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Praxair Reports Third-Quarter 2012 Results

Stocks in this article: PX

Sales in Asia were $358 million, up 3% from the prior-year quarter. Higher on-site sales in China from new plant start-ups were partially offset by lower merchant sales to the electronics and photovoltaic industries. Operating profit was $52 million, as compared to $58 million in the prior-year, due to negative currency translation and lower pricing.

Praxair Surface Technologies third-quarter sales were $157 million compared to $163 million in the prior-year quarter. Sales grew 2%, excluding currency translation impact, primarily from higher jet engine and energy coatings. Operating profit was $25 million with underlying growth offset by currency translation impacts and cost increases.

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

*See the attachments for calculations of non-GAAP measures. Third-quarter 2012 results are adjusted to exclude cost reduction charges, a pension settlement charge and an income tax benefit.

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

A teleconference on Praxair’s third-quarter results is being held this morning, October 24, at 11:00 a.m. Eastern Time. The number is (617) 597-5397 -- Passcode: 56053291. The call also is available as a web cast at www.praxair.com/investors. Materials to be used in the teleconference are also available.

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company’s Form 10-K and 10-Q reports filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.

 
 
PRAXAIR, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(UNAUDITED)
                           
The following Non-GAAP measures are intended to supplement investors' understanding of the company's financial statements by providing measures which investors, financial analysts and management use to help evaluate the company's operating performance. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.
 
(Millions of dollars, except per share amounts)
Operating Profit Income Taxes

Net Income - Praxair, Inc.

Diluted EPS

2012

2011

2012

2011

2012

2011

2012

2011

 

Quarter Ended September 30,

Reported GAAP amounts $ 558 $ 632 $ 90 $ 166 $ 430 $ 429 $ 1.43 $ 1.40
Non-GAAP adjustments:
Cost reduction program (a) 56 - 16 - 38 - 0.12 -
Pension settlement charge (b) 9 - 3 - 6 - 0.02 -
Income tax benefit (c)   -   -   55   -   (55 )   -   (0.18 )   -
Total adjustments   65   -   74   -   (11 )   -   (0.04 )   -
Adjusted amounts $ 623 $ 632 $ 164 $ 166 $ 419   $ 429 $ 1.39   $ 1.40
 
 

Nine-months Ended September 30,

Reported GAAP amounts $ 1,821 $ 1,850 $ 424 $ 485 $ 1,278 $ 1,252 $ 4.23 $ 4.07
Non-GAAP adjustments:
Cost reduction program (a) 56 - 16 - 38 - 0.12 -
Pension settlement charge (b) 9 - 3 - 6 - 0.02 -
Income tax benefit (c)   -   -   55   -   (55 )   -   (0.18 )   -
Total adjustments   65   -   74   -   (11 )   -   (0.04 )   -
Adjusted amounts $ 1,886 $ 1,850 $ 498 $ 485 $ 1,267   $ 1,252 $ 4.19   $ 4.07
 
 
(a) Charges related to severance and business restructuring actions primarily in Europe within the industrial gases and surface technologies businesses.
(b) A pension settlement charge was recorded in the 2012 third quarter related to lump sum benefit payments made from the U.S. supplemental pension plan to a number of recently retired senior managers.
(c) Income tax benefit related to a loss on a liquidated subsidiary as a result of the divestiture of the U.S. Homecare business.
 
 

               
 
PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)
 
Quarter Ended September 30, Year to Date September 30,
2012 2011 2012 2011
 
SALES $ 2,774 $ 2,896 $ 8,425 $ 8,456
Cost of sales 1,595 1,684 4,813 4,860
Selling, general and administrative 306 307 951 924
Depreciation and amortization 248 256 747 754
Research and development 24 22 73 67
Cost reduction program and other charges 65 - 65 -
Other income (expense) - net   22     5     45     (1 )
OPERATING PROFIT 558 632 1,821 1,850
Interest expense - net   36     36     106     107  
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS 522 596 1,715 1,743
Income taxes   90     166     424     485  
INCOME BEFORE EQUITY INVESTMENTS 432 430 1,291 1,258
Income from equity investments   8     13     25     33  
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) 440 443 1,316 1,291
Less: noncontrolling interests   (10 )   (14 )   (38 )   (39 )
NET INCOME - PRAXAIR, INC. $ 430   $ 429   $ 1,278   $ 1,252  
 
