Simon R. Moore - Director of Investor Relations Seifollah Ghasemi - Chairman, Chief Executive Officer, President, Senior Vice President, General Manager of Tonnage Gases, Equipment and Energy and China, Member of Environmental, Safety and Public Policy Committee and President of Air Products and Chemicals, Inc. M. Scott Crocco - Chief Financial Officer, Principal Accounting Officer and Senior Vice President Corning F. Painter - Senior Vice President and General Manager of Merchant Gases Guillermo Novo - Senior Vice President and General Manager of Electronics, Performance Materials, Strategy & Technology

P. J. Juvekar - Citigroup Inc, Research Division Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division John P. McNulty - Crédit Suisse AG, Research Division Neal P. Sangani - Goldman Sachs Group Inc., Research Division Vincent Andrews - Morgan Stanley, Research Division David L. Begleiter - Deutsche Bank AG, Research Division Duffy Fischer - Barclays Capital, Research Division James Sheehan - SunTrust Robinson Humphrey, Inc., Research Division Donald Carson - Susquehanna Financial Group, LLLP, Research Division Kevin W. McCarthy - BofA Merrill Lynch, Research Division David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division

Good morning, and welcome to the Air Products and Chemicals Fourth Quarter Earnings Release Conference Call. [Operator Instructions] Also this telephone teleconference presentation and 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 teleconference by any other party are permitted without the express written permission of Air Products. Your participation indicates your agreement. Beginning today's call is Mr. Simon Moore, Director of Investor Relations. Mr. Moore, you may begin.

Thank you, Anthony. Good morning, everyone, and welcome to Air Products' Fourth Quarter 2014 Results Teleconference. This is Simon Moore, Director of Investor Relations. I'm pleased to be joined today by Seifi Ghasemi, our Chairman, President and CEO; Scott Crocco, our CFO; and our senior business leaders. After our comments, we'll be pleased to take your questions. [Operator Instructions] We issued our earnings release this morning. It's available on our website along with the slides for this teleconference. Please go to airproducts.com to access the materials. As a reminder, we will be discussing our Q4 and FY '14 results under our previous segment structure. When we report our Q1 FY '15 earnings in January, we will be reporting under our new segment structure. Please turn to Slide 2. As always, today's teleconference will contain forward-looking statements based on current expectations and assumptions. Please review the information on this slide and at the end of today's earnings release, explaining factors that may affect these expectations. Now I'm pleased to turn the call over to Seifi.

Thank you, Simon, and good morning to everyone. Thank you for taking time from your busy schedule to be on our call. We do appreciate your interest in our company. In addition to Simon and Scott, I have both of Air Products' Executive Vice Presidents, Mr. Corning Painter and Mr. Guillermo Novo, here with me to participate in the call and answer your questions. As most of you know, I have been Chairman, President and CEO of Air Products now for 120 days. During this period I have taken the time to meet more than 4,000 of our people in small groups of 50 to 60. As a result of my discussions and observations during these meetings, I am now more than ever convinced that Air Products has a great future ahead of it. Our people are talented, committed, dedicated and enthusiastic to restructure and rebuild Air Products to be the great company it was 20 years ago. The people of Air Products in the last 120 days have demonstrated what they are capable of delivering. Our safety and financial performance in the last quarter demonstrates the power of the 20,000 people in Air Products coming together and delivering results that exceed expectations. Now please turn to Slide #4. Last month we presented our strategy for moving forward. We announced that our goal is to be the safest and most profitable industrial gas company in the world. Our people have embraced the challenge, and all of us will work 24 hours a day, 7 days a week to get there as soon as we can. In all of our internal meetings we start with a discussion about safety, and I would like to do the same with our investor presentations. So please turn to Slide #5. In the fourth quarter…

