LINDE PLC - Annual Report: 2019 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________

FORM 10-K

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

For the fiscal year ended December 31, 2019



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

For the transition period from to

Commission file number 001-38730

LINDE PLC

(Exact name of registrant as specified in its charter)



Ireland					98-1448883
(State or other jurisdiction of incorporation)					(I.R.S. Employer Identification No.)
	The Priestley Centre
	10 Priestley Road,
	Surrey Research Park,
	Guildford,		Surrey	GU2 7XY
	United Kingdom
	(Address of principal executive offices) (Zip Code)
	+44	14	83 242200
(Registrant's telephone number, including area code)

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



Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Ordinary shares (€0.001 nominal value per share)	LIN	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

___________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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). Yes ☑ No ☐

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

Large accelerated filer ☑ Accelerated filer ☐ Non- accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

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

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

The aggregate market value of the voting and non-voting common stock held by non-affiliates as of June 30, 2019, was approximately $108 billion (based on the closing sale price of the stock on that date as reported on the New York Stock Exchange).

At January 31, 2020, 532,959,736 ordinary shares of €0.001 nominal value per share of the Registrant were outstanding.

Documents incorporated by reference:

Portions of the Proxy Statement of Linde plc for its 2020 Annual General Meeting of Shareholders, are incorporated in Part III of this report.

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LINDE PLC

ANNUAL REPORT ON FORM 10-K

For the fiscal year ended December 31, 2019

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		Page

Part I

Item 1:	Business	4
Item 1A:	Risk Factors	9
Item 1B:	Unresolved Staff Comments	16
Item 2:	Properties	16
Item 3:	Legal Proceedings	16
Item 4:	Mine Safety Disclosures	16

Part II

Item 5:	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6:	Selected Financial Data	19
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A:	Quantitative and Qualitative Disclosures About Market Risk	62
Item 8:	Financial Statements and Supplementary Data	63
Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	133
Item 9A:	Controls and Procedures	133
Item 9B:	Other Information	133

Part III

Item 10:	Directors, Executive Officers and Corporate Governance	134
Item 11:	Executive Compensation	134
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	135
Item 13:	Certain Relationships and Related Transactions and Director Independence	135
Item 14:	Principal Accounting Fees and Services	135

Part IV

Item 15:	Exhibits and Financial Statement Schedules	136
Item 16:	Form 10-K Summary	142

Signatures		143

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FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. They are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the ability to successfully integrate the Praxair and Linde AG businesses; regulatory or other requirements imposed as a result of the business combination of Praxair and Linde AG that could reduce anticipated benefits of the transaction; the risk that Linde plc may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates, including the impact of the U.S. Tax Cuts and Jobs Act of 2017; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from accounting principles generally accepted in the United States of America, International Financial Reporting Standards or adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in this report, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.

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Linde plc and Subsidiaries

PART I

ITEM 1. BUSINESS

General

Linde plc is a public limited company formed under the laws of Ireland with its principal offices in the United Kingdom. Linde plc was formed in 2017 in accordance with the requirements of the business combination agreement, dated June 1, 2017, as amended, between Linde plc, Praxair, Inc. ("Praxair") and Linde Aktiengesellschaft ("Linde AG"). Effective October 31, 2018, the business combination was completed and Linde plc is comprised of the businesses of Praxair and Linde AG (hereinafter the combined group will be referred to as "the company" or "Linde").

The business combination brought together two leading companies in the global industrial gases industry, leveraging the proven strengths of each. Linde believes the merger will combine Linde AG’s long-held expertise in technology with Praxair’s efficient operating model, thus creating a global leader. The company is expected to have strong positions in key geographies and end markets that will create a more diverse and balanced global portfolio.

Linde is the largest industrial gas company worldwide and is a major technological innovator in the industrial gases industry. Its primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, and rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene). The company also designs and builds equipment that produces industrial gases primarily for internal use and offers customers a wide range of gas production and processing services such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants.

Linde serves a diverse group of industries including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals, electronics and water treatment.

In 2018, the company, Praxair and Linde AG entered into various agreements with regulatory authorities to satisfy antitrust requirements to secure approval to consummate the business combination. These agreements required the sale of the majority of Praxair's European industrial gases business (completed on December 3, 2018), the majority of Linde AG's Americas industrial gases business (completed on March 1, 2019), select assets of Linde AG's South Korea industrial gases business (completed April 30, 2019), select assets of Praxair's Indian industrial gases business (completed July 12, 2019), select assets of Linde AG's Indian industrial gases business (completed December 16, 2019) as well as certain divestitures of other Praxair and Linde AG businesses in Asia that are expected to be sold in 2020. As of December 31, 2018 and until the completion of the majority of such divestitures, Linde AG and Praxair were obligated to operate their businesses globally as separate and independent companies, and not coordinate any of their commercial operations. The U.S. Federal Trade Commission's (“FTC”) hold separate order (“HSO”) restrictions were lifted March 1, 2019, concurrent with the sale of the required merger-related divestitures in the United States. See Note 4 to the consolidated financial statements for additional information relating to divestitures.

Praxair was determined to be the accounting acquirer in the business combination. Accordingly, the historical financial statements of Praxair for the periods prior to the business combination are considered to be the historical financial statements of the company. The results of Linde AG are included in Linde's consolidated results from the date of the completion of the business combination forward. During 2018, the company reported its continuing operations in six reporting segments under which it managed its operations, assessed performance, and reported earnings: North America, South America, Asia, Europe, Surface Technologies and Linde AG. Effective with the lifting of the hold separate order on March 1, 2019, new operating segments were established. Linde’s industrial gases operations are managed on a geographic basis, which represents three of the company's new reportable segments - Americas, EMEA (Europe/Middle East/Africa), and APAC (Asia/South Pacific); a fourth reportable segment which represents the company's Engineering business, designs and manufactures equipment for air separation and other industrial gas applications specifically for end customers and is managed on a worldwide basis operating in all geographic segments. Other consists of corporate costs and a few smaller businesses, which individually do not meet the quantitative thresholds for separate presentation.

Linde’s sales were $28,228 million, $14,836 million, and $11,358 million for 2019, 2018, and 2017, respectively. Refer to Item 7, Management's Discussion and Analysis, for a discussion of consolidated sales and Note 20 to the consolidated financial statements for additional information related to Linde’s reportable segments.

Industrial Gases Products and Manufacturing Processes

Atmospheric gases are the highest volume products produced by Linde. Using air as its raw material, Linde produces oxygen, nitrogen and argon through several air separation processes of which cryogenic air separation is the most prevalent. Rare gases, such as krypton, neon and xenon, are also produced through cryogenic air separation. As a pioneer

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in the industrial gases industry, Linde is a leader in developing a wide range of proprietary and patented applications and supply systems technology. Linde also led the development and commercialization of non-cryogenic air separation technologies for the production of industrial gases. These technologies open important new markets and optimize production capacity for the company by lowering the cost of supplying industrial gases. These technologies include proprietary vacuum pressure swing adsorption (“VPSA”) and membrane separation to produce gaseous oxygen and nitrogen, respectively.

Process gases, including carbon dioxide, hydrogen, carbon monoxide, helium, specialty gases and acetylene are produced by methods other than air separation. Most carbon dioxide is purchased from by-product sources, including chemical plants, refineries and industrial processes or is recovered from carbon dioxide wells. Carbon dioxide is processed in Linde’s plants to produce commercial and food-grade carbon dioxide. Hydrogen and carbon monoxide can be produced by either steam methane reforming or auto-thermal reforming of natural gas or other feed streams such as naphtha. Hydrogen is also produced by purifying by-product sources obtained from the chemical and petrochemical industries. Acetylene is primarily sourced as a chemical by-product, but may also be produced from calcium carbide and water.

Industrial Gases Distribution

There are three basic distribution methods for industrial gases: (i) on-site or tonnage; (ii) merchant or bulk liquid; and (iii) packaged or cylinder gases. These distribution methods are often integrated, with products from all three supply modes coming from the same plant. The method of supply is generally determined by the lowest cost means of meeting the customer’s needs, depending upon factors such as volume requirements, purity, pattern of usage, and the form in which the product is used (as a gas or as a cryogenic liquid).

On-site. Customers that require the largest volumes of product (typically oxygen, nitrogen and hydrogen) and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Linde constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and containing minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. Therefore, plants are typically not dedicated to a single customer. Advanced air separation processes allow on-site delivery to customers with smaller volume requirements. Customers using these systems usually enter into requirement contracts with terms typically ranging from ten to twenty years.

Merchant. The merchant business is generally associated with distributable liquid oxygen, nitrogen, argon, carbon dioxide, hydrogen and helium. The deliveries generally are made from Linde’s plants by tanker trucks to storage containers at the customer's site which are owned and maintained by Linde and leased to the customer. Due to distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The customer agreements used in the merchant business are usually three to seven-year requirement contracts.

Packaged Gases. Customers requiring small volumes are supplied products in metal containers called cylinders, under medium to high pressure. Packaged gases include atmospheric gases, carbon dioxide, hydrogen, helium, acetylene and related products. Linde also produces and distributes in cylinders a wide range of specialty gases and mixtures. Cylinders may be delivered to the customer’s site or picked up by the customer at a packaging facility or retail store. Packaged gases are generally sold under one to three-year supply contracts and through purchase orders.

A substantial amount of the cylinder gases sold in the United States are distributed by independent distributors that buy merchant gases in liquid form and repackage the products in their facilities. Packaged gas distributors, including Linde, also distribute hardgoods and welding equipment purchased from independent manufacturers. Over time, Linde has acquired a number of independent industrial gases and welding products distributors at various locations in the United States and continues to sell merchant gases to other independent distributors. Between its own distribution business, joint ventures and sales to independent distributors, Linde is represented in 48 states, the District of Columbia and Puerto Rico.

Engineering

Linde’s Engineering business has a global presence, with its focus on market segments such as olefin, natural gas, air separation, hydrogen and synthesis gas plants. The company utilizes its own extensive process engineering know-how in the planning, project development and construction of turnkey industrial plants and associated services. Linde plants are used in a wide variety of fields: in the petrochemical and chemical industries, in refineries and fertilizer plants, to recover air gases, to produce hydrogen and synthesis gases, to treat natural gas and to produce noble gases. The Engineering business either supplies plant components and services directly to the customer or to the industrial gas business of Linde which operates the plants on behalf of the customer under a long-term gases supply contract.

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Inventories – Linde carries inventories of merchant and cylinder gases, hardgoods and coatings materials to supply products to its customers on a reasonable delivery schedule. On-site plants and pipeline complexes have limited inventory. Inventory obsolescence is not material to Linde’s business.

Customers – Linde is not dependent upon a single customer or a few customers.

International – Linde is a global enterprise with approximately 70% of its 2019 sales outside of the United States. The company also has majority or wholly owned subsidiaries that operate in approximately 45 European, Middle Eastern and African countries (including Germany, France, Sweden, the Republic of South Africa, and the United Kingdom); approximately 20 Asian and South Pacific countries (including China, Taiwan, India and Australia); and approximately 20 countries in North and South America (including Canada, Mexico and Brazil).

The company also has equity method investments operating in Europe, Asia, Africa, the Middle East, and North America.

Linde’s international business is subject to risks customarily encountered in foreign operations, including fluctuations in foreign currency exchange rates, import and export controls, and other economic, political and regulatory policies of local governments. Also, see Item 1A. “Risk Factors” and Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.”

Seasonality – Linde’s business is generally not subject to seasonal fluctuations to any significant extent.

Research and Development – Linde’s research and development is directed toward development of gas processing, separation and liquefaction technologies, improving distribution of industrial gases and the development of new markets and applications for these gases. This results in the development of new advanced air separation, hydrogen, synthesis gas, natural gas, adsorption and chemical process technologies as well as the frequent introduction of new industrial gas applications. Research and development is primarily conducted at Pullach, Germany, Tonawanda, New York, Burr Ridge, Illinois and Shanghai, China.

Patents and Trademarks – Linde owns or licenses a large number of patents that relate to a wide variety of products and processes. Linde’s patents expire at various times over the next 20 years. While these patents and licenses are considered important to its individual businesses, Linde does not consider its business as a whole to be materially dependent upon any one particular patent, or patent license, or family of patents. Linde also owns a large number of trademarks, of which the "Linde" trademark is the most significant.

Raw Materials and Energy Costs – Energy is the single largest cost item in the production and distribution of industrial gases. Most of Linde’s energy requirements are in the form of electricity, natural gas and diesel fuel for distribution. The company mitigates electricity, natural gas, and hydrocarbon price fluctuations contractually through pricing formulas, surcharges, and cost pass–through and tolling arrangements.

The supply of energy has not been a significant issue in the geographic areas where the company conducts business. However, energy availability and price is unpredictable and may pose unforeseen future risks.

For carbon dioxide, carbon monoxide, helium, hydrogen, specialty gases and surface technologies, raw materials are largely purchased from outside sources. Linde has contracts or commitments for, or readily available sources of, most of these raw materials; however, their long-term availability and prices are subject to market conditions.

Competition – Linde participates in highly competitive markets in the industrial gases, engineering and healthcare businesses, which are characterized by a mixture of local, regional and global players, all of which exert competitive pressure on the parties. In locations where Linde has pipeline networks, which enable the company to provide reliable and economic supply of products to larger customers, Linde derives a competitive advantage.

Competitors in the industrial and medical gases industry include global and regional companies such as L’Air Liquide S.A., Air Products and Chemicals, Inc., Messer Group GmbH, Mitsubishi Chemical Holdings Corporation (through Taiyo Nippon Sanso Corporation) as well as an extensive number of small to medium size independent industrial gas companies which compete locally as producers or distributors. In addition, a significant portion of the international gases market relates to customer-owned plants.

Employees and Labor Relations – As of December 31, 2019, Linde had 79,886 employees worldwide. Linde has collective bargaining agreements with unions at numerous locations throughout the world, which expire at various dates. Linde considers relations with its employees to be satisfactory.

Environment – Information required by this item is incorporated herein by reference to the section captioned “Management’s Discussion and Analysis – Environmental Matters” in Item 7 of this 10-K.

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Available Information – The company makes its periodic and current reports available, free of charge, on or through its website, www.linde.com, as soon as practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC"). Investors may also access from the company website other investor information such as press releases and presentations. Information on the company’s website is not incorporated by reference herein. In addition, the public may read and copy any materials filed with the SEC free of charge at the SEC’s website, www.sec.gov, that contains reports, proxy information statements and other information regarding issuers that file electronically.

Executive Officers – The following Executive Officers have been elected by the Board of Directors and serve at the pleasure of the Board. It is expected that the Board will elect officers annually following each annual meeting of shareholders.

Stephen F. Angel, 64, is Chief Executive Officer of Linde. Prior to that, Mr. Angel was Chairman, President and CEO of Praxair, Inc. since 2007. Angel joined Praxair in 2001 as an executive vice president and was named president and chief operating officer in February 2006. Prior to joining Praxair, Angel spent 22 years in a variety of management positions with General Electric. Angel serves on the board of directors of PPG Industries and the U.S.-China Business Council and is a member of The Business Council. Angel received a bachelor of science degree in civil engineering from North Carolina State University and an MBA from Loyola College in Baltimore.

Dr. Christian Bruch, age 49, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is also the Head of Engineering for Linde and is a member of the Executive Board of Linde AG. Dr. Bruch joined The Linde Group's Gases Division in 2004 as a Business Development Manager for Airgases. In 2006 he became the Head of Tonnage Business Development for air separation projects in Europe, the Middle East and Africa. In 2009 he transferred to the Engineering Division, where he was responsible for the product line Air Separation Plants. In 2013 he was appointed a member of the Board of Directors at the Engineering Division, a position he held until becoming a member of the Executive Board of Linde AG at the beginning of 2015 responsible for the Linde Engineering Division and the Corporate & Support Function Technology & Innovation. Prior to joining The Linde Group, Dr. Bruch worked for the Swiss Institute of Technology in Zürich and for the RWE Group in Essen, Germany.

Kelcey E. Hoyt, age 50, became the Chief Accounting Officer of Linde in connection with the business combination in October 2018. Prior to this, she served as Vice President and Controller of Praxair, Inc. effective August 1, 2016. Prior to becoming Controller, she served as Praxair’s Director of Investor Relations since 2010. She joined Praxair in 2002 and served as Director of Corporate Accounting and SEC Reporting through 2008, and later served as Controller for various divisions within Praxair’s North American Industrial Gas business. Previously, she had five years of experience in audit at KPMG, LLP.

Sanjiv Lamba age 55, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is the Head of APAC. Mr. Lamba was appointed a Member of the Executive Board of Linde AG in 2011, responsible for the Asia, Pacific segment of the Gases Division, for Global Gases Businesses Helium & Rare Gases, Electronics as well as Asia Joint Venture Management. Mr. Lamba started his career 1989 with BOC India in Finance where he progressed to become Director of Finance. He was appointed Managing Director for BOC’s India’s business in 2001. Throughout his years with BOC/Linde, he has worked in a number of geographies including Germany, the UK, Singapore and India where he has held numerous roles across the organization.

Eduardo F. Menezes, age 56, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is the Head of EMEA. Mr. Menezes previously served as Executive Vice President of Praxair, Inc. since 2012, responsible for Praxair Europe, Praxair Mexico, Praxair South America and Praxair Asia. From 2010 to March 2011, he was a Vice President of Praxair with responsibility for the North American Industrial Gases business and was named senior vice president in 2011. From 2007 to 2010, he was President of Praxair Europe. He served as Managing Director of Praxair’s business in Mexico from 2004 to 2007, as Vice President and General Manager for Praxair Distribution, Inc. from 2003 to 2004 and as Vice President, U.S. West Region, for North American Industrial Gases, from 2000 to 2003.

