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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~March 31,~~September 30, 2022


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

For the transition period from to


Commission file number			001-38730

LINDE PLC

(Exact name of registrant as specified in its charter)


Ireland						98-1448883
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)

10 Riverview Drive,						Forge
Danbury, Connecticut						43 Church Street West
United States 06810						Woking, Surrey GU21 6HT
						United Kingdom

(Address of principal executive offices) (Zip Code)
(203) 837 - 2000						+44 14 83 242200
(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report

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

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Ordinary shares (€0.001 nominal value per share)

LIN

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At ~~March 31,~~September 30, 2022, ~~503,281,693~~494,379,532 ordinary shares (€0.001 par value) of the Registrant were outstanding.

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INDEX

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Consolidated Statements of Income - Quarters Ended ~~March 31,~~Sept ember 30, 2022 and 2021	4


	Consolidated Statements of ~~Comprehensive~~ Income - ~~Quarters~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	5

	Consolidated Statements of Comprehensive Income - Quarters Ended September 30, 2022 and 2021	6

	Consolidated Statements of Comprehensive Income - Nine Months Ended Septemb er 30, 2022 and 2021	7

	Condensed Consolidated Balance Sheets - ~~March 31,~~September 30, 2022 and December 31, 2021	68

	Condensed Consolidated Statements of Cash Flows - ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	79

	Notes to Condensed Consolidated Financial Statements	810

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2426

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4145

Item 4.	Controls and Procedures	4145

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	4246

Item 1A.	Risk Factors	4246

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4246

Item 3.	Defaults Upon Senior Securities	4246

Item 4.	Mine Safety Disclosures	4246

Item 5.	Other Information	4246

Item 6.	Exhibits	4347

Signature		4448

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Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. They are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics, pandemics such as COVID-19, and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause future results or circumstances to differ materially from adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A. Risk Factors in Linde plc’s Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 28, 2022, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)


		Quarter Ended March 31,					Quarter Ended September 30,
		2022		2021			2022		2021
Sales	Sales	$	8,211	$	7,243	Sales	$	8,797	$	7,668
Cost of sales, exclusive of depreciation and amortization	Cost of sales, exclusive of depreciation and amortization	4,798		4,054		Cost of sales, exclusive of depreciation and amortization	5,285		4,368
Selling, general and administrative	Selling, general and administrative	802		787		Selling, general and administrative	770		793
Depreciation and amortization	Depreciation and amortization	1,112		1,166		Depreciation and amortization	1,045		1,163
Research and development	Research and development	35		35		Research and development	35		36
Cost reduction programs and other charges		(4)		(8)
Russia-Ukraine conflict and other charges						Russia-Ukraine conflict and other charges	15		26

Other income (expense) - net	Other income (expense) - net	12		4		Other income (expense) - net	(34)		10
Operating Profit	Operating Profit	1,480		1,213		Operating Profit	1,613		1,292
Interest expense - net	Interest expense - net	9		20		Interest expense - net	18		8
Net pension and OPEB cost (benefit), excluding service cost	Net pension and OPEB cost (benefit), excluding service cost	(64)		(49)		Net pension and OPEB cost (benefit), excluding service cost	(53)		(45)
Income From Continuing Operations Before Income Taxes and Equity Investments	Income From Continuing Operations Before Income Taxes and Equity Investments	1,535		1,242		Income From Continuing Operations Before Income Taxes and Equity Investments	1,648		1,329
Income taxes on continuing operations	Income taxes on continuing operations	369		268		Income taxes on continuing operations	391		321
Income From Continuing Operations Before Equity Investments	Income From Continuing Operations Before Equity Investments	1,166		974		Income From Continuing Operations Before Equity Investments	1,257		1,008
Income from equity investments	Income from equity investments	44		43		Income from equity investments	43		1
Income From Continuing Operations (Including Noncontrolling Interests)	Income From Continuing Operations (Including Noncontrolling Interests)	1,210		1,017		Income From Continuing Operations (Including Noncontrolling Interests)	1,300		1,009
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	—		1		Income from discontinued operations, net of tax	—		1
Net Income (Including Noncontrolling Interests)	Net Income (Including Noncontrolling Interests)	1,210		1,018		Net Income (Including Noncontrolling Interests)	1,300		1,010
Less: noncontrolling interests from continuing operations	Less: noncontrolling interests from continuing operations	(36)		(38)		Less: noncontrolling interests from continuing operations	(27)		(31)
Net Income – Linde plc	Net Income – Linde plc	$	1,174	$	980	Net Income – Linde plc	$	1,273	$	979

Net Income – Linde plc	Net Income – Linde plc					Net Income – Linde plc
Income from continuing operations	Income from continuing operations	$	1,174	$	979	Income from continuing operations	$	1,273	$	978
Income from discontinued operations	Income from discontinued operations	$	—	$	1	Income from discontinued operations	$	—	$	1

Per Share Data – Linde plc Shareholders	Per Share Data – Linde plc Shareholders					Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	2.31	$	1.87	Basic earnings per share from continuing operations	$	2.56	$	1.90
Basic earnings per share from discontinued operations	Basic earnings per share from discontinued operations	—		—		Basic earnings per share from discontinued operations	—		—
Basic earnings per share	Basic earnings per share	$	2.31	$	1.87	Basic earnings per share	$	2.56	$	1.90
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.30	$	1.86	Diluted earnings per share from continuing operations	$	2.54	$	1.88
Diluted earnings per share from discontinued operations	Diluted earnings per share from discontinued operations	—		—		Diluted earnings per share from discontinued operations	—		—
Diluted earnings per share	Diluted earnings per share	$	2.30	$	1.86	Diluted earnings per share	$	2.54	$	1.88

Weighted Average Shares Outstanding (000’s):	Weighted Average Shares Outstanding (000’s):					Weighted Average Shares Outstanding (000’s):
Basic shares outstanding	Basic shares outstanding	507,152		522,459		Basic shares outstanding	497,186		515,169
Diluted shares outstanding	Diluted shares outstanding	511,410		526,927		Diluted shares outstanding	501,151		520,079

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

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)


	Nine Months Ended September 30,
	2022		2021
Sales	$	25,465	$	22,495
Cost of sales, exclusive of depreciation and amortization	15,023		12,616
Selling, general and administrative	2,343		2,402
Depreciation and amortization	3,248		3,500
Research and development	107		105
Russia-Ukraine conflict and other charges	1,004		222

Other income (expense) - net	(58)		(3)
Operating Profit	3,682		3,647
Interest expense - net	32		46
Net pension and OPEB cost (benefit), excluding service cost	(179)		(143)
Income From Continuing Operations Before Income Taxes and Equity Investments	3,829		3,744
Income taxes on continuing operations	1,046		923
Income From Continuing Operations Before Equity Investments	2,783		2,821
Income from equity investments	137		81
Income From Continuing Operations (Including Noncontrolling Interests)	2,920		2,902
Income from discontinued operations, net of tax	—		3
Net Income (Including Noncontrolling Interests)	2,920		2,905
Less: noncontrolling interests from continuing operations	(101)		(105)
Net Income – Linde plc	$	2,819	$	2,800

Net Income – Linde plc
Income from continuing operations	$	2,819	$	2,797
Income from discontinued operations	$	—	$	3

Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations	$	5.62	$	5.39
Basic earnings per share from discontinued operations	—		0.01
Basic earnings per share	$	5.62	$	5.40
Diluted earnings per share from continuing operations	$	5.57	$	5.34
Diluted earnings per share from discontinued operations	—		0.01
Diluted earnings per share	$	5.57	$	5.35

Weighted Average Shares Outstanding (000’s):
Basic shares outstanding	501,743		518,802
Diluted shares outstanding	506,012		523,662

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

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

(UNAUDITED)


		Quarter Ended March 31,					Quarter Ended September 30,
		2022		2021			2022		2021
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	1,210	$	1,018	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	1,300	$	1,010

OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)					OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:	Translation adjustments:					Translation adjustments:
Foreign currency translation adjustments	Foreign currency translation adjustments	60		(657)		Foreign currency translation adjustments	(1,769)		(823)
Reclassification to net income	Reclassification to net income	—		(52)		Reclassification to net income	24		—
Income taxes	Income taxes	(12)		(6)		Income taxes	2		4
Translation adjustments	Translation adjustments	48		(715)		Translation adjustments	(1,743)		(819)
Funded status - retirement obligations (Note 8):	Funded status - retirement obligations (Note 8):					Funded status - retirement obligations (Note 8):
Retirement program remeasurements	Retirement program remeasurements	55		20		Retirement program remeasurements	66		52
Reclassifications to net income	Reclassifications to net income	19		43		Reclassifications to net income	24		43
Income taxes	Income taxes	(21)		(23)		Income taxes	(19)		(28)
Funded status - retirement obligations	Funded status - retirement obligations	53		40		Funded status - retirement obligations	71		67
Derivative instruments (Note 5):	Derivative instruments (Note 5):					Derivative instruments (Note 5):
Current unrealized gain (loss)	Current unrealized gain (loss)	18		21		Current unrealized gain (loss)	60		64
Reclassifications to net income	Reclassifications to net income	(23)		(2)		Reclassifications to net income	(54)		(25)
Income taxes	Income taxes	2		(5)		Income taxes	(2)		(10)
Derivative instruments	Derivative instruments	(3)		14		Derivative instruments	4		29

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	98		(661)		TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	(1,668)		(723)

COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	1,308		357		COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	(368)		287
Less: noncontrolling interests	Less: noncontrolling interests	(24)		(32)		Less: noncontrolling interests	15		(18)
COMPREHENSIVE INCOME (LOSS) - LINDE PLC	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	1,284	$	325	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	(353)	$	269

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

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

(UNAUDITED)


	Nine Months Ended September 30,
	2022		2021
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	2,920	$	2,905

OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:
Foreign currency translation adjustments	(3,279)		(1,068)
Reclassification to net income	(110)		(52)
Income taxes	(5)		(4)
Translation adjustments	(3,394)		(1,124)
Funded status - retirement obligations (Note 8):
Retirement program remeasurements	188		53
Reclassifications to net income	62		130
Income taxes	(47)		(53)
Funded status - retirement obligations	203		130
Derivative instruments (Note 5):
Current unrealized gain (loss)	170		104
Reclassifications to net income	(74)		(30)
Income taxes	(20)		(18)
Derivative instruments	76		56





TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	(3,115)		(938)

COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	(195)		1,967
Less: noncontrolling interests	(30)		(95)
COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	(225)	$	1,872

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

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

(UNAUDITED)


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	4,464	$	2,823	Cash and cash equivalents	$	3,756	$	2,823
Accounts receivable - net	Accounts receivable - net	4,845		4,499		Accounts receivable - net	4,599		4,499
Contract assets	Contract assets	100		134		Contract assets	104		134
Inventories	Inventories	1,766		1,733		Inventories	1,855		1,733
Prepaid and other current assets	Prepaid and other current assets	1,082		970		Prepaid and other current assets	889		970
Total Current Assets	Total Current Assets	12,257		10,159		Total Current Assets	11,203		10,159
Property, plant and equipment - net	Property, plant and equipment - net	25,595		26,003		Property, plant and equipment - net	22,586		26,003

Goodwill	Goodwill	26,822		27,038		Goodwill	24,565		27,038
Other intangible assets - net	Other intangible assets - net	13,506		13,802		Other intangible assets - net	11,810		13,802
Other long-term assets	Other long-term assets	4,587		4,603		Other long-term assets	4,159		4,603
Total Assets	Total Assets	$	82,767	$	81,605	Total Assets	$	74,323	$	81,605
Liabilities and equity	Liabilities and equity					Liabilities and equity
Accounts payable	Accounts payable	$	3,387	$	3,503	Accounts payable	$	3,067	$	3,503
Short-term debt	Short-term debt	2,549		1,163		Short-term debt	3,179		1,163
Current portion of long-term debt	Current portion of long-term debt	1,074		1,709		Current portion of long-term debt	1,551		1,709
Contract liabilities	Contract liabilities	3,035		2,940		Contract liabilities	2,902		2,940

Other current liabilities	Other current liabilities	4,461		4,328		Other current liabilities	4,362		4,328
Total Current Liabilities	Total Current Liabilities	14,506		13,643		Total Current Liabilities	15,061		13,643
Long-term debt	Long-term debt	12,833		11,335		Long-term debt	10,608		11,335
Other long-term liabilities	Other long-term liabilities	11,038		11,186		Other long-term liabilities	9,715		11,186

Total Liabilities	Total Liabilities	38,377		36,164		Total Liabilities	35,384		36,164
Redeemable noncontrolling interests	Redeemable noncontrolling interests	13		13		Redeemable noncontrolling interests	13		13
Linde plc Shareholders’ Equity:	Linde plc Shareholders’ Equity:					Linde plc Shareholders’ Equity:
Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2022 issued: 552,012,862 ordinary shares; 2021 issued: 552,012,862 ordinary shares		1		1
Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2022 and 2021 issued: 552,012,862 ordinary shares						Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2022 and 2021 issued: 552,012,862 ordinary shares	1		1
Additional paid-in capital	Additional paid-in capital	39,972		40,180		Additional paid-in capital	40,011		40,180
Retained earnings	Retained earnings	19,387		18,710		Retained earnings	19,845		18,710
Accumulated other comprehensive income (loss) (Note 11)	Accumulated other comprehensive income (loss) (Note 11)	(4,938)		(5,048)		Accumulated other comprehensive income (loss) (Note 11)	(8,094)		(5,048)
Less: Treasury shares, at cost (2022 – 48,731,169 shares and 2021 – 43,331,983 shares)		(11,459)		(9,808)
Less: Treasury shares, at cost (2022 – 57,633,330 shares and 2021 – 43,331,983 shares)						Less: Treasury shares, at cost (2022 – 57,633,330 shares and 2021 – 43,331,983 shares)	(14,135)		(9,808)
Total Linde plc Shareholders’ Equity	Total Linde plc Shareholders’ Equity	42,963		44,035		Total Linde plc Shareholders’ Equity	37,628		44,035
Noncontrolling interests	Noncontrolling interests	1,414		1,393		Noncontrolling interests	1,298		1,393
Total Equity	Total Equity	44,377		45,428		Total Equity	38,926		45,428
Total Liabilities and Equity	Total Liabilities and Equity	$	82,767	$	81,605	Total Liabilities and Equity	$	74,323	$	81,605

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

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)

(UNAUDITED)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2022		2021			2022		2021
Increase (Decrease) in Cash and Cash Equivalents	Increase (Decrease) in Cash and Cash Equivalents					Increase (Decrease) in Cash and Cash Equivalents
Operations	Operations					Operations
Net income - Linde plc	Net income - Linde plc	$	1,174	$	980	Net income - Linde plc	$	2,819	$	2,800
Less: Income from discontinued operations, net of tax and noncontrolling interests	Less: Income from discontinued operations, net of tax and noncontrolling interests	—		(1)		Less: Income from discontinued operations, net of tax and noncontrolling interests	—		(3)
Add: Noncontrolling interests from continuing operations	Add: Noncontrolling interests from continuing operations	36		38		Add: Noncontrolling interests from continuing operations	101		105
Income from continuing operations (including noncontrolling interests)	Income from continuing operations (including noncontrolling interests)	1,210		1,017		Income from continuing operations (including noncontrolling interests)	2,920		2,902
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Cost reduction programs and other charges, net of payments		(34)		(76)
Russia-Ukraine conflict and other charges, net of payments						Russia-Ukraine conflict and other charges, net of payments	909		83

Depreciation and amortization	Depreciation and amortization	1,112		1,166		Depreciation and amortization	3,248		3,500
Deferred income taxes	Deferred income taxes	(59)		(65)		Deferred income taxes	(412)		(184)
Share-based compensation	Share-based compensation	34		29		Share-based compensation	78		95
Working capital:	Working capital:					Working capital:
Accounts receivable	Accounts receivable	(340)		(178)		Accounts receivable	(572)		(539)
Inventory	Inventory	(35)		(60)		Inventory	(300)		(77)
Prepaid and other current assets	Prepaid and other current assets	(107)		(64)		Prepaid and other current assets	(111)		(25)
Payables and accruals	Payables and accruals	51		69		Payables and accruals	376		131
Contract assets and liabilities, net	Contract assets and liabilities, net	192		191		Contract assets and liabilities, net	369		530
Pension contributions	Pension contributions	(13)		(12)		Pension contributions	(44)		(32)
Long-term assets, liabilities and other	Long-term assets, liabilities and other	(11)		92		Long-term assets, liabilities and other	308		108
Net cash provided by operating activities	Net cash provided by operating activities	2,000		2,109		Net cash provided by operating activities	6,769		6,492
Investing	Investing					Investing
Capital expenditures	Capital expenditures	(649)		(762)		Capital expenditures	(2,237)		(2,247)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(43)		(10)		Acquisitions, net of cash acquired	(110)		(31)
Divestitures and asset sales, net of cash divested		27		21
Divestitures, net of cash divested and asset sales						Divestitures, net of cash divested and asset sales	140		147
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(665)		(751)		Net cash provided by (used for) investing activities	(2,207)		(2,131)
Financing	Financing					Financing
Short-term debt borrowings (repayments) - net	Short-term debt borrowings (repayments) - net	1,416		704		Short-term debt borrowings (repayments) - net	2,229		369
Long-term debt borrowings	Long-term debt borrowings	2,296		34		Long-term debt borrowings	2,291		2,260
Long-term debt repayments	Long-term debt repayments	(1,166)		(57)		Long-term debt repayments	(1,725)		(821)
Issuances of ordinary shares	Issuances of ordinary shares	10		17		Issuances of ordinary shares	24		39
Purchases of ordinary shares	Purchases of ordinary shares	(1,719)		(868)		Purchases of ordinary shares	(4,478)		(3,251)
Cash dividends - Linde plc shareholders	Cash dividends - Linde plc shareholders	(592)		(553)		Cash dividends - Linde plc shareholders	(1,758)		(1,648)

Noncontrolling interest transactions and other	Noncontrolling interest transactions and other	(1)		(247)		Noncontrolling interest transactions and other	(62)		(319)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	244		(970)		Net cash provided by (used for) financing activities	(3,479)		(3,371)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	62		(46)		Effect of exchange rate changes on cash and cash equivalents	(150)		(44)
Change in cash and cash equivalents	Change in cash and cash equivalents	1,641		342		Change in cash and cash equivalents	933		946
Cash and cash equivalents, beginning-of-period	Cash and cash equivalents, beginning-of-period	2,823		3,754		Cash and cash equivalents, beginning-of-period	2,823		3,754

Cash and cash equivalents, end-of-period	Cash and cash equivalents, end-of-period	$	4,464	$	4,096	Cash and cash equivalents, end-of-period	$	3,756	$	4,700

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

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INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notes to Condensed Consolidated Financial Statements - Linde plc and Subsidiaries (Unaudited)

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1. Summary of Significant Accounting Policies

Presentation of Condensed Consolidated Financial Statements - In the opinion of Linde management, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods presented and such adjustments are of a normal recurring nature. The accompanying condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements of Linde plc and subsidiaries in Linde's 2021 Annual Report on Form 10-K. There have been no material changes to the company’s significant accounting policies during 2022.

