio	of	forward	exchange	contracts	consists	primarily	of	Euros	and	U.S.	Dollars.	The	maximum	remaining	term of	any	forward	exchange	contract	currently	outstanding	and	designated	as	a	cash	flow	hedge	at	30	September	2018	is	1.9	years.

Forward	exchange	contracts	are	also	used	to	hedge	the	value	of	investments	in	certain	foreign	subsidiaries	and	affiliates	by	creating	a	liability	in	a currency	in	which	we	have	a	net	equity	position.	The	primary	currency	pair	in	this	portfolio	of	forward	exchange	contracts	is	Euros	and	U.S.	Dollars.

In	addition	to	the	forward	exchange	contracts	that	are	designated	as	hedges,	we	utilize	forward	exchange	contracts	that	are	not	designated	as	hedges. These	contracts	are	used	to	economically	hedge	foreign	currency-denominated	monetary	assets	and	liabilities,	primarily	working	capital.	The	primary objective	of	these	forward	exchange	contracts	is	to	protect	the	value	of	foreign	currency-denominated	monetary	assets	and	liabilities	from	the	effects	of volatility	in	foreign	exchange	rates	that	might	occur	prior	to	their	receipt	or	settlement.	This	portfolio	of	forward	exchange	contracts	consists	of	many different	foreign	currency	pairs,	with	a	profile	that	changes	from	time	to	time	depending	on	business	activity	and	sourcing	decisions.

The	table	below	summarizes	our	outstanding	currency	price	risk	management	instruments:

|  | 30	September	2018<br>US$<br>Notional | Years<br>Average<br>Maturity | 30	September	2017<br>US$<br>Notional | Years<br>Average<br>Maturity |
| :--- | :--- | :--- | :--- | :--- |
| Forward\tExchange\tContracts |  |  |  |  |
| Cash\tflow\thedges | $2,489.1 | 0.4 | $3,150.2 | 0.4 |
| Net\tinvestment\thedges | 457.5 | 1.7 | 675.5 | 3.0 |
| Not\tdesignated | 1,736.1 | 0.8 | 273.8 | 0.1 |
| Total\tForward\tExchange\tContracts | $4,682.7 | 0.7 | $4,099.5 | 0.8 |

The	notional	value	of	forward	exchange	contracts	not	designated	in	the	table	above	increased	as	a	result	of	repayment	of	intercompany	loans	prior	to their	original	maturity	dates.	The	outstanding	forward	exchange	contracts	no	longer	qualified	as	cash	flow	hedges	due	to	the	early	repayment	of	the	loans. In	addition,	as	a	result	of	changes	in	our	currency	exposures,	we	de-designated	a	portion	of	forward	exchange	contracts	previously	designated	as	net investment	hedges.	To	eliminate	any	future	earnings	impact	from	these	items,	we	entered	into	equal	and	offsetting	forward	exchange	contracts.

In	addition	to	the	above,	we	use	foreign	currency-denominated	debt	to	hedge	the	foreign	currency	exposures	of	our	net	investment	in	certain	foreign subsidiaries.	The	designated	foreign	currency-denominated	debt	and	related	accrued	interest	included	€908.8	million	($1,054.6)	at	30	September	2018 and	€912.2	million	($1,077.7)	at	30	September	2017.	The	designated	foreign	currency-denominated	debt	is	located	on	the	balance	sheets	in	the	long-term debt	line	item.

# Debt	Portfolio	Management

It	is	our	policy	to	identify	on	a	continuing	basis	the	need	for	debt	capital	and	evaluate	the	financial	risks	inherent	in	funding	the	Company	with	debt	capital. Reflecting	the	result	of	this	ongoing	review,	the	debt	portfolio	and	hedging	program	are	managed	with	the	objectives	and	intent	to	(1)	reduce	funding	risk with	respect	to	borrowings	made	by	us	to	preserve	our	access	to	debt	capital	and	provide	debt	capital	as	required	for	funding	and	liquidity	purposes,	and (2)	manage	the	aggregate	interest	rate	risk	and	the	debt	portfolio	in	accordance	with	certain	debt	management	parameters.

# Interest	Rate	Management	Contracts

We	enter	into	interest	rate	swaps	to	change	the	fixed/variable	interest	rate	mix	of	our	debt	portfolio	in	order	to	maintain	the	percentage	of	fixed-	and variable-rate	debt	within	the	parameters	set	by	management.	In	accordance	with	these	parameters,	the	agreements	are	used	to	manage	interest	rate risks	and	costs	inherent	in	our	debt	portfolio.	Our	interest	rate	management	portfolio	generally	consists	of	fixed-to-floating	interest	rate	swaps	(which	are designated	as	fair	value	hedges),	pre-issuance	interest	rate	swaps	and	treasury	locks	(which	hedge	the	interest	rate	risk	associated	with	anticipated	fixed- rate	debt	issuances	and	are	designated	as	cash	flow	hedges),	and	floating-to-fixed	interest	rate	swaps	(which	are	designated	as	cash	flow	hedges).	At	30 September	2018,	the	outstanding	interest	rate	swaps	were	denominated	in	U.S.	Dollars.	The	notional	amount	of	the	interest	rate	swap	agreements	is equal	to	or	less	than	the	designated	debt	being	hedged.	When	interest	rate	swaps	are	used	to	hedge	variable-rate	debt,	the	indices	of	the	swaps	and	the debt	to	which	they	are	designated	are	the	same.	It	is	our	policy	not	to	enter	into	any	interest	rate	management	contracts	which	lever	a	move	in	interest rates	on	a	greater	than	one-to-one	basis.

# Cross	Currency	Interest	Rate	Swap	Contracts

We	enter	into	cross	currency	interest	rate	swap	contracts	when	our	risk	management	function	deems	necessary.	These	contracts	may	entail	both	the exchange	of	fixed-	and	floating-rate	interest	payments	periodically	over	the	life	of	the	agreement	and	the	exchange	of	one	currency	for	another	currency	at inception	and	at	a	specified	future	date.	The	contracts	are	used	to	hedge	either	certain	net	investments	in	foreign	operations	or	nonfunctional	currency cash	flows	related	to	intercompany	loans.	The	current	cross	currency	interest	rate	swap	portfolio	consists	of	fixed-to-fixed	swaps	primarily	between	U.S. Dollars	and	Chinese	Renminbi,	U.S.	Dollars	and	Chilean	Pesos,	and	U.S.	Dollars	and	Indian	Rupee.

The	following	table	summarizes	our	outstanding	interest	rate	management	contracts	and	cross	currency	interest	rate	swaps:

|  | US$<br>Notional | 30	September	2018<br>Average<br>Pay	% | Average<br>Receive<br>% | Years<br>Average<br>Maturity | US$<br>Notional | 30	September	2017<br>Average<br>Pay	% | Average<br>Receive<br>% | Years<br>Average<br>Maturity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Interest\trate\tswaps\n(fair\tvalue\thedge) | $600.0 | LIBOR | 2.60% | 1.6 | $600.0 | LIBOR | 2.28% | 1.3 |
| Cross\tcurrency\tinterest |  |  |  |  |  |  |  |  |
| rate\tswaps\t(net |  |  |  |  |  |  |  |  |
| investment\thedge) | $201.7 | 4.42% | 2.97% | 3.1 | $539.7 | 3.27% | 2.59% | 1.9 |
| Cross\tcurrency\tinterest |  |  |  |  |  |  |  |  |
| rate\tswaps\t(cash\tflow |  |  |  |  |  |  |  |  |
| hedge) | $1,052.7 | 4.99% | 2.89% | 2.3 | $1,095.7 | 4.96% | 2.78% | 2.4 |
| Cross\tcurrency\tinterest |  |  |  |  |  |  |  |  |
| rate\tswaps\t(not |  |  |  |  |  |  |  |  |
| designated) | $80.2 | 4.88% | 3.43% | 3.9 | $41.6 | 3.28% | 2.32% | 1.7 |

The	table	below	summarizes	the	fair	value	and	balance	sheet	location	of	our	outstanding	derivatives:

|  | Balance	Sheet | 30	September | 30	September | Balance	Sheet | 30	September | 30	September |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Location | 2018 | 2017 | Location | 2018 | 2017 |
| Derivatives\tDesignated\tas\tHedging\nInstruments: |  |  |  |  |  |  |
| Forward\texchange\tcontracts | Other\treceivables | $24.9 | $81.7 | Accrued\tliabilities | $37.0 | $82.0 |
| Interest\trate\tmanagement\tcontracts | Other\treceivables | 24.3 | 11.1 | Accrued\tliabilities | 2.3 | 10.7 |
|  |  |  |  | Other\tnoncurrent |  |  |
| Forward\texchange\tcontracts | Other\tnoncurrent\tassets | 19.8 | 27.1 | \tliabilities | 4.6 | 13.8 |
|  |  |  |  | Other\tnoncurrent |  |  |
| Interest\trate\tmanagement\tcontracts | Other\tnoncurrent\tassets | 48.7 | 102.6 | liabilities | 11.6 | 22.2 |
| Total\tDerivatives\tDesignated\tas\tHedging\nInstruments |  | $117.7 | $222.5 |  | $55.5 | $128.7 |
| Derivatives\tNot\tDesignated\tas\tHedging\nInstruments: |  |  |  |  |  |  |
| Forward\texchange\tcontracts | Other\treceivables | 7.9 | 1.1 | Accrued\tliabilities | $14.9 | $2.2 |
| Interest\trate\tmanagement\tcontracts | Other\treceivables | 4.0 | — | Accrued\tliabilities | — | 1.0 |
|  |  |  |  | Other\tnoncurrent |  |  |
| Forward\texchange\tcontracts | Other\tnoncurrent\tassets | 16.2 | — | liabilities | 23.7 | — |
|  |  |  |  | Other\tnoncurrent |  |  |
| Interest\trate\tmanagement\tcontracts | Other\tnoncurrent\tassets | .3 | 4.2 | liabilities | — | — |
| Total\tDerivatives\tNot\tDesignated\tas\nHedging\tInstruments |  | $28.4 | $5.3 |  | $38.6 | $3.2 |
| Total\tDerivatives |  | $146.1 | $227.8 |  | $94.1 | $131.9 |

Refer	to	Note	14,	Fair	Value	Measurements,	which	defines	fair	value,	describes	the	method	for	measuring	fair	value,	and	provides	additional	disclosures regarding	fair	value	measurements.

The	table	below	summarizes	the	gain	or	loss	related	to	our	cash	flow	hedges,	fair	value	hedges,	net	investment	hedges,	and	derivatives	not	designated as	hedging	instruments:

|  |  |  | Year	Ended	30	September | Year	Ended	30	September |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Forward\nExchange\tContracts |  | Foreign\nCurrency\nDebt |  | Other(A) | Other(A) | Total |  |
|  | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| Cash\tFlow\tHedges,\tnet\tof\ttax: |  |  |  |  |  |  |  |  |
| Net\tgain\t(loss)\trecognized\tin\tOCI\n(effective\tportion) | $2.4 | $.3 | $— | $— | $43.5 | ($12.9) | $45.9 | ($12.6) |
| Net\t(gain)\tloss\treclassified\tfrom\tOCI\tto\nsales/cost\tof\tsales\t(effective\tportion) | 7.1 | 18.3 | — | — | — | — | 7.1 | 18.3 |
| Net\t(gain)\tloss\treclassified\tfrom\tOCI\tto |  |  |  |  |  |  |  |  |
| other\tincome\t(expense),\tnet\t(effective |  |  |  |  |  |  |  |  |
| portion) | (7.8) | (3.8) | — | — | (33.8) | 10.5 | (41.6) | 6.7 |
| Net\t(gain)\tloss\treclassified\tfrom\tOCI\tto\ninterest\texpense\t(effective\tportion) | 1.2 | (2.1) | — | — | 3.9 | 2.9 | 5.1 | .8 |
| Net\t(gain)\tloss\treclassified\tfrom\tOCI\tto |  |  |  |  |  |  |  |  |
| other\tincome\t(expense),\tnet |  |  |  |  |  |  |  |  |
| (ineffective\tportion) | (.5) | (1.6) | — | — | (.5) | — | (1.0) | (1.6) |
| Fair\tValue\tHedges: |  |  |  |  |  |  |  |  |
| Net\tgain\t(loss)\trecognized\tin\tinterest\nexpense(B) | $— | $— | $— | $— | ($10.1) | ($14.7) | ($10.1) | ($14.7) |
| Net\tInvestment\tHedges,\tnet\tof\ttax: |  |  |  |  |  |  |  |  |
| Net\tgain\t(loss)\trecognized\tin\tOCI | ($.6) | ($11.1) | $10.2 | ($32.8) | $11.0 | ($15.6) | $20.6 | ($59.5) |
| Derivatives\tNot\tDesignated\tas\nHedging\tInstruments: |  |  |  |  |  |  |  |  |
| Net\tgain\t(loss)\trecognized\tin\tother\nincome\t(expense),\tnet(C) | ($4.0) | $4.1 | $— | $— | ($.8) | ($2.4) | ($4.8) | $1.7 |

(A) Other	includes	the	impact	on	other	comprehensive	income	(OCI)	and	earnings	primarily	related	to	interest	rate	and	cross	currency	interest	rate swaps.

(B) The	impact	of	fair	value	hedges	noted	above	was	largely	offset	by	recognized	gains	and	losses	resulting	from	the	impact	of	changes	in	related	interest	rates	on outstanding	debt.

(C) The	impact	of	the	non-designated	hedges	noted	above	was	largely	offset	by	recognized	gains	and	losses	resulting	from	the	impact	of	changes	in	exchange rates	on	assets	and	liabilities	denominated	in	nonfunctional	currencies.

The	amount	of	cash	flow	hedges'	unrealized	gains	and	losses	at	 30	September	2018	that	are	expected	to	be	reclassified	to	earnings	in	the	next	twelve months	is	not	material.

The	cash	flows	related	to	all	derivative	contracts	are	reported	in	the	operating	activities	section	of	the	consolidated	statements	of	cash	flows.

# Credit	Risk-Related	Contingent	Features

Certain	derivative	instruments	are	executed	under	agreements	that	require	us	to	maintain	a	minimum	credit	rating	with	both	Standard	&	Poor's	and Moody's.	If	our	credit	rating	falls	below	this	threshold,	the	counterparty	to	the	derivative	instruments	has	the	right	to	request	full	collateralization	on	the derivatives'	net	liability	position.	The	net	liability	position	of	derivatives	with	credit	risk-related	contingent	features	was	$33.4	as	of	30	September	2018	and $34.6	as	of	30	September	2017.	Because	our	current	credit	rating	is	above	the	various	pre-established	thresholds,	 no	collateral	has	been	posted	on	these liability	positions.

# Counterparty	Credit	Risk	Management

We	execute	financial	derivative	transactions	with	counterparties	that	are	highly	rated	financial	institutions,	all	of	which	are	investment	grade	at	this	time. Some	of	our	underlying	derivative	agreements	give	us	the	right	to	require	the	institution	to	post	collateral	if	its	credit	rating	falls	below	the	pre-established thresholds	with	Standard	&	Poor's	or	Moody's.	The	collateral	that	the	counterparties	would	be	required	to	post	was	$97.6	as	of	30	September	2018	and $138.5	as	of	30	September	2017.	No	financial	institution	is	required	to	post	collateral	at	this	time,	as	all	have	credit	ratings	at	or	above	the	threshold.

Fair	value	is	defined	as	an	exit	price,	i.e.,	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between market	participants	at	the	measurement	date.

The	fair	value	hierarchy	prioritizes	the	inputs	to	valuation	techniques	used	to	measure	fair	value	into	three	broad	levels	as	follows:

Level	2— Inputs	that	are	observable	for	the	asset	or	liability,	either	directly	or	indirectly	through	market	corroboration,	for	substantially	the full	term	of	the	asset	or	liability.

Level	3— Inputs	that	are	unobservable	for	the	asset	or	liability	based	on	our	own	assumptions	(about	the	assumptions	market	participants would	use	in	pricing	the	asset	or	liability).

The	methods	and	assumptions	used	to	measure	the	fair	value	of	financial	instruments	are	as	follows:

Short-term	investments	include	time	deposits	with	original	maturities	greater	than	three	months	and	less	than	one	year.	The	estimated	fair	value	of	the short-term	investments,	which	approximates	carrying	value	as	of	30	September	2018	and	2017,	was	determined	using	level	2	inputs	within	the	fair	value hierarchy.	Level	2	measurements	were	based	on	current	interest	rates	for	similar	investments	with	comparable	credit	risk	and	time	to	maturity.

# Derivatives

The	fair	value	of	our	interest	rate	management	contracts	and	forward	exchange	contracts	are	quantified	using	the	income	approach	and	are	based	on estimates	using	standard	pricing	models.	These	models	take	into	account	the	value	of	future	cash	flows	as	of	the	balance	sheet	date,	discounted	to	a present	value	using	discount	factors	that	match	both	the	time	to	maturity	and	currency	of	the	underlying	instruments.	The	computation	of	the	fair	values	of these	instruments	is	generally	performed	by	the	Company.	These	standard	pricing	models	utilize	inputs	which	are	derived	from	or	corroborated	by observable	market	data	such	as	interest	rate	yield	curves	as	well	as	currency	spot	and	forward	rates.	Therefore,	the	fair	value	of	our	derivatives	is classified	as	a	level	2	measurement.	On	an	ongoing	basis,	we	randomly	test	a	subset	of	our	valuations	against	valuations	received	from	the	transaction's counterparty	to	validate	the	accuracy	of	our	standard	pricing	models.	Counterparties	to	these	derivative	contracts	are	highly	rated	financial	institutions.

Refer	to	Note	13,	Financial	Instruments,	for	a	description	of	derivative	instruments,	including	details	on	the	balance	sheet	line	classifications.

# Long-term	Debt,	Including	Related	Party

The	fair	value	of	our	debt	is	based	on	estimates	using	standard	pricing	models	that	take	into	account	the	value	of	future	cash	flows	as	of	the	balance sheet	date,	discounted	to	a	present	value	using	discount	factors	that	match

both	the	time	to	maturity	and	currency	of	the	underlying	instruments.	These	standard	valuation	models	utilize	observable	market	data	such	as	interest	rate yield	curves	and	currency	spot	rates.	Therefore,	the	fair	value	of	our	debt	is	classified	as	a	level	2	measurement.	We	generally	perform	the	computation	of the	fair	value	of	these	instruments.