Dr. Andreas Opfermann, 48, became Executive Vice President of Americas and a member of the Management Committee of Linde in November 2019. Prior to this, from 2016-2019, he was the regional business unit leader for Linde’s North European region. Dr. Opfermann joined Linde in 2005 initially in Corporate Strategy. He has subsequently served as Head of Innovation Management from 2008 to 2010, Head of Clean Energy and Innovation Management from 2010 to 2014, and Head of Technology and Innovation from 2015 to 2016, responsible for all Linde research and development. Before joining Linde, he held positions at McKinsey & Company.

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Anne K. Roby, age 55, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. She is the Head of Global Functions. Prior to this, Dr. Roby served as Senior Vice President of Praxair, Inc. since January 1, 2014, responsible for Global Supply Systems, R&D, Global Market Development, Global Operations Excellence, Global Strategic Sales, Global Procurement, Sustainability and Safety, Health and Environment. From 2011to 2013, she served as President of Praxair Asia, responsible for Praxair’s industrial gases business in China, India, South Korea and Thailand as well as the electronics market globally. In 2010, Dr. Roby became President of Praxair Electronics, after having served as Vice President, Global Sales, for Praxair from 2009 to 2010. Prior to this, she was Vice President of the Praxair U.S. South Region from 2006 to 2009. Dr. Roby joined Praxair in 1991 as a development associate in the company’s R&D organization and was promoted to other positions of increasing responsibility.

Matt J. White, age 47, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is the Chief Financial Officer for Linde. He previously served as the Senior Vice President and Chief Financial Officer of Praxair, Inc. since January 1, 2014. Prior to this, Mr. White was President of Praxair Canada from 2011-2014. He joined Praxair in 2004 as finance director for the company’s largest business unit, North American Industrial Gases. In 2008, he became Vice President and Controller of Praxair, Inc., then was named Vice President and Treasurer in 2010. Before joining Praxair, White was vice president, finance, at Fisher Scientific and before that he held various financial positions, including group controller, at GenTek, a manufacturing and performance chemicals company.

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ITEM 1A. RISK FACTORS

Due to the size and geographic reach of the company’s operations, a wide range of factors, many of which are outside of the company’s control, could materially affect the company’s future operations and financial performance. Management believes the following risks may significantly impact the company:

The company may fail to realize the anticipated strategic and financial benefits sought from the business combination.

The company may not realize all of the anticipated benefits of the business combination between Praxair, Inc. and Linde AG, which was completed on October 31, 2018. The success of the business combination will depend on, among other things, the company’s ability to combine Praxair, Inc.’s and Linde AG’s businesses in a manner that facilitates growth and realizes the anticipated annual synergies and cost reductions without adversely affecting current revenues and investments in future growth. The actual integration will continue to involve complex operational, technological and personnel-related challenges. Difficulties in the integration of the businesses, which may result in significant costs and delays, include:


•	managing a significantly larger combined group;


•	aligning and executing the strategy of the company;


•	integrating and unifying the offerings and services available to customers and coordinating distribution and marketing efforts in geographically separate organizations;


•	coordinating corporate and administrative infrastructures and aligning insurance coverage;


•	coordinating accounting, reporting, information technology, communications, administration and other systems;


•	addressing possible differences in corporate cultures and management philosophies;


•	the company being subject to Irish laws and regulations and legal action in Ireland;


•	coordinating the compliance program and uniform financial reporting, information technology and other standards, controls, procedures and policies;


•	the implementation, ultimate impact and outcome of post-completion reorganization transactions, which may be delayed;


•	unforeseen and unexpected liabilities related to the business combination or the combined businesses;


•	managing tax costs or inefficiencies associated with integrating operations;


•	identifying and eliminating redundant and underperforming functions and assets; and


•	effecting actions that may be required in connection with obtaining regulatory approvals.

These and other factors could result in increased costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue and earnings. The integration process and other disruptions resulting from the business combination may also adversely affect the company’s relationships with employees, suppliers, customers, distributors, licensors and others with whom Praxair, Inc. and Linde AG have business or other dealings, and difficulties in integrating the businesses could harm the reputation of the company.

If the company is not able to successfully integrate the businesses of Praxair, Inc. and Linde AG in an efficient, cost-effective and timely manner, the anticipated benefits and cost savings of the business combination may not be realized fully, or at all, or may take longer to realize than expected.

Weakening economic conditions in markets in which Linde does business may adversely impact its financial results and/or cash flows.

Linde serves a diverse group of industries across more than 100 countries, which generally leads to financial stability through various business cycles. However, a broad decline in general economic or business conditions in the industries served by its customers could adversely affect the demand for Linde’s products and impair the ability of its customers to satisfy their obligations to Linde, resulting in uncollected receivables and/or unanticipated contract terminations or project delays. For example, global political and economic uncertainty could reduce investment activities of Linde’s customers, which could adversely affect Linde’s business.

In addition, many of Linde’s customers are in businesses that are cyclical in nature, such as the chemicals, electronics, metals and energy industries. Downturns in these industries may adversely impact Linde during these cycles. Additionally, such conditions could impact the utilization of Linde’s manufacturing capacity which may require it to

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recognize impairment losses on tangible assets such as property, plant and equipment, as well as intangible assets such as goodwill, customer relationships or intellectual property.

Increases in the cost of energy and raw materials and/or disruption in the supply of these materials could result in lost sales or reduced profitability.

Energy is the single largest cost item in the production and distribution of industrial gases. Most of Linde’s energy requirements are in the form of electricity, natural gas and diesel fuel for distribution. Linde attempts to minimize the financial impact of variability in these costs through the management of customer contracts and reducing demand through operational productivity and energy efficiency. Large customer contracts typically have escalation and pass-through clauses to recover energy and feedstock costs. Such attempts may not successfully mitigate cost variability, which could negatively impact Linde’s financial condition or results of operations. The supply of energy has not been a significant issue in the geographic areas where Linde conducts business. However, regional energy conditions are unpredictable and may pose future risk.

For carbon dioxide, carbon monoxide, helium, hydrogen, specialty gases and surface technologies, raw materials are largely purchased from outside sources. Where feasible, Linde sources several of these raw materials, including carbon dioxide, hydrogen and calcium carbide, as chemical or industrial byproducts. In addition, Linde has contracts or commitments for, or readily available sources of, most of these raw materials; however, their long-term availability and prices are subject to market conditions. A disruption in supply of such raw materials could impact Linde’s ability to meet contractual supply commitments.

Linde’s international operations are subject to the risks of doing business abroad and international events and circumstances may adversely impact its business, financial condition or results of operations.

Linde has substantial international operations which are subject to risks including devaluations in currency exchange rates, transportation delays and interruptions, political and economic instability and disruptions, restrictions on the transfer of funds, trade conflicts and the imposition of duties and tariffs, import and export controls, changes in governmental policies, labor unrest, possible nationalization and/or expropriation of assets, domestic and international tax laws and compliance with governmental regulations. These events could have an adverse effect on the international operations of Linde in the future by reducing the demand for its products, decreasing the prices at which it can sell its products, reducing the revenue from international operations or otherwise having an adverse effect on its business. For example, Linde has a meaningful presence in the U.K. and the U.K.’s ongoing exit process from the EU has continued to cause, and may in the future cause, political and economic uncertainty, which could have an adverse impact on the markets which Linde supplies.

Currency exchange rate fluctuations and other related risks may adversely affect Linde's results.

Because a significant portion of Linde's revenue is denominated in currencies other than its reporting currency, the U.S. dollar, changes in exchange rates will produce fluctuations in revenue, costs and earnings and may also affect the book value of assets and liabilities and related equity. Although the company from time to time utilizes foreign exchange forward contracts to hedge these exposures, its efforts to minimize currency exposure through such hedging transactions may not be successful depending on market and business conditions. As a result, fluctuations in foreign currency exchange rates could adversely affect Linde’s financial condition, results of operations or cash flows.

Macroeconomic factors may impact Linde’s ability to obtain financing or increase the cost of obtaining financing which may adversely impact Linde’s financial results and/or cash flows.

Volatility and disruption in the U.S., European and global credit and equity markets, from time to time, could make it more difficult for Linde to obtain financing for its operations and/or could increase the cost of obtaining financing. In addition, Linde’s borrowing costs can be affected by short- and long-term debt ratings assigned by independent rating agencies which are based, in significant part, on its performance as measured by certain criteria such as interest coverage and leverage ratios. A decrease in these debt ratings could increase the cost of borrowing or make it more difficult to obtain financing.

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An impairment of goodwill or intangible assets could negatively impact the company's financial results.

As of December 31, 2019, the net carrying value of goodwill and other indefinite-lived intangible assets was $27 billion and $2 billion, respectively, primarily as a result of the business combination and the related acquisition method of accounting applied to Linde AG. In accordance with generally accepted accounting principles, the company periodically assesses these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to business, unexpected significant changes or planned changes in use of the assets, divestitures and sustained market capitalization declines may result in recognition of impairments to goodwill or other indefinite-lived assets. Any charges relating to such impairments could have a material adverse impact on Linde's results of operations in the periods recognized.

Catastrophic events could disrupt the operations of Linde and/or its customers and suppliers and may have a significant adverse impact on the results of operations.

The occurrence of catastrophic events or natural disasters such as extreme weather, including hurricanes and floods; health epidemics; and acts of war or terrorism, could disrupt or delay Linde’s ability to produce and distribute its products to customers and could potentially expose Linde to third-party liability claims. In addition, such events could impact Linde’s customers and suppliers resulting in temporary or long-term outages and/or the limitation of supply of energy and other raw materials used in normal business operations. Linde evaluates the direct and indirect business risks, consults with vendors, insurance providers and industry experts, makes investments in suitably resilient design and technology, and conducts regular reviews of the business risks with management. Despite these steps, however, these situations are outside Linde’s control and may have a significant adverse impact on its financial results.

The inability to attract and retain qualified personnel may adversely impact Linde’s business.

If Linde fails to attract, hire and retain qualified personnel, it may not be able to develop, market or sell its products or successfully manage its business. Linde is dependent upon a highly skilled, experienced and efficient workforce to be successful. Much of Linde’s competitive advantage is based on the expertise and experience of key personnel regarding marketing, technology, manufacturing and distribution infrastructure, systems and products. The inability to attract and hire qualified individuals or the loss of key employees in very skilled areas could have a negative effect on Linde’s financial results.

If Linde fails to keep pace with technological advances in the industry or if new technology initiatives do not become commercially accepted, customers may not continue to buy Linde’s products and results of operations could be adversely affected.

Linde’s research and development is directed toward developing new and improved methods for the production and distribution of industrial gases, the design and construction of plants and toward developing new markets and applications for the use of industrial and process gases. This results in the introduction of new applications and the development of new advanced air separation process technologies. As a result of these efforts, Linde develops new and proprietary technologies and employs necessary measures to protect such technologies within the global geographies in which Linde operates. These technologies help Linde to create a competitive advantage and to provide a platform to grow its business. If Linde’s research and development activities do not keep pace with competitors or if Linde does not create new technologies that benefit customers, future results of operations could be adversely affected.

Risks related to pension benefit plans may adversely impact Linde’s results of operations and cash flows.

Pension benefits represent significant financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments and asset returns, significant estimates are required to calculate pension expense and liabilities related to Linde’s plans. Linde utilizes the services of independent actuaries, whose models are used to facilitate these calculations. Several key assumptions are used in the actuarial models to calculate pension expense and liability amounts recorded in the consolidated financial statements. In particular, significant changes in actual investment returns on pension assets, discount rates, or legislative or regulatory changes could impact future results of operations and required pension contributions.

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Operational risks may adversely impact Linde’s business or results of operations.

Linde’s operating results are dependent on the continued operation of its production facilities and its ability to meet customer contract requirements and other needs. Insufficient or excess capacity threatens Linde’s ability to generate competitive profit margins and may expose Linde to liabilities related to contract commitments. Operating results are also dependent on Linde’s ability to complete new construction projects on time, on budget and in accordance with performance requirements. Failure to do so may expose Linde’s business to loss of revenue, potential litigation and loss of business reputation.

Also inherent in the management of Linde’s production facilities and delivery systems, including storage, vehicle transportation and pipelines, are operational risks that require continuous training, oversight and control. Material operating failures at production, storage facilities or pipelines, including fire, toxic release and explosions, or the occurrence of vehicle transportation accidents could result in loss of life, damage to the environment, loss of production and/or extensive property damage, all of which may negatively impact Linde’s financial results.

Linde may be subject to information technology system failures, network disruptions and breaches in data security.

Linde relies on information technology systems and networks for business and operational activities, and also stores and processes sensitive business and proprietary information in these systems and networks. These systems are susceptible to outages due to fire, flood, power loss, telecommunications failures, viruses, break-ins and similar events, or breaches of security.

Linde has taken steps to address these risks and concerns by implementing advanced security technologies, internal controls, network and data center resiliency and recovery process. Despite these steps, however, operational failures and breaches of security from increasingly sophisticated cyber threats could lead to the loss or disclosure of confidential information, result in business interruption or malfunction or regulatory actions and have a material adverse impact on Linde’s operations, reputation and financial results.

The inability to effectively integrate acquisitions or collaborate with joint venture partners could adversely impact Linde’s financial position and results of operations.

In addition to the business combination, Linde has evaluated and expects to continue to evaluate, a wide array of potential strategic acquisitions and joint ventures. Many of these transactions, if consummated, could be material to its financial condition and results of operations. In addition, the process of integrating an acquired company, business or group of assets may create unforeseen operating difficulties and expenditures. Although historically Linde has been successful with its acquisition strategy and execution, the areas where Linde may face risks include:


•	the need to implement or remediate controls, procedures and policies appropriate for a larger public company at companies that prior to the acquisition lacked these controls, procedures and policies;


•	diversion of management time and focus from operating existing business to acquisition integration challenges;


•	cultural challenges associated with integrating employees from the acquired company into the existing organization;


•	the need to integrate each company’s accounting, management information, human resources and other administrative systems to permit effective management;


•	difficulty with the assimilation of acquired operations and products;


•	failure to achieve targeted synergies and cost reductions; and


•	inability to retain key employees and business relationships of acquired companies.

Foreign acquisitions and joint ventures involve unique risks in addition to those mentioned herein, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.

Also, the anticipated benefit of potential future acquisitions may not materialize. Future acquisitions or dispositions could result in the incurrence of debt, contingent liabilities or amortization expenses, or impairments of goodwill, any of which could adversely impact Linde’s financial results.

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Linde is subject to a variety of international laws and government regulations and changes in, or failure to comply with, these laws or regulations could have an adverse impact on the company’s business, financial position and results of operations.

Linde is subject to regulations in the following areas, among others:


•	environmental protection, including climate change and energy efficiency laws and policies;


•	domestic and international tax laws and currency controls;


•	safety;


•	securities laws applicable in the United States, the European Union, Germany, Ireland, and other jurisdictions;


•	trade and import/export restrictions, as well as economic sanctions laws;


•	antitrust matters;


•	data protection;


•	global anti-bribery laws, including the U.S. Foreign Corrupt Practices Act; and


•	healthcare regulations.

Changes in these or other regulatory areas, such as evolving environmental legislation in China, may impact Linde’s profitability and may give rise to new or increased compliance risks: it may become more complex and costly to ensure compliance, and the level of sanctions in the event of non-compliance may rise. Such changes may also restrict Linde’s ability to compete effectively in the marketplace. Noncompliance with such laws and regulations could result in penalties or sanctions, cancellation of marketing rights or restrictions on participation in, or even exclusion from, public tender proceedings, all of which could have a material adverse impact on Linde’s financial results and/or reputation.

Doing business globally requires Linde to comply with anti-corruption, trade, compliance and economic sanctions and similar laws, and to implement policies and procedures designed to ensure that its employees and other intermediaries comply with the applicable restrictions. These restrictions include prohibitions on the sale or supply of certain products, services and any other economic resources to embargoed or sanctioned countries, governments, persons and entities. Compliance with these restrictions requires, among other things, screening of business partners. Despite its commitment to legal compliance and corporate ethics, the company cannot ensure that its policies and procedures will always protect it from intentional, reckless or negligent acts committed by employees or agents under the applicable laws. If Linde fails to comply with laws governing the conduct of international operations, Linde may be subject to criminal and civil penalties and other remedial measures, which could materially adversely affect its reputation, business and results of operations.

The outcome of litigation or governmental investigations may adversely impact the company’s business or results of operations.

Linde’s subsidiaries are party to various lawsuits and governmental investigations arising in the ordinary course of business. Adverse outcomes in some or all of the claims pending may result in significant monetary damages or injunctive relief that could adversely affect Linde’s ability to conduct business. Linde and its subsidiaries may in the future become subject to further claims and litigation, which is impossible to predict. The litigation and other claims Linde faces are subject to inherent uncertainties. Legal or regulatory judgments or agreed settlements might give rise to expenses which are not covered, or are not fully covered, by insurance benefits and may also lead to negative publicity and reputational damage. An unfavorable outcome or determination could cause a material adverse impact on the company’s results of operations.

Potential product defects or inadequate customer care may adversely impact Linde’s business or results of operations.

Risks associated with products and services may result in potential liability claims, the loss of customers or damage to Linde’s reputation. Principal possible causes of risks associated with products and services are product defects or an inadequate level of customer care when Linde is providing services.

