SYS-CON MEDIA Authors: Yeshim Deniz, Elizabeth White, Greg Ness, Sean Houghton, Glenn Rossman

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Praxair Reports First-Quarter 2014 Results

Praxair, Inc. (NYSE:PX) reported first-quarter net income and diluted earnings per share of $448 million and $1.51, 8% and 9% above the prior-year quarter, respectively.*

Sales in the first quarter were $3,026 million, 5% above the prior-year quarter, and up 9%, excluding foreign currency. Organic sales grew 6% driven by higher on-site volumes from new project start-ups primarily in North America and Asia. By end-market, sales growth was strongest for energy, chemicals, and food and beverage customers, as compared to the prior-year quarter. Acquisitions contributed 2% growth in the quarter.

Operating profit in the first quarter was $675 million, 8% above the prior-year quarter. Excluding negative currency translation impacts, operating profit rose 12% driven by higher volumes, higher pricing, acquisitions and productivity gains. Operating profit as a percentage of sales was a strong 22.3% and the EBITDA margin grew to 32.0%.*

First-quarter cash flow from operations was $536 million and capital expenditures were $393 million, primarily for new production plants under long-term contracts with customers. Acquisition expenditures were $124 million, related primarily to Italian industrial gas and U.S. packaged gas businesses. The company paid dividends of $191 million and repurchased $237 million of stock, net of issuances. During the quarter, the company issued €600 million of 6-year notes with a 1.5% coupon. The after-tax return-on-capital and return on equity for the quarter were 12.6% and 28.7%, respectively.*

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair delivered solid results in the first quarter with sales growth of 9% and operating profit growth of 12%, excluding the impact of currency headwinds. Organic growth of 6% reflected contributions from new projects in North America and Asia, as well as modest volume growth in our South America, Europe and Surface Technologies operating segments. Praxair’s relentless focus on achieving productivity benefits and higher price to offset cost inflation produced strong operating leverage and an operating margin of 22.3%.

We expect base volumes for the remainder of 2014 to continue to reflect modest growth in-line with the current macro-economic environment. Through continued operational excellence, project execution and financial discipline, we expect to continue to deliver increasing cash flow and earnings per share. We expect contribution from new projects and acquisitions to increase return on capital in the second half of the year.”

For the second quarter of 2014, Praxair expects diluted earnings per share in the range of $1.55 to $1.60.

For the full year of 2014, Praxair expects sales in the range of $12.4 billion to $12.8 billion. The company expects diluted earnings per share to be in the range of $6.30 to $6.50, 6% to 10% above the prior year.* Full-year capital expenditures are expected to be about $1.8 billion, and the effective tax rate is forecasted to remain at about 28%.

Following is additional detail on first-quarter 2014 results by segment.

In North America, first-quarter sales were $1,580 million, 8% above the prior-year quarter, and up 10% excluding negative currency translation impacts. Organic sales growth was 5%, driven primarily by higher sales to the energy end-market as on-site volumes increased from new project start-ups for hydrogen supply to refinery customers and higher pricing. Acquisitions contributed 3% growth. Operating profit was $378 million, 6% above prior-year.

In Europe, first-quarter sales were $397 million, up 7% versus the first quarter of 2013. Acquisitions, primarily Dominion Technology Gases, contributed 5% growth. Organic sales growth of 2% came from higher pricing and higher volumes. Operating profit was $79 million, an increase of 27% versus the prior-year quarter, including positive currency translation and acquisitions. Underlying operating profit growth was driven by higher volumes, higher price and lower costs.

In South America, first-quarter sales were $488 million. Sales grew 7% from the prior-year quarter, excluding a 15% negative currency impact, primarily due to volume growth and higher overall pricing. Operating profit was $113 million, up 16% excluding negative currency translation, due to higher volumes and higher pricing partially offset by cost inflation.

