Good morning and welcome to Air Products and Chemicals first quarter 2009 earnings results conference call. (Operator Instructions) Beginning today’s call is Mr. Nelson Squires, Director of Investor Relations. Mr. Squires, you may begin.

Thank you Elizabeth. Good morning and welcome to Air Products quarterly earnings teleconference. This is Nelson Squires. Today CFO Paul Huck and I will review our fiscal 2009 first quarter results and outlook. 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 2:00 PM Eastern Time are also available on the website. Please turn to Slide 2. 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. Before we start, please note that today’s comments on operating results will exclude the $174 million restructuring charge. Details are included in the notes to the 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 turn to Slide Number 3. As we indicated back on December 16, declining conditions in the business around the world are creating one of the weakest business environments that we have seen across our end markets in some time. This quarter buyings declined each month as many customers are running at significantly lower operating rates or in some cases, have temporarily idled their facilities completely. Sales of $2.2 billion declined 5% versus prior year, excluding currency and natural gas pass-through impacts. Underlying business was off primarily due to lower volumes in our Electronics and Performance Materials segment. Demands were lower in Merchant Gases but this decline was offset by higher pricing. Sequentially, the rapidly deteriorating business conditions are more obvious. Underlying business was off 8% sequentially on lower volumes across Electronics and Performance Materials, Merchant Gases, and Tonnage Gases. Nelson will walk you through the details by segment momentarily. Consolidated operating income declined by 24%, driven by the lower volumes and unfavorable currency. Our operating margin declined 270 basis points versus last year, primarily due to lower volumes, partially offset by higher prices and lower costs. For the quarter versus prior year, our net income and diluted earnings per share decreased by 21% and 18% respectively. Return on capital employed was unchanged versus prior year. Now let me turn to Slide 4 and review the factors that affected the quarters’ performance in terms of earnings per share. There were two disclosed items this quarter. In discontinued operations we took an additional impairment charge this quarter, reflecting a revision of the estimated net realizable value of the U.S. Healthcare business. Discussions with potential buyers for this business continue. As we finalize our restructuring charge, the actual cost per business exits and asset management actions and the number of positions impacted were slightly higher than our initial estimates back in December. Excluding the discontinued operations and the restructuring charge, our adjusted earnings per share from continuing operations decreased $0.21 versus last year. Lower volumes accounted for $0.25 of the year-on-year decline. Pricing and margins together, including energy and raw materials, were favorable netting to $0.05. Our cost improvement actions contributed $0.03. Unfavorable currency and foreign exchange cost us $0.13. Lower interest rates added $0.01. A lower tax rate added $0.03. And fewer shares outstanding contributed $0.05. Now I’ll turn the call over to Nelson to review our business segment results. Nelson.

Thanks Paul. Please turn to Slide 5, Merchant Gases. Merchant Gases posted sales of $925 million, down 8% versus prior year. Currency reduced sales by 8%, while volumes were down 6% and pricing added 6%. We delivered solid pricing performance worldwide, and this helped to offset the volume declines. Sequentially, Merchant Gases sales decreased 16%. Volumes were down 7% and currency reduced sales by 9%. Merchant Gases operating income of $171 million was down 15% versus prior year. Segment operating margin of 18.4% was down 150 basis points versus prior year due to lower volumes and reduced system loading. Operating margins were up 50 basis points sequentially due to improved cost performance. Let me now provide a few comments by region. Please turn to Slide 6. In North America, sales increased 2% versus prior year, driven by strong pricing gains. Our one October price increase was well timed. Volumes were down 6% versus prior year, reflecting weakness across most of our end markets and the impact of a very soft December. New business signings were stronger than Q4 but below prior year. In Europe, sales decreased 13% versus prior year. Currency reduced sales by 12%, while price added 6% and volumes were down 7%. Similar to North America, we saw demand weaken across most end markets and regions in Europe. The availability of argon was impacted by steel shutdowns across both the U.S. and Europe. Pricing was strong in the quarter in both our liquid bulk and packaged gas businesses. Signings in Europe were ahead of planned and well ahead of prior year. In Asia, Merchant sales were down 8% versus last year. Currency reduced sales by 7%, while volumes were down 6% and prices were up 5%. Volume declines were mostly due to lower demand from steel and worsening…

