SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

AIR PRODUCTS AND CHEMICALS, INC.



Delaware		23-1274455
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

7201 Hamilton Boulevard, Allentown, Pennsylvania		18195-1501
(Address of Principal Executive Offices)		(Zip Code)



Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨	Emerging growth company ¨
	(Do not check if a smaller reporting company)



Class		Outstanding at 31 December ~~2016~~2017
Common Stock, $1 par value		~~217,589,952~~218,939,303

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

Three Months Ended
31 December
(Millions of dollars, except for share data) 2016 2015
Sales $ 1,882.5
$ 1,866.3
Cost of sales 1,318.1
1,295.9
Selling and administrative 165.7
173.9
Research and development 15.1
16.9
Business separation costs 30.2
12.0
Cost reduction and asset actions 50.0
—
Other income (expense), net 24.7
4.9
Operating Income 328.1
372.5
Equity affiliates’ income 38.0
33.3
Interest expense 29.5
22.2
Income From Continuing Operations Before Taxes 336.6
383.6
Income tax provision 78.4
96.4
Income from Continuing Operations 258.2
287.2
Income From Discontinued Operations, net of tax 48.2
84.8
Net Income 306.4
372.0
Net Income Attributable to Noncontrolling Interests of Continuing Operations 6.6
6.3
Net Income Attributable to Noncontrolling Interests of Discontinued Operations —
2.1
Net Income Attributable to Air Products $ 299.8
$ 363.6
Net Income Attributable to Air Products
Income from continuing operations $ 251.6
$ 280.9
Income from discontinued operations 48.2
82.7
Net Income Attributable to Air Products $ 299.8
$ 363.6
Basic Earnings Per Common Share Attributable to Air Products
Income from continuing operations $ 1.16
$ 1.30
Income from discontinued operations .22
.38
Net Income Attributable to Air Products $ 1.38
$ 1.68
Diluted Earnings Per Common Share Attributable to Air Products
Income from continuing operations $ 1.15
$ 1.29
Income from discontinued operations .22
.38
Net Income Attributable to Air Products $ 1.37
$ 1.67
Weighted Average Common Shares – Basic (in millions)
217.7
215.8
Weighted Average Common Shares – Diluted (in millions)
219.7
217.6
Dividends Declared Per Common Share – Cash $ .86
$ .81



	Three Months Ended
	31 December
(Millions of dollars, except for share and per share data)	2017			2016
Sales	$	2,216.6		$	1,882.5
Cost of sales	1,571.8			1,316.7
Selling and administrative	191.6			164.7
Research and development	14.6			15.0
Business separation costs	—			32.5
Cost reduction and asset actions	—			50.0
Other income (expense), net	22.1			24.7
Operating Income	460.7			328.3
Equity affiliates' income	13.8			38.0
Interest expense	29.8			29.5
Other non-operating income (expense), net	9.8			(.2		)
Income From Continuing Operations Before Taxes	454.5			336.6
Income tax provision	291.8			78.4
Income From Continuing Operations	162.7			258.2
Income (Loss) From Discontinued Operations, net of tax	(1.0		)	48.2
Net Income	161.7			306.4
Net Income Attributable to Noncontrolling Interests of Continuing Operations	7.1			6.6
Net Income Attributable to Air Products	$	154.6		$	299.8
Net Income Attributable to Air Products
Income from continuing operations	$	155.6		$	251.6
Income (Loss) from discontinued operations	(1.0		)	48.2
Net Income Attributable to Air Products	$	154.6		$	299.8
Basic Earnings Per Common Share Attributable to Air Products
Income from continuing operations	$	.71		$	1.16
Income from discontinued operations	—			.22
Net Income Attributable to Air Products	$	.71		$	1.38
Diluted Earnings Per Common Share Attributable to Air Products
Income from continuing operations	$	.70		$	1.15
Income from discontinued operations	—			.22
Net Income Attributable to Air Products	$	.70		$	1.37
Weighted Average Common Shares – Basic (in millions)	218.9			217.7
Weighted Average Common Shares – Diluted (in millions)	220.4			219.7
Dividends Declared Per Common Share – Cash	$	.95		$	.86

The accompanying notes are an integral part of these statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

(Unaudited)


	Three Months Ended						Three Months Ended
	31 December						31 December
(Millions of dollars)	2016			2015			2017			2016
Net Income	$	306.4		$	372.0		$	161.7		$	306.4
Other Comprehensive Loss, net of tax:
Translation adjustments, net of tax of $32.3 and ($6.7)	(281.2		)	(102.9		)
Net gain (loss) on derivatives, net of tax of ($10.7) and $4.8	(9.8		)	16.0
Other Comprehensive Income (Loss), net of tax:
Translation adjustments, net of tax of ($6.6) and $32.3							136.4			(281.2		)
Net loss on derivatives, net of tax of ($5.3) and ($10.7)							(9.5		)	(9.8		)
Reclassification adjustments:
Currency translation adjustment	—			2.4			3.1			—
Derivatives, net of tax of $10.6 and ($8.0)	25.6			(19.3		)
Pension and postretirement benefits, net of tax of $12.9 and $10.1	27.4			21.1
Total Other Comprehensive Loss	(238.0		)	(82.7		)
Derivatives, net of tax of $1.7 and $10.6							.8			25.6
Pension and postretirement benefits, net of tax of $11.0 and $12.9							22.9			27.4
Total Other Comprehensive Income (Loss)							153.7			(238.0		)
Comprehensive Income	68.4			289.3			315.4			68.4
Net Income Attributable to Noncontrolling Interests	6.6			8.4			7.1			6.6
Other Comprehensive Loss Attributable to Noncontrolling Interests	(3.1		)	—
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests							1.9			(3.1		)
Comprehensive Income Attributable to Air Products	$	64.9		$	280.9		$	306.4		$	64.9

The accompanying notes are an integral part of these statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	31 December			30 September			31 December			30 September
(Millions of dollars, except for share data)	2016			2016			2017			2017
Assets
Current Assets
Cash and cash items	$	655.5		$	1,293.2		$	2,722.6		$	3,273.6
Short-term investments							407.1			404.0
Trade receivables, net	1,063.3			1,146.2			1,233.4			1,174.0
Inventories	330.7			255.0			347.4			335.4
Contracts in progress, less progress billings	84.6			64.6			85.4			84.8
Prepaid expenses	68.6			93.9			177.7			191.4
Other receivables and current assets	485.9			538.2			371.7			403.3
Current assets of discontinued operations	860.2			926.2			10.2			10.2
Total Current Assets	3,548.8			4,317.3			5,355.5			5,876.7
Investment in net assets of and advances to equity affiliates	1,254.7			1,283.6			1,258.0			1,286.9
Plant and equipment, at cost	18,273.8			18,660.2			20,040.0			19,547.8
Less: accumulated depreciation	10,243.5			10,400.5			11,408.1			11,107.6
Plant and equipment, net	8,030.3			8,259.7			8,631.9			8,440.2
Goodwill, net	811.1			845.1			790.8			721.5
Intangible assets, net	376.7			387.9			429.1			368.3
Noncurrent capital lease receivables	1,162.6			1,221.7			1,126.0			1,131.8
Other noncurrent assets	772.0			671.0			617.5			641.8
Noncurrent assets of discontinued operations	—			1,042.3
Total Noncurrent Assets	12,407.4			13,711.3			12,853.3			12,590.5
Total Assets	$	15,956.2		$	18,028.6		$	18,208.8		$	18,467.2
Liabilities and Equity
Current Liabilities
Payables and accrued liabilities	$	1,677.5		$	1,652.2		$	1,609.5		$	1,814.3
Accrued income taxes	133.7			117.9			110.1			98.6
Short-term borrowings	156.1			935.8			87.1			144.0
Current portion of long-term debt	873.3			365.4			11.3			416.4
Current liabilities of discontinued operations	89.2			211.8			13.6			15.7
Total Current Liabilities	2,929.8			3,283.1			1,831.6			2,489.0
Long-term debt	3,289.0			3,909.7			3,414.9			3,402.4
Other noncurrent liabilities	1,797.3			1,816.5			1,921.9			1,611.9
Deferred income taxes	679.0			710.4			719.2			778.4
Noncurrent liabilities of discontinued operations	—			1,095.5
Total Noncurrent Liabilities	5,765.3			7,532.1			6,056.0			5,792.7
Total Liabilities	8,695.1			10,815.2			7,887.6			8,281.7
Commitments and Contingencies – See Note 11
Commitments and Contingencies - See Note 12
Air Products Shareholders’ Equity
Common stock (par value $1 per share; issued 2017 and 2016 - 249,455,584 shares)	249.4			249.4
Common stock (par value $1 per share; issued 2018 and 2017 - 249,455,584 shares)							249.4			249.4
Capital in excess of par value	967.5			970.0			998.1			1,001.1
Retained earnings	10,771.7			10,475.5			12,792.3			12,846.6
Accumulated other comprehensive loss	(2,611.7		)	(2,388.3		)	(1,695.6		)	(1,847.4		)
Treasury stock, at cost (2017 - 31,865,632 shares; 2016 - 32,104,759 shares)	(2,215.4		)	(2,227.0		)
Treasury stock, at cost (2018 - 30,516,281 shares; 2017 - 31,109,510 shares)							(2,128.9		)	(2,163.5		)
Total Air Products Shareholders’ Equity	7,161.5			7,079.6			10,215.3			10,086.2
Noncontrolling Interests	99.6			133.8			105.9			99.3
Total Equity	7,261.1			7,213.4			10,321.2			10,185.5
Total Liabilities and Equity	$	15,956.2		$	18,028.6		$	18,208.8		$	18,467.2

The accompanying notes are an integral part of these statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended						Three Months Ended
	31 December						31 December
(Millions of dollars)	2016			2015			2017			2016
Operating Activities
Net income	$	306.4		$	372.0		$	161.7		$	306.4
Less: Net income attributable to noncontrolling interests of continuing operations	6.6			6.3			7.1			6.6
Less: Net income attributable to noncontrolling interests of discontinued operations	—			2.1
Net income attributable to Air Products	299.8			363.6			154.6			299.8
Income from discontinued operations	(48.2		)	(82.7		)
(Income) Loss from discontinued operations							1.0			(48.2		)
Income from continuing operations attributable to Air Products	251.6			280.9			155.6			251.6
Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization	206.1			214.7			227.9			206.1
Deferred income taxes	(23.6		)	31.7			(76.7		)	(23.6		)
Tax reform repatriation							310.3			—
Undistributed earnings of unconsolidated affiliates	(6.9		)	7.0			34.0			(6.9		)
Gain on sale of assets and investments	(5.0		)	(.9		)	(.6		)	(5.0		)
Share-based compensation	9.0			8.3			11.8			9.0
Noncurrent capital lease receivables	22.3			12.2			23.3			22.3
Write-down of long-lived assets associated with restructuring	45.7			—			—			45.7
Other adjustments	10.7			(66.2		)	5.3			10.7
Working capital changes that provided (used) cash, excluding effects of acquisitions and divestitures:
Trade receivables	42.3			83.7			(34.2		)	42.3
Inventories	9.9			(19.0		)	(8.4		)	9.9
Contracts in progress, less progress billings	(22.6		)	(20.3		)	—			(22.6		)
Other receivables	(7.2		)	(25.3		)	23.8			(7.2		)
Payables and accrued liabilities	10.4			(100.7		)	(113.5		)	10.4
Other working capital	31.6			(8.9		)	5.5			31.6
Cash Provided by Operating Activities	574.3			397.2			564.1			574.3
Investing Activities
Additions to plant and equipment	(239.2		)	(248.4		)	(256.6		)	(239.2		)
Acquisitions, less cash acquired							(237.1		)	—
Investment in and advances to unconsolidated affiliates	(8.8		)	1.3			—			(8.8		)
Proceeds from sale of assets and investments	11.4			30.8			10.6			11.4
Purchases of investments							(212.2		)	—
Proceeds from investments							208.9			—
Other investing activities	(1.5		)	.6			1.5			(1.5		)
Cash Used for Investing Activities	(238.1		)	(215.7		)	(484.9		)	(238.1		)
Financing Activities
Long-term debt proceeds	1.2			—			—			1.2
Payments on long-term debt	(14.4		)	(65.5		)	(408.6		)	(14.4		)
Net (decrease) increase in commercial paper and short-term borrowings	(772.2		)	46.0
Net decrease in commercial paper and short-term borrowings							(40.7		)	(772.2		)
Dividends paid to shareholders	(186.9		)	(174.4		)	(207.5		)	(186.9		)
Proceeds from stock option exercises	10.7			10.3			34.4			10.7
Other financing activities	(12.9		)	(16.6		)	(18.7		)	(12.9		)
Cash Used for Financing Activities	(974.5		)	(200.2		)	(641.1		)	(974.5		)
Discontinued Operations
Cash (used for) provided by operating activities	(59.6		)	176.9
Cash used for operating activities							(3.1		)	(59.6		)
Cash used for investing activities	(19.4		)	(86.3		)	—			(19.4		)
Cash provided by financing activities	69.5			2.1			—			69.5
Cash (Used for) Provided by Discontinued Operations	(9.5		)	92.7
Cash Used for Discontinued Operations							(3.1		)	(9.5		)
Effect of Exchange Rate Changes on Cash	(16.2		)	(1.3		)	14.0			(16.2		)
(Decrease) Increase in Cash and Cash Items	(664.0		)	72.7
Cash and Cash Items – Beginning of Year	1,330.8			206.4
Decrease in cash and cash items							(551.0		)	(664.0		)
Cash and Cash items – Beginning of Year							3,273.6			1,330.8
Cash and Cash Items – End of Period	$	666.8		$	279.1		$	2,722.6		$	666.8
Less: Cash and Cash Items – Discontinued Operations	11.3			46.7			—			11.3
Cash and Cash Items – Continuing Operations	$	655.5		$	232.4		$	2,722.6		$	655.5

The accompanying notes are an integral part of these ~~statements.~~statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


1.	~~BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES~~

1. BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES

Refer to our ~~2016~~2017 Form 10-K for a description of major accounting policies. There have been no significant changes to these accounting policies during the first three months of fiscal year ~~2017~~2018 other than those detailed in Note 2, New Accounting ~~Guidance.~~Guidance, under Accounting Guidance Implemented in 2018. Certain prior year information has been reclassified to conform to the fiscal year ~~2017~~2018 presentation.