Sales in Asia were $392 million in the quarter, up 7% from the prior year driven by volume growth in India, China, and Korea and higher pricing for helium and rare gases. Sales growth came primarily from metals, energy and electronics customers. Operating profit was $75 million, an increase of 19% versus the prior-year period due primarily to volume growth and higher pricing.

Praxair Surface Technologies had first-quarter sales of $169 million, 4% above prior year. Organic sales increased 3% from higher volumes of aviation coatings and higher price. Operating profit was $30 million as compared to $26 million in the prior year, due primarily to higher volumes, price and productivity gains.

About Praxair

Praxair, Inc., a Fortune 250 company with 2013 sales of $12 billion, is the largest industrial gases company in North and South America and one of the largest worldwide. The company produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings. Praxair products, services and technologies are making our planet more productive by bringing efficiency and environmental benefits to a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals and many others. More information about Praxair, Inc. is available at www.praxair.com.

*See the attachments for calculations of non-GAAP measures. Non-GAAP adjustments in 2013 relate to the first-quarter Venezuela currency devaluation charge, a third-quarter pension settlement charge and fourth-quarter income tax benefit and bond redemption charge.

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

A teleconference on Praxair’s first-quarter results is being held this morning, April 23, at 11:00 am Eastern Daylight Time. The number is (617) 399-3482 -- Passcode: 91636623. The call also is available as a webcast live and on demand at www.praxair.com/investors. Materials to be used in the teleconference are also available on the website.

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. Additionally, financial projections or estimates exclude the impact of special items which the company believes are not indicative of ongoing business performance. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company’s Form 10-K and 10-Q reports filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.

 
PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)
 
        Quarter Ended
March 31,
2014     2013
 
SALES $ 3,026 $ 2,888
Cost of sales 1,726 1,638
Selling, general and administrative 326 337
Depreciation and amortization 285 266
Research and development 23 24
Venezuela currency devaluation - 23
Other income (expense) - net   9     -  
OPERATING PROFIT 675 600
Interest expense - net   46     40  
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS 629 560
Income taxes   176     164  
INCOME BEFORE EQUITY INVESTMENTS 453 396
Income from equity investments   9     10  
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) 462 406
Less: noncontrolling interests   (14 )   (15 )
NET INCOME - PRAXAIR, INC. $ 448   $ 391  
 
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
 
Basic earnings per share $ 1.52 $ 1.32
 
Diluted earnings per share $ 1.51 $ 1.30
 
Cash dividends $ 0.65 $ 0.60
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic shares outstanding (000's) 294,195 296,604
Diluted shares outstanding (000's) 297,253 299,700
 

Note: See page 9 for a reconciliation to 2013 adjusted amounts which are non-GAAP.

 

 
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(UNAUDITED)
 
  March 31,       December 31,
2014 2013
ASSETS        
Cash and cash equivalents $ 144 $ 138
Accounts receivable - net 2,027 1,892
Inventories 520 506
Prepaid and other current assets   358   380
TOTAL CURRENT ASSETS 3,049 2,916
 
Property, plant and equipment - net 12,326 12,278
Goodwill 3,243 3,194
Other intangibles - net 612 596
Other long-term assets   1,308   1,271
TOTAL ASSETS $ 20,538 $ 20,255
 
LIABILITIES AND EQUITY
Accounts payable $ 879 $ 921
Short-term debt 701 782
Current portion of long-term debt 5 3
Other current liabilities   849   958
TOTAL CURRENT LIABILITIES 2,434 2,664
Long-term debt 8,564 8,026
Other long-term liabilities   2,347   2,255
TOTAL LIABILITIES 13,345 12,945
 
REDEEMABLE NONCONTROLLING INTERESTS 195 307
 
EQUITY
Praxair, Inc. shareholders' equity 6,600 6,609
Noncontrolling interests   398   394
TOTAL EQUITY   6,998   7,003
TOTAL LIABILITIES AND EQUITY $ 20,538 $ 20,255
 

 
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
 
        Quarter Ended
March 31,
2014     2013
OPERATIONS
Net income - Praxair, Inc. $ 448 $ 391
Noncontrolling interests   14     15  
Net income (including noncontrolling interests) 462 406
 