Thank you Nelson. Now if you’ll turn to Slide 10. I’d like to share my thoughts on our 2009 outlook. As I stated earlier, the global economy got worse in the first quarter. We expect that the economy will continue to deteriorate in Quarter 2, and expect the second quarter to be the worst quarter of 2009. January volumes have started slow, as many of our customers have extended their holiday shutdowns into this month. Additionally, we will see the impact of Lunar New Year in Asia this quarter. Specifically for our businesses, we are forecasting lower sequential volumes in Merchant Gases, Electronics and Performance Materials, and the steel and chemical portions of Tonnage Gases for Quarter 2. On the favorable side, we will see some impact from our cost reductions; a larger impact will be seen in Quarters 3 and 4. Our guidance for Q2 is for earnings per share of $0.80 to $0.90. As we look at 2009, we are facing the most uncertain economic environment we have seen in decades. Here is our current view on the global economy and our key markets for our fiscal 2009. Overall, we now expect manufacturing to decline globally by 4 to 5%, with the U.S. declining 6 to 7%; Europe declining 6 to 7%; and Asia, excluding Japan, growing about 2%. The global decline is down significantly from the 1 to 2% growth we gave you in our initial 2009 guidance. Specifically, by market, we expect the following. Refinery hydrogen demand should hold up well, even with the drop in demand for transportation fuels as the refineries that use large quantities of hydrogen have the best cash margins and will continue to operate. Electronics will continue to decline in Quarter 2. However, we do expect that sometime in our third…

Your first question comes from David Begleiter - Deutsche Bank.

Paul, any further insights to the backlog and any cancellations or delays that you’ve seen recently?

Yes, Dave, we have not seen any of our projects cancelled. We have seen our projects delayed. And you can see that in the reductions in capital spending. The other thing in which we’re seeing as far as the backlog is concerned is that on the order side, I think that we’re going to see delays in orders going out. People are not going to make a lot of long term decisions at this point in time with the economic uncertainty that’s out there.

And just on electronics, obviously a very severe environment. Any structural erosion in electronics profitability and long term electronics operating margin targets?

No, Dave. As we take a look at the business long term, we continue to take the right actions and decide the business correctly. A lot of the reduction which you’re seeing here is around our electronics business. They’ve been the one which has been hardest hit on the volume side and so we’re taking the right actions to do that. The commitment on the margin target remains for us.

Your next question comes from Robert Koort - Goldman Sachs.

Firstly, can you offer us any rays of hope out there that you’ve seen some improvement after some de-stocking period in your end markets? Has there been any improvement in trends? And then secondly, I think Paul if I do the math, based on what you’re saying about this current very weak quarter, it would imply a year-on-year improvement second half fiscal ’09 versus second half fiscal ’08. And just wondering how you get comfort around what might be some optimism things there that things are better than the prior year.

Bob, if we take a look at on the rays of hope for things, I don’t think I’m seeing it in the operating rates of my customer base. The good news, which I already gave you, was that in fiscal ’08 and fiscal ’09 so far the refining of hydrogen business has held up very well. And so that is a very good performance for us. So I think we’re happy with that as we take a look at that. And if we look at the economy as a whole, and you try to take and break the economy down, I hope that we have moved through the bulk of the financial crisis portion of this. And that’s because of this, and until we get through that we’re not going to see rays of hope from the consumer. The consumers have gone back and retrenched. So if we take the first phase that occurs on the financial crisis side and the consumers have started that and they started that in the summer quarter and they went through the first quarter of our fiscal year and we think it’s going to get worse in the second quarter. Now the rays of hope which I would say is that we think things start to pick up on the consumer demand side in the third and fourth quarter for us. If I take a look at ’08 versus ’09, at my second half of guidance, I still think I’m down a little bit on that. I’m certainly not down as much as I was in the first half of the year, but it certainly is a much better year – a much better second half if you look at that. And the things which actually produce that, Bob, because if you take a look at that the thing which I’m going to – the cost reduction impact, that’s probably worth somewhere around $0.15 a share for me in the second half to first half. I have a number of new plants which come on strained. That’s probably worth about $0.10 a share, first half to second half on average. And then if I take a look at the volume recovery, how much is that worth? It’s probably worth somewhere around $0.30 to $0.40 first half to second half.

