Over
the past year, we have quickened the pace of decision-making,
established new investment criteria, and restructured our base
business in the U.S. We have reallocated resources to promote
growth and sustained competitive advantage. We have been able
to move quickly because we were willing to look beyond our traditional
business and envision what it would take to be an industrial company
in a new economy.
A key motivator is our frustration over Praxair's stock price,
which ended the year down 12% from 1999. Going forward, we are
committed to doing what it takes to attract a premium valuation
for Praxair's stock. The industry is a solid one, the opportunities
are there, and Praxair has the drive and capabilities. We have
adjusted our business strategies to achieve the growth and rates
of return that we believe will attract investors
Our financial goals are straightforward: 1) double-digit growth
in earnings per share and cash flow from operations; 2) after-tax
return on capital in the mid-teens; 3) substantial free cash flow;
and 4) debt-to- capital of 50%.
In
2000, the Praxair team delivered a 10% increase in earnings per
share, excluding repositioning and special charges, while exceeding
$5 billion in sales, up 9% over the previous year. After three
years of after-tax return on capital of just over 11%, Praxair
generated a return of 12%. We are proud to have the highest return
on capital among our industrial gases peers, achieved through
sound financial strategies and by reducing capital spending without
sacrificing earnings growth. Debt-to-capital at the end of the
year was 56%. We have put in place the strategies that will allow
us to make further improvements in 2001.