Reclassifications – Certain prior periods' amounts have been reclassified to conform to the current year’s presentation.

2. ~~Cost Reduction Programs~~Russia-Ukraine Conflict and Other Charges

2022 Charges

~~Cost reduction programs~~Other charges were $15 million (benefit of $10 million, after tax) for the quarter ended September 30, 2022 and primarily related to the sale of the GIST business. Total Russia-Ukraine conflict and other charges were $1,004 million ($878 million, after tax and noncontrolling interests) for the nine months ended September 30, 2022, largely attributable to the Russia-Ukraine conflict.

The following tables summarize the company's pre-tax charges for the nine months ended September 30, 2022:


	Nine Months Ended September 30, 2022
(millions of dollars)	Russia deconsolidation charges		Other Russia related charges		Total Russia charges		Merger-related and other charges		Total
Americas	$	—	$	—	$	—	$	3	$	3
EMEA	733		2		735		49		784
APAC	—		—		—		29		29
Engineering	54		112		166		(9)		157
Other	—		—		—		31		31
Total	$	787	$	114	$	901	$	103	$	1,004

Russia-Ukraine Conflict

Deconsolidation of Russian entities

In response to the Russian invasion of Ukraine, multiple jurisdictions, including Europe and the U.S., have imposed several tranches of economic sanctions on Russia. As a result, Linde reassessed its ability to control its Russian subsidiaries and determined that as of June 30, 2022 it can no longer exercise control over these entities. As such, Linde deconsolidated its Russian gas and engineering business entities as of June 30, 2022. The deconsolidation of the company's Russian gas and engineering business entities resulted in a loss of $787 million ($730 million after tax) during the second quarter.

The fair value of Linde’s Russian subsidiaries was determined using a probability weighted discounted cash flow model, which resulted in the recognition of a $407 million loss on deconsolidation when compared to the carrying value of the entities. This loss is recorded within Russia-Ukraine conflict and other charges in the consolidated statements of income.

Upon deconsolidation an investment was recorded, which represents the fair value of net ~~benefit~~assets. The company did not receive any consideration, cash or otherwise, as part of ~~$4 million~~the deconsolidation. Linde will maintain its interest in its Russian subsidiaries and will continue to comply with sanctions and government restrictions as it continues to develop divestiture options. The investment will be monitored for impairment in future periods.

Receivables, primarily loans receivable, with newly deconsolidated entities were reassessed for collectability resulting in a write-off of approximately $380 million.

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Other Russia related charges

Other charges related specifically to the Russia-Ukraine conflict were $114 million ($84 million after tax) for the ~~three~~ nine months ended ~~March 31,~~September 30, 2022, ~~($1 million, after tax).~~ ~~Total cost reduction program related charges were $4 million for~~ and are primarily comprised of impairments of assets which are maintained by international entities in support of the ~~three months ended March 31, 2022 ($4 million, after tax), primarily~~Russian business.

Merger-related and other charges

Merger related ~~to severance in the APAC segment. Merger-related costs~~ and other charges were ~~a benefit of $8~~$15 million for the ~~three months~~quarter ended ~~March 31,~~September 30, 2022, ~~(benefit of $5 million after tax),~~ primarily related to ~~a gain on~~the sale of ~~an interest~~the GIST business. On September 30, 2022, Linde completed the sale of its GIST business. The total consideration for the sale was $292 million, $184 million of which was paid in cash with the remaining $108 million to be paid in future periods. The sale of the GIST business resulted in a ~~joint venture.~~loss of $21 million (benefit of $3 million, after tax) recorded within the Russia-Ukraine conflict and other charges in the consolidated statement of income.

Merger related and other charges were $103 million for the nine months ended September 30, 2022, primarily related to the impairment of an equity method investment in the EMEA segment.

Cash Requirements

The total cash requirements of the Russia-Ukraine conflict and other charges incurred during the nine months ended September 30, 2022 are expected to be immaterial. Liabilities accrued are expected to be paid through 2023. Russia-Ukraine conflict and other charges, net of payments in the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 also reflects the impact of cash payments of liabilities accrued as of December 31, 2021.

The following table summarizes the activities related to the company's ~~cost reduction related~~Russia-Ukraine conflict and other charges for the ~~three~~nine months ended ~~March 31,~~September 30, 2022:


(millions of dollars)	(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total		(millions of dollars)	Total Russia charges		Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total

Balance, December 31, 2021	Balance, December 31, 2021	$	384	$	38	$	422	$	31	$	453	Balance, December 31, 2021	$	—	$	384	$	38	$	422	$	31	$	453
2022 Cost Reduction Programs and Other Charges		4		—		4		(8)		(4)
2022 Russia-Ukraine conflict and other charges												2022 Russia-Ukraine conflict and other charges	901		30		16		46		57		1,004
Less: Cash payments / receipts	Less: Cash payments / receipts	(34)		(1)		(35)		5		(30)		Less: Cash payments / receipts			(99)		(15)		(114)		19		(95)

Less: Non-cash charges												Less: Non-cash charges	(901)		—		(7)		(7)		(76)		(984)
Foreign currency translation and other	Foreign currency translation and other	(8)		(3)		(11)		—		(11)		Foreign currency translation and other	—		(41)		(5)		(46)		(3)		(49)
Balance, March 31, 2022		$	346	$	34	$	380	$	28	$	408
Balance, September 30, 2022												Balance, September 30, 2022	$	—	$	274	$	27	$	301	$	28	$	329

2021 Charges

Cost reduction programs and other charges were ~~a net benefit of $8~~$26 million and $222 million for the ~~three~~quarter and nine months ended ~~March 31,~~September 30, 2021, respectively ($2858 million and $228 million after tax).

Total cost reduction program related charges were ~~$44~~$29 million and $277 million ($3425 million and $209 million after tax), for the ~~three~~quarter and nine months ended ~~March 31,~~September 30, 2021, ~~which~~respectively. These expenses consisted primarily of severance charges of ~~$26~~$20 million and $228 million and other charges of ~~$18~~$9 million and $49 million for the quarter and nine months ended September 30, 2021, respectively, related to the execution of the company's synergistic ~~actions.~~ actions including location consolidations and business rationalization projects, process harmonization, and associated non-recurring costs.

Merger-related and other charges were benefits of $3 million and $55 million for the quarter and nine months ended September 30, 2021, respectively (charge of $33 million and a benefit of ~~$52 million for the three months ended March 31, 2021 ($62~~$19 million, after tax),. The 2021 year-to-date pre-tax benefit was primarily due to a $52 million gain triggered by a joint venture deconsolidation in the APAC ~~segment~~segment.

In addition, the nine months ended September 30, 2021 include net income tax charges of $38 million, primarily related to (i) $81 million of expense due to the revaluation of a net deferred tax liability resulting from a tax rate increase in the United Kingdom enacted in the current quarter, and ~~other~~(ii) a tax ~~adjustments.~~settlement benefit of $33 million.

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The quarter and nine months ended September 30, 2021 also include an impairment charge of $35 million ($35 million, after tax) related to a joint venture in the APAC segment. The charge is shown within income from equity investments on the consolidated statements of income.

Classification in the condensed consolidated financial statements

The costs are shown within operating profit in a separate line item on the consolidated statements of income. On the condensed consolidated statements of cash flows, the impact of these costs, net of cash payments, is shown as an adjustment to reconcile net income to net cash provided by operating activities. In Note 10 Segments, Linde excluded these costs from its management definition of segment operating profit; a reconciliation of segment operating profit to consolidated operating profit is shown within the segment operating profit table.

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3. Supplemental Information

Receivables

Linde applies loss rates that are lifetime expected credit losses at initial recognition of the receivables. These expected loss rates are based on an analysis of the actual historical default rates for each business, taking regional circumstances into account. If necessary, these historical default rates are adjusted to reflect the impact of current changes in the macroeconomic environment using forward-looking information. The loss rates are also evaluated based on the expectations of the responsible management team regarding the collectability of the receivables. Gross trade receivables aged less than one year were ~~$4,808~~$4,574 million and $4,425 million at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively, and gross receivables aged greater than one year were ~~$278~~$285 million and $329 million at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. Other receivables were ~~$158~~$117 million and $150 million at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. Receivables aged greater than one year are generally fully reserved unless specific circumstances warrant exceptions, such as those backed by federal governments.

Accounts receivable net of reserves were ~~$4,845~~$4,599 million at ~~March 31,~~September 30, 2022 and $4,499 million at December 31, 2021. Allowances for expected credit losses were ~~$399~~$377 million at ~~March 31,~~September 30, 2022 and $405 million at December 31, 2021. Provisions for expected credit losses were ~~$35~~$112 million and ~~$39~~$101 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively. The allowance activity in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 related to write-offs of uncollectible amounts, net of recoveries and currency movements is not material.

Inventories

The following is a summary of Linde's consolidated inventories:


(Millions of dollars)	(Millions of dollars)	March 31, 2022		December 31, 2021		(Millions of dollars)	September 30, 2022		December 31, 2021
Inventories	Inventories					Inventories
Raw materials and supplies	Raw materials and supplies	$	440	$	399	Raw materials and supplies	$	477	$	399
Work in process	Work in process	318		334		Work in process	321		334
Finished goods	Finished goods	1,008		1,000		Finished goods	1,057		1,000
Total inventories	Total inventories	$	1,766	$	1,733	Total inventories	$	1,855	$	1,733

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4. Debt

The following is a summary of Linde's outstanding debt at ~~March 31,~~September 30, 2022 and December 31, 2021:


(Millions of dollars)	(Millions of dollars)	March 31, 2022		December 31, 2021		(Millions of dollars)	September 30, 2022		December 31, 2021
SHORT-TERM	SHORT-TERM					SHORT-TERM
Commercial paper	Commercial paper	$	2,249	$	278	Commercial paper	$	2,954	$	278
Other bank borrowings (primarily non U.S.)	Other bank borrowings (primarily non U.S.)	300		885		Other bank borrowings (primarily non U.S.)	225		885
Total short-term debt	Total short-term debt	2,549		1,163		Total short-term debt	3,179		1,163
LONG-TERM (a)	LONG-TERM (a)					LONG-TERM (a)
(U.S. dollar denominated unless otherwise noted)	(U.S. dollar denominated unless otherwise noted)					(U.S. dollar denominated unless otherwise noted)
0.250% Euro denominated notes due 2022 (b) (c)	0.250% Euro denominated notes due 2022 (b) (c)	—		1,137		0.250% Euro denominated notes due 2022 (b) (c)	—		1,137
2.20% Notes due 2022(e)	2.20% Notes due 2022(e)	500		500		2.20% Notes due 2022(e)	—		500
2.70% Notes due 2023	2.70% Notes due 2023	500		500		2.70% Notes due 2023	500		500
2.00% Euro denominated notes due 2023 (b)	2.00% Euro denominated notes due 2023 (b)	735		759		2.00% Euro denominated notes due 2023 (b)	642		759
5.875% GBP denominated notes due 2023 (b)	5.875% GBP denominated notes due 2023 (b)	415		432		5.875% GBP denominated notes due 2023 (b)	345		432
1.20% Euro denominated notes due 2024	1.20% Euro denominated notes due 2024	608		625		1.20% Euro denominated notes due 2024	539		625
1.875% Euro denominated notes due 2024 (b)	1.875% Euro denominated notes due 2024 (b)	342		356		1.875% Euro denominated notes due 2024 (b)	298		356
2.65% Notes due 2025	2.65% Notes due 2025	399		399		2.65% Notes due 2025	399		399
1.625% Euro denominated notes due 2025	1.625% Euro denominated notes due 2025	550		565		1.625% Euro denominated notes due 2025	487		565
0.00% Euro denominated notes due 2026	0.00% Euro denominated notes due 2026	777		799		0.00% Euro denominated notes due 2026	689		799
3.20% Notes due 2026	3.20% Notes due 2026	725		725		3.20% Notes due 2026	725		725
3.434% Notes due 2026	3.434% Notes due 2026	198		197		3.434% Notes due 2026	198		197
1.652% Euro denominated notes due 2027	1.652% Euro denominated notes due 2027	91		94		1.652% Euro denominated notes due 2027	80		94
0.250% Euro denominated notes due 2027	0.250% Euro denominated notes due 2027	828		850		0.250% Euro denominated notes due 2027	734		850
1.00% Euro denominated notes due 2027 (d)	1.00% Euro denominated notes due 2027 (d)	551		—		1.00% Euro denominated notes due 2027 (d)	488		—
1.00% Euro denominated notes due 2028 (b)	1.00% Euro denominated notes due 2028 (b)	824		879		1.00% Euro denominated notes due 2028 (b)	689		879
1.10% Notes due 2030	1.10% Notes due 2030	696		696		1.10% Notes due 2030	696		696
1.90% Euro denominated notes due 2030	1.90% Euro denominated notes due 2030	115		118		1.90% Euro denominated notes due 2030	102		118
1.375% Euro denominated notes due 2031 (d)	1.375% Euro denominated notes due 2031 (d)	821		—		1.375% Euro denominated notes due 2031 (d)	728		—
0.550% Euro denominated notes due 2032	0.550% Euro denominated notes due 2032	824		847		0.550% Euro denominated notes due 2032	730		847
0.375% Euro denominated notes due 2033	0.375% Euro denominated notes due 2033	550		565		0.375% Euro denominated notes due 2033	487		565
1.625% Euro denominated notes due 2035 (d)	1.625% Euro denominated notes due 2035 (d)	874		—		1.625% Euro denominated notes due 2035 (d)	773		—
3.55% Notes due 2042	3.55% Notes due 2042	664		664		3.55% Notes due 2042	665		664
2.00% Notes due 2050	2.00% Notes due 2050	296		296		2.00% Notes due 2050	296		296
1.00% Euro denominated notes due 2051	1.00% Euro denominated notes due 2051	767		788		1.00% Euro denominated notes due 2051	679		788
Non U.S borrowings	Non U.S borrowings	247		243		Non U.S borrowings	180		243
Other	Other	10		10		Other	10		10
		13,907		13,044			12,159		13,044
Less: current portion of long-term debt	Less: current portion of long-term debt	(1,074)		(1,709)		Less: current portion of long-term debt	(1,551)		(1,709)
Total long-term debt	Total long-term debt	12,833		11,335		Total long-term debt	10,608		11,335
Total debt	Total debt	$	16,456	$	14,207	Total debt	$	15,338	$	14,207

(a)Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable.

(b)~~March 31,~~September 30, 2022 and December 31, 2021 included a cumulative $4$46 million and $42 million adjustment to carrying value, respectively, related to hedge accounting of interest rate swaps. Refer to Note 5.

(c)In January 2022, Linde repaid €1.0 billion of 0.250% notes that became due.

(d)In March 2022, Linde issued €500 million of 1.000% notes due 2027, €750 million of 1.375% notes due 2031, and €800 million of 1.625% notes due 2035.

(e)In May 2022, Linde repaid $500 million of 2.20% notes due in August 2022. There was no impact to interest within the consolidated statements of income.

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The company maintains a $5 billion unsecured revolving credit agreement with a syndicate of banking institutions that expires March 26, 2024. There are no financial maintenance covenants contained within the credit agreement. No borrowings were outstanding under the credit agreement as of ~~March 31,~~September 30, 2022.

5. Financial Instruments

In its normal operations, Linde is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, and energy and commodity costs. The objective of financial risk management at Linde is to minimize the negative impact of such fluctuations on the company’s earnings and cash flows. To manage these risks, among other strategies, Linde routinely enters into various derivative financial instruments (“derivatives”) including interest-rate swap and treasury rate lock agreements, currency-swap agreements, forward contracts, currency options, and commodity-swap agreements. These instruments are not entered into for trading purposes and Linde only uses commonly traded and non-leveraged instruments.

There are 3three types of derivatives that the company enters into: (i) those relating to fair-value exposures, (ii) those relating to cash-flow exposures, and (iii) those relating to foreign currency net investment exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions; and net investment exposures relate to the impact of foreign currency exchange rate changes on the carrying value of net assets denominated in foreign currencies.

When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge, cash-flow hedge, or a net investment hedge. Currently, Linde designates all interest-rate and treasury-rate locks as hedges for accounting purposes; however, cross-currency contracts are generally not designated as hedges for accounting purposes. Certain currency contracts related to forecasted transactions are designated as hedges for accounting purposes. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective through the use of a qualitative assessment, then hedge accounting will be discontinued prospectively.

Counterparties to Linde's derivatives are major banking institutions with credit ratings of investment grade or better. The company has Credit Support Annexes ("CSAs") in place for certain entities with its principal counterparties to minimize potential default risk and to mitigate counterparty risk. Under the CSAs, the fair values of derivatives for the purpose of interest rate and currency management are collateralized with cash on a regular basis. As of ~~March 31,~~September 30, 2022, the impact of such collateral posting arrangements on the fair value of derivatives was insignificant. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any losses would be immaterial.

