PROSPECTUS 4,200,000 SHARES
[LINCOLN
THE LINCOLN ELECTRIC COMPANY ELECTRIC LOGO]
CLASS A COMMON SHARES
------------------------

Of the 4,200,000 Class A Common Shares, without par value, offered hereby,
2,796,914 are being sold by The Lincoln Electric Company, an Ohio corporation
(the "Company"), and 1,403,086 are being sold by certain selling shareholders
(the "Selling Shareholders"). The Company will not receive any proceeds from the
sale of Class A Common Shares by the Selling Shareholders. See "Selling
Shareholders."

On May 24, 1995, the Company declared a dividend of one Class A Common Share
for each outstanding share of the Company's Common Shares and Class B Common
Shares, payable on June 12, 1995 to holders of record as of June 5, 1995. The
Company's Common Shares and Class A Common Shares commenced trading on the
NASDAQ National Market on June 13, 1995 under the symbols "LECO" and "LECOA,"
respectively. On June 29, 1995, the last reported sale price of the Class A
Common Shares on the NASDAQ National Market was $31 1/2. See "Prospectus
Summary -- The Recapitalization."

THE CLASS A COMMON SHARES ARE A NEWLY CREATED CLASS OF NON-VOTING SHARES.
The Class A Common Shares are substantially identical to the voting common
shares of the Company, except that holders of Class A Common Shares have no
voting rights other than upon the occurrence of certain events described in the
Company's Restated Articles of Incorporation ("Articles of Incorporation") and
as required by Ohio law. See "Description of Capital Stock."

SEE "RISK FACTORS" IMMEDIATELY FOLLOWING THE PROSPECTUS SUMMARY FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE CLASS A COMMON SHARES OFFERED HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------

PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) SHAREHOLDERS(2)
- --------------------------------------------------------------------------------------------------------

Per Share................. $30.00 $1.65 $28.35 $28.35
- --------------------------------------------------------------------------------------------------------
Total(3).................. $126,000,000 $6,930,000 $79,292,512 $39,777,488
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
<FN>
(1) The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act of
1933. See "Underwriting."

(2) Before deducting expenses estimated at $600,000 and $300,000 payable by the
Company and by the Selling Shareholders, respectively.

(3) The Company and the Selling Shareholders have granted to the several
Underwriters options, exercisable within 30 days of the date hereof, to
purchase up to an additional 419,536 Class A Common Shares from the Company
and an additional 210,464 Class A Common Shares from the Selling
Shareholders solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discount,
Proceeds to Company and Proceeds to Selling Shareholders will be
$144,900,000, $7,969,500, $91,186,358 and $45,744,142, respectively. See
"Underwriting."

------------------------
The Class A Common Shares are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Class A Common Shares will be made in New York, New York on or
about July 6, 1995.
------------------------
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.

MCDONALD & COMPANY
SECURITIES, INC.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 29, 1995.
2

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
SHARES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, THE
OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained at prescribed rates by writing the Commission, Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549.

The Company has filed with the Commission a registration statement (the
"Registration Statement," which term shall include any amendments thereto) on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Class A Common Shares offered hereby. This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain parts of which are omitted in accordance
with the rules and regulations of the Commission, and to which reference is
hereby made. For further information, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus
and shall be deemed to be a part hereof:

1. The Company's Annual Report on Form 10-K for the year ended December 31,
1994 (File No. 0-1402).

2. The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1995.

3. The Company's Proxy Statement for its 1995 Annual Meeting of
Shareholders dated April 24, 1995.

4. The description of the Company's Class A Common Shares set forth in the
Company's Registration Statement on Form 8-A filed under Section 12 of
the Exchange Act on June 5, 1995.

All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the Offering shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from their respective
dates of filing. Any statement contained herein or in any document incorporated
or deemed to be incorporated shall be deemed to be modified or superseded for
all purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any subsequently filed document which also is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON WRITTEN OR ORAL REQUEST
OF SUCH PERSON, A COPY OF ANY AND ALL OF THE INFORMATION THAT HAS BEEN
INCORPORATED BY REFERENCE IN THIS PROSPECTUS (OTHER THAN EXHIBITS TO THE
INFORMATION THAT ARE INCORPORATED BY REFERENCE UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THIS PROSPECTUS
INCORPORATES). REQUESTS SHOULD BE DIRECTED TO FREDERICK G. STUEBER, ESQ., VICE
PRESIDENT, GENERAL COUNSEL AND SECRETARY, THE LINCOLN ELECTRIC COMPANY, AT THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICES, 22801 ST. CLAIR AVENUE, CLEVELAND, OHIO
44117, TELEPHONE NUMBER (216) 481-8100. PERSONS REQUESTING COPIES OF EXHIBITS TO
SUCH DOCUMENTS THAT WERE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS WILL BE CHARGED THE COSTS OF REPRODUCTION AND MAILING.

2
3

PHOTO PAGE

The Invertec STT (Surface-Tension-Transfer) power source precisely controls the
electric wave form to significantly reduce post-welding cleanup time. The STT
has promising application for the initial weld on pipe and a variety of critical
sheet metal products.

Six-axis robots can be mated with Lincoln power sources, torches and consumables
for welding or with the Pro-Cut Plasma Cutting Systems for accurate metal
cutting in fabrication shop settings.

New adaptive inverter power sources like the Power Wave 450 instantaneously
communicate with the wire feeding system to control and adapt to changing
conditions at the welding arc.

Lincoln's complete welding packages are marketed through welding distribution
channels which include distributors, direct sales customers and mass market
retailers. Packages include all necessary welding and safety equipment,
consumables and training aids.
4

PHOTO PAGE

Lincoln's welding equipment and consumables are used around the world for
fabrication, manufacturing and repair of thousands of metal products.

Lincoln's latest generation of programmable MIG welding power sources, such as
the Idealarc SP-255, provides accurate operator control when welding on carbon
steel, stainless steel and aluminum.

A leader in welding and cutting products

[LINCOLN ELECTRIC LOGO]
5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the consolidated
financial statements and related notes thereto appearing elsewhere in this
Prospectus. All share amounts and per share financial information presented in
this Prospectus have been adjusted to reflect the reclassification of the
Company's voting common shares, the creation of the Class A Common Shares and
the issuance of a dividend of one Class A Common Share for each outstanding
share of the Company's voting common shares. Such dividend had the same effect
on the total number of common shares outstanding as a two-for-one share split.
Unless otherwise indicated, the information in this Prospectus assumes that the
Underwriters' over-allotment options are not exercised. See "Underwriting."

THE COMPANY

The Lincoln Electric Company is one of the world's largest designers and
manufacturers of arc welding products, manufacturing a full line of arc welding
equipment and consumable welding products. The Company, now entering its second
century of operations, also manufactures a broad line of integral horsepower
industrial electric motors. The Company's welding products are used in a wide
range of industrial applications, including the manufacturing of automobiles,
trucks, heavy machinery, railcars and ships, and the construction of buildings,
bridges, oil platforms and pipelines. The Company distributes its products
through a large, technically trained sales force and a broad distribution
network.

According to market estimates, the Company believes that it maintains a
market leading 42% share of the United States arc welding consumables business
and a top-tiered share of the United States arc welding equipment business. The
Company also believes that it is the low-cost full line producer in the
approximately $750 million United States arc welding consumable products
business. To retain its leading position in the United States, the Company has
made substantial investments in facilities and equipment to improve production
efficiencies and further achieve manufacturing cost reductions.

The Company's welding products business, which in 1994 contributed over 93%
of the Company's net sales, primarily involves the design, manufacture and
distribution of arc welding equipment and consumable welding products. Arc
welding, which today is the most common industrial welding process, uses the
concentrated heat of an electric arc to join metal by fusion with a deposit of
molten metal, typically from a consumable electrode. The Company's arc welding
equipment products include welding machines, power sources and automated welding
systems and range from basic units used for light manufacturing and maintenance
to highly sophisticated machines used in robotic applications, high production
welding and fabrication. The Company's consumable products, designed for use
with arc welding equipment, include a full line of manual electrodes, fluxes and
wires. The Company also participates in businesses that are closely related to
its arc welding business, including the manufacture of oxy-fuel welding and
cutting torches, gas flow control devices (regulators) and industrial gases.

The Company also designs, manufactures and sells a broad line of steel,
aluminum and cast iron frame integral horsepower electric motors for use in
industrial applications. In 1992, the Company acquired the industrial electric
motor assets of the Delco division of General Motors Corporation in Dayton,
Ohio, substantially expanding its market position and broadening its product
line. Presently, the Company's line of steel and aluminum frame industrial
electric motors ranges from 1/3 to 250 horsepower and up to 1,250 horsepower for
cast iron motors.

The Company expects to build on its position as a leader in the domestic
arc welding industry with continued market penetration facilitated by a broad
range of new product offerings and further capacity additions. Furthermore,
management believes that long-term growth requires a strong global presence.
From 1985 to 1992, the Company expanded its international business by completing
12 acquisitions with operations in 13 foreign countries. In 1992, the Company,
under the leadership of newly promoted chief executive and chief operating
officers, refocused and redirected its global strategy and initiated a major
restructuring to downsize and streamline certain unprofitable operations in
Europe, South America and Japan. While in 1992 and 1993 the Company experienced
losses, primarily as the result of restructuring charges, the Company's domestic
arc welding operations maintained strong net sales and operating profitability.
In 1994, the Company reported the highest net sales, net income and net income
per common share in its history. In that same year, the Company's foreign
operations returned to profitability.

3
6

The Company's business strategy is to continue to strengthen its operations
in the United States and internationally, and to exploit opportunities for
growth. Key elements of the Company's business strategy include:

- Manufacturing High Quality Products. The Company enjoys a worldwide
reputation for manufacturing consistently high quality, state of the art
products that are robust and rugged. Manufacturing efficiencies,
flexibility and quality are enhanced by the Company's high degree of
vertical integration. All of the Company's worldwide consumable
manufacturing facilities and its domestic machine and motor facilities
meet ISO 9002 standards. A key element of the Company's incentive
management system is the individual employee's responsibility for the
quality of the product.

- Highly Productive and Motivated Workforce. The Company believes its
incentive management system has increased productivity, led to enhanced
operating flexibility and contributed to the Company's industry
leadership position. In the core United States operations, absenteeism of
less than 2% and turnover rates, among employees with more than 180 days
of service, of approximately 4% annually help drive productivity, while
management's ability to reassign employees to where they are most needed
and to require overtime work as needed provides greater operating
flexibility.

- Advanced Engineering Expertise. The Company is a leader in the
development of innovative, value added arc welding products. The efforts
of its engineers, many of whom have been granted patents and awards for
their contributions to welding technology, have helped the Company gain a
global leadership role in the design of welding products for such
critical applications as gas and oil pipelines, offshore drilling
platforms and nuclear submarines.

- Focused Growth in New Markets. The Company believes that international
markets will provide expanded opportunities for increased sales of both
basic and advanced technology products. Part of the Company's growth
strategy is focused on marketing its existing products into Central
Europe, Asia, Latin America and other developing economies to take
advantage of the significant number of infrastructure projects planned in
these economies in the next decade. The Company's strategy to gain entry
in new markets includes formation of joint ventures with local partners
and the use of licensing or private labeling arrangements to build market
share before engaging in capital intensive projects such as construction
of local manufacturing facilities. Also as part of its growth strategy,
the Company is expanding its integral horsepower industrial electric
motor facility and anticipates continued development of this business.

4
7

THE RECAPITALIZATION

The Company has recently completed a recapitalization plan (the
"Recapitalization") that included the authorization of the Class A Common
Shares, which is a new class of non-voting common shares (the "Class A Common
Shares"). The Recapitalization included a distribution payable on June 12, 1995
(the "Distribution Date"), to holders of record of the Company's outstanding
voting common shares as of June 5, 1995, of a dividend of one Class A Common
Share for each outstanding share of the Company's voting common shares (the
"Distribution"). Prior to the adoption of the Recapitalization, the Company had
two authorized and outstanding classes of voting common shares. As a result of
the Recapitalization, the Company's authorized capital consists of two voting
classes, the Common Shares, without par value (the "Common Shares"), and the
Class B Common Shares, without par value (the "Class B Common Shares"), and one
non-voting class, the Class A Common Shares. The Common Shares, the Class A
Common Shares and the Class B Common Shares are collectively referred to herein
as the "Common Equity." See "Description of Capital Stock."

The Recapitalization modified the capital structure of the Company while
maintaining, subject to certain limitations, the voting power of existing
shareholders, thus allowing for continuity in the Company's current operating
policies and long-term strategy. A revised capital structure with both voting
and non-voting common equity was chosen by the Board of Directors to enhance
shareholder liquidity and increase the Company's flexibility in issuing Common
Equity to raise equity capital, as consideration for future acquisitions and in
connection with employee benefit plans without diluting the voting power or
control of existing shareholders.

As used herein, the term "Lincoln Family" means any person who is a
descendant of, or who is related by blood or marriage to a descendant of, James
F. Lincoln or John C. Lincoln, any trusts or similar arrangements for any of the
foregoing, any foundations established by any of the foregoing, the Estate of
Helen C. Lincoln (and any executor or administrator thereof) and any corporation
(other than the Company) or partnership in which a majority of the outstanding
shares or partnership interests are owned by any of the foregoing. The Lincoln
Family includes each of the Selling Shareholders. As used herein, the term
"Employee Constituency" means current and former employees of the Company and
their relatives (including the Company's Employee Stock Ownership Plan, the
"ESOP").

The following table sets forth the approximate percentage ownership of
voting common shares, Class A Common Shares and total Common Equity, prior to
and following this Offering, for the Lincoln Family, the Employee Constituency
and the Company's public shareholders:

CLASS A
COMMON SHARES
VOTING SHARES (NON-VOTING) TOTAL COMMON EQUITY
------------------------- ------------------------- -------------------------
PRIOR TO FOLLOWING PRIOR TO FOLLOWING PRIOR TO FOLLOWING
THE THE THE THE THE THE
OFFERING OFFERING OFFERING OFFERING OFFERING OFFERING
----------- ----------- ----------- ----------- ----------- -----------

Lincoln Family.......... 46% 46% 46% 27% 46% 35%
Employee Constituency... 28% 28% 28% 22% 28% 25%
Public shareholders..... 26% 26% 26% 51% 26% 40%

5
8

THE OFFERING

Class A Common Shares offered by
the Company...................... 2,796,914 shares
Class A Common Shares offered by
the Selling Shareholders......... 1,403,086 shares
Common Equity outstanding after the
Offering:
Common Shares................. 10,520,820
Class A Common Shares......... 13,813,578
Class B Common Shares......... 499,840
----------
Total Common Equity......... 24,834,238 shares
==========
Rights of Class A Common Shares.... The Class A Common Shares offered hereby have no voting
rights, other than upon the occurrence of certain events
described in the Company's Articles of Incorporation and
as required by Ohio law; the Common Shares and Class B
Common Shares each have one vote per share. Each Class A
Common Share has rights equal to those of the Common
Shares and Class B Common Shares with respect to cash
dividends, stock splits, consideration payable in a
merger or consolidation and distributions upon
liquidation. See "Price Range of Common Stock and
Dividend Policy" and "Description of Capital Stock."
Class A Common Share Protection
Feature.......................... Holders of Class A Common Shares will have the
opportunity to participate in any premium paid in the
future for a significant block (15% or more) of the
voting Common Shares by a buyer who has not acquired a
proportionate share of the Class A Common Shares (unless
such acquiror forgoes voting rights with respect to all
Common Shares held by such acquiror). See "Description
of Capital Stock -- Common Equity -- Class A
Protection."
Use of Proceeds.................... All of the net proceeds of the Offering to be received
by the Company (estimated to be approximately $78.7
million) will be used to reduce outstanding
indebtedness. The Company will not receive any proceeds
from the sale of Class A Common Shares by the Selling
Shareholders. See "Use of Proceeds."
NASDAQ National Market symbols:(1)
Common Shares................. LECO
Class A Common Shares......... LECOA

<FN>
- ---------------
(1) The Class B Common Shares do not trade on any organized market.

6
9

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following summary consolidated financial information of the Company for
the years 1990 through 1994 was derived from the Company's audited consolidated
financial statements for those years. The information for the three months ended
March 31, 1995 and 1994 was derived from unaudited consolidated financial
statements of the Company. The Company believes the unaudited consolidated
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the financial
information for the period. Results for the three months ended March 31, 1995
are not indicative of results which may be expected for any other interim period
or for the year as a whole. The following information is qualified in its
entirety by and should be read in conjunction with the consolidated financial
statements and related notes appearing elsewhere in this Prospectus,
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

INCOME STATEMENT DATA:
Net sales................................ $263,407 $210,525 $906,604 $845,999 $853,007 $833,892 $796,671
Gross profit............................. 101,862 81,966 350,345 313,204 299,904 312,063 286,176
Restructuring charges (income)........... -- -- (2,735) 70,079 23,897 -- --
Operating income (loss).................. 30,047 20,942 91,399 (33,878) (23,188) 40,348 26,965
Income (loss) before income taxes and
cumulative effect of accounting
change................................. 26,856 17,785 80,168 (46,950) (34,430) 34,411 30,360
Net income (loss)........................ 16,054 10,407 48,008 (38,068) (45,800) 14,365 11,052
Net income (loss) per common share....... .73 .48 2.19 (1.75) (2.12) .67 .52
Weighted average number of common shares
outstanding (000's).................... 22,031 21,791 21,940 21,704 21,593 21,587 21,389
OPERATING DATA:
Net sales:
United States.......................... $182,814 $151,265 $641,607 $543,458 $487,145 $459,768 $494,016
Non-United States...................... 80,593 59,260 264,997 302,541 365,862 374,124 302,655
Pre-tax profit (loss):
United States.......................... $ 23,699 $ 16,868 $ 68,316 $ 42,570 $ 24,860 $ 45,742 $ 36,946
Non-United States...................... 4,240 1,860 11,953 (91,768) (60,011) (11,474) (6,396)
OTHER DATA:
Operating income before restructuring
charges (income)....................... $ 30,047 $ 20,942 $ 88,664 $ 36,201 $ 709 $ 40,348 $ 26,965

MARCH 31, 1995
-------------------------------
ACTUAL AS ADJUSTED (1)
-------- ------------------
(DOLLARS IN THOUSANDS)

BALANCE SHEET DATA:
Working capital.......................... $159,699 $159,699
Total assets............................. 607,121 607,121
Total debt............................... 192,820 114,127
Total liabilities........................ 394,021 315,328
Shareholders' equity..................... 213,100 291,793
Ratio of total debt to total
capitalization......................... 47.5% 28.1%

<FN>
- ---------------
(1) The unaudited as adjusted balance sheet data gives effect to the Offering
and the application of the estimated net proceeds therefrom as set forth
under "Use of Proceeds" as if the same had occurred on March 31, 1995.

