Lincoln Electric Reports Record 2008 Second Quarter Financial Results
CLEVELAND, July 23 --
Three Months Ended June 30, 2008
- Sales increased 19.3% to $699.8 million
- Operating income increased 21.6% to $91.6 million
- Net income increased 26.9% to $70.1 million
- Diluted earnings per share increased 27.6% to $1.62
Six Months Ended June 30, 2008
- Sales increased 16.2% to $1.32 billion
- Operating income increased 18.4% to $170.1 million
- Net income increased 19.7% to $123.6 million
- Diluted earnings per share increased 20.6% to $2.87
Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO - News) today
reported record 2008 second quarter operating income, increasing 21.6% to
$91.6 million from $75.4 million in 2007, on a sales increase of 19.3%. Net
income for the second quarter increased 26.9% to $70.1 million, or $1.62 per
diluted share from $55.2 million, or $1.27 per diluted share in 2007. The
2008 second quarter effective tax rate was 26.3% compared with 29.6% in 2007.
Sales for the second quarter increased 19.3% to $699.8 million from $586.6
million in the comparable period of 2007. Sales for the Company's North
American operations were $400.7 million in the quarter versus $363.8 million
in the comparable quarter last year, an increase of 10.1%. U.S. export sales
in the quarter increased 28.6% to $64.5 million from $50.1 million in 2007. Sales at Lincoln subsidiaries outside North America increased to $299.1
million in the second quarter, compared with $222.8 million in the year ago
quarter, an increase of 34.2%. Excluding acquisitions and the effect of
changes in foreign currency exchange rates, sales outside North America
increased 12.3% in the quarter. "I am pleased to report excellent results for the second quarter," said
John M. Stropki, Chairman and Chief Executive Officer. "We continue to
realize strong sales results, profitability and cash flows despite a
challenging North American industrial economic cycle, continued unprecedented
volatility in the metals markets and significant challenges in ensuring supply
availability. Our broad market position in key global growth segments allowed
us to take advantage of expansion opportunities, and minimize the impact of
softening in traditional markets. We continue to be focused in executing our
global strategy, capitalizing on key infrastructure development opportunities,
and leveraging our value-driven welding product and service offering." Operating income for the first six months of 2008 increased 18.4% to
$170.1 million from $143.7 million in 2007, on a sales increase of 16.2%. Net
income for the first half increased 19.7% to $123.6 million, or $2.87 per
diluted share from $103.2 million, or $2.38 per diluted share in 2007. Sales for the first six months increased 16.2% to $1.32 billion from $1.14
billion in the comparable period of 2007. Sales for the Company's North
American operations were $771.8 million in the first half versus $709.6
million in the comparable period last year, an increase of 8.8%. U.S. export
sales in the first half increased 29.1% to $126.0 million from $97.6 million
in 2007. Sales at Lincoln subsidiaries outside North America increased to $548.2
million in the first half, compared with $426.1 million for the comparable
period in 2007, an increase of 28.7%. Excluding acquisitions and the effect
of changes in foreign currency exchange rates, sales outside North America
increased 9.6% in the first half. Net cash provided by operating activities was $53.2 million in the second