The results of our previous Material Technologies segment, which contained the Electronic Materials Division (EMD) and Performance Materials Division (PMD), and the former Energy-from-Waste segment have been presented as discontinued operations. Refer to Note 3, Discontinued Operations, for additional details. The results of operations and cash flows of these businesses have been removed from the results of continuing operations and segment results for all periods presented. The assets and liabilities of the discontinued operations have been reclassified and are segregated in the consolidated balance sheets. The comprehensive income related to these businesses has not been segregated and is included in the Consolidated Comprehensive Income Statement for all periods presented. The Notesnotes to the interim ~~Consolidated Financial Statements,~~consolidated financial statements, unless otherwise indicated, are on a continuing operations basis.

The consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries (“we,” “our,” “us,” the “Company,” “Air Products,” or “registrant”) included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In our opinion, the accompanying statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the ~~Notes.~~notes. The interim results for the periods indicated herein, however, do not reflect certain adjustments, such as the valuation of inventories on the last-in, first-out (LIFO) cost basis, which are only finally determined on an annual basis. ~~The~~In order to fully understand the basis of presentation, the consolidated financial statements and related ~~Notes~~notes included herein should be read in conjunction with the financial statements and ~~Notes~~notes thereto included in our ~~latest~~2017 Form ~~10-K in order to fully understand the basis of presentation.~~10-K. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.


2.	~~NEW ACCOUNTING GUIDANCE~~

2. NEW ACCOUNTING GUIDANCE

Accounting Guidance Implemented in ~~2017~~2018

~~Consolidation Analysis~~Presentation of Net Periodic Pension and Postretirement Benefit Cost

In ~~February 2015,~~March 2017, the Financial Accounting Standards Board (FASB) issued ~~an update~~guidance for improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that the service cost component of the net periodic benefit cost 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 income statement outside of operating income. The amendments also allow only the service cost component to ~~amend current consolidation guidance.~~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. The Company applied the practical expedient to use the amounts disclosed in its retirement benefits note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements.

Prior to adoption of the guidance, ~~impacts~~we classified all net periodic benefit costs within operating costs, primarily within "Cost of sales" and "Selling and administrative" on the ~~analysis an entity must perform~~consolidated income statements. The line item classification changes required by the new guidance did not impact the Company's 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 ~~determining if it should consolidate certain legal entities such~~the counterparty to a derivative instrument that has been designated as ~~limited partnerships, limited liability corporations,~~a hedging instrument does not, in and ~~securitization structures.~~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 ~~2017.~~2018. This guidance did not have ~~a significant~~an impact on our consolidated financial statements upon adoption.

~~Debt Issuance Costs~~

In April 2015, the FASB issued guidance requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt instead of as a separate deferred asset. In addition, guidance was issued to allow for a policy election on the presentation of debt issuance costs associated with a line-of-credit arrangement, regardless of whether there are any outstanding borrowings. We adopted the guidance during the first quarter of fiscal year 2017 on a retrospective basis. The guidance resulted in a reclassification adjustment that decreased other noncurrent assets by $17.0 with a corresponding decrease to long-term debt as of 30 September 2016. We will continue to present debt issuance costs associated with a line-of-credit arrangement as a deferred asset, regardless of whether there are any outstanding borrowings.

Adoption of this guidance also impacted the presentation of debt issuance costs related to our discontinued operations. As of 30 September 2016, other noncurrent assets and long-term debt balances of discontinued operations were both reduced by $9.6.

~~Share-Based Compensation~~

In March 2016, the FASB issued an update to simplify the accounting for employee share-based payments, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. We elected to early adopt this guidance in the first quarter of fiscal year 2017. The new guidance requires excess tax benefits and deficiencies to be recognized in the income statement rather than in additional paid-in capital on the balance sheet. As a result of applying this change prospectively, we recognized $7.0 of excess tax benefits in our provision for income taxes during the first quarter of fiscal year 2017. In addition, adoption of the new guidance resulted in a $8.8 cumulative-effect adjustment to retained earnings as of 1 October 2016 to recognize deferred taxes for U.S. state net operating loss and other carryforwards attributable to excess tax benefits. We retroactively applied the guidance which requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Cash paid on employees’ behalf related to shares withheld for tax purposes continues to be classified as a financing activity. Forfeitures have not been significant historically. We have elected to account for forfeitures as they occur, rather than to estimate them.

~~Definition of a Business~~

In January 2017, the FASB issued guidance that clarifies the definition of a business in order to assist in determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the new guidance, fewer transactions are expected to be accounted for as business combinations. We elected to early adopt this guidance prospectively beginning in the first quarter of fiscal year 2017. This guidance did not have a significant impact on our consolidated financial statements upon adoption.

New Accounting Guidance to be Implemented

Revenue Recognition

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 ~~have the option to adopt the standard in either fiscal year 2018 or 2019 either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We intend to~~will adopt this guidance in fiscal year ~~2019.~~2019 under the modified retrospective approach, which will result in a cumulative-effect adjustment as of 1 October 2018. We are ~~currently~~in the process of evaluating ~~the adoption alternatives allowed by the~~and implementing necessary changes to accounting policies, processes, controls and systems to enable compliance with this new ~~standard and~~standard. We continue to evaluate the impact the adoption of this standard ~~is expected to~~will have on our consolidated financial ~~statements. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact the timing of revenue~~statements and cost recognition across all of our business segments, in addition to our business processes and information technology systems. As a result, our evaluation of the effect of the new standard will extend over future periods.related disclosures.

Leases

In February 2016, the FASB issued guidance which 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, and must be applied using a modified retrospective approach. We are currently evaluating the impact of adopting this new guidance on the consolidated financial statements, ~~and we have started~~including the assessment ~~process by evaluating the~~of our current lease population ~~of leases~~ under the revised definition of what qualifies as a leased asset.

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 operating leases on the balance sheet with a right-of-use asset and corresponding liability for future payment obligations.

~~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. This guidance is effective in fiscal year 2018, with early adoption permitted. We do not expect adoption of this guidance to have a significant impact on our consolidated financial statements.

Credit Losses on Financial Instruments

In June 2016, the FASB issued ~~an update~~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 ~~update~~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 fiscal year 2019, with early adoption permitted, and should be applied retrospectively. We are currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

Intra-Entity Asset Transfers

In October 2016, the FASB issued guidance on the accounting for the income tax effects of intra-entity transfers of assets other than inventory. Current GAAP 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 directly to retained earnings as of the date of adoption. We are currently evaluating the impact this guidance will have on our consolidated financial statements and plan to adopt the guidance in fiscal year 2019.

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. The update must be adopted at the same time as the new guidance on revenue recognition discussed above, which we will adopt in fiscal year 2019. The guidance may be applied retrospectively or with a cumulative-effect adjustment to retained earnings at the date of adoption. We are currently evaluating the impact this update will have 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.


3.	~~DISCONTINUED OPERATIONS~~

~~Materials Technologies~~3. DISCONTINUED OPERATIONS

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

During the second quarter of fiscal year 2017, we completed the sale of PMD to Evonik Industries AG (Evonik) for $3.8 billion in cash. A gain of $2,870 ($1,828 after-tax, or $8.32 per share) was recognized on the sale, which closed on 3 January 2017.

In fiscal year 2016, we discontinued efforts to start up and operate two EfW projects located in Tees Valley, United Kingdom. During the second quarter of fiscal year 2016, we recorded an initial loss on disposal of $945.7 ($846.6 after-tax) to write down plant assets to their estimated net realizable value and record a liability for plant disposition and other costs. Income tax benefits related only to one of the projects as the other did not qualify for a local tax deduction. During the first quarter of fiscal year 2017, we recorded an additional loss on disposal of $59.3 ($47.1 after-tax), primarily for land lease obligations and to update our estimate of the net realizable value of the plant assets as of 31 December 2016. There have been no significant changes to our estimates as of 31 December 2017.

The losses on disposal were recorded as a component of discontinued operations while the liability associated with land lease obligations was recorded in continuing operations. The remaining carrying amount of the accrual in discontinued operations at 31 December 2017 was not material.

Summarized Financial Information of Discontinued Operations

For the three months ended 31 December 2017, the loss from discontinued operations, net of tax, on the consolidated income statements of $1.0 related to ongoing EfW project exit activities and administrative costs.

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



	Three Months Ended
	31 December 2016
							Total
	Performance			Energy-			Discontinued
	Materials			from-Waste^(A)			Operations
Sales	$	254.8		$	—		$	254.8
Cost of sales	179.0			6.6			185.6
Selling and administrative	20.4			.2			20.6
Research and development	5.1			—			5.1
Other income (expense), net	(.4		)	.3			(.1		)
Operating Income (Loss)	49.9			(6.5		)	43.4
Equity affiliates’ income	.3			—			.3
Income (Loss) Before Taxes	50.2			(6.5		)	43.7
Income tax benefit^(B)	(50.5		)	(1.1		)	(51.6		)
Income (Loss) From Operations of Discontinued Operations, net of tax	100.7			(5.4		)	95.3
Loss on Disposal, net of tax	—			(47.1		)	(47.1		)
Income (Loss) From Discontinued Operations, net of tax	100.7			(52.5		)	48.2


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


^(B)	As a result of the expected gain on 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.

Current assets of discontinued operations on the consolidated balance sheets of $10.2 as of 31 December 2017 and 30 September 2017 relate to the remaining EfW plant and equipment.

Current liabilities of discontinued operations on the consolidated balance sheets of $13.6 and $15.7 as of 31 December 2017 and 30 September 2017, respectively, primarily relate to reserves associated with the disposition of PMD.

4. MATERIALS TECHNOLOGIES SEPARATION

In fiscal year 2017, we completed the separation of the divisions comprising the former Materials Technologies segment. As further discussed below, we completed the separation of the Electronic Materials Division (EMD) through the spin-off of Versum Materials, Inc. (Versum). For information on the disposition of PMD, refer to Note 3, Discontinued Operations.

Spin-off of ~~Electronic Materials~~EMD

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

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

~~Sale of Performance Materials (Subsequent Event)~~

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

~~Energy-from-Waste~~

On 29 March 2016, the Board of Directors approved the Company’s exit of its Energy-from-Waste (EfW) business. As a result, efforts to start up and operate the two EfW projects located in Tees Valley, United Kingdom, were discontinued. The decision to exit the business and stop development of the projects was based on continued difficulties encountered and the Company’s conclusion, based on testing and analysis completed during the second quarter of fiscal year ~~2016, that significant additional time and resources would be required to make the projects operational. Since that time, the EfW segment~~2017. There has been ~~presented as a~~no activity in discontinued operation. During the second quarter of fiscal year 2016, a loss of $945.7 ($846.6 after-tax) was recorded to write down plant assets to their estimated net realizable value and record a liability for plant disposition and other costs. Income tax benefits related only to one of the projects, as the other did not qualify for a local tax deduction.

During the first quarter of fiscal year 2017, we determined that it is unlikely for a buyer to assume the remaining assets and contract obligations, including the related land lease. As a result, we recorded an additional loss of $59.3 ($47.1 after-tax), of which $53.0 was recorded primarily for land lease obligations and $6.3 was recorded to update our estimate of the net

~~realizable value of the plant assets as of 31 December 2016. We may incur additional exit costs in future periods related to other outstanding commitments.~~

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

Asset
Actions

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

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

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

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


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


^(B)	~~As a result of the expected gain on sale of PMD that closed~~and no assets or liabilities presented in the second quarter of 2017, we released valuation allowances related to capital loss and net operating loss carryforwards that favorably impacted our income tax provision within discontinued operations by approximately $66 during the first quarter of 2017.

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

Three Months Ended
31 December 2015
Total

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


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


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

~~The following table details the major line items that comprise total assets and total liabilities of~~ discontinued operations on the consolidated balance sheets ~~as of 31 December 2016:~~related to EMD for the periods presented.

Business Separation Costs

31 December 2016
Total
Performance Energy- Discontinued
Materials from-Waste Operations
Assets
Current Assets
Cash and cash items $ 11.3
$ —
$ 11.3
Trade receivables, net 149.5
—
149.5
Inventories 222.2
—
222.2
Plant and equipment, net 306.8
11.0
317.8
Goodwill, net 122.4
—
122.4
Intangible assets, net 23.1
—
23.1
Other receivables and current assets 12.5
1.4
13.9
Total Current Assets 847.8
12.4
860.2
Total Assets $ 847.8
$ 12.4
$ 860.2
Liabilities

Current Liabilities

Payables and accrued liabilities $ 59.3
$ 10.9
$ 70.2
Accrued income taxes 11.2
—
11.2
Other current liabilities 7.8
—
7.8
Total Current Liabilities 78.3
10.9
89.2
Total Liabilities $ 78.3
$ 10.9
$ 89.2

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

30 September 2016
Total
Electronic Performance Energy- Discontinued
Materials Materials from-Waste Operations
Assets
Current Assets
Cash and cash items $ 170.6
$ 37.5
$ —
$ 208.1
Trade receivables, net 134.7
159.0
—
293.7
Inventories 138.1
226.8
—
364.9
Plant and equipment, net —
—
18.2
18.2
Other receivables and current assets 34.5
5.6
1.2
41.3
Total Current Assets 477.9
428.9
19.4
926.2
Plant and equipment, net 296.5
296.5
—
593.0
Goodwill, net 180.0
125.0
—
305.0
Intangible assets, net 75.1
25.0
—
100.1
Other noncurrent assets 37.5
6.7
—
44.2
Total Noncurrent Assets 589.1
453.2
—
1,042.3
Total Assets $ 1,067.0
$ 882.1
$ 19.4
$ 1,968.5
Liabilities

Current Liabilities

Payables and accrued liabilities $ 85.8
$ 72.5
$ 19.0
$ 177.3
Accrued income taxes 22.7
6.0
—
28.7
Current portion of long-term debt 5.8
—
—
5.8
Total Current Liabilities 114.3
78.5
19.0
211.8
Long-term debt 981.8
—
—
981.8
Deferred income taxes 50.3
6.4
—
56.7
Other noncurrent liabilities 47.4
9.6
—
57.0
Total Noncurrent Liabilities 1,079.5
16.0
—
1,095.5
Total Liabilities $ 1,193.8
$ 94.5
$ 19.0
$ 1,307.3


4.	~~BUSINESS SEPARATION COSTS~~

In connection with the ~~disposition~~dispositions of ~~the two divisions comprising the former Materials Technologies segment,~~EMD and PMD, we incurred net separation costs of $30.2 during the first quarter of fiscal year 2017. The net costs include legal and ~~$12.0 for the three months ended 31 December 2016 and 2015, respectively. These costs~~advisory fees of $32.5, which are reflected on the consolidated income statements as “Business separation ~~costs”~~costs,” and ~~include legal, advisory, and~~a pension ~~related costs.~~settlement benefit of $2.3 that is now presented within "Other non-operating income (expense), net" as a result of the adoption of pension guidance at the beginning of fiscal year 2018. Refer to Note ~~3, Discontinued Operations,~~2, New Accounting Guidance, for additional ~~information regarding~~information.