The following table is a summary of the notional amount and fair value of derivatives outstanding at ~~March 31,~~September 30, 2022 and December 31, 2021 for consolidated subsidiaries:


						Fair Value													Fair Value
		Notional Amounts				Assets (a)				Liabilities (a)					Notional Amounts				Assets (a)				Liabilities (a)
(Millions of dollars)	(Millions of dollars)	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		(Millions of dollars)	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Derivatives Not Designated as Hedging Instruments:	Derivatives Not Designated as Hedging Instruments:													Derivatives Not Designated as Hedging Instruments:
Currency contracts:	Currency contracts:													Currency contracts:
Balance sheet items	Balance sheet items	$	4,460	$	4,427	$	25	$	22	$	19	$	17	Balance sheet items	$	3,237	$	4,427	$	36	$	22	$	17	$	17
Forecasted transactions	Forecasted transactions	415		537		7		6		11		11		Forecasted transactions	471		537		11		6		25		11
Cross-currency swaps	Cross-currency swaps	140		148		18		21		5		4		Cross-currency swaps	60		148		1		21		2		4
Total	Total	$	5,015	$	5,112	$	50	$	49	$	35	$	32	Total	$	3,768	$	5,112	$	48	$	49	$	44	$	32
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:													Derivatives Designated as Hedging Instruments:

Currency contracts:	Currency contracts:													Currency contracts:

Forecasted transactions	Forecasted transactions	693		758		14		14		32		3		Forecasted transactions	323		758		10		14		4		3

Commodity contracts	Commodity contracts	N/A		N/A		56		49		—		—		Commodity contracts	N/A		N/A		20		49		2		—

Interest rate swaps	Interest rate swaps	885		1,251		7		24		19		—		Interest rate swaps	784		1,251		—		24		59		—
Total Hedges	Total Hedges	$	1,578	$	2,009	$	77	$	87	$	51	$	3	Total Hedges	$	1,107	$	2,009	$	30	$	87	$	65	$	3
Total Derivatives	Total Derivatives	$	6,593	$	7,121	$	127	$	136	$	86	$	35	Total Derivatives	$	4,875	$	7,121	$	78	$	136	$	109	$	35

(a)~~March 31,~~Amounts as at September 30, 2022 and December 31, 2021 included current assets of ~~$109~~$72 million and $101 million which are recorded in prepaid and other current assets; long-term assets of ~~$18~~$6 million and $35 million which are recorded in other long-term assets; current liabilities of ~~$40~~$42 million and $27 million which are recorded in other current liabilities; and long-term liabilities of ~~$46~~$67 million and $8 million which are recorded in other long-term liabilities.

Balance Sheet Items

Foreign currency contracts related to balance sheet items consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on recorded balance sheet assets and liabilities denominated in currencies other than the functional currency of the related operating unit. Certain forward currency contracts are entered into to protect underlying monetary assets and liabilities denominated in foreign currencies from foreign exchange risk and are not designated as hedging instruments. For balance sheet items that are not designated as hedging instruments, the fair value adjustments on these contracts are offset by the fair value adjustments recorded on the underlying monetary assets and liabilities.

Forecasted Transactions

Foreign currency contracts related to forecasted transactions consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on (1) forecasted purchases of capital-related equipment and services, (2) forecasted sales, or (3) other forecasted cash flows denominated in currencies other than the functional currency of the related operating units. For forecasted transactions that are designated as cash flow hedges, fair value adjustments are recorded to accumulated other comprehensive income ("AOCI") with deferred amounts reclassified to earnings over the same time period as the income statement impact of the associated forecasted transaction. For forecasted transactions that do not qualify for cash flow hedging relationships, fair value adjustments are recorded directly to earnings.

Cross-Currency Swaps

Cross-currency interest rate swaps are ~~entered into~~used to limit the foreign currency risk of future principal and interest cash flows associated with intercompany loans denominated in non-functional currencies. The fair value adjustments on the cross-currency swaps are recorded to earnings, where they are offset by fair value adjustments on the underlying intercompany loan or bond.

Commodity Contracts

Commodity contracts are ~~entered into~~used to manage the exposure to fluctuations in commodity prices, which arise in the normal course of business from its procurement transactions. Commodity price fluctuations are largely covered through contractual pass through to customers. To reduce the extent of the remaining risk, Linde enters into a limited number of electricity, natural gas, and propane gas derivatives. For forecasted transactions that are designated as cash flow hedges, fair value adjustments are recorded to accumulated other comprehensive income ("AOCI") with deferred amounts reclassified to earnings over the same time period as the income statement impact of the associated purchase.

Net Investment Hedges

As of ~~March 31,~~September 30, 2022, Linde has ~~€6.9~~€7.5 billion ($~~7.7~~7.5 billion) Euro-denominated notes and intercompany loans that are designated as hedges of the net investment positions in foreign operations. Since hedge inception, the deferred gain recorded within the cumulative translation adjustment component of AOCI in the condensed consolidated balance sheets and the consolidated statements of comprehensive income is ~~$269~~$1,191 million (deferred gain of ~~$129~~$512 million and $1,051 million recorded for the ~~three~~quarter and nine months ended ~~March 31,~~September 30, 2022).

As of ~~March 31,~~September 30, 2022, Linde has exchange rate movements relating to previously designated hedges that remain in AOCI isat a loss of $42 million. These movements will remain in AOCI, until appropriate, such as upon sale or liquidation of the related foreign operations at which time amounts will be reclassified to the consolidated ~~statement~~statements of income.

Interest Rate Swaps

Linde uses interest rate swaps to hedge the exposure to changes in the fair value of financial assets and financial liabilities as a result of interest rate changes. These interest rate swaps effectively convert fixed-rate interest exposures to variable rates; fair value adjustments are recognized in earnings along with an equally offsetting charge/benefit to earnings for the changes in the fair value of the underlying financial asset or financial liability (See Note 4).

Derivatives' Impact on Consolidated Statements of Income

The following table summarizes the impact of the company’s derivatives on the consolidated statements of income:


		Amount of Pre-Tax Gain (Loss) Recognized in Earnings *					Amount of Pre-Tax Gain (Loss) Recognized in Earnings *
		Quarter Ended March 31,					Quarter Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	(Millions of dollars)	2022		2021		(Millions of dollars)	2022		2021		2022		2021
Derivatives Not Designated as Hedging Instruments	Derivatives Not Designated as Hedging Instruments					Derivatives Not Designated as Hedging Instruments
Currency contracts:	Currency contracts:					Currency contracts:
Balance sheet items	Balance sheet items					Balance sheet items
Debt-related	Debt-related	$	51	$	19	Debt-related	$	(52)	$	(13)	$	(42)	$	16
Other balance sheet items	Other balance sheet items	(12)		4		Other balance sheet items	19		2		11		9

Total	Total	$	39	$	23	Total	$	(33)	$	(11)	$	(31)	$	25

* The gains (losses) on balance sheet items are offset by gains (losses) recorded on the underlying hedged assets and liabilities. Accordingly, the gains (losses) for the derivatives and the underlying hedged assets and liabilities related to debt items are recorded in the consolidated statements of income as interest expense-net. Other balance sheet items and anticipated net income gains (losses) are generally recorded in the consolidated statements of income as other income (expenses)-net.

The amounts of gain or loss recognized in AOCI and reclassified to the consolidated statement of income was ~~immaterial~~not material for the quarter and ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively. Net ~~losses~~impacts expected to be reclassified to earnings during the next twelve months are also not material.

6. Fair Value Disclosures

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 in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes assets and liabilities measured at fair value on a recurring basis:


		Fair Value Measurements Using													Fair Value Measurements Using
		Level 1				Level 2				Level 3					Level 1				Level 2				Level 3
(Millions of dollars)	(Millions of dollars)	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		(Millions of dollars)	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Assets	Assets													Assets
Derivative assets	Derivative assets	$	—	$	—	$	127	$	136	$	—	$	—	Derivative assets	$	—	$	—	$	78	$	136	$	—	$	—
Investments and securities*	Investments and securities*	38		42		—		—		17		20		Investments and securities*	20		42		—		—		12		20
Total	Total	$	38	$	42	$	127	$	136	17		$	20	Total	$	20	$	42	$	78	$	136	12		$	20

Liabilities	Liabilities													Liabilities
Derivative liabilities	Derivative liabilities	$	—	$	—	$	86	$	35	$	—	$	—	Derivative liabilities	$	—	$	—	$	109	$	35	$	—	$	—

* Investments and securities are recorded in prepaid and other current assets and other long-term assets in the company's condensed consolidated balance sheets.

Level 1 investments and securities are marketable securities traded on an exchange. Level 2 investments are based on market prices obtained from independent brokers or determined using quantitative models that use as their basis readily observable market parameters that are actively quoted and can be validated through external sources, including third-party pricing services, brokers and market transactions. Level 3 investments and securities consist of a venture fund. For the valuation, Linde uses the net asset value received as part of the fund's quarterly reporting, which for the most part is not based on quoted prices in active markets. In order to reflect current market conditions, Linde proportionally adjusts ~~these~~the investment value by observable market data (stock exchange prices) or current transaction prices.

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Changes in level 3 investments and securities were immaterial.

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The fair value of cash and cash equivalents, short-term debt, accounts receivable-net, and accounts payable approximate carrying value because of the short-term maturities of these instruments.

The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues. Long-term debt is categorized within either Level 1 or Level 2 of the fair value hierarchy depending on the trading volume of the issues and whether or not they are actively quoted in the market as opposed to traded through over-the-counter transactions. At ~~March 31,~~September 30, 2022, the estimated fair value of Linde’s long-term debt portfolio was ~~$13,415~~$10,298 million versus a carrying value of ~~$13,907~~$12,159 million. At December 31, 2021, the estimated fair value of Linde’s long-term debt portfolio was $13,219 million versus a carrying value of $13,044 million. Differences between the carrying value and the fair value are attributable to fluctuations in interest rates subsequent to when the debt was issued and relative to stated coupon rates.

7. Earnings Per Share – Linde plc Shareholders

Basic and diluted earnings per share is computed by dividing Income from continuing operations, Income from discontinued operations and Net income – Linde plc for the period by the weighted average number of either basic or diluted shares outstanding, as follows:


		Quarter Ended March 31,					Quarter Ended September 30,				Nine Months Ended September 30,
		2022		2021			2022		2021		2022		2021
Numerator (Millions of dollars)	Numerator (Millions of dollars)					Numerator (Millions of dollars)
Income from continuing operations	Income from continuing operations	$	1,174	$	979	Income from continuing operations	$	1,273	$	978	$	2,819	$	2,797
Income from discontinued operations	Income from discontinued operations	—		1		Income from discontinued operations	—		1		$	—	3
Net Income – Linde plc	Net Income – Linde plc	$	1,174	$	980	Net Income – Linde plc	$	1,273	$	979	$	2,819	$	2,800
Denominator (Thousands of shares)	Denominator (Thousands of shares)					Denominator (Thousands of shares)
Weighted average shares outstanding	Weighted average shares outstanding	506,716		522,103		Weighted average shares outstanding	496,691		514,770		501,266		518,418
Shares earned and issuable under compensation plans	Shares earned and issuable under compensation plans	436		356		Shares earned and issuable under compensation plans	495		399		477		384
Weighted average shares used in basic earnings per share	Weighted average shares used in basic earnings per share	507,152		522,459		Weighted average shares used in basic earnings per share	497,186		515,169		501,743		518,802
Effect of dilutive securities	Effect of dilutive securities					Effect of dilutive securities
Stock options and awards	Stock options and awards	4,258		4,468		Stock options and awards	3,965		4,910		4,269		4,860
Weighted average shares used in diluted earnings per share	Weighted average shares used in diluted earnings per share	511,410		526,927		Weighted average shares used in diluted earnings per share	501,151		520,079		506,012		523,662
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	2.31	$	1.87	Basic earnings per share from continuing operations	$	2.56	$	1.90	$	5.62	$	5.39
Basic earnings per share from discontinued operations	Basic earnings per share from discontinued operations	—		—		Basic earnings per share from discontinued operations	—		—		$	—	$	0.01
Basic Earnings Per Share	Basic Earnings Per Share	$	2.31	$	1.87	Basic Earnings Per Share	$	2.56	$	1.90	$	5.62	$	5.40
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.30	$	1.86	Diluted earnings per share from continuing operations	$	2.54	$	1.88	$	5.57	$	5.34
Diluted earnings per share from discontinued operations	Diluted earnings per share from discontinued operations	—		—		Diluted earnings per share from discontinued operations	—		—		$	—	$	0.01
Diluted Earnings Per Share	Diluted Earnings Per Share	$	2.30	$	1.86	Diluted Earnings Per Share	$	2.54	$	1.88	$	5.57	$	5.35

There were no antidilutive shares for any period presented.

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8. Retirement Programs

The components of net pension and postretirement benefits other than pensions (“OPEB”) costs for the quarter and ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 are shown below:


		Quarter Ended March 31,					Quarter Ended September 30,				Nine Months Ended September 30,

(Millions of dollars)	(Millions of dollars)	2022		2021		(Millions of dollars)	2022		2021		2022		2021
Amount recognized in Operating Profit	Amount recognized in Operating Profit					Amount recognized in Operating Profit
Service cost	Service cost	$	33	$	40	Service cost	$	31	$	39	$	96	$	118
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost	Amount recognized in Net pension and OPEB cost (benefit), excluding service cost					Amount recognized in Net pension and OPEB cost (benefit), excluding service cost
Interest cost	Interest cost	53		39		Interest cost	49		41		153		118
Expected return on plan assets	Expected return on plan assets	(136)		(131)		Expected return on plan assets	(126)		(129)		(394)		(391)
Net amortization and deferral	Net amortization and deferral	19		43		Net amortization and deferral	18		39		56		126

		(64)		(49)

Settlement charge (a)						Settlement charge (a)	6		4		6		4
							(53)		(45)		(179)		(143)
Net periodic benefit cost (benefit)	Net periodic benefit cost (benefit)	$	(31)	$	(9)	Net periodic benefit cost (benefit)	$	(22)	$	(6)	$	(83)	$	(25)

(a) In the third quarters of 2022 and 2021, Linde recorded pension settlement charges of $6 million and $4 million ($5 million and $3 million, after tax), respectively, related to lump sum benefit payments made from a U.S. non-qualified plan.

Components of net periodic benefit expense for other post-retirement plans for the ~~three~~quarter and nine months ended ~~March 31,~~September 30, 2022 and 2021 were not material.

Linde estimates that 2022 required contributions to its pension plans will be ~~in the range of~~ approximately~~$40 million to~~ $50 million, of which ~~$13~~$44 million have been made through ~~March 31,~~September 30, 2022.

9. Commitments and Contingencies

Contingent Liabilities

Linde is subject to various lawsuits and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others. Linde has strong defenses in these cases and intends to defend itself vigorously. It is possible that the company may incur losses in connection with some of these actions in excess of accrued liabilities. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a significant impact on the company’s reported results of operations in any given period (see Note 17 to the consolidated financial statements of Linde's 2021 Annual Report on Form 10-K).

Significant matters are:

•During 2009, the Brazilian government published Law 11941/2009 instituting a new voluntary amnesty program (“Refis Program”) which allowed Brazilian companies to settle certain federal tax disputes at reduced amounts. During 2009, the company decided that it was economically beneficial to settle many of its outstanding federal tax disputes and such disputes were enrolled in the Refis Program, subject to final calculation and review by the Brazilian federal government. The company recorded estimated liabilities based on the terms of the Refis Program. Since 2009, Linde has been unable to reach final agreement on the calculations and initiated litigation against the government in an attempt to resolve certain items. Open issues relate to the following matters: (i) application of cash deposits and net operating loss carryforwards to satisfy obligations and (ii) the amount of tax reductions available under the Refis Program. It is difficult to estimate the timing of resolution of legal matters in Brazil.

•At ~~March 31,~~September 30, 2022 the most significant non-income and income tax claims in Brazil, after enrollment in the Refis Program, relate to state VAT tax matters and a federal income tax matter where the taxing authorities are challenging the tax rate that should be applied to income generated by a subsidiary company. The total estimated exposure relating to such claims, including interest and penalties, as appropriate, is approximately ~~$235~~$215 million. Linde has not recorded any liabilities related to such claims based on management judgments, after considering judgments and opinions of outside counsel. Because litigation in Brazil historically takes many years to resolve, it is very difficult to estimate the

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timing of resolution of these matters; however, it is possible that certain of these matters may be resolved within the near term. The company is vigorously defending against the proceedings.

•On September 1, 2010, CADE (Brazilian Administrative Council for Economic Defense) announced alleged anticompetitive activity on the part of 5five industrial gas companies in Brazil and imposed fines. Originally, CADE imposed a civil fine of $2.2 billion Brazilian reais ($~~464~~407 million) on White Martins, the Brazil-based subsidiary of ~~Praxair,~~Linde Inc. The fine was reduced to $1.7 billion Brazilian reais ($~~359~~314 million) due to a calculation error made by CADE. The fine against White Martins was overturned by the Ninth Federal Court of Brasilia. CADE appealed this

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decision, and the Federal Court of Appeals rejected CADE's appeal and confirmed the decision of the Ninth Federal Court of Brasilia. CADE has filed an appeal with the Superior Court of Justice and a decision is pending.

Similarly, on September 1, 2010, CADE imposed a civil fine of $237 million Brazilian reais ($5044 million) on Linde Gases Ltda., the former Brazil-based subsidiary of Linde AG, which was divested to MG Industries GmbH on March 1, 2019 and with respect to which Linde provided a contractual indemnity. The fine was reduced to $188 million Brazilian reais ($4035 million) due to a calculation error made by CADE. The fine against Linde Gases Ltda. was overturned by the Seventh Federal Court in Brasilia. CADE appealed this decision, and the Federal Court of Appeals rejected CADE's appeal and confirmed the decision of the Seventh Federal Court of Brasilia. CADE filed an appeal with the Superior Court of Justice which was denied. In parallel, CADE filed (i) an appeal with the Supreme Court of Justice, which was denied, and (ii) a subsequent appeal to a panel of the Supreme Court of Justice where a final decision is pending.

Linde has strong defenses and is confident that it will prevail on appeal and have the fines overturned. Linde strongly believes that the allegations of anticompetitive activity against our current and former Brazilian subsidiaries are not supported by valid and sufficient evidence. Linde believes that this decision will not stand up to judicial review and deems the possibility of cash outflows to be extremely unlikely. As a result, no reserves have been recorded as management does not believe that a loss from this case is probable.

