SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2012

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 5 — SEGMENT INFORMATION

The Company’s primary business is the design and manufacture of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products.  The Company also has a leading global position in the brazing and soldering alloys market.  The Company has aligned its business units into five operating segments to enhance the utilization of the Company’s worldwide resources and global sourcing initiatives.  The operating segments consist of North America Welding, Europe Welding, Asia Pacific Welding, South America Welding and The Harris Products Group.  The North America Welding segment includes welding operations in the United States, Canada and Mexico.  The Europe Welding segment includes welding operations in Europe, Russia and Africa.  The other two welding segments include welding operations in Asia Pacific and South America, respectively.  The fifth segment, The Harris Products Group, includes the Company’s global cutting, soldering and brazing businesses as well as the retail business in the United States.

Segment performance is measured and resources are allocated based on a number of factors, the primary profit measure being earnings before interest and income taxes (“EBIT”), as adjusted.  Segment EBIT is adjusted for special items as determined by management, such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.

Financial information for the reportable segments follows:

	North America Welding		Europe Welding		Asia Pacific Welding			South America Welding		The Harris Products Group		Corporate / Eliminations			Consolidated
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, as adjusted	$	76,556	$	10,991	$	4,014		$	2,980	$	9,041	$	(2,509	)	$	101,073
Special items charge (gain)	77		592		589			1,381		—		—			2,639
EBIT	$	76,479	$	10,399	$	3,425		$	1,599	$	9,041	$	(2,509	)	$	98,434
Interest income															849
Interest expense															(1,126		)
Income before income taxes															$	98,157
Three months ended June 30, 2011
Net sales	$	321,656	$	139,248	$	102,721		$	37,769	$	97,899	$	—		$	699,293
Inter-segment sales	37,222		6,302		3,397			120		2,017		(49,058		)	—
Total	$	358,878	$	145,550	$	106,118		$	37,889	$	99,916	$	(49,058	)	$	699,293
EBIT, as adjusted	$	58,120	$	11,073	$	1,256		$	3,527	$	9,197	$	(788	)	$	82,385
Special items charge (gain)	—		34		(109		)	—		—		—			(75		)
EBIT	$	58,120	$	11,039	$	1,365		$	3,527	$	9,197	$	(788	)	$	82,460
Interest income															661
Interest expense															(1,627		)
Income before income taxes															$	81,494
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, as adjusted	$	146,075	$	23,802	$	6,587		$	5,885	$	16,194	$	(4,262	)	$	194,281
Special items charge (gain)	77		592		589			1,381		—		—			2,639
EBIT	$	145,998	$	23,210	$	5,998		$	4,504	$	16,194	$	(4,262	)	$	191,642
Interest income															1,732
Interest expense															(2,298		)
Income before income taxes															$	191,076
Total assets	$	897,248	$	453,089	$	365,494		$	124,093	$	200,676	$	(18,612	)	$	2,021,988
Six months ended June 30, 2011
Net sales	$	602,413	$	253,456	$	190,281		$	71,842	$	180,480	$	—		$	1,298,472
Inter-segment sales	72,349		10,137		6,610			120		4,250		(93,466		)	—
Total	$	674,762	$	263,593	$	196,891		$	71,962	$	184,730	$	(93,466	)	$	1,298,472
EBIT, as adjusted	$	104,756	$	16,985	$	1,382		$	5,575	$	15,740	$	(109	)	$	144,329
Special items charge (gain)	—		392		(110		)	—		—		—			282
EBIT	$	104,756	$	16,593	$	1,492		$	5,575	$	15,740	$	(109	)	$	144,047
Interest income															1,269
Interest expense															(3,285		)
Income before income taxes															$	142,031
Total assets	$	678,044	$	505,590	$	369,181		$	119,387	$	235,068	$	93,796		$	2,001,066

In the second quarter of 2012, special items include charges of $77, $592 and $589 for rationalization actions in the North America Welding, Europe Welding and Asia Pacific Welding segments, respectively, primarily related to employee severance and other costs associated with the consolidation of manufacturing operations.  The South America Welding segment special item represents a charge of $1,381, relating to a change in Venezuelan labor law, which provides for increased employee severance obligations.

In the second quarter of 2011, special items include net charges of $34 and $94 for rationalization actions in the Europe Welding and Asia Pacific Welding segments, respectively, primarily related to employee severance and other costs associated with the consolidation of manufacturing operations.  The Asia Pacific Welding segment special items also include a gain of $203 on the sale of assets at a rationalized operation.

In the six months ended June 30, 2012, special items include charges of $77, $592 and $589 for rationalization actions in the North America Welding, Europe Welding and Asia Pacific Welding segments, respectively, primarily related to employee severance and other costs associated with the consolidation of manufacturing operations.  The South America Welding segment special item represents a charge of $1,381, relating to a change in Venezuelan labor law, which provides for increased employee severance obligations.

In the six months ended June 30, 2011, special items include net charges of $188 and $93 for rationalization actions in the Europe Welding and Asia Pacific Welding segments, respectively, primarily related to employee severance and other costs associated with the consolidation of manufacturing operations.  The Europe Welding and Asia Pacific Welding segments special items also include a loss of $204 and a gain of $203, respectively, on the sale of assets at rationalized operations.