Thank you, Seifi. Now please turn to Slide 10 for a review of our 2014 results. After a challenging second quarter, we delivered improved results in the second half of fiscal 2014 and ended the year with a very strong fourth quarter. For the year, sales of $10.4 billion increased 3% on stronger volumes in the Electronics and Performance Materials, where volumes were up 9% and Merchant Gases where volumes grew 3%. We continued to focus more sharply on cash flow and specifically, EBITDA, or earnings before interest, taxes, depreciation and amortization. We have updated our definition of EBITDA to include income from equity affiliate joint ventures and have provided a reconciliation in the appendix to the slides. EBITDA and operating income improved by 5% and 6% respectively on higher volumes. We delivered operating leverage for the first time in several years, as EBITDA improved by 5% and operating income improved by 6% on the 3% sales growth. EBITDA margin improved to 26.5%, while our operating margin improved to almost 16%, both up about 50 basis points versus FY '13. Earnings per share grew by 5%. Our return on capital employed declined by 30 basis points to 9.8% for the year, primarily as a result of our capital spending and higher construction in progress, but remains well above our cost of capital. ROCE bottomed out earlier in 2014 and has begun to show improvement with Q4 coming in at 11%. I want to remind you that the new projects we are developing, executing and operating will be accretive to ROCE over the next few years. During the year, we also remained focused on delivering shareholder value. 2014 was the 32nd consecutive year of increasing the dividend, which we raised 8%. Before I comment on our Q4 performance, I'd like to…

Thanks, Scott. Please turn to Slide 14. The Merchant Gases segment continued to show strong momentum in Q4. Our focus on pricing and cost enabled us to deliver operating leverage, as Seifi mentioned. In fact, this was the best operating margin performance for the Merchant segment in over 2 years. We are also focused on safety and serving customers while we implement the changes that will drive further improvement in our business. Merchant Gases sales of almost $1.1 billion were up 3% last year on 2% higher volumes and 2% higher pricing. Volume growth was broad across the U.S. and Canada, Europe and Asia, while pricing was positive in the U.S. and Canada, Europe and Latin America. This was our best overall pricing quarter in almost 2 years. Sequentially, sales were up 1% on higher volumes, which were up in all regions except Latin America. For several years, helium volumes have been trending down while pricing has trended up. With new supplies coming into the market, the supply and demand dynamics are changing. While the shortage has eased, the cost structure is evolving with typically more expensive new sources coming online and a change in the U.S. government pricing program. Going forward, we are focused on managing price, cost and sales volumes as we expect sourcing to be less of a challenge. Merchant Gases' operating income of $186 million was up 5% from prior year and up 7% sequentially. The segment operating margin of 17.1% was up 40 basis points compared to last year and up 100 basis points sequentially. Operating leverage from the volume growth, combined with a strong cost focus and pricing results, delivered the numbers. Now let's take a look at the Merchant business by region on Slide 15. In the U.S. and Canada, sales were up…

Thanks, Corning. Please turn to Slide 16. Excluding PUI, Tonnage Gases operating income was up 10% this quarter and up 17% sequentially, primarily due to lower costs. We continue to see strong base business demand, including for hydrogen on the U.S. Gulf Coast. Overall sales of $806 million were down 4% versus last year. Gases volumes were down 1% on lower Europe sales due to plant outages. While we did see some impact on the U.S. Gulf Coast from interruptions in feedstock supply from a supplier and a few customers having plant operating challenges, we continue to see strong demand and little to no impact from the lighter, sweeter shale oil. As we have said, while shale oil availability may moderate hydrogen demand growth going forward, the U.S. Gulf Coast customers are also adding heavy Canadian oil sands to their crude slate, which brings significant hydrogen demand. And low-cost natural gas creates an operating cost advantage for the refiners, allowing them to profitably export refined products. Overall, we may see some growth moderation but don't see risk to our existing assets. Operating income was up 17% sequentially, primarily on lower maintenance costs. Lower PUI volumes impacted sales this quarter by 4% or about $35 million and about $0.03 of profit. As a reminder, we fully exited this business in Q1 of FY '14. And for the full year, saw PUI sales down about $140 million and about an $0.08 EPS headwind. In addition to driving improvement in our base business, we continue to focus on executing our strong backlog of projects safely, on time and on budget. As we said during this quarter, we are seeing delays in onstream timing from some of our large China customers. In some cases, our customers have minor contract flexibility in start dates, but…

