RETIREMENT ANNUITY AND GUARANTEED CONTINUOUS EMPLOYMENT PLANS

The Company maintains a number of defined benefit and defined contribution plans to provide retirement benefits for employees. These plans are maintained and contributions are made in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA"), local statutory law or as determined by the Board of Directors. The plans generally provide benefits based upon years of service and compensation. Pension plans are funded except for a domestic non-qualified pension plan for certain key employees and certain foreign plans. The Company uses a December 31 measurement date for its plans.

The Company does not have, and does not provide for, any postretirement or postemployment benefits other than pensions and certain non-U.S. statutory termination benefits.

Defined Benefit Plans

Contributions are made in amounts sufficient to fund current service costs on a current basis and to fund past service costs, if any, over various amortization periods.

Obligations and Funded Status



	December 31,
	2014			2013
Change in benefit obligations
Benefit obligations at beginning of year	$	941,442		$	1,033,725
Service cost	19,062			23,188
Interest cost	42,485			37,225
Plan participants' contributions	215			221
Plan amendments	45			1,623
Actuarial loss (gain)	117,881			(91,851		)
Benefits paid	(60,582		)	(59,296		)
Settlements/curtailments	(7,172		)	(1,390		)
Currency translation	(7,905		)	(2,003		)
Benefit obligations at end of year	1,045,471			941,442

Change in plan assets
Fair value of plan assets at beginning of year	939,995			813,897
Actual return on plan assets	108,060			101,044
Employer contributions	27,550			85,456
Plan participants' contributions	215			221
Benefits paid	(59,196		)	(57,644		)
Settlement	—			(1,390		)
Currency translation	(5,687		)	(1,589		)
Fair value of plan assets at end of year	1,010,937			939,995

Funded status at end of year	(34,534		)	(1,447		)
Unrecognized actuarial net loss	316,296			258,781
Unrecognized prior service cost	(1,930		)	(2,547		)
Unrecognized transition assets, net	45			26
Net amount recognized	$	279,877		$	254,813

The actuarial loss arising during 2014 was primarily attributable to a lower discount rate and the adoption of new mortality tables for the Company's U.S. defined benefit plans.

The after-tax amounts of unrecognized actuarial net loss, prior service costs and transition assets included in Accumulated other comprehensive loss at December 31, 2014 were $199,786, $(1,931) and $38, respectively. The actuarial loss represents changes in the estimated obligation not yet recognized in the Consolidated Income Statement. The pre-tax amounts of unrecognized actuarial net loss, prior service credits and transition obligations expected to be recognized as components of net periodic benefit cost during 2015 are $22,657, $(625) and $3, respectively.

Amounts Recognized in Consolidated Balance Sheets



	December 31,
	2014			2013
Prepaid pensions	$	1,240		$	36,116
Accrued pension liability, current	(2,971		)	(10,564		)
Accrued pension liability, long-term	(32,803		)	(26,999		)
Accumulated other comprehensive loss, excluding tax effects	314,411			256,260
Net amount recognized in the balance sheets	$	279,877		$	254,813

Components of Pension Cost for Defined Benefit Plans



	Year Ended December 31,
	2014			2013			2012
Service cost	$	19,062		$	23,188		$	21,538
Interest cost	42,485			37,225			41,584
Expected return on plan assets	(67,953		)	(61,244		)	(58,754		)
Amortization of prior service cost	(616		)	(613		)	(90		)
Amortization of net loss	17,644			30,929			31,085
Settlement/curtailment loss	1,773			423			895
Pension cost for defined benefit plans	$	12,395		$	29,908		$	36,258

The Company's defined benefit plans costs decreased in 2014 primarily as a result of a lower amortization of net loss and a higher expected return on plan assets.

Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets



	December 31,
	2014		2013
U.S. pension plans
Projected benefit obligation	$	34,066	$	37,355
Accumulated benefit obligation	30,202		33,416
Fair value of plan assets	11,638		10,028
Non-U.S. pension plans
Projected benefit obligation	$	5,573	$	7,587
Accumulated benefit obligation	3,372		3,804

The total accumulated benefit obligation for all plans was $1,003,296 as of December 31, 2014 and $891,397 as of December 31, 2013.

Contributions to Plans

The Company expects to contribute $21,000 to the defined benefit plans in the United States in 2015. The actual amounts to be contributed in 2015 will be determined at the Company's discretion.

Benefit Payments for Plans

Benefits expected to be paid for the U.S. plans are as follows:



Estimated Payments
2015	$	65,434
2016	72,631
2017	65,459
2018	63,777
2019	64,457
2020 through 2024	317,919

Assumptions

Weighted average assumptions used to measure the benefit obligation for the Company's significant defined benefit plans as of December 31, 2014 and 2013 were as follows:



	December 31,
	2014		2013
Discount Rate	4.1	%	4.7	%
Rate of increase in compensation	2.8	%	4.2	%

Weighted average assumptions used to measure the net periodic benefit cost for the Company's significant defined benefit plans for each of the three years ended December 31, 2014 were as follows:



	December 31,
	2014		2013		2012
Discount rate	4.7	%	3.8	%	4.2	%
Rate of increase in compensation	4.1	%	4.1	%	4.0	%
Expected return on plan assets	7.3	%	7.4	%	7.7	%

To develop the discount rate assumption to be used for U.S. plans, the Company refers to the yield derived from matching projected pension payments with maturities of bonds rated AA or an equivalent quality. The expected long-term rate of return assumption is based on the weighted average expected return of the various asset classes in the plans' portfolio and the targeted allocation of plan assets. The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance. The rate of compensation increase is determined by the Company based upon annual reviews.