Adjustments to reconcile net income to net cash provided
by operating activities:

Venezuela currency devaluation

- 23
Depreciation and amortization 285 266
Accounts receivable (136 ) (161 )
Inventory (16 ) (16 )
Payables and accruals (116 ) -
Pension contributions (9 ) (5 )
Deferred income taxes and other   66     (41 )
Net cash provided by operating activities   536     472  
 
INVESTING
Capital expenditures (393 ) (466 )
Acquisitions, net of cash acquired (124 ) (1,098 )
Divestitures and asset sales   66     31  
Net cash used for investing activities   (451 )   (1,533 )
 
FINANCING
Debt increase (decrease) - net 464 1,316
Issuances of common stock 49 33
Purchases of common stock (286 ) (150 )
Cash dividends - Praxair, Inc. shareholders (191 ) (178 )
Excess tax benefit on stock option exercises 20 14
Noncontrolling interest transactions and other   (140 )   (5 )
Net cash provided by (used for) financing activities (84 ) 1,030
 
Effect of exchange rate changes on cash and
cash equivalents   5     (13 )
 
Change in cash and cash equivalents 6 (44 )
Cash and cash equivalents, beginning-of-period   138     157  
 
Cash and cash equivalents, end-of-period $ 144   $ 113  
 

 
PRAXAIR, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)
 
        Quarter Ended
March 31,
2014       2013
SALES
North America $ 1,580 $ 1,457
Europe 397 370
South America 488 531
Asia 392 367
Surface Technologies   169   163  
Total sales $ 3,026 $ 2,888  
 
OPERATING PROFIT
North America $ 378 $ 358
Europe 79 62
South America 113 114
Asia 75 63
Surface Technologies   30   26  
Segment operating profit 675 623
Venezuela currency devaluation   -   (23 )
Total operating profit $ 675 $ 600  
 

 
PRAXAIR, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL SUMMARY
(Millions of dollars, except per share data)
(UNAUDITED)
 
        2014     2013
Q1 Q4 (b)     Q3 (b)     Q2     Q1 (b)
FROM THE INCOME STATEMENT
Sales $ 3,026 $ 3,010 $ 3,013 $ 3,014 $ 2,888
Cost of sales 1,726 1,699 1,697 1,710 1,638
Selling, general and administrative 326 332 336 344 337
Depreciation and amortization 285 287 281 275 266
Research and development 23 26 24 24 24
Venezuela currency devaluation and other charges - - 9 - 23
Other income (expenses) - net   9     24         4         4         -  
Operating profit 675 690 670 665 600
Interest expense - net 46 56 41 41 40
Income taxes 176 136 175 174 164
Income from equity investments   9     9         8         11         10  
Net income (including noncontrolling interests) 462 507 462 461 406
Less: noncontrolling interests   (14 )   (33 )       (17 )       (16 )       (15 )
Net income - Praxair, Inc. $ 448   $ 474       $ 445       $ 445       $ 391  
 
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Diluted earnings per share $ 1.51 $ 1.59 $ 1.49 $ 1.49 $ 1.30
Cash dividends per share $ 0.65 $ 0.60 $ 0.60 $ 0.60 $ 0.60
Diluted weighted average shares outstanding (000's) 297,253 298,225 298,357 298,654 299,700
 
FROM THE BALANCE SHEET
Net debt (a) $ 9,126 $ 8,673 $ 8,892 $ 9,004 $ 8,563
Capital (a) $ 16,319 $ 15,983 $ 15,757 $ 15,548 $ 15,344
Debt-to-capital ratio (a) 55.9 % 54.3 % 56.4 % 57.9 % 55.8 %
 
FROM THE STATEMENT OF CASH FLOWS
Cash flow from operations $ 536 $ 964 $ 904 $ 577 $ 472
Capital expenditures 393 516 516 522 466
Acquisitions 124 12 42 171 1,098
Cash dividends 191 177 176 177 178
 
