Lincoln Electric (LECO) 8-K Lincoln Electric Reports Record 2007 Third Quarter Financial Results

Exhibit 99.1 Contact: Roy L. Morrow (216) 383-4893
Roy_Morrow@lincolnelectric.com

LINCOLN ELECTRIC REPORTS RECORD
2007 THIRD QUARTER FINANCIAL RESULTS

Three Months Ended September 30, 2007

• Sales increased 14.1% to $564.8 million

• Operating income increased 13.3%

• Excluding non-recurring items in 2006, operating income increased 12.1%

• Net income increased 14.0% to $50.0 million

• Excluding non-recurring items in 2006, adjusted net income increased 12.3% to $50.0 million

• Diluted Earnings Per Share (EPS) were $1.15 vs. $1.02, an increase of 12.7%

• Excluding non-recurring items in 2006, Diluted EPS was $1.15 vs. $1.03 an increase of 11.7%

• Net cash provided by operating activities was $96.7 million

Nine Months Ended September 30, 2007

• Sales increased 16.0% to $1.70 billion

• Operating income increased 21.6%

• Excluding non-recurring items, operating income increased 19.7%

• Net income increased 24.3% to $153.2 million

• Excluding non-recurring items, adjusted net income increased 21.7% to $153.6 million

• Diluted EPS was $3.53 vs. $2.87, an increase of 23.0%

• Excluding non-recurring items, Diluted EPS was $3.54 vs. $2.94, an increase of 20.4%

• Net cash provided by operating activities was $204.1 million

          CLEVELAND, Ohio, U.S.A., October 25, 2007 — Lincoln Electric Holdings, Inc. (the “Company”) (NASDAQ: LECO) today reported that 2007 third quarter net income increased 14.0% to $50.0 million, or $1.15 per diluted share, on sales of $564.8 million, an increase of 14.1%. Net income in the comparable period of 2006 was $43.9 million, or $1.02 per diluted share, on net sales of $495.1 million. Operating income for the 2007 third quarter increased 13.3% to $67.6 million from $59.7 million in the comparable 2006 period. Net income for the 2006 third quarter includes charges of $0.7 million ($0.7 million after-tax, or $0.01 per diluted share) related to European rationalization actions. Excluding non-recurring items, adjusted net income increased 12.3% to $50.0 million, or $1.15 per diluted share in 2007 compared to $44.5 million or $1.03 per diluted share in 2006. The 2007 third quarter effective tax rate was 28.7% compared with 28.9% in 2006.

          “We had another strong quarter of overall sales, profits and cash flow. These positive results have been achieved despite challenges in several key market and geographic segments,” said John M. Stropki, Chairman and Chief Executive Officer. “We continue to focus on strategically strengthening our broad global manufacturing platform and product line. I am very pleased with the continued impact of supply chain improvements which resulted in record levels of operating cash flows.”

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Lincoln Electric Reports Record 2007 Third Quarter Financial Results

          Sales for the Company’s North American operations were $346.7 million in the quarter versus $330.4 million in the comparable quarter last year, an increase of 4.9%. U.S. export sales in the quarter increased 19.6% to $50.6 million from $42.3 million in 2006.

          Sales at Lincoln subsidiaries outside North America increased to $218.1 million in the third quarter, compared with $164.7 million in the year ago quarter. In local currencies, international subsidiaries’ sales increased 19.2%.

          Net income for the first nine months of 2007 increased 24.3% to $153.2 million, or $3.53 per diluted share. This compares with net income of $123.2 million in the same period last year, or $2.87 per diluted share. Operating income for the nine month period increased 21.6% to $211.3 million from $173.7 million in the 2006 period. Net income for the first nine months of 2007 and 2006 includes non-recurring charges related to European rationalization actions of $0.4 million ($0.4 million after-tax, or $0.01 per diluted share) and $3.0 million ($3.0 million after-tax, or $0.07 per diluted share), respectively. Excluding non-recurring items, adjusted net income increased 21.7% to $153.6 million, or $3.54 per diluted share in 2007 compared to $126.2 million, or $2.94 per diluted share in 2006.