quarter compared with $65.1 million for the comparable period in 2007. For
the first half, net cash provided by operating activities was $120.7 million
compared with $107.5 million for the comparable period in 2007. During the
first half of 2008, the Company paid $21.4 million in dividends. The
Company's Board of Directors declared a quarterly cash dividend of $0.25,
which was paid on July 15, 2008 to holders of record as of June 30, 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: 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 second quarter 2008 results is scheduled for
today, Wednesday, July 23, 2008 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
Fav (Unfav) to
Three Months Ended June 30, Prior Year
2008 % of Sales 2007 % of Sales $ %
Net sales $ 699,826 100.0% $ 586,638 100.0% $ 113,188 19.3%
Cost of
goods sold 495,112 70.7% 417,970 71.2% (77,142) (18.5%)
Gross profit 204,714 29.3% 168,668 28.8% 36,046 21.4%
Selling, general &
administrative
expenses 113,118 16.2% 93,317 15.9% (19,801) (21.2%)
Operating
income 91,596 13.1% 75,351 12.8% 16,245 21.6%
Interest income 1,865 0.3% 1,699 0.3% 166 9.8%
Equity earnings
in affiliates 3,814 0.5% 3,677 0.6% 137 3.7%
Other income 627 0.1% 580 0.1% 47 8.1%
Interest
expense (2,802) (0.4%) (2,786) (0.5%) (16) (0.6%)
Income before
income taxes 95,100 13.6% 78,521 13.4% 16,579 21.1%
Income taxes 24,972 3.6% 23,272 4.0% (1,700) (7.3%)
Effective
tax rate 26.3% 29.6% 3.3%
Net income $ 70,128 10.0% $ 55,249 9.4% $ 14,879 26.9%
Basic earnings
per share $ 1.64 $ 1.29 $ 0.35 27.1%
Diluted earnings
per share $ 1.62 $ 1.27 $ 0.35 27.6%
Weighted average
shares
(basic) 42,709 42,947
Weighted average
shares
(diluted) 43,173 43,461
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Income
Fav (Unfav) to
Six Months Ended June 30, Prior Year
2008 % of Sales 2007 % of Sales $ %
Net sales $ 1,320,053 100.0% $ 1,135,681 100.0% $ 184,372 16.2%
Cost of
goods sold 937,888 71.0% 808,797 71.2% (129,091) (16.0%)
Gross profit 382,165 29.0% 326,884 28.8% 55,281 16.9%
Selling, general &
administrative
expenses 212,079 16.1% 182,837 16.1% (29,242) (16.0%)
Rationalization
charges - 0.0% 396 0.0% 396 100.0%
Operating
income 170,086 12.9% 143,651 12.6% 26,435 18.4%
Interest income 4,299 0.3% 3,149 0.3% 1,150 36.5%
Equity earnings
in affiliates 4,363 0.3% 5,155 0.5% (792) (15.4%)
Other income 1,126 0.1% 1,044 0.1% 82 7.9%
Interest expense (5,783) (0.4%) (5,513) (0.5%) (270) (4.9%)
Income before
income taxes 174,091 13.2% 147,486 13.0% 26,605 18.0%
Income taxes 50,486 3.8% 44,237 3.9% (6,249) (14.1%)
Effective
tax rate 29.0% 30.0% 1.0%
Net income(1) $ 123,605 9.4% $ 103,249 9.1% $ 20,356 19.7%
Reconciliation of Net Income as Reported to Adjusted Net Income
Excluding Non-Recurring Item:
Six Months Ended
June 30, Change
2008 2007 $ %
Net income as reported (1) $123,605 $103,249 $20,356 19.7%
Non-recurring item:
European rationalization
charges (after-tax) - 396 (396) (100.0%)
Adjusted net income excluding
non-recurring item (2) $123,605 $103,645 $19,960 19.3%
Basic earnings per share $2.90 $2.41 $0.49 20.3%
Non-recurring item (1) - 0.01 (0.01) (100.0%)
Basic earnings per share excluding
non-recurring item (2) $2.90 $2.42 $0.48 19.8%
Diluted earnings per share $2.87 $2.38 $0.49 20.6%
Non-recurring item (1) - 0.01 (0.01) (100.0%)
Diluted earnings per share
excluding non-recurring item (2) $2.87 $2.39 $0.48 20.1%
Weighted average shares (basic) 42,692 42,895