7
10

RISK FACTORS

Prospective investors should consider, in addition to the information set
forth elsewhere in this Prospectus, the following matters in evaluating the
Company and the Class A Common Shares offered hereby.

NON-VOTING SHARES

The Class A Common Shares have no voting rights other than upon the
occurrence of certain events described in the Company's Articles of
Incorporation and as required by Ohio law, generally relating to proposals that
would change the par value of the Class A Common Shares, alter or change the
express terms of those shares, or otherwise affect them in a substantially
prejudicial manner. Consequently, holders of Class A Common Shares will not be
entitled to elect directors or vote on other matters customarily decided by
shareholders, such as mergers, consolidations or the sale of all or
substantially all of the Company's assets. See "Description of Capital Stock."

CONTROL BY LINCOLN FAMILY AND EMPLOYEES

Upon completion of the Offering (assuming no exercise of the Underwriters'
over-allotment options), the Lincoln Family and the Employee Constituency will
own on an aggregate basis approximately 35% and 25%, respectively, of the
Company's Common Equity and approximately 46% and 28%, respectively, of the
Company's voting securities. By class, the Lincoln Family will beneficially own
approximately 48% of the Company's Common Shares, 27% of the Company's Class A
Common Shares and less than 1% of the Class B Common Shares. Similarly, by class
the Employee Constituency will beneficially own approximately 24% of the
Company's Common Shares, 22% of the Company's Class A Common Shares and over 99%
of the Company's Class B Common Shares. No voting arrangements exist among the
Lincoln Family or the Employee Constituency.

Under Ohio law and the Company's Articles of Incorporation, amendments to
the Company's Articles of Incorporation and transactions involving a merger,
consolidation or sale of substantially all the assets of the Company require the
approval of at least two-thirds of the voting power of the Company. The
provisions of Article Eighth of the Company's Articles of Incorporation impose
additional requirements beyond those required by Ohio law. Generally, under
Article Eighth, business combinations involving the Company and the owner of 5%
or more of the Company's voting securities must be approved by the disinterested
members of the Board of Directors or by an increased vote of the disinterested
shareholders, or must meet certain minimum price, form of consideration and
procedural requirements designed to ensure fairness to all shareholders.
Consequently, as a result of the above provisions, in the event the Lincoln
Family and/or the Employee Constituency vote together, they will have the
effective ability to direct the affairs of the Company or to block approval of
certain transactions. Holders of Common Shares who also hold Class A Common
Shares can sell Class A Common Shares without adversely affecting their voting
power. See "Selling Shareholders" and "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of Common Shares or Class A Common Shares by the Company or
its existing shareholders could adversely affect the prevailing market price of
the Class A Common Shares. The Company, its management directors and executive
officers, the Selling Shareholders and certain other of its existing
shareholders have agreed that they will not for a period of 180 days following
the date of this Prospectus, without the prior written consent of the
representatives of the Underwriters, offer, sell, contract to sell or otherwise
dispose of any Common Shares or Class A Common Shares or any security
convertible or exchangeable into or exercisable for Common Shares or Class A
Common Shares. Following the Offering, the Company's management directors and
executive officers, the Selling Shareholders and such other of its existing
shareholders will hold in the aggregate approximately 33% of the Company's
Common Shares and 19% of the Company's Class A Common Shares.

8
11

Virtually all of the Common Shares, other than Common Shares held by
affiliates of the Company, are freely tradable. The Class B Common Shares are
only issued to the ESOP and are not freely tradable. In addition to the Class A
Common Shares offered hereby, the Board of Directors declared a dividend, which
was paid on June 12, 1995, consisting of one Class A Common Share for each
outstanding Common Share and Class B Common Share. All of such Class A Common
Shares, other than those held by affiliates of the Company, a small number
subject to certain contractual transfer restrictions and those covered by
agreements described in the preceding paragraph, are freely tradable. Shares
held by affiliates of the Company are subject to certain restrictions on resale
under the Securities Act, but may be resold in accordance with the volume and
manner of sale restrictions of Rule 144 under the Securities Act. Accordingly,
sales of substantial amounts of Class A Common Shares or Common Shares in the
public market, or the perception that such sales may occur, may adversely affect
the trading price of the Class A Common Shares.

ANTI-TAKEOVER PROVISIONS AND STATE ANTI-TAKEOVER LAWS

Certain provisions of the Company's Articles of Incorporation and Code of
Regulations, as well as provisions of Ohio law, may have the effect of deterring
hostile takeovers or delaying or preventing changes in control or management of
the Company. As a result, shareholders may be denied an otherwise available
opportunity to receive a premium for their shares. See "Description of Capital
Stock -- Anti-Takeover Provisions and State Anti-Takeover Laws."

LIMITED PUBLIC TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

The Company's Common Shares and Class A Common Shares commenced trading on
the NASDAQ National Market on June 13, 1995 under the symbols "LECO" and
"LECOA," respectively. However, there can be no assurances that an active
trading market for either class of shares will be sustained after the Offering.
Accordingly, no assurance can be given as to the liquidity of the market for the
Class A Common Shares or the price at which any sales may occur, which price
will depend upon the number of holders thereof, the interest of securities
dealers in maintaining a market in the Class A Common Shares and other factors
beyond the control of the Company. The market price of the Class A Common Shares
could be subject to significant fluctuations in response to the Company's
operating results and other factors, and there can be no assurance that the
market price of the Class A Common Shares will not decline below the initial
public offering price. The Class A Common Shares may trade at prices above,
below or the same as the prices at which the Common Shares trade. It is
currently anticipated that there will be a greater number of Class A Common
Shares available in the market than Common Shares; however, there can be no
certainty that such will always be the case and a substantial increase in the
number of Common Shares available in the market may adversely affect the trading
price of the Class A Common Shares.

CYCLICALITY AND MATURITY OF THE WELDING INDUSTRY

The arc welding industry in the United States is a mature industry that is
cyclical in nature. The substitution of plastic, concrete and other materials
impacts the use of fabricated metal parts in many products and structures.
Increased offshore manufacturing by United States companies has contributed to
slow growth rates in the domestic manufacturing industry and in turn has led to
slower growth in the United States arc welding industry. During periods of
economic expansion the welding industry has grown at double digit rates but has
experienced contraction during periods of slowing industrial activity. There can
be no assurance that during future periods of economic expansion the welding
industry will experience the same double digit growth rates as it has in the
past. Based on market estimates, the United States arc welding industry as a
whole has grown at a compound annual nominal rate of approximately 3.4 percent
over the past five years. Although the Company believes that its exposure to
cyclical downturns is moderated by its broad customer base and the diversity of
the industries it serves, cyclical downturns could have an adverse effect on
period-to-period results.

INTERNATIONAL MARKETS; RECENT RESTRUCTURING OF INTERNATIONAL OPERATIONS

Due to the limited long-term growth potential of the overall United States
arc welding market, the Company's growth strategy is to increase the marketing
of existing products into Central Europe, Asia, Latin

9
12

America and other developing economies, and to increase its share in its current
international markets. However, there can be no certainty that the Company will
be successful in its expansion efforts. Manufacturing expansion by the Company
in the last decade in Germany, Brazil, Venezuela and Japan did not prove
successful, and resulted in losses, including restructuring charges of $70.1
million in 1993 and $23.9 million in 1992. Although the Company's foreign
operations returned to profitability in 1994, there can be no assurance that
such profitability will continue. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Approximately 36% of the Company's net sales in 1994 (including its United
States third party export sales) were made to purchasers located in foreign
countries. Because of its foreign operations, the Company's business is subject
to the currency risks of doing business abroad, including exchange rate
fluctuations and limits on repatriation of funds.

Further, many developing economies have a significant degree of political
and economic uncertainty. Social unrest, the absence of trained labor pools and
the uncertainty of entering into joint ventures or other partnership
arrangements with local organizations have slowed business activities in some
large developing economies. The political and economic uncertainties present in
these promising growth markets may adversely impact the Company's ability to
implement and achieve its foreign growth objectives.

COMPETITION

The arc welding industry is highly competitive. While the Company believes
it is one of only a few worldwide broad line manufacturers of both arc welding
equipment and consumable products, the Company competes in each of its
businesses with other broad line manufacturers and numerous smaller competitors
specializing in particular products.

In recent years, the United States arc welding industry has been subject to
increased levels of foreign competition. While the Company believes that it is
the leader in the domestic consumable welding products business, this business
has become more competitive, primarily in the commodity-type consumables
segment, as low cost imports are occasionally available depending upon market
conditions. The intensity of foreign competition is substantially affected by
fluctuations in the value of the United States dollar against other currencies.
The attractiveness of the United States welding marketplace to foreign exporters
may be diminished by the recent substantial decline in the value of the United
States dollar relative to certain foreign currencies. However, foreign exchange
rates are subject to substantial fluctuations and there can be no assurance that
this condition will continue to exist.

Steel manufacturers have not traditionally been significant competitors in
the domestic arc welding industry. There is competition in the arc welding
consumables business in some foreign countries, such as Japan, from integrated
steel producers who manufacture selected consumable products. If this practice
were to occur in countries in which the Company is a more active participant,
the Company could be adversely affected by increased competition from such
integrated steel producers. The Company's expansion into some foreign countries
also could be adversely affected if steel manufacturers in those countries
become more active in the arc welding consumables business.

10
13

THE COMPANY

The Company was founded in 1895 by John C. Lincoln and originally
manufactured electric motors and generators. The Company entered the arc welding
business, then in its infancy, in 1911. The Company is widely recognized for its
implementation of the "incentive management system" developed by John C.
Lincoln's brother, James F. Lincoln, who headed the Company from 1914 to 1965.
This system currently extends to substantially all full-time employees at the
Company's core United States operations (consisting of its arc welding products
and industrial electric motors production facilities located near Cleveland,
Ohio) as well as to employees in its long established operations in Canada and
Australia. The system is based on several key concepts including (i) shared
benefits from increased productivity and performance-based pay; (ii) fair
treatment for all constituents, including valuing the employee as an individual,
open communications between employees and managers, and service to the customer
as a primary constituent; and (iii) displaying the highest integrity and ethics
in all aspects of doing business. The Company currently implements these
principles through several practices:

- Piece Rate Pay -- Production employees receive no base salary but are
instead compensated on a piecework basis (i.e., the number of quality
units produced multiplied by a per unit price). There is no limit to the
amount of piecework compensation that can be earned.

- Guaranteed Employment -- The Company guarantees that each employee who
has been employed by the Company's core United States operations for at
least three years and who continues to maintain a satisfactory
performance level will have the opportunity to work a minimum of 75
percent (or 30 hours) of a normal work week but is not guaranteed the
rate of compensation. The Company has the right to transfer employees to
other jobs as needed and to require them to work overtime as required,
which contributes to a flexible response to production needs. The Company
has reserved the right to terminate such guarantee by giving notice of
such termination not less than six months prior to the end of any given
year.

- Open Communications -- Employees are encouraged to bring new ideas
forward and, through the bonus, share in the rewards of producing better
products. Open communications are furthered by a formal advisory board
that focuses on increasing Company productivity, efficiency and quality
control. The advisory board meets semi-monthly with the Chairman of the
Board or President, maintaining a tradition started in 1914.

- Promotion From Within -- The Company maintains a policy of promotion from
within for qualified applicants. Any employee is entitled to apply for
open jobs that are posted on employee bulletin boards.

- Merit Rating System -- Employees are rated semiannually on four
categories: ideas and cooperation, output, dependability and quality. An
employee's rating determines his/her share of any results-based bonus
money available. This system provides incentive for individual
achievement while recognizing the value of teamwork.

- Bonus -- Employees share in the results of increased operating
efficiency. Since 1934, workers have received year-end bonuses based on
their performance and Company results. During the last ten years these
bonuses have in the aggregate averaged 70 percent of pre-bonus pay.

The Company believes that the incentive management system results in many
benefits to overall Company performance, including high quality products, higher
productivity, substantial employee participation in manufacturing decisions and
technological innovations, flexibility to assign employees where they are most
needed, retention of employees, low employee absenteeism and improved control of
expenditures in a business downturn.

The Company's principal executive offices are located at 22801 St. Clair
Avenue, Cleveland, Ohio 44117.

11
14

USE OF PROCEEDS

The net proceeds to be received by the Company from the Offering, after
deducting the underwriting discount and estimated offering expenses, are
estimated to be approximately $78.7 million (approximately $90.6 million if the
over-allotment option granted by the Company to the Underwriters is exercised in
full). The Company will not receive any proceeds from the sale of Class A Common
Shares by the Selling Shareholders. The Company expects to apply all of the net
proceeds to reduce its outstanding indebtedness including amounts outstanding
under the existing multi-currency credit agreement ("Credit Agreement") and
various short-term bank obligations. Borrowings under the Credit Agreement and
the various short-term bank obligations have been used for a variety of general
corporate purposes, including capital expenditures and working capital.

The Credit Agreement permits borrowings of up to $200 million on a
revolving basis and currently expires on October 1, 1997, unless extended.
Interest on such borrowings can range from LIBOR (as defined in the Credit
Agreement) plus .375% to LIBOR plus 1.125%, depending on the defined leverage
rate. At March 31, 1995, borrowings under the Credit Agreement had a weighted
average interest rate of 6.8%. At March 31, 1995, borrowings under the Company's
short-term bank obligations had a weighted average interest rate of 7.1%. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note D of Notes to
Consolidated Financial Statements. Henry L. Meyer, III, a Director of the
Company, is Chairman and Chief Executive Officer of Society National Bank
("SNB"). SNB serves as the agent bank for the Company's Credit Agreement, in
which ten institutions participate. SNB has made the largest commitment
thereunder, in the amount of approximately $39 million. SNB has provided other
credit facilities to or on behalf of the Company in the aggregate amount of
approximately $17 million.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Shares and Class A Common Shares commenced trading on
the NASDAQ National Market on June 13, 1995. For the period from June 13, 1995
through June 29, 1995, the high and low sale prices for the Common Shares were
$38 and $29 3/4, respectively and the high and low sale prices for the Class A
Common Shares were $37 1/4 and $29 1/2, respectively. On June 29, 1995, the last
reported sale price of the Common Shares was $32 per share and the last reported
sale price of the Class A Common Shares was $31 1/2 per share.

The Company has paid an annual dividend since 1915. Payment of future
dividends, however, will be at the discretion of the Company's Board of
Directors after taking into account various factors, including the Company's
financial condition, operating results, current and anticipated cash needs and
plans for expansion.

A total of $8.1 million in dividends was paid in 1994, including a special
dividend of $0.01 per share ($0.2 million in the aggregate) in the fourth
quarter of 1994. Management has expressed its intention of not continuing the
practice of declaring special dividends in the future.

The Company's existing long-term debt agreements contain financial
covenants that place restrictions on the payments of dividends. Under such
agreements the payment of dividends and purchases of unrestricted common stock
are limited to 50% of cumulative net income from January 1, 1993, plus $25.0
million. At March 31, 1995, $19.6 million was available for the payment of
dividends and the purchase of unrestricted common stock. On May 24, 1995, the
Company's Board of Directors declared a regular quarterly cash dividend of $.10
per share payable on July 14, 1995 to shareholders of record on June 30, 1995.
Purchasers of the Class A Common Shares offered hereby will not be entitled to
receive such dividend.

12
15

CAPITALIZATION

The following table sets forth the capitalization of the Company at March
31, 1995, and as adjusted to give effect to the Recapitalization and the
Offering and the application of the estimated net proceeds therefrom to reduce
amounts outstanding under the Credit Agreement. See "Use of Proceeds." The
information presented below should be read in conjunction with the consolidated
financial statements and related notes appearing elsewhere in this Prospectus
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

MARCH 31, 1995
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)

Short-term debt:
Notes payable to banks............................................ $ 16,229 $ 16,229
Current portion of long-term debt................................. 2,065 2,065
-------- -----------
Total short-term debt.......................................... 18,294 18,294
Long-term debt:
Multi-currency Credit Agreement................................... 90,365 11,672
8.98% Senior Note due 2003........................................ 75,000 75,000
Other borrowings due through 2023, interest at 2.00% to 13.76%.... 11,226 11,226
Less current portion of long-term debt............................ (2,065) (2,065)
-------- -----------
Total long-term debt........................................... 174,526 95,833
-------- -----------
Total debt..................................................... 192,820 114,127

Shareholders' equity:
Common Shares(1).................................................. 2,103 2,103
Class A Common Shares............................................. -- 2,763
Class B Common Shares(2).......................................... 100 100
Additional paid-in capital........................................ 25,546 101,476
Retained earnings................................................. 190,816 190,816
Cumulative translation adjustments................................ (5,465) (5,465)
-------- -----------
Total shareholders' equity..................................... 213,100 291,793
-------- -----------
Total capitalization......................................... $405,920 $ 405,920
======== ===========
<FN>
- ---------------

(1) Formerly designated as Common Stock.

(2) Formerly designated as Class A Common Stock.

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16

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following selected consolidated financial information of the Company
for the years 1990 through 1994 was derived from the Company's audited
consolidated financial statements for those years. The information for the three
months ended March 31, 1995 and 1994 was derived from unaudited consolidated
financial statements of the Company. The Company believes the unaudited
consolidated financial statements include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the financial
information for the period. Results for the three months ended March 31, 1995
are not indicative of results which may be expected for any other interim period
or for the year as a whole. The following information is qualified in its
entirety by and should be read in conjunction with the consolidated financial
statements and related notes appearing elsewhere in this Prospectus,
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

INCOME STATEMENT DATA:
Net sales.................................. $263,407 $210,525 $906,604 $845,999 $853,007 $833,892 $796,671
Cost of goods sold......................... 161,545 128,559 556,259 532,795 553,103 521,829 510,495
-------- -------- -------- -------- -------- -------- --------
Gross profit............................. 101,862 81,966 350,345 313,204 299,904 312,063 286,176
Distribution cost/selling, general &
administrative expenses.................. 71,815 61,024 261,681 277,003 299,195 271,715 259,211
Restructuring charges (income)............. -- -- (2,735) 70,079 23,897 -- --
-------- -------- -------- -------- -------- -------- --------
Operating income (loss).................. 30,047 20,942 91,399 (33,878) (23,188) 40,348 26,965
Interest income............................ 392 293 1,442 1,627 3,061 5,992 11,359
Other income............................... 394 448 3,067 2,922 4,433 3,803 3,128
Interest expense........................... (3,977) (3,898) (15,740) (17,621) (18,736) (15,732) (11,092)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes and
cumulative effect of accounting
change................................. 26,856 17,785 80,168 (46,950) (34,430) 34,411 30,360
Income taxes (benefit)..................... 10,802 7,378 32,160 (6,414) 11,370 20,046 19,308
-------- -------- -------- -------- -------- -------- --------
Income (loss) before cumulative effect of
accounting change...................... 16,054 10,407 48,008 (40,536) (45,800) 14,365 11,052
Cumulative effect of accounting change..... -- -- -- 2,468 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........................ $ 16,054 $ 10,407 $ 48,008 $(38,068) $(45,800) $ 14,365 $ 11,052
======== ======== ======== ======== ======== ======== ========
Net income (loss) per common share....... $ .73 $ .48 $ 2.19 $ (1.75) $ (2.12) $ .67 $ .52
======== ======== ======== ======== ======== ======== ========
Weighted average number of common shares
outstanding (000's)...................... 22,031 21,791 21,940 21,704 21,593 21,587 21,389

OPERATING DATA:
Net sales:
United States............................ $182,814 $151,265 $641,607 $543,458 $487,145 $459,768 $494,016
Non-United States........................ 80,593 59,260 264,997 302,541 365,862 374,124 302,655
Pre-tax profit (loss):
United States............................ $ 23,699 $ 16,868 $ 68,316 $ 42,570 $ 24,860 $ 45,742 $ 36,946
Non-United States........................ 4,240 1,860 11,953 (91,768) (60,011) (11,474) (6,396)

OTHER DATA:
Operating income before restructuring
charges (income)......................... $ 30,047 $ 20,942 $ 88,664 $ 36,201 $ 709 $ 40,348 $ 26,965

14
17

MARCH 31, 1995
---------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(DOLLARS IN THOUSANDS)

BALANCE SHEET DATA:
Working capital................. $159,699 $159,699
Total assets.................... 607,121 607,121
Total debt...................... 192,820 114,127
Total liabilities............... 394,021 315,328
Shareholders' equity............ 213,100 291,793
Ratio of total debt to total
capitalization................ 47.5% 28.1%

<FN>
- ---------------

(1) The unaudited as adjusted balance sheet data gives effect to the Offering
and the application of the estimated net proceeds therefrom as set forth
under "Use of Proceeds" as if the same had occurred on March 31, 1995.