          Sales in the first nine months of 2007 increased 16.0%, to $1.70 billion from $1.47 billion in the 2006 comparable period. The Company’s North American operations had sales of $1.06 billion in 2007, compared with $986.3 million for the same period in 2006, an increase of 7.1%. U.S. export sales increased 31.7% to $148.2 million, compared with $112.5 million in the comparable 2006 period. Lincoln operations outside of North America had sales of $644.2 million, an increase of 34.3% over prior year sales of $479.7 million. In local currencies, sales for the Company’s international operations increased 20.6%.

          Net cash provided by operating activities was $96.7 million and $204.1 million for the three month and nine month periods ending September 30, 2007, respectively, compared with $47.8 million and $105.1 million for the comparable periods of 2006. During 2007, the Company repaid $40.0 million of outstanding debt under its Senior Unsecured Notes and paid $28.3 million in dividends. The Company’s Board of Directors declared a quarterly cash dividend of $0.22, which was paid on October 15, 2007 to holders of record as of September 28, 2007.

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Lincoln Electric Reports Record 2007 Third Quarter Financial Results

          Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc-welding systems, plasma and oxyfuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in Cleveland, Ohio, Lincoln has 35 manufacturing locations, including operations, manufacturing alliances and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric, its products and services, visit the Company’s Website athttp://www.lincolnelectric.com.

          The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: the effectiveness of operating initiatives; currency exchange and interest rates; adverse outcome of pending or potential litigation; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of international terrorism and hostilities on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

          A conference call to discuss third quarter 2007 results is scheduled for today, Thursday, October 25, 2007 at 9:30 a.m. Eastern Time. An audio webcast of the call is accessible through the Investor page on the Company’s Website at http://www.lincolnelectric.com.

#2007-1025#

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)

Consolidated Statements of Income

	Three Months Ended September 30,												Fav (Unfav) to Prior Year
	2007			% of Sales			2006			% of Sales			$			%
Net sales	$	564,824			100.0	%	$	495,137			100.0	%	$	69,687			14.1	%
Cost of goods sold		405,083			71.7	%		353,800			71.5	%		(51,283	)		(14.5	%)
Gross profit		159,741			28.3	%		141,337			28.5	%		18,404			13.0	%
Selling, general & administrative expenses		92,140			16.3	%		81,019			16.4	%		(11,121	)		(13.7	%)
Rationalization charges		—			0.0	%		665			0.1	%		665			100.0	%
Operating income		67,601			12.0	%		59,653			12.0	%		7,948			13.3	%
Interest income		2,290			0.4	%		1,607			0.3	%		683			42.5	%
Equity earnings in affiliates		2,263			0.4	%		2,450			0.5	%		(187	)		(7.6	%)
Other income		819			0.1	%		436			0.1	%		383			87.8	%
Interest expense		(2,866	)		(0.5	%)		(2,504	)		(0.5	%)		(362	)		(14.5	%)
Income before income taxes		70,107			12.4	%		61,642			12.4	%		8,465			13.7	%
Income taxes		20,129			3.6	%		17,787			3.5	%		(2,342	)		(13.2	%)
Effective tax rate		28.7	%					28.9	%					0.2	%
Net income(1)	$	49,978			8.8	%	$	43,855			8.9	%	$	6,123			14.0	%

Reconciliation of Net Income as Reported to Adjusted Net
IncomeExcluding Non-Recurring Items:

	Three Months Ended September 30,				Change
	2007		2006		$			%
Net income as reported(1)	$	49,978	$	43,855	$	6,123			14.0	%
Non-recurring items:
European rationalization charges (after-tax)		—		665		(665	)		(100.0	%)
Adjusted net income excluding non-recurring items(2)	$	49,978	$	44,520	$	5,458			12.3	%
Basic earnings per share	$	1.16	$	1.03	$	0.13			12.6	%
Non-recurring items(1)		—		0.01		(0.01	)		(100.0	%)
Basic earnings per share excluding non-recurring items(2)	$	1.16	$	1.04	$	0.12			11.5	%
Diluted earnings per share	$	1.15	$	1.02	$	0.13			12.7	%
Non-recurring items(1)		—		0.01		(0.01	)		(100.0	%)
Diluted earnings per share excluding non-recurring items(2)	$	1.15	$	1.03	$	0.12			11.7	%
Weighted average shares (basic)		42,969		42,608
Weighted average shares (diluted)		43,467		43,119

(1)

Net income includes charges related to European rationalization actions of $665 ($665 after-tax) for the three months ended September 30, 2006.