•On and after April 23, 2019 former shareholders of Linde AG filed appraisal proceedings at the District Court (Landgericht) Munich I (Germany), seeking an increase of the cash consideration paid in connection with the previously completed cash merger squeeze-out of all of Linde AG’s minority shareholders for €189.46 per share. Any such increase would apply to all 14,763,113 Linde AG shares that were outstanding on April 8, 2019, when the cash merger squeeze-out was completed. The period for plaintiffs to file claims expired on July 9, 2019. The company believes the consideration paid was fair and that the claims lack merit, and no reserve has been established. We cannot estimate the timing of resolution.

10. Segments

For a description of Linde plc's operating segments, refer to Note 18 to the consolidated financial statements on Linde plc's 2021 Annual Report on Form 10-K.

The table below presents sales and operating profit information about reportable segments and Other for the ~~three~~quarter and nine months ended ~~March 31,~~September 30, 2022 and 2021.

Quarter Ended March 31,
(Millions of dollars) 2022 2021
SALES(a)
Americas $ 3,241 $ 2,840
EMEA 2,148 1,799
APAC 1,602 1,436
Engineering 728 674
Other 492 494
Total sales $ 8,211 $ 7,243

Quarter Ended March 31,
(Millions of dollars) 2022 2021
SEGMENT OPERATING PROFIT
Americas $ 904 $ 795
EMEA 503 451
APAC 399 351
Engineering 143 109
Other (44) (18)
Segment operating profit 1,905 1,688
Cost reduction programs and other charges (Note 2) 4 8
Purchase accounting impacts - Linde AG (429) (483)
Total operating profit $ 1,480 $ 1,213


	Quarter Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2022		2021		2022		2021
SALES(a)
Americas	$	3,694	$	3,091	$	10,453	$	8,951
EMEA	2,125		1,911		6,417		5,585
APAC	1,660		1,564		4,913		4,544
Engineering	828		601		2,200		1,921
Other	490		501		1,482		1,494


Total sales	$	8,797	$	7,668	$	25,465	$	22,495

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	Quarter Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2022		2021		2022		2021
SEGMENT OPERATING PROFIT
Americas	$	974	$	859	$	2,788	$	2,525
EMEA	465		476		1,504		1,414
APAC	429		382		1,254		1,122
Engineering	150		106		398		323
Other	(8)		(13)		(41)		(49)
Segment operating profit	2,010		1,810		5,903		5,335
Russia-Ukraine conflict and other charges (Note 2)	(15)		(26)		(1,004)		(222)


Purchase accounting impacts - Linde AG	(382)		(492)		(1,217)		(1,466)
Total operating profit	$	1,613	$	1,292	$	3,682	$	3,647

(a)Sales reflect external sales only. Intersegment sales, primarily from Engineering to the industrial gases segments, were ~~not material.~~$251 million and $728 million for the quarter and nine months ended September 30, 2022, respectively, and $243 million and $666 million for the respective 2021 periods.

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11. Equity

Equity

A summary of the changes in total equity for the ~~quarters~~quarter and nine months ended ~~March 31,~~September 30, 2022 and 2021 is provided below:


		Quarter Ended March 31,													Quarter Ended September 30,
(Millions of dollars)	(Millions of dollars)	2022						2021						(Millions of dollars)	2022						2021
Activity	Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance, beginning of period	Balance, beginning of period	$	44,035	$	1,393	$	45,428	$	47,317	$	2,252	$	49,569	Balance, beginning of period	$	39,674	$	1,353	$	41,027	$	45,777	$	1,438	$	47,215
Net income (a)	Net income (a)	1,174		36		1,210		980		38		1,018		Net income (a)	1,273		27		1,300		979		31		1,010
Other comprehensive income (loss)	Other comprehensive income (loss)	110		(12)		98		(655)		(6)		(661)		Other comprehensive income (loss)	(1,628)		(40)		(1,668)		(710)		(13)		(723)
Noncontrolling interests:	Noncontrolling interests:													Noncontrolling interests:
Additions (reductions) ~~(b)~~	Additions (reductions) ~~(b)~~	—		4		4		—		(853)		(853)		Additions (reductions) ~~(b)~~	—		(7)		(7)		—		(15)		(15)
Dividends and other capital changes	Dividends and other capital changes	—		(7)		(7)		—		(21)		(21)		Dividends and other capital changes	—		(35)		(35)		—		(40)		(40)

Dividends to Linde plc ordinary share holders ($1.17 per share in 2022 and $1.06 per share in 2021)	Dividends to Linde plc ordinary share holders ($1.17 per share in 2022 and $1.06 per share in 2021)	(592)		—		(592)		(553)		—		(553)		Dividends to Linde plc ordinary share holders ($1.17 per share in 2022 and $1.06 per share in 2021)	(581)		—		(581)		(546)		—		(546)
Issuances of ordinary shares:	Issuances of ordinary shares:													Issuances of ordinary shares:

For employee savings and incentive plans	For employee savings and incentive plans	(46)		—		(46)		(2)		—		(2)		For employee savings and incentive plans	7		—		7		(1)		—		(1)

Purchases of ordinary shares	Purchases of ordinary shares	(1,752)		—		(1,752)		(906)		—		(906)		Purchases of ordinary shares	(1,144)		—		(1,144)		(1,208)		—		(1,208)

Share-based compensation	Share-based compensation	34		—		34		29		—		29		Share-based compensation	27		—		27		32		—		32
Balance, end of period	Balance, end of period	$	42,963	$	1,414	$	44,377	$	46,210	$	1,410	$	47,620	Balance, end of period	$	37,628	$	1,298	$	38,926	$	44,323	$	1,401	$	45,724


	Nine Months Ended September 30,
(Millions of dollars)	2022						2021
Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance, beginning of period	$	44,035	$	1,393	$	45,428	$	47,317	$	2,252	$	49,569
Net income (a)	2,819		101		2,920		2,800		105		2,905
Other comprehensive income (loss)	(3,046)		(69)		(3,115)		(928)		(10)		(938)
Noncontrolling interests:
Additions (reductions) (b)	—		(56)		(56)		—		(861)		(861)
Dividends and other capital changes	—		(71)		(71)		—		(85)		(85)

Dividends to Linde plc ordinary share holders ($3.51 per share in 2022 and $3.18 per share in 2021)	(1,758)		—		(1,758)		(1,648)		—		(1,648)
Issuances of ordinary shares:

For employee savings and incentive plans	(32)		—		(32)		(12)		—		(12)

Purchases of ordinary shares	(4,468)		—		(4,468)		(3,301)		—		(3,301)

Share-based compensation	78		—		78		95		—		95
Balance, end of period	$	37,628	$	1,298	$	38,926	$	44,323	$	1,401	$	45,724

(a) Net income for noncontrolling interests excludes net income related to redeemable noncontrolling interests which is not significant for the ~~three~~quarter and nine months ended ~~March 31,~~September 30, 2022 and 2021 and which is not part of total equity.

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(b) Additions (reductions) for noncontrolling interests for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 includes the impact of deconsolidating the company's Russian gas and engineering business entities (refer to Note 2). Additions (reductions) for noncontrolling interests for the nine months ended September 30, 2021 includes the impact from the deconsolidation of a joint venture with operations in APAC.

The components of AOCI are as follows:


		March 31,		December 31,			September 30,		December 31,
(Millions of dollars)	(Millions of dollars)	2022		2021		(Millions of dollars)	2022		2021
Cumulative translation adjustment - net of taxes:	Cumulative translation adjustment - net of taxes:					Cumulative translation adjustment - net of taxes:
Americas	Americas	$	(3,652)	$	(3,985)	Americas	$	(4,087)	$	(3,985)
EMEA	EMEA	(402)		94		EMEA	(2,625)		94
APAC	APAC	162		154		APAC	(1,514)		154
Engineering	Engineering	(100)		24		Engineering	(626)		24
Other	Other	59		(280)		Other	1,534		(280)
		(3,933)		(3,993)			(7,318)		(3,993)
Derivatives - net of taxes	Derivatives - net of taxes	72		75		Derivatives - net of taxes	151		75

Pension / OPEB (net of $284 million and $305 million tax benefit in March 31, 2022 and December 31, 2021, respectively)		(1,077)		(1,130)
Pension / OPEB (net of $258 million and $305 million tax benefit in September 30, 2022 and December 31, 2021, respectively)						Pension / OPEB (net of $258 million and $305 million tax benefit in September 30, 2022 and December 31, 2021, respectively)	(927)		(1,130)
		$	(4,938)	$	(5,048)		$	(8,094)	$	(5,048)

12. Revenue Recognition

Revenue is accounted for in accordance with ASC 606. Revenue is recognized as control of goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled to receive in exchange for the goods or services.

Contracts with Customers

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Linde serves a diverse group of industries including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics.

Industrial Gases

Within each of the company’s geographic segments for industrial gases, there are three basic distribution methods: (i) on-site or tonnage; (ii) merchant or bulk liquid; and (iii) packaged or cylinder gases. The distribution method used by Linde to supply a customer is determined by many factors, including the customer’s volume requirements and location. The distribution method generally determines the contract terms with the customer and, accordingly, the revenue recognition accounting practices. Linde's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). These products are generally sold through one of the three distribution methods.

Following is a description of each of the three industrial gases distribution methods and the respective revenue recognition policies:

On-site. Customers that require the largest volumes of product and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Linde constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. Where there are large concentrations of customers, a single pipeline may be connected to several plants and customers. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and contain minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. Therefore, plants are typically not dedicated to a single customer. Additionally, Linde is responsible for the design, construction, operations and maintenance of the plants and our customers typically have no involvement in these activities. Advanced air separation processes also allow on-site delivery to customers with smaller volume requirements.

The company’s performance obligations related to on-site customers are satisfied over time as customers receive and obtain control of the product. Linde has elected to apply the practical expedient for measuring progress towards the completion of a performance obligation and recognizes revenue as the company has the right to invoice each customer, which generally corresponds with product delivery. Accordingly, revenue is recognized when product is delivered to the customer and the company has the right to invoice the customer in accordance with the contract terms. Consideration in these contracts is generally based on pricing which fluctuates with various price indices. Variable components of consideration exist within on-site contracts but are considered constrained.

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Merchant. Merchant deliveries generally are made from Linde's plants by tanker trucks to storage containers at the customer's site. Due to the relatively high distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The customer agreements used in the merchant business are usually three-to ~~seven-year~~seven-year supply agreements based on the requirements of the customer. These contracts generally do not contain minimum purchase requirements or volume commitments.

The company’s performance obligations related to merchant customers are generally satisfied at a point in time as the customers receive and obtain control of the product. Revenue is recognized when product is delivered to the customer and the company has the right to invoice the customer in accordance with the contract terms. Any variable components of consideration within merchant contracts are ~~constrained~~constrained; however, this consideration is not significant.

Packaged Gases. Customers requiring small volumes are supplied products in containers called cylinders, under medium to high pressure. Linde distributes merchant gases from its production plants to company-owned cylinder filling plants where cylinders are then filled for distribution to customers. Cylinders may be delivered to the customer’s site or picked up by the customer at a packaging facility or retail store. Linde invoices the customer for the industrial gases and the use of the cylinder container(s). The company also sells hardgoods and welding equipment purchased from independent manufacturers. Packaged gases are generally sold under one to ~~three-year~~three-year supply contracts and purchase orders and do not contain minimum purchase requirements or volume commitments.

The company’s performance obligations related to packaged gases are satisfied at a point in time. Accordingly, revenue is recognized when product is delivered to the customer or when the customer picks up product from a packaged gas facility or retail store and the company has the right to payment from the customer in accordance with the contract terms. Any variable consideration is constrained and will be recognized when the uncertainty related to the consideration is resolved.

Linde Engineering

The company designs and manufactures equipment for air separation and other industrial gas applications manufactured specifically for end customers. Sale of equipment contracts are generally comprised of a single performance obligation. Revenue from sale of equipment is generally recognized over time as Linde has an enforceable right to payment for

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performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. Costs incurred include material, labor, and overhead costs and represent work contributing and proportionate to the transfer of control to the customer. ~~Contract~~Changes to cost estimates and contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative ~~adjustment~~adjustments for the inception-to-date effect of such change.

Contract Assets and Liabilities

Contract assets and liabilities result from differences in timing of revenue recognition and customer invoicing. Contract assets primarily relate to sale of equipment contracts for which revenue is recognized over time. The balance represents unbilled revenue which occurs when revenue recognized under the measure of progress exceeds amounts invoiced to customers. Customer invoices may be based on the passage of time, the achievement of certain contractual milestones or a combination of both criteria. Contract liabilities include advance payments or right to consideration prior to performance under the contract. Contract liabilities are recognized as revenue as performance obligations are satisfied under contract terms. Linde has contract assets of ~~$100~~$104 million and $134 million at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. Total contract liabilities are ~~$3,874~~$3,799 million at ~~March 31,~~September 30, 2022 (current of ~~$3,035~~$2,902 million and ~~$839~~$897 million within other long-term liabilities in the condensed consolidated balance sheets). As of September 30, 2022, Linde has approximately $1.8 billion recorded in contract liabilities related to engineering projects subject to sanctions in Russia. Total contract liabilities were $3,699 million at December 31, 2021 (current contract liabilities of $2,940 million and $759 million in other long-term liabilities in the condensed consolidated balance sheets). Revenue recognized for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 that was included in the contract liability at December 31, 2021 was ~~$611~~$1,085 million. Contract assets and liabilities primarily relate to the Linde Engineering business.

Payment Terms and Other

Linde generally receives payment after performance obligations are satisfied, and customer prepayments are not typical for the industrial gases business. Payment terms vary based on the country where sales originate and local customary payment practices. Linde does not offer extended financing outside of customary payment terms. Amounts billed for sales and use taxes, value-added taxes, and certain excise and other specific transactional taxes imposed on revenue producing transactions are presented on a net basis and are not included in sales within the consolidated ~~statement~~statements of income. Additionally, sales returns and allowances are not a normal practice in the industry and are not significant.

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Disaggregated Revenue Information

As described above and in Note 18 to ~~Linde's~~Linde plc's 2021 Annual Report on Form 10-K, the company manages its industrial gases business on a geographic basis, while the Engineering and Other businesses are generally managed on a global basis. Furthermore, the company believes that reporting sales by distribution method by reportable geographic segment best illustrates the nature, timing, type of customer, and contract terms for its revenues, including terms and pricing.

The following tables show sales by distribution method at the consolidated level and for each reportable segment and Other for the ~~three~~third quarter and nine months ended ~~March 31,~~September 30, 2022 and ~~March 31,~~September 30, 2021.


(Millions of dollars)	(Millions of dollars)	Quarter Ended March 31, 2022														(Millions of dollars)	Quarter Ended September 30, 2022
Sales	Sales	Americas		EMEA		APAC		Engineering		Other		Total		%		Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	Merchant	$	874	$	614	$	516	$	—	$	39	$	2,043	25	%	Merchant	$	986	$	620	$	593	$	—	$	43	$	2,242	25	%
On-Site	On-Site	883		631		655		—		—		2,169		26	%	On-Site	1,178		651		605		—		—		2,434		28	%
Packaged Gas	Packaged Gas	1,432		891		361		—		7		2,691		33	%	Packaged Gas	1,478		841		403		—		21		2,743		31	%
Other	Other	52		12		70		728		446		1,308		16	%	Other	52		13		59		828		426		1,378		16	%
Total	Total	$	3,241	$	2,148	$	1,602	$	728	$	492	$	8,211	100	%	Total	$	3,694	$	2,125	$	1,660	$	828	$	490	$	8,797	100	%


(Millions of dollars)	(Millions of dollars)	Quarter Ended March 31, 2021														(Millions of dollars)	Quarter Ended September 30, 2021
Sales	Sales	Americas		EMEA		APAC		Engineering		Other		Total		%		Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	Merchant	$	771	$	531	$	484	$	—	$	53	$	1,839	25	%	Merchant	$	849	$	559	$	563	$	—	$	38	$	2,009	26	%
On-Site	On-Site	689		392		553		—		—		1,634		23	%	On-Site	836		462		578		—		—		1,876		24	%
Packaged Gas	Packaged Gas	1,332		861		361		—		6		2,560		35	%	Packaged Gas	1,385		880		394		—		7		2,666		35	%
Other	Other	48		15		38		674		435		1,210		17	%	Other	21		10		29		601		456		1,117		15	%
Total	Total	$	2,840	$	1,799	$	1,436	$	674	$	494	$	7,243	100	%	Total	$	3,091	$	1,911	$	1,564	$	601	$	501	$	7,668	100	%


(Millions of dollars)	Nine Months Ended September 30, 2022
Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	$	2,801	$	1,868	$	1,671	$	—	$	122	$	6,462	25	%
On-Site	3,110		1,892		1,891		—		—		6,893		27	%
Packaged Gas	4,383		2,616		1,153		—		37		8,189		32	%
Other	159		41		198		2,200		1,323		3,921		15	%
Total	$	10,453	$	6,417	$	4,913	$	2,200	$	1,482	$	25,465	100	%


(Millions of dollars)	Nine Months Ended September 30, 2021
Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	$	2,441	$	1,646	$	1,598	$	—	$	133	$	5,818	26	%
On-Site	2,299		1,250		1,712		—		—		5,261		23	%
Packaged Gas	4,086		2,652		1,147		—		19		7,904		35	%
Other	125		37		87		1,921		1,342		3,512		16	%
Total	$	8,951	$	5,585	$	4,544	$	1,921	$	1,494	$	22,495	100	%

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Remaining Performance Obligations

As described above, Linde's contracts with on-site customers are under long-term supply arrangements which generally require the customer to purchase their requirements from Linde and also have minimum purchase requirements. Additionally, plant sales from the Linde Engineering business are primarily contracted on a fixed price basis. The company estimates the consideration related to future minimum purchase requirements and plant sales was approximately ~~$51~~$52 billion (excludes Russian projects which are ~~currently or expected to be~~ impacted by sanctions, ~~as discussed in~~refer to Note ~~13)~~2). This amount excludes all on-site sales above minimum purchase requirements, which can be significant depending on customer needs. In the future, actual amounts will be different due to impacts from several factors, many of which are beyond the company’s control including, but not limited to, timing of newly signed, terminated and renewed contracts, inflationary price escalations, currency exchange rates, and pass-through costs

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related to natural gas and electricity. The actual duration of long-term supply contracts ranges up to twenty years. The company estimates that approximately half of the revenue related to minimum purchase requirements will be earned in the next five years and the remaining thereafter.