15
18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company is engaged primarily in the design, manufacture and sale of arc
welding and other welding products, which represented 93% of the Company's 1994
net sales. The Company is one of the world's largest manufacturers of arc
welding products. The Company also designs, manufactures and sells integral
horsepower industrial electric motors.

In 1994, the Company reported the highest net sales, net income and net
income per common share in its history. This sales increase was broadly based
and was primarily attributable to increased volume, higher selling prices and
improved economic conditions in the United States, Canada and Europe. The
Company believes that the high quality of its products, advanced engineering
expertise and strong distributor network coupled with its large technically
trained sales force, has permitted the Company to increase global market share.

The Company's 1992 and 1993 earnings were negatively affected by
restructuring charges taken by the Company to consolidate and reorganize foreign
operations. In 1992, the Company recorded a restructuring charge of $23.9
million (without tax benefit, or $1.11 per share) as a result of decisions at
that time by management to downsize and streamline certain non-United States
operations (principally in Europe). The 1992 restructuring charge was primarily
for severance pay, redundancies and other liabilities relating to the
reorganization of the sales and distribution operations.

The Company decided in late 1993 to further restructure its European, South
American and Far Eastern operations. This resulted in the decision in early 1994
to terminate the operations of its Messer Lincoln subsidiary in Germany (the
"German Subsidiary") as well as manufacturing operations in Brazil, Venezuela
and Japan. Sales, marketing and distribution activities continue to be carried
on in these countries, other than Venezuela, by other affiliates of the Company.
The 1993 restructuring resulted in a charge of $70.1 million ($40.9 million
after-tax, or $1.88 per share). The elements of this charge were: (i) asset
writedowns in the amount of $45.9 million including goodwill of $8.9 million;
(ii) severance and other redundancy costs of $27.5 million; and (iii) a net
credit of $3.3 million comprised of a claim settlement and other restructuring
liabilities including estimated losses through the final facility closing dates
in 1994. To date, approximately 1,400 employees have been terminated as a result
of the 1992 and 1993 restructuring programs. The remaining cash outlays to
complete the restructuring are expected to be incurred in 1995 and 1996.
Management believes it has adequately provided for costs and expenses of the
restructuring. Although European sales and profitability remained constrained in
1994, the 1992 and 1993 restructuring programs have returned the Company's
European operations to profitability.

Research and development expenditures by the Company, excluding the German
Subsidiary expenditures, increased approximately 16.5% to $17.6 million in 1993
and increased 5.2% to $18.5 million in 1994. The Company believes that, over the
past three years, expenditures for research and development activities have been
adequate to maintain the Company's product lines and to introduce new products
at an appropriate rate to sustain future growth. Expenditures on research and
development are expected to increase in 1995.

16
19

QUARTERLY RESULTS OF OPERATIONS

The following table shows the Company's results of operations for the three
months ended March 31, 1995 and 1994:

THREE MONTHS ENDED MARCH 31,
-----------------------------------
1995 1994
--------------- ---------------
% OF % OF
AMOUNT SALES AMOUNT SALES
------ ----- ------ -----
(IN MILLIONS OF DOLLARS)

Net Sales........................................................ $263.4 100.0% $210.5 100.0%
Cost of Goods Sold............................................... 161.5 61.3% 128.5 61.1%
------ ----- ------ -----
Gross Profit................................................... 101.9 38.7% 82.0 38.9%
Distribution Cost/Selling
General & Administrative Expenses.............................. 71.8 27.3% 61.0 29.0%
------ ----- ------ -----
Operating Income............................................... 30.1 11.4% 21.0 9.9%
Other Income..................................................... 0.4 0.2% 0.4 0.2%
Interest Expense, Net............................................ (3.6) -1.4% (3.6) -1.7%
------ ----- ------ -----
Income before Income Taxes..................................... 26.9 10.2% 17.8 8.4%
Income Taxes..................................................... 10.8 4.1% 7.4 3.5%
------ ----- ------ -----
Net Income....................................................... $16.1 6.1% $10.4 4.9%
====== ===== ====== =====

THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THREE MONTHS ENDED MARCH 31, 1994

Net Sales. Net sales for the quarter ended March 31, 1995 increased by
25.1% to $263.4 million, as compared with net sales of $210.5 million reported
for the comparable period in 1994. Net sales from the Company's U.S. operations
totaled $182.8 million for the first quarter of 1995, representing an increase
of 20.9% or $31.5 million over the comparable prior year period. Non-U.S. sales
totaled $80.6 million for the first quarter of 1995, representing an increase of
36.0% or $21.4 million over the same period in 1994. Both sales increases were
attributable to increases in volume and price with volume being the more
important factor. European sales also benefited from the partial regaining of
market share in Germany where in 1994 market share had been lost because of 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 quarter of 1995. Currency translation had a positive
effect of approximately $2.8 million on 1995 non-U.S. sales. Total U.S. third
party and intercompany export sales were $31.9 million for the first quarter of
1995, an increase of 26.7% from $25.2 million reported in the prior year period.
This increase reflects improved worldwide economic conditions and the effect of
additional distributors.

Gross Profit. Gross profit increased to $101.9 million in the first
quarter of 1995, as compared with $82.0 million for the same period in 1994.
Gross profit as a percentage of sales declined slightly to 38.7% in the first
quarter of 1995 from 38.9 % in the comparable period in 1994. U.S. margins were
38.9% which was a decrease from 1994's first quarter margin of 39.7% principally
caused by the first quarter's sales growth being proportionally higher in lower
margin machines and motors. This trend is expected to continue. Higher U.S.
material and other manufacturing costs incurred in the quarter were essentially
offset by higher selling prices.

Distribution Cost/Selling, General & Administrative Expenses. Distribution
cost/selling, general & administrative expenses were $71.8 million or 27.3% of
sales (26.4% at the Company's U.S. operations) for the first quarter of 1995.
This compares with expenses of $61.0 million or 29.0% of sales (28.2% at the
Company's U.S. operations) for the same period in 1994. Expenses for 1995 were
unfavorably affected by further devaluation of the Mexican Peso resulting in a
charge to operations without tax benefit of approximately $2.3 million in the
first quarter of 1995. The decrease in expenses as a percentage of sales is
attributable to increased sales volume and resulting operating leverage.
Included in distribution cost/selling,

17
20

general & administrative expenses are costs ($19.8 million in 1995 and $17.4
million in 1994) related to the Company's discretionary year-end employee bonus
program which is subject to Board of Directors approval.

Interest Expense, Net. Interest expense, net was $3.6 million for the
quarter ended March 31, 1995 which was unchanged from the prior year period as
higher interest rates for 1995 were offset by lower debt levels.

Income Taxes. Income taxes for the quarter ended March 31, 1995 were $10.8
million on income before income taxes of $26.9 million, an effective rate of
40.2%, as compared with income taxes of $7.4 million on income before taxes of
$17.8 million, or an effective rate of 41.5% for the same period in 1994. 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 the related deferred tax
asset.

Net Income. Net income increased 54.3% to $16.1 million or $0.73 per share
for the quarter ended March 31, 1995 as compared with $10.4 million or $0.48 per
share for the comparable period in 1994.

YEARLY RESULTS OF OPERATIONS

The following table shows the Company's results of operations for the years
ended December 31, 1994, 1993 and 1992:

YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1994 1993 1992
--------------- --------------- ---------------
% OF % OF % OF
AMOUNT SALES AMOUNT SALES AMOUNT SALES
------ ----- ------ ----- ------ -----
(IN MILLIONS OF DOLLARS)

Net Sales........................................ $906.6 100.0% $846.0 100.0% $853.0 100.0%
Cost of Goods Sold............................... 556.2 61.3% 532.8 63.0% 553.1 64.8%
------ ----- ------ ----- ------ -----
Gross Profit................................... 350.4 38.7% 313.2 37.0% 299.9 35.2%
Distribution Cost/Selling
General & Administrative Expenses.............. 261.7 28.9% 277.0 32.7% 299.2 35.1%
------ ----- ------ ----- ------ -----
Operating Income before Restructuring.......... 88.7 9.8% 36.2 4.3% 0.7 0.1%
Restructuring Charges (income)................... (2.7) -0.3% 70.1 8.3% 23.9 2.8%
------ ----- ------ ----- ------ -----
Operating Income (loss)........................ 91.4 10.1% (33.9) -4.0% (23.2) -2.7%
Other Income..................................... 3.1 0.3% 2.9 0.3% 4.4 0.5%
Interest Expense, Net............................ (14.3) -1.6% (16.0) -1.9% (15.6) -1.8%
------ ----- ------ ----- ------ -----
Income (loss) before Income Taxes.............. 80.2 8.8% (47.0) -5.6% (34.4) -4.0%
Income Taxes (benefit)........................... 32.2 3.5% (6.4) -0.8% 11.4 1.3%
Income (loss) before Cumulative effect of
Accounting Change............................ $48.0 5.3% $(40.6) -4.8% $(45.8) -5.3%
Cumulative effect to January 1, 1993 of change in
method of accounting for income taxes.......... 2.5 .3%
------ ----- ------ ----- ------ -----
Net Income (loss)................................ $48.0 5.3% $(38.1) -4.5% $(45.8) -5.3%
====== ===== ====== ===== ====== =====

1994 COMPARED TO 1993

Net Sales. Net sales for 1994 were $906.6 million, an increase of $60.6
million or 7.2% from $846.0 million for 1993. Net sales for 1993 include the
sales of manufacturing operations (principally in Germany) that were closed in
early 1994. Excluding the 1993 sales of the closed operations, sales for 1994
increased 17.0%. A portion of this increase was due to the absorption by the
Company's other manufacturing operations of the sales formerly made by the
closed operations. Sales from the Company's United States operations were $641.6
million in 1994 or 18.1% higher than 1993 sales of $543.5 million, attributable
to volume and price increases. Non-United States sales in 1994 were $265.0
million compared to $302.5 million in 1993, a decrease of 12.4%. Excluding the
1993 sales of the closed operations, non-United States sales for 1994 increased
14.7% over non-United States sales for 1993 reflecting improved economic
conditions in Europe and

18
21

elsewhere in the world. A portion of this increase was also due to the
absorption by the Company's other manufacturing operations of the sales formerly
made by the Company's closed German Subsidiary. Total United States export sales
were $105.3 million in 1994, an increase of $18.1 million or 20.8% from $87.2
million in 1993. This increase in export sales largely reflects improved
worldwide economic conditions. In 1994, sales of certain new products were
restricted by capacity limitations inherent in tooling up production which have
now been resolved.

Gross Profit. Gross profit increased to $350.4 million in 1994 as compared
with $313.2 million in 1993. Gross profit as a percentage of sales improved to
38.7% in 1994 from 37.0% in 1993. This improvement in gross profit is largely
attributable to a greater percentage of total sales coming from the higher
margin United States operations in 1994. In addition, 1993 gross profit was
unfavorably affected as it included lower gross profit levels for the
manufacturing operations that were closed in early 1994. Gross profit for the
Company's United States operations in 1994 remained substantially consistent
with 1993 at 39.1%.

Distribution Cost/Selling, General & Administrative Expenses. Distribution
cost/selling, general & administrative expenses were $261.7 million in 1994, or
28.9% of sales (28.4% at the Company's United States operations), as compared to
$277.0 million, or 32.7% of sales in 1993 (29.7% at the Company's United States
operations). The decrease in these expenses as a percentage of sales evidences
the effects of the closing of the German Subsidiary, the Company's restructuring
program and management's initiatives to control operating costs throughout the
Company. The higher expense level in 1993 was principally due to the inclusion
of the operating results of the Company's closed German Subsidiary. Included in
distribution cost/selling, general & administrative expenses are the costs
($68.4 million in 1994 and $61.9 million in 1993) related to the Company's
discretionary employee bonus program.

Interest Expense, Net. Interest expense, net was $14.3 million in 1994 as
compared with $16.0 million in 1993, a decrease which reflects the effect of
lower debt levels offset partially by higher interest rates.

Income Taxes. Income taxes in 1994 were $32.2 million on income before
income taxes of $80.2 million, an effective rate of 40.1%, as compared to a tax
benefit of $6.4 million on a loss before income taxes of $47.0 million in 1993.
The 1993 tax benefit principally reflects the tax benefits attributable to the
plant closure and liquidation of the German Subsidiary. Results from 1993 also
benefited from the cumulative effect of a change in accounting for income taxes,
which decreased the net loss by $2.5 million or $0.12 per share.

Net Income. As a result of the restructuring programs in 1992 and 1993 and
the improvement in economic conditions in Europe, the United States and Canada,
net income for 1994 was $48.0 million as compared to a net loss of $38.1 million
in 1993. Results in 1993 were adversely affected by a $40.9 million net-of-tax
restructuring charge. 1994 results benefited from a net reversal of $2.7 million
of restructuring charges recorded previously.

1993 COMPARED TO 1992

Net Sales. Net sales for 1993 were $846.0 million, a decrease of $7.0
million or less than 1.0% from 1992 sales of $853.0 million. Excluding the 1993
and 1992 sales of the operations closed in early 1994, sales increased 5.7%.
Sales from the Company's United States operations in 1993 were $543.5 million or
11.6% higher than 1992 sales of $487.1 million, attributable to volume and price
increases. Non-United States sales in 1993 were $302.5 million compared to
$365.9 million in 1992, a decrease of 17.3%. Excluding the sales of operations
closed in early 1994, non-United States sales for 1993 decreased 5.8% from 1992
non-United States sales. Currency translation adversely affected these 1993
sales by $23.5 million. Total United States export sales were $87.2 million in
1993, a decrease of $10.4 million or 10.6% from $97.6 million in 1992. This
decrease in export sales reflects the depressed economic conditions in Europe
and lower intercompany export sales due to inventory reductions at the Company's
foreign subsidiaries.

Gross Profit. Gross profit increased to $313.2 million in 1993 as compared
with $299.9 million in 1992. Gross profit as a percentage of sales improved to
37.0% in 1993 (38.9% at the Company's United States operations) from 35.2% in
1992 (35.1% at the Company's United States operations). This improvement in
gross profit was largely attributable to United States sales volume increases
and improved absorption of

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manufacturing costs. Gross profit in 1993 was also favorably impacted by reduced
overhead costs as a result of restructurings in 1992 and reduced price pressures
in Europe. In 1992, gross profit was adversely affected by inventory adjustments
as a result of management's decisions to reduce certain inventory.

Distribution Cost/Selling, General & Administrative Expenses. Distribution
cost/selling, general & administrative expenses were $277.0 million in 1993, or
32.7% of sales (29.7% at the Company's United States operations), as compared to
$299.2 million, or 35.1% of sales in 1992 (31.1% at the Company's United States
operations). Expenses for 1993 include $3.7 million for asset disposals and
other non-recurring costs as compared to expenses for 1992 which include $18.9
million relating to certain one-time costs at the Company's closed German
Subsidiary, asset disposals and certain other non-recurring costs. Included in
distribution cost/selling, general & administrative expenses are the costs
($61.9 million in 1993 and $55.3 million in 1992) related to the Company's
discretionary employee bonus program.

Interest Expense, Net. Interest expense, net was $16.0 million in 1993 as
compared with $15.6 million in 1992, reflecting the use of credit facilities
with more favorable terms in 1993, offset by lower interest income in 1993.

Income Taxes. The 1993 tax benefit of $6.4 million on a loss before income
taxes of $47.0 million compares to the 1992 provision for income taxes of $11.4
million on a loss before income taxes of $34.4 million. The 1993 tax benefit
principally reflects the tax benefits attributable to the plant closure and
liquidation of the German Subsidiary. The higher effective rate experienced in
1992 was principally due to losses from non-United States subsidiaries that were
in net operating loss carryover positions. Results from 1993 also benefited from
the cumulative effect of a change in accounting for income taxes, which
decreased the net loss by $2.5 million or $0.12 per share.

Net Loss. The net loss for 1993 was $38.1 million as compared to a net
loss of $45.8 million in 1992. Results were adversely affected by restructuring
charges of $40.9 million net-of-tax and $23.9 million without tax benefit in
1993 and 1992, respectively.

LIQUIDITY AND CAPITAL RESOURCES

During the three years ended December 31, 1994 and the quarter ended March
31, 1995, the Company has relied primarily on cash flow from operations and
borrowings to finance working capital, investments, capital expenditures and the
payment of dividends. Cash provided from operating activities for the quarter
ended March 31, 1995 amounted to $33.8 million compared with $30.3 million for
the comparable period in 1994. Cash flows from operations for 1995 were used
primarily for net capital expenditures of $10.5 million, net debt repayments of
$23.9 million and the payment of dividends in the amount of $2.2 million. Cash
provided from operating activities during 1994 amounted to $68.7 million, an
increase of $40.0 million over 1993. This increase in cash flow resulted
primarily from the Company's increase in net income; partially offset by
increased working capital requirements associated with increased sales volume.
Cash flows from operations for 1994 and the proceeds from the sale of common
stock ($2.1 million) were used primarily for net capital expenditures of $32.3,
net debt repayments of $42.1 and the payment of dividends of $8.1 million. Cash
provided from operating activities amounted to $28.7 million in 1993 and $23.6
million in 1992 despite net losses of $38.1 million and $45.8 million,
respectively, which were principally caused by the restructuring charges. In
1993, cash flows from operations and a net increase in debt in the amount of
$5.1 million were used primarily for net capital expenditures of $16.5 million,
the purchase of the remaining minority interest in a subsidiary in Spain for
$8.5 million, and the payment of dividends of $7.8 million. In 1992, cash flow
from operations coupled with a net increase in debt in the amount of $53.5
million and proceeds of $2.4 million from the sale of common stock were used
primarily for net capital expenditures of $30.4 million, the purchase of the
outstanding minority interest in the Lincoln Norweld subsidiary and a small
Mexican company for a total of $37.3 million, the payment of dividends of $7.8
million and the purchase of common stock for $4.1 million.

