Praxair Reports Third-Quarter 2011 Results

Praxair, Inc. (NYSE: PX) reported third-quarter net income and diluted earnings per share of $429 million and $1.40, 14% and 16% above the prior-year quarter, respectively.

Third-quarter sales were $2,896 million, 14% above the previous-year quarter. Sales increased across all geographic regions with strong growth from manufacturing, metals, energy and chemicals markets. Sales rose 1% sequentially from the second quarter due primarily to higher volumes.

Operating profit in the third quarter was $632 million, up 15% from the prior-year quarter, reflecting higher volumes and prices combined with cost savings from productivity programs.

The company generated strong cash flow from operations in the quarter of $732 million. Operating cash flow funded $458 million of capital expenditures, primarily for new production plants under long-term contracts with customers. The company paid dividends of $150 million and purchased $251 million of stock, net of issuances. The after-tax return-on-capital ratio and return on equity for the quarter both increased, to 14.8% and 28.3%, respectively.*

Commenting on the business outlook, Chairman and Chief Executive Officer Steve Angel said, "We are continuing to see solid growth in all geographies with the exception of Europe. Proposal activity remains at healthy levels and our backlog of large customer projects under construction is at a record $2.7 billion, 25% above 2010 levels. Most importantly, we remain confident in our ability to bring growth to the bottom line through our commitment to productivity and flawless execution.”

For the fourth quarter of 2011, Praxair expects diluted earnings per share in the range of $1.33 to $1.38. This guidance anticipates a headwind from weaker overseas currencies of about 5 cents relative to the third quarter of 2011.

For the full year of 2011, Praxair expects sales in the area of $11.2 billion and diluted earnings per share in the range of $5.40 to $5.45. Excluding the fourth-quarter currency headwinds, this guidance remains at the upper end of prior guidance. Full-year capital expenditures are expected to be approximately $1.8 billion, and the effective tax rate is forecasted to be about 28%.

Following is additional detail on third-quarter 2011 results by segment.

In North America, third-quarter sales were $1,427 million, up 11% from the prior-year quarter, primarily due to organic growth. Sales growth was strongest to manufacturing, energy, chemicals and metals markets. Operating profit of $350 million grew 11% from the prior year due primarily to higher volumes, price and productivity.

In Europe, third-quarter sales were $358 million, up 11% from the prior year, primarily due to positive currency effects. Operating profit increased 10% from the prior-year quarter to $65 million due to positive currency effects slightly offset by continued margin pressures.

In South America, third-quarter sales of $607 million grew 20% versus the prior-year quarter. Excluding currency effects, sales grew 14% due primarily to higher on-site, merchant and packaged-gas sales to manufacturing, metals and food and beverage markets. Operating profit was $140 million, 20% above the prior-year quarter, due to higher volumes, price, productivity and currency effects.

Sales in Asia were $341 million in the quarter, up 19% from the prior year driven by strong growth in China, India, Korea and Thailand. Sales growth came from metals, electronics and chemical customers. Operating profit was $51 million, 34% above the prior-year quarter, due primarily to higher volumes, price and productivity.

Praxair Surface Technologies had third-quarter sales of $163 million, up 16% from the prior-year quarter. Sales growth came primarily from higher volumes of coatings to energy markets. Operating profit of $26 million in the quarter was 13% above the prior-year period due primarily to higher volumes.

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 our 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 at www.praxair.com.

*See the attachments for calculations of non-GAAP measures

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

A teleconference on Praxair’s third-quarter results is being held this morning, October 26, 2011, at 11:00 am Eastern Time. The number is (617) 801-9713 -- Passcode: 82506832. 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; 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
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)
				Quarter Ended								Year to Date
				September 30,								September 30,
					2011				2010				2011				2010
SALES (a)				$	2,896			$	2,538			$	8,456			$	7,493
Cost of sales					1,684				1,444				4,860				4,262
Selling, general and administrative					307				299				924				895
Depreciation and amortization					256				227				754				685
Research and development					22				19				67				56
Venezuela currency devaluation (b)					-				-				-				27
Other income (expense) - net					5				2				(1	)			9
OPERATING PROFIT					632				551				1,850				1,577
Interest expense - net					36				29				107				90
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS					596				522				1,743				1,487
Income taxes (b)					166				146				485				422
INCOME BEFORE EQUITY INVESTMENTS					430				376				1,258				1,065
Income from equity investments					13				12				33				27
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)					443				388				1,291				1,092
Less: noncontrolling interests					(14	)			(11	)			(39	)			(30	)
NET INCOME - PRAXAIR, INC. (b)				$	429			$	377			$	1,252			$	1,062
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Basic earnings per share				$	1.42			$	1.22			$	4.13			$	3.46
Diluted earnings per share (b)				$	1.40			$	1.21			$	4.07			$	3.41
Cash dividends				$	0.50			$	0.45			$	1.50			$	1.35
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic shares outstanding (000's)					301,594				307,127				303,125				306,915
Diluted shares outstanding (000's)					305,623				311,608				307,581				311,424