The	carrying	values	and	fair	values	of	financial	instruments	were	as	follows:

|  | 30	September	2018<br>Carrying	Value | Fair	Value | 30	September	2017<br>Carrying	Value | Fair	Value |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Derivatives |  |  |  |  |
| Forward\texchange\tcontracts | $68.8 | $68.8 | $109.9 | $109.9 |
| Interest\trate\tmanagement\tcontracts | 77.3 | 77.3 | 117.9 | 117.9 |
| Liabilities |  |  |  |  |
| Derivatives |  |  |  |  |
| Forward\texchange\tcontracts | $80.2 | $80.2 | $98.0 | $98.0 |
| Interest\trate\tmanagement\tcontracts | 13.9 | 13.9 | 33.9 | 33.9 |
| Long-term\tdebt,\tincluding\tcurrent\tportion | 3,758.3 | 3,788.2 | 3,818.8 | 3,928.2 |

The	carrying	amounts	reported	on	the	consolidated	balance	sheets	for	cash	and	cash	items,	short-term	investments,	trade	receivables,	payables	and accrued	liabilities,	accrued	income	taxes,	and	short-term	borrowings	approximate	fair	value	due	to	the	short-term	nature	of	these	instruments.	Accordingly, these	items	have	been	excluded	from	the	above	table.

The	following	table	summarizes	assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	in	the	consolidated	balance	sheets:

|  |  | 30	September	2018 | 30	September	2018 |  |  | 30	September	2017 | 30	September	2017 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total | Level\t1 | Level\t2 | Level\t3 | Total | Level\t1 | Level\t2 | Level\t3 |
| Assets\tat\tFair\tValue |  |  |  |  |  |  |  |  |
| Derivatives |  |  |  |  |  |  |  |  |
| Forward\texchange\ncontracts | $68.8 | $— | $68.8 | $— | $109.9 | $— | $109.9 | $— |
| Interest\trate\tmanagement\ncontracts | 77.3 | — | 77.3 | — | 117.9 | — | 117.9 | — |
| Total\tAssets\tat\tFair\tValue | $146.1 | $— | $146.1 | $— | $227.8 | $— | $227.8 | $— |
| Liabilities\tat\tFair\tValue |  |  |  |  |  |  |  |  |
| Derivatives |  |  |  |  |  |  |  |  |
| Forward\texchange\ncontracts | $80.2 | $— | $80.2 | $— | $98.0 | $— | $98.0 | $— |
| Interest\trate\tmanagement\ncontracts | 13.9 | — | 13.9 | — | 33.9 | — | 33.9 | — |
| Total\tLiabilities\tat\tFair\nValue | $94.1 | $— | $94.1 | $— | $131.9 | $— | $131.9 | $— |

The	following	is	a	tabular	presentation	of	nonrecurring	fair	value	measurements	along	with	the	level	within	the	fair	value	hierarchy	in	which	the	fair	value measurement	in	its	entirety	falls:

| Total | 30	June	2017<br>Level	1 | Level	2 | Level	3 | 2017	Loss |
| :--- | :--- | :--- | :--- | :--- |
| $68.5 | $— | $— | $68.5 | $79.5 |

(A) In	fiscal	year	2017,	we	assessed	the	recoverability	of	the	carrying	value	of	our	equity	investment	in	AHG.	We	estimated	the	fair	value	of	our	investment	using weighting	of	the	results	of	the	income	and	market	approaches.	An	impairment	loss	was	recognized	for	the	difference	between	the	carrying	amount	and	the	fair value	of	the	investment	as	of	30	June	2017.	There	have	been	no	events	during	fiscal	year	2018	requiring	reassessment	of	our	investment.	For	additional information,	see	Note	8,	Summarized	Financial	Information	of	Equity	Affiliates.

During	the	third	quarter	ended	30	June	2017,	we	recognized	a	goodwill	impairment	charge	of	 $145.3	and	an	intangible	asset	impairment	charge	of	 $16.8 associated	with	our	LASA	reporting	unit.	Refer	to	Note	10,	Goodwill,	and	Note	11,	Intangible	Assets,	for	more	information	related	to	these	charges	and the	associated	fair	value	measurement	methods	and	significant	inputs/assumptions,	which	were	classified	as	Level	3	since	unobservable	inputs	were utilized	in	the	fair	value	measurements.

The	tables	below	summarize	our	outstanding	debt	at	 30	September	2018	and	2017:

| 30	September | 2018 | 2017 |
| :--- | :--- | :--- |
| Short-term\tborrowings | $54.3 | $144.0 |
| Current\tportion\tof\tlong-term\tdebt | 406.6 | 416.4 |
| Long-term\tdebt | 2,967.4 | 3,402.4 |
| Long-term\tdebt\t–\trelated\tparty(A) | 384.3 | — |
| Total\tDebt | $3,812.6 | $3,962.8 |

# (A) Refer	to	Note	6,	Acquisitions,	for	additional	information	regarding	related	party

debt.

# Short-term	Borrowings

Short-term	borrowings	consisted	of	bank	obligations	of	 $54.3	and	$144.0	at	30	September	2018	and	2017,	respectively.	The	weighted	average	interest rate	of	short-term	borrowings	outstanding	at	30	September	2018	and	2017	was	5.0%	and	4.6%,	respectively.

# Long-term	Debt

| 30	September | Fiscal	Year<br>Maturities | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Payable\tin\tU.S.\tDollars |  |  |  |
| Debentures |  |  |  |
| 8.75% | 2021 | $18.4 | $18.4 |
| Medium-term\tNotes\t(weighted\taverage\trate) |  |  |  |
| Series\tE\t7.6% | 2026 | 17.2 | 17.2 |
| Senior\tNotes |  |  |  |
| Note\t1.2% | 2018 | — | 400.0 |
| Note\t4.375% | 2019 | 400.0 | 400.0 |
| Note\t3.0% | 2022 | 400.0 | 400.0 |
| Note\t2.75% | 2023 | 400.0 | 400.0 |
| Note\t3.35% | 2024 | 400.0 | 400.0 |
| Other\t(weighted\taverage\trate) |  |  |  |
| Variable-rate\tindustrial\trevenue\tbonds\t1.51% | 2035\tto\t2050 | 631.9 | 631.9 |
| Other\t.25% | 2019\tto\t2022 | .9 | 10.9 |
| Payable\tin\tOther\tCurrencies |  |  |  |
| Eurobonds\t2.0% | 2020 | 348.1 | 354.4 |
| Eurobonds\t.375% | 2021 | 406.2 | 413.5 |
| Eurobonds\t1.0% | 2025 | 348.1 | 354.4 |
| Other\t4.3% | 2019\tto\t2023 | 8.0 | 25.8 |
| Related\tParty(A) |  |  |  |
| Chinese\tRenminbi\t5.5% | 2020\tto\t2026 | 384.3 | — |
| Capital\tLease\tObligations |  |  |  |
| United\tStates\t5.0% | 2018 | — | .2 |
| Foreign\t10.4% | 2019\tto\t2036 | 10.5 | 10.6 |
| Total\tPrincipal\tAmount |  | 3,773.6 | 3,837.3 |
| Less:\tUnamortized\tdiscount\tand\tdebt\tissuance\tcosts |  | (15.3) | (18.5) |
| Total\tLong-term\tDebt |  | 3,758.3 | 3,818.8 |
| Less:\tCurrent\tportion\tof\tlong-term\tdebt |  | (406.6) | (416.4) |
| Less:\tLong-term\tdebt\t–\trelated\tparty |  | (384.3) | — |
| Long-term\tDebt |  | $2,967.4 | $3,402.4 |
| (A)\nRefer\tto\tNote\t6,\tAcquisitions,\tfor\tadditional\tinformation\tregarding\trelated\tparty\ndebt. |  |  |  |
| Maturities\tof\tlong-term\tdebt,\tincluding\trelated\tparty,\tin\teach\tof\tthe\tnext | five\tyears\tand\tbeyond\tare\tas\tfollows: |  |  |
| 2019 | 2019 | 2019 | $406.6 |
| 2020 |  |  | 380.9 |
| 2021 | 2021 | 2021 | 473.9 |
| 2022 |  |  | 448.3 |
| 2023 | 2023 | 2023 | 448.8 |
| Thereafter |  |  | 1,615.1 |
| Total | Total | Total | $3,773.6 |

(A) Refer	to	Note	6,	Acquisitions,	for	additional	information	regarding	related	party debt.

Maturities	of	long-term	debt,	including	related	party,	in	each	of	the	next five	years	and	beyond	are	as	follows:

Various	debt	agreements	to	which	we	are	a	party	include	financial	covenants	and	other	restrictions,	including	restrictions	pertaining	to	the	ability	to	create property	liens	and	enter	into	certain	sale	and	leaseback	transactions.	As	of	30	September	2018,	we	are	in	compliance	with	all	the	financial	and	other covenants	under	our	debt	agreements.

Additional	commitments	totaling	$7.0	are	maintained	by	our	foreign	subsidiaries,	all	of	which	were	borrowed	and	outstanding	at 30	September	2018.

# 2017	Credit	Agreement

The	2017	Credit	Agreement	provides	a	source	of	liquidity	for	the	Company	and	supports	its	commercial	paper	program.	The	Company's	only	financial covenant	under	the	2017	Credit	Agreement	is	a	maximum	ratio	of	total	debt	to	total	capitalization	(total	debt	plus	total	equity)	no	greater	than	70%.	No borrowings	were	outstanding	under	the	2017	Credit	Agreement	as	of	 30	September	2018.

In	September	2016,	we	exchanged	notes	issued	to	us	by	Versum	in	anticipation	of	the	spin-off.	The	exchange	resulted	in	a	loss	of $6.9.	Refer	to	Note	4, Materials	Technologies	Separation,	for	additional	information.

The	Company	and	certain	of	its	subsidiaries	sponsor	defined	benefit	pension	plans	and	defined	contribution	plans	that	cover	a	substantial	portion	of	its worldwide	employees.	The	principal	defined	benefit	pension	plans	are	the	U.S.	salaried	pension	plan	and	the	U.K.	pension	plan.	These	plans	were	closed to	new	participants	in	2005,	after	which	defined	contribution	plans	were	offered	to	new	employees.	The	principal	defined	contribution	plan	is	the Retirement	Savings	Plan,	in	which	a	substantial	portion	of	the	U.S.	employees	participate.	A	similar	plan	is	offered	to	U.K.	employees.	We	also	provide other	postretirement	benefits	consisting	primarily	of	healthcare	benefits	to	U.S.	retirees	who	meet	age	and	service	requirements.

# Defined	Benefit	Pension	Plans

|  |  | 2018 |  | 2017 |  | 2016 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | U.S. | International | U.S. | International | U.S. | International |
| Service\tcost | $25.5 | $25.5 | $29.0 | $25.9 | $36.5 | $24.3 |
| Interest\tcost | 107.2 | 37.3 | 107.5 | 32.2 | 110.7 | 44.3 |
| Expected\treturn\ton\tplan\tassets | (201.6) | (81.7) | (207.7) | (75.2) | (202.0) | (78.3) |
| Amortization |  |  |  |  |  |  |
| Net\tactuarial\tloss | 87.4 | 40.2 | 88.7 | 54.7 | 85.3 | 35.6 |
| Prior\tservice\tcost\t(credit) | 1.6 | — | 2.3 | (.1) | 2.8 | (.2) |
| Settlements | 45.0 | 3.5 | 10.5 | 1.7 | 5.1 | 1.3 |
| Curtailments | — | — | 4.3 | (1.3) | — | (1.1) |
| Special\ttermination\tbenefits | .4 | — | 2.8 | .4 | 2.0 | — |
| Other | — | 1.5 | — | 1.1 | (.3) | 2.1 |
| Net\tPeriodic\tBenefit\tCost\t–\tTotal | $65.5 | $26.3 | $37.4 | $39.4 | $40.1 | $28.0 |
| Less:\tDiscontinued\tOperations | — | — | (.7) | (4.1) | (7.9) | (4.4) |
| Net\tPeriodic\tBenefit\tCost\t–\tContinuing\nOperations | $65.5 | $26.3 | $36.7 | $35.3 | $32.2 | $23.6 |

As	discussed	in	Note	2,	New	Accounting	Guidance,	we	early	adopted	guidance	on	the	presentation	of	net	periodic	pension	and	postretirement	benefit cost	during	the	first	quarter	of	fiscal	year	2018.	The	amendments	require	the	service	cost	component	of	net	periodic	benefit	cost	to	be	presented	within the	same	line	items	as	other	compensation	costs	arising	from	services	rendered	by	employees	during	the	period.	Accordingly,	our	service	costs	are primarily	included	within	"Cost	of	sales"	and	"Selling	and	administrative	expense"	on	our	consolidated	income	statements.	The	non-service	related	costs, including	pension	settlement	losses,	are	presented	outside	operating	income	within	"Other	non-operating	income	(expense),	net."	The	amount	of	service costs	capitalized	in	fiscal	year	2018	and	the	amount	of	net	periodic	benefit	costs	capitalized	in	fiscal	years	 2017	and	2016	were	not	material.

During	the	fourth	quarter	of	fiscal	year	2018,	we	recognized	a	pension	settlement	loss	of	 $43.7	primarily	resulting	from	the	transfer	of	certain	pension payment	obligations	for	our	U.S.	salaried	and	hourly	plans	to	an	insurer	through	the	purchase	of	an	irrevocable,	nonparticipating	group	annuity	contract with	plan	assets	on	17	September	2018.	The	transaction	does	not	change	the	amount	of	the	monthly	pension	benefits	received	by	affected	retirees.

Certain	of	our	pension	plans	provide	for	a	lump	sum	benefit	payment	option	at	the	time	of	retirement,	or	for	corporate	officers,	six	months	after	their retirement	date.	A	participant's	vested	benefit	is	considered	settled	upon	cash	payment	of	the	lump	sum.	We	recognize	pension	settlement	losses	when cash	payments	exceed	the	sum	of	the	service	and	interest	cost	components	of	net	periodic	benefit	cost	of	the	plan	for	the	fiscal	year.	We	recognized pension	settlement	losses	of	$10.5	and	$5.1	in	fiscal	years	2017	and	2016,	respectively,	to	accelerate	recognition	of	a	portion	of	actuarial	losses	deferred in	accumulated	other	comprehensive	loss,	primarily	associated	with	the	U.S.	Supplementary	Pension	Plan.

We	calculate	net	periodic	benefit	cost	for	a	given	fiscal	year	based	on	assumptions	developed	at	the	end	of	the	previous	fiscal	year.	The	following	table sets	forth	the	weighted	average	assumptions	used	in	the	calculation	of	net	periodic	benefit	cost:

|  |  | 2018 |  | 2017 |  | 2016 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | U.S. | International | U.S. | International | U.S. | International |
| Discount\trate\t–\tService\tcost | 3.9% | 2.6% | 3.6% | 2.1% | 4.5% | 3.4% |
| Discount\trate\t–\tInterest\tcost | 3.3% | 2.2% | 3.0% | 1.8% | 3.6% | 2.9% |
| Expected\treturn\ton\tplan\tassets | 7.5% | 5.8% | 8.0% | 6.1% | 8.0% | 6.3% |
| Rate\tof\tcompensation\tincrease | 3.5% | 3.6% | 3.5% | 3.5% | 3.5% | 3.5% |

The	projected	benefit	obligation	(PBO)	is	the	actuarial	present	value	of	benefits	attributable	to	employee	service	rendered	to	date,	including	the	effects	of estimated	future	salary	increases.	The	following	table	sets	forth	the	weighted	average	assumptions	used	in	the	calculation	of	the	PBO:

|  | 2018 |  | 2017 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | U.S. | International | U.S. | International |
| Discount\trate | 4.3% | 2.5% | 3.8% | 2.4% |
| Rate\tof\tcompensation\tincrease | 3.5% | 3.5% | 3.5% | 3.6% |

The	following	tables	reflect	the	change	in	the	PBO	and	the	change	in	the	fair	value	of	plan	assets	based	on	the	plan	year	measurement	date,	as	well	as the	amounts	recognized	in	the	consolidated	balance	sheets:

Settlements	in	the	table	above	primarily	reflect	the	impact	of	the	transfer	of	certain	pension	obligations	and	plan	assets	of	our	U.S.	salaried	and	hourly plans	to	an	insurer	through	the	purchase	of	an	irrevocable,	nonparticipating	group	annuity	contract	in	the	fourth	quarter	of	fiscal	year	2018.

The	changes	in	plan	assets	and	benefit	obligation	that	have	been	recognized	in	other	comprehensive	income	on	a	pretax	basis	during	fiscal	years 2018 and	2017	consist	of	the	following:

|  | U.S. | International | U.S. | International |
| :--- | :--- | :--- | :--- | :--- |
| Net\tactuarial\tgain\tarising\tduring\tthe\tperiod | ($167.7) | ($64.6) | ($189.8) | ($162.0) |
| Amortization\tof\tnet\tactuarial\tloss | (132.4) | (43.7) | (103.3) | (55.7) |
| Prior\tservice\tcost\tarising\tduring\tthe\tperiod | .1 | .7 | 1.9 | — |
| Amortization\tof\tprior\tservice\tcost | (1.6) | — | (2.3) | .1 |
| Total | ($301.6) | ($107.6) | ($293.5) | ($217.6) |

The	net	actuarial	gain	represents	the	actual	changes	in	the	estimated	obligation	and	plan	assets	that	have	not	yet	been	recognized	in	the	consolidated income	statements	and	are	included	in	accumulated	other	comprehensive	loss.	Actuarial	gains	arising	during	fiscal	year	2018	are	primarily	attributable	to higher	discount	rates	and	higher	than	expected	return	on	plan	assets.	Accumulated	actuarial	gains	and	losses	that	exceed	a	corridor	are	amortized	over the	average	remaining	service	period	of	U.S.	participants,	which	was	approximately	eight	years	as	of	30	September	2018.	For	U.K.	participants, accumulated	actuarial	gains	and	losses	that	exceed	a	corridor	are	amortized	over	the	average	remaining	life	expectancy,	which	was	approximately	26 years	as	of	30	September	2018.