Net working capital was $159.7 million at March 31, 1995, compared to
$169.3 million at December 31, 1994 and $149.9 million at December 31, 1993. The
net decrease in working capital for the first quarter of 1995 was primarily a
combination of increases in accounts receivable of $24.6 million and inventories
of $17.0

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million as a result of the increase in business volume offset by increases in
current liabilities of $51.5 million as a result of higher accounts payable,
accrued taxes and other current liabilities. Other current liabilities at March
31, 1995 includes provisions for possible year-end bonuses and related payroll
taxes of $17.6 million which are wholly discretionary and subject to Board of
Directors approval. Net working capital increased $19.4 million from December
31, 1993 to December 31, 1994. This net increase was the result of increases in
inventories and receivables to support the increase in business volume offset
partially by the liquidation of assets and liabilities related to the 1993
restructuring activities and a reduction in short-term indebtedness of $15.3
million.

In October 1994, the Company amended its unsecured, multi-currency Credit
Agreement and reduced its committed line under the Credit Agreement from $230.0
million to $200.0 million. The amended Credit Agreement also permits the
establishment of an accounts receivable facility of up to $50 million. See Note
D to the consolidated financial statements for additional information regarding
the terms and financial covenants of the Company's borrowing arrangements. Under
such covenants, the Company's ability to borrow under the Credit Agreement at
December 31, 1994 was limited to aggregate borrowings of $176.9 million. At
December 31, 1994, $100.9 million was outstanding under the Credit Agreement.

Total debt at March 31, 1995 was $192.8 million compared to $212.9 million
in December 31, 1994. At March 31, 1995, total debt was 47.5% 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, and increased
equity as a result of earnings for the quarter, net of dividend payments, and
the favorable effects of currency translation of $5.0 million in the first
quarter of 1995. Total debt at December 31, 1994 was $212.9 million compared to
$250.3 million at December 31, 1993 reflecting the significantly improved 1994
financial results and cash flow from operating activities. At December 31, 1994,
total debt was 52.3% of total capitalization compared with 63.6% at year end
1993.

Capital expenditures for property, plant and equipment totaled $10.7
million for the first quarter of 1995, $37.4 million in 1994 and $19.1 million
in 1993. These expenditures for property, plant and equipment represent the
Company's continued commitment to support and develop advanced technologies,
support new products, expand current capacity and reduce future manufacturing
costs. The Company is continuing the modernization and expansion of its motor
division, has established a separate facility in Cleveland dedicated to motor
manufacturing and is increasing its testing and design capacity to be able to
reduce costs, increase output, and meet scheduled higher industry efficiency
standards.

The Company is committed to reducing its debt levels in 1995, continues to
closely monitor its capital expenditures and is adding to capacity to meet the
demand for its products and modernizing facilities as necessary. While the
financial covenants of the Company's debt agreements place limitations on
capital expenditures, capital expenditures for 1995 are expected to increase
over 1994 expenditures.

A total of $8.1 million in dividends, including a special dividend, was
paid in 1994. Although the Company paid a special dividend of $0.01 per share in
the fourth quarter of 1994, management expressed its intention of not continuing
such a practice in the future. 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 (.60 to 1 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. While the losses
of 1993 and 1992 placed constraints on the Company's financial flexibility, the
impact was reduced, but not eliminated, by the strong 1994 performance. The
Company is in compliance with all of its financial covenants and does not
anticipate violating any of its covenants.

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BUSINESS

GENERAL

The Company is one of the world's largest designers and manufacturers of
arc welding products, manufacturing a full line of arc welding equipment and
consumable welding products. The Company, now entering its second century of
operations, also manufactures a broad line of integral horsepower industrial
electric motors. The Company's welding products are used in a wide range of
industrial applications, including the manufacturing of automobiles, trucks,
heavy machinery, railcars and ships, and the construction of buildings, bridges,
oil platforms and pipelines. The Company distributes its products through a
large, technically trained sales force and a broad distribution network.

BUSINESS STRATEGY

- Highly Productive and Motivated Workforce. The Company's employees and
incentive management system are essential components of the Company's
century of success. The Company believes its incentive management system
has increased productivity, led to enhanced operating flexibility and
contributed to the Company's industry leadership position. In the core
United States operations, absenteeism of less than 2% and turnover rates,
among employees with more than 180 days of service, of approximately 4%
annually help drive productivity, while management's ability to reassign
employees to where they are most needed and to require overtime work as
needed provides greater operating flexibility. All employees are
encouraged and empowered to make suggestions for improvements in quality,
safety and cost reduction.

- Advanced Engineering Expertise. The Company is a leader in the
development of innovative, value added arc welding products. An example
of the Company's emphasis on advanced technology is its Consumables
Research and Development Department, which employs 57 engineers and
technicians in

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the design of manual electrodes, submerged arc electrodes and fluxes,
self-shielded cored electrodes, and gas-shielded solid and cored
electrodes. All of the Company's research and development departments
provide technical support to the Company's domestic and foreign
operations. The efforts of its engineers, many of whom have been granted
patents and awards for their contributions to welding technology, have
helped the Company gain a global leadership role in the design of welding
products for such critical applications as gas and oil pipelines,
offshore drilling platforms and nuclear submarines.

- Strong Distribution Network. In the United States, the Company believes
it has the most extensive distribution network in the domestic welding
industry. The Company's domestic distribution network includes more than
950 welding distributors and 1,050 motor distributors, and seven
strategically located distribution centers designed to deliver 95 percent
of all standard products within 48 hours. The Company also has two
distribution centers in Canada that are fully integrated into the
domestic sales and distribution system. Although the Company restructured
certain of its international operations beginning in 1992, the Company
has a substantial international presence and a broad distribution
network. The Company and its foreign subsidiaries have more than 1,200
distributors outside the United States.

- Large, Technically Trained Sales Force. The Company's domestic sales
force primarily consists of engineers experienced in welding who, with
support from the Company's Welding Technology Center and Research and
Development and Engineering Departments, can provide the customer with
practical, timely and cost-saving solutions to problems. Located in 34
district offices, the Company's highly trained domestic sales force
numbers approximately 260 individuals, each with the ability to conduct
welding demonstrations and train distributor personnel in the use of the
Company's products. The Company utilizes this technical expertise to
present to end users its Guaranteed Cost Reduction Program in which the
Company guarantees that the user will save money in its manufacturing
process when it utilizes the Company's products. This close relationship
between the technical sales force and the end users, together with the
Company's supportive relationship with its distributors, who are
particularly interested in handling the Company's broad line of products,
is an important element of the Company's market success and a valuable
asset of the Company. The Company's foreign subsidiaries have a sales
force that totals more than 265 individuals, with approximately 130
operating out of the Company's various European subsidiaries. In
addition, the Company has an international export sales force that
functions overseas in more than 85 countries, primarily where the Company
does not have foreign subsidiaries. The Company maintains 20
international sales offices located in 17 countries.

- Focused Growth in New Markets. The Company believes that international
markets will provide expanded opportunities for increased sales of both
basic and advanced technology products. The Company recently received the
President's "E" Award for excellence in exporting. Part of the Company's
growth strategy is focused on marketing its existing products into
Central Europe, Asia, Latin America and other developing economies to
take advantage of the significant number of infrastructure projects
planned in these economies in the next decade. The Company believes that
the restructuring of its continuing European operations has provided it a
sound base for current and future distribution and sales growth in the
European market, including expansion into new markets in Central Europe.
The Company also believes that its long established presence in Australia
will continue to facilitate growing export sales to Indonesia and
Southeast Asia. While the Company maintains a sales organization in
Brazil, the Company's strong North American presence, including
manufacturing facilities in Canada and Mexico as well as the core United
States operations, will serve as the Company's principal base for
expansion into Latin America. The Company's strategy to gain entry in new
markets includes formation of joint ventures with local partners and the
use of licensing or private labeling arrangements to build market share
before engaging in capital intensive projects such as construction of
local manufacturing facilities.

Also as part of its growth strategy, the Company is expanding its
integral horsepower industrial electric motor facility and anticipates
continued development of this business. The Company is continuing the
modernization and expansion of its motor division, has established a
separate, world-class facility dedicated to motor manufacturing, and is
increasing its testing and design capacity to be able to reduce costs,
increase output, and meet scheduled higher industry efficiency standards.

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INDUSTRY BACKGROUND

Welding

Welding is a technique used for joining metallic parts usually through
applying intense heat supplied by electricity or by gas flame. Virtually any two
metal items can be joined by welding. There are many welding processes, with the
most common being arc welding, oxy-fuel welding and resistance welding. Arc
welding, which was first introduced at the end of the 19th century and today is
the most common industrial welding process, uses the concentrated heat of an
electric arc to join metal by fusion with a deposit of molten metal, typically
from a consumable electrode. The Company believes it is a worldwide leader among
arc welding manufacturers.

As part of the arc welding process, it is necessary to shield the molten
metal supplied by the electrode from oxygen or other gases in the atmosphere
that might otherwise react with the molten metal, creating undesirable
weaknesses in the weld. Process variations using different types of electrodes
have been developed to accomplish this objective, including "stick" electrodes
(the oldest form of arc electrode), metal inert gas ("MIG") wire electrodes,
tungsten inert gas ("TIG") wire electrodes, and submerged arc electrodes and
flux cored wire electrodes.

The MIG process, which may be the most utilized process in the United
States today involves a continuous, small diameter, consumable, metallic
electrode wire fed through a gun into the electric arc. An inert gas contained
in a high-pressure cylinder is also introduced by the gun and creates a shield
around the weld to prevent contamination. The gas pressure is limited with a
regulator that feeds a controlled amount of gas through a separate hose
integrated into the wire-feed tube. The process limits heat input to the
specific welding area to prevent distortion. MIG welding is especially useful
when joining sheetmetal as it limits distortion and warpage. Power for the arc
is provided by a power source integrated with electronic controls that allow the
user to adjust both wire speed and arc length. The thickness of the material to
be welded and the size of the weld dictate the amount of current to be used.

Arc welding is commonly used in light and heavy industry. Oxy-fuel welding
is more commonly used in maintenance repairs and in home workshops. The
Company's welding products are used in a wide range of industrial applications,
including the manufacturing of automobiles, trucks, heavy machinery, railcars
and ships, and the construction of buildings, bridges, oil platforms and
pipelines, and are also sold widely for non-industrial uses such as construction
and equipment repairs.

The Company believes the world market for welding and cutting equipment,
consumables and accessories is in excess of $8 billion. The United States,
Western Europe and Japan, as the three largest areas, account for roughly 45% of
that total market. Newly industrialized or developing areas represent sizable
welding products markets. For example, China's total welding products market is
believed to be rapidly approaching the size of the United States welding
products market.

The United States welding and cutting market is estimated to exceed $1.5
billion, with approximately $1.4 billion constituting the arc welding business.
Of this amount, consumables represent $750 million and arc welding equipment
represents $620 million. The Company believes that, based on industry estimates,
it maintains a market leading 42% share of the United States consumables
business and a top-tiered share of the United States arc welding equipment
business.

Cutting

Virtually all users of welding products also utilize one or more processes
to cut and shape metal. Cutting processes include plasma, oxy-fuel and laser
cutting systems. The plasma cutting process involves a stream of ionized gas
that carries an electric arc through a small opening, resulting in high
concentrations of heat at the cut. The oxy-fuel process is a low-cost and highly
versatile process in which steel is preheated and a concentrated, high-velocity
stream of oxygen is introduced which can cut steel of unlimited thicknesses via
the exothermic process of oxidation. The Company participates in the cutting
industry in arc and plasma cutting equipment, and through its Harris Calorific
Division ("Harris") designs, manufactures and sells equipment and accessories
for the oxy-fuel cutting business.

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Industrial Electric Motors

The Company's Electric Motor Division operates in a $2.0 billion industrial
motor market. The Company estimates that it competes in a business segment of
$1.3 billion within this larger market. The industrial motor market will be
significantly impacted by federally legislated efficiency requirements which go
into effect at the end of 1997. The Company is currently redesigning its entire
product line in order to meet these federal efficiency standards.

PRODUCTS

Welding and Cutting

The Company's full line of arc welding equipment includes welding machines,
power sources and automated welding systems and ranges from basic units used for
light manufacturing, maintenance and farm use to highly sophisticated or heavy
duty machines used in robotic applications, high production welding and
fabrication. The Company manufactures arc welding products at facilities located
in the United States (2), Australia, Canada, Mexico, England, France, the
Netherlands, Norway (2) and Spain.

The Company is a leader in the development of welding equipment with
sophisticated applications. New welding equipment produced by the Company
provides end users with better control of the welding process, is easier for
less-experienced welders to operate and provides greater versatility, in many
cases at reduced cost. For example, high power solid state electronic switching
circuits for use in static welding power sources permit the control of the
welding current to produce optimum arc characteristics. New advanced
computer-based circuits now control the output of welding power sources to
develop customized welding wave shapes, making machines such as the Company's
Power Wave(TM) more user-friendly by storing specific applications in memory and
assisting the operator in selecting the proper process and welding procedure.

Certain of the Company's recently developed products have enabled the use
of the welding process in applications that were not previously feasible. For
example, the Company recently introduced the surface-tension-transfer
("STT(TM)") power source which was developed to enable the welding of
light-gauge materials that were not suited for the traditional welding process.
The Company is currently the only manufacturer to offer the technology provided
by the STT in a reliable form. Such technology is the result of the Company's
commitment to product development and its strategy to be on the leading-edge of
welding technology with broad customer application. This strategy has also
resulted in an increased focus on welding automation, including the increasing
growth of the Company's robot welding systems. The Company offers automation
systems through its worldwide sales and distribution network.

The Company's consumable products, designed for use in conjunction with arc
welding equipment, include a full line of manual electrodes, fluxes and wires.
The Company's consumable products are used in light to heavy fabrication of mild
and alloy steels and in hardfacing applications. Hardfacing involves coating
metal surfaces with alloys to increase durability. Three primary types of arc
welding electrodes are produced: (i) coated manual or stick electrodes, (ii)
solid wire electrodes produced in coil form for continuous feeding in mechanized
welding, and (iii) cored wire electrodes produced in coil form for continuous
feeding in mechanized welding. Cored electrodes are used with no external
shielding (self-shielded), with gas shielding or with a granular flux for
submerged arc applications. The Company is the recognized leader in the
development of the self-shielded cored electrodes (Innershield(R)) which require
no external gas shielding. The unique technology embodied in these electrode
designs is used to great advantage in applications ranging from the high speed
welding of sheet metal for automotive applications to the fabrication of
offshore drilling platforms. In building construction, the Innershield process
is widely used because of its productivity and because the process is not
affected by wind conditions.

Low cost imports, when they are available due to market conditions, are a
threat in commodity-type consumables, such as MIG wire electrodes. See "Risk
Factors -- Competition." The Company, therefore, is focused on the development,
manufacturing and marketing of value added products. The Company's current
consumables focus centers on premium MIG products while long-term efforts will
stress flux-cored wire and hardfacing. The Company anticipates that premium MIG
wire and flux-cored wire consumables will generate continued growth, while stick
and submerged arc products are expected to decrease, particularly in established

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economies such as the United States and Western Europe. Stick arc technology is
still prevalent in developing economies. Focusing on higher technology products
such as flux-cored wires and certain welding subarc fluxes will offer the
Company greater export opportunities as the Company currently holds a
significant technology advantage over local producers in the target developing
countries markets.

The Company also manufactures and sells regulators and torches used in
oxy-fuel welding and cutting, principally through its Harris division which has
been a recognized leader in the industry since 1905. Products offered by Harris
include regulators used in industrial and medical gas applications, torches used
in oxy-fuel welding and cutting and gas seals. Harris manufactures its products
domestically at facilities located in Gainesville, Georgia and Monterey Park,
California and internationally in Ireland and Italy. Harris' sales in North
America have grown 30% since 1992. The Company attributes this growth to several
factors: (i) market penetration due to the synergy with the Company's core
marketing strength, since Harris and the Company share largely the same markets
and virtually 100% of the distribution channels, (ii) Harris regulator products
which are used in all of the gas-shielded arc welding processes, and (iii)
continuing improvements in quality and productivity through the sharing of
manufacturing technology and the incorporation of the Company's incentive
management principles. The Company believes that Harris' growth will largely
parallel that of the arc welding business.

Industrial Electric Motors

The Company designs, manufactures and sells a broad line of steel, aluminum
and cast iron frame integral horsepower electric motors for use in industrial
applications. In 1992, the Company acquired the industrial electric motor assets
of the Delco division of General Motors Corporation in Dayton, Ohio,
substantially expanding its market position and broadening its product line.
Presently, the Company's line of steel and aluminum frame industrial electric
motors ranges from 1/3 to 250 horsepower and up to 1,250 horsepower for cast
iron motors. The Company is continuing the modernization and expansion of its
motor division, has established a separate, world-class facility near Cleveland,
Ohio dedicated to motor manufacturing, and is increasing its testing and design
capacity to reduce costs, increase output and meet scheduled higher industry
efficiency standards. The Company anticipates that the growth of its industrial
motor business will reduce the impact of downturns in the arc welding industry.

The industrial electric motor industry's emphasis on increased system
efficiencies and lower maintenance costs has led to greater demand for AC motor
drives and variable speed motors. The Company is actively participating in the
AC motor business and seeks to expand its business in AC motor drives.

Custom designing value added products to meet particular applications,
especially with larger motors, is also a priority of the Company. Historically,
the Company participated primarily in that portion of the industrial motor
market that was the most competitive, with fairly standard products. The
addition of a cast iron product line in 1992, together with the recent addition
of new plant capacity and engineering expertise, has increased the Company's
ability to compete in a broader range of these value added products.

RESEARCH AND DEVELOPMENT

While arc welding has been used industrially since the late 19th century,
both equipment and consumables continue to experience technological advances
that improve the efficiency of welding equipment and processes, resulting in
improved quality and user savings on gas, energy, welding time and manpower
needs. The Company introduces a variety of new or updated products each year.
Special applications have created a market for value-engineered products that
can create a competitive advantage in markets, such as the United States, where
some welding products are reaching commodity status. The Company anticipates
continued growth in sales of automated welding systems as well as continuing
refinements to basic units.