Thanks, Simon. Please turn to Slide 18. The Electronics and Performance Materials segment again delivered very strong results as both businesses showed double-digit volume growth, while the focus on cost and productivity delivered leverage to the bottom line. Margins have been increasing over the last few quarters, and this was the best quarterly operating margin in more than 8 years. Segment sales of $660 million were up 14% versus last year, driven by 13% higher volumes. Versus prior year, electronic sales were up 16%. Advanced materials showed strong growth as our customers continued to ramp production of their next-generation nodes, driving increased demand for our materials. Process materials also showed strong growth by leveraging its improved cost position as end-market demand and industry capacity rationalization improved volume and pricing. Delivery Systems was up significantly as we provided equipment and installation services to a number of key fab customers and new node ramps. We would expect particularly the installation portion, which is roughly 30% to 40% of our Delivery System sales, to slow as we move through fiscal year '15. Tonnage also showed growth as we brought onstream new projects. Sequentially, sales were up 14%. Performance Materials sales were up 11% versus last year as we saw strong growth across every region and every product line. End-market demand remains strong, and we are additionally benefiting from share gains and strong successful new product introduction. Sequentially, sales were down 1%, better than the typical seasonal decline. Operating income of $128 million was up 33%, and operating margin was up 280 basis points to 19.3%, as leverage from higher volumes was expanded with strong cost performance. We remain on track and are delivering on our business restructuring and cost reduction programs. Sequential operating income was up 19%, and margins improved 200 basis points even compared to a strong Q3. As I mentioned, the team delivered significant profit improvement and the best operating margins in over 8 years. Innovation-driven growth, pricing, manufacturing productivity, cost improvements and share gains all contributed to the strong performance and allowed us to gain leverage from the improving market conditions. As a reminder, our Q1 results will be for the Materials Technologies segment, which will not include our electronics on-site business. We're excited about the new and more focused Materials Technologies segment, and the team is looking forward to driving further improvements. Now I'll turn the call back over to Seifi.

Thank you very much, Guillermo. Now please turn to Slide #19. At this point, based on what we know today, our guidance for fiscal year 2015 is for earnings per share of $6.30 to $6.55. At the midpoint, this represents an increase of 11% over our fiscal year 2014 results. We are focused on actions that we can control to deliver these results next year. Our new organization enables us to reduce overhead cost, which will continue to improve cash flow and earnings in 2015. Our new organization will allow us to be more effective and improve the performance of our existing assets and businesses. And we will have a laser focus on cost reduction, especially pricing improvement and asset utilization. Our guidance for the first quarter of fiscal year 2015 is for earnings per share of $1.45 to $1.50. At midpoint, this would represent a growth of about 10% versus quarter 1 fiscal year '14. Please note that the sequential drop from quarter 4 of this year is driven by lower seasonal volumes across our businesses and an increase in maintenance costs for our on-site plants. As for capital expenditure for fiscal year 2015, we estimate that to be around $1.7 billion to $1.9 billion, as we focus on our core business and, as you know, we have raised our required project returns. You can see a split of the capital by the new reporting segments in appendix Slide #22. I also want to remind you that we will be reporting our first quarter of 2015 results in January under our new segmentation. To help understand the new segments, we expect to provide historical results of the new segments in December of 2000 -- of calendar 2014. Now please turn to Slide #20. I shared this slide with you in September. This is the plan we are following to drive us toward our goal to be the safest and most profitable industrial gas company in the world, providing excellent service to our customers. This will enable us to accomplish our overall mission, which is to create value for our shareholders. Our new organization is in place. The right people have the right authority and the right accountability for results, and we have the right rewards system in place. We are focused on our core business and we are implementing a culture which is focused on safety, simplicity, speed and self-confidence. We have already -- you have already begun to see the results of our hard work in our fourth quarter results, as we just announced, and we expect that good performance to continue into next year. I continue to be very optimistic about the future of Air Products and the ability of our committed and dedicated people to deliver excellent results as we move forward. Now with that, we are delighted to answer your questions. Anthony?

It appears we have our first question from P.J. Juvekar with Citi.

Seifi, since you've taken over, pricing seems to be at the front and center. There have been several price increases announced. I think U.S. merchant price was up 5% in the quarter. So can you talk about your pricing strategy? And how do you manage pricing versus volume trade-off?

That's an excellent question, P.J. When I looked at Air Products' costs during the past 15, 20 years, quite honestly, and the prices that we are getting for the outstanding products that we produce, prices have not kept up with the increase in our costs. I mean, we obviously have to pay our people more. The cost of raw materials go up. We have not recovered our cost increases. And therefore, I think it is imperative for us to push the pricing so that we can at least recover the cost. We are not asking people -- we are very focused on improving productivity and all of that to keep our costs under control. But historically, Air Products has not recovered its cost increases as a result of price. Therefore, we are very much focused on that.

And a question for Corning. You were around when Indura was acquired. And today, you guys wrote down almost 1/3 of the Indura purchase price. So can you do a little postmortem for us on Indura and what went wrong relative to your expectations?

