EX-99.1 2 exhibit991q22013.htm EXHIBIT Exhibit 99.1 (Q2 2013)

Exhibit 99.1
 
Investor Relations: Amanda Butler (216) 383-2534
Amanda_Butler@lincolnelectric.com

 
LINCOLN ELECTRIC REPORTS SECOND QUARTER 2013 RESULTS
2Q EPS Increases 10% to $0.87, Adjusted EPS Increases 12% to $0.91
 
 
Second Quarter Highlights vs. Prior Year
 
§    Operating income up 9% to $104 million, or 14.3% of sales, despite 2% lower sales
 
§    Adjusted operating income up 9% to $108 million and up 150 bps to 14.8% of sales
 
§    Profitability tracks higher on mix, operational improvements, and price/cost relationship
 
§    Cash flow from operations up 31% to $107 million
 
§    Returned $57 million to shareholders through share repurchases
 
 
 
CLEVELAND, Ohio, July 29, 2013 -- Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported second quarter 2013 net income of $72.6 million, or $0.87 per diluted share.  Adjusted net income was $75.7 million, or $0.91 per diluted share, compared to adjusted net income of $68.1 million, or $0.81 per diluted share, in the comparable 2012 period.

Sales were $727.4 million in the second quarter 2013 versus $744.0 million in the comparable 2012 period, a decrease of 2.2%.  Operating income for the second quarter increased $8.2 million to $104.3 million, or 14.3% of sales, from $96.0 million, or 12.9% of sales, in the comparable 2012 period.  Special items that impacted operating income in the second quarter 2013 include pre-tax rationalization charges of $0.9 million, and pre-tax charges of $2.5 million to Costs of goods sold related to the devaluation of the Venezuelan currency.

Sales for the six months ended June 30, 2013 were $1.4 billion versus $1.5 billion in the comparable 2012 period, a decrease of 1.7%. Operating income for the six months ended June 30, 2013 increased $5.2 million to $192.9 million, or 13.3% of sales, from $187.7 million, or 12.8% of sales, in the comparable 2012 period.
    
Net income for the six months ended June 30, 2013 was $139.4 million, or $1.67 per diluted share, compared with net income of $130.6 million, or $1.54 per diluted share, in 2012.  Adjusted net income was $152.9 million, or $1.83 per diluted share, compared to adjusted net income of $132.4 million, or $1.57 per diluted share, in 2012.  The effective tax rate for the six months ended June 30, 2013 was 29.3% compared with 31.7% in 2012. 
 
"We are pleased by our ongoing profitability improvement which reflects solid execution of our operational and commercial initiatives globally," said Christopher L. Mapes, President and Chief Executive Officer. "While we maintain a cautious outlook for the balance of the year on mixed end sector performance, we expect to continue to deliver solid margin and earnings performance from the benefits of our initiatives, new product introductions and the careful management of expenses. Our efforts position us well to realize improved earnings, cash flow and shareholder returns as we work to execute our '2020 Vision' strategy and expand our global reach.”

The Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share, which was paid on July 15, 2013 to holders of record on June 28, 2013. During the quarter, the Company made voluntary contributions of $25.0 million to its U.S. pension plans and returned $56.9 million to shareholders through the repurchase of 1,014,824 of the common shares for treasury. 

During the six months ended June 30, 2013, the Company made voluntary contributions of $75.0 million to its U.S. pension plans and returned $69.7 million to shareholders through the repurchase of 1,243,646 of the common shares for treasury.


- more -



Lincoln Electric Reports Second Quarter 2013 Financial Results


Webcast Information
 
A conference call to discuss second quarter 2013 financial results will be webcast live today, Monday, July 29, 2013, at 10:00 a.m., Eastern Time.  This webcast is accessible at http://www.lincolnelectric.com/InvestorWebcasts. Listeners should go to the web site prior to the call to register and download and install any necessary audio software. A replay of the webcast will be available on the Company's web site.
 
Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 407-9205 (domestic) or (201) 689-8054 (international). A telephonic replay will be available starting at 12:00 p.m. Eastern Time today and will end on Monday, August 5, 2013 at 11:59 p.m. Eastern Time. To listen to the replay, please dial (877) 660-6853 (domestic) or (201) 612-7415 (international) and use confirmation code 417171.

