Excluding these items, net income was $318 million and diluted earnings per share were $1.02, as compared to $355 million and $1.11 in the prior-year quarter.*

Sales in the third quarter were $2,288 million, 20% below $2,852 million in the third quarter of 2008. Excluding the negative effects of foreign currency and cost pass-through, underlying sales were 9% lower due to 11% lower volumes partially offset by 2% higher overall pricing. Sequentially, sales rose 7% from the 2009 second quarter.

Reported operating profit in the third quarter was $174 million. Excluding the above-mentioned charge, adjusted operating profit was $480 million, 12% below the prior-year period and 7% above the second quarter. Adjusted operating margin was 21% in the current quarter, up from 19.1% in the prior year as cost reductions and pricing more than offset volume declines.*

The company generated strong cash flow from operations of $547 million in the quarter which funded $334 million of capital expenditures, supporting primarily the construction of new on-site production plants for customers under long-term contracts. Acquisition expenditures were $117 million, primarily for the purchase of Sermatech International Holdings Corp. which was announced on July 1, 2009 and closed during the quarter. The company paid $122 million of dividends. The after-tax return-on-capital ratio and return on equity for the quarter were 13.6%, and 26.2%, respectively.*

Commenting on the results and business outlook, Chairman and Chief Executive Officer Steve Angel said, "Business conditions stabilized globally during the quarter. Our base business volumes improved from the second quarter in all our geographic regions. The strongest pick-up was in Asia and South America, where government stimulus programs have increased domestic demand and industrial production. To a lesser extent, volumes in North America and Europe also improved from the 2009 second quarter, due primarily to increased production by our metals, chemicals and electronics customers. Overall demand from general manufacturing markets in these regions remains relatively weak and has yet to show meaningful signs of recovery.

"We continue to hold a tight rein on costs. Our cost reduction and productivity programs have offset a substantial amount of the impact of lower volumes compared to last year. Our lower cost base will therefore give us significant operating leverage as volumes improve."

For the fourth quarter of 2009, Praxair expects diluted earnings per share in the range of $1.05 to $1.10.

For the full year of 2009, Praxair expects sales to be about $9 billion. The company expects adjusted diluted earnings per share to be in the range of $3.96 to $4.01.* Full-year capital expenditures are expected to be about $1.4 billion.

Following is additional detail on third-quarter 2009 results by geographic region and for Praxair Surface Technologies.

In North America, third-quarter sales were $1,162 million, 25% below the third quarter of 2008. Excluding the negative effect of currency and cost pass-through, underlying sales declined 12% due to lower volumes, partially offset by higher overall pricing. Higher refinery hydrogen volumes were offset by lower volumes to chemicals, metals, and general manufacturing markets. Compared to the second quarter of 2009, sales grew 4% primarily due to higher volumes to chemicals and steel customers. Despite 13% lower volumes compared to the prior year, operating profit of $263 million declined only 4% due to significantly lower costs.

In Europe, third-quarter sales were $323 million, 16% below the prior year. Excluding currency effects, sales were 8% below the prior year due to lower volumes in manufacturing and metals markets. Operating profit was $68 million in the quarter, compared to $96 million in the prior-year quarter due to lower volumes and currency effects. Compared to the 2009 second quarter, sales and operating profit both improved.

In South America, third-quarter sales were $436 million, 17% below the prior-year period. Excluding currency effects, sales were 6% below the prior-year quarter. Operating profit in the third quarter was $94 million, 15% below the prior-year period due to lower volumes partially offset by higher pricing levels. As compared to the second quarter, sales and operating profit ex-currency effects both improved from moderately higher volumes and cost reduction.

Sales in Asia were $232 million in the quarter, 3% below the third quarter of 2008. Excluding currency translation effects, underlying sales grew 3% from the prior-year quarter and 15% from the second quarter of 2009. Sales growth in the region came from higher on-site and liquid volumes in China, India, and Korea and was broad-based across most industrial end markets. Operating profit was $37 million, 3% below the prior-year quarter but 12% higher sequentially.

Praxair Surface Technologies had third-quarter sales of $135 million versus $145 million in the prior-year quarter. Excluding currency effects and the sales contribution from the Sermatech acquisition, sales were 17% below the prior-year quarter. Higher coatings volumes for jet engines and natural gas turbines were more than offset by lower coatings volumes for industrial gas turbines and for general manufacturing markets in the U.S. and Europe. Operating profit was $18 million in the quarter versus $25 million in the prior-year period and $19 million in the second quarter, reflecting lower overall volumes and acquisition integration expenses.

Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2008 sales of $10.8 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 third-quarter operating profit, incomes taxes, net income, and diluted earnings per share, adjusted to exclude the impact of the Brazil tax amnesty program and other charges which resulted in a net after-tax benefit of $7 million, or 2 cents of diluted earnings per share; and after-tax return-on-capital; return-on-equity; and debt-to-capital ratios.

Attachments: Non-GAAP Reconciliation -- Brazil Tax Amnesty Program and Other Charges, Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures

A teleconference on Praxair's third-quarter results is being held this morning, October 28, at 11:00 am Eastern Time. The number is (617) 614-3449 -- Passcode: 51428025. 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.

 Non-GAAP Reconciliation - Brazil Tax Amnesty Program and Other Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
 The following is a reconciliation of 2009 third quarter reported GAAP amounts to Adjusted Non-GAAP amounts. The Non-GAAP adjustments eliminate the impacts of a net after-tax benefit of $7 million, or $0.02 per diluted share, related to a recently announced Federal tax amnesty program in Brazil (referred to as "Refis Program") and other charges. The company believes these adjustments are not indicative of ongoing business trends, and accordingly, the non-GAAP measures are presented so that investors can evaluate and analyze historical and future business trends on a consistent basis, and in line with how management evaluates performance and trends.