Chairman's Letter cont'd

We are focusing this effort on five global segments: metals technologies, food and beverage, healthcare, surface technologies and semiconductor materials. Together, we expect these segments to grow at or above 15% per year.

As a company with a rich technology heritage, it was natural for us to start with technology licensing. We created a new organization, Praxair Metals Technologies, and already have had success with our patented CoJet ™ oxygen-injection technology. This system brings significant cost-reduction, efficiency and environmental benefits to steel producers. In the electric-arc furnace market, we have 33 licensees in nine countries. During 2001, the technology is being commercialized in the integrated mills segment, where the potential value to customers is in the billions of dollars. We also see future application of CoJet technology in the production of stainless steel and other metals.

But our licensing programs are not limited to metals. With the increasing demand for higher food quality and greater food safety, the food and beverage market also offers licensing potential. For example, an alternative to heat pasteurization is a technology based on carbon dioxide that preserves the flavor of fruit and vegetable juices while meeting food-safety requirements. Working with a major university, we plan to bring this technology to market in 2001. The technology ultimately may be applicable to a wide range of liquid food products. Additional technology programs are in late-stage commercial development for egg-cooling and shelf-life extension of fresh foods.

The rapidly-evolving healthcare segment also is rich with opportunity. As hospitals and other healthcare providers seek ways to reduce costs, Praxair has been able to offer management services in addition to medical gases. Several healthcare networks have engaged Praxair to coordinate site-gas management, inventory control and procurement, for example. Another trend is the increase in home healthcare, driven both by the high costs of hospital care and an aging population. Praxair already supplies 50,000 home healthcare patients, largely outside the U.S. We will continue to expand this business internationally while building it up in the U.S., partially through small acquisitions. Our new Grab 'n Go™ portable oxygen system has proved to be popular with hospitals and clinics throughout North America, and also has potential in the home healthcare market.