Pension Plans' Assets

The primary objective of the pension plans' investment policy is to ensure sufficient assets are available to provide benefit obligations when such obligations mature. Investment management practices must comply with ERISA or any other applicable regulations and rulings. The overall investment strategy for the defined benefit pension plans' assets is to achieve a rate of return over a normal business cycle relative to an acceptable level of risk that is consistent with the long-term objectives of the portfolio. During 2014, the Company changed the target allocation for plan assets to 45% to 55% equity securities and 45% to 55% debt securities. The Company expects a 100 basis point decrease in the expected rate of return on plan assets in 2015 related to this change.

The following table sets forth, by level within the fair value hierarchy, the pension plans' assets as of December 31, 2014:



	Pension Plans' Assets at Fair Value as of December 31, 2014
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	4,873	$	—	$	—	$	4,873
Fixed income securities (1)
U.S. government bonds	27,305		—		—		27,305
Corporate debt and other obligations	—		212,326		—		212,326
Common trusts and 103-12 investments (2)
Cash and cash equivalents	—		7,499		—		7,499
Common trusts and 103-12 investments	—		720,919		—		720,919
Private equity funds (3)	—		—		38,015		38,015
Total assets at fair value	$	32,178	$	940,744	$	38,015	$	1,010,937

The following table sets forth, by level within the fair value hierarchy, the pension plans' assets as of December 31, 2013:



	Pension Plans' Assets at Fair Value as of December 31, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Common trusts and 103-12 investments (2)
Cash and cash equivalents	$	—	$	4,686	$	—	$	4,686
Common trusts and 103-12 investments	—		902,746		—		902,746
Private equity funds (3)	—		—		32,563		32,563
Total assets at fair value	$	—	$	907,432	$	32,563	$	939,995

_______________________________________________________________________________


(1)	Fixed income securities are primarily comprised of governmental and corporate bonds directly held by the plans. Governmental and corporate bonds are valued using both market observable inputs for similar assets that are traded on an active market and the closing price on the active market on which the individual securities are traded.

(2)

Common trusts and 103-12 investments (collectively "Trusts") are comprised of a number of investment funds that invest in a diverse portfolio of assets including equity securities, corporate and governmental bonds, equity and credit indexes, and money markets. Trusts are valued at the net asset value ("NAV") as determined by their custodian. NAV represents the accumulation of the unadjusted quoted close prices on the reporting date for the underlying investments divided by the total shares outstanding at the reporting dates.

(3)

Private equity funds consist of four funds seeking capital appreciation by investing in private equity investment partnerships and venture capital companies. Funds are comprised of unrestricted and restricted publicly traded securities and privately held securities. Unrestricted securities are valued at the closing market price on the reporting date. Restricted securities may be valued at a discount from such closing public market price, depending on facts and circumstances. Privately held securities are valued at fair value as determined by the fund directors and general partners.

The table below sets forth a summary of changes in the fair value of the Level 3 pension plans' assets for the year ended December 31, 2014:



	Private Equity Funds
Balance at the beginning of year	$	32,563
Purchases, sales, issuances and settlements	(283		)
Realized and unrealized gains	5,735
Balance at the end of year	$	38,015
The amount of total gains during the period attributable to the change in unrealized gains relating to Level 3 net assets still held at the reporting date	$	4,887

Supplemental Executive Retirement Plan

The Company maintains a domestic unfunded supplemental executive retirement plan ("SERP") under which non-qualified supplemental pension benefits are paid to certain employees in addition to amounts received under the Company's qualified retirement plan which is subject to Internal Revenue Service ("IRS") limitations on covered compensation. The annual cost of this program has been included in the determination of total net pension costs shown above and was $3,012, $2,329 and $2,254 in 2014, 2013 and 2012, respectively. The projected benefit obligation associated with this plan is also included in the pension disclosure shown above and was $17,953, $22,877 and $25,646 at December 31, 2014, 2013 and 2012, respectively.

Defined Contribution Plans

Substantially all U.S. employees are covered under defined contribution plans. The Lincoln Electric Employee Savings Plan, a 401(k) savings plan which represents a majority of defined contribution plan expense, allows employees to invest 1% or more of eligible compensation, limited to maximum amounts as determined by the IRS. For most participants the plan provides for Company matching contributions of 35% of the first 6% of employee compensation contributed to the plan.

The plan also includes a feature in which all participants hired after November 1, 1997 receive an annual Company contribution of 2% of their base pay. The plan allowed employees hired before November 1, 1997, at their election, to receive this contribution in exchange for forfeiting certain benefits under the pension plan. In 2006, the plan was amended to include a feature in which all participants receive an annual Company contribution ranging from 4% to 10% of base pay based on years of service.

The annual costs recognized for defined contribution plans were $11,088, $10,812 and $9,405 in 2014, 2013 and 2012, respectively.

Multi-Employer Plans

The Company participates in multi-employer plans for several of its operations in Europe. Costs for these plans are recognized as contributions are funded. The Company's risk of participating in these plans is limited to the annual premium as determined by the plan. The annual costs of these programs were $1,068, $1,048 and $942 in 2014, 2013 and 2012, respectively.

Other Benefits

The Cleveland, Ohio, area operations have a Guaranteed Continuous Employment Plan covering substantially all employees which, in general, provides that the Company will provide work for at least 75% of every standard work week (presently 40 hours). This plan does not guarantee employment when the Company's ability to continue normal operations is seriously restricted by events beyond the control of the Company. The Company has reserved the right to terminate this plan effective at the end of a calendar year by giving notice of such termination not less than six months prior to the end of such year.