1. Stacie Stuart November 22, 2011 APD

3. Sector – Basic Materials Industry – Chemicals Established in 1940 Largest supplier of hydrogen and helium Serve range of industries – food and beverage, health and personal care, energy, transportation, semiconductors Supply atmospheric gases, process and specialty gases, performance materials, equipment and services Global – US, Canada, South America, Europe, and Asia Headquarters – Allentown, PA

4. Large customer base Range of industries Diversified geographic presence Strong R&D capability Currently cutting costs and improving operating margins

5. Sales growth of 11-13% – Will increase revenue to $15 billion ($9 billion in 2010) Operating margin of 20% Return on capital employed to 15% ”..by executing on its innovation, improvement and integration actions, the company should continue to lower its costs, improve returns and gain a greater competitive advantage over its peers.”

6. Anti-competitive allegation against the company’s subsidiary Inability to meet goals Operating improvements may be prevented by poor execution

7. Expanding in Asian countries – Air separation units and supply gases – PetroChina Enhance US customer base – Liquid helium production plant with MATHESON – Pipeline connecting LA and TX hydrogen pipelines – Formation of Hydrochlor with Linde Gas N. America Energy savings – Solar farm in Allentown – Energy from waste in England

8. Intense competition – APD consistently underperforms competitors Fluctuating energy prices Availability of raw materials for contractual commitments

9. Buy: 12 Hold: 1 Consider Buying: $64.40 Consider Selling: $124.20 Look into competitors (PX, ARG) Buy 40 – 2% of portfolio – 15.7% of sector – Materials 12.7% – 40 @ 79.34 = $3173.60

12. Largest industrial gas supplier in North and South America Provides atmospheric, process and specialty gases, and related services, systems, equipment, and technologies Only U.S. chemical company chosen for DOW Serves 24 industries Established in 1907 Sector – Industrials Industry – Diversified Industrials

13. Strong financials and revenue growth Presence in emerging markets Increased quarterly operating margins (21.8%) Continues to outperform peers Good customer service – Provides LT contracts (15-20 years) 20% invested in countercyclical industries – Health, food and beverage Investing research in alternative energy Small exposure to cyclical technology sector due to having diverse products and services

14. Slow growth in North America Decline in Europe – Reduction in profitability due to EU Operating margin pressure in Asia due to overstaffing

15. Growth in India and China

16. Success is strongly related to economic stability Competition in foreign markets

17. Buy: 7 Hold: 10 Consider Buying: $66.50 Consider Selling: $128.30

20. Largest U.S. distributor of industrial, medical, specialty gases, hardgoods, nitrous oxide, dry ice, and process chemicals – Through subsidiaries Leading U.S. distributor of safety products Largest U.S producer of liquid carbon dioxide in Southeast Founded in 1982 Had almost 360 acquisitions – Spent near $1.8 billion in last 5 years

21. Niche: Packaged Gas industry Revenue increase by 12% from last year Multiple types of sales force and distribution channels – Good relationships with customers and customize to their needs – Can offer training courses and specialized salesforce Strong footprint in U.S. – Despite overall slowdown in U.S., Airgas performance has been consistent Market leader Despite acquisitions, is able to keep debt low

22. Geographic barriers with regions Fragmented U.S. market No long term contracts New acquisition of Linde increases market in industrial gas supply but it is reliant on its competitors Acquisition risk – Selection, integration, and overpayment

23. Invested in SAP software – Full implementation occurring in Dec 2012 Spread into Foreign Markets

24. Exposed to market conditions Reliance on competitors

25. Buy: 11 Hold: 2 Consider Buying: $33.60 Consider Selling: $64.80

26. Buy APD ARG is EXTREMELY overvalued – Not a global company, affected by U.S. market PX is also overvalued – No growth opportunities in the Americas or Europe – Competitors are going to India and China too