(a)		Sales for the 2011 quarter and year-to-date periods increased $38 million and $91 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $119 million and $294 million, respectively, due to currency effects versus 2010.
(b)		The 2010 year-to-date period includes a first quarter charge of $27 million ($26 million after-tax, or $0.08 per diluted share), related to the Venezuela currency devaluation. See appendix for non-GAAP measures which exclude the impact of this charge.

PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(UNAUDITED)
				September 30,			December 31,
					2011			2010
ASSETS
Cash and cash equivalents				$	125		$	39
Accounts receivable - net					1,860			1,664
Inventories					445			399
Prepaid and other current assets					274			276
TOTAL CURRENT ASSETS					2,704			2,378
Property, plant and equipment - net					9,754			9,532
Goodwill					2,043			2,066
Other intangibles - net					132			132
Other long-term assets					1,269			1,166
TOTAL ASSETS				$	15,902		$	15,274
LIABILITIES AND EQUITY
Accounts payable				$	855		$	830
Short-term debt					477			370
Current portion of long-term debt					24			32
Other current liabilities					813			878
TOTAL CURRENT LIABILITIES					2,169			2,110
Long-term debt					5,809			5,155
Other long-term liabilities					1,803			1,864
TOTAL LIABILITIES					9,781			9,129
EQUITY
Praxair, Inc. shareholders' equity					5,753			5,792
Noncontrolling interests					368			353
TOTAL EQUITY					6,121			6,145
TOTAL LIABILITIES AND EQUITY				$	15,902		$	15,274

PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
			Quarter Ended								Year to Date
			September 30,								September 30,
				2011				2010				2011				2010
OPERATIONS
Net income - Praxair, Inc.			$	429			$	377			$	1,252			$	1,062
Noncontrolling interests				14				11				39				30
Net income (including noncontrolling interests)				443				388				1,291				1,092
Adjustments to reconcile net income to net cash provided
by operating activities:
Venezuela currency devaluation, net of payments - pre-tax				-				(1	)			-				23
Deferred income taxes				(49	)			11				33				111
Depreciation and amortization				256				227				754				685
Accounts receivable				65				(91	)			(202	)			(139	)
Inventory				7				(30	)			(43	)			(27	)
Payables and accruals				105				89				(48	)			61
Pension contributions				(2	)			(3	)			(87	)			(117	)
Other				(93	)			6				(34	)			(74	)
Net cash provided by operating activities				732				596				1,664				1,615
INVESTING
Capital expenditures				(458	)			(324	)			(1,225	)			(937	)
Acquisitions, net of cash acquired				(19	)			(114	)			(99	)			(134	)
Divestitures and asset sales				3				23				40				44
Net cash used for investing activities				(474	)			(415	)			(1,284	)			(1,027	)
FINANCING
Debt increase (decrease) - net				204				8				725				(19	)
Issuances of common stock				22				79				164				134
Purchases of common stock				(273	)			(133	)			(758	)			(273	)
Cash dividends - Praxair, Inc. shareholders				(150	)			(139	)			(453	)			(414	)
Excess tax benefit on stock option exercises				6				25				47				38
Noncontrolling interest transactions and other				(3	)			(6	)			(4	)			(17	)
Net cash provided by (used for) financing activities				(194	)			(166	)			(279	)			(551	)
Effect of exchange rate changes on cash and
cash equivalents				(19	)			8				(15	)			(11	)
Change in cash and cash equivalents				45				23				86				26
Cash and cash equivalents, beginning-of-period				80				48				39				45
Cash and cash equivalents, end-of-period			$	125			$	71			$	125			$	71

PRAXAIR, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)
				Quarter Ended							Year to Date
				September 30,							September 30,
					2011			2010				2011			2010
SALES
North America (a)				$	1,427		$	1,282			$	4,132		$	3,801
Europe (b)					358			322				1,068			995
South America (c)					607			506				1,776			1,454
Asia (d)					341			287				992			825
Surface Technologies (e)					163			141				488			418
Total sales				$	2,896		$	2,538			$	8,456		$	7,493
OPERATING PROFIT
North America (a)				$	350		$	314				1,008			885
Europe (b)					65			59				199			199
South America (c)					140			117				412			340
Asia (d)					51			38				153			116
Surface Technologies (e)					26			23				78			64
Segment operating profit					632			551				1,850			1,604
Venezuela currency devaluation					-			-				-			(27	)
Total operating profit				$	632		$	551			$	1,850		$	1,577

