Air Products & Chemicals, Inc.

A description of our major accounting policies, including those that we consider to be the most critical to understanding our financial statements, is included in our 2024 Form 10-K. There were no significant changes to our accounting policies during the first nine months of fiscal year 2025.

Management’s Discussion and Analysis of our financial condition and results of operations is based on the consolidated financial statements and accompanying notes that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates reflect our best judgment about current and/or future economic and market conditions and their effect based on information available as of the date of our consolidated financial statements. If conditions change, actual results may differ materially from these estimates.

Judgments and estimates of uncertainties are required to apply our accounting policies in many areas. However, application of policies that management has identified as critical places significant importance on management’s judgment, often as the result of the need to make estimates about the effects of matters that are inherently uncertain.

During the first nine months of fiscal year 2025, we recorded charges totaling approximately $3.0 billion ($2.3 billion attributable to Air Products after tax, or $10.35 per share) for the actions described in Note 4, Business and Asset Actions, to the consolidated financial statements. This charge included approximately $1.8 billion to reduce the carrying value of assets associated with project exits to their estimated net realizable value of $22.5. We estimated the net realizable value of the assets as of 31 March 2025 assuming an orderly liquidation through a secondary equipment market based on our experience with selling similar equipment. An asset’s orderly liquidation value is the amount that could be realized from a liquidation sale, given a reasonable period of time to find a buyer, selling the asset in the existing condition where it is located, and assuming the highest and best use of the asset by market participants. The inputs used for the valuation include significant unobservable inputs, or "Level 3" inputs, based on our best judgment regarding assumptions we expect market participants would use. The loss was measured as the difference between the orderly liquidation value of the assets and the net book value of the assets as of 31 March 2025. There have been no significant changes in the estimated net realizable value as of 30 June 2025.

Additionally, during the first nine months of fiscal year 2025, we recorded changes to project revenue and cost estimates on certain sale of equipment projects that are accounted for under the cost incurred input method. Accordingly, we recorded cumulative effect adjustments that unfavorably impacted operating income (loss) by approximately $20 and $63 for the three and nine months ended 30 June 2025, respectively.

There were no other changes to our estimates during the first nine months of fiscal year 2025 that had a significant impact on our financial condition, change in financial condition, liquidity, or results of operations.