Linde is exposed to legal risks relating to product liability in the countries where it operates, including countries such as the United States, where legal risks (in particular through class actions) have historically been more significant than in other countries. The outcome of any pending or future products and services proceedings or investigations cannot be predicted and legal or regulatory judgments or agreed settlements may give rise to significant losses, costs and expenses.

The manufacturing and sale of products as well as the construction of plants by Linde may give rise to risks associated with the production, filling, storage, handling and transport of raw materials, goods or waste. Industrial gases are

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potentially hazardous substances and medical gases and the related healthcare services must comply with the relevant specifications in order to not adversely affect the health of patients treated with them.

Linde’s products and services, if defective or not handled or performed appropriately, may lead to personal injuries, business interruptions, environmental damages or other significant damages, which may result, among other consequences, in liability, losses, monetary penalties or compensation payments, environmental clean-up costs or other costs and expenses, exclusion from certain market sectors deemed important for future development of the business and loss of reputation. All these consequences could have a material adverse effect on Linde’s business and results of operations.

U.S. civil liabilities may not be enforceable against Linde.

Linde is organized under the laws of Ireland and substantial portions of its assets will be located outside of the United States. In addition, certain directors and officers of Linde and its subsidiaries reside outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon Linde or such persons, or to enforce outside the United States judgments obtained against such persons in U.S. courts in any action, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions located outside the United States, rights predicated upon the U.S. federal securities laws.

A judgment for the payment of money rendered by a court in the United States based on civil liability would not be automatically enforceable in Ireland. There is no treaty between Ireland and the United States providing for the reciprocal enforcement of foreign judgments. The following requirements must be met before the foreign judgment will be deemed to be enforceable in Ireland (i) the judgment must be for a definite sum, (ii) the judgment must be final and conclusive; and (iii) the judgment must be provided by a court of competent jurisdiction.

An Irish court will also exercise its right to refuse judgment if the foreign judgment (i) was obtained by fraud; (ii) violated Irish public policy; (iii) is in breach of natural justice; or (iv) if the judgment is irreconcilable with an earlier foreign judgment.

In addition, there is doubt as to whether an Irish court would accept jurisdiction and impose civil liability on Linde or such persons in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in Ireland against Linde or such member, officer or expert, respectively.

Changes in tax laws or policy could adversely impact the company’s financial position or results of operations.

Linde and its subsidiaries are subject to the tax rules and regulations in the U.S., Germany, Ireland, the U.K. and other countries in which they operate. Those tax rules and regulations are subject to change on a prospective or retroactive basis. Under current economic and political conditions, including the U.K.’s ongoing exit process from the EU, tax rates and policies in any jurisdiction, including the U.S., the U.K. and the EU, are subject to significant change. In particular, since Linde is currently treated as U.K. tax resident, any potential changes in the tax rules applying to U.K. tax-resident companies would directly affect Linde.

A change in Linde’s tax residency could have a negative effect on the company’s future profitability and may trigger taxes on dividends or exit charges. If Linde ceases to be resident in the United Kingdom and becomes resident in another jurisdiction, it may be subject to United Kingdom exit charges, and/or could become liable for additional tax charges in the other jurisdiction. If Linde were to be treated as resident in more than one jurisdiction, it could be subject to duplicative taxation. Furthermore, although Linde is incorporated in Ireland and is not expected to be treated as a domestic corporation for U.S. federal income tax purposes, it is possible that the IRS could disagree with this result or that changes in U.S. federal income tax law could alter this result. If the IRS successfully asserted such a position or the law were to change, significant adverse tax consequences may result for Linde, the company and Linde’s shareholders.

When tax rules change, this may result in a higher tax expense and the need to make higher tax payments. In addition, changes in tax legislation may have a significant impact on Linde’s and its subsidiaries’ tax receivables and tax liabilities as well as on their deferred tax assets and deferred tax liabilities and uncertainty about the tax environment in some regions may restrict their opportunities to enforce their respective rights under the law. Linde also operates in countries with complex tax regulations which could be interpreted in different ways. Interpretations of these regulations or changes in the tax system might have an adverse impact on the tax liabilities, profitability and business operations of

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Linde. Linde and its subsidiaries are subject to periodic audits by the tax authorities in various jurisdictions or other review actions by the relevant financial or tax authorities. The ultimate tax outcome may differ from the amounts recorded in Linde’s or its subsidiaries’ financial statements and may materially affect their respective financial results for the period when such determination is made.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

Linde has received no written SEC staff comments regarding any of its Exchange Act reports which remain unresolved.

ITEM 2. PROPERTIES

Linde plc's principal executive offices are located in owned office space in Guildford, United Kingdom. Linde also owns principal administrative office space in Danbury, Connecticut and Houston, Texas, United States; Pullach, Germany; and Singapore.

Due to the nature of Linde’s industrial gas products, it is generally uneconomical to transport them distances greater than a few hundred miles from the production facility. As a result, Linde operates a significant number of production facilities spread globally throughout a number of geographic regions.

The following is a description of production facilities for Linde by segment. No significant portion of these assets was leased at December 31, 2019. Generally, these facilities are fully utilized and are sufficient to meet the company's manufacturing needs.

Americas

The Americas segment operates production facilities primarily in the U.S., Canada, Mexico and Brazil, approximately 350 of which are mainly cryogenic air separation plants, hydrogen plants and carbon dioxide plants. There are five major pipeline complexes in North America located in northern Indiana, Houston, along the Gulf Coast of Texas, Detroit and Louisiana. Many of the South American plants support one pipeline complex in Southern Brazil. Also located throughout the Americas are noncryogenic air separation plants, packaged gas facilities and other smaller plant facilities.

EMEA

The EMEA segment has production facilities primarily in Italy, Spain, Germany, the Benelux region, the United Kingdom, Scandinavia and Russia which include approximately 230 cryogenic air separation plants and carbon dioxide plants. Also located throughout Europe are noncryogenic air separation plants, packaged gas facilities and other smaller plant facilities.

APAC

The APAC segment has production facilities located primarily in China, Korea, India and Thailand, approximately 230 of which are cryogenic air separation plants and carbon dioxide plants. Also located throughout Asia are noncryogenic air separation plants, hydrogen, packaged gas and other production facilities.

Engineering

The Linde Engineering business designs and constructs turnkey process plants for third-party customers as well as for the Linde gases businesses in many locations worldwide, such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants. Plant components are produced in owned factories in Pullach and Tacherting, Germany; Hesinque, France; Oklahoma, United States; and Dalian, China.

ITEM 3. LEGAL PROCEEDINGS

Information required by this item is incorporated herein by reference to the section captioned “Notes to Consolidated Financial Statements – 19. Commitments and Contingencies” in Item 8 of this 10-K.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

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PART II


ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Linde plc shares trade on the New York Stock Exchange (“NYSE”) and the Frankfurt Stock Exchange (“FSE”) under the ticker symbol “LIN”. At December 31, 2019 there were 9,322 shareholders of record.

Purchases of Equity Securities – Certain information regarding purchases made by or on behalf of the company or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of its ordinary shares during the three months ended December 31, 2019 is provided below:



Period	Total Number of Shares Purchased (Thousands)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (1) (Thousands)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (2) (Millions)
October 2019	716	$	191.19	716	$	4,322
November 2019	1,039	$	205.74	1,039	$	4,108
December 2019	1,896	$	207.31	1,896	$	3,715
Fourth Quarter 2019	3,651	$	203.70	3,651	$	3,715

________________________

(1)

On January 22, 2019 the company’s board of directors approved the repurchase of $6.0 billion of its ordinary shares ("2019 program") which could take place from time to time on the open market (and could include the use of 10b5-1 trading plans), subject to market and business conditions. The 2019 program has a maximum repurchase amount of 15% of outstanding shares and a stated expiration date of February 1, 2021.


(2)	As of December 31, 2019, the company repurchased $2.3 billion of its ordinary shares pursuant to the 2019 program, leaving an additional $3.7 billion authorized.

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Peer Performance Table – The graph below compares the most recent five-year cumulative returns of the common stock of Praxair, the company's predecessor, through October 31, 2018 and Linde's ordinary shares from October 31, 2018 through December 31, 2019 with those of the Standard & Poor’s 500 Index ("SPX") and the S5 Materials Index ("S5MATR") which covers 22 companies, including Linde. The figures assume an initial investment of $100 on December 31, 2014 and that all dividends have been reinvested.



	2014	2015	2016	2017	2018	2019
LIN	$100	$79	$90	$119	$120	$164
SPX	$100	$99	$109	$130	$122	$157
S5MATR	$100	$90	$102	$124	$104	$126

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ITEM 6. SELECTED FINANCIAL DATA

FIVE-YEAR FINANCIAL SUMMARY

(Dollar amounts in millions, except per share data)

The year ended December 31, 2019 reflects the results of both Praxair and Linde AG for the entire year. The year ended December 31, 2018 reflects the results of Praxair for the entire year and the results of Linde AG for the period beginning after October 31, 2018 (the merger date), including the impacts of purchase accounting (See Notes 1, 3 and 4 to the consolidated financial statements). The historical periods prior to 2018 reflect the results of Praxair.



Year Ended December 31,	2019(a)			2018(a)			2017(a)			2016(a)			2015(a)
From the Consolidated Statements of Income
Sales	$	28,228		$	14,836		$	11,358		$	10,469		$	10,710
Cost of sales, exclusive of depreciation and amortization	16,644			9,020			6,382			5,790			5,852
Selling, general and administrative	3,457			1,629			1,207			1,145			1,152
Depreciation and amortization	4,675			1,830			1,184			1,122			1,106
Research and development	184			113			93			92			93
Cost reduction programs and other charges	567			309			52			96			165
Net gain on sale of businesses	164			3,294			—			—			—
Other income (expenses) – net	68			18			4			23			28
Operating profit	2,933			5,247			2,444			2,247			2,370
Interest expense – net	38			202			161			190			161
Net pension and OPEB cost (benefit), excluding service cost	(32		)	(4		)	(4		)	9			49
Income from continuing operations before income taxes and equity investments	2,927			5,049			2,287			2,048			2,160
Income taxes on continuing operations	769			817			1,026			551			612
Income from continuing operations before equity investments	2,158			4,232			1,261			1,497			1,548
Income from equity investments	114			56			47			41			43
Income from continuing operations (including noncontrolling interests)	2,272			4,288			1,308			1,538			1,591
Noncontrolling interests from continuing operations	(89		)	(15		)	(61		)	(38		)	(44		)
Income from continuing operations	$	2,183		$	4,273		$	1,247		$	1,500		$	1,547
Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations	$	4.03		$	12.93		$	4.36		$	5.25		$	5.39
Diluted earnings per share from continuing operations	$	4.00		$	12.79		$	4.32		$	5.21		$	5.35
Cash dividends per share	$	3.50		$	3.30		$	3.15		$	3.00		$	2.86
Weighted Average Shares Outstanding (000’s) (b)
Basic shares outstanding	541,094			330,401			286,261			285,677			287,005
Diluted shares outstanding	545,170			334,127			289,114			287,757			289,055
Other Information and Ratios
Total assets	$	86,612		$	93,386		$	20,436		$	19,332		$	18,319
Total debt	$	13,956		$	15,296		$	9,000		$	9,515		$	9,231
Cash flow from operations	$	6,119		$	3,654		$	3,041		$	2,789		$	2,695
Net cash provided by (used for) investing activities	$	1,189		$	5,363		$	(1,314	)	$	(1,770	)	$	(1,303	)
Net cash used for financing activities	$	(8,997	)	$	(4,998	)	$	(1,656	)	$	(659	)	$	(1,310	)
Capital expenditures	$	3,682		$	1,883		$	1,311		$	1,465		$	1,541
Shares outstanding (000’s)	534,381			547,242			286,777			284,901			284,879
Number of employees	79,886			80,820			26,461			26,498			26,657


(a)	Amounts for 2019 include: (i) charges of $567 million for cost reduction programs and other charges primarily related to the merger and synergies, (ii) pension settlement charges of $97 million related to lump sum benefit payments made from pension plans, (iii) a net gain on sale of businesses of $164 million and (iv) the purchase accounting impacts of the merger of $1,952 million.

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Amounts for 2018 include: (i) charges of $309 million for transaction costs and other charges primarily related to the merger, (ii) pension settlement charges of $14 million related to lump sum benefit payments made from pension plans, (iii) income tax benefit, net of $17 million due to U.S. Tax Cuts and Jobs Act and other tax charges, (iv) a net gain on sale of businesses of $3,294 million, (v) bond redemption costs of $26 million, and (vi) the purchase accounting impacts of the merger of $714 million.

Amounts for 2017 include: (i) charges of $52 million for transaction costs related to the merger, (ii) a pension settlement charge of $2 million related to lump sum benefit payments made from an international pension plan, and (iii) income tax charges, net of $394 million due to U.S. Tax Cuts and Jobs Act.

Amounts for 2016 include: (i) a $16 million charge to interest expense related to the redemption of the $325 million 5.20% notes due 2017, (ii) a pre–tax pension settlement charge of $4 million related to lump sum benefit payments made from the U.S. supplemental pension plan, and (iii) pre–tax charges of $96 million primarily related to cost reduction actions.

Amounts for 2015 include: (i) a pre-tax charge of $165 million related to the cost reduction program and other charges; and (ii) a pre-tax charge of $7 million related to a pension settlement.

See Notes 1, 3, 4, 5, 7, 13 and 18 to the consolidated financial statements.

(b) As a result of the merger, share amounts for the year ended December 31, 2018 reflect the weighted averaging effect of Praxair shares outstanding prior to October 31, 2018 and Linde shares outstanding from October 31, 2018 through December 31, 2018.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the company’s financial condition and results of operations should be read together with its consolidated financial statements and notes to the consolidated financial statements included in Item 8 of this Form 10-K.



	Page
Merger of Praxair, Inc. and Linde AG	21
Business Overview	23
Executive Summary – Financial Results & Outlook	24
Consolidated Results and Other Information	25
Segment Discussion	33
Liquidity, Capital Resources and Other Financial Data	43
Contractual Obligations	47
Off-Balance Sheet Arrangements	48
Critical Accounting Policies	48
New Accounting Standards	51
Fair Value Measurements	51
Supplemental Pro Forma Income Statement Information	52
Non-GAAP Financial Measures	56

MERGER OF PRAXAIR, INC. AND LINDE AG

Linde plc ("Linde") is a public limited company formed under the laws of Ireland in 2017 in accordance with the requirements of the business combination agreement between Praxair, Inc. ("Praxair") and Linde Aktiengesellschaft ("Linde AG"). On October 31, 2018 Praxair and Linde AG combined their respective businesses through an all-stock transaction, and became subsidiaries of Linde plc (collectively referred to as the “business combination” or "merger"). The business combination of Praxair and Linde AG has been accounted for using the acquisition method of accounting under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 805, “Business Combinations,” with Praxair representing the accounting acquirer under this guidance. Accordingly, the historical financial statements of Praxair for the periods prior to the merger are considered to be the historical financial statements of Linde. The results of Linde AG are included in Linde’s consolidated results from the merger date forward. The Linde shares trade on the New York Stock Exchange and the Frankfurt Stock Exchange under the ticker symbol “LIN”. See Notes 1 and 3 to the consolidated financial statements for additional information.

In connection with the business combination, the company, Praxair and Linde AG, entered into various agreements with regulatory authorities to satisfy anti-trust requirements to secure approval to consummate the business combination. These agreements required the sale of the majority of Praxair’s European businesses (completed on December 3, 2018), a significant portion of Linde AG’s Americas business (completed on March 1, 2019), select assets of Linde AG's South Korean industrial gases business (completed April 30, 2019), select assets of Praxair's Indian industrial gases business (completed July 12, 2019), select assets of Linde AG's Indian industrial gases business (completed December 16, 2019) as well as certain divestitures of other Praxair and Linde AG businesses in Asia that are currently expected to be sold in 2020 (collectively, the “merger-related divestitures”). In the consolidated financial statements included in Item 8, Praxair’s merger-related divestitures are included in the results of operations until sold and Linde AG’s merger-related divestitures are accounted for as discontinued operations. See Notes 1, 3 and 4 to the consolidated financial statements included in Item 8 for additional information relating to merger-related divestitures.

Additionally, to obtain merger approval in the United States Linde, Praxair and Linde AG entered into an agreement with the U.S. Federal Trade Commission dated October 1, 2018 (“hold separate order” or “HSO”). Under the HSO, the company, Praxair and Linde AG agreed to continue to operate Linde AG and Praxair as independent, ongoing, economically viable, competitive businesses held separate, distinct, and apart from each other’s operations; and not coordinate any aspect of their operations until certain divestitures in the United States were completed. Accordingly, Linde had accounted for Linde AG as a separate segment for 2018 reporting purposes effective with the merger date. Prior to the merger date, the company’s Linde AG segment did not exist. Since the FTC hold separate order restrictions were lifted effective March 1, 2019, the company subsequently implemented a new segment structure as follows: Americas; EMEA

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(Europe/Middle East/Africa); APAC (Asia/South Pacific) and Engineering. This new management organization structure was implemented during the first quarter 2019 and, accordingly, segment information has been retrospectively recast for all prior periods.