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
 
Basic earnings per share $ 1.44 $ 1.42 $ 4.28 $ 4.13
 
Diluted earnings per share $ 1.43 $ 1.40 $ 4.23 $ 4.07
 
Cash dividends $ 0.55 $ 0.50 $ 1.65 $ 1.50
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic shares outstanding (000's) 298,416 301,594 298,793 303,125
Diluted shares outstanding (000's) 301,731 305,623 302,352 307,581
 
 

           
 
 
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(UNAUDITED)
 
September 30, December 31,
2012 2011
ASSETS
Cash and cash equivalents $ 108 $ 90
Accounts receivable - net 1,901 1,795
Inventories 483 456
Prepaid and other current assets   361   266
TOTAL CURRENT ASSETS 2,853 2,607
 
Property, plant and equipment - net 11,074 10,131
Goodwill 2,381 2,372
Other intangibles - net 146 167
Other long-term assets   1,185   1,079
TOTAL ASSETS $ 17,639 $ 16,356
LIABILITIES AND EQUITY
Accounts payable $ 919 $ 896
Short-term debt 587 337
Current portion of long-term debt 160 387
Other current liabilities   882   915
TOTAL CURRENT LIABILITIES 2,548 2,535
Long-term debt 6,389 5,838
Other long-term liabilities   2,113   1,966
TOTAL LIABILITIES 11,050 10,339
 
REDEEMABLE NONCONTROLLING INTERESTS 243 220
 
EQUITY
Praxair, Inc. shareholders' equity 6,015 5,488
Noncontrolling interests   331   309
TOTAL EQUITY   6,346   5,797
TOTAL LIABILITIES AND EQUITY $ 17,639 $ 16,356
 
 

                   
 
 
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
 
Quarter Ended Year to Date
September 30, September 30,
2012 2011 2012 2011
OPERATIONS
Net income - Praxair, Inc. $ 430 $ 429 $ 1,278 $ 1,252
Noncontrolling interests   10     14     38     39  
Net income (including noncontrolling interests) 440 443 1,316 1,291
 
Adjustments to reconcile net income to net cash providedby operating activities:
 
Cost reduction program, net of payments 52 - 52 -
Deferred income taxes 119 (49 ) 202 33
Depreciation and amortization 248 256 747 754
Accounts receivable (60 ) 65 (107 ) (202 )
Inventory (16 ) 7 (30 ) (43 )
Payables and accruals 43 105 (75 ) (48 )
Pension contributions (3 ) (2 ) (112 ) (87 )
Other   (77 )   (93 )   (120 )   (34 )
Net cash provided by operating activities   746     732     1,873     1,664  
INVESTING
Capital expenditures (547 ) (458 ) (1,594 ) (1,225 )
Acquisitions, net of cash acquired (58 ) (19 ) (109 ) (99 )
Divestitures and asset sales   6     3     77     40  
Net cash used for investing activities   (599 )   (474 )   (1,626 )   (1,284 )
 
FINANCING
Debt increase (decrease) - net 131 204 583 725
Issuances of common stock 19 22 126 164
Purchases of common stock (125 ) (273 ) (438 ) (758 )
Cash dividends - Praxair, Inc. shareholders (164 ) (150 ) (492 ) (453 )
Excess tax benefit on stock option exercises 6 6 50 47
Noncontrolling interest transactions and other   (14 )   (3 )   (55 )   (4 )
Net cash provided by (used for) financing activities (147 ) (194 ) (226 ) (279 )
 
Effect of exchange rate changes on cash andcash equivalents
  4     (19 )   (3 )   (15 )
 
Change in cash and cash equivalents 4 45 18 86
Cash and cash equivalents, beginning-of-period   104     80     90     39  
 
Cash and cash equivalents, end-of-period $ 108   $ 125   $ 108   $ 125  
 
 

                     
 
PRAXAIR, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)
 
Quarter Ended September 30, Year to Date September 30,
2012 2011 (a) 2012 2011 (a)
SALES
North America $ 1,391 $ 1,416 $ 4,182 $ 4,102
Europe 352 361 1,111 1,076
South America 516 607 1,598 1,776
Asia 358 349 1,040 1,014
Surface Technologies   157     163     494       488  
Total sales $ 2,774   $ 2,896   $ 8,425     $ 8,456  
 
OPERATING PROFIT
North America $ 374 $ 340 $ 1,098 $ 978
Europe 60 68 196 208
South America 112 140 337 412
Asia 52 58 177 174
Surface Technologies   25     26     78     78  
Segment operating profit 623 632 1,886 1,850
 