The Company views excellence in product development as a continuing key
factor in its future success. The Company has greatly expanded the size of its
engineering staff at its core United States operations over the last ten years.
The Company invested approximately $18.5 million in research and development in
1994. These activities were primarily related to the development of new products
utilizing the latest available technology. As of December 31, 1994, the number
of engineering employees engaged full-time in these

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research and development activities was 103, supported by more than 320
additional engineers and technical staff who assist in developing new products
through the manufacturing process.

SALES AND DISTRIBUTION; MARKETING

The Company's products are sold in both domestic and international markets.
Domestically, they are sold by distributors as well as directly by the Company's
own sales organization. The Company has an extensive arc welding distribution
network in the United States. In 1994, approximately 80% of the Company's arc
welding sales were through the Company's more than 950 distributors. The Company
maintains 34 district sales offices, all of which include training centers, and
seven distribution centers to provide for expedited delivery to customers. The
Company's highly trained domestic sales force numbers approximately 260
individuals, each with the ability to conduct welding demonstrations and train
distributor personnel in the use of the Company's products.

The Company believes its welding products have particular value because of
its highly trained technical sales force and the support of its research and
development staff which allow it to assist the consumers of its welding products
in solving their welding application problems. The Company utilizes this
technical expertise to present to end users its Guaranteed Cost Reduction
Program, in which the Company guarantees that the user will save money in its
manufacturing process when it utilizes the Company's products. The Company
evaluates a customer's current manufacturing operation as it relates to welded
fabrication. Based on the analysis of these details and the production targets
of the customer, a variety of cost reduction opportunities are presented. If the
customer implements these cost reduction ideas, the Company will "guarantee" a
specific dollar savings to be achieved on an annualized basis. If the customer
does not realize these savings, the Company will pay the customer for the
difference between the savings actually achieved and the "guarantee." In 1994,
the program contributed an estimated $14.8 million in new domestic sales without
any claims under the guarantee. The Guaranteed Cost Reduction Program allows the
Company to introduce its products to new users and to establish and maintain
close relationships with the consumers. This close relationship between the
technical sales force and the end users, together with the Company's supportive
relationship with its distributors, who are particularly interested in handling
the Company's broad line of products, is an important element of the Company's
market success and a valuable asset of the Company.

Although the Company restructured certain of its international operations
beginning in 1992, the Company has a substantial international presence and a
broad distribution network. The Company and its foreign subsidiaries have more
than 1,200 distributors outside the United States. The Company's foreign
subsidiaries have a sales force that totals more than 265 individuals, with
approximately 130 operating out of the Company's various European subsidiaries.
In addition, the Company has an international export sales force that functions
overseas in more than 85 countries, primarily where the Company does not have
foreign subsidiaries. The Company maintains 20 international sales offices
located in 17 countries.

The Company enjoys substantial name brand recognition in its worldwide
markets. Much of its product recognition may be attributed to the Company's
active role in training welding operators and supervisors. Since 1917, the
Company's welding school has trained over 70,000 students, and its training
publications on welding are broadly distributed.

The industrial motor business is divided roughly equally between sales to
original equipment manufacturers ("OEMs") and to distributors. The Company's
domestic distribution network includes 1,050 motor distributors. In 1994,
approximately 60% of the Company's motor sales were through distributors and 40%
were sold directly to OEMs. The Company believes that over 50% of its sales are
for replacement motors and consequently its sales are less subject to an
economic downturn.

The Company markets its industrial electric motors to small and medium size
companies, while many of the Company's larger competitors focus on sales to the
larger OEMs. The Company believes it is well positioned to serve small and
medium size companies because of its large field sales force and distribution
system. Concentrating sales to specific targeted segments of the industrial
motor business is consistent with the Company's strategy of developing a niche
for offering high quality industrial motors with an emphasis on value
engineering.

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CUSTOMERS

The Company sells its products to a broad range of end users. Approximately
80% of its domestic sales are made through distributors with the balance
comprised of direct sales to customers and retail sales. The Company is not
dependent on a single end-use customer. The loss of any one end-use customer
would not have a material adverse effect on its business. The Company's business
is not seasonal.

COMPETITION

Conditions in the arc welding industry are highly competitive. The Company
believes that it is one of only a few worldwide broad line manufacturers of both
arc welding equipment and consumables products. The industry also includes
numerous smaller competitors specializing in particular products. Competition in
the arc welding industry is on the basis of price, brand preference, product
quality and performance, warranty, delivery, service and technical support. The
Company believes that its position as an industry leader demonstrates that it
competes effectively in these areas. See "Risk Factors -- Competition."

The marketplace for industrial electric motors is also very competitive.
The Company competes domestically with approximately nine other manufacturers.
According to industry sources, four competitors (Baldor, Reliance Electric,
Emerson/United States and General Electric) command approximately 60% of the
business. The remaining 40% is believed to be divided among the remaining six
companies, including the Company.

EMPLOYEES

As of December 31, 1994, the Company had approximately 5,700 employees.
None of the employees at the Company's Australian, Canadian or United States
operations are unionized. Employees at the operations of the Company's Mexico
and European subsidiaries are unionized or are members of local work councils.

The Company's incentive management system today applies to substantially
all full-time employees at the Company's United States operations and in Canada
and Australia. Harris' domestic operations and the Company's operations in
Mexico have adopted portions of the system, and the Company is exploring methods
to bring the system to its operations in Europe, where workplace rules impede
adoption of certain aspects of the system.

LEGAL PROCEEDINGS

The Company is involved in various civil lawsuits and administrative
hearings arising in the ordinary course of business. Current litigation
involving the Company includes the following cases, in which claimants seek
recovery for injuries allegedly resulting from exposure to fumes and gases in
the welding environment. In management's opinion, the outcome of these matters
will not have a material adverse effect on the Company's financial condition,
liquidity or results of operations.

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 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.

The Company is also a defendant in four other cases, alleging that exposure
to welding fumes generally impaired the respiratory system of the plaintiffs.
The plaintiffs seek compensatory and punitive damages, in most cases for
unspecified sums. During the preceding five years, 39 similar cases have
resulted in 11 voluntary dismissals, 7 defense verdicts or summary judgments and
21 settlements for immaterial amounts.

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

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asbestos claimants seek compensatory and punitive damages, in most cases for
unspecified sums. 20 cases have been tried, all to defense verdicts. Voluntary
dismissals on such claims total over 13,000; summary judgments for the defense
total 74.

The Company, together with the hundreds of co-defendants, is a defendant in
state court in Morris County, Texas, in litigation on behalf of 3,027 claimants,
all prior employees of a local pipe fabricator, alleging that occupational
exposures caused a wide variety of illnesses. The prayers seek compensatory and
punitive damages of unspecified sums.

The Company bears the costs of defending those of its product liability
cases arising and filed after 1990. In many cases where there are multiple
defendants, cost sharing efficiencies are arranged. Subject to the Company's per
claim retention under its insurance coverage, the Company has tendered the
manganese, fume, asbestos and Morris County, Texas cases to its insurance
carrier which has accepted such tender for all situations except those where
liability would result solely from asbestos; no such situations have arisen to
date.

Ellis F. Smolik filed a proposed class action on April 27, 1995 in Common
Pleas Court, Cuyahoga County, Ohio, alleging that the Company breached the terms
of incentive stock award agreements with him and 49 others. According to the
complaint, under those agreements these individuals were entitled to, but did
not receive, an aggregate of approximately 530,000 shares of common stock of the
Company based on what the complaint says was the Company's financial performance
in the years 1989 through 1991. The complaint also alleges that the Company
breached fiduciary duties owed to these individuals. The complaint seeks
compensatory damages of $31 million, calculated by reference to the current
market price of Company stock, and punitive damages of eight times that amount.
Mr. Smolik voluntarily retired as an officer of the Company in 1994, at age 75,
without reference to these allegations. The Company believes that the
allegations are without merit and that the damage claims are not supportable.
The Company plans a vigorous defense and it has filed counterclaims against Mr.
Smolik. The Company has also tendered the matter to its insurance carrier.

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MANAGEMENT

DIRECTORS

The Company's Board of Directors currently consists of 15 members elected
for terms of three years, classified into three classes. See "Risk
Factors -- Anti-Takeover Provisions and State Anti-Takeover Laws" and
"Description of Capital Stock -- Anti-Takeover Provisions and State
Anti-Takeover Laws." The following table sets forth certain information
regarding the Company's directors.

NAME AGE POSITION
- ------------------------- --- --------------------------------------------------------

Harry Carlson 61 Vice Chairman of the Company since 1987 -- term expires
1997.
David H. Gunning 53 Director since 1987 -- term expires 1996. Chairman,
President and Chief Executive Officer of Capitol
American Financial Corp. (insurance company).
Donald F. Hastings 66 Chairman of the Board and Chief Executive Officer of the
Company since 1992; President of the Company 1987-1992
-- term expires 1996.
Edward E. Hood, Jr. 64 Director since 1993 -- term expires 1996. Former Vice
Chairman of the Board and Executive Officer of The
General Electric Company.
Paul E. Lego 65 Director since 1993 -- term expires 1996. President of
Intelligent Enterprises (consulting). Former Chairman
and Chief Executive Officer of Westinghouse Corp.
Hugh L. Libby 69 Director since 1985 -- term expires in 1997. Chairman of
the Board and Chief Executive Officer of Libby Corp.
(manufacturer of diesel/gas turbine generator sets and
aircraft ground power units).
David C. Lincoln 69 Director since 1958 -- term expires in 1997. Chairman of
the Board and Chief Executive Officer of Lincoln Laser
Co. (manufacturer of laser scanning equipment).
Emma S. Lincoln 72 Director since 1989 -- term expires 1996. Retired from
the practice of law for the past five years.
G. Russell Lincoln 49 Director since 1989 -- term expires 1997. Chairman of
the Board and Chief Executive Officer of Algan, Inc.
(manufacturer of industrial coatings and chemicals for
the printing industry).
Kathryn Jo Lincoln 40 Director -- term expires 1998. Vice Chair of The Lincoln
Institute of Land Policy and Vice President of The
Lincoln Foundation, Inc. (non-profit corporations for
educational purposes).
Frederick W. Mackenbach 64 President and Chief Operating Officer of the Company
since 1992; President of Lincoln Latin America
1991-1992; District Manager 1976-1991 -- term expires
1998.
Henry L. Meyer, III 45 Director since 1994 -- term expires 1997. Chairman of
the Board and Chief Executive Officer of Society
National Bank.
Lawrence O. Selhorst 62 Director since 1992 -- term expires 1998. Chairman of
the Board and Chief Executive Officer of American Spring
Wire Corporation (manufacturer of specialty wires).
Craig R. Smith 70 Director since 1992 -- term expires 1998. Former
Chairman and Chief Executive Officer of Ameritrust
Corporation (banking).
Frank L. Steingass 56 Director since 1971 -- term expires 1997. Chairman of
the Board and President of Buehler/Steingass, Inc.
(commercial printers).

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Kathryn Jo Lincoln is David C. Lincoln's daughter. Three Directors are
related to G. Russell Lincoln as follows: Emma S. Lincoln, stepmother; Frank L.
Steingass, first cousin; and Harry Carlson, first cousin by marriage. Three
other Directors are related to Emma S. Lincoln as follows: David C. Lincoln,
first cousin by marriage; Frank L. Steingass, nephew by marriage; and Harry
Carlson, nephew by marriage.

Mr. Carlson is considering retirement as an officer of the Company
effective June 30, 1995. In such event, Mr. Carlson will continue to serve as a
director of the Company. In conjunction with his contemplated retirement, the
Compensation Committee of the Board of Directors of the Company has approved
Deferred Compensation and Consulting Agreements with Mr. Carlson. Pursuant to
the proposed 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 proposed
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 would extend through July 7, 1999 (with a
three-year non-competition provision thereafter). The Company would pay 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 would
increase to 50% and his credited years of service would be increased to 45
years. Mr. Carlson's 1995 salary and bonus compensation would be established at
$340,000.

EXECUTIVE OFFICERS (EXCLUDING DIRECTORS)

The following table sets forth certain information about the Company's
executive officers (excluding Messrs. Hastings, Carlson and Mackenbach):

NAME AGE POSITION
- ------------------------- --- --------------------------------------------------------

David J. Fullen 64 Senior Vice President, Machine and Motor Divisions since
1994; Vice President -- Machine and Motor Divisions
1989-1994.
John M. Stropki 44 Senior Vice President, Sales since 1994; General Sales
Manager 1992-1994; District Manager 1986-1992.
Richard C. Ulstad 55 Senior Vice President, Consumable Division since 1994;
Vice President -- Manufacturing Electrode Division
1992-1994; Superintendent -- Electrode Division
1984-1992.
Frederick W. Anderson 42 Vice President, Manufacturing -- Machine Division since
1994; Plant Manager Machine and Motor Divisions
1993-1994; Plant Superintendent 1989-1993.
Paul J. Beddia 61 Vice President, Human Resources since 1989.
Dennis D. Crockett 52 Vice President, Consumable Research and Development
since 1993; Chief Engineer, Consumables Research and
Development 1987-1993.
James R. Delaney 46 Corporate Vice President and President of Lincoln
Electric Latin America since 1994; President of Lincoln
Electric South America 1993-1994; Vice President of
Lincoln Electric Latin America 1992; Vice President of
Lincoln Mexicana 1988-1992.
H. Jay Elliott 53 Vice President, Chief Financial Officer, and Treasurer
since 1994; International Chief Financial Officer
1993-1994; prior thereto, Assistant Comptroller of The
Goodyear Tire & Rubber Company responsible at various
times for Corporate Strategic Planning, Finance Director
of North American Tires and International Vice
President-Finance.
Paul F. Fantelli 50 Vice President, Business Development since 1994;
Assistant to the Chief Executive Officer 1992-1994;
President and Chief Executive Officer of the Company's
subsidiary, Harris Calorific 1990-1992.

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NAME AGE POSITION
- ------------------------- --- --------------------------------------------------------

Anthony A. Massaro 51 Corporate Vice President and President and Chief
Executive Officer of Lincoln Electric Europe since 1994;
Director of International Operations 1993-1994; prior
thereto, as a corporate officer with Westinghouse
Electric Corporation, served as Vice President and then
as President and a Member of the Management Committee
with responsibilities worldwide.
Ronald A. Nelson 45 Vice President, Machine Research and Development since
1994; Chief Engineer -- Machine and Motor Division
1993-1994; Service Manager 1989-1993.
Richard J. Seif 47 Vice President, Marketing since 1994; Director of
Marketing 1991-1994; Project Manager 1989-1991.
Frederick G. Stueber 41 Vice President, General Counsel and Secretary since
February 1995; prior thereto, partner in the law firm of
Jones, Day, Reavis and Pogue.
John H. Weaver 56 Vice President, Export Sales since 1994; International
Sales Manager 1987-1994.

SELLING SHAREHOLDERS

The Selling Shareholders listed in the following table are offering the
number of Class A Common Shares shown opposite their names. The amounts set
forth below represent the beneficial ownership of the Selling Shareholders prior
to and following the Offering.

CLASS A
COMMON SHARES COMMON SHARES
NUMBER OF NUMBER OF BENEFICIALLY OWNED BENEFICIALLY OWNED
CLASS A COMMON SHARES CLASS A AFTER THE OFFERING(2) AFTER THE OFFERING
NAME OF SELLING BENEFICIALLY OWNED COMMON SHARES ---------------------- ----------------------
SHAREHOLDER(1) PRIOR TO THE OFFERING OFFERED NUMBER PERCENTAGE NUMBER PERCENTAGE
- -------------------------------------------------- ------------- ------- ---------- ------- ----------

The Lincoln Foundation, Inc. 998,550 868,304 130,246 * 998,550 9.50%
Estate of Helen C. Lincoln 500,000 434,782 65,218 * 500,000 4.75%
LFM, Inc. 500,000 100,000 400,000 2.90% 500,000 4.75%

<FN>
- ---------------
* Less than one percent
(1) David C. Lincoln, a Director of the Company and a member of the Lincoln Family, is the President
and a member of the Board of Trustees of The Lincoln Foundation, Inc., a co-administrator of the
Estate of Helen C. Lincoln and the President of LFM, Inc. See "Management -- Directors."
(2) The Selling Shareholders have granted to the several Underwriters options, exercisable within 30
days of the date hereof, to purchase up to an additional 210,464 Class A Common Shares solely to
cover over-allotments, if any. If such over-allotment options are exercised by the Underwriters in
full, The Lincoln Foundation, Inc. and the Estate of Helen C. Lincoln will own no Class A Common
Shares after the Offering and LFM, Inc. will own 2.79% of the Class A Common Shares.

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35

DESCRIPTION OF CAPITAL STOCK

COMMON EQUITY

The Company is authorized to issue up to a maximum of sixty-two million
(62,000,000) shares of Common Equity, 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. Following the Offering, the Company will have
outstanding 10,520,820 Common Shares, 13,813,578 Class A Common Shares and
499,840 Class B Common Shares. All shares of the Common Equity outstanding are
validly issued and fully paid and non-assessable in accordance with the Ohio
General Corporation Law. The shares of each class have the express terms set
forth in Article Fourth of the Company's Articles of Incorporation.

The powers, preferences and rights of the Common Shares, Class A Common
Shares and Class B Common Shares, and the qualifications, limitations and
restrictions thereof, will in all respects be identical, except as otherwise
required by law or as expressly provided in the Company's Articles of
Incorporation. All of the material provisions of the Company's Common Equity are
described herein.

Voting. The holders of Class A Common Shares are entitled to vote only
under those circumstances set forth in Sections 1701.71(B), 1701.78(F),
1701.79(D) and 1701.801(C) of the Ohio General Corporation Law, generally
relating to proposals that would change the par value of the Class A Common
Shares, alter or change the express terms of those shares, or otherwise affect
them in a substantially prejudicial manner. The non-voting status of the Class A
Common Shares is subject to the convertibility provisions described below.

Subject to the Class A Protection provision described below, each Common
Share entitles the holder thereof to vote on all matters on which shareholders
are entitled to vote, including the election of directors. Similarly, each Class
B Common Share entitles the holder thereof to vote on all matters on which
shareholders are entitled to vote, including the election of directors. Except
as otherwise required by the Ohio General Corporation Law, the holders of Common
Shares and Class B Common Shares vote together as one class on all matters.

The holders of Common Shares and Class B Common Shares are entitled to
elect the entire Board of Directors. In addition, the holders of the Common
Shares and Class B Common Shares could vote to amend the Articles of
Incorporation in order to increase or decrease the number of authorized Class A
Common Shares (but not below the number of such shares outstanding).

