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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
For the fiscal year ended December 31, 1999
OR
Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
----- of 1934
For the transition period from to
---------------------------- -------------------
Commission file number 0-1402
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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:
Lincoln Electric Holdings, Inc.
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199
SIGNATURES
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
By: /S/ H. JAY ELLIOTT
H. Jay Elliott
Senior Vice President,
Chief Financial Officer
and Treasurer
Date: June 26, 2000
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FINANCIAL STATEMENTS AND SCHEDULE
The Lincoln Electric Company Employees Savings Plan
December 31, 1999 and 1998
PLAN SPONSOR AND ADMINISTRATOR
The Lincoln Electric Company
Cleveland, Ohio 44117
(216) 481-8100
Employer Identification Number: 34-0359955
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Report of Independent Auditors
Plan Administrator
The Lincoln Electric Company
Employee Savings Plan
We have audited the accompanying statements of net assets available for benefits
(modified cash basis) of The Lincoln Electric Company Employee Savings Plan as
of December 31, 1999 and 1998, and the related statement of changes in net
assets available for benefits (modified cash basis) for the year ended December
31, 1999. 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 auditing standards generally accepted
in the United States. 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 B, the financial statements and supplemental schedule were
prepared on a modified cash basis of accounting, which is a comprehensive basis
of accounting other than accounting principles generally accepted in the United
States.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the Plan's net assets available for benefits (modified
cash basis) as of December 31, 1999 and 1998, and changes therein (modified
cash basis) for the year ended December 31, 1999, on the basis of accounting
described in Note B.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedule
(modified cash basis) of assets held for investment purposes at end of year as
of December 31, 1999 is presented for purpose of additional analysis and is not
a required part of the financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule (modified cash basis) has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
June 14, 2000
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The Lincoln Electric Company
Employee Savings Plan
Statements of Net Assets Available for Benefits
(Modified Cash Basis)
DECEMBER 31
1999 1998
------------ ------------
ASSETS
Investments $114,326,612 $ 91,363,032
Receivables:
Investment income receivable 239,966 201,403
Pending sales of investments
and other receivables 128,071 11,818
------------ ------------
368,037 213,221
------------ ------------
Total assets 114,694,649 91,576,253
LIABILITIES
Accrued purchases of investments
and other payables 341,605 118,054
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $114,353,044 $ 91,458,199
============ ============
See notes to financial statements (modified cash basis).
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The Lincoln Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
(Modified Cash Basis)
Year Ended December 31, 1999
Additions:
Investment income:
Net appreciation in fair value of investments $ 8,260,886
Interest and dividends 4,898,889
Contributions:
Participants 10,236,539
Employer 3,099,717
------------
Total additions 26,496,031
Deductions:
Benefits paid directly to participants 3,601,186
------------
Net increase 22,894,845
Net assets available for benefits, at beginning of year 91,458,199
------------
NET ASSETS AVAILABLE FOR BENEFITS, AT END OF YEAR $114,353,044
============
See notes to financial statements (modified cash basis).
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The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements (Modified Cash Basis)
December 31, 1999
NOTE A--DESCRIPTION OF THE PLAN
The following description of The Lincoln Electric Company Employee Savings Plan
(the Plan) provides only general information. Participants should refer to the
Summary Plan Description for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan covering certain employees of Lincoln
Electric Holdings, Inc. and its subsidiaries (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 and
its subsidiaries. The Plan provides a Financial Security Program (FSP) feature
to certain eligible participants who made an irrevocable election to
participate in the program and to all eligible participants who were hired on
or after November 1, 1997. Participants in the FSP program receive annually a
Company contribution to the Plan of 2% of their base pay. The amount of the FSP
contribution was $1,503,225 and $1,277,052 for 1999 and 1998, respectively. FSP
contributions are invested in the same manner as participant contributions. The
Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974.
CONTRIBUTIONS
Each year, participants may make pre-tax contributions to the Plan of 1% or more
(in whole percentages) of their regular and/or bonus pay up to the maximum
amount as set by the Internal Revenue Service ($10,000 in 1999 and 1998).
Participants are immediately vested in their contributions plus actual earnings
thereon. A participant for whose account a contribution is made shall have the
right to direct Key Trust Company of Ohio, N.A. (the Trustee) to invest such
contribution in any one fund or in a combination of funds in 5% increments.
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The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements (Modified Cash Basis)--Continued
NOTE A--DESCRIPTION OF THE PLAN--CONTINUED
The Company contributes 25% of the first 6% of compensation contributed by the
participant to the Plan. Matching contributions are made monthly and are 100%
vested after an employee has attained three years of service.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's contributions and (b) Plan earnings, and is
charged with an allocation of certain administrative expenses. Allocations are
based on participant earnings or accounts balances, as defined. Forfeited
balances of terminated participants' nonvested accounts are used to reduce
future Company contributions to the Plan. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's account.
PARTICIPANT LOANS
Active participants may borrow from their fund accounts a minimum of $1,000 up
to a maximum equal to the lesser of $50,000 or 50% of their vested account
balance. Loan terms range from one to five years, or up to 15 years for the
purchase of a primary residence. The loans are secured by the balance in the
participant's account and bear interest at a rate computed as the prime rate in
effect at the loan origination date plus 1%, as determined by the Trustee.
Principal and interest is paid ratably through payroll deductions.