(a)		North American 2011 sales for the quarter and year-to-date periods increased $22 million and $40 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $26 million and $71 million, respectively, due to currency effects versus 2010.
(b)		European 2011 sales for the quarter and year-to-date periods increased $4 million and $5 million, respectively, due to cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $41 million and $63 million, respectively, due to currency effects versus 2010.
(c)		South American 2011 sales for the quarter and year-to-date periods increased $6 million and $19 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $30 million and $113 million, respectively, due to currency effects versus 2010.
(d)		Asian 2011 sales for the quarter and year-to-date periods increased $3 million and $21 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $14 million and $31 million, respectively, due to currency effects versus 2010.
(e)		Surface Technologies 2011 sales for the quarter and year-to-date periods increased $3 million and $6 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $8 million and $16 million, respectively due to currency effects versus 2010.

PRAXAIR, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL SUMMARY
(Millions of dollars, except per share data)
(UNAUDITED)
				2011												2010
				Q3				Q2				Q1				Q4 (b)				Q3				Q2				Q1 (b)
FROM THE INCOME STATEMENT
Sales				$	2,896			$	2,858			$	2,702			$	2,623			$	2,538			$	2,527			$	2,428
Cost of sales					1,684				1,640				1,536				1,492				1,444				1,437				1,381
Selling, general and administrative					307				309				308				301				299				302				294
Depreciation and amortization					256				254				244				240				227				230				228
Research and development					22				23				22				23				19				19				18
U.S. Homecare divestiture and Venezuela devaluation					-				-				-				58				-				-				27
Other income (expenses) – net					5				(5	)			(1	)			(4	)			2				8				(1	)
Operating profit					632				627				591				505				551				547				479
Interest expense - net					36				36				35				28				29				29				32
Income taxes					166				163				156				346				146				145				131
Income from equity investments					13				11				9				11				12				8				7
Net income (including noncontrolling interests)					443				439				409				142				388				381				323
Less: noncontrolling interests					(14	)			(14	)			(11	)			(9	)			(11	)			(10	)			(9	)
Net income - Praxair, Inc.				$	429			$	425			$	398			$	133			$	377			$	371			$	314
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Diluted earnings per share				$	1.40			$	1.38			$	1.29			$	0.43			$	1.21			$	1.19			$	1.01
Cash dividends per share				$	0.50			$	0.50			$	0.50			$	0.45			$	0.45			$	0.45			$	0.45
Diluted weighted average shares outstanding (000's)					305,623				308,253				308,595				310,733				311,608				311,109				311,159
FROM THE BALANCE SHEET
Total debt				$	6,310			$	6,119			$	5,838			$	5,557			$	5,077			$	5,026			$	5,404
Total capital (a)					12,431				12,889				12,375				11,702				11,407				10,793				11,134
Debt-to-capital ratio (a)					50.8	%			47.5	%			47.2	%			47.5	%			44.5	%			46.6	%			48.5	%
FROM THE STATEMENT OF CASH FLOWS
Cash flow from operations				$	732			$	573			$	359			$	290			$	596			$	536			$	483
Capital expenditures					458				433				334				451				324				325				288
Acquisitions					19				80				-				14				114				16				4
Cash dividends					150				151				152				137				139				137				138
OTHER INFORMATION
After-tax return on capital (ROC) (a)					14.8	%			14.7	%			14.4	%			14.4	%			14.7	%			14.7	%			13.6	%
Return on Praxair, Inc. shareholders' equity (ROE) (a)					28.3	%			27.1	%			26.6	%			26.4	%			26.4	%			27.4	%			25.4	%
Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) (a)				$	901			$	892			$	844			$	814			$	790			$	785			$	741
Debt-to-adjusted EBITDA ratio (a)					1.7				1.7				1.7				1.6				1.6				1.7				1.8
Number of employees					25,793				25,678				25,482				26,261				26,025				25,877				26,010
SEGMENT DATA
SALES
North America				$	1,427			$	1,371			$	1,334			$	1,310			$	1,282			$	1,281			$	1,238
Europe					358				367				343				339				322				335				338
South America					607				611				558				516				506				490				458
Asia					341				341				310				308				287				280				258
Surface Technologies					163				168				157				150				141				141				136
Total sales				$	2,896			$	2,858			$	2,702			$	2,623			$	2,538			$	2,527			$	2,428
OPERATING PROFIT
North America				$	350			$	336			$	322			$	311			$	314			$	294			$	277
Europe					65				69				65				68				59				73				67
South America					140				139				133				114				117				114				109
Asia					51				56				46				50				38				44				34
Surface Technologies					26				27				25				20				23				22				19
Segment operating profit					632				627				591				563				551				547				506
U.S. Homecare divestiture and Venezuela devaluation													-				(58	)							-				(27	)
Total operating profit				$	632			$	627			$	591			$	505			$	551			$	547			$	479