Weighted average shares (diluted) 43,132 43,407
(1) Net income includes a charge of $396 ($396 after-tax) in 2007 related
to European rationalization actions. (2) Adjusted net income excluding the non-recurring item and basic and
diluted earnings per share excluding the non-recurring item 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
June 30, December 31,
2008 2007
Cash and cash equivalents $268,357 $217,382
Total current assets 1,194,861 969,648
Property, plant and equipment, net 462,835 429,944
Total assets 1,937,641 1,645,296
Total current liabilities 479,695 311,921
Short-term debt 63,274 12,486
Long-term debt 87,701 117,329
Total shareholders' equity 1,223,162 1,087,220
Net Operating Working Capital
June 30, December 31,
2008 2007
Trade accounts receivable $432,455 $344,058
Inventory 403,833 343,849
Trade accounts payable 208,167 152,301
Net operating working capital $628,121 $535,606
Net operating working capital
% to net sales 25.5% 23.5%
Invested Capital
June 30, December 31,
2008 2007
Short-term debt $63,274 $12,486
Long-term debt 87,701 117,329
Total debt 150,975 129,815
Equity 1,223,162 1,087,220
Total $1,374,137 $1,217,035
Total debt/capitalization 11.0% 10.7%
Return on invested capital 20.3% 20.5%
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Cash Flows
Three Months Ended June 30,
2008 2007
OPERATING ACTIVITIES:
Net income $ 70,128 $ 55,249
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 14,441 13,322
Equity earnings of affiliates, net (2,921) (2,853)
Other non-cash items, net 1,206 (8,013)
Changes in operating assets and liabilities
net of effects from acquisitions:
Increase in accounts receivable (24,529) (18,025)
(Increase) decrease in inventories (9,954) 5,880
Increase (decrease) in accounts payable 6,385 (752)
Net change in other current assets
and liabilities (5,109) 23,490
Net change in other long-term assets
and liabilities 3,515 (3,189)
NET CASH PROVIDED BY OPERATING ACTIVITIES 53,162 65,109
INVESTING ACTIVITIES:
Capital expenditures (18,286) (13,916)
Acquisition of businesses,
net of cash acquired (15,589) (52)
Proceeds from sale of property,
plant and equipment 42 128
NET CASH USED BY INVESTING ACTIVITIES (33,833) (13,840)
FINANCING ACTIVITIES:
Net change in borrowings 15,173 5,748
Proceeds from exercise of stock options 3,844 2,636
Tax benefit from exercise of stock options 1,889 2,240
Cash dividends paid to shareholders (10,660) (9,422)
NET CASH USED BY FINANCING ACTIVITIES 10,246 1,202
Effect of exchange rate changes on cash
and cash equivalents 929 974
INCREASE IN CASH AND CASH EQUIVALENTS 30,504 53,445
Cash and cash equivalents at
beginning of period 237,853 94,536
Cash and cash equivalents at
end of period $ 268,357 $ 147,981
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
Six Months Ended June 30,
2008 2007
OPERATING ACTIVITIES:
Net income $ 123,605 $ 103,249
Adjustments to reconcile net income
to net cash provided by operating
activities:
Rationalization charges - 396
Depreciation and amortization 28,348 25,833
Equity earnings of affiliates, net (2,917) (3,987)
Other non-cash items, net 5,022 (10,690)
Changes in operating assets and
liabilities net of effects from
acquisitions:
Increase in accounts receivable (61,703) (53,759)
Increase in inventories (36,924) (12,236)
Increase in accounts payable 37,557 14,529
Net change in other current assets
and liabilities 34,849 52,511
Net change in other long-term
assets and liabilities (7,152) (8,394)