ITEMS AFFECTING COMPARABILITY

Because Praxair and Linde AG combined their respective businesses effective with the merger date of October 31, 2018, the year ended December 31, 2019 reflects the results and cash flows of the combined business, while the year ended December 31, 2018 includes twelve months of Praxair and two months of Linde AG. Due to the size of Linde AG’s businesses prior to the merger, the reported results for 2019 and 2018 periods are not comparable. The balance sheets at December 31, 2019 and December 31, 2018 are comparable because both periods reflect the merger.

Pro Forma Income Statement Information

Therefore, to assist with a discussion of the 2019 and 2018 results on a comparable basis, certain supplemental unaudited pro forma income statement information is provided on both a consolidated and segment basis (referred to as "pro forma income statement information" or "pro forma information").

The pro forma information has been prepared on a basis consistent with Article 11 of Regulation S-X, assuming the merger and merger-related divestitures had been consummated on January 1, 2018. In preparing this pro forma information, the historical financial information has been adjusted to give effect to pro forma Adjustments that are (i) directly attributable to the business combination and other transactions presented herein, such as the merger-related divestitures, (ii) factually supportable, and (iii) expected to have a continuing impact on the combined entity’s consolidated results. The pro forma information is based on management's assumptions and is presented for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combination and merger-related divestitures had occurred as of the dates indicated or what the results would be for any future periods. Pro forma information was not developed for the year ended December 31, 2017. Also, the pro forma information does not include the impact of any revenue, cost or other operating synergies that may result from the business combination or any related restructuring costs.

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BUSINESS OVERVIEW

With the merger, Linde is the leading industrial gas company worldwide. The company's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). The company also designs, engineers, and builds equipment that produces industrial gases primarily for internal use; and offers its customers a wide range of gas production and processing services such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants.

Linde’s industrial gas operations are managed on a geographical basis and in 2019 83% of sales were generated by Linde's three geographic segments (Americas, EMEA and APAC) and the remaining 17% is related primarily to the Engineering segment, and to a lesser extent Other (see Note 20 to the consolidated financial statements for operating segment details).

Linde generates most of its revenues and earnings in the following twelve geographies where the company has its strongest market positions and where distribution and production operations allow the company to deliver the highest level of service to its customers at the lowest cost.



North and South America ("Americas")	Europe, Middle East and Africa (“EMEA”)	Asia and Pacific (“APAC”)
United States	Germany	China & Taiwan
Brazil	United Kingdom	Australia
Mexico	Eastern Europe	South Korea
Canada		India

The company manufactures and distributes its industrial gas products through networks of thousands of production plants, pipeline complexes, distribution centers and delivery vehicles. Major pipeline complexes are primarily located in the United States. These networks are a competitive advantage, providing the foundation of reliable product supply to the company’s customer base. The majority of Linde’s business is conducted through long-term contracts which provide stability in cash flow and the ability to pass through changes in energy and feedstock costs to customers. The company has growth opportunities in all major geographies and in diverse end-markets such as energy, electronics, chemicals, metals, healthcare, food and beverage, and aerospace.

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EXECUTIVE SUMMARY – FINANCIAL RESULTS & OUTLOOK

2019 Year in review

On October 31, 2018 Praxair and Linde AG combined their respective businesses through an all-stock merger transaction, and became subsidiaries of Linde plc. The year ended December 31, 2018 reflects the results of Praxair for the entire year and the results of Linde AG for the period beginning after October 31, 2018.


•	Sales of $28,228 million were 90% above 2018 sales of $14,836 million, primarily driven by the merger that contributed 89% to sales, net of divestitures. Underlying sales increased 1% driven by 3% higher pricing across all geographic segments and 1% volume growth, partially offset by unfavorable currency translation and lower cost pass-through.

•

Reported operating profit of $2,933 million was 44% below 2018 primarily driven by the net gain on sale of businesses in 2018 partially offset by the impact of the merger, including purchase accounting impacts, in the current year. On an adjusted pro forma basis, operating profit increased $476 million, or 10%, for 2019 versus 2018, as the impacts of higher pricing and volumes were partially offset by unfavorable currency impacts and cost inflation.*

•

Income from continuing operations of $2,183 million and diluted earnings per share from continuing operations of $4.00 decreased from $4,273 million and $12.79, respectively in 2018. Adjusted pro forma income from continuing operations of $4,003 million and adjusted pro forma diluted earnings per share from continuing operations of $7.34 were 17% and 19%, respectively above 2018 adjusted pro forma amounts.*


•	Cash flow from operations was $6,119 million, or 22% of sales. Capital expenditures were $3,682 million; dividends paid were $1,891 million; net purchases of ordinary shares of $2,586 million; and debt repayments, net were $1,260 million.

* A reconciliation of the adjusted pro forma amounts can be found in the "Supplemental Pro Forma Income Statement Information" and "Non-GAAP Financial Measures" section in this MD&A. See Notes 1, 3, 4, 5, 7, 13 and 18 to the consolidated financial statements.

2020 Outlook

The company’s business is to build, own, and operate industrial gas plants in order to supply atmospheric and process gases to customers. As such, Linde believes that its sale of gas project backlog is one indicator of future sales growth. At December 31, 2019, Linde’s sale of gas backlog of large projects under construction was $4.4 billion. This represents the total estimated capital cost of large plants under construction. APAC and Americas represent 64 percent and 29 percent of the backlog, respectively, with the remaining backlog in EMEA. These plants will primarily supply customers in the energy, chemical, and electronics end-markets.

The above outlook should be read in conjunction with the section entitled “Forward-Looking Statements.”

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

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CONSOLIDATED RESULTS AND OTHER INFORMATION

The following table provides summary information for 2019, 2018 and 2017. The reported amounts are GAAP amounts from the Consolidated Statements of Income. The pro forma and adjusted pro forma amounts are intended to supplement investors' understanding of the company's financial information and are not a substitute for GAAP measures. The year ended December 31, 2018 reflects the results of Praxair for the entire year and the results of Linde AG for the period beginning after October 31, 2018 (the merger date), including the impacts of purchase accounting (See Notes 1, 3 and 4 to the consolidated financial statements). The historical periods prior to 2018 reflect the results of Praxair, Inc:



	Reported Amounts (GAAP)													Pro Forma Amounts (a)
(Millions of dollars, except per share data) Year Ended December 31,	2019			2018			2017			2019 vs. 2018		2018 vs. 2017		2019			2018			2019 vs. 2018
Reported Amounts
Sales	$	28,228		$	14,836		$	11,358		90	%	31	%	$	28,163		$	28,084		—	%
Cost of sales, exclusive of depreciation and amortization	$	16,644		$	9,020		$	6,382		85	%	41	%	$	16,584		$	16,929		(2	)%
As a percent of sales	59.0		%	60.8		%	56.2		%					58.9		%	60.3		%
Selling, general and administrative	$	3,457		$	1,629		$	1,207		112	%	35	%	$	3,456		$	3,635		(5	)%
As a percent of sales	12.2		%	11.0		%	10.6		%					12.3		%	12.9		%
Depreciation and amortization	$	4,675		$	1,830		$	1,184		155	%	55	%	$	4,675		$	4,924		(5	)%
Cost reduction programs and other charges (b)	$	567		$	309		$	52						$	377		$	56
Net gain on sale of businesses (b)	$	164		$	3,294		$	—						$	—		$	—
Operating Profit	$	2,933		$	5,247		$	2,444		(44	)%	115	%	$	2,955		$	2,561		15	%
Operating margin	10.4		%	35.4		%	21.5		%					10.5		%	9.1		%
Interest expense – net	$	38		$	202		$	161		(81	)%	25	%	$	38		$	379		(90	)%
Net pension and OPEB cost (benefit), excluding service cost	$	(32	)	$	(4	)	$	(4	)	700	%	—	%	$	(129	)	$	(165	)	(22	)%
Effective tax rate	26.3		%	16.2		%	44.9		%					24.6		%	28.5		%
Income from equity investments	$	114		$	56		$	47		104	%	19	%	$	114		$	52		119	%
Noncontrolling interests from continuing operations	$	(89	)	$	(15	)	$	(61	)			(75	)%	$	(89	)	$	—
Income from continuing operations	$	2,183		$	4,273		$	1,247		(49	)%	243	%	$	2,322		$	1,729		34	%
Diluted earnings per share from continuing operations	$	4.00		$	12.79		$	4.32		(69	)%	196	%	$	4.25		$	3.11		37	%
Diluted shares outstanding (c)	545,170			334,127			289,114			63	%	16	%	545,170			555,151			(2	)%
Number of employees	79,886			80,820			26,461
														Adjusted Pro forma Amounts (d)
Operating profit														$	5,272		$	4,796		10	%
Operating margin														18.7		%	17.1		%
Income from continuing operations														$	4,003		$	3,433		17	%
Diluted earnings per share from continuing operations														$	7.34		$	6.19		19	%
Other Financial Data (d)
EBITDA and pro forma EBITDA from continuing operations	$	7,722		$	7,133		$	3,675		8	%	94	%	$	7,744		$	7,537		3	%
As percent of sales	27.4		%	48.1		%	32.4		%	(43	)%	48	%	27.5		%	26.8		%
Adjusted pro forma EBITDA from continuing operations														$	8,178		$	7,603		8	%
As percent of sales														29.0		%	27.1		%

________________________


(a)	Pro forma amounts are supplemental to the GAAP presentations and are prepared on a basis consistent with Article 11 of Regulation S-X. See "Supplemental Pro Forma Income Statement Information" and "Non-GAAP Reconciliations" sections of this MD&A.

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(b)	See Notes 4 and 5 to the consolidated financial statements.


(c)	As a result of the merger, share amounts for the year ended December 31, 2018 reflect the weighted averaging effect of Praxair shares outstanding prior to October 31, 2018 and Linde shares outstanding from October 31, 2018 through December 31, 2018.


(d)	Adjusted pro forma amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted pro forma amounts can be found in the "Supplemental Pro Forma Income Statement Information" and "Non-GAAP Reconciliations" sections of this MD&A.

Results of Operations

The following table provides a summary of changes in consolidated reported and pro forma sales:



	2019 vs. 2018				2018 vs. 2017
	% Change				% Change
	Reported		Pro forma		Reported
Factors Contributing to Changes - Sales
Volume	1	%	2	%	4	%
Price/Mix	3	%	2	%	2	%
Cost pass-through	(1	)%	(1	)%	1	%
Currency	(2	)%	(4	)%	(1	)%
Acquisitions/Divestitures	89	%	1	%	25	%
	90	%	—	%	31	%

2019 Compared With 2018

Sales

Reported sales increased $13,392 million, or 90% for the year primarily due to the merger, net of related divestitures. On a pro forma basis sales increased $79 million in 2019 compared to 2018.

On a reported basis, sales increased 90% to $28,228 million in 2019 compared to $14,836 million in 2018 primarily due to the merger, net of related divestitures. Volume increased sales by 1% driven by higher volumes largely in the APAC segment, including new project start-ups. Higher pricing across all geographic segments contributed 3% to sales. Currency translation decreased sales by 2% driven by the weakening of the Brazilian real, Canadian dollar and Chinese yuan against the US dollar. Lower cost pass-through, primarily natural gas, decreased sales by 1% with minimal impact on operating profit.

On a pro forma basis, sales were relatively flat with prior year. Volume growth of 2% was largely driven by higher volumes in the Americas and APAC segments, including new project start-ups. Higher pricing across the gases segments contributed 2% to sales. Unfavorable currency translation, primarily driven by the weakening of the Euro, British pound, Chinese yuan and Australian dollar, decreased sales by 4%. Lower cost pass-through, primarily natural gas, decreased sales by 1% with minimal impact on operating profit. Acquisitions, largely in the Americas segment, contributed 1% to sales.

Cost of sales, exclusive of depreciation and amortization

Reported cost of sales, exclusive of depreciation and amortization increased $7,624 million, or 85%, for the year primarily due to the merger, net of related divestitures.

On a pro forma basis, cost of sales, exclusive of depreciation and amortization decreased $345 million or 2% in 2019 as compared to 2018. Pro forma cost of sales, exclusive of depreciation and amortization was 58.9% of sales in the year versus 60.3% of sales for 2018. The decrease as a percentage of sales in the year was due primarily to higher pricing.

Selling, general and administrative expenses

Reported selling, general and administrative ("SG&A") expenses increased $1,828 million, or 112%, in 2019 to $3,457 million primarily due to the merger. On a pro forma basis, SG&A decreased $179 million, or 5%, versus the 2018 period.

On a reported basis, SG&A increased 112% in 2019, primarily due to the merger. SG&A was 12.2% of sales in 2019 versus 11.0% in 2018, primarily due to the merger.

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On a pro forma basis, SG&A decreased 5% in 2019 versus 2018. SG&A was 12.3% of sales in 2019 versus 12.9% in 2018. Currency impacts decreased SG&A by approximately $145 million in the 2019 period. Excluding currency impacts, underlying SG&A decreased due to cost reduction actions and productivity improvements which also drove the improvement of SG&A as a percentage of sales in the period.

Depreciation and amortization

Reported depreciation and amortization expense increased $2,845 million, or 155%, versus 2018. The increase is primarily due to the merger, including $1,940 million of purchase accounting impacts related to the depreciation and amortization of the fair value adjustments of fixed assets and intangible assets acquired in the merger.

On a pro forma basis, depreciation and amortization expense decreased $249 million, or 5%, versus 2018. Currency movements decreased depreciation and amortization by approximately $197 million for the year. Excluding currency effects, depreciation and amortization expense decreased approximately $52 million, primarily driven by measurement period adjustments recognized in 2019 (see Note 3 to the consolidated financial statements), partially offset by increases due to large project start-ups.

Cost reduction programs and other charges

Linde recorded cost reduction programs and other charges of $567 million and $309 million for 2019 and 2018, respectively, primarily related to merger and synergy-related costs and an asset impairment in the third quarter 2019 of approximately $73 million related to a joint venture in APAC resulting from an unfavorable arbitration ruling (see Note 5 to the consolidated financial statements).

On an adjusted pro forma basis, these costs have been eliminated in both periods.

Operating profit

Reported operating profit decreased $2,314 million in 2019, or 44%, primarily driven by the net gain on sale of businesses in 2018 partially offset by the impact of the merger, including purchase accounting impacts, in the current year. On an adjusted pro forma basis, operating profit increased $476 million, or 10%, for 2019 versus 2018.

On a reported basis, operating profit decreased $2,314 million, or 44%. 2019 includes Linde AG's operating results for the full year and a gain on merger-related divestitures of $164 million, which was offset by $1,952 million which primarily related to $1,940 million of purchase accounting charges for additional depreciation and amortization, and $567 million in cost reduction program and other charges. 2018 included Linde AG's operating results from October 31, 2018 forward and a gain on merger-related divestitures of $3,294 million, partially offset by purchase accounting impacts of $714 million and $309 million of merger-related charges.

On an adjusted pro forma basis, which excludes the impacts of purchase accounting, cost reduction programs and other charges and net gains from merger-related divestitures, operating profit increased $476 million, or 10%, as the impacts of higher pricing and volumes were partially offset by unfavorable currency impacts and cost inflation. A discussion of operating profit by segment is included in the segment discussion that follows.

Interest expense - net

Reported interest expense – net in 2019 decreased $164 million, or 81%, versus 2018. On an adjusted pro forma basis interest expense decreased $145 million, or 52% in 2019 as compared to 2018.

On a reported basis, interest expense - net decreased $164 million in 2019 and included a decrease of $96 million related to purchase accounting impacts on the fair value of debt acquired in the merger. Excluding this purchase accounting impact, reported interest expense decreased $68 million in the year as interest on debt acquired in the merger was more than offset by higher interest income.

On an adjusted pro forma basis, interest expense - net decreased $145 million in 2019 primarily due to lower debt levels and higher interest income.

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

Reported net pension and OPEB cost (benefit), excluding service cost was a benefit of $32 million in 2019 versus a benefit of $4 million in 2018 and included pension settlement charges of $97 million and a net $8 million curtailment charge (see Note 18 to the consolidated financial statements). Excluding the impact of these charges, the net pension and OPEB benefit, excluding service cost increased $133 million in 2019, primarily due to the impact of pension and OPEB plans acquired in the merger.

On an adjusted pro forma basis, net pension and OPEB (benefit), excluding service cost was a benefit of $129 million in 2019 versus a benefit of $165 million in 2018.

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Effective tax rate

The reported effective tax rate ("ETR") for 2019 was 26.3% versus 16.2% in 2018. 2018 included the impact of the sale of Praxair's European industrial gas business (see Note 7 to the consolidated financial statements).

On an adjusted pro forma basis, the ETR for 2019 was 24.0% versus 25.8% in 2018.

Income from equity investments

Reported income from equity investments for 2019 increased $58 million to $114 million largely related to investments in APAC and EMEA. This increase is primarily related to the merger.

On an adjusted pro forma basis, income from equity investments for 2019 increased $55 million to $171 million. The increase is primarily related to increased earnings from equity investments.

Noncontrolling interests from continuing operations

At December 31, 2019, noncontrolling interests from continuing operations consisted primarily of noncontrolling shareholders’ investments in APAC (primarily in China) and surface technologies.

Reported noncontrolling interests from continuing operations increased $74 million to $89 million in 2019 from $15 million in 2018, primarily driven by the merger. 2019 noncontrolling interests includes a $33 million impact for an asset impairment charge in the third quarter related to a joint venture in APAC (see Note 5 to the consolidated financial statements).

On an adjusted pro forma basis, noncontrolling interests from continuing operations increased $10 million in 2019 driven by higher income from continuing operations.

