FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
---------------
OR
[ ] 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 1-11037
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Praxair, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1249050
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
39 Old Ridgebury Road, Danbury, CT 06810-5113
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(203) 837-2000
--------------------------------------------------
Registrant's telephone number, including area code
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 [X] No [ ]
At June 30, 1998, 158,168,854 shares of common stock ($.01 par value) of the
Registrant were outstanding.
<PAGE>
Forward-looking statements
--------------------------
The forward-looking statements contained in this document concerning, among
other things, projected capital spending, continuation of acquisition
activities in the packaged gases and surface technologies businesses, tax
planning initiatives and effective tax rates, impacts in Brazil related to
currency and a change in functional currency, impacts from currency and
economic developments in Asia, and the timing, proceeds and other terms of the
disposition of assets held for sale involve risks and uncertainties, and are
subject to change based on various factors, including the impact of changes in
worldwide and national economies, pricing fluctuations in foreign currencies,
changes in interest rates, the continued timely development and acceptance of
new products and processes, the impact of competitive products and pricing, the
ability to continue to develop potential acquisition opportunities, and the
impact of tax and other legislation and regulation in the jurisdictions in
which the Company operates.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income - Praxair, Inc. and Subsidiaries
Quarter and Six Months Ended June 30, 1998 and 1997 (Unaudited)
Condensed Consolidated Balance Sheet - Praxair, Inc. and Subsidiaries
June 30, 1998 (Unaudited) and December 31, 1997
Condensed Consolidated Statement of Cash Flows - Praxair, Inc. and
Subsidiaries Six Months Ended June 30, 1998 and 1997 (Unaudited)
Notes to Condensed Consolidated Financial Statements - Praxair, Inc.
and Subsidiaries (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signature
Exhibit Index
PART I. FINANCIAL INFORMATION
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of dollars, except per share data)
Quarter Ended Six Months Ended
June 30, June 30,
---------------- ----------------
1998 1997 1998 1997
------- ------- ------- -------
SALES .................................. $1,234 $1,178 $2,435 $2,336
Cost of sales, exclusive of
depreciation and amortization ........ 711 681 1,408 1,346
Selling, general and administrative .... 165 165 332 332
Depreciation and amortization .......... 119 110 234 220
Research and development ............... 18 20 37 39
Other income-net ....................... 6 11 17 21
------- ------- ------- -------
OPERATING PROFIT ....................... 227 213 441 420
Interest expense ....................... 67 52 132 103
------- ------- ------- -------
INCOME BEFORE INCOME TAXES ............. 160 161 309 317
Income taxes ........................... 40 40 78 79
------- ------- ------- -------
INCOME OF CONSOLIDATED ENTITIES ........ 120 121 231 238
Minority interests ..................... (13) (17) (26) (34)
Income from equity investments ......... 1 3 5 5
------- ------- ------- -------
NET INCOME ............................. $ 108 $ 107 $ 210 $ 209
PER SHARE DATA:
Basic earnings per share ............... $ 0.68 $ 0.68 $ 1.33 $ 1.32
Diluted earnings per share.............. $ 0.66 $ 0.65 $ 1.28 $ 1.27
Cash dividends per share ............... $ 0.125 $ 0.11 $ 0.25 $ 0.22
WEIGHTED AVERAGE SHARES OUTSTANDING (000'S):
Basic shares outstanding ............... 158,623 158,276 158,329 158,198
Diluted shares outstanding ............. 164,057 164,542 163,632 164,472
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Millions of dollars)
June 30,
1998 December 31,
(Unaudited) 1997
----------- ------------
ASSETS
Cash and cash equivalents ....................... $ 31 $ 43
Accounts receivable ............................. 985 971
Inventories ..................................... 319 329
Prepaid and other current assets ................ 164 154
-------- --------
TOTAL CURRENT ASSETS ....................... 1,499 1,497
Property, plant and equipment-net ............... 4,755 4,607
Other long-term assets .......................... 1,825 1,706
-------- --------
TOTAL ASSETS ............................... $ 8,079 $ 7,810
LIABILITIES AND EQUITY
Accounts payable ................................ $ 376 $ 383