~~13. Subsequent Events~~

~~Conflict between Russia and Ukraine~~

~~In response to the Russian invasion of Ukraine, multiple jurisdictions, including Europe and the U.S., have imposed several tranches of economic sanctions on Russia.~~

In 2021, Linde’s industrial gas business generated approximately 1% of consolidated Linde sales from Russia. Total assets in Russia represent approximately 1% of consolidated Linde assets. Sales and total assets in Ukraine are immaterial. As of March 31, 2022, Linde has approximately $2 billion recorded in contract liabilities within the condensed consolidated balance sheet related to engineering projects in Russia.

Linde continues to closely monitor the situation in Ukraine and has taken steps to ensure the safety of its employees and the continuous delivery of critical medical oxygen. Linde is working with the relevant governments and authorities to ensure the company fully complies with international sanctions and is safely winding down affected projects in Russia. During the first quarter of 2022, engineering projects being executed for Russia that are currently or expected to be impacted by sanctions and thus being wound down were approximately $0.35 billion of sales. Linde has suspended all business development for new projects and is scaling back its operations in Russia by ceasing to supply certain customers and starting the process to divest industrial assets to reduce its footprint in the country.

It is possible that Linde may incur impairment and other charges in future quarters as these actions are defined and executed and as further sanctions are enacted that impact the Company’s operations in Russia, including industrial gases and engineering. Any charges related to such impairments or obligation to satisfy any residual contract liabilities may have an adverse effect on Linde’s result of operations or cash flows.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")

Non-GAAP Measures

Throughout MD&A, the company provides adjusted operating results from continuing operations exclusive of certain items such as cost reduction programs as well as Russia-Ukraine conflict and other charges, net gains or losses on sale of businesses, purchase accounting impacts of the Linde AG merger and pension settlement charges. Adjusted amounts are non-GAAP measures which are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management find useful in evaluating the company’s operating performance. Items which the company does not believe to be indicative of on-going business performance are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. In addition, operating results from continuing operations, excluding these items, is important to management's development of annual and long-term employee incentive compensation plans. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.

The non-GAAP measures and reconciliations are separately included in a later section in the MD&A titled "Non-GAAP Measures and Reconciliations."

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Consolidated Results

The following table provides summary information for the ~~three~~quarter and nine months ended ~~March 31,~~September 30, 2022 and 2021. The reported amounts are GAAP amounts from the Consolidated Statements of Income. The adjusted amounts are intended to supplement investors' understanding of the company's financial information and are not a substitute for GAAP measures:


		Quarter Ended March 31,								Quarter Ended September 30,					Nine Months Ended September 30,
(Millions of dollars, except per share data)	(Millions of dollars, except per share data)	2022			2021			Variance			(Millions of dollars, except per share data)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	8,211		$	7,243		13	%		Sales	$	8,797		$	7,668		15	%	$	25,465		$	22,495		13	%
Cost of sales, exclusive of depreciation and amortization	Cost of sales, exclusive of depreciation and amortization	$	4,798		$	4,054		18	%		Cost of sales, exclusive of depreciation and amortization	$	5,285		$	4,368		21	%	$	15,023		$	12,616		19	%
As a percent of sales	As a percent of sales	58.4		%	56.0		%				As a percent of sales	60.1		%	57.0		%			59.0		%	56.1		%
Selling, general and administrative	Selling, general and administrative	$	802		$	787		2	%		Selling, general and administrative	$	770		$	793		(3)	%	$	2,343		$	2,402		(2)	%
As a percent of sales	As a percent of sales	9.8		%	10.9		%				As a percent of sales	8.8		%	10.3		%			9.2		%	10.7		%
Depreciation and amortization	Depreciation and amortization	$	1,112		$	1,166		(5)	%		Depreciation and amortization	$	1,045		$	1,163		(10)	%	$	3,248		$	3,500		(7)	%
Cost reduction programs and other charges (b)		$	(4)		$	(8)		(50)	%

Russia-Ukraine conflict and other charges (b)											Russia-Ukraine conflict and other charges (b)	$	15		$	26		—	%	$	1,004		$	222		—	%
Other income (expense) - net	Other income (expense) - net	$	12		$	4		(200)	%		Other income (expense) - net	$	(34)		$	10		—	%	$	(58)		$	(3)		—	%
Operating profit	Operating profit	$	1,480		$	1,213		22	%		Operating profit	$	1,613		$	1,292		25	%	$	3,682		$	3,647		1	%
Operating margin	Operating margin	18.0		%	16.7		%				Operating margin	18.3		%	16.8		%			14.5		%	16.2		%
Interest expense - net	Interest expense - net	$	9		$	20		(55)	%		Interest expense - net	$	18		$	8		125	%	$	32		$	46		(30)	%
Net pension and OPEB cost (benefit), excluding service cost	Net pension and OPEB cost (benefit), excluding service cost	$	(64)		$	(49)		31	%		Net pension and OPEB cost (benefit), excluding service cost	$	(53)		$	(45)		18	%	$	(179)		$	(143)		25	%
Effective tax rate	Effective tax rate	24.0		%	21.6		%				Effective tax rate	23.7		%	24.2		%			27.3		%	24.7		%
Income from equity investments	Income from equity investments	$	44		$	43		2	%		Income from equity investments	$	43		$	1		—	%	$	137		$	81		—	%
Noncontrolling interests from continuing operations	Noncontrolling interests from continuing operations	$	(36)		$	(38)		(5)	%		Noncontrolling interests from continuing operations	$	(27)		$	(31)		(13)	%	$	(101)		$	(105)		(4)	%
Income from continuing operations	Income from continuing operations	$	1,174		$	979		20	%		Income from continuing operations	$	1,273		$	978		30	%	$	2,819		$	2,797		1	%
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.30		$	1.86		24	%		Diluted earnings per share from continuing operations	$	2.54		$	1.88		35	%	$	5.57		$	5.34		4	%
Diluted shares outstanding	Diluted shares outstanding	511,410			526,927			(3)	%		Diluted shares outstanding	501,151			520,079			(4)	%	506,012			523,662			(3)	%
Number of employees	Number of employees	72,507			71,699			1	%		Number of employees	65,293			72,159			(10)	%	65,293			72,159			(10)	%
Adjusted Amounts (a)	Adjusted Amounts (a)										Adjusted Amounts (a)
Operating profit	Operating profit	$	1,905		$	1,688		13	%		Operating profit	$	2,010		$	1,810		11	%	$	5,903		$	5,335		11	%
Operating margin	Operating margin	23.2		%	23.3		%				Operating margin	22.8		%	23.6		%			23.2		%	23.7		%
Effective tax rate	Effective tax rate	24.3		%	23.9		%				Effective tax rate	25.0		%	23.9		%			24.6		%	24.1		%
Income from continuing operations	Income from continuing operations	$	1,500		$	1,312		14	%		Income from continuing operations	$	1,555		$	1,421		9	%	$	4,621		$	4,148		11	%
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.93		$	2.49		18	%		Diluted earnings per share from continuing operations	$	3.10		$	2.73		14	%	$	9.13		$	7.92		15	%
Other Financial Data (a)	Other Financial Data (a)										Other Financial Data (a)
EBITDA from continuing operations	EBITDA from continuing operations	$	2,636		$	2,422		9	%		EBITDA from continuing operations	$	2,701		$	2,456		10	%	$	7,067		$	7,228		(2)	%
As percent of sales	As percent of sales	32.1		%	33.4		%				As percent of sales	30.7		%	32.0		%			27.8		%	32.1		%
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	$	2,663		$	2,438		9	%		Adjusted EBITDA from continuing operations	$	2,739		$	2,559		7	%	$	8,148		$	7,582		7	%
As percent of sales	As percent of sales	32.4		%	33.7		%				As percent of sales	31.1		%	33.4		%			32.0		%	33.7		%

(a) Adjusted Amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.

(b) See Note 2 to the condensed consolidated financial statements.

Reported

In the ~~first~~third quarter of 2022, Linde's sales were ~~$8,211~~$8,797 million, ~~13%~~15% above prior year, primarily driven by 6%8% price attainment and 3% higher volumes. Cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, increased sales by 6%8% in the quarter, with minimal impact on operating profit. Engineering increased sales by 4% in the quarter. Currency translation decreased sales by 3%7% in the ~~first~~quarter. Divestitures, net of acquisitions, decreased sales by 1%, primarily in EMEA, in the third quarter of 2022 as compared to 2021.

Reported operating profit for the ~~first~~third quarter of 2022 of ~~$1,480~~$1,613 million, or ~~18%~~18.3% of sales, was ~~22%~~25% above prior year. The reported year-over-year increase was primarily due to higher ~~price, the benefit of cost reduction programs and~~pricing, volumes, productivity initiatives and lower depreciation and amortization driven by merger related intangible assets. The reported effective tax rate ("ETR") was ~~24.0%~~23.7% in the ~~first~~third quarter 2022 versus ~~21.6%~~24.2% in the ~~first~~third quarter 2021. Diluted earnings per share from continuing operations ("EPS") was ~~$2.30, or 24% above EPS of $1.86 in the first quarter of 2021 primarily due to higher income from continuing operations and lower diluted shares outstanding.~~

$2.54,

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or 35% above EPS of $1.88 in the third quarter of 2021 primarilydue to higher income from continuing operations and lower diluted shares outstanding.

Adjusted

In the ~~first~~third quarter of 2022, adjusted operating profit of ~~$1,905~~$2,010 million, or ~~23.2%~~22.8% of sales, was ~~13%~~11% higher as compared to 2021, driven by higher ~~price and the benefit of cost reduction programs~~pricing, volumes and productivity ~~initiatives.~~initiatives, partially offset by inflation. The adjusted ETR was ~~24.3%~~25.0% in the ~~first~~third quarter 2022 versus 23.9% in the 2021 ~~quarter.~~quarter, primarily due to lower tax benefits from share option exercises. On an adjusted basis, EPS was ~~$2.93, 18%~~$3.10, 14% above the 2021 adjusted EPS of ~~$2.49,~~$2.73, driven by higher adjusted income from continuing operations and lower diluted shares outstanding.

Outlook

Linde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via quarterly earnings releases and investor teleconferences. These updates are available on the company’s website, www.linde.com, but are not incorporated herein.

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Results of operations

The changes in consolidated sales compared to the prior year are attributable to the following:


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~

~~Factors Contributing to Changes - Sales~~
~~Volume~~	3	%
~~Price/Mix~~	6	%
~~Cost pass-through~~	6	%
~~Currency~~	~~(3)~~	%
~~Acquisitions/divestitures~~	—	%
~~Engineering~~	1	%
	13	%


	Quarter Ended September 30, 2022 vs. 2021		Nine Months Ended September 30, 2022 vs. 2021
	% Change		% Change

Factors Contributing to Changes - Sales
Volume	3	%	2	%
Price/Mix	8	%	7	%
Cost pass-through	8	%	7	%
Currency	(7)	%	(5)	%
Acquisitions/divestitures	(1)	%	—	%
Engineering	4	%	2	%
	15	%	13	%

Sales

Sales increased ~~$968~~$1,129 million, or ~~13%~~15%, for the ~~first~~third quarter of 2022 and increased $2,970 million, or 13% for the nine months ended September 30, 2022 versus the respective 2021 ~~period.~~periods. Volume growth ~~across most~~in all end markets, except healthcare, and project startups increased sales by 3% in the ~~quarter.~~quarter and 2% in the year-to-date period. Higher pricing across all geographic segments contributed 6%8% to sales in the ~~quarter.~~quarter and 7% in the year-to-date period. Cost pass-through increased sales by 8% in the quarter and 7% in the year-to-date period with minimal impact on operating profit. Currency translation decreased sales by 3%7% in the quarter and 5% in the year-to-date period, largely in EMEA, APAC and ~~APAC,~~Engineering, driven by the weakening of the Euro, Chinese yuan, British pound and Australian dollar ~~Korean won and British pound~~ against the U.S. dollar. ~~Cost pass-through~~The impact of divestitures decreased sales by 1% in the quarter. Engineering increased sales by 6%4% in the quarter ~~with minimal impact on operating profit.~~and 2% in the year-to-date period.

Cost of sales, exclusive of depreciation and amortization

Cost of sales, exclusive of depreciation and amortization increased ~~$744~~$917 million, or ~~18%~~21%, for the ~~first~~third quarter of 2022 and increased $2,407 million, or 19% for the nine months ended September 30, 2022 primarily due to inflation and higher volumes, ~~and cost pass-through,~~ partially offset by productivity ~~initiatives~~gains and currency ~~impacts.~~effects. Cost of sales, exclusive of depreciation and amortization was ~~58.4%~~60.1% and 59.0% of sales, respectively, for the ~~first~~third quarter ofand nine months ended September 30, 2022 versus ~~56.0%~~57.0% and 56.1% of sales for the respective 2021 ~~period.~~periods. The increase as a percentage of sales for the ~~first~~ quarter ofand nine months ended September 30, 2022 was due primarily to higher cost ~~pass-through.~~pass-through to customers.

Selling, general and administrative expenses

Selling, general and administrative expense ("SG&A") ~~increased $15~~decreased $23 million, or 3%, for the third quarter of 2022 and decreased $59 million, or 2%, for the ~~first quarter of~~nine months ended September 30, 2022. SG&A was ~~9.8%~~8.8% of ~~first~~third quarter sales and 9.2% of sales for the nine months ended September 30, 2022 versus ~~10.9%~~10.3% and 10.7% for the respective 2021 ~~period.~~periods. Currency impacts decreased SG&A by approximately ~~$18~~$42 million inand $92 million for the ~~quarter.~~quarter and nine months ended September 30, 2022, respectively. Excluding currency impacts, underlying SG&A increased in the ~~first~~third quarter ofand nine months ended September 30, 2022 ~~driven~~ primarily bydue to higher ~~incentive compensation.~~costs.

Depreciation and amortization

Reported depreciation and amortization expense decreased ~~$54~~$118 million, or 10%, for the ~~first~~third quarter of 2022 and decreased $252 million, or 7%, for the nine months ended September 30, 2022. The decrease is related primarily to lower depreciation and amortization of intangible assets acquired in the ~~merger.~~merger and currency impacts.

On an adjusted basis, depreciation and amortization ~~increased $6~~decreased $26 million, ~~or 1%,~~ for the ~~first~~third quarter of 2022 ~~primarily due to new project start ups which were partially offset by currency translation~~and decreased $22 million, for the year-to-date period. Currency impacts ~~which~~ decreased depreciation and amortization by ~~$16 million.~~$41 million and $86 million, for the quarter and nine months ended September 30, 2022, respectively. Excluding currency, underlying depreciation and amortization increased including new project start ups.

Russia-Ukraine conflict and other charges

Russia-Ukraine conflict and other charges were $15 million and $1,004 million for the third quarter and nine months ended September 30, 2022, respectively. The charge recorded in the third quarter of 2022 is primarily driven by the sale of the GIST business. The charge for the nine months ended September 30, 2022 relates primarily to the deconsolidation and impairment of Russian subsidiaries resulting from the ongoing war in Ukraine and related sanctions recorded as of June 30, 2022. 2021 charges of $26 million and $222 million, for the quarter and year-to-date periods respectively, relate to cost reduction program and other charges, primarily severance (see Note 2 to the condensed consolidated financial statements).

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On an adjusted basis, these benefits and costs have been excluded in both periods.

Operating profit

On a reported basis, operating profit increased ~~$267~~$321 million, or ~~22%~~25%, for the ~~first~~third quarter of 2022 and increased $35 million, or 1%, for the nine months ended September 30, 2022. The increase for the quarter and year-to-date periods was primarily due to higher pricing, ~~the benefit of cost reduction programs and~~volumes, savings from productivity initiatives, and lower depreciation and amortization driven by merger related intangible ~~assets which~~assets. These increases more than offset the adverse impacts of inflation and currency in the quarter and year-to-date periods as well as the Russia-Ukraine conflict and other charges recorded during the ~~quarter.~~second quarter of 2022.

On an adjusted basis, which excludes the impacts of purchase accounting ~~and cost reduction programs~~as well as Russia-Ukraine conflict and other charges, operating profit increased ~~$217~~$200 million, or ~~13%~~11% in the 2022 ~~quarter.~~quarter and increased $568 million, or 11%, for the nine months ended September 30, 2022. Operating profit growth was driven by higher pricing, ~~and the benefit of cost reduction programs~~volumes and productivity initiatives, which more than offset the effects of inflation and currency during the ~~period.~~periods. A discussion of operating profit by segment is included in the segment discussion that follows.

Interest expense - net

Reported interest expense - net ~~decreased $11~~increased $10 million for the ~~first~~third quarter of 2022 and decreased $14 million for the nine months ended September 30, 2022. On an adjusted basis, interest expense ~~decreased $19~~increased $8 million for the ~~first~~third quarter of 2022 and decreased $30 million for the nine months ended September 30, 2022 versus the respective 2021 periods. The increase in the quarter-to-date period is driven primarily by ~~a lower effective~~higher borrowing ~~rate.~~

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costs on short-term debt and unfavorable foreign currency revaluation on unhedged intercompany exposures in the current year. In the year-to-date period, interest expense - net decreased as higher interest income on cash deposits more than offset these impacts.

Net pension and OPEB cost (benefit), excluding service cost

Reported net pension and OPEB cost (benefit), excluding service cost was a benefit of ~~$64~~$53 million and $179 million for the quarter and nine months ended September 30, 2022, respectively, versus a benefit of ~~$49~~$45 million and $143 million for the respective 2021 ~~period.~~periods. The increase in benefit primarily relates to lower amortization of deferred losses, partially offset by higher interest cost reflective of the higher discount rate environment year-over-year.