OTHER INFORMATION
After-tax return on capital (ROC) (a) 12.6 % 12.8 % 12.8 % 13.0 % 13.3 %
Return on Praxair, Inc. shareholders' equity (ROE) (a) 28.7 % 28.6 % 28.4 % 28.4 % 28.1 %

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted

EBITDA) (a)

$ 969 $ 986 $ 968 $ 951 $ 899
Debt-to-adjusted EBITDA ratio (a) 2.3 2.2 2.2 2.1 2.1
Number of employees 27,578 27,560 27,794 28,878 27,380
 
SEGMENT DATA
SALES
North America $ 1,580 $ 1,567 $ 1,588 $ 1,552 $ 1,457
Europe 397 404 386 382 370
South America 488 481 494 536 531
Asia 392 394 385 379 367
Surface Technologies   169     164         160         165         163  
Total sales $ 3,026   $ 3,010       $ 3,013       $ 3,014       $ 2,888  
OPERATING PROFIT
North America $ 378 $ 393 $ 406 $ 381 $ 358
Europe 79 75 64 69 62
South America 113 115 115 123 114
Asia 75 80 67 61 63
Surface Technologies   30     27         27         31         26  
Segment operating profit 675 690 679 665 623
Venezuela currency devaluation and other charges   -     -         (9 )       -         (23 )
Total operating profit $ 675   $ 690       $ 670       $ 665       $ 600  
 
(a)   Non-GAAP measure, see Appendix.
 
(b) 2013 includes: (i) a charge of $18 million ($12 million after-tax, or $0.04 per diluted share) related to a bond redemption and an income tax benefit of $40 million ($24 million after non-controlling interests, or $0.08 per diluted share) related to the realignment of Praxair's Italian legal structure, both recorded during the fourth quarter; (ii) a charge of $9 million ($6 million after-tax, or $0.02 per diluted share) related to pension settlement in the third quarter; and (iii) a charge of $23 million ($23 million after-tax, or $0.08 per diluted share), related to the Venezuela currency devaluation in the first quarter.
 

 

PRAXAIR, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATIONS

(UNAUDITED)

 

The following adjusted amounts in 2013 are non-GAAP measures and are intended to supplement investors' understanding of the company's financial statements by providing measures which investors, financial analysts and management use to help evaluate the company's operating performance. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.

 
(Millions of dollars, except per share amounts)
        Operating Profit     Income Taxes      

Net Income -

Praxair, Inc.

    Diluted EPS

2014

   

2013

2014

   

2013

2014

   

2013

2014

   

2013

 

Quarter Ended March 31,

Reported GAAP amounts $ 675 $ 600 $ 176 $ 164 $ 448 $ 391 $ 1.51 $ 1.30
Non-GAAP adjustment:
Venezuela currency devaluation (a)   -       23   -       -   -       23   -       0.08
Adjusted amounts $ 675     $ 623 $ 176     $ 164 $ 448     $ 414 $ 1.51     $ 1.38
 
(a) Charge in the first quarter of 2013 related to the Venezuela currency devaluation.
 

PRAXAIR, INC. AND SUBSIDIARIES

APPENDIX

NON-GAAP MEASURES

(Millions of dollars, except per share data)

 

The following non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s financial leverage, return on capital and operating performance. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures. Adjusted amounts exclude the impact of the 2013 fourth quarter bond redemption and the income tax benefit related to the realignment of Praxair's Italian legal structure, third quarter pension settlement, and the 2013 first quarter loss on Venezuela currency devaluation; the 2012 third quarter cost reduction program, pension settlement charge, and an income tax benefit.

 

2014

  2013   2012
Q1 Q4   Q3   Q2   Q1 Q4   Q3   Q2   Q1
 

Debt-to-Capital Ratio - The debt-to-capital ratio is a measure used by investors, financial analysts and management to provide a measure of financial

leverage and insights into how the company is financing its operations.

