Praxair Reports Record Second-Quarter Results; Raises Full-Year Guidance

-- Diluted EPS of $1.08 up 21% versus prior year

-- Sales growth of 23% versus 2007; strong results in all
geographies

-- Operating cash flow of $389 million; return on capital of
15.4%*

-- Increased FY 2008 EPS guidance to $4.20 - $4.30*

-- New $1 billion share repurchase program authorized
DANBURY, Conn.--(Business Wire)--
Praxair, Inc. (NYSE: PX) reported second-quarter net income of
$349 million and diluted earnings per share of $1.08, compared to $291
million and 89 cents, respectively, in the prior-year quarter. This
represents net income and earnings per share growth of 20% and 21%,
respectively, versus the prior-year quarter.

Sales in the second quarter were $2,878 million, up 23% from
$2,332 million in the second quarter of 2007. Praxair achieved strong
sales growth in every geographic region, led by South America and
Asia.

Operating profit was a record $543 million, 24% above $439 million
in the prior-year quarter. Higher pricing and cost savings from
productivity programs offset inflationary cost increases.

Cash flow from operations was $389 million. Capital expenditures
of $380 million largely supported the construction of new on-site
supply systems under contract for customers. The company invested $30
million in acquisitions, primarily industrial packaged gas businesses
in North America. The debt-to-capital ratio was 43.4% at the end of
the quarter. The after-tax return-on-capital ratio was 15.4%, and
return on equity was 25.7%*.

Due to strong cash flow generation from operations, the company
has completed to date $931 million of stock repurchases under the $1
billion repurchase program authorized in July 2007. The company
announced this morning a new $1 billion stock repurchase program which
has been authorized by Praxair's board of directors, based on a
positive outlook for continued strong growth in earnings and cash flow
generation.

In North America, second-quarter sales reached $1,573 million, 22%
above the prior year. Excluding the effect of higher natural gas
prices passed through to customers in hydrogen prices, sales growth
was 18%, led by higher sales to energy and general manufacturing
markets. Operating profit grew 19% to $275 million.

In Europe, sales in the second quarter of $406 million grew 21%
from $336 million in the prior-year quarter. Currency effects
contributed 16% to sales growth. Underlying sales growth came
primarily from growth in merchant and packaged gases volumes in
Germany and Italy. Second-quarter operating profit of $99 million rose
25% from the prior-year period.

In South America, second-quarter sales of $514 million grew 31%
versus the prior-year quarter due to higher prices and volumes, and
favorable currency effects of 16%. Sales growth came primarily from
higher sales to metals and manufacturing markets. Operating profit
rose 34% to $102 million in the quarter.

Sales in Asia grew 30% to $232 million in the quarter,
attributable primarily to strong volume growth from new plant
start-ups and higher sales to the electronics, manufacturing and
metals markets. Operating profit in the quarter grew 33% to $40
million from the prior-year period.

Praxair Surface Technologies had second-quarter sales of $153
million, 17% above the prior-year quarter. Sales growth was driven by
higher sales to aerospace and energy markets. Operating profit of $27
million was 17% above the 2007 quarter.

For the third quarter of 2008, Praxair expects diluted earnings
per share in the range of $1.06 to $1.10. This represents earnings
growth of 13% to 17% above the third quarter of 2007.

For the full year of 2008, Praxair expects year-over-year sales
growth in the range of 16% to 20%. The company expects diluted
earnings per share to be in the range of $4.20 to $4.30, excluding the
impact of the 3-cent pension settlement charge which occurred in the
first quarter of 2008. This represents 16% to 19% growth from 2007*.
Full-year capital expenditures are expected to be about $1.5 billion,
supporting an increasing number of contracts for on-site production
plants globally which will come on-stream over the next several years,
generating strong revenue and earnings growth.

Commenting on the results and business outlook, Chairman and Chief
Executive Officer Steve Angel said, "We had another strong quarter.
Our results reflect strong sales growth in Asia and South America due
to the high level of investment by our customers in these developing
economies. In North America, we are continuing to see strong demand
from the energy sector and steady growth in our base business. We
therefore expect that our results will continue to reflect strong
year-over-year growth in sales and earnings.

"The new stock repurchase program which we announced today
reflects our positive outlook. We expect to fund this repurchase
program largely out of operating cash flow, while simultaneously
investing in a record number of new on-site projects for our
customers."