P.J., I'd like to answer that because Corning was not around when that acquisition was made. He was not responsible for that business at all. He had nothing to do with it. The reason that we are where we are is that when you look at Indura's performance, Indura's performance hasn't really changed that much during the years. What had happened is that at the time of the acquisition, the expectations that was put out to justify the purchase price and the goodwill, those assumptions were wrong. There were assumptions for significant growth in Latin America that has not materialized. There was assumptions for synergies that have not materialized. That is the reason that we have to take the write-off. The write-off is not something that we came in and said, "Oh, we have to take a write-off." As you know, in accordance with good accounting practices, every quarter we look at all of our assets and see if they are impaired. And when we looked at all of our assets, the good news is that nothing else was impaired. But then you look at Indura, it was impaired. We had paid too much for the business, and we have to take about half of their goodwill out. So that -- I hope that clarifies the situation, P.J.

Your next question comes from Jeff Zekauskas with JPMorgan. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Maybe a couple of questions on the tonnage business. I think the tonnage volumes for Air Products this year, exclusive of PUI, were down. And I was wondering if you could diagnose why they were down. And I was hoping you could also provide some detail about the delay in China projects, which projects they are and what's the magnitude of the delay?

Very good. Jeff, I'll try to answer this thing in a general way, and then I'll turn it over to Scott -- to Simon to give you more details. First of all, if I may answer your second question first, the delay in the China project is actually, right now, 2 of the projects. I don't want to name them, but it is basically 2 of the projects are about -- delayed about 2 quarters from what we expected. And the projects are -- it is not as if the projects are not viable. It is just that when you are building a $10 billion facility, which we are part of it, there is delays in the start-up and all of that. We do not expect this to be a major issue for us. We do not expect to be taking any write-offs, and we have taken these delays fully into consideration when we gave you our guidance. So it's not as if next quarter, we are going to say, "Well, we have to adjust our guidance because the projects are delayed." We know where they are and we have taken that into consideration. In the long term, we don't see any problems there. With respect to their volumes for our existing businesses, their shortfall in volume is mainly in Europe, and I'll have Simon comment on that.

Great. Thank you, Seifi. And Jeff, I think maybe if I could just frame that, I believe you asked about the full year. And I think as you reflect on the full year volumes in tonnage, first of all, it's contributed by the fact that we didn't have the new plants come onstream. But also as you remember, particularly back in Q2 and Q3, we had a lot of outages that were planned. Our customers planning our outages, we take the plants down, and so that limited our volume opportunities. So as we bring the new plants on next year, we would expect that to improve.

Our next question comes from John McNulty with Crédit Suisse. John P. McNulty - Crédit Suisse AG, Research Division: So with regard to the Electronics and Performance Materials segment, the margins have taken a solid jump up. And I guess I'm wondering if you can parse out what's -- what the major drivers behind that are? How much might be tied to cost cutting versus just the incremental volumes you've seen with the electronics recovery?

Sure, John. I'm going to have Guillermo answer that. But in general, I would like to say that the margins have jumped up because if you recall, when we're discussing this last quarter, I said that, that business has a lot of room for improvement. What we have done is that we have an outstanding team running the place. What we have done is that we have given them authority. We have given them the room to run, and they are doing a great job in running the business. And I think they have a great future ahead of them. I'm very pleased with the management team and the restructuring that Guillermo has done, but -- Guillermo?

I think there are several dimensions that are driving the improvement. First, if you remember last year, we said we were going to drive a significant improvement program in our Performance Materials business, which was one of the underperforming segments. And we have been delivering exactly on that, reducing our costs, improving plant productivity, shifting a lot of our production capabilities to Asia, where we are in a more competitive position. So all those activities that we had planned have been delivered, and that has been a big driver to our overall improvement, so that cost productivity is a big driver. In doing that, as the market has improved and capacity utilizations have improved, we've also been able to take advantage of our competitive position to gain share and improve our pricing position in that area. So that's for the process material side. In the advanced materials, although we started a little bit slower in the first part of the year because of just delays from the industry and the [indiscernible]. Towards back end of the year, we are starting to see that movement, and that's -- a lot of our advanced materials are newer products that come at a higher margin and improve our mix. And lastly, I would say it's in the Delivery Systems. We've also taken productivity initiatives to improve our overall competitiveness in that segment. And we've been able to pick up some additional business during the year, which also helped our loading. So as I said in my comments, there's a lot -- a lot of things have happened, not one single thing that drove our overall improvement. John P. McNulty - Crédit Suisse AG, Research Division: And then maybe just a -- with a follow-up question. On SG&A, we saw a pretty solid drop down, both sequentially and year-over-year. I guess I'm wondering if there's any kind of onetime-ish type items. Or is this just the beginning of the costs cuts to come?