PAYMENT OF BENEFITS
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 $5,000 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. Participants who leave the Company may withdraw
their money at any time. Withdrawal must begin no later than April 1 of the
calendar year following the later of the calendar year in which age 70-1/2 is
attained or the calendar year in which the participant is terminated. A
participant or beneficiary may elect to receive that portion of their
distribution which is attributable to their interest in the Company Common Stock
Fund in the form of whole shares of Company stock with any fractional shares of
Company stock in cash.
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The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements (Modified Cash Basis)--Continued
NOTE A--DESCRIPTION OF THE PLAN--CONTINUED
PLAN TERMINATION
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. Upon termination of
the Plan, the rights to benefits accrued by participants or their beneficiaries,
to the extent that such benefits are funded or credited to participants'
accounts, shall be nonforfeitable. 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.
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting records of the Plan are maintained on the modified cash basis of
accounting, which is a comprehensive basis of accounting other than accounting
principles generally accepted in the United States. Employee contributions are
recorded when received by the Trustee, whereas investment income and plan
liabilities are recorded when earned and incurred, respectively.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. The units of registered
investment companies are valued at quoted market prices, which represent the net
asset values of units held by the Plan at year-end. The common shares of the
Company are valued at the last reported sales price on the last business day of
the plan year. The participant loans are valued at their outstanding balances,
which approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
that affect amounts reported in the accompanying financial statements and notes.
Actual results could differ from these estimates.
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The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements (Modified Cash Basis)--Continued
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
ADMINISTRATIVE EXPENSES
All costs and expenses incurred in connection with the administration of the
Plan and trust are paid from the trust fund unless the Company elects to pay all
or part of such expenses. The Company elected to pay all administrative costs of
the Plan in 1999 and 1998.
RECLASSIFICATION
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
NOTE C--INVESTMENTS
During 1999, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
NET REALIZED
AND UNREALIZED
APPRECIATION
(DEPRECIATION) IN
FAIR VALUE OF
INVESTMENTS
-----------------------
Common/Collective trusts $ 365,905
Units of registered investment
companies 10,417,126
Common stock (2,522,145)
-----------------------
$ 8,260,886
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The Lincoln Electric Company Employee Savings Plan
Notes to Financial Statements (Modified Cash Basis)--Continued
NOTE C--INVESTMENTS--CONTINUED
The fair value of investments that represent 5% or more of the Plan's net assets
available for benefits at December 31, 1999 and 1998, are as follows:
1999 1998
---------------------------
Key Prism Victory U.S. Government
Obligations Fund $ 6,708,786 $ 5,426,314
Fidelity Advisors Balanced Fund 8,212,245 7,173,946
Fidelity Advisors Equity Growth Fund 28,114,676 17,317,920
Key Prism Victory Stock Index Fund 14,573,964 10,627,681
Templeton Foreign Fund 8,822,423 5,773,783
Lincoln Electric Holdings, Inc. Common Shares 30,782,029 36,994,696
NOTE D--INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated March 22, 1996, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from
taxation. Once qualified, the Plan is required to operate in conformity with the
IRC to maintain its qualification. The Plan Administrator believes the Plan is
being operated in compliance with the applicable requirements of the IRC and,
therefore, believes that the Plan is qualified and the related trust is tax
exempt.
NOTE E--TRANSACTIONS WITH PARTIES-IN-INTEREST
Party-in-interest transactions included the investment in the proprietary funds
of the Trustee and the payment of administrative expenses. Such transactions are
exempt from being prohibited transactions.
At December 31, 1999, the Plan held 1,492,462 Common Shares of Lincoln Electric
Holdings, Inc. with a market value of $30,782,029. For the year ended December
31, 1999, the Plan received dividends on Lincoln Electric Holdings, Inc. Common
Shares of $761,509. At December 31, 1998, the Plan held 1,662,683 Common Shares
of Lincoln Electric Holdings, Inc. with a market value of $36,994,696.
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The Lincoln Electric Company Employee Savings Plan
EIN 34-0359955 Plan 005
Form 5500, Schedule H, Line 4i--Schedule of Assets
Held for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
Description of
Investment,
including
Maturity
Date, Rate of
Interest, Par or Current
Identity of Issue Maturity Value Value
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common/Collective trusts:
Key Prism Victory U.S. Government
Obligations Fund* 551,478 units $ 6,708,786
Key Employee Benefit Prism MaGIC Fund* 187,484 units 2,550,105
Key Trust Company of Ohio
N.A.--Employee Benefits
Money Market Fund* 674,171 units 674,171
--------------------
9,933,062
Units of registered investment companies:
Bond Fund of America 106,864 units 1,387,095
Fidelity Advisors Balanced Fund 449,986 units 8,212,245
Fidelity Advisors Equity Growth Fund 392,608 units 28,114,676
Key Prism Victory Stock Index Fund* 596,560 units 14,573,964
Templeton Foreign Fund 786,312 units 8,822,423
The Franklin Small Cap Growth Fund 106,023 units 4,678,793
Income Fund of America 55,003 units 865,750
American Washington Mutual
Investors Fund 41,452 units 1,225,317
American EuroPacific Growth Fund 39,556 units 1,687,467
Neuberger & Berman Partners Assets Fund 29,996 units 462,539
Neuberger & Berman Genesis Assets Fund 18,441 units 242,865
--------------------
70,273,134
Common Stock:
Lincoln Electric Holdings, Inc.* 1,492,462
common shares 30,782,029
Participant loans* 8.75% to 10% variable
maturities 3,338,387
--------------------
$ 114,326,612
====================
</TABLE>
* Indicates party-in-interest to the Plan
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