Effective tax rate

The reported effective tax rate ("ETR") for the quarter and nine months ended September 30, 2022 was ~~24.0%~~23.7% and 27.3%, respectively, versus ~~21.6%~~24.2% and 24.7% for the respective 2021 ~~period.~~periods. The ~~increase~~decrease in the quarter rate is primarily ~~driven~~related to a deferred tax benefit resulting from the divestiture of the GIST business, partially offset by lower tax ~~impact~~benefits from share based ~~compensation~~compensation. The increase in ~~2022 and a non-taxable gain~~the year-to-date rate is primarily related to the net tax expense resulting from the deconsolidation and impairment of the company’s business in Russia, partially offset by the reversal of a ~~joint venture with operations in APAC~~related deferred tax liability. For the quarter and nine months ended September 30, 2021, the ETR included net tax charges of $38 million primarily related to $81 million of expense due to a tax rate increase in the ~~first quarter~~United Kingdom, partially offset by a tax settlement benefit of ~~2021.~~$33 million (see Note 2 to the condensed consolidated financial statements).

On an adjusted basis, the ETR for the quarter and nine months ended September 30, 2022 was ~~24.3%~~25.0% and 24.6%, respectively, versus 23.9% and 24.1% for the respective 2021 ~~period.~~periods. The increase in both periods is primarily due to lower tax benefits from share option exercises.

Income from equity investments

Reported income from equity investments for the ~~first~~ quarter ofand nine months ended September 30, 2022 was ~~$44~~$43 million and $137 million, respectively, versus ~~$43~~$1 million and $81 million for the respective 2021 ~~period.~~periods. On an adjusted basis, income from equity investments for the ~~first~~ quarter and nine months ended September 30, 2022 was ~~$64~~$61 million and $194 million, respectively, versus ~~$62~~$55 million and $173 million in the prior year respective ~~period.~~periods.

On a reported basis, income from equity investments was higher in the third quarter of 2022 due primarily to a $35 million impairment charge taken in the third quarter of 2021 related to a joint venture in the APAC segment (see Note 2 to the condensed consolidated financial statements). On an adjusted basis, the increase year-over-year was primarily driven by the overall performance of investments in APAC.

Noncontrolling interests from continuing operations

At ~~March 31,~~September 30, 2022, noncontrolling interests from continuing operations consisted primarily of non-controlling shareholders' investments in APAC (primarily China).

Reported noncontrolling interests from continuing operations decreased $2$4 million for both the ~~first~~ quarter ofand nine months ended September 30, 2022 versus the respective 2021 ~~period.~~periods.

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Income from continuing operations

Reported income from continuing operations increased ~~$195~~$295 million, or ~~20%~~30%, for the ~~first~~third quarter of 2022 and increased $22 million, or 1%, for the nine months ended September 30, 2022 versus the respective 2021 ~~period, primarily due to higher overall operating profit.~~

periods. On an adjusted basis, which excludes the impacts of purchase accounting and Russia-Ukraine conflict and other ~~non-GAAP adjustments,~~charges, income from continuing operations increased ~~$188~~$134 million, or ~~14%~~9%, for the quarter and increased $473 million, or 11%, for the nine months ended September 30, 2022 versus the respective 2021 ~~period. The~~periods. On both a reported and adjusted basis, the increase was driven by higher ~~overall adjusted~~ operating profit.

Diluted earnings per share from continuing operations

Reported diluted earnings per share from continuing operations increased ~~$0.44,~~$0.66, or ~~24%~~35%, for the ~~first~~third quarter of 2022 and increased $0.23, or 4%, for the nine months ended September 30, 2022 versus the comparable 2021 ~~period.~~periods. On an adjusted basis, diluted EPS increased $0.37, or 14%, for the ~~first~~third quarter of 2022 and increased ~~$0.44,~~$1.21, or ~~18%~~15%, for the nine months ended September 30, 2022 versus the respective 2021 ~~period.~~periods. The increase on both ~~bases was~~a reported and adjusted basis is primarily due to higher income from continuing operations and lower diluted shares outstanding.

Employees

The number of employees at ~~March 31,~~September 30, 2022 was ~~72,507, an increase~~65,293, a decrease of ~~808~~6,866 employees from ~~March 31,~~September 30, 2021, driven primarily by the ~~Americas.~~sale of the GIST business, cost reduction initiatives and the deconsolidation of Russian subsidiaries in the EMEA and Engineering segments.

Other Financial Data

EBITDA was ~~$2,636 million~~$2,701 for the ~~first~~third quarter of 2022 as compared to ~~$2,422~~$2,456 million in the respective 2021 period driven by higher income from continuing operations versus prior year. EBITDA was $7,067 million for the nine months ended September 30, 2022 as compared to $7,228 million in the respective 2021 period driven by lower income from continuing operations due to the impact of Russia-Ukraine conflict and other charges.

Adjusted EBITDA from continuing operations increased to $2,739 million for the third quarter 2022 from $2,559 million in the respective 2021 period. Adjusted EBITDA from continuing operations increased to ~~$2,663~~$8,148 million from $7,582 million for the ~~first quarter~~nine months ended September 30, 2022 ~~from $2,438 million in~~as compared to the respective 2021 period. On both a quarter-to-date and year-to-date adjusted basis, higher EBITDA was primarily due to higher income from continuing operations versus the respective prior periods.

See the "Non-GAAP Measures and Reconciliations" section for definitions and reconciliations of these adjusted non-GAAP measures to reported GAAP amounts.

Other Comprehensive Income (Loss)

Other comprehensive losses for the ~~first~~third quarter of 2022 and nine months ended September 30, 2022 were ~~$98~~$1,668 million and $3,115 million, respectively, resulting primarily from currency translation adjustments of ~~$48~~$1,743 million and $3,394 million during the ~~quarter.~~quarter and year-to-date periods, respectively. The translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements to U.S. dollars, and are largely driven by the movement of the U.S. dollar against major currencies including the Euro, British pound and the Chinese yuan. See the "Currency" section of the MD&A for exchange rates used for translation purposes and Note 11 to the condensed consolidated financial statements for a summary of the currency translation adjustment component of accumulated other comprehensive income by segment.

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Segment Discussion

The following summary of sales and operating profit by segment provides a basis for the discussion that follows. Linde plc evaluates the performance of its reportable segments based on operating profit, excluding items not indicative of ongoing business trends. The reported amounts are GAAP amounts from the Consolidated Statements of Income.


		Quarter Ended March 31,							Quarter Ended September 30,						Nine Months Ended September 30,
(Millions of dollars)	(Millions of dollars)	2022		2021		Variance		(Millions of dollars)	2022		2021		Variance		2022		2021		Variance
SALES	SALES							SALES
Americas	Americas	$	3,241	$	2,840	14	%	Americas	$	3,694	$	3,091	20	%	$	10,453	$	8,951	17	%
EMEA	EMEA	2,148		1,799		19	%	EMEA	2,125		1,911		11	%	6,417		5,585		15	%
APAC	APAC	1,602		1,436		12	%	APAC	1,660		1,564		6	%	4,913		4,544		8	%
Engineering	Engineering	728		674		8	%	Engineering	828		601		38	%	2,200		1,921		15	%
Other	Other	492		494		—	%	Other	490		501		(2)	%	1,482		1,494		(1)	%
Total sales	Total sales	$	8,211	$	7,243	13	%	Total sales	$	8,797	$	7,668	15	%	$	25,465	$	22,495	13	%

SEGMENT OPERATING PROFIT	SEGMENT OPERATING PROFIT							SEGMENT OPERATING PROFIT
Americas	Americas	$	904	$	795	14	%	Americas	$	974	$	859	13	%	$	2,788	$	2,525	10	%
EMEA	EMEA	503		451		12	%	EMEA	465		476		(2)	%	1,504		1,414		6	%
APAC	APAC	399		351		14	%	APAC	429		382		12	%	1,254		1,122		12	%
Engineering	Engineering	143		109		31	%	Engineering	150		106		42	%	398		323		23	%
Other	Other	(44)		(18)		(144)	%	Other	(8)		(13)		38	%	(41)		(49)		16	%
Segment operating profit	Segment operating profit	$	1,905	$	1,688	13	%	Segment operating profit	$	2,010	$	1,810	11	%	$	5,903	$	5,335	11	%
Reconciliation to reported operating profit:	Reconciliation to reported operating profit:							Reconciliation to reported operating profit:
Cost reduction programs and other charges (Note 2)		4		8
Russia-Ukraine conflict and other charges (Note 2)								Russia-Ukraine conflict and other charges (Note 2)	(15)		(26)				(1,004)		(222)
Purchase accounting impacts - Linde AG	Purchase accounting impacts - Linde AG	(429)		(483)				Purchase accounting impacts - Linde AG	(382)		(492)				(1,217)		(1,466)
Total operating profit	Total operating profit	$	1,480	$	1,213			Total operating profit	$	1,613	$	1,292			$	3,682	$	3,647

~~Americas~~

Quarter Ended March 31,
(Millions of dollars) 2022 2021 Variance
Sales $ 3,241 $ 2,840 14 %
Operating profit $ 904 $ 795 14 %
As a percent of sales 27.9 % 28.0 %


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume~~	5	%
~~Price/Mix~~	5	%
~~Cost pass-through~~	4	%
~~Currency~~	—	%
~~Acquisitions/divestitures~~	—	%

	14	%

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Americas


	Quarter Ended September 30,								Nine Months Ended September 30,
(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	$	3,694		$	3,091		20	%	$	10,453		$	8,951		17	%

Operating profit	$	974		$	859		13	%	$	2,788		$	2,525		10	%
As a percent of sales	26.4		%	27.8		%			26.7		%	28.2		%


	Quarter Ended September 30, 2022 vs. 2021		Nine Months Ended September 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume	7	%	4	%
Price/Mix	6	%	5	%
Cost pass-through	8	%	8	%
Currency	(1)	%	—	%
Acquisitions/divestitures	—	%	—	%

	20	%	17	%

The Americas segment includes Linde's industrial gases operations in approximately 20 countries including the United States, Canada, Mexico, and Brazil.

Sales

Sales for the Americas segment increased ~~$401~~$603 million, or ~~14%~~20%, in the third quarter and increased $1,502 million, or 17%, for the ~~first quarter~~nine months ended September 30, 2022 versus the respective 2021 ~~period.~~periods. Higher pricing contributed 5%6% to sales in the ~~quarter.~~quarter and 5% in the year-to-date period. Higher volumes increased sales by 5%7% for the ~~first~~third quarter and increased 4% for the nine months ended September 30, 2022, driven by higher demand across ~~most~~all end markets except healthcare, led by chemicals and ~~energy and manufacturing.~~energy. Cost pass-through increased sales by 4%8% for the ~~first~~third quarter and the nine months ended September 30, 2022 with minimal impact on operating profit. ~~The impact of currency~~Currency translation indecreased sales by 1% for the third quarter and was not ~~significant.~~significant for the year-to-date period.

Operating profit

Operating profit in the Americas segment increased ~~$109~~$115 million, or ~~14%~~13%, in the ~~first~~third quarter and increased $263 million, or 10%, for the nine months ended September 30, 2022 versus the respective 2021 ~~period,~~periods, driven primarily by higher pricing, volumes and continued productivity initiatives which more than offset inflation during the ~~quarter.~~quarter and year-to-date period.

EMEA


		Quarter Ended March 31,									Quarter Ended September 30,								Nine Months Ended September 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	2,148		$	1,799		19	%	Sales	$	2,125		$	1,911		11	%	$	6,417		$	5,585		15	%

Operating profit	Operating profit	$	503		$	451		12	%	Operating profit	$	465		$	476		(2)	%	$	1,504		$	1,414		6	%
As a percent of sales	As a percent of sales	23.4		%	25.1		%			As a percent of sales	21.9		%	24.9		%			23.4		%	25.3		%


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume~~	—	%
~~Price/Mix~~	11	%
~~Cost pass-through~~	14	%
~~Currency~~	~~(6)~~	%
~~Acquisitions/divestitures~~	—	%

	19	%

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	Quarter Ended September 30, 2022 vs. 2021		Nine Months Ended September 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume	(3)	%	(2)	%
Price/Mix	14	%	13	%
Cost pass-through	17	%	15	%
Currency	(14)	%	(10)	%
Acquisitions/divestitures	(3)	%	(1)	%

	11	%	15	%

The EMEA segment includes Linde's industrial gases operations in approximately 45 European, Middle Eastern and African countries including Germany, France, Sweden, the Republic of South Africa, and the United Kingdom.

Sales

EMEA segment sales increased by ~~$349~~$214 million, or ~~19%~~11%, in the ~~first~~third quarter and increased $832 million, or 15%, for the nine months ended September 30, 2022 as compared to the respective 2021 ~~period.~~periods driven by higher sales across all end-markets except healthcare. Cost pass-through contributed ~~14%~~17% to sales in the quarter and 15% in the year-to-date period, with minimal impact on operating profit, while higher price attainment increased sales by ~~11%~~14% in the ~~quarter. Volumes were relatively flat~~quarter and 13% in the ~~quarter.~~year-to-date period. Volumes decreased sales by 3% in the quarter and 2% in the year to date period. Currency translation decreased sales by 6%14% in the quarter and 10% in the year-to-date period, due largely to the weakening of the Euro and British pound against the U.S. Dollar. The impact of net divestitures decreased sales by 3% in the quarter and 1% in the year-to-date period, primarily due to the deconsolidation of Russian subsidiaries as of June 30, 2022.

Operating Profit

Operating profit for the EMEA segment ~~increased~~decreased by ~~$52~~$11 million, or ~~12%~~2%, in the ~~first~~third quarter and increased $90 million, or 6%, for the nine months ended September 30, 2022 as compared to the respective 2021 periods. The decrease in operating profit in the quarter was driven primarily by currency translation, lower volumes and divestitures, partially offset by higher pricing and continued productivity initiatives. The increase in the year-to-date period was driven largely by higher pricing and continued productivity initiatives which more than offset currency, inflation ~~during the quarter.~~

and divestitures.

APAC


		Quarter Ended March 31,									Quarter Ended September 30,								Nine Months Ended September 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	1,602		$	1,436		12	%	Sales	$	1,660		$	1,564		6	%	$	4,913		$	4,544		8	%

Operating profit	Operating profit	$	399		$	351		14	%	Operating profit	$	429		$	382		12	%	$	1,254		$	1,122		12	%
As a percent of sales	As a percent of sales	24.9		%	24.4		%			As a percent of sales	25.8		%	24.4		%			25.5		%	24.7		%

~~Table of Contents~~


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume/Equipment~~	6	%
~~Price/Mix~~	4	%
~~Cost pass-through~~	4	%
~~Currency~~	~~(2)~~	%
~~Acquisitions/divestitures~~	—	%

	12	%


	Quarter Ended September 30, 2022 vs. 2021		Nine Months Ended September 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume/Equipment	5	%	4	%
Price/Mix	7	%	5	%
Cost pass-through	2	%	4	%
Currency	(8)	%	(5)	%
Acquisitions/divestitures	—	%	—	%

	6	%	8	%

The APAC segment includes Linde's industrial gases operations in approximately 20 Asian and South Pacific countries and regions including China, Australia, India, and South Korea.

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Sales

Sales for the APAC segment increased ~~$166~~$96 million, or ~~12%~~6%, for the ~~first~~third quarter and increased $369 million, or 8%, for the nine months ended September 30, 2022 versus the respective 2021 ~~period.~~periods. Volumes increased 6%5% in the quarter ~~driven by increased demand across most end markets, led by~~and 4% in the year-to-date period including project start-ups in the electronics and chemicals and energy ~~and project start-ups.~~end markets. Higher ~~price and cost pass-through both~~pricing contributed 4%7% to sales in the ~~quarter. The~~quarter and 5% to sales in the year-to-date period. Cost pass-through contributed 2% to sales in the quarter and 4% in the year-to-date period with minimal impact ~~of cost pass-through~~ on operating ~~profit was minimal.~~profit. Currency translation decreased sales by 2%8% in quarter and 5% in the year-to-date period driven primarily by the weakening of the Australian dollar, ~~and~~ Korean won and Chinese Yuan against the U.S. Dollar.

Operating profit

Operating profit in the APAC segment increased ~~$48~~$47 million, or ~~14%~~12%, in the ~~first~~third quarter and increased $132 million , or 12%, for the nine months ended September 30, 2022 versus the respective 2021 ~~period~~periods driven by higher volumes and pricing and continued productivity initiatives which more than offset the impact of currency and inflation during the ~~quarter.~~quarter and year-to-date period.

Engineering


		Quarter Ended March 31,									Quarter Ended September 30,								Nine Months Ended September 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	728		$	674		8	%	Sales	$	828		$	601		38	%	$	2,200		$	1,921		15	%

Operating profit	Operating profit	$	143		$	109		31	%	Operating profit	$	150		$	106		42	%	$	398		$	323		23	%
As a percent of sales	As a percent of sales	19.6		%	16.2		%			As a percent of sales	18.1		%	17.6		%			18.1		%	16.8		%


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume~~	13	%


~~Currency~~	~~(5)~~	%


	8	%


	Quarter Ended September 30, 2022 vs. 2021		Nine Months Ended September 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume	50	%	24	%


Currency	(12)	%	(9)	%


	38	%	15	%

Sales

Engineering segment sales increased ~~$54~~$227 million in the third quarter and increased $279 million, or 8%15%, in the ~~first quarter~~nine months ended September 30, 2022 as compared to the respective 2021 ~~period~~periods. The increase was driven ~~primarily~~ by a $321 million project ~~timing,~~progress recognition partially offset by other project timing and negative currency ~~impacts which decreased sales by 5% in the quarter.~~translation.

Projects ~~being executed~~ for Russia that ~~are currently or expected to be~~were sanctioned and ~~thus being~~have been wound down ~~represent~~represented approximately ~~$350~~$123 million and $773 million of the Engineering segment sales during the ~~first~~third quarter ofand nine months ended September 30, 2022.

Operating profit

Engineering segment operating profit increased, ~~$34~~$44 million ~~or 31%,~~ in the ~~first~~third quarter and increased $75 million for the nine months ended September 30, 2022 as compared to the respective 2021 ~~period~~periods driven ~~primarily~~by the aforementioned project partially offset by project ~~timing.~~timing and currency impacts.

