<PAGE> 1
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
(Mark One)
X Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of
- ---- 1934 (Fee Required)
For the fiscal year ended December 31, 1995
or
Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
- ---- of 1934 (Fee Required)
For the transition period from _____________________ to ______________________
Commission file number 0-1402
--------------------------------------------------------
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
The Lincoln Electric Company Employee
Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
The Lincoln Electric Company
22801 St. Clair Avenue
Cleveland, Ohio 44117
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
The Lincoln Electric Company
Employee Savings Plan
June 27, 1996
By: /s/ H. Jay Elliott
----------------------------
H. Jay Elliott
Senior Vice President
Chief Financial Officer and Treasurer
<PAGE> 2
Annual Report
THE LINCOLN ELECTRIC COMPANY
EMPLOYEE SAVINGS PLAN
PLAN SPONSOR AND ADMINISTRATOR
The Lincoln Electric Company
Cleveland, Ohio 44117
(216) 481-8100
Employer Identification Number: 34-0359955
December 31, 1995 and 1994
<PAGE> 3
Report of Independent Auditors
Plan Administrator
The Lincoln Electric Company
Employee Savings Plan
We have audited the accompanying statement of net assets available for
benefits, with fund information (modified cash basis) of The Lincoln Electric
Company Employee Savings Plan as of December 31, 1995 and 1994, and the related
statement of changes in net assets available for benefits, with fund
information (modified cash basis) for the year ended December 31, 1995. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note A, the financial statements referred to above were
prepared on a modified cash basis of accounting, which is a comprehensive basis
of accounting other than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in
all material respects, information regarding the Plan's net assets available
for benefits (modified cash basis) as of December 31, 1995 and 1994, and
changes therein (modified cash basis) for the year ended December 31, 1995, on
the basis of accounting described in Note A.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedules
(modified cash basis) of assets held for investment purposes as of December 31,
1995, and reportable transactions for the year then ended, are presented for
purposes of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974, and are not a required part of the financial statements. The fund
information in the statements of net assets available for benefits (modified
cash basis) and the statement of changes in net assets available for benefits
(modified cash basis) is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedules and fund
information (modified cash basis) have been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
June 7, 1996 Ernst & Young LLP
Cleveland, Ohio
1
<PAGE> 4
The Lincoln Electric Company
Employee Savings Plan
Statement of Net Assets Available
for Benefits, with Fund Information
December 31, 1995
<TABLE>
<CAPTION>
Fidelity
Victory U.S. Fidelity Advisors
Government The Bond Advisors Equity Victory Templeton
Obligations Fund of Income & Portfolio Stock Index Foreign
Fund America Growth Fund Growth Fund Fund Fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Mutual funds $ 136,774 $1,920,942 $ 3,745,918 $ 1,380,276 $ 2,761,917
Money market fund $ 2,316,043 73 1,858
The Lincoln Electric Company
Common Shares
The Lincoln Electric Company
Class A Common Shares
Participant loans receivable
-------------------------------------------------------------------------------------
Total investments 2,316,043 136,847 1,920,942 3,745,918 1,382,134 2,761,917
Investment income receivable 790 70 27,286 5,662 14
-------------------------------------------------------------------------------------
Total assets 2,316,833 136,917 1,948,228 3,751,580 1,382,134 2,761,931
LIABILITIES
Accrued purchase of investments 1,012 27,280 5,648
Other payables--net 1,855
-------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,316,833 $ 135,905 $1,920,948 $ 3,745,932 $ 1,380,279 $ 2,761,931
======================================================================================
</TABLE>
<TABLE>
<CAPTION>
The
The Lincoln
Lincoln Electric
Electric Non-Voting
Voting Stock Stock Loan
Fund Fund Fund Total
---------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Mutual funds $ 9,945,827
Money market fund $ 2,887 $ 9,203 2,330,064
The Lincoln Electric Company
Common Shares 74,100 74,100
The Lincoln Electric Company
Class A Common Shares 38,496 38,496
Participant loans receivable $ 65,927 65,927
---------------------------------------------------
Total investments 76,987 47,699 65,927 12,454,414
Investment income receivable 389 1,532 35,743
---------------------------------------------------
Total assets 77,376 49,231 65,927 12,490,157
LIABILITIES
Accrued purchase of investments 33,940
Other payables--net 1,855
---------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 77,376 $ 49,231 $ 65,927 $ 12,454,362
===================================================
</TABLE>
See notes to financial statements.