Short-term debt ................................. 323 391
Current portion of long-term debt ............... 39 40
Other current liabilities ....................... 506 552
-------- --------
TOTAL CURRENT LIABILITIES .................. 1,244 1,366
Long-term debt .................................. 3,151 2,874
Other long-term liabilities ..................... 928 852
-------- --------
TOTAL LIABILITIES .......................... 5,323 5,092
Minority interests .............................. 482 521
Preferred stock ................................. 75 75
Shareholders' equity ............................ 2,199 2,122
-------- --------
TOTAL LIABILITIES AND EQUITY ............... $ 8,079 $ 7,810
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions of dollars)
Six Months Ended June 30,
-------------------------
1998 1997
----------- -----------
OPERATIONS
Net income ..................................... $ 210 $ 209
Adjustments:
Depreciation and amortization ................ 234 220
Deferred income taxes ........................ 19 27
Working capital .............................. (50) (164)
Long-term assets and liabilities ............. (48) (16)
Other non-cash charges ....................... 5 (6)
------- -------
Net cash provided by operating activities ...... 370 270
------- -------
INVESTING
Construction ................................... (363) (417)
Acquisitions ................................... (222) (34)
Divestitures and asset sales ................... 13 245
-------- --------
Net cash used for investing activities ......... (572) (206)
-------- --------
FINANCING
Short-term repayments - net .................... (67) (187)
Long-term borrowings ........................... 336 140
Long-term debt repayments ...................... (76) (74)
Minority transactions and other ................ (1) 69
Issuances of common stock ...................... 71 75
Purchases of common stock ...................... (32) (66)
Cash dividends ................................. (40) (35)
-------- --------
Net cash provided by (used for)
financing activities ......................... 191 (78)
-------- --------
Effect of exchange rate changes on cash and
cash equivalents ............................... (1) (1)
-------- --------
Change in cash and cash equivalents .............. (12) (15)
Cash and cash equivalents beginning-of-year....... 43 63
-------- --------
Cash and cash equivalents end-of-period .......... $ 31 $ 48
Supplemental data:
Effect of functional currency change (Note 2) .... $ 81 $ -
Acquired debt from acquisitions .................. 20 -
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRAXAIR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Presentation of Condensed Consolidated Financial Statements
In the opinion of Praxair, Inc. (Praxair) management, the accompanying
condensed consolidated financial statements include all adjustments
necessary for a fair presentation of the results for the interim periods
presented. These adjustments consisted of only normal recurring
adjustments. The accompanying condensed consolidated financial statements
should be read in conjunction with the notes to the financial statements
of Praxair, Inc. and subsidiaries in Praxair's 1997 Annual Report.
Certain prior years' amounts have been reclassified to conform to the
current years' presentation.
2. Accounting Matters
FUNCTIONAL CURRENCY CHANGE IN BRAZIL - As required by accounting
standards, effective January 1, 1998 Brazil is no longer a
hyperinflationary economy. Accordingly, Praxair's majority owned
subsidiary (SA White Martins) designated the Brazilian Real as its
functional currency instead of the U.S. Dollar. This change increased
operating profit and interest expense by approximately $5 million and $ 10
million, respectively, for the quarter and six months ended June 30, 1998.
The impact on sales, taxes and net income was not significant. This
change also required Praxair to record a one-time cumulative adjustment
for additional deferred income taxes of $81 million with offsetting
balance sheet adjustments to the cumulative translation component of
shareholders' equity and minority interests of $57 million and $24
million, respectively.
COMPREHENSIVE INCOME - Effective January 1, 1998, Praxair adopted
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income." The adoption produced no effect on the Company's
financial position, cash flows, or results of operations. Comprehensive
income has been disclosed in Note 5.
3. Special Charges
At June 30, 1998, the remaining accrual balance related to 1996 and 1997
special charges was $21 million (see Note 3 to Praxair's 1997 consolidated
financial statements).