I'd like to have Scott comment on that.

Sure. So we're focused, as you heard from us in the past and Seifi this morning, on costs and you saw that in the SG&A line. Going forward, where are we going to be next year? We have to continue to drive it down, both on an absolute basis as well as on a percentage-of-sales basis. So I'm not giving guidance in the future for SG&A, but that's going to be a particular area of focus. We delivered results in the fourth quarter and we expect to continue to do so going forward.

Our next question comes from Bob Koort with Goldman Sachs.

This is Neal Sangani on for Bob. During the quarter, can you tell us specifically what you did around cost reduction in the fourth quarter? And what's incrementally ahead?

Well, what we did in the cost reduction is obviously we reduced our staff and the number two is that we controlled travel costs. We controlled all the consulting costs. We controlled all of the -- as you know, it's not one item that you do, it's 10,000 things that you have to do. But I challenged the organization in July when we started, and they have responded. Everybody watches everything that we do. We don't make unnecessary trips. We don't have fancy conferences in fancy resorts. And obviously, there has been people reduction in terms -- in our different businesses. I'd like to have Scott make some additional comments.

Sure. Thank you, Seifi. So just to build -- just to remind folks, we took a provision last year, and we concluded the savings associated with that provision here in the fourth quarter, $45 million or so for this year with an annual rate of about 75. So we'll see that going into next year. That's been brought to closure. And then also we've taken actions in this quarter under the new organization. And you saw, we've had a provision of about $13 million in this quarter reflective of additional actions that we're going to take, that we have taken and that we're going to continue to take going forward. So just wanted to frame and remind folks that there was the conclusion of the previous efforts and now the beginning of the efforts going forward under the new organization.

And then just a follow-up on electronics. You stated when you came onboard that noncore businesses like Electronics and Performance Materials would need to be improved or divested. How does that fit with the bounce back in volumes and margins you saw this quarter? And can you also tell us what the revenue base in margins would look like once you remove some of the on-site products?

Well, we challenged -- we have told them that they get their margins up to where the gases margin are. That means an operating margin of around 24%, 25% operating margin, that we would love to keep the business. I mean, it's a great business, great people, and they are making significant improvements toward that goal. So -- and at the rate that they are going, I think that they will be able to achieve that. Guillermo, do you want to make any additional comments?

No, I think I said we're very, very happy with the overall performance. I think one of the questions was around the tonnage part of the business. You'll see those numbers as we roll them out, but it is part of the investor presentation we've made in the past. We break it out. I think roughly you can calculate around $350 million would be the Tonnage Gases portion of the business.

Our next question comes from Vincent Andrews with Morgan Stanley.

Wondering if you could just help us a little bit with the composition of 2015. How much earnings or EPS do you expect from sort of new plant loadings? And then can you talk to us a little bit about how much EBITDA should grow and where EBITDA margins should go for the full year, just so that we could help benchmark your progress relative to what you're asking your employees to do?

Well, thanks for the question. But we have decided not to really get into the details of how many cents from new plants and how many cents from this and that. We consider that to be a little bit of a getting into too much detail. And in addition to that, if something is delayed in terms of new plants, we do something else to make up for that. So we are not going to really go through that kind of a detail. But in general, I would say that we expect that our EBITDA margins to continue to improve. We are -- as you know, our goal is to get to an EBITDA margin of 32%, 33%. This quarter, we were at around 28%. Next year we will probably be around that and then hopefully, improve every quarter.

Okay. And just as a follow-up, on the 11% instantaneous ROCE, can you just help us understand how the Indura write-off was accounted for in that?

Okay. Scott will answer that. Scott?

Yes. So in that instantaneous this quarter, very little impact that you see in there. I think going forward and if I just pull it back, broadly speaking, post the write-down of the LASA reporting unit, call it 20 basis points improvement from the change in the denominator. So that's about the ballpark.

So you took Indura out of the denominator and helped by 20 basis points. Is that the answer?

As part of a write-down, then the denominator gets lower. And it's about a 20 basis point impact for ROCE going forward, roughly.

