Good morning welcome to Air Products and Chemicals Third Quarter 2008 Earnings Results Conference Call. Just a reminder that you will be in a listen-only mode until the question-and-answer segment of today's conference. [Operator Instructions]. Also, this teleconference presentation and the comments made on behalf of Air Products are subject to copyright by Air Products, and all rights are reserved. Air Products will be recording this teleconference and may publish all or a portion of the teleconference. No other recording or redistribution of this telephone conference by any other party are permitted without expressed or written permission of Air Products. Your participation indicates your agreement. Beginning today's conference is Mr. Nelson Squires, Director of Investor Relations. Mr. Squires. You may begin.

Thank you, Amy. Good morning, and welcome to Air Products quarterly earnings teleconference. This is Nelson Squires. Today, our CFO, Paul Huck, and I will review our third quarter results. We issued our earnings release this morning and it is available on our website along with the slides for this teleconference. Please go to airproducts.com and click on the scrolling red banner to access the materials. Instructions for accessing the replay of this call beginning at 2 PM Eastern Time are also available on the website. Please turn to slide two. As always, today's teleconference will contain forward-looking statements based on current expectations regarding important risk factors. Please review the Safe Harbor language on this slide and at the end of today's earnings release. Now, I'll turn the call over to Paul.

Thank you Nelson. Good morning and thank you for joining us today. Now please just turn to slide number three, before we look it this quarter's results I would like to spend a few minute updating you on several portfolio management items. First as we mentioned last quarter, we were marketing our remaining emulsions properties enclosed on the sale of those facilities to Ashland on June 30th. Second, we have completed the review of our strategic alternatives for our U.S. Healthcare business. As part of our review process we performed an asset impairment test and have recorded $315 million impairment charge this quarter. We also reviewed our options for the business with our Board last week. We have approval to sell the business and have already started the process. We have reached an agreement in principle to sell our business in New York and New Jersey, which represents about 10% of our U.S. Healthcare business sales. We expect to close on this transaction in the fourth quarter. Regarding the remaining U.S. business, we have solicited and received a number of indications of interest in the business. And we are in currently in discussions with those potential buyers. As a result of our Board approval, we will begin reporting the U.S. Healthcare business in discontinued operations starting in quarter four. We will also move the leadership of our European Healthcare business into our Merchant business, reporting it as part of that segment. Prior to our earnings announcement for the quarter, we will provide you with restated segment information. This transaction will have a favorable impact on a number of key metrics we are working to improve. The sale of business should improve earnings per share from continuing operations by $0.11 in 2008. It will also improve our return on capital employed…

Thanks, Paul. Please turn to slide six, Merchant Gases. Merchant Gases grew at a solid pace during the quarter. Sales of $973 million were up 19% versus prior year. Currency contributed 8% and volume contributed 5%, pricing added 4% and acquisitions 2%. Merchant Gases operating income of $177 million was up 20% versus prior year and segment operating margin of 18.2% was up 20 basis points. Mainly, due to pricing and volume gains margins were down sequentially by 30 basis points due to significantly higher energy and fuel cost in May and June. Let me now provide a few highlights by region. Please turn to slide seven. In North America, our sales increased to 11% driven by continued strong pricing gains and solid volume growth. We are seeing the expected volume growth in oxygen and nitrogen versus last year, realizing the impact of new business signings from previous quarters. Liquid nitrogen for oil field services was also very strong in the quarter. We are bringing on previously announced capacity at three of our facilities and are pleased with the loading and returns on these news expansions. Pricing continued its strong trend, however, we were not able to keep up with rising energy cost in the quarter. In this quarter alone we saw an unprecedented 30% increase in the cost of diesel fuel. Diesel is now up over 50% versus prior year. We implemented another fuel surcharge on 1 July our third this year to recover the most recent cost increases which haven't incurred since our previous surcharge implementation on 1 May, 2008. We expect this action to help drive improvement in our overall segment margins in the fourth quarter. New business signings continued their strong pace in the quarter and this fiscal year will be our best ever in terms…