Praxair is the largest industrial gases company in North and South
America, and one of the largest worldwide, with 2007 sales of $9.4
billion. The company produces, sells and distributes atmospheric and
process gases, and high-performance surface coatings. Praxair
products, services and technologies bring productivity and
environmental benefits to a wide variety of industries, including
aerospace, chemicals, food and beverage, electronics, energy,
healthcare, manufacturing, metals and others. More information on
Praxair is available on the Internet at www.praxair.com.

*See the attachments for calculations of non-GAAP measures related
to 2008 operating profit, net income, and diluted earnings per share
adjusted to exclude a $17-million pension-settlement charge in the
first quarter, $11 million after-tax, 3 cents EPS. All full
year-over-year comparisons, including percentage changes, are based on
adjusted amounts for 2008 which exclude the pension-settlement charge.
The attachments also include calculations of non-GAAP measures related
to after-tax return-on-capital; return on equity; and debt-to-capital
ratios.

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

A teleconference on Praxair's second-quarter results is being held
this morning, July 23, at 11:00 a.m. Eastern Time. The number is (617)
597-5395 -- Passcode: 77241552. The call also is available as a web
cast at www.praxair.com/investors. Materials to be used in the
teleconference are available on www.praxair.com/investors.

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 tax, environmental, home
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; 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. 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 latest Annual
Report on Form 10-K filed with the SEC which should be reviewed
carefully. Please consider the company's forward-looking statements in
light of those risks.

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*T
PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)

Quarter Ended Year to Date
June 30, June 30,
---------------------------------------
2008 2007 2008 2007
--------- --------- --------- ---------

SALES (a) $ 2,878 $ 2,332 $ 5,541 $ 4,507
Cost of sales 1,748 1,388 3,343 2,670
Selling, general and
administrative 341 296 676 582
Depreciation and amortization 216 189 426 371
Research and development 24 24 48 48
Other income (expense) - net
(b) (6) 4 (23) 6
--------- --------- --------- ---------
OPERATING PROFIT 543 439 1,025 842
Interest expense - net 52 41 99 79
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 491 398 926 763
Income taxes 137 103 259 198
--------- --------- --------- ---------
354 295 667 565
Minority interests (13) (9) (28) (18)
Income from equity investments 8 5 17 9
--------- --------- --------- ---------
NET INCOME $ 349 $ 291 $ 656 $ 556
========= ========= ========= =========

PER SHARE DATA

Basic earnings per share $ 1.11 $ 0.91 $ 2.09 $ 1.73

Diluted earnings per share $ 1.08 $ 0.89 $ 2.04 $ 1.70

Cash dividends $ 0.375 $ 0.30 $ 0.75 $ 0.60

WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic shares outstanding
(000's) 315,312 320,213 314,624 320,488
Diluted shares outstanding
(000's) 322,088 326,301 321,245 326,447

(a)Sales for the 2008 quarter and year-to-date periods increased $56
million and $76 million, respectively, from the contractual pass-
through of hydrogen feedstock costs, with minimal impact on
operating profit compared to 2007. Sales for the quarter and year-
to-date periods increased $160 million and $322 million,
respectively, due to currency effects versus 2007.

(b)Other income (expense) for the 2008 year-to-date period includes a
pension settlement charge of $17 million ($11 million after-tax or
$0.03 per diluted share).
*T

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PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(UNAUDITED)

June December
30, 31,
2008 2007
------- --------
ASSETS
Cash and cash equivalents $ 27 $ 17
Accounts receivable - net 1,982 1,723
Inventories 507 474
Prepaid and other current assets 230 194
------- --------
TOTAL CURRENT ASSETS 2,746 2,408

Property, plant and equipment - net 8,459 7,963
Goodwill 2,072 1,967
Other intangibles - net 144 134
Other long-term assets 1,007 910
------- --------
TOTAL ASSETS $14,428 $13,382
======= ========

LIABILITIES AND EQUITY
Accounts payable $ 911 $ 818
Short-term debt 882 788
Current portion of long-term debt 40 40
Other current liabilities 885 1,004
------- --------
TOTAL CURRENT LIABILITIES 2,718 2,650

Long-term debt 3,674 3,364
Other long-term liabilities 2,048 1,905
------- --------
TOTAL LIABILITIES 8,440 7,919

