<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Six Months Ended Commission File
June 30, 1995 No. 0-1402
THE LINCOLN ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
State of Incorporation: I.R.S. Employer
Ohio Ident. No:34-0359955
Common Shares Outstanding: 10,520,820
Class A Common Shares Outstanding: 11,016,664
Class B Common Shares Outstanding: 499,840
Address of Principal Executive Offices:
22801 St. Clair Avenue
Cleveland, Ohio 44117
Registrant's Telephone Number:
(216) 481-8100
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- -----
<PAGE> 2
STATEMENTS OF CONSOLIDATED OPERATIONS
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(In thousands of dollars except per share data)
"UNAUDITED"
<TABLE>
<CAPTION>
Quarter ended June 30 Six months ended June 30
--------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $268,199 $234,173 $531,606 $444,698
Cost of goods sold 160,984 143,857 322,529 272,416
-------- -------- -------- --------
Gross profit 107,215 90,316 209,077 172,282
Distribution cost/selling,
general & administrative
expenses 76,566 65,818 148,381 126,842
-------- -------- -------- --------
Operating income 30,649 24,498 60,696 45,440
Other income/(expense):
Interest income 320 299 712 592
Other income 552 809 946 1,257
Interest expense (3,559) (4,112) (7,536) (8,010)
------- -------- -------- --------
Total other income/(expense) (2,687) (3,004) (5,878) (6,161)
------- -------- -------- --------
Income before income taxes 27,962 21,494 54,818 39,279
Income taxes 10,577 9,187 21,379 16,565
-------- -------- -------- --------
Net income $ 17,385 $ 12,307 $ 33,439 $ 22,714
======== ======== ======== ========
Net income per share $ 0.79 $ 0.56 $ 1.52 $ 1.04
Cash dividends paid per
share $ 0.10 $ 0.09 $ 0.20 $ 0.18
Average number of Common Shares
outstanding: (in thousands
of shares) 22,034 21,926 22,032 21,864
<FN>
NOTE: All shares and per share amounts have been adjusted to reflect the
stock dividend on June 12, 1995 of one Class A Common Share for each
outstanding Common Share and Class B Common Share held on the record
date of June 5, 1995.
</TABLE>
See notes to consolidated financial statements.
<PAGE> 3
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(In thousands of dollars)
"UNAUDITED"
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 11,606 $ 10,424
Accounts receivable (less allowances
of $4,178 in 1995; $4,251 in 1994) 157,910 126,007
Inventories: (Note B)
Raw materials and in-process 89,939 72,302
Finished goods 97,952 82,974
-------- --------
187,891 155,276
Deferred income taxes 11,318 11,601
Prepaid expenses 2,473 2,899
Other current assets 7,313 7,220
-------- --------
TOTAL CURRENT ASSETS 378,511 313,427
OTHER ASSETS
Notes receivable from employees 281 3,151
Goodwill, net 39,667 39,213
Other 16,974 16,855
-------- --------
56,922 59,219
PROPERTY, PLANT AND EQUIPMENT
Land 13,185 12,655
Buildings 122,086 118,903
Machinery, tools and equipment 340,538 312,957
-------- --------
475,809 444,515
Less allowances for depreciation
and amortization 274,883 260,304
-------- --------
200,926 184,211
-------- --------
TOTAL ASSETS $636,359 $556,857
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(In thousands of dollars)
"UNAUDITED"
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 66,889 $ 54,766
Notes payable to banks 19,616 15,843
Salaries, wages and amounts withheld 12,713 12,405
Taxes, including income taxes 39,930 21,783
Dividends payable 2,229 2,203
Current portion of long-term debt 1,796 2,272
Accrued restructuring charges 8,676 8,968
Other current liabilities (Note C) 63,705 25,877
-------- --------
TOTAL CURRENT LIABILITIES 215,554 144,117
Long-term debt, less current portion 165,577 194,831
Deferred income taxes 6,381 6,631
Other long-term liabilities 12,985 10,337
Minority interest in subsidiaries 6,634 6,808
Shareholders' equity (Notes D & E)
Common Shares 2,104 2,103
Class A Common Shares 2,203
Class B Common Shares 100 100
Class A Common Shares Subscribed 79,293
Stock Subscription Receivable (79,293)
Additional paid-in-capital 23,462 25,447
Retained earnings 205,997 176,965
Cumulative translation adjustments (4,638) (10,482)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 229,228 194,133
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $636,359 $556,857
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
STATEMENTS OF CONSOLIDATED CASH FLOWS
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(In thousands of dollars)
"UNAUDITED"
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------
1995 1994
------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $33,439 $ 22,714
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 13,067 12,914
Minority interest 214 234
Change in operating assets and liabilities:
(Increase) in accounts receivable (29,316) (19,851)
(Increase) decrease in inventories (30,009) 2,948
Decrease in other current assets 1,435 2,755
Increase in accounts payable 11,486 4,189
Increase in other current liabilities 53,185 34,125
Gross change in other noncurrent assets 212 (1,182)
Gross change in other noncurrent liabilities 2,124 (706)
Other-net 1,057 60
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 56,894 58,200
INVESTING ACTIVITIES
Purchases of property, plant and equipment (25,604) (13,375)
Proceeds from sale of property, plant and equipment 1,263 1,273
------ -------
NET CASH (USED) BY INVESTING ACTIVITIES (24,341) (12,102)
FINANCING ACTIVITIES
Short-term borrowings-net 506 (316)
Repayment on short-term borrowings, maturities
greater than three months (20,849) (26,698)
Proceeds on short-term borrowings, maturities
greater than three months 22,395 13,801
Proceeds from long-term borrowings 211,274 183,765
Repayments on long-term borrowings (242,466) (213,017)
Cash dividends (4,406) (3,920)
Other 2,784 1,323
------- -------
NET CASH (USED) BY FINANCING ACTIVITIES (30,762) (45,062)
Effect of exchange rate changes on cash and
cash equivalents (609) 2,148
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 1,182 3,184
Cash and cash equivalents at beginning of period 10,424 20,381
------- -------
Cash and cash equivalents at end of period $ 11,606 $ 23,565
======= =======
Cash paid during the period for: Interest $ 8,478 $ 8,184
Income taxes $ 5,246 $ 4,434
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS "UNAUDITED"
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
June 30, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and contain all the adjustments
(consisting of only normal recurring accruals) necessary to fairly present the
financial position, results of operations and changes in cash flows for the
interim periods. Operating results for the quarter and six months ended June
30, 1995 are not necessarily indicative of the results which may be expected
for any other interim period or for the year ending December 31, 1995. For
further information, refer to the Consolidated Financial Statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
NOTE B - INVENTORY VALUATION
The actual valuation of inventory under the last-in first-out (LIFO) method is
made at the end of each year based on inventory levels and costs at that time.
Accordingly, interim LIFO calculations by necessity are based on estimates of
expected year-end inventory levels and costs. Accordingly, interim results are
subject to the final year-end LIFO inventory calculation.
NOTE C - OTHER CURRENT LIABILITIES
Other current liabilities at June 30, 1995 include accruals for possible
year-end bonuses and related payroll taxes of $35.5 million. The payment of
bonuses is wholly discretionary and is determined each year by the Board of
Directors.
NOTE D - RECAPITALIZATION AND STOCK DISTRIBUTION
At the Annual Meeting on May 23, 1995, the shareholders of the Company
approved, among other things, an amendment to the Company's Articles of
Incorporation to:
(1) Change the existing class of Common Stock, without par
value into Common Shares;
(2) Change the existing class of Class A Common Stock, without
par value, into Class B Common Shares;
(3) Authorize a new class of non-voting shares to be designated
Class A Common Shares;
(4) Increase the total number of authorized common shares of all
classes from seventeen million (17,000,000) to sixty-two
million (62,000,000) shares consisting of thirty million
(30,000,000) Common Shares, thirty million (30,000,000)
Class A Common Shares and two million (2,000,000) Class B
Common Shares.
<PAGE> 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS "UNAUDITED"
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
June 30, 1995
On May 24, 1995, the Board of Directors of the Company approved the filing of
Restated Articles of Incorporation with the Secretary of the State of Ohio, and
authorized a dividend payable on June 12, 1995 to shareholders of record on
June 5, 1995 of one Class A Common Share for each outstanding Common Share
(formerly known as Common Stock) and Class B Common Share (formerly known as
Class A Common Stock). All per share amounts and the shares used in the
computation of per share amounts have been adjusted to reflect the
recapitalization and dividend distribution. See Item 2.
