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Lincoln Electric Reports 2008 Full Year and Fourth Quarter Financial Results
    CLEVELAND, Feb. 23 /PRNewswire-FirstCall/ --

    Three Months Ended December 31, 2008
    --  Sales decreased 9.3% to $526.2 million
    --  Rationalization and asset impairment charges totaling $19.4 million
        were recorded in the quarter
    --  Net income decreased 60.7% to $19.5 million; excluding rationalization
        and asset impairment charges, net income decreased 22.9% to $37.8
        million or $0.88 per diluted share

    Twelve Months Ended December 31, 2008
    --  Sales increased 8.7% to $2.5 billion
    --  Operating income increased 6.4% to $295.4 million
    --  Net income increased 4.7% to $212.3 million; excluding rationalization
        and asset impairment charges, net income increased 13.8% to $230.6
        million or $5.36 per diluted share
    --  Net cash provided by operating activities was $257.4 million

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported 2008 sales increased 8.7% to $2.5 billion from $2.3 billion in 2007. Operating income for 2008 increased 6.4% to $295.4 million from $277.6 million in 2007 or increased 13.5% excluding rationalization and asset impairment charges. Sales for the Company's North American operations were $1.45 billion in 2008 versus $1.40 billion in 2007, an increase of 3.6%. U.S. export sales in 2008 increased 24.6% to $242.3 million from $194.5 million in 2007.

Sales at Lincoln subsidiaries outside North America increased 16.9% to $1.03 billion in 2008, compared with $879.4 million in 2007. Excluding acquisitions and the effect of changes in foreign currency exchange rates, sales outside North America increased 5.4% in 2008 compared with 2007.

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.

"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.




                              Lincoln Electric Holdings, Inc.
                                  Financial Highlights
                         (In thousands, except per share data)
                                     (Unaudited)

    Consolidated Statements of Income

                                Three Months Ended            Fav (Unfav) to
                                    December 31,                Prior Year
                                ------------------            --------------
                                  % of              % of
                            2008  Sales       2007  Sales       $        %
                            ----  -----       ----  -----       -        -

      Net sales         $526,186  100.0%  $580,279  100.0%  $(54,093)  (9.3%)
      Cost of goods sold 385,078   73.2%   419,338   72.3%    34,260    8.2%
                         -------           -------            ------
      Gross profit       141,108   26.8%   160,941   27.7%   (19,833) (12.3%)
      Selling, general
       & administrative
       expenses           86,200   16.4%    95,145   16.4%     8,945    9.4%
      Rationalization
       and asset
       impairment
       charges (gain)     19,371    3.7%      (584)  (0.1%)  (19,955)   N/A
                          ------              ----           -------
      Operating income    35,537    6.8%    66,380   11.4%   (30,843) (46.5%)
      Interest income      2,229    0.4%     2,855    0.5%      (626) (21.9%)
      Equity (loss)
       earnings in
       affiliates         (2,068)  (0.4%)    2,420    0.4%    (4,488)(185.5%)
      Other income           354    0.1%       960    0.2%      (606) (63.1%)
      Interest expense    (3,216)  (0.6%)   (3,051)  (0.5%)     (165)  (5.4%)
                          ------            ------              ----
      Income before
       income taxes       32,836    6.2%    69,564   12.0%   (36,728) (52.8%)
      Income taxes        13,366    2.5%    20,055    3.5%     6,689   33.4%
                          ------            ------             -----
      Effective tax rate    40.7%             28.8%            (11.9%)
                            ----              ----             -----
      Net income         $19,470    3.7%   $49,509    8.5%  $(30,039) (60.7%)
                         =======           =======          ========