4. Inventories
The following is a summary of Praxair's consolidated inventories:
(Millions of dollars)
June 30,
1998 December 31,
(Unaudited) 1997
----------- ------------
Raw materials and supplies...... $ 114 $ 120
Work in process................. 32 48
Finished goods.................. 173 161
------ ------
$ 319 $ 329
<PAGE>
5. Shareholders' Equity
Changes in Shareholders' Equity were as follows:
(Thousands of shares)
Common Treasury
Stock Issued Stock
------------ ---------
Balance, January 1, 1998................ 159,970 2,596
Common stock activity (a) .............. 877 82
--------- --------
Balance, June 30, 1998.................. 160,847 2,678
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(Millions of dollars) Accumulated
Additional Other
Common Paid-In Treasury Retained Comprehensive
Stock Capital Stock Earnings Income Total
------ ---------- -------- -------- ----------- -------
Balance, January 1, 1998 ..... $ 2 $1,471 $(129) $1,034 $(256) $2,122
Net income ................... 210 210
Translation adjustments ...... (75) (75)
Effect of functional currency
change (Note 2) ............ (57) (57)
-------
Comprehensive income (b).... $ 78
Dividends - common stock...... (40) (40)
Common stock activity (a)..... 39 39
--- ------ ------ ------- ------ -------
Balance, June 30, 1998 ....... $ 2 $1,510 $(129) $1,204 $(388) $2,199
=== ====== ====== ====== ====== =======
</TABLE>
(a) Relates to issuances of common stock for the Dividend Reinvestment and
Stock Purchase Plan, employee savings and incentive plans, and
issuances/purchases of common stock.
(b) Comprehensive income for the quarter and six months ended June 30, 1998 was
$62 million and $78 million, respectively, as compared to $103 million and
$157 million, respectively, in the 1997 periods.
During the quarter and six months ended June 30, 1998 Praxair granted options
for 56,200 and 889,425 shares, respectively, of common stock having option
prices ranging from $40.56 to $52.50 per share, the closing market price of
Praxair's common stock on the day of the grants. At June 30, 1998 there were
11,217,899 shares under option at prices ranging from $9.80 to $56.13 per share
(weighted average of $26.82) of which options for 7,434,059 shares were
exercisable at prices ranging from $9.80 to $46.50 per share (weighted average
of $17.43). During the quarter and six months ended June 30, 1998, 280,905 and
553,875 options were exercised, respectively.
<PAGE>
6 Debt and Financial Instruments
Debt - The following is a summary of Praxair's outstanding debt at June 30,
1998 and December 31, 1997:
(Millions of dollars) June 30,
1998 December 31,
(Unaudited) 1997
----------- ------------
Short-term:
Canadian borrowings.................... $ 120 $ 84
South American borrowings.............. 168 268
Other borrowings....................... 35 39
------- -------
Total Short-term Debt.................... 323 391
Long-term:
U.S.:
Commercial paper and US bank borrowings. $ 817 $ 860
6.25% Notes due 2000................... 75 75
6.70% Notes due 2001................... 250 250
6.15% Notes due 2003................... 250 -
6.625% Notes due 2003................... 75 75
6.75% Notes due 2003................... 300 300
6.85% Notes due 2005................... 150 150
6.90% Notes due 2006................... 250 250
6.625% Notes due 2007................... 250 250
8.70% Debentures due 2022
(Redeemable after 2002).......... 300 300
Other borrowings........................ 59 57
Canadian borrowings....................... 208 160
South American borrowings................. 142 136
Other International borrowings............ 64 51
------- -------
3,190 2,914
Less: Current portion of long-term debt .. 39 40
------- -------
Total Long-term Debt...................... 3,151 2,874
------- -------
Total Debt................................ $3,513 $3,305
At June 30, 1998, $817 million of short-term borrowings have been
classified as long term ($860 million at December 31, 1997) because of the
Company's intent to refinance this debt on a long-term basis and the
availability of such financing under the terms of its $1.5 billion credit
agreement.
On April 2, 1998, Praxair issued $250 million of 6.15% non-redeemable
Notes due 2003 with interest payable semi-annually. The proceeds from the
Notes were used to repay outstanding commercial paper and for other
general corporate purposes.
<PAGE>
Financial Instruments - The following table is a summary of the notional
amount of interest rate agreements at June 30, 1998:
(Millions of dollars) June 30,
1998
(Unaudited)
-----------
Maturing within one year (a):
Fixed Rate Swaps .................... $722
Interest Rate Lock .................. $200
Maturing 2001:
Fixed Rate Swaps .................... $ 80
(a) During the 1998 second quarter, $150 million notional value of floating
rate swaps matured. Additionally, at June 30, 1998, there are $300
million notional value of floating rate swaps that effectively offset
$300 million notional value of fixed rate swaps through July 1998.