NOTE E - SALE OF CLASS A COMMON SHARES
On June 29, 1995, the Company sold in an underwritten public offering 2,796,914
Class A Common Shares for $28.35 per share, net of the underwriting discount.
The closing date for the transaction was July 6, 1995 at which time the Company
received the net proceeds of $79.3 million which were used to reduce debt of
the Company. In the June 30, 1995 statement of consolidated financial
condition, the Company recorded in Shareholders' Equity the transaction as
Class A Common Shares subscribed with an offsetting stock subscription
receivable. On August 2, 1995, the Company sold an additional 66,593 Class A
Common Shares for $28.35 per share under an over allotment provision of the
Underwriting Agreement and received additional net proceeds of $1.9 million.
<PAGE> 8
Part 1 - Item 2
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Quarterly and Six-Month Results of Operations
The following table shows the Company's results of operations for the three and
six month periods ending June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Three months ended June 30,
1995 1994
-------------- -------------
% of % of
Amount Sales Amount Sales
------ ------ ------ -----
(in millions of dollars)
<S> <C> <C>
Net Sales $268.2 100.0% $234.2 100.0%
Cost of Goods Sold 161.0 60.0% 143.9 61.4%
------ ------ ------ ------
Gross Profit 107.2 40.0% 90.3 38.6%
Distribution Cost/Selling
General & Adm. Expenses 76.6 28.5% 65.8 28.1%
------ ------ ------ ------
Operating Income 30.6 11.5% 24.5 10.5%
Other Income 0.6 0.2% 0.8 0.3%
Interest expense, Net (3.2) -1.2% (3.8) -1.6%
------ ------ ------ ------
Income before Income Taxes 28.0 10.5% 21.5 9.2%
Income Taxes 10.6 4.0% 9.2 3.9%
------ ------ ------ ------
Net Income $ 17.4 6.5% $ 12.3 5.3%
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Six months ended June 30,
1995 1994
-------------- --------------
% of % of
Amount Sales Amount Sales
------ ------ ------ ------
(in millions of dollars)
<S> <C> <C>
Net Sales $531.6 100.0% $444.7 100.0%
Cost of Goods Sold 322.5 60.7% 272.4 61.3%
------ ------ ------ ------
Gross Profit 209.1 39.3% 172.3 38.7%
Distribution Cost/Selling
General & Adm. Expenses 148.4 27.9% 126.8 28.5%
------ ------ ------ ------
Operating Income 60.7 11.4% 45.5 10.2%
Other Income 0.9 0.2% 1.2 0.3%
Interest expense, Net (6.8) -1.3% (7.4) -1.7%
------ ------ ------ ------
Income before Income Taxes 54.8 10.3% 39.3 8.8%
Income Taxes 21.4 4.0% 16.6 3.7%
------ ------ ------ ------
Net Income $ 33.4 6.3% $ 22.7 5.1%
====== ====== ====== ======
</TABLE>
<PAGE> 9
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE MONTHS ENDED
JUNE 30, 1994.
NET SALES. Net sales were $268.2 million for the quarter ended June 30, 1995,
an increase of 14.5% over the $234.2 million reported for the second quarter of
1994. Net sales from the Company's U.S. operations were $186.1 million for the
second quarter of 1995, an increase of 13.2% or $21.7 million over the
comparable prior year period. Included in net sales from the Company's U.S.
operations were third party export sales of $22.5 million, which represents a
39.6% increase over the same period in 1994. Non-U.S. sales were $82.1 million
for the second quarter of 1995, an increase of 17.7% or $12.3 million over the
same period last year. Volume and price increases contributed to the growth in
revenues in the quarter both in the U.S. and abroad, with volume growth being
the most important factor. Non-U.S. sales were also favorably affected by
currency rates.
GROSS PROFIT. Gross profit was $107.2 million (40.0% of net sales) for the
second quarter of 1995 compared with $90.3 million (38.6% of net sales) for the
same period in 1994 with the increase due principally to higher gross profit
margins on non-U.S. sales. Gross profit as a percentage of net sales from the
Company's U.S. operations was substantially consistent with the comparable
period in 1994 as higher raw material and other manufacturing costs were
essentially offset by higher selling prices. The improvement in the gross
profit margins on non-U.S. sales was attibutable to greater absorption of
manufacturing expenses over higher sales volume and the effects of general
price increases instituted in the first quarter of 1995.
DISTRIBUTION COST/SELLING, GENERAL & ADMINISTRATIVE (SG&A) EXPENSES. SG&A
expenses were $76.6 million or 28.5% of net sales for the second quarter of
1995. This compares with expenses of $65.8 million or 28.1% of net sales for
the comparable prior year period. Included in SG&A expenses are costs related
to the Company's discretionary year-end bonus program amounting to
approximately $20.4 million ($18.7 million in 1994) which are subject to Board
of Directors' approval. Also included in SG&A expenses in the second quarter
of 1995 are costs of $1.9 million related to the retirement of an officer of
the Company.
INTEREST EXPENSE, NET. Interest expense, net was $3.2 million for the second
quarter of 1995 as compared with $3.8 million for the second quarter of 1994
reflecting lower debt levels between periods, offset partially by higher
interest rates.
<PAGE> 10
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INCOME TAXES. Income taxes for the second quarter of 1995 were $10.6 million
on income before income taxes of $28.0 million, an effective rate of 37.8%, as
compared with income taxes of $9.2 million on income before income taxes of
$21.5 million, an effective rate of 42.7%, for the same period last year. The
decrease in the effective tax rate continues to reflect the utilization of tax
loss carryovers principally for the Company's European subsidiaries for which
valuation allowances were previously provided against related deferred tax
assets. In the 1995 second quarter, the estimated 1995 annual effective income
tax rate was reduced to 39.0% from 40.2% as reported in the 1995 first quarter.
The rate reduction was principally attributable to greater anticipated
utilization of tax loss carryforwards principally in Europe for which deferred
tax valuation allowances had previously been provided. The change in the
estimated annual effective income tax rate increased net income for the 1995
second quarter by $.7 million or $0.03 per share.
NET INCOME. Net income increased 41.3% to $17.4 million, or $0.79 per share
for the second quarter of 1995, as compared with $12.3 million or $0.56 per
share for the prior year.
SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED
JUNE 30, 1994.
NET SALES. For the first six months of 1995, net sales were $531.6 million, or
19.5% higher than the $444.7 million reported for the first half of 1994. U.S.
sales totaled $368.9 million, representing an increase of 16.9%, or $53.3
million over the same period last year. Included in net sales from the
Company's U.S. operations were third party export sales of $40.9 million which
represented a 28.4% increase over the same period in 1994. Non-U.S. sales
totaled $162.7 million, representing an increase of 26.1%, or $33.6 million,
over the prior year's six-month period. Sales increases in the U.S. and abroad
were attributable to a combination of volume and price increases with volume
being the most important factor. European sales continued to benefit from the
partial regaining of market share in Germany where in early 1994 market share
had been lost due to the 1993 restructuring activities. Assuming economic
activity in the U.S. and Western Europe continues to expand, sales in these
regions are expected to remain strong for the balance of the year but not with
the percentage increases achieved in the first six months of 1995. Currency
translation had a positive effect of approximately $6.1 million on 1995
non-U.S. sales.
<PAGE> 11
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GROSS PROFIT. Gross profit was $209.1 million (39.3% of net sales) for the
first six months of 1995 as compared with $172.3 million (38.7% of sales) for
the same period in 1994 with the increase due principally to higher gross
profit margins on non-U.S. sales. The improvement in non-U.S. gross profit
margins was attributable to a combination of greater absorption of
manufacturing expenses over higher sales volume and general price increases.
