Air Products & Chemicals (APD) 10-K risk factor changes: FY2019 vs FY2018

[removed: These or other events associated with weak economic conditions or specific end] market, product, or customer events may require us to record an impairment on tangible assets, such as facilities and equipment, or intangible assets, such as intellectual property or goodwill, which would have a negative impact on our financial results.

In fiscal year [removed: 2018,] [added: 2019,] over 60% of our sales were derived from customers outside the United States and many of our operations, suppliers, and employees are located outside the United States.

Our growth strategies depend in part on our ability to further penetrate markets outside the United States, particularly in higher-growth [removed: markets,] [added: markets such as China, India, Russia] and [added: the Middle East, and] involve [added: significantly] larger and more complex projects, including [removed: world-scale] gasification projects, [added: some] in regions where there is the potential for significant economic and political [removed: disruptions, including Russia, the Middle East and China.][added: disruptions.]

We are actively investing [removed: significant] [added: large amounts of] capital and other resources, in some cases through joint ventures, in developing [removed: or] [added: markets with] high growth [removed: markets, which present special risks.][added: potential.]

Our operations in these markets may be subject to greater risks than those faced by our operations in mature economies, including political and economic instability, project delay or abandonment due to unanticipated government actions, inadequate investment in infrastructure, undeveloped property rights and legal systems, unfamiliar regulatory environments, relationships with local partners, language and cultural differences and [removed: talent risks.][added: increased difficulty recruiting, training and retaining qualified employees.]

For a more detailed discussion of currency exposure, see Item 7A, [removed: Quantitative] [added: *Quantitative] and Qualitative Disclosures About Market [removed: Risk,] [added: Risk*,] below.

[removed: Some of our projects, including some of our largest growth projects,] [added: Gasification and other large projects] involve challenging engineering, procurement and construction phases that may occur in more risky locations and over extended time periods, sometimes up to several years.

We may encounter difficulties in engineering, delays in designs or materials provided by the customer or a third party, equipment and materials delivery delays, schedule changes, customer scope changes, delays related to obtaining regulatory permits and rights-of-way, inability to find adequate sources of labor in the locations where we are building new plants, weather-related delays, delays by customers' contractors in completing their portion of a project, technical or transportation difficulties, [added: cost overruns] and other factors, [removed: some] [added: many] of which are beyond our control, [removed: but which] [added: that] may impact our ability to complete a project within the original delivery schedule.

[removed: These] [added: All of these] factors could also negatively impact our reputation or relationships with our customers, which could adversely affect our ability to secure new contracts in the [removed: future, and these risks are more significant as we take on larger and more complex projects, including gasification projects, as part of our growth strategy.][added: future.]

Regulations addressing, among other things, [removed: environmental compliance,] import/export restrictions, anti-bribery and corruption, and taxes, can negatively impact our financial condition, results of operation, and cash flows.

[removed: Large] [added: In addition, large] scale gasification projects may contain processes or technologies that we have not operated at the same scale or in the same combination, and although such projects generally include technologies and processes that have been demonstrated previously by others, such technologies or processes may be new to us and may introduce new risks to our operations.

Some of our operations are within jurisdictions that have or are developing regulatory regimes governing emissions of greenhouse gases [removed: ("GHG"),] [added: ("GHGs"),] including carbon dioxide.

These include existing coverage under the European Union Emission Trading system, the California cap and trade [removed: schemes, Alberta’s Carbon Competitiveness Incentive Regulation,] [added: scheme,] China’s Emission Trading [removed: Scheme,] [added: Scheme and its nation-wide expansion, and] South Korea’s Emission Trading [removed: Scheme, nation-wide expansion of the China Emission Trading Scheme, revisions to the Alberta regulation, and Environment Canada's developing Output Based Pricing System.][added: Scheme.]

Although uncertain, these developments could increase our costs related to consumption of electric [removed: power and] [added: power,] hydrogen [removed: production.][added: production and application of our gasification technology.]

For a more detailed description of these matters, see Item [removed: 1 - Business Environmental Controls,] [added: 1, *Business–Environmental Controls*,] above.

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act [removed: ("the Tax] [added: (the "Tax] Act"), which significantly revised the U.S. federal corporate income tax law by, among other things, lowering the corporate income tax rate, implementing a territorial tax system, and imposing a one-time tax on unremitted cumulative non-U.S. earnings of foreign subsidiaries.

These or other events associated with weak economic conditions or specific end

These projects are large scale and technically complex and, as a result, face greater development and operational risks.

In addition, in some cases we seek limited recourse financing for certain large projects and face market risk associated with the availability and terms of such financing.

These financing arrangements may require that we comply with certain performance requirements which, if not met, could result in default and restructuring costs or other losses.

Performance difficulties on these larger projects may have a material adverse effect on our operations and financial results.

In addition, performance challenges may adversely affect our reputation and our ability to obtain future contracts for gasification projects.

In addition, although gasification enables the conversion of lower value feedstocks into cleaner energy and value-added products, our gasification projects will increase our carbon footprint because the gasification process produces carbon dioxide.

In Canada, Alberta and Ontario are both in the development/approval process for new GHG regulations.

Alberta’s Carbon Competitiveness Incentive Regulation will end December 31, 2019 and will be replaced by the proposed Technology Innovation and Emission Reduction ("TIER") System or Environment & Climate Change Canada's Output Based Pricing System ("OBPS").

In lieu of adherence to the OBPS, Ontario seeks approval from Environment & Climate Change Canada to implement their proposed GHG Emissions Performance Standards program.

As a result of the Tax Act, we recorded a discrete net tax expense of $180.6 for fiscal 2018, including a reduction in the deemed repatriation tax related to the taxation of deemed foreign dividends that may be eliminated by future legislation.

| [Business [removed: Overview](#s6E6AD90830B9554EA5C7718CB430601D)] [added: Overview](#s30F63A54F14656A088987494DF077991)] | [removed: [20](#s6E6AD90830B9554EA5C7718CB430601D)] [added: [21](#s30F63A54F14656A088987494DF077991)] |

| [Results of [removed: Operations](#s03109A342BEB5F6C9DC3B481E5A95F12)] [added: Operations](#sFEDB0739B06650C8A6E403B4297C0ABD)] | [removed: [23](#s03109A342BEB5F6C9DC3B481E5A95F12)] [added: [23](#sFEDB0739B06650C8A6E403B4297C0ABD)] |

[removed: | [Reconciliation of Non-GAAP Financial Measures](#s4DA03329DFA3555B913A59F104C6F5CC) | [33](#s4DA03329DFA3555B913A59F104C6F5CC) |][added: RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES]

| [Liquidity and Capital [removed: Resources](#s8BAD14BAEAA758828CC844AE16DACBA7)] [added: Resources](#s314F7640DBEF52319AC8E878A08EA3CD)] | [removed: [40](#s8BAD14BAEAA758828CC844AE16DACBA7)] [added: [34](#s314F7640DBEF52319AC8E878A08EA3CD)] |

| [Contractual [removed: Obligations](#s9D6940CFE6D856D3B3E1AECEDBC7AF19)] [added: Obligations](#s11E5E73A14995016ADC265F643225EE6)] | [removed: [43](#s9D6940CFE6D856D3B3E1AECEDBC7AF19)] [added: [37](#s11E5E73A14995016ADC265F643225EE6)] |

| [Pension [removed: Benefits](#sEEBAF84FEBA35E478C18712F26AE00B4)] [added: Benefits](#s62B3E242D4F85E95B1A034B6990A9409)] | [removed: [45](#sEEBAF84FEBA35E478C18712F26AE00B4)] [added: [38](#s62B3E242D4F85E95B1A034B6990A9409)] |

| [Environmental [removed: Matters](#s9D374202F92A5D3D9902609A40A159F5)] [added: Matters](#s0B995E94634E565682C4241B6C6A1C81)] | [removed: [46](#s9D374202F92A5D3D9902609A40A159F5)] [added: [40](#s0B995E94634E565682C4241B6C6A1C81)] |

| [Off-Balance Sheet [removed: Arrangements](#s8963DAE343135F1F892B61141233C64B)] [added: Arrangements](#s17452AF4801F5340840CF65E8FBF7C9A)] | [removed: [47](#s8963DAE343135F1F892B61141233C64B)] [added: [41](#s17452AF4801F5340840CF65E8FBF7C9A)] |

| [Related Party [removed: Transactions](#s9CF652B1F9E8542DA5028F6F82345DC3)] [added: Transactions](#s4482A3524D8B5977A0BA237A39DEC5B4)] | [removed: [48](#s9CF652B1F9E8542DA5028F6F82345DC3)] [added: [41](#s4482A3524D8B5977A0BA237A39DEC5B4)] |

| [Critical Accounting Policies and [removed: Estimates](#s67F553A7FD945DD69905F2708D468780)] [added: Estimates](#sB645E67CA7E15B819DABF790C856F04E)] | [removed: [48](#s67F553A7FD945DD69905F2708D468780)] [added: [41](#sB645E67CA7E15B819DABF790C856F04E)] |

| [New Accounting [removed: Guidance](#s7BF93D3014C457D693F6D0DE1DE54062)] [added: Guidance](#s343F7D0B752A5D6B80B0E51FB89D3316)] | [removed: [55](#s7BF93D3014C457D693F6D0DE1DE54062)] [added: [46](#s343F7D0B752A5D6B80B0E51FB89D3316)] |

Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management, including, without limitation, those described in [removed: our Forward-Looking Statements] [added: *Forward-Looking Statements*] and [removed: Part I,] Item [removed: 1A.][added: 1A, *Risk Factors*, of this Annual Report on Form 10-K.]