The	components	recognized	in	accumulated	other	comprehensive	loss	on	a	pretax	basis	at	30	September	consisted	of	the	following:

|  | U.S. | International | U.S. | International |
| :--- | :--- | :--- | :--- | :--- |
| Net\tactuarial\tloss | $680.4 | $443.6 | $980.5 | $551.9 |
| Prior\tservice\tcost\t(credit) | 6.6 | (1.1) | 8.1 | (1.8) |
| Net\ttransition\tliability | — | .4 | — | .4 |
| Total | $687.0 | $442.9 | $988.6 | $550.5 |

The	amount	of	accumulated	other	comprehensive	loss	at	 30	September	2018	that	is	expected	to	be	recognized	as	a	component	of	net	periodic	pension cost	during	fiscal	year	2019,	excluding	discontinued	operations	and	amounts	that	may	be	recognized	through	settlement	losses,	is	as	follows:

The	accumulated	benefit	obligation	(ABO)	is	the	actuarial	present	value	of	benefits	attributed	to	employee	service	rendered	to	a	particular	date,	based	on current	salaries.	The	ABO	for	all	defined	benefit	pension	plans	was	$4,376.4	and	$4,842.8	as	of	30	September	2018	and	2017,	respectively.

The	following	table	provides	information	on	pension	plans	where	the	benefit	liability	exceeds	the	value	of	plan	assets:

|  | 30	September	2018<br>U.S. | International | 30	September	2017<br>U.S. | International |
| :--- | :--- | :--- | :--- | :--- |
| Pension\tPlans\twith\tPBO\tin\tExcess\tof\tPlan\tAssets: |  |  |  |  |
| PBO | $2,733.6 | $452.6 | $3,116.7 | $465.7 |
| Fair\tvalue\tof\tplan\tassets | 2,467.5 | 276.8 | 2,623.0 | 243.1 |
| Pension\tPlans\twith\tABO\tin\tExcess\tof\tPlan\tAssets: |  |  |  |  |
| ABO | $2,608.6 | $357.9 | $2,951.0 | $365.6 |
| Fair\tvalue\tof\tplan\tassets | 2,467.5 | 228.2 | 2,623.0 | 197.1 |

The	tables	above	include	several	pension	arrangements	that	are	not	funded	because	of	jurisdictional	practice.	The	ABO	and	PBO	related	to	these	plans as	of	30	September	2018	were	$92.8	and	$100.9,	respectively.

# Pension	Plan	Assets

Our	pension	plan	investment	strategy	is	to	invest	in	diversified	portfolios	to	earn	a	long-term	return	consistent	with	acceptable	risk	in	order	to	pay retirement	benefits	and	meet	regulatory	funding	requirements	while	minimizing	company	cash	contributions	over	time.	De-risking	strategies	are	also employed	for	closed	plans	as	funding	improves,	generally	resulting	in	higher	allocations	to	long	duration	bonds.	The	plans	invest	primarily	in	passive	and actively	managed	equity	and	debt	securities.	Equity	investments	are	diversified	geographically	and	by	investment	style	and	market	capitalization.	Fixed income	investments	include	sovereign,	corporate	and	asset-backed	securities	generally	denominated	in	the	currency	of	the	plan.

Asset	allocation	targets	are	established	based	on	the	long-term	return,	volatility	and	correlation	characteristics	of	the	asset	classes,	the	profiles	of	the plans'	liabilities,	and	acceptable	levels	of	risk.	Actual	allocations	vary	from	target	due	to	market	changes	and	are	reviewed	regularly.	Assets	are	routinely rebalanced	through	contributions,	benefit	payments,	and	otherwise	as	deemed	appropriate.	The	actual	and	target	allocations	at	the	measurement	date are	as	follows:

|  |  | 2018	Target	Allocation<br>U.S. | 2018	Target	Allocation<br>U.S. | 2018	Target	Allocation<br>U.S. | International | International | 2018	Actual	Allocation<br>U.S. | International | 2017	Actual	Allocation<br>U.S. | International |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Asset\tCategory |  |  |  |  |  |  |  |  |  |  |
| Equity\tsecurities | 38 | - | 48% | 40 | - | 49% | 41% | 46% | 58% | 53% |
| Debt\tsecurities | 44 | - | 54% | 50 | - | 60% | 50% | 53% | 34% | 46% |
| Real\testate/other | — | - | 10% | — | - —% | - —% | 8% | —% | 7% | 1% |
| Cash |  |  | —% |  |  | —% | 1% | 1% | 1% | —% |
| Total |  |  |  |  |  |  | 100% | 100% | 100% | 100% |

In	fiscal	year	2018,	the	7.5%	expected	return	for	U.S.	plan	assets	was	based	on	a	weighted	average	of	estimated	long-term	returns	of	major	asset classes	and	the	historical	performance	of	plan	assets.	The	estimated	long-term	return	for	equity,	debt	securities,	and	real	estate	is	8.0%,	5.4%,	and	6.9%, respectively.	In	determining	asset	class	returns,	we	take	into	account	historical	long-term	returns	and	the	value	of	active	management,	as	well	as	other economic	and	market	factors.

In	fiscal	year	2018,	the	5.8%	expected	rate	of	return	for	international	plan	assets	was	based	on	a	weighted	average	return	for	plans	outside	the	U.S., which	vary	significantly	in	size,	asset	structure	and	expected	returns.	The	expected	asset	return	for	the	U.K.	plan,	which	represents	over	80%	of	the assets	of	our	International	plans,	is	6.2%	and	was	derived	from	expected	equity	and	debt	security	returns	of	 7.4%	and	2.7%,	respectively.

The	following	table	summarizes	pension	plan	assets	measured	at	fair	value	by	asset	class	(see	Note 14,	Fair	Value	Measurements,	for	definition	of	the levels):

|  | Total | 30	September	2018<br>Level	1 | Level	2 | Level	3 | Total | 30	September	2017<br>Level	1 | Level	2 | Level	3 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| U.S.\tQualified\tPension\tPlans |  |  |  |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $13.8 | $13.8 | $— | $— | $13.6 | $13.6 | $— | $— |
| Equity\tsecurities | 397.9 | 397.9 | — | — | 598.6 | 598.6 | — | — |
| Equity\tmutual\tfunds | 173.8 | 173.8 | — | — | 276.5 | 276.5 | — | — |
| Equity\tpooled\tfunds | 545.2 | — | 545.2 | — | 787.0 | — | 787.0 | — |
| Fixed\tincome: |  |  |  |  |  |  |  |  |
| Bonds\t(government\nand\tcorporate) | 1,344.6 | — | 1,344.6 | — | 985.7 | — | 985.7 | — |
| Total\tU.S.\tQualified\tPension\tPlans\tat\nFair\tValue | $2,475.3 | $585.5 | $1,889.8 | $— | $2,661.4 | $888.7 | $1,772.7 | $— |
| Real\testate\tpooled\tfunds(A) | $209.6 |  |  |  | $207.8 |  |  |  |
| Total\tU.S.\tQualified\tPension\tPlans | $2,684.9 |  |  |  | $2,869.2 |  |  |  |
| International\tPension\tPlans |  |  |  |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $15.8 | $15.8 | $— | $— | $7.3 | $7.3 | $— | $— |
| Equity\tpooled\tfunds | 727.9 | — | 727.9 | — | 821.4 | — | 821.4 | — |
| Fixed\tincome\tpooled\tfunds | 615.2 | — | 615.2 | — | 651.3 | — | 651.3 | — |
| Other\tpooled\tfunds | 11.6 | — | 11.6 | — | 18.6 | — | 10.8 | 7.8 |
| Insurance\tcontracts | 217.7 | — | — | 217.7 | 41.4 | — | — | 41.4 |
| Total\tInternational\tPension\tPlans | $1,588.2 | $15.8 | $1,354.7 | $217.7 | $1,540.0 | $7.3 | $1,483.5 | $49.2 |

(A) Real	estate	pooled	funds	consist	of	funds	that	invest	in	properties.	Interests	in	these	funds	are	valued	using	the	net	asset	value	("NAV")	per	share	practical expedient	and	are	not	classified	in	the	fair	value	hierarchy.	During	fiscal	year	2018,	we	identified	that	these	investments	were	improperly	included	in	the	fair	value hierarchy	table	of	our	2017	Form	10-K.	Accordingly,	we	have	updated	the	prior	period	to	conform	with	the	appropriate	current	year	presentation.

The	following	table	summarizes	changes	in	fair	value	of	the	pension	plan	assets	classified	as	Level	3,	by	asset	class:

|  | Other<br>Pooled	Funds | Insurance<br>Contracts | Total |
| :--- | :--- | :--- | :--- |
| 30\tSeptember\t2016 | $7.3 | $45.8 | $53.1 |
| Actual\treturn\ton\tplan\tassets: |  |  |  |
| Assets\theld\tat\tend\tof\tyear | 1.2 | (1.0) | .2 |
| Assets\tsold\tduring\tthe\tperiod | .3 | — | .3 |
| Purchases,\tsales,\tand\tsettlements,\tnet | (1.0) | (3.4) | (4.4) |
| 30\tSeptember\t2017 | $7.8 | $41.4 | $49.2 |
| Actual\treturn\ton\tplan\tassets: |  |  |  |
| Assets\theld\tat\tend\tof\tyear | — | .9 | .9 |
| Assets\tsold\tduring\tthe\tperiod | .5 | — | .5 |
| Purchases,\tsales,\tand\tsettlements,\tnet | (8.3) | 175.4 | 167.1 |
| 30\tSeptember\t2018 | $— | $217.7 | $217.7 |

The	descriptions	and	fair	value	methodologies	for	the	U.S.	and	International	pension	plan	assets	are	as	follows:

# Cash	and	Cash	Equivalents

The	carrying	amounts	of	cash	and	cash	equivalents	approximate	fair	value	due	to	the	short-term	maturity.

# Equity	Securities

Equity	securities	are	valued	at	the	closing	market	price	reported	on	a	U.S.	or	international	exchange	where	the	security	is	actively	traded	and	are	therefore classified	as	Level	1	assets.

# Equity	Mutual	and	Pooled	Funds

Shares	of	mutual	funds	are	valued	at	the	net	asset	value	(NAV)	of	the	fund	and	are	classified	as	Level	1	assets.	Units	of	pooled	funds	are	valued	at	the per	unit	NAV	determined	by	the	fund	manager	based	on	the	value	of	the	underlying	traded	holdings	and	are	classified	as	Level	2	assets.

# Corporate	and	Government	Bonds

Corporate	and	government	bonds	are	classified	as	Level	2	assets,	as	they	are	either	valued	at	quoted	market	prices	from	observable	pricing	sources	at the	reporting	date	or	valued	based	upon	comparable	securities	with	similar	yields	and	credit	ratings.

# Other	Pooled	Funds

Other	pooled	funds	classified	as	Level	2	assets	are	valued	at	the	NAV	of	the	shares	held	at	year	end,	which	is	based	on	the	fair	value	of	the	underlying investments.	Securities	and	interests	classified	as	Level	3	are	carried	at	the	estimated	fair	value.	The	estimated	fair	value	is	based	on	the	fair	value	of	the underlying	investment	values,	which	includes	estimated	bids	from	brokers	or	other	third-party	vendor	sources	that	utilize	expected	cash	flow	streams	and other	uncorroborated	data	including	counterparty	credit	quality,	default	risk,	discount	rates,	and	the	overall	capital	market	liquidity.

# Insurance	Contracts

Insurance	contracts	are	classified	as	Level	3	assets,	as	they	are	carried	at	contract	value,	which	approximates	the	estimated	fair	value.	The	estimated	fair value	is	based	on	the	fair	value	of	the	underlying	investment	of	the	insurance	company	and	discount	rates	that	require	inputs	with	limited	observability.

# Contributions	and	Projected	Benefit	Payments

Pension	contributions	to	funded	plans	and	benefit	payments	for	unfunded	plans	for	fiscal	year	 2018	were	$68.3.	Contributions	for	funded	plans	resulted primarily	from	contractual	and	regulatory	requirements.	Benefit	payments	to	unfunded	plans	were	due	primarily	to	the	timing	of	retirements.	We	anticipate contributing	$45	to	$65	to	the	defined	benefit	pension	plans	in	fiscal	year	 2019.	These	contributions	are	anticipated	to	be	driven	primarily	by	contractual and	regulatory	requirements	for	funded	plans	and	benefit	payments	for	unfunded	plans,	which	are	dependent	upon	timing	of	retirements.

Projected	benefit	payments,	which	reflect	expected	future	service,	are	as	follows:

|  | U.S. | International |
| :--- | :--- | :--- |
| 2019 | $165.5 | $52.8 |
| 2020 | 152.4 | 53.9 |
| 2021 | 157.0 | 55.6 |
| 2022 | 163.7 | 56.0 |
| 2023 | 167.9 | 60.6 |
| 2024-2028 | 900.2 | 336.8 |

These	estimated	benefit	payments	are	based	on	assumptions	about	future	events.	Actual	benefit	payments	may	vary	significantly	from	these	estimates.

# Defined	Contribution	Plans

We	maintain	a	nonleveraged	employee	stock	ownership	plan	(ESOP)	which	forms	part	of	the	Air	Products	and	Chemicals,	Inc.	Retirement	Savings	Plan (RSP).	The	ESOP	was	established	in	May	of	2002.	The	balance	of	the	RSP	is	a	qualified	defined	contribution	plan	including	a	401(k)	elective	deferral component.	A	substantial	portion	of	U.S.	employees	are	eligible	and	participate.

We	treat	dividends	paid	on	ESOP	shares	as	ordinary	dividends.	Under	existing	tax	law,	we	may	deduct	dividends	which	are	paid	with	respect	to	shares held	by	the	plan.	Shares	of	the	Company's	common	stock	in	the	ESOP	totaled	2,378,336	as	of	30	September	2018.

Our	contributions	to	the	RSP	include	a	Company	core	contribution	for	certain	eligible	employees	who	do	not	receive	their	primary	retirement	benefit	from the	defined	benefit	pension	plans,	with	the	core	contribution	based	on	a	percentage	of	pay	that	is	dependent	on	years	of	service.	For	the	RSP,	we	also make	matching	contributions	on	overall	employee	contributions	as	a	percentage	of	the	employee	contribution	and	include	an	enhanced	contribution	for certain	eligible	employees	that	do	not	participate	in	the	defined	benefit	pension	plans.	Worldwide	contributions,	excluding	discontinued	operations, expensed	to	income	in	fiscal	years	2018,	2017,	and	2016	were	$34.2,	$33.7,	and	$34.6,	respectively.

# Other	Postretirement	Benefits

We	provide	other	postretirement	benefits	consisting	primarily	of	healthcare	benefits	to	certain	U.S.	retirees	who	meet	age	and	service	requirements.	The healthcare	benefit	is	a	continued	medical	benefit	until	the	retiree	reaches	age	65.	Healthcare	benefits	are	contributory,	with	contributions	adjusted periodically.	The	retiree	medical	costs	are	capped	at	a	specified	dollar	amount,	with	the	retiree	contributing	the	remainder.	The	cost	of	these	benefits	were not	material	in	fiscal	years	2018,	2017,	and	2016.	Accumulated	postretirement	benefit	obligations	as	of	the	end	of	fiscal	years	 2018	and	2017	were	$56.4 and	$67.0,	respectively,	of	which	$9.4	and	$10.0	were	current	obligations,	respectively.

The	changes	in	other	postretirement	benefit	plan	obligations	that	have	been	recognized	in	other	comprehensive	income	on	a	pretax	basis	during	fiscal years	2018	and	2017	were	gains	of	$3.1	and	$10.7	that	arose	during	the	periods,	respectively,	and	 $.3	and	$.2	of	net	actuarial	loss	amortization, respectively.	The	net	actuarial	loss	recognized	in	accumulated	other	comprehensive	loss	on	a	pretax	basis	was	$4.4	at	30	September	2018	and	$7.8	at 30	September	2017.

Expected	per	capita	claims	costs	are	currently	assumed	to	be	greater	than	the	annual	cap;	therefore,	the	assumed	healthcare	cost	trend	rate,	ultimate trend	rate,	and	the	year	the	ultimate	trend	rate	is	reached	have	no	impact	on	plan	obligations.

# 17.	COMMITMENTS	AND	CONTINGENCIES

We	are	involved	in	various	legal	proceedings,	including	commercial,	competition,	environmental,	health,	safety,	product	liability,	and	insurance	matters.	In September	2010,	the	Brazilian	Administrative	Council	for	Economic	Defense	("CADE")	issued	a	decision	against	our	Brazilian	subsidiary,	Air	Products Brasil	Ltda.,	and	several	other	Brazilian	industrial	gas	companies	for	alleged	anticompetitive	activities.	CADE	imposed	a	civil	fine	of	R$179.2	million (approximately	$44	at	30	September	2018)	on	Air	Products	Brasil	Ltda.	This	fine	was	based	on	a	recommendation	by	a	unit	of	the	Brazilian	Ministry	of Justice,	whose	investigation	began	in	2003,	alleging	violation	of	competition	laws	with	respect	to	the	sale	of	industrial	and	medical	gases.	The	fines	are based	on	a	percentage	of	our	total	revenue	in	Brazil	in	2003.

We	have	denied	the	allegations	made	by	the	authorities	and	filed	an	appeal	in	October	2010	with	the	Brazilian	courts.	On	6	May	2014,	our	appeal	was granted	and	the	fine	against	Air	Products	Brasil	Ltda.	was	dismissed.	CADE	has	appealed	that	ruling	and	the	matter	remains	pending.	We,	with	advice	of our	outside	legal	counsel,	have	assessed	the	status	of	this	matter	and	have	concluded	that,	although	an	adverse	final	judgment	after	exhausting	all appeals	is	possible,	such	a	judgment	is	not	probable.	As	a	result,	no	provision	has	been	made	in	the	consolidated	financial	statements.	We	estimate	the maximum	possible	loss	to	be	the	full	amount	of	the	fine	of	R$179.2	million	(approximately	$44	at	30	September	2018)	plus	interest	accrued	thereon	until final	disposition	of	the	proceedings.

Other	than	this	matter,	we	do	not	currently	believe	there	are	any	legal	proceedings,	individually	or	in	the	aggregate,	that	are	reasonably	possible	to	have	a material	impact	on	our	financial	condition,	results	of	operations,	or	cash	flows.