Not that significant.

Right.

Our next question comes from David Begleiter with Deutsche Bank.

Just on the restructuring, Seifi, should we expect a large charge going forward? Or similar to this past quarter, smaller charges over the next few quarters?

We are not going to take a onetime one large charge. But I should think that you should expect that during the year, as -- we are going to take the charges as incurred as we do the restructuring. Whatever they charges us, we'll report you. But I expect that if you add up all of those numbers for fiscal year 2015, that would come out to a substantial number if you are going to achieve and do what we have suggested that we are going to do.

Very good. And just on the 2 large China projects that are being delayed. What's the EPS impact in 2015 versus prior expectations?

Well, David, if you don't mind, as I said, we have taken that into consideration when we gave you the forecast. But I don't want to quote a specific number, if you don't mind.

Our next question comes from Duffy Fischer with Barclays.

Question. Now that you've kind of reset the capital bar and obviously getting tighter with capital, Seifi, how do you think about over a longer period of time what the natural growth rate is for your business?

Actual growth rate? Well, it obviously depends on the worldwide economy. But we believe that Air Products has the capacity and we should grow at least at 1.5x GDP worldwide. That would be a natural growth rate.

Okay. And then expectations among the investment community is for call it roughly $600 million of kind of cost outs from this time you started. Can you walk us through how you think the cadence of that will flow through what you can get? Or maybe what you've got already? What you can get within the next 1 year and then maybe what takes 2 to 3 years to get?

Well, we expect that out of those $600 million, if we are going to achieve our goal, I think we have said, Duffy, that about half of that will be from SG&A and overhead costs. And the other half will come from fundamentally the runoff facilities and efficiency and distribution, power consumption and all of the other things that we do. So that's the overall breakdown. In terms of breaking it down by years, we'll see how fast we can run. In our forecast that we have given you for next year, obviously, we are assuming that we will have some of that cost saving under our belt. But I don't want to give you a very specific number, but that's the order of magnitude of the numbers, Duffy.

Our next question comes from James Sheehan with SunTrust Robinson Humphrey.

Scott, just wondering if you could give us some color on how you see return on capital trends unfolding over the next year.

Right. So from an instantaneous perspective, we'd expect it to come down a little bit given the first quarter and the traditional seasonality that we see in the business. But in general -- generally speaking, improvement going forward as we load the assets that we have and bring the projects that are in backlog, and importantly, drive the earnings improvement from the productivity efforts that we have. So we'd expect that to improve going forward as well as all the other metrics that we've talked about, cash flow and so forth.

And one for Seifi, on the cost controls that you've delivered so far are pretty strong. I'm just wondering if you could characterize the cost cuts you've done so far. Would you see that as low-hanging fruits that the pace of cost control slows going forward? Or how do you see that unfolding?

Well, Jim, my friend, nothing is low-hanging fruit. It doesn't come out easily. But I have to give a lot of credit to the organization for responding to the challenge, and we are controlling every aspect of our cost. And as I said, it's not 1 or 2 items. It's not one magic wand. It's 10,000 different things that people do every day in running our business. So -- and none of that is easy, but -- and it is painful. But the organization has decided that we want to go back to where we were 20 years ago, be the best performing industrial gas company in the world, and they are moving toward that.

Our next question comes from Don Carson with Susquehanna.

Seifi, I want to go back to your guidance for fiscal '15. It's above consensus despite obviously some big headwinds out there in terms of economic growth, currency and pension. So 2 questions. One, what is the pension and currency headwind you've built into your numbers? And how would you characterize your growth in terms of how much is cost driven versus how much is really volume driven?

That's an excellent question, Don. First of all, in terms of volumes, you know the economic situation in the world better than I do. We are not counting on getting any significant help from economic growth. So we are not counting that our top line will grow a lot, maybe 2% or maybe even less. What we are counting on is on our ability to focus on the things that we control, which is basically our cost and productivity. And obviously, we are also counting on pricing to make sure that we get the right prices for our products. That's the direction that we are going. In terms of currency, now I'd just like to give you a general number. I know everybody is concerned about the euro and all of that. Our exposure in Europe -- no, maybe we should give you some numbers to frame this thing in a better way that our total exposure to Europe is about 26% of our Air Products sales. But 30% of that European exposure is primarily our pipeline network in Rotterdam. So really, only 18% of Air Products sales are exposed to the economy within Europe. But that includes a little bit of our Performance Materials business. But the significant majority of the 18% is our Merchant business. And of that, 25% of that is in U.K. and Ireland. So we don't really have too much exposure to the U.S. currency today, general economic conditions in Europe. In terms of currency, the biggest swing can come from the -- from euro. And on that one, order of magnitude, 10% change in the value of euro, a 10% change will affect our EPS by about $0.07 or $0.08. So that's the kind of thing that we have done. With respect to pension and so on, I'd like Scott to comment on that.