Your next question comes from [Steve Shuman] – Lafayette Research. Steve Shuman – Lafayette Research: Question on the currency impact from Merchant Gases. It was quite large. I was on the impression over the years you’ve been moving to setting your contracts up in dollars instead of the local currency. Can you kind of explain your efforts on that and where the currency impact came from?

Steve, we put our contracts in terms of where our costs are. And so in the Merchant Gas area, the bulk of our contracts are in the local currency because I produce in the local currency. So you know the sales are going to go down obviously, but my costs go down by the same amount or close to it, and the same percentage amount. Steve Shuman – Lafayette Research: And then on electronics, you know, you’ve bought and sold a few companies through the years but how do you compare this downturn versus the one we saw in ’99 and 2000?

A lot faster into decline right now. We just got a preliminary look at the MSI for our first quarter of our fiscal year or the last quarter of ’08, and it is down about 35%. So it is a very sharp decline. It has not been a steady decline. And I think the reason why is that people are reacting to inventories; they don’t want to build inventories. And we’ll see how it plays out. In the forecast which we have, it has a continued decline in the second quarter but then a sequential pick-up in third and fourth quarter. Steve Shuman – Lafayette Research: And then I guess on the profit side, you’ve done a lot of work cutting off various product lines that you felt weren’t important. How does that look versus the last time?

We have reacted a lot faster to that and we’re doing it right now, and we will continue to do that to get to the goals in the business in that margin. To get to the business goals for margin.

Your next question comes from [P.J. Juvekar] – Citi. P. J. Juvekar – Citi: In Merchant Gases you took a sizable hit of profitability. What is your average operating rate and do you think pricing can really hold if volumes keep dropping?

P.J. this is Nelson. Let me answer that. Yes, certainly the biggest impact was operating rates. And if you – they’re really disadvantaged by a really weak December. We look across all three regions of the world, you know, everywhere operating rates dropped substantially in December. A lot of people just closed up in mid-December and frankly have taken their time getting started back up in January. So we saw operating rates drop in all three major regions that we operate in. But at the same time though you can see from our numbers that pricing has gone up in all three regions. We’re pretty happy about that. And we actually expect no change in that in the current time. The other thing that gives us some confidence here is you can see that signings remain pretty strong through the first quarter. We’re on level par with Asia. We’re up substantially in Europe and sequentially we saw an improvement in North America. So while operating rates are down, we think it’s more of a phenomenon of the very weak December and carrying into a pretty weak January. And we expect pricing to hold up. P. J. Juvekar – Citi: And how much of your Merchant business, Nelson, would get re-priced this year?

That’s really a function of going out and doing price increases. And as we said in the commentary that we try to time our increases to more of a summer and early fall type of sequence. We are basically raising prices only in places now where we have cost changes, meaning cost increases. So that could be power. You know changes in de-regulation of power, etc. But we’re going to be very careful there and go for pricing only where it’s needed to get us recovery against cost increases. P. J. Juvekar – Citi: One quick question for Paul. Paul, your operating cash flow was weak and less than your CapEx, so do you expect your debt to sort of go up throughout ’09 or do you expect any help from cash relief from working capital?

P. J., cash flow in the first quarter was held down by a few things. If you take a look at the operating cash flow, it’s about $170 million different from Q4 of ’08 – Q2, 1 of ’08. About a third of that P. J. is due to the drop in income and changes in depreciation. And so if I take a look at that, that’s what I would expect coming out of the business. We did have a couple of things which flowed through operating cash flow in this quarter. One was taking our derivative contracts and they get marked to a fair value, and we book a receivable which we’re going to receive during the year. That’s actually almost half of the difference in cash flow. And so I’m going to get that in through the year. The other thing was which on the year-on-year comparison is I got a refund in taxes last year, which was a one time item which boosted it and boosted it by about $30 to $40 million. So a long explanation but I think in terms of cash flow, I think we’re going to turn – it’s going to turn in 2009, Quarter 2, 3 and 4 it’s going to improve.

Your next question comes from [Peter Butler – Glen Hill Investments]. Peter Butler – Glen Hill Investments: A year from now is a long time, but it’s usually one of the critical questions you ask yourself. You know, what is their products environment going to look like a year from now? And I’m wondering as you look down the road, is there going to be a new normal that we’re trying to get back to? Or are we going to get back to the old normal? Or do you think some of these changes are permanent and maybe you could talk a little bit about what you’re seeing next year.