Thanks, Nelson. Now if you will turn to slide 12. Now let's take a look at our guidance. As I mentioned earlier we'll be moving to U.S. healthcare business to discontinued operations in quarter four. On a continuing operations bases this will add $0.07 to 2007, and $0.11 to our 2008 guidance. Therefore the equivalent range to our 2008 $4.95 to $5.05 guidance would now be $5.06 to $5.16. Based upon the third quarter improvements and a strong outlook for quarter four we are raising this range $0.10 on the bottom and $0.05 on the top, to $5.16 to $5.21 and now expect to deliver 21% to 22% growth in 2008 versus last year. Year-to-date ex-U.S. healthcare and pension settlement charge, we have earnings per share from continuing operations of $3.79. This gives us fourth quarter guidance of $1.37 to $1.42. Turning to slide number thirteen. As we look forward from quarter three to quarter four we see the following. On the positive side, we expect to see increased earnings sequentially from the following areas. In Merchant Gases we continued to implement price increases and fuel based surcharges to recover escalating energy costs. In Tonnage Gases we expect higher operating performance bonuses and lower maintenance spending in quarter four. In electronics and performance materials we anticipate higher electronics, specially materials volumes and lower cost, partially due to our product line rationalization efforts. And finally we expect to book Q4 effective tax rate of approximately 24% as a result of continuing benefits from our tax planning strategies. Slightly offsetting these sequential improvements is our forecast for lower equity affiliates income due to one time favorable adjustments in this quarter. On the economic front globally the outlook is turning more pessimistic over the past three months. The credit crisis continues to spread,…

Thank you. [Operator Instructions]. Our first question comes from David Begleiter with Deutsche Bank.

Thank you. Paul on the --

Good morning.

n the CapEx outlook. What are the returns on capital metrics of the backlog right now?

If you have the return on capital it is above... and the returns which we have experienced in our existing business, we're probably seeing our returns going up overtime. It's hard to give an average because it's a mix of risk there Dave. And we are looking at the projects individually. But I can assure you that we are exceeding our return on capital from a cash flow standpoint by very good margin.

And any reason why the CapEx would be down in 2010 given the strength of the backlog?

No. I'm very specific about that I think as we look at 2009 we look at CapEx growing and given the biding activity which we have today and the projects which we are working on. We would expect our CapEx to grow in the 2010 and 2011, primarily driven by onsite contracts hydrogen and gasification.

And what's the only onside projects, the ones you aggressively bid for, what's your win rate?

It's hard to actually get a win rate because these are large, are large deals but I think we feel very good about our win rate on here. I don't really keep track of a batting average per say in that area for us. A lot of the jobs, which we are getting now Dave and we really aren't bidding, a lot of them sit on our pipeline systems or sit with existing customers who we have build our relationship with. And so it's a deal for us which they aren't going out and getting some of the bids on.

Thank you very much.

Thank you. Our next question comes from Jeff Zekauskas with JP Morgan.

Hi, good morning.

Good morning Jeff.

Couple of things, the equity income went from I think $35.5 million last year to $46.5 million, so it's up 30%. And you're operating profits I think were up 8%, so what's the difference, what's going on in equity income that's so strong?

The first thing in which we said Jeff is, about half of that gain is due to some adjustments for converting to GAAP in our Asian affiliates, U.S. GAAP, as they made adjustments. Over a period of time, we have consolidated that now, and taken a look at those things. If you then look at the other things you have to look at the underlying economies in which these are. Next you can affiliate is getting very strong growth in volumes, principally due to a lot of things on oil recovery. We continue to grow in India; we continue to grow in Italy. So it's the underlying growth in those areas.

So I take it that's about $0.03 a share benefit.

The benefit from equity affiliates in term.

Yes.

Yes.

And secondly can you just remind me like what your output in standard cubic feet is in hydrogen and when you look at the new business you bringing on for '09, how much does that grow and for 2010 when you are just talking about new capacity you are bringing on?

When you look at the new capacity which we are bringing on in '09 in hydrogen, in '09 it is not substantial for us as we look at that right now. We have most of the new capacity which we have won in hydrogen comes on stream in 2010, 2011 for us, alright. And if you look at the annual sales of the onsite business it is about at the run rate today and the current hydrogen price is up $4 billion, about 75% or so of that 80% of that is hydrogen for us.