Convertibility. None of the Common Shares, the Class A Common Shares or
the Class B Common Shares are convertible into another class of Common Equity or
any other security of the Company, except that all then outstanding Class A
Common Shares will convert into Common Shares on a share-for-share basis (i)
automatically on June 12, 2005 unless the Board of Directors, acting by a
two-thirds majority and no earlier than 30 months and no later than 24 months
prior to the initial or any subsequently established conversion date, elects to
extend the conversion of the Class A Common Shares for five years from and after
such conversion date, and any new conversion date and all subsequently extended
conversion dates which may be extended in a like manner and for a like period;
(ii) automatically at any time when the number of outstanding Common Shares and
Class B Common Shares falls below 20% of the aggregate number of outstanding
Common Shares, Class A Common Shares and Class B Common Shares; and (iii) upon
resolution of the Board of Directors if, as a result of the existence of the
Class A Common Shares, either the Common Shares or Class A Common Shares are, or
both are, excluded from quotation on the NASDAQ National Market and all other
national quotation systems then in existence and are excluded from trading on
all principal national securities exchanges then in existence. To the extent
that the market price of the Common Shares is higher or lower than the market
price of the Class A Common Shares immediately prior to such conversion, the
market price of the shares held by particular holders may be adversely affected
by the conversion.

Dividends. The Articles of Incorporation provide that no dividend will be
paid on any of the three classes of Common Equity unless an equal dividend is
paid on all three classes, subject to the following (i) if a cash dividend is
paid on one class of Common Equity, the dividend paid on the other two classes
will also be in cash; (ii) stock dividends on Class A Common Shares will be paid
only in shares of Class A Common Shares;

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(iii) a stock dividend on Class B Common Shares will be paid in the same class
of Common Equity as the stock dividend on Common Shares; and (iv) subject to the
limitations in (ii) and (iii), a stock dividend on Class A Common Shares paid in
Class A Common Shares will be considered equal to a stock dividend on Common
Shares and Class B Common Shares paid in any of the other classes of Common
Equity as long as the proportion is the same and regardless of any differences
in fair market value among the classes.

Mergers and Consolidations. In the event of a merger, consolidation or
combination of the Company with another entity (whether or not the Company is
the surviving entity) or in the event of dissolution of the Company, the holders
of Class A Common Shares will be entitled to receive the same per share
consideration as the per share consideration, if any, received by holders of
Common Shares and Class B Common Shares in that transaction. Accordingly, if
holders of Common Shares and Class B Common Shares receive shares of voting
stock as consideration in a merger, the holders of Class A Common Shares will
also be entitled to receive shares of such voting stock.

Stock Splits and Combinations. If the Company in any manner splits,
subdivides or combines the outstanding Common Shares, Class A Common Shares or
Class B Common Shares, the outstanding shares of the other such classes will be
proportionately split, subdivided or combined in the same manner and on the same
basis as the outstanding shares of the other classes that have been split,
subdivided or combined.

Class A Protection. It is possible that voting rights disproportionate to
equity ownership could be acquired through acquisitions of Common Shares without
corresponding purchases of Class A Common Shares. In order to reduce somewhat
the likelihood of Common Shares and Class A Common Shares trading at
significantly different market prices and to give holders of Class A Common
Shares the opportunity to participate in any premium paid in the future relating
to the acquisition of 15% or more of the Common Shares by a buyer who has not
acquired a proportionate number of Class A Common Shares, the Articles of
Incorporation include a "Class A Protection" feature, as described below. The
Class A Protection feature might have an anti-takeover effect by making the
Company a less attractive target for a takeover bid. See "Risk
Factors -- Anti-Takeover Provisions and State Anti-Takeover Laws." (Although
Class B Common Shares have voting rights, Article Fourth of the Articles of
Incorporation contains restrictions on transfer of such shares. The lack of an
organized trading market in Class B Common Shares is therefore likely to
continue, making it unlikely that a significant number of Class B Common Shares
could be acquired in the market. Therefore, the Class A Protection feature does
not apply to acquisitions of Class B Common Shares.)

If any person or group, as defined below (excluding the Company, but
including members of the Lincoln Family), acquires beneficial ownership of 15%
or more of the then outstanding Common Shares, other than the Excluded Shares
(defined below), after May 24, 1995, and such person or group (a "Significant
Shareholder") does not then own an equal or greater percentage of all then
outstanding Class A Common Shares, the Class A Protection provision requires
such Significant Shareholder to commence within a 90-day period beginning the
day after becoming a Significant Shareholder a public cash tender offer to
acquire additional Class A Common Shares, as described below (a "Class A
Protection Transaction"). The 15% ownership threshold of the number of Common
Shares which triggers a Class A Protection Transaction may not be waived by the
Board of Directors, nor may the Board of Directors amend this threshold in the
Articles of Incorporation without shareholder approval, including, under current
Ohio law, a two-thirds vote of the outstanding Class A Common Shares voting
separately as a class.

For purposes of determining the shares owned by a Significant Shareholder,
but not for the purposes of determining shares outstanding, the following Common
Shares will be excluded: (i) shares beneficially owned at May 24, 1995; (ii)
shares acquired by will, by laws of descent and distribution, by gift, or by
foreclosure of a bona fide loan; (iii) shares acquired from the Company; (iv)
shares acquired by operation of law (including a merger or consolidation
effected for the purpose of recapitalizing or reincorporating such person but
not for the purpose of acquiring another Person); (v) Common Shares received in
exchange for Class A Common Shares if the Class A Common Shares were acquired by
the exchanging party directly from the Company as a dividend on Common Shares;
and (vi) shares acquired by or from a qualified employee benefit plan of the
Company (collectively, (i) through (vi), "Excluded Shares").

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In a Class A Protection Transaction, the Significant Shareholder must offer
to acquire from holders of the Class A Common Shares at least that number of
additional Class A Common Shares (the "Additional Shares") determined by (i)
multiplying the percentage of the number of outstanding Common Shares that are
beneficially owned by such Significant Shareholder, and were acquired after May
24, 1995, by the total number of Class A Common Shares outstanding on the date
such Person or group became a Significant Shareholder; and (ii) subtracting
therefrom the excess (if any) of the number of Class A Common Shares
beneficially owned on such date over the number of Class A Common Shares
beneficially owned on June 12, 1995. The Significant Shareholder must acquire
all Class A Common Shares validly tendered or, if the number of shares tendered
exceeds the number determined pursuant to such formula, a pro-rata number from
each tendering holder (based on the number of shares tendered by each tendering
shareholder).

The offer price for any shares required to be purchased by the Significant
Shareholder pursuant to this provision would be the greatest of: (i) the highest
price per share paid by the Significant Shareholder for any Common Share or
Class A Common Share in the six-month period ending on the date such Person or
group became a Significant Shareholder; (ii) the highest sale price of a Common
Share or Class A Common Share on the NASDAQ National Market (or such other
securities exchange or quotation system as is then the principal trading market
for such class of Common Equity) during the thirty-day period preceding the date
such person or group became a Significant Shareholder; or (iii) the highest
reported sale price for a Common Share or Class A Common Share on the NASDAQ
National Market (or such other securities exchange or quotation system
constituting the principal trading market for such class of Common Equity) on
the business day preceding the date the Significant Shareholder commences the
required tender offer.

If a Significant Shareholder fails to undertake a Class A Protection
Transaction within the time provided therefor, the voting rights of all of the
Common Shares beneficially owned by such Significant Shareholder, regardless of
when such shares were acquired, would be automatically suspended until
completion of a Class A Protection Transaction or until divestiture of the
excess Common Shares that triggered such requirement. To the extent that the
voting power of any Common Shares is so suspended, such shares will not be
included in the determination of aggregate voting shares for any purpose.

A Class A Protection Transaction would also be required of any Significant
Shareholder that acquires (other than any Excluded Shares) an amount equal to or
greater than the next highest integral multiple of 5% (e.g., 20%, 25%, 30%,
etc.) of the outstanding Common Shares after May 24, 1995 and such Significant
Shareholder does not own an equal or greater percentage of all then outstanding
Class A Common Shares that such Significant Shareholder acquired after June 12,
1995. Such Significant Shareholder would be required to offer to buy that number
of Additional Shares prescribed by the formula set forth above; provided that,
for purposes of such formula, the date on which the Significant Shareholder
acquired the next highest integral multiple of 5% of the outstanding Common
Shares will be deemed to be the date on which such person or group became a
Significant Shareholder.

The requirement to engage in a Class A Protection Transaction will be
satisfied by making the requisite offer and purchasing validly tendered shares,
even if the number of shares tendered is less than the number of shares included
in the required offer. If any Significant Shareholder fails to make the required
tender offer, or to purchase shares validly tendered (after proration, if any),
the voting rights of all Common Shares owned by such Significant Shareholder
will be automatically suspended until consummation of an offer as required by
the terms of the Class A Protection feature or until divestiture of the excess
Common Shares that triggered the tender offer requirement.

Neither the Class A Protection Transaction requirement nor the related
possibility of suspension of voting rights applies to any increase in percentage
ownership of Common Shares resulting solely from a change in the total number of
Common Shares outstanding. All calculations with respect to percentage ownership
of outstanding shares of either class of Common Equity are to be based upon the
number of outstanding shares reflected in either the records of or a certificate
from the Company's stock transfer agent or reported in the last to be filed of
the Company's Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K, Form 10-C or definitive proxy statement.

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Since the definition of Significant Shareholder is based on the beneficial
ownership percentage of Common Shares acquired after May 24, 1995, a person or
group who is a shareholder of the Company at May 24, 1995 will not become a
Significant Shareholder unless such person or group acquires an additional 15%
of the then outstanding Common Shares, regardless of the number of Common Shares
owned prior to May 24, 1995.

The Class A Protection provision does not prevent any person or group from
acquiring a significant or controlling interest in the Company, provided such
person or group acquires a proportionate percentage of the Class A Common
Shares, undertakes a Class A Protection Transaction or incurs suspension of the
voting rights of Common Shares as provided by the Class A Protection feature. If
a Class A Protection Transaction is required, the purchase price to be paid in
such offer may be higher than the price at which a Significant Shareholder might
otherwise be able to acquire an identical number of Class A Common Shares. Such
requirement could make an acquisition of a significant or controlling interest
in the Company more expensive and, if the Class A Protection Transaction is
required, more time consuming, than if such requirement did not exist.
Consequently, a person or group might be deterred from acquiring a significant
or controlling interest in the Company as a result of such requirement.
Moreover, by restricting the ability of an acquiror to acquire a significant
interest in the Common Shares by paying a "control premium" for such shares
without acquiring, or paying a similar premium for, Class A Common Shares, the
Class A Protection feature is designed to help reduce or eliminate any discount
on either of these classes of Common Equity.

There can be no assurance that a person or group will be readily
identifiable as a Significant Shareholder. Although the Federal securities laws
currently require persons or groups holding 5% or more of the Common Shares or
the Class A Common Shares to file reports with the Commission and the Company
specifying the level of their ownership, there can be no assurance that a person
or group will comply with such laws or that alternative methods of identifying
such holders will be available. Accordingly, the benefits of the Class A
Protection feature may be difficult to enforce.

Preemptive Rights. None of the Common Shares, the Class A Common Shares or
the Class B Common Shares will carry any preemptive rights enabling a holder to
subscribe for or receive shares of the Company of any class or any other
securities convertible into any class of the Company's shares.

Sales and Repurchases. The Articles of Incorporation expressly permit the
Board of Directors to authorize the sale of a class of shares even though a
higher price could be obtained by selling shares of another class. The Articles
of Incorporation also expressly permit the Board of Directors to repurchase
shares of any class even though a lower price could be obtained by repurchasing
the shares of another class.

Transferability. The Common Shares and the Class A Common Shares will be
freely transferable, subject to the existing Incentive Equity Plan ("IEP")
restrictions on shares issued pursuant to such plan (and to certain contractual
restrictions with respect to 15,000 Common Shares and a like number of Class A
Common Shares received with respect thereto, held by a former officer of the
Company). There is no established trading market for the Class B Common Shares
because such shares are subject to the Company's right to repurchase contained
in the Articles of Incorporation in the event of the death of the holder of
Class B Common Shares or upon certain determinations by a holder of Class B
Common Shares to dispose of such shares.

Shareholder Information. The Company will deliver to the holders of Class
A Common Shares the same proxy statements (without proxies except as required by
law), annual reports and other information and reports as it delivers to holders
of Common Shares and Class B Common Shares.

Class B Repurchase Provision. The Articles of Incorporation grant the
Company a first right to purchase Class B Common Shares from any holder of Class
B Common Shares who makes certain determinations to dispose of or in any manner
encumber such shares or upon the death of any holder. No sale, assignment,
transfer, pledge, encumbrance or any other disposition of any Class B Common
Shares may be made unless such Class B Common Shares are first offered to the
Company. Class B Common Shares may be freely disposed of by the holder only if
the Company does not exercise its option to purchase any or all of the Class B
Common Shares offered to it. Any Class B Common Shares disposed of pursuant to
this procedure

36
39

continue to be subject to the terms and conditions of the Class B Repurchase
Provision contained in the Company's Articles of Incorporation.

ANTI-TAKEOVER PROVISIONS AND STATE ANTI-TAKEOVER LAWS

Control of the Company by the Lincoln Family and employees of the Company,
as well as certain statutory provisions of Ohio law and the Company's Articles
of Incorporation and Code of Regulations may have the effect of deterring
hostile takeovers or delaying or preventing changes in control or management of
the Company, including transactions in which shareholders might otherwise
receive a premium for their shares over the then current market prices. In
particular, Article Eighth of the Company's Articles of Incorporation, which
contains requirements for approval of certain business combinations by holders
of the Company's voting securities who qualify as "Disinterested Shareholders,"
and the Class A Protection feature contained in Article Fourth of the Company's
Articles of Incorporation, which requires any person or group who acquires
beneficial ownership of 15% or more of the outstanding Common Shares after May
24, 1995, to acquire an equal or greater percentage of all then outstanding
Class A Common Shares, might have an anti-takeover effect by making the Company
a less attractive target for a takeover bid. Also, the Company's Board of
Directors is classified, so that only one-third of the Directors are subject to
election at any one annual meeting of the shareholders. In addition to having a
potential anti-takeover effect, classification reduces the ability to alter the
composition of the Board of Directors.

Further, Ohio law prohibits any person who owns 10% or more of a company's
stock from engaging in mergers, consolidations, majority share acquisitions,
asset sales, loans and certain other transactions with the corporation for a
three-year period after acquiring the 10% ownership, unless approval is first
obtained from the corporation's board of directors. After the three-year waiting
period, the 10% shareholder can complete the transaction only if, among other
things: (i) approval is received from two-thirds of all voting shares and from a
majority of shares not held by the 10% shareholder or certain affiliated
persons; or (ii) the transaction meets certain criteria designed to ensure
fairness to all remaining shareholders.

In addition, the acquisition of shares entitling the holder to exercise
certain levels of voting power of the Company (one-fifth or more, one-third or
more, or a majority) can be made only with the prior authorization of (i) the
holders of at least a majority of the total voting power and (ii) the holders of
at least a majority of the total voting power held by shareholders other than
the proposed acquirer, officers of the Company elected or appointed by the
Directors, and Directors of the Company who are also employees and excluding
certain shares that are transferred after the announcement of the proposed
acquisition and prior to the vote with respect to the proposed acquisition. In
light of the fact that, upon completion of the Offerings, the ownership of the
Company's voting securities by existing shareholders will not change,
acquisitions of the foregoing levels of voting power by third parties may not be
possible unless the current shareholders of the Company vote in favor thereof.

TRANSFER AGENT AND REGISTRAR

KeyCorp Shareholder Services, Inc., Cleveland, Ohio, serves as the Transfer
Agent and Registrar for the Common Shares and the Class A Common Shares.

37
40

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Company and the Selling Shareholders have agreed to
sell to each of the Underwriters named below, and each of the Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), J.P.
Morgan Securities Inc. and McDonald & Company Securities, Inc. are acting as
representatives (the "Representatives"), have severally agreed to purchase from
the Company and the Selling Shareholders, the respective number of Class A
Common Shares set forth opposite its name below at the initial public offering
price less the underwriting discount set forth on the cover page of this
Prospectus. In the Purchase Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Class A Common Shares offered hereby if any of such shares are purchased. In the
event of default by an Underwriter, the Purchase Agreement provides that, in
certain circumstances, the purchase commitments of the nondefaulting
Underwriters may be increased or the Purchase Agreement may be terminated.

NUMBER OF
UNDERWRITER SHARES
---------

Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... 693,334
J.P. Morgan Securities Inc......................................... 693,333
McDonald & Company Securities, Inc................................. 693,333
CS First Boston Corporation........................................ 80,000
Dean Witter Reynolds Inc........................................... 80,000
Donaldson, Lufkin & Jenrette Securities Corporation................ 80,000
A.G. Edwards & Sons, Inc........................................... 80,000
Goldman, Sachs & Co................................................ 80,000
Lehman Brothers Inc................................................ 80,000
Morgan Stanley & Co. Incorporated.................................. 80,000
PaineWebber Incorporated........................................... 80,000
Prudential Securities Incorporated................................. 80,000
Smith Barney Inc................................................... 80,000
Wasserstein Perella Securities, Inc................................ 80,000
Wertheim Schroder & Co. Incorporated............................... 80,000
ABN AMRO Securities (USA) Inc...................................... 80,000
Commerzbank Capital Markets Corporation............................ 80,000
Credit Lyonnais Securities (USA) Inc............................... 80,000
Dresdner Securities (USA) Inc...................................... 80,000
Robert W. Baird & Co. Incorporated................................. 40,000
George K. Baum & Company........................................... 40,000
Carleton, McCreary, Holmes & Co.................................... 40,000
The Chicago Corporation............................................ 40,000
Cleary Gull Reiland & McDevitt Inc................................. 40,000
Dain Bosworth Incorporated......................................... 40,000
Fahnestock & Co. Inc............................................... 40,000
First of Michigan Corporation...................................... 40,000
Gabelli & Company, Inc............................................. 40,000
Gilford Securities Incorporated.................................... 40,000
Howe Barnes Investments, Inc....................................... 40,000
Edward D. Jones & Co............................................... 40,000
Kemper Securities, Inc............................................. 40,000
Ladenburg, Thalmann & Co. Inc...................................... 40,000
Mericka & Co., Inc................................................. 40,000
Mesirow Financial, Inc............................................. 40,000
The Ohio Company................................................... 40,000
Parker/Hunter Incorporated......................................... 40,000
Rodman & Renshaw, Inc.............................................. 40,000
Stephens Inc....................................................... 40,000
Tucker Anthony Incorporated........................................ 40,000
---------
Total................................................. 4,200,000
========

The Representatives have advised the Company and the Selling Shareholders
that the Underwriters propose initially to offer the Class A Common Shares to
the public at the initial public offering price set forth on the cover page of
this Prospectus, and to certain dealers at such price less a concession not in
excess of

38
41

$1.00 per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $.10 per share to certain other dealers. After the
initial public offering, the offering price and other selling terms may be
changed by the Representatives.