DISTRIBUTION COST/SELLING, GENERAL & ADMINISTRATIVE (SG&A) EXPENSES. For the
first six months of 1995, SG&A expenses were $148.4 million or 27.9% of net
sales. This compares with expenses of $126.8 million or 28.5% of sales for the
first half of 1994. The decrease in costs as a percentage of sales reflects
improved economies of scale achieved by higher sales volume and tight
cost-control initiatives. Expenses for 1995 were unfavorably affected by a
first quarter charge without tax benefit of $2.3 million due to the devaluation
of the Mexican Peso and in the second quarter a $1.9 million charge for costs
related to the retirement of an officer of the Company. Included in SG&A
expenses are costs related to the Company's discretionary year-end bonus
program amounting to approximately $40.5 million for the first half of 1995
($36.0 million in 1994) which is subject to Board of Directors' approval.
INTEREST EXPENSE, NET. For the first six months of 1995, interest expense net
was $6.8 million compared with $7.4 million for the first six months of 1994.
The decrease was attributable to lower debt levels, which were offset partially
by higher interest rates in 1995.
INCOME TAXES. For the six months ended June 30, 1995, income taxes were $21.4
million on income before income taxes of $54.8 million, an effective tax rate
of 39.0%, as compared with income taxes of $16.6 million on income before
income taxes of $39.3 million, an effective tax rate of 42.2%, for the same
period last year. The decrease in the effective tax rate reflects the
utilization of tax loss carryovers principally for the Company's European
subsidiaries for which valuation allowances were previously provided against
related deferred tax assets. In the 1995 second quarter, the estimated 1995
annual effective income tax rate was reduced to 39.0% from 40.2% as reported in
the 1995 first quarter. The rate reduction was principally attributable to
greater anticipated utilization of tax loss carryforwards principally in Europe
for which deferred tax valuation allowances had previously been provided. The
change in the estimated annual effective income tax rate increased net income
for the 1995 second quarter and six month periods by $.7 million or $0.03 per
share.
<PAGE> 12
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NET INCOME. Net income for the first six months of 1995 increased 47.2% to
$33.4 million, or $1.52 per share, as compared with $22.7 million, or $1.04 per
share, reported for the comparable period in 1994.
LIQUIDITY AND CAPITAL RESOURCES. The Company's cash flows for the six months
ended June 30, 1995 and 1994 are presented in the consolidated statements of
cash flows. Cash provided from operating activities for the six months ended
June 30, 1995 amounted to $56.9 million as compared with $58.2 million for the
comparable period in 1994. Cash flows from operations for 1995 were used
primarily for net capital expenditures of $24.3 million, net debt repayments of
$29.1 million and the payment of dividends in the amount of $4.4 million. Cash
flows from operations for 1994 were used primarily for net capital expenditures
of $12.1 million, net debt repayments of $42.5 million, and the payment of
dividends in the amount of $3.9 million.
Net working capital was $163.0 million at June 30, 1995 compared to $169.3
million at December 31, 1994. The net decrease in working capital for the
first six months of 1995 was primarily a combination of increases in accounts
receivable of $31.9 million and inventories of $32.6 million as a result of the
increase in business volume offset by increases in current liabilities of $71.4
million principally as a result of higher accounts payable ($12.1 million),
accrued taxes ($18.1 million) and other current liabilities ($37.8 million).
Other current liabilities at June 30, 1995 include accruals for possible
year-end bonuses and related payroll taxes of $35.5 million which are wholly
discretionary and subject to Board of Directors approval.
Total debt at June 30, 1995 was $187.0 million as compared with $212.9 million
at December 31, 1994. At June 30, 1995, total debt was 44.9% of total
capitalization (shareholders' equity plus total debt), as compared with 52.3%
at the end of 1994. The improvement in the ratio of total debt to total
capitalization was due to a combination of reduced debt levels, increased
equity resulting from earnings for the period, net of dividend payments,
favorable effects of currency translation of $5.8 million and the cyclical
nature of the Company's cash requirements. The payment of bonuses at the end
of 1995 will affect the ratio of total debt to total capitalization.
Capital expenditures for property, plant and equipment totaled $25.6 million
for the six months of 1995, compared to $13.4 million for the comparable period
in 1994. Expenditures for property, plant and equipment represent the
Company's continued commitment to support and develop advanced technologies and
new products, to expand current capacity and reduce future manufacturing costs.
The Company continues to closely monitor its capital expenditures and is adding
to capacity to meet the demand for its products and modernizing facilities as
necessary. Capital expenditures for 1995 are expected to increase over 1994
expenditures.
<PAGE> 13
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
On June 29, 1995, the Company sold in an underwritten public offering
approximately 2.8 million Class A Common Shares for $28.35 per share, net of
the underwriting discount. The closing date for the transaction was July 6,
1995 at which time the Company received net proceeds of $79.3 million which
were used to reduce debt. On August 2, 1995, the Company sold an additional
66,593 Class A Common Shares for $28.35 per share under an over allotment
provision of the Underwriting Agreement and received net proceeds of $1.9
million. Giving effect to the sale of the aforementioned Class A Common Shares
and the application of the proceeds to reduce debt, the ratio of total debt to
total capitalization at June 30, 1995 would have been 25.4%.
The Company's Credit Agreement and 8.98% Senior Note Agreement contain various
financial covenants which require the following: (i) a 1.35 to 1 consolidated
current ratio, (ii) the maintenance of consolidated tangible net worth of $125
million plus 50% of net income subsequent to January 1, 1995 (iii) a minimum
interest coverage ratio of 3 to 1 after June 30, 1995, (iv) funded debt to
capital ratios (.55 to 1 as of July 1, 1995 decreasing to .50 to 1 after
December 31, 1995), (v) limitations on capital expenditures and (vi)
limitations on the payment of dividends and purchases of unrestricted stock to
50% of cumulative net income from January 1, 1993, plus $25 million. The
Company is in compliance with all of its financial covenants and does not
anticipate violating any of its covenants. Management believes that the
current financing arrangements and the cash flows generated from operations
will provide adequate funds to support the existing operations of the Company
and satisfy both its capital requirements and regular dividend practices
throughout the term of the Credit Agreement.
Part II - Other Information
Item 1. Legal proceedings
The Company is a co-defendant in nineteen cases alleging that exposure to
manganese contained in arc welding electrode products caused the plaintiffs to
develop a neurological condition known as manganism. The total number of
claimants in these cases is 28. The amended complaints in two of the cases,
pending in Illinois and Wisconsin, include class action allegations, which the
Company intends to contest. The plaintiffs seek compensatory and, in most
instances, punitive damages, usually for unspecified sums. Two similar cases
have been tried, both to defense verdicts.
<PAGE> 14
Part II - Other Information
Item 1. Legal proceedings (Cont'd.)
Claims pending against the Company alleging asbestos induced illness total
12,731; in each instance, the Company is one of a large number of defendants.
Approximately 4,407 of these asbestos claims are in Orange County, Texas where
a motion to certify a class action, which is being contested vigorously, is
pending. The asbestos claimants seek compensatory and punitive damages, in
most cases for unspecified sums. Twenty cases have been tried, all to defense
verdicts. Voluntary dismissals on such claims total over 13,000; summary
judgments for the defense total 74.
Item 2. Changes in Securities
On May 24, 1995, the Company amended its Amended and Restated Articles of
Incorporation to (i) change the then existing class of Common Stock, without
par value, into Common Shares; (ii) change the then existing class of Class A
Common Stock, without par value, into Class B Common Shares; (iii) authorize a
new class of non-voting shares to be designated Class A Common Shares; (iv)
increase the total number of authorized common shares of all classes from
17,000,000 to 62,000,000, consisting of 30,000,000 Common Shares, 30,000,000
Class A Common Shares and 2,000,000 Class B Common Shares; and (v) clarify the
circumstances under which the Company may purchase and sell its own shares in
accordance with the Ohio General Corporation Law.
The authorization and subsequent issuance of the Class A Common Shares did not
materially limit or qualify the rights of holders of Common Shares and Class B
Common Shares except as follows: in certain limited situations in which the
holder of Common Shares has acquired voting rights disproportionate to equity
ownership through acquisitions of Common Shares without corresponding purchases
of Class A Common Shares, the voting rights of all Common Shares owned by such
shareholder will be automatically suspended until (a) consummation of a tender
offer to acquire additional Class A Common Shares or (b) all Common Shares
causing such offer requirement to be effective are no longer beneficially owned
by such shareholder.
Item 3. Defaults Upon Senior Securities -- None.
Item 4. Submission of Matters to a Vote of Security-Holders.