Right now we are in a time of a lot of uncertainty as to where the economy is going. And hopefully as we go through 2009 and into 2010 we are going to see a lot of this – a lot of things come forward and we’ll have the economies picking up at that point in time. And that would be what you would normally expect as the world plays out and goes through a recessionary timeframe. And that’s important. I think the other thing for us, which is important, is that we will be bringing on stream about $1 billion in capital in 2010 which is going to add a lot to our profitability in that time period. We have four contracts in the hydrogen area which come on stream, plus we have some oxygen plants which come on stream next year. And so that’s going to give us a good boost towards growth. The other thing is we’re going to see the impact of on the cost reductions, and we will do the right level of cost reductions to size the cost structure to the opportunity in the business. Peter Butler – Glen Hill Investments: Second subject, the only time you mentioned share repurchases was during your mention of the pluses and minuses to earnings per share, and I think you said that fewer shares contributed $0.05 a share roughly.

Yes. Peter Butler – Glen Hill Investments: I’m wondering what you actually did in share repurchases during the quarter. Did you take the opportunity to buy low after perhaps buying high previously? Or how is it working out?

I did not do any share buyback in the first quarter, Peter. If you take a look at the free cash flow it didn’t permit it. And one of the things which we said is that we were not going to get ahead of ourselves on this. We want to have the funds available because if we take a look at how we use cash, the first priority is always to invest it in good projects in the business and we still have a good number of projects in the business and they need to be funded and we’ll take that. I don’t expect I’m going to see an opportunity to buyback shares in the second quarter, and we’ll see in the last half of the year.

Your next question comes from Mike Harrison - First Analysis.

I was wondering if you could talk about what you’re seeing in terms of competitive behavior for new projects, any trends that might be of concern as they relate to the returns on future on-site projects.

Mike, for the moment we have not seen the prices going down or anything like that or our competitors in trying to grab projects. I think everyone still has a good backlog of things to bring on-stream. I think the thing which we have seen and I talked about this earlier is that we have seen bids postponed and projects delayed for the future. And so that’s kind of the environment which we are looking at, but for right now the pricing seems to be good for us.

In your comments earlier on the equipment business, you said that you’re seeing some new activity that you thought might be related to capital costs leveling out. I was wondering if maybe you’re seeing that kind of perspective as well in customers looking at some new on-site projects that maybe we’ve hit an inflection point in terms of customers delaying decisions on their bigger projects?

Mike, this is Nelson. Clearly activity in terms of discussion with customers and bidding on the L&G heat exchanger side is beginning to pick up again. And so we do expect some movement here this calendar year. With regard to your second question, I think people are still watching to see where the general economy is heading and where we – what bottom the economy finds, and therefore how much manufacturing capability is unloaded when we come out of the downturn. That being said, there is still project activity in the places where you would expect; in hydrogen, in oxygen for gasification as Paul mentioned. And those activities have remained relatively steady here through the last six months, because most of those are long term decisions that A rated customers are making. And so that continues and we’ll see I think when we get out of this downturn the activity level across the project stack pick up again.

The last question I had was on the electronics side. You mentioned that you expect sequential volume to increase in Q3 or Q4 but I was wondering what you’re hearing from customers in terms of when they expect to return to some level of “normalized production.” Any sense of when that happens and maybe where that production level might be relative to where it was before the downturn began? I mean, are we talking about production down 10% versus like an ’07 type of level, 15%, 5%?

Mike, if you would take a look at that and go out I think what we have said is that in the first quarter we saw a sharp drop on the MSI, which I talked about before. And we expect that to continue to drop and then a sequential pick-up in the third and fourth quarters. That would still leave the third and fourth quarters below the third and fourth quarters of 2008. So if you take a look on MSI, and it could be down anywhere from 20 to 30% for the year, what that would say is that the third and fourth quarters are likely to be somewhere 10 to 15% under the production rates in the third and fourth quarters of ’08.

And then you said on the timing of returning to a more normalized is that what you mean by the sequential increase?

Yes, yes it is. And because it would be. If you take a look on MSI, the MSI in ’08 it was up in the first quarter, up in the second quarter, about flat in the third quarter on a sequential basis. It was down about 5% sequentially in the fourth quarter. And now it’s down 35% in the first quarter this year for us of ’09, and then we’re predicting a further downturn in the second quarter. So we are not going to get back up to the rates of ’08 until sometime in 2010 certainly.

