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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended 31 December 2020
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 001-04534
apd-20201231_g1.jpg
AIR PRODUCTS AND CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware23-1274455
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
7201 Hamilton Boulevard
Allentown, Pennsylvania 18195-1501
(Address of principal executive offices and Zip Code)
610-481-4911
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareAPDNew York Stock Exchange
0.375% Euro Notes due 2021APD21BNew York Stock Exchange
1.000% Euro Notes due 2025APD25New York Stock Exchange
0.500% Euro Notes due 2028APD28New York Stock Exchange
0.800% Euro Notes due 2032APD32New York Stock Exchange
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 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 an 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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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 Exchange Act). Yes  No 
The number of shares of common stock, par value $1 per share, outstanding at 31 December 2020 was 221,276,890.


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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended 31 December 2020

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FORWARD-LOOKING STATEMENTS
This quarterly report contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” "future," “goal,” “intend,” “may,” “outlook,” “plan,” “positioned,” “possible,” “potential,” “project,” “should,” “target,” “will,” “would,” and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. Forward-looking statements are based on management’s expectations and assumptions as of the date of this report and are not guarantees of future performance. You are cautioned not to place undue reliance on our forward-looking statements.
Forward-looking statements may relate to a number of matters, including expectations regarding revenue, margins, expenses, earnings, tax provisions, cash flows, pension obligations, share repurchases or other statements regarding economic conditions or our business outlook; statements regarding plans, projects, strategies and objectives for our future operations, including our ability to win new projects and execute the projects in our backlog; and statements regarding our expectations with respect to pending legal claims or disputes. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation:
the duration and impacts of the novel coronavirus (“COVID-19”) global pandemic and efforts to contain its transmission, including the effect of these factors on our business, our customers, economic conditions and markets generally;
changes in global or regional economic conditions, supply and demand dynamics in the market segments we serve, or in the financial markets that may affect the availability and terms on which we may obtain financing;
risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets;
project delays, contract terminations, customer cancellations, or postponement of projects and sales;
our ability to develop and operate large scale and technically complex projects, including gasification projects;
the future financial and operating performance of major customers and joint venture partners;
our ability to develop, implement, and operate new technologies;
our ability to execute the projects in our backlog;
tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate;
the impact of environmental, tax or other legislation, as well as regulations affecting our business and related compliance requirements, including legislation or regulations related to global climate change;
changes in tax rates and other changes in tax law;
the timing, impact, and other uncertainties relating to acquisitions and divestitures, including our ability to integrate acquisitions and separate divested businesses, respectively;
risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems;
catastrophic events, such as natural disasters, public health crises, acts of war, or terrorism;
the impact on our business and customers of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility;
costs and outcomes of legal or regulatory proceedings and investigations;
asset impairments due to economic conditions or specific events;
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FORWARD-LOOKING STATEMENTS (CONTINUED)
significant fluctuations in interest rates and foreign currency exchange rates from those currently anticipated;
damage to facilities, pipelines or delivery systems, including those we own or operate for third parties;
availability and cost of raw materials; and
the success of productivity and operational improvement programs.
In addition to the foregoing factors, forward-looking statements contained herein are qualified with respect to the risks disclosed elsewhere in this document, including in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Disclosures About Market Risk, as well as with respect to the risks described in Item 1A, Risk Factors, to our Annual Report on Form 10-K for the year ended 30 September 2020. Any of these factors, as well as those not currently anticipated by management, could cause our results of operations, financial condition or liquidity to differ materially from what is expressed or implied by any forward-looking statement. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended
31 December
(Millions of dollars, except for share and per share data)20202019
Sales$2,375.2 $2,254.7 
Cost of sales1,632.4 1,486.6 
Selling and administrative202.7 201.7 
Research and development23.5 17.7 
Other income (expense), net22.5 12.3 
Operating Income539.1 561.0 
Equity affiliates' income69.3 58.2 
Interest expense36.7 18.7 
Other non-operating income (expense), net18.6 9.1 
Income From Continuing Operations Before Taxes590.3 609.6 
Income tax provision113.9 120.7 
Income From Continuing Operations476.4 488.9 
Income from discontinued operations, net of tax10.3  
Net Income486.7 488.9 
Net income attributable to noncontrolling interests of continuing operations4.7 13.3 
Net Income Attributable to Air Products$482.0 $475.6 
Net Income Attributable to Air Products
Net income from continuing operations$471.7 $475.6 
Net income from discontinued operations10.3  
Net Income Attributable to Air Products$482.0 $475.6 
Per Share Data*
Basic EPS from continuing operations$2.13 $2.15 
Basic EPS from discontinued operations0.05  
Basic EPS Attributable to Air Products$2.18 $2.15 
Diluted EPS from continuing operations$2.12 $2.14 
Diluted EPS from discontinued operations0.05  
Diluted EPS Attributable to Air Products$2.17 $2.14 
Weighted Average Common Shares (in millions)
Basic221.5 220.9 
Diluted
222.6 222.2 
*Earnings per share ("EPS") is calculated independently for each component and may not sum to total EPS due to rounding.