Minority interests 317 321
Shareholders' equity 5,671 5,142
------- --------
TOTAL LIABILITIES AND EQUITY $14,428 $13,382
======= ========
*T

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PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)

Quarter Ended Year to Date
June 30, June 30,
------------- -------------
2008 2007 2008 2007
------ ------ ------ ------
OPERATIONS
Net income $ 349 $ 291 $ 656 $ 556
Depreciation and amortization 216 189 426 371
Accounts receivable (85) (90) (269) (163)
Inventory (24) (21) (33) (37)
Payables and accruals 37 89 95 17
Pension contributions (2) (3) (13) (14)
Other (102) 26 (94) 49
------ ------ ------ ------
Net cash provided by operating
activities 389 481 768 779
------ ------ ------ ------

INVESTING
Capital expenditures (380) (329) (724) (614)
Acquisitions (30) (31) (70) (327)
Divestitures and asset sales 30 17 46 21
------ ------ ------ ------
Net cash used for investing activities (380) (343) (748) (920)
------ ------ ------ ------

FINANCING
Debt increase (decrease) - net 27 (67) 356 473
Purchases of common stock, net of
issuances 49 - (178) (186)
Cash dividends (119) (96) (236) (192)
Excess tax benefit on stock option
exercises 39 20 44 34
Minority interest transactions and other (1) (1) - (4)
------ ------ ------ ------
Net cash (used for) provided by
financing activities (5) (144) (14) 125

Effect of exchange rate changes on cash and
cash equivalents 2 2 4 2
------ ------ ------ ------

Change in cash and cash equivalents 6 (4) 10 (14)
Cash and cash equivalents, beginning-of-
period 21 26 17 36
------ ------ ------ ------

Cash and cash equivalents, end-of-period $ 27 $ 22 $ 27 $ 22
====== ====== ====== ======
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PRAXAIR, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)

Quarter Ended Year to Date
June 30, June 30,
----------------------------
2008 2007 2008 2007
------ -------------- ------
SALES
North America (a) $1,573 $1,293 $3,027 $2,498
Europe (b) 406 336 796 666
South America (c) 514 393 980 741
Asia (d) 232 179 443 346
Surface Technologies (e) 153 131 295 256
------ ------ ------- ------
Total sales $2,878 $2,332 $5,541 $4,507
====== ====== ======= ======

OPERATING PROFIT
North America (a) $ 275 $ 231 $ 537 $ 448
Europe 99 79 186 151
South America 102 76 191 142
Asia 40 30 77 57
Surface Technologies 27 23 51 44
------ ------ ------- ------
Segment operating profit 543 439 1,042 842
Pension settlement charge - - (17) -
------ ------ ------- ------
Total operating profit $ 543 $ 439 $1,025 $ 842
====== ====== ======= ======

(a)North American 2008 sales for the quarter and year-to-date periods
increased $56 million and $76 million, respectively, from the
contractual pass-through of hydrogen feedstock costs, with minimal
impact on operating profit compared to 2007. Sales for the quarter
and year-to-date periods increased $26 million and $62 million,
respectively, due to currency effects versus 2007.
(b)European 2008 sales for the quarter and year-to-date periods
increased $54 million and $96 million, respectively, due to
currency effects versus 2007.
(c)South American 2008 sales for the quarter and year-to-date periods
increased $64 million and $129 million, respectively, due to
currency effects versus 2007.
(d)Asian 2008 sales for the quarter and year-to-date periods increased
$5 million and $15 million, respectively, due to currency effects
versus 2007.
(e)Surface Technologies 2008 sales for the quarter and year-to-date
periods increased $11 million and $20 million, respectively, due
to currency effects versus 2007.
*T

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PRAXAIR, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL SUMMARY
(Millions of dollars, except per share data)
(UNAUDITED)

2008
-------------------
Q2 Q1
FROM THE INCOME STATEMENT
Sales $ 2,878 $ 2,663
Cost of sales 1,748 1,595
Selling, general and administrative 341 335
Depreciation and amortization 216 210
Research and development 24 24
Other income (expenses) - net (6) (17)
--------- ---------
Operating profit 543 482
Interest expense - net 52 47
Income taxes 137 122
Minority interests (13) (15)
Income from equity investments 8 9
--------- ---------
Net income $ 349 $ 307
========= =========

