CLEVELAND, July 28 /PRNewswire-FirstCall/ --

Three Months Ended June 30, 2009

• Sales were $413.3 million, a decrease of 40.9%
• Operating income was $19.4 million; excluding special items, operating income was $24.7 million
• Net income was $15.1 million, or $0.35 per diluted share; excluding special items, net income was $14.5 million, or $0.34 per diluted share
• Net cash provided by operating activities was $62.6 million, an increase of 17.7%
  

Six Months Ended June 30, 2009

• Sales were $825.0 million, a decrease of 37.5%
• Operating income was $20.4 million; excluding special items, operating income was $37.5 million
• Net income was $11.5 million, or $0.27 per diluted share; excluding special items, net income was $18.3 million, or $0.43 per diluted share
• Net cash provided by operating activities was $134.2 million, an increase of 11.2%
  

Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported 2009 second quarter net income of $15.1 million, or $0.35 per diluted share, on sales of $413.3 million. Operating income for the second quarter increased sequentially to $19.4 million from $1.0 million in the first quarter of 2009. Excluding special items, operating income in the quarter was $24.7 million or 6.0% of sales.

Sales were $413.3 million in the second quarter versus $699.8 million in the comparable 2008 period, a decrease of 40.9%. Sales for the Company's North American operations were $239.7 million in the quarter versus $400.7 million in the comparable quarter last year, a decrease of 40.2%. U.S. export sales in the quarter were $37.8 million versus $64.5 million in the comparable prior year period, a decrease of 41.4%.

Sales at Lincoln subsidiaries outside North America were $173.6 million in the second quarter versus $299.1 million in the comparable quarter last year, a decrease of 42.0%. Excluding acquisitions and the effect of changes in foreign currency exchange rates, sales outside North America decreased 33.2% in the quarter.

Special items for the three months ended June 30, 2009, which impacted operating income, included pre-tax rationalization charges of $6.9 million and a pre-tax pension settlement gain of $1.5 million included in selling, general and administrative expenses. Special items which impacted net income included after-tax rationalization charges of $6.6 million, an after-tax pension settlement gain of $1.5 million included in selling, general and administrative expenses and an after-tax gain on the sale of a property by the Company's joint venture in Turkey of $5.7 million included in equity earnings in affiliates. Rationalization charges during the 2009 second quarter related primarily to a facility closure in Europe.

Net income for the second quarter was $15.1 million, or $0.35 per diluted share, compared with net income of $70.1 million in the second quarter of 2008. Excluding special items, net income was $14.5 million, or $0.34 per diluted share. The 2009 second quarter effective tax rate was 36.9% compared with 26.3% in 2008.

"Our second quarter results continue to reflect the difficult economic realities of the global markets," said John M. Stropki, Chairman and Chief Executive Officer. "Although volumes are generally stabilizing with trends in the most recent quarters, this lower level of business activity has resulted in a significant reduction in profitability compared with the second quarter 2008.

"We are continuing to aggressively realign our business to current market conditions, and we are pleased that these actions resulted in improved profitability from the first quarter 2009. In addition, our focus on managing the balance sheet and reducing working capital helped us generate over $134 million in operating cash flows for the first half of 2009. 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 remain confident that we will emerge from the global recession with a more efficient and highly competitive business model."

Net cash provided by operating activities increased 17.7% to $62.6 million in the second quarter compared with $53.2 million for the comparable period in 2008. During the second quarter 2009, the Company paid $11.5 million in dividends.

Sales for the first six months were $825.0 million versus $1.3 billion in the comparable 2008 period, a decrease of 37.5%. Operating income for the first half decreased to $20.4 million from $170.1 million in 2008. Excluding special items, operating income was $37.5 million or 4.5% of sales.

Sales for the Company's North American operations were $486.4 million in the first six months versus $771.8 million in the comparable period last year, a decrease of 37.0%. U.S. export sales in the first half were $74.8 million versus $126.0 million in the prior year period, a decrease of 40.7%.

Sales at Lincoln subsidiaries outside North America were $338.7 million in the first six months compared with $548.2 million in the comparable period last year, a decrease of 38.2%. Excluding acquisitions and the effect of changes in foreign currency exchange rates, sales outside North America decreased 29.2% in the first half.

Special items for the first half of 2009 which impacted operating income included pre-tax rationalization charges of $18.6 million and a pre-tax pension settlement gain of $1.5 million included in selling, general and administrative expenses. Special items which impacted net income included after-tax rationalization charges of $14.1 million, an after-tax pension settlement gain of $1.5 million included in selling, general and administrative expenses and an after-tax gain on the sale of a property by the Company's joint venture in Turkey of $5.7 million included in equity earnings in affiliates.

Net income for the first six months was $11.5 million, or $0.27 per diluted share, compared with net income of $123.6 million in the first half of 2008. Excluding special items, net income was $18.3 million, or $0.43 per diluted share. The 2009 first half effective tax rate was 47.5% compared with 29.0% in 2008.

Net cash provided by operating activities increased 11.2% to $134.2 million in the first half of 2009 compared with $120.7 million for the comparable period in 2008. During the first six months of 2009, the Company repaid $30.0 million of outstanding debt on maturity under its Senior Unsecured Notes and paid $22.9 million in dividends. The Company's Board of Directors declared a quarterly cash dividend of $0.27 per share, which was paid on July 15, 2009 to holders of record as of June 30, 2009.

On March 16, 2009, the Company announced the signing of definitive agreements to acquire Jinzhou Jin Tai Welding and Metal Co., Ltd., ("Jin Tai"), a welding wire business in Jinzhou, China. This acquisition, targeted to close in the third quarter 2009, but subject to closing conditions, will greatly expand the Company's customer base and bring significant cost-competitive MIG wire manufacturing capacity under the Company's control. The Company previously owned 48% of Jin Tai, whose annualized sales were approximately $130 million for the six months ended June 30, 2009.

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 41 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.

A conference call to discuss the 2009 second quarter financial results is scheduled for today, Tuesday, July 28, 2009, at 10:00 a.m., Eastern Time.