At June 30, 1998, Praxair had $454 million of currency exchange forward
contracts outstanding primarily to hedge balance sheet exposures.
Additionally, there are $107 million notional value of currency exchange
contracts that effectively offset. These contracts all mature within one
year.
7. Earnings Per Share
Basic earnings per share is computed by dividing net income for the period
by the weighted average number of Praxair common shares outstanding.
Diluted earnings per share is computed by dividing net income for the
period by the weighted average number of Praxair common shares outstanding
and dilutive common stock equivalents. The difference between the number
of shares used in the basic earnings per share calculation is due to the
dilutive effect of outstanding stock options.
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Consolidated Results
(Millions of dollars, except percent)
Percent
Quarter Ended June 30, 1998 1997 Change
- -------------------------------------- ------ -------- ---------
Sales................................. $1,234 $1,178 + 5%
Selling, general and administrative... $ 165 $ 165 -
Depreciation and amortization......... $ 119 $ 110 + 8%
Operating profit...................... $ 227 $ 213 + 7%
Interest expense...................... $ 67 $ 52 + 29%
Effective tax rate.................... 25% 25% -
Net income............................ $ 108 $ 107 + 1%
Percent
Six Months Ended June 30, 1998 1997 Change
- -------------------------------------- ------ -------- ---------
Sales................................. $2,435 $2,336 + 4%
Selling, general and administrative... $ 332 $ 332 -
Depreciation and amortization......... $ 234 $ 220 + 6%
Operating profit...................... $ 441 $ 420 + 5%
Interest expense...................... $ 132 $ 103 + 28%
Effective tax rate.................... 25% 25% -
Net income............................ $ 210 $ 209 + 1%
The sales growth for the quarter and six months ended June 30, 1998, of 5% and
4%, respectively, was predominately due to increased sales volumes and the
effect of newly acquired packaged gases and Surface Technologies subsidiaries.
This increase was partly offset by unfavorable currency translation effects.
Surface Technologies posted record sales, increasing 12% for the quarter and
11% for the six month period primarily due to volume growth and acquisitions.
The sales growth, acquisitions, productivity gains and the effect of the
functional currency change in Brazil (see Note 2), partially offset by negative
currency translation effects, were primarily responsible for the increase in
operating profit for the quarter and year versus the 1997 periods. Increased
depreciation and amortization reflected new projects coming on-stream, as well
the impact of acquisitions. Selling, general and administrative expenses were
flat due to the effects of productivity improvements offset by acquisitions and
cost inflation.
Interest expense increased due primarily to higher average debt levels and the
effect of the functional currency change in Brazil. The effective tax rate for
all periods was 25%. Minority interests decreased versus 1997 due to the
acquisition of minority interests and lower income from Brazil.
Net income for the quarter and six months ended June 30, 1998 increased 1% over
the 1997 amounts due principally to higher operating profit and a reduction of
minority interest, partially offset by the increased interest expense.
The number of employees at June 30, 1998 was approximately 26,000 which, when
adjusted for acquisitions, reflects a decrease of approximately 850 from
December 31, 1997. The decrease is principally the result of productivity
improvement initiatives in South America, Europe and the North American
packaged gases business; partially offset by the addition of employees to
support volume growth.
<PAGE>
Segment Discussion
This summary of sales and operating profit by geographic segment provides a
basis for the discussion that follows:
(Millions of dollars)
Quarter Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
------- ------- ------ -------
SALES
United States....... $ 645 $ 591 $1,272 $1,179
South America....... 239 249 485 497
Europe.............. 164 155 320 305
Canada, Mexico,
Asia and Other... 186 183 358 355
------- ------- ------- -------
$1,234 $1,178 $2,435 $2,336
OPERATING PROFIT
United States....... $ 127 $ 117 $ 249 $ 229
South America....... 50 50 96 102
Europe.............. 32 29 62 58
Canada, Mexico,
Asia and Other... 24 22 46 42
Corporate........... (6) (5) (12) (11)
------- ------- ------- -------
$ 227 $ 213 $ 441 $ 420
United States
- -------------
Sales increased 9% and 8%, respectively, for the quarter and six months ended
June 30, 1998, as compared to the 1997 periods. Volume growth and
acquisitions, partly offset by slight price decreases, accounted for the sales
increase for the quarter and six months ended June 30, 1998 as compared to the
1997 periods. Acquisitions improved sales by 8% and 7%, respectively, for the
quarter and six months ended June 30, 1998 as compared to the 1997 periods.
