com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
0-1402
(Commission File Number)
Ohio 34-1860551
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
(216) 481-8100
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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On February 23, 2009, Lincoln Electric Holdings, Inc. (the “Company”) issued a press release reporting its financial results for
the year ended December 31, 2008. A copy of the Company’s press release issued on February 23, 2009 is attached hereto as
Exhibit 99.1 and incorporated herein by reference. The press release is also available through the Company’s website at
www.lincolnelectric.com. The information in this Current Report on Form 8-K, including the Exhibit, is being furnished and
shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or
otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Exchange Act.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Exhibit 99.1
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Lincoln Electric Reports 2008 Full Year and Fourth Quarter Financial Results
Net income for 2008 increased 4.7% to $212.3 million, or $4.93 per diluted share, from $202.7 million, or $4.67 per diluted share, in 2007.
Included in net income was a $19.4 million charge ($18.3 million after-tax), or $0.43 per diluted share, associated with rationalization and non-
cash asset impairment charges. The rationalization charges totaled $2.4 million ($1.7 million after-tax) related to fourth quarter actions to align
the business to current market conditions. Asset impairment charges included $13.2 million of goodwill and $2.4 million of long-lived assets
related to Chinese businesses and intangible assets totaling $1.3 million ($1.0 million after-tax) related to North American and European
businesses.
“Financial results for 2008 were the best in Lincoln’s history,” said John M. Stropki, Chairman and Chief Executive Officer. “Sales of
nearly $2.5 billion and net income of $4.93 per diluted share were both records. Results in the fourth quarter, however, started to reflect the
significant challenges in this very difficult economic environment.
“During the fourth quarter, our sales around the world suffered from the weakened global economy, and we expect the lower sales
volumes experienced in the quarter to continue. The impact of liquidating high cost inventory combined with declining volumes will continue
to pressure margins into 2009.”
Sales for the fourth quarter decreased 9.3% to $526.2 million from $580.3 million in the comparable 2007 period. Sales for the Company’s
North American operations were $309.0 million in the quarter versus $345.1 million in the comparable quarter last year, a decrease of 10.5%.
U.S. export sales in the quarter increased 16.4% to $53.8 million from $46.3 million in 2007.
Sales at Lincoln subsidiaries outside North America decreased to $217.2 million in the fourth quarter compared with $235.2 million in the
year-ago quarter, a decrease of 7.7%. Excluding acquisitions and the effect of changes in foreign currency exchange rates, sales outside North
America decreased 3.5% in the quarter.
Net income for the fourth quarter decreased 60.7% to $19.5 million, or $0.46 per diluted share, from $49.5 million in 2007. Excluding
rationalization and asset impairment charges, net income decreased 22.9% to $37.8 million or $0.88 per diluted share. The 2008 fourth quarter
effective tax rate increased to 40.7% compared with 28.8% in 2007 primarily as a result of asset impairment charges with no tax benefit.
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Lincoln Electric Reports 2008 Full Year and Fourth Quarter Financial Results
“As announced on February 2, 2009, we have taken aggressive measures to align our business with current market conditions. These
actions plus additional cost cutting measures will result in a first quarter 2009 pre-tax rationalization charge between $10 million and $12 million
and will generate annualized savings of approximately $80 million. We are monitoring these initiatives closely to ensure we achieve the
expected financial results. Our strong financial position will allow us to continue making strategic investments to enhance our global presence
and develop new products and services for the future,” said Mr. Stropki.
Net cash provided by operating activities was $40.7 million in the fourth quarter and $257.4 million for the full year of 2008. During 2008,
the Company paid $42.8 million in dividends and spent $42.3 million on share repurchases. The Company’s Board of Directors declared a
quarterly cash dividend of $0.27 per share, which was paid on January 15, 2009 to holders of record as of December 31, 2008.
Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc-welding systems,
plasma and oxyfuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in
Cleveland, Ohio, Lincoln has 38 manufacturing locations, including operations and joint ventures in 20 countries and a worldwide network of
distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric, its products and services, visit
the Company’s website at http://www.lincolnelectric.com.
The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a
number of risks and uncertainties. Actual results may differ materially from such statements due to a variety of factors that could adversely
affect the Company’s operating results. The factors include, but are not limited to: general economic and market conditions; the effectiveness
of operating initiatives; currency exchange and interest rates; adverse outcome of pending or potential litigation; possible acquisitions; market
risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of
international terrorism and hostilities on the Company or its customers, suppliers and the economy in general. For additional discussion, see
“Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K.
A conference call to discuss financial results for the 2008 fourth quarter and full year is scheduled for today, Monday, February 23, 2009, at
10:00 a.m., Eastern Time. An audio webcast of the call is accessible through the investor tab on the Company’s website at
http://www.lincolnelectric.com.