Cost reduction program and other charges   (65 )   -     (65 )     -  
Total operating profit $ 558   $ 632   $ 1,821     $ 1,850  

(a)

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

 
 
PRAXAIR, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL SUMMARY
(Millions of dollars, except per share data)
(UNAUDITED)
                   
2012 2011
Q3 (b) Q2 Q1 Q4 (b) Q3 Q2 Q1
FROM THE INCOME STATEMENT
Sales $ 2,774 $ 2,811 $ 2,840 $ 2,796 $ 2,896 $ 2,858 $ 2,702
Cost of sales 1,595 1,602 1,616 1,598 1,684 1,640 1,536
Selling, general and administrative 306 310 335 315 307 309 308
Depreciation and amortization 248 247 252 249 256 254 244
Research and development 24 25 24 23 22 23 22
Cost reduction program and other charges - net 65 - - 1 - - -
Other income (expenses) - net   22     9     14     8     5     (5 )   (1 )
Operating profit 558 636 627 618 632 627 591
Interest expense - net 36 33 37 38 36 36 35
Income taxes 90 169 165 156 166 163 156
Income from equity investments   8     10     7     7     13     11     9  
Net income (including noncontrolling interests) 440 444 432 431 443 439 409
Less: noncontrolling interests   (10 )   (15 )   (13 )   (11 )   (14 )   (14 )   (11 )
Net income - Praxair, Inc. $ 430   $ 429   $ 419   $ 420   $ 429   $ 425   $ 398  
 
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Diluted earnings per share $ 1.43 $ 1.42 $ 1.38 $ 1.38 $ 1.40 $ 1.38 $ 1.29
Cash dividends per share $ 0.55 $ 0.55 $ 0.55 $ 0.50 $ 0.50 $ 0.50 $ 0.50
Diluted weighted average shares outstanding (000's) 301,731 302,492 302,876 303,700 305,623 308,253 308,595
 
FROM THE BALANCE SHEET
Net debt (a) $ 7,028 $ 6,891 $ 6,749 $ 6,472 $ 6,185 $ 6,039 $ 5,752
Capital (a) $ 13,617 $ 13,017 $ 13,248 $ 12,489 $ 12,306 $ 12,809 $ 12,289
Debt-to-capital ratio (a) 51.6 % 52.9 % 50.9 % 51.8 % 50.3 % 47.1 % 46.8 %
 
FROM THE STATEMENT OF CASH FLOWS
Cash flow from operations $ 746 $ 725 $ 402 791 $ 732 $ 573 $ 359
Capital expenditures 547 564 483 572 458 433 334
Acquisitions 58 39 12 195 19 80 -
Cash dividends 164 164 164 149 150 151 152
 
OTHER INFORMATION
After-tax return on capital (ROC) (a) 14.2 % 14.5 % 14.6 % 14.8 % 14.8 % 14.7 % 14.6 %
Return on Praxair, Inc. shareholders' equity (ROE) (a) 29.2 % 29.0 % 28.4 % 28.1 % 27.2 % 26.6 % 26.6 %

Adjusted earnings before interest, taxes, depreciation andamortization (adjusted EBITDA) (a)

$ 879 $ 893 $ 886 $ 875 $ 901 $ 892 $ 844
Debt-to-adjusted EBITDA ratio (a) 1.9 1.8 1.8 1.7 1.7 1.6 1.6
Number of employees 26,215 26,353 26,259 26,184 25,793 25,678 25,482
 
SEGMENT DATA (c)
SALES
North America $ 1,391 $ 1,393 $ 1,398 $ 1,388 $ 1,416 $ 1,361 $ 1,325
Europe 352 382 377 382 361 370 345
South America 516 520 562 532 607 611 558
Asia 358 348 334 334 349 348 317
Surface Technologies   157     168     169     160     163     168     157  

Total sales

$ 2,774   $ 2,811   $ 2,840   $ 2,796   $ 2,896   $ 2,858   $ 2,702  
OPERATING PROFIT
North America $ 374 $ 363 $ 361 $ 353 $ 340 $ 326 $ 312
Europe 60 68 68 64 68 72 68
South America 112 110 115 118 140 139 133
Asia 52 68 57 60 58 63 53
Surface Technologies   25     27     26     24     26     27     25  
Segment operating profit 623 636 627 619 632 627 591
Cost reduction program and other charges - net   (65 )   -     -     (1 )   -     -     -  
Total operating profit $ 558   $ 636   $ 627   $ 618   $ 632   $ 627   $ 591  
(a)   Non-GAAP measure, see Appendix.
 