(a) The Annual Meeting was held on May 23, 1995.
(b) The following were elected Directors at the meeting:
For terms ending in 1998:
Kathryn Jo Lincoln
Frederick W. Mackenbach
Lawrence O. Selhorst
Craig R. Smith
<PAGE> 15
Part II - Other Information (Cont'd.)
Item 4. Submission of Matters to a Vote of Security-Holders.
(Cont'd.)
Continuing Directors whose terms end in 1997:
Donald F. Hastings
Hugh L. Libby
David C. Lincoln
G. Russell Lincoln
Henry L. Meyer, III
Frank L. Steingass
Continuing Directors whose terms end in 1996:
Harry Carlson
David H. Gunning
Edward E. Hood, Jr.
Paul E. Lego
Emma S. Lincoln
(c) The following matters were voted upon by security-
holders:
(i) ELECTION OF DIRECTORS: The shareholders voted in
favor of electing the following persons as Directors of
the Company whose terms end in 1998:
<TABLE>
<CAPTION>
Votes for Votes Withheld
--------- --------------
<S> <C> <C>
Kathryn Jo Lincoln 9,717,476 122,659
Frederick W. Mackenbach 9,736,364 103,771
Lawrence O. Selhorst 9,743,095 97,040
Craig R. Smith 9,722,813 117,322
</TABLE>
(ii) RECAPITALIZATION AMENDMENT: The security-holders
approved a proposal to amend the Company's Articles to
change the existing class of Common Stock, without par value,
into Common Shares, change the existing class of Class A Common
Stock, without par value, into Class B Common Shares, authorize a
new class of non-voting shares to be designated Class A Common
Shares, increase the total number of authorized common shares of
all classes from 17,000,000 to 62,000,000, consisting of
30,000,000 Common Shares, 30,000,000 Class A Common Shares and
2,000,000 Class B Common Shares, and clarify the circumstances
under which the Company may purchase and sell its own shares in
accordance with the Ohio General Corporation Law. Approval of
the Recapitalization Amendment required the affirmative vote of
holders of two-thirds of the outstanding common shares
<PAGE> 16
Part II - Other Information (Cont'd.)
Item 4. Submission of Matters to a Vote of Security-Holders.
(Cont'd.)
voting together as a single class, as well as the vote
of holders of two-thirds of the outstanding common
shares (excluding the Class B Common Shares) voting
separately as a class. The results of the security-
holder votes on the Recapitalization Amendment are as
follows:
a) common shares voting together as a single class:
<TABLE>
<S> <C>
For 9,069,614
Against 187,077
Abstain 181,870
Broker Non-Vote 401,574
</TABLE>
b) common shares (excluding Class B Common Shares)
voting as a single class:
<TABLE>
<S> <C>
For 8,913,124
Against 179,555
Abstain 176,298
Broker Non-Vote 401,574
</TABLE>
(iii) PROPOSAL TO AMEND ARTICLE EIGHTH OF THE ARTICLES OF THE
COMPANY: The security-holders approved a proposal to amend
Article Eighth to conform certain portions of Article Eighth to
reflect the Company's revised capital structure after approval of
the Recapitalization Amendment. Approval of the Articles
Amendment required the affirmative vote of the holders of
two-thirds of the outstanding common shares voting together as a
single class, as well as the holders of two-thirds of the
out-standing common shares held by persons who are not members of
the Lincoln Family, voting together as a single class. The results
of the security-holder votes on the proposal to amend Article
Eighth of the Articles of the Company are as follows:
a) common shares voting together as a single class:
<TABLE>
<S> <C>
For 9,050,349
Against 180,786
Abstain 207,426
Broker Non-Vote 401,574
</TABLE>
<PAGE> 17
Part II - Other Information (Cont'd.)
Item 4. Submission of Matters to a Vote of Security-Holders.
(Cont'd.)
b) common shares held by persons who are not
members of the Lincoln Family voting together
as a single class:
<TABLE>
<S> <C>
For 4,076,357
Against 180,786
Abstain 207,426
Broker Non-Vote 401,574
</TABLE>
(iv) PROPOSAL TO AMEND ARTICLES VI AND VII AND TO DELETE
ARTICLE VIII OF THE REGULATIONS OF THE COMPANY: The
security-holders approved a proposal to amend Article VI
and Article VII and to delete Article VIII of the
Regulations of the Company. The Regulations Amendment
authorizes both standing and special Board committees
and provides the Board of Directors with more
flexibility with respect to the election and removal of
officers, and the duties ascribed to each officer. The
results of the security-holder vote on the Regulations
Amendment are as follows:
<TABLE>
<S> <C>
For 9,042,509
Against 209,576
Abstain 230,426
Broker Non-Vote 401,574
</TABLE>
(v) APPROVAL OF THE 1995 LINCOLN STOCK PURCHASE PLAN:
The security-holders approved the 1995 Lincoln Stock
Purchase Plan, which provides for the purchase of Common
Shares and Class A Common Shares by the employees of the
Company and its subsidiaries. The results of the
security-holder vote on the 1995 Lincoln Stock Purchase
Plan are as follows:
<TABLE>
<S> <C>
For 9,237,633
Against 77,150
Abstain 123,778
Broker Non-Vote 401,574
</TABLE>
<PAGE> 18
Part II - Other Information (Cont'd.)
Item 4. Submission of Matters to a Vote of Security-Holders.
(Cont'd.)
(vi) APPROVAL OF THE LINCOLN NON-EMPLOYEE DIRECTORS'
RESTRICTED STOCK PLAN: The security-holders approved
resolutions that constitute the Lincoln Non-Employee
Directors' Restricted Stock Plan which provides for
automatic awards on January 1 of each year (or, with
respect to 1995, on June 13, 1995) of $10,000 worth
of Common Shares to each non-employee Director subject
to certain transfer restrictions and risk of forfeiture.
The results of the security-holder vote on the
resolutions providing a Non-Employee Directors'
Restricted Stock Plan are as follows:
<TABLE>
<S> <C>
For 8,528,890
Against 646,360
Abstain 307,261
Broker Non-Vote 357,624
</TABLE>
(vii) APPOINTMENT OF INDEPENDENT AUDITORS: The
security-holders ratified the appointment of the firm of
Ernst & Young LLP as independent auditors to examine the
books of account and other records of the Company for
the fiscal year ending December 31, 1995. The results
of the security-holder vote on the proposal to ratify
the Appointment of Independent Auditors are as follows:
<TABLE>
<S> <C>
For 9,709,214
Against 54,117
Abstain 76,804
Broker Non-Vote 0
</TABLE>
(viii) PROPOSAL AND SUPPORTING STATEMENT OF PROPONENT:
The security-holders defeated a proposal submitted with
supporting statement by Allen Wolff, Trustee, to remove
all discretionary power of voting by the named proxy-
holder on any issue where no direction has been given.
The results of the security-holder vote on the Proposal
and Supporting Statement of Proponent are as follows:
<TABLE>
<S> <C>
For 837,421
Against 8,254,485
Abstain 346,655
Broker Non-Vote 401,574
</TABLE>
<PAGE> 19
Part II - Other Information (Cont'd.)
Item 5. Other Information
1. Mr. Carlson retired an as officer of the Company effective June 30, 1995.
Mr. Carlson continues to serve as a director of the Company. In conjunction
with his retirement, the Company entered into Deferred Compensation and
Consulting Agreements with Mr. Carlson. Pursuant to the Deferred Compensation
Agreement, Mr. Carlson will receive $198,750 in each of 1996, 1997 and 1998,
with an additional $198,750 credited to his account under the Company's
Deferred Compensation Plan. Under the Consulting Agreement, commencing in
1996, Mr. Carlson will receive, if services are requested under such Agreement,
$1,200 per day plus expenses for services rendered. The Consulting Agreement
extends through July 7, 1999 (with a three-year non-competition provision
thereafter). The Company paid Mr. Carlson an inducement fee of $400,000 in
connection with the execution of the Consulting Agreement. With respect to Mr.
Carlson's benefits under the Company's Supplemental Executive Retirement Plan,
Mr. Carlson's participation factor was increased to 50% and his credited years
of service was increased to 45 years. Mr. Carlson's 1995 salary and bonus
compensation was established at $340,000. With respect to Mr. Carlson's
retirement, the Company incurred a pre-tax charge of approximately $1.9 million
in the second quarter of 1995.