2
<PAGE> 5
The Lincoln Electric Company
Employee Savings Plan
Statement of Net Assets Available
for Benefits, with Fund Information
December 31, 1994
<TABLE>
<CAPTION>
Fidelity
Advisors
Victory Fidelity Equity
U.S. Treasury Advisors Victory Portfolio
Money Society EB Income & Stock Index Growth
Market Fund MaGIC Fund Growth Fund Fund Fund
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Mutual funds $ 662,675 $ 685,767 $ 356,900 $ 1,030,436
Money market fund $417,252
Investment income receivable 1,626 736 875 454 1,306
--------------------------------------------------------------------------
418,878 663,411 686,642 357,354 1,031,742
LIABILITIES
Accrued purchase of investments 45 193
--------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $418,833 $ 663,218 $ 686,642 $ 357,354 $ 1,031,742
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
Templeton
Foreign Fund Total
---------------------------
<S> <C> <C>
ASSETS
Investments:
Mutual funds $ 1,273,493 $ 4,009,271
Money market fund 417,252
Investment income receivable 7,239 12,236
---------------------------
1,280,732 4,438,759
LIABILITIES
Accrued purchase of investments 5,617 5,855
---------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 1,275,115 $ 4,432,904
===========================
</TABLE>
See notes to financial statements.
3
<PAGE> 6
The Lincoln Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available
for Benefits, with Fund Information
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Fidelity
Victory Fidelity Advisors
U.S. Advisors Equity
Government The Bond Income & Portfolio Victory Templeton
Society EB Obligations Fund of Growth Growth Stock Index Foreign
MaGIC Fund Fund America Fund Fund Fund Fund
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS
Contributions-employees $ 460,511 $1,013,894 $ 57,897 $ 1,154,670 $1,912,361 $ 708,543 $ 1,583,408
Investment income 26,705 70 53,207 5,419 18,052 56,055
-----------------------------------------------------------------------------------------
Total additions 460,511 1,040,599 57,967 1,207,877 1,917,780 726,595 1,639,463
DEDUCTIONS
Benefits paid to participants 6,286 9,119 10,517 13,764 2,018 16,643
Fees and expenses 2,408
-----------------------------------------------------------------------------------------
Total deductions 8,694 9,119 - 10,517 13,764 2,018 16,643
Net realized and unrealized
appreciation (depreciation)
of investments 54,972 8,270 849 87,909 528,408 165,655 133,317
Net investment transfers (1,170,007) 858,250 77,089 (50,963) 281,766 132,693 (269,321)
-----------------------------------------------------------------------------------------
Net additions (deductions) (663,218) 1,898,000 135,905 1,234,306 2,714,190 1,022,925 1,486,816
Net assets available for benefits at
beginning of the year 663,218 418,833 - 686,642 1,031,742 357,354 1,275,115
-----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS
AT END OF THE YEAR $ - $2,316,833 $ 135,905 $ 1,920,948 $3,745,932 $ 1,380,279 $ 2,761,931
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
The
The Lincoln
Lincoln Electric
Electric Non-Voting
Voting Stock Stock Loan
Fund Fund Fund Total
----------------------------------------------
<S> <C> <C> <C> <C>
ADDITIONS
Contributions-employees $31,908 $ 12,945 $ 6,936,137
Investment income 429 1,514 $ 2,803 164,254
----------------------------------------------
Total additions 32,337 14,459 2,803 7,100,391
DEDUCTIONS
Benefits paid to participants 58,347
Fees and expenses 7 15 2,430
----------------------------------------------
Total deductions 7 15 - 60,777
Net realized and unrealized
appreciation (depreciation)
of investments 4,039 (1,575) 981,844
Net investment transfers 41,007 36,362 63,124 0
----------------------------------------------
Net additions (deductions) 77,376 49,231 65,927 8,021,458
Net assets available for benefits at
beginning of the year - - - 4,432,904
----------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS
AT END OF THE YEAR $77,376 $ 49,231 $ 65,927 $ 12,454,362
===============================================
</TABLE>
See notes to financial statements.
4
<PAGE> 7
The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements
December 31, 1995
A. SIGNIFICANT ACCOUNTING POLICIES
The accounting records of The Lincoln Electric Company Employee Savings Plan
(the Plan) are maintained on the modified cash basis of accounting. Employee
contributions are recorded when received by Key Trust Company of Ohio, N.A.
(the Trustee), whereas investment income and plan liabilities are recorded when
earned and incurred.
Investment assets of each fund are stated at market value on the last business
day of the year as determined by the Trustee.