NET CASH PROVIDED BY OPERATING ACTIVITIES 120,685 107,452
INVESTING ACTIVITIES:
Capital expenditures (31,098) (29,640)
Acquisition of businesses, net of
cash acquired (24,264) (4,414)
Proceeds from sale of property,
plant and equipment 314 201
NET CASH USED BY INVESTING
ACTIVITIES (55,048) (33,853)
FINANCING ACTIVITIES:
Net change in borrowings 14,078 (35,972)
Proceeds from exercise of stock options 5,435 5,062
Tax benefit from exercise of stock options 2,708 2,736
Purchase of shares for treasury (18,033) -
Cash dividends paid to shareholders (21,380) (18,825)
NET CASH USED BY FINANCING ACTIVITIES (17,192) (46,999)
Effect of exchange rate changes on
cash and cash equivalents 2,530 1,169
INCREASE IN CASH AND CASH EQUIVALENTS 50,975 27,769
Cash and cash equivalents at
beginning of period 217,382 120,212
Cash and cash equivalents at
end of period $ 268,357 $ 147,981
Cash dividends paid per share $ 0.50 $ 0.44
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
Segment Highlights
North Other
America Europe Countries Eliminations Consolidated
Three months ended
June 30, 2008
Net sales to
unaffiliated
customers $400,735 $170,978 $128,113 $ - $699,826
Inter-segment
sales 31,145 7,339 2,731 (41,215) -
Total $431,880 $178,317 $130,844 $(41,215) $699,826
Income before
interest and
income taxes $62,049 $20,510 $12,385 $1,093 $96,037
As a percent
of total
sales 14.4% 11.5% 9.5% 13.7%
Three months ended
June 30, 2007
Net sales to
unaffiliated
customers $363,846 $132,219 $90,573 $ - $586,638
Inter-segment
sales 25,644 4,525 2,853 (33,022) -
Total $389,490 $136,744 $93,426 $(33,022) $586,638
Income before
interest and
income taxes $55,130 $18,507 $7,347 $(1,376) $79,608
As a percent
of total
sales 14.2% 13.5% 7.9% 13.6%
North Other
America Europe Countries Eliminations Consolidated
Six months ended
June 30, 2008
Net sales to
unaffiliated
customers $771,848 $318,423 $229,782 $ - $1,320,053
Inter-segment
sales 58,211 14,264 4,297 (76,772) -
Total $830,059 $332,687 $234,079 $(76,772) $1,320,053
Income before
interest and
income taxes $118,582 $38,729 $17,424 $840 $175,575
As a percent
of total
sales 14.3% 11.6% 7.4% 13.3%
Six months ended
June 30, 2007
Net sales to
unaffiliated
customers $709,566 $254,000 $172,115 $ - $1,135,681
Inter-segment
sales 49,672 11,184 8,296 (69,152) -
Total $759,238 $265,184 $180,411 $(69,152) $1,135,681
Income before
interest and
income taxes $104,233 $33,189 $13,735 $(1,307) $149,850
As a percent
of total
sales 13.7% 12.5% 7.6% 13.2%
------ Lincoln Electric Reports Record 2008 Second Quarter Financial Results CLEVELAND, July 23 /PRNewswire-FirstCall/ --
Three Months Ended June 30, 2008
- Sales increased 19.3% to $699.8 million
- Operating income increased 21.6% to $91.6 million
- Net income increased 26.9% to $70.1 million
- Diluted earnings per share increased 27.6% to $1.62
Six Months Ended June 30, 2008
- Sales increased 16.2% to $1.32 billion
- Operating income increased 18.4% to $170.1 million
- Net income increased 19.7% to $123.6 million
- Diluted earnings per share increased 20.6% to $2.87
Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO - News) today
reported record 2008 second quarter operating income, increasing 21.6% to
$91.6 million from $75.4 million in 2007, on a sales increase of 19.3%. Net
income for the second quarter increased 26.9% to $70.1 million, or $1.62 per
diluted share from $55.2 million, or $1.27 per diluted share in 2007. The
2008 second quarter effective tax rate was 26.3% compared with 29.6% in 2007.