Right. I would expect, while it's not final, Don, call it roughly even FY '15 versus '14, not a big movement in pension expense.

Okay. Then one follow-up, Seifi, I know you're very focused on improving the density of your assets to improve returns. Have you thought of any closures in the U.S.? I mean, your operating ratio is still only in the high 70s. Are there areas in the U.S. where you don't have the density you need? And could you help yourself out by shuttering some plants?

I don't think we need to shut down some plants. So the density thing can only be improved significantly if we do any kind of swaps with other people. On that one, there are plenty of ideas around, but the issue is fundamentally, what would the authorities approve? I mean, with these things it's always easy to talk about it. But in the real world, there are restrictions from an antitrust point of view about market concentration, about what we can and what we cannot do. We are not counting on that as a significant factor for improving our results. We are open to suggestions. We are open to discussions. But quite honestly, we haven't built anything like that into our forecast.

Our next question comes from Kevin McCarthy with Bank of America.

If we look at the last 3 years and consider the seasonal pattern from the September quarter into the December quarter, your earnings have declined typically $0.12 to $0.14. Based on the guidance you put forth this morning, if I use the midpoint, it sounds like you're looking for a decline of $0.23 to $0.24. I heard you referenced some higher maintenance costs, and I suppose foreign exchange is not helping sequentially. Are there other factors at work that would be perhaps weighing on the December quarter?

Look, Kevin, the main reason that you come up with $0.24 is because we had an excellent fourth quarter.

Yes, I agree.

You know what I mean? If we had delivered $1.55 and then we said for next quarter, we do $1.50, then you would say it's only $0.05. So there's a little bit of an element of that, but we take very seriously when we talk about giving you guidance. And therefore, we didn't want to get ahead of our headlights for the first quarter. Can we do better? We'll -- obviously, we'll try to do that. But we just want to be cautious that we kind of deliver what we promise, and then so that we don't surprise people.

Okay. I understand. That makes sense. The second question, if I may, Seifi, on the strategic side. If you think about various possibilities such as potential to buy out some joint ventures, and I think you alluded to asset swaps or -- did you see any greater potential today, less potential or about the same, relative to your first day?

Well, I see potential, but whether they are actionable, quite honestly, is a challenge. I'm not expecting any kind of a significant happening there, no.

Our next question comes from David Manthey with Robert W. Baird. David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: Along the same lines here in terms of the fourth quarter strength and into the first quarter, and I think it was asked before, I'm not sure if it got answered. In terms of -- anything unusual in the fourth quarter in terms of year-end accrual, true-ups? Or anything unusual we should think about that could put that 17.6 in appropriate context?

David, our fourth quarter results are "very clean." There wasn't any kind of a special thing that we moved forward or anything like that. That we feel we have the clean numbers. And if that implies that we are being conservative about the first quarter, maybe there is some element of truth in that. But I would like to have Scott comment on this a little bit more in detail.

Just I think, as mentioned earlier, when you look at it versus a year-on-year, I think that's the better reference, right? So in any time, any quarter, whether it's sale of equipment and different ins and outs and so forth and seasonality, there's going to be movement. But I think the best way to look at it is how did we do last year? How does that compare to what our guidance is for the first quarter? And again, focusing on the actions that we can control to continue to deliver cost reductions and productivity to the bottom line.

That does conclude our question-and-answer session for today's conference. I would like to turn the conference back over to our speakers for any additional or closing remarks.

Well, thank you very much. And I would like to just, at this time, thank everybody who was on the call. We very much appreciate your very good questions. We look forward to getting a chance to talk to many of you over the next few months. And I would like to remind everybody that we are planning our 2015 Investor Conference. It will be held in New York and it will be late March or early April as soon as we have finalized the venue for that. We will share more details as we go forward, and we always look forward to seeing all of you. And again, thanks for the very good questions. We appreciate them.

That does conclude today's conference. Thank you for your participation.