# ENVIRONMENTAL

In	the	normal	course	of	business,	we	are	involved	in	legal	proceedings	under	the	Comprehensive	Environmental	Response,	Compensation,	and	Liability Act	(CERCLA:	the	federal	Superfund	law);	Resource	Conservation	and	Recovery	Act	(RCRA);	and	similar	state	and	foreign	environmental	laws	relating	to the	designation	of	certain	sites	for	investigation	or	remediation.	Presently,	there	are	32	sites	on	which	a	final	settlement	has	not	been	reached	where	we, along	with	others,	have	been	designated	a	potentially	responsible	party	by	the	Environmental	Protection	Agency	or	are	otherwise	engaged	in	investigation or	remediation,	including	cleanup	activity	at	certain	of	our	current	and	former	manufacturing	sites.	We	continually	monitor	these	sites	for	which	we	have environmental	exposure.

Accruals	for	environmental	loss	contingencies	are	recorded	when	it	is	probable	that	a	liability	has	been	incurred	and	the	amount	of	loss	can	be reasonably	estimated.	The	consolidated	balance	sheets	at	30	September	2018	and	2017	included	an	accrual	of	$76.8	and	$83.6,	respectively,	primarily as	part	of	other	noncurrent	liabilities.	The	environmental	liabilities	will	be	paid	over	a	period	of	up	to	30	years.	We	estimate	the	exposure	for	environmental loss	contingencies	to	range	from	$76	to	a	reasonably	possible	upper	exposure	of	 $90	as	of	30	September	2018.

Actual	costs	to	be	incurred	at	identified	sites	in	future	periods	may	vary	from	the	estimates,	given	inherent	uncertainties	in	evaluating	environmental exposures.	Using	reasonably	possible	alternative	assumptions	of	the	exposure	level	could	result	in	an	increase	to	the	environmental	accrual.	Due	to	the inherent	uncertainties	related	to	environmental	exposures,	a	significant	increase	to	the	reasonably	possible	upper	exposure	level	could	occur	if	a	new	site is	designated,	the	scope	of	remediation	is	increased,	a	different	remediation	alternative	is	identified,	or	a	significant	increase	in	our	proportionate	share occurs.	We	do	not	expect	that	any	sum	we	may	have	to	pay	in	connection	with	environmental	matters	in	excess	of	the	amounts	recorded	or	disclosed above	would	have	a	material	adverse	impact	on	our	financial	position	or	results	of	operations	in	any	one	year.

At	30	September	2018,	$26.0	of	the	environmental	accrual	was	related	to	the	Pace	facility.

In	2006,	we	sold	our	Amines	business,	which	included	operations	at	Pace,	Florida,	and	recognized	a	liability	for	retained	environmental	obligations associated	with	remediation	activities	at	Pace.	We	are	required	by	the	Florida	Department	of	Environmental	Protection	(FDEP)	and	the	United	States Environmental	Protection	Agency	(USEPA)	to	continue	our	remediation	efforts.	We	estimated	that	it	would	take	a	substantial	period	of	time	to	complete the	groundwater	remediation,	and	the	costs	through	completion	were	estimated	to	range	from	$42	to	$52.	As	no	amount	within	the	range	was	a	better estimate	than	another,	we	recognized	a	before-tax	expense	of	$42	in	fiscal	2006	as	a	component	of	income	from	discontinued	operations	and	recorded	an environmental	accrual	of	$42	in	continuing	operations	on	the	consolidated	balance	sheets.	There	has	been	 no	change	to	the	estimated	exposure	range related	to	the	Pace	facility.

We	have	implemented	many	of	the	remedial	corrective	measures	at	the	Pace	facility	required	under	1995	Consent	Orders	issued	by	the	FDEP	and	the USEPA.	Contaminated	soils	have	been	bioremediated,	and	the	treated	soils	have	been	secured	in	a	lined	on-site	disposal	cell.	Several	groundwater recovery	systems	have	been	installed	to	contain	and	remove	contamination	from	groundwater.	We	completed	an	extensive	assessment	of	the	site	to determine	how	well	existing	measures	are	working,	what	additional	corrective	measures	may	be	needed,	and	whether	newer	remediation	technologies that	were	not	available	in	the	1990s	might	be	suitable	to	more	quickly	and	effectively	remove	groundwater	contaminants.	Based	on	assessment	results, we	completed	a	focused	feasibility	study	that	has	identified	alternative	approaches	that	may	more	effectively	remove	contaminants.	We	continue	to	review alternative	remedial	approaches	with	the	FDEP	and	have	started	additional	field	work	to	support	the	design	of	an	improved	groundwater	recovery	network with	the	objective	of	targeting	areas	of	higher	contaminant	concentration	and	avoiding	areas	of	high	groundwater	iron	which	has	proven	to	be	a	significant operability	issue	for	the	project.	In	the	first	quarter	of	2015,	we	entered	into	a	new	Consent	Order	with	the	FDEP	requiring	us	to	continue	our	remediation efforts	at	the	Pace	facility.	The	costs	we	are	incurring	under	the	new	Consent	Order	are	consistent	with	our	previous	estimates.

# Piedmont

At	30	September	2018,	$15.7	of	the	environmental	accrual	was	related	to	the	Piedmont	site.

On	30	June	2008,	we	sold	our	Elkton,	Maryland,	and	Piedmont,	South	Carolina,	production	facilities	and	the	related	North	American	atmospheric emulsions	and	global	pressure	sensitive	adhesives	businesses.	In	connection	with	the	sale,	we	recognized	a	liability	for	retained	environmental obligations	associated	with	remediation	activities	at	the	Piedmont	site.	This	site	is	under	active	remediation	for	contamination	caused	by	an	insolvent	prior owner.

We	are	required	by	the	South	Carolina	Department	of	Health	and	Environmental	Control	(SCDHEC)	to	address	both	contaminated	soil	and	groundwater. Numerous	areas	of	soil	contamination	have	been	addressed,	and	contaminated	groundwater	is	being	recovered	and	treated.	The	SCDHEC	issued	its	final approval	to	the	site-wide	feasibility	study	on	13	June	2017	and	the	Record	of	Decision	for	the	site	on	27	June	2018.	Field	work	has	started	to	support	the remedial	design,	and	in	the	fourth	quarter	of	fiscal	year	2018,	we	signed	a	Consent	Agreement	Amendment	memorializing	our	obligations	to	complete	the cleanup	of	the	site.	We	estimate	that	source	area	remediation	and	groundwater	recovery	and	treatment	will	continue	through	2029.	Thereafter,	we	expect this	site	to	go	into	a	state	of	monitored	natural	attenuation	through	2047.

We	recognized	a	before-tax	expense	of	$24	in	2008	as	a	component	of	income	from	discontinued	operations	and	recorded	an	environmental	liability	of $24	in	continuing	operations	on	the	consolidated	balance	sheets.	There	have	been	 no	significant	changes	to	the	estimated	exposure.

# Pasadena

At	30	September	2018,	$11.7	of	the	environmental	accrual	was	related	to	the	Pasadena	site.

During	the	fourth	quarter	of	2012,	management	committed	to	permanently	shutting	down	our	polyurethane	intermediates	(PUI)	production	facility	in Pasadena,	Texas.	In	shutting	down	and	dismantling	the	facility,	we	have	undertaken	certain	obligations	related	to	soil	and	groundwater	contaminants.	We have	been	pumping	and	treating	groundwater	to	control	off-site	contaminant	migration	in	compliance	with	regulatory	requirements	and	under	the	approval of	the	Texas	Commission	on	Environmental	Quality	(TCEQ).	We	estimate	that	the	pump	and	treat	system	will	continue	to	operate	until	2042.

We	plan	to	perform	additional	work	to	address	other	environmental	obligations	at	the	site.	This	additional	work	includes	remediating,	as	required,	impacted soils,	investigating	groundwater	west	of	the	former	PUI	facility,	performing	post	closure	care	for	two	closed	RCRA	surface	impoundment	units,	and establishing	engineering	controls.	In	2012,	we	estimated	the	total	exposure	at	this	site	to	be	$13.	There	have	been	no	significant	changes	to	the	estimated exposure.

Our	asset	retirement	obligations	are	primarily	associated	with	on-site	long-term	supply	contracts	under	which	we	have	built	a	facility	on	land	owned	by	the customer	and	are	obligated	to	remove	the	facility	at	the	end	of	the	contract	term.	The	retirement	of	assets	includes	the	contractually	required	removal	of	a long-lived	asset	from	service	and	encompasses	the	sale,	removal,	abandonment,	recycling,	or	disposal	of	the	assets	as	required	at	the	end	of	the	contract terms.	These	obligations	are	primarily	reflected	in	"Other	noncurrent	liabilities"	on	the	consolidated	balance	sheets.	The	timing	and/or	method	of settlement	of	these	obligations	are	conditional	on	a	future	event	that	may	or	may	not	be	within	our	control.

Changes	to	the	carrying	amount	of	our	asset	retirement	obligations	are	as	follows:

The	increase	in	the	liability	during	fiscal	year	2018	primarily	relates	to	new	obligations	associated	with	the	Lu'An	asset	acquisition	completed	in	April 2018.

# GUARANTEES	AND	WARRANTIES

In	April	2015,	we	entered	into	joint	venture	arrangements	in	Saudi	Arabia.	An	equity	bridge	loan	has	been	provided	to	the	joint	venture	 until	2020	to	fund equity	commitments.	We	guaranteed	the	repayment	of	our	25%	share	of	this	loan,	and	our	venture	partner	guaranteed	repayment	of	its	share.	Our maximum	exposure	under	the	guarantee	is	approximately	$100.	As	of	30	September	2018	and	2017,	we	recorded	a	noncurrent	liability	of	 $94.4	for	our obligation	to	make	future	equity	contributions	based	on	our	proportionate	share	of	the	advances	received	by	the	joint	venture	under	the	loan.

Air	Products	has	also	entered	into	a	long-term	sale	of	equipment	contract	with	the	joint	venture	to	engineer,	procure,	and	construct	the	industrial	gas facilities	that	will	supply	gases	to	Saudi	Aramco.	We	provided	bank	guarantees	to	the	joint	venture	to	support	our	performance	under	the	contract.	As	of 30	September	2018,	our	maximum	potential	payments	were	$249.	Exposures	under	the	guarantees	decline	over	time	and	will	be	completely	extinguished after	completion	of	the	project.

We	are	party	to	an	equity	support	agreement	and	operations	guarantee	related	to	an	air	separation	facility	constructed	in	Trinidad	for	a	venture	in	which we	own	50%.	At	30	September	2018,	maximum	potential	payments	under	joint	and	several	guarantees	were	 $27.0.	Exposures	under	the	guarantees decline	over	time	and	will	be	completely	extinguished	by	2024.

During	the	first	quarter	of	2014,	we	sold	the	remaining	portion	of	our	Homecare	business	and	entered	into	an	operations	guarantee	related	to	obligations under	certain	homecare	contracts	assigned	in	connection	with	the	transaction.	Our	maximum	potential	payment	under	the	guarantee	is	£20	million (approximately	$25	at	30	September	2018),	and	our	exposure	will	be	extinguished	 by	2020.

To	date,	no	equity	contributions	or	payments	have	been	made	since	the	inception	of	these	guarantees.	The	fair	value	of	the	above	guarantees	is	not material.

We,	in	the	normal	course	of	business	operations,	have	issued	product	warranties	related	to	equipment	sales.	Also,	contracts	often	contain	standard	terms and	conditions	which	typically	include	a	warranty	and	indemnification	to	the	buyer	that	the	goods	and	services	purchased	do	not	infringe	on	third-party intellectual	property	rights.	The	provision	for	estimated	future	costs	relating	to	warranties	is	not	material	to	the	consolidated	financial	statements.

We	do	not	expect	that	any	sum	we	may	have	to	pay	in	connection	with	guarantees	and	warranties	will	have	a	material	adverse	effect	on	our	consolidated financial	condition,	liquidity,	or	results	of	operations.

We	are	obligated	to	make	future	payments	under	unconditional	purchase	obligations	as	summarized	below:

| UNCONDITIONAL	PURCHASE	OBLIGATIONS |  |
| :--- | :--- |
| We\tare\tobligated\tto\tmake\tfuture\tpayments\tunder\tunconditional\tpurchase\tobligations\tas\tsummarized\tbelow: |  |
| 2019 | $851 |
| 2020 | 362 |
| 2021 | 342 |
| 2022 | 318 |
| 2023 | 326 |
| Thereafter | 5,461 |
| Total | $7,660 |

# 18.	CAPITAL	STOCK

# Common	Stock

Authorized	common	stock	consists	of	300	million	shares	with	a	par	value	of	 $1	per	share.	As	of	30	September	2018,	249	million	shares	were	issued,	with 220	million	outstanding.

On	15	September	2011,	the	Board	of	Directors	authorized	the	repurchase	of	up	to	 $1.0	billion	of	our	outstanding	common	stock.	We	repurchase	shares pursuant	to	Rules	10b5-1	and	10b-18	under	the	Securities	Exchange	Act	of	1934,	as	amended,	through	repurchase	agreements	established	with	several brokers.	We	did	not	purchase	any	of	our	outstanding	shares	during	fiscal	year	2018.	At	30	September	2018,	$485.3	in	share	repurchase	authorization remains.

# The	following	table	reflects	the	changes	in	common	shares:

| Year	ended	30	September | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Number\tof\tCommon\tShares\tOutstanding |  |  |  |
| Balance,\tbeginning\tof\tyear | 218,346,074 | 217,350,825 | 215,359,113 |
| Issuance\tof\ttreasury\tshares\tfor\tstock\toption\tand\taward\tplans | 1,169,171 | 995,249 | 1,991,712 |
| Balance,\tend\tof\tyear | 219,515,245 | 218,346,074 | 217,350,825 |

# Preferred	Stock

Authorized	preferred	stock	consists	of	25	million	shares	with	a	par	value	of	 $1	per	share,	of	which	2.5	million	were	designated	as	Series	A	Junior Participating	Preferred	Stock.	There	were	no	shares	issued	or	outstanding	as	of	30	September	2018	and	2017.

We	have	various	share-based	compensation	programs,	which	include	deferred	stock	units,	stock	options,	and	restricted	stock.	Under	all	programs,	the terms	of	the	awards	are	fixed	at	the	grant	date.	We	issue	shares	from	treasury	stock	upon	the	payout	of	deferred	stock	units,	the	exercise	of	stock options,	and	the	issuance	of	restricted	stock	awards.	Share	information	presented	is	on	a	total	company	basis.	As	of	30	September	2018,	there	were 4,869,212	shares	available	for	future	grant	under	our	Long-Term	Incentive	Plan	(LTIP),	which	is	shareholder	approved.

Share-based	compensation	cost	recognized	in	the	consolidated	income	statements	is	summarized	below:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Before-Tax\tShare-Based\tCompensation\tCost\t–\tTotal | $38.8 | $40.7 | $37.6 |
| Before-Tax\tShare-Based\tCompensation\tCost\t–\tDiscontinued\tOperations | — | .8 | 6.6 |
| Before-Tax\tShare-Based\tCompensation\tCost\t–\tContinuing\tOperations | $38.8 | $39.9 | $31.0 |
| Income\ttax\tbenefit\t–\tContinuing\tOperations | (9.1) | (14.0) | (10.8) |
| After-Tax\tShare-Based\tCompensation\tCost\t–\tContinuing\tOperations | $29.7 | $25.9 | $20.2 |

Before-tax	share-based	compensation	cost	is	primarily	included	in	selling	and	administrative	expense	on	our	consolidated	income	statements.	The amount	of	share-based	compensation	cost	capitalized	in	fiscal	years	2018,	2017,	and	2016	was	not	material.

On	a	total	company	basis,	before-tax	share-based	compensation	cost	by	type	of	program	was	as	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Deferred\tstock\tunits | $38.3 | $34.5 | $29.9 |
| Stock\toptions | .2 | 1.4 | 4.2 |
| Restricted\tstock | .3 | 4.8 | 3.5 |
| Before-Tax\tShare-Based\tCompensation\tCost\t–\tTotal | $38.8 | $40.7 | $37.6 |

# Deferred	Stock	Units

We	have	granted	deferred	stock	units	to	executives,	selected	employees,	and	outside	directors.	These	deferred	stock	units	entitle	the	recipient	to	one share	of	common	stock	upon	vesting,	which	is	conditioned,	for	employee	recipients,	on	continued	employment	during	the	deferral	period	and	may	be conditioned	on	achieving	certain	performance	targets.	We	grant	deferred	stock	unit	awards	with	a	two-	to	five-year	deferral	period	that	is	subject	to	payout upon	death,	disability,	or	retirement.	Deferred	stock	units	issued	to	outside	directors	are	paid	after	service	on	the	Board	of	Directors	ends	at	the	time elected	by	the	director	(not	to	exceed	10	years	after	service	ends).	We	generally	expense	the	grant-date	fair	value	of	these	awards	on	a	straight-line	basis over	the	vesting	period;	however,	expense	recognition	is	accelerated	for	retirement	eligible	individuals	who	meet	the	requirements	for	vesting	upon retirement.	We	have	elected	to	account	for	forfeitures	as	they	occur,	rather	than	to	estimate	them.	Forfeitures	have	not	been	significant	historically.

Market-based	deferred	stock	units	vest	as	long	as	the	employee	continues	to	be	employed	by	the	Company	and	upon	the	achievement	of	the performance	target.	The	performance	target,	which	is	approved	by	the	Compensation	Committee,	is	the	Company's	total	shareholder	return	(share	price appreciation	and	dividends	paid)	in	relation	to	a	defined	peer	group	over	a	three-year	performance	period	beginning	1	October	of	the	fiscal	year	of	grant. We	granted	105,268,	117,692,	and	130,167	market-based	deferred	stock	units	in	fiscal	years	2018,	2017,	and	2016,	respectively.