The accompanying notes are an integral part of these statements.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS
(Unaudited)
Three Months Ended
31 December
(Millions of dollars)20202019
Net Income$486.7 $488.9 
Other Comprehensive Income, net of tax:
Translation adjustments, net of tax of ($24.2) and ($10.8)
415.7 264.0 
Net gain (loss) on derivatives, net of tax of $2.7 and $2.6
13.8 22.1 
Reclassification adjustments:
Derivatives, net of tax of ($0.8) and ($0.8)
(1.3)(3.6)
Pension and postretirement benefits, net of tax of $5.9 and $6.5
18.3 19.7 
Total Other Comprehensive Income446.5 302.2 
Comprehensive Income933.2 791.1 
Net Income Attributable to Noncontrolling Interests4.7 13.3 
Other Comprehensive Income Attributable to Noncontrolling Interests19.7 15.2 
Comprehensive Income Attributable to Air Products$908.8 $762.6 
The accompanying notes are an integral part of these statements.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
31 December30 September
(Millions of dollars, except for share and per share data)20202020
Assets
Current Assets
Cash and cash items$5,788.0 $5,253.0 
Short-term investments412.0 1,104.9 
Trade receivables, net1,419.7 1,274.8 
Inventories422.9 404.8 
Prepaid expenses178.5 164.5 
Other receivables and current assets588.7 482.9 
Total Current Assets8,809.8 8,684.9 
Investment in net assets of and advances to equity affiliates1,520.4 1,432.2 
Plant and equipment, at cost26,308.1 25,176.2 
Less: accumulated depreciation13,791.0 13,211.5 
Plant and equipment, net12,517.1 11,964.7 
Goodwill, net923.9 891.5 
Intangible assets, net452.5 435.8 
Noncurrent lease receivables816.2 816.3 
Other noncurrent assets1,048.2 943.1 
Total Noncurrent Assets17,278.3 16,483.6 
Total Assets$26,088.1 $25,168.5 
Liabilities and Equity  
Current Liabilities
Payables and accrued liabilities$1,962.2 $1,833.2 
Accrued income taxes108.4 105.8 
Short-term borrowings9.2 7.7 
Current portion of long-term debt906.1 470.0 
Total Current Liabilities2,985.9 2,416.7 
Long-term debt6,779.1 7,132.9 
Long-term debt – related party312.5 297.2 
Other noncurrent liabilities1,935.7 1,916.0 
Deferred income taxes1,003.0 962.6 
Total Noncurrent Liabilities10,030.3 10,308.7 
Total Liabilities13,016.2 12,725.4 
Commitments and Contingencies - See Note 10
Air Products Shareholders’ Equity
Common stock (par value $1 per share; issued 2021 and 2020 - 249,455,584 shares)
249.4 249.4 
Capital in excess of par value1,083.0 1,094.8 
Retained earnings15,060.5 14,875.7 
Accumulated other comprehensive loss(1,713.3)(2,140.1)
Treasury stock, at cost (2021 - 28,178,694 shares; 2020 - 28,438,125 shares)
(1,996.0)(2,000.0)
Total Air Products Shareholders’ Equity12,683.6 12,079.8 
Noncontrolling Interests388.3 363.3 
Total Equity13,071.9 12,443.1 
Total Liabilities and Equity$26,088.1 $25,168.5 
The accompanying notes are an integral part of these statements.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
 31 December
(Millions of dollars)20202019
Operating Activities
Net income$486.7 $488.9 
Less: Net income attributable to noncontrolling interest of continuing operations4.7 13.3 
Net income attributable to Air Products482.0 475.6 
Income from discontinued operations(10.3) 
Income from continuing operations attributable to Air Products471.7 475.6 
Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization323.7 289.2 
Deferred income taxes47.6 24.4 
Undistributed earnings of equity method investments(10.8)(26.2)
Gain on sale of assets and investments(1.1)(1.1)
Share-based compensation9.8 13.9 
Noncurrent lease receivables21.9 23.5 
Other adjustments19.3 30.8 
Working capital changes that provided (used) cash, excluding effects of acquisitions:
Trade receivables(44.1)0.9 
Inventories(9.9)(8.4)
Other receivables(30.1)1.4 
Payables and accrued liabilities24.2 (115.4)
Other working capital(47.5)(41.6)
Cash Provided by Operating Activities774.7 667.0 
Investing Activities
Additions to plant and equipment, including long-term deposits(664.2)(447.7)
Investment in and advances to equity method investments(20.0)(7.1)
Proceeds from sale of assets and investments2.6 15.2 
Purchases of investments(158.5) 
Proceeds from investments855.0 177.0 
Other investing activities3.3 1.9 
Cash Provided by (Used for) Investing Activities18.2 (260.7)
Financing Activities
Payments on long-term debt(1.1)(2.8)
Net increase (decrease) in commercial paper and short-term borrowings4.5 (10.4)
Dividends paid to shareholders(296.2)(255.7)
Proceeds from stock option exercises 1.6 5.5 
Other financing activities(15.9)(6.9)
Cash Used for Financing Activities(307.1)(270.3)
Effect of Exchange Rate Changes on Cash49.2 21.4 
Increase in cash and cash items535.0 157.4 
Cash and Cash items – Beginning of Year5,253.0 2,248.7 
Cash and Cash Items – End of Period$5,788.0 $2,406.1 
The accompanying notes are an integral part of these statements.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Three Months Ended
31 December 2020
(Millions of dollars, except for per share data)Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Air
Products
Shareholders'
Equity
Non-
controlling
Interests
Total
Equity
Balance at 30 September 2020$249.4 $1,094.8 $14,875.7 ($2,140.1)($2,000.0)$12,079.8 $363.3 $12,443.1 
Net income— — 482.0 — — 482.0 4.7 486.7 
Other comprehensive income (loss)— — — 426.8 — 426.8 19.7 446.5 
Dividends on common stock (per share $1.34)
— — (296.5)— — (296.5)— (296.5)
Share-based compensation— 10.3 — — — 10.3 — 10.3 
Issuance of treasury shares for stock option and award plans— (21.0)— — 4.0 (17.0)— (17.0)
Investments by noncontrolling interests— — — — — — 0.6 0.6 
Other equity transactions— (1.1)(0.7)— — (1.8) (1.8)
Balance at 31 December 2020$249.4 $1,083.0 $15,060.5 ($1,713.3)($1,996.0)$12,683.6 $388.3 $13,071.9 
Three Months Ended
31 December 2019
(Millions of dollars, except for per share data)Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Air
Products
Shareholders'
Equity
Non-
controlling
Interests
Total
Equity
Balance at 30 September 2019$249.4 $1,070.9 $14,138.4 ($2,375.6)($2,029.5)$11,053.6 $334.7 $11,388.3 
Net income— — 475.6 — — 475.6 13.3 488.9 
Other comprehensive income (loss)— — — 287.0 — 287.0 15.2 302.2 
Dividends on common stock (per share $1.16)
— — (256.0)— — (256.0)— (256.0)
Dividends to noncontrolling interests— — — — — — (1.3)(1.3)
Share-based compensation— 13.9 — — — 13.9 — 13.9 
Issuance of treasury shares for stock option and award plans— (18.5)— — 6.1 (12.4)— (12.4)
Investments by noncontrolling interests— — — — — — 11.9 11.9 
Other equity transactions— (4.6)(1.1)— — (5.7) (5.7)
Balance at 31 December 2019$249.4 $1,061.7 $14,356.9 ($2,088.6)($2,023.4)$11,556.0 $373.8 $11,929.8 
The accompanying notes are an integral part of these statements.

