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Table of Contents                
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission file number001-38730
LINDE PLC
(Exact name of registrant as specified in its charter)
Ireland
98-1448883
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
The Priestley Centre
10 Riverview Dr.,10 Priestley Road,
Danbury,ConnecticutSurrey Research Park,
United States 06810Guildford,SurreyGU2 7XY
United Kingdom
(Address of principal executive offices) (Zip Code)
(203) 837-2000+441483 242200
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s) Name of each exchange on which registered
Ordinary shares (€0.001 nominal value per share)LIN New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer 
Non-accelerated filer Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No 
At September 30, 2021, 512,554,731 ordinary shares (€0.001 par value) of the Registrant were outstanding.
1    

Table of Contents                
INDEX
PART I - FINANCIAL INFORMATION 
Item 1.
Financial Statements (unaudited)
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2    

Table of Contents                
Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. They are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics, pandemics such as COVID-19, and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from accounting principles generally accepted in the United States of America, International Financial Reporting Standards or adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A. Risk Factors in Linde plc’s Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 1, 2021, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.









3    

Table of Contents                

LINDE PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED) 

 Quarter Ended September 30,
 20212020
Sales$7,668 $6,855 
Cost of sales, exclusive of depreciation and amortization4,368 3,835 
Selling, general and administrative793 770 
Depreciation and amortization1,163 1,168 
Research and development36 36 
Cost reduction programs and other charges 26 48 
Other income (expense) - net10 (29)
Operating Profit1,292 969 
Interest expense - net8 38 
Net pension and OPEB cost (benefit), excluding service cost(45)(41)
Income From Continuing Operations Before Income Taxes and Equity Investments1,329 972 
Income taxes on continuing operations321 265 
Income From Continuing Operations Before Equity Investments1,008 707 
Income from equity investments1 23 
Income From Continuing Operations (Including Noncontrolling Interests)1,009 730 
Income from discontinued operations, net of tax1 1 
Net Income (Including Noncontrolling Interests)1,010 731 
Less: noncontrolling interests from continuing operations (31)(31)
Net Income – Linde plc$979 $700 
Net Income – Linde plc
Income from continuing operations $978 $699 
Income from discontinued operations$1 $1 
Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations$1.90 $1.33 
Basic earnings per share from discontinued operations  
Basic earnings per share $1.90 $1.33 
Diluted earnings per share from continuing operations$1.88 $1.32 
Diluted earnings per share from discontinued operations   
Diluted earnings per share$1.88 $1.32 
Weighted Average Shares Outstanding (000’s):
Basic shares outstanding515,169 525,694 
Diluted shares outstanding520,079 530,415 

The accompanying notes are an integral part of these financial statements.

4    

Table of Contents                
LINDE PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED) 
 Nine Months Ended September 30,
 20212020
Sales$22,495 $19,971 
Cost of sales, exclusive of depreciation and amortization12,616 11,297 
Selling, general and administrative2,402 2,391 
Depreciation and amortization3,500 3,434 
Research and development105 114 
Cost reduction programs and other charges 222 428 
Other income (expense) - net(3)(14)
Operating Profit3,647 2,293 
Interest expense - net46 80 
Net pension and OPEB cost (benefit), excluding service cost(143)(131)
Income From Continuing Operations Before Income Taxes and Equity Investments3,744 2,344 
Income taxes on continuing operations923 594 
Income From Continuing Operations Before Equity Investments2,821 1,750 
Income from equity investments81 69 
Income From Continuing Operations (Including Noncontrolling Interests)2,902 1,819 
Income from discontinued operations, net of tax3 3 
Net Income (Including Noncontrolling Interests)2,905 1,822 
Less: noncontrolling interests from continuing operations (105)(91)
Net Income – Linde plc$2,800 $1,731 
Net Income – Linde plc
Income from continuing operations $2,797 $1,728 
Income from discontinued operations$3 $3 
Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations$5.39 $3.28 
Basic earnings per share from discontinued operations0.01 0.01 
Basic earnings per share $5.40 $3.29 
Diluted earnings per share from continuing operations$5.34 $3.25 
Diluted earnings per share from discontinued operations 0.01 0.01 
Diluted earnings per share$5.35 $3.26 
Weighted Average Shares Outstanding (000’s):
Basic shares outstanding518,802 527,501 
Diluted shares outstanding523,662 531,724 
The accompanying notes are an integral part of these financial statements.