The	fair	value	of	market-based	deferred	stock	units	was	estimated	using	a	Monte	Carlo	simulation	model	as	these	equity	awards	are	tied	to	a	market condition.	The	model	utilizes	multiple	input	variables	that	determine	the	probability	of	satisfying	the	market	condition	stipulated	in	the	grant	and	calculates the	fair	value	of	the	awards.	We	generally	expense	the	grant-date	fair	value	of	these	awards	on	a	straight-line	basis	over	the	vesting	period.	The estimated	grant-date	fair	value	of	market-based	deferred	stock	units	was	$202.50,	$156.87,	and	$135.49	per	unit	in	fiscal	years	 2018,	2017,	and	2016, respectively.	The	calculation	of	the	fair	value	used	the	following	assumptions:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Expected\tvolatility | 18.7% | 20.6% | 20.5% |
| Risk-free\tinterest\trate | 1.9% | 1.4% | 1.2% |
| Expected\tdividend\tyield | 2.6% | 2.5% | 2.2% |

| Deferred	Stock	Units | Shares	(000) | Grant-Date	Fair	Value |
| :--- | :--- | :--- |
| Outstanding\tat\t30\tSeptember\t2017 | 975 | $127.29 |
| Granted | 249 | 179.21 |
| Paid\tout | (237) | 134.99 |
| Forfeited/adjustments | (47) | 153.57 |
| Outstanding\tat\t30\tSeptember\t2018 | 940 | $137.78 |

Cash	payments	made	for	deferred	stock	units	were	$2.2,	$2.1,	and	$2.9	in	fiscal	years	2018,	2017,	and	2016,	respectively.	As	of	30	September	2018, there	was	$40.5	of	unrecognized	compensation	cost	related	to	deferred	stock	units.	The	cost	is	expected	to	be	recognized	over	a	weighted	average period	of	1.6	years.	The	total	fair	value	of	deferred	stock	units	paid	out	during	fiscal	years	 2018,	2017,	and	2016,	including	shares	vested	in	prior	periods, was	$38.5,	$36.6,	and	$41.6,	respectively.

# Stock	Options

We	have	granted	awards	of	options	to	purchase	common	stock	to	executives	and	selected	employees.	The	exercise	price	of	stock	options	equals	the market	price	of	our	stock	on	the	date	of	the	grant.	Options	generally	vest	incrementally	over	three	years,	and	remain	exercisable	for	 ten	years	from	the date	of	grant.	In	fiscal	years	2018,	2017,	and	2016,	no	stock	options	were	awarded.

A	summary	of	stock	option	activity	is	presented	below:

| Stock	Options | Shares	(000) | Exercise	Price |
| :--- | :--- | :--- |
| Outstanding\tat\t30\tSeptember\t2017 | 3,202 | $84.85 |
| Exercised | (1,015) | 75.15 |
| Forfeited | (1) | 124.76 |
| Outstanding\tand\tExercisable\tat\t30\tSeptember\t2018 | 2,186 | $89.33 |

| Stock	Options | Weighted	Average	Remaining<br>Contractual	Term	(in	years) | Aggregate	Intrinsic	Value |
| :--- | :--- | :--- |
| Outstanding\tand\tExercisable\tat\t30\tSeptember\t2018 | 3.9 | $170 |

The	aggregate	intrinsic	value	represents	the	amount	by	which	our	closing	stock	price	of	 $167.05	as	of	30	September	2018	exceeds	the	exercise	price multiplied	by	the	number	of	in-the-money	options	outstanding	or	exercisable.

Compensation	cost	is	generally	recognized	over	the	stated	vesting	period	consistent	with	the	terms	of	the	arrangement	(i.e.,	either	on	a	straight-line	or graded-vesting	basis).	Expense	recognition	is	accelerated	for	retirement-eligible	individuals	who	would	meet	the	requirements	for	vesting	of	awards	upon their	retirement.	As	of	30	September	2018,	there	was	no	unrecognized	compensation	cost	as	all	stock	option	awards	were	fully	vested.

Cash	received	from	option	exercises	during	fiscal	year	 2018	was	$76.2.	The	total	tax	benefit	realized	from	stock	option	exercises	in	fiscal	year	 2018	was $25.8,	of	which	$19.0	was	the	excess	tax	benefit.

# Restricted	Stock

The	grant-date	fair	value	of	restricted	stock	is	estimated	on	the	date	of	grant	based	on	the	closing	price	of	the	stock,	and	compensation	cost	is	generally amortized	to	expense	on	a	straight-line	basis	over	the	vesting	period	during	which	employees	perform	related	services.	Expense	recognition	is accelerated	for	retirement-eligible	individuals	who	would	meet	the	requirements	for	vesting	of	awards	upon	their	retirement.	We	have	elected	to	account for	forfeitures	as	they	occur,	rather	than	to	estimate	them.	Forfeitures	have	not	been	significant	historically.

We	have	issued	shares	of	restricted	stock	to	certain	officers.	Participants	are	entitled	to	cash	dividends	and	to	vote	their	respective	shares.	Restrictions	on shares	lift	in	one	to	four	years	or	upon	the	earlier	of	retirement,	death,	or	disability.	The	shares	are	nontransferable	while	subject	to	forfeiture.

A	summary	of	restricted	stock	activity	is	presented	below:

| Restricted	Stock | Shares	(000) | Weighted	Average<br>Grant-Date	Fair	Value |
| :--- | :--- | :--- |
| Outstanding\tat\t30\tSeptember\t2017 | 56 | $135.74 |
| Vested | (14) | 121.90 |
| Outstanding\tat\t30\tSeptember\t2018 | 42 | $140.28 |

As	of	30	September	2018,	there	was	$.1	of	unrecognized	compensation	cost	related	to	restricted	stock	awards.	The	cost	is	expected	to	be	recognized over	a	weighted	average	period	of	0.5	years.	The	total	fair	value	of	restricted	stock	vested	during	fiscal	years	 2018,	2017,	and	2016	was	$2.2,	$4.1,	and $4.3,	respectively.

As	discussed	in	Note	3,	Discontinued	Operations,	Air	Products	completed	the	spin-off	of	Versum	on	1	October	2016.	In	connection	with	the	spin-off,	the Company	adjusted	the	number	of	deferred	stock	units	and	stock	options	pursuant	to	existing	anti-dilution	provisions	in	the	LTIP	to	preserve	the	intrinsic value	of	the	awards	immediately	before	and	after	the	separation.	The	outstanding	awards	will	continue	to	vest	over	the	original	vesting	period	defined	at the	grant	date.	Outstanding	awards	at	the	time	of	spin-off	were	primarily	converted	into	awards	of	the	holders'	employer	following	the	separation.

Stock	awards	held	upon	separation	were	adjusted	based	upon	the	conversion	ratio	of	Air	Products'	New	York	Stock	Exchange	("NYSE")	volume	weighted- average	closing	stock	price	on	30	September	2016	($150.35)	to	the	NYSE	volume	weighted-average	opening	stock	price	on	3	October	2016	( $140.38),	or 1.071.	The	adjustment	to	the	awards	did	not	result	in	incremental	fair	value,	and	no	incremental	compensation	expense	was	recorded	related	to	the conversion	of	these	awards.

# 20.	ACCUMULATED	OTHER	COMPREHENSIVE	LOSS

The	table	below	summarizes	changes	in	AOCL,	net	of	tax,	attributable	to	Air	Products:

|  | Derivatives<br>qualifying<br>as	hedges | Foreign<br>currency<br>translation<br>adjustments | Pension	and<br>postretirement<br>benefits | Total |
| :--- | :--- | :--- | :--- | :--- |
| Balance\tat\t30\tSeptember\t2015 | ($42.9) | ($956.5) | ($1,126.5) | ($2,125.9) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | 13.7 | 9.9 | (335.1) | (311.5) |
| Amounts\treclassified\tfrom\tAOCL | (36.0) | 2.7 | 87.2 | 53.9 |
| Net\tcurrent\tperiod\tother\tcomprehensive\tincome\t(loss) | ($22.3) | $12.6 | ($247.9) | ($257.6) |
| Amount\tattributable\tto\tnoncontrolling\tinterest | (.2) | 5.4 | (.4) | 4.8 |
| Balance\tat\t30\tSeptember\t2016 | ($65.0) | ($949.3) | ($1,374.0) | ($2,388.3) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | (12.6) | 101.9 | 251.6 | 340.9 |
| Amounts\treclassified\tfrom\tAOCL | 24.2 | 57.3 | 110.7 | 192.2 |
| Net\tcurrent\tperiod\tother\tcomprehensive\tincome | $11.6 | $159.2 | $362.3 | $533.1 |
| Spin-off\tof\tVersum | .2 | 6.0 | 5.3 | 11.5 |
| Amount\tattributable\tto\tnoncontrolling\tinterest | (.1) | 3.0 | .8 | 3.7 |
| Balance\tat\t30\tSeptember\t2017 | ($53.1) | ($787.1) | ($1,007.2) | ($1,847.4) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | 45.9 | (244.6) | 179.4 | (19.3) |
| Amounts\treclassified\tfrom\tAOCL | (30.4) | 3.1 | 133.1 | 105.8 |
| Net\tcurrent\tperiod\tother\tcomprehensive\tincome\t(loss) | $15.5 | ($241.5) | $312.5 | $86.5 |
| Amount\tattributable\tto\tnoncontrolling\tinterest | — | (18.8) | (.2) | (19.0) |
| Balance\tat\t30\tSeptember\t2018 | ($37.6) | ($1,009.8) | ($694.5) | ($1,741.9) |

The	table	below	summarizes	the	reclassifications	out	of	accumulated	other	comprehensive	loss	and	the	affected	line	item	on	the	consolidated	income statements:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| (Gain)\tLoss\ton\tCash\tFlow\tHedges,\tnet\tof\ttax |  |  |  |
| Sales/Cost\tof\tsales | $7.1 | $18.3 | $.2 |
| Other\tincome\t(expense),\tnet | (42.6) | 5.1 | (46.2) |
| Interest\texpense | 5.1 | .8 | 10.0 |
| Total\t(Gain)\tLoss\ton\tCash\tFlow\tHedges,\tnet\tof\ttax | ($30.4) | $24.2 | ($36.0) |
| Currency\tTranslation\tAdjustment |  |  |  |
| Cost\tof\tsales(A) | $3.1 | $— | $— |
| Cost\treduction\tand\tassets\tactions (B) | — | 8.2 | — |
| \t\tLoss\tfrom\tdiscontinued\toperations,\tnet\tof\ttax (C) | — | 49.1 | 2.7 |
| Total\tCurrency\tTranslation\tAdjustment | $3.1 | $57.3 | $2.7 |
| Pension\tand\tPostretirement\tBenefits,\tnet\tof\ttax (D) | $133.1 | $110.7 | $87.2 |

(A) The	fiscal	year	2018	impact	relates	to	an	equipment	sale	resulting	from	the	termination	of	a	contract	in	the	Industrial	Gases	–	Asia	segment	during	the	first quarter.

(B) The	fiscal	year	2017	impact	relates	to	the	planned	sale	of	a	non-industrial	gas	hardgoods	business	in	the	Industrial	Gases	–	Americas	segment	recorded	in the	third	quarter.

(C) The	fiscal	year	2017	impact	relates	to	the	sale	of	PMD	during	the	second	quarter.	The	fiscal	year	2016	impact	primarily	relates	to	the	sale	of	an	equity	affiliate in	the	first	quarter.

(D) The	components	of	net	periodic	benefit	cost	reclassified	out	of	AOCL	include	items	such	as	prior	service	cost	amortization,	actuarial	loss	amortization,	and settlements	and	are	included	in	"Other	non-operating	income	(expense),	net"	on	the	consolidated	income	statements.	Refer	to	Note	16,	Retirement	Benefits, for	additional	information.

# 21.	EARNINGS	PER	SHARE

The	following	table	sets	forth	the	computation	of	basic	and	diluted	earnings	per	share	(EPS):

| 30	September | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Numerator |  |  |  |
| Income\tfrom\tcontinuing\toperations | $1,455.6 | $1,134.4 | $1,099.5 |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | 42.2 | 1,866.0 | (468.4) |
| Net\tIncome\tAttributable\tto\tAir\tProducts | $1,497.8 | $3,000.4 | $631.1 |
| Denominator\t(in\tmillions) |  |  |  |
| Weighted\taverage\tcommon\tshares\t—\tBasic | 219.3 | 218.0 | 216.4 |
| Effect\tof\tdilutive\tsecurities |  |  |  |
| Employee\tstock\toption\tand\tother\taward\tplans | 1.5 | 1.8 | 1.9 |
| Weighted\taverage\tcommon\tshares\t—\tDiluted | 220.8 | 219.8 | 218.3 |
| Basic\tEPS\tAttributable\tto\tAir\tProducts |  |  |  |
| Income\tfrom\tcontinuing\toperations | $6.64 | $5.20 | $5.08 |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | .19 | 8.56 | (2.16) |
| Net\tIncome\tAttributable\tto\tAir\tProducts | $6.83 | $13.76 | $2.92 |
| Diluted\tEPS\tAttributable\tto\tAir\tProducts |  |  |  |
| Income\tfrom\tcontinuing\toperations | $6.59 | $5.16 | $5.04 |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | .19 | 8.49 | (2.15) |
| Net\tIncome\tAttributable\tto\tAir\tProducts | $6.78 | $13.65 | $2.89 |

Diluted	EPS	attributable	to	Air	Products	reflects	the	potential	dilution	that	could	occur	if	stock	options	or	other	share-based	awards	were	exercised	or converted	into	common	stock.	The	dilutive	effect	is	computed	using	the	treasury	stock	method,	which	assumes	all	share-based	awards	are	exercised	and the	hypothetical	proceeds	from	exercise	are	used	by	the	Company	to	purchase	common	stock	at	the	average	market	price	during	the	period.	The incremental	shares	(difference	between	shares	assumed	to	be	issued	versus	purchased),	to	the	extent	they	would	have	been	dilutive,	are	included	in	the denominator	of	the	diluted	EPS	calculation.	Outstanding	share-based	awards	of	.1	million	and	.2	million	shares	were	antidilutive	and	therefore	excluded from	the	computation	of	diluted	EPS	for	2018	and	2016,	respectively.	There	were	no	antidilutive	outstanding	share-based	awards	in	fiscal	year	2017.

The	following	table	summarizes	the	income	of	U.S.	and	foreign	operations	before	taxes:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Income\tfrom\tContinuing\tOperations\tbefore\tTaxes |  |  |  |
| United\tStates | $688.5 | $669.8 | $631.7 |
| Foreign | 1,151.7 | 666.2 | 775.9 |
| Income\tfrom\tequity\taffiliates | 174.8 | 80.1 | 147.0 |
| Total | $2,015.0 | $1,416.1 | $1,554.6 |

On	22	December	2017,	the	United	States	enacted	the	U.S.	Tax	Cuts	and	Jobs	Act	("Tax	Act"	or	"Tax	reform")	which	significantly	changed	existing	U.S. tax	laws,	including	a	reduction	in	the	federal	corporate	income	tax	rate	from	35%	to	21%,	a	deemed	repatriation	tax	on	unremitted	foreign	earnings,	as well	as	other	changes.	Our	consolidated	income	statements	for	the	twelve	months	ended	30	September	2018	reflect	a	discrete	net	tax	expense	of	$180.6 and	a	$28.5	reduction	in	equity	affiliate	income	for	the	impacts	of	the	Tax	Act.	The	 $180.6	includes	a	$392.4	cost	comprised	of	$322.1	for	the	deemed repatriation	tax	and	$70.3	primarily	for	additional	foreign	taxes	on	the	repatriation	of	foreign	earnings.	This	cost	is	partially	offset	by	a $211.8	benefit primarily	from	the	re-measurement	of	our	net	U.S.	deferred	tax	liabilities	at	the	lower	corporate	tax	rate.

The	deemed	repatriation	tax	includes	a	$56.2	non-recurring	benefit	related	to	the	U.S.	taxation	of	deemed	foreign	dividends	in	fiscal	year	2018,	the	year of	enactment	of	the	Tax	Act.	This	benefit	may	be	eliminated	by	future	legislation.

After	applying	tax	credits,	the	balance	of	the	deemed	repatriation	tax	obligation	is	 $203.2,	which	we	intend	to	pay	in	installments	over	eight	years.	We have	recorded	$184.4	of	this	obligation	on	our	consolidated	balance	sheets	in	noncurrent	liabilities.

In	December	2017,	the	Securities	and	Exchange	Commission	staff	issued	Staff	Accounting	Bulletin	No.	118,	which	addresses	how	a	company	recognizes provisional	estimates	when	a	company	does	not	have	the	necessary	information	available,	prepared	or	analyzed	in	reasonable	detail	to	complete	its accounting	for	the	effect	of	the	changes	in	the	Tax	Act.	We	are	reporting	the	$392.4	cost	of	deemed	repatriation	tax	and	foreign	repatriation	taxes	and	the $211.8	re-measurement	of	our	net	U.S.	deferred	tax	liabilities	provisionally	based	upon	reasonable	estimates	as	of	 30	September	2018.	The	impacts	are not	yet	finalized	as	they	are	dependent	on	factors	and	analysis	not	yet	known	or	fully	completed,	including	but	not	limited	to,	changes	in	our	estimates	of book	to	U.S.	tax	adjustments	for	the	earnings	and	foreign	taxes	of	foreign	and	domestic	entities,	as	well	as	our	ongoing	analysis	of	the	Tax	Act.	Estimates used	in	the	provisional	amounts	include	earnings,	cash	positions,	foreign	taxes	and	withholding	taxes	attributable	to	foreign	subsidiaries	as	well	as	the anticipated	reversal	pattern	of	gross	deferred	balances.	We	are	continuing	to	gather	additional	information	and	expect	to	complete	our	accounting	by	the first	quarter	of	fiscal	year	2019,	within	the	prescribed	one-year	measurement	period.

Due	to	the	Company's	fiscal	year,	certain	amounts	cannot	be	finalized	until	the	completion	and	filing	of	the	Company's	U.S.	federal	2018	tax	return,	which is	due	in	the	fourth	quarter	of	fiscal	year	2019,	and	any	changes	to	the	tax	positions	reflected	in	those	returns	could	result	in	an	adjustment	to	the	impact of	the	Tax	Act.	In	addition	to	final	calculations	of	the	earnings	and	taxes	of	foreign	entities	that	would	impact	the	deemed	repatriation	tax,	estimates	that are	timing-related	may	result	in	adjustments	due	to	the	reduction	of	the	U.S.	tax	rate.	Foreign	audit	settlements,	as	well	as	future	regulatory	guidance, could	also	significantly	impact	the	deemed	repatriation	tax.

We	have	historically	asserted	our	intention	to	indefinitely	reinvest	foreign	earnings	in	certain	foreign	subsidiaries.	We	have	reevaluated	our	historic assertion	as	a	result	of	enactment	of	the	Tax	Act	and	adjusted	our	position	relative	to	the	indefinitely	reinvested	earnings	of	various	foreign	subsidiaries. The	impact	of	these	changes	is	included	in	the	$70.3	for	additional	foreign	taxes	on	the	repatriation	of	foreign	earnings.