    Reconciliation of Net Income as
     Reported to Adjusted Net Income:
                                             Three Months
                                          Ended December 31,     Change
                                          ----------------       ------
                                             2008    2007      $         %
                                             ----    ----      -         -
      Net income as reported (1)          $19,470 $49,509  $(30,039) (60.7%)
      Adjustments:
         Rationalization and asset
          impairment charges (gain)
          after-tax                        18,313    (503)   18,816    N/A
                                          ------- -------  --------
      Adjusted net income (2)             $37,783 $49,006  $(11,223) (22.9%)
                                          ======= =======  ========


      Basic earnings per share              $0.46   $1.15    $(0.69) (60.0%)
      Adjustments (1)                        0.43   (0.01)     0.44    N/A
                                             ----   -----      ----
      Adjusted basic earnings per share (2) $0.89   $1.14    $(0.25) (21.9%)
                                            =====   =====    ======

      Diluted earnings per share            $0.46   $1.14    $(0.68) (59.6%)
      Adjustments (1)                        0.42   (0.01)     0.43    N/A
                                             ----   -----      ----
      Adjusted diluted earnings per
       share (2)                            $0.88   $1.13    $(0.25) (22.1%)
                                            =====   =====    ======

      Weighted average shares (basic)      42,430  42,969
      Weighted average shares (diluted)    42,695  43,447


    (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.



                             Lincoln Electric Holdings, Inc.
                                  Financial Highlights
                          (In thousands, except per share data)
                                       (Unaudited)

      Consolidated Statements of Income
                                                               Fav (Unfav) to
                          Twelve Months Ended December 31,       Prior Year
                         --------------------------------      --------------
                                  % of                % of
                            2008  Sales        2007  Sales      $        %
                            ----  -----        ----  -----      -        -

      Net sales       $2,479,131 100.0%  $2,280,784  100.0% $198,347    8.7%
      Cost of goods
       sold            1,758,980  71.0%   1,633,218   71.6% (125,762)  (7.7%)
                       ---------          ---------         --------
      Gross profit       720,151  29.0%     647,566   28.4%   72,585   11.2%
      Selling, general
       & administrative
       expenses          405,376  16.4%     370,122   16.2%  (35,254)  (9.5%)
      Rationalization
       and asset
       impairment
       charges (gain)     19,371   0.8%        (188)  (0.0%)  (19,559)   N/A
                          ------               ----          -------
      Operating
       income            295,404  11.9%     277,632   12.2%   17,772    6.4%
      Interest
       income              8,845   0.4%       8,294    0.4%      551    6.6%
      Equity
       earnings in
       affiliates          6,034   0.2%       9,838    0.4%   (3,804) (38.7%)
      Other income         1,681   0.1%       2,823    0.1%   (1,142) (40.5%)
      Interest
       expense           (12,155) (0.5%)    (11,430)  (0.5%)    (725)  (6.3%)
                         -------            -------             ----
      Income before
       income taxes      299,809  12.1%     287,157   12.6%   12,652    4.4%
      Income taxes        87,523   3.5%      84,421    3.7%   (3,102)  (3.7%)
                          ------             ------           ------
      Effective tax rate   29.2%              29.4%             0.2%
                            ----               ----              ---
      Net income        $212,286   8.6%    $202,736    8.9%   $9,550    4.7%
                        ========           ========           ======


      Reconciliation of Net Income as
      Reported to Adjusted Net Income:
                                           Twelve Months Ended
                                              December 31,         Change
                                           -----------------       ------
                                              2008     2007      $       %
                                              ----     ----      -       -
      Net income as reported (1)           $212,286 $202,736    $9,550  4.7%
      Adjustments:
         Rationalization and
          asset impairment charges
         (gain) after-tax                    18,313     (107)   18,420  N/A
                                           -------- --------   -------
      Adjusted net income (2)              $230,599 $202,629   $27,970 13.8%
                                           ======== ========   =======


      Basic earnings per share                $4.98    $4.73     $0.25  5.3%
      Adjustments (1)                          0.43        -      0.43  N/A
                                               ----     ----      ----
      Adjusted basic earnings per
       share (2)                              $5.41    $4.73     $0.68 14.4%
                                              =====    =====     =====

      Diluted earnings per share              $4.93    $4.67     $0.26  5.6%
      Adjustments (1)                          0.43        -      0.43  N/A
                                               ----     ----      ----
      Adjusted diluted earnings per
       share (2)                              $5.36    $4.67     $0.69 14.8%
                                              =====    =====     =====

      Weighted average shares (basic)        42,648   42,899
      Weighted average shares (diluted)      43,054   43,392


    (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.