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LINDE PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Millions of dollars)
(UNAUDITED)
 
 Quarter Ended September 30,
 20212020
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)$1,010 $731 
OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:
Foreign currency translation adjustments(823)696 
Reclassification to net income  
Income taxes4 7 
Translation adjustments(819)703 
Funded status - retirement obligations (Note 8):
Retirement program remeasurements52 (49)
Reclassifications to net income43 28 
Income taxes(28)(2)
Funded status - retirement obligations67 (23)
Derivative instruments (Note 5):
Current unrealized gain (loss)64 16 
Reclassifications to net income(25)(5)
Income taxes(10)(3)
Derivative instruments29 8 
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)(723)688 
COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)287 1,419 
Less: noncontrolling interests(18)(71)
COMPREHENSIVE INCOME (LOSS) - LINDE PLC$269 $1,348 

The accompanying notes are an integral part of these financial statements.




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LINDE PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Millions of dollars)
(UNAUDITED)
 Nine Months Ended September 30,
 20212020
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)$2,905 $1,822 
OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:
Foreign currency translation adjustments(1,068)(1,299)
Reclassification to net income (Note 13)(52) 
Income taxes(4)31 
Translation adjustments(1,124)(1,268)
Funded status - retirement obligations (Note 8):
Retirement program remeasurements53 2 
Reclassifications to net income130 71 
Income taxes(53)(26)
Funded status - retirement obligations130 47 
Derivative instruments (Note 5):
Current period unrealized gain (loss)104 (29)
Reclassifications to net income(30)45 
Income taxes(18)(2)
Derivative instruments56 14 
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)(938)(1,207)
COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)1,967 615 
Less: noncontrolling interests(95)(43)
COMPREHENSIVE INCOME (LOSS) - LINDE PLC$1,872 $572 
The accompanying notes are an integral part of these financial statements.


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LINDE PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(UNAUDITED)
 
September 30, 2021December 31, 2020
Assets
Cash and cash equivalents$4,700 $3,754 
Accounts receivable - net4,367 4,167 
Contract assets 166 162 
Inventories1,694 1,729 
Prepaid and other current assets1,080 1,112 
Total Current Assets12,007 10,924 
Property, plant and equipment - net26,180 28,711 
Goodwill27,178 28,201 
Other intangible assets - net14,048 16,184 
Other long-term assets4,778 4,209 
Total Assets$84,191 $88,229 
Liabilities and equity
Accounts payable$3,069 $3,095 
Short-term debt2,895 3,251 
Current portion of long-term debt2,293 751 
Contract liabilities2,213 1,769 
Other current liabilities4,288 4,874 
Total Current Liabilities14,758 13,740 
Long-term debt11,539 12,152 
Other long-term liabilities12,157 12,755 
Total Liabilities38,454 38,647 
Redeemable noncontrolling interests13 13 
Linde plc Shareholders’ Equity:
Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2021 issued: 552,012,862 ordinary shares; 2020 issued: 552,012,862 ordinary shares
1 1 
Additional paid-in capital40,220 40,202 
Retained earnings18,240 17,178 
Accumulated other comprehensive income (loss) (Note 11)
(5,618)(4,690)
Less: Treasury shares, at cost (2021 – 39,458,131 shares and 2020 – 28,718,333 shares)
(8,520)(5,374)
Total Linde plc Shareholders’ Equity44,323 47,317 
Noncontrolling interests1,401 2,252 
Total Equity45,724 49,569 
Total Liabilities and Equity $84,191 $88,229 

The accompanying notes are an integral part of these financial statements.
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LINDE PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
Nine Months Ended September 30,
20212020
Increase (Decrease) in Cash and Cash Equivalents
Operations
Net income - Linde plc$2,800 $1,731 
Less: Income from discontinued operations, net of tax and noncontrolling interests(3)(3)
Add: Noncontrolling interests from continuing operations105 91 
Income from continuing operations (including noncontrolling interests)2,902 1,819 
Adjustments to reconcile net income to net cash provided by operating activities:
Cost reduction programs and other charges, net of payments83 240 
Depreciation and amortization3,500 3,434 
Deferred income taxes(184)(299)
Share-based compensation95 104 
Working capital:
Accounts receivable(539)(76)
Inventory(77)(101)
Prepaid and other current assets(25)1 
Payables and accruals131 (12)
    Contract assets and liabilities, net530 89 
Pension contributions(32)(76)
Long-term assets, liabilities and other108 (128)
Net cash provided by operating activities6,492 4,995 
Investing
Capital expenditures(2,247)(2,373)
Acquisitions, net of cash acquired(31)(41)
Divestitures and asset sales, net of cash divested147 435 
Net cash provided by (used for) investing activities(2,131)(1,979)
Financing
Short-term debt borrowings (repayments) - net369 2,154 
Long-term debt borrowings2,260 2,763 
Long-term debt repayments(821)(1,582)
Issuances of ordinary shares39 41 
Purchases of ordinary shares(3,251)(2,030)
Cash dividends - Linde plc shareholders(1,648)(1,523)
Noncontrolling interest transactions and other(319)(201)
Net cash provided by (used for) financing activities(3,371)(378)
Effect of exchange rate changes on cash and cash equivalents(44)(139)
Change in cash and cash equivalents946 2,499 
Cash and cash equivalents, beginning-of-period3,754 2,700 
Cash and cash equivalents, end-of-period$4,700 $5,199 
The accompanying notes are an integral part of these financial statements.
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INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Notes to Condensed Consolidated Financial Statements - Linde plc and Subsidiaries (Unaudited)
 