(b) The third quarter 2012 includes: (i) a pre-tax charge of $56 million ($38 million after-tax and non-controlling interests, or $0.12 per diluted share) related to the 2012 cost reduction program; (ii) a pre-tax charge of $9 million ($6 million after-tax, or $0.02 per diluted share) related to pension settlement; and (iii) an income tax benefit of $55 million, or $0.18 per diluted share related to a loss on liquidated subsidiary as a result of the divestiture of the U.S. Homecare business. The fourth quarter 2011 includes: (i) a pre-tax gain of $39 million ($37 million after-tax and noncontrolling interests, or $0.12 per diluted share) related to a gain on acquisition; and (ii) a pre-tax charge of $40 million ($31 million after-tax, or $0.10 per diluted share) related to the 2011 cost reduction program. Also, see the Appendix - Non-GAAP Measures which provides Non-GAAP amounts that exclude the impact of these items.
 
(c) Effective with the 2012 first quarter, Praxair changed the measurement of its segment sales and operating profit. Prior period amounts have been reclassified to conform to the current presentation. See segment information.
 
 

 
 
PRAXAIR, INC. AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES
(Millions of dollars, except per share data)
(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 financing leverage, return on net assets employed and operating performance. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures. Adjusted amounts exclude the impact of the 2012 cost reduction program, pension settlement charge, and an income tax benefit; the 2011 fourth quarter gain on acquisition and cost reduction program; and the 2010 first quarter loss on Venezuela currency devaluation and the 2010 fourth quarter loss on the U.S. Homecare divestiture, Spanish income tax settlement and repatriation tax benefit which helps investors understand underlying performance on a comparable basis.
 
To be more consistent with the methodology used for annual reporting and to improve comparability, effective in the third quarter 2012 the company changed the methodology that it uses for calculating the following non-GAAP measures: Debt to capital, After-tax ROC, ROE, Debt-to-Adjusted EBITDA These calculations are now based on a rolling four quarters approach for the earnings component of the calculations (NOPAT, Net income- Praxair, Inc., Adjusted EBITDA) and a five quarter average for the balance sheet component of the calculation (capital, equity, debt). In addition, the company decided to use net debt instead of debt in the calculations. Net debt is defined as debt less cash and cash equivalents. Prior period amounts have been adjusted to conform to the current methodology. For transition purposes, the company has also presented the amounts calculated using the previous methodology.
 
2012 2011   2010
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
 
Debt to Capital Ratio - The debt-to-capital ratio is a measure used by investors, financial analysts and management to provide a measure of financial leverage and insights into how the company is financing its operations.
 
Debt $ 7,136 $ 6,995 $ 6,856 $ 6,562 $ 6,310 $ 6,119 $ 5,838 $ 5,557 $ 5,077 $ 5,026 $ 5,404
Less: cash and cash equivalents   (108 )     (104 )     (107 )   (90 )     (125 )   (80 )     (86 )   (39 )   (71 )   (48 )   (376 )
Net debt 7,028 6,891 6,749 6,472 6,185 6,039 5,752 5,518 5,006 4,978 5,028
Equity and redeemable noncontrolling interests:
Redeemable noncontrolling interests 243 232 232 220 - - - - - - -
Praxair, Inc. shareholders' equity 6,015 5,615 5,940 5,488 5,753 6,400 6,165 5,792 5,991 5,452 5,398
Noncontrolling interests   331       279       327     309       368     370       372     353     339     315     332  
Total equity and redeemable noncontrolling interests   6,589       6,126       6,499     6,017       6,121     6,770       6,537     6,145     6,330     5,767     5,730  
Capital $ 13,617 $ 13,017 $ 13,248 $ 12,489 $ 12,306 $ 12,809 $ 12,289 $ 11,663 $ 11,336 $ 10,745 $ 10,758
Add: cash and cash equivalents   108       104       107     90       125     80       86     39     71     48     376  
Total capital $ 13,725     $ 13,121     $ 13,355   $ 12,579     $ 12,431   $ 12,889     $ 12,375   $ 11,702   $ 11,407   $ 10,793   $ 11,134  
 
Net debt-to-capital   51.6 %     52.9 %     50.9 %   51.8 %     50.3 %   47.1 %     46.8 %   47.3 %   44.2 %   46.3 %   46.7 %
 
Debt-to-total capital 52.0 % 53.3 % 51.3 % 52.2 % 50.8 % 47.5 % 47.2 % 47.5 % 44.5 % 46.6 % 48.5 %
 
After -tax return on Capital (ROC) - After-tax return on capital is a measure used by investors, financial analysts and management to evaluate the return on net assets employed in the business. ROC measures the after-tax operating profit that the company was able to generate with the investments made by all parties in the business (debt, noncontrolling interests and Praxair, Inc. shareholders’ equity).
 