PER SHARE DATA
Diluted earnings per share $ 1.08 $ 0.96
Cash dividends per share $ 0.375 $ 0.375
Diluted weighted average shares outstanding
(000's) 322,088 320,409

FROM THE BALANCE SHEET
Total debt $ 4,596 $ 4,574
Total capital (a) 10,584 10,127
Debt-to-capital ratio (a) 43.4% 45.2%

FROM THE STATEMENT OF CASH FLOWS
Cash flow from operations $ 389 $ 379
Capital expenditures 380 344
Acquisitions 30 40
Cash dividends 119 117

OTHER INFORMATION
Number of employees 27,999 27,948
After-tax return on capital (ROC) (a) 15.4% 14.8%
Return on equity (ROE) (a) 25.7% 24.6%

SEGMENT DATA
SALES
North America $ 1,573 $ 1,454
Europe 406 390
South America 514 466
Asia 232 211
Surface Technologies 153 142
--------- ---------
Total sales $ 2,878 $ 2,663
========= =========
OPERATING PROFIT
North America $ 275 $ 262
Europe 99 87
South America 102 89
Asia 40 37
Surface Technologies 27 24
--------- ---------
Segment operating profit 543 499
Pension settlement charge - (17)
--------- ---------
Total operating profit $ 543 $ 482
========= =========

2007
---------------------------------------
Q4 Q3 Q2 Q1
FROM THE INCOME STATEMENT
Sales $ 2,523 $ 2,372 $ 2,332 $ 2,175
Cost of sales 1,493 1,394 1,388 1,282
Selling, general and
administrative 314 294 296 286
Depreciation and amortization 207 196 189 182
Research and development 26 24 24 24
Other income (expenses) - net 1 (4) 4 2
---------------------------------------
Operating profit 484 460 439 403
Interest expense - net 50 44 41 38
Income taxes 115 106 103 95
Minority interests (16) (9) (9) (9)
Income from equity investments 13 4 5 4
---------------------------------------
Net income $ 316 $ 305 $ 291 $ 265
=======================================

PER SHARE DATA
Diluted earnings per share $ 0.98 $ 0.94 $ 0.89 $ 0.81
Cash dividends per share $ 0.30 $ 0.30 $ 0.30 $ 0.30
Diluted weighted average shares
outstanding (000's) 323,328 324,920 326,301 326,787

FROM THE BALANCE SHEET
Total debt $ 4,192 $ 4,003 $ 3,700 $ 3,736
Total capital (a) 9,655 9,120 8,784 8,433
Debt-to-capital ratio (a) 43.4% 43.9% 42.1% 44.3%

FROM THE STATEMENT OF CASH
FLOWS
Cash flow from operations $ 587 $ 592 $ 481 $ 298
Capital expenditures 402 360 329 285
Acquisitions 127 22 31 296
Cash dividends 94 95 96 96

OTHER INFORMATION
Number of employees 27,992 27,479 28,035 27,681
After-tax return on capital
(ROC) (a) 15.7% 15.5% 15.3% 14.8%
Return on equity (ROE) (a) 25.3% 25.1% 25.0% 23.5%

SEGMENT DATA
SALES
North America $ 1,381 $ 1,306 $ 1,293 $ 1,205
Europe 354 325 336 330
South America 444 419 393 348
Asia 210 190 179 167
Surface Technologies 134 132 131 125
---------------------------------------
Total sales $ 2,523 $ 2,372 $ 2,332 $ 2,175
=======================================
OPERATING PROFIT
North America $ 255 $ 244 $ 231 $ 217
Europe 86 78 79 72
South America 85 84 76 66
Asia 34 30 30 27
Surface Technologies 24 24 23 21
---------------------------------------
Segment operating profit 484 460 439 403
Pension settlement charge - - - -
---------------------------------------
Total operating profit $ 484 $ 460 $ 439 $ 403
=======================================

(a) Non-GAAP measure, see Appendix.
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PRAXAIR, INC. AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES
(Millions of dollars, except per share data)
(UNAUDITED)

Definitions of the following non-GAAP measures may not be comparable
to similar definitions used by other companies. Praxair believes that
its (i) debt-to-capital ratio is appropriate for measuring its
financial leverage; (ii) after-tax return on invested capital ratio
(ROC) is an appropriate measure for judging performance as it
reflects the approximate after-tax profit earned as a percentage of
investments by all parties in the business (debt, minority interests
and shareholders' equity); (iii) return on equity ratio (ROE) is an
appropriate measure for judging performance for shareholders; and
(iv) 2008 adjusted operating profit, net income and diluted EPS which
are adjusted for the impact of the 2008 Q1 pension settlement charge
helps investors understand underlying performance on a comparable
basis.