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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars unless otherwise indicated, except for share and per share data)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
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1. BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES
Basis of Presentation
The interim consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries (“we,” “our,” “us,” the “Company,” “Air Products,” or “registrant”) included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In our opinion, the accompanying statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated and contain adequate disclosures to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the notes to the interim consolidated financial statements. These notes, unless otherwise indicated, are presented on a continuing operations basis.
To fully understand the basis of presentation, the interim consolidated financial statements and related notes included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended 30 September 2020 ( the "2020 Form 10-K"). Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.
COVID-19 Risks and Uncertainties
The novel strain of coronavirus ("COVID-19"), which was declared a global pandemic by the World Health Organization in March 2020, continues to impact our business operations and results globally. Due to numerous uncertainties, including the duration and severity of the outbreak, we are unable to predict the impact that COVID-19 will have on our future financial position and operating results.
Major Accounting Policies
Refer to our 2020 Form 10-K for a description of major accounting policies. In fiscal year 2021, accounting policies related to customer credit losses were impacted by the implementation of certain new accounting guidance, as further discussed below and in Note 2, New Accounting Guidance. There were no other notable changes to our accounting policies during the first three months of fiscal year 2021.
Credit Losses
We are exposed to credit losses through sales of products and services. When extending credit, we evaluate customer creditworthiness based on a combination of qualitative and quantitative factors that include, but are not limited to, the customer’s credit score from external providers, financial condition, and past payment experience.
We assess allowances for credit losses on our trade receivables and lease receivable portfolios. Allowances are evaluated by portfolio on a collective basis where similar characteristics exist. A provision for customer defaults is made on a general formula basis as the risk of some default is expected but cannot yet be associated with specific customers. The assessment of the likelihood of default is based on various factors, including the length of time the receivables are past due, historical experience, existing economic conditions, and forward-looking information. When we identify specific customers with known collectability issues, the assessment for credit losses is performed on an individual basis, considering current and forward-looking information of the customer.
The use of forward-looking information considers economic conditions that may affect the customers’ ability to pay. Although we historically have not experienced significant credit losses, our exposure to credit losses may increase if our customers are adversely affected by economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current COVID-19 pandemic, or other customer-specific factors. We review our reserves for credit losses on a quarterly basis.
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Trade receivables comprise amounts owed to us through our operating activities and are presented net of allowances for credit losses.
Changes to the carrying amount of the allowance for credit losses on trade receivables are summarized below:
Balance at 30 September 2020$23.9 
Adoption of new credit losses standard0.5 
Provision for credit losses1.0 
Write-offs charged against the allowance(0.8)
Currency translation and other1.6 
Balance at 31 December 2020$26.2 