[removed: Unless otherwise indicated,] [added: Except for net income,] financial information is presented on a continuing operations basis.

[removed: All amounts presented] [added: The financial measures included in the discussion that follows] are [added: presented] in accordance with U.S. generally accepted accounting principles [removed: (GAAP),] [added: ("GAAP"),] except as noted.

[removed: All amounts are presented in millions] [added: *Millions] of [removed: dollars,] [added: dollars unless otherwise indicated,] except for per share [removed: data, unless otherwise indicated.][added: data*]

The [removed: presentation of] [added: Company believes these] non-GAAP measures [removed: is intended to] provide investors, potential investors, securities analysts, and others with useful [removed: supplemental] information to evaluate the performance of the business because such measures, when viewed together with [removed: our] financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting [removed: our] [added: the Company's] historical financial performance and projected future results.

Air Products and Chemicals, Inc. is a world-leading [removed: Industrial Gases] [added: industrial gases] company in operation for [removed: over 75] [added: nearly 80] years.

[removed: The Company’s core industrial gases business provides atmospheric, process, and specialty gases] [added: Focused on serving energy, environment] and [added: emerging markets, the Company provides essential industrial gases,] related equipment [added: and applications expertise] to [removed: many industries] [added: customers in dozens of industries,] including refining, chemical, [removed: gasification,] metals, electronics, manufacturing, and food and beverage.

Air Products is also the [removed: world’s leading supplier] [added: global leader in the supply] of liquefied natural gas [removed: (LNG)] [added: ("LNG")] process technology and equipment.

With operations in [removed: 50 countries,] [added: 51 countries outside the United States,] in fiscal year [removed: 2018] [added: 2019] we had sales of $8.9 billion, assets of [removed: $19.2] [added: $18.9] billion, and a worldwide workforce of approximately [removed: 16,300] [added: 17,700] full- and part-time employees.

As of 30 September [removed: 2018,] [added: 2019,] our operations were organized into five reportable business segments: [removed: Industrial Gases – Americas; Industrial Gases – EMEA (Europe, Middle East, and Africa); Industrial Gases – Asia; Industrial Gases – Global; and Corporate and other.]

[removed: The financial statements] [added: This Management’s Discussion] and [removed: analysis that follow discuss] [added: Analysis discusses] our results based on these operations.

Refer to Note [removed: 25, Business] [added: 26, *Business] Segment and Geographic [removed: Information,] [added: Information*,] to the consolidated financial statements for additional details on our reportable business segments.

[removed: We delivered operating margin of 22.0%] [added: Adjusted EBITDA] and [removed: adjusted] [added: Adjusted] EBITDA [removed: margin of 34.9%.][added: Margin]

| • | Adjusted EBITDA of [removed: $3,115.5] [added: $3,468.0] increased 11%, or [removed: $316.3. Adjusted] [added: $352.5, and adjusted] EBITDA margin of [removed: 34.9%] [added: 38.9%] increased [removed: 70] [added: 400] bp. |

Changes in Diluted [removed: Earnings per Share] [added: EPS] Attributable to Air Products

| | | | | | | | [removed: | | |] Increase | | |

| | [removed: | 2018 | |] [added: 2019] | | [removed: 2017] | [added: 2018] | | | (Decrease) | | |

| Operating Income Impact (after-tax) | | | | | | | | | | [removed: | | |]

| Underlying business | | | | | | | | | | [removed: | | |]

| Volume | [removed: | | | | | | | | | | $.71] [added: 2] | [added: %] |

| Currency | [removed: | | | | | | | | | .16 |] [added: (3] | [added: )%] |

| Change in inventory valuation method | | | | | | | [removed: | | | .08] [added: (.08] | | [added: )] |

| Business separation costs | [removed: | | |] [added: .12] | | | [added: .21] | | | [removed: .12] [added: .03] | | |

| Cost reduction and asset actions | [removed: | | | | |] [added: 25.5] | | | [added: —] | [removed: .49] | | |

| Goodwill and intangible asset impairment charge | [removed: | | |] [added: .70] | | | [added: —] | | | [removed: .70] [added: —] | | |

| Gain on land [removed: sale | | |] [added: sales] | [added: (.03] | | [added: )] | [added: —] | | | [removed: (.03] [added: (.13] | | ) |

| Total Operating Income Impact (after-tax) | | | | | | | | [removed: | | | $1.94] [added: $.71] | |

| Other Impact (after-tax) | | | | | | | | | | [removed: | | |]

| Equity affiliates' income | | | | | | | [removed: | | | .15] [added: .04] | | |

| [2019 in Summary](#s1685A0DE2A365944902D685591AF8097) | [21](#s1685A0DE2A365944902D685591AF8097) |

| [2020 Outlook](#sB69918A702F9531B8E489313291191F2) | [23](#sB69918A702F9531B8E489313291191F2) |

| [Inflation](#sD6248CD32B395CB7809E878F9D054538) | [41](#sD6248CD32B395CB7809E878F9D054538) |

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for fiscal years 2019 and 2018.

For the discussion of changes from fiscal year 2017 to fiscal year 2018 and other financial information related to fiscal year 2017, refer to Item 7, *Management’s Discussion and Analysis of Financial Condition and Results of Operations*, of our fiscal year 2018 Form 10-K.

This document was filed with the United States Securities and Exchange Commission on 20 November 2018.

For each non-GAAP financial measure, including adjusted diluted earnings per share ("EPS"), adjusted EBITDA, adjusted EBITDA margin, and adjusted effective tax rate, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP.

These reconciliations and explanations regarding the use of these measures are presented on pages 29-33.

The Company also develops, engineers, builds, owns and operates some of the world's largest industrial gas projects, including gasification projects that sustainably convert abundant natural resources into syngas for the production of high-value power, fuels and chemicals.

| • | Industrial Gases – Americas; |

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

| • | Industrial Gases – Asia; |

| • | Industrial Gases – Global; and |

| • | Corporate and other |

2019 IN SUMMARY

In fiscal year 2019, we remained focused on improving our existing business while deploying capital into larger, more complex industrial gas projects.

We continued to execute our gasification strategy, with the Lu'An project in China reaching its first full year of operation and the progression of other projects such as the Jiutai coal-to-syngas project and the Debang syngas project.

We also received a number of important recognitions for our strong focus on sustainability and our commitment to advancing diversity and inclusion.

The results below are compared to fiscal year 2018.

| • | Sales of $8,918.9 were flat as favorable pricing of 3% and higher volumes of 2% were offset by negative currency impacts of 3% and the negative impact of a contract modification to a tolling arrangement in India of 2%. |

| • | Operating income of $2,144.4 increased 9%, or $178.8, and operating margin of 24.0% increased 200 bp. |

| • | Net income of $1,809.4 increased 18%, or $276.5, and net income margin of 20.3% increased 310 bp. |

| • | Diluted EPS of $7.94 increased 20%, or $1.35 per share. Adjusted diluted EPS of $8.21 increased 10%, or $.76 per share. A summary table of changes in diluted EPS is presented on the following page. |

| • | We increased our quarterly dividend by 5% from $1.10 to $1.16 per share, or $4.64 per share annually. This is the 37th consecutive year that we have increased our dividend payment, reflecting continued confidence in our financial strength, significant cash flows, and growth outlook. |

| Diluted EPS | | $7.94 | | | $6.59 | | | $1.35 | |

| Price, net of variable costs | | | | | | | .81 | | |

| Other costs | | | | | | | (.17 | | ) |

| Facility closure | | | | | | | (.10 | | ) |

| Cost reduction actions | | | | | | | (.08 | | ) |

| Gain on exchange of equity affiliate investments | | | | | | | .13 | | |

| Change in effective tax rate, excluding discrete items below | | | | | | | (.09 | | ) |

| Tax reform adjustment related to deemed foreign dividends | | | | | | | (.51 | | ) |

| Total Change in Diluted EPS | | | | | | | | $1.35 | |

| Diluted EPS | | $7.94 | | | $6.59 | | | $1.35 | |

| Facility closure | .10 | | | — | | | .10 | | |

| Cost reduction actions | .08 | | | — | | | .08 | | |

| Gain on exchange of equity affiliate investments | (.13 | | ) | — | | | (.13 | | ) |

| Adjusted Diluted EPS | | $8.21 | | | $7.45 | | | $.76 | |

2020 OUTLOOK

We expect earnings to grow from an investment in a new equity affiliate that will acquire the gasification, power, and industrial gas assets at Jazan Economic City, Saudi Arabia ("the Jazan gas and power project").

| [2018 in Summary](#sF775479B21A15D58A3C9095D4A635942) | [21](#sF775479B21A15D58A3C9095D4A635942) |

| [2019 Outlook](#sBA9C0020B399571B980605A12FAD4EBA) | [23](#sBA9C0020B399571B980605A12FAD4EBA) |

| [Inflation](#sAFA08E4E94D35B44BBBF180BB4F423C3) | [48](#sAFA08E4E94D35B44BBBF180BB4F423C3) |

Risk Factors, of this Annual Report on Form 10-K.

All comparisons in the discussion are to the corresponding prior year, unless otherwise stated.

Captions such as income from continuing operations attributable to Air Products, net income attributable to Air Products, and diluted earnings per share attributable to Air Products are simply referred to as “income from continuing operations,” “net income,” and “diluted earnings per share (EPS)” throughout this Management’s Discussion and Analysis, unless otherwise stated.

The discussion of results that follows includes comparisons to certain non-GAAP ("adjusted") financial measures.