 
Debt $ 9,270 $ 8,811 $ 9,026 $ 9,106 $ 8,676 $ 7,362 $ 7,136 $ 6,995 $ 6,856
Less: cash and cash equivalents   (144 )   (138 )     (134 )     (102 )     (113 )   (157 )     (108 )     (104 )     (107 )
Net debt 9,126 8,673 8,892 9,004 8,563 7,205 7,028 6,891 6,749
Equity and redeemable noncontrolling interests:
Redeemable noncontrolling interests 195 307 290 259 255 252 243 232 232
Praxair, Inc. shareholders' equity 6,600 6,609 6,210 5,928 6,169 6,064 6,015 5,615 5,940
Noncontrolling interests   398     394       365       357       357     357       331       279       327  
Total equity and redeemable noncontrolling interests   7,193     7,310       6,865       6,544       6,781     6,673       6,589       6,126       6,499  
Capital $ 16,319 $ 15,983 $ 15,757 $ 15,548 $ 15,344 $ 13,878 $ 13,617 $ 13,017 $ 13,248
 
Debt-to-capital   55.9 %   54.3 %     56.4 %     57.9 %     55.8 %   51.9 %     51.6 %     52.9 %     50.9 %
 

After-tax return on Capital (ROC) - After-tax return on capital is a measure used by investors, financial analysts and management to evaluate the return

on net assets employed in the business. ROC measures the after-tax operating profit that the company was able to generate with the investments made

by all parties in the business (debt, noncontrolling interests and Praxair, Inc. shareholders’ equity).

 
Adjusted operating profit (a) $ 675 $ 690 $ 679 $ 665 $ 623 $ 616 $ 623 $ 636 $ 627
Less: adjusted income taxes (a) (176 ) (182 ) (178 ) (174 ) (164 ) (162 ) (164 ) (169 ) (165 )
Less: tax benefit on adjusted interest expense (a) (13 ) (11 ) (11 ) (11 ) (11 ) (10 ) (10 ) (9 ) (10 )
Add: income from equity investments   9     9       8       11       10     9       8       10       7  
Adjusted net operating profit after-tax (NOPAT)

 

$ 495 $ 506 $ 498 $ 491 $ 458 $ 453 $ 457 $ 468 $ 459
4-quarter trailing adjusted NOPAT $ 1,990 $ 1,953 $ 1,900 $ 1,859 $ 1,836
 
Ending capital (see above) $ 16,319 $ 15,983 $ 15,757 $ 15,548 $ 15,344 $ 13,878 $ 13,617 $ 13,017 $ 13,248
5-quarter average ending capital $ 15,790 $ 15,302 $ 14,829 $ 14,281 $ 13,821
 

After-tax ROC (4-quarter trailing NOPAT / 5-quarter average capital)

    12.6 %   12.8 %     12.8 %     13.0 %     13.3 %              
 

Return on Praxair, Inc. Shareholder's Equity (ROE) - Return on Praxair, Inc. shareholders' equity is a measure used by investors, financial analysts and

management to evaluate operating performance from a Praxair shareholder perspective. ROE measures the net income attributable to Praxair, Inc. that

the company was able to generate with the money shareholders have invested.

 
Adjusted net income - Praxair, Inc. (a) $ 448 $ 462 $ 451 $ 445 $ 414 $ 414 $ 419 $ 429 $ 419
4-quarter trailing adjusted net income - Praxair, Inc. $ 1,806 $ 1,772 $ 1,724 $ 1,692 $ 1,676
 
Ending Praxair, Inc. shareholders' equity $ 6,600 $ 6,609 $ 6,210 $ 5,928 $ 6,169 $ 6,064 $ 6,015 $ 5,615 $ 5,940
5-quarter average Praxair shareholders' equity $ 6,303 $ 6,196 $ 6,077 $ 5,958 $ 5,961
 
ROE (4-quarter trailing adjusted net income - Praxair, Inc. / 5-quarter average Praxair shareholders' equity)     28.7 %   28.6 %     28.4 %     28.4 %     28.1 %   28.9 %     29.2 %     29.0 %     28.4 %
 

Adjusted EBITDA and Debt-to-Adjusted EBITDA Ratio- These measures are used by investors, financial analysts and management to assess a

company's ability to meet it's financial obligations.