Financial results for the second quarter 2013 can also be obtained at http://www.lincolnelectric.com/InvestorNews.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market.  Headquartered in Cleveland, Ohio, Lincoln has 45 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries.  For more information about Lincoln Electric and its products and services, visit the Company’s website at http://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share 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.  Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.  Please refer to the attached schedule for a reconciliation of non-GAAP financial measures to the related GAAP financial measures.

Forward-Looking Statements

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.  Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning.  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; actual costs of the Company’s rationalization plans; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, 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.






Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Fav (Unfav) to Prior Year
 
 
2013
 
% of Sales
 
2012
 
% of Sales
 
$
 
%
Net sales
 
$
727,432

 
100.0
%
 
$
744,045

 
100.0
%
 
$
(16,613
)
 
(2.2
%)
Cost of goods sold
 
487,094

 
67.0
%
 
519,048

 
69.8
%
 
31,954

 
6.2
%
Gross profit
 
240,338

 
33.0
%
 
224,997

 
30.2
%
 
15,341

 
6.8
%
Selling, general & administrative expenses
 
135,215

 
18.6
%
 
127,714

 
17.2
%
 
(7,501
)
 
(5.9
%)
Rationalization and asset impairment charges
 
851

 
0.1
%
 
1,258

 
0.2
%
 
407

 
32.4
%
Operating income
 
104,272

 
14.3
%
 
96,025

 
12.9
%
 
8,247

 
8.6
%
Interest income
 
890

 
0.1
%
 
849

 
0.1
%
 
41

 
4.8
%
Equity earnings in affiliates
 
1,258

 
0.2
%
 
2,006

 
0.3
%
 
(748
)
 
(37.3
%)
Other income
 
913

 
0.1
%
 
403

 
0.1
%
 
510

 
126.6
%
Interest expense
 
(799
)
 
(0.1
%)
 
(1,126
)
 
(0.2
%)
 
327

 
29.0
%
Income before income taxes
 
106,534

 
14.6
%
 
98,157

 
13.2
%
 
8,377

 
8.5
%
Income taxes
 
34,007

 
4.7
%
 
31,792

 
4.3
%
 
(2,215
)
 
(7.0
%)
Effective tax rate
 
31.9
%
 
 

 
32.4
%
 
 

 
0.5
%
 
 
Net income including non-controlling interests
 
72,527

 
10.0
%
 
66,365

 
8.9
%
 
6,162

 
9.3
%
Non-controlling interests in subsidiaries’ (loss) earnings
 
(79
)
 
—

 
46

 
—

 
(125
)
 
(271.7
%)
Net income
 
$
72,606

 
10.0
%
 
$
66,319

 
8.9
%
 
$
6,287

 
9.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.88

 
 

 
$
0.80

 
 

 
$
0.08

 
10.0
%
Diluted earnings per share
 
$
0.87

 
 

 
$
0.79

 
 

 
$
0.08

 
10.1
%
Weighted average shares (basic)
 
82,419

 
 

 
83,328

 
 

 
 

 
 

Weighted average shares (diluted)
 
83,411

 
 

 
84,448

 
 

 
 

 
 

 
 
Six months ended June 30,
 
Fav (Unfav) to Prior Year
 
 
2013
 
% of Sales
 
2012
 
% of Sales
 
$
 
%
Net sales
 
$
1,446,005

 
100.0
%
 
$
1,471,167

 
100.0
%
 
$
(25,162
)
 
(1.7
%)
Cost of goods sold
 
979,095

 
67.7
%
 
1,030,905

 
70.1
%
 
51,810

 
5.0
%
Gross profit
 
466,910

 
32.3
%
 
440,262

 
29.9
%
 
26,648

 
6.1
%
Selling, general & administrative expenses
 
272,106

 
18.8
%
 
251,329

 
17.1
%
 
(20,777
)
 
(8.3
%)
Rationalization and asset impairment charges
 
1,902

 
0.1
%
 
1,258

 
0.1
%
 
(644
)
 
(51.2
%)
Operating income
 
192,902

 
13.3
%
 
187,675

 
12.8
%
 
5,227

 
2.8
%
Interest income
 
1,916

 
0.1
%
 
1,732

 
0.1
%
 
184

 
10.6
%
Equity earnings in affiliates
 
2,517

 
0.2
%
 
2,698

 
0.2
%
 
(181
)
 