The	Tax	Act	also	enacted	new	provisions	related	to	the	taxation	of	foreign	operations,	known	as	Global	Intangible	Low	Tax	Income	or	("GILTI").	We	have elected	as	an	accounting	policy	to	account	for	GILTI	as	a	period	cost	when	incurred.	This	and	various	other	provisions	of	the	Tax	Act	do	not	become effective	until	fiscal	year	2019	and	did	not	impact	our	tax	provision	in	fiscal	year	2018.	We	have	also	elected	as	an	accounting	policy	to	record	within income	tax	expense	transaction	gains	and	losses	on	foreign	currency	denominated	withholding	tax	liabilities.

As	a	fiscal	year-end	taxpayer,	certain	provisions	of	the	Tax	Act	become	effective	in	our	fiscal	year	2018	while	other	provisions	do	not	become	effective until	fiscal	year	2019.	The	corporate	tax	rate	reduction	is	effective	as	of	1	January	2018	and,	accordingly,	reduces	our	2018	fiscal	year	U.S.	federal statutory	rate	to	a	blended	rate	of	approximately	24.5%.	The	21%	federal	tax	rate	will	apply	to	our	fiscal	year	ended	30	September	2019	and	each	year thereafter.

The	following	table	shows	the	components	of	the	provision	for	income	taxes:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Current\tTax\tProvision |  |  |  |
| Federal | $305.1 | $62.8 | $171.0 |
| State | 17.7 | 7.0 | 21.2 |
| Foreign | 256.9 | 229.1 | 178.6 |
|  | 579.7 | 298.9 | 370.8 |
| Deferred\tTax\tProvision |  |  |  |
| Federal | (121.7) | 1.4 | 45.0 |
| State | 12.5 | 6.0 | 2.8 |
| Foreign | 53.8 | (45.4) | 14.0 |
|  | (55.4) | (38.0) | 61.8 |
| Income\tTax\tProvision | $524.3 | $260.9 | $432.6 |

| (Percent	of	income	before	taxes) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| U.S.\tfederal\tstatutory\ttax\trate | 24.5\t% | 35.0\t% | 35.0\t% |
| State\ttaxes,\tnet\tof\tfederal\tbenefit | 1.0 | 1.0 | 1.2 |
| Income\tfrom\tequity\taffiliates | (2.1) | (2.0) | (3.3) |
| Foreign\ttax\tdifferentials | (1.0) | (7.9) | (6.6) |
| Tax\ton\tforeign\trepatriated\tearnings | (.4) | (2.2) | (3.1) |
| Domestic\tproduction\tactivities | (.4) | (.8) | (.8) |
| Share-based\tcompensation | (1.0) | (1.2) | — |
| Tax\treform\trepatriation | 19.5 | — | — |
| Tax\treform\trate\tchange\tand\tother | (11.1) | — | — |
| Tax\trestructuring\tbenefit | (1.8) | — | — |
| Non-deductible\tgoodwill\timpairment\tcharge | — | 3.6 | — |
| Non-U.S.\tsubsidiary\ttax\telection | — | (7.7) | — |
| Business\tseparation\tcosts | — | .2 | 4.2 |
| Other | (1.2) | .4 | 1.2 |
| Effective\tTax\tRate | 26.0\t% | 18.4\t% | 27.8\t% |

Foreign	tax	differentials	represent	the	differences	between	foreign	earnings	subject	to	foreign	tax	rates	lower	than	the	U.S.	federal	statutory	tax	rate.

Some	of	our	foreign	earnings	are	subject	to	local	country	tax	rates	that	are	below	the	U.S.	federal	statutory	rate	and	include	tax	holidays	and	incentives.

As	a	result	of	the	reduction	in	the	federal	corporate	income	tax	rates	under	the	Tax	Act	our	effective	non-U.S.	tax	rate	is	now	closer	to	our	blended	current year	U.S.	statutory	rate	of	24.5%.

Tax	on	foreign	repatriated	earnings	includes	benefits	and	costs	related	to	U.S.	and	additional	foreign	taxation	on	the	current	and	future	repatriation	of foreign	earnings	and	a	U.S.	benefit	for	related	foreign	tax	credits.	As	a	result	of	the	Tax	Act,	the	impact	on	our	effective	rate	from	repatriations	and	credits has	been	significantly	reduced.	Due	to	the	effective	date	of	provisions	under	the	Tax	Act,	certain	benefits	reported	in	fiscal	year	2018	will	not	recur	in	fiscal year	2019.

The	Tax	Act	repeals	the	domestic	production	activities	deduction,	effective	for	our	fiscal	2019	tax	year,	and	lowers	the	benefit	taken	in	fiscal	year	2018.

In	fiscal	year	2018,	we	recognized	a	tax	benefit	of	 $35.7,	net	of	reserves	for	uncertain	tax	positions,	and	a	corresponding	decrease	in	net	deferred	tax liabilities	resulting	from	the	restructuring	of	several	foreign	subsidiaries.

During	the	first	quarter	of	fiscal	year	2017,	we	adopted	new	accounting	guidance	that	requires	excess	tax	benefits	and	deficiencies	from	share-based compensation	to	be	recognized	in	the	consolidated	income	statements	rather	than	in	additional	paid-in	capital	on	the	consolidated	balance	sheets.	As	a result	of	applying	this	change	prospectively,	we	recognized	$21.5	and	$17.6	of	excess	tax	benefits	in	our	provision	for	income	taxes	during	fiscal	year 2018	and	2017,	respectively.

Primarily	due	to	the	impact	of	the	Tax	Act	and	the	restructuring	benefit,	our	effective	tax	rate	was 26%	for	the	twelve	months	ended	 30	September	2018.

In	2017,	the	effective	tax	rate	was	impacted	by	a	tax	election	made	with	respect	to	a	Chilean	holding	company	resulting	in	an	income	tax	benefit	of $111.4 on	tax	losses	related	to	investments	in	Chile.	The	effective	tax	rate	was	also	impacted	by	a	goodwill	impairment	charge	of	$145.3	for	which	no	tax	benefits were	available.	See	Note	10,	Goodwill,	for	additional	information	regarding	the	impairment	charge.

In	2016,	the	effective	tax	rate	was	impacted	by	tax	costs	of	 $51.8	incurred	in	anticipation	of	the	tax-free	spin-off	of	Versum,	primarily	for	a	dividend declared	during	the	third	quarter	of	2016	to	repatriate	$443.8	from	a	subsidiary	in	South	Korea	to	the	U.S.	Previously,	most	of	these	foreign	earnings	were considered	to	be	indefinitely	reinvested.	In	addition,	a	tax	benefit	was	not	available	on	a	significant	portion	of	the	business	separation	costs.	See	Note	4, Materials	Technologies	Separation,	for	additional	information.

The	significant	components	of	deferred	tax	assets	and	liabilities	are	as	follows:

| 30	September | 2018 | 2017 |
| :--- | :--- | :--- |
| Gross\tDeferred\tTax\tAssets |  |  |
| Retirement\tbenefits\tand\tcompensation\taccruals | $153.1 | $370.1 |
| Tax\tloss\tcarryforwards | 143.5 | 64.5 |
| Tax\tcredits\tand\tother\ttax\tcarryforwards | 17.1 | 76.1 |
| Reserves\tand\taccruals | 42.5 | 88.2 |
| Currency\tlosses | 3.8 | 20.7 |
| Other | 45.4 | 37.2 |
| Valuation\tallowance | (105.0) | (107.7) |
| Deferred\tTax\tAssets | 300.4 | 549.1 |
| Gross\tDeferred\tTax\tLiabilities |  |  |
| Plant\tand\tequipment | 811.8 | 1,035.6 |
| Unremitted\tearnings\tof\tforeign\tentities | 36.1 | 20.9 |
| Partnership\tand\tother\tinvestments | 16.3 | 5.4 |
| Intangible\tassets | 84.3 | 81.9 |
| Other | 5.6 | 9.2 |
| Deferred\tTax\tLiabilities | 954.1 | 1,153.0 |
| Net\tDeferred\tIncome\tTax\tLiability | $653.7 | $603.9 |

Deferred	tax	assets	and	liabilities	are	included	within	the	consolidated	financial	statements	as	follows:

|  | 2018 | 2017 |
| :--- | :--- | :--- |
| Deferred\tTax\tAssets |  |  |
| Other\tnoncurrent\tassets | $121.4 | $174.5 |
| Deferred\tTax\tLiabilities |  |  |
| Deferred\tincome\ttaxes | 775.1 | 778.4 |
| Net\tDeferred\tIncome\tTax\tLiability | $653.7 | $603.9 |

The	various	components	of	deferred	tax	assets	and	liabilities,	including	plant	and	equipment,	retirement	benefits	and	compensation	accruals,	and	reserves and	accruals	were	reduced	by	the	re-measurement	of	our	U.S.	deferred	tax	accounts	to	the	lower	U.S.	corporate	tax	rate.	Tax	loss	carryforwards increased	primarily	due	to	the	sale	of	plant	and	equipment	related	to	our	EfW	business.	The	sale	converted	these	assets	into	capital	losses	which	are subject	to	a	full	valuation	allowance.	In	addition,	deferred	tax	liabilities	related	to	plant	and	equipment	also	includes	an	increase	due	to	the	impact	of	the immediate	expensing	provision	allowed	for	under	the	Tax	Act.	The	balance	of	unremitted	earnings	of	foreign	entities	and	partnership	and	other investments	were	increased	by	additional	foreign	withholding	tax	liability	recorded	as	a	result	of	the	Tax	Act,	net	of	tax	payments.	Retirement	benefits	and compensation	accruals	are	also	impacted	significantly	by	the	changes	in	plan	assets	and	benefit	obligations	that	have	been	recognized	in	other comprehensive	income.	See	Note	16,	Retirement	Benefits,	for	additional	information.

As	of	30	September	2018,	the	Company	had	the	following	deferred	tax	assets	for	certain	tax	credits:

At	30	September	2018,	the	Company	had	the	following	loss	carryforwards:

| At	30	September	2018,	the	Company	had	the	following	loss	carryforwards: |  |  |
| :--- | :--- | :--- |
| Jurisdiction | Gross\tLoss\tCarryforward | Expiration\tPeriod |
| U.S.\tState\tNet\tOperating\tLoss | $324.9 | 2019\t-\t2034 |
| Foreign\tNet\tOperating\tLoss | 340.6 | 2019\t-\t2028;\tIndefinite |
| Foreign\tCapital\tLoss | 281.9 | Indefinite |

In	fiscal	year	2018	we	utilized	the	balance	of	our	federal	tax	credit	carryforward	against	the	deemed	repatriation	tax.	Of	the	 $340.6	of	foreign	net	operating loss	carryforwards,	$121.8	have	indefinite	carryforward	periods.	Of	the	$21.6	foreign	tax	credits,	$16.4	have	indefinite	carryforward	periods.

The	valuation	allowance	as	of	30	September	2018	of	$105.0,	primarily	related	to	the	tax	benefit	of	foreign	loss	carryforwards	of	 $56.0	as	well	as	foreign capital	losses	of	$47.9	that	were	generated	from	the	loss	recorded	on	the	exit	from	the	Energy-from-Waste	business	in	2016.	If	events	warrant	the reversal	of	the	valuation	allowance,	it	would	result	in	a	reduction	of	tax	expense.	We	believe	it	is	more	likely	than	not	that	future	earnings	and	reversal	of deferred	tax	liabilities	will	be	sufficient	to	utilize	our	deferred	tax	assets,	net	of	existing	valuation	allowance,	at	30	September	2018.

As	a	result	of	the	Tax	Act	we	recorded	 $322.1	of	federal	income	tax	from	the	deemed	repatriation	tax	on	approximately	 $5.8	billion	of	previously undistributed	earnings	from	our	foreign	subsidiaries	and	corporate	joint	ventures.	These	earnings	are	now	eligible	to	be	repatriated	to	the	U.S.	with reduced	U.S.	tax	impacts.	However,	such	earnings	may	be	subject	to	foreign	withholding	and	other	taxes.	We	record	foreign	and	U.S.	income	taxes	on	the undistributed	earnings	of	our	foreign	subsidiaries	and	corporate	joint	ventures	unless	those	earnings	are	indefinitely	reinvested.	The	cumulative undistributed	earnings	that	are	considered	to	be	indefinitely	reinvested	in	foreign	subsidiaries	and	corporate	joint	ventures	are	included	in	retained earnings	on	the	consolidated	balance	sheets	and	amounted	to	$3.2	billion	as	of	30	September	2018.	An	estimated	$420.4	in	additional	foreign	withholding and	other	income	taxes	would	be	due	if	these	earnings	were	remitted	as	dividends.

A	reconciliation	of	the	beginning	and	ending	amount	of	the	unrecognized	tax	benefits	is	as	follows:

| Unrecognized	Tax	Benefits | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $146.4 | $90.2 | $83.8 |
| Additions\tfor\ttax\tpositions\tof\tthe\tcurrent\tyear | 26.4 | 47.5 | 12.5 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 119.2 | 16.1 | 2.9 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (41.3) | (4.0) | — |
| Settlements | (14.2) | (2.0) | (5.6) |
| Statute\tof\tlimitations\texpiration | (2.6) | (3.2) | (2.9) |
| Foreign\tcurrency\ttranslation | (.3) | 1.8 | (.5) |
| Balance\tat\tEnd\tof\tYear | $233.6 | $146.4 | $90.2 |

Interest	and	penalties	related	to	unrecognized	tax	benefits	are	recorded	as	a	component	of	income	tax	expense	and	totaled	 ($2.4),	$3.7,	and	$1.8	in	fiscal years	2018,	2017,	and	2016,	respectively.	Our	accrued	balance	for	interest	and	penalties	was	 $8.4	and	$12.1	as	of	30	September	2018	and	2017, respectively.

The	additions	for	tax	positions	of	prior	years	of	 $119.2	relates	primarily	to	uncertain	state	tax	filing	positions	taken	related	to	the	sale	of	PMD.	Additions	for tax	positions	of	the	current	year	of	$26.4	included	uncertain	tax	positions	related	to	the	restructuring	of	foreign	subsidiaries	and	reserves	for	ongoing transfer	pricing	uncertainties.

On	17	April	2018,	we	received	a	final	audit	settlement	agreement	that	resolved	uncertainties	related	to	unrecognized	tax	benefits	of $43.1,	including interest.	This	settlement	primarily	related	to	tax	positions	taken	in	conjunction	with	the	disposition	of	our	Homecare	business	in	2012.	As	a	result,	we recorded	an	income	tax	benefit	of	$25.6,	including	interest,	in	income	from	discontinued	operations	during	2018.	The	settlement	also	resulted	in	an income	tax	benefit	of	approximately	$9.1,	including	interest,	in	continuing	operations	for	the	release	of	tax	reserves	on	other	matters.	The	reduction	in prior	year	positions	and	settlement	payments	also	reflect	the	settlement	of	U.S.	federal	tax	audits	for	2012	through	2014	reported	in	the	first	quarter	of	the year.

We	are	currently	under	examination	in	a	number	of	tax	jurisdictions,	some	of	which	may	be	resolved	in	the	next	twelve	months.	As	a	result,	it	is reasonably	possible	that	a	change	in	the	unrecognized	tax	benefits	may	occur	during	the	next	twelve	months.	However,	quantification	of	an	estimated range	cannot	be	made	at	this	time.

We	generally	remain	subject	to	examination	in	the	following	major	tax	jurisdictions	for	the	years	indicated	below:

| United	States	–	Federal | 2015 | - | 2018 |
| :--- | :--- | :--- | :--- |
| United\tStates\t–\tAll\tStates | 2011 | - | 2018 |
| Canada | 2014 | - | 2018 |
| Europe |  |  |  |
| France | 2015 | - | 2018 |
| Germany | 2013 | - | 2018 |
| Netherlands | 2012 | - | 2018 |
| Spain | 2015 | - | 2018 |
| United\tKingdom | 2014 | - | 2018 |
| Asia |  |  |  |
| China | 2013 | - | 2018 |
| South\tKorea | 2010 | - | 2018 |
| Taiwan | 2013 | - | 2018 |
| Latin\tAmerica |  |  |  |
| Chile | 2015 | - | 2018 |

# 23.	SUPPLEMENTAL	INFORMATION

# Other	Receivables	and	Current	Assets

(A) Primarily	includes	related	party	activity	with	our	equity affiliates.

(B) Beginning	in	the	second	quarter	of	fiscal	year	2017,	interest	income	associated	with	our	cash	and	cash	items	and	short-term	investments	is	reflected	on	the consolidated	income	statements	in	"Other	non-operating	income	(expense),	net."

(C) Includes	a	gain	of	$12.2	resulting	from	the	sale	of	a	parcel	of	land	during	the	fourth	quarter	of	fiscal	year 2017.

(D) Reflects	reimbursement	for	costs	in	support	of	transition	services	agreements	with	Versum	for	EMD	and	with	Evonik	for	PMD.	Refer	to	Note	4,	Materials Technologies	Separation,	for	additional	information.

| 30	September | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Interest\tincome(A) | $46.3 | $29.8 | $— |
| Pension\tsettlement\tloss(B) | (48.5) | (10.5) | (5.1) |
| Other\tnon-service\tpension\tbenefit\t(costs) | 7.7 | (1.9) | (.3) |
| Other | (.4) | (.8) | — |
| Other\tnon-operating\tincome\t(expense),\tnet | $5.1 | $16.6 | ($5.4) |

(A) Prior	to	the	second	quarter	of	fiscal	year	2017,	interest	income	associated	with	our	cash	and	cash	items	and	short-term	investments	was	reflected	on	the consolidated	income	statements	in	"Other	income	(expense),	net."

(B) Fiscal	year	2018	includes	a	loss	of	$43.7	that	primarily	resulted	from	the	transfer	of	certain	pension	payment	obligations	to	an	insurer	through	the	purchase	of	an irrevocable,	nonparticipating	group	annuity	contract	during	the	fourth	quarter.