(a)		Non-GAAP measure, see Appendix.
(b)		The fourth quarter 2010 includes: (i) a net tax charge of $250 million, or $0.80 per diluted share, related to a Spanish income tax settlement; (ii) a pre-tax charge of $58 million ($40 million after-tax, or $0.13 per diluted share) related to the U.S. Homecare divestiture; and (iii) a net repatriation tax benefit of $35 million, or $0.11 per diluted share. The first quarter 2010 includes a charge of $27 million ($26 million after-tax, or $0.08 per diluted share), related to the Venezuela currency devaluation. Also, see the appendix for non-GAAP measures which exclude the impact of these items.

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 2010 fourth quarter Spanish income tax settlement, business divestiture and repatriation tax benefit which helps investors understand underlying performance on a comparable basis.

								2011												2010
								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.
				Total debt				$	6,310			$	6,119			$	5,838			$	5,557			$	5,077			$	5,026			$	5,404
				Equity:
				Praxair, Inc. shareholders' equity					5,753				6,400				6,165				5,792				5,991				5,452				5,398
				Noncontrolling interests					368				370				372				353				339				315				332
				Total equity					6,121				6,770				6,537				6,145				6,330				5,767				5,730
				Total Capital				$	12,431			$	12,889			$	12,375			$	11,702			$	11,407			$	10,793			$	11,134
				Debt-to-capital ratio					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).
				Operating profit (a)				$	632			$	627			$	591			$	563			$	551			$	547			$	506
				Less: income taxes (a)					(166	)			(163	)			(156	)			(149	)			(146	)			(145	)			(132	)
				Less: tax benefit on interest expense					(10	)			(10	)			(10	)			(8	)			(8	)			(8	)			(9	)
				Add: income from equity investments					13				11				9				11				12				8				7
				Net operating profit after-tax (NOPAT)				$	469			$	465			$	434			$	417			$	409			$	402			$	372
				Beginning capital				$	12,889			$	12,375			$	11,702			$	11,407			$	10,793			$	11,134			$	10,703
				Ending capital				$	12,431			$	12,889			$	12,375			$	11,702			$	11,407			$	10,793			$	11,134
				Average capital				$	12,660			$	12,632			$	12,039			$	11,555			$	11,100			$	10,964			$	10,919
				Average capital - 5 quarter average
				ROC %					3.7	%			3.7	%			3.6	%			3.6	%			3.7	%			3.7	%			3.4	%
				ROC % (annualized)					14.8	%			14.7	%			14.4	%			14.4	%			14.7	%			14.7	%			13.6	%
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.
				Net income - Praxair, Inc. (a)				$	429			$	425			$	398			$	388			$	377			$	371			$	340
				Beginning Praxair, Inc. shareholders' equity				$	6,400			$	6,165			$	5,792			$	5,991			$	5,452			$	5,398			$	5,315
				Ending Praxair, Inc. shareholders' equity				$	5,753			$	6,400			$	6,165			$	5,792			$	5,991			$	5,452			$	5,398
				Average Praxair, Inc. shareholders' equity				$	6,077			$	6,283			$	5,979			$	5,892			$	5,722			$	5,425			$	5,357
				ROE %					7.1	%			6.8	%			6.7	%			6.6	%			6.6	%			6.8	%			6.3	%
				ROE % (annualized)					28.3	%			27.1	%			26.6	%			26.4	%			26.4	%			27.4	%			25.4	%
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.
				Net income - Praxair, Inc. (a)				$	429			$	425			$	398			$	388			$	377			$	371			$	340
				Add: noncontrolling interests					14				14				11				9				11				10				9
				Add: interest expense - net					36				36				35				28				29				29				32
				Add: income taxes (a)					166				163				156				149				146				145				132
				Add: depreciation and amortization					256				254				244				240				227				230				228
				Adjusted EBITDA				$	901			$	892			$	844			$	814			$	790			$	785			$	741
				Beginning total debt				$	6,119			$	5,838			$	5,557			$	5,077			$	5,026			$	5,404			$	5,055
				Ending total debt				$	6,310			$	6,119			$	5,838			$	5,557			$	5,077			$	5,026			$	5,404
				Average total debt				$	6,215			$	5,979			$	5,698			$	5,317			$	5,052			$	5,215			$	5,230
				Debt-to-adjusted EBITDA ratio					6.9				6.7				6.8				6.5				6.4				6.6				7.1
				Debt-to-adjusted EBITDA ratio (annualized)					1.7				1.7				1.7				1.6				1.6				1.7				1.8