Your next question comes from Laurence Alexander - Jefferies & Co. Laurence Alexander - Jefferies & Co.: I guess first just in terms of functions, what’s your currency assumption embedded in your outlook?

Yes, if you look at the rates of the euro we probably have it about $1.30 right now. Laurence Alexander - Jefferies & Co.: Would the plants that are being delayed is it broad based or are there particular industries that you’ve seen most of your delays?

Well, it is across the industries, Laurence. And so if you take chemicals, if you take the refining, if you take steel and stuff like that people are just not going out and making a lot of decisions long term right now on those industries, with the economic outlook. Laurence Alexander - Jefferies & Co.: If you look at the new plants that are coming in over the next 18 months, if they just [ranted] their minimum take or pay contracts, what do you see as the year-over-year tailwind?

The increase year-over-year next 18 months we are probably looking at something around $0.40 a share. Laurence Alexander - Jefferies & Co.: Could you just give us a real quick snapshot on trends in the argon and helium markets?

Clearly the supply of argon is being impinged by steel operating rates right now. We’ve seen that really happen most acutely in North America and Europe. Steel operating rates are probably under 50% right now in North America and Europe. We expect them to go down a little bit and probably not see recovery until late in 2009 in the calendar year. So I think argon will continue to be in shorter supply. Demand has obviously come down a little bit because of the slowdown in the economies, so we’re managing that situation right now. Pricing still remains very good in that product. Helium has the dynamics have not changed all that much. It’s still a pretty tight supply and demand remains relatively solid for the helium product. While we’ve seen MSI drop substantially, flat panel utilization has probably only dropped to about 80% and that is a new demand as you know for helium. So that market’s held up pretty well. So we expect things to remain tight throughout 2009.

Your next question comes from Jeff Zekauskas - J.P. Morgan.

So in your data you said your prices year-over-year were up 3%. So last year your sales were $2.2 billion, so if you multiply that by 3% you get $66 million and you know if you tax [affect] it that’s a benefit of about $0.23 a share. And in your slide you say that price/raw materials was a benefit of $0.05. So is the right way to read that number that the cost hit from raw materials was $0.18 roughly?

Yes.

And could that be something where you might get some relief through the costs through the course of the year?

Yes, Jeff.

Second thing is your shares outstanding on a sequential basis for fully diluted purposes went from 216.9 to 212.1 or down 4.8, but I think your basic shares went from 208.9 to 209.4 sequentially. I imagine that this has to do in part or in total with changes in the value of options because of the share price. So is this a permanent difference or a temporary difference or how do we account for that change in fully diluted share on a sequential basis?

The way in which you take a look at that is that the dilution increases from options as the price goes up. And so the decline in the prices of the shares takes options and takes the dilution impact down and that’s what happened.

So if I understand that correctly then if your – if we look at where your share price was I guess over the past few months, it was sort of more like 70ish to pick a number. So if we were back up at $70 would your shares outstanding go back up to 216 or 217? How do we get back to that 217 number?

It would not go that high, Jeff, because if you look at it and you take a look at that 217 it was an average for the year last year I believe that you had. And so if you take a look at the fourth quarter it was actually lower. I don’t have the fourth quarter numbers right in front of me, but it was lower.

In terms of the Merchant business, was hydrogen up and by what amount? And was oxygen and nitrogen and by what amounts to the quarter?

Yes, you have to dissect that regionally. Hydrogen – basically all products were down. Nitrogen, oxygen actually up slightly in North America but really price driven versus volume driven. We saw - when you speak to hydrogen that’s liquid hydrogen demand was off for government contracts, which is a major customer, pretty substantial there. That really drives the hydrogen business; and on top of that, weaker demand. But if I look to Europe and Asia it was really demand in nitrogen and oxygen that was down that really pushed it. Helium was up for example and that was the biggest contributor in the decline.

So in your slide it said hydrogen volumes up and oxygen and nitrogen volumes down. Can you give me those orders of magnitude? How much hydrogen was up and oxygen and nitrogen down?

Well, hydrogen would have been up in the Tonnage segment. And that’s why I just want to make sure we’ve got apples and apples there. We were up in Tonnage year-on-year even with the hurricane impacts about 3%.