#022309#
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(1) Net income includes a rationalization charge of $2,447 ($1,698 after-tax) and asset impairment charges of
$16,924 ($16,615 after-tax) in the fourth quarter of 2008 and a gain of $584 ($503 after-tax) in the fourth quarter
of 2007 related to rationalization actions.
(2) Adjusted net income excluding rationalization and asset impairment charges and adjusted basic and diluted
earnings per share excluding rationalization and asset impairment charges are non-GAAP financial measures
that management believes are important to investors to evaluate and compare the Company’s financial
performance from period to period. Management uses this information in assessing and evaluating the
Company’s underlying operating performance.
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(1) Net income includes a rationalization charge of $2,447 ($1,698 after-tax) and asset impairment charges of
$16,924 ($16,615 after-tax) in 2008 and a gain of $188 ($107 after-tax) in 2007 related to rationalization actions.
(2) Adjusted net income excluding rationalization and asset impairment charges and adjusted basic and diluted
earnings per share excluding rationalization and asset impairment charges are non-GAAP financial measures
that management believes are important to investors to evaluate and compare the Company’s financial
performance from period to period. Management uses this information in assessing and evaluating the
Company’s underlying operating performance.
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Invested Capital
(1) Return on invested capital is defined as rolling 12 months of earnings excluding tax-effected interest divided
by invested capital.
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INVESTING ACTIVITIES:
Capital expenditures (18,947) (15,856)
Acquisition of businesses, net of cash acquired (16,015) (12,671)
Proceeds from sale of property, plant and equipment 73 94
NET CASH USED BY INVESTING ACTIVITIES (34,889) (28,433)
FINANCING ACTIVITIES:
Net change in borrowings (221) 123
Proceeds from exercise of stock options 81 1,055
Tax benefit from exercise of stock options 312 (712)
Purchase of shares for treasury (19,216) (15,459)
Cash dividends paid to shareholders (10,685) (9,473)
NET CASH USED BY FINANCING ACTIVITIES (29,729) (24,466)
Effect of exchange rate changes on cash and cash equivalents (4,346) 1,336
DECREASE IN CASH AND CASH EQUIVALENTS (28,258) (5,838)
Cash and cash equivalents at beginning of period 312,590 223,220
Cash and cash equivalents at end of period $ 284,332 $ 217,382
INVESTING ACTIVITIES:
Capital expenditures (72,426) (61,633)
Acquisition of businesses, net of cash acquired (44,036) (18,773)
Proceeds from sale of property, plant and equipment 662 701
NET CASH USED BY INVESTING ACTIVITIES (115,800) (79,705)
FINANCING ACTIVITIES:
Net change in borrowings 6,423 (37,316)
Proceeds from exercise of stock options 7,201 8,644
Tax benefit from exercise of stock options 3,728 4,289
Purchase of shares for treasury (42,337) (15,459)
Cash dividends paid to shareholders (42,756) (37,744)
NET CASH USED BY FINANCING ACTIVITIES (67,741) (77,586)
Effect of exchange rate changes on cash and cash equivalents (6,958) 4,629
INCREASE IN CASH AND CASH EQUIVALENTS 66,950 97,170
Cash and cash equivalents at beginning of period 217,382 120,212
Cash and cash equivalents at end of period $ 284,332 $ 217,382
Segment Highlights
North O the r
Am e rica Eu rope C ou n trie s Elim inations C on solidate d
Three months ended December 31, 2008
Net sales to unaffiliated customers $309,011 $116,829 $ 100,346 $ — $ 526,186
Inter-segment sales 28,726 4,029 3,468 (36,223) —
Total $337,737 $120,858 $ 103,814 $ (36,223) $ 526,186
Income before interest and income taxes $ 45,318 $ (2,973) $ (8,185) $ (337) $ 33,823
As a percent of total sales 13.4% (2.5%) (7.9%) 6.4%
Adjustments:
Rationalization and asset impairment
charges $ 1,319 $ 2,470 $ 15,582 $ — $ 19,371
North O the r
Am e rica Eu rope C ou n trie s Elim inations C on solidate d
Twelve months ended December 31, 2008
Net sales to unaffiliated customers $1,451,333 $576,945 $ 450,853 $ — $ 2,479,131
Inter-segment sales 114,686 25,612 10,590 (150,888) —
Total $1,566,019 $602,557 $ 461,443 $ (150,888) $ 2,479,131
Income before interest and income taxes $ 224,706 $ 55,407 $ 22,591 $ 415 $ 303,119
As a percent of total sales 14.3% 9.2% 4.9% 12.2%
Adjustments:
Rationalization and asset impairment
charges $ 1,319 $ 2,470 $ 15,582 $ — $ 19,371