Adjusted operating profit (a) $ 623 $ 636 $ 627 $ 619 $ 632 $ 627 $ 591 $ 563 $ 551 $ 547 $ 506
Less: adjusted income taxes (a) (164 ) (169 ) (165 ) (162 ) (166 ) (163 ) (156 ) (149 ) (146 ) (145 ) (132 )
Less: tax benefit on interest expense (10 ) (9 ) (10 ) (11 ) (10 ) (10 ) (10 ) (8 ) (8 ) (8 ) (9 )
Add: income from equity investments   8       10       7     7       13     11       9     11     12     8     7  
Adjusted net operating profit after-tax (NOPAT) $ 457 $ 468 $ 459 $ 453 $ 469 $ 465 $ 434 $ 417 $ 409 $ 402 $ 372
4-quarter trailing adjusted NOPAT $ 1,837 $ 1,849 $ 1,846 $ 1,821 $ 1,785 $ 1,725 $ 1,662
 
Ending capital (see above) $ 13,617 $ 13,017 $ 13,248 $ 12,489 $ 12,306 $ 12,809 $ 12,289 $ 11,663 $ 11,336 $ 10,745 $ 10,758
5-quarter average ending capital $ 12,935 $ 12,774 $ 12,628 $ 12,311 $ 12,081 $ 11,768 $ 11,358
Ending total capital (see above) $ 13,725 $ 13,121 $ 13,355 $ 12,579 $ 12,431 $ 12,889 $ 12,375 $ 11,702
2-quarter average ending total capital $ 13,423 $ 13,238 $ 12,967 $ 12,505 $ 12,660 $ 12,632 $ 12,039
 
After-tax ROC (4-quarter trailing NOPAT / 5-quarter average capital)   14.2 %     14.5 %     14.6 %   14.8 %     14.8 %   14.7 %     14.6 %                        
 
Quarterly after-tax ROC ((current quarter NOPAT/2-quarter average total capital) x 4) 13.6 % 14.1 % 14.2 % 14.5 % 14.8 % 14.7 % 14.4 %
 
Return on Praxair, Inc. Shareholder's equity (ROE) - Return on Praxair, Inc. shareholders' equity is a measure used by investors, financial analysts and management to evaluate operating performance from a Praxair shareholder perspective. ROE measures the net income attributable to Praxair, Inc. that the company was able to generate with the money shareholders have invested.
 
Adjusted net income - Praxair, Inc. (a) $ 419 $ 429 $ 419 $ 414 $ 429 $ 425 $ 398 $ 388 $ 377 $ 371 $ 340
4-quarter trailing adjusted net income - Praxair, Inc. (a) $ 1,681 $ 1,691 $ 1,687 $ 1,666 $ 1,640 $ 1,588 $ 1,534
 
Ending Praxair, Inc. shareholders' equity $ 6,015 $ 5,615 $ 5,940 $ 5,488 $ 5,753 $ 6,400 $ 6,165 $ 5,792 $ 5,991 $ 5,452 $ 5,398
5-quarter average Praxair shareholders' equity $ 5,762 $ 5,839 $ 5,949 $ 5,920 $ 6,020 $ 5,960 $ 5,760
2-quarter average Praxair shareholders' equity $ 5,815 $ 5,778 $ 5,714 $ 5,621 $ 6,077 $ 6,283 $ 5,979
 
ROE (4-quarter trailing adjusted net income - Praxair, Inc. / 5-quarter average Praxair shareholders' equity)   29.2 %     29.0 %     28.4 %   28.1 %     27.2 %   26.6 %     26.6 %                        
 
Quarterly ROE ((current quarter adjusted net income - Praxair, Inc. / 2-quarter average Praxair shareholders' equity) x 4) 28.8 % 29.7 % 29.3 % 29.5 % 28.3 % 27.1 % 26.6 %
 
Adjusted EBITDA and Debt-to-Adjusted EBITDA Ratio - These measures are used by investors, financial analysts and management to assess a company's ability to meet it's financial obligations.
 