Proceeds from sales of securities, less market value at the beginning of the
year or cost for purchases during the year, and net unrealized appreciation
(depreciation) based on market price fluctuations during the year or since date
of acquisition, are included as net realized and unrealized appreciation
(depreciation) of investments for the year in the Statement of Changes in Net
Assets Available for Benefits.
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions in
certain circumstances that affect amounts reported in the accompanying
financial statements and notes. Actual results could differ from these
estimates.
B. DESCRIPTION OF THE PLAN
The Lincoln Electric Company (the Company) established the Plan which became
effective November 1, 1994, to cover certain employees of the Company as
defined by the Plan, as amended. The Plan provides that employees will be
eligible for participation in the Plan following one year of service with the
Company.
5
<PAGE> 8
The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements -- Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
Eligible employees may make pre-tax contributions to the Plan of 1% or more of
their regular and/or bonus pay up to the maximum amount as set by the Internal
Revenue Service ($9,240 in 1995 and 1994). Employee contributions are fully
vested when made. A participant for whose account a contribution is made shall
have the right to direct the Trustee to invest such contribution in any one
fund or in a combination of funds in 5% increments. The investment options are
as follows:
<TABLE>
<CAPTION>
Fund Description Sponsor
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Victory U.S. Government
Obligations Fund Money Market Victory Broker Dealer Services
The Bond Fund of America Bonds American Funds Group
Fidelity Advisors Income &
Growth Fund Growth Stocks Fidelity Investment Co.
Fidelity Advisors Equity Preferred and Common Fidelity Investment Co.
Portfolio Growth Fund Stocks
Victory Stock Index Fund S&P 500 Index Victory Broker Dealer Services
Templeton Foreign Fund International Fund Templeton Investment Co.
The Lincoln Electric The Lincoln Electric The Lincoln Electric
Voting Stock Fund Company Common Shares Company
The Lincoln Electric The Lincoln Electric The Lincoln Electric
Non-voting Stock Fund Company Class A Common Company
Shares
</TABLE>
Effective June 2, 1995, The Victory U.S. Treasury Money Market Fund was
consolidated into the Victory U.S. Government Obligations Fund. The two funds
are similar in their investment strategies. Effective December 1, 1995, The
Bond Fund of America was offered as a new investment option. Also effective
December 1, 1995 the Company added two Company stock funds as investment
options: The Lincoln Electric Voting Stock Fund and The Lincoln Electric
Non-Voting Stock Fund.
6
<PAGE> 9
The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements -- Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
The Company, at its discretion, may make a matching contribution, profit
sharing contribution or qualified nonelective contribution for any plan year to
be made in cash or Company stock. No Company contributions were made for 1995
or 1994.
During 1995, the Plan was amended effective as of November 1, 1994, to state
that all costs and expenses incurred in connection with the administration of
the Plan and Trust shall be paid from the trust fund; unless the Company elects
to pay all or part of such expenses. The Company elected to pay certain
administrative costs of the Plan in 1995 and 1994.
Participants may receive the value of their account in a single sum payment or
in ten or fewer annual installment payments following separation from the
Company, whether by retirement, disability or otherwise except that if the full
value of a participant's account is $3,500 or less, or if the participant dies
and his/her account is payable to his/her beneficiary, such account balance
will be paid in a single sum payment. If the value of a participant's account
is more than $3,500 the participant may elect to defer the payment of his/her
account until they reach age 60. Participants who leave the Company may
withdraw their money at any time. Withdrawal must begin when the participants
attain the age of 70 1/2. Effective October 1, 1995, a participant or
beneficiary may elect to receive that portion of their distribution which is
attributable to their interest in the Company Stock Funds in the form of whole
shares of Company stock with any fractional shares of Company stock in cash.
Active employees are eligible to borrow up to 50% of their vested account with
a minimum borrowing of $1,000 up to a maximum of $50,000. The loan may be paid
back over any number of months, up to five years. The interest rate on
participant loans is determined by the Trustee. The interest rate on loans
outstanding at December 31, 1995 ranged from 8.5% to 8.9%. There were no
loans outstanding at December 31, 1994.
Although the Company has not expressed an intent to do so, it has the right to
amend, modify, suspend or terminate the Plan at any time. No amendment,
modification, suspension or termination of the Plan shall have the effect of
providing that any amounts then held under the Plan may be used or diverted to
any purpose other than for the exclusive benefit of the participants or their
beneficiaries.
Information about the Plan is contained in the Plan Document, which is
available from the Company upon request.