Sales for the second quarter increased 19.3% to $699.8 million from $586.6
million in the comparable period of 2007. Sales for the Company's North
American operations were $400.7 million in the quarter versus $363.8 million
in the comparable quarter last year, an increase of 10.1%. U.S. export sales
in the quarter increased 28.6% to $64.5 million from $50.1 million in 2007. Sales at Lincoln subsidiaries outside North America increased to $299.1
million in the second quarter, compared with $222.8 million in the year ago
quarter, an increase of 34.2%. Excluding acquisitions and the effect of
changes in foreign currency exchange rates, sales outside North America
increased 12.3% in the quarter. "I am pleased to report excellent results for the second quarter," said
John M. Stropki, Chairman and Chief Executive Officer. "We continue to
realize strong sales results, profitability and cash flows despite a
challenging North American industrial economic cycle, continued unprecedented
volatility in the metals markets and significant challenges in ensuring supply
availability. Our broad market position in key global growth segments allowed
us to take advantage of expansion opportunities, and minimize the impact of
softening in traditional markets. We continue to be focused in executing our
global strategy, capitalizing on key infrastructure development opportunities,
and leveraging our value-driven welding product and service offering." Operating income for the first six months of 2008 increased 18.4% to
$170.1 million from $143.7 million in 2007, on a sales increase of 16.2%. Net
income for the first half increased 19.7% to $123.6 million, or $2.87 per
diluted share from $103.2 million, or $2.38 per diluted share in 2007. Sales for the first six months increased 16.2% to $1.32 billion from $1.14
billion in the comparable period of 2007. Sales for the Company's North
American operations were $771.8 million in the first half versus $709.6
million in the comparable period last year, an increase of 8.8%. U.S. export
sales in the first half increased 29.1% to $126.0 million from $97.6 million
in 2007. Sales at Lincoln subsidiaries outside North America increased to $548.2
million in the first half, compared with $426.1 million for the comparable
period in 2007, an increase of 28.7%. Excluding acquisitions and the effect
of changes in foreign currency exchange rates, sales outside North America
increased 9.6% in the first half. Net cash provided by operating activities was $53.2 million in the second
quarter compared with $65.1 million for the comparable period in 2007. For
the first half, net cash provided by operating activities was $120.7 million
compared with $107.5 million for the comparable period in 2007. During the
first half of 2008, the Company paid $21.4 million in dividends. The
Company's Board of Directors declared a quarterly cash dividend of $0.25,
which was paid on July 15, 2008 to holders of record as of June 30, 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: 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 second quarter 2008 results is scheduled for
today, Wednesday, July 23, 2008 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
Fav (Unfav) to
Three Months Ended June 30, Prior Year
2008 % of Sales 2007 % of Sales $ %
Net sales $ 699,826 100.0% $ 586,638 100.0% $ 113,188 19.3%
Cost of
goods sold 495,112 70.7% 417,970 71.2% (77,142) (18.5%)
Gross profit 204,714 29.3% 168,668 28.8% 36,046 21.4%
Selling, general &
administrative
expenses 113,118 16.2% 93,317 15.9% (19,801) (21.2%)
Operating
income 91,596 13.1% 75,351 12.8% 16,245 21.6%
Interest income 1,865 0.3% 1,699 0.3% 166 9.8%
Equity earnings
in affiliates 3,814 0.5% 3,677 0.6% 137 3.7%
Other income 627 0.1% 580 0.1% 47 8.1%
Interest
expense (2,802) (0.4%) (2,786) (0.5%) (16) (0.6%)
Income before
income taxes 95,100 13.6% 78,521 13.4% 16,579 21.1%
Income taxes 24,972 3.6% 23,272 4.0% (1,700) (7.3%)
Effective
tax rate 26.3% 29.6% 3.3%