The reconciliations of reported GAAP results to non-GAAP measures are presented on pages 33-39.

Descriptions of the excluded items appear on pages 25-28.

2018 IN SUMMARY

In fiscal year 2018, we delivered strong safety and financial results.

Sales of $8.9 billion increased nine percent over the prior year primarily driven by higher volumes from base business growth and new, large industrial gas project onstreams.

The higher regional volumes were partially offset by lower sale of equipment activity on our Jazan project as we near project completion.

In addition, we began to execute our gasification strategy with the completion and onstream of the Lu'An acquisition and our announcements of the Jazan gasifier/power project in Jazan, Saudi Arabia, the Yankuang coal-to-syngas production facility in Yulin City, Shaanxi Province, China, and the Jiutai coal-to-syngas project in Hohhot, China.

Diluted EPS of $6.59 increased 28% from the prior year.

On a non-GAAP basis, adjusted diluted EPS of $7.45 increased 18%.

Highlights for 2018

| • | Sales of $8,930.2 increased 9%, or $742.6, from underlying sales growth of 7% and favorable currency impacts of 2%. The underlying sales growth was primarily driven by higher volumes across all regional Industrial Gases segments, partially offset by lower sale of equipment activity in the Industrial Gases – Global segment. |

| • | Operating income of $1,965.6 increased 37%, or $525.6, and operating margin of 22.0% increased 440 bp. On a non‑GAAP basis, adjusted operating income of $1,941.5 increased 9%, or $167.7, and adjusted operating margin of 21.7% was flat. |

| • | Income from continuing operations of $1,455.6 increased 28%, or $321.2, and diluted EPS of $6.59 increased 28%, or $1.43. On a non-GAAP basis, adjusted income from continuing operations of $1,644.7 increased 19%, or $258.8, and adjusted diluted EPS of $7.45 increased 18%, or $1.14. A summary table of changes in diluted earnings per share is presented on the following page. |

| • | We completed the formation of a syngas supply joint venture with Lu'An, including the acquisition of Lu'An's gasification and syngas purification assets. |

| • | We increased our quarterly dividend by 16% from $.95 to $1.10 per share, or $4.40 per share annually, the largest increase in Company history. This represents the 36th consecutive year that we have increased our dividend payment. |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | |

| Diluted Earnings per Share | | | | | | | | | | | | |

| Net income | | | $6.78 | | | | $13.65 | | | | ($6.87 | ) |

| Income from discontinued operations | | .19 | | | | 8.49 | | | | (8.30 | | ) |

| Income from Continuing Operations – GAAP | | | $6.59 | | | | $5.16 | | | | $1.43 | |

| Price/raw materials | | | | | | | | | | .16 | | |

| Costs | | | | | | | | | | (.45 | | ) |

| Income tax | | | | | | | | | | .44 | | |

| Total Change in Diluted Earnings per Share from Continuing Operations – GAAP Measure | | | | | | | | | | | $1.43 | |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | |

| Income from Continuing Operations – GAAP Basis | | | $6.59 | | | | $5.16 | | | | $1.43 | |

| Business separation costs | | — | | | | .12 | | | | (.12 | | ) |

| Tax benefit associated with business separation | | — | | | | (.02 | | ) | | .02 | | |

| Gain on land sale | | — | | | | (.03 | | ) | | .03 | | |

For details on the types and use of these derivative instruments and the major accounting policies, see Note 1, [removed: Major] [added: *Major] Accounting [removed: Policies,] [added: Policies*,] and Note [removed: 13, Financial Instruments,] [added: 14, *Financial Instruments*,] to the consolidated financial statements, for additional information.

The net market value of these financial instruments combined is referred to below as the net financial instrument position and is disclosed in Note [removed: 14, Fair] [added: 15, *Fair] Value [removed: Measurements,] [added: Measurements*,] to the consolidated financial statements.

At 30 September [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the net financial instrument position was a liability of [removed: $3,736.2] [added: $3,239.1] and [removed: $3,832.3,] [added: $3,736.2,] respectively.

Our debt portfolio as of 30 September [removed: 2017,] [added: 2019,] including the effect of currency and interest rate swap agreements, was composed of [removed: 65%] [added: 74%] fixed-rate debt and [removed: 35%] [added: 26%] variable-rate debt.

The sensitivity analysis related to the interest rate risk on the fixed portion of our debt portfolio assumes an instantaneous 100 bp [added: parallel] move in interest rates from the level at 30 September [removed: 2018,] [added: 2019,] with all other variables held constant.

A 100 bp increase in market interest rates would result in a decrease of [removed: $96] [added: $75] and [removed: $112] [added: $96] in the net liability position of financial instruments at 30 September [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

A 100 bp decrease in market interest rates would result in an increase of [removed: $101] [added: $80] and [removed: $119] [added: $101] in the net liability position of financial instruments at 30 September [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

Based on the variable-rate debt included in our debt portfolio, including the interest rate swap agreements, a 100 bp increase in interest rates would result in an additional [removed: $13] [added: $8] and [removed: $14] [added: $13] of interest incurred per year at the end of 30 September [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

A 100 bp decline in interest rates would lower interest incurred by [removed: $13] [added: $8] and [removed: $14] [added: $13] per year at 30 September [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

The sensitivity analysis related to foreign currency exchange rates assumes an instantaneous 10% change in the foreign currency exchange rates from their levels at 30 September [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] with all other variables held constant.

A 10% strengthening or weakening of the functional currency of an entity versus all other currencies would result in a decrease or increase, respectively, of [removed: $329] [added: $326] and [removed: $312] [added: $329] in the net liability position of financial instruments at 30 September [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

We estimate that a 10% reduction in either the Chinese Renminbi or the Euro versus the U.S. Dollar would lower our annual operating income by approximately [removed: $30] [added: $40] and $25, respectively.

The decrease in the net financial instrument position was primarily due to the repayment of long-term debt.

The decrease in variable-rate debt was the result of the repayment and maturity of the 4.375% Senior Note and related fixed-to-variable interest rate swaps.

The Company is the world’s largest supplier of hydrogen and has built leading positions in growth markets such as helium and [added: liquefied] natural gas [removed: liquefaction.][added: ("LNG") process technology and equipment.]

During its fiscal year ended 30 September [removed: 2018] [added: 2019] (“fiscal year [removed: 2018”),] [added: 2019”),] the Company reported its continuing operations in five reporting segments under which it managed its operations, assessed performance, and reported earnings: Industrial Gases – Americas; Industrial Gases – EMEA (Europe, Middle East, and Africa); Industrial Gases – Asia; Industrial Gases – Global; and Corporate and other.

Refer to [removed: Management's Discussion and Analysis of Financial Condition and Results of Operations and] Note [removed: 25, Business Segment and Geographic Information, and Note 3, Discontinued Operations,] [added: 4, *Discontinued Operations*,] to the consolidated financial statements for additional details on our [removed: reportable business segments and our] discontinued operations.

The Company’s Industrial Gases business produces atmospheric [removed: gases (oxygen,] [added: gases, such as oxygen,] nitrogen, [removed: argon,] and [removed: rare gases);] [added: argon,] process [removed: gases (hydrogen,] [added: gases, such as hydrogen,] helium, carbon dioxide, carbon monoxide, [added: and] syngas, and specialty [removed: gases); and equipment for the production or processing of gases, such as air separation units and non-cryogenic generators.][added: gases.]

Hydrogen is [removed: also] produced by purifying byproduct sources obtained from the chemical and petrochemical industries; and helium is produced as a byproduct of gases extracted from underground reservoirs, primarily natural gas, but also carbon dioxide purified before resale.

On-Site Gases—Large quantities of hydrogen, nitrogen, oxygen, carbon monoxide, and syngas (a mixture of hydrogen and carbon monoxide) are provided to customers, principally [added: in] the energy production and refining, chemical, gasification, and metals industries worldwide, that require large volumes of gases and have relatively constant demand.

During fiscal year [removed: 2018,] [added: 2019,] no significant difficulties were encountered in obtaining adequate supplies of power and natural gas.

The regional Industrial Gases segments also include our [removed: share of] [added: interests in] the results of several joint ventures accounted for by the equity [removed: method.][added: method, which are reported in our financial statements as income from equity affiliates.]

[removed: In] [added: We derive a competitive advantage in] locations where we have pipeline networks, which enable us to provide reliable and economic supply of products to [added: our] larger [removed: customers, we derive a competitive advantage.][added: customers.]

Overall regional industrial gases sales constituted approximately [removed: 94%] [added: 96%, 94%, and 90%] of consolidated sales in fiscal [removed: year] [added: years 2019,] 2018, [removed: 90% in fiscal year 2017,] and [removed: 90% in fiscal year 2016.][added: 2017, respectively.]

Sales of [added: atmospheric gases constituted approximately 46%, 46%, 45% of consolidated sales in fiscal years 2019, 2018, and 2017, respectively, while sales of] tonnage [removed: hydrogen] [added: hydrogen, syngas,] and related products constituted approximately [removed: 25%] [added: 26%, 25%, and 24%] of consolidated sales in fiscal [removed: year] [added: years 2019,] 2018, [removed: 24% in fiscal year 2017,] and [removed: 21% in fiscal year 2016.][added: 2017, respectively.]

[removed: Sales] [added: Sale] of [removed: atmospheric gases] [added: equipment] constituted approximately [removed: 46%] [added: 4%, 6%, and 10%] of consolidated sales in fiscal [removed: year] [added: years 2019,] 2018, [removed: 45% in fiscal year 2017,] and [removed: 46% in fiscal year 2016.][added: 2017, respectively.]