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1. Summary of Significant Accounting Policies
Presentation of Condensed Consolidated Financial Statements - In the opinion of Linde management, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods presented and such adjustments are of a normal recurring nature. The accompanying condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements of Linde plc and subsidiaries in Linde's 2020 Annual Report on Form 10-K. There have been no material changes to the company’s significant accounting policies during 2021.
Accounting Standards Implemented in 2021

Income Taxes - Simplifying the Accounting for Income Taxes - In December 2019, the FASB issued guidance which simplifies the accounting for income taxes by removing several exceptions in the current standard and adds guidance to reduce complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, evaluating whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction and allocating taxes to members of a consolidated group. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption of this standard did not materially impact the company's consolidated financial statements.
Reference Rate Reform - In March 2020 with amendments in 2021, the FASB issued guidance related to reference rate reform which provides practical expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that the reference London Interbank Offered Rate (“LIBOR”) and other interbank offered rates. This update is applicable to our contracts and hedging relationships that reference LIBOR and other interbank offered rates. The amendments may be applied to impacted contracts and hedges prospectively through December 31, 2022. The application of this guidance did not materially impact the company's consolidated financial statements.

Reclassifications – Certain prior periods' amounts have been reclassified to conform to the current year’s presentation.

2. Cost Reduction Programs and Other Charges

2021 Charges

Cost reduction programs and other charges were $26 million and $222 million for the quarter and nine months ended September 30, 2021, respectively ($58 million and $228 million, after tax). The following table summarizes the activities related to the company's cost reduction charges for the quarter and nine months ended September 30, 2021:
Quarter Ended September 30, 2021
(millions of dollars)Severance costsOther cost reduction chargesTotal cost reduction program related chargesMerger-related and other chargesTotal
Americas$1 $ $1 $(4)$(3)
EMEA15 2 17  17 
APAC     
Engineering     
Other4 7 11 1 12 
Total$20 $9 $29 $(3)$26 
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Nine Months Ended September 30, 2021
(millions of dollars)Severance costsOther cost reduction chargesTotal cost reduction program related chargesMerger-related and other chargesTotal
Americas$4 $2 $6 $(4)$2 
EMEA197 23 220  220 
APAC7 2 9 (53)(44)
Engineering7 6 13  13 
Other13 16 29 2 31 
Total$228 $49 $277 $(55)$222 

Cost Reduction Programs

Total cost reduction program related charges were $29 million for the quarter and $277 million for the nine months ended September 30, 2021 ($25 million and $209 million, after tax).

Severance costs

Severance costs were $20 million and $228 million for the quarter and nine months ended September 30, 2021. As of September 30, 2021, approximately half of the actions have been taken, with remaining actions planned to be completed by the first quarter of 2022.

Other cost reduction charges

Other cost reduction charges of $9 million and $49 million for the quarter and nine months ended September 30, 2021, respectively, are primarily charges related to the execution of the company's synergistic actions including location consolidations and business rationalization projects, process harmonization, and associated non-recurring costs.

Merger-related Costs and Other Charges

Merger-related costs and other charges were benefits of $3 million and $55 million for the quarter and nine months ended September 30, 2021, respectively (charges of $33 million and $19 million, after tax). The year-to-date pre-tax benefit was primarily due to a $52 million gain triggered by a joint venture deconsolidation in the APAC segment in the first quarter (see Note 13). After-tax charges also include the impact of the below items.

The nine months ended September 30, 2021 include a net income tax charge of $38 million, primarily related to (i) $81 million of expense due to the revaluation of a net deferred tax liability resulting from a tax rate increase in the United Kingdom enacted in the second quarter, and (ii) a tax settlement benefit of $33 million.