(2)

Adjusted net income excluding non-recurring items and basic and diluted earnings per share excluding non-recurring items, non-GAAP financial measures, are presented as management believes these financial measures are important to investors to evaluate and compare the Company’s financial performance from period to period. Management uses this information in assessing and evaluating the Company’s underlying operating performance.

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)

Consolidated Statements of Income

	Nine Months Ended September 30,												Fav (Unfav) to Prior Year
	2007			% of Sales			2006			% of Sales			$			%
Net sales	$	1,700,505			100.0	%	$	1,466,041			100.0	%	$	234,464			16.0	%
Cost of goods sold		1,213,880			71.4	%		1,048,171			71.5	%		(165,709	)		(15.8	%)
Gross profit		486,625			28.6	%		417,870			28.5	%		68,755			16.5	%
Selling, general & administrative expenses		274,977			16.2	%		241,126			16.4	%		(33,851	)		(14.0	%)
Rationalization charges		396			0.0	%		3,006			0.2	%		2,610			86.8	%
Operating income		211,252			12.4	%		173,738			11.9	%		37,514			21.6	%
Interest income		5,439			0.3	%		4,201			0.3	%		1,238			29.5	%
Equity earnings in affiliates		7,418			0.4	%		4,974			0.3	%		2,444			49.1	%
Other income		1,863			0.1	%		985			0.0	%		878			89.1	%
Interest expense		(8,379	)		(0.4	%)		(7,343	)		(0.5	%)		(1,036	)		(14.1	%)
Income before income taxes		217,593			12.8	%		176,555			12.0	%		41,038			23.2	%
Income taxes		64,366			3.8	%		53,332			3.6	%		(11,034	)		(20.7	%)
Effective tax rate		29.6	%					30.2	%					0.6	%
Net income(1)	$	153,227			9.0	%	$	123,223			8.4	%	$	30,004			24.3	%

Reconciliation of Net Income as Reported to Adjusted Net
Income Excluding Non-Recurring Items:

	Nine Months Ended September 30,				Change
	2007		2006		$			%
Net income as reported(1)	$	153,227	$	123,223	$	30,004			24.3	%
Non-recurring items:
European rationalization charges (after-tax)		396		3,006		(2,610	)		(86.8	%)
Adjusted net income excluding non-recurring items(2)	$	153,623	$	126,229	$	27,394			21.7	%
Basic earnings per share	$	3.57	$	2.90	$	0.67			23.1	%
Non-recurring items(1)		0.01		0.07		(0.06	)		(85.7	%)
Basic earnings per share excluding non-recurring items(2)	$	3.58	$	2.97	$	0.61			20.5	%
Diluted earnings per share	$	3.53	$	2.87	$	0.66			23.0	%
Non-recurring items(1)		0.01		0.07		(0.06	)		(85.7	%)
Diluted earnings per share excluding non-recurring items(2)	$	3.54	$	2.94	$	0.60			20.4	%
Weighted average shares (basic)		42,875		42,468
Weighted average shares (diluted)		43,373		42,960

(1)

Net income includes charges related to European rationalization actions of $396 ($396 after-tax) for the nine months ended September 30, 2007 and $3,006 ($3,006 after-tax) for the nine months ended September 30, 2006.

(2)

Adjusted net income excluding non-recurring items and basic and diluted earnings per share excluding non-recurring items, non-GAAP financial measures, are presented as management believes these financial measures are important to investors to evaluate and compare the Company’s financial performance from period to period. Management uses this information in assessing and evaluating the Company’s underlying operating performance.

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)

Balance Sheet Highlights

Selected Consolidated Balance Sheet Data

	September 30,		December 31,
	2007		2006
Cash and cash equivalents	$	223,220	$	120,212
Total current assets		997,867		829,410
Net property, plant and equipment		420,563		389,518
Total assets		1,626,432		1,394,579
Total current liabilities		356,610		338,288
Short-term debt		12,053		47,134
Long-term debt		114,586		113,965
Total shareholders’ equity		1,033,519		852,976

Net Operating Working Capital

	September 30,			December 31,
	2007			2006
Trade accounts receivable	$	353,316		$	298,993
Inventory		355,977			351,144
Trade accounts payable		140,203			142,264
Net operating working capital	$	569,090		$	507,873
Net operating working capital % to net sales		25.8	%		25.8	%