# Related	Party	Sales

# 24.	SUMMARY	BY	QUARTER	(UNAUDITED)

| 2018 | Q1 |  | Q2 |  | Q3 |  | Q4 |  | Total |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Sales | $2,216.6 |  | $2,155.7 |  | $2,259.0 |  | $2,298.9 |  | $8,930.2 |  |
| Gross\tprofit | 644.8 |  | 649.2 |  | 713.6 |  | 733.1 |  | 2,740.7 |  |
| Operating\tincome | 460.7 |  | 455.4 |  | 515.8 |  | 533.7 |  | 1,965.6 |  |
| Equity\taffiliates\tincome | 13.8 | (A) | 43.7 |  | 58.1 |  | 59.2 | (A) | 174.8 | (A) |
| Income\ttax\tprovision | 291.8 | (A) | 56.2 | (B) | 107.1 |  | 69.2 | (A)(B) | 524.3 | (A)(B) |
| Net\tincome | 161.7 |  | 423.6 |  | 487.9 |  | 459.7 |  | 1,532.9 |  |
| Net\tincome\tattributable\tto\tAir\tProducts |  |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | 155.6 |  | 416.4 |  | 430.7 |  | 452.9 |  | 1,455.6 |  |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | (1.0) |  | — |  | 43.2 | (C) | — |  | 42.2 | (C) |
| Net\tincome\tattributable\tto\tAir\tProducts | 154.6 |  | 416.4 |  | 473.9 |  | 452.9 |  | 1,497.8 |  |
| Basic\tEarnings\tPer\tCommon\tShare\tAttributable\tto\tAir\nProducts |  |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | .71 |  | 1.90 |  | 1.96 |  | 2.06 |  | 6.64 |  |
| Income\tfrom\tdiscontinued\toperations | — |  | — |  | .20 |  | — |  | .19 |  |
| Net\tincome\tattributable\tto\tAir\tProducts | .71 |  | 1.90 |  | 2.16 |  | 2.06 |  | 6.83 |  |
| Diluted\tEarnings\tPer\tCommon\tShare\tAttributable\tto\tAir\nProducts |  |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | .70 |  | 1.89 |  | 1.95 |  | 2.05 |  | 6.59 |  |
| Income\tfrom\tdiscontinued\toperations | — |  | — |  | .20 |  | — |  | .19 |  |
| Net\tincome\tattributable\tto\tAir\tProducts | .70 |  | 1.89 |  | 2.15 |  | 2.05 |  | 6.78 |  |
| Weighted\tAverage\tCommon\tShares\t—\tDiluted\t(in\nmillions) | 220.4 |  | 220.8 |  | 220.9 |  | 220.9 |  | 220.8 |  |
| Dividends\tdeclared\tper\tcommon\tshare | .95 |  | 1.10 |  | 1.10 |  | 1.10 |  | 4.25 |  |
| Market\tprice\tper\tcommon\tshare\t–\tHigh | 164.78 |  | 175.17 |  | 170.29 |  | 171.66 |  |  |  |
| Market\tprice\tper\tcommon\tshare\t–\tLow | 150.55 |  | 152.71 |  | 154.67 |  | 153.02 |  |  |  |

| 2017 | Q1 | Q2 |  | Q3 |  | Q4 |  | Total |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Sales | $1,882.5 | $1,980.1 |  | $2,121.9 |  | $2,203.1 |  | $8,187.6 |  |
| Gross\tprofit | 565.8 | 576.3 |  | 635.9 |  | 658.1 |  | 2,436.1 |  |
| Business\tseparation\tcosts(D) | 32.5 | — |  | — |  | — |  | 32.5 |  |
| Cost\treduction\tand\tassets\tactions (E) | 50.0 | 10.3 |  | 42.7 |  | 48.4 |  | 151.4 |  |
| Goodwill\tand\tintangible\tasset\timpairment\tcharge (F) | — | — |  | 162.1 |  | — |  | 162.1 |  |
| Gain\ton\tland\tsale | — | — |  | — |  | 12.2 |  | 12.2 |  |
| Operating\tincome | 328.3 | 395.6 |  | 258.7 |  | 457.4 |  | 1,440.0 |  |
| Equity\taffiliates\tincome\t(loss) | 38.0 | 34.2 |  | (36.9) | (G) | 44.8 |  | 80.1 | (G) |
| Income\ttax\tprovision\t(benefit) | 78.4 | 94.5 |  | 89.3 |  | (1.3) | (H) | 260.9 | (H) |
| Net\tincome | 306.4 | 2,135.7 | (I) | 104.1 |  | 475.0 |  | 3,021.2 | (I) |
| Net\tincome\tattributable\tto\tAir\tProducts |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | 251.6 | 304.4 |  | 104.2 |  | 474.2 |  | 1,134.4 |  |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | 48.2 | 1,825.6 | (I) | (2.3) |  | (5.5) |  | 1,866.0 | (I) |
| Net\tincome\tattributable\tto\tAir\tProducts | 299.8 | 2,130.0 |  | 101.9 |  | 468.7 |  | 3,000.4 |  |
| Basic\tEarnings\tPer\tCommon\tShare\tAttributable\tto\tAir\nProducts |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | 1.16 | 1.40 |  | .48 |  | 2.17 |  | 5.20 |  |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | .22 | 8.38 |  | (.01) |  | (.02) |  | 8.56 |  |
| Net\tincome\tattributable\tto\tAir\tProducts | 1.38 | 9.78 |  | .47 |  | 2.15 |  | 13.76 |  |
| Diluted\tEarnings\tPer\tCommon\tShare\tAttributable\tto\tAir\nProducts |  |  |  |  |  |  |  |  |  |
| Income\tfrom\tcontinuing\toperations | 1.15 | 1.39 |  | .47 |  | 2.15 |  | 5.16 |  |
| Income\t(Loss)\tfrom\tdiscontinued\toperations | .22 | 8.31 |  | (.01) |  | (.02) |  | 8.49 |  |
| Net\tincome\tattributable\tto\tAir\tProducts | 1.37 | 9.70 |  | .46 |  | 2.13 |  | 13.65 |  |
| Weighted\tAverage\tCommon\tShares\t—\tDiluted\t(in\nmillions) | 219.7 | 219.7 |  | 219.8 |  | 220.1 |  | 219.8 |  |
| Dividends\tdeclared\tper\tcommon\tshare | .86 | .95 |  | .95 |  | .95 |  | 3.71 |  |
| Market\tprice\tper\tcommon\tshare\t–\tHigh | 150.45 | 149.46 |  | 147.66 |  | 152.26 |  |  |  |
| Market\tprice\tper\tcommon\tshare\t–\tLow | 129.00 | 133.63 |  | 134.09 |  | 141.88 |  |  |  |

(A) Includes	the	impacts	of	the	Tax	Act.	For	additional	information,	refer	to	Note	22,	Income Taxes.

(B) Includes	the	impacts	of	the	restructuring	of	several	foreign	subsidiaries.	For	additional	information,	refer	to	Note	22,	Income Taxes.

(C) Primarily	includes	benefits	resulting	from	the	resolution	of	uncertain	tax	positions	related	to	the	disposition	of	our	former	European	Homecare	business	and	post- closing	adjustments	associated	with	the	sale	of	PMD.	For	additional	information,	refer	to	Note	3,	Discontinued	Operations.

(D) For	additional	information,	refer	to	Note	4,	Materials	Technologies Separation.

(E) For	additional	information,	refer	to	Note	5,	Cost	Reduction	and	Asset Actions.

(F) For	additional	information,	refer	to	Note	10,	Goodwill,	and	Note	11,	Intangible Assets.

(G) Includes	the	impact	of	an	other-than-temporary	impairment	of	an	investment	in	an	equity	affiliate.	For	additional	information,	refer	to	Note	8,	Summarized	Financial Information	of	Equity	Affiliates.

(H) Includes	the	impact	of	a	tax	election	benefit	related	to	a	non-U.S.	subsidiary.	For	additional	information,	see	Note	22,	Income Taxes.

(I) Includes	the	after-tax	gain	on	the	sale	of	PMD.	For	additional	information,	see	Note	3,	Discontinued Operations.

# 25.	BUSINESS	SEGMENT	AND	GEOGRAPHIC	INFORMATION

Our	reporting	segments	reflect	the	manner	in	which	our	chief	operating	decision	maker	reviews	results	and	allocates	resources.	Except	in	the	Industrial Gases	–	EMEA	and	Corporate	and	other	segments,	each	reporting	segment	meets	the	definition	of	an	operating	segment	and	does	not	include	the aggregation	of	multiple	operating	segments.	Our	Industrial	Gases	–	EMEA	and	Corporate	and	other	segment	each	include	the	aggregation	of	two operating	segments	that	meet	the	aggregation	criteria	under	GAAP.

# Our	reporting	segments	are:

•Industrial	Gases	–	EMEA	(Europe,	Middle	East,	and	Africa)

# Industrial	Gases	–	Regional

The	regional	Industrial	Gases	segments	(Americas,	EMEA,	and	Asia)	include	the	results	of	our	regional	industrial	gas	businesses,	which	produce	and	sell atmospheric	gases	such	as	oxygen,	nitrogen,	argon,	and	rare	gases	(primarily	recovered	by	the	cryogenic	distillation	of	air),	process	gases	such	as hydrogen,	helium,	carbon	dioxide,	carbon	monoxide,	syngas	(a	mixture	of	hydrogen	and	carbon	monoxide),	and	specialty	gases,	and	equipment	for	the production	or	processing	of	gases,	such	as	air	separation	units	and	non-cryogenic	generators.

We	supply	gases	to	customers	in	many	industries,	including	those	in	refining,	chemical,	gasification,	metals,	electronics,	manufacturing,	and	food	and beverage.	We	distribute	gases	to	our	customers	through	a	variety	of	supply	modes	including	liquid	or	gaseous	bulk	supply	delivered	by	tanker	or	tube trailer	and,	for	smaller	customers,	packaged	gases	delivered	in	cylinders	and	dewars	or	small	on-sites	(cryogenic	or	non-cryogenic	generators).	For	large- volume	customers,	we	construct	an	on-site	plant	adjacent	to	or	near	the	customer's	facility	or	deliver	product	from	one	of	our	pipelines.	We	are	the	world's largest	provider	of	hydrogen,	which	is	used	by	refiners	to	facilitate	the	conversion	of	heavy	crude	feedstock	and	lower	the	sulfur	content	of	gasoline	and diesel	fuels.

Electricity	is	the	largest	cost	component	in	the	production	of	atmospheric	gases,	and	natural	gas	is	the	principal	raw	material	for	hydrogen,	carbon monoxide,	and	syngas	production.	We	mitigate	energy	and	natural	gas	price	fluctuations	contractually	through	pricing	formulas,	surcharges,	cost	pass- through,	and	tolling	arrangements.	The	regional	Industrial	Gases	segments	also	include	our	share	of	the	results	of	several	joint	ventures	accounted	for	by the	equity	method.	The	largest	of	these	joint	ventures	operate	in	Mexico,	Italy,	South	Africa,	India,	Saudi	Arabia,	and	Thailand.

Each	of	the	regional	Industrial	Gases	segments	competes	against	global	industrial	gas	companies	as	well	as	regional	competitors.	Competition	is	based primarily	on	price,	reliability	of	supply,	and	the	development	of	industrial	gas	applications.	We	derive	a	competitive	advantage	in	locations	where	we	have pipeline	networks,	which	enable	us	to	provide	reliable	and	economic	supply	of	products	to	larger	customers.

The	Industrial	Gases	–	Global	segment	includes	cryogenic	and	gas	processing	equipment	for	air	separation.	The	equipment	is	sold	worldwide	to customers	in	a	variety	of	industries,	including	chemical	and	petrochemical	manufacturing,	oil	and	gas	recovery	and	processing,	and	steel	and	primary metals	processing.	The	Industrial	Gases	–	Global	segment	also	includes	centralized	global	costs	associated	with	management	of	all	the	Industrial	Gases segments.	These	costs	include	Industrial	Gases	global	administrative	costs,	product	development	costs,	and	research	and	development	costs.	We compete	with	a	large	number	of	firms	for	all	the	offerings	included	in	the	Industrial	Gases	–	Global	segment.	Competition	in	the	equipment	businesses	is based	primarily	on	technological	performance,	service,	technical	know-how,	price,	and	performance	guarantees.

The	Corporate	and	other	segment	includes	our	LNG	equipment	and	helium	storage	and	distribution	sale	of	equipment	businesses	and	corporate	support functions	that	benefit	all	segments.	Competition	for	the	sale	of	equipment	businesses	is	based	primarily	on	technological	performance,	service,	technical know-how,	price,	and	performance	guarantees.

Corporate	and	other	also	includes	income	and	expense	that	is	not	directly	associated	with	the	other	segments,	including	foreign	exchange	gains	and losses	and	stranded	costs.	Stranded	costs	result	from	functional	support	previously	provided	to	the	two	divisions	comprising	the	former	Materials Technologies	segment.	The	majority	of	these	costs	are	reimbursed	to	Air	Products	pursuant	to	short-term	transition	services	agreements	under	which	Air Products	provides	transition	services	to	Versum	for	EMD	and	to	Evonik	for	PMD.	The	reimbursement	for	costs	in	support	of	the	transition	services	has been	reflected	on	the	consolidated	income	statements	within	"Other	income	(expense),	net."	All	transition	services	were	completed	during	fiscal	year 2018.	Refer	to	Note	4,	Materials	Technologies	Separation,	for	additional	information.

In	addition	to	assets	of	the	global	businesses	included	in	this	segment,	other	assets	include	cash,	deferred	tax	assets,	and	financial	instruments.

We	do	not	have	a	homogeneous	customer	base	or	end	market,	and	no	single	customer	accounts	for	more	than 10%	of	our	consolidated	revenues.

# Accounting	Policies

The	accounting	policies	of	the	segments	are	the	same	as	those	described	in	Note 1,	Major	Accounting	Policies.	We	evaluate	the	performance	of segments	based	upon	reported	segment	operating	income.

# Business	Segment

|  | Industrial<br>Gases–<br>Americas | Industrial<br>Gases–<br>EMEA | Industrial<br>Gases–<br>Asia | Industrial<br>Gases–<br>Global | Corporate<br>and	other | Segment<br>Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| 2018 |  |  |  |  |  |  |
| Sales | $3,758.8 | $2,193.3 | $2,458.0 | $436.1 | $84.0 | $8,930.2 |
| Operating\tincome\t(loss) | 927.9 | 445.8 | 689.9 | 53.9 | (176.0) | 1,941.5 |
| Depreciation\tand\tamortization | 485.3 | 198.6 | 265.8 | 8.1 | 12.9 | 970.7 |
| Equity\taffiliates'\tincome | 82.0 | 61.1 | 58.3 | 1.9 | — | 203.3 |
| Expenditures\tfor\tlong-lived\tassets | 546.5 | 163.1 | 791.9 | 17.3 | 49.6 | 1,568.4 |
| Investments\tin\tnet\tassets\tof\tand\tadvances\tto\nequity\taffiliates | 312.1 | 503.3 | 445.6 | 16.2 | — | 1,277.2 |
| Total\tassets | 5,904.0 | 3,280.4 | 5,899.5 | 240.1 | 3,854.3 | 19,178.3 |
| 2017 |  |  |  |  |  |  |
| Sales | $3,637.0 | $1,780.4 | $1,964.7 | $722.9 | $82.6 | $8,187.6 |
| Operating\tincome\t(loss) | 946.1 | 395.5 | 532.6 | 71.1 | (171.5) | 1,773.8 |
| Depreciation\tand\tamortization | 464.4 | 177.1 | 203.2 | 8.9 | 12.2 | 865.8 |
| Equity\taffiliates'\tincome | 58.1 | 47.1 | 53.5 | .9 | — | 159.6 |
| Expenditures\tfor\tlong-lived\tassets | 427.2 | 143.2 | 337.8 | 25.6 | 105.9 | 1,039.7 |
| Investments\tin\tnet\tassets\tof\tand\tadvances\tto\nequity\taffiliates | 287.5 | 508.6 | 471.8 | 19.0 | — | 1,286.9 |
| Total\tassets | 5,840.8 | 3,276.1 | 4,412.1 | 279.6 | 4,648.4 | 18,457.0 |
| 2016 |  |  |  |  |  |  |
| Sales | $3,344.1 | $1,704.4 | $1,720.4 | $498.8 | $236.0 | $7,503.7 |
| Operating\tincome\t(loss) | 891.3 | 387.0 | 452.8 | (21.5) | (89.4) | 1,620.2 |
| Depreciation\tand\tamortization | 443.6 | 185.7 | 197.9 | 7.9 | 19.5 | 854.6 |
| Equity\taffiliates'\tincome | 52.7 | 36.5 | 57.8 | — | — | 147.0 |
| Expenditures\tfor\tlong-lived\tassets | 406.6 | 159.5 | 313.3 | 6.0 | 22.3 | 907.7 |
| Investments\tin\tnet\tassets\tof\tand\tadvances\tto\nequity\taffiliates | 250.6 | 580.5 | 442.5 | 10.0 | — | 1,283.6 |
| Total\tassets | 5,896.7 | 3,178.6 | 4,232.7 | 367.6 | 2,384.5 | 16,060.1 |

The	sales	information	noted	above	relates	to	external	customers	only.	All	intersegment	sales	are	eliminated	in	consolidation.	The	Industrial Gases	–	Global	segment	had	intersegment	sales	of	$254.3,	$239.0,	and	$232.4	in	fiscal	years	2018,	2017,	and	2016,	respectively.	These	sales	are generally	transacted	at	market	pricing.

We	generally	do	not	have	intersegment	sales	from	our	regional	industrial	gases	businesses.	Equipment	manufactured	for	our	regional	industrial	gases segments	are	generally	transferred	at	cost	and	are	not	reflected	as	an	intersegment	sale.

# Geographic	Information

(A) Includes	Canada,	Latin	America,	and

India.

(B) Long-lived	assets	include	plant	and	equipment,

Geographic	information	is	based	on	country	of	origin.	Included	in	United	States	revenues	are	export	sales	to	third-party	customers	of $33.1	in	fiscal	year 2018,	$64.2	in	fiscal	year	2017,	and	$134.9	in	fiscal	year	2016.

# ITEM	9. CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL	DISCLOSURE

# ITEM	9A.				CONTROLS	AND	PROCEDURES

# Disclosure	Controls	and	Procedures

We	maintain	a	comprehensive	set	of	disclosure	controls	and	procedures	(as	defined	in	Rules	13a-15 	(e)	and	15d-15 	(e)	under	the	Exchange	Act).	Under the	supervision	of	the	Chief	Executive	Officer	and	Chief	Financial	Officer,	the	Company's	management	conducted	an	evaluation	of	the	effectiveness	of the	Company's	disclosure	controls	and	procedures	as	of	30	September	2018.	Based	on	that	evaluation,	the	Chief	Executive	Officer	and	Chief	Financial Officer	concluded	that,	as	of	30	September	2018,	the	disclosure	controls	and	procedures	were	effective.