                             Lincoln Electric Holdings, Inc.
                                 Financial Highlights
                                    (In thousands)
                                     (Unaudited)

      Balance Sheet Highlights


      Selected Consolidated
       Balance Sheet Data                December 31,         December 31,
                                            2008                 2007
                                            ----                 ----

      Cash and cash equivalents           $284,332             $217,382
      Total current assets               1,024,726              969,648
      Property, plant and
       equipment, net                      427,902              429,944
      Total assets                       1,718,805            1,645,296

      Total current liabilities            356,642              311,921
      Short-term debt                       50,693               12,486
      Long-term debt                        91,537              117,329
      Total shareholders' equity           995,312            1,087,220


      Net Operating Working
       Capital                           December 31,         December 31,
                                            2008                 2007
                                            ----                 ----

      Trade accounts receivable           $299,171             $344,058
      Inventory                            346,932              343,849
      Trade accounts payable               124,388              152,301
                                           -------              -------
      Net operating working capital       $521,715             $535,606
                                          ========             ========

      Net operating working capital
       % to net sales                        21.0%                23.5%
                                             ====                 ====


      Invested Capital                   December 31,         December 31,
                                            2008                 2007
                                            ----                 ----

      Short-term debt                      $50,693              $12,486
      Long-term debt                        91,537              117,329
                                            ------              -------
      Total debt                           142,230              129,815
      Total shareholders' equity           995,312            1,087,220
                                           -------            ---------
      Invested capital                  $1,137,542           $1,217,035
                                        ==========           ==========

      Total debt / invested
       capital                               12.5%                10.7%
      Return on invested
       capital (1)                           18.8%                16.8%

      (1) 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 data)
                                   (Unaudited)

    Consolidated Statements of Cash Flows

                                             Three Months Ended December 31,
                                             -------------------------------
                                                  2008             2007
                                                  ----             ----
    OPERATING ACTIVITIES:
    Net income                                  $19,470          $49,509
      Adjustments to reconcile net
       income to net cash provided
       by operating activities:
            Rationalization and asset
             impairment charges (gain)           19,371             (584)
            Depreciation and amortization        14,024           13,514
            Equity loss (earnings) of
             affiliates, net                      2,595           (1,677)
            Other non-cash items, net            13,037            9,667
            Changes in operating assets
             and liabilities net of
             effects from acquisitions:
               Decrease in accounts
                receivable                       63,084           14,462
               Decrease in inventories           52,048           18,170
               (Decrease) increase in
                accounts payable                (55,205)           9,999
               (Decrease) increase in
                accrued pensions                 (8,403)           1,583
               Net change in other current
                assets and liabilities          (76,455)         (69,116)
               Net change in other
                long-term assets and
                liabilities                      (2,860)             198
                                                 ------              ---
    NET CASH PROVIDED BY OPERATING
     ACTIVITIES                                  40,706           45,725

    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
                                               ========         ========

    Cash dividends paid per share                 $0.25            $0.22



                               Lincoln Electric Holdings, Inc.
                                   Financial Highlights
                           (In thousands, except per share data)
                                       (Unaudited)

    Consolidated Statements of Cash Flows
                                            Twelve Months Ended December 31,
                                            --------------------------------
                                                 2008             2007
                                                 ----             ----