Okay, thank you very much.

Sure.

Thank you our next question comes from P.J. Juvekar with Citi.

Good morning.

Good morning P.J.

You know, you guys did a big U turn in healthcare. If you are trying to make earnings less cyclical and increase return on capital then by same logic why wouldn't you sell your equipment business?

If you take a look at the equipment business P.J. it is something which we have which actually supports the onsite business. We have been through this probably a lot of times with people, is that it leads to orders in the future for us. So a lot of the work which we have done in the equipment business to sell large air separations plans has actually led us to have the right solutions in the gasification end of projects which we are doing very well. We have number of projects in China, which we are working on our backlog right now, and so that does support. The other thing is the O&G business, it helps us acquire presence in the Middle East as does the oxygen plant sale business which we have there. So lot of there is really is support business in the onsite area and has performed very well for us, so its part of that business. It doesn't really put a lot of cyclicality into it. It doesn't take a lot of capital for it. It is not something which I would like to sell to somebody and put somebody else into the business of this.

Well I understand the ASU business but L&G energy business is cyclical?

The L&G business is, absolutely. It does go up and down. It doesn't require a lot of investment for us. We think... we actually think that Air Products is the high value honor for this business we think...

Okay...

We think the skills which we have build up and we don't think we could get the same value off of somebody else.

Right, I am not saying you should sell it; I just wanted to understand your logic.

Okay, that's fine.

The second question I have is on operating margins and your operating margin goals.

Yes

Are you focusing on the right things, because with this natural gas raw material pass through the operating margins are becoming quite volatile and it's very difficult to track them against the goals.

And P.J. and you are right, if you take a look at the onsite business and the Tonnage Gas business as you saw this quarter and the margins were taken down by that. However, if you look at the Electronics business, the Performance Materials business, the Merchant gas business, all of those are businesses in which we have established targets for margins. And so we have an overall target, but I think more importantly we have targets for each of those areas. And as to get to the Electronics and Performance Materials business above 15 to get the Merchant gas business above 17, if the pass through prove and presents some improvement on the Tonnage side as long as I am looking and getting a good return I going to be happy with that business. So I think we are focused right but I know we are focused right on this year, on the right metrics for how we are measuring and going after this business.

And just I have a follow up question, just a quick question on the --

P.J, I just got to correct. I made a mistake. I said the Merchant Gas business was negative above 20%. I think I said 17% that was error on my part. Okay.

Okay. And in your answer to Jeff Zekauskas questions about this equity income, you said there was a conversion of some of this equity income to U.S. GAAP, does that means it was not reported under U.S. GAAP before, was there cash benefit?

It was reported under GAAP before but what happens here is that the conversion were done in the country and we took the work back here and we looked and made adjustments as to how they did the conversions. And the conversions were wrong.

And was there a catch up benefit in the quarter?

Yes, there was... and that was due... and that was about half of the increase.

Okay. Thank you.

Okay.

Thank you. Our next question comes from Mike Harrison with First Analysis.

Hi, good morning.

Hi Mike.

It's my understanding that one of your competitors recently raised pricing in Europe. I was wondering if you could talk about the impact that you have seen, as a result of that on the pricing environment in Europe?

Yes, in the pricing environment in Europe is getting better, as we've talked about that. We're out there trying to get our prices up in that area. You can see in this quarter and I think in slide seven that our prices were up 3% quarter three way over '07.

And then was wondering if you could give us an update on the Eastman gasification project? Is construction there still plan to begin in early '09, or if there have been any changes there?

On the project, I think you are best to talk Eastman and there the person who is actually trying and we are both, the customer of the project and a supplier. We are excited to be in it, we see as a great opportunity for us but I don't want a comment on my customer's project for you.

Okay. And then in the Merchant business you were talking about the two fuel surcharges you put in place. Can you walk through, how those work. And as you see diesel prices rising, what assumptions had you been making about fuel cost and is the surcharge then something that is static or is it something that changes with changes in fuel costs?