So how much was oxygen and nitrogen down in Tonnage?

Tonnage it was down about 9% I believe Jeff.

And then lastly in electronics, I guess I’d always thought that there might have been a more stable component to your electronics business. You know, maybe some onsite oxygen or onsite nitrogen. So maybe if you kind of break up electronics into Equipment and Specialty Gases and onsite oxygen and nitrogen, sort of how do those individual pieces look? How do they look in the quarter?

Jeff, before I just gave you – the [inaudible] number was down 6%. It wasn’t 9. If you take a look at the electronics volumes, and the volumes overall were down about 20% for us, and if you then take a look at the structure of what we had in the business, the Tonnage volumes which are about a third of the business were actually up 4%. Specialty materials, which is about half the business, was down about 20%. And then if you take the equipment and services portion of the business which is about 15% of the business, it was down 60% year-on-year.

Your next question comes from Kevin McCarthy - Banc of America Securities.

You mentioned in your press release that one of your customers filed for bankruptcy and that you had $35.7 million of exposure there, presumably that the [Flying Bell Refinery] hydrogen. Can you address that in terms of your outlook? In other words is there any provision for higher bad debt expense reflected in your fiscal second quarter annual numbers?

We have not accrued anything for that bankruptcy which occurred in the beginning of January at this point in time, Kevin. We are seeing as far as the business overall, we are seeing bad debt expense go up though a little bit, but it’s not up a lot. We don’t have a lot of bad debt expense in our business.

So these outlook numbers are really reflective of the underlying business, including any variables like that.

Yes. Yes they are.

And then a broad question if I may on the Merchant business. You’ve indicated that you anticipate a global manufacturing decline of 4 to 5%. I was just wondering if you could comment on your expectations for volumes globally in the Merchant business. Historically we’ve seen the industry, I believe, grow at a premium due to application growth. In this market perhaps you have greater energy related headwinds such as net gas fracking in the light. So would you expect your volumes and merchants to be materially different than that global number for the fiscal year?

Not materially different. We would see those volumes dip in Q2 I think as we bottom out as Paul referred to in terms of global demand. What also is going to weigh on that in Merchant this quarter is the slow restart after the long turndown in December that has extended into certainly early to mid-January. And Lunar New Year is upon us shortly, which will affect Asia volumes. But we do expect to see that pick back up in the third and fourth quarters. And then a couple of points that you made. Certainly fracking is important at gas at $5.00 and above and right now gas is below $5.00 in North America as we know. And that has certainly slowed down that business a little bit. It’s hard to imagine that that level stays down there. That’s obviously down due to the lack of industrial demand for nat gas. So we would expect that to recover. The good news is that we have – the signings have stayed fairly solid across all regions. While things slowed down dramatically, here we’ve seen pretty good signings for across our applications base. And so that should continue to point us well towards volume growth. Obviously we’re going to need our customers that we have under contract right now to pick their volumes up as the economy rises. But there are no real systemic changes in the application interest of our customers. That seems to be progressing well.

In the Merchant business, if we were to look at pricing trends on a sequential basis rather than year-over-year if you were to survey the major markets around the world, have you seen any examples of reversals or erosion of prices versus let’s say September levels? Or are the increases hanging in nicely?

Simply put, Kevin, they are hanging in nicely. We have not seen any specific erosion and that comment pretty much carries globally for us.

Your next question comes from Michael Sison - KeyBanc Capital Markets.

In terms of the first quarter results for Merchant and Tonnage in terms of operating income somewhat encouraging in terms of op income in year-over-year relative to volume decline, so when you think about ’09 in total embedded in your guidance is Merchant and Tonnage operating income going to be sort of like flattish to up, flattish to down at the end of the day?

If we take a look at the op income in 2009 what we should see is we ought to see the is in the Merchant area a decline in operating income but principally from what happens on the currency end of things. We are seeing a currency headwind here which I see the bulk in the Merchant Gases area, which is probably year-over-year about $0.50 a share right now in the forecast, Mike. And so if I then turn around and say on the Tonnage area I expect that to be about flat year-over-year. But the Merchant op income’s probably down year-over-year.

And then I guess if you look at it then, Electronics and Performance Materials really takes the brunt of the year-over-year decline embedded in the EPS sort of guidance year-over-year.