The quarter and nine months ended September 30, 2021 also include an impairment charge of $35 million ($35 million, after tax) related to a joint venture in the APAC segment. The charge is shown within income from equity investments on the consolidated statements of income.

Cash Requirements

The total cash requirements of the cost reduction program and other charges during the nine months ended September 30, 2021 are estimated to be approximately $236 million and are expected to be paid through 2023. Total cost reduction programs and other charges, net of payments in the condensed consolidated statements of cash flows for the nine months ended September 30, 2021 also reflects the impact of cash payments of liabilities accrued as of December 31, 2020.

The following table summarizes the activities related to the company's cost reduction related charges for the nine months ended September 30, 2021:
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(millions of dollars)Severance costsOther cost reduction chargesTotal cost reduction program related chargesMerger-related and other chargesTotal
Balance, December 31, 2020$283 $22 $305 $64 $369 
2021 Cost Reduction Programs and Other Charges228 49 277 (55)222 
Less: Cash payments(113)(9)(122)(17)(139)
Less: Non-cash charges / benefits (21)(21)54 33 
Foreign currency translation and other(14)(5)(19) (19)
Balance, September 30, 2021$384 $36 $420 $46 $466 

2020 Charges

Cost reduction programs and other charges were $48 million and $428 million for the quarter and nine months ended September 30, 2020, respectively ($36 million and $318 million, after tax).

Total cost reduction program related charges were $39 million and $330 million ($29 million and $236 million, after tax), for the quarter and nine months ended September 30, 2020, respectively, which consisted primarily of severance charges of $31 million and $281 million. Merger-related and other charges were $9 million and $98 million for the quarter and nine months ended September 30, 2020 ($7 million and $82 million, after tax).

Classification in the condensed consolidated financial statements

The costs are shown within operating profit in a separate line item on the consolidated statements of income. On the condensed consolidated statements of cash flows, the impact of these costs, net of cash payments, is shown as an adjustment to reconcile net income to net cash provided by operating activities. In Note 10 Segments, Linde excluded these costs from its management definition of segment operating profit; a reconciliation of segment operating profit to consolidated operating profit is shown within the segment operating profit table.
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3. Supplemental Information
Receivables
Linde applies loss rates that are lifetime expected credit losses at initial recognition of the receivables. These expected loss rates are based on an analysis of the actual historical default rates for each business, taking regional circumstances into account. If necessary, these historical default rates are adjusted to reflect the impact of current changes in the macroeconomic environment using forward-looking information. The loss rates are also evaluated based on the expectations of the responsible management team regarding the collectability of the receivables. Gross trade receivables aged less than one year were $4,358 million and $4,169 million at September 30, 2021 and December 31, 2020 respectively and gross receivables aged greater than one year were $308 million and $358 million at September 30, 2021 and December 31, 2020, respectively. Other receivables were $124 million and $111 million at September 30, 2021 and December 31, 2020, respectively. Receivables aged greater than one year are generally fully reserved unless specific circumstances warrant exceptions, such as those backed by federal governments.
Accounts receivable net of reserves were $4,367 million at September 30, 2021 and $4,167 million at December 31, 2020. Allowances for expected credit losses were $423 million at September 30, 2021 and $471 million at December 31, 2020.  Provisions for expected credit losses were $101 million and $136 million for the nine months ended September 30, 2021 and 2020, respectively. The allowance activity in the nine months ended September 30, 2021 and 2020 related to write-offs of uncollectible amounts, net of recoveries and currency movements is not material.