Hi, Mike. This is Nelson. I will comment on that. It is indexed to a basically published information on diesel fuel cost index. Both the Government and Air Products do forecast going forward. Clearly the run up that we saw in the last quarter that we talked about the 30% jump. We talked about in May and June and you could really see it happen over about of four to six week period. Clearly it got out in front of us from that standpoint. We were pretty comfortable with what we had out there in May versus forecast. What we have done with the July action, is increased the amount required to not only catch up but also get ahead of whatever forecast is out there. And then the surcharge will basically adjust if diesel prices fall down and we typically use the three quarter rolling average. Why we like this mechanism, is that our contracts allow us to surcharge and so this is something that we can implement very rapidly and get that in place pretty quickly so we can have a fairly quick impact on the P&L.

Thank you. Our next question comes from Laurence Alexander with Jefferies. Laurence Alexander - Jefferies & Co.: Good morning.

Hi Laurence. Laurence Alexander - Jefferies & Co.: I guess first of all, on the tonnage, what was the incremental margin on the flat sales or how much of the delta we think about in Q4 versus Q3?

The margin on the spot sales, if you look at that really depends upon what the price was for gas there, but I think you can look at spot sales margins incrementally and not being questioned for the overhead activities of somewhere in the 20% range or so. Laurence Alexander - Jefferies & Co.: Okay. And do you have a rough sense for... you have done a good job on taxes this year, do you have a rough sense for whether the tax rate is sustainable next year or should we expect it to creep higher?

Right now I would expect it to be up a percent or two over the 25% which I'm going to book over all in this year. But that's something which we are currently taking a look at. It depends a lot of decisions on how we manage our cash and fund things but we obviously try to keep this as low as possible and pay as few taxes as we are required to. Laurence Alexander - Jefferies & Co.: And then the nascretion [ph] on healthcare is $0.11 for this year, that's about $0.09 in first three quarters?

It's about $0.08 in the first three quarters. Laurence Alexander - Jefferies & Co.: Okay and I guess just lastly on, this has been an unusual quarter, having pricing lagging energy cost. Is there anything, is there a mix issue embedded in that or are there particular end markets where you have had an issue?

No. What happened was that the diesel cost went up a lot more than what we anticipated and we have taken the action to get the price increases out there, but that was simply the fact we didn't see and there wasn't anyone who saw the amount of increase in the diesel cost which occurred in May and June. Laurence Alexander - Jefferies & Co.: Okay, thank you.

Thank you. Our next question comes from Don Carson with Merrill Lynch.

Thank you. Paul a question on the Tonnage business, you talked about volume slow down due to lower refinery utilization rates, question there is, is that specific to some of your customers, I would have thought that those who were switching over to greater dist [ph] with production would have required even more hydrogen? And then I know you have three projects that you have signed, but haven't announced and you have got some potential in the oil sands. Again what would be the volume impact from these projects as they start up in 2010, 2011, what percentage of your existing business would they?

Okay, Don, if you take a look at the on the customers yes, it was specific to few of our customers in the Tonnage area for hydrogen and it was around how the refining was running, whether refining was up or down. We don't think there was anything long-term. Overall we think the dynamics here are for the refineries to acquire a lot more high vision in the future, to make more transportation fields, and to also process heavier and more solid crudes. If you take a look at the projects in which we have the... the three projects and the work which we're doing in oil sands. I think what we are looking at is sales growth its going to be lumpy obviously with the projects but if you look over a period of time something in 15% to 20% range for us is what we are predicting.

Okay. And Nelson a follow up on Merchants, you talked about some capacity additions in the U.S. you are still seeing volume growth. What are your operating rate trends there? And if you could also tell us what operating rates are doing in Europe?

U.S. operating rates are holding pretty steady. I mean, we're consuming this product that we're bringing on stream, if anything we probably saw a slight pick up quarter-to-quarter in utilization. Even with the capacity coming on stream. As we said before we were careful in where we place this product, these expansions and the demand has come in as expected. So that continues to work pretty well for us. In Europe, clearly UK is right from a loading perspective. As we made the comment in the commentary, we are happy to see some of our signings rates picking up and some new customer's that have come on stream specifically in the UK have helped us load those plans. Our volumes or capacity is pretty tight and remains tight on the continent. We are not seeing any slippage in utilization rates. And our Eastern Europe plans are still very tight as you were adding some capacity and pull in to address that. So it still remains pretty tight across the system which should continue to support our pricing efforts.