2. In 1994, two officers and directors, Mr. Young and Mr. Gonzalez, entered
into Severance Agreements with the Company, and resigned from their Board
positions. Mr. Young's Agreement provided that he receive $206,565.22 in 1994
compensation and approximately $207,000 for each of 1995 and 1996, in addition
to his retirement benefits under the Retirement Annuity Program and
Supplemental Executive Retirement Plan (adjusted to $19,225). Mr. Gonzalez's
Agreement provided that he receive $231,000 in 1994 compensation and $300,000
in 1995, in addition to his retirement benefits under the Retirement Annuity
Program and Supplemental Executive Retirement Plan (adjusted to $28,948). With
respect to the Severance Agreements entered into with Mr. Young and Mr.
Gonzalez, the Company incurred a pre-tax charge in 1994 of approximately $1.0
million.
3. The Deferred Compensation Plan was adopted by the Compensation Committee of
the Board of Directors of the Company on November 10, 1994 and became
effective as of November 15, 1994. The purpose of the Deferred Compensation
Plan is to provide deferred compensation benefits to certain management
and/or highly compensated employees of the Company as determined and
designated from time to time by the Committee. The Company has implemented
the Deferred Compensation Plan to enable its designated management and/or
highly compensated employees to defer a portion of their current salary.
Under the Deferred Compensation Plan, allocations are made by the Company to
an account on behalf of eligible employees who elect to defer a portion of
their base salary and/or bonus (the "Employee Deferrals"). Employee
Deferrals are credited to individual accounts established and maintained on
the books of the Company in the name of each participating employee.
Employee Deferrals will be deemed to have been invested in one or more
hypothetical investment funds (as deemed to have been elected by the employee
based on his or her investment election under the Deferred Compensation Plan)
whose yields will correspond to the performance of one or both of two
investment funds maintained under the Plan: the Stock Index Fund and the
Moody's Corporate Average Bond Yield Fund.
A similar plan was adopted on May 24, 1995 for non-employee directors,
who may elect to defer all or a portion of their annual cash compensation.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBIT NO.
(10) (a) Deferred Compensation Agreement dated
June 30, 1995 by and between Harry Carlson
and the Company
(b) Consulting Agreement dated as of July 7, 1995
by and between Harry Carlson and the Company
<PAGE> 20
Part II - Other Information (Cont'd.)
Item 6. Exhibits and Reports on Form 8-K (Cont'd.)
(a) EXHIBIT NO. (Cont'd.)
(10) (Cont'd.)
(c) Non-Employee Directors' Restricted Stock
Plan (as set forth in resolution of the
the Board of Directors dated March 30, 1995)
(d) The Lincoln Electric Company Non-Employee
Directors' Deferred Compensation Plan dated
as of May 24, 1995, filed herewith.
(27) Financial Data Schedule
(b) REPORTS ON FORM 8-K
A report on Form 8-K relating to shareholder approval
of the proposed recapitalization plan was filed on
May 26, 1995.
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LINCOLN ELECTRIC COMPANY
/s/ H. Jay Elliott /s/ Graham A. Peters
------------------------------- --------------------------------
H. Jay Elliott Graham A. Peters
Vice President, Chief Financial Corporate Controller
Officer and Treasurer
August 7, 1995 August 7, 1995
<PAGE> 1
EXHIBIT 10(a)
Mr. Harry Carlson
Vice-Chairman
The Lincoln Electric Company
22801 St. Clair Avenue
Cleveland, Ohio 44117
June 30, 1995
Re: DEFERRED COMPENSATION AGREEMENT
Dear Harry:
In conjunction with your retirement, the Compensation Committee of the Board
of Directors has authorized me to enter into this letter agreement.
The Company will pay you a total deferred compensation amount of $795,000.
25% of the total deferred compensation amount equal to $198,750 shall be
treated as compensation deferred under The Lincoln Electric Company Deferred
Compensation Plan and prior to your retirement, credited to your account under
the Plan following your existing 1995 Participation Agreement. The balance of
the total deferred compensation amount equal to $596,250 shall be paid to you
in three equal amounts of $198,750 each on the first business day of January in
1996, 1997 and 1998. These payments are for services to the Company through
the date of this letter agreement and are intended to qualify as deferred
compensation under Section 3121(v) of the Internal Revenue Code, but shall not
be treated as "compensation" for purposes of computing your benefit under the
Company's Supplemental Executive Retirement Plan.
This letter agreement is binding on the Company and its successors and
assigns. It shall inure to the benefit of and be enforceable by your personal
or legal representatives, executors, administrators, successors, heirs,
distributees and/or legatees.
Please indicate your acceptance of the foregoing items by signing and
returning the enclosed copy of this letter agreement. Thank you for your
service to the Company.
Sincerely,
Donald F. Hastings
Chairman and Chief
Executive Officer
The foregoing is acknowledged and
agreed to as of the ___ day of
June, 1995.
______________________________________________________
Harry Carlson
<PAGE> 1
EXHIBIT 10(b)
CONSULTING AGREEMENT
Consulting Agreement ("Agreement"), dated as of July 7, 1995, between The
Lincoln Electric Company (the "Company") and Harry Carlson.
WHEREAS, in order to have available to the Chief Executive Officer and the
Board of Directors and its committees, Mr. Carlson's long experience, knowledge
and advice, this Agreement is entered into between the Company and Mr. Carlson;
WHEREAS, it will be important to have available Mr. Carlson's participation
in and guidance on a number of areas where the Company anticipates significant
policy review and possible change. These include shareholder affairs,
corporate strategic planning, employee compensation including international
executive compensation, the Incentive System, and the broad spectrum of
matters arising as a result of the corporate financial restructuring. It is
also anticipated that Mr. Carlson will be available to participate in the
preparation of information related to the Annual Meeting of Shareholders;
NOW, THEREFORE, the parties hereto agree as follows:
1. TERM. The term of this Agreement begins on the date of execution and
extends through July 7, 1999.
2. ENGAGEMENT OF MR. CARLSON BY COMPANY. The Company engages Mr. Carlson as
an independent contractor to advise and consult with the Chief Executive
Officer, the Board of Directors and its committees. Mr. Carlson shall devote
such time as is necessary to provide the services requested on a mutually
agreed upon schedule.
3. PRICE. This Agreement provides for an inducement fee of $400,000 and a
per diem of $1,200 plus expenses. The full amount of the inducement shall be
paid on July 7, 1995. No per diem amount shall be paid for any services of Mr.
Carlson hereunder in 1995. Commencing January 1, 1996, per diem amounts and
expenses for services requested and rendered hereunder shall be paid monthly.
4. CONFIDENTIAL INFORMATION. Mr. Carlson agrees that during the term of this
Agreement, and at all times thereafter, he shall not disclose, unless either
required by law or in connection with his responsibilities as a Director, to
any third parties confidential information about the Company, and that he shall
confine use of confidential information exclusively to carrying out his
consulting responsibilities and/or his responsibilities as a Director.
5. NON-COMPETITION. Mr. Carlson agrees that during the term of this
Agreement and for a period of three years thereafter he shall not compete with
any business engaged in by the Company. For the purposes of this paragraph,
Mr. Carlson shall be deemed to be competing with a business referred to herein
if he engages in any business directly or indirectly, whether for his own
account or for that of any other person, firm or corporation and whether as a
shareholder, partner or investor possessing an ownership interest exceeding 5%
in any such entity, or as a principal, agent, proprietor, officer, director,
employee or consultant, or in any other capacity. If any clause of this
paragraph shall be unenforceable, then such clause shall be deemed to be
<PAGE> 2
EXHIBIT 10(b)
deleted, but every other clause shall continue in full force and effect. The
restraints imposed upon Mr. Carlson pursuant to this paragraph are not greater
than is reasonably necessary to preserve and protect the assets and legitimate
business interests of the Company.
6. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of Ohio, and both parties consent to venue end personal jurisdiction of the
courts within Ohio, including the federal courts, for purposes of construction
and enforcement of this Agreement.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties pertaining to the consulting and non-competition obligations of Mr.
Carlson.
8. SUCCESSORS AND BINDING AGREEMENT.
a. This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of or assign of the Company.
b. This Agreement shall inure to the benefit of and be enforceable by Mr.