Lease receivables, net, primarily relate to sales-type leases on certain on-site assets which are collected over the contract term. As of 31 December 2020 and 30 September 2020, our lease receivables, net were $903.9 and $903.0, respectively. Lease receivables, net, are primarily included within "Noncurrent lease receivables" on our consolidated balance sheets, with the remaining balance in "Other receivables and current assets." The majority of our leases are of high credit quality and were originated prior to fiscal year 2017. Allowances for credit losses on lease receivables were not material as of 31 December 2020 and 30 September 2020, respectively.

2. NEW ACCOUNTING GUIDANCE
Accounting Guidance Implemented in Fiscal Year 2021
Credit Losses on Financial Instruments
In June 2016, the FASB issued guidance on the measurement of credit losses, which requires measurement and recognition of expected credit losses for financial assets, including trade receivables and lease receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The method to determine a loss is different from the previous guidance, which delayed recognition of a credit loss until it was probable that a loss had been incurred. We adopted this guidance on 1 October 2020 using a modified retrospective approach with an after-tax cumulative-effect adjustment of $1.3 to retained earnings. Refer to Note 1, Basis of Presentation and Major Accounting Policies, for a description of our accounting policy on “Credit Losses."
Cloud Computing Implementation Costs
In August 2018, the FASB issued guidance which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software. We adopted this guidance prospectively at the beginning of fiscal year 2021. Eligible implementation costs previously capitalized in "Plant and equipment, net" were reclassified to "Other noncurrent assets" on our consolidated balance sheets beginning in fiscal year 2021. This guidance did not have a material impact on our consolidated financial statements upon adoption.
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued an update to simplify the accounting for income taxes and improve consistent application by clarifying or amending existing guidance. We adopted this guidance at the beginning of fiscal year 2021. This guidance did not have a material impact on our consolidated financial statements upon adoption.
New Accounting Guidance to be Implemented
Reference Rate Reform
In March 2020, the FASB issued an update to provide practical expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This update is primarily applicable to our contracts and hedging relationships that reference LIBOR. The amendments may be applied to impacted contracts and hedges prospectively through 31 December 2022. To date, we have had no impacts on our hedging relationships related to reference rate reform. We will continue to evaluate the impact this guidance could have on our consolidated financial statements.