The Corporate and other segment includes three global equipment businesses: our LNG equipment business, our Gardner Cryogenics business fabricating helium and hydrogen transport and storage containers, and our Rotoflow [removed: business] [added: business,] which manufactures turboexpanders and other precision rotating equipment.

[removed: Adequate raw] [added: Raw] materials for individual projects [added: typically] are acquired under firm purchase agreements.

The backlog of equipment orders was approximately [removed: $.2] [added: $.9] billion on 30 September [removed: 2018] [added: 2019] (as compared to a total backlog of approximately [removed: $.5] [added: $.2] billion on 30 September [removed: 2017).][added: 2018).]

The Company estimates that approximately 50% of the total [added: equipment] sales backlog as of 30 September [removed: 2018] [added: 2019] will be recognized as revenue during fiscal year [removed: 2019,] [added: 2020,] dependent on execution schedules of the relevant projects.

The Company, through subsidiaries, affiliates, and [removed: less-than-controlling interests,] [added: joint ventures accounted for using the equity method,] conducts business in [removed: 50] [added: 51] countries outside the United States.

Its international businesses are subject to risks customarily encountered in foreign operations, including fluctuations in foreign currency exchange rates and [removed: controls;] [added: controls, tariffs, trade sanctions, and] import and export [removed: controls;] [added: controls,] and other economic, political, and regulatory policies of local governments described in Item 1A, [removed: Risk Factors,] [added: *Risk Factors*,] below.

The Company has majority or wholly owned foreign subsidiaries that operate in Canada; [removed: 16] [added: 17] European countries (including the [removed: United Kingdom, the] Netherlands, [added: Spain,] and [removed: Spain); eight] [added: the United Kingdom); nine] Asian countries (including China, South Korea, and Taiwan); seven Latin American countries (including [removed: Chile] [added: Brazil] and [removed: Brazil); four] [added: Chile); five] countries in the Middle [removed: East,] [added: East (including Saudi Arabia),] and [removed: two] [added: three] African countries.

The Company also owns less-than-controlling interests in entities operating in Europe, Asia, [removed: Africa,] [added: Latin America,] the Middle East, and [removed: Latin America] [added: Africa] (including [removed: Italy, Germany,] China, [added: Germany,] India, [added: Italy, Mexico, Oman,] Saudi Arabia, [removed: Thailand, Oman,] South Africa, and [removed: Mexico).][added: Thailand).]

Financial information about the Company’s foreign operations and investments is included in Note [removed: 8, Summarized] [added: 9, *Summarized] Financial Information of Equity [removed: Affiliates;] [added: Affiliates*;] Note [removed: 22, Income Taxes;] [added: 23, *Income Taxes;*] and Note [removed: 25, Business] [added: 26, *Business] Segment and Geographic [removed: Information,] [added: Information*,] to the consolidated financial statements included under Item 8, below.

Information about foreign currency translation is included under “Foreign Currency” in Note 1, [removed: Major] [added: *Major] Accounting [removed: Policies,] [added: Policies*,] and information on the Company’s exposure to currency fluctuations is included in Note [removed: 13, Financial Instruments,] [added: 14, *Financial Instruments*,] to the consolidated financial statements, included under Item 8, below, and in “Foreign Currency Exchange Rate Risk,” included under Item 7A, below.

Export sales from operations in the United States to third-party customers amounted to [removed: $33.1] [added: $41.3] million, [removed: $64.2] [added: $33.1] million, and [removed: $134.9] [added: $64.2] million in fiscal years [added: 2019,] 2018, [removed: 2017,] and [removed: 2016,] [added: 2017,] respectively.

During fiscal year [removed: 2018,] [added: 2019,] the Company owned approximately [removed: 535] [added: 857] United States patents, approximately [removed: 2,888] [added: 3,733] foreign patents, and was a licensee under certain patents owned by others.

In the normal course of business, the Company is involved in legal proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act [removed: (CERCLA:] [added: ("CERCLA,"] the federal Superfund law); Resource Conservation and Recovery Act [removed: (RCRA);] [added: ("RCRA");] and similar state and foreign environmental laws relating to the designation of certain sites for investigation or remediation.

The Company’s accounting policy for environmental expenditures is discussed in Note 1, [removed: Major] [added: *Major] Accounting [removed: Policies,] [added: Policies*,] and environmental loss contingencies are discussed in Note [removed: 17, Commitments] [added: 18, *Commitments] and [removed: Contingencies,] [added: Contingencies*,] to the consolidated financial statements, included under Item 8, below.

The amounts charged to income from continuing operations related to environmental matters totaled [added: $14.2 million,] $12.8 [removed: million in fiscal year 2018,] [added: million, and] $11.4 million in fiscal [removed: year 2017,] [added: years 2019, 2018,] and [removed: $12.2 million in fiscal year 2016.][added: 2017, respectively.]

Refer to Note [removed: 17, Commitments] [added: 18, *Commitments] and [removed: Contingencies,] [added: Contingencies*,] to the consolidated financial statements for additional information.

The Company estimates that we spent approximately [added: $5 million,] $3 [removed: million in fiscal year 2018,] [added: million, and] $7 million in fiscal [removed: year 2017,] [added: years 2019, 2018,] and [removed: $3 million in fiscal year 2016] [added: 2017, respectively,] on capital projects reflected in continuing operations to control pollution.

Capital expenditures to control pollution are estimated to be approximately [removed: $4] [added: $5] million in both fiscal years [removed: 2019] [added: 2020] and [removed: 2020.][added: 2021.]

On 30 September [removed: 2018,] [added: 2019,] the Company (including majority-owned subsidiaries) had approximately [removed: 16,300] [added: 17,700] employees, of whom approximately [removed: 16,000] [added: 17,440] were full-time employees and of whom approximately [removed: 11,800] [added: 12,950] were located outside the United States.

All periodic and current reports, registration statements, [added: proxy statements,] and other filings that the Company is required to file with the Securities and Exchange Commission ("SEC"), including the Company’s [removed: annual report] [added: Annual Report] on Form 10-K, [removed: quarterly reports] [added: Quarterly Reports] on Form 10-Q, [removed: current reports] [added: Current Reports] on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), are available free of charge through the Company’s website at www.airproducts.com.

[removed: All such reports filed during the period] covered by this report were available on the Company’s website on the same day as filing.

Within each of these industries, [removed: the Company has] [added: we have] several large-volume customers with long-term contracts.

The Company’s executive officers and their respective positions and ages on [removed: 20] [added: 26] November [removed: 2018] [added: 2019] follow.

| M. Scott Crocco | [removed: 54] [added: 55] | Executive Vice President and Chief Financial Officer (became Executive Vice President and Chief Financial Officer in 2016; Senior Vice President and Chief Financial Officer in 2013; and Vice President and Corporate Controller in 2008). |

| Seifi Ghasemi | [removed: 74] [added: 75] | Chairman, President, and Chief Executive Officer (became Chairman, President and Chief Executive Officer in 2014 and previously served as Chairman and Chief Executive Officer of Rockwood Holdings, Inc. [removed: beginning in 2001).] [added: from 2001 to 2014).] Mr. Ghasemi is a member and Chairman of the Board of Directors and the Chairman of the Executive Committee of the Board of Directors. |

| Sean D. Major | [removed: 54] [added: 55] | Executive Vice President, General Counsel and Secretary (Secretary since December 2017 and Executive Vice President and General Counsel since May 2017). Previously, Mr. Major served as Executive Vice President, General Counsel and Secretary for Joy Global Inc. [removed: since 2007. From 1998 until joining Joy Global Inc. in 2007, Mr. Major was employed by Johnson Controls, Inc., serving in roles of increasing legal responsibility, including Assistant General Counsel and Assistant Secretary.] [added: from 2007 to 2017.] |

| Dr. Samir [added: J.] Serhan | [removed: 57] [added: 58] | Executive Vice President (since December 2016). Previously, Dr. Serhan served as President, Global HyCO, since 2014 for Praxair Inc. From 2000-2014, he worked in leadership positions in the U.S. and Germany for The Linde Group, including Managing Director of Linde Engineering from 2008-2014. |

The Company also develops, engineers, builds, owns and operates some of the world’s largest industrial gas projects, including gasification projects that sustainably convert abundant natural resources into syngas for the production of high-value power, fuels and chemicals.

The Industrial Gases business also develops, builds and operates equipment for the production or processing of gases, such as air separation units and non-cryogenic generators.

We distribute gases to our sale of gas customers through different supply modes depending on various factors including the customer's volume requirements and location.

Our supply modes are as follows:

The increase in the number of patents compared to fiscal year 2018 is primarily attributable to the acquisition of General Electric Company’s gasification business, completed in August 2019, inclusive of its related patent estate.

All such reports filed during the period

We distribute gases to our customers through a variety of supply modes:

Sale of equipment constituted approximately 6% of consolidated sales in fiscal year 2018, 10% in fiscal year 2017, and 10% in fiscal year 2016.

In the normal course of business, the Company and its subsidiaries are involved in various legal proceedings, including [removed: contract, product liability,] [added: commercial, competition, environmental,] intellectual property, [removed: insurance,] [added: regulatory, product liability,] and [removed: regulatory] [added: insurance] matters.

The Company is a party to proceedings under CERCLA, [removed: the] RCRA, and similar state and foreign environmental laws relating to the designation of certain sites for investigation or remediation.

Presently there are [removed: 32] [added: 31] sites on which a final settlement has not been reached where the Company, along with others, has been designated a potentially responsible party by the Environmental Protection Agency or is otherwise engaged in investigation or remediation, including cleanup activity at certain of its current and former manufacturing sites.

