Lincoln Electric Announces Cost-Saving Measures
February 02 2009 - 8:53AM
PR Newswire (US)
CLEVELAND, Feb. 2 /PRNewswire-FirstCall/ -- - A greater than 10%
global workforce reduction will generate annualized savings of
approximately $50 million - Reduced work hours at Cleveland-based
operations generate the equivalent of a greater than 10% headcount
reduction within the facility - Voluntary Separation Program for
Cleveland-based employees initiated in Q1 2009 - Executive
Management team base salaries cut and overall 2009 compensation
expected to be reduced between 20% and 45% - All merit increases
and external hiring frozen - Annual capital expenditures to be
reduced by a minimum of $20 million - Year-end cash balance in
excess of $275 million, with no net debt Lincoln Electric Holdings,
Inc. (NASDAQ:LECO) today announced a number of actions to lower its
fixed and variable cost structure to align the Company's business
with the current economic environment. These measures include the
continuation of previously announced reduced work hours, cutting
expenses and discretionary spending in all areas, reassigning
employees under the Company's Guaranteed Employment policy,
canceling merit raises, instituting a base salary reduction for its
executive management (with overall compensation expected to be
reduced by as much as 45%), suspending the Company's 401(k) match
and offering a voluntary separation incentive program to its
Cleveland-based employees. "Lincoln Electric has a long history of
effectively managing its cost structure through economic cycles,"
said John M. Stropki, Chairman and Chief Executive Officer. "The
variable compensation programs at our major operations in the U.S.
enable us to seamlessly adjust our manufacturing labor cost to
market conditions without incremental cost to our business.
However, the severity of global conditions has required us to
institute additional actions and target cost reductions in our
Selling, General & Administrative expenses." The Company
announced today that a voluntary separation program is being
offered to all of its approximately 2,900 Cleveland bonus-eligible
employees, regardless of years of service. Lincoln will also
continue to reduce the number of temporary and contract workers. In
addition, the Company is releasing those employees who are not
meeting performance expectations and is reviewing workers not
covered by its Guaranteed Employment policy (employees with less
than three years of continuous service and those not meeting
performance standards). The initiatives announced today are in
addition to the headcount reductions begun during the second half
of 2008 throughout its global subsidiaries. The combination of
ongoing programs and actions announced today are anticipated to
result in a greater than 10% reduction in the global workforce with
an annualized savings of approximately $50 million, excluding any
reduction in the profit-sharing bonus. "The dynamics of the
economic situation are very fluid, and we will adjust our
strategies, implement new cost reduction initiatives, reduce
capital expenditures by a minimum of $20 million and adapt other
business objectives as market conditions dictate," said Mr.
Stropki. The Company is in a very strong financial position and has
a solid track record of good cash flow generation and profitability
in slower economic environments. Lincoln ends 2008 with a strong
balance sheet and cash balances of over $275 million and no net
debt. Mr. Stropki said: "We are very optimistic in our ability to
weather these most difficult economic times. Our strong balance
sheet and net cash position will be applied to strengthen our
global market position by making opportunistic investments in
R&D, strategic investments in capital expenditures and
acquisitions. We plan to emerge as a stronger, more capable
company, better positioned to address the long-term needs of our
global customers and the welding industry." Lincoln Electric is
scheduled to report 2008 fourth quarter and full year financial
results on February 23, 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 38
manufacturing locations, including operations, manufacturing
alliances 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 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: 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. DATASOURCE:
Lincoln Electric Holdings, Inc. CONTACT: Media -- Roy L. Morrow,
+1-216-383-4893, , or Investors -- Joe Kelley, +1-216-383-8346, ,
both of Lincoln Electric Holdings, Inc. Web Site:
http://www.lincolnelectric.com/
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