Inventories
The following is a summary of Linde's consolidated inventories:
(Millions of dollars)September 30,
2021
December 31,
2020
Inventories
Raw materials and supplies$391 $411 
Work in process 357 337 
Finished goods946 981 
Total inventories$1,694 $1,729 
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4. Debt
The following is a summary of Linde's outstanding debt at September 30, 2021 and December 31, 2020:
(Millions of dollars)September 30,
2021
December 31,
2020
SHORT-TERM
Commercial paper$2,022 $2,527 
Other borrowings (primarily non U.S.)873 724 
Total short-term debt2,895 3,251 
LONG-TERM (a)
(U.S. dollar denominated unless otherwise noted)
3.875% Euro denominated notes due 2021 (c)
 748 
0.250% Euro denominated notes due 2022 (b)
1,160 1,226 
2.45% Notes due 2022
600 599 
2.20% Notes due 2022
500 499 
2.70% Notes due 2023
499 499 
2.00% Euro denominated notes due 2023 (b)
777 832 
5.875% GBP denominated notes due 2023 (b)
436 460 
1.20% Euro denominated notes due 2024
636 671 
1.875% Euro denominated notes due 2024 (b)
364 389 
2.65% Notes due 2025
399 398 
1.625% Euro denominated notes due 2025
575 607 
0.00% Euro denominated notes due 2026 (d)
814  
3.20% Notes due 2026
725 725 
3.434% Notes due 2026
197 196 
1.652% Euro denominated notes due 2027
95 100 
0.250% Euro denominated notes due 2027
867 914 
1.00% Euro denominated notes due 2028 (b)
902 966 
1.10% Notes due 2030
696 696 
1.90% Euro denominated notes due 2030
121 127 
0.550% Euro denominated notes due 2032
862 909 
0.375% Euro denominated notes due 2033 (d)
575  
3.55% Notes due 2042
664 664 
2.00% Notes due 2050
296 296 
1.00% Euro denominated notes due 2051 (d)
803  
Non U.S. borrowings259 372 
Other10 10 
13,832 12,903 
Less: current portion of long-term debt(2,293)(751)
Total long-term debt11,539 12,152 
Total debt$16,727 $16,154 
 
(a)Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable.
(b)September 30, 2021 and December 31, 2020 included a cumulative $52 million and $79 million adjustment to carrying value, respectively, related to hedge accounting of interest rate swaps. Refer to Note 5.
(c)In June 2021, the company repaid €600 million of 3.875% note that became due.
(d)In September 2021, Linde issued €700 million of 0.000% notes due 2026, €500 million of 0.375% notes due 2033, and €700 million of 1.000% notes due 2051.
The company maintains a $5 billion unsecured revolving credit agreement with a syndicate of banking institutions that expires March 26, 2024. There are no financial maintenance covenants contained within the credit agreement. No borrowings were outstanding under the credit agreement as of September 30, 2021.
15    


5. Financial Instruments
In its normal operations, Linde is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, energy and commodity costs. The objective of financial risk management at Linde is to minimize the negative impact of such fluctuations on the company’s earnings and cash flows. To manage these risks, among other strategies, Linde routinely enters into various derivative financial instruments (“derivatives”) including interest-rate swap and treasury rate lock agreements, currency-swap agreements, forward contracts, currency options, and commodity-swap agreements. These instruments are not entered into for trading purposes and Linde only uses commonly traded and non-leveraged instruments.
There are three types of derivatives that the company enters into: (i) those relating to fair-value exposures, (ii) those relating to cash-flow exposures, and (iii) those relating to foreign currency net investment exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions; and net investment exposures relate to the impact of foreign currency exchange rate changes on the carrying value of net assets denominated in foreign currencies.
When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge, cash-flow hedge, or a net investment hedge. Currently, Linde designates all interest-rate and treasury-rate locks as hedges for accounting purposes; however, cross-currency contracts are generally not designated as hedges for accounting purposes. Certain currency contracts related to forecasted transactions are designated as hedges for accounting purposes. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective through the use of a qualitative assessment, then hedge accounting will be discontinued prospectively.
Counterparties to Linde's derivatives are major banking institutions with credit ratings of investment grade or better. The company has Credit Support Annexes ("CSAs") in place with its principal counterparties to minimize potential default risk and to mitigate counterparty risk. Under the CSAs, the fair values of derivatives for the purpose of interest rate and currency management are collateralized with cash on a regular basis. As of September 30, 2021, the impact of such collateral posting arrangements on the fair value of derivatives was insignificant. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any losses would be immaterial.
The following table is a summary of the notional amount and fair value of derivatives outstanding at September 30, 2021 and December 31, 2020 for consolidated subsidiaries:
   Fair Value
 Notional AmountsAssets (a)Liabilities (a)
(Millions of dollars)September 30,
2021
December 31,
2020
September 30,
2021
December 31,
2020
September 30,
2021
December 31,
2020
Derivatives Not Designated as Hedging Instruments:
Currency contracts:
Balance sheet items$4,136 $6,470 $19 $72 $29 $48 
Forecasted transactions 520 823 7 16 8 12 
Cross-currency swaps165 260 21 24 4 7 
Commodity contracts N/AN/A6 1 — — 
Total $4,821 $7,553 $53 $113 $41 $67 
Derivatives Designated as Hedging Instruments:
Currency contracts:
       Forecasted transactions322 355 7 20 2 14 
Commodity contracts N/AN/A56 3 — — 
Interest rate swaps1,273 1,923 31 64   
Total Hedges$1,595 $2,278 $94 $87 $