Net income $ 70,128 10.0% $ 55,249 9.4% $ 14,879 26.9%
Basic earnings
per share $ 1.64 $ 1.29 $ 0.35 27.1%
Diluted earnings
per share $ 1.62 $ 1.27 $ 0.35 27.6%
Weighted average
shares
(basic) 42,709 42,947
Weighted average
shares
(diluted) 43,173 43,461
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Income
Fav (Unfav) to
Six Months Ended June 30, Prior Year
2008 % of Sales 2007 % of Sales $ %
Net sales $ 1,320,053 100.0% $ 1,135,681 100.0% $ 184,372 16.2%
Cost of
goods sold 937,888 71.0% 808,797 71.2% (129,091) (16.0%)
Gross profit 382,165 29.0% 326,884 28.8% 55,281 16.9%
Selling, general &
administrative
expenses 212,079 16.1% 182,837 16.1% (29,242) (16.0%)
Rationalization
charges - 0.0% 396 0.0% 396 100.0%
Operating
income 170,086 12.9% 143,651 12.6% 26,435 18.4%
Interest income 4,299 0.3% 3,149 0.3% 1,150 36.5%
Equity earnings
in affiliates 4,363 0.3% 5,155 0.5% (792) (15.4%)
Other income 1,126 0.1% 1,044 0.1% 82 7.9%
Interest expense (5,783) (0.4%) (5,513) (0.5%) (270) (4.9%)
Income before
income taxes 174,091 13.2% 147,486 13.0% 26,605 18.0%
Income taxes 50,486 3.8% 44,237 3.9% (6,249) (14.1%)
Effective
tax rate 29.0% 30.0% 1.0%
Net income(1) $ 123,605 9.4% $ 103,249 9.1% $ 20,356 19.7%
Reconciliation of Net Income as Reported to Adjusted Net Income
Excluding Non-Recurring Item:
Six Months Ended
June 30, Change
2008 2007 $ %
Net income as reported (1) $123,605 $103,249 $20,356 19.7%
Non-recurring item:
European rationalization
charges (after-tax) - 396 (396) (100.0%)
Adjusted net income excluding
non-recurring item (2) $123,605 $103,645 $19,960 19.3%
Basic earnings per share $2.90 $2.41 $0.49 20.3%
Non-recurring item (1) - 0.01 (0.01) (100.0%)
Basic earnings per share excluding
non-recurring item (2) $2.90 $2.42 $0.48 19.8%
Diluted earnings per share $2.87 $2.38 $0.49 20.6%
Non-recurring item (1) - 0.01 (0.01) (100.0%)
Diluted earnings per share
excluding non-recurring item (2) $2.87 $2.39 $0.48 20.1%
Weighted average shares (basic) 42,692 42,895
Weighted average shares (diluted) 43,132 43,407
(1) Net income includes a charge of $396 ($396 after-tax) in 2007 related
to European rationalization actions. (2) Adjusted net income excluding the non-recurring item and basic and
diluted earnings per share excluding the non-recurring item 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
June 30, December 31,
2008 2007
Cash and cash equivalents $268,357 $217,382
Total current assets 1,194,861 969,648
Property, plant and equipment, net 462,835 429,944
Total assets 1,937,641 1,645,296
Total current liabilities 479,695 311,921
Short-term debt 63,274 12,486
Long-term debt 87,701 117,329
Total shareholders' equity 1,223,162 1,087,220
Net Operating Working Capital
June 30, December 31,
2008 2007
Trade accounts receivable $432,455 $344,058
Inventory 403,833 343,849
Trade accounts payable 208,167 152,301
Net operating working capital $628,121 $535,606
Net operating working capital
% to net sales 25.5% 23.5%
Invested Capital
June 30, December 31,
2008 2007
Short-term debt $63,274 $12,486
Long-term debt 87,701 117,329
Total debt 150,975 129,815
Equity 1,223,162 1,087,220
Total $1,374,137 $1,217,035
Total debt/capitalization 11.0% 10.7%
Return on invested capital 20.3% 20.5%
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)
Consolidated Statements of Cash Flows
Three Months Ended June 30,
2008 2007
OPERATING ACTIVITIES:
Net income $ 70,128 $ 55,249
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 14,441 13,322
Equity earnings of affiliates, net (2,921) (2,853)
Other non-cash items, net 1,206 (8,013)
Changes in operating assets and liabilities
net of effects from acquisitions:
Increase in accounts receivable (24,529) (18,025)
(Increase) decrease in inventories (9,954) 5,880
Increase (decrease) in accounts payable 6,385 (752)
Net change in other current assets
and liabilities (5,109) 23,490
Net change in other long-term assets
and liabilities 3,515 (3,189)
NET CASH PROVIDED BY OPERATING ACTIVITIES 53,162 65,109
INVESTING ACTIVITIES:
Capital expenditures (18,286) (13,916)
Acquisition of businesses,
net of cash acquired (15,589) (52)
Proceeds from sale of property,
plant and equipment 42 128
NET CASH USED BY INVESTING ACTIVITIES (33,833) (13,840)
FINANCING ACTIVITIES:
Net change in borrowings 15,173 5,748
Proceeds from exercise of stock options 3,844 2,636
Tax benefit from exercise of stock options 1,889 2,240
Cash dividends paid to shareholders (10,660) (9,422)
NET CASH USED BY FINANCING ACTIVITIES 10,246 1,202
Effect of exchange rate changes on cash
and cash equivalents 929 974
INCREASE IN CASH AND CASH EQUIVALENTS 30,504 53,445
Cash and cash equivalents at
beginning of period 237,853 94,536
Cash and cash equivalents at
end of period $ 268,357 $ 147,981
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
Six Months Ended June 30,
2008 2007
OPERATING ACTIVITIES:
Net income $ 123,605 $ 103,249
Adjustments to reconcile net income
to net cash provided by operating
activities:
Rationalization charges - 396
Depreciation and amortization 28,348 25,833
Equity earnings of affiliates, net (2,917) (3,987)
Other non-cash items, net 5,022 (10,690)
Changes in operating assets and
liabilities net of effects from
acquisitions:
Increase in accounts receivable (61,703) (53,759)
Increase in inventories (36,924) (12,236)
Increase in accounts payable 37,557 14,529
Net change in other current assets
and liabilities 34,849 52,511
Net change in other long-term
assets and liabilities (7,152) (8,394)
NET CASH PROVIDED BY OPERATING ACTIVITIES 120,685 107,452
INVESTING ACTIVITIES:
Capital expenditures (31,098) (29,640)
Acquisition of businesses, net of
cash acquired (24,264) (4,414)
Proceeds from sale of property,
plant and equipment 314 201
NET CASH USED BY INVESTING
ACTIVITIES (55,048) (33,853)
FINANCING ACTIVITIES:
Net change in borrowings 14,078 (35,972)
Proceeds from exercise of stock options 5,435 5,062
Tax benefit from exercise of stock options 2,708 2,736
Purchase of shares for treasury (18,033) -
Cash dividends paid to shareholders (21,380) (18,825)
NET CASH USED BY FINANCING ACTIVITIES (17,192) (46,999)
Effect of exchange rate changes on
cash and cash equivalents 2,530 1,169
INCREASE IN CASH AND CASH EQUIVALENTS 50,975 27,769
Cash and cash equivalents at
beginning of period 217,382 120,212
Cash and cash equivalents at
end of period $ 268,357 $ 147,981
Cash dividends paid per share $ 0.50 $ 0.44
Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)
Segment Highlights
North Other
America Europe Countries Eliminations Consolidated
Three months ended
June 30, 2008
Net sales to
unaffiliated
customers $400,735 $170,978 $128,113 $ - $699,826
Inter-segment
sales 31,145 7,339 2,731 (41,215) -
Total $431,880 $178,317 $130,844 $(41,215) $699,826
Income before
interest and
income taxes $62,049 $20,510 $12,385 $1,093 $96,037
As a percent
of total
sales 14.4% 11.5% 9.5% 13.7%
Three months ended
June 30, 2007
Net sales to
unaffiliated
customers $363,846 $132,219 $90,573 $ - $586,638
Inter-segment
sales 25,644 4,525 2,853 (33,022) -
Total $389,490 $136,744 $93,426 $(33,022) $586,638
Income before
interest and
income taxes $55,130 $18,507 $7,347 $(1,376) $79,608
As a percent
of total
sales 14.2% 13.5% 7.9% 13.6%
North Other
America Europe Countries Eliminations Consolidated
Six months ended
June 30, 2008
Net sales to
unaffiliated
customers $771,848 $318,423 $229,782 $ - $1,320,053
Inter-segment
sales 58,211 14,264 4,297 (76,772) -
Total $830,059 $332,687 $234,079 $(76,772) $1,320,053
Income before
interest and
income taxes $118,582 $38,729 $17,424 $840 $175,575
As a percent
of total
sales 14.3% 11.6% 7.4% 13.3%
Six months ended
June 30, 2007
Net sales to
unaffiliated
customers $709,566 $254,000 $172,115 $ - $1,135,681
Inter-segment
sales 49,672 11,184 8,296 (69,152) -
Total $759,238 $265,184 $180,411 $(69,152) $1,135,681
Income before
interest and
income taxes $104,233 $33,189 $13,735 $(1,307) $149,850
As a percent
of total
sales 13.7% 12.5% 7.6% 13.2%
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