Income from continuing operations

Reported income from continuing operations decreased $2,090 million, or 49%, primarily due to the 2018 gain on merger-related divestitures, partially offset by the merger. Other impacts related to interest - net; net pension and OPEB cost (benefit), excluding service cost; income taxes; income from equity investments; and noncontrolling interest largely offset in the aggregate.

On an adjusted pro forma basis, which excludes the impacts of purchase accounting and other non-GAAP adjustments, income from continuing operations increased $570 million, or 17%, in 2019 primarily due to higher adjusted pro forma operating profit, lower adjusted pro forma interest expense-net, lower adjusted ETR, and higher adjusted pro forma income from equity investments.

Diluted earnings per share from continuing operations

Reported diluted earnings per share from continuing operations decreased $8.79, or 69%, in 2019 as compared to 2018, primarily due to lower net income from continuing operations and higher diluted shares outstanding as a result of the merger.

On an adjusted pro forma basis, diluted EPS of $7.34 in 2019 increased 19% versus 2018, primarily due to higher adjusted pro forma income from continuing operations and lower diluted shares outstanding.

Employees

The number of employees at December 31, 2019 was 79,886, a decrease of 934 employees from December 31, 2018 primarily driven by cost reduction actions partially offset by acquisitions.

Other Financial Data

EBITDA increased to $7,722 million in 2019 from $7,133 million in 2018, primarily due to the merger.

Adjusted pro forma EBITDA from continuing operations increased to $8,178 million for 2019 as compared to $7,603 million in 2018 primarily due to higher income from continuing operations versus the prior year period.

See the "Supplemental Pro Forma Income Statement Information" for pro forma amounts and "Non-GAAP Reconciliations" for adjusted pro forma amounts sections below for definitions and reconciliations of these pro forma and adjusted pro forma non-GAAP measures to reported GAAP amounts.

Other Comprehensive Income (Loss)

Other comprehensive loss for the year ended December 31, 2019 of $435 million resulted primarily from a decrease in the funded status of the company's largest retirement programs. Driven by the low discount rate environment,

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the other comprehensive loss of $544 million related to the remeasurement of such retirement programs was partially offset by benefits from cumulative translation adjustments. The translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements to U.S. dollars, and are largely driven by the movement of the U.S. dollar against major currencies including the Euro, the Chinese yuan and the British pound. See the "Currency" section of the MD&A for exchange rates used for translation purposes and Note 9 to the consolidated financial statements for a summary of the currency translation adjustment component of accumulated other comprehensive income by segment.

2018 Compared With 2017

Sales increased 31% to $14,836 million in 2018 compared to $11,358 million in 2017 primarily reflecting the merger with Linde AG which contributed 25% to sales, net of divestitures. Underlying sales increased 6% driven by higher volumes and pricing. Volume growth of 4% was driven by higher volumes in North America and Asia, including new project start-ups. Higher overall pricing across all geographic segments contributed 2% to sales. Currency translation impact decreased sales by 1%. Higher cost pass-through, primarily natural gas, increased sales by 1% with minimal impact on operating profit. The divestiture of Praxair's European businesses in December of 2018 decreased sales by 1%.

Selling, general and administrative expenses increased $422 million, or 35%, in 2018 to $1,629 million primarily due to the merger. SG&A was 11.0% of sales in 2018 versus 10.6% in 2017, primarily due to the merger.

Depreciation and amortization expense increased $646 million, or 55%, versus 2017. The increase is primarily due to the merger, including $346 million of purchase accounting impacts related to the fair value of fixed assets and intangible assets acquired in the merger.

Cost reduction programs and other charges were $309 million and $52 million in 2018 and 2017, respectively and are primarily related to the merger. See Note 5 to the consolidated financial statements.

Net gain on the sale of businesses was $3,294 million and related primarily to the divestiture of Praxair's European industrial gases business in connection with the merger. See Note 4 to the consolidated financial statements.

Other income (expenses) – net in 2018 was a $18 million benefit versus a $4 million benefit in 2017 (see Note 9 to the consolidated financial statements for a summary of major components). In North America, 2018 included a $30 million asset impairment charge which was more than offset by $43 million of gains on asset disposals. In Asia, 2018 included a $22 million asset impairment charge, offset by a litigation settlement gain.

Reported operating profit of $5,247 million in 2018 was $2,803 million, or 115% higher than reported operating profit of $2,444 million in 2017. 2018 includes a net gain on sale of businesses of $3,294 million, partially offset by transaction costs and other charges of $309 million, and purchase accounting impacts of $714 million related to the Linde AG merger (see Notes 4, 5 and 3, respectively, to the consolidated financial statements). 2017 included transaction costs of $52 million (see Note 5 to the consolidated financial statements). Excluding the impact of these items, adjusted operating profit of $2,976 million in 2018 was $480 million, or 19%, higher than adjusted operating profit of $2,496 million in 2017 driven primarily by the merger. Higher volumes and price in the geographic segments and surface technologies also contributed to operating profit growth. A discussion of operating profit by segment is included in the segment discussion that follows.

Reported interest expense – net in 2018 increased $41 million, or 25%, versus 2017. 2018 included charges of $26 million relating to the early redemption of notes and a decrease of $21 million related to purchase accounting impacts related to the fair value of debt acquired in the merger (see Notes 13 and 3 to the consolidated financial statements, respectively). Excluding these impacts, adjusted interest expense of $197 million increased $36 million, or 22%, largely attributable to interest on the debt acquired in the merger and lower capitalized interest. See Note 9 to the consolidated financial statements for further information relating to interest expense.

The reported effective tax rate ("ETR") for 2018 was 16.2% versus 44.9% in 2017. The decrease in the ETR for the 2018 period versus the U.S. statutory rate of 21% was primarily due to the impact of the sale of Praxair's European industrial gases business. The increase in the ETR for the 2017 period versus the U.S. statutory rate of 35% was primarily due to the net $394 million charge related to the Tax Act. Excluding these and other smaller impacts as set forth in the "Non-GAAP financial measures" section of this MD&A, on an adjusted basis the ETR for the 2018 and 2017 periods was 23.8% and 27.2%, respectively. The decrease was driven primarily by the impact of the Tax Act enacted in the fourth quarter of 2017 which lowered the U.S. statutory tax rate from 35% in 2017 to 21% in 2018 (see Note 7 to the consolidated financial statements).

Equity income increased $9 million in 2018 versus 2017 and included charges of $9 million for purchase accounting impacts related to the fair value step up of equity investments acquired in the merger. Excluding this impact, equity income increased $18 million, primarily driven by income from equity investments acquired in the merger.

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At December 31, 2018, reported noncontrolling interests from continuing operations consisted primarily of noncontrolling shareholders’ investments in Asia (primarily in China) and surface technologies. Reported noncontrolling interests from continuing operations decreased $46 million to $15 million in 2018 from $61 million in 2017. 2018 includes the impact of the merger and related purchase accounting impacts. Excluding these impacts, adjusted noncontrolling interests from continuing operations of $73 million increased $12 million, or 20%, primarily due to noncontrolling interests acquired in the merger.

Reported income from continuing operations for 2018 was $4,273 million, $3,026 million, or 243%, higher than reported income from continuing operations of $1,247 million in 2017. Adjusted income from continuing operations of $2,121 million in 2018 was $431 million, or 26%, higher than adjusted income from continuing operations of $1,690 million in 2017 primarily due to higher adjusted operating profit and a lower effective tax rate.

Reported diluted earnings per share from continuing operations ("EPS") of $12.79 in 2018 increased $8.47 per diluted share, or 196% from $4.32 in 2017. Adjusted diluted EPS of $6.35 in 2018 increased $.50 per diluted share, or 9%, from adjusted diluted EPS of $5.85 in 2017. The increase in adjusted diluted EPS was primarily due to the merger and higher adjusted income from continuing operations, partially offset by an increase in diluted shares resulting from equity acquired in the merger.

Other comprehensive losses for the year ended December 31, 2018 of $299 million resulted primarily from (i) a $221 million unfavorable impact in the funded status of Linde's retirement obligations and (ii) adverse currency translation adjustments of $76 million, net of a benefit of $318 million related to the release of currency translation adjustments on Praxair's European business (See Note 4 to the consolidated financial statements). The decrease in the funded status of retirement obligations was primarily the result of higher current year actuarial losses, as the impact of higher U.S. discount rates was largely offset by a lower actual return on assets. Unfavorable translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements into U.S. dollars, and are largely driven by the strengthening of the U.S. dollar against major currencies including the Euro, Brazilian real and Canadian dollar.

Unfavorable currency translation adjustments included $343 million in South America and $149 million in Asia, partially offset by favorable currency translation adjustments of $231 million related to Linde AG (primarily Europe and Asia) representing translation impacts for the period from merger date through December 31, 2018. Remaining other comprehensive losses of $2 million relate to the amortization of deferred losses on the company's derivatives and unrealized losses on available for sale securities. Refer to the Currency section of the MD&A and Notes 9 and 18 to the consolidated financial statements.

The number of employees at December 31, 2018 was 80,820, an increase of 54,359 employees from December 31, 2017 primarily driven by an increase of approximately 56,000 related to the merger partially offset by a decrease of approximately 2,500 from the divestiture of Praxair's European industrial gases business.

Other Financial Data

Earnings before interest taxes depreciation and amortization ("EBITDA") increased $3,458 million to $7,133 million in 2018 from $3,675 million in 2017. EBITDA in 2018 includes a gain on sale of businesses and purchase accounting impacts, and both periods include transaction and other costs. Excluding the impacts of these items, adjusted EBITDA increased $789 million to $4,516 million in 2018 from $3,727 million in 2017 driven by the consolidation of Linde AG starting October 31, 2018, and higher adjusted income from continuing operations plus depreciation and amortization versus the prior year.

See the “Non-GAAP Financial Measures” section for definitions and reconciliation of these non-GAAP measures to reported amounts.

Related Party Transactions

The company’s related parties are primarily unconsolidated equity affiliates. The company did not engage in any material transactions involving related parties that included terms or other aspects that differ from those which would be negotiated with independent parties.

Environmental Matters

Linde’s principal operations relate to the production and distribution of atmospheric and other industrial gases, which historically have not had a significant impact on the environment. However, worldwide costs relating to environmental

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protection may continue to grow due to increasingly stringent laws and regulations, and Linde's ongoing commitment to rigorous internal standards. In addition, Linde may face physical risks from climate change and extreme weather.

Climate Change

Linde operates in jurisdictions that have, or are developing, laws and/or regulations to reduce or mitigate the perceived adverse effects of greenhouse gas ("GHG") emissions and faces a highly uncertain regulatory environment in this area. For example, the U.S. Environmental Protection Agency ("EPA") has promulgated rules requiring reporting of GHG emissions, and Linde and many of its suppliers and customers are subject to these rules. EPA has also promulgated regulations to restrict GHG emissions, including final rules regulating GHG emissions from light-duty vehicles and certain large manufacturing facilities, many of which are Linde suppliers or customers. In addition to these developments in the United States, GHGs are regulated in the European Union under the Emissions Trading System, which has wide implications for the company's customers and may impact certain operations of Linde in Europe. There are also requirements for mandatory reporting in Canada, which apply to certain Linde operations and will be used in developing cap-and-trade regulations on GHG emissions. These regulations are expected to impact certain Linde facilities in Canada. Climate change and energy efficiency laws and policies are also being widely introduced in jurisdictions throughout Latin America and parts of Asia. China has announced plans to implement its national carbon emissions trading system in 2020, though it does not appear the regulations will have a direct impact on GHG emissions from Linde facilities. Among other impacts, such regulations are expected to raise the cost of energy, which is a significant cost for Linde. Nevertheless, Linde's long-term customer contracts routinely provide rights to recover increased electricity, natural gas, and other costs that are incurred by the company as a result of climate change regulation.

Linde anticipates continued growth in its hydrogen business, as hydrogen is essential to refineries that use it to remove sulfur from transportation fuels in order to meet ambient air quality standards in the United States and fuel standards in other regions. Hydrogen production plants and a large number of other manufacturing and electricity-generating plants have been identified in California and the European Union as a source of carbon dioxide emissions and these plants are subject to cap-and-trade regulations in those jurisdictions. Linde believes it will be able to mitigate the costs of these regulations through the terms of its product supply contracts. However, legislation that limits GHG emissions may impact growth by increasing capital, compliance, operating and maintenance costs and/or decreasing demand.

To manage business risks from current and potential GHG emission regulation as well as physical consequences of climate change, Linde actively monitors current developments, evaluates the direct and indirect business risks, and takes appropriate actions. Among others, actions include: increasing relevant resources and training; maintaining contingency plans; obtaining advice and counsel from expert vendors, insurance providers and industry experts; incorporating GHG provisions in commercial agreements; and conducting regular reviews of the business risks with management. Although there are considerable uncertainties, Linde believes that the business risk from potential regulations can be effectively managed through its commercial contracts. Additionally, Linde does not anticipate any material effects regarding its plant operations or business arising from potential physical risks of climate change.

Linde continuously seeks opportunities to optimize energy use and GHG footprint through research and development in customer applications and rigorous operational energy efficiency, investment in renewable energy, and purchasing hydrogen as a chemical byproduct where feasible. Linde maintains related performance improvement targets and reports progress against these targets regularly to business management and annually to Linde's Board of Directors.

At the same time, Linde may benefit from business opportunities arising from governmental regulation of GHG and other emissions; uncertain costs of energy and certain natural resources; the development of renewable energy alternatives; and new technologies that help extract natural gas, improve air quality, increase energy efficiency and mitigate the impacts of climate change. Linde continues to develop new applications that can lower emissions, including GHG emissions, in Linde's processes and help customers lower energy consumption and increase product throughput. Stricter regulation of water quality in emerging economies such as China provide a growing market for a number of gases, e.g., oxygen for wastewater treatment. Increased concern about drought in areas such as California and Australia may create additional markets for carbon dioxide for desalination. Renewable fuel standards in the European Union and U.S. create a market for second-generation biofuels which use industrial gases such as oxygen, carbon dioxide, and hydrogen.

Costs Relating to the Protection of the Environment

Environmental protection costs in 2019 were not significant. Linde anticipates that future annual environmental protection expenditures will be similar to 2019, subject to any significant changes in existing laws and regulations. Based

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on historical results and current estimates, management does not believe that environmental expenditures will have a material adverse effect on the consolidated financial position, the consolidated results of operations or cash flows in any given year.

Legal Proceedings

See Note 19 to the consolidated financial statements for information concerning legal proceedings.

Retirement Benefits

Pensions

The net periodic benefit cost for the U.S. and international pension plans was $107 million in 2019, $24 million in 2018 and $58 million in 2017. The net periodic pension cost for 2019 includes pension settlement charges of $97 million related to lump sum payments, which were triggered by either a change in control provision or merger-related divestitures and a net curtailment charge of $8 million for termination benefits, primarily in connection with a defined benefit pension plan freeze. Settlement charges for 2018 and 2017 were $14 million and $2 million, respectively.

The funded status (pension benefit obligation ("PBO") less the fair value of plan assets) for the U.S. plans was a deficit of $504 million as of December 31, 2019 and a deficit of $556 million at December 31, 2018. The funded status for international plans was a deficit of $1,801 million as of December 31, 2019 and a deficit of $1,241 million at December 31, 2018. In the U.S., the benefit from the actual return on assets more than offset the impacts of unfavorable liability experience, resulting from the low discount rate environment. For the international plans, the unfavorable impact of lower discount rates outweighed favorable plan asset experience.

Global pension contributions were $94 million in 2019, $87 million in 2018 and $19 million in 2017. At a minimum, Linde contributes to its pension plans to comply with local regulatory requirements (e.g., ERISA in the United States). Discretionary contributions in excess of the local minimum requirements are made based on many factors, including long-term projections of the plans' funded status, the economic environment, potential risk of overfunding, pension insurance costs and alternative uses of cash. Changes to these factors can impact the timing of discretionary contributions from year to year. Estimated required contributions for 2020 are currently expected to be in the range of $50 million to $80 million.

Linde assumes expected returns on plan assets for 2020 of 7.00% and 5.31% for the U.S. and international plans, respectively, which are consistent with the long-term expected returns on its investment portfolios.

Excluding the impact of any settlements, 2020 consolidated pension expense is expected to be a benefit of approximately $45 million. The benefit derived from the expected return on assets assumption for Linde's most significant plans is anticipated to more than offset the expense from service and interest cost accruals and the amortization of deferred losses.

Refer to the Critical Accounting Policies section and Note 18 to the consolidated financial statements for a more detailed discussion of the company’s retirement benefits, including a description of the various retirement plans and the assumptions used in the calculation of net periodic benefit cost and funded status.

Insurance

Linde purchases insurance to limit a variety of property and casualty risks, including those related to property, business interruption, third-party liability and workers’ compensation. Currently, the company self retains up to $10 million per occurrence for vehicle liability in the United States, $5 million per occurrence for workers' compensation and general liability. In addition, the company self retains risk up to $5 million at its various properties worldwide for property damage resulting from fire, flood and other perils effecting its properties along with a separate $5 million deductible on all business interruption resulting from a major peril loss. To mitigate its aggregate loss potential above these retentions, the company purchases catastrophic insurance coverage from highly rated insurance companies. The company does not currently operate or participate in any captive insurance companies or other non-traditional risk transfer alternatives.