Operating profit improved 9% for the quarter and the six month period as
compared to the 1997 periods. The improvement is due primarily to increased
sales, acquisitions, and the benefits of productivity and cost improvement
initiatives.
South America
- -------------
Sales for the quarter and six months ended June 30, 1998 decreased 4% and 2%,
respectively, as compared to the 1997 periods, primarily due to unfavorable
currency translation effects, partly offset by sales volume growth and an
improvement in pricing during the second quarter of 1998. Excluding currency
translation effects, sales increased by 4% and 5%, respectively, for the
quarter and the six months ended June 30, 1998, as compared to the 1997
periods.
Operating profit for the quarter and six months ended June 30, 1998 decreased
$5 million and $16 million, respectively, as compared to the 1997 periods after
excluding the positive impact of the functional currency change in Brazil (see
Note 2). These reductions were due to the sales decreases, cost inflation and
currency translation effects, partially offset by productivity improvement
initiatives.
<PAGE>
Europe
- ------
Sales for the quarter and six months ended June 30, 1998 increased 6% and 5%,
respectively, as compared to the 1997 periods. The increase was due primarily
to volume growth and increased sales associated with Surface Technologies'
acquisitions, partly offset by unfavorable currency translation effects.
Excluding the currency translation effects for the quarter and six months ended
June 30, 1998, sales increased by 11% and 13%, respectively, as compared to the
1997 periods.
Operating profit for the quarter and six months ended June 30, 1998 increased
10% and 7%, respectively, as compared to the 1997 periods, due primarily to
improved sales volume growth and cost reduction initiatives, partly offset by
unfavorable currency translation effects.
Canada, Mexico, Asia and Other
- ------------------------------
Sales for the quarter and six months ended June 30, 1998 increased 2% and 1%,
respectively, as compared to the 1997 periods, due to business and minority
acquisitions in Asia and pricing improvements and strong volume growth in
Mexico, partly offset by unfavorable currency translation effects. Excluding
the currency translation effects for the quarter and six months ended June 30,
1998, sales increased by 13% and 14%, respectively.
Operating profit for the quarter and six months ended June 30, 1998 increased
9% and 10%, respectively, as compared to the 1997 periods, primarily due to
acquisitions, strong sales growth in Mexico and the impact of productivity
initiatives (primarily in Canada), partly offset by negative currency
translation effects and cost inflation.
<PAGE>
Liquidity, Capital Resources and Other Financial Data
Cash Flow From Operations
- -------------------------
Cash flow from operations in the first six months of 1998, as compared to 1997,
increased $100 million, primarily due to the timing of cash payments and
receipts, and payments made in the first six months of 1997 for pre-1997
incentive compensation programs.
Investing
- ---------
Cash flow used for investing in the first six months of 1998 totaled $572
million, an increase of $366 million from the 1997 period. This increase was
due primarily to higher acquisition expenditures and lower divestiture and
asset sales, partly offset by lower construction expenditures.
Construction expenditures for the first six months of 1998 totaled $363
million, down $54 million from the corresponding period in 1997, largely due to
the timing of cash payments.
Acquisition expenditures for the first six months of 1998 totaled $222 million,
an increase of $188 million from the 1997 period. This increase is primarily
related to the purchase of the remaining shares outstanding of Gas Tech, Inc. a
U.S. packaged gases distributor (previously an equity investment), other
investments related to the U.S. packaged gases business, the acquisition of two
companies in India, acquisitions in the Surface Technologies' business, and
buy-outs of minority interests in Asia, South America and Canada.
Divestitures and asset sales in the first six months of 1998 decreased $232
million as compared to the 1997 period primarily due to proceeds received on
the initial public offering of Chicago Bridge and Iron Co., N.V. in the second
quarter of 1997.