Our income tax provision for the ~~dispositions.~~three months ended 31 December 2016 includes additional tax expense of $2.7 related to the separation. No business separation costs were incurred during fiscal year 2018.


5.	~~COST REDUCTION AND ASSET ACTIONS~~

~~The charges we record for cost reduction and asset actions have been excluded from segment operating income.~~5. COST REDUCTION AND ASSET ACTIONS

In the first quarter of fiscal year 2017, we recognized a net expense of $50.0, ~~($41.2 after-tax, or $.19 per share). The net expense~~which included a charge of $53.4 for actions taken during the first quarter of fiscal year 2017, partially offset by the favorable settlement of the remaining $3.4 accrued balance associated with business restructuring actions taken in 2015.

~~Asset actions taken in the first quarter of 2017 of~~ $45.7 ~~resulted~~ 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. ~~Severance~~

In fiscal year 2017, we recognized a net expense of $151.4. The 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. Asset actions of $88.5 included charges resulting from the write-down of an air separation unit in the Industrial Gases – EMEA segment discussed above, 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 liquefied natural gas (LNG) heat exchangers. During fiscal year 2017, severance and other benefits totaled ~~$7.7~~$66.3 and related to the elimination or planned elimination of approximately 50625 positions, primarily in the Corporate and other segment and in the Industrial Gases – EMEA ~~segments.~~

~~During fiscal year 2016, we incurred an expense of $34.5 for severance~~segment. The actions in the Corporate and other ~~benefits~~segment were driven by the reorganization of our engineering, manufacturing, and technology functions. The 2017 charge related to the ~~elimination of approximately 610 positions. No expense was recognized~~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 the first quarter of fiscal year ~~2016.~~ 2018, cash expenditures for severance and other benefits totaled $13.5.

The ~~fiscal year 2016 expenses primarily related to the Industrial Gases – Americas~~charges we record for cost reduction and ~~the Industrial Gases – EMEA segments.~~asset actions have been excluded from segment operating income.

The following table summarizes the carrying amount of the accrual for cost reduction and asset actions at 31 December ~~2016:~~2017:



	Severance and Other Benefits			Asset Actions/Other			Total
30 September 2016	$	12.3		$	—		$	12.3
2017 Charge	66.3			88.5			154.8
Noncash expenses	—			(84.2		)	(84.2		)
Amount reflected in pension liability	(2.0		)	—			(2.0		)
Amount reflected in other noncurrent liabilities	—			(2.2		)	(2.2		)
Cash expenditures	(35.7		)	(1.2		)	(36.9		)
Currency translation adjustment	(.3		)	—			(.3		)
30 September 2017	$	40.6		$	.9		$	41.5
Cash expenditures	(13.5		)	(.1		)	(13.6		)
Currency translation adjustment	.2			—			.2
31 December 2017	$	27.3		$	.8		$	28.1

Severance and
Other Benefits

Asset
Actions/Other
Total
2016 Charge $ 34.5
$ —
$ 34.5
Amount reflected in pension liability (.9 ) —
(.9 )
Cash expenditures (21.6 ) —
(21.6 )
Currency translation adjustment .3
—
.3
30 September 2016 $ 12.3
$ —
$ 12.3
2017 Charge 7.7
45.7
53.4
Noncash expenses —
(45.7 ) (45.7 )
Amount reflected in pension liability (.3 ) —
(.3 )
Cash expenditures (7.6 ) —
(7.6 )
Currency translation adjustment (.6 ) —
(.6 )
31 December 2016 $ 11.5
$ —
$ 11.5


6.	~~INVENTORIES~~

6. BUSINESS COMBINATIONS

During the first quarter of fiscal year 2018, we completed three acquisitions with an aggregate purchase price, net of cash acquired, of $237.1. The largest acquisition consists 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.

The first quarter 2018 acquisitions resulted in the recognition of $148.5 of plant and equipment, $53.7 of goodwill, $3.0 of which is deductible for tax purposes, and $53.4 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 segment.

7. INVENTORIES

The components of inventories are as follows:



	31 December			30 September
	2017			2017
Finished goods	$	135.1		$	120.0
Work in process	17.8			15.7
Raw materials, supplies and other	218.6			223.0
Total FIFO cost	$	371.5		$	358.7
Less: Excess of FIFO cost over LIFO cost	(24.1		)	(23.3		)
Inventories	$	347.4		$	335.4

31 December 30 September
2016 2016
Finished goods $ 126.5
$ 131.3
Work in process 17.3
18.3
Raw materials, supplies and other 202.0
117.1
$ 345.8
$ 266.7
Less: Excess of FIFO cost over LIFO cost (15.1 ) (11.7 )
Inventories $ 330.7
$ 255.0

First-in, first-out (FIFO) cost approximates replacement cost.


7.	~~GOODWILL~~

8. GOODWILL

Changes to the carrying amount of consolidated goodwill by segment for the three months ended 31 December ~~2016~~2017 are as follows:

Industrial
Gases–
Americas

Industrial
Gases–
EMEA

Industrial
Gases–
Asia

Industrial
Gases–
Global
Total
Goodwill, net at 30 September 2016 $ 309.1
$ 380.6
$ 135.2
$ 20.2
$ 845.1
Currency translation (4.0 ) (26.9 ) (2.7 ) (.4 ) (34.0 )
Goodwill, net at 31 December 2016 $ 305.1
$ 353.7
$ 132.5
$ 19.8
$ 811.1



	Industrial Gases– Americas		Industrial Gases– EMEA		Industrial Gases– Asia		Industrial Gases– Global			Total
Goodwill, net at 30 September 2017	$	163.7	$	402.4	$	135.2	$	20.2		$	721.5
Acquisitions	—		17.3		36.4		—			53.7
Currency translation	2.3		10.9		2.5		(.1		)	15.6
Goodwill, net at 31 December 2017	$	166.0	$	430.6	$	174.1	$	20.1		$	790.8



	31 December			30 September
	2017			2017
Goodwill, gross	$	1,224.4		$	1,138.7
Accumulated impairment losses	(433.6		)	(417.2		)
Goodwill, net	$	790.8		$	721.5

31 December 30 September
2016 2016
Goodwill, gross $ 1,064.6
$ 1,103.7
Accumulated impairment losses^(A)
(253.5 ) (258.6 )
Goodwill, net $ 811.1
$ 845.1


^(A)	~~Amount is attributable to the Industrial Gases – Americas segment and includes currency translation of $51.7 and $46.6 as of 31 December 2016 and 30 September 2016, respectively.~~

We ~~conduct~~review goodwill for impairment ~~testing~~annually in the fourth quarter of ~~each~~the fiscal year and whenever events ~~and~~or changes in circumstances indicate that the carrying value of goodwill might not be recoverable.

The accumulated impairment losses of $433.6 as of 31 December 2017 are attributable to LASA within the Industrial Gases– Americas segment and include impairment charges recorded in previous years as well as the impacts of currency translation on the losses.


8.	~~FINANCIAL INSTRUMENTS~~

9. FINANCIAL INSTRUMENTS

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 seek 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.~~Dollars. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at 31 December ~~2016~~2017 is ~~2.5~~1.5 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 ~~pairs~~pair in this portfolio of forward exchange contracts ~~are~~is Euros and U.S. ~~dollars and British Pound Sterling and U.S. dollars.~~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, primarily working capital, from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. This portfolio of forward exchange contracts comprises 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:



	31 December 2017			30 September 2017
	US$ Notional		Years Average Maturity	US$ Notional		Years Average Maturity
Forward Exchange Contracts:
Cash flow hedges	$	3,209.0	.5	$	3,150.2	.4
Net investment hedges	674.0		2.8	675.5		3.0
Not designated	390.2		.2	273.8		.1
Total Forward Exchange Contracts	$	4,273.2	.8	$	4,099.5	.8

31 December 2016 30 September 2016

US$
Notional

Years
Average
Maturity

US$
Notional

Years
Average
Maturity
Forward Exchange Contracts:
Cash flow hedges $ 4,148.1
.4
$ 4,130.3
.5
Net investment hedges 833.3
2.7
968.2
2.7
Not designated 2,405.1
.2
2,648.3
.4
Total Forward Exchange Contracts $ 7,386.5
.6
$ 7,746.8
.7

The notional value of forward exchange contracts not designated in the table above includes forward contracts which were hedging intercompany loans that were repaid prior to their original maturity dates in anticipation of the spin-off of Versum. The forward exchange contracts no longer qualified as cash flow hedges due to the early repayment of the loans. We entered into additional forward exchange contracts to offset these outstanding positions to eliminate any future earnings impact.

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 ~~€910.9~~€909.0 million ($~~958.0)~~1,091.2) at 31 December ~~2016~~2017 and ~~€920.7~~€912.2 million ($~~1,034.4)~~1,077.7) at 30 September ~~2016.~~2017. The designated foreign currency-denominated debt is located on the balance sheet in the long-term debt ~~and current portion of long-term debt~~ line ~~items.~~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 31 December ~~2016,~~2017, the outstanding interest rate swaps were denominated in U.S. ~~dollars.~~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 non-functional 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~~Dollars and offshore Chinese Renminbi, U.S. ~~dollars~~Dollars and Chilean Pesos, and U.S. ~~dollars~~Dollars and British Pound Sterling.

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



	31 December 2017							30 September 2017
	US$ Notional		Average Pay %		Average Receive %		Years Average Maturity	US$ Notional		Average Pay %		Average Receive %		Years Average Maturity
Interest rate swaps (fair value hedge)	$	400.0	LIBOR		2.53	%	1.6	$	600.0	LIBOR		2.28	%	1.3
Cross currency interest rate swaps (net investment hedge)	$	670.1	3.73	%	2.82	%	2.6	$	539.7	3.27	%	2.59	%	1.9
Cross currency interest rate swaps (cash flow hedge)	$	1,027.8	5.05	%	2.82	%	2.3	$	1,095.7	4.96	%	2.78	%	2.4
Cross currency interest rate swaps (not designated)	$	58.1	3.34	%	2.07	%	1.3	$	41.6	3.28	%	2.32	%	1.7

31 December 2016 30 September 2016

US$
Notional

Average
Pay %

Average
Receive
%

Years
Average
Maturity

US$
Notional

Average
Pay %

Average
Receive
%

Years
Average
Maturity
Interest rate swaps
(fair value hedge)
$ 600.0
LIBOR
2.28 % 2.0 $ 600.0
LIBOR
2.28 % 2.3
Cross currency interest rate swaps
(net investment hedge)
$ 522.0
3.24 % 2.41 % 2.3 $ 517.7
3.24 % 2.43 % 2.6
Cross currency interest rate swaps
(cash flow hedge)
$ 1,088.9
4.77 % 2.72 % 3.0 $ 1,088.9
4.77 % 2.72 % 3.3
Cross currency interest rate swaps
(not designated)
$ 23.1
3.62 % .81 % 1.6 $ 27.4
3.62 % .81 % 1.8

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



	Balance Sheet Location	31 December 2017		30 September 2017		Balance Sheet Location	31 December 2017		30 September 2017
Derivatives Designated as Hedging Instruments:
Forward exchange contracts	Other receivables	$	58.6	$	81.7	Accrued liabilities	$	44.3	$	82.0
Interest rate management contracts	Other receivables	7.0		11.1		Accrued liabilities	14.8		10.7
Forward exchange contracts	Other noncurrent assets	23.2		27.1		Other noncurrent liabilities	21.9		13.8
Interest rate management contracts	Other noncurrent assets	79.5		102.6		Other noncurrent liabilities	38.2		22.2
Total Derivatives Designated as Hedging Instruments		$	168.3	$	222.5		$	119.2	$	128.7
Derivatives Not Designated as Hedging Instruments:
Forward exchange contracts	Other receivables	$	2.4	$	1.1	Accrued liabilities	$	6.0	$	2.2
Interest rate management contracts	Other receivables	—		—		Accrued liabilities	2.7		1.0
Interest rate management contracts	Other noncurrent assets	4.6		4.2		Other noncurrent liabilities	—		—
Total Derivatives Not Designated as Hedging Instruments		$	7.0	$	5.3		$	8.7	$	3.2
Total Derivatives		$	175.3	$	227.8		$	127.9	$	131.9

Balance Sheet
Location
31 December 2016 30 September 2016
Balance Sheet
Location
31 December 2016 30 September 2016
Derivatives Designated as Hedging Instruments:
Forward exchange contracts Other receivables $ 62.4
$ 72.3
Accrued liabilities $ 144.2
$ 44.0
Interest rate management contracts Other receivables 32.3
19.9
Accrued liabilities —
—
Forward exchange contracts
Other noncurrent
assets
73.6
44.4
Other noncurrent
liabilities
1.9
9.1
Interest rate management contracts
Other noncurrent
assets
202.6
160.0
Other noncurrent
liabilities
14.8
12.0
Total Derivatives Designated as Hedging Instruments $ 370.9
$ 296.6
$ 160.9
$ 65.1
Derivatives Not Designated as Hedging Instruments:
Forward exchange contracts Other receivables $ 93.4
$ 77.1
Accrued liabilities $ 47.7
$ 29.5
Forward exchange contracts
Other noncurrent
assets
—
—
Other noncurrent
liabilities
.2
—
Interest rate management contracts
Other noncurrent
assets
—
—
Other noncurrent
liabilities
.3
.7
Total Derivatives Not Designated as Hedging Instruments $ 93.4
$ 77.1
$ 48.2
$ 30.2
Total Derivatives $ 464.3
$ 373.7
$ 209.1
$ 95.3