(6.7
%)
Other income
 
1,627

 
0.1
%
 
1,269

 
0.1
%
 
358

 
28.2
%
Interest expense
 
(1,749
)
 
(0.1
%)
 
(2,298
)
 
(0.2
%)
 
549

 
23.9
%
Income before income taxes
 
197,213

 
13.6
%
 
191,076

 
13.0
%
 
6,137

 
3.2
%
Income taxes
 
57,843

 
4.0
%
 
60,562

 
4.1
%
 
2,719

 
4.5
%
Effective tax rate
 
29.3
%
 
 

 
31.7
%
 
 

 
2.4
%
 
 
Net income including non-controlling interests
 
139,370

 
9.6
%
 
130,514

 
8.9
%
 
8,856

 
6.8
%
Non-controlling interests in subsidiaries’ loss
 
(42
)
 
—

 
(48
)
 
—

 
6

 
12.5
%
Net income
 
$
139,412

 
9.6
%
 
$
130,562

 
8.9
%
 
$
8,850

 
6.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
1.69

 
 

 
$
1.57

 
 

 
$
0.12

 
7.6
%
Diluted earnings per share
 
$
1.67

 
 

 
$
1.54

 
 

 
$
0.13

 
8.4
%
Weighted average shares (basic)
 
82,569

 
 

 
83,390

 
 

 
 

 
 

Weighted average shares (diluted)
 
83,606

 
 

 
84,527

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 




Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Non-GAAP Financial Measures
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Operating income as reported
 
$
104,272

 
$
96,025

 
$
192,902

 
$
187,675

Special items (pre-tax):
 
 

 
 

 
 

 
 

Rationalization and asset impairment charges (1)
 
851

 
1,258

 
1,902

 
1,258

Venezuelan currency devaluation (2)
 
2,538

 
—

 
12,198

 
—

Venezuelan statutory severance obligation (3)
 
—

 
1,381

 
—

 
1,381

Adjusted operating income (4)
 
$
107,661

 
$
98,664

 
$
207,002

 
$
190,314

 
 
 
 
 
 
 
 
 
Net income as reported
 
$
72,606

 
$
66,319

 
$
139,412

 
$
130,562

Special items (after-tax):
 
 

 
 

 
 

 
 

Rationalization and asset impairment charges (1)
 
579

 
915

 
1,252

 
915

Venezuelan currency devaluation (2)
 
2,538

 
—

 
12,198

 
—

Venezuelan statutory severance obligation (3)
 
—

 
906

 
—

 
906

Adjusted net income (4)
 
$
75,723

 
$
68,140

 
$
152,862

 
$
132,383

 
 
 
 
 
 
 
 
 
Diluted earnings per share as reported
 
$
0.87

 
$
0.79

 
$
1.67

 
$
1.54

Special items
 
0.04

 
0.02

 
0.16

 
0.03

Adjusted diluted earnings per share (4)
 
$
0.91

 
$
0.81

 
$
1.83

 
$
1.57

 
 
 
 
 
 
 
 
 
Weighted average shares (diluted)
 
83,411

 
84,448

 
83,606

 
84,527


(1)
The three and six months ended June 30, 2013 include net charges associated with severance and other costs from the consolidation of manufacturing operations initiated in 2012 partially offset by gains related to the sale of assets at rationalized operations. 
(2)
Represents the impact of the devaluation of the Venezuelan currency.
(3)
Represents an unfavorable adjustment due to a change in Venezuelan labor law, which provides for increased employee severance obligations.
(4)
Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share 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.  Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.















Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
 
Balance Sheet Highlights
 
Selected Consolidated Balance Sheet Data
 
June 30, 2013
 
December 31, 2012
Cash and cash equivalents
 
$
256,389

 
$
286,464

Total current assets
 
1,134,224

 
1,132,816

Property, plant and equipment, net
 
476,152

 
486,236

Total assets
 
2,060,117

 
2,089,863

Total current liabilities
 
452,685

 
440,267

Short-term debt (1)
 
14,776

 
18,676

Long-term debt
 
1,388

 
1,599

Total equity
 
1,394,455

 
1,358,321

 
 
 
 
 
Net Operating Working Capital
 
June 30, 2013
 
December 31, 2012
Accounts receivable
 
$
396,383

 
$
360,662

Inventory
 
367,631

 
364,890

Trade accounts payable
 
195,459

 
209,647

Net operating working capital
 
$
568,555

 
$
515,905

 
 
 
 
 
Net operating working capital to net sales (2)
 
19.5
%
 
18.8
%
 
 
 
 
 
Invested Capital
 
June 30, 2013
 
December 31, 2012
Short-term debt (1)
 
$
14,776

 
$
18,676

Long-term debt
 
1,388

 
1,599

Total debt
 
16,164

 
20,275

Total equity
 
1,394,455

 
1,358,321

Invested capital
 
$
1,410,619

 
$
1,378,596

 
 
 
 
 
Total debt / invested capital
 
1.1
%
 
1.5
%
Return on invested capital (3)
 
18.9
%
 
18.7
%

(1)
Includes current portion of long-term debt.
(2)
Net operating working capital to net sales is defined as net operating working capital divided by annualized rolling three months of sales.
(3)
Return on invested capital is defined as rolling 12 months of earnings excluding tax-effected interest divided by invested capital.














Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows 
 
 
Three months ended June 30,
 
 
2013
 
2012
OPERATING ACTIVITIES:
 
 

 
 

Net income
 
$
72,606

 
$
66,319

Non-controlling interests in subsidiaries’ (loss) earnings
 
(79
)
 
46

Net income including non-controlling interests
 
72,527

 
66,365

Adjustments to reconcile Net income including non-controlling interests to Net cash
   provided by operating activities:
 
 

 
 

Rationalization and asset impairment charges
 
240

 
—

Depreciation and amortization
 
17,158

 
16,206

Equity earnings in affiliates, net
 
(446
)
 
(1,154
)
Pension expense
 
7,320

 
9,193

Pension contributions and payments
 
(26,030
)
 
(19,354
)
Other non-cash items, net
 
9,991

 
12,589

Changes in operating assets and liabilities, net of effects from acquisitions:
 
 

 
 

Decrease in accounts receivable
 
23,218

 
8,203

Decrease (increase) in inventories
 
4,026

 
(6,240
)
Decrease in trade accounts payable
 
(20,108
)
 
(6,958
)
Net change in other current assets and liabilities
 
21,439

 
3,409

Net change in other long-term assets and liabilities
 
(2,136
)
 
(537
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
 
107,199

 
81,722

 
 
 
 
 
INVESTING ACTIVITIES:
 
 

 
 

Capital expenditures
 
(15,910
)
 
(13,680
)
Acquisition of businesses, net of cash acquired
 
(4,127
)
 
(27,439
)
Proceeds from sale of property, plant and equipment
 
487

 
128

  Other investing activities
 
(4,217
)
 
(1,541
)
NET CASH USED BY INVESTING ACTIVITIES
 
(23,767
)
 
(42,532
)
 
 
 
 
 
FINANCING ACTIVITIES:
 
 

 
 

Net change in borrowings
 
(1,263
)
 
(1,371
)
Proceeds from exercise of stock options
 
3,546

 
4,772

Excess tax benefits from stock-based compensation
 
1,476

 
2,471

Purchase of shares for treasury
 
(56,897
)
 
(20,040
)
Cash dividends paid to shareholders
 
(16,580
)
 
(14,177
)
Other financing activities
 
(2,809
)
 
—

NET CASH USED BY FINANCING ACTIVITIES
 
(72,527
)
 
(28,345
)
 
 
 
 
 
Effect of exchange rate changes on Cash and cash equivalents
 
(2,971
)
 
(3,720
)
INCREASE IN CASH AND CASH EQUIVALENTS
 
7,934

 
7,125

Cash and cash equivalents at beginning of period
 
248,455

 
300,838

Cash and cash equivalents at end of period
 
$
256,389

 
$
307,963

 
 
 
 
 
Cash dividends paid per share
 
$
0.20

 
$
0.17




Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)
 
Condensed Consolidated Statements of Cash Flows 
 
 
Six months ended June 30,
 
 
2013
 
2012
OPERATING ACTIVITIES:
 
 

 
 

