Item 6. SELECTED FINANCIAL DATA

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Item 6. SELECTED FINANCIAL DATA

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



(Millions of dollars, except for share and per share data)	2018(A)			2017(A)			2016(A)			2015(A)			2014(A)
Operating Results
Sales		$8,930			$8,188			$7,504			$7,824			$8,384
Cost of sales(B)	6,190			5,752			5,177			5,584			6,178
Selling and administrative(B)	761			714			684			765			876
Research and development	65			58			72			76			78
Cost reduction and asset actions	—			151			35			180			11
Operating income(B)	1,966			1,440			1,535			1,276			976
Equity affiliates’ income(C)	175			80			147			152			149
Income from continuing operations attributable to Air Products	1,456			1,134			1,100			933			697
Net income attributable to Air Products(D)	1,498			3,000			631			1,278			992
Basic earnings per common share attributable to Air Products:
Income from continuing operations	6.64			5.20			5.08			4.34			3.28
Net income(D)	6.83			13.76			2.92			5.95			4.66
Diluted earnings per common share attributable to Air Products:
Income from continuing operations	6.59			5.16			5.04			4.29			3.24
Net income(D)	6.78			13.65			2.89			5.88			4.61
Year-End Financial Position
Plant and equipment, at cost		$21,490			$19,548			$18,660			$17,999			$18,180
Total assets(D)	19,178			18,467			18,029			17,317			17,648
Working capital(D)	2,744			3,388			1,034			(851		)	199
Total debt(E)	3,813			3,963			5,211			5,856			6,081
Air Products shareholders’ equity(D)	10,858			10,086			7,080			7,249			7,366
Total equity(D)	11,176			10,186			7,213			7,381			7,521
Financial Ratios
Return on average Air Products shareholders’ equity(F)	13.9		%	13.2		%	15.4		%	12.7		%	9.5		%
Operating margin(B)	22.0		%	17.6		%	20.5		%	16.3		%	11.6		%
Selling and administrative as a percentage of sales(B)	8.5		%	8.7		%	9.1		%	9.8		%	10.4		%
Total debt to total capitalization(E)(G)	25.4		%	28.0		%	41.9		%	44.2		%	43.8		%
Other Data
Income from continuing operations including noncontrolling interests		$1,491			$1,155			$1,122			$966			$691
Adjusted EBITDA(B)(H)	3,116			2,799			2,622			2,422			2,322
Adjusted EBITDA margin(B)	34.9		%	34.2		%	34.9		%	31.0		%	27.7		%
Depreciation and amortization	971			866			855			859			876
Capital expenditures on a GAAP basis(I)	1,914			1,056			908			1,201			1,297
Capital expenditures on a non-GAAP basis(I)	1,934			1,066			935			1,575			1,498
Cash provided by operating activities	2,555			2,534			2,259			2,047			1,862
Cash used for investing activities	(1,649		)	(1,418		)	(865		)	(1,147		)	(1,257		)
Cash used for financing activities	(1,360		)	(2,041		)	(860		)	(960		)	(524		)
Dividends declared per common share	4.25			3.71			3.39			3.20			3.02
Weighted Average Common Shares – Basic (in millions)	219			218			216			215			213
Weighted Average Common Shares – Diluted (in millions)	221			220			218			217			215
Book value per common share at year-end		$49.46			$46.19			$32.57			$33.66			$34.49
Shareholders at year-end	5,500			5,700			6,000			6,400			6,600
Employees at year-end(J)	16,300			15,300			18,600			19,700			21,200


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

(A)

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


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


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


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


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


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


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


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


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

(I)

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


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

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