And by tight community in the U.S. you are still sort of in the mid upper 80s?

Yes, upper 80s.

Alright. Okay. Thank you.

Thank you. Our next question comes from Mark Gulley with Soleil - Gulley & Associates. Mark Gulley - Soleil - Gulley & Associates: Hi, good morning guys.

Hey, good morning, Mark. Mark Gulley - Soleil - Gulley & Associates: I want to talk a little bit by CapEx-to-sales. If I did the math it would appear as if for next year your CapEx-to-sales on an adjusted basis is going to be coming in the 15% area, well above the 10% where you have been running and the industry has been running for a while. And lot closer to the battle, 20% when I care to remember. So, is that 15% CapEx-to-sales number that's going to be, something sustained for a while? And are you concerned about a capacity searcher?

Mark, I do believe that and the number is going through sustained going out in the future. I'm not concerned about the capacity coming on stream because this CapEx is sold as we are bringing it on stream. It is in the Tonnage gas area, principally for hygiene and refining and oxygen for gasification are the two areas in which we look at. And so it is not like the old days where we... a lot of plant and equipment was going in the liquid plant area. Mark Gulley - Soleil - Gulley & Associates: Okay, fair enough. The industry has been very successful in getting price increases and surcharges for sometime now. Are you starting to see any kind of push back at all and customer saying enough is enough that we really can't absorb these higher costs?

Mark, Nelson, responding that, we have not seen the push back. What we have talked about in the previous calls is that our customers have been more successful in last two or three or four years of passing these increases on to their customers and that trend certainly is continuing. Again with our third surcharge of the year our customers understand why we're doing if they are seeing those prices themselves. And so we continue to be successful at getting those out there. Mark Gulley - Soleil - Gulley & Associates: And the final question is one of your competitors has announced another share repurchase program as they look at their balance sheet. I know, you haven't talked a lot about '09 but Paul, can you share with us whether not surplus free cash flow could be used to buy more stock for your products?

And the answer is yes. And I have been through the... and the way in which we use our cash and we still have about $840 million of authority from our board on that and we would use it in that way. Mark Gulley - Soleil - Gulley & Associates: Thanks Paul.

Thank you. Our next question comes from Kevin McCarthy with Banc of America Securities.

Good morning.

Hi Kevin.

If I look at the equipments in Energy business, it looks like your backlog improved sequentially there, you have some new equipment orders, profit was down quite a bit in the quarter. If you look at that $4 million operating income number, had that compared to what you would envision as a cyclical trough level in that business, trying to gauge how close we might be to the cyclical bottom there?

I think we are close to the bottom there.

Okay. So you would expect that business to remain in the black through the bottom?

Yes.

Okay. Then to follow up on tonnage a little bit, you referenced slower spot sales. Could you advice, what percentage of sales in that business were spot and whether or not you are seeing customers that are offline completely because of operating problems or is it a situation where your are seeing folks throttle back due to poor spreads?

With regards to the percentage of sales would you have. If you take a look at the pipeline systems which we operate somewhere in 10% and 15% of the systems are available for spot, in general. So that would be the way in which I would look at that. As far as the customers coming down, there were some turns which customers had and they were also decisions on the customers part to operate in and cut back. So we saw both of those things.

Okay. And finally can you give us an updated time line on your ASU starts at Reidsville and Ashland, I was expecting Reidsville to come up fairly soon here.

Reidsville is on stream. Ashland will be up very soon like within the next 30 days.

Great, thank you very much.

Thank you, our next question comes from, Mike Sison with KeyBanc Capital Markets.

Paul when take a look at that 15% goal that you had thought for the total company for operating margins, are you on track there for Merchant gasses and Electronic Performance Material this year?

Yes, we are. As far as the progress, yes.

Okay, then when you think about electronics business, I thought I heard you say that it was growing 20% excluding equipment?