 
Adjusted net income - Praxair, Inc. (a) $ 419 $ 429 $ 419 $ 414 $ 429 $ 425 $ 398 $ 388 $ 377 $ 371 $ 340
 
Add: adjusted noncontrolling interests (a) 12 15 13 12 14 14 11 9 11 10 9
Add: interest expense - net 36 33 37 38 36 36 35 28 29 29 32
Add: adjusted income taxes (a) 164 169 165 162 166 163 156 149 146 145 132
Add: depreciation and amortization   248       247       252     249       256     254       244     240     227     230     228  
Adjusted EBITDA $ 879 $ 893 $ 886 $ 875 $ 901 $ 892 $ 844 $ 814 $ 790 $ 785 $ 741
4-quarter trailing adjusted EBITDA $ 3,533 $ 3,555 $ 3,554 $ 3,512 $ 3,451 $ 3,340 $ 3,233
 
 
Ending net debt (see above) $ 7,028 $ 6,891 $ 6,749 $ 6,472 $ 6,185 $ 6,039 $ 5,752 $ 5,518 $ 5,006 $ 4,978 $ 5,028
5-quarter average net debt $ 6,665 $ 6,467 $ 6,239 $ 5,993 $ 5,700 $ 5,459 $ 5,256
Ending debt (see above) $ 7,136 $ 6,995 $ 6,856 $ 6,562 $ 6,310 $ 6,119 $ 5,838 $ 5,557
2-quarter average debt $ 7,066 $ 6,926 $ 6,709 $ 6,436 $ 6,215 $ 5,979 $ 5,698
 
Debt-to-adjusted EBITDA ratio (5-quarter average net debt / 4-quarter trailing adjusted EBITDA)   1.9       1.8       1.8     1.7       1.7     1.6       1.6                          
 
Quarterly Debt-to-adjusted EBITDA ratio ((2-quarter average debt / current quarter adjusted EBITDA )/ 4) 2.0 1.9 1.9 1.8 1.7 1.7 1.7
 
 
(a)The following table presents adjusted amounts for Operating Profit and Operating Profit Margin, Income Taxes, Effective Tax Rate, Noncontrolling Interests, Net income - Praxair, Inc., and Diluted EPS for the Third Quarter and September year-to-date of 2012, the Fourth Quarter and full year of 2011 and the First Quarter, Fourth Quarter and full year 2010. Additionally, this table presents the percentage change in Diluted EPS Guidance for the full year 2012.
 
Year-to-date September 30, Third

Quarter

Year Fourth

Quarter

Year Fourth

Quarter

First

Quarter

2012 2012 2011 2011 2010 2010 2010
Adjusted Operating Profit and Operating Profit Margin
Reported operating profit $ 1,821 $ 558 $ 2,468 $ 618 $ 2,082 $ 505 $ 479
Add: Pension settlement charge 9 9 - - - - -
Add: Cost reduction program 56 56 40 40 - - -
Less: Gain on acquisition - - (39 ) (39 ) - - -
Add: U.S. Homecare divestiture - - - - 58 58 -
Add: Venezuela currency devaluation   -     -     -     -     27     -     27  
Total adjustments   65     65     1     1     85     58     27  
Adjusted operating profit $ 1,886   $ 623   $ 2,469   $ 619   $ 2,167   $ 563   $ 506  
 
Reported sales $ 8,425 $ 2,774 $ 11,252 $ 2,796 $ 10,116 $ 2,623 $ 2,428
Adjusted operating profit margin 22.4 % 22.5 % 21.9 % 22.1 % 21.4 % 21.5 % 20.8 %
 
Adjusted Income Taxes
Reported income taxes $ 424 $ 90 $ 641 $ 156 $ 768 $ 346 $ 131
Add: Pension settlement charge 3 3 - - - - -
Add: Income tax benefit 55 55 - - - - -
Add: Cost reduction program 16 16 9 9 - - -
Less: Gain on acquisition - - (3 ) (3 ) - - -
Less: Spanish income tax settlement - - - - (250 ) (250 ) -
Add: U.S. Homecare divestiture - - - - 18 18 -
Add: Repatriation tax benefit - - - - 35 35 -
Add: Venezuela currency devaluation   -     -     -     -     1     -     1  
Total adjustments   74     74     6     6     (196 )   (197 )   1  
Adjusted income taxes $ 498   $ 164   $ 647   $ 162   $ 572   $ 149   $ 132  
 