Net income
 
$
139,412

 
$
130,562

Non-controlling interests in subsidiaries’ loss
 
(42
)
 
(48
)
Net income including non-controlling interests
 
139,370

 
130,514

Adjustments to reconcile Net income including non-controlling interests to Net cash
   provided by operating activities:
 
 

 
 

Rationalization and asset impairment charges
 
354

 
—

Depreciation and amortization
 
34,555

 
31,785

Equity earnings in affiliates, net
 
(882
)
 
(711
)
Pension expense
 
14,935

 
17,690

Pension contributions and payments
 
(81,351
)
 
(39,049
)
Other non-cash items, net
 
24,336

 
20,176

Changes in operating assets and liabilities, net of effects from acquisitions:
 
 

 
 

Increase in accounts receivable
 
(43,367
)
 
(21,549
)
Increase in inventories
 
(12,308
)
 
(20,702
)
(Decrease) increase in trade accounts payable
 
(11,840
)
 
16,383

Net change in other current assets and liabilities
 
25,621

 
22,484

Net change in other long-term assets and liabilities
 
(2,372
)
 
3,865

NET CASH PROVIDED BY OPERATING ACTIVITIES
 
87,051

 
160,886

 
 
 
 
 
INVESTING ACTIVITIES:
 
 

 
 

Capital expenditures
 
(31,048
)
 
(26,247
)
Acquisition of businesses, net of cash acquired
 
(4,676
)
 
(49,335
)
Proceeds from sale of property, plant and equipment
 
592

 
338

Other investing activities
 
(4,217
)
 
(1,541
)
NET CASH USED BY INVESTING ACTIVITIES
 
(39,349
)
 
(76,785
)
 
 
 
 
 
FINANCING ACTIVITIES:
 
 

 
 

Net change in borrowings
 
(2,755
)
 
(85,369
)
Proceeds from exercise of stock options
 
13,204

 
12,212

Excess tax benefits from stock-based compensation
 
5,465

 
5,454

Purchase of shares for treasury
 
(69,677
)
 
(40,138
)
Cash dividends paid to shareholders
 
(16,580
)
 
(28,363
)
Other financing activities
 
(2,809
)
 
—

NET CASH USED BY FINANCING ACTIVITIES
 
(73,152
)
 
(136,204
)
 
 
 
 
 
Effect of exchange rate changes on Cash and cash equivalents
 
(4,625
)
 
(1,035
)
DECREASE IN CASH AND CASH EQUIVALENTS
 
(30,075
)
 
(53,138
)
Cash and cash equivalents at beginning of period
 
286,464

 
361,101

Cash and cash equivalents at end of period
 
$
256,389

 
$
307,963

 
 
 
 
 
Cash dividends paid per share
 
$
0.20

 
$
0.34






Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)
 
 
 
North
America
Welding
 
Europe
Welding
 
Asia Pacific
Welding
 
South
America
Welding
 
The Harris
Products
Group
 
Corporate /
Eliminations
 
Consolidated
Three months ended
   June 30, 2013
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Net sales
 
$
419,069

 
$
108,661

 
$
69,239

 
$
44,503

 
$
85,960

 
$
—

 
$
727,432

Inter-segment sales
 
35,529

 
4,330

 
4,374

 
51

 
2,674

 
(46,958
)
 
—

Total
 
$
454,598

 
$
112,991

 
$
73,613

 
$
44,554

 
$
88,634

 
$
(46,958
)
 
$
727,432

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBIT (1)
 
$
82,511

 
$
9,457

 
$
143

 
$
8,527

 
$
7,343

 
$
(1,538
)
 
$
106,443

As a percent of total sales
 
18.2
%
 
8.4
%
 
0.2
%
 
19.1
%
 
8.3
%
 
 

 
14.6
%
Special items charge (2)
 
$
266

 
$
75

 
$
510

 
$
2,538

 
$
—

 
$
—

 
$
3,389

EBIT, as adjusted (4)
 
$
82,777

 
$
9,532

 
$
653

 
$
11,065

 
$
7,343

 
$
(1,538
)
 
$
109,832

As a percent of total sales
 
18.2
%
 
8.4
%
 
0.9
%
 
24.8
%
 
8.3
%
 
 

 
15.1
%
Three months ended
   June 30, 2012
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Net sales
 