Yes

Is that run-rate sustainable? Can you give us little bit of idea where the winds or where the growth is coming from there?

Certainly Mike, this is Nelson. Materials growth is very strong so that number was ex-equipment and ex-skew reduction effort, the 20%. Continuing to see good volume growth in products like NF3 and the other key products that we are selling. Our ACT product line continues to perform very well. That's all in the face of silicon that's growing probably a little lighter than last year probably in the 5% to 6% versus a full year 7%. So we are getting a multiple on the silicon growth as we expected. Our prospects as we see things flat panel is also done a bit better than expected this year. We expect that to basically continue. Silicon growth appears to be solid. So that looks like it will continue and the other part of this is we are bringing the new NF3 capacity on as we speak in Korea and we expect that to be largely loaded fairly quickly. And behind that is again some new low key products which are picking up momentum in sales. So, we think we're going to continue in a solid growth pattern there.

Okay and then, if you take a look at the European healthcare business, can you just sort of remind us why you are saying that business is a good business to keep? When you put it into Merchant, will it... the press margins, health margins, margins about the same?

It was going to help the margins in the Merchant area as it goes in and so you can see the map from the stuff which we have put out there. But overall Mike, this structure of the market is not the same as in the U.S. Bulk of the business, which we have in Europe is bid and you get it... and you get the business and you're able to serve it. Then that's not the same thing as what occurs here in the market here.

Okay. And one last quick question. You seem to be little more pessimistic in the overall global economy. Can you just give us a little bit... at least a little more pessimist then what you thought in April and May, can you just give us an idea of maybe regionally or are there any certain end markets there that are causing you to be little bit of watchful in terms of the economy?

It is not so much driven by the end market, it is more driven by the factors, that we continue to see the bank saving trouble. So we continue to see that happen. We see a drop in consumer confidence which has to have, which is going to... its going to... it has to reflect itself back. We actually think that consumer confidence is too low for how the economy is actually working. And then probably the bad news which comes over on the news on TV every night, weighs upon people and they hear it too much. But there are a lot of good things in the economy too. If you look at the underlying the strength of especially in the U.S. of exports has really bowled manufacture economy here. So it's a balanced look on those things. Overall we think the manufacturing sector is actually performing the best of anybody. So, in our area we are feeling pretty good.

Thank you guys.

Thanks.

Thank you. Our next question comes from Chris Shaw with UBS.

Hey, good morning.

Hi Chris.

Hi Chris.

To beat those spot sales versus the data. From the way you described it the reduction in spot sales reflection of refinery usage rates as well, utilization [ph] rates?

Yes.

And then most everything has been covered. But was the accretion from the impact of investing in U.S. Healthcare for the quarter?

$0.03, it will be when you look at it.

Okay. That's all I got. Thanks.

Okay. Chris.

Thank you, your next question comes from Marybeth Connolly with Goldman Sachs.

Actually it's Bob Koort. Good morning guys.

Hi Bob.

Just a quick question on, healthcare and I am sure you will be glad to start talking about it soon, but why the magnitude to write off and then why sell it piece meals [ph] trying to package it, so I thought at least the strategy when you guys owned it was doing critical math to provide some synergy?

Sure. As far as the size of the charge it is based upon an impairment analysis of trying to take a look at the cash flows of the business Bob and that's what it comes out to be. And so our view of the business, based upon the things which we are seeing today and what's happened in the marketplace is a lot worse than it was a year ago and that's why the size of the charge. As far as trying to grab and sell things in pieces we are not. We are actually trying to... we are growing to market with the thing is a whole. The New York and New Jersey Properties came as an opportunity for us, in that business actually. It was in very bad place for us as far as from a cash standpoint. And we had an opportunity from a local guy who wanted that business and we chose the sell it.

Thank you.

You're welcome.

Our next question comes from Sergey Vasnetsov with Lehman Brothers.

Good morning.

Hi Sergey.

Good morning, Sergey.

Paul can you help us understand how much of the factor was the escalation of the construction course. And by that I mean total construction course, labor, materials, etc. If you said number may be from 75 to 78 or maybe you have even annual numbers?

Construction cost on capital spending?