Adjusted Effective Tax Rate
Reported income before income taxes and equity investments $ 1,715 $ 522 $ 2,323 $ 580 $ 1,964 $ 477 $ 447
Add: Pension settlement charge 9 9 - - - - -
Add: Cost reduction program 56 56 40 40 - - -
Less: Gain on acquisition - - (39 ) (39 ) - - -
Add: U.S. Homecare divestiture - - - - 58 58 -
Add: Venezuela currency devaluation   -     -     -     -     27     -     27  
Total adjustments   65     65     1     1     85     58     27  
Adjusted income before income taxes and equity investments $ 1,780   $ 587   $ 2,324   $ 581   $ 2,049   $ 535   $ 474  
 
Adjusted income taxes (above) $ 498 $ 164 $ 647 $ 162 $ 572 $ 149 $ 132
Adjusted effective tax rate 28 % 28 % 28 % 28 % 28 % 28 % 28 %
 
Adjusted Noncontrolling interest
Reported noncontrolling interest $ 38 $ 10 $ 50 $ 11
Add: Cost reduction program 2 2 - -
Add: Gain on acquisition   -     -     1     1  
Total adjustments   2     2     51     12  
Adjusted noncontrolling interest $ 40   $ 12   $ 51   $ 12  
 
Adjusted Net Income - Praxair, Inc.
Reported net income - Praxair, Inc. $ 1,278 $ 430 $ 1,672 $ 420 $ 1,195 $ 133 $ 314
Add: Pension settlement charge 6 6 - - - - -
Less: Income tax benefit (55 ) (55 ) - - - - -
Add: Cost reduction program 38 38 31 31 - - -
Less: Gain on acquisition - - (37 ) (37 ) - - -
Add: Spanish income tax settlement - - - - 250 250 -
Add: U.S. Homecare divestiture - - - - 40 40 -
Less: Repatriation tax benefit - - - - (35 ) (35 ) -
Add: Venezuela currency devaluation   -     -     -     -     26     -     26  
Total adjustments   (11 )   (11 )   (6 )   (6 )   281     255     26  
Adjusted net income - Praxair, Inc. $ 1,267   $ 419   $ 1,666   $ 414   $ 1,476   $ 388   $ 340  
 
Adjusted Diluted EPS
Reported diluted EPS $ 4.23 $ 1.43 $ 5.45 $ 1.38 $ 3.84 $ 0.43 $ 1.01
Add: Pension settlement charge 0.02 0.02 - - - - -
Less: Income tax benefit (0.18 ) (0.18 ) - - - - -
Add: Cost reduction program 0.12 0.12 0.10 0.10 - - -
Less: Gain on acquisition - - (0.12 ) (0.12 ) - - -
Add: Spanish income tax settlement - - - - 0.80 0.80 -
Add: U.S. Homecare divestiture - - - - 0.13 0.13 -
Less: Repatriation tax benefit - - - - (0.11 ) (0.11 ) -
Add: Venezuela currency devaluation   -     -     -     -     0.08     -     0.08  
Total adjustments   (0.04 )   (0.04 )   (0.02 )   (0.02 )   0.90     0.82     0.08  
Adjusted diluted EPS $ 4.19   $ 1.39   $ 5.43   $ 1.36   $ 4.74   $ 1.25   $ 1.09  
 
 
Percentage Change in Adjusted Full Year 2012 Diluted EPS Guidance
 
Full Year 2012
Low End   High End
 
Diluted EPS guidance $ 5.58 $ 5.63
Non-GAAP adjustments:
Add: Pension settlement charge 0.02 0.02
Less: Income tax benefit (0.18 ) (0.18 )
Add: Cost reduction program   0.12     0.12  
Adjusted diluted EPS * $ 5.54 $ 5.59
Add: estimated negative currency impact   0.28     0.28  
2012 adjusted diluted EPS guidance, excluding currency impact $ 5.82 $ 5.87
 
2011 adjusted diluted EPS (see above) $ 5.43 $ 5.43
 
 
Percentage change from 2011 adjusted amounts 2 % 3 %
Percentage change from 2011 adjusted amounts, excluding currency impact 7 % 8 %
 
 




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