The Company and the Underwriters have agreed to reserve up to 210,000 of
the Class A Common Shares offered hereby for sale by the Underwriters to certain
eligible employees and other designees of the Company at the initial public
offering price set forth on the cover page of this Prospectus. Any reserved
Class A Common Shares not purchased by such persons will be offered by the
Underwriters to the public on the same basis as the other Class A Common Shares
offered hereby. Participants in the reserved share program have agreed not to
make any disposition of such Class A Common Shares for a period of 180 days
after the date of this Prospectus without the consent of Merrill Lynch.

The Company and the Selling Shareholders have each granted to the
Underwriters options, exercisable for 30 days after the date of this Prospectus,
to purchase up to an additional 419,536 Class A Common Shares from the Company
and 210,464 Class A Common Shares from such Selling Shareholders at the initial
public offering price set forth on the cover page hereof, less the underwriting
discount. The Underwriters may exercise such options only to cover
over-allotments, if any, made in connection with the sale of Class A Common
Shares offered hereby. To the extent that the Underwriters exercise these
options, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage of such shares that
the number of Class A Common Shares to be purchased by it shown in the foregoing
table bears to the total number of Class A Common Shares initially offered by
the Underwriters hereby. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the initial shares are
being offered.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act.

The Company, its management directors and executive officers, the Selling
Shareholders and certain other of its existing shareholders have agreed that
they will not for a period of 180 days from the date of this Prospectus, without
the prior written consent of the Representatives, offer, sell, contract to sell
or otherwise dispose of any Common Shares or Class A Common Shares, or any
security convertible or exchangeable into or exercisable for Common Shares or
Class A Common Shares, except that the Company may, without such consent, issue
Common Shares or Class A Common Shares pursuant to reservations, agreements or
employee benefit plans referred to herein. Following the Offering, the Company's
management directors and executive officers, the Selling Shareholders and such
other of its existing shareholders will hold in the aggregate approximately 33%
of the Company's Common Shares and 19% of the Company's Class A Common Shares.

Morgan Guaranty Trust Company of New York, an affiliate of J. P. Morgan
Securities Inc., is a participant under the Credit Agreement. J.P. Morgan
Securities Inc. provides financial advisory services to the Company and is paid
a monthly retainer.

LEGAL MATTERS

The validity of the Class A Common Shares offered hereby will be passed
upon for the Company by Jones, Day, Reavis & Pogue, Cleveland, Ohio. Certain
legal matters will be passed upon for the Underwriters by Mayer, Brown & Platt,
Chicago, Illinois.

EXPERTS

The consolidated financial statements of The Lincoln Electric Company at
December 31, 1994 and 1993, and for each of the three years in the period ended
December 31, 1994, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein which, as to the years 1994, 1993 and
1992, are based in part on the reports of Price Waterhouse, independent
auditors, and as to the year 1992, are based in part on the reports of KPMG
Accountants N.V., independent auditors, and KPMG Klynveld Peat Marwick
Goerdeler, independent auditors. The consolidated financial statements referred
to above are included in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.

39
42

[THIS PAGE LEFT BLANK INTENTIONALLY]

40
43

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
-----

Audited Consolidated Financial Statements:
Independent Auditors' Reports....................................................... F-2
Statements of Consolidated Financial Condition
as of December 31, 1994 and 1993................................................. F-6
Statements of Consolidated Operations for the year
ended December 31, 1994, 1993 and 1992........................................... F-8
Statements of Consolidated Shareholders' Equity for
the year ended December 31, 1994, 1993 and 1992.................................. F-9
Statements of Consolidated Cash Flows for the
year ended December 31, 1994, 1993 and 1992...................................... F-10
Notes to Consolidated Financial Statements.......................................... F-11
Unaudited Consolidated Financial Statements:
Statement of Consolidated Financial Condition as of March 31, 1995.................. F-23
Statements of Consolidated Operations for the three months ended March 31, 1995 and
1994............................................................................. F-24
Statements of Consolidated Cash Flows for the three months ended March 31, 1995 and
1994............................................................................. F-25
Notes to Consolidated Financial Statements.......................................... F-26

F-1
44

REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
The Lincoln Electric Company

We have audited the accompanying statements of consolidated financial
condition of The Lincoln Electric Company and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the consolidated
financial statements of The Lincoln Electric Company (Australia) Proprietary
Limited and subsidiaries and, for 1992, the consolidated financial statements of
Lincoln Norweld B.V. and subsidiaries and the consolidated financial statements
of Messer Lincoln GmbH and subsidiary, all consolidated subsidiaries, which
statements reflect total assets constituting 7% in 1994 and 5% in 1993 and total
revenues constituting 5% in 1994 and 1993 and 36% in 1992 of the related
consolidated totals. Those statements were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to
data included for The Lincoln Electric Company (Australia) Proprietary Limited
and subsidiaries and, for 1992, Lincoln Norweld B.V. and subsidiaries and Messer
Lincoln GmbH and subsidiary, is based solely on the reports of the other
auditors.

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 and the reports of other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of The Lincoln Electric
Company and subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles.

As discussed in Note A to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for income taxes.

ERNST & YOUNG LLP

Cleveland, Ohio
March 3, 1995, except for Note M
as to which the date is
June 5, 1995

F-2
45

To the Board of Directors of
The Lincoln Electric Company

REPORT OF INDEPENDENT ACCOUNTANTS

In our opinion, the consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows (none
of which are presented separately herein) present fairly, in all material
respects, the financial position of The Lincoln Electric Company (Australia)
Proprietary Limited and its subsidiaries at December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE

Parramatta, Australia
March 27, 1995

F-3
46

INDEPENDENT AUDITORS' REPORT

The Board of Directors
of Messer Lincoln GmbH

We have audited the consolidated balance sheet of Messer Lincoln GmbH and
its subsidiary as of December 31, 1992 and the balance sheet of Messer Lincoln
GmbH as of December 31, 1991 and the related (consolidated) statements of
income, retained earnings, and cash flows for the year ended December 31, 1992
and the period ended December 31, 1991. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements (none of which are presented separately
herein) based on our audits.

The Company is a subsidiary of The Lincoln Electric Company based in
Cleveland, Ohio, USA, which is responsible for management of the Company. The
financial statements have been prepared assuming that the Company will continue
as a going concern. The Company has suffered considerable losses in 1992 and
1991 and is dependent on the continued support of The Lincoln Electric Company
for the continuance of its operations. The Lincoln Electric Company has
confirmed that it will provide financial and other support to enable the Company
to continue to trade as a viable and solvent business entity at least through
December 31, 1993.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Messer Lincoln GmbH and its
subsidiary as of December 31, 1992 and of Messer Lincoln GmbH as of December 31,
1991, and the results of its operations and its cash flows for the year ended
December 31, 1992 and the period ended December 31, 1991 in conformity with
generally accepted accounting principles.

Dusseldorf, March 12, 1993

KPMG KLYNVELD PEAT MARWICK GOERDELER
Gesellschaft mit beschrankter Haftung
Wirtschaftsprufungsgesellschaft

W. Schweiger T. te Dorsthorst

F-4
47

To the board of directors of
Lincoln-Norweld B.V.

INDEPENDENT AUDITORS' REPORT

We have audited the consolidated balance sheet of Lincoln-Norweld B.V. and
subsidiaries as of December 31, 1992, and the related consolidated statement of
income, retained earnings and cash flows for the year ended December 31, 1992
(none of which are presented separately herein). These financial statements are
the responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the balance sheet and
statement of income 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
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Lincoln-Norweld B.V. and subsidiaries as of December 31, 1992, and the results
of its operations and its cash flows for the year then ended in conformity with
United States generally accepted accounting principles.

KPMG Accountants N.V.

Arnhem, The Netherlands
March 23, 1993

F-5
48

STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

DECEMBER 31
1994 1993
-------- --------
(IN THOUSANDS OF
DOLLARS)

ASSETS
CURRENT ASSETS
Cash and cash equivalents............................................ $ 10,424 $ 20,381
Accounts receivable (less allowances of $4,251 in 1994; $6,258 in
1993)............................................................. 126,007 110,504
Inventories
Raw materials and in-process...................................... 72,302 66,987
Finished goods.................................................... 82,974 76,698
-------- --------
155,276 143,685
Deferred income taxes -- Note E...................................... 11,601 42,960
Prepaid expenses..................................................... 2,899 3,241
Other current assets................................................. 7,220 4,937
-------- --------
TOTAL CURRENT ASSETS................................................... 313,427 325,708
OTHER ASSETS
Notes receivable from employees...................................... 3,151 4,747
Goodwill -- Note C................................................... 39,213 39,732
Other................................................................ 16,855 19,665
-------- --------
59,219 64,144
PROPERTY, PLANT AND EQUIPMENT
Land................................................................. 12,655 12,802
Buildings............................................................ 118,903 113,927
Machinery, tools and equipment....................................... 312,957 279,933
-------- --------
444,515 406,662
Less allowances for depreciation and amortization.................... 260,304 236,971
-------- --------
184,211 169,691
-------- --------

TOTAL ASSETS........................................................... $556,857 $559,543
======== ========

F-6
49

STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

DECEMBER 31,
1994 1993
-------- --------
(IN THOUSANDS OF
DOLLARS)

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable............................................... $ 54,766 $ 43,471
Notes payable to banks -- Note D..................................... 15,843 23,198
Salaries, wages and amounts withheld................................. 12,405 12,779
Taxes, including income taxes -- Note E.............................. 21,783 23,061
Dividend payable..................................................... 2,203 1,959
Current portion of long-term debt -- Note D.......................... 2,272 10,200
Accrued restructuring charges -- Note C.............................. 8,968 29,618
Other current liabilities............................................ 25,877 31,569
-------- --------
TOTAL CURRENT LIABILITIES.............................................. 144,117 175,855
LONG-TERM DEBT, less current portion -- Note D......................... 194,831 216,915
DEFERRED INCOME TAXES -- Note E........................................ 6,631 6,128
OTHER LONG-TERM LIABILITIES............................................ 10,337 9,221
MINORITY INTEREST IN SUBSIDIARIES...................................... 6,808 7,929
SHAREHOLDERS' EQUITY
Common Stock, without par value -- at stated
capital amount -- Note B:
Authorized -- 15,000,000 shares
Outstanding -- 10,514,324 shares in 1994 and 10,381,450 shares
in 1993, exclusive of 4,346,516 shares in 1994 and 4,479,390
shares in 1993 held in treasury................................ 2,103 2,076
Class A Common Stock, without par value -- at stated capital
amount --
Note B:
Authorized -- 2,000,000
Outstanding -- 499,840 shares................................... 100 100
Additional paid-in capital........................................... 25,447 22,926
Retained earnings.................................................... 176,965 137,307
Cumulative translation adjustments................................... (10,482) (18,914)
-------- --------
194,133 143,495
-------- --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................. $556,857 $559,543
======== ========

See notes to consolidated financial statements.

F-7
50

STATEMENTS OF CONSOLIDATED OPERATIONS

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

YEAR ENDED DECEMBER 31
1994 1993 1992
-------- -------- --------
(IN THOUSANDS OF DOLLARS EXCEPT
PER SHARE DATA)

Net sales.................................................. $906,604 $845,999 $853,007
Cost of goods sold......................................... 556,259 532,795 553,103
-------- -------- --------
Gross Profit............................................... 350,345 313,204 299,904
Distribution cost/selling, general & administrative
expenses................................................. 261,681 277,003 299,195
Restructuring charges (income) -- Note C................... (2,735) 70,079 23,897
-------- -------- --------
Operating income (loss).................................... 91,399 (33,878) (23,188)
Other income (expense):
Interest income.......................................... 1,442 1,627 3,061
Other income............................................. 3,067 2,922 4,433
Interest expense......................................... (15,740) (17,621) (18,736)
-------- -------- --------
(11,231) (13,072) (11,242)
-------- -------- --------
Income (loss) before income taxes and cumulative effect of
accounting change........................................ 80,168 (46,950) (34,430)
Income taxes (benefit) -- Note E........................... 32,160 (6,414) 11,370
-------- -------- --------
Income (loss) before cumulative effect of accounting
change................................................... 48,008 (40,536) (45,800)
Cumulative effect to January 1, 1993 of change in method of
accounting for income taxes -- Note A.................... 2,468
-------- -------- --------
Net income (loss).......................................... $ 48,008 $(38,068) $(45,800)
======== ======== ========
Per share:
Income (loss) before cumulative effect of accounting
change................................................ $ 2.19 $ (1.87) $ (2.12)
Cumulative effect of accounting change................... 0.12
-------- -------- --------
Net income (loss)........................................ $ 2.19 $ (1.75) $ (2.12)
======== ======== ========

See notes to consolidated financial statements.

F-8
51

STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

YEAR ENDED DECEMBER 31, 1994, 1993 AND 1992

CLASS A COMMON
COMMON STOCK STOCK ADDITIONAL CUMULATIVE
------------------- ---------------- PAID IN RETAINED TRANSLATION
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENTS TOTAL
---------- ------ ------- ------ ---------- -------- ----------- -----------
(IN THOUSANDS OF DOLLARS)

Balance, January 1, 1992............. 1,039,142 $ 208 35,794 $ 7 $ 20,845 $238,412 $ 4,664 $ 264,136
Net loss........................... (45,800) (45,800)
Cash dividends declared -- $0.36
per share........................ (7,762) (7,762)
Purchases of Common Stock.......... (16,841) (3 ) (2,473) (1,667) (4,143)
Shares sold to employees........... 9,979 2 2,373 2,375
Shares issued to ESOP.............. 9,268 2 2,058 2,060
Shares issued under Incentive
Equity Plan...................... 1,066 264 264
Adjustment for the year............ (12,407) (12,407)
---------- ------ ------- ------ ---------- -------- ----------- -----------
Balance, December 31, 1992........... 1,033,346 207 45,062 9 23,067 183,183 (7,743) 198,723
Net loss........................... (38,068) (38,068)
Cash dividends declared -- $0.36
per share........................ (7,808) (7,808)
Shares sold to employees........... 3,648 1 678 679
Shares issued under Incentive
Equity Plan...................... 1,151 224 224
Ten-for-one stock split............ 9,343,305 1,868 405,558 81 (1,949)
Shares issued to ESOP.............. 49,220 10 906 916
Adjustment for the year............ (11,171) (11,171)
---------- ------ ------- ------ ---------- -------- ----------- -----------
Balance, December 31, 1993........... 10,381,450 2,076 499,840 100 22,926 137,307 (18,914) 143,495
Net income......................... 48,008 48,008
Cash dividends declared -- $0.38
per share........................ (8,350) (8,350)
Shares sold to employees........... 107,520 22 2,063 2,085
Shares issued under Incentive
Equity Plan...................... 25,354 5 458 463
Adjustment for the year............ 8,432 8,432
---------- ------ ------- ------ ---------- -------- ----------- -----------
Balance, December 31, 1994........... 10,514,324 $2,103 499,840 $100 $ 25,447 $176,965 $ (10,482) $ 194,133
========= ======= ======= ======= ========= ======== ========== ========

See notes to consolidated financial statements.

F-9
52

STATEMENTS OF CONSOLIDATED CASH FLOWS

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

YEAR ENDED DECEMBER 31
1994 1993 1992
-------- -------- --------
(IN THOUSANDS OF DOLLARS)

OPERATING ACTIVITIES
Net income (loss).......................................... $ 48,008 $(38,068) $(45,800)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization....................... 27,960 30,545 31,511
Deferred income taxes............................... 31,862 (32,501) 538
Cumulative effect of accounting change.............. (2,468)
Foreign exchange loss (gain)........................ 4,047 (348) 957
Employee Stock Ownership Plan....................... 916 2,060
Minority interest................................... 416 (358) (2,158)
Provision for restructuring......................... (2,735) 68,370 18,356
Changes in operating assets and liabilities net of
effects from acquisitions:
(Increase) in accounts receivable.............. (14,003) (6,228) (739)
(Increase) decrease in inventories............. (6,476) 10,654 22,939
(Increase) decrease in other current assets.... (1,447) (1,331) 695
Increase in accounts payable................... 9,929 2,856 171
(Decrease) in other current liabilities........ (31,026) (2,928) (4,060)
Gross change in other noncurrent assets........ 1,368 (3,112) (2,699)
Other--net..................................... 763 2,734 1,853
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.................. 68,666 28,733 23,624
INVESTING ACTIVITIES
Purchases of property, plant and equipment............... (37,366) (19,090) (34,847)
Sales of property, plant and equipment................... 5,099 2,599 4,448
Acquisitions, net of cash acquired....................... (8,518) (37,288)
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES...................... (32,267) (25,009) (67,687)
FINANCING ACTIVITIES
Proceeds from the sale of Common Stock................... 2,085 679 2,375
Purchase of Common Stock................................. (4,143)
Proceeds from short-term borrowings, maturities greater
than three months..................................... 56,405 305 11,674
Payments on short-term borrowings, maturities greater
than three months..................................... (59,293) (12,736)
Notes payable to banks--net.............................. (5,122) (9,470) (33,416)
Proceeds from long-term borrowings....................... 317,669 603,405 287,317
Payment on long-term borrowings.......................... (351,793) (576,445) (212,111)
Dividends paid........................................... (8,106) (7,791) (7,756)
Other.................................................... 838 (210) 321
-------- -------- --------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES........... (47,317) (2,263) 44,261
Effect of exchange rate changes on cash and cash
equivalents.............................................. 961 (1,707) 170
-------- -------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........... (9,957) (246) 368
Cash and cash equivalents at beginning of year............. 20,381 20,627 20,259
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR................... $ 10,424 $ 20,381 $ 20,627
======== ======== ========
<FN>

See notes to consolidated financial statements.

F-10
53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)

DECEMBER 31, 1994

NOTE A -- ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include
the accounts of The Lincoln Electric Company and its subsidiaries (the
"Company") after elimination of all significant intercompany accounts,
transactions and profits.

Cash Equivalents: The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.

Inventories: Inventories are valued at the lower of cost or market. For
domestic inventories, cost is determined principally by the last-in, first-out
(LIFO) method, and for foreign inventories cost is determined by the first-in,
first-out (FIFO) method. At December 31, 1994 and 1993, approximately 62% and
60%, respectively, of total inventories were valued using the LIFO method. The
excess of current cost over LIFO cost amounted to $51,739 at December 31, 1994
and $48,876 at December 31, 1993. During 1992, certain LIFO inventories were
reduced, resulting in liquidations of LIFO inventory quantities carried at the
lower costs of prior years, as compared with their 1992 costs. The effect of
these liquidations was to reduce the 1992 net loss after tax, by $1,018 ($0.05
per share).

Property, Plant and Equipment: Property, plant and equipment, including
facilities and equipment under capital leases (not material), are stated at cost
and include improvements which significantly extend the useful lives of existing
plant and equipment. Depreciation and amortization are computed by both
accelerated and straight-line methods.

Research and Development: Research and development costs, which are
expensed as incurred, were $18,473 in 1994, $19,210 in 1993 and $19,364 in 1992.

Goodwill: The excess of the purchase price over the fair value of net
assets acquired (goodwill) is amortized by the straight-line basis over periods
not exceeding 40 years. Amounts are stated net of accumulated amortization of
$5,784 and $2,363 in 1994 and 1993, respectively.

The carrying value of goodwill is reviewed if facts and circumstances
indicate a potential impairment of carrying value utilizing relevant cash flow
and profitability information.

Translation of Foreign Currencies: For subsidiaries in countries which do
not have highly inflationary economies, asset and liability accounts are
translated into U.S. dollars using exchange rates in effect at the balance sheet
date and revenue and expense accounts are translated at average monthly exchange
rates. Translation adjustments are reflected as a component of shareholders'
equity.

For subsidiaries in countries with highly inflationary economies (Venezuela
and Brazil) inventories, property, plant and equipment and related depreciation
are translated into U.S. dollars at historical exchange rates. Other asset and
liability accounts are translated at exchange rates in effect at the balance
sheet date and revenues and expenses, excluding depreciation, are translated at
average monthly exchange rates. Translation adjustments for these subsidiaries,
as well as transaction gains and losses of all other subsidiaries, are included
in the statements of consolidated operations in distribution cost/selling,
general & administrative expenses. The Company recorded transaction losses of
$3,746 in 1994, $228 in 1993 and $859 in 1992. The increase in transaction
losses in 1994 is attributable to the effect of the devaluation of the Mexican
peso on a U.S. dollar denominated debt obligation.

F-11
54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE A -- ACCOUNTING POLICIES -- (CONTINUED)

Financial Instruments: The Company on a limited basis has used forward
exchange contracts to hedge exposure to exchange rate fluctuations on
anticipated future purchase and sales transactions and certain intercompany
transactions. Any contracts that are entered into are written on a short-term
basis, are not held for trading purposes, and are not held for purposes of
speculation. Gains and losses on forward exchange contracts described herein are
recognized in the statements of consolidated operations in the periods the
exchange rates change. At December 31, 1994, the Company had no outstanding
forward exchange contracts.

Accounting Change: Effective January 1, 1993, the Company adopted FASB
Statement No. 109, "Accounting for Income Taxes." Under Statement No. 109, the
liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Prior to the adoption of Statement No. 109, income tax
expense was determined using the deferred method under which deferred tax
expense was based on items of income and expense that were reported in different
years in the financial statements and tax returns and were measured at the tax
rate in effect in the year the difference originated. As permitted by Statement
No. 109, the Company elected not to restate the financial statements of any
prior year. The cumulative effect of the change decreased the net loss for 1993
by $2,468 or $0.12 per share.

Net Income (Loss) per Share: Net income (loss) per share is based on the
average number of all shares outstanding during the year (21,939,982 in 1994;
21,703,982 in 1993 and 21,592,820 in 1992).

Other: Included in Distribution cost/selling, general & administrative
expenses are the costs related to the Company's discretionary employee bonus
($68,370 in 1994; $61,883 in 1993; and $55,282 in 1992.)

Notes receivable from employees are secured by Company Common Stock owned
by the employee.

Reclassification: Certain reclassifications have been made to prior year
financial statements to conform to current year classifications.

NOTE B -- SHAREHOLDERS' EQUITY

The Lincoln Electric Company Employees' Stock Purchase Plan ("Plan") which
provided that employees could purchase shares of the Company's Common Stock,
when offered, at its estimated fair value, was terminated by the Board of
Directors in February 1995 effective March 30, 1995. Under the Plan, the Company
had the option to repurchase the shares, but in 1992 the Company suspended the
repurchase of all shares and the employees were permitted to sell their shares
on the open market. Upon termination of the Plan, all shares issued under the
Plan (1,639,686) became unrestricted shares.

The Lincoln Electric Company 1988 Incentive Equity Plan ("Incentive Equity
Plan") provides for the award or sale of Common Stock to officers and other key
employees of the Company and its subsidiaries. Distribution of shares is based
on certain specified performance and other conditions being satisfied. As a
result of conditions being fulfilled in 1991 with respect to certain of the
Company's subsidiaries, the Company awarded 32,524 shares (including 524 shares
issued for dividends accrued during the deferral period) of which 10,660 shares
were distributed in 1992, 11,510 shares in 1993, and 10,354 shares in 1994.
These shares, along with 15,000 shares issued to a former officer of the
Company, are restricted as to resale rights with the Company having a right of
first refusal at a purchase price based on the book value of the shares.
Additionally, in 1994, 15,000 shares were issued to certain officers of the
Company. Such shares vest equally over a three-year period, commencing in 1995
and ending in 1997. At December 31, 1994, there were no other outstanding awards
under the Plan, and 952,476 shares are reserved for future issuance under the
Incentive Equity Plan.
F-12
55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE B -- SHAREHOLDERS' EQUITY -- (CONTINUED)

The Lincoln Electric Company Employee Stock Ownership Plan (the "ESOP") is
a non-contributory profit-sharing plan established to provide deferred
compensation benefits for all eligible employees. The cost of the plan is borne
by the Company through contributions to an employee stock ownership trust as
determined annually by the Board of Directors. In May 1989, shareholders
authorized 2,000,000 shares of Class A Common Stock ("Class A Common Stock"),
without par value. The Company's Common Stock and Class A Common Stock are
identical in all respects, except that holders of Class A Common Stock are
subject to certain transfer restrictions and the Class A Common Stock is only
issued to the ESOP. In 1994, no shares of stock were issued to the ESOP. In
1993, the Company issued 49,220 shares (92,680 shares in 1992) to the ESOP with
an estimated fair value of $916 ($2,060 in 1992) which was recorded as
compensation expense. The difference between the total stated capital amount of
$.20 per share and the estimated fair value was recorded as additional
paid-in-capital. At December 31, 1994 and 1993, 1,500,160 authorized but
unissued shares are available for future issuance to the ESOP.

NOTE C -- RESTRUCTURING CHARGES

In 1993, the Company substantially completed the formulation of its plan,
which was subsequently implemented principally in 1994, to downsize and
streamline its foreign operations (primarily in Europe) and close manufacturing
facilities in Germany, Japan and South America. Management's decisions resulted
in a restructuring charge for 1993 of $70,100 ($40,900 after tax or $1.88 per
share) which was comprised of (1) asset write-downs in the amount of $45,900
including goodwill of $8,900; (2) severance and other redundancy costs of
$27,500; and (3) a net credit of $3,300 comprised of a claim settlement and
other restructuring liabilities including estimated losses through the final
facility closing dates in 1994.

In 1992, the Company recorded a restructuring charge of $23,900 (without
tax benefit, or $1.11 per share) as a result of decisions by management at that
time to downsize and streamline certain foreign operations (principally in
Europe). This charge was primarily for severance pay, redundancies and other
liabilities relating to the reorganization of the sales and distribution
operations in Europe.

In 1994, all of the planned facility closings were completed and one of the
facilities was disposed of. In total, approximately 1,400 employees were
terminated as a result of the 1992 and 1993 restructuring programs. In 1994 the
restructuring accruals were adjusted to reflect management's current cost
estimates to complete the program which resulted in a credit to income of
$2,735. Included in property, plant and equipment, are facilities held for sale
with a net carrying value of $4,700. The remaining expenditures, which include
costs related to the sale of real estate and holding costs to be incurred
through the estimated date of disposal, are anticipated to be incurred in 1995
and 1996.

F-13
56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE D -- SHORT-TERM AND LONG-TERM DEBT

1994 1993
-------- --------

Short-term debt:
Notes payable to banks at interest rates from 5.6625% to
11.25% (4.125% to 23.25% in 1993)........................ $ 15,843 $ 23,198
======== ========
Long-term debt:
Multi-currency Credit Agreement, due October 1, 1997........ $100,947 $126,457
8.98% Senior Note due 2003 (equal annual principal payments
commencing in 1996)...................................... 75,000 75,000
Other borrowings due through 2023, interest at 2.00% to
13.74% (3.00% to 13.74% in 1993)......................... 21,156 25,658
-------- --------
$197,103 $227,115
Less current portion........................................ 2,272 10,200
-------- --------
Total $194,831 $216,915
======== ========

In October 1994, the Company amended its unsecured, multi-currency Credit
Agreement with ten banks and reduced its committed line under the Credit
Agreement from $230,000 to $200,000 which the Company believes is sufficient to
meet future financing needs. Under the terms of the amended agreement which
expires October 1, 1997, but provides for a mechanism for annual extensions, the
interest rate on outstanding borrowings is determined based upon defined
leverage rates for the pricing option selected. The interest rate can range from
the LIBOR plus .375% to LIBOR plus 1.125% depending upon the defined leverage
rate. The agreement also provides for commitment fees ranging from .2% to .375%
per annum on the unused credit lines based upon the defined leverage rate. Prior
to the amendment, the interest rates ranged from LIBOR plus 1% to LIBOR plus 2%,
and the commitment fees were from .375% to .5%.

Simultaneously, with the signing of the Credit Agreement, the $75,000 8.98%
Senior Note due in 2003 was amended to change the financial covenants to conform
with the financial covenants of the amended Credit Agreement, which requires a
1.35 to 1 consolidated current ratio and the maintenance of consolidated
tangible net worth of $125,000 plus 50% of net income subsequent to January 1,
1995. In addition, there are requirements with respect to interest coverage and
funded debt to capital ratios (.60 to 1 decreasing to .50 to 1 after December
31, 1995), and limitations on capital expenditures. Purchases of unrestricted
stock and the payment of dividends are limited to 50% of cumulative net income
from January 1, 1993, plus $25,000. At December 31, 1994, the Company was in
compliance with all of its financial covenants and $13,800 was available for
dividends and the purchase of unrestricted stock. The limitations on capital
expenditures, purchases of unrestricted common stock and payment of dividends
can be waived based on the achievement of a certain interest coverage ratio for
three consecutive quarters.

Maturities of long-term debt for the five years succeeding December 31,
1994 are $2,272 in 1995, $10,652 in 1996, $120,884 in 1997, $9,861 in 1998;
$9,612 in 1999 and $43,822 thereafter.

At December 31, 1994, certain loans ($7,900) were collateralized by
property and equipment.

Interest expense capitalized to property, plant and equipment was $244 in
1994, $71 in 1993 and $320 in 1992. Total interest paid was $17,400 in 1994,
$19,000 in 1993 and $17,500 in 1992. Weighted average interest rates on notes
payable to banks at December 31, 1994 and 1993 were 6.8% and 9.1%, respectively.

In 1992, the Company terminated an interest rate swap agreement with a
notional borrowing amount of $75,000 and received $2,586 which was amortized
($904 in 1994; $986 in 1993 and $696 in 1992) over the original swap term as a
yield adjustment to interest expense on the underlying $75,000 debt.

F-14
57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE D -- SHORT-TERM AND LONG-TERM DEBT -- (CONTINUED)

In connection with the expansion of its motor plant, the Company received
in 1994 $6,000 of low interest rate loans from certain governmental entities.
The Company also received in 1994 $1,750 of government grants which were
recorded as a reduction in property, plant and equipment.

NOTE E -- INCOME TAXES

The components of income (loss) before income taxes and cumulative effect
of accounting change are as follows:

1994 1993 1992
------- -------- --------

U.S.................................................. $70,703 $ 43,345 $ 24,120
Non-U.S.............................................. 9,465 (90,295) (58,550)
------- -------- --------
Total...................................... $80,168 $(46,950) $(34,430)
======= ======== ========

Components of income tax expense (benefit) are as follows:

DEFERRED
LIABILITY METHOD METHOD
-------------------- --------
1994 1993 1992
-------- -------- --------

Current:
Federal........................................... $ (8,379) $ 21,032 $ 8,295
Non-U.S........................................... 4,143 2,227 1,310
State and local................................... 4,534 2,828 1,227
-------- -------- --------
298 26,087 10,832
Deferred:
Federal........................................... 31,223 (32,980) 1,232
Non-U.S........................................... 639 479 (694)
-------- -------- --------
31,862 (32,501) 538
-------- -------- --------
Total..................................... $ 32,160 $ (6,414) $ 11,370
======== ======== ========

The components of the provision for deferred income taxes for 1992 were as
follows:

Inventory adjustments........................................... $ 201
Incentive equity plan........................................... 87
Depreciation.................................................... 204
Other asset adjustments......................................... (88)
Pension adjustments............................................. (299)
Employee stock ownership plan................................... (149)
Other........................................................... 582
-----
Total................................................. $ 538
=====

F-15
58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE E -- INCOME TAXES -- (CONTINUED)

The differences between total income tax expense (benefit) and the amount
computed by applying the statutory Federal income tax rate to income (loss)
before income taxes and cumulative effect of accounting change are as follows:

DEFERRED
LIABILITY METHOD METHOD
------------------- --------
1994 1993 1992
------- -------- --------

Statutory rate applied............................... 35% 35% 34%
to pre-tax income (loss)........................... $28,059 $(16,432) $(11,706)
Effect of state and local income taxes, net of
Federal tax benefit................................ 2,947 1,838 810
Differences in income taxes on non-U.S. earnings and
remittances........................................ (1,158) 336 (502)
Non-U.S. losses and unrecognized tax benefits........ 2,113 8,308 22,650
Foreign Sales Corporation............................ (838) (703) (630)
Other -- net......................................... 1,037 239 748
------- -------- --------
Total...................................... $32,160 $ (6,414) $ 11,370
======= ======== ========

Total income tax payments, net of refunds, were $6,115 in 1994, $19,400 in
1993 and $16,500 in 1992.

At December 31, 1994, the Company's foreign subsidiaries have net operating
loss carryforwards of approximately $61,100 which expire in various years from
1995 through 2002, except for $5,000 for which there is no expiration date.

Significant components of the Company's deferred tax assets and liabilities
at December 31, 1994 and 1993, are as follows:

1994 1993
-------- --------

Deferred tax assets:
Net operating loss carryforwards........................... $ 20,015 $ 15,709
Restructuring activities................................... 33,446
Inventory adjustments...................................... 3,274 2,772
Other accrual accounts..................................... 4,273 1,685
Employee benefits.......................................... 1,269 (172)
Other asset adjustments.................................... 3,350 3,245
Pension adjustments........................................ 2,417 2,085
Other deferred tax assets.................................. 2,844 7,406
-------- --------
37,442 66,176
Valuation allowance........................................ (18,987) (15,709)
-------- --------
18,455 50,467
Deferred tax liabilities:
Depreciation............................................... (8,136) $ (3,390)
Pension adjustments........................................ (2,690) (618)
Other deferred tax liabilities............................. (2,659) (9,627)
-------- --------
(13,485) (13,635)
-------- --------
Total.............................................. $ 4,970 $ 36,832
======== ========

F-16
59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE E -- INCOME TAXES -- (CONTINUED)

Income taxes currently payable amounted to approximately $10,100 and
$12,200 at December 31, 1994 and 1993, respectively.

The Company does not provide deferred income taxes on unremitted earnings
of foreign subsidiaries as such funds are deemed permanently reinvested to
finance foreign expansion and meet operational needs on an ongoing basis. Upon
distribution of those earnings in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes subject to an adjustment for
foreign tax credits and withholding taxes payable to the various foreign
countries. Determination of the amount of unrecognized deferred U.S. income tax
liability is not practicable because of the complexities associated with its
calculation; however, unrecognized non-U.S. tax credits and non-U.S. withholding
taxes paid upon distribution would be available to reduce some portion of the
U.S. liability.

NOTE F -- RETIREMENT ANNUITY AND GUARANTEED CONTINUOUS EMPLOYMENT PLANS

The Company and its subsidiaries maintain a number of defined benefit and
defined contribution plans to provide retirement benefits for their employees in
the United States as well as their employees in foreign countries. These plans
are maintained and contributions are made in accordance with the Employee
Retirement Income Security Act of 1974, local statutory law or as determined by
the Board of Directors. The plans generally provide benefits based upon years of
service and compensation. Pension costs accrued are funded except for the cost
associated with a supplemental employee retirement plan for certain key
employees.

A summary of the components of total pension expense is as follows:

1994 1993 1992
-------- -------- --------

U.S. Plans:
Service cost -- benefits earned during the year.......... $ 7,155 $ 6,115 $ 5,571
Interest cost on projected benefit obligation............ 19,601 18,158 17,207
Actual return on plan assets............................. (18,795) (19,569) (16,812)
Net amortization and deferral............................ (528) 1,441 (1,404)
-------- -------- --------
Net pension cost of defined benefit plans................ 7,433 6,145 4,562
Defined contribution plans............................... 258 193 225
-------- -------- --------
Total U.S. plans................................. 7,691 6,338 4,787
Non-U.S. Plans:
Service cost -- benefits earned during the year.......... 1,524 1,422 1,555
Interest cost on projected benefit obligation............ 2,207 2,253 2,472
Actual return on plan assets............................. (932) (4,506) (2,800)
Net amortization and deferral............................ (1,717) 2,000 289
-------- -------- --------
Net pension cost of defined benefit plans................ 1,082 1,169 1,516
Defined contribution plans............................... 702 1,326 905
-------- -------- --------
Total Non-U.S. plans............................. 1,784 2,495 2,421
-------- -------- --------
Total pension expense............................ $ 9,475 $ 8,833 $ 7,208
======== ======== ========

F-17
60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE F -- RETIREMENT ANNUITY AND GUARANTEED CONTINUOUS EMPLOYMENT
PLANS -- (CONTINUED)

The funded status of the U.S. and Non-U.S. plans at December 31, 1994 and
1993 is as follows:

U.S. NON-U.S.
1994 1993 1994 1993
-------- -------- -------- --------

Actuarial present value of accumulated benefit
obligations:
Vested..................................... $218,754 $222,588 $ 24,902 $ 23,881
Nonvested.................................. 9,797 8,463 881 1,136
-------- -------- -------- --------
$228,551 $231,051 $ 25,783 $ 25,017
======== ======== ======== ========
Actuarial present value of projected benefit
obligations................................... $258,661 $254,295 $ 29,020 $ 28,396
Plan assets at fair value....................... 243,802 228,014 32,272 28,191
-------- -------- -------- --------
Excess of projected benefit obligations over
plan assets................................... (14,859) (26,281) 3,252 (205)
Unrecognized net (gain) loss............... 155 13,788 (1,410) (1,593)
Unrecognized prior service cost............ 13,839 10,835 389 540
Unrecognized net assets at January 1, 1994
and 1993, net of amortization............ (2,910) (3,239) (1,519) (1,449)
Minimum Liability.......................... (2,183) (480) (351)
-------- -------- -------- --------
Accrued retirement annuity expense
recognized in the balance sheet.......... $ (5,958) $ (4,897) $ 232 $ (3,058)
======== ======== ======== ========

The decrease in the actuarial present value of accumulated benefit
obligations ("ABO") for the U.S. plans is largely due to the change in the