LECO Lincoln Electric Holdings Inc

Lincoln Electric Reports 2005 First-Quarter Financial Results - First quarter sales up more than 18% to $362.9 million CLEVELAND, April 29 /PRNewswire-FirstCall/ -- Lincoln Electric Holdings, Inc. (NASDAQ:LECO) today reported that net income in the 2005 first quarter rose 22% to $22.2 million, or 53 cents per diluted share, on sales that increased 18% to $362.9 million. This compares with net income of $18.2 million, or 45 cents per diluted share, on $306.5 million in sales for the 2004 quarter. The 2005 first quarter included rationalization charges of $1.25 million ($848 thousand after-tax, or 2 cents per share) related to previously announced actions taken by the Company affecting its European operations. "We had a solid first quarter," said John M. Stropki, Chairman and Chief Executive Officer. "Demand in our domestic industrial market has been steady, while export sales from the U.S. rose 32% and sales in our international operations, excluding our acquisitions in China, increased 24%." North American sales increased 13% in the quarter to $231.5 million, compared with $205.7 million in the year-ago quarter. U.S. export sales were $22.3 million, compared with $16.9 million in the first quarter last year. Sales outside North America rose 30% to $131.4 million in the quarter, compared with $100.8 million in the year-ago period. The 2005 first quarter includes $8.9 million of sales related to acquisitions in China. Mr. Stropki said: "We continue to see positive market dynamics around the globe, and we have been able to increase sales levels in all regions while improving overall operating margins. Our regional managers continue to adjust to the market challenges specific to their territories to ensure a positive and profitable contribution to our results." Cash flow from operations in the quarter was $17.9 million, compared with $11.9 million in the 2004 quarter. During the 2005 first quarter, the Company paid $7.5 million in dividends. The Board of Directors also declared a quarterly cash dividend of 18 cents, which was paid April 15, 2005 to holders of record March 31, 2005. The Annual Meeting of Shareholders of Lincoln Electric Holdings, Inc. is scheduled for 10:30 a.m., Thursday, May 5, 2005, at the Wellington Center, Highland Heights, Ohio. 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. Headquartered in Cleveland, Ohio, Lincoln has operations, manufacturing alliances and joint ventures in 18 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 Web site 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; and the possible effects of international terrorism and hostilities on the Company or its customers, suppliers and the economy in general. A conference call to discuss 2005 first-quarter financial results is scheduled for today, Friday, April 29, 2005, at 11:00 a.m. EDT. An audio webcast of the call is accessible through the investors page on the Company's Web site at http://www.lincolnelectric.com/ . Lincoln Electric Holdings, Inc. Financial Highlights (amounts in millions, except per share data) (Unaudited) Consolidated Three Months Ended March 31, Fav (Unfav) to Statements of Income % of % of Prior Year 2005 Sales 2004 Sales $ % Net Sales $362.9 100.0% $306.5 100.0% $56.4 18.4% Cost of Goods Sold 264.6 72.9% 222.6 72.6% (42.0) (18.9%) Gross Profit 98.3 27.1% 83.9 27.4% 14.4 17.1% SG&A Expenses 66.9 18.4% 60.5 19.7% (6.4) (10.5%) Rationalization Charges 1.3 0.4% - 0.0% (1.3) (100.0%) Operating Income 30.1 8.3% 23.4 7.7% 6.7 28.7% Interest Income 0.8 0.2% 0.6 0.2% 0.2 22.9% Equity Earnings in Affiliates 0.5 0.2% 0.9 0.3% (0.4) (41.9%) Other Income 0.5 0.1% 0.4 0.1% 0.1 