$
416,223

 
$
114,437

 
$
85,433

 
$
37,169

 
$
90,783

 
$
—

 
$
744,045

Inter-segment sales
 
39,658

 
4,466

 
5,076

 
11

 
2,353

 
(51,564
)
 
—

Total
 
$
455,881

 
$
118,903

 
$
90,509

 
$
37,180

 
$
93,136

 
$
(51,564
)
 
$
744,045

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBIT (1)
 
$
76,479

 
$
10,399

 
$
3,425

 
$
1,599

 
$
9,041

 
$
(2,509
)
 
$
98,434

As a percent of total sales
 
16.8
%
 
8.7
%
 
3.8
%
 
4.3
%
 
9.7
%
 
 

 
13.2
%
Special items charge (3)
 
$
77

 
$
592

 
$
589

 
$
1,381

 
$
—

 
$
—

 
$
2,639

EBIT, as adjusted (4)
 
$
76,556

 
$
10,991

 
$
4,014

 
$
2,980

 
$
9,041

 
$
(2,509
)
 
$
101,073

As a percent of total sales
 
16.8
%
 
9.2
%
 
4.4
%
 
8.0
%
 
9.7
%
 
 

 
13.6
%
Six months ended
   June 30, 2013
 
 
 
 

 
 

 
 

 
 

 
 

 
 

Net sales
 
$
838,623

 
$
219,152

 
$
139,278

 
$
80,877

 
$
168,075

 
$
—

 
$
1,446,005

Inter-segment sales
 
64,514

 
8,609

 
8,758

 
71

 
4,898

 
(86,850
)
 
—

Total
 
$
903,137

 
$
227,761

 
$
148,036

 
$
80,948

 
$
172,973

 
$
(86,850
)
 
$
1,446,005

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBIT (1)
 
$
158,311

 
$
20,164

 
$
2,239

 
$
3,979

 
$
14,494

 
$
(2,141
)
 
$
197,046

As a percent of total sales
 
17.5
%
 
8.9
%
 
1.5
%
 
4.9
%
 
8.4
%
 
 

 
13.6
%
Special items charge (2)
 
$
1,126

 
$
69

 
$
707

 
$
12,198

 
$
—

 
$
—

 
$
14,100

EBIT, as adjusted (4)
 
$
159,437

 
$
20,233

 
$
2,946

 
$
16,177

 
$
14,494

 
$
(2,141
)
 
$
211,146

As a percent of total sales
 
17.7
%
 
8.9
%
 
2.0
%
 
20.0
%
 
8.4
%
 
 

 
14.6
%
Six months ended
   June 30, 2012
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Net sales
 
$
797,552

 
$
240,240

 
$
177,996

 
$
77,007

 
$
178,372

 
$
—

 
$
1,471,167

Inter-segment sales
 
73,200

 
8,917

 
8,893

 
11

 
4,736

 
(95,757
)
 
—

Total
 
$
870,752

 
$
249,157

 
$
186,889

 
$
77,018

 
$
183,108

 
$
(95,757
)
 
$
1,471,167

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBIT (1)
 
$
145,998

 
$
23,210

 
$
5,998

 
$
4,504

 
$
16,194

 
$
(4,262
)
 
$
191,642

As a percent of total sales
 
16.8
%
 
9.3
%
 
3.2
%
 
5.8
%
 
8.8
%
 
 

 
13.0
%
Special items charge (3)
 
$
77

 
$
592

 
$
589

 
$
1,381

 
$
—

 
$
—

 
$
2,639

EBIT, as adjusted (4)
 
$
146,075

 
$
23,802

 
$
6,587

 
$
5,885

 
$
16,194

 
$
(4,262
)
 
$
194,281

As a percent of total sales
 
16.8
%
 
9.6
%
 
3.5
%
 
7.6
%
 
8.8
%
 
 

 
13.2
%
(1)
EBIT is defined as Operating income plus Equity earnings in affiliates and Other income.
(2)
Special items in the three and six months ended June 30, 2013 include net rationalization and asset impairment charges and the impact of the devaluation of the Venezuelan currency.
(3)
Special items include net rationalization and asset impairment charges and an unfavorable adjustment due to a change in Venezuelan labor law, which provides for increased employee severance obligations.
(4)
The primary profit measure used by management to assess segment performance is EBIT, as adjusted.  EBIT for each operating segment is adjusted for special items to derive EBIT, as adjusted.




Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unaudited)
 
Three Months Ended June 30th Change in Net Sales by Segment
 
 
 
 
Change in Net Sales due to:
 
 
 
 
Net Sales
2012
 
Volume
 
Acquisitions
 
Price
 
Foreign
Exchange
 
Net Sales
2013
Operating Segments
 
 

 
 

 
 

 
 

 
 

 
 

North America Welding
 
$
416,223

 
$
(20,571
)
 
$
22,954

 
$
1,354

 
$
(891
)
 
$
419,069

Europe Welding
 
114,437

 
(5,624
)
 
—

 
789

 
(941
)
 
108,661

Asia Pacific Welding
 
85,433

 
(15,177
)
 
—

 
(1,063
)
 
46

 
69,239

South America Welding
 
37,169

 
3,060

 
—

 
6,005

 
(1,731
)
 
44,503

The Harris Products Group
 
90,783

 
1,997

 
—

 
(6,356
)
 
(464
)
 
85,960

Consolidated
 
$
744,045

 
$
(36,315
)
 
$
22,954

 
$
729

 
$
(3,981
)
 
$
727,432

% Change
 
 

 
 

 
 

 
 

 
 

 
 

North America Welding
 
 

 
(4.9
%)
 
5.5
%
 
0.3
%
 
(0.2
%)
 
0.7
%
Europe Welding
 
 

 
(4.9
%)
 
—

 
0.7
%
 
(0.8
%)
 
(5.0
%)
Asia Pacific Welding
 
 

 
(17.8
%)
 
—

 
(1.2
%)
 
0.1
%
 
(19.0
%)
South America Welding
 
 

 
8.2
%
 
—

 
16.2
%
 
(4.7
%)
 
19.7
%
The Harris Products Group
 
 

 
2.2
%
 
—

 
(7.0
%)
 
(0.5
%)
 
(5.3
%)
Consolidated
 
 

 
(4.9
%)
 
3.1
%
 
0.1
%
 
(0.5
%)
 
(2.2
%)


Six Months Ended June 30th Change in Net Sales by Segment
 
 
 
 
Change in Net Sales due to:
 
 
 
 
Net Sales
2012
 
Volume
 
Acquisitions
 
Price
 
Foreign
Exchange
 
Net Sales
2013
Operating Segments
 
 

 
 

 
 

 
 

 
 

 
 

North America Welding
 
$
797,552

 
$
(27,921
)
 
$
63,214

 
$
6,630

 
$
(852
)
 
$
838,623

Europe Welding
 
240,240

 
(14,631
)
 
—

 
(3,187
)
 
(3,270
)
 
219,152

Asia Pacific Welding
 
177,996

 
(35,322
)
 
—

 
(2,984
)
 
(412
)
 
139,278

South America Welding
 
77,007

 
(261
)
 
—

 
7,997

 
(3,866
)
 
80,877

The Harris Products Group
 
178,372

 
(1,810
)
 
—

 
(6,815
)
 
(1,672
)
 
168,075

Consolidated
 
$
1,471,167

 
$
(79,945
)
 
$
63,214

 
$
1,641

 
$
(10,072
)
 
$
1,446,005

% Change
 
 

 
 

 
 

 
 

 
 

 
 

North America Welding
 
 

 
(3.5
%)
 
7.9
%
 
0.8
%
 
(0.1
%)
 
5.1
%
Europe Welding
 
 

 
(6.1
%)
 
—

 
(1.3
%)
 
(1.4
%)
 
(8.8
%)
Asia Pacific Welding
 
 

 
(19.8
%)
 
—

 
(1.7
%)
 
(0.2
%)
 
(21.8
%)
South America Welding
 
 

 
(0.3
%)
 
—

 
10.4
%
 
(5.0
%)
 
5.0
%
The Harris Products Group
 
 

 
(1.0
%)
 
—

 
(3.8
%)
 
(0.9
%)
 
(5.8
%)
Consolidated
 
 

 
(5.4
%)
 
4.3
%
 
0.1
%
 
(0.7
%)
 
(1.7
%)