Additional information on the Company’s environmental exposure is included under Item [removed: 1.][added: 1, *Business–Environmental Controls*.]

CADE imposed a civil fine of R$179.2 million (approximately [removed: $44] [added: $43] million at 30 September [removed: 2018)] [added: 2019)] on Air Products Brasil Ltda.

Other than [removed: this matter,] [added: the CADE matter discussed above,] we do not currently believe there are any legal proceedings, individually or in the aggregate, that are reasonably possible to have a material impact on our financial condition, results of operations, or cash flows.

In November 2019, the Company finalized a Consent Order with the City of Santa Clara, CA (“City”) to address certain alleged administrative violations at its Santa Clara facility.

The Consent Order requires the Company to pay the City approximately $.6 million to settle the allegations, which includes an enforcement penalty and funding for various supplemental environmental and training projects.

Business, Environmental Controls.

[removed: FORM 10-K][added: FORM 10-K]

| [removed: x] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended 30 September [removed: 2018] [added: 2019] |

| [removed: ¨] [added: ☐] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |

[removed: |] 7201 Hamilton Boulevard [removed: | | State of incorporation: Delaware |]

[removed: | Allentown, Pennsylvania, 18195-1501 | | I.R.S. identification number: 23-1274455 |][added: Allentown, Pennsylvania 18195-1501]

[removed: | Tel. (610) 481-4911 | | |][added: 610\-481-4911]

| Title of Each Class: | [added: Trading Symbol(s)] | Registered on: |

| Common Stock, par value $1.00 per share | [added: APD] | New York Stock Exchange |

| [removed: 2.0%] [added: 2.000%] Euro Notes due 2020 | [added: APD20] | New York Stock Exchange |

| 0.375% Euro Notes due 2021 | [added: APD21B] | New York Stock Exchange |

| [removed: 1.0%] [added: 1.000%] Euro Notes due 2025 | [added: APD25] | New York Stock Exchange |

| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | | [removed: YES] [added: Yes] | [removed: x] [added: ☒] | | [removed: NO] [added: No] | [removed: ¨] [added: ☐] |

| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | | [removed: YES] [added: Yes] | [removed: ¨] [added: ☐] | | [removed: NO] [added: No] | [removed: x] [added: ☒] |

| 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. | | [removed: YES] [added: Yes] | [removed: x] [added: ☒] | | [removed: NO] [added: No] | [removed: ¨] [added: ☐] |

| 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 such files). | | [removed: YES] [added: Yes] | [removed: x] [added: ☒] | | [removed: NO] [added: No] | [removed: ¨] [added: ☐] |

| Large accelerated filer [removed: x] | [added: ☒] | [added: |] Accelerated filer [removed: ¨] | [added: ☐] | [added: |] Non-accelerated filer [removed: ¨] | [added: ☐] | [added: |] Smaller reporting company [removed: ¨] | [added: ☐] | [added: |] Emerging growth company [removed: ¨] | [added: ☐ |]

| 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. | | | | | | [removed: ¨] [added: ☐] |

| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | | [removed: YES] [added: Yes] | [removed: ¨] [added: ☐] | | [removed: NO] [added: No] | [removed: x] [added: ☒] |

The aggregate market value of the voting stock held by non-affiliates of the registrant on [removed: 31] [added: 29] March [removed: 2018] [added: 2019] was approximately [removed: $34.8] [added: $42.0] billion.

The number of shares of common stock outstanding as of 31 October [removed: 2018] [added: 2019] was [removed: 219,533,532.][added: 220,433,925.]

Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019] [added: 2020] are incorporated by reference into Part III.

For the fiscal year ended 30 September [removed: 2018][added: 2019]

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| ITEM 5. | [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#s494EB0B58C8F5749A531FC6CF0E3D8E8)] [added: SECURITIES](#s068B1F01262A51D29F073BAF3903BBA9)] | [removed: [16](#s494EB0B58C8F5749A531FC6CF0E3D8E8)] [added: [17](#s068B1F01262A51D29F073BAF3903BBA9)] |

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| ITEM 7. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#sE006A594763A5212B37B19EDB7BE788F)] [added: OPERATIONS](#s20C492F736D153E4A277DBBB238477DB)] | [removed: [20](#sE006A594763A5212B37B19EDB7BE788F)] [added: [20](#s20C492F736D153E4A277DBBB238477DB)] |

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| Delaware | | | | | | 23-1274455 |

| (State or Other Jurisdiction of Incorporation or Organization) | | | | | | (I.R.S. Employer Identification No.) |

(Address of Principal Executive Offices and Zip Code)

(Registrant’s Telephone Number, Including Area Code)

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| [INDEX TO EXHIBITS](#s35CF6CBA04875D21A1AC87D9032F36B4) | | [122](#s35CF6CBA04875D21A1AC87D9032F36B4) |

| [SIGNATURES](#sD0F521FA5ABB571AABDB80F102CAD02E) | | [126](#sD0F521FA5ABB571AABDB80F102CAD02E) |

| • | our ability to develop and operate large scale and technically complex projects, including gasification projects; |

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| --- | --- | --- | --- | --- | --- | --- |

| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. | | | | | | ¨ |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| [INDEX TO EXHIBITS](#s9079552A8E825A808A653C09DE643979) | | [126](#s9079552A8E825A808A653C09DE643979) |

| [SIGNATURES](#s6F13B5395B5D5A51BD7CD3D4F7A75D7A) | | [130](#s6F13B5395B5D5A51BD7CD3D4F7A75D7A) |

Industrial Gases – Asia currently operates from over 170 production and distribution facilities within Asia (approximately one-fourth of which are on owned property or [removed: long duration] [added: long-duration] term grants).

Not applicable.

Not applicable

Dividend information for each quarter of fiscal years [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] is summarized below:

| First quarter | | [removed: $.95] [added: $1.10] | | | [removed: $.86] [added: $.95] | |

| Second quarter | [removed: 1.10] [added: 1.16] | | | [removed: .95] [added: 1.10] | | |

| Third quarter | [removed: 1.10] [added: 1.16] | | | [removed: .95] [added: 1.10] | | |

| Fourth quarter | [removed: 1.10] [added: 1.16] | | | [removed: .95] [added: 1.10] | | |

| Total | | [removed: $4.25] [added: $4.58] | | | [removed: $3.71] [added: $4.25] | |

There were no purchases of stock during fiscal year [removed: 2018.][added: 2019.]

At 30 September [removed: 2018,] [added: 2019,] $485.3 million in share repurchase authorization remained.

[removed: ][added: ]

| | Sept [removed: 2013 | Sept] 2014 | Sept 2015 | Sept 2016 | Sept 2017 | Sept 2018 | [added: Sept 2019 |]

| S&P 500 Materials Index | 100 | [removed: 122] [added: 82] | [removed: 96] [added: 100] | [removed: 120] [added: 122] | [removed: 146] [added: 126] | [removed: 152] [added: 130] |

Our common stock is listed on the New York Stock Exchange under the symbol "APD." As of 31 October 2019, there were 5,166 record holders of our common stock.

| | 2019 | | | 2018 | | |

| Air Products | 100 | 100 | 120 | 134 | 153 | 208 |

| S&P 500 Index | 100 | 99 | 115 | 136 | 160 | 167 |

Our common stock (ticker symbol APD) is listed on the New York Stock Exchange.

Our transfer agent and registrar is Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342, Brentwood, New York 11717, telephone (844) 318-0129 (U.S.) or (720) 358-3595 (all other locations); website, http://shareholder.broadridge.com/airproducts; and e-mail address, shareholder@broadridge.com.

As of 31 October 2018, there were 5,391 record holders of our common stock.

| | 2018 | | | 2017 | | |

| Air Products | 100 | 128 | 122 | 149 | 168 | 191 |

| S&P 500 Index | 100 | 120 | 116 | 137 | 161 | 191 |

| (Millions of dollars, except for share and per share data) | [removed: 2018(A)] [added: 2019] | | | [removed: 2017(A)] [added: 2018] | | | [removed: 2016(A)] [added: 2017] | | | [removed: 2015(A)] [added: 2016] | | | [removed: 2014(A)] [added: 2015] | | |

| Sales | | [removed: $8,930] [added: $8,919] | | | [removed: $8,188] [added: $8,930] | | | [removed: $7,504] [added: $8,188] | | | [removed: $7,824] [added: $7,504] | | | [removed: $8,384] [added: $7,824] | |

| Operating [removed: income(B)] [added: income] | [removed: 1,966] [added: 2,144] | | | [removed: 1,440] [added: 1,966] | | | [removed: 1,535] [added: 1,440] | | | [removed: 1,276] [added: 1,535] | | | [removed: 976] [added: 1,276] | | |

| Equity affiliates’ [removed: income(C)] [added: income(A)] | [removed: 175] [added: 215] | | | [removed: 80] [added: 175] | | | [removed: 147] [added: 80] | | | [removed: 152] [added: 147] | | | [removed: 149] [added: 152] | | |

| [removed: Income] [added: Basic earnings per common share] from continuing operations | [removed: 6.64] [added: 7.99] | | | [removed: 5.20] [added: 6.64] | | | [removed: 5.08] [added: 5.20] | | | [removed: 4.34] [added: 5.08] | | | [removed: 3.28] [added: 4.34] | | |

| [removed: Income] [added: Diluted earnings per common share] from continuing operations | [removed: 6.59] [added: 7.94] | | | [removed: 5.16] [added: 6.59] | | | [removed: 5.04] [added: 5.16] | | | [removed: 4.29] [added: 5.04] | | | [removed: 3.24] [added: 4.29] | | |