 
Adjusted net income - Praxair, Inc. (a) $ 448 $ 462 $ 451 $ 445 $ 414 $ 414 $ 419 $ 429 $ 419
 
Add: adjusted noncontrolling interests (a) 14 17 17 16 15 14 12 15 13
Add: adjusted interest expense - net (a) 46 38 41 41 40 35 36 33 37
Add: adjusted income taxes (a) 176 182 178 174 164 162 164 169 165
Add: depreciation and amortization     285     287       281       275       266     254       248       247       252  
Adjusted EBITDA $ 969 $ 986 $ 968 $ 951 $ 899 $ 879 $ 879 $ 893 $ 886
4-quarter trailing adjusted EBITDA $ 3,874 $ 3,804 $ 3,697 $ 3,608 $ 3,550
 
Ending net debt (see above) $ 9,126 $ 8,673 $ 8,892 $ 9,004 $ 8,563 $ 7,205 $ 7,028 $ 6,891 $ 6,749
5-quarter average net debt $ 8,852 $ 8,467 $ 8,138 $ 7,738 $ 7,287
 
Debt-to-adjusted EBITDA ratio (5-quarter average net debt / 4-quarter trailing adjusted EBITDA)   2.3     2.2       2.2       2.1       2.1                
 

(a)   The following table presents adjusted amounts for Operating Profit and Operating Profit Margin, Interest Expense - net, Income Taxes, Effective Tax Rate, Noncontrolling Interests, Net income - Praxair, Inc., and Diluted EPS for the periods presented. Additionally, this table presents the percentage change in Diluted EPS Guidance for the full year 2014 as compared to 2013 Adjusted Diluted EPS.
 
 
        First

Quarter

    Year    

Fourth

Quarter

   

Third

Quarter

   

First

Quarter

    Third

Quarter

2014 2013 2013 2013 2013 2012
Adjusted Operating Profit and Operating Profit Margin
Reported operating profit 675 2,625 $ 690 $ 670 $ 600 $ 558
Add: Pension settlement charge - 9 - 9 - 9
Add: Venezuela currency devaluation - 23 - - 23 -
Add: Cost reduction program   -     -     -     -     -     56  
Total adjustments   -     32     -     9     23     65  
Adjusted operating profit $ 675   $ 2,657   $ 690   $ 679   $ 623   $ 623  
 
Reported sales $ 3,026 $ 11,925 $ 3,010 $ 3,013 $ 2,888 $ 2,774
Adjusted operating profit margin 22.3 % 22.3 % 22.9 % 22.5 % 21.6 % 22.5 %
 
Adjusted Interest Expense - net
Reported interest expense - net $ 46 $ 178 $ 56 $ 41 $ 40 $ 36
Less: Bond redemption   -     (18 )   (18 )   -     -     -  
Adjusted interest expense - net $ 46   $ 160   $ 38   $ 41   $ 40   $ 36  
 
Adjusted Income Taxes
Reported income taxes $ 176 $ 649 $ 136 $ 175 $ 164 $ 90
Add: Bond redemption - 6 6 - - -
Add: Income tax benefit - 40 40 - - 55
Add: Pension settlement charge - 3 - 3 - 3
Add: Cost reduction program   -     -     -     -     -     16  
Total adjustments   -     49     46     3     -     74  
Adjusted income taxes $ 176   $ 698   $ 182   $ 178   $ 164   $ 164  
 
Adjusted Effective Tax Rate
Reported income before income taxes and equity investments $ 629 $ 2,447 $ 634 $ 629 $ 560 $ 522
Add: Bond redemption - 18 18 - - -
Add: Pension settlement charge - 9 - 9 - 9
Add: Venezuela currency devaluation - 23 - - 23 -
Add: Cost reduction program   -     -     -     -     -     56  
Total adjustments   -     50     18     9     23     65  
Adjusted income before income taxes and equity investments $ 629   $ 2,497   $ 652   $ 638   $ 583   $ 587  
 