17.8% Interest Expense (1.7) (0.5%) (1.7) (0.6%) - 0.0% Income Before Income Taxes 30.2 8.3% 23.6 7.7% 6.6 27.9% Income Taxes 8.0 2.2% 5.4 1.7% (2.6) (48.1%) Net Income $22.2 6.1% $18.2 6.0% $4.0 21.9% Basic Earnings Per Share $0.53 $0.45 $0.08 17.8% Rationalization charges (1) 0.02 - 0.02 (100.0%) Basic Earnings Per Share excluding rationalization charges (2) $0.55 $0.45 $0.10 22.2% Diluted Earnings Per Share $0.53 $0.45 $0.08 17.8% Rationalization charges (1) 0.02 - 0.02 (100.0%) Diluted Earnings Per Share excluding rationalization charges (2) $0.55 $0.45 $0.10 22.2% Weighted Average Shares (Basic) 41.7 40.7 Weighted Average Shares (Diluted) 42.1 40.9 (1) European rationalization charges of $1,250 pre-tax, or $848 after tax. (2) Basic and diluted earnings per share excluding rationalization charges are presented as management believes this financial measure 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. Lincoln Electric Holdings, Inc. Financial Highlights (amounts in millions, except per share data) (Unaudited) Balance Sheet Highlights Selected Consolidated Balance Sheet Data March 31, December 31, 2005 2004 Cash and Cash Equivalents $142.7 $92.8 Marketable Securities - 50.5 Total Current Assets 669.3 637.6 Net Property, Plant and Equipment 311.6 316.1 Total Assets 1,086.5 1,059.2 Total Current Liabilities 283.1 263.0 Short-Term Debt 4.7 3.4 Long-Term Debt 160.4 163.9 Total Shareholders' Equity 582.4 577.3 Net Working Capital March 31, December 31, 2005 2004 Trade Accounts Receivable $237.3 $219.5 Inventory 249.0 236.3 Trade Accounts Payable 125.8 111.2 Net Working Capital $360.5 $344.6 Average Operating Working Capital % to Net Sales 32.5% 32.6% Total Debt March 31, December 31, 2005 2004 Short-term debt $4.7 $3.4 Long-term debt 160.4 163.9 Total Debt 165.1 167.3 Equity 582.4 577.3 Total $747.5 $744.6 Total Debt/Capitalization 22.1% 22.5% Return on Average Shareholders' Equity 15.5% 15.4% Lincoln Electric Holdings, Inc. Financial Highlights (amounts in millions, except per share data) (Unaudited) Consolidated Three Months Ended March 31, Statements of Cash Flows 2005 2004 Operating Activities: Net Income $22.2 $18.2 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Rationalization Charges 1.3 - Depreciation and Amortization 10.3 9.4 Equity Earnings of Affiliates and Other Non-Cash Items, net 2.3 2.7 Changes in Operating Assets and Liabilities: Increase in Accounts Receivable (21.6) (35.4) Increase in Inventories (17.2) (6.4) Increase in Accounts Payable 16.8 19.3 Contributions to Pension Plans (10.0) (10.0) Net change in Other Current Assets and Liabilities 14.9 10.2 Net change in Other Long-Term Assets and Liabilities (1.1) 3.9 Net Cash Provided by Operating Activities 17.9 11.9 Investing Activities: Capital Expenditures (9.7) (8.8) Proceeds from Sales of Fixed Assets - 0.2 Sales (Purchases) of marketable securities, net 50.5 11.0 Other - 0.1 Net Cash provided by Investing Activities 40.8 2.5 Financing Activities: Net change in Borrowings 2.7 (1.0) Issuance of Shares from Treasury for Stock Options 1.8 4.3 Purchase of Shares for Treasury (4.0) (0.8) Cash Dividends Paid (7.5) (6.5) Net Cash Used by Financing Activities (7.0) (4.0) Effect of Exchange Rate Changes on Cash and Cash Equivalents (1.8) (0.7) Increase in Cash and Cash Equivalents 49.9 9.7 Cash and Cash Equivalents at Beginning of Period 92.8 113.9 Cash and Cash Equivalents at End of Period $142.7 $123.6 Cash Dividends Paid Per Share $0.18 $0.16 DATASOURCE: Lincoln Electric Holdings, Inc. CONTACT: Roy L. Morrow of Lincoln Electric Holdings, Inc., +1-216-383-4893, or Web site: http://www.lincolnelectric.com/

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