| Total assets(D) | [removed: 19,178] [added: 18,943] | | | [removed: 18,467] [added: 19,178] | | | [removed: 18,029] [added: 18,467] | | | [removed: 17,317] [added: 18,029] | | | [removed: 17,648] [added: 17,317] | | |

| Total debt(E) | [removed: 3,813] [added: 3,326] | | | [removed: 3,963] [added: 3,813] | | | [removed: 5,211] [added: 3,963] | | | [removed: 5,856] [added: 5,211] | | | [removed: 6,081] [added: 5,856] | | |

| Operating [removed: margin(B)] [added: margin] | [removed: 22.0] [added: 24.0] | | % | [removed: 17.6] [added: 22.0] | | % | [removed: 20.5] [added: 17.6] | | % | [removed: 16.3] [added: 20.5] | | % | [removed: 11.6] [added: 16.3] | | % |

| Income from continuing operations [removed: including noncontrolling interests] | [added: 1,809] | [removed: $1,491] | | [added: 1,491] | [removed: $1,155] | | [added: 1,155] | [removed: $1,122] | | [added: 1,122] | [removed: $966] | | [added: 966] | [removed: $691] | |

| Adjusted [removed: EBITDA(B)(H)] [added: EBITDA(C)] | [removed: 3,116] [added: 3,468] | | | [removed: 2,799] [added: 3,116] | | | [removed: 2,622] [added: 2,799] | | | [removed: 2,422] [added: 2,622] | | | [removed: 2,322] [added: 2,422] | | |

| Adjusted EBITDA [removed: margin(B)] [added: margin(C)] | [removed: 34.9] [added: 38.9] | | % | [removed: 34.2] [added: 34.9] | | % | [removed: 34.9] [added: 34.2] | | % | [removed: 31.0] [added: 34.9] | | % | [removed: 27.7] [added: 31.0] | | % |

| Dividends declared per common share | [removed: 4.25] [added: 4.58] | | | [removed: 3.71] [added: 4.25] | | | [removed: 3.39] [added: 3.71] | | | [removed: 3.20] [added: 3.39] | | | [removed: 3.02] [added: 3.20] | | |

| (D) | [removed: Information presented on a total company basis, which] [added: Total assets] includes [removed: both] [added: assets from] continuing and discontinued operations. |

| (E) | Total debt includes long-term [removed: debt, including] debt [removed: to related parties,] [added: and] current portion of long-term debt, [added: including debt to related parties,] and short-term borrowings as of the end of the year for continuing operations. [added: Long-term obligations decreased in fiscal year 2017 primarily due to debt repayments subsequent to the spin-off of the former Electronic Materials division as Versum Materials, Inc.] |

| [removed: (H)] [added: (C)] | A reconciliation of [removed: income] [added: adjusted diluted earnings per common share] from continuing operations [added: to diluted earnings per common share from continuing operations] on a GAAP basis [removed: to] [added: is presented on page 30. A reconciliation of] adjusted EBITDA [added: and adjusted EBITDA margin to net income and net income margin on a GAAP basis, respectively,] is presented on [removed: pages 36-39.] [added: page 31.] |

| Net income(B)(C) | 1,809 | | | 1,533 | | | 3,021 | | | 662 | | | 1,318 | | |

| Net income margin(C) | 20.3 | | % | 17.2 | | % | 36.9 | | % | 8.8 | | % | 16.8 | | % |

| Adjusted diluted earnings per common share from continuing operations(C) | | $8.21 | | | $7.45 | | | $6.31 | | | $5.64 | | | $4.88 | |

| (A) | Fiscal year 2017 included the impact of an other-than-temporary noncash impairment charge of $80 on a 25%‑owned equity affiliate in Saudi Arabia. |

| (B) | Fiscal year 2017 included net income from discontinued operations of $1,866 primarily resulting from the sale of the Performance Materials Division to Evonik Industries AG. Fiscal year 2016 included a net loss from discontinued operations of $465, which included an after-tax loss on the disposal of the Energy-from-Waste business of $847, partially offset by income from operations of the former Electronic Materials and Performance Materials divisions. |

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

| Operating Results | | | | | | | | | | | | | | | |

| 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 | | |

| 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: | | | | | | | | | | | | | | | |

| Net income(D) | 6.83 | | | 13.76 | | | 2.92 | | | 5.95 | | | 4.66 | | |

| Diluted earnings per common share attributable to Air Products: | | | | | | | | | | | | | | | |

| 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 | |

| Working capital(D) | 2,744 | | | 3,388 | | | 1,034 | | | (851 | | ) | 199 | | |

| 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 | | % |

| 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 | | | | | | | | | | | | | | | |

| 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 | | ) |

| 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). |

| | |

| --- | --- |

| (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. |

| | |

Management has evaluated the effectiveness of its internal control over financial reporting based on criteria established in [removed: Internal] [added: *Internal] Control—Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, management concluded that, as of 30 September [removed: 2018,] [added: 2019,] the Company’s internal control over financial reporting was effective.

[removed: KPMG] [added: Deloitte & Touche] LLP, an independent registered public accounting firm, has issued its opinion on the Company’s internal control over financial reporting as of 30 September [removed: 2018] [added: 2019] as stated in its report which appears herein.

[removed: | 20] November [removed: 2018 | | | | 20 November] [added: 20,] 2018 [removed: |]

[removed: *Opinions] [added: Opinions] on [removed: the* Consolidated *Financial] [added: the Financial] Statements and Internal Control [removed: Over] [added: over] Financial [removed: Reporting*][added: Reporting]

We have audited the accompanying consolidated balance [removed: sheets] [added: sheet] of Air Products and Chemicals, Inc. and Subsidiaries (the Company) as of 30 September [removed: 2018 and 2017,] [added: 2018,] the related consolidated income statements, consolidated comprehensive income statements, consolidated statements of cash flows and consolidated statements of equity for each of the years in the [removed: three-year] [added: two‑year] period ended 30 September 2018, and the related notes and [removed: the] financial statement schedule referred to in Item 15(a)(2) in [removed: this] [added: the] Form 10-K (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of [removed: 30] September [removed: 2018,] [added: 30, 2019,] based on criteria established in *Internal Control - Integrated [removed: Framework* *(2013)*] [added: Framework (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission.][added: Commission (COSO).]

In our opinion, the consolidated financial statements [removed: referred to above] present fairly, in all material respects, the financial position of the Company as of 30 September [removed: 2018 and 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the years in the [removed: three-year] [added: two‑year] period ended 30 September 2018, in conformity with U.S. generally accepted accounting principles.

[removed: Also] [added: Also,] in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of [removed: 30] September [removed: 2018,] [added: 30, 2019,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by [removed: the Committee of Sponsoring Organizations of the Treadway Commission.][added: COSO.]

[removed: *Basis] [added: Basis] for [removed: Opinions*][added: Opinions]

The Company’s management is responsible for these [removed: consolidated] financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying [removed: “Management’s] [added: Management’s] Report on Internal Control [removed: over] [added: Over] Financial [removed: Reporting”.][added: Reporting.]

Our responsibility is to express an opinion on [removed: the Company’s consolidated] [added: these] financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [removed: consolidated] financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the consolidated financial statements] included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

[removed: *Definition] [added: Definition] and Limitations of Internal Control [removed: Over] [added: over] Financial [removed: Reporting*][added: Reporting]

We have served as the [removed: Company’s] [added: Company's] auditor since [removed: 2002.][added: 2018.]

[removed: | Year ended 30 September (Millions] [added: *Millions] of dollars, except for share and per share [removed: data) | 2018 | | | 2017 | | | 2016 | | |][added: data*]

| Sales | | [removed: $8,930.2] [added: $8,918.9] | | | [removed: $8,187.6] [added: $8,930.2] | | | [removed: $7,503.7] [added: $8,187.6] | |

| Cost of sales | [removed: 6,189.5] [added: 5,975.5] | | | [removed: 5,751.5] [added: 6,189.5] | | | [removed: 5,177.3] [added: 5,751.5] | | |

| Selling and administrative | [removed: 760.8] [added: 750.0] | | | [removed: 713.5] [added: 760.8] | | | [removed: 683.8] [added: 713.5] | | |

| Research and development | [removed: 64.5] [added: 72.9] | | | [removed: 57.6] [added: 64.5] | | | [removed: 71.8] [added: 57.6] | | |

| Business separation costs | — | | | [removed: 32.5] [added: —] | | | [removed: 50.6] [added: 32.5] | | |

| Cost reduction and asset actions | [removed: —] [added: 25.5] | | | [removed: 151.4] [added: —] | | | [removed: 34.5] [added: 151.4] | | |

| Goodwill and intangible asset impairment charge | — | | | [removed: 162.1] [added: —] | | | [removed: —] [added: 162.1] | | |

| Other income (expense), net | [removed: 50.2] [added: 49.3] | | | [removed: 121.0] [added: 50.2] | | | [removed: 49.4] [added: 121.0] | | |

| Operating Income | [removed: 1,965.6] [added: 2,144.4] | | | [removed: 1,440.0] [added: 1,965.6] | | | [removed: 1,535.1] [added: 1,440.0] | | |

| Equity affiliates' income | [removed: 174.8] [added: 215.4] | | | [removed: 80.1] [added: 174.8] | | | [removed: 147.0] [added: 80.1] | | |

| Interest expense | [removed: 130.5] [added: 137.0] | | | [removed: 120.6] [added: 130.5] | | | [removed: 115.2] [added: 120.6] | | |