At December 31, 2019 and 2018, the company had recorded a total of $66 million and $60 million, respectively, representing an estimate of the retained liability for the ultimate cost of claims incurred and unpaid as of the balance sheet dates. The estimated liability is established using statistical analysis and is based upon historical experience, actuarial assumptions and professional judgment. These estimates are subject to the effects of trends in loss severity and frequency and are subject to a significant degree of inherent variability. If actual claims differ from the company’s estimates, they will be adjusted at that time and financial results could be impacted.

Linde recognizes estimated insurance proceeds relating to damages at the time of loss only to the extent of incurred losses. Any insurance recoveries for business interruption and for property damages in excess of the net book value of the property are recognized only when realized or pending payments confirmed by its insurance companies.

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SEGMENT DISCUSSION

Effective October 31, 2018, Praxair and Linde AG completed the previously announced merger, resulting in the formation of Linde plc (see Note 1 to the consolidated financial statements for additional information on the merger). As a result of the merger and effective with the lifting of the hold separate order effective on March 1, 2019, new operating segments were created which are used by the company's Chief Operating Decision Maker ("CODM") to allocate company resources and assess performance. Linde’s operations consist of two major product lines: industrial gases and engineering. As further described in the following paragraph, Linde’s industrial gases operations are managed on a geographic basis, which represents three of the company's new reportable segments - Americas, EMEA (Europe/Middle East/Africa), and APAC (Asia/South Pacific); a fourth reportable segment which represents the company's Engineering business, designs and manufactures equipment for air separation and other industrial gas applications specifically for end customers and is managed on a worldwide basis operating in all geographic segments. Other consists of corporate costs and a few smaller businesses which individually do not meet the quantitative thresholds for separate presentation.

The industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). Many of these products are co-products of the same manufacturing process. Linde manufactures and distributes nearly all of its products and manages its customer relationships on a regional basis. Linde’s industrial gases are distributed to various end-markets within a regional segment through one of three basic distribution methods: on-site or tonnage; merchant or bulk; and packaged or cylinder gases. The distribution methods are generally integrated in order to best meet the customer’s needs and very few of its products can be economically transported outside of a region. Therefore, the distribution economics are specific to the various geographies in which the company operates and are consistent with how management assesses performance.

The company’s measure of profit/loss for segment reporting purposes remains unchanged - Segment operating profit. Segment operating profit is defined as operating profit excluding purchase accounting impacts of the Linde AG merger, intercompany royalties, and items not indicative of ongoing business trends. This is the manner in which the company’s CODM assesses performance and allocates resources. For a description of Linde's previous operating segments, refer to Note 20 to the consolidated financial statements of Linde's 2018 Annual Report on Form 10-K.

The table below presents sales and operating profit information about reportable segments and Other for the year ended December 31, 2019, 2018 and 2017. The year ended December 31, 2019 reflects the results of both Praxair and Linde AG for the entire year. The year ended December 31, 2018 reflects the results of Praxair for the entire year and the results of Linde AG for the period beginning after October 31, 2018 (the merger date), including the impacts of purchase accounting (See Notes 1, 3 and 4 to the consolidated financial statements). The historical periods prior to 2018 reflect the results of Praxair. Prior periods presented have been recast to be consistent with the new segment structure.:

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Reported										Variance
(Millions of dollars) Year Ended December 31,	2019			2018			2017			2019 vs. 2018		2018 vs. 2017
Sales
Americas	$	10,993		$	8,017		$	7,204		37	%	11	%
EMEA	6,643			2,644			1,520			151	%	74	%
APAC	5,839			2,446			1,571			139	%	56	%
Engineering	2,799			459			N/A			N/M		N/A
Other	1,954			1,270			1,063			54	%	19	%
	$	28,228		$	14,836		$	11,358		90	%	31	%
Operating Profit
Americas	$	2,578		$	2,053		$	1,854		26	%	11	%
EMEA	1,367			481			317			184	%	52	%
APAC	1,198			465			329			158	%	41	%
Engineering	390			14			N/A			N/M		N/A
Other	(245		)	(37		)	(4		)	N/M		N/M
Segment operating profit	5,288			2,976			2,496			78	%	19	%
Reconciliation to reported operating Profit :
Cost reduction programs and other charges (Note 5)	(567		)	(309		)	(52		)
Net gain on sale of businesses	164			3,294			N/A
Purchase accounting impacts - Linde AG	(1,952		)	(714		)	N/A
Total operating profit	$	2,933		$	5,247		$	2,444



Pro Forma							Variance
(Dollar amounts in millions) Year Ended December 31,	2019			2018			2019 vs. 2018
Sales
Americas	$	10,989		$	10,539		4	%
EMEA	6,643			6,991			(5	)%
APAC	5,779			5,950			(3	)%
Engineering	2,799			2,792			—	%
Other	1,953			1,812			8	%
	$	28,163		$	28,084		—	%
Operating Profit
Americas	$	2,577		$	2,433		6	%
EMEA	1,367			1,344			2	%
APAC	1,184			1,029			15	%
Engineering	390			285			37	%
Other	(246		)	(295		)	(17	)%
Segment operating profit	$	5,272		$	4,796		10	%

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Americas



										Variance
(Dollar amounts in millions) Year Ended December 31,	2019			2018			2017			2019 vs. 2018		2018 vs. 2017

Reported sales	$	10,993		$	8,017		$	7,204		37	%	11	%
Pro forma sales	$	10,989		$	10,539		N/A			4	%	N/A

Reported operating profit	$	2,578		$	2,053		$	1,854		26	%	11	%
As a percent of sales	23.5		%	25.6		%	25.7		%
Pro forma operating profit	$	2,577		$	2,433		N/A			6	%	N/A
As a percent of sales	23.5		%	23.1		%	N/A



	2019 vs. 2018				2018 vs. 2017
	% Change				% Change
	Reported		Pro forma		Reported
Factors Contributing to Changes - Sales
Volume/Equipment	—	%	1	%	3	%
Price/Mix	3	%	3	%	2	%
Cost pass-through	(1	)%	(1	)%	1	%
Currency	(2	)%	(2	)%	(2	)%
Acquisitions/Divestitures	37	%	3	%	7	%
	37	%	4	%	11	%

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

Sales

Reported sales for the Americas segment for 2019 increased $2,976 million, or 37%, versus 2018, primarily due to the merger. On a pro forma basis, sales increased $450 million, or 4%, versus 2018.

On a reported basis, sales increased 37% in 2019 primarily due to the merger. Higher pricing contributed 3% to sales. Unfavorable currency translation decreased sales by 2%, primarily driven by the weakening of the Brazilian real, Mexican peso and Canadian dollar against the U.S. Dollar. Lower cost past-through, primarily natural gas, decreased sales by 1% with minimal impact on operating profit.

On a pro forma basis, volume growth contributed 1% to sales in 2019 as compared to 2018 primarily driven by base volume growth in the United States and Latin America and project start ups in the United States Gulf Coast. Higher pricing contributed 3% to sales. Currency translation decreased sales by 2%. Acquisitions and divestitures increased sales by 3%, related primarily to acquisitions in North America. Lower cost pass-through decreased sales by 1% with minimal impact on operating profit.

Reported sales for 2018 increased $813 million, or 11%, versus 2017 primarily due to the merger which contributed 7% to sales. Underlying sales growth was 4%, driven by higher volumes and higher price. Unfavorable currency impacts decreased sales by 2%. Higher cost pass-through increased sales by 1% with minimal impact on operating profit.

Operating Profit

Reported operating profit for the Americas segment for 2019 increased $525 million, or 26% from 2018, due primarily to the merger. On a pro forma basis, operating profit increased $144 million, or 6%, for 2019 as compared to 2018.

On a reported basis, operating profit increased 26% in 2019 largely driven by the merger and higher pricing, partially offset by unfavorable currency translation impacts of 2%.

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Pro forma operating profit in the Americas segment increased $144 million for 2019, or 6%, versus the 2018 period. Operating growth from higher volumes, higher price and acquisitions was partially offset by unfavorable currency translation impacts of 2% in the year. The 2018 year also included net gains on asset disposals of approximately $20 million.

Reported operating profit for 2018 increased $199 million, or 11%, driven primarily by the merger, higher volumes and higher price partially offset by unfavorable currency translation. The 2018 period also included net gains on asset disposals of $13 million.

EMEA



(Dollar amounts in millions) Year Ended December 31,										Variance
(Dollar amounts in millions) Year Ended December 31,	2019			2018			2017			2019 vs. 2018		2018 vs. 2017

Reported sales	$	6,643		$	2,644		$	1,520		151	%	74	%
Pro forma sales	$	6,643		$	6,991		N/A			(5	)%	N/A

Reported operating profit	$	1,367		$	481		$	317		184	%	52	%
As a percent of sales	20.6		%	18.2		%	20.9		%
Pro forma operating profit	$	1,367		$	1,344		N/A			2	%	N/A
As a percent of sales	20.6		%	19.2		%	N/A



	2019 vs. 2018				2018 vs. 2017
	% Change				% Change
	Reported		Pro forma		Reported
Factors Contributing to Changes
Volume	(1	)%	(1	)%	1	%
Price/Mix	1	%	2	%	2	%
Cost pass-through	(1	)%	—	%	2	%
Currency	(1	)%	(6	)%	4	%
Acquisitions/Divestitures	153	%	—	%	65	%
	151	%	(5	)%	74	%

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

Sales

On a reported basis, EMEA segment sales increased by $3,999 million, or 151%, in 2019 as compared to 2018, primarily due to the merger, net of related divestitures. On a pro forma basis, sales decreased $348 million, or 5%, in 2019 versus 2018.

On a reported basis, sales increased 151% in 2019 driven primarily by the net impact of the merger with Linde AG and the related divestiture of Praxair's European gases business in the fourth quarter of 2018. Excluding this net impact, sales decreased 2%. Volumes decreased 1% driven by weaker industrial production. Higher price contributed 1% to sales. Unfavorable currency translation and cost pass-through each decreased sales by 1%.

On a pro forma basis, sales decreased 5% in 2019, primarily driven by unfavorable currency translation due to the weakening of the Euro, British pound and South African rand against the U.S. Dollar which decreased sales by 6% . Higher price increased sales by 2%. Volumes decreased 1% driven by weaker industrial production.

Reported sales increased $1,124 million, or 74%, in 2018 driven primarily by the merger, net of related divestitures. Excluding the impact of the merger and related divestitures, sales increase 9% from 2017. Higher cost pass-through

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increased sales by 2% with minimal impact on operating profit. Favorable currency translation increased sales by 4%. Higher volumes and higher price increased sales by 1% and 2%, respectively.

Operating Profit

On a reported basis, operating profit for the EMEA segment increased by $886 million, or 184%, in 2019 as compared to 2018. On a pro forma basis, operating profit increased $23 million, or 2%, in 2019 versus the respective 2018 period.

On a reported basis, operating profit increased 184% in 2019, driven primarily by the net impact of the merger with Linde AG and the related divestiture of Praxair's European gases business in the fourth quarter of 2018.

On a pro forma basis, operating profit increased 2% in 2019 as compared to 2018 as higher pricing and the impact of cost reduction actions more than offset the impacts of unfavorable currency translation and cost inflation.

Reported operating profit increased $164 million, or 52%, in 2018 driven primarily by the merger, net of related divestitures. Favorable currency translation increased operating profit by 5%. Excluding the impact of the merger and related divestitures and currency, operating profit increased driven by higher price and higher volumes, partially offset by cost inflation.

APAC



(Dollar amounts in millions) Year Ended December 31,									Variance
(Dollar amounts in millions) Year Ended December 31,	2019			2018			2017		2019 vs. 2018		2018 vs. 2017

Reported sales	$	5,839		$	2,446		$	1,571	139	%	56	%
Pro forma sales	$	5,779		$	5,950		N/A		(3	)%	N/A

Reported operating profit	$	1,198		$	465		$	329	158	%	41	%
As a percent of sales	20.5		%	19.0		%
Pro forma operating profit	$	1,184		$	1,029		N/A		15	%	N/A
As a percent of sales	20.5		%	17.3		%	N/A



	2019 vs. 2018				2018 vs. 2017
	% Change				% Change
	Reported		Pro forma		Reported
Factors Contributing to Changes
Volume	4	%	1	%	9	%
Price/Mix	2	%	2	%	2	%
Cost pass-through	—	%	(1	)%	1	%
Currency	(3	)%	(4	)%	1	%
Acquisitions/Divestitures	136	%	(1	)%	43	%
	139	%	(3	)%	56	%

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

Sales

On a reported basis, APAC segment sales increased by $3,393 million, or 139%, in 2019 as compared to 2018, primarily due to the merger. On a pro forma basis, sales decreased $171 million, or 3%, in 2019 versus 2018.

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On a reported basis, sales increased 139% in 2019 driven by the merger. Unfavorable currency translation decreased sales by 3%, driven primarily by the weakening of the Chinese yuan, Korean won and Indian rupee against the U.S. Dollar. Excluding the impacts of the merger and currency, sales increased by 6% driven by higher base volumes, new project start ups and higher price.

On a pro forma basis, sales decreased 3% in 2019. Higher pricing increased sales by 2%. Higher volumes contributed 1% to sales driven by higher base volumes and new project start-ups. Currency translation decreased sales by 4%. Lower cost pass-through decreased sales by 1% with minimal impact on operating profit. Acquisitions and divestitures decreased sales by 1%.

Reported sales in 2018 increased $875 million, or 56%, versus 2017 driven primarily by the merger which contributed 43% to sales. Cost pass-through, primarily energy, and currency impacts each increased sales by 1%. Volume growth of 9% was primarily attributable to base volume growth in China, Korea and India and new project start-ups in China. Higher price increased sales by 2% driven by China.

Operating Profit

On a reported basis, operating profit for the APAC segment increased by $733 million, or 158%, in 2019 as compared to 2018, due primarily to the merger. On a pro forma basis, operating profit increased $155 million, or 15%, in 2019 versus the respective 2018 period.

On a reported basis, operating profit increased 158% in 2019, driven by the net impact of the merger with Linde AG. Unfavorable currency translation decreased operating profit by 3% for the year. Excluding the merger and currency impacts, operating profit growth was driven by higher price and cost reduction programs.

On a pro forma basis, operating profit increased 15% in 2019 as compared to 2018. Unfavorable currency translation decreased operating profit by 5% in the year. Excluding currency impacts, operating growth was driven by higher price and cost reduction programs.

Reported operating profit in 2018 increased $136 million, or 41%, versus 2017 driven primarily by the merger, higher volumes and price. Operating profit for 2018 included a $22 million asset impairment charge, offset by a litigation settlement gain.

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Engineering



(Dollar amounts in millions) Year Ended December 31,								Variance
(Dollar amounts in millions) Year Ended December 31,	2019			2018			2017	2019 vs. 2018		2018 vs. 2017

Reported sales	$	2,799		$	459		N/A	510	%	100	%
Pro forma sales	$	2,799		$	2,792		N/A	—	%	N/A

Reported operating profit	$	390		$	14		N/A	N/M		100	%
As a percent of sales	13.9		%	3.1		%
Pro forma operating profit	$	390		$	285		N/A	37	%	N/A
As a percent of sales	13.9		%	10.2		%	N/A



	2019 vs. 2018				2018 vs. 2017
	% Change				% Change
	Reported		Pro forma		Reported
Factors Contributing to Changes
Volume/Price	8	%	4	%	—	%
Currency	(2	)%	(4	)%	—	%
Acquisitions/Divestitures	504	%	—	%	100	%
	510	%	—	%	100	%

Sales

Reported Engineering segment sales increased $2,340 million, or 510%, in 2019 as compared to the respective 2018 period. On a pro forma basis, segment sales increased $7 million in 2019 as compared to the respective 2018 period.

On a reported basis, 2019 sales increased 510% in year primarily related to the merger of the Linde Engineering business. Excluding the impact of the merger, volume growth of 8% was partially offset by unfavorable currency translation of 2%.

On a pro forma basis, 2019 sales were flat versus 2018 as volume growth of 4% was offset by unfavorable currency translation of 4%.

Reported sales for 2018 increased 100% versus 2017 due to the merger of the Linde Engineering business.

Operating profit

Reported Engineering segment operating profit increased $376 million, or 2,686%, in 2019 versus 2018. On a pro forma basis, operating profit increased $105 million, or 37%, in 2019 versus 2018.

On a reported basis, operating profit increased in 2019 related primarily to the merger of the Linde Engineering business.

On a pro forma basis, operating profit increased 37% for the year. Unfavorable currency translation decreased operating profit by 4% in 2019. Excluding the impact of currency, operating profit increased due to timing of project completion, favorable costs and procurement savings.

Reported operating profit for 2018 increased 100% versus 2017 due to the merger of the Linde Engineering business.

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Other



(Dollar amounts in millions) Year Ended December 31,										Variance
(Dollar amounts in millions) Year Ended December 31,	2019			2018			2017			2019 vs. 2018		2018 vs. 2017

Reported sales	$	1,954		$	1,270		$	1,063		54	%	19	%
Pro forma sales	$	1,953		$	1,812		N/A			8	%	N/A

Reported operating profit	$	(245	)	$	(37	)	$	(4	)	(562	)%	825	%
As a percent of sales	(12.5		)%	(2.9		)%
Pro forma operating profit	$	(246	)	$	(295	)	N/A			17	%	N/A
As a percent of sales	(12.6		)%	(16.3		)%	N/A



	2019 vs. 2018				2018 vs. 2017
	% Change				% Change
	Reported		Pro forma		Reported
Factors Contributing to Changes
Volume/Price	9	%	12	%	8	%
Currency	(2	)%	(4	)%	2	%
Acquisitions/Divestitures	47	%	—	%	9	%
	54	%	8	%	19	%

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

Sales

Reported sales for Other increased $684 million, or 54%, for the 2019 year versus the respective 2018 period, primarily due to the merger. On a pro forma basis, sales increased $141 million, or 8%, for 2019 versus the respective 2018 periods.