(a)		The following table presents adjusted amounts for Operating Profit and Operating Profit Margin, Income Taxes, Effective Tax Rate, Net income - Praxair, Inc., and Diluted EPS for the First and Fourth Quarter of 2010 and percentage change in Diluted EPS Guidance for the full year 2011. Certain 2011 amounts are included for reference purposes.
						4th Qrt.				1st Qrt.
							2010				2010
		Adjusted Operating Profit and Operating Profit Margin *
		Reported operating profit				$	505			$	479
		Add: U.S. Homecare divestiture					58				-
		Add: Venezuela currency devaluation					-				27
		Adjusted operating profit				$	563			$	506
		Reported sales				$	2,623			$	2,428
		Adjusted operating profit margin					21	%			21	%
		Adjusted Income Taxes *
		Reported income taxes				$	346			$	131
		Less: Spanish income tax settlement					(250	)			-
		Add: U.S. Homecare divestiture					18				-
		Add: Repatriation tax benefit					35				-
		Add: Venezuela currency devaluation					-				1
		Total adjustments					(197	)			1
		Adjusted income taxes				$	149			$	132
		Adjusted Effective Tax Rate *
		Reported income before income taxes and equity investments				$	477			$	447
		Add: U.S. Homecare divestiture					58				-
		Add: Venezuela currency devaluation					-				27
		Adjusted income before income taxes and equity investments				$	535			$	474
		Adjusted income taxes (above)				$	149			$	132
		Adjusted effective tax rate					28	%			28	%
		Adjusted Net Income - Praxair, Inc. *
		Reported net income - Praxair, Inc.				$	133			$	314
		Add: Spanish income tax settlement					250				-
		Add: U.S. Homecare divestiture					40				-
		Less: Repatriation tax benefit					(35	)			-
		Add: Venezuela currency devaluation and other charges (b)					-				26
		Total adjustments					255				26
		Adjusted net income - Praxair, Inc.				$	388			$	340
		Adjusted Diluted EPS *
		Diluted weighted average shares					310,733				311,159
		Reported diluted EPS				$	0.43			$	1.01
		Add: Spanish income tax settlement					0.80				-
		Add: U.S. Homecare divestiture					0.13				-
		Less: Repatriation tax benefit					(0.11	)			-
		Add: Venezuela currency devaluation					-				0.08
		Total adjustments					0.82				0.08
		Adjusted diluted EPS				$	1.25			$	1.09

Percentage Change in Adjusted Fourth Quarter and Full Year 2011 Diluted EPS Guidance *
				Fourth Quarter 2011								Full Year 2011
				Low End				High End				Low End				High End
2011 diluted EPS guidance **				$	1.33			$	1.38			$	5.40			$	5.45
Reported 2010 diluted EPS					0.43				0.43				3.84				3.84
Add: Spanish income tax settlement					0.80				0.80				0.80				0.80
Add: Business divestiture					0.13				0.13				0.13				0.13
Less: Repatriation tax benefit					(0.11	)			(0.11	)			(0.11	)			(0.11	)
Add: Venezuela currency devaluation													0.08				0.08
Total adjustments					0.82				0.82				0.90				0.90
2010 Adjusted diluted EPS *				$	1.25			$	1.25			$	4.74			$	4.74
Percentage change from 2010					6	%			10	%			14	%			15	%

*		Adjusted for non-GAAP adjustments to eliminate the impact of (i) 2010 fourth quarter U.S. Homecare divestiture charge; (ii) 2010 fourth quarter Spanish income tax settlement; (iii) 2010 fourth quarter repatriation tax benefit and (iv) 2010 first quarter Venezuela currency devaluation. See Praxair’s 2010 Annual Report on Form 10-K for additional information.
**		Excludes gain on Yara Praxair acquisition and any potential restructuring costs.