Refer to Note 9,10, 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:

Three Months Ended 31 December

Forward
Exchange Contracts
Foreign Currency
Debt
Other ^(A)
Total
2016 2015 2016 2015 2016 2015 2016 2015
Cash Flow Hedges, net of tax:
Net gain (loss) recognized in OCI (effective portion) $ (59.4 ) $ (4.7 ) $ —
$ —
$ 49.6
$ 20.7
$ (9.8 ) $ 16.0
Net (gain) loss reclassified from OCI to sales/cost of sales (effective portion) 4.6
.9
—
—
—
—
4.6
.9
Net (gain) loss reclassified from OCI to other income (expense), net (effective portion) 49.5
(1.8 ) —
—
(28.2 ) (20.2 ) 21.3
(22.0 )
Net (gain) loss reclassified from OCI to interest expense (effective portion) (.8 ) 1.4
—
—
.7
.8
(.1 ) 2.2
Net (gain) loss reclassified from OCI to other income (expense), net (ineffective portion) (.2 ) (.4 ) —
—
—
—
(.2 ) (.4 )
Fair Value Hedges:
Net gain (loss) recognized in interest expense^(B)
$ —
$ —
$ —
$ —
$ (9.1 ) $ (9.0 ) $ (9.1 ) $ (9.0 )
Net Investment Hedges, net of tax:
Net gain (loss) recognized in OCI $ 27.9
$ 3.0
$ 41.8
$ 7.6
$ 13.1
$ 6.5
$ 82.8
$ 17.1
Derivatives Not Designated as Hedging Instruments:
Net gain (loss) recognized in other income (expense), net^(C)
$ 2.1
$ (.4 ) $ —
$ —
$ .8
$ —
$ 2.9
$ (.4 )



	Three Months Ended 31 December
	Forward Exchange Contracts						Foreign Currency Debt					Other ^(A)						Total
	2017			2016			2017			2016		2017			2016			2017			2016
Cash Flow Hedges, net of tax:
Net gain (loss) recognized in OCI (effective portion)	$	7.5		$	(59.4	)	$	—		$	—	$	(17.0	)	$	49.6		$	(9.5	)	$	(9.8	)
Net (gain) loss reclassified from OCI to sales/cost of sales (effective portion)	1.0			4.6			—			—		—			—			1.0			4.6
Net (gain) loss reclassified from OCI to other income (expense), net (effective portion)	(17.6		)	49.5			—			—		16.4			(28.2		)	(1.2		)	21.3
Net (gain) loss reclassified from OCI to interest expense (effective portion)	.6			(.8		)	—			—		.6			.7			1.2			(.1		)
Net (gain) loss reclassified from OCI to other income (expense), net (ineffective portion)	(.2		)	(.2		)	—			—		—			—			(.2		)	(.2		)
Fair Value Hedges:
Net gain (loss) recognized in interest expense^(B)	$	—		$	—		$	—		$	—	$	(3.2	)	$	(9.1	)	$	(3.2	)	$	(9.1	)
Net Investment Hedges, net of tax:
Net gain (loss) recognized in OCI	$	(7.5	)	$	27.9		$	(17.3	)	$	41.8	$	(11.2	)	$	13.1		$	(36.0	)	$	82.8
Derivatives Not Designated as Hedging Instruments:
Net gain (loss) recognized in other income (expense), net^(C)	$	(1.5	)	$	2.1		$	—		$	—	$	(1.3	)	$	.8		$	(2.8	)	$	2.9


^(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 non-functional currencies.

The amount of cash flow hedges’ unrealized gains and losses at 31 December ~~2016~~2017 that are expected to be reclassified to earnings in the next twelve months is ~~not material.~~approximately $14. The balance primarily consists of losses on forward exchange contracts that hedged foreign currency exposures for a sale of equipment project and intercompany loans.

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 ~~$17.4~~$78.7 as of 31 December ~~2016~~2017 and ~~$11.2~~$34.6 as of 30 September ~~2016.~~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 ~~$334.0~~$100.6 as of 31 December ~~2016~~2017 and ~~$267.6~~$138.5 as of 30 September ~~2016.~~2017. No financial institution is required to post collateral at this time, as all have credit ratings at or above threshold.


9.	~~FAIR VALUE MEASUREMENTS~~

10. FAIR VALUE MEASUREMENTS

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 1	— Quoted prices (unadjusted) in active markets for identical assets or liabilities.


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

Short-term investments primarily include time deposits and treasury securities 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 31 December 2017 and 30 September 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 ~~and~~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 8,9, Financial Instruments, for a description of derivative instruments, including details on the balance sheet line classifications.

Long-term Debt

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:



	31 December 2017				30 September 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets
Derivatives
Forward exchange contracts	$	84.2	$	84.2	$	109.9	$	109.9
Interest rate management contracts	91.1		91.1		117.9		117.9
Liabilities
Derivatives
Forward exchange contracts	$	72.2	$	72.2	$	98.0	$	98.0
Interest rate management contracts	55.7		55.7		33.9		33.9
Long-term debt, including current portion	3,426.2		3,519.6		3,818.8		3,928.2

31 December 2016 30 September 2016
Carrying Value Fair Value Carrying Value Fair Value
Assets
Derivatives
Forward exchange contracts $ 229.4
$ 229.4
$ 193.8
$ 193.8
Interest rate management contracts 234.9
234.9
179.9
179.9
Liabilities
Derivatives
Forward exchange contracts $ 194.0
$ 194.0
$ 82.6
$ 82.6
Interest rate management contracts 15.1
15.1
12.7
12.7
Long-term debt, including current portion 4,162.3
4,253.8
4,275.1
4,450.5

The carrying amounts reported in the balance sheet 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:



	31 December 2017								30 September 2017
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets at Fair Value
Derivatives
Forward exchange contracts	$	84.2	$	—	$	84.2	$	—	$	109.9	$	—	$	109.9	$	—
Interest rate management contracts	91.1		—		91.1		—		117.9		—		117.9		—
Total Assets at Fair Value	$	175.3	$	—	$	175.3	$	—	$	227.8	$	—	$	227.8	$	—
Liabilities at Fair Value
Derivatives
Forward exchange contracts	$	72.2	$	—	$	72.2	$	—	$	98.0	$	—	$	98.0	$	—
Interest rate management contracts	55.7		—		55.7		—		33.9		—		33.9		—
Total Liabilities at Fair Value	$	127.9	$	—	$	127.9	$	—	$	131.9	$	—	$	131.9	$	—

31 December 2016 30 September 2016
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets at Fair Value
Derivatives
Forward exchange contracts $ 229.4
$ —
$ 229.4
$ —
$ 193.8
$ —
$ 193.8
$ —
Interest rate management contracts 234.9
—
234.9
—
179.9
—
179.9
—
Total Assets at Fair Value $ 464.3
$ —
$ 464.3
$ —
$ 373.7
$ —
$ 373.7
$ —
Liabilities at Fair Value
Derivatives
Forward exchange contracts $ 194.0
$ —
$ 194.0
$ —
$ 82.6
$ —
$ 82.6
$ —
Interest rate management contracts 15.1
—
15.1
—
12.7
—
12.7
—
Total Liabilities at Fair Value $ 209.1
$ —
$ 209.1
$ —
$ 95.3
$ —
$ 95.3
$ —

~~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:~~11. RETIREMENT BENEFITS

31 December 2016
2017
Loss
Total Level 1 Level 2 Level 3
Plant and Equipment – Continuing operations^(A)
$ 1.4
$ —
$ —
$ 1.4
$ 45.7
Plant and Equipment – Discontinued operations^(A)
$ 11.0
$ —
$ —
$ 11.0
$ 6.3

^(A)

We assessed the recoverability of the carrying value of assets associated with the EfW discontinued operation, including the air separation unit within continuing operations of our Industrial Gases- EMEA segment. We based our estimates primarily on an orderly liquidation valuation which resulted in losses for the difference between the orderly liquidation value and net book value of the assets as of 31 December 2016. For additional information, see Note 3, Discontinued Operations and Note 5, Cost Reduction and Asset Actions.


~~10.~~	~~RETIREMENT BENEFITS~~

The components of net periodic benefit cost for the defined benefit pension ~~and other postretirement benefit~~ plans for the three months ended 31 December ~~2016~~2017 and ~~2015~~2016 were as follows:


	Pension Benefits												Other Benefits					Pension Benefits
	2016						2015						2016		2015			2017						2016
Three Months Ended 31 December	U.S.			International			U.S.			International								U.S.			International			U.S.			International
Service Cost	$	8.3		$	6.7		$	9.0		$	6.2		$	.5	$	.5
Interest Cost	24.9			7.6			27.7			11.6			.4		.5
Service cost^(A)																		$	6.4		$	6.3		$	8.3		$	6.7
Interest cost																		26.7			9.2			24.9			7.6
Expected return on plan assets	(52.7		)	(18.5		)	(50.5		)	(20.7		)	—		—			(50.4		)	(20.2		)	(52.7		)	(18.5		)
Prior service cost amortization	.6			—			.7			—			—		—			.4			—			.6			—
Actuarial loss amortization	26.1			13.9			21.1			9.2			.2		.2			21.7			10.0			26.1			13.9
Settlements	—			(2.3		)	—			—			—		—			1.8			—			—			(2.3		)
Curtailment	4.2			(3.1		)	—			—			—		—			—			—			4.2			(3.1		)
Special termination benefits	1.1			.4			—			—			—		—			—			—			1.1			.4
Other	—			2.7			—			.5			—		—			—			.5			—			2.7
Net periodic benefit cost (Total)	$	12.5		$	7.4		$	8.0		$	6.8		$	1.1	$	1.2
Net Periodic Benefit Cost (Total)																		$	6.6		$	5.8		$	12.5		$	7.4
Less: Discontinued Operations	(.6		)	(.7		)	(1.8		)	(1.4		)	—		(.1		)	—			—			(.6		)	(.7		)
Net periodic benefit cost (Continuing Operations)	$	11.9		$	6.7		$	6.2		$	5.4		$	1.1	$	1.1
Net Periodic Benefit Cost (Continuing Operations)																		$	6.6		$	5.8		$	11.9		$	6.7

^(A)Includes total service costs from discontinued operations of $1.3 for the three months ended 31 December 2016. There was no discontinued operations activity for the three months ended 31 December 2017.

~~Net~~As noted 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 that the service cost component of the net periodic benefit cost isbe presented in the same line items as other compensation costs arising from services rendered by employees during the period. The non-service related costs are presented outside of operating income in "Other non-operating income (expense), net."

Service costs are primarily included in ~~cost~~"Cost of ~~sales~~sales" and ~~selling~~"Selling and ~~administrative expense~~administrative" on our consolidated income statements. The ~~amount of net periodic benefit cost~~costs capitalized in fiscal year 2018 and 2017 ~~and 2016 was~~were not material.

In connection with the disposition of the two divisions comprising the Materials Technologies segment, we incurred settlement, curtailment, special termination benefits and other pension related costs totaling $2.5. These costs are reflected on the consolidated income statements as "Business separation costs".

As discussed in Note 3, Discontinued Operations, we completed the separation of EMD through the spin-off of Versum on 1 October 2016. In connection with the spin-off, the Company transferred defined benefit pension assets and obligations to Versum resulting in a net decrease in the underfunded status of the Company's sponsored pension plans of $24. Additionally, as a result of the transfer of unrecognized losses to Versum, accumulated other comprehensive loss, net of tax, decreased by approximately $5.

The increase in pension expense primarily resulted from a decrease in discount rates, partially offset by favorable asset experience and the adoption of new mortality projections for certain of our plans.

For the three months ended 31 December ~~2016~~2017 and ~~2015,~~2016, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were ~~$24.9~~$27.4 and ~~$51.8,~~$24.9, respectively. Total contributions for fiscal ~~2017~~year 2018 are expected to be approximately ~~$65~~$50 to ~~$85.~~$70. During fiscal ~~2016,~~year 2017, total contributions were ~~$79.3.~~$64.1.

12. 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 ~~$55~~$54 at 31 December ~~2016)~~2017) 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 ~~$55~~$54 at 31 December ~~2016)~~2017) 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.

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 approximately 3332 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 31 December ~~2016~~2017 and 30 September ~~2016~~2017 included an accrual of ~~$80.1~~$81.4 and ~~$81.3,~~$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 ~~$80~~$81 to a reasonably possible upper exposure of ~~$94~~$95 as of 31 December ~~2016.~~2017.

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 31 December ~~2016, $29.8~~2017, $28.5 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 ~~20 years~~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 pretax expense in fiscal 2006 of $42 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.~~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 ~~expected to be~~ consistent with our previous estimates.

At 31 December ~~2016, $17.3~~2017, $16.4 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. On 13 June 2017, the SCDHEC issued its final approval to the site-wide feasibility study, and with that, we will be moving towards a record of decision for the Piedmont site and into the final remedial design phase of this project. We estimate that it will take until 2019 to complete source area remediation, with groundwater recovery and treatment continuing through 2029. Thereafter, we are expecting this site to go into a state of monitored natural attenuation through 2047. We recognized a pretax expense in 2008 of $24 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.

At 31 December ~~2016, $10.3~~2017, $12.0 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 ~~has~~have been no ~~change~~significant changes to the estimated exposure.

13. SHARE-BASED COMPENSATION

We have various share-based compensation programs, which include deferred stock units, stock options, and restricted stock. During the three months ended 31 December ~~2016,~~2017, we granted market-based and time-based deferred stock units. 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. As of 31 December ~~2016,~~2017, there were ~~4,793,342~~4,627,480 shares available for future grant under our Long-Term Incentive Plan (LTIP), which is shareholder approved.