Total Debt

	September 30,			December 31,
	2007			2006
Short-term debt	$	12,053		$	47,134
Long-term debt		114,586			113,965
Total debt		126,639			161,099
Equity		1,033,519			852,976
Total	$	1,160,158		$	1,014,075
Total debt/capitalization		10.9	%		15.9	%
Return on invested capital		22.1	%		19.9	%

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended September 30,
	2007			2006
OPERATING ACTIVITIES:
Net income	$	49,978		$	43,855
Adjustments to reconcile net income to net cash provided by operating activities:
Rationalization charges		—			665
Depreciation and amortization		13,263			12,832
Equity earnings of affiliates, net		(1,544	)		(1,950	)
Other non-cash items, net		414			3,273
Changes in operating assets and liabilities net of effects from acquisitions:
Decrease in accounts receivable		18,574			7,378
Decrease (increase) in inventories		30,077			(5,554	)
(Decrease) in accounts payable		(27,861	)		(20,981	)
Contributions to pension plans		(1,897	)		(3,259	)
(Decrease) increase in accrued pensions		(110	)		3,758
Net change in other current assets and liabilities		17,161			9,616
Net change in other long-term assets and liabilities		(1,400	)		(1,872	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		96,655			47,761
INVESTING ACTIVITIES:
Capital expenditures		(16,137	)		(21,057	)
Acquisition of businesses, net of cash acquired		(1,688	)		(407	)
Proceeds from sale of property, plant and equipment		406			218
NET CASH USED BY INVESTING ACTIVITIES		(17,419	)		(21,246	)
FINANCING ACTIVITIES:
Net change in borrowings		(1,467	)		(110	)
Proceeds from exercise of stock options		2,527			1,330
Tax benefit from the exercise of stock options		2,265			796
Purchase of treasury shares		—			(126	)
Cash dividends paid to shareholders		(9,446	)		(8,101	)
NET CASH USED BY FINANCING ACTIVITIES		(6,121	)		(6,211	)
Effect of exchange rate changes on cash and cash equivalents		2,124			180
INCREASE IN CASH AND CASH EQUIVALENTS		75,239			20,484
Cash and cash equivalents at beginning of the period		147,981			125,427
Cash and cash equivalents at end of period	$	223,220		$	145,911
Cash dividends paid per share	$	0.22		$	0.19

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share data)
(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2007			2006
OPERATING ACTIVITIES:
Net income	$	153,227		$	123,223
Adjustments to reconcile net income to net cash provided by operating activities:
Rationalization charges		396			3,006
Depreciation and amortization		39,096			35,817
Equity earnings of affiliates, net		(5,531	)		(3,541	)
Other non-cash items, net		(10,276	)		5,751
Changes in operating assets and liabilities net of effects from acquisitions:
(Increase) in accounts receivable		(35,185	)		(48,422	)
Decrease (increase) in inventories		17,841			(54,982	)
(Decrease) increase in accounts payable		(13,332	)		6,843
Contributions to pension plans		(12,292	)		(19,656	)
Increase in accrued pensions		915			12,395
Net change in other current assets and liabilities		69,672			48,356
Net change in other long-term assets and liabilities		(424	)		(3,699	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		204,107			105,091
INVESTING ACTIVITIES:
Capital expenditures		(45,777	)		(53,318	)
Acquisition of businesses, net of cash acquired		(6,102	)		(502	)
Proceeds from sale of property, plant and equipment		607			859
NET CASH USED BY INVESTING ACTIVITIES		(51,272	)		(52,961	)
FINANCING ACTIVITIES:
Net change in borrowings		(37,439	)		(5,083	)
Proceeds from exercise of stock options		7,589			10,282
Tax benefit from the exercise of stock options		5,001			3,847
Purchase of treasury shares		—			(126	)
Cash dividends paid to shareholders		(28,271	)		(24,178	)
NET CASH USED BY FINANCING ACTIVITIES		(53,120	)		(15,258	)
Effect of exchange rate changes on cash and cash equivalents		3,293			1,032
INCREASE IN CASH AND CASH EQUIVALENTS		103,008			37,904
Cash and cash equivalents at beginning of period		120,212			108,007
Cash and cash equivalents at end of period	$	223,220		$	145,911
Cash dividends paid per share	$	0.66		$	0.57