On a reported basis, sales increased 54% for the year, primarily due to the merger which increased sales by 47%. Higher volumes and price increased sales by 9% in the year, primarily driven by higher surface technologies volumes to the aerospace and manufacturing end-markets and higher price. Currency translation decreased sales by 2% for the year.

On a pro forma basis, sales increased 8% for 2019. Volume and price growth increased sales by 12%, driven by helium and surface technologies. Currency translation decreased sales by 4%.

Reported sales for 2018 increased $207 million, or 19%, versus 2017 driven primarily by the merger. Excluding the impact of the merger, underlying sales increased driven by surface technologies volumes to the aerospace and manufacturing end-markets and higher price.

Operating profit

Reported operating profit in Other decreased $208 million in 2019 versus the respective 2018 periods, due primarily to the merger. On a pro forma basis, operating loss improved $49 million, or 17%, when comparing 2019 to the 2018 period.

On a reported basis, operating profit decreased $208 million primarily related to the merger as operating profit increases from higher volumes and price were more than offset by the merger of Linde AG corporate.

On a pro forma basis, operating profit improved $49 million in the year. Higher volumes, helium pricing and cost reduction actions improved operating profit which was partially offset by higher helium sourcing costs.

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Reported operating profit for 2018 decreased $33 million versus 2017 primarily related to the merger as operating profit increases from higher volumes and price were more than offset by the merger of Linde AG corporate.

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Currency

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

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



	Percent of 2019 Consolidated Sales		Statements of Income			Balance Sheets
			Average Year Ended December 31,			December 31,
Currency			2019	2018	2017	2019	2018
Euro	20	%	0.89	0.85	0.89	0.89	0.87
Chinese yuan	7	%	6.90	6.60	6.76	6.96	6.88
British pound	6	%	0.78	0.75	0.78	0.75	0.78
Australian dollar	4	%	1.44	1.34	N/A	1.42	1.42
Brazilian real	4	%	3.94	3.63	3.19	4.03	3.87
Korean won	3	%	1,165	1,100	1,131	1,156	1,111
Canadian dollar	3	%	1.33	1.30	1.30	1.30	1.36
Mexican peso	2	%	19.24	19.20	18.86	18.93	19.65
Taiwan dollar	2	%	30.90	30.13	30.43	29.99	30.55
Indian rupee	2	%	70.40	68.00	65.00	71.38	69.77
South African rand	1	%	14.43	13.16	N/A	14.00	14.35
Swedish kroner	1	%	9.45	8.68	8.53	9.37	8.85
Thailand bhat	1	%	31.04	32.30	33.91	29.71	32.33

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LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA



(Millions of dollars) Year Ended December 31,	2019			2018			2017
Net Cash Provided by (Used for)
Operating Activities
Income from continuing operations (including noncontrolling interests)	$	2,272		$	4,288		$	1,308
Non-cash charges (credits):
Add: Cost reduction programs and other charges, net of payments (a)	(236		)	40			26
Add: Amortization of merger-related inventory step-up	12			368			—
Less: Net gain on sale of businesses, net of tax (b)	(108		)	(2,923		)	—
Add: Tax Act income tax charge, net	—			(61		)	394
Add: Depreciation and amortization	4,675			1,830			1,184
Add (Less): Deferred income taxes, excluding Tax Act	(303		)	(187		)	136
Add (Less): non-cash charges and other	(32		)	237			102
Income from continuing operations adjusted for non-cash charges and other	6,280			3,592			3,150
Less: Pension contributions	(94		)	(87		)	(19		)
Add (Less): Working capital	(160		)	202			(158		)
Add (Less): Other	93			(53		)	68
Net cash provided by operating activities	$	6,119		$	3,654		$	3,041
Investing Activities
Capital expenditures	$	(3,682	)	$	(1,883	)	$	(1,311	)
Acquisitions, net of cash acquired	(225		)	(25		)	(33		)
Divestitures and asset sales, net of cash divested	5,096			5,908			30
Cash acquired in merger transaction	—			1,363			—
Net cash provided by (used for) investing activities	$	1,189		$	5,363		$	(1,314	)
Financing Activities
Debt increases (decreases) – net	$	(1,260	)	$	(2,908	)	$	(771	)
Issuances (purchases) of ordinary shares – net	(2,586		)	(522		)	108
Cash dividends – Linde plc shareholders	(1,891		)	(1,166		)	(901		)
Noncontrolling interest transactions and other	(3,260		)	(402		)	(92		)
Net cash (used) for financing activities	$	(8,997	)	$	(4,998	)	$	(1,656	)

Effect of exchange rate changes on cash	$	(77	)	$	(60	)	$	22
Cash and cash equivalents, end-of-period	$	2,700		$	4,466		$	617

____________________


(a)	See Note 5 to the consolidated financial statements.


(b)	See Note 4 to the consolidated financial statements.

Cash decreased $1,766 million in 2019 versus 2018. The primary sources of cash in 2019 were cash flows from operations of $6,119 million and proceeds from divestitures and asset sales of $5,096 million. The primary uses of cash included capital expenditures of $3,682 million, transactions with noncontrolling interests of $3,260 million, net purchases of ordinary shares of $2,586 million, cash dividends to shareholders of $1,891 million and net debt repayments of $1,260 million. Noncontrolling interest transactions and other of $3,260 million included a payment of approximately $3.2 billion related to the cash-merger squeeze-out of the 8% of Linde AG shares completed on April 8, 2019 (see Note 16 to the consolidated financial statements).

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Cash Flows From Operations

2019 compared with 2018

Cash flows from operations was $6,119 million, or 22% of sales, an increase of $2,465 million from $3,654 million, or 25% of sales in 2018. The increase was primarily attributable to the merger which drove higher net income adjusted for non-cash charges, partially offset by higher working capital requirements and higher merger and synergy related cash outflows. 2019 included merger and synergy related cash outflows of $803 million, of which $567 million is included within "Net income (including noncontrolling interests)" and $236 million is included within "Cost reduction programs and other charges, net of payments".

2018 compared with 2017

Cash flows from operations was $3,654 million, or 25% of sales, an increase of $613 million from $3,041 million, or 27% of sales in 2017. The increase was primarily attributable to the merger, higher net income adjusted for non-cash charges and favorable working capital requirements, partially offset by unfavorable changes in other long–term assets and liabilities and higher pension contributions.

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Investing

2019 compared with 2018

Net cash provided by investing activities of $1,189 million decreased $4,174 million from 2018 primarily driven by lower proceeds from merger-related divestitures, cash acquired in the merger and higher capital expenditures.

Capital expenditures in 2019 were $3,682 million, an increase of $1,799 million from 2018, driven primarily by the merger. Capital expenditures during 2019 related primarily to investments in new plant and production equipment for growth. Approximately 44% of the capital expenditures were in the Americas segment with 33% in the APAC segment and the rest primarily in the EMEA segment.

Acquisition expenditures in 2019 were $225 million, an increase of $200 million from 2018 and related primarily to acquisitions in the Americas.

Divestitures and asset sales in 2019 totaled $5,096 million primarily driven by proceeds from merger-related divestitures including $3.4 billion from the sale of Linde AG's Americas business, $1.2 billion from the sale of Linde Korea, and approximately $200 million each from the sale of the legacy Praxair and legacy Linde India selected assets (see Note 4 to the consolidated financial statements). 2018 divestiture and asset sale cash flows included $5.6 billion from the sale of Praxair's European business and $214 million related to the sale of Praxair's Italian joint venture (see Note 4 to the consolidated financial statements).

2018 compared with 2017

Net cash provided by investing activities of $5,363 million increased $6,677 million from 2017 primarily driven by proceeds from the divestiture of Praxair's European business and cash acquired in the merger, partially offset by higher capital expenditures.

Capital expenditures in 2018 were $1,883 million, an increase of $572 million from 2017, driven primarily by the merger with Linde AG. Capital expenditures during 2019 related primarily to investments in new plant and production equipment for growth and density.

Acquisition expenditures in 2018 were $25 million, a decrease of $8 million from 2017. Additionally, $1,363 million of cash was acquired in the merger (see Note 3 to the consolidated financial statements).

Divestitures and asset sales in 2018 totaled $5,908 million primarily driven by proceeds from merger-related divestitures including $5.6 billion from the sale of Praxair's European business and $214 million related to the sale of Praxair's Italian joint venture (see Note 4 to the consolidated financial statements).

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Financing

Linde’s financing strategy is to secure long-term committed funding by issuing public notes and debentures and commercial paper backed by a long-term bank credit agreement. Linde’s international operations are funded through a combination of local borrowing and intercompany funding to minimize the total cost of funds and to manage and centralize currency exchange exposures. As deemed necessary, Linde manages its exposure to interest-rate changes through the use of financial derivatives (see Note 14 to the consolidated financial statements and Item 7A. Quantitative and Qualitative Disclosures About Market Risk).

Cash used for financing activities was $8,997 million in 2019 compared to $4,998 million in 2018. The primary financing uses of cash were for transactions with noncontrolling interests, net debt repayments, cash dividends and net purchases of Linde ordinary shares. Noncontrolling interest transactions and other payments of $3,260 million increased $2,858 million from 2018 driven by a payment of approximately $3.2 billion for the cash-merger squeeze-out of the 8% of Linde AG shares completed on April 8, 2019 (see Note 16 to the consolidated financial statements). Amounts paid in 2018 include $315 million for the purchase of the noncontrolling interest in Praxair's Italian joint venture in a merger-related transaction (see Note 4 to the consolidated financial statements) and $25 million in interest related to the early redemption of bonds. Cash dividends of $1,891 million increased $725 million from 2018 driven primarily by higher shares outstanding after the merger and a 6% increase in dividends per share from $3.30 to $3.50. Net purchases of ordinary shares were $2,586 million in 2019 versus $522 million in 2018 driven by increased share repurchases. The cash used for debt repayments-net of $1,260 million decreased $1,648 million from $2,908 million during 2018 while cash decreased $1,766 million. Net debt (calculated as total debt less cash and cash equivalents) increased $426 million primarily due to lower cash balances partially offset by debt repayments.

The company believes that it has sufficient operating flexibility, cash reserves, and funding sources to maintain adequate amounts of liquidity to meet its business needs around the world. At December 31, 2019, Linde's credit ratings as reported by Standard & Poor’s and Moody’s were A-1 and P-1 for short-term debt, respectively, and A and A2 for long-term debt, respectively.

Note 13 to the consolidated financial statements includes information with respect to the company’s debt repayments in 2019, current debt position, debt covenants and the available credit facilities; and Note 14 includes information relating to derivative financial instruments. Linde's credit facilities are with major financial institutions and are non-cancelable until maturity. Therefore, the company believes the risk of the financial institutions being unable to make required loans under the credit facilities, if requested, to be low. Linde’s major bank credit and long-term debt agreements contain standard covenants. The company was in compliance with these covenants at December 31, 2019 and expects to remain in compliance for the foreseeable future.

Linde’s total net debt outstanding at December 31, 2019 was $11,256 million, $426 million higher than $10,830 million at December 31, 2018. The December 31, 2019 net debt balance includes $12,752 million in public securities, $1,204 million representing primarily worldwide bank borrowings, net of $2,700 million of cash. Linde’s global effective borrowing rate was approximately 2% for 2019.

In February 2019, Linde repaid $500 million of 1.90% rate notes that became due; in May 2019 Linde repaid $150 million of variable rate notes that became due; in June 2019 Linde repaid €500 million of 1.75% notes that due and AUD100 million of variable rate notes that became due; in August 2019 Linde repaid $200 million of variable rate notes that became due.

On March 26, 2019 the company and certain of its subsidiaries entered into an unsecured revolving credit agreement ("the Credit Agreement") with a syndicate of banking institutions, which became effective on March 29, 2019. The Credit Agreement provides for total commitments of $5.0 billion, which may be increased up to $6.5 billion, subject to receipt of additional commitments and satisfaction of customary conditions. There are no financial maintenance covenants contained within the Credit Agreement. The revolving credit facility expires on March 26, 2024 with the option to request two one-year extensions of the expiration date. In connection with the effectiveness of the Credit Agreement, Praxair and Linde AG terminated their respective existing revolving credit facilities. No borrowings were outstanding under the Credit Agreement as of December 31, 2019.

On September 3, 2019, Linde and the company’s subsidiaries Praxair and Linde AG entered into a series of parent and subsidiary guarantees related to currently outstanding notes issued by Praxair and Linde AG as well as the $5 billion Credit Agreement.

On December 10, 2018, the company announced a $1.0 billion share repurchase program, which was completed in February of 2019. On January 22, 2019, the company’s board of directors approved the additional repurchase of $6.0 billion of its ordinary shares, of which $2.3 billion had been repurchased through December 31, 2019. For additional information

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related to the share repurchase programs, see Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

CONTRACTUAL OBLIGATIONS

The following table sets forth Linde’s material contract obligations and other commercial commitments as of December 31, 2019:



(Millions of dollars)	Due or expiring by December 31,
	2020		2021		2022		2023		2024		Thereafter		Total
Long-term debt obligations:
Debt and capitalized lease maturities (Note 13)	$	1,531	$	1,855	$	2,330	$	1,798	$	983	$	3,727	$	12,224
Contractual interest	297		237		175		146		98		585		1,538
Operating leases (Note 6)	275		208		163		110		75		251		1,082
Retirement obligations	101		36		37		37		36		183		430
Unconditional purchase obligations	833		769		718		660		650		2,877		6,507
Construction commitments	2,234		871		291		25		—		—		3,421
Total Contractual Obligations	$	5,271	$	3,976	$	3,714	$	2,776	$	1,842	$	7,623	$	25,202

Contractual interest on long-term debt of $1,538 million represents interest the company is contracted to pay on outstanding long-term debt, current portion of long-term debt and capital lease obligations, calculated on a basis consistent with planned debt maturities, excluding the interest impact of interest rate swaps. At December 31, 2019, Linde had fixed-rate debt of $10,799 million and floating-rate debt of $3,157 million. The rate assumed for floating-rate debt was the rate in effect at December 31, 2019.

Retirement obligations of $430 million include estimates of pension plan contributions and expected future benefit payments for unfunded pension and OPEB plans. Pension plan contributions are forecasted for 2020 only. For purposes of the table, $60 million of estimated contributions have been included for 2020. Expected future unfunded pension and OPEB benefit payments are forecasted only through 2029. Contribution and unfunded benefit payment estimates are based upon current valuation assumptions. Estimates of pension contributions after 2020 and unfunded benefit payments after 2029 are not included in the table because the timing of their resolution cannot be estimated. Retirement obligations are more fully described in Note 18 to the consolidated financial statements.

Unconditional purchase obligations of $6,507 million represent contractual commitments under various long and short-term take-or-pay arrangements with suppliers and are not included on Linde's balance sheet. These obligations are primarily minimum-purchase commitments for helium, electricity, natural gas and feedstock used to produce atmospheric and process gases. A significant portion of these obligations is passed on to customers through similar take-or-pay or other contractual arrangements. Purchase obligations that are not passed along to customers through such contractual arrangements are subject to market conditions, but do not represent a material risk to Linde. Approximately $2,983 million of the purchase obligations relates to power and is intended to secure the uninterrupted supply of electricity and feedstock to Linde's plants to reliably satisfy customer product supply obligations, and extend through 2030. Certain of the power contracts contain various cancellation provisions requiring supplier agreement, and many are subject to annual escalations based on local inflation factors.

Construction commitments of $3,421 million represent outstanding commitments to complete authorized construction projects as of December 31, 2019. A significant portion of Linde’s capital spending is related to the construction of new production facilities to satisfy customer commitments which may take a year or more to complete.

Liabilities for uncertain tax positions totaling $415 million, including interest and penalties, are not included in the table because the timing of their resolution cannot be estimated. Tax liabilities for deemed repatriation of earnings of $261 million are payable over the next six years. See Note 7 to the consolidated financial statements for disclosures surrounding the "Tax Act" and uncertain income tax positions.

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OFF-BALANCE SHEET ARRANGEMENTS

As discussed in Note 19 to the consolidated financial statements, at December 31, 2019, Linde had undrawn outstanding letters of credit, bank guarantees and surety bonds entered into in connection with normal business operations and they are not reasonably likely to have a material impact on Linde’s consolidated financial condition, results of operations, or liquidity.

CRITICAL ACCOUNTING POLICIES

The policies discussed below are considered by management to be critical to understanding Linde’s financial statements and accompanying notes prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Their application places significant importance on management’s judgment as a result of the need to make estimates of matters that are inherently uncertain. Linde’s financial position, results of operations and cash flows could be materially affected if actual results differ from estimates made. These policies are determined by management and have been reviewed by Linde’s Audit Committee.

Purchase Accounting

Linde AG’s assets and liabilities were measured at fair value as of the date of the merger. Estimates of fair value represent management's best estimate of assumptions about future events and uncertainties. In determining the fair value, Linde utilized various forms of the income, cost and market approaches depending on the asset or liability being fair valued. The estimation of fair value includes significant judgments related to future cash flows (sales, costs, customer attrition rates, and contributory asset charges), discount rates, competitive trends, market comparables and others. Inputs were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates. The estimates and assumptions used to determine the estimated fair value assigned to each class of assets and liabilities, as well as asset lives, have a material impact to the company's consolidated financial statements, and are based upon assumptions believed to be reasonable but that are inherently uncertain. As of the end of 2019, the valuation process to determine the fair value of the acquired assets and liabilities is complete.