Adjusted income taxes (above) $ 176 $ 698 $ 182 $ 178 $ 164 $ 164
Adjusted effective tax rate 28 % 28 % 28 % 28 % 28 % 28 %
 
Adjusted Noncontrolling interests
Reported noncontrolling interests $ 14 $ 81 $ 33 $ 17 $ 15 $ 10
Less: Income tax benefit - (16 ) (16 ) - - -
Add: Cost reduction program   -     -     -     -     -     2  
Total adjustments   -     (16 )   (16 )   -     -     2  
Adjusted noncontrolling interests $ 14   $ 65   $ 17   $ 17   $ 15   $ 12  
 
Adjusted Net Income - Praxair, Inc.
Reported net income - Praxair, Inc. $ 448 $ 1,755 $ 474 $ 445 $ 391 $ 430
Add: Bond redemption - 12 12 - - -
Less: Income tax benefit - (24 ) (24 ) - - (55 )
Add: Pension settlement charge - 6 - 6 - 6
Add: Venezuela currency devaluation - 23 - - 23 -
Add: Cost reduction program   -     -     -     -     -     38  
Total adjustments   -     17     (12 )   6     23     (11 )
Adjusted net income - Praxair, Inc. $ 448   $ 1,772   $ 462   $ 451   $ 414   $ 419  
 
Adjusted Diluted EPS
Reported diluted EPS $ 1.51 $ 5.87 $ 1.59 $ 1.49 $ 1.30 $ 1.43
Add: Bond redemption - 0.04 0.04 - - -
Less: Income tax benefit - (0.08 ) (0.08 ) - - (0.18 )
Add: Pension settlement charge - 0.02 - 0.02 - 0.02
Add: Venezuela currency devaluation - 0.08 - - 0.08 -
Add: Cost reduction program   -     -     -     -     -     0.12  
Total adjustments   -     0.06     (0.04 )   0.02     0.08     (0.04 )
Adjusted diluted EPS $ 1.51   $ 5.93   $ 1.55   $ 1.51   $ 1.38   $ 1.39  
 
Full-Year 2014 Diluted EPS Guidance
Full Year 2014
Low End       High End
 
Diluted EPS guidance $ 6.30 $ 6.50
 
2013 adjusted diluted EPS (see above) $ 5.93 $ 5.93
 
Percentage change 6 % 10 %
 

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The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrateg...
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, demonstrated how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect...
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to th...
What do a firewall and a fortress have in common? They are no longer strong enough to protect the valuables housed inside. Like the walls of an old fortress, the cracks in the firewall are allowing the bad guys to slip in - unannounced and unnoticed. By the time these thieves get in, the damage is already done and the network is already compromised. Intellectual property is easily slipped out the back door leaving no trace of forced entry. If we want to reign in on these cybercriminals, it's hig...
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from ha...
SYS-CON Media announced that Centrify, a provider of unified identity management across cloud, mobile and data center environments that delivers single sign-on (SSO) for users and a simplified identity infrastructure for IT, has launched an ad campaign on Cloud Computing Journal. The ads focus on security: how an organization can successfully control privilege for all of the organization’s identities to mitigate identity-related risk without slowing down the business, and how Centrify provides ...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
We are reaching the end of the beginning with WebRTC, and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will w...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
In her General Session at 15th Cloud Expo, Anne Plese, Senior Consultant, Cloud Product Marketing, at Verizon Enterprise, focused on finding the right mix of renting vs. buying Oracle capacity to scale to meet business demands, and offer validated Oracle database TCO models for Oracle development and testing environments. Anne Plese is a marketing and technology enthusiast/realist with over 19+ years in high tech. At Verizon Enterprise, she focuses on driving growth for the Verizon Cloud platfo...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...