As discussed in Note 3, Discontinued Operations, we completed the separation of EMD through the spin-off of Versum on 1 October 2016. In connection with 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 holder’s employer following the separation. 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.

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



	Three Months Ended
	31 December
	2017			2016
Before-tax share-based compensation cost	$	11.8		$	9.0
Income tax benefit	(3.2		)	(3.0		)
After-tax share-based compensation cost	$	8.6		$	6.0

Three Months Ended
31 December
2016 2015
Before-Tax Share-Based Compensation Cost $ 9.0
$ 8.3
Income Tax Benefit (3.0 ) (2.8 )
After-Tax Share-Based Compensation Cost $ 6.0
$ 5.5

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 year ~~2017~~2018 and ~~2016~~2017 was not material.

Deferred Stock Units

During the three months ended 31 December ~~2016,~~2017, we granted ~~116,740~~99,130 market-based deferred stock units. The market-based deferred stock units are earned out at the end of a performance period beginning 1 October ~~2016~~2017 and ending 30 September ~~2019,~~2020, conditioned on the level of the Company’s total shareholder return in relation to a defined peer group over the three-year performance period.

The market-based deferred stock units had an estimated grant-date fair value of ~~$156.87~~$202.47 per unit, which was estimated using a Monte Carlo simulation model. 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~~straight-line basis over the vesting period. The calculation of the fair value of market-based deferred stock units used the following assumptions:



Expected volatility	~~20.6~~18.7	%
Risk-free interest rate	~~1.4~~1.9	%
Expected dividend yield	~~2.5~~2.6	%

In addition, during the three months ended 31 December ~~2016,~~2017, we granted ~~145,604~~125,140 time-based deferred stock units at a weighted average grant-date fair value of ~~$143.51.~~$161.49.

The following is a summary of the changes in total equity:

15. ACCUMULATED OTHER COMPREHENSIVE LOSS

The ~~table~~tables below ~~summarizes~~summarize changes in accumulated other comprehensive loss (AOCL), net of tax, attributable to Air Products for the three months ended 31 December ~~2016:~~2017:

Net loss on
derivatives
qualifying as
hedges

Foreign
currency
translation
adjustments

Pension and
postretirement
benefits
Total
Balance at 30 September 2016 $ (65.0 ) $ (949.3 ) $ (1,374.0 ) $ (2,388.3 )
Other comprehensive loss before reclassifications (9.8 ) (281.2 ) —
(291.0 )
Amounts reclassified from AOCL 25.6
—
27.4
53.0
Net current period other comprehensive income (loss) 15.8
(281.2 ) 27.4
(238.0 )
Spin-off of Versum .2
6.0
5.3
11.5
Amount attributable to noncontrolling interests —
(3.1 ) —
(3.1 )
Balance at 31 December 2016 $ (49.0 ) $ (1,221.4 ) $ (1,341.3 ) $ (2,611.7 )



	Derivatives qualifying as hedges			Foreign currency translation adjustments			Pension and postretirement benefits			Total
Balance at 30 September 2017	$	(53.1	)	$	(787.1	)	$	(1,007.2	)	$	(1,847.4	)
Other comprehensive income (loss) before reclassifications	(9.5		)	136.4			—			126.9
Amounts reclassified from AOCL	.8			3.1			22.9			26.8
Net current period other comprehensive income (loss)	(8.7		)	139.5			22.9			153.7
Amount attributable to noncontrolling interests	—			1.9			—			1.9
Balance at 31 December 2017	$	(61.8	)	$	(649.5	)	$	(984.3	)	$	(1,695.6	)

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

16. EARNINGS PER SHARE

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



	Three Months Ended
	31 December
	2017			2016
Numerator
Income from continuing operations	$	155.6		$	251.6
Income (Loss) from discontinued operations	(1.0		)	48.2
Net Income Attributable to Air Products	$	154.6		$	299.8
Denominator (in millions)
Weighted average common shares — Basic	218.9			217.7
Effect of dilutive securities
Employee stock option and other award plans	1.5			2.0
Weighted average common shares — Diluted	220.4			219.7
Basic Earnings Per Common Share Attributable to Air Products
Income from continuing operations	$	.71		$	1.16
Income from discontinued operations	—			.22
Net Income Attributable to Air Products	$	.71		$	1.38
Diluted Earnings Per Common Share Attributable to Air Products
Income from continuing operations	$	.70		$	1.15
Income from discontinued operations	—			.22
Net Income Attributable to Air Products	$	.70		$	1.37

Three Months Ended
31 December
2016 2015
Numerator
Income from continuing operations $ 251.6
$ 280.9

Income from discontinued operations 48.2
82.7

Net Income Attributable to Air Products $ 299.8
$ 363.6

Denominator (in millions)

Weighted average common shares — Basic 217.7
215.8

Effect of dilutive securities
Employee stock option and other award plans 2.0
1.8

Weighted average common shares — Diluted 219.7
217.6

Basic Earnings Per Common Share Attributable to Air Products
Income from continuing operations $ 1.16
$ 1.30

Income from discontinued operations .22
.38

Net Income Attributable to Air Products $ 1.38
$ 1.68

Diluted Earnings Per Common Share Attributable to Air Products
Income from continuing operations $ 1.15
$ 1.29

Income from discontinued operations .22
.38

Net Income Attributable to Air Products $ 1.37
$ 1.67

Outstanding share-based awards of .2.1 million and .3.2 million shares were antidilutive and therefore excluded from the computation of diluted earnings per share for the three months ended 31 December ~~2016~~2017 and ~~2015,~~2016, respectively.

U.S. Tax Cuts and Jobs Act ("the Act")

On 22 December 2017, the United States enacted the U.S. Tax Cuts and Jobs Act (“the Act”) 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. As a result of the Act, our consolidated income statements reflect a net expense of $239.0 in the first quarter of fiscal year 2018. This includes an expense of $453.0 for the cost of the deemed repatriation tax and adjustments to the future cost of repatriation from foreign investments. This expense impacted our income tax provision by $420.5 and equity affiliate income by $32.5 for future costs of repatriation that will be borne by an equity affiliate. In addition, the income tax provision was benefited by $214.0 primarily from the re-measurement of our net U.S. deferred tax liabilities at the lower corporate tax rate.

The $420.5 adjustment recorded in the first quarter reflects a deemed repatriation tax of $364.1 that is payable over eight years and $56.4 resulting primarily from withholding taxes that were established for repatriation of foreign earnings and other impacts of the Act. We expect to apply $53.8 of existing foreign tax credits towards the $364.1 deemed repatriation tax. Of the remaining $310.3 obligation, $296.6 is recorded on our consolidated balance sheets in noncurrent liabilities.

We are reporting the impacts of the Act provisionally based upon reasonable estimates. 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, the final cash balances for fiscal year 2018, 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 Act.

As a fiscal year-end taxpayer, certain provisions of the 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%.

Primarily due to the impact of the Act, our effective tax rate was 64.2% for our first quarter ended 31 December 2017.

Cash Paid for Taxes (Net of Cash Refunds)

On a total company basis, income tax payments, net of refunds, were ~~$96.7~~$61.0 and ~~$66.9~~$96.7 for the three months ended 31 December ~~2016~~2017 and ~~2015,~~2016, respectively.

~~Subsequent Event~~

~~On 26 January 2017, the Board of Directors declared the second quarter dividend of $.95. The dividend is payable on 8 May 2017 to shareholders of record at the close of business on 3 April 2017.~~

18. BUSINESS SEGMENT INFORMATION

Our reporting segments reflect the manner in which our chief operating decision maker reviews results and allocates resources. Except in the Corporate and other segment, each reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments. Our liquefied natural gas (LNG) and helium storage and distribution sale of equipment businesses are aggregated within the Corporate and other segment.

Our reporting segments are:

~~Business Segment~~



	Industrial Gases – Americas		Industrial Gases – EMEA		Industrial Gases – Asia		Industrial Gases – Global		Corporate and other			Segment Total
Three Months Ended 31 December 2017
Sales	$	909.8	$	515.9	$	643.6	$	133.0	$	14.3		$	2,216.6
Operating income (loss)	217.2		104.5		175.5		9.5		(46.0		)	460.7
Depreciation and amortization	117.8		49.1		56.8		1.6		2.6			227.9
Equity affiliates' income	18.6		13.1		14.2		.4		—			46.3
Three Months Ended 31 December 2016
Sales	$	863.9	$	399.7	$	438.3	$	147.9	$	32.7		$	1,882.5
Operating income (loss)	223.3		90.0		118.4		8.2		(29.1		)	410.8
Depreciation and amortization	111.8		42.2		46.7		2.0		3.4			206.1
Equity affiliates' income	14.7		9.5		13.5		.3		—			38.0




Total Assets
31 December 2017	$	5,878.6	$	3,378.5	$	4,592.3	$	285.5	$	4,063.7	$	18,198.6
30 September 2017	5,840.8		3,276.1		4,412.1		279.6		4,648.4		18,457.0

Industrial
Gases–
Americas
Industrial
Gases–
EMEA
Industrial
Gases–
Asia
Industrial
Gases–
Global
Corporate
and other
Segment
Total
Three Months Ended 31 December 2016
Sales $ 863.9
$ 399.7
$ 438.3
$ 147.9
$ 32.7
$ 1,882.5
Operating income (loss) 223.8
88.0
118.1
8.2
(29.8 ) 408.3
Depreciation and amortization 111.8
42.2
46.7
2.0
3.4
206.1
Equity affiliates' income 14.7
9.5
13.5
.3
—
38.0
Three Months Ended 31 December 2015
Sales $ 836.3
$ 439.6
$ 414.6
$ 104.3
$ 71.5
$ 1,866.3
Operating income (loss) 211.6
92.3
117.3
(19.3 ) (17.4 ) 384.5
Depreciation and amortization 109.0
46.8
51.9
2.1
4.9
214.7
Equity affiliates' income (loss) 14.5
7.6
11.7
(.5 ) —
33.3
Total Assets
31 December 2016 $ 5,873.9
$ 3,005.0
$ 4,098.0
$ 268.5
$ 1,850.6
$ 15,096.0
30 September 2016 5,896.7
3,178.6
4,232.7
367.6
2,384.5
16,060.1

In 2015, we entered into a long-term sale of equipment contract to engineer, procure, and construct industrial gas facilities with a 25%-owned joint venture for Saudi Aramco's Jazan oil refinery and power plant in Saudi Arabia. Sales related to this contract are included in the results of our Industrial Gases – Global segment and were approximately $90 and $110 during the three months ended 31 December 2017 and 2016, respectively.

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



	Three Months Ended
	31 December
Operating Income	2017		2016
Segment total	$	460.7	$	410.8
Business separation costs	—		(32.5		)
Cost reduction and asset actions	—		(50.0		)
Consolidated Total	$	460.7	$	328.3

Three Months Ended
31 December
Operating Income 2016 2015
Segment total $ 408.3
$ 384.5
Business separation costs (30.2 ) (12.0 )
Cost reduction and asset actions (50.0 ) —
Consolidated Total $ 328.1
$ 372.5




	Three Months Ended
	31 December
Equity Affiliates' Income	2017			2016
Segment total	$	46.3		$	38.0
Tax reform repatriation - equity method investment^(A)	(32.5		)	—
Consolidated Total	$	13.8		$	38.0



	31 December		30 September
Total Assets	2017		2017
Segment total	$	18,198.6	$	18,457.0
Discontinued operations	10.2		10.2
Consolidated Total	$	18,208.8	$	18,467.2

31 December 30 September
Total Assets 2016 2016
Segment total $ 15,096.0
$ 16,060.1
Discontinued operations 860.2
1,968.5
Consolidated Total $ 15,956.2
$ 18,028.6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~(Millions of dollars, except for share data)~~

The disclosures in this quarterly report are complementary to those made in our ~~2016~~2017 Form 10-K. An analysis of results for the first quarter of ~~2017~~fiscal year 2018 is provided in ~~the~~this Management’s Discussion and ~~Analysis to follow.~~Analysis.

~~On 1 October 2016, we completed~~The following discussion should be read in conjunction with the separation of EMD through the spin-off of Versum Materials, Inc. (Versum). On 3 January 2017, we completed the sale of PMD to Evonik Industries AG for $3.8 billion in cash subject to customary post-closing adjustments, including working capital. As a result, these divisions are reflected in our consolidated financial statements ~~as discontinued operations for all periods presented.~~

~~The discussion that follows, unless~~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”~~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 ~~enhance~~provide investors, potential investors, securities analysts, and others with useful supplemental information to evaluate the ~~usefulness~~performance of ~~financial information by providing~~the business because such measures, ~~which,~~ when viewed together with our financial results ~~reported~~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 ~~reconciliation~~reconciliations of reported GAAP results to ~~non-GAAP~~non‑GAAP measures isare presented on pages ~~35-38.~~36-39. Descriptions of the excluded items appear on ~~page 31.~~pages 31 and 32.

