Three Months Ended March 31, 2009     --  Sales decreased 33.6% to $411.8 million     --  Excluding rationalization charges, operating income was $12.7 million;       including rationalization charges, operating income was $1.0 million     --  Rationalization charges totaling $11.7 million recorded in the quarter     --  Excluding rationalization charges, net income was $3.8 million, or       $0.09 per diluted share; including rationalization charges, net loss       was $3.6 million, or $0.08 per diluted share     --  Net cash provided by operating activities increased 6.1% to $71.7       million   

Lincoln Electric Holdings, Inc. (the "Company") today reported 2009 first quarter sales decreased 33.6% to $411.8 million from $620.2 million in the comparable 2008 period. Operating income for the first quarter decreased to $1.0 million from $78.5 million in 2008. Excluding rationalization charges, operating income was $12.7 million.

Sales for the Company's North American operations were $246.7 million in the quarter versus $371.1 million in the comparable quarter last year, a decrease of 33.5%. U.S. export sales in the quarter decreased 39.9% to $37.0 million from $61.6 million in the year-ago quarter.

Sales at Lincoln subsidiaries outside North America decreased 33.7% to $165.1 million in the first quarter, compared with $249.1 million in the comparable quarter last year. Excluding acquisitions and the effect of changes in foreign currency exchange rates, sales outside North America decreased 24.4% in the quarter.

The net loss for the first quarter was $3.6 million, or $0.08 per diluted share, compared with net income of $53.5 million in the first quarter of 2008. Excluding rationalization charges, net income was $3.8 million, or $0.09 per diluted share. The Company recorded tax expense of $1.6 million on a pretax loss of $2.0 million for the first quarter of 2009 as several foreign entities reported losses with no tax benefit.

"Our first quarter results reflect the difficult challenges and negative impacts of the depressed global economy," said John M. Stropki, Chairman and Chief Executive Officer. "The rapid and steep deterioration in overall global demand, combined with the liquidation of our higher cost inventory, resulted in a significant reduction in profitability during the quarter.

"We have been aggressively realigning our business to current market conditions. These actions resulted in a first quarter 2009 pre-tax rationalization charge of $11.7 million, the benefits of which, if annualized, we estimate will generate savings of over $80 million. During the first quarter, we began to see the positive impacts of these actions and expect to see the full benefit in the 2009 second quarter of an approximate $20 million per quarter cost savings. In addition, we are actively evaluating additional actions which will further rationalize staffing, compensation levels and manufacturing facilities around the world. We estimate these actions will generate additional annualized savings of $20 million to $25 million and result in pre-tax rationalization charges of $8 million to $10 million. During the quarter, our focus on managing our balance sheet resulted in reducing our working capital, helping us generate over $71.7 million in cash. This enabled us to increase our cash balance to over $300 million, including paying down $30 million in debt. Our strong financial position and our ongoing rationalization efforts will allow us to make the necessary investments to achieve our long-term strategic objectives. We are confident we will emerge from the global recession with a more efficient and highly competitive business model, one which will further strengthen our market leadership position, accelerate our global growth and improve our overall profitability."

Net cash provided by operating activities increased 6.1% to $71.7 million in the first quarter compared with $67.5 million for the comparable period in 2008. During the first quarter 2009, the Company repaid $30 million of outstanding debt on maturity under its Senior Unsecured Notes and paid $11.4 million in dividends. The Company's Board of Directors declared a quarterly cash dividend of $0.27 per share, which was paid on April 15, 2009 to holders of record as of March 31, 2009.

The Company announced on March 16, 2009, that its Asian subsidiary, The Lincoln Electric Company (Asia Pacific) Pte., Ltd. ("Lincoln Asia Pacific"), had signed definitive agreements to acquire 100% of Jinzhou Jin Tai Welding and Metal Co., ("Jin Tai"), a welding wire business in Jinzhou, China. This acquisition will greatly expand the Company's customer base and bring significant cost-competitive MIG wire manufacturing capacity under the Company's control. Lincoln Asia Pacific previously owned 48% of Jin Tai, whose sales were approximately $200 million in 2008. The transaction is subject to the approval of government regulatory agencies, with closing expected in the third quarter of 2009, subject to the satisfaction or waiver of customary conditions.

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 42 manufacturing locations, including operations and joint ventures in 21 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.