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3. REVENUE RECOGNITION
The majority of our revenue is generated from our sale of gas customers within the Industrial Gases regional segments. We distribute gases through either our on-site or merchant supply mode depending on various factors, including the customer's volume requirements and location. The Industrial Gases – Global and the Corporate and other segments serve our sale of equipment customers.
Disaggregation of Revenue
The tables below present our consolidated sales disaggregated by supply mode for each of our reporting segments for the three months ended 31 December 2020 and 2019. We believe this presentation best depicts the nature, timing, type of customer, and contract terms for our sales.
Industrial
Gases–
Americas
Industrial
Gases–
EMEA
Industrial
Gases–
Asia
Industrial
Gases–
Global
Corporate
and other
Total%
Three Months Ended 31 December 2020
On-site$541.3 $188.7 $414.9 $ $ $1,144.9 48 %
Merchant391.7 374.3 302.6   1,068.6 45 %
Sale of Equipment   104.5 57.2 161.7 7 %
Total $933.0 $563.0 $717.5 $104.5 $57.2 $2,375.2 100 %
Three Months Ended 31 December 2019
On-site$534.5 $171.4 $418.3 $ $ $1,124.2 50 %
Merchant401.7 327.3 274.5   1,003.5 44 %
Sale of Equipment   92.6 34.4 127.0 6 %
Total $936.2 $498.7 $692.8 $92.6 $34.4 $2,254.7 100 %
Remaining Performance Obligations
As of 31 December 2020, the transaction price allocated to remaining performance obligations is estimated to be approximately $23 billion. This amount includes fixed-charge contract provisions associated with our on-site and sale of equipment supply modes. We estimate that approximately half of this revenue will be recognized over approximately the next five years and the balance thereafter.
Expected revenue associated with new on-site plants that are not yet onstream is excluded from this amount. In addition, this amount excludes consideration associated with contracts having an expected duration of less than one year and variable consideration for which we recognize revenue at the amount to which we have the right to invoice, including pass-through costs related to energy and natural gas.
In the future, actual amounts will differ due to events outside of our control, including but not limited to inflationary price escalations, currency exchange rates, and terminated or renewed contracts.
Contract Balances
The table below details balances arising from contracts with customers:
Balance Sheet Location31 December 202030 September 2020
Assets
Contract assets – currentOther receivables and current assets$64.9 $55.9 
Contract fulfillment costs – currentOther receivables and current assets140.9 109.9 
Liabilities
Contract liabilities – currentPayables and accrued liabilities434.0 313.8 
Contract liabilities – noncurrentOther noncurrent liabilities58.8 57.9 
Changes to our contract balances primarily relate to our sale of equipment contracts. During the three months ended 31 December 2020, we recognized approximately $85 in revenue associated with sale of equipment contracts that was included within our contract liabilities as of 30 September 2020.

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4. DISCONTINUED OPERATIONS
In the first quarter of fiscal year 2021, we recorded a tax benefit of $10.3 as a component of discontinued operations. This benefit primarily resulted from the settlement of a state tax appeal related to the gain on the sale of our former Performance Materials Division in fiscal year 2017. The benefit is reflected within "Income from discontinued operations, net of tax" on our consolidated income statement for the three months ended 31 December 2020. The settlement did not have an impact on our statement of cash flows for the first three months of fiscal year 2021.