| Other non-operating income (expense), net | [removed: 5.1] [added: 66.7] | | | [removed: 16.6] [added: 5.1] | | | [removed: (5.4] [added: 16.6] | | [removed: )] |

| Income From Continuing Operations Before Taxes | [removed: 2,015.0] [added: 2,289.5] | | | [removed: 1,416.1] [added: 2,015.0] | | | [removed: 1,554.6] [added: 1,416.1] | | |

| Income tax provision | [removed: 524.3] [added: 480.1] | | | [removed: 260.9] [added: 524.3] | | | [removed: 432.6] [added: 260.9] | | |

| Income From Continuing Operations | [removed: 1,490.7] [added: 1,809.4] | | | [removed: 1,155.2] [added: 1,490.7] | | | [removed: 1,122.0] [added: 1,155.2] | | |

| [removed: Income (Loss) From Discontinued Operations,] [added: Income from discontinued operations,] net of [removed: tax] [added: tax] | [removed: 42.2] [added: —] | | | [removed: 1,866.0] [added: 42.2] | | | [removed: (460.5] [added: 1,866.0] | | [removed: )] |

| Net Income | [removed: 1,532.9] [added: 1,809.4] | | | [removed: 3,021.2] [added: 1,532.9] | | | [removed: 661.5] [added: 3,021.2] | | |

| [removed: Net Income Attributable] [added: Net income attributable] to [removed: Noncontrolling Interests] [added: noncontrolling interests] of [removed: Continuing Operations] [added: continuing operations] | [removed: 35.1] [added: 49.4] | | | [removed: 20.8] [added: 35.1] | | | [removed: 22.5] [added: 20.8] | | |

| [removed: Net Income Attributable] [added: Less: Net income attributable] to [removed: Noncontrolling Interests] [added: noncontrolling interests] of [removed: Discontinued Operations] [added: continuing operations] | [removed: —] [added: 49.4] | | | [removed: —] [added: 35.1] | | | [removed: 7.9] [added: 20.8] | | |

| Net Income Attributable to Air Products | | [removed: $1,497.8] [added: $1,760.0] | | | [removed: $3,000.4] [added: $1,497.8] | | | [removed: $631.1] [added: $3,000.4] | |

| [removed: Income] [added: Net income] from continuing operations | | [removed: $1,455.6] [added: $1,760.0] | | | [removed: $1,134.4] [added: $1,455.6] | | | [removed: $1,099.5] [added: $1,134.4] | |

| Income [removed: (Loss)] from discontinued operations | [removed: 42.2] [added: —] | | | [removed: 1,866.0] [added: (42.2] | | [added: )] | [removed: (468.4] [added: (1,866.0] | | ) |

| Net Income Attributable to Air Products | | [removed: $1,497.8] [added: $1,760.0] | | | [removed: $3,000.4] [added: $1,497.8] | | | [removed: $631.1] [added: $3,000.4] | |

| [Management's Report on Internal Control Over Financial Reporting](#s2988C18E29045A7BBE421E86371AF1D3) | [50](#s2988C18E29045A7BBE421E86371AF1D3) |

| [Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm](#s226568e70b5c405fb537a7a013ee4e77) | [51](#s226568e70b5c405fb537a7a013ee4e77) |

| [Report of KPMG LLP, Independent Registered Public Accounting Firm](#s8291380B73FE5103B77DACDAB93CC8D4) | [53](#s8291380B73FE5103B77DACDAB93CC8D4) |

| [Consolidated Income Statements – Years Ended 30 September 2019, 2018, and 2017](#sDFE811B1EE9C51E5B9A6ADFB4661C775) | [54](#sDFE811B1EE9C51E5B9A6ADFB4661C775) |

| [Consolidated Comprehensive Income Statements – Years Ended 30 September 2019, 2018, and 2017](#sE9EC1BA60DA154109B8425B72BF75004) | [55](#sE9EC1BA60DA154109B8425B72BF75004) |

| [Consolidated Balance Sheets – 30 September 2019 and 2018](#sC6D9E70DD913588A971529CD532A24B0) | [56](#sC6D9E70DD913588A971529CD532A24B0) |

| [Consolidated Statements of Cash Flows – Years Ended 30 September 2019, 2018, and 2017](#sC2A43942D1415FA1A80A1B7CB0D32B0D) | [57](#sC2A43942D1415FA1A80A1B7CB0D32B0D) |

| [Consolidated Statements of Equity – Years Ended 30 September 2019, 2018, and 2017](#s517DA8C18906541AB3E95CEB10B38291) | [58](#s517DA8C18906541AB3E95CEB10B38291) |

| [Notes to Consolidated Financial Statements](#sEDF14F5C8D735EF19A6A0B6006C3068F) | [59](#sEDF14F5C8D735EF19A6A0B6006C3068F) |

| 26 November 2019 | | | | 26 November 2019 |

We have audited the accompanying consolidated balance sheet of Air Products and Chemicals, Inc. and subsidiaries (the "Company") as of September 30, 2019, the related consolidated income statement, comprehensive income statement, statement of equity, and statement of cash flows, for the year then ended, and the related notes and the schedule listed in Item 15(a)(2) as of and for the year ended September 30, 2019 (collectively referred to as the "financial statements").

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2019, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue - On-site Industrial Gas Customer Contracts - Refer to Notes 1 and 3 to the financial statements

*Critical Audit Matter Description*

On-site industrial gas customer contracts involve large capital investments to construct facilities and serve customers who require large volumes of gases and have relatively constant demand.

The Company builds, owns and operates facilities on or near the customer’s facilities to produce and supply the customer with gases under a long-term arrangement.

Typically, these contracts have 15 to 20-year terms and contain fixed monthly charges and/or minimum purchase requirements.

Revenue associated with these contracts is generally recognized over time during the period in which the Company delivers or makes available the agreed upon quantity of gases.

In addition, certain on-site industrial gas contracts contain complex terms and provisions such as tolling arrangements, minimum payment requirements, variable components, and pricing provisions that are specific to a customer arrangement, which may require greater judgment in determining when contractual requirements have been met impacting the timing and amount of revenue to be recorded.

We identified revenue recognition for certain on-site industrial gas customer contracts with complex terms and provisions as a critical audit matter because of the judgments necessary for management to assess complex contract terms and provisions in order to determine the amount and timing of revenue recognition.

This required a high degree of auditor judgment when performing procedures to audit management’s determination of the amount and timing of revenue recognition and evaluating the results of those procedures.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to revenue recognition for certain on-site industrial gas customer contracts with complex terms and provisions included the following procedures, among others:

| • | We tested the effectiveness of the Company’s controls related to the amount and timing of revenue recognition, including controls over identifying and assessing complex contract terms and provisions in certain on-site industrial gas customer contracts. |

| • | We evaluated the terms included within customer contracts to assess the accounting for provisions such as tolling arrangements, minimum payment requirements, pricing provisions, and variable components that require management to apply judgment in determining revenue recognition associated with the contract. |

| • | We tested the probability of collection of variable components, including penalties, which impacts the amount of revenue to which the Company is entitled. |

| • | We considered subsequent events, write-offs of customer receivables, collectability, and other factors that would impact the amount and timing of revenue recognition. |

/s/ Deloitte & Touche LLP

November 26, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Air Products and Chemicals, Inc.:

Opinion on the Consolidated Financial Statements

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

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20 November 2018

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| Loss on extinguishment of debt | — | | | — | | | 6.9 | | |

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| Current liabilities of discontinued operations | — | | | 15.7 | | |

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| Less: Net income attributable to noncontrolling interests of continuing operations | 35.1 | | | 20.8 | | | 22.5 | | |

| Less: Net income attributable to noncontrolling interests of discontinued operations | — | | | — | | | 7.9 | | |

| Loss on extinguishment of debt | — | | | — | | | 6.9 | | |

| Contracts in progress, less progress billings | 4.7 | | | (19.3 | | ) | 28.2 | | |

| Other receivables | 123.6 | | | 124.7 | | | (6.7 | | ) |

| Other investing activities | (2.0 | | ) | (2.3 | | ) | (1.7 | | ) |

| Less: Cash and Cash Items – Discontinued Operations | | $— | | | $— | | | $208.1 | |

| Cash and Cash Items – Continuing Operations | | $2,791.3 | | | $3,273.6 | | | $1,293.2 | |

| Balance 30 September 2015 | | $249.4 | | | $904.7 | | | $10,580.4 | | | ($2,125.9 | ) | | ($2,359.6 | ) | | $7,249.0 | | | $132.1 | | | $7,381.1 | |

| Net income | — | | | — | | | 631.1 | | | — | | | — | | | 631.1 | | | 30.4 | | | 661.5 | | |

| Tax benefit of stock option and award plans | — | | | 33.2 | | | — | | | — | | | — | | | 33.2 | | | — | | | 33.2 | | |

| Other equity transactions | — | | | — | | | (2.3 | | ) | — | | | — | | | (2.3 | | ) | .1 | | | (2.2 | | ) |

| Other comprehensive income | — | | | — | | | — | | | 529.4 | | | — | | | 529.4 | | | 3.7 | | | 533.1 | | |

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Revenue from product sales is recognized as risk and title to the product transfer to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured.

Revenue from equipment sale contracts is recorded primarily using the percentage-of-completion method.

Under this method, revenue from the sale of major equipment, such as liquefied natural gas (LNG) heat exchangers and large air separation units, is primarily recognized based on costs incurred to date compared with total estimated costs to be incurred.

When adjustments in estimated total contract revenues or estimated total costs are required, any changes in the estimated profit from prior estimates are recognized in the current period for the inception-to-date effect of such change.