# Internal	Control	Over	Financial	Reporting

Our	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	(as	defined	in	Rules	13a-15(f)	and	15d- 15(f)	under	the	Exchange	Act).	Management	has	evaluated	the	effectiveness	of	its	internal	control	over	financial	reporting	as	of	30	September	2018	based on	criteria	established	in	Internal	Control—Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway Commission	(COSO).	Based	on	that	evaluation,	management	concluded	that,	as	of	30	September	2018,	the	Company's	internal	control	over	financial reporting	was	effective.	Management's	Report	on	Internal	Control	over	Financial	Reporting	is	provided	under	Part	II,	Item	8,	of	this	Form	10-K.

There	was	no	change	in	the	Company's	internal	control	over	financial	reporting	during	the	fourth	quarter	of	fiscal	year 2018	that	has	materially	affected,	or is	reasonably	likely	to	materially	affect,	the	Company's	internal	control	over	financial	reporting.

KPMG	LLP,	the	Company's	independent	registered	public	accounting	firm,	has	audited	the	Company's	internal	control	over	financial	reporting	as	of 30 September	2018.	The	Report	of	the	Independent	Registered	Public	Accounting	Firm	is	provided	under	Part	II,	Item	8,	of	this	Form	10-K.

# ITEM	9B.				OTHER	INFORMATION

On	19	November	2018,	the	Management	Development	and	Compensation	Committee	(the	"Committee")	of	the	Board	of	Directors	granted	Dr.	Samir Serhan,	Executive	Vice	President,	a	deferred	stock	unit	retention	award	of	$1.5	million.	This	award	will	consist	of	restricted	stock	units	("RSUs")	with	a	3 December	2018	grant	date.	The	RSUs	will	vest	in	three	equal	installments	beginning	on	3	December	2019.	The	Committee	took	this	action	in	recognition of	Dr.	Serhan's	expanded	scope	of	responsibilities	in	the	Company's	operations,	and	in	particular	the	leadership	role	he	will	play	in	winning	and	executing our	largest	projects	and	building	out	and	integrating	our	global	gasification	technologies.

# PART	III

# ITEM	10.				DIRECTORS,	EXECUTIVE	OFFICERS	AND	CORPORATE	GOVERNANCE

The	information	required	by	this	item	relating	to	the	Company's	directors	and	nominees	is	incorporated	herein	by	reference	to	the	section	captioned	"The Board	of	Directors"	in	the	Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019.	The	information	required	by	this	item relating	to	the	Company's	executive	officers	is	set	forth	in	Item	1	of	Part	I	of	this	report.

The	information	required	by	this	item	relating	to	the	Company's	Audit	and	Finance	Committee	and	its	Audit	and	Finance	Committee	Financial	Expert	is incorporated	herein	by	reference	to	the	sections	captioned	"Standing	Committees	Of	The	Board"	and	"Audit	and	Finance	Committee"	in	the	Proxy Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019.

The	information	required	by	this	item	relating	to	the	Company's	procedures	regarding	the	consideration	of	candidates	recommended	by	shareholders	and a	procedure	for	submission	of	such	candidates	is	incorporated	herein	by	reference	to	the	section	captioned	"Selection	of	Directors"	in	the	Proxy	Statement for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019.

The	information	required	by	the	item	relating	to	Section	16(a)	Beneficial	Ownership	Reporting	Compliance	is	incorporated	herein	by	reference	to	the section	captioned	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	in	the	Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held on	24	January	2019.

The	Company	has	adopted	a	Code	of	Conduct	that	applies	to	all	employees,	including	the	Chief	Executive	Officer,	the	Chief	Financial	Officer,	and	the Principal	Accounting	Officer.	The	Code	of	Conduct	can	be	found	at	our	website	at	www.airproducts.com/codeofconduct.

# ITEM	11.				EXECUTIVE	COMPENSATION

The	information	required	by	this	item	is	incorporated	herein	by	reference	to	the	sections	captioned	"Compensation	of	Executive	Officers"	and "Compensation	of	Directors"	in	the	Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019.

# ITEM	12. SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED	STOCKHOLDER	MATTERS

# Securities	Authorized	for	Issuance	Under	Equity	Compensation	Plans.

# Equity	Compensation	Plan	Information

The	following	table	provides	information	as	of	30	September	2018	about	Company	stock	that	may	be	issued	upon	the	exercise	of	options,	warrants,	and rights	granted	to	employees	or	members	of	the	Board	under	the	Company's	existing	equity	compensation	plans,	including	plans	approved	by shareholders	and	plans	that	have	not	been	approved	by	shareholders	in	reliance	on	the	NYSE's	former	treasury	stock	exception	or	other	applicable exception	to	the	Exchange's	listing	requirements.

| Plan	Category | Number	of	securities	to	be<br>issued	upon	exercise	of<br>outstanding	options,<br>warrants,	and	rights |  | Weighted-average	exercise<br>price	of<br>outstanding	options,<br>warrants,	and	rights | Number	of	Securities<br>remaining	available	for	future<br>issuance	under	equity<br>compensation	plans	(excluding<br>securities	reflected	in	column<br>(a)) |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\nholders | 3,181,790 | (1) | $89.33 | 4,869,212 | (2) |
| Equity\tcompensation\tplans\tnot\tapproved\tby\nsecurity\tholders | 63,060 | (3) | $— | — |  |
| Total | 3,244,850 |  | $89.33 | 4,869,212 |  |

(1) Represents	Long-Term	Incentive	Plan	outstanding	stock	options	and	deferred	stock	units	that	have	been	granted.	Deferred	stock	units	entitle	the	recipient	to	one	share	of Company	common	stock	upon	vesting,	which	is	conditioned	on	continued	employment	during	a	deferral	period	and	may	also	be	conditioned	on	earn-out	against	certain performance	targets.	The	amount	presented	assumes	the	maximum	potential	payout.

(2) Represents	authorized	shares	that	were	available	for	future	grants	as	of	30	September	2018.	These	shares	may	be	used	for	options,	deferred	stock	units,	restricted	stock, and	other	stock-based	awards	to	officers,	directors,	and	key	employees.	Full	value	awards	such	as	restricted	stock	are	limited	to	20%	of	cumulative	awards	after	1	October 2001.

(3) This	number	represents	deferred	stock	units	issued	under	the	Deferred	Compensation	Plan,	which	are	purchased	for	the	fair	value	of	the	underlying	shares	of	stock	with eligible	deferred	compensation.

The	Deferred	Compensation	Plan	was	not	approved	by	shareholders.	It	does	not	require	shareholder	approval	because	participants	forego	compensation equal	to	the	full	market	value	of	any	share	units	credited	under	the	plans.

Deferred	Compensation	Plan—The	Company's	Deferred	Compensation	Plan	is	an	unfunded	employee	retirement	benefit	plan	available	to	certain	of	the Company's	U.S.-based	management	and	other	highly	compensated	employees	(and	those	of	its	subsidiaries)	who	receive	awards	under	the	Company's Annual	Incentive	Plan,	which	is	the	annual	cash	bonus	plan	for	executives	and	key	salaried	employees	of	the	Company	and	its	subsidiaries.	Because participants	forego	current	compensation	to	"purchase"	deferred	stock	units	for	full	value	under	the	Plan,	it	is	not	required	to	be	approved	by	shareholders under	the	NYSE	listing	standards.	Under	the	Plan,	participants	may	defer	a	portion	of	base	salary	(elective	deferrals)	which	cannot	be	contributed	to	the Company's	Retirement	Savings	Plan,	a	401(k)	and	profit-sharing	plan	offered	to	all	salaried	employees	(RSP),	because	of	tax	limitations	and	earn matching	contributions	from	the	Company	that	they	would	have	received	if	their	elective	deferrals	had	been	contributed	to	the	RSP	(matching	credits).	In addition,	participants	in	the	Plan	may	defer	all	or	a	portion	of	their	bonus	awards	under	the	Annual	Incentive	Plan	(bonus	deferrals)	under	the	Deferred Compensation	Plan.	Finally,	certain	participants	under	the	Plan	who	participate	in	the	profit-sharing	component	of	the	RSP	rather	than	the	Company's salaried	pension	plans	receive	contribution	credits	under	the	Plan	which	are	a	percentage	ranging	from	4%-6%,	based	on	their	years	of	service,	of	their salary	in	excess	of	tax	limitations	and	their	bonus	awards	under	the	Annual	Incentive	Plan	(contribution	credits).	The	dollar	amount	of	elective	deferrals, matching	credits,	bonus	deferrals,	and	contribution	credits	is	initially	credited	to	an	unfunded	account,	which	earns	interest	credits.	Participants	are periodically	permitted	while	employed	by	the	Company	to	irrevocably	convert	all	or	a	portion	of	their	interest-bearing	account	to	deferred	stock	units	in	a Company	stock	account.	Upon	conversion,	the	Company	stock	account	is	credited	with	deferred	stock	units	based	on	the	fair	value	of	a	share	of Company	stock	on	the	date	of	crediting.	Dividend	equivalents	corresponding	to	the	number	of	units	are	credited	quarterly	to	the	interest-bearing	account. Deferred	stock	units	generally	are	paid	after	termination	of	employment	in	shares	of	Company	stock.

The	Deferred	Compensation	Plan	was	formerly	known	as	the	Supplementary	Savings	Plan.	The	name	was	changed	in	2006	when	the	deferred	bonus program,	previously	administered	under	the	Annual	Incentive	Plan,	was	merged	into	this	Plan.

Certain	information	required	by	this	item	regarding	the	beneficial	ownership	of	the	Company's	common	stock	is	incorporated	herein	by	reference	to	the sections	captioned	"Persons	Owning	More	than	5%	of	Air	Products	Stock	as	of	September	30,	2018"	and	"Air	Products	Stock	Beneficially	Owned	by Officers	and	Directors"	in	the	Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019.

# ITEM	13. CERTAIN	RELATIONSHIPS	AND	RELATED	TRANSACTIONS,	AND	DIRECTOR	INDEPENDENCE

The	information	required	by	this	item	is	incorporated	herein	by	reference	to	the	sections	captioned	"Director	Independence"	and	"Transactions	with Related	Persons"	in	the	Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019.

# ITEM	14.				PRINCIPAL	ACCOUNTANT	FEES	AND	SERVICES

The	information	required	by	this	item	is	incorporated	herein	by	reference	to	the	section	captioned	"Independent	Registered	Public	Accountant"	in	the Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	on	24	January	2019.

# PART	IV

# ITEM	15.				EXHIBITS	AND	FINANCIAL	STATEMENT	SCHEDULES

(a) The	following	documents	are	filed	as	a	part	of	this	report:

(1) The	Company's	2018	consolidated	financial	statements	and	the	Report	of	the	Independent	Registered	Public	Accounting	Firm	are included	in	Part	II,	Item	8.

(2) Financial	Statement	Schedules—the	following	additional	information	should	be	read	in	conjunction	with	the	consolidated	financial statements	in	the	Company's	2018	consolidated	financial	statements.

All	other	schedules	are	omitted	because	the	required	matter	or	conditions	are	not	present	or	because	the	information	required	by the	Schedules	is	submitted	as	part	of	the	consolidated	financial	statements	and	notes	thereto.

(3) Exhibits—The	exhibits	filed	as	a	part	of	this	Annual	Report	on	Form	10-K	are	listed	in	the Index	to	Exhibits	located	on	page	126	of this	Report.

# INDEX	TO	EXHIBITS

10.5(a) Form	of	Award	Agreement	under	the	Long-Term	Incentive	Plan	of	the	Company,	used	for	FY	2009	Awards.	(Filed	as	Exhibit	10.1	to the	Company's	Form	10-Q	Report	for	the	quarter	ended	31	December	2008.)*†

10.5(b) Form	of	Award	Agreement	under	the	Long-Term	Incentive	Plan	of	the	Company,	used	for	FY2010	awards.	(Filed	as	Exhibit	10.1	to the	Company's	Form	10-Q	Report	for	the	quarter	ended	31	December	2009.)*†

Exhibit	No. Description 10.5(c) Form	of	Award	Agreement	under	the	Long-Term	Incentive	Plan	of	the	Company,	used	for	FY2011	awards.	(Filed	as	Exhibit	10.1	to the	Company's	Form	10-Q	Report	for	the	quarter	ended	31	December	2010.)*† 10.5(d) Form	of	Award	Agreement	under	the	Long-Term	Incentive	Plan	of	the	Company,	used	for	FY2012	awards.	(Filed	as	Exhibit	10.1	to the	Company's	Form	10-Q	Report	for	the	quarter	ended	31	December	2011.)*†

10.5(e) Form	of	Award	Agreement	under	the	Long-Term	Incentive	Plan	of	the	Company,	used	for	FY2013	awards.	(Filed	as	Exhibit	10.1	to the	Company's	Form	10-Q	Report	for	the	quarter	ended	31	December	2012.)*†

10.5(f) Form	of	Award	Agreement	under	the	Long-Term	Incentive	Plan	of	the	Company,	used	for	FY2014	awards.	(Filed	as	Exhibit	10.1	to the	Company's	Form	10-Q	Report	for	the	quarter	ended	31	December	2013.)*†

10.5(g) Form	of	Award	Agreement	under	the	Long-Term	Incentive	Plan	of	the	Company,	used	for	FY2015	awards.	(Filed	as	Exhibit	10.1	to the	Company's	Form	10-Q	Report	for	the	quarter	ended	31	December	2014.)*†

10.7(b) Amendment	No.	2	dated	as	of	30	September	2016	to	the	Supplementary	Pension	Plan	of	Air	Products	and	Chemicals,	Inc.	as Amended	and	Restated	effective	1	August	2014.	(Filed	as	Exhibit	10.7(b)	to	the	Company's	Form	10-K	Report	for	fiscal	year	ended 30	September	2016.)†

10.7(c) Amendment	No.	3	dated	as	of	26	July	2017	to	the	Supplementary	Pension	Plan	of	Air	Products	and	Chemicals,	Inc.	as	Amended	and Restated	effective	1	August	2017.(Filed	as	Exhibit	10.7(c)	to	the	Company's	Form	10-K	Report	for	the	fiscal	year	ended	30 September	2017.)*†

* Previously	filed	as	indicated	and	incorporated	herein	by	reference.	Exhibits	incorporated	by	reference	are	located	in	SEC	File	No.	001-04534	unless	otherwise indicated.

† Indicated	management	contract	or	compensatory	arrangement.

†† The	certification	attached	as	Exhibit	32.1	that	accompanies	this	Annual	Report	on	Form	10-K,	is	not	deemed	filed	with	the	Securities	and	Exchange	Commission and	is	not	to	be	incorporated	by	reference	into	any	filing	of	Air	Products	and	Chemicals,	Inc.	under	the	Securities	Act	of	1933,	as	amended,	or	the	Securities Exchange	Act	of	1934,	as	amended,	whether	made	before	or	after	the	date	of	this	Form	10-K,	irrespective	of	any	general	incorporation	language	contained	in such	filing.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	Report	to	be	signed	on	its behalf	by	the	undersigned,	thereunto	duly	authorized.

(Registrant)

/s/	M.	Scott	Crocco

M.	Scott	Crocco

Executive	Vice	President	and	Chief	Financial	Officer

(Principal	Financial	Officer)

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	Report	has	been	signed	below	by	the	following	persons	on	behalf	of	the registrant	and	in	the	capacities	and	on	the	dates	indicated.

Director

# Signature	and	Title

(Matthew	H.	Paull)

* Sean	D.	Major,	Executive	Vice	President,	General	Counsel	and	Secretary,	by	signing	his	name	hereto,	does	sign	this	document	on	behalf	of	the above	noted	individuals,	pursuant	to	a	power	of	attorney	duly	executed	by	such	individuals,	which	is	filed	with	the	Securities	and	Exchange Commission	herewith.

Sean	D.	Major

Executive	Vice	President,	General	Counsel	and	Secretary

# SCHEDULE	II–VALUATION	AND	QUALIFYING	ACCOUNTS

|  | Balance	at<br>Beginning<br>of	Period | Additions<br>Charged	to<br>Expense | Additions<br>Charged	to<br>Other	Accounts | Other<br>Changes(A) | Balance<br>at	End	of<br>Period |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Year\tEnded\t30\tSeptember\t2018 |  |  |  |  |  |
| Allowance\tfor\tdoubtful\taccounts | $94 | $17 | $7 | ($27) | $91 |
| Allowance\tfor\tdeferred\ttax\tassets | 108 | 3 | 4 | (10) | 105 |
| Year\tEnded\t30\tSeptember\t2017 |  |  |  |  |  |
| Allowance\tfor\tdoubtful\taccounts | $55 | $7 | $39 | ($7) | $94 |
| Allowance\tfor\tdeferred\ttax\tassets\t(B) | 165 | 6 | 7 | (70) | 108 |
| Year\tEnded\t30\tSeptember\t2016 |  |  |  |  |  |
| Allowance\tfor\tdoubtful\taccounts | $48 | $9 | $13 | ($15) | $55 |
| Allowance\tfor\tdeferred\ttax\tassets(C) | 112 | 1 | 52 | — | 165 |

(A) Other	changes	related	to	allowance	for	doubtful	accounts	primarily	includes	write-offs	of	uncollectible	trade	receivables,	net	of	recoveries.	Other	Changes	also includes	the	impact	of	foreign	currency	translation	adjustments.

(B) The	decrease	in	the	valuation	allowance	was	primarily	due	to	the	utilization	of	federal	and	state	loss	carryforwards	as	a	result	of	recognizing	the	gain	on	the	sale of	our	PMD	business.	This	benefit	was	recorded	in	discontinued	operations.	See	Note	3,	Discontinued	Operations,	for	additional	information.

(C) The	increase	in	the	valuation	allowance	was	primarily	due	to	the	loss	recorded	on	the	exit	from	the	Energy-from-Waste	business.	These	costs	were	recorded	in discontinued	operations.	See	Note	3,	Discontinued	Operations,	for	additional	information.



Question: what was the decrease observed in the total fair value of restricted stock that vested during 2017 and 2018?
Answer: 46.34%