5. INVENTORIES
The components of inventories are as follows:
31 December30 September
20202020
Finished goods$147.7 $134.5 
Work in process23.3 21.3 
Raw materials, supplies and other251.9 249.0 
Inventories$422.9 $404.8 

6. GOODWILL
Changes to the carrying amount of consolidated goodwill by segment for the three months ended 31 December 2020 are as follows:
Industrial
Gases–
Americas
Industrial
Gases–
EMEA
Industrial
Gases–
Asia
Industrial
Gases–
Global
Corporate
and other
Total
Goodwill, net at 30 September 2020$152.6 $524.1 $180.4 $19.5 $14.9 $891.5 
Currency translation and other5.1 22.8 4.1 0.4  32.4 
Goodwill, net at 31 December 2020$157.7 $546.9 $184.5 $19.9 $14.9 $923.9 
31 December30 September
20202020
Goodwill, gross$1,298.5 $1,230.2 
Accumulated impairment losses(A)
(374.6)(338.7)
Goodwill, net$923.9 $891.5 
(A)Accumulated impairment losses include the impacts of currency translation. These losses are attributable to our Latin America reporting unit ("LASA") within the Industrial Gases – Americas segment.
We review goodwill for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying value of goodwill might not be recoverable.

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7. FINANCIAL INSTRUMENTS
Currency Price Risk Management
Our earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency-denominated transactions and net investments in foreign operations. It is our policy to seek to minimize our cash flow volatility from changes in currency exchange rates. This is accomplished by identifying and evaluating the risk that our cash flows will change in value due to changes in exchange rates and by executing strategies necessary to manage such exposures. Our objective is to maintain economically balanced currency risk management strategies that provide adequate downside protection.
Forward Exchange Contracts
We enter into forward exchange contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated cash flows and certain firm commitments, such as the purchase of plant and equipment. We also enter into forward exchange contracts to hedge the cash flow exposure on intercompany loans and third-party debt. This portfolio of forward exchange contracts consists primarily of Euros and U.S. Dollars. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at 31 December 2020 is 2.6 years.
Forward exchange contracts are also used to hedge the value of investments in certain foreign subsidiaries and affiliates by creating a liability in a currency in which we have a net equity position. The primary currency pair in this portfolio of forward exchange contracts is Euros and U.S. Dollars.
We also utilize forward exchange contracts that are not designated as hedges. These contracts are used to economically hedge foreign currency-denominated monetary assets and liabilities, primarily working capital. The primary objective of these forward exchange contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. This portfolio of forward exchange contracts consists of many different foreign currency pairs, with a profile that changes from time to time depending on business activity and sourcing decisions.
The table below summarizes our outstanding currency price risk management instruments:
31 December 202030 September 2020
US$
Notional
Years
Average
Maturity
US$
Notional
Years
Average
Maturity
Forward Exchange Contracts:
Cash flow hedges$2,752.9 0.4$2,842.1 0.5
Net investment hedges694.9 3.5636.6 3.8
Not designated947.8 0.31,685.2 0.3
Total Forward Exchange Contracts$4,395.6 0.9$5,163.9 0.8

The decrease in the notional value of forward exchange contracts that are not designated is primarily due to maturities.
We also use foreign currency-denominated debt to hedge the foreign currency exposures of our net investment in certain foreign subsidiaries. The designated foreign currency-denominated debt and related accrued interest was €1,306.9 million ($1,596.4) at 31 December 2020 and €1,288.7 million ($1,510.8) at 30 September 2020. The designated foreign currency-denominated debt is presented within "Long-term debt" on the consolidated balance sheets.
Debt Portfolio Management
It is our policy to identify, on a continuing basis, the need for debt capital and to evaluate the financial risks inherent in funding the Company with debt capital. Reflecting the result of this ongoing review, our debt portfolio and hedging program are managed with the intent to (1) reduce funding risk with respect to borrowings made by us to preserve our access to debt capital and provide debt capital as required for funding and liquidity purposes, and (2) manage the aggregate interest rate risk and the debt portfolio in accordance with certain debt management parameters.
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Interest Rate Management Contracts
We enter into interest rate swaps to change the fixed/variable interest rate mix of our debt portfolio in order to maintain the percentage of fixed- and variable-rate debt within the parameters set by management. In accordance with these parameters, the agreements are used to manage interest rate risks and costs inherent in our debt portfolio. Our interest rate management portfolio generally consists of fixed-to-floating interest rate swaps (which are designated as fair value hedges), pre-issuance interest rate swaps and treasury locks (which hedge the interest rate risk associated with anticipated fixed-rate debt issuances and are designated as cash flow hedges), and floating-to-fixed interest rate swaps (which are designated as cash flow hedges). As of 31 December 2020, the outstanding interest rate swaps were denominated in U.S. Dollars. The notional amount of the interest rate swap agreements is equal to or less than the designated debt being hedged. When interest rate swaps are used to hedge variable-rate debt, the indices of the swaps and the debt to which they are designated are the same. It is our policy not to enter into any interest rate management contracts which lever a move in interest rates on a greater than one-to-one basis.
Cross Currency Interest Rate Swap Contracts
We enter into cross currency interest rate swap contracts when our risk management function deems necessary. These contracts may entail both the exchange of fixed- and floating-rate interest payments periodically over the life of the agreement and the exchange of one currency for another currency at inception and at a specified future date. The contracts are used to hedge either certain net investments in foreign operations or non-functional currency cash flows related to intercompany loans. The current cross currency interest rate swap portfolio consists of fixed-to-fixed swaps primarily between U.S. Dollars and Chinese Renminbi, U.S. Dollars and Indian Rupee, and U.S. Dollars and Chilean Pesos.
The following table summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:
31 December 202030 September 2020
US$
Notional
Average
Pay %
Average
Receive
%
Years
Average
Maturity
US$
Notional
Average
Pay %
Average
Receive
%
Years
Average
Maturity
Interest rate swaps
(fair value hedge)
$200.0 LIBOR2.76 %0.8$200.0 LIBOR2.76 %1.1
Cross currency interest rate swaps
(net investment hedge)
$205.6 4.30 %3.13 %3.0$201.6 4.27 %3.12 %3.2
Cross currency interest rate swaps
(cash flow hedge)
$1,099.6 4.85 %2.94 %2.5$1,057.9 4.83 %2.98 %2.5
Cross currency interest rate swaps
(not designated)
$8.8 5.39 %3.54 %2.9$12.8 5.39 %3.54 %3.2