If an arrangement involves multiple deliverables, the delivered items are considered separate units of accounting if the items have value on a stand-alone basis.

Revenues are allocated to each deliverable based upon relative selling prices derived from company specific evidence.

We record a liability until remitted to the respective taxing authority.

Selling and administrative expenses also include costs for functional support previously provided to the former Electronic Materials and Performance Materials Divisions and in support of transition services agreements with Versum and with Evonik, for which the reimbursement is reflected in "Other income (expense), net" on our consolidated income statements.

Under the supervision of the Chief Executive Officer and Chief Financial Officer, the Company’s management conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of 30 September [removed: 2018.][added: 2019.]

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of 30 September [removed: 2018,] [added: 2019,] the disclosure controls and procedures were effective.

Management has evaluated the effectiveness of its internal control over financial reporting as of 30 September [removed: 2018] [added: 2019] based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on that evaluation, management concluded that, as of 30 September [removed: 2018,] [added: 2019,] the Company’s internal control over financial reporting was effective.

There was no change in the Company’s internal control over financial reporting during the fourth quarter of fiscal year [removed: 2018] [added: 2019] that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

[removed: KPMG] [added: Deloitte & Touche] LLP, the Company’s independent registered public accounting firm, has audited the Company’s internal control over financial reporting as of 30 September [removed: 2018.][added: 2019.]

None.

On 19 November 2018, the Management Development and Compensation Committee (the “Committee”) of the Board of Directors granted Dr. Samir Serhan, Executive Vice President, a deferred stock unit retention award of $1.5 million.

This award will consist of restricted stock units (“RSUs”) with a 3 December 2018 grant date.

The RSUs will vest in three equal installments beginning on 3 December 2019.

The Committee took this action in recognition of Dr. Serhan’s expanded scope of responsibilities in the Company’s operations, and in particular the leadership role he will play in winning and executing our largest projects and building out and integrating our global gasification technologies.

The information required by this item relating to the Company’s directors and nominees is incorporated herein by reference to the section captioned “The Board of Directors” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

The information required by this item relating to the Company’s Audit and Finance Committee and its Audit and Finance Committee Financial Expert is incorporated herein by reference to the sections captioned “Standing Committees Of The Board” and “Audit and Finance Committee” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

The information required by this item relating to the Company’s procedures regarding the consideration of candidates recommended by shareholders and a procedure for submission of such candidates is incorporated herein by reference to the section captioned “Selection of Directors” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

The information required by the item relating to Section 16(a) Beneficial Ownership Reporting Compliance is incorporated herein by reference to the section captioned “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

The information required by this item is incorporated herein by reference to the sections captioned “Compensation of Executive Officers” and “Compensation of Directors” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

The following table provides information as of 30 September [removed: 2018] [added: 2019] about Company stock that may be issued upon the exercise of options, warrants, and rights granted to employees or members of the Board under the Company’s existing equity compensation plans, including plans approved by shareholders and plans that have not been approved by shareholders in reliance on the NYSE’s former treasury stock exception or other applicable exception to the Exchange’s listing requirements.

| Equity compensation plans [added: not] approved by security holders | [removed: 3,181,790] [added: 54,304] | | [removed: (1)] [added: (3)] | [added: —] | [removed: $89.33] | | [removed: 4,869,212] [added: —] | | [removed: (2)] |

| Equity compensation plans [removed: not] approved by security holders | [removed: 63,060] [added: 2,567,962] | | [removed: (3)] [added: (1)] | [removed: $—] | [added: $93.75] | | [removed: —] [added: 4,581,960] | | [added: (2)] |

| (2) | Represents authorized shares that were available for future grants as of 30 September [removed: 2018.] [added: 2019.] These shares may be used for options, deferred stock units, restricted stock, and other stock-based awards to officers, directors, and key employees. Full value awards such as restricted stock are limited to 20% of cumulative awards after 1 October 2001. |

Certain information required by this item regarding the beneficial ownership of the Company’s common stock is incorporated herein by reference to the sections captioned “Persons Owning More than 5% of Air Products Stock as of September 30, [removed: 2018”] [added: 2019”] and “Air Products Stock Beneficially Owned by Officers and Directors” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

The information required by this item is incorporated herein by reference to the sections captioned “Director Independence” and “Transactions with Related Persons” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

| Total | 2,622,266 | | | | $93.75 | | 4,581,960 | | |

| Total | 3,244,850 | | | | $89.33 | | 4,869,212 | | |

The information required by this item is incorporated herein by reference to the section captioned “Independent Registered Public Accountant” in the Proxy Statement for the Annual Meeting of Shareholders to be held on [removed: 24] [added: 23] January [removed: 2019.][added: 2020.]

| (a) [removed: |] The [removed: following] documents [added: below] are filed as a part of this report: | | |

| | [removed: |] [Report of [added: KPMG LLP,] Independent Registered Public Accounting [removed: Firm dated 20 November 2018](#s7DEB966185865DCF8D5A2CC639DC0E4E)] [added: Firm](#s8291380B73FE5103B77DACDAB93CC8D4)] | [removed: [58](#s7DEB966185865DCF8D5A2CC639DC0E4E)] [added: [53](#s8291380B73FE5103B77DACDAB93CC8D4)] |

| | [removed: |] [Consolidated Income Statements [removed: for the three fiscal years ended] [added: – Years Ended] 30 September [removed: 2018](#s930037C3BA63524CA23311087B7B1888)] [added: 2019, 2018, and 2017](#sDFE811B1EE9C51E5B9A6ADFB4661C775)] | [removed: [59](#s930037C3BA63524CA23311087B7B1888)] [added: [54](#sDFE811B1EE9C51E5B9A6ADFB4661C775)] |

| | [removed: |] [Consolidated Comprehensive Income Statements [removed: for the three fiscal years ended] [added: – Years Ended] 30 September [removed: 2018](#s8A9F0382EABC575E9B3C8824E47DD50F)] [added: 2019, 2018, and 2017](#sE9EC1BA60DA154109B8425B72BF75004)] | [removed: [60](#s8A9F0382EABC575E9B3C8824E47DD50F)] [added: [55](#sE9EC1BA60DA154109B8425B72BF75004)] |

| | [removed: |] [Consolidated Balance Sheets [removed: as of] [added: –] 30 September [removed: 2018] [added: 2019] and [removed: 2017](#sDE259DDCB12459F3B90316026467CD37)] [added: 2018](#sC6D9E70DD913588A971529CD532A24B0)] | [removed: [61](#sDE259DDCB12459F3B90316026467CD37)] [added: [56](#sC6D9E70DD913588A971529CD532A24B0)] |

| | [removed: |] [Consolidated Statements of Cash Flows [removed: for the three fiscal years ended] [added: – Years Ended] 30 September [removed: 2018](#sE1F445EA18AB56D08ABB8099FAC89FC3)] [added: 2019, 2018, and 2017](#sC2A43942D1415FA1A80A1B7CB0D32B0D)] | [removed: [62](#sE1F445EA18AB56D08ABB8099FAC89FC3)] [added: [57](#sC2A43942D1415FA1A80A1B7CB0D32B0D)] |

| | [removed: |] [Consolidated Statements of Equity [removed: for the three fiscal years ended] [added: – Years Ended] 30 September [removed: 2018](#s1EB5A7F749215A4EACC82D739D38EB89)] [added: 2019, 2018, and 2017](#s517DA8C18906541AB3E95CEB10B38291)] | [removed: [63](#s1EB5A7F749215A4EACC82D739D38EB89)] [added: [58](#s517DA8C18906541AB3E95CEB10B38291)] |

| | [removed: |] [Schedule II Valuation and Qualifying Accounts for the three fiscal years ended 30 September [removed: 2018](#sECDE7AE18AE85C408407E7BB035E4CFB)] [added: 2019](#s6674DDE1AFAB57B2BA52BE140D8B29F9)] | [removed: [132](#sECDE7AE18AE85C408407E7BB035E4CFB)] [added: [128](#s6674DDE1AFAB57B2BA52BE140D8B29F9)] |

| [removed: |] [added: (2)] | [added: *Financial Statement Schedules.* The financial statement schedule below is filed as a part of this report as required by Form 10-K.] All other schedules are omitted because the required matter or conditions are not present or because the information required by the Schedules is submitted as part of the consolidated financial statements and notes thereto. | |

| [removed: |] (3) | [removed: Exhibits—The] [added: *Exhibits.* The] exhibits filed as a part of this [removed: Annual Report on Form 10-K] [added: report as required by Item 601 of Regulation S-K] are listed in the [Index to [removed: Exhibits](#s9079552A8E825A808A653C09DE643979)] [added: Exhibits](#s35CF6CBA04875D21A1AC87D9032F36B4)] located on page [removed: [126](#s9079552A8E825A808A653C09DE643979)] [added: [122](#s35CF6CBA04875D21A1AC87D9032F36B4)] of this [removed: Report.] [added: report.] | |

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| (1) | *Financial Statements.* The following is a list of the Consolidated Financial Statements of Air Products and Chemicals, Inc. and its subsidiaries included in Item 8 of Part II of this report: | |

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| | [Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm](#s226568e70b5c405fb537a7a013ee4e77) | [51](#s226568e70b5c405fb537a7a013ee4e77) |

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| | (1) | The Company’s 2018 consolidated financial statements and the Report of the Independent Registered Public Accounting Firm are included in Part II, Item 8. | |

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| | (2) | Financial Statement Schedules—the following additional information should be read in conjunction with the consolidated financial statements in the Company’s 2018 consolidated financial statements. | |

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