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Other


		Quarter Ended March 31,									Quarter Ended September 30,								Nine Months Ended September 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	492		$	494		—	%	Sales	$	490		$	501		(2)	%	$	1,482		$	1,494		(1)	%

Operating profit (loss)	Operating profit (loss)	$	(44)		$	(18)		(144)	%	Operating profit (loss)	$	(8)		$	(13)		38	%	$	(41)		$	(49)		16	%
As a percent of sales	As a percent of sales	(8.9)		%	(3.6)		%			As a percent of sales	(1.6)		%	(2.6)		%			(2.8)		%	(3.3)		%


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume/price~~	1	%
~~Cost pass-through~~	1	%
~~Currency~~	~~(2)~~	%
~~Acquisitions/divestitures~~	—	%

	—	%


	Quarter Ended September 30, 2022 vs. 2021		Nine Months Ended September 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume/price	6	%	3	%
Cost pass-through	—	%	1	%
Currency	(8)	%	(5)	%
Acquisitions/divestitures	—	%	—	%

	(2)	%	(1)	%

Other consists of corporate costs and a few smaller businesses ~~including:~~including Surface Technologies, GIST and global helium ~~wholesale;~~wholesale, which individually do not meet the quantitative thresholds for separate presentation.

Sales

Sales for Other decreased $2$11 million for the ~~first~~third quarter and decreased $12 million for the nine months ended September 30, 2022 versus the respective 2021 ~~period.~~periods. Currency translation decreased sales by 2%8% in the ~~quarter.~~quarter and 5% in the year-to-date period. Underlying sales increased 6% in the quarter and 3% for the year-to-date period driven primarily by price and higher aviation and electronic sales in the coatings business. Cost pass-through increased sales by 1% in the year-to-date period.

Sales of the GIST business which was divested as of September 30, 2022 represented approximately $200 million and $630 million of Other sales during the third quarter ~~driven by higher pricing partially offset by lower global helium volumes.~~and nine months ended September 30, 2022, respectively.

Operating profit

Operating profit in Other ~~decreased $26~~increased $5 million, or ~~144%~~38% in the ~~first~~third quarter and increased $8 million, or 16%, in the nine months ended September 30, 2022 versus the respective 2021 ~~period,~~periods, due primarily to lower ~~volumes and~~corporate costs in the quarter, partially offset by higher sourcing costs in the global helium business.

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Currency

The results of Linde's non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies. For most operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde's results of operations in any given period.

To help understand the reported results, the following is a summary of the significant currencies underlying Linde's consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):


		Percentage of YTD 2022 Consolidated Sales		Exchange Rate for Income Statement		Exchange Rate for Balance Sheet			Percentage of YTD 2022 Consolidated Sales		Exchange Rate for Income Statement		Exchange Rate for Balance Sheet
				Year-To-Date Average		March 31,	December 31,				Year-To-Date Average		September 30,	December 31,
Currency	Currency			2022	2021	2022	2021	Currency			2022	2021	2022	2021
Euro	Euro	23	%	0.89	0.83	0.90	0.88	Euro	21	%	0.94	0.84	1.02	0.88
Chinese yuan	Chinese yuan	8	%	6.35	6.48	6.34	6.36	Chinese yuan	8	%	6.59	6.47	7.12	6.36
British pound	British pound	7	%	0.75	0.73	0.76	0.74	British pound	6	%	0.79	0.72	0.90	0.74
Australian dollar	Australian dollar	4	%	1.38	1.29	1.34	1.38	Australian dollar	4	%	1.41	1.32	1.56	1.38
Brazilian real	Brazilian real	4	%	5.22	5.46	4.74	5.58	Brazilian real	4	%	5.12	5.33	5.41	5.58
Canadian dollar	Canadian dollar	3	%	1.27	1.27	1.25	1.26	Canadian dollar	3	%	1.28	1.25	1.38	1.26
Korean won	Korean won	3	%	1,203	1,114	1,212	1,189	Korean won	3	%	1,265	1,131	1,432	1,189
Mexican peso	Mexican peso	2	%	20.50	20.34	19.87	20.53	Mexican peso	2	%	20.25	20.13	20.14	20.53
Indian rupee	Indian rupee	2	%	75.21	72.90	75.79	74.34	Indian rupee	2	%	77.34	73.57	81.35	74.34
South African rand	South African rand	1	%	15.23	14.96	14.61	15.94	South African rand	2	%	15.90	14.56	18.09	15.94
Swedish krona	Swedish krona	1	%	9.34	8.39	9.40	9.05	Swedish krona	1	%	9.88	8.48	11.09	9.05
Thailand bhat	Thailand bhat	1	%	33.04	30.28	33.26	33.40	Thailand bhat	1	%	34.54	31.48	37.85	33.40
Russian ruble		1	%	87.41	74.43	118.69	74.68

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Liquidity, Capital Resources and Other Financial Data

The following selected cash flow information provides a basis for the discussion that follows:


(Millions of dollars)	(Millions of dollars)	Three months ended March 31,				(Millions of dollars)	Nine months ended September 30,
		2022		2021			2022		2021
NET CASH PROVIDED BY (USED FOR):	NET CASH PROVIDED BY (USED FOR):					NET CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income (including noncontrolling interests)	Net income (including noncontrolling interests)	$	1,210	$	1,017	Net income (including noncontrolling interests)	$	2,920	$	2,902
Non-cash charges (credits):	Non-cash charges (credits):					Non-cash charges (credits):
Add: Depreciation and amortization	Add: Depreciation and amortization	1,112		1,166		Add: Depreciation and amortization	3,248		3,500
Add: Deferred income taxes	Add: Deferred income taxes	(59)		(65)		Add: Deferred income taxes	(412)		(184)
Add: Share-based compensation	Add: Share-based compensation	34		29		Add: Share-based compensation	78		95
Add: Cost reduction programs and other charges, net of payments (a)		(34)		(76)
Add: Russia-Ukraine conflict and other charges, net of payments (a)						Add: Russia-Ukraine conflict and other charges, net of payments (a)	909		83
Net income adjusted for non-cash charges	Net income adjusted for non-cash charges	2,263		2,071		Net income adjusted for non-cash charges	6,743		6,396
Less: Working capital	Less: Working capital	(239)		(42)		Less: Working capital	(238)		20

Less: Pension contributions	Less: Pension contributions	(13)		(12)		Less: Pension contributions	(44)		(32)
Other	Other	(11)		92		Other	308		108
Net cash provided by operating activities	Net cash provided by operating activities	$	2,000	$	2,109	Net cash provided by operating activities	$	6,769	$	6,492
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(649)		(762)		Capital expenditures	(2,237)		(2,247)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(43)		(10)		Acquisitions, net of cash acquired	(110)		(31)
Divestitures and asset sales		27		21
Divestitures, net of cash divested and asset sales						Divestitures, net of cash divested and asset sales	140		147
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	$	(665)	$	(751)	Net cash provided by (used for) investing activities	$	(2,207)	$	(2,131)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Debt increase (decrease) - net	Debt increase (decrease) - net	2,546		681		Debt increase (decrease) - net	2,795		1,808
Issuances (purchases) of common stock - net	Issuances (purchases) of common stock - net	(1,709)		(851)		Issuances (purchases) of common stock - net	(4,454)		(3,212)
Cash dividends - Linde plc shareholders	Cash dividends - Linde plc shareholders	(592)		(553)		Cash dividends - Linde plc shareholders	(1,758)		(1,648)
Noncontrolling interest transactions and other	Noncontrolling interest transactions and other	(1)		(247)		Noncontrolling interest transactions and other	(62)		(319)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	$	244	$	(970)	Net cash provided by (used for) financing activities	$	(3,479)	$	(3,371)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	$	62	$	(46)	Effect of exchange rate changes on cash and cash equivalents	$	(150)	$	(44)
Cash and cash equivalents, end-of-period	Cash and cash equivalents, end-of-period	$	4,464	$	4,096	Cash and cash equivalents, end-of-period	$	3,756	$	4,700

(a) See Note 2 to the condensed consolidated financial statements.

Cash Flow from Operations

Cash provided by operations of ~~$2,000~~$6,769 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~decreased $109~~increased $277 million, or 5%4%, versus 2021. The ~~decrease~~increase was driven primarily by ~~higher working capital requirements, which more than offset~~ higher net income adjusted for non-cash ~~charges. Cost reduction programs~~charges, partially offset by higher working capital requirements. Russia-Ukraine conflict and other charges were ~~benefits of $4~~$1,004 million and $8$222 million, respectively, for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021. Related cash outflows were ~~$30~~$95 million and ~~$68~~$139 million for the same respective periods.

Linde estimates that total 2022 required contributions to its pension plans will be ~~in the range of $40 million to~~approximately $50 million, of which ~~$13~~$44 million has been made through ~~March 31,~~September 30, 2022.

~~Investing~~

~~Net~~As of September 30, 2022, Linde has approximately $1.8 billion recorded in contract liabilities within the condensed consolidated balance sheet related to engineering projects in Russia. Any obligation to satisfy the related residual contract liabilities may have an adverse effect on Linde’s cash used for investing of $665 million for the three months ended March 31, 2022 decreased $86 million versus 2021, primarily driven by lower capital expenditures, partially offset by higher acquisition spend net of cash acquired.flows.

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Investing

Net cash used for investing of $2,207 million for the nine months ended September 30, 2022 increased $76 million versus 2021, as higher acquisition and lower proceeds from divestitures, net of cash divested and asset sales more than offset lower capital expenditures.

Capital expenditures for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 were ~~$649~~$2,237 million, ~~$113~~$10 million lower than the prior year.

At ~~March 31,~~September 30, 2022, Linde's sale of gas backlog of large projects under construction was approximately ~~$3.5~~$3.7 billion. This represents the total estimated capital cost of large plants under construction.

Acquisitions, net of cash acquired for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 were ~~$43~~$110 million and 10$31 million, respectively, and related primarily to acquisitions in ~~EMEA.~~EMEA and the Americas. Divestitures, net of cash divested and asset sales for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 were ~~$27~~$140 million and ~~$21~~$147 million, respectively. Divestiture proceeds for the nine months ended September 30, 2022 include cash received from the sale of the company's GIST business of $184 million, net of cash divested of $75 million, for net proceeds of $109 million (see Note 2 to the condensed consolidated financial statements).

Financing

Cash ~~provided by~~used for financing activities was ~~$244~~$3,479 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 as compared to cash used for financing activities of ~~$970~~$3,371 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021. Cash provided by debt was ~~$2,546~~$2,795 million versus ~~$681~~$1,808 million in 2021 driven by higher commercial paper borrowings and debt issuances in 2022. In January 2022, Linde repaid €1.0 billion of 0.250% notes that became due. In March 2022, Linde issued €500 million of 1.000% notes due 2027, €750 million of 1.375% notes due 2031, and €800 million of 1.625% notes due 2035. In May 2022, Linde repaid $500 million of 2.20% notes due in August 2022.

Net purchases of ordinary shares were ~~$1,709~~$4,454 million in 2022 versus ~~$851~~$3,212 million in 2021. On February 28, 2022, the company’s Board of Directors approved the additional repurchase of $10.0 billion of its ordinary shares. For additional information related to the share repurchase programs, see Part II Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Cash dividends of ~~$592~~$1,758 million increased ~~$39~~$110 million from 2021 driven primarily by a 10% increase in quarterly dividends per share from $1.06 per share to $1.17 per share, partially offset by lower shares outstanding. Cash used for Noncontrolling interest transactions and other was $1$62 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 versus cash used of ~~$247~~$319 million for the respective 2021 period due to the settlement of the buyout of minority interests in the Republic of South Africa in January of 2021.

The company continues to believe it has sufficient operating flexibility, cash, and funding sources to meet its business needs around the world. The company had ~~$4.5~~$3.8 billion of cash as of ~~March 31,~~September 30, 2022, and has a $5 billion unsecured and undrawn revolving credit agreement with no associated financial covenants. No borrowings were outstanding under the credit agreement as of ~~March 31,~~September 30, 2022. The company does not anticipate any limitations on its ability to access the debt capital markets and/or other external funding sources and remains committed to its strong ratings from Moody’s and Standard & Poor’s.

Legal Proceedings

See Note 9 to the condensed consolidated financial statements.

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NON-GAAP MEASURES AND RECONCILIATIONS

(Millions of dollars, except per share data)

(UNAUDITED)

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


		Quarter Ended March 31,					Quarter Ended September 30,					Nine Months Ended September 30,
		2022			2021				2022				2021			2022			2021

Adjusted Operating Profit and Operating Margin	Adjusted Operating Profit and Operating Margin							Adjusted Operating Profit and Operating Margin
Reported operating profit	Reported operating profit	$	1,480		$	1,213		Reported operating profit	$	1,613			$	1,292		$	3,682		$	3,647
Add: Cost reduction programs and other charges		(4)			(8)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	15				26			1,004			222

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	429			483			Add: Purchase accounting impacts - Linde AG (c)	382				492			1,217			1,466
Total adjustments	Total adjustments	425			475			Total adjustments	397				518			2,221			1,688
Adjusted operating profit	Adjusted operating profit	$	1,905		$	1,688		Adjusted operating profit	$	2,010			$	1,810		$	5,903		$	5,335

Reported percentage change	Reported percentage change	22		%	65		%	Reported percentage change	25		%					1		%
Adjusted percentage change	Adjusted percentage change	13		%	25		%	Adjusted percentage change	11		%					11		%

Reported sales	Reported sales	$	8,211		$	7,243		Reported sales	$	8,797			$	7,668		$	25,465		$	22,495

Reported operating margin	Reported operating margin	18.0		%	16.7		%	Reported operating margin	18.3		%		16.8		%	14.5		%	16.2		%
Adjusted operating margin	Adjusted operating margin	23.2		%	23.3		%	Adjusted operating margin	22.8		%		23.6		%	23.2		%	23.7		%

Adjusted Depreciation and amortization	Adjusted Depreciation and amortization							Adjusted Depreciation and amortization
Reported depreciation and amortization	Reported depreciation and amortization	$	1,112		$	1,166		Reported depreciation and amortization	$	1,045			$	1,163		$	3,248		$	3,500
Less: Purchase accounting impacts - Linde AG (c)	Less: Purchase accounting impacts - Linde AG (c)	(418)			(478)			Less: Purchase accounting impacts - Linde AG (c)	(377)				(469)			(1,196)			(1,426)
Adjusted depreciation and amortization	Adjusted depreciation and amortization	$	694		$	688		Adjusted depreciation and amortization	$	668			$	694		$	2,052		$	2,074

Adjusted Other Income (Expense) - net	Adjusted Other Income (Expense) - net							Adjusted Other Income (Expense) - net
Reported Other Income (Expense) - net	Reported Other Income (Expense) - net	$	12		$	4		Reported Other Income (Expense) - net	$	(34)			$	10		$	(58)		$	(3)
Less: Purchase accounting impacts - Linde AG (c)	Less: Purchase accounting impacts - Linde AG (c)	(11)			(5)			Less: Purchase accounting impacts - Linde AG (c)	(5)				(23)			(21)			(40)
Adjusted Other Income (Expense) - net	Adjusted Other Income (Expense) - net	$	23		$	9		Adjusted Other Income (Expense) - net	$	(29)			$	33		$	(37)		$	37

Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost	Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost							Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost
Reported net pension and OPEB cost (benefit), excluding service cost	Reported net pension and OPEB cost (benefit), excluding service cost	$	(64)		$	(49)		Reported net pension and OPEB cost (benefit), excluding service cost	$	(53)			$	(45)		$	(179)		$	(143)
Add: Pension settlement charges	Add: Pension settlement charges	—			—			Add: Pension settlement charges	(6)				(4)			(6)			(4)
Adjusted Net Pension and OPEB cost (benefit), excluding service costs	Adjusted Net Pension and OPEB cost (benefit), excluding service costs	$	(64)		$	(49)		Adjusted Net Pension and OPEB cost (benefit), excluding service costs	$	(59)			$	(49)		$	(185)		$	(147)

Adjusted Interest Expense - Net	Adjusted Interest Expense - Net							Adjusted Interest Expense - Net
Reported interest expense - net	Reported interest expense - net	$	9		$	20		Reported interest expense - net	$	18			$	8		$	32		$	46
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	10			18			Add: Purchase accounting impacts - Linde AG (c)	8				10			27			43

Adjusted interest expense - net	Adjusted interest expense - net	$	19		$	38		Adjusted interest expense - net	$	26			$	18		$	59		$	89

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Adjusted Income Taxes (a)	Adjusted Income Taxes (a)							Adjusted Income Taxes (a)
Reported income taxes	Reported income taxes	$	369		$	268		Reported income taxes	$	391		$	321		$	1,046		$	923
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	108			118			Add: Purchase accounting impacts - Linde AG (c)	92			115			308			349
Add: Pension settlement charges	Add: Pension settlement charges	—			—			Add: Pension settlement charges	1			1			1			1
Add: Cost reduction programs and other charges		(3)			20
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	26			3			127			29

Total adjustments	Total adjustments	105			138			Total adjustments	119			119			436			379
Adjusted income taxes	Adjusted income taxes	$	474		$	406		Adjusted income taxes	$	510		$	440		$	1,482		$	1,302

Adjusted Effective Tax Rate (a)	Adjusted Effective Tax Rate (a)							Adjusted Effective Tax Rate (a)
Reported income before income taxes and equity investments	Reported income before income taxes and equity investments	$	1,535		$	1,242		Reported income before income taxes and equity investments	$	1,648		$	1,329		$	3,829		$	3,744
Add: Pension settlement charge	Add: Pension settlement charge	—			—			Add: Pension settlement charge	6			4			6			4
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	419			465			Add: Purchase accounting impacts - Linde AG (c)	374			482			1,190			1,423
Add: Cost reduction programs and other charges		(4)			(8)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	15			26			1,004			222

Total adjustments	Total adjustments	415			457			Total adjustments	395			512			2,200			1,649
Adjusted income before income taxes and equity investments	Adjusted income before income taxes and equity investments	$	1,950		$	1,699		Adjusted income before income taxes and equity investments	$	2,043		$	1,841		$	6,029		$	5,393