See Note 3 to the consolidated financial statements for additional information.

Depreciation and Amortization

Depreciable Lives of Property, Plant and Equipment

Linde’s net property, plant and equipment at December 31, 2019 was $29,064 million, representing 34% of the company’s consolidated total assets. Depreciation expense for the year ended December 31, 2019 was $3,940 million, or 16% of total operating costs. Management judgment is required in the determination of the estimated depreciable lives that are used to calculate the annual depreciation expense and accumulated depreciation.

Property, plant and equipment are recorded at cost and depreciated over the assets’ estimated useful lives on a straight-line basis for financial reporting purposes. The estimated useful life represents the projected period of time that the asset will be productively employed by the company and is determined by management based on many factors, including historical experience with similar assets, technological life cycles, geographic locations and contractual supply relationships with on-site customers. Circumstances and events relating to these assets, such as on-site contract modifications, are monitored to ensure that changes in asset lives or impairments (see “Asset Impairments”) are identified and prospective depreciation expense or impairment expense is adjusted accordingly. Linde’s largest asset values relate to cryogenic air-separation production plants with depreciable lives of principally 15 years.

Based upon the assets as of December 31, 2019, if depreciable lives of machinery and equipment, on average, were increased or decreased by one year, annual depreciation expense would be decreased by approximately $471 million or increased by approximately $618 million, respectively.

See Notes 3, 9 and 10 to the consolidated financial statements for additional information.

Amortization of Other Intangible Assets

Linde’s net other intangible assets at December 31, 2019 was $16,137 million, representing 19% of the company’s consolidated total assets, including $1,870 million of indefinite-lived intangibles. Amortization expense related to finite-lived intangible assets for the year ended December 31, 2019 was $735 million, or 3% of total operating costs. Management judgment is required in the determination of the estimated amortizable lives that are used to calculate the annual amortization expense and accumulated amortization. See Note 12 to the consolidated financial statements.

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Based upon the assets as of December 31, 2019, if amortization lives of other intangible assets, on average, were increased or decreased by one year, annual amortization expense would be decreased by approximately $33 million or increased by approximately $36 million, respectively.

See Notes 3, 9, and 12 to the consolidated financial statements for additional information.

Revenue Recognition

Long-Term Construction Contracts

The company designs and manufactures equipment for air separation and other varied gas production and processing plants manufactured specifically for end customers. Revenue from sale of equipment is generally recognized over time as Linde has an enforceable right to payment for performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. Costs incurred include material, labor, and overhead costs and represent work contributing and proportionate to the transfer of control to the customer. Contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative adjustment for the inception-to-date effect of such change. We assess performance as progress towards completion is achieved on specific projects, earnings will be impacted by changes to our forecast of revenues and costs on these projects.

Pension Benefits

Pension benefits represent financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments, significant estimates are required to calculate pension expense and liabilities related to the company’s plans. The company utilizes the services of independent actuaries, whose models are used to facilitate these calculations.

Several key assumptions are used in actuarial models to calculate pension expense and liability amounts recorded in the financial statements. Management believes the three most significant variables in the models are the expected long-term rate of return on plan assets, the discount rate, and the expected rate of compensation increase. The actuarial models also use assumptions for various other factors, including employee turnover, retirement age, and mortality. Linde management believes the assumptions used in the actuarial calculations are reasonable, reflect the company’s experience and expectations for the future and are within accepted practices in each of the respective geographic locations in which it operates. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The sensitivities to each of the key assumptions presented below exclude the impact of special items that occurred during the year (e.g., divestiture-related settlement charges, settlement charges resulting from change in control provisions, etc.).

The weighted-average expected long-term rates of return on pension plan assets were 7.27% for U.S. plans and 5.15% for international plans for the year ended December 31, 2019 (7.62% and 5.13%, respectively at December 31, 2018). The expected long-term rate of return on the U.S. and international plan assets is estimated based on the plans' investment strategy and asset allocation, historical capital market performance and, to a lesser extent, historical plan performance. A 0.50% change in these expected long-term rates of return, with all other variables held constant, would change Linde’s pension expense by approximately $44 million.

The company has consistently used a market-related value of assets rather than the fair value at the measurement date to determine annual pension expense. The market-related value recognizes investment gains or losses over a five-year period. As a result, changes in the fair value of assets from year to year are not immediately reflected in the company’s annual pension expense. Instead, annual pension expense in future periods will be impacted as deferred investment gains or losses are recognized in the market-related value of assets over the five-year period. The consolidated market-related value of assets was $8,778 million, or $158 million lower than the fair value of assets of $8,936 million at December 31, 2019. These net deferred investment losses of $158 million will be recognized in the calculation of the market-related value of assets ratably over the next four years and will impact future pension expense. Future actual investment gains or losses will impact the market-related value of assets and, therefore, will impact future annual pension expense in a similar manner.

Discount rates are used to calculate the present value of plan liabilities and pension costs and are determined annually by management. The company measures the service and interest cost components of pension and OPEB expense for significant U.S. and international plans using the spot rate approach. U.S. plans that do not use the spot rate approach continue to determine discount rates by using a cash flow matching model provided by the company's independent actuaries. The model includes a portfolio of corporate bonds graded Aa or better by at least half of the ratings agencies and matches the U.S. plans' projected cash flows to the calculated spot rates. Discount rates for the remaining international plans are based on market yields for high-quality fixed income investments representing the approximate duration of the pension liabilities on the measurement

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date. Refer to Note 18 to the consolidated financial statements for a summary of the discount rates used to calculate plan liabilities and benefit costs, and to the Retirement Benefits section of the Consolidated Results and Other Information section of this MD&A for a further discussion of 2019 benefit costs. A 0.50% reduction in discount rates, with all other variables held constant, would increase Linde’s pension expense by approximately $29 million whereas a 0.50% increase in discount rates would result in a decrease of $25 million. A 0.50% reduction in discount rates would increase the PBO by approximately $976 million whereas a 0.50% increase in discount rates would have a favorable impact to the PBO of approximately $855 million.

The weighted-average expected rate of compensation increase was 3.25% for U.S. plans and 2.46% for international plans at December 31, 2019 (3.25% and 2.38%, respectively, at December 31, 2018). The estimated annual compensation increase is determined by management every year and is based on historical trends and market indices. A 0.50% change in the expected rate of compensation increase, with all other variables held constant, would change Linde’s pension expense by approximately $8 million and would impact the PBO by approximately $65 million.

Asset Impairments

Goodwill and Other Indefinite-Lived Intangibles Assets

At December 31, 2019, the company had goodwill of $27,019 million and $1,870 million of other indefinite-lived intangible assets. Goodwill represents the aggregate of the excess consideration paid for acquired businesses over the fair value of the net assets acquired. Indefinite-lived other intangibles relate to the Linde name.

The company performs a goodwill impairment test annually or more frequently if events or circumstances indicate that an impairment loss may have been incurred. During the fourth quarter of fiscal year 2019, the company changed the date of its annual goodwill impairment test from April 30 to October 1. The change was made to more closely align the impairment testing date with the company’s planning process. The change in annual impairment testing date did not delay, accelerate or avoid an impairment charge. The company has determined this change in the method of applying an accounting principle is preferable.

The impairment tests performed during the second and fourth quarters of 2019 indicated no impairment. At December 31, 2019, Linde’s enterprise value was approximately $125 billion (outstanding shares multiplied by the year-end stock price plus net debt, and without any control premium) while its total capital was approximately $63 billion.

The impairment test allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. Reporting units are determined based on one level below the operating segment level. In estimating the fair value of each reporting unit, management applied a multiple of earnings from a peer group to the company’s forecasted earnings for the year ending December 31, 2019. The peer group is comprised of comparable entities with similar operations and economic characteristics.

Such analysis requires the use of certain market assumptions and discount factors, which are subjective in nature. As applicable, estimated values can be affected by many factors beyond the company's control such as business and economic trends, government regulation, and technological changes. Management believes that the quantitative and qualitative factors used to perform its annual goodwill impairment assessment are appropriate and reasonable. Although the 2019 assessment indicated that it is more likely than not that the fair value of each reporting unit exceeded its carrying value, changes in circumstances or conditions affecting this analysis could have a significant impact on the fair value determination, which could then result in a material impairment charge to the company's results of operations. Reporting units with greater concentration of Linde AG assets fair valued during the recent merger are at greater risk of impairment in future periods.

Other indefinite-lived intangible assets from Linde AG recently fair valued are evaluated for impairment on an annual basis or more frequently if events and circumstances indicate that an impairment loss may have been incurred, and no impairments were indicated.

See Notes 3, 11 and 12 to the consolidated financial statements.

Long-Lived Assets

Long-lived assets, including property, plant and equipment and finite-lived other intangible assets, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. For purposes of this test, asset groups are determined based upon the lowest level for which

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there are independent and identifiable cash flows. Based upon Linde's business model, for property, plant and equipment an asset group may be a single plant and related assets used to support on-site, merchant and packaged gas customers. Alternatively, the asset group may be a pipeline complex which includes multiple interdependent plants and related assets connected by pipelines within a geographic area used to support the same distribution methods.

Income Taxes

At December 31, 2019, Linde had deferred tax assets of $2,179 million (net of valuation allowances of $222 million), and deferred tax liabilities of $8,825 million. At December 31, 2019, uncertain tax positions totaled $472 million (see Notes 2 and 7 to the consolidated financial statements). Income tax expense was $769 million for the year ended December 31, 2019, or about 26.3% of pre-tax income (see Note 7 to the consolidated financial statements for additional information related to taxes).

In the preparation of consolidated financial statements, Linde estimates income taxes based on diverse legislative and regulatory structures that exist in various jurisdictions where the company conducts business. Deferred income tax assets and liabilities represent tax benefits or obligations that arise from temporary differences due to differing treatment of certain items for accounting and income tax purposes. Linde evaluates deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character (e.g. capital gain versus ordinary income treatment), amount and timing to result in their recovery. A valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances and in assessing exposures related to tax matters. As events and circumstances change, related reserves and valuation allowances are adjusted to income at that time. Linde’s tax returns are subject to audit and local taxing authorities could challenge the company’s tax positions. The company’s practice is to review tax filing positions by jurisdiction and to record provisions for uncertain income tax positions, including interest and penalties when applicable. Linde believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets. If new information becomes available, adjustments are charged or credited against income at that time. Management does not anticipate that such adjustments would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.

Contingencies

The company accrues liabilities for non-income tax contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized or realizable. If new information becomes available or losses are sustained in excess of recorded amounts, adjustments are charged against income at that time. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.

Linde is subject to various claims, legal proceedings and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others (see Note 19 to the consolidated financial statements). Such contingencies are significant and the accounting requires considerable management judgments in analyzing each matter to assess the likely outcome and the need for establishing appropriate liabilities and providing adequate disclosures. Linde believes it records and/or discloses such contingencies as appropriate and has reasonably estimated its liabilities.

NEW ACCOUNTING STANDARDS

See Note 2 to the consolidated financial statements for information concerning new accounting standards and the impact of the implementation of these standards on the company’s financial statements.

FAIR VALUE MEASUREMENTS

Linde does not expect changes in the aggregate fair value of its financial assets and liabilities to have a material impact on the consolidated financial statements. See Note 15 to the consolidated financial statements.

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SUPPLEMENTAL PRO FORMA INCOME STATEMENT INFORMATION

To assist with a discussion of the 2019 and 2018 results on a comparable basis, certain supplemental unaudited pro forma income statement information is provided on both a consolidated and segment basis (referred to as "pro forma Income Statement Information" or "pro forma information").

The pro forma information has been prepared on a basis consistent with Article 11 of Regulation S-X, assuming the merger and the merger-related divestitures had been consummated on January 1, 2018 and includes adjustments for (1) the preliminary purchase accounting impacts of the merger, including increased amortization expense on acquired intangible assets, increased depreciation on property, plant and equipment and lower interest expense due to revaluing existing debt to fair value, (2) conversion to US GAAP from IFRS for Linde AG, (3) accounting policy alignment, (4) the elimination of the impact of transactions between Praxair and Linde AG, (5) the elimination of the effect of events that are directly attributable to the Merger Agreement and (6) the elimination of the effect of consummated and probable divestitures required as a condition of the approval for the merger. In preparing this pro forma information, the historical financial information has been adjusted to give effect to pro forma Adjustments that are (i) directly attributable to the business combination and other transactions presented herein, such as the merger-related divestitures, (ii) factually supportable, and (iii) expected to have a continuing impact on the combined entity’s consolidated results.

The pro forma information is based on management's assumptions and is presented for illustrative purposes and does not purport to represent what the results of operations would actually have been if the merger and merger-related divestitures had occurred as of the dates indicated or what the results would be for any future periods. Also, the pro forma information does not include the impact of any revenue, cost or other operating synergies that may result from the merger or any related restructuring costs. Events that are not expected to have a continuing impact on the combined results (e.g. inventory step-up costs, non-recurring income/charges) are excluded from the unaudited pro forma information.

The unaudited pro forma income statement has been presented for informational purposes only and is not necessarily indicative of what Linde's results of operation actually would have been had the merger been completed on January 1, 2018. In addition, the unaudited pro forma income statement does not purport to project the future operating results of the company.

The pro forma Income Statement Information are included in the following schedules:

- Year ended December 31, 2019 pro forma Income Statement Information

- Year ended December 31, 2018 pro forma Income Statement Information

Refer to an earlier section in this MD&A titled "Merger of Praxair, Inc. and Linde AG".

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YEAR TO DATE DECEMBER 31, 2019 PRO FORMA INCOME STATEMENT INFORMATION

(Millions of dollars, except per share data)

(UNAUDITED)



				Pro forma Adjustments
	Linde plc Reported			Divestitures (a)			Other				Total			Pro Forma
Sales	$	28,228		$	(65	)	$	—			$	(65	)	$	28,163
Cost of sales, exclusive of depreciation	16,644			(48		)	(12		)	(b)	(60		)	16,584
Selling, general and administrative	3,457			(1		)					(1		)	3,456
As a % of Sales	12.2		%											12.3		%
Depreciation and amortization	4,675										—			4,675
Research and development	184										—			184
Cost reduction programs and other charges	567						(190		)	(c)	(190		)	377
Net gain on sale of businesses	164						(164		)	(d)	(164		)	—
Other income (expense) - net	68										—			68
Operating profit	2,933			(16		)	38				22			2,955
Operating margin	10.4		%											10.5		%
Net pension and OPEB cost (benefit), excluding service costs	(32		)				(97		)	(e)	(97		)	(129		)
Interest expense - net	38										—			38
Income taxes	769			(5		)	(15		)	(f)	(20		)	749
Effective Tax Rate	26.3		%											24.6		%
Income from equity investments	114										—			114
Noncontrolling interests from continuing operations	(89		)								—			(89		)
Income from continuing operations	$	2,183		$	(11	)	$	150			$	139		$	2,322
Diluted shares outstanding	545,170										545,170			545,170
Diluted EPS from continuing operations	$	4.00									$	0.25		$	4.25
SEGMENT SALES
Americas	$	10,993		$	(4	)	$	—			$	(4	)	$	10,989
EMEA	6,643										—			6,643
APAC	5,839			(60		)					(60		)	5,779
Engineering	2,799										—			2,799
Other	1,954			(1		)					(1		)	1,953
Segment sales	$	28,228		$	(65	)	$	—			$	(65	)	$	28,163
SEGMENT OPERATING PROFIT
Americas	$	2,578		$	(1	)	$	—			$	(1	)	$	2,577
EMEA	1,367													1,367
APAC	1,198			(14		)					(14		)	1,184
Engineering	390													390
Other	(245		)	(1		)					(1		)	(246		)
Segment operating profit	5,288			(16		)	—				(16		)	5,272
Cost reduction programs and other charges	(567		)								—			(567		)
Net gain on sale of businesses	164										—			164
Purchase accounting impacts - Linde AG	(1,952		)								—			(1,952		)
Total operating profit	$	2,933		$	(16	)	$	—			$	(16	)	$	2,917

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2019 Pro forma adjustments
	(a)	To eliminate the results of Praxair's merger-related divestitures.
	(b)	To eliminate the impact of the inventory step-up recorded in purchase accounting for the merger. This item is nonrecurring in nature, directly attributable to the merger and occurred within one year of the transaction.
	(c)	To eliminate the transaction costs and other charges related to the merger. These transaction costs are nonrecurring, directly attributable to the merger, and incremental. See Note 5 to the consolidated financial statements.
	(d)	To eliminate the gain on merger related divestitures.
	(e)	To eliminate pension settlement charges related to the merger.
	(f)	To eliminate the income tax impacts of Other adjustments.

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YEAR TO DATE DECEMBER 31, 2018 PRO FORMA INCOME STATEMENT INFORMATION

(Millions of dollars, except per share data)

(UNAUDITED)



			Pro forma Adjustments
	Linde plc (a)		Linde AG (b)		Divestitures (c)			Purchase Accounting (d)		Other				Total		Pro Forma Linde plc
Sales	$	14,836	$	16,929	$	(3,598	)	$	—	$	(83	)	(e)	$	13,248	$	28,084
Cost of sales, exclusive of depreciation	9,020		10,515		(2,155		)	—		(451		)	(e)	7,909		16,929
Selling, general and administrative	1,629		2,370		(364		)