Carlson's personal or legal representatives, executors, administrators,
successors, heirs, distributees and/or legatees.
c. This Agreement is personal in nature and none of the parties hereto
shall without the consent of the other parties, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in subparagraph (a) and (b) of this paragraph 8.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
noted below.
THE LINCOLN ELECTRIC COMPANY
Date: June 30, 1995 By: _____________________________________
Donald F. Hastings
Chairman and Chief Executive Officer
Date: June 30, 1995 ______________________________________
Harry Carlson
Vice Chairman
<PAGE> 1
EXHIBIT 10(c)
RESOLVED, that immediately after the earlier of (i) the payment of the
Dividend that is expected to follow adoption of the Recapitalization Amendment
and the filing of the Amended Articles (as those terms are defined in the Proxy
Statement), or (ii) August 1, 1995, and on January 1 of each year thereafter,
each non-employee director of the Company ("Director") shall be automatically
granted $10,000 worth of Common Shares, without par value, of the Company
("Voting Shares") subject to the transfer restrictions and risk of forfeiture
hereinafter described ("Restricted Shares").
RESOLVED, that the value of Voting Shares for the purposes hereof shall be
equal to the last reported trading price for the Voting Shares, and if no price
has been reported within the 30 days before any award, the value shall be equal
to the last reported trading price of the Class A Common Shares.
RESOLVED, that the aggregate number of Voting Shares that may be awarded as
Restricted Shares and released from substantial risk of forfeiture shall not
exceed 100,000 Voting Shares, which may be shares of original issuance or
treasury shares or a combination.
RESOLVED, that Restricted Shares held by a Director may not be sold or
otherwise disposed of until, and shall be forfeited if such Director ceases to
serve as a Director of the Company before, the restrictions lapse as provided
below.
RESOLVED, that the restrictions on each award of Restricted Shares shall
lapse when the Director has served continuously as a Director of the Company
for a period of three years after the award; PROVIDED, HOWEVER, that the
restrictions shall lapse earlier if the Director (1) dies or (2) completes the
term in which the award was received and is not elected to another term by the
shareholders, or (3) in the event of a change in control of the Company as set
forth in APPENDIX A to these resolutions.
RESOLVED, that Directors shall have all the rights of shareholders with
respect to such Restricted Shares, provided that such Restricted Shares,
together with any additional shares of the Company that a Director may
receive by virtue of any share dividend, merger, reorganization or other change
in capital structure, shall be subject to the restrictions set forth above.
RESOLVED, that the automatic awards of Restricted Shares herein provided for
may be referred to as "The Lincoln Non-Employee Directors' Restricted Stock
Plan" and shall continue, subject to availability of shares, until such
automatic awards are discontinued by resolution of this Board.
RESOLVED, that effectiveness of the foregoing resolutions shall be subject
to approval of this plan by the Company's shareholders, and such plan shall be
subject to Rule 16b-3 under the Securities Exchange Act of 1934 as in effect
prior to May 1, 1991 until otherwise determined by this Board or its
Compensation Committee.
<PAGE> 2
RESOLVED, that the plan as set forth above shall be subject to shareholder
approval at the 1995 annual meeting, and the notice and proxy material set
forth above shall be modified to include the foregoing proposal.
APPENDIX A
A "change in control" shall occur upon the happening of any of the following
events:
(a) The Company is merged or consolidated or reorganized into or with
another company or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such company or person
immediately after such transaction is held in the aggregate by the holders of
the then outstanding securities entitled to vote generally in election of the
directors of the Company ("Voting Stock") of the Company immediately prior to
such transaction;
(b) The Company sells or otherwise transfers all or substantially all
of its assets to any other company or other legal person, and as a result of
such sale or transfer less than a majority of the combined voting power of the
then-outstanding securities of such company or person immediately after such
sale or transfer is held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such sale or transfer; or
(c) Any person or group of persons (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 30% or more of the outstanding Voting
Stock, excluding (i) any person or group of persons who are officers, directors
or employees of the Company or any subsidiary as of the date hereof or are
related by blood or marriage to the descendants of James F. or John C. Lincoln,
including any trusts or similar arrangements for any of the foregoing and any
foundations established by any of the foregoing and (ii) any underwriter or
syndicate of underwriters acting on behalf of the Company in a public offering
of the Company's securities and any of their transferees.
<PAGE> 1
Exhibit 10(d)
THE LINCOLN ELECTRIC COMPANY
NON-EMPLOYEE DIRECTORS'
DEFERRED COMPENSATION PLAN
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
ARTICLE I. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III. PARTICIPATION AND DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.1. Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Initial Year of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Amount of Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.3. No Modification of Deferral
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV. DIRECTORS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.1. Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.2. Crediting of Deferred Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.3. Determination of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Determination of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.4. Adjustments to Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.5. Statement of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.6. Vesting of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V. FINANCING OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.1. Financing of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.2. Security for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.3. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VI. DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.1. Settlement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.2. Amount to Be Distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.3. In-Service Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.4. Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.5. Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.6. Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 8
Section 7.1. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 8
Section 7.2. Amendment, Termination and Withdrawal . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 8
Section 7.3. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 8
Section 7.4. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 9
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 9
Section 8.1. No Continuing Right as Director . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 9
Section 8.2. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 9
Section 8.3. Interests Not Transferable . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 9
Section 8.4. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 9
Section 8.5. Withholding of Taxes . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 10
</TABLE>
ii
<PAGE> 4
THE LINCOLN ELECTRIC COMPANY
NON-EMPLOYEE DIRECTORS'
DEFERRED COMPENSATION PLAN
The Lincoln Electric Company Non-Employee Directors' Deferred Compensation
Plan is made and executed as of the ___ day of May, 1995 and is effective as of
May 24, 1995.
ARTICLE I. PURPOSE
THE LINCOLN ELECTRIC COMPANY NON-EMPLOYEE DIRECTORS' DEFERRED COMPENSATION
PLAN is hereby established by The Lincoln Electric Company to allow directors
of the Corporation to defer a portion of their Directors' Fees. It is intended
that the Plan will aid in attracting and retaining Directors of exceptional
ability by providing this benefit. The terms and conditions of the Plan are
set forth below.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
Section 2.1. DEFINITIONS. Whenever the following terms are used in this
Plan they shall have the meanings specified below unless the context clearly
indicates to the contrary:
(a) "Account": The bookkeeping account maintained for each Director
showing his interest under the Plan.
(b) "Accounting Date": December 31 of each year and the last day of
any calendar quarter in which a Director's Settlement Date occurs.
(c) "Accounting Period": The period beginning on the day immediately
following an Accounting Date and ending on the next following Accounting
Date.
(d) "Administrator": The Board.
(e) "Annual Retainer": The annual cash retainer earned by a
Director for services as a Director of the Corporation.
(f) "Beneficiary": The person or persons (natural or otherwise),
within the meaning of Section 6.5, who are entitled to receive
distribution of the Director's Account balance in the event of the
Director's death.
(g) "Board": The Board of Directors of the Corporation.
<PAGE> 5
(h) "Corporation": The Lincoln Electric Company or any successor or
successors thereto.
(i) "Deferral Commitment": An agreement by a Director to have a
specified percentage or dollar amount of his Fees deferred under the Plan
for a specified period in the future.
(j) "Deferral Period": Means the Plan Year for which a Director
has elected to defer a portion of his Fees.
(k) "Director": An individual duly elected or chosen as a director
of the Corporation who is not also an employee of the Corporation or its
subsidiaries.
(l) "Effective Date": May 24, 1995.
(m) "Fees": The Annual Retainer and Other Compensation.
(n) "Other Compensation": The meeting and other cash fees earned
as a Director for services as a Director of the Corporation, other than the
Annual Retainer.
(o) "Participation Agreement": The Agreement submitted by a
Director to the Administrator with respect to one or more Deferral
Commitments.
(p) "Plan": The Plan set forth in this instrument as it may, from
time to time, be amended.
(q) "Plan Year": The 12-month period beginning January 1 through
December 31; provided that the first plan year shall begin on the Effective
Date and end on December 31, 1995.
(r) "Request": The meaning set forth in Section 5.3.