Reported Income taxes	Reported Income taxes	$	369		$	268		Reported Income taxes	$	391		$	321		$	1,046		$	923
Reported effective tax rate	Reported effective tax rate	24.0		%	21.6		%	Reported effective tax rate	23.7		%	24.2		%	27.3		%	24.7		%

Adjusted income taxes	Adjusted income taxes	$	474		$	406		Adjusted income taxes	$	510		$	440		$	1,482		$	1,302
Adjusted effective tax rate	Adjusted effective tax rate	24.3		%	23.9		%	Adjusted effective tax rate	25.0		%	23.9		%	24.6		%	24.1		%

Income from Equity Investments	Income from Equity Investments							Income from Equity Investments
Reported income from equity investments	Reported income from equity investments	$	44		$	43		Reported income from equity investments	$	43		$	1		$	137		$	81
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	20			19			Add: Purchase accounting impacts - Linde AG (c)	18			19			57			57
Add: Cost reduction programs and other charges (e)		—			—
Add: Russia-Ukraine conflict and other charges (d)								Add: Russia-Ukraine conflict and other charges (d)	—			35			—			35
Adjusted income from equity investments	Adjusted income from equity investments	$	64		$	62		Adjusted income from equity investments	$	61		$	55		$	194		$	173

Adjusted Noncontrolling Interests from Continuing Operations	Adjusted Noncontrolling Interests from Continuing Operations							Adjusted Noncontrolling Interests from Continuing Operations
Reported noncontrolling interests from continuing operations	Reported noncontrolling interests from continuing operations	$	(36)		$	(38)		Reported noncontrolling interests from continuing operations	$	(27)		$	(31)		$	(101)		$	(105)

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	(4)			(5)			Add: Purchase accounting impacts - Linde AG (c)	(12)			(4)			(19)			(11)

Adjusted noncontrolling interests from continuing operations	Adjusted noncontrolling interests from continuing operations	$	(40)		$	(43)		Adjusted noncontrolling interests from continuing operations	$	(39)		$	(35)		$	(120)		$	(116)

Adjusted Income from Continuing Operations (b)	Adjusted Income from Continuing Operations (b)							Adjusted Income from Continuing Operations (b)
Reported income from continuing operations	Reported income from continuing operations	$	1,174		$	979		Reported income from continuing operations	$	1,273		$	978		$	2,819		$	2,797
Add: Pension settlement charge	Add: Pension settlement charge	—			—			Add: Pension settlement charge	5			3			5			3
Add: Cost reduction programs and other charges		(1)			(28)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	(11)			58			877			228

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	327			361			Add: Purchase accounting impacts - Linde AG (c)	288			382			920			1,120
Total adjustments	Total adjustments	326			333			Total adjustments	282			443			1,802			1,351
Adjusted income from continuing operations	Adjusted income from continuing operations	$	1,500		$	1,312		Adjusted income from continuing operations	$	1,555		$	1,421		$	4,621		$	4,148

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Adjusted Diluted EPS from Continuing Operations (b)	Adjusted Diluted EPS from Continuing Operations (b)							Adjusted Diluted EPS from Continuing Operations (b)
Reported diluted EPS from continuing operations	Reported diluted EPS from continuing operations	$	2.30		$	1.86		Reported diluted EPS from continuing operations	$	2.54		$	1.88		$	5.57		$	5.34
Add: Pension settlement charge	Add: Pension settlement charge	—			—			Add: Pension settlement charge	0.01			0.01			0.01			0.01
Add: Cost reduction programs and other charges		—			(0.05)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	(0.02)			0.11			1.73			0.44

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	0.63			0.68			Add: Purchase accounting impacts - Linde AG (c)	0.57			0.73			1.82			2.13
Total adjustments	Total adjustments	0.63			0.63			Total adjustments	0.56			0.85			3.56			2.58
Adjusted diluted EPS from continuing operations	Adjusted diluted EPS from continuing operations	$	2.93		$	2.49		Adjusted diluted EPS from continuing operations	$	3.10		$	2.73		$	9.13		$	7.92

Reported percentage change	Reported percentage change	24		%	74		%	Reported percentage change	35		%				4		%
Adjusted percentage change	Adjusted percentage change	18		%	32		%	Adjusted percentage change	14		%				15		%

Adjusted EBITDA and % of Sales	Adjusted EBITDA and % of Sales							Adjusted EBITDA and % of Sales
Income from continuing operations	Income from continuing operations	$	1,174		$	979		Income from continuing operations	$	1,273		$	978		$	2,819		$	2,797
Add: Noncontrolling interests related to continuing operations	Add: Noncontrolling interests related to continuing operations	36			38			Add: Noncontrolling interests related to continuing operations	27			31			101			105
Add: Net pension and OPEB cost (benefit), excluding service cost	Add: Net pension and OPEB cost (benefit), excluding service cost	(64)			(49)			Add: Net pension and OPEB cost (benefit), excluding service cost	(53)			(45)			(179)			(143)
Add: Interest expense	Add: Interest expense	9			20			Add: Interest expense	18			8			32			46
Add: Income taxes	Add: Income taxes	369			268			Add: Income taxes	391			321			1,046			923
Add: Depreciation and amortization	Add: Depreciation and amortization	1,112			1,166			Add: Depreciation and amortization	1,045			1,163			3,248			3,500
EBITDA from continuing operations	EBITDA from continuing operations	$	2,636		$	2,422		EBITDA from continuing operations	$	2,701		$	2,456		$	7,067		$	7,228
Add: Cost reduction programs and other charges		(4)			(8)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	15			61			1,004			257
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	31			24			Add: Purchase accounting impacts - Linde AG (c)	23			42			77			97
Total adjustments	Total adjustments	27			16			Total adjustments	38			103			1,081			354
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	$	2,663		$	2,438		Adjusted EBITDA from continuing operations	$	2,739		$	2,559		$	8,148		$	7,582

Reported sales	Reported sales	$	8,211		$	7,243		Reported sales	$	8,797		$	7,668		$	25,465		$	22,495
% of sales	% of sales							% of sales
EBITDA from continuing operations	EBITDA from continuing operations	32.1		%	33.4		%	EBITDA from continuing operations	30.7		%	32.0		%	27.8		%	32.1		%
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	32.4		%	33.7		%	Adjusted EBITDA from continuing operations	31.1		%	33.4		%	32.0		%	33.7		%

(a) The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.

(b) Net of income taxes which are shown separately in “Adjusted Income Taxes and Adjusted Effective Tax Rate”.

(c) The company believes that its non-GAAP measures excluding Purchase accounting impacts - Linde AG are useful to investors because: (i) the business combination was a merger of equals in an all-stock merger transaction, with no cash consideration, (ii) the company is managed on a geographic basis and the results of certain geographies are more heavily impacted by purchase accounting than others, causing results that are not comparable at the reportable segment level, therefore, the impacts of purchase accounting adjustments to each segment vary and are not comparable within the company and when compared to other companies in similar regions, (iii) business management is evaluated and variable compensation is determined based on results excluding purchase accounting impacts, and; (iv) it is important to investors and analysts to understand the purchase accounting impacts to the financial statements.

A summary of each of the adjustments made for Purchase accounting impacts - Linde AG are as follows:

Adjusted Operating Profit and Margin: The purchase accounting adjustments for the periods presented relate primarily to depreciation and amortization related to the fair value step up of fixed assets and intangible assets (primarily customer related) acquired in the merger and the allocation of fair value step-up for ongoing Linde AG asset disposals (reflected in Other Income/(Expense)).

Adjusted Interest Expense - Net: Relates to the amortization of the fair value of debt acquired in the merger.

Adjusted Income Taxes and Effective Tax Rate: Relates to the current and deferred income tax impact on the adjustments discussed above. The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.

Adjusted Income from Equity Investments: Represents the amortization of increased fair value on equity investments related to depreciable and amortizable assets.

Adjusted Noncontrolling Interests from Continuing Operations: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis.

~~(e)~~(d) Impairment charge related to a joint venture in the APAC segment.

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Net Debt and Adjusted Net Debt

Net debt is a financial liquidity measure used by investors, financial analysts and management to evaluate the ability of a company to repay its debt. Purchase accounting impacts have been excluded as they are non-cash and do not have an impact on liquidity.


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
(Millions of dollars)	(Millions of dollars)					(Millions of dollars)
Debt	Debt	$	16,456	$	14,207	Debt	$	15,338	$	14,207
Less: cash and cash equivalents	Less: cash and cash equivalents	(4,464)		(2,823)		Less: cash and cash equivalents	(3,756)		(2,823)
Net debt	Net debt	11,992		11,384		Net debt	11,582		11,384
Less: purchase accounting impacts - Linde AG	Less: purchase accounting impacts - Linde AG	(50)		(61)		Less: purchase accounting impacts - Linde AG	(28)		(61)
Adjusted net debt	Adjusted net debt	$	11,942	$	11,323	Adjusted net debt	$	11,554	$	11,323

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Supplemental Guarantee Information

On June 6, 2020, the company filed a Form S-3 Registration Statement with the SEC ("the Registration Statement").

Linde plc may offer debt securities, preferred shares, depositary shares and ordinary shares under the Registration Statement, and debt securities exchangeable for or convertible into preferred shares, ordinary shares or other debt securities. Debt securities of Linde plc may be guaranteed by Linde Inc and/or Linde GmbH. Linde plc may provide guarantees of debt securities offered by its wholly owned subsidiaries Linde Inc. or Linde Finance under the Registration Statement.

Linde Inc. is a wholly owned subsidiary of Linde plc. Linde Inc. may offer debt securities under the Registration Statement. Debt securities of Linde Inc. will be guaranteed by Linde plc, and such guarantees by Linde plc may be guaranteed by Linde GmbH. Linde Inc. may also provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) guarantees of the guarantees provided by Linde plc of debt securities of Linde Finance offered under the Registration Statement.

Linde Finance B.V. is a wholly owned subsidiary of Linde plc. Linde Finance may offer debt securities under the Registration Statement. Linde plc will guarantee debt securities of Linde Finance offered under the Registration Statement. Linde GmbH and Linde Inc. may guarantee Linde plc’s obligations under its downstream guarantee.

Linde GmbH is a wholly owned subsidiary of Linde plc. Linde GmbH may provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Inc. or Linde Finance offered under the Registration Statement.

In September 2019, Linde plc provided downstream guarantees of all of the pre-business combination Linde Inc. and Linde Finance notes, and Linde GmbH and Linde Inc., respectively, provided upstream guarantees of Linde plc’s downstream guarantees.

For further information about the guarantees of the debt securities registered under the Registration Statement (including the ranking of such guarantees, limitations on enforceability of such guarantees and the circumstances under which such guarantees may be released), see “Description of Debt Securities – Guarantees” and “Description of Debt Securities – Ranking” in the Registration Statement, which subsections are incorporated herein by reference.

The following tables present summarized financial information for Linde plc, Linde Inc., Linde GmbH and Linde Finance on a combined basis, after eliminating intercompany transactions and balances between them and excluding investments in and equity in earnings from non-guarantor subsidiaries.

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(Millions of dollars)	(Millions of dollars)					(Millions of dollars)
Statement of Income Data	Statement of Income Data	Three Months Ended March 31, 2022		Twelve Months Ended December 31, 2021		Statement of Income Data	Nine Months Ended September 30, 2022		Twelve Months Ended December 31, 2021
Sales	Sales	$	2,121	$	7,767	Sales	$	6,650	$	7,767
Operating profit	Operating profit	293		973		Operating profit	347		973
Net income	Net income	192		721		Net income	(26)		721
Transactions with non-guarantor subsidiaries	Transactions with non-guarantor subsidiaries	364		2,067		Transactions with non-guarantor subsidiaries	1,231		2,067

Balance Sheet Data (at period end)	Balance Sheet Data (at period end)					Balance Sheet Data (at period end)
Current assets (a)	Current assets (a)	$	7,158	$	5,826	Current assets (a)	$	8,284	$	5,826
Long-term assets (b)	Long-term assets (b)	14,501		15,928		Long-term assets (b)	13,123		15,928
Current liabilities (c)	Current liabilities (c)	9,752		8,853		Current liabilities (c)	10,747		8,853
Long-term liabilities (d)	Long-term liabilities (d)	43,200		42,860		Long-term liabilities (d)	44,508		42,860

(a) From current assets above, amount due from non-guarantor subsidiaries	(a) From current assets above, amount due from non-guarantor subsidiaries	$	4,362	$	4,209	(a) From current assets above, amount due from non-guarantor subsidiaries	$	5,392	$	4,209
(b) From long-term assets above, amount due from non-guarantor subsidiaries	(b) From long-term assets above, amount due from non-guarantor subsidiaries	2,070		3,257		(b) From long-term assets above, amount due from non-guarantor subsidiaries	1,719		3,257
(c) From current liabilities above, amount due to non-guarantor subsidiaries	(c) From current liabilities above, amount due to non-guarantor subsidiaries	1,362		1,304		(c) From current liabilities above, amount due to non-guarantor subsidiaries	1,492		1,304
(d) From long-term liabilities above, amount due to non-guarantor subsidiaries	(d) From long-term liabilities above, amount due to non-guarantor subsidiaries	27,226		28,142		(d) From long-term liabilities above, amount due to non-guarantor subsidiaries	30,868		28,142

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Refer to Item 7A. to Part II of Linde's 2021 Annual Report on Form 10-K for discussion.

Item 4. Controls and Procedures

(a)Based on an evaluation of the effectiveness of Linde's disclosure controls and procedures, which was made under the supervision and with the participation of management, including Linde's principal executive officer and principal financial officer, the principal executive officer and principal financial officer have each concluded that, as of the end of the quarterly period covered by this report, such disclosure controls and procedures are effective in ensuring that information required to be disclosed by Linde in reports that it files under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and accumulated and communicated to management including Linde's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

(b)There were no changes in Linde's internal control over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, Linde's internal control over financial reporting.

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PART II - OTHER INFORMATION

Linde plc and Subsidiaries

Item 1. Legal Proceedings

See Note 9 to the condensed consolidated financial statements for a description of current legal proceedings.

Item 1A. Risk Factors

Through the quarterly period covered by this report, there have been no material changes to the risk factors disclosed in Item 1A to Part I of Linde's Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities- Certain information regarding purchases made by or on behalf of the company or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of its ordinary shares during the quarter ended ~~March 31,~~September 30, 2022 is provided below:

Period
Total Number
of Shares
Purchased
(Thousands)
Average
Price Paid
Per Share
Total Numbers of Shares
Purchased as Part of
Publicly Announced
Program (1,2)
(Thousands)
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Program (1)
(Millions)
January 2022 1,005 $ 325.25 1,005 $ 168
February 2022 554 $ 303.26 554 $ —
March 2022 4,270 $ 294.39 4,270 $ 8,743
First Quarter 2022 5,829 $ 300.57 5,829 $ 8,743


Period	Total Number of Shares Purchased (Thousands)	Average Price Paid Per Share		Total Numbers of Shares Purchased as Part of Publicly Announced Program (1,2) (Thousands)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (1) (Millions)
July 2022	783	$	278.82	783	$	6,953
August 2022	1,462	$	296.53	1,462	$	6,520
September 2022	1,768	$	278.56	1,768	$	6,027
Third Quarter 2022	4,013	$	285.16	4,013	$	6,027

(1) On January 25, 2021 the company's board of directors approved the repurchase of $5.0 billion of its ordinary shares ("2021 program") which could take place from time to time on the open market (and could include the use of 10b5-1 trading plans), subject to market and business conditions. The 2021 program has a maximum repurchase amount of 15% of outstanding shares, began on February 1, 2021, expires on July 31, 2023, and was fully utilized as of February 28, 2022.

~~(2)~~ On February 28, 2022, the company's board of directors approved the repurchase of $10.0 billion of its ordinary shares ("2022 program") which could take place from time to time on the open market (and could include the use of 10b5-1 trading plans), subject to market and business conditions. The 2022 program has a maximum repurchase amount of 15% of outstanding shares, began on March 1, 2022 and expires on July 31, 2024.

As of ~~March 31,~~September 30, 2022, the company repurchased ~~$495 million and $1.3~~$4.0 billion of its ordinary shares pursuant to the ~~2021 and~~ 2022 ~~programs, respectively.~~program. As of ~~March 31,~~September 30, 2022, ~~$8.7~~$6.0 billion of share repurchases remain authorized under the 2022 program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

(a)

Exhibits

~~4.1~~

~~Final Terms of 1.000% Notes due 2027 of Linde plc (Filed as Exhibit 4.1 to Linde plc 's current report on Form 8-K, dated March 31, 2022, Filing No. 1-38730, and incorporated herein by reference).~~

~~4.2~~

~~Final Terms of 1.375% Notes due 2031 of Linde plc (Filed as Exhibit 4.2 to Linde plc 's current report on Form 8-K, dated March 31, 2022, Filing No. 1-38730, and incorporated herein by reference).~~

~~4.3~~

~~Final Terms of 1.625% Notes due 2035 of Linde plc (Filed as Exhibit 4.3 to Linde plc 's current report on Form 8-K, dated March 31, 2022, Filing No. 1-38730, and incorporated herein by reference).~~

31.01

Rule 13a-14(a) Certification

31.02

Rule 13a-14(a) Certification

32.01

Section 1350 Certification (such certifications are furnished for the information of the Commission and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act).

32.02

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

*Indicates a management contract or compensatory plan or arrangement.

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SIGNATURE

Linde plc and Subsidiaries

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						Linde plc

						(Registrant)

Date: ~~May 2,~~October 27, 2022						By: /s/ Kelcey E. Hoyt

						Kelcey E. Hoyt
						Chief Accounting Officer

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Note 1. Summary of Significant Accounting Policies			911

Note 2. ~~Cost Reduction Programs~~Russia-Ukraine Conflict and Other Charges			911

Note 3. Supplemental Information			1013

Note 4. Debt			1114

Note 5. Financial Instruments			1314

Note 6. Fair Value Disclosures			1516

Note 7. Earnings Per Share – Linde plc Shareholders			1617

Note 8. Retirement Programs			1718

Note 9. Commitments and Contingencies			1718

Note 10. Segments			1819

Note 11. Equity			2021

Note 12. Revenue Recognition			2022

~~Note 13. Subsequent Events~~			23