~~Changes in Diluted Earnings per Share Attributable to Air Products~~

RESULTS OF OPERATIONS

Discussion of Consolidated Results


	Three Months Ended											Three Months Ended
	31 December											31 December
	2016			2015			$ Change			Change		2017			2016			$ Change			Change
Sales	$	1,882.5		$	1,866.3		$	16.2		1	%	$	2,216.6		$	1,882.5		$	334.1		18	%
Operating income	328.1			372.5			(44.4		)	(12	)%	460.7			328.3			132.4			40	%
Operating margin	17.4		%	20.0		%				(260 bp)		20.8		%	17.4		%				340 bp
Equity affiliates’ income	38.0			33.3			4.7			14	%	13.8			38.0			(24.2		)	(64	)%
Income from continuing operations												155.6			251.6			(96.0		)	(38	)%
Non-GAAP Basis
Adjusted EBITDA	$	652.4		$	632.5		$	19.9		3	%	$	734.9		$	654.9		$	80.0		12	%
Adjusted EBITDA margin	34.7		%	33.9		%				80 bp		33.2		%	34.8		%				(160 bp)
Adjusted Operating income	408.3			384.5			23.8			6	%
Adjusted Operating margin	21.7		%	20.6		%				110 bp
Adjusted operating income												460.7			410.8			49.9			12	%
Adjusted operating margin												20.8		%	21.8		%				(100 bp)
Adjusted equity affiliates' income												46.3			38.0			8.3			22	%



	% Change from Prior Year
Underlying business
Volume	213	%
Price	—2	%
~~Currency~~	(3	)%
Energy and ~~raw material~~natural gas cost pass-through	2—	%
Currency	3	%
Total Consolidated Change	118	%

Sales of $2,216.6 increased 18%, or $334.1. Underlying sales increased ~~2% as~~15% from higher volumes of 13% and higher pricing of 2%. Volumes were higher across all regional Industrial Gases segments driven by an equipment sale resulting from the termination of a contract in the Industrial Gases – Asia segment, new project onstreams in the Industrial Gases – Asia and ~~Industrial Gases – Global~~EMEA segments, ~~were partially offset by lower activity from our LNG~~and base business ~~in the Corporate and other segment. Higher volumes in~~growth. The pricing improvement was attributable to the Industrial Gases – ~~Global segment resulted from our Jazan sale-of-equipment project. Unfavorable~~Asia segment. 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, ~~reduced~~increased sales by 3%~~. Higher energy and natural gas contractual cost pass-through to customers increased sales by 2%~~.

Operating Income and Margin

Operating income of ~~$328.1 decreased 12%~~$460.7 increased 40%, or ~~$44.4, as higher~~$132.4, due to favorable volumes of $52, lower cost reduction and asset actions of $50, ~~unfavorable volumes of $20, higher~~lower business separation costs of ~~$18, unfavorable currency impacts of $10, and unfavorable~~$33, favorable pricing, net of energy, fuel, and raw material costs, of ~~$2,~~$22, and favorable currency impacts of $16, partially offset by unfavorable net operating costs of $41. Net operating costs were higher primarily due to higher planned maintenance costs. Operating margin of 20.8% increased 340 bp, primarily due to lower cost reduction and asset actions and lower business separation costs, partially offset by higher operating costs.

On a non-GAAP basis, adjusted operating income of $460.7 increased 12%, or $49.9, primarily due to higher volumes, favorable pricing, and favorable currency impacts, partially offset by unfavorable net operating costs. Adjusted operating margin of 20.8% decreased 100 bp as higher costs were partially offset by favorable ~~net operating costs of $56. Net operating costs were lower primarily due to benefits from operational improvements and higher other income. Operating margin of 17.4% decreased 260 bp.~~pricing.

On a non-GAAP basis, operating income of $408.3 increased $23.8. Operating margin of 21.7% increased 110 bp primarily due to favorable cost performance from productivity actions, partially offset by unfavorable volume mix.

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 ~~$652.4~~$734.9 increased 3%12%, or ~~$19.9,~~$80.0, primarily due to higher volumes and favorable ~~costs.~~pricing. Adjusted EBITDA margin of ~~34.7% increased 80 bp.~~

~~Equity Affiliates’ Income~~

~~Income from equity affiliates of $38.0 increased $4.7~~33.2% decreased 160 bp, primarily due to ~~Industrial Gases – EMEA and~~the impact of an equipment sale resulting from the termination of a contract in the Industrial Gases – Asia ~~affiliates.~~segment of 90 bp, a new hydrogen plant in India of 40 bp, and higher planned maintenance costs of 30 bp.

Equity Affiliates' Income

Equity affiliates' income of $13.8 decreased $24.2 and includes $32.5 resulting from the U.S. Tax Cuts and Jobs Act. Refer to Note 17, Income Taxes, to the consolidated financial statements for additional information. On a non-GAAP basis, equity affiliates' income of $46.3 increased 22%, or $8.3, primarily driven by Industrial Gases – Americas and Industrial Gases – EMEA affiliates.

Cost of Sales and Gross Margin

Cost of sales of ~~$1,318.1~~$1,571.8 increased ~~$22.2,~~$255.1, or 19%, due to higher costs attributable to sales volumes of ~~$52~~$183, unfavorable currency impacts of $36, higher other costs of $28, and higher energy ~~costs~~and natural gas cost pass-through to customers of ~~$38, partially offset by favorable currency impacts of $44 and lower operating costs of $24.~~

$8. Gross margin of ~~30.0%~~29.1% decreased 60100 bp, primarily due to unfavorable ~~volume mix of 160 bp,~~costs, partially offset by favorable ~~costs.~~currency.

Selling and Administrative Expense

Selling and administrative expense of ~~$165.7 decreased $8.2,~~$191.6 increased $26.9, primarily ~~due to benefits of our productivity actions.~~driven by unfavorable currency impacts and other higher costs. Selling and administrative expense, as a percent of sales, decreased from ~~9.3%~~8.7% to ~~8.8%~~8.6%.

Research and Development

Research and development expense of ~~$15.1~~$14.6 decreased ~~$1.8.~~$.4. Research and development expense, as a percent of sales, decreased from ~~.9%~~.8% to ~~.8%~~.7%.

Business Separation Costs

~~In connection with~~With the disposition of the two divisions comprising the former Materials Technologies segment ~~we incurred~~complete, no business separation costs were incurred during the first quarter of $30.2 ($26.5 after-tax, or $.12 per share) and $12.0 ($0.06 per share), for the three months ended 31 December 2016 and 2015, respectively. These costs are reflected on the consolidated income statements as “Business separation costs” and include legal, advisory, and pension related costs. A significant portion of these costs were not tax deductible because they were directly related to the plan for the tax-free spin-off of Versum. In addition, our income tax provision includes additional tax expense related to the separation of $2.7 ($.01 per share).fiscal year 2018. Refer to ~~the discussion on Discontinued Operations below and~~ Note 3, Discontinued Operations, and Note 4, Materials Technologies Separation, to the consolidated financial statements for additional information regarding the dispositions.

For the three months ended 31 December 2016, we incurred legal and advisory fees related to the dispositions of $32.5 ($26.5 after-tax, or $.12 per share). Our income tax provision for the three months ended 31 December 2016 includes additional tax expense of $2.7 ($.01 per share) related to the separation.

Cost Reduction and Asset Actions

~~During~~For the three months ended 31 December 2016, we recognized a net expense of $50.0 ($41.2 after-tax, or $.19 per share), ~~primarily related to~~which included $45.7 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 and for severance and other benefits.~~plants. Refer to Note 5, Cost Reduction and Asset Actions, to the consolidated financial statements for additional details. There were no charges recorded for cost reduction and asset actions for the three months ended 31 December 2017.

Other Income (Expense), Net

Other income (expense), net of ~~$24.7 increased $19.8 partly~~$22.1 decreased $2.6, primarily due to ~~income from the transition services agreement with Versum~~lower sales of assets and ~~higher gains from asset sales. Otherwise, no individual items were significant in comparison to the prior year.~~investments.

Interest incurred decreased $3.2 as the impact from a lower average debt balance of $8 was ~~flat as~~partially offset by the impact from a higher average interest rate on the debt portfolio ~~was offset by the impact from a lower average debt balance and a stronger U.S. dollar on the translation~~ of ~~foreign currency interest.~~$5. The change in capitalized interest was driven by a decrease in the carrying value of projects under ~~construction,~~construction.

Other Non-Operating Income (Expense), Net

The effective tax rate equals the income tax provision divided by income from continuing operations before taxes. The effective tax rate was ~~23.3%~~64.2% and ~~25.1%~~23.3% in the first quarter of ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~decrease included~~current year rate was higher primarily due to the enactment of the U.S. Tax Cuts and Jobs Act ("the Act"), which significantly changed existing U.S. tax laws, including a ~~210 bp impact~~reduction in the federal corporate income tax rate from ~~excess~~35% to 21% that is effective 1 January 2018, a deemed repatriation tax ~~benefits~~ on ~~shared-based compensation in accordance with our adoption of new accounting guidance,~~unremitted foreign earnings, as well as other changes. As a ~~150 bp benefit related~~result of the Act, our income tax provision reflects a net income tax expense of $206.5. This included a deemed repatriation tax on accumulated unremitted foreign earnings and adjustments to the future cost of repatriation from foreign ~~tax law changes. These benefits were partially~~investments of $420.5, offset by ~~higher business separation costs for which~~ a benefit of $214.0 primarily from the re-measurement of our net U.S. deferred tax ~~benefit was not available.~~ liabilities at the lower corporate tax rate. Additionally, the current year effective tax rate benefited from a lower U.S. federal statutory rate under the Act.

On a non-GAAP basis, the effective tax rate decreased ~~320bp~~ from ~~24.4% in 2016 to~~ 21.2% in 2017 ~~due~~ to 17.5% in 2018. We estimate that the ~~impact of~~Act reduced our non-GAAP effective tax rate by approximately 2.6% for the ~~excess~~three months ended 31 December 2017. The tax ~~benefits on~~rate for the current year was also reduced by a higher tax benefit from share-based compensation and from the mix of income earned in countries with lower statutory tax rates.

We are reporting the impacts of the Act provisionally based upon reasonable estimates. 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, the final cash balances for fiscal year 2018, further book to U.S. tax adjustments for the earnings of foreign ~~tax law changes.~~ entities, the issuance of additional guidance, as well as our ongoing analysis of the Act.

At this time, we do not anticipate a significant change in our full-year rate in fiscal year 2019 versus our estimated fiscal year 2018 full-year rate of 20.0% to 21.0% (after one-time adjustments) related to provisions of the Act.

Refer to Note ~~2, New Accounting Guidance,~~17, Income Taxes, to the consolidated financial statements for additional ~~information on our adoption of the share based compensation accounting guidance.~~

Discontinued Operations

The results of our ~~previous~~former Performance Materials ~~Technologies~~Division (PMD) and Energy-from-Waste (EfW) segment which contained EMD and PMD, and the former Energy-from-Waste segment have been presented as discontinued operations. Refer to Note 3, Discontinued Operations, for additional information, including detail of the major line items that comprise income from discontinued operations, net of tax, on the consolidated income statements for the three months ended 31 December 2016 and 2015.

~~Materials Technologies~~

On 16 September 2015, we announced plans to separate our Materials Technologies business, which contained EMD and PMD. On 1 October 2016, we completed the separation of EMD through the spin-off of Versum. On 3 January 2017, we completed the sale of PMD to Evonik Industries AG for $3.8 billion in cash subject to customary post-closing adjustments, including working capital. As a result, these divisions are reflected in our consolidated financial statements as discontinued operations for all periods presented. Refer to Note 3, Discontinued Operations, to the consolidated financial statements for additional information.

~~Energy-from-Waste~~

During the second quarter of fiscal year 2016, the Board of Directors approved the Company’s exit of its Energy-from-Waste (EfW) business. As a result, efforts to start up and operate its two EfW projects located in Tees Valley, United Kingdom, had been discontinued and a loss on disposal of $945.7 ($846.6 after-tax) was recorded to write down assets to their estimated net realizable value and record a liability for plant disposition costs.

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

Industrial Gases – Americas

Industrial Gases – Americas Sales



	% Change from Prior Year
Underlying business
Volume	(25	)%
Price	—	%
~~Currency~~Energy and natural gas cost pass-through	—(1	)%
~~Energy and raw material cost pass-through~~Currency	51	%
Total Industrial Gases – Americas Sales Change	35	%

Industrial Gases – Americas Operating Income and Margin

Operating income of ~~$223.8 increased $12.2,~~$217.2 decreased 3%, or ~~6%, as favorable operating~~$6.1, primarily due to higher costs of ~~$27 and higher pricing net of energy and fuel costs of $2 were~~$15, partially offset by ~~lower~~favorable volumes of ~~$16. Operating~~$8 and favorable currency impacts of $2. The higher costs ~~were lower due to benefits from productivity actions.~~primarily included higher planned maintenance costs. Operating margin of ~~25.9% increased 60~~23.9% decreased 190 bp, ~~from the prior year~~ primarily due to ~~favorable cost performance partially offset by lower volumes and~~ higher ~~energy pass-through.~~costs.

Industrial Gases – Americas Equity Affiliates’ Income

Equity affiliates’ income of ~~$14.7~~$18.6 increased ~~$.2.~~$3.9 due to favorable currency and volume growth.

Industrial Gases – Europe, Middle East, and Africa (EMEA)

Industrial Gases – EMEA Sales



	% Change from Prior Year
Underlying business
Volume	(217	)%
Price	—	%
~~Currency~~	(6	)%
Energy and ~~raw material~~natural gas cost pass-through	(13	)%
Currency	9	%
Total Industrial Gases – EMEA Sales Change	(929	)%

Underlying sales ~~decreased 2%~~were up 17% from ~~lower~~higher volumes, ~~as pricing~~primarily due to a new hydrogen plant in India. Higher merchant volumes increased sales by 3%. Pricing was ~~flat. Volumes decreased from lower liquid volumes across all regions. Unfavorable~~flat versus the prior year. 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, ~~reduced~~increased sales by ~~6%. Lower energy and natural gas contractual cost pass-through to customers decreased sales by 1%~~9%.

Industrial Gases – EMEA Operating Income and Margin

Operating income of ~~$88.0 decreased by 5%~~$104.5 increased 16%, or ~~$4.3, primarily~~$14.5, due to ~~unfavorable~~higher new plant and base business volumes of $11 and favorable currency impacts of $8, ~~lower volumes~~partially offset by higher costs of $3 and lower ~~pricing~~price, net of ~~energy and fuel~~power costs, of ~~$2, partially offset by favorable costs, driven by operational improvements, of $9. The lower pricing net of energy and fuel costs primarily resulted from higher power costs.~~$1. Operating margin of ~~22.0% increased 100~~20.3% decreased 220 bp, ~~from the prior year,~~ primarily due to ~~favorable~~lower margins on the new hydrogen volumes in India and higher energy and natural gas cost ~~performance.~~pass‑through to customers.

Industrial Gases – EMEA Equity Affiliates’ Income

Equity affiliates’ income of ~~$9.5~~$13.1 increased ~~$1.9.~~

$3.6 due to favorable currency and volume growth.