The table below provides the amounts recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
Carrying amounts of hedged itemCumulative hedging adjustment, included in carrying amount
Balance Sheet Location31 December 202030 September 202031 December 202030 September 2020
Current portion of long-term debt$404.2 $ $4.4 $ 
Long-term debt 405.4  5.7 
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The table below summarizes the fair value and balance sheet location of our outstanding derivatives:
Balance Sheet
Location
31 December 202030 September 2020Balance Sheet
Location
31 December 202030 September 2020
Derivatives Designated as Hedging Instruments:
Forward exchange contractsOther receivables and current assets$97.2 $51.1 Payables and accrued liabilities$42.8 $22.5 
Interest rate management contractsOther receivables and current assets13.1 14.7 Payables and accrued liabilities7.2 0.4 
Forward exchange contractsOther noncurrent assets3.3 0.8 Other noncurrent liabilities53.9 33.0 
Interest rate management contractsOther noncurrent
assets
14.6 44.3 Other noncurrent liabilities32.7 1.7 
Total Derivatives Designated as Hedging Instruments$128.2 $110.9 $136.6 $57.6 
Derivatives Not Designated as Hedging Instruments:
Forward exchange contractsOther receivables and current assets$18.4 $31.7 Payables and accrued liabilities$17.2 $28.0 
Forward exchange contractsOther noncurrent assets  Other noncurrent liabilities0.2  
Interest rate management contractsOther noncurrent assets 0.7 Other noncurrent liabilities0.1  
Total Derivatives Not Designated as Hedging Instruments$18.4 $32.4 $17.5 $28.0 
Total Derivatives$146.6 $143.3 $154.1 $85.6 

Refer to Note 8, Fair Value Measurements, which defines fair value, describes the method for measuring fair value, and provides additional disclosures regarding fair value measurements.
The tables below summarize gains (losses) recognized in other comprehensive income during the period related to our net investment and cash flow hedging relationships:
Three Months Ended 31 December
20202019
Net Investment Hedging Relationships
Forward exchange contracts($35.9)($9.1)
Foreign currency debt(64.2)(29.9)
Cross currency interest rate swaps(14.2)(3.5)
Total Amount Recognized in OCI(114.3)(42.5)
Tax effects28.6 10.2 
Net Amount Recognized in OCI($85.7)($32.3)
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Three Months Ended 31 December
20202019
Derivatives in Cash Flow Hedging Relationships
Forward exchange contracts$64.7 $26.3 
Forward exchange contracts, excluded components(2.7)(4.5)
Other(A)
(45.5)2.9 
Total Amount Recognized in OCI16.5 24.7 
Tax effects(2.7)(2.6)
Net Amount Recognized in OCI$13.8 $