(s) "Settlement Date": The date on which a Director terminates as a
Director. Settlement Date shall also include with respect to any Deferral
Period the date prior or subsequent to termination as a Director selected
by a Director in a Participation Agreement for distribution of all or a
portion of the amounts deferred during such Deferral Period.
(t) "Trust": The meaning set forth in Section 5.2
Section 2.2. CONSTRUCTION. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary. The
words "hereof," "herein," "hereunder," and other similar compounds of
2
<PAGE> 6
the word "here" shall mean and refer to the entire Plan, and not to any
particular provision or Section.
ARTICLE III. PARTICIPATION AND DEFERRALS
Section 3.1. ELIGIBILITY AND PARTICIPATION.
(a) ELIGIBILITY. Eligibility to participate in the Plan for any
Deferral Period is limited to Directors.
(b) PARTICIPATION. A Director may elect to participate in the Plan
with respect to any deferral period by submitting a participation agreement
to the administrator by the last business day immediately preceding the
applicable deferral period.
(c) INITIAL YEAR OF PARTICIPATION. In the event that an individual
first becomes a Director during a Deferral Period and wishes to elect a
Deferral Commitment with respect to the Fees earned by and payable to the
individual during such Deferral Period, and with respect to the first Plan
Year, a Participation Agreement must be submitted to the Administrator no
later than 30 days following such individual's becoming a Director, or
following the beginning of such Plan Year, respectively. Any Deferral
Commitment elected in such Participation Agreement shall be effective only
with regard to Fees earned following the submission of the Participation
Agreement to the Administrator. If a Director does not submit a
Participation Agreement within such period of time, such individual will
not be eligible to participate in the Plan until the first day of a
Deferral Period subsequent to the Deferral Period in which the individual
became a Director.
(d) TERMINATION OF PARTICIPATION. Participation in the Plan shall
continue as long as the Director is eligible to receive benefits under the
Plan.
Section 3.2 AMOUNT OF DEFERRAL. With respect to each Plan Year, a Director
may elect to defer a specified dollar amount or percentage of his Fees. For
the first Plan Year, a Director may elect to defer all or any portion of his
Fees earned or payable after the later of the effective date of the
Participation Agreement or the date of filing the Participation Agreement with
the Administrator. A Director may change the dollar amount or percentage of
his Fees to be deferred by filing a written notice thereof with the
Administrator. Any such change shall be effective as of the first day of the
Plan Year immediately succeeding the Plan Year in which such notice is filed
with the Administrator.
3
<PAGE> 7
Section 3.3. NO MODIFICATION OF DEFERRAL COMMITMENTS. A Deferral
Commitment shall be irrevocable with respect to the Deferral Period for which
it is made.
ARTICLE IV. DIRECTORS' ACCOUNTS
Section 4.1. ESTABLISHMENT OF ACCOUNTS. The Corporation, through its
accounting records, shall establish an Account for each Director who elects to
participate in the Plan. In addition, the Corporation may establish one or
more subaccounts of a Director's Account, if the Corporation determines that
such subaccounts are necessary or appropriate in administering the Plan.
Section 4.2. CREDITING OF DEFERRED FEES. A Director's Fees that are
deferred pursuant to a Deferral Commitment shall be credited to the Director's
Account within 30 days following the date the corresponding non-deferred
portion of his Fees would have been paid to the Director. Any withholding of
taxes or other amounts with respect to any deferred Fees that is required by
state, federal or local law shall be withheld from the Director's non-deferred
Fees, or if none, then the Director's Deferred Commitment shall be reduced by
the amount of such withholding.
Section 4.3. DETERMINATION OF ACCOUNTS.
(a) DETERMINATION OF ACCOUNTS. The amount credited to each
Director's Account as of a particular date shall equal the deemed balance
of such Account as of such date. The balance in the Account shall equal
the amount credited pursuant to Section 4.2, and shall be adjusted in the
manner provided in Section 4.4.
(b) ACCOUNTING. The Corporation, through its accounting records,
shall maintain a separate and distinct record of the amount in each Account
as adjusted to reflect income, gains, losses, withdrawals and
distributions.
Section 4.4. ADJUSTMENTS TO ACCOUNTS.
(a) Each Director's Account shall be debited with the amount of any
distributions under the Plan to or on behalf of the Director or, in the
event of his death, his Beneficiary during the Accounting Period ending on
such Accounting Date.
(b) The Director's Account shall next be credited or debited, as the
case may be, with an income (loss) factor equal to an amount determined by
multiplying (i) the balance credited to the Director's Account as of the
immediately preceding Accounting Date (as adjusted pursuant to Section
4.4(a) for the current Accounting Date) by (ii) the
4
<PAGE> 8
rate of return for the Accounting Period ending on such Accounting Date on
deemed investments provided for in Section 5.3.
Section 4.5. STATEMENT OF ACCOUNTS. As soon as practicable after the end
of each Plan Year, a statement shall be furnished to each Director or, in the
event of his death, to his Beneficiary showing the status of his Account as of
the end of the Plan Year, any changes in his Account since the end of the
immediately preceding Plan Year, and such other information as the
Administrator shall determine.
Section 4.6. VESTING OF ACCOUNTS. Subject to Section 5.1, each Director
shall at all times have a nonforfeitable interest in his Account balance.
ARTICLE V. FINANCING OF BENEFITS
Section 5.1. FINANCING OF BENEFITS. Benefits payable under the Plan to a
Director or, in the event of his death, to his Beneficiary shall be paid by the
Corporation from its general assets. The payment of benefits under the Plan
represents an unfunded, unsecured obligation of the Corporation.
Notwithstanding the fact that the Directors' Accounts may be adjusted by an
amount that is measured by reference to the performance of any deemed
investments as provided in Section 5.3, no person entitled to payment under the
Plan shall have any claim, right, security interest or other interest in any
fund, trust, account, insurance contract or asset of the Corporation which may
be responsible for such payment.
Section 5.2. SECURITY FOR BENEFITS. Notwithstanding the provisions of
Section 5.1, nothing in this Plan shall preclude the Corporation from setting
aside amounts in trust (the "Trust") pursuant to one or more trust agreements
between a trustee and the Corporation. However, no Director or Beneficiary
shall have any security interest or claim in any assets or property of the
Corporation or the Trust and all funds contained in the Trust shall remain
subject to the claims of the Corporation's general creditors.
Section 5.3. INVESTMENTS. The Board may designate one or more separate
investment funds or vehicles, including, without limitation, certificates of
deposit, mutual funds, money market accounts or funds, limited partnerships, or
debt or equity securities, other than equity securities of the Corporation, in
which the amount credited to a Director's Account will be deemed to be
invested. Each Director shall file an investment preference request
("Request") to be effective as of the date of such Request with respect to the
amounts credited to his Account as of such date and amounts subsequently
credited to his Account. A Request will advise the Administrator as to the
Director's preference with respect to investment vehicles for all or some
5
<PAGE> 9
portion of the amounts credited to a Director's Account in specified multiples
of 10%. A Request may be changed prospectively by a Director only as of
January 1, April 1, July 1 and October 1 by giving the Administrator prior
written notice. The Administrator may, but is under no obligation to, deem the
amounts credited to a Director's Account to be invested in accordance with the
Request made by the Director, or the Board may, instead, in its sole
discretion, deem such Account to be invested in any deemed investment funds
selected by the Board. Earnings on any amounts deemed to have been invested in
any deemed investment fund shall be deemed to have been reinvested in such
fund.
ARTICLE VI. DISTRIBUTION OF BENEFITS
Section 6.1. SETTLEMENT DATE. A Director or, in the event of his death,
his Beneficiary shall be entitled to distribution of the balance of his
Account, as provided in this Article VI, following his Settlement Date or
Dates.
Section 6.2. AMOUNT TO BE DISTRIBUTED. The amount to which a Director or,
in the event of his death, his Beneficiary is entitled in accordance with the
following provisions of this Article shall be based on the Director's adjusted
account balance determined as of the Accounting Date coincident with or next
following his Settlement Date or Dates.
Section 6.3. IN-SERVICE DISTRIBUTION. A Director may elect to commence to
receive an in-service distribution of his deferred Fees for any Deferral Period
beginning at any time at least two years after the date such Fees otherwise
would have been first payable. A Director's election of an in-service
distribution shall be filed in writing with the Administrator at the same time
as is filed his election to participate as provided in Section 3.1. The
Director may elect to receive such Fees as an in-service distribution under one
of the forms provided in Section 6.4. Any benefits paid to the Director as an
in-service distribution shall reduce the Director's Account. In the event of a
Director's death, the balance of his Account shall be distributed to his
Beneficiary in a lump sum.