Industrial Gases – Asia

Industrial Gases – Asia Sales



	% Change from Prior Year
Underlying business
Volume	1036	%
Price	(17	)%
~~Currency~~	(3	)%
Energy and ~~raw material~~natural gas cost pass-through	—	%
Currency	4	%
Total Industrial Gases – Asia Sales Change	647	%

Underlying sales ~~increased by 9%~~were up 43% from higher volumes of ~~10%, partially offset by lower~~36% and higher pricing of 1%7%. ~~Volumes increased primarily due to new plants, including~~The volume increase included 28% from an equipment sale resulting from the ~~commencement~~termination of a ~~utility pass-through,~~contract and ~~base business growth driven by~~8% primarily from new plant onstreams and higher merchant ~~volumes~~volumes. Merchant pricing improved across ~~Asia. Pricing~~Asia driven primarily by China. Energy and natural gas cost pass-through to customers was ~~down slightly primarily due to helium pricing. Unfavorable~~flat versus the prior year. Favorable currency impacts, primarily from the Chinese Renminbi, ~~decreased~~South Korean Won, and Taiwan Dollar, increased sales by 3%4%.

Industrial Gases – Asia Operating Income and Margin

Operating income of ~~$118.1~~$175.5 increased 1%48%, or ~~$.8, primarily~~$57.1, due to ~~higher~~the equipment sale and merchant volumes of $7$40, favorable price, net of power costs, of $23, and ~~lower~~a favorable currency impact of $5, partially offset by higher operating costs of ~~$1, partially offset by an unfavorable currency impact~~$11. Operating margin of $427.3% increased 30 bp as higher volumes and ~~unfavorable~~favorable price, net of ~~energy~~power costs, were mostly offset by the dilutive impact of the equipment sale and ~~fuel costs of $3. Operating margin of 26.9% decreased 140 bp from the prior year, due to the higher utility pass-through on new plants and lower pricing.~~unfavorable cost performance.

Industrial Gases – Asia Equity Affiliates’ Income

Equity affiliates’ income of ~~$13.5~~$14.2 increased ~~$1.8.~~$.7.

Industrial Gases – Global

Industrial Gases – Global Sales and Operating Income ~~(Loss)~~

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 ~~regional~~ Industrial Gases segments.

Sales of ~~$147.9 increased $43.6,~~$133.0 decreased $14.9, or ~~42%~~10%. The ~~increase~~decrease in sales was primarily driven by alower sale of equipment ~~contract for~~activity on the multiple air separation units that will serve Saudi Aramco’s Jazan oil refinery and power plant in Saudi ~~Arabia, which more than offset the decrease in small equipment and other air separation unit sales.~~

Operating income of ~~$8.2~~$9.5 increased ~~$27.5 from an operating loss in the prior year, primarily from income on the Jazan project and productivity improvements.~~$1.3.

In addition to our liquefied natural gas (LNG) and helium storage and distribution sale of equipment businesses, the results of the Corporate and other segment include stranded costs related to the former Materials Technologies segment as discontinued operations. These stranded costs primarily relate to costs in support of transition services agreements with Versum and Evonik, the majority of which are reimbursed to Air Products. All transition services for Evonik were completed during the first quarter of fiscal year 2018, and we expect all transition services for Versum to end in the second quarter of fiscal year 2018.

We will continue to take actions to reduce the costs after completion of these services.

Corporate and other Sales and Operating Loss

Sales of ~~$32.7~~$14.3 decreased ~~$38.8~~$18.4, primarily due to lower ~~liquefied natural gas (LNG)~~LNG project activity. We expect delays in new LNG project orders due to continued ~~weakness~~oversupply of LNG in ~~energy markets.~~the market. Operating loss of ~~$29.8~~$46.0 increased ~~$12.4~~$16.9 due to lower LNG ~~activity, partially offset by productivity improvements and the transition service agreement with Versum.~~activity.

(Millions of dollars unless otherwise indicated, except for 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.

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.

Income Tax
Provision^(B)

Operating
Margin^(A)

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.

Below is a reconciliation of Income from Continuing Operations on a GAAP basis to Adjusted EBITDA:

Three Months Ended
2017 vs. 2016 31 December
Change GAAP
Income from continuing operations change $ (29.0 )
Income from continuing operations % change (10 )%
Change Non-GAAP
Adjusted EBITDA change $ 19.9
Adjusted EBITDA % change 3 %

Below is a reconciliation of segment operating income to Adjusted EBITDA:



	Industrial Gases– Americas			Industrial Gases– EMEA			Industrial Gases– Asia			Industrial Gases– Global			Corporate and other			Segment Total
GAAP MEASURE
Three Months Ended 31 December 2017
Operating income (loss)	$	217.2		$	104.5		$	175.5		$	9.5		$	(46.0	)	$	460.7
Operating margin	23.9		%	20.3		%	27.3		%							20.8		%
Three Months Ended 31 December 2016
Operating income (loss)	$	223.3		$	90.0		$	118.4		$	8.2		$	(29.1	)	$	410.8
Operating margin	25.8		%	22.5		%	27.0		%							21.8		%
Operating income (loss) change	$	(6.1	)	$	14.5		$	57.1		$	1.3		$	(16.9	)	$	49.9
Operating income (loss) % change	(3		)%	16		%	48		%	16		%	(58		)%	12		%
Operating margin change	(190		) bp	(220		) bp	30		bp							(100		) bp
NON-GAAP MEASURE
Three Months Ended 31 December 2017
Operating income (loss)	$	217.2		$	104.5		$	175.5		$	9.5		$	(46.0	)	$	460.7
Add: Depreciation and amortization	117.8			49.1			56.8			1.6			2.6			227.9
Add: Equity affiliates' income	18.6			13.1			14.2			.4			—			46.3
Adjusted EBITDA	$	353.6		$	166.7		$	246.5		$	11.5		$	(43.4	)	$	734.9
Adjusted EBITDA margin	38.9		%	32.3		%	38.3		%							33.2		%
Three Months Ended 31 December 2016
Operating income (loss)	$	223.3		$	90.0		$	118.4		$	8.2		$	(29.1	)	$	410.8
Add: Depreciation and amortization	111.8			42.2			46.7			2.0			3.4			206.1
Add: Equity affiliates' income	14.7			9.5			13.5			.3			—			38.0
Adjusted EBITDA	$	349.8		$	141.7		$	178.6		$	10.5		$	(25.7	)	$	654.9
Adjusted EBITDA margin	40.5		%	35.5		%	40.7		%							34.8		%
Adjusted EBITDA change	$	3.8		$	25.0		$	67.9		$	1.0		$	(17.7	)	$	80.0
Adjusted EBITDA % change	1		%	18		%	38		%	10		%	(69		)%	12		%
Adjusted EBITDA margin change	(160		) bp	(320		) bp	(240		) bp							(160		) bp

Industrial
Gases–
Americas Industrial
Gases–
EMEA Industrial
Gases–
Asia Industrial
Gases–
Global Corporate
and other Segment
Total
GAAP MEASURE
Three Months Ended 31 December 2016
Operating income (loss) $ 223.8
$ 88.0
$ 118.1
$ 8.2
$ (29.8 ) $ 408.3
Operating margin 25.9 % 22.0 % 26.9 % 21.7 %
Three Months Ended 31 December 2015
Operating income (loss) $ 211.6
$ 92.3
$ 117.3
$ (19.3 ) $ (17.4 ) $ 384.5
Operating margin 25.3 % 21.0 % 28.3 % 20.6 %
Operating income (loss) change $ 12.2
$ (4.3 ) $ .8
$ 27.5
$ (12.4 ) $ 23.8
Operating income (loss) % change 6 % (5 )% 1 % 142 % (71 )% 6 %
Operating margin change 60 bp 100 bp (140 ) bp 110 bp
NON-GAAP MEASURE
Three Months Ended 31 December 2016
Operating income (loss) $ 223.8
$ 88.0
$ 118.1
$ 8.2
$ (29.8 ) $ 408.3
Add: Depreciation and amortization 111.8
42.2
46.7
2.0
3.4
206.1
Add: Equity affiliates' income 14.7
9.5
13.5
.3
—
38.0
Adjusted EBITDA $ 350.3
$ 139.7
$ 178.3
$ 10.5
$ (26.4 ) $ 652.4
Adjusted EBITDA margin 40.5 % 35.0 % 40.7 % 34.7 %
Three Months Ended 31 December 2015
Operating income (loss) $ 211.6
$ 92.3
$ 117.3
$ (19.3 ) $ (17.4 ) $ 384.5
Add: Depreciation and amortization 109.0
46.8
51.9
2.1
4.9
214.7
Add: Equity affiliates' income (loss) 14.5
7.6
11.7
(.5 ) —
33.3
Adjusted EBITDA $ 335.1
$ 146.7
$ 180.9
$ (17.7 ) $ (12.5 ) $ 632.5
Adjusted EBITDA margin 40.1 % 33.4 % 43.6 % 33.9 %
Adjusted EBITDA change $ 15.2
$ (7.0 ) $ (2.6 ) $ 28.2
$ (13.9 ) $ 19.9
Adjusted EBITDA % change 5 % (5 )% (1 )% 159 % (111 )% 3 %
Adjusted EBITDA margin change 40 bp 160 bp (290 ) bp 80 bp

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



	Three Months Ended
	31 December
Equity Affiliates' Income	2017			2016
Segment total	$	46.3		$	38.0
Tax reform repatriation - equity method investment^(A)	(32.5		)	—
Consolidated Total	$	13.8		$	38.0

The tax impact ofon 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 impacts of the U.S. Tax Cuts and Jobs Act, refer to Note 17, Income Taxes, to the consolidated financial statements.

Effective Tax Rate
Three Months Ended
31 December

2016 2015
Income Tax Provision — GAAP $ 78.4
$ 96.4
Income From Continuing Operations Before Taxes — GAAP $ 336.6
$ 383.6
Effective Tax Rate — GAAP 23.3 % 25.1 %
Income Tax Provision — GAAP $ 78.4
$ 96.4
Business separation costs 3.7
—
Tax costs associated with business separation (2.7 ) —
Cost reduction and asset actions 8.8
—
Income Tax Provision — Non-GAAP Measure $ 88.2
$ 96.4
Income From Continuing Operations Before Taxes — GAAP $ 336.6
$ 383.6
Business separation costs 30.2
12.0
Cost reduction and asset actions 50.0
—
Income From Continuing Operations Before Taxes — Non-GAAP Measure $ 416.8
$ 395.6
Effective Tax Rate — Non-GAAP Measure 21.2 % 24.4 %



	Effective Tax Rate
	Three Months Ended 31 December
	2017			2016
Income Tax Provision—GAAP	$	291.8		$	78.4
Income From Continuing Operations Before Taxes—GAAP	$	454.5		$	336.6
Effective Tax Rate—GAAP	64.2		%	23.3		%
Income Tax Provision—GAAP	$	291.8		$	78.4
Business separation costs	—			3.7
Tax costs associated with business separation	—			(2.7		)
Cost reduction and asset actions	—			8.8
Tax reform repatriation	(420.5		)	—
Tax reform rate change and other	214.0			—
Income Tax Provision—Non-GAAP Measure	$	85.3		$	88.2
Income From Continuing Operations Before Taxes—GAAP	$	454.5		$	336.6
Business separation costs	—			30.2
Cost reduction and asset actions	—			50.0
Tax reform repatriation - equity method investment	32.5			—
Income From Continuing Operations Before Taxes—Non-GAAP Measure	$	487.0		$	416.8
Effective Tax Rate—Non-GAAP Measure	17.5		%	21.2		%

As noted in Note 2, New Accounting Guidance, to the consolidated financial statements, 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 that the service cost component of the net periodic benefit cost be presented in the same line items as other compensation costs arising from services rendered by employees during the period. The non-service related costs are presented outside of operating income in "Other non-operating income (expense), net."

For the three months ended 31 December 2017 and 2016, total net periodic pension cost was $12.4 and $18.6, respectively. We recognized service-related costs of $13.2 and $19.0, respectively, on our consolidated income statements within operating income of continuing operations. The non-service benefits of $.8 and $.4 were included in "Other non-operating income (expense), net" for the three months ended 31 December 2017 and 2016, respectively. The decrease in pension expense in fiscal year 2018 results from lower loss amortization primarily due to favorable asset experience and the effects of the disposition of the former Materials Technologies segment. The costs capitalized in fiscal year 2018 and 2017 were not material.

For the three months ended 31 December ~~2016~~2017 and ~~2015,~~2016, we recognized ~~net periodic benefit cost~~a pension settlement loss of ~~$18.6~~$1.8 and ~~$11.6,~~a gain of $2.3, respectively, in ~~continuing operations.~~"Other non-operating income (expense), net" on our consolidated income statements to accelerate recognition of a portion of actuarial gains and losses deferred in accumulated other comprehensive loss. The ~~increase~~pension settlement loss in fiscal year 2018 was associated with the U.S. Supplementary Pension Plan. The pension ~~expense primarily~~settlement gain in fiscal year 2017 resulted from ~~a decrease in discount rates, partially offset by favorable asset experience and the adoption of new mortality tables for our major plans.~~

~~In connection with~~ the disposition of the ~~two divisions comprising the~~ former Materials Technologies ~~segment, we incurred~~segment. We expect total pension settlement ~~curtailment, special termination benefit and other pension related costs totaling $2.5. These costs are reflected on the consolidated income statements within "Business separation costs".~~

~~Upon completion~~losses of ~~the separation of EMD on 1 October 2016, the Company transferred defined benefit pension assets and obligations to the Versum plans resulting~~approximately $5 in a net decrease in the underfunded status of the sponsored pension plans of $24. Additionally, as a result of the transfer of unrecognized losses to Versum, accumulated other comprehensive loss, net of tax, decreased by approximately $5.fiscal year 2018.

Management considers various factors when making pension funding decisions, including tax, cash flow, and regulatory implications. For the three months ended 31 December ~~2016~~2017 and ~~2015,~~2016, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were ~~$24.9~~$27.4 and ~~$51.8,~~$24.9, respectively. Total contributions for fiscal ~~2017~~2018 are expected to be approximately ~~$65~~$50 to ~~$85.~~$70. During fiscal ~~2016,~~2017, total contributions were ~~$79.3.~~

We have consistent access to commercial paper markets, and our cash balance and cash flows from operations and financing activities are expected to meet liquidity needs for the foreseeable future.