7
<PAGE> 10
The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements -- Continued
C. INVESTMENTS
The Trustee of the Plan holds the Plan's investment assets and executes
transactions.
The fair value of investments that represent 5% or more of the Plan's net
assets available for plan benefits at December 31, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------------
<S> <C> <C>
Victory U.S. Government Obligations Fund $2,316,043
Fidelity Advisors Income & Growth Fund 1,920,942 $ 685,767
Fidelity Advisors Equity Portfolio Growth Fund 3,745,918 1,030,436
Victory Stock Index Fund 1,380,276 356,900
Templeton Foreign Fund 2,761,917 1,273,493
Victory U.S. Treasury Money Market Fund 417,252
Society EB MaGIC Fund 662,675
</TABLE>
D. INCOME TAX STATUS
The Internal Revenue Service ruled that the Plan qualifies under Section 401(a)
of the Internal Revenue Code (IRC) and, therefore, the related trust is not
subject to tax under present income tax law. Once qualified, the Plan is
required to operate in conformity with the IRC to maintain its qualification.
The Company is not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status. The tax
exempt status of the Plan does not apply to the taxability of distributions to
participants under the Plan.
E. TRANSACTIONS WITH PARTIES-IN-INTEREST
Party-in-interest transactions included the investment in the special funds of
the Trustee and the payment of administrative expenses. Such transactions are
exempt from being prohibited transactions.
At December 31, 1995, the Plan held 2,964 Common Shares and 1,604 Class A
Common Shares of The Lincoln Electric Company stock with a fair value of
$74,100 and $38,496, respectively.
8
<PAGE> 11
The Lincoln Electric Company Employee Savings Plan
Form 5500, Item 27(a)--Schedule of Assets Held for Investment Purposes
December 31, 1995
<TABLE>
<CAPTION>
Description of Historical Current
Identity of Issue Investment Cost Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Victory U.S. Government
Obligations Fund 230,640.232 units $ 2,307,955 $ 2,316,043
The Bond Fund of America 9,854.093 units 135,923 136,774
Fidelity Advisors Income & Growth Fund 122,275.100 units 1,839,693 1,920,942
Fidelity Advisors Equity Portfolio
Growth Fund 99,864.518 units 3,376,809 3,745,918
Victory Stock Index Fund 106,420.65 units 1,238,325 1,380,276
Templeton Foreign Fund 300,862.429 units 2,729,359 2,761,917
Key Trust Company of Ohio*
N.A.--Employee Benefits
Money Market Fund 14,021.30 units 14,021 14,021
The Lincoln Electric Company* 2,964 Common Shares 70,061 74,100
The Lincoln Electric Company* 1,604 Class A 38,776 38,496
Common Shares
Participant Loans 8.5% to 8.9%; variable
maturities 65,927 65,927
---------------------------------
$ 11,816,849 $ 12,454,414
=================================
</TABLE>
*Indicates party-in-interest to the Plan
9
<PAGE> 12
<TABLE>
The Lincoln Electric Company Employee Savings Plan
Form 5500, Item 27(d)--Schedule of Reportable Transactions
Year Ended December 31, 1995
<CAPTION>
Net
Purchase Selling Cost of Current Gain
Description of Asset Price Price Asset Value (Loss)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
Key Trust Company of Ohio, N.A. --
Employee Benefits Money
Market Fund $2,228,583 $2,228,583 $2,228,583
$2,214,562 2,214,562 2,214,562
Fidelity Advisors Income &
Growth Fund 1,249,834 1,249,834 1,249,834
Victory Stock Index Fund 925,840 925,840 925,840
Fidelity Advisors Equity Portfolio
Growth Fund 2,253,364 2,253,364 2,253,364
Templeton Foreign Fund 1,622,687 1,622,687 1,622,687
267,579 259,843 267,579 $ 7,736
Victory U.S. Government
Obligations Fund 3,687,642 3,687,642 3,687,642
1,910,202 1,910,020 1,910,202 182
Society EB MaGIC Fund 1,507,162 1,507,162 1,507,162
2,224,809 2,167,302 2,224,809 57,507
</TABLE>
There were no category (i), (ii), or (iv) reportable transactions during the
year ended December 31, 1995.
10
<PAGE> 1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-64189) pertaining to The Lincoln Electric Company Employee
Savings Plan of our report dated June 7, 1996, with respect to the financial
statements and schedules of The Lincoln Electric Company Employee Savings Plan
included in this Annual Report (Form 11-K) for the year ended December 31,
1995.
Ernst & Young LLP
Cleveland, Ohio
June 27, 1996
11