Correct.

If we take a look at that and go from lets say 2003 to 2004 before commodity prices starting to run up, it depends upon the area the country. But we could see capital cost being up anywhere from 25% to 50%.

Okay. And so, when you sign your new contract formalities, do you try to achieve a certain profit for Tonnage of output or you've taken into account higher current construction costs and that becomes your base factor.

We price based upon the cost of the capital there. So what we're doing is recovering on the cost of capital there. So it is not based upon the output, its based upon the cost which we are going to have to invest there.

Okay and lastly on the topic. When you think about your move from $1.4 billion in '08, so lets say $1.8 billion in '09 how much of this increase is due to high construction cost?

From '08 to '09 it's not a lot probably.

So you must have --

And maybe 5 to 10.

So it is mostly volume driven.

A lot of the inflation on the construction has already occurred. The other thing Sergey and we are taking a different look as far as on the rest of these projects. We are trying to pass a lot more of that risk on to our customers here.

Okay. Thank you.

Thank you. Our next question comes from John McNulty with Credit Suisse.

Yes, good morning, just two questions.

Hi John

In the Merchant CapEx that you are going to be spending, can you give us a rough idea of regionally where that CapEx is going to be spent for the Merchant capacity coming on in '09?

Okay, the bulk of that is being spent in Asia. It has to do with capacity for Electronics and Performance Materials which a lot of that is in Asia and that lot of expansions on the liquid products is Asia also and the bulk of that.

Okay that's helpful and then in the material or the performance materials business with volumes up 5%, can you give us some help in understanding where that's actually coming from, I thought this business was mostly inks and codings related which certainly wouldn't be an up 5% type number?

The bulk of this is Asia and is driven by good demand in the epoxy area, which goes around the infrastructure improvements being made in Asia.

Okay, great. Thanks a lot.

Sure.

Thank you, our next question comes from Hassan Ahmed with HSBC.

Good morning guys.

Hi Hassan.

Clearly a fair bit of chemical and general process industry activity in the Middle East, so could you guys just give me your view of the lay of the land out there, essentially in terms of future gases growth, and maybe also elaborate on essentially a product strategy to win incremental business in the region.

Yes, and that... the Middle East is a market which Air Products has worked in for a while. We actually have two plants which will be coming on later in the year which are sale of gas JV's in that area. What is far as from other in the market for gases in that area has been principally been sale of equipment. We are trying to convert that to a sale gas market for oxygen, nitrogen, and hydrogen. We are working very hard at and we think we are going to make and be a success in that area. And we are excited about that opportunity.

So you think the prudent strategy is that a sale of equipment leads to sale of gases there?

Yes.

And there will be a move towards let's say outsourcing on the part of the Middle Eastern companies, outsourcing in terms of gasses?

Yes.

Thanks.

Thank you and our final question will come from Edward Yang with Oppenheimer. Edward H. Yang - Oppenheimer & Co.: Hi good morning, Paul.

Hi Ed. Edward H. Yang - Oppenheimer & Co.: Just on NF3, what was the growth in volumes and pricing this quarter and also in the prior quarter?

If we look at that on the NF3, I have to check here, hold on for a second, I will pull a number here as far as NF3, I don't have the individual product volumes brought in front of me. But if we look at that the pricing and volume basically were an offset over the whole speck materials area. We are up versus about 17% in volume in that area in the quarter over the prior year right now, I just got the number. Edward H. Yang - Oppenheimer & Co.: And in the second quarter, it was faster or slower?

It's about flat with Q2. Edward H. Yang - Oppenheimer & Co.: And on Merchant in Europe, again the improvement in volumes there was that driven by England, Spain or Germany?

It was driven by probably the UK because that's the area in which we have the capacity of sale, in the other countries I am sold out. Edward H. Yang - Oppenheimer & Co.: Okay. Thank you very much.

Yes.

Thank you and at this time, I would like to turn it back over to you for any additional or closing remarks.

Thanks, Amy. Please go to our website to access a replay of this call beginning at 2:00 PM today. Thank you for joining us and have a nice day.

Thank you. That does conclude today's conference. Thank you for your participation and have a great day.