On a worldwide basis, construction and acquisition expenditures for the full
year 1998 are expected to be slightly over $1 billion; primarily from growth
opportunities in the United States, South America, Europe and Asia, and the
continuation of Praxair's packaged gases and Surface Technologies acquisition
strategies. It is expected that construction and acquisition expenditures will
be about 20% lower in 1999, as compared to 1998, due primarily to the expected
timing of acquisitions and slowing economies in Asia.
Financing
- ---------
At June 30, 1998, Praxair's total debt outstanding was $3,513 million, an
increase of $208 million versus December 31, 1997. This increase in debt was
needed primarily to finance acquisitions. As of June 30, 1998, there were no
borrowings under Praxair's $1.5 billion U.S. bank credit facility.
On April 2, 1998, Praxair issued $250 million of 6.15% non-redeemable Notes due
2003 with interest payable semi-annually. The proceeds from the Notes were used
to repay outstanding commercial paper and for other general corporate purposes.
Praxair's debt-to-capital ratio increased from 54.9% at December 31, 1997 to
56.0% at June 30, 1998. This increase is due to a combination of the effect of
the functional currency change in Brazil, which reduced Praxair's shareholders'
equity and minority interests (see Note 2), and the higher debt levels required
to finance acquisitions and construction expenditures.
<PAGE>
Recently Issued Accounting Standards
Effective January 1, 1998, Praxair implemented the requirements of Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income"
(see Note 2 to the condensed consolidated financial statements). Additionally,
Praxair will implement the disclosure requirements of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information", in the
fourth quarter of 1998 (see Management's Discussion and Analysis included in
Praxair's 1997 Annual Report).
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which requires
implementation no later than January 1, 2000. Praxair is currently analyzing
the requirements and has not yet determined when it will adopt the new
standard, or what the impact will be, if any, when adopted.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Refer to "Market Risks and Sensitivity Analyses" in the Management's Discussion
and Analysis section of Praxair's 1997 Annual Report.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Praxair, Inc. was held on April 28, 1998.
Information concerning the matters submitted to a vote of the security holders
at that meeting was disclosed in the company's Report on Form 10-Q for the
quarter ended March 31, 1998.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
27. Financial Data Schedule
Reports on Form 8-K
As a result of the new accounting standard regarding earnings per share
(Statement of Financial Accounting Standards No. 128), a report on Form 8-K
dated April 1, 1998 was filed in order to retroactively restate the
Corporation's earnings per share information included in Financial Data
Schedules filed with Forms 10Q and 10K. This Form 8-K was also disclosed in the
company's Report on Form 10-Q for the quarter ended March 31, 1998.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRAXAIR, INC.
-------------
(Registrant)
Date: August 6 , 1998 By: /s/J. Robert Vipond
------------------------ -----------------------------
J. Robert Vipond
Vice President and Controller
(On behalf of the Registrant
and as Chief Accounting Officer)
<PAGE>
Exhibit Index
-------------
Exhibit No.
- -----------------------------------------------------------------------------
27. Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule - Exhibit 27
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 31
<SECURITIES> 0
<RECEIVABLES> 1010
<ALLOWANCES> 25
<INVENTORY> 319
<CURRENT-ASSETS> 1499
<PP&E> 8507
<DEPRECIATION> 3752
<TOTAL-ASSETS> 8079
<CURRENT-LIABILITIES> 1244
<BONDS> 3151
75
0
<COMMON> 2
<OTHER-SE> 2197
<TOTAL-LIABILITY-AND-EQUITY> 8079
<SALES> 2435
<TOTAL-REVENUES> 2435
<CGS> 1408<F1>
<TOTAL-COSTS> 1408<F1>
<OTHER-EXPENSES> 234<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132
<INCOME-PRETAX> 309
<INCOME-TAX> 78
<INCOME-CONTINUING> 210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210
<EPS-PRIMARY> 1.33<F2>
<EPS-DILUTED> 1.28<F2>
<FN>
<F1>Cost of goods sold and total costs are exclusive of depreciation and
amortization which is shown on the other expense line in the Financial Data
Schedule.
<F2>Effective in 1997, SFAS No. 128 established new standards for computing and
presenting earnings per share (EPS). In the Financial Data Schedule, Praxair's
Basic EPS is presented on the "EPS-Primary" line and Diluted EPS is presented
on the "EPS-Diluted" line. Diluted EPS is consistent with Praxair's previously
disclosed amounts.
</FN>
</TABLE>