As of 31 December ~~2016,~~2017, we had ~~$644.9~~$1,396.9 of foreign cash and cash items compared to total cash and cash items of ~~$655.5. If we needed foreign cash for operations in~~$2,722.6. As a result of the U.S. ortax reform, we ~~otherwise elect to repatriate~~currently do not expect that a significant portion of the funds, we may be required to accrue and pay U.S. taxes on those amounts. However, since we have significant current investment plans outside the U.S., it is our intent to permanently reinvest the majorityearnings 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.

Operating Activities

For the first three months of 2018, cash provided by operating activities was $564.1. Income from continuing operations of $155.6 was adjusted for items including depreciation and ~~cash items outside~~amortization, deferred income taxes, impacts from the U.S. ~~Current financing alternatives do not require~~Tax Cuts and Jobs Act, undistributed earnings of unconsolidated affiliates, share-based compensation, and noncurrent capital lease receivables. The tax reform repatriation adjustment of $310.3 represents our obligation for the deemed repatriation tax resulting from U.S. tax reform and is payable over a period of eight years. Undistributed earnings of unconsolidated affiliates includes $32.5 of expense resulting from the U.S. Tax Cuts and Jobs Act. See Note 17, Income Taxes, to the consolidated financial statements for additional ~~repatriation~~information. The working capital accounts were a use of ~~foreign funds.~~

~~Operating Activities~~cash of $126.8, primarily driven by $113.5 from payables and accrued liabilities and $34.2 from trade receivables. The use of cash in payables and accrued liabilities included a $39.3 decrease in accrued incentive compensation due to payments on the 2017 plan and $13.5 of severance actions.

For the first three months of 2017, cash provided by operating activities was $574.3. Income from continuing operations of $251.6 included the ~~non-cash~~noncash 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. Other adjustments included depreciation and amortization, deferred income taxes, share-based compensation, noncurrent capital lease receivables, and undistributed earnings of unconsolidated affiliates. The working capital accounts were a source of cash of $64.4, which was primarily driven by a decrease in trade receivables of $42.3 and other working capital of $31.6. The decrease in trade receivables includes collections from our joint venture in Jazan, Saudi Arabia. The source of cash from other working capital was primarily due to a decrease in prepaid income taxes.

For the first three months of 2016, cash provided by operating activities was $397.2 which includes income from continuing operations of $280.9. Other adjustments include a use of cash of $66.2, which included $51.8 of pension and postretirement contributions primarily for a plan in the U.K. The change in payables and accrued liabilities of $100.7 was primarily driven by a decrease in the accrual for incentive compensation due to payments on the 2015 plan.

We estimate that cash paid for taxes, net of refunds, on a continuing operations basis were ~~$79.7~~$61.0 and ~~$59.8~~$79.7 for the three months ended 31 December 2017 and 2016, ~~and 2015,~~ respectively.

Investing Activities

For the first three months of 2018, cash used for investing activities was $484.9. Capital expenditures for plant and equipment were $256.6. We completed three acquisitions with an aggregate purchase price, net of cash acquired, of $237.1. See Note 6, Business Combinations, to the consolidated financial statements for further details.

For the first three months of 2017, cash used for investing activities was $238.1, primarily driven by capital expenditures for plant and equipment of $239.2.

For the first three months of 2016, cash used for investing activities was $215.7, primarily driven by capital expenditures for plant and equipment of $248.4. Proceeds from the sale of assets and investments of $30.8 were primarily driven by the receipt of $30.0 for our rights to a corporate aircraft that was under construction.

Capital expenditures are detailed in the table below:

We expect capital expenditures of approximately ~~$1,000~~$1,200 to $1,400 on a GAAP and non-GAAP basis in ~~2017.~~

~~On 19 April 2015,~~fiscal year 2018. This range excludes possible acquisitions and our previously announced agreement to form 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 expects to invest approximately $100. Air Products has also entered into a sale of equipment contractLu’an (Changzhi) Co., Ltd., with ~~the joint venture to engineer, procure and construct the industrial gas facilities that will supply the gases to Saudi Aramco.~~Lu’An Clean Energy Company.

Sales backlog represents our estimate of revenue to be recognized in the future on sale of equipment orders and related process technologies that are under firm contracts. The sales backlog for the Company at 31 December ~~2016~~2017 was ~~$920,~~$405, compared to ~~$1,057~~$481 at 30 September ~~2016.~~2017.

Financing Activities

For the first three months of 2018, cash used for financing activities was $641.1. This consisted primarily of repayment on long-term debt of $408.6, dividend payments to shareholders of $207.5, and repayments of commercial paper and short-term borrowings of $40.7. 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 first three months of 2017, cash used for financing activities was $974.5. This consisted primarily of repayments of commercial paper and short-term borrowings of $772.2 and dividend payments of $186.9.

For the first three months of 2016, cash used for financing activities was $200.2. This consisted primarily of dividend payments of $174.4 and a $19.5 net use of cash from our borrowings (short- and long-term proceeds, net of repayments).

Financing and Capital Structure

Capital needs were satisfied primarily with cash from operations. Total debt at 31 December ~~2016~~2017 and 30 September ~~2016,~~2017, expressed as a percentage of ~~the sum of total debt and~~ total capitalization (total debt plus total equity), was ~~37.3%~~25.4% and ~~41.9%~~28.0%, respectively. Total debt decreased from ~~$5,210.9~~$3,962.8 at 30 September ~~2016~~2017 to ~~$4,318.4~~$3,513.3 at 31 December ~~2016 as a result of~~2017 primarily due to the repayment of ~~commercial paper.~~the 1.2% U.S. Senior Note.



		~~Page No.~~
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements
Consolidated Income Statements – Three Months Ended 31 December ~~2016~~2017 and ~~2015~~2016	3
Consolidated Comprehensive Income Statements – Three Months Ended 31 December ~~2016~~2017 and ~~2015~~2016	4
Consolidated Balance Sheets – 31 December ~~2016~~2017 and 30 September ~~2016~~2017	5
Consolidated Statements of Cash Flows – Three Months Ended 31 December ~~2016~~2017 and ~~2015~~2016	6
Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44

PART II.	OTHER INFORMATION

Item 5.	Other Information	44
Item 6.	Exhibits	45
~~Signatures~~Signature	46
~~Exhibit Index~~		47



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



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



	31 December 2016								2017 Loss
	Total		Level 1		Level 2		Level 3		2017 Loss
Plant and Equipment – Continuing operations^(A)	$	1.4	$	—	$	—	$	1.4	$	45.7
Plant and Equipment – Discontinued operations^(A)	$	11.0	$	—	$	—	$	11.0	$	6.3


^(A)	The impact is reflected in ~~Other income (expense), net~~"Cost of sales" and relates to an equipment sale resulting from the ~~sale~~termination of ~~an equity affiliate.~~a contract in the Industrial Gases – Asia segment.


^(A)	For additional information on the impact of the U.S. Tax Cuts and Jobs Act, including our equity affiliate impact, refer to Note 17, Income Taxes.


Changes in Diluted Earnings per Share Attributable to Air Products								Changes in Diluted Earnings per Share Attributable to Air Products

	Three Months Ended								Three Months Ended
	31 December				Increase				31 December				Increase
	2016		2015		(Decrease)				2017		2016		(Decrease)
Diluted Earnings per Share
Net Income	$	1.37	$	1.67	$	(.30	)
Income from Discontinued Operations	.22		.38		(.16		)
Net income									$	.70	$	1.37	$	(.67	)
Income from discontinued operations									—		.22		(.22		)
Income from Continuing Operations – GAAP Basis	$	1.15	$	1.29	$	(.14	)		$	.70	$	1.15	$	(.45	)
Operating Income Impact (after-tax)
Underlying business
Volume					$	(.07	)						$	.19
Price/raw materials					(.01		)						.08
Costs					.19								(.15		)
Currency					(.03		)						.06
Business separation costs					(.06		)						.12
Cost reduction and asset actions					(.19		)						.19
Operating Income					$	(.17	)
Other (after-tax)
Total Operating Income Impact (after-tax)													$	.49
Other Impact (after-tax)
Equity affiliates' income					.02								$	.03
Interest expense					(.03		)
Other non-operating income (expense), net													.04
Income tax					.06								.08
Tax reform repatriation													(2.06		)
Tax reform rate change and other													.97
Tax costs associated with business separation					(.01		)						.01
Weighted average diluted shares					(.01		)						(.01		)
Other					$	.03
Total Other Impact (after-tax)													$	(.94	)
Total Change in Diluted Earnings per Share from Continuing Operations – GAAP Basis					$	(.14	)						$	(.45	)


	Continuing Operations														Continuing Operations
	Three Months Ended 31 December
2017 vs. 2016	Operating Income			Operating Margin^(A)		Income Tax Provision^(B)			Net Income			Diluted EPS
Q1 2018 vs. Q1 2017															Operating Income			Operating Margin^(A)		Equity Affiliates' Income			Income Tax Provision			Net Income			Diluted EPS
2018 GAAP															$	460.7		20.8	%	$	13.8		$	291.8		$	155.6		$	.70
2017 GAAP	$	328.1		17.4	%	$	78.4		$	251.6		$	1.15		328.3			17.4	%	38.0			78.4			251.6			1.15
2016 GAAP	372.5			20.0	%	96.4			280.9			1.29
Change GAAP	$	(44.4	)	(260	)bp	$	(18.0	)	$	(29.3	)	$	(.14	)	$	132.4		340	bp	$	(24.2	)	$	213.4		$	(96.0	)	$	(.45	)
% Change GAAP	(12		)%						(10		)%	(11		)%	40		%			(64		)%	272		%	(38		)%	(39		)%
2018 GAAP															$	460.7		20.8	%	$	13.8		$	291.8		$	155.6		$	.70
Tax reform repatriation^(B)															—			—	%	32.5			(420.5		)	453.0			2.06
Tax reform rate change and other^(B)															—			—	%	—			214.0			(214.0		)	(.97		)
2018 Non-GAAP Measure															$	460.7		20.8	%	$	46.3		$	85.3		$	394.6		$	1.79
2017 GAAP	$	328.1		17.4	%	$	78.4		$	251.6		$	1.15		$	328.3		17.4	%	$	38.0		$	78.4		$	251.6		$	1.15
Business separation costs	30.2			1.6	%	3.7			26.5			.12			32.5			1.7	%	—			3.7			26.5			.12
Tax costs associated with business separation	—			—	%	(2.7		)	2.7			.01			—			—	%	—			(2.7		)	2.7			.01
Cost reduction and asset actions	50.0			2.7	%	8.8			41.2			.19			50.0			2.7	%	—			8.8			41.2			.19
2017 Non-GAAP Measure	$	408.3		21.7	%	$	88.2		$	322.0		$	1.47		$	410.8		21.8	%	$	38.0		$	88.2		$	322.0		$	1.47
2016 GAAP	$	372.5		20.0	%	$	96.4		$	280.9		$	1.29
Business separation costs	12.0			.6	%	—			12.0			.06
2016 Non-GAAP Measure	$	384.5		20.6	%	$	96.4		$	292.9		$	1.35
Change Non-GAAP Measure	$	23.8		110	bp	$	(8.2	)	$	29.1		$	.12		$	49.9		(100	)bp	$	8.3		$	(2.9	)	$	72.6		$	.32
% Change Non-GAAP Measure	6		%						10		%	9		%	12		%			22		%	(3		)%	23		%	22		%


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


^(A)	Includes net income attributable to noncontrolling interests.



~~10.1~~	~~Amendment No. 5 dated as of 9 June 2016, to the Revolving Credit Agreement dated as of 30 April 2013.~~
	Exhibit No.	Description
~~10.2~~	10.1	Air Products and Chemicals, Inc. ~~Senior Management Severance Plan and Summary Plan Description effective 1 April 2016.~~Restricted Stock Unit Award Agreement for FY2018.

	10.2	Air Products and Chemicals, Inc. Performance Share Award Agreement for FY2018.

	10.3	Amended and Restated Employment Agreement, dated 14 November 2017, by and between Air Products and Chemicals, Inc. and Seifollah Ghasemi (Filed as Exhibit 10.1 to the Company's Form 8-K Report dated 14 November 2017.)

	10.4	Amended and Restated Air Products and Chemicals, Inc. Retirement Savings Plan effective 1 November 2017 with provisions effective 1 January 2018.

	10.5	Amended and Restated Air Products and Chemicals, Inc. Deferred Compensation Plan effective 1 January 2018.

	12.	Computation of Ratios of Earnings to Fixed Charges.

	31.1	Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.~~	32.1	Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

	101.INS	XBRL Instance Document. The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

	101.SCH	XBRL Taxonomy Extension Schema

	101.CAL	XBRL Taxonomy Extension Calculation Linkbase

	101.LAB	XBRL Taxonomy Extension Label Linkbase

	101.PRE	XBRL Taxonomy Extension Presentation Linkbase

	101.DEF	XBRL Taxonomy Extension Definition Linkbase

†	The certification attached as Exhibit 32 that accompanies this Quarterly Report on Form 10-Q, 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-Q, irrespective of any general incorporation language contained in such filing.



	Air Products and Chemicals, Inc.
	(Registrant)

Date: 26 January ~~27, 2017~~2018	By:	/s/ M. Scott Crocco
		M. Scott Crocco
		Executive Vice President and Chief Financial Officer



~~10.1~~	~~Form of Award Agreement under the Long-Term Incentive Plan of the Company for FY2017.~~

~~10.2~~	~~Form of Award Agreement under the Long-Term Incentive Plan of the Company for FY2017.~~

~~10.3~~	~~Amendment No. 2 to the Air Products and Chemicals, Inc. Retirement Savings Plan effective 3 January, 2017.~~

~~12.~~	~~Computation of Ratios of Earnings to Fixed Charges.~~

~~31.1~~	Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~	Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.~~	~~Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †~~

~~101.INS~~	~~XBRL Instance Document~~

~~101.SCH~~	~~XBRL Taxonomy Extension Schema~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase~~