A lot of it, yes. It takes a lot of it.

It’s sort of masks the more defensive nature of your Merchant and Tonnage Gases business in a difficult environment. So strategically you’ve sort of looked at other businesses in the past, why is it then Electronics Performance Materials that you think makes sense longer term, considering its more cyclical nature? Sort of a business to keep, I mean.

Sure. Absolutely. And that is a fair question for people to ask and we obviously have had a very sharp decline in the economy here for this thing. And for right now, we are not happy with the results which we have gotten out of the business. We have to make the business a lot more stable over time and we have made a lot of changes in it. And we are going to continue to make those changes in the business and position us for the long term. And we want to be able to achieve a better margin in the business. And if we enter this time period with a better margin, it wouldn’t be as tough of a ride for us. And that’s one of the reasons why we want to get it. And you have to remember we don’t have any sacred cows around here. We are committed to trying to improve the business and we have shown that we can make improvements here, but if we can’t get it to the right place above our cost to capital we are going to take other actions on those businesses.

At the end of the day will Electronics excluding the Performance Materials side be profitable by year-end?

As far as for the year, they should both make money yet. They should, but it’s going to be below the cost of capital for us and we have to get that above.

In terms of energy costs considering where natural gas is, it should be down for you in ’09 versus ’08 and if you hold pricing that’s sort of a nice little bonus if you will in your outlook.

It does help but the thing which you have to think about on the energy side is that on the Tonnage business I’ve passed that through so I don’t get an impact. I will take the sales down but the profits will stay the same. Now on the other side of this is I do get an impact from the Merchant side but I do surcharge on the energy costs, so as the energy costs come down the surcharge is going to come off, too.

Your next question comes from Sergey Vasnetsov - Barclays Capital.

On the tax rates, is 24% the number we should use for the rest of the year?

No. It is likely to be higher. We will probably finish the year somewhere 25 to 26% Sergey.

And your interest income this time was a little bit lower than we expected although that hasn’t changed. Is it because the [libor] went lower and so should we expect similar number at least for the next couple of quarters?

Yes. Yes.

On pensions, I think your projection for the full year impact based on your annual reports was about $170 million for the full year. I think the cash contribution this quarter was around $20 million. So has your view changed for the full year or this number will accel rates for the rest of the year?

No. We have not changed. I think the actual pension was about $40 million or so, the contributions net overall.

Your last question comes from Chris Shaw – UBS. Chris Shaw – UBS: Just a quick over the guidance one more time. I’m sorry but for the second half guidance if you take your the mid-points of both Q2 and the full year and then for versus 2008 you add back the $0.10 from hurricane impacts and the fire at your Korean plant, and then if you take out say the $0.15 in cost cutting and the $0.10 in new plant, sort of your base business seems like the earnings are going to be down about 22% in the second half. Is that the right way of looking at it? I mean, will the base business be off that much?

I didn’t follow the – as far as the math is concerned. If I look at the second half is $2.61 a share in the second half for us. So what you’re saying is you’re adding back on the fire and the hurricane for us. Chris Shaw – UBS: Right. But then also for your second half guidance this year I took out cost cutting and the contribution from new plants.

Okay. All right. Okay. Yes if you take a look at the year-over-year for us, Chris, and the hit on volume total for the whole year is somewhere in the as far as sales are concerned somewhere around 10% to 12% when I look at the forecast for the year overall. And if you then take that out what you see is that it is a large amount, which is going to impact there. The big offset to that are the new plants coming on-stream and the impact also of the cost reductions for those things. And the other thing which you have to look at is we have a headwind on currency which is somewhere $0.10 to $0.15 a share every quarter probably right now. And so that is something which, for the last half, that’s a $0.20 to $0.30 headwind so the impact of that is somewhere around a 10% drop in income if you think about it that way Chris. Chris Shaw – UBS: And then just quickly you said chemical operating rates at your customers were down 10 to 15%. What does that mean in volumes for you in Tonnage then? Are they down 10 to 15%?

Yes it does, about that.

That does conclude today’s Question-and-Answer session. I would like to turn the call back over to Mr. Squires for any closing remarks.

Thanks Elizabeth. 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.

Once again that concludes today’s Air Products and Chemicals conference call. We thank you for your participation and have a wonderful day.