2008 2007
----------------- -------------------------------
Q2 Q1 Q4 Q3 Q2 Q1
Total Capital
--------------------
Total debt $ 4,596 $ 4,574 $4,192 $4,003 $3,700 $3,736
Minority interests 317 344 321 255 234 230
Shareholders'
equity 5,671 5,209 5,142 4,862 4,850 4,467
-------- -------- -------------------------------
Total Capital $10,584 $10,127 $9,655 $9,120 $8,784 $8,433
======== ======== ===============================

Debt-to-Capital
Ratio 43.4% 45.2% 43.4% 43.9% 42.1% 44.3%
-------------------- ================= ===============================

After-Tax Return on
Capital (ROC)
--------------------

Adjusted operating
profit (see below) $ 543 $ 499 $ 484 $ 460 $ 439 $ 403

Less: income taxes (137) (122) (115) (106) (103) (95)
Less: tax benefit
on pension
settlement charge* - (6) - - - -
Less: tax benefit
on interest
expense (15) (13) (13) (11) (11) (10)
Add: income from
equity investments 8 9 13 4 5 4
----------------- -------------------------------
Net operating
profit
after-tax (NOPAT) $ 399 $ 367 $ 369 $ 347 $ 330 $ 302

Beginning capital $10,127 $ 9,655 $9,120 $8,784 $8,433 $7,943
Ending capital $10,584 $10,127 $9,655 $9,120 $8,784 $8,433
Average capital $10,356 $ 9,891 $9,388 $8,952 $8,609 $8,188

ROC % 3.9% 3.7% 3.9% 3.9% 3.8% 3.7%

ROC % (annualized) 15.4% 14.8% 15.7% 15.5% 15.3% 14.8%
======== ========================================

Return on Equity
(ROE)
--------------------

Adjusted net income
(see below) $ 349 $ 318 $ 316 $ 305 $ 291 $ 265

Beginning
shareholders'
equity $ 5,209 $ 5,142 $4,862 $4,850 $4,467 $4,554
Ending
shareholders'
equity $ 5,671 $ 5,209 $5,142 $4,862 $4,850 $4,467
Average
shareholders'
equity $ 5,440 $ 5,176 $5,002 $4,856 $4,659 $4,511

ROE % 6.4% 6.1% 6.3% 6.3% 6.2% 5.9%

ROE % (annualized) 25.7% 24.6% 25.3% 25.1% 25.0% 23.5%
================= ==============================-
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2008 Adjusted Operating profit, Net income and Diluted EPS
----------------------------------------------------------------------

First Full Year 2008
Quarter Guidance
-------- ----------------
High
2008 Low End End
-------- --------- ------
Reported operating profit $ 482
Add: pension settlement charge* 17
--------
Adjusted operating profit $ 499
--------

Reported net income $ 307
Add: pension settlement charge* 11
--------
Adjusted net income $ 318
--------

Diluted weighted average shares 320,409

Reported diluted EPS $ 0.96 $4.17 $4.27
Add: pension settlement charge* 0.03 0.03 0.03
-------- --------- ------
Adjusted Diluted EPS $ 0.99 $4.20 $4.30
======== ========= ======

Reported 2007 Diluted EPS $3.62 $3.62
Percentage change from 2007 16% 19%

*A pension settlement charge of $17 million ($11 million after-tax or
$0.03 per diluted share) was recorded in the 2008 first quarter
related to lump sum benefit payments made from the U.S.
supplemental pension plan to a number of recently retired senior
managers, including Praxair's former chairman and chief executive
officer.
*T

Praxair, Inc.
Media
Susan Szita Gore, 203-837-2311
susan_szita-gore@praxair.com
or
Investors
Elizabeth Hirsch, 203-837-2354
liz_hirsch@praxair.com

Copyright Business Wire 2008