Section 6.4. FORM OF DISTRIBUTION. As soon as practicable after the end of
the Accounting Period in which a Director's Settlement Date occurs, but in no
event later than thirty days following the end of such Accounting Period, the
Corporation shall commence distribution or cause distribution to be commenced,
to the Director or, in the event of his death, to his Beneficiary, of the
balance of the Director's Account, as determined under Section 6.2, under one
of the forms provided in this Section. Notwithstanding the foregoing, if
elected by the Director, the distribution of all or a portion of the Director's
Account may commence at the beginning of the Plan Year next following his
Settlement Date.
6
<PAGE> 10
Distribution of a Director's Account with respect to any Deferral Period
shall be made in one of the following forms as elected by the Director:
(a) by payment in cash in a single lump sum;
(b) by payment in cash in not greater than ten (10) annual installments; or
(c) a combination of (a) and (b) above. The Director shall designate the
percentage payable under each option.
The Director's election of the form of distribution shall be made by written
notice filed with the Administrator at least 1 year prior to the Director's
voluntary termination as a Director. Any such election may be changed by the
Director at any time and from time to time without the consent of any other
person by filing a later signed written election with the Administrator;
provided that any election made less than 1 year prior to the Director's
voluntary termination as a Director shall not be valid, and in such case
payment shall be made in accordance with the Director's prior election.
The amount of each installment shall be equal to the quotient obtained by
dividing the Director's Account balance as of the date of such installment
payment by the number of installment payments remaining to be made to or in
respect of such Director at the time of calculation.
If a Director fails to make an election in a timely manner as provided in
this Section 6.4, distribution shall be made in cash in a lump sum.
Section 6.5. BENEFICIARY DESIGNATION. As used in the Plan the term
"Beneficiary" means:
(a) The last person designated as Beneficiary by the Director in a
written notice on a form prescribed by the Administrator;
(b) If there is no designated Beneficiary or if the person so
designated shall not survive the Director, such Director's spouse; or
(c) If no such designated Beneficiary and no such spouse is living upon
the death of a Director, or if all such persons die prior to the full
distribution of the Director's Account balance, then the legal
representative of the last survivor of the Director and such persons, or, if
the Administrator shall not receive notice of the appointment of any such
legal representative within one year after such death, the heirs-at-law of
such survivor (in the proportions in which they would inherit his intestate
personal
7
<PAGE> 11
property) shall be the Beneficiaries to whom the then remaining balance of
the Director's Account shall be distributed.
Any Beneficiary designation may be changed from time to time by like notice
similarly delivered. No notice given under this Section shall be effective
unless and until the Administrator actually receives such notice.
Section 6.6. FACILITY OF PAYMENT. Whenever and as often as any Director or
his Beneficiary entitled to payments hereunder shall be under a legal
disability or, in the sole judgment of the Administrator, shall otherwise be
unable to apply such payments to his own best interests and advantage, the
Administrator in the exercise of its discretion may direct all or any portion
of such payments to be made in any one or more of the following ways: (i)
directly to him; (ii) to his legal guardian or conservator; or (iii) to his
spouse or to any other person, to be expended for his benefit; and the decision
of the Administrator, shall in each case be final and binding upon all persons
in interest.
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION
Section 7.1. ADMINISTRATION. The Plan shall be administered by an
Administrator. The Administrator shall have such powers as may be necessary to
discharge its duties hereunder. The Administrator may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit,
and may from time to time consult with legal counsel who may be counsel to the
Corporation. The Administrator shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided under the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan. No member of the Administrator shall
act in respect of his own Account. All decisions and determinations by the
Administrator shall be final and binding on all parties. All decisions of the
Administrator shall be made by the vote of the majority, including actions in
writing taken without a meeting. All elections, notices and directions under
the Plan by a Director shall be made on such forms as the Administrator shall
prescribe.
Section 7.2. AMENDMENT, TERMINATION AND WITHDRAWAL. The Plan may be
amended from time to time or may be terminated at any time by the Board. No
amendment or termination of the Plan, however, may adversely affect the amount
or timing of payment of any person's benefits accrued under the Plan to the
date of amendment or termination without such person's written consent.
Section 7.3. SUCCESSORS. The Corporation shall require any successor
(whether direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or
8
<PAGE> 12
substantially all of the business and/or assets of the Corporation expressly to
assume and to agree to perform this Plan in the same manner and to the same
extent the Corporation would be required to perform if no such succession had
taken place. This Plan shall be binding upon and inure to the benefit of the
Corporation and any successor of or to the Corporation, including without
limitation any persons acquiring directly or indirectly all or substantially
all of the business and/or assets of the Corporation whether by sale, merger,
consolidation, reorganization or otherwise (and such successor shall thereafter
be deemed the "Corporation" for the purposes of this Plan), and the heirs,
beneficiaries, executors and administrators of each Director.
Section 7.4. EXPENSES. All expenses of the Plan shall be paid by the
Corporation from funds other than those deemed investments as provided in
Section 5.3, except that brokerage commissions and other transaction fees and
expenses relating to the investment of deemed assets and investment fees
attributable to commingled investment of such assets shall be paid from or
charged to such assets or earnings thereon.
ARTICLE VIII. MISCELLANEOUS
Section 8.1. NO CONTINUING RIGHT AS DIRECTOR. Neither the adoption or
operation of this Plan, nor any document describing or referring to this Plan,
or any part thereof, shall confer upon any Director any right to continue as a
Director of the Corporation or any subsidiary of the Corporation.
Section 8.2. APPLICABLE LAW. All questions arising in respect of the Plan,
including those pertaining to its validity, interpretation and administration,
shall be governed, controlled and determined in accordance with the applicable
provisions of federal law and, to the extent not preempted by federal law, the
internal substantive laws of the State of Ohio.
Section 8.3. INTERESTS NOT TRANSFERABLE. No person shall have any right to
commute, encumber, pledge or dispose of any interest herein or right to receive
payments hereunder, nor shall such interests or payments be subject to seizure,
attachment or garnishment for the payments of any debts, judgments, alimony or
separate maintenance obligations or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise, all payments and rights hereunder
being expressly declared to be nonassignable and nontransferable.
Section 8.4. SEVERABILITY. Each section, subsection and lesser section of
this Plan constitutes a separate and distinct undertaking, covenant and/or
provision hereof. Whenever possible, each provision of this Plan shall be
interpreted in such manner as to be effective and valid under applicable law.
In the event that any provision of this Plan shall finally be
9
<PAGE> 13
determined to be unlawful, such provision shall be deemed severed from this
Plan, but every other provision of this Plan shall remain in full force and
effect, and in substitution for any such provision held unlawful, there shall
be substituted a provision of similar import reflecting the original intention
of the parties hereto to the extent permissible under law.
Section 8.5. WITHHOLDING OF TAXES. The Corporation may withhold or cause
to be withheld from any amounts payable under this Plan all federal, state,
local and other taxes as shall be legally required.
IN WITNESS WHEREOF, The Lincoln Electric Company has caused this instrument
to be executed in its name as of the date first above written.
THE LINCOLN ELECTRIC COMPANY
By: __________________________
Its: __________________________
Attest:
____________________________
10
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<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 11,606
<SECURITIES> 0
<RECEIVABLES> 157,910
<ALLOWANCES> 4,178
<INVENTORY> 187,891
<CURRENT-ASSETS> 378,511
<PP&E> 475,809
<DEPRECIATION> 274,883
<TOTAL-ASSETS> 636,539
<CURRENT-LIABILITIES> 215,554
<BONDS> 165,577
<COMMON> 4,407
0
0
<OTHER-SE> 224,821
<TOTAL-LIABILITY-AND-EQUITY> 636,359
<SALES> 531,606
<TOTAL-REVENUES> 533,264
<CGS> 322,529
<TOTAL-COSTS> 322,529
<OTHER-EXPENSES> 148,381
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<INTEREST-EXPENSE> 7,536
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<EPS-PRIMARY> 1.52
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</TABLE>