    OPERATING ACTIVITIES:
    Net income                                $212,286         $202,736
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
      Rationalization and asset
       impairment charges (gain)                19,371             (188)
      Depreciation and amortization             56,925           52,610
      Equity earnings of affiliates, net        (3,235)          (7,208)
      Other non-cash items, net                 17,611             (609)
      Changes in operating assets and
       liabilities net of effects from
       acquisitions:
         Decrease (increase) in accounts
          receivable                            30,130          (20,723)
         (Increase) decrease in inventories    (27,845)          36,011
         Decrease in accounts payable          (26,768)          (3,333)
         Decrease in accrued pensions          (25,975)          (9,794)
         Net change in other current assets
          and liabilities                        9,590              556
         Net change in other long-term
          assets and liabilities                (4,641)            (226)
                                                 ------             ----
    NET CASH PROVIDED BY OPERATING ACTIVITIES  257,449          249,832

    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
                                              ========         ========

    Cash dividends paid per share                $1.00            $0.88



                            Lincoln Electric Holdings, Inc.
                                 Financial Highlights
                                    (In thousands)
                                      (Unaudited)

    Segment Highlights

                         North                Other     Elimin-    Consoli-
                        America    Europe   Countries   ations      dated
                        -------    ------   ---------   -------    --------
    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

    Adjusted income
     before interest
     and income taxes
      excluding
       rationalization
       and asset
       impairment
       charges (1)       $46,637     $(503)    $7,397      $(337)    $53,194
         As a percent
          of total
          sales            13.8%     (0.4%)      7.1%                  10.1%

    Three months
     ended December
     31, 2007
      Net sales to
       unaffiliated
       customers        $345,104  $134,579   $100,596   $      -    $580,279
      Inter-segment
       sales              25,483     7,470      1,272    (34,225)          -
                          ------     -----      -----    -------    --------
         Total          $370,587  $142,049   $101,868   $(34,225)   $580,279
                        ========  ========   ========   ========    ========
      Income before
       interest and
       income taxes      $54,809   $14,169     $1,458      $(676)    $69,760
         As a percent
          of total
          sales            14.8%     10.0%       1.4%                  12.0%



                         North                Other      Elimin-    Consoli-
                        America    Europe   Countries    ations      dated
                        -------    ------   ---------    -------    --------
    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

    Adjusted income
     before interest
     and income taxes
      excluding
       rationalization
       and asset
       impairment
       charges (1)      $226,025   $57,877    $38,173       $415    $322,490
         As a percent
          of total
          sales            14.4%      9.6%       8.3%                  13.0%

    Twelve months
     ended December
     31, 2007
      Net sales to
       unaffiliated
       customers      $1,401,393  $510,514   $368,877  $       -  $2,280,784
      Inter-segment
       sales              99,227    24,156     11,645   (135,028)          -
                          ------    ------     ------   --------  ----------
         Total        $1,500,620  $534,670   $380,522  $(135,028) $2,280,784
                      ==========  ========   ========  =========  ==========
      Income before
       interest and
       income taxes     $211,092   $63,170    $18,578    $(2,547)   $290,293
         As a percent
          of total
          sales            14.1%     11.8%       4.9%                  12.7%

    (1) Adjusted income before interest and income taxes excluding
        rationalization and asset impairment charges is a non-GAAP financial
        measure that management believes is 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.

SOURCE  Lincoln Electric Holdings, Inc.

    -0-                           02/23/2009
    /CONTACT:  Media, Roy L. Morrow, +1-216-383-4893,
Roy_Morrow@lincolnelectric.com, or Investors, Joseph P. Kelley,
+1-216-383-8346, Joe_Kelley@lincolnelectric.com/
    /Web Site:  http://www.lincolnelectric.com /
    (LECO)

CO:  Lincoln Electric Holdings, Inc.

ST:  Ohio
IN:  MCT MAC
SU:  ERN CCA

PR
-- CL73743 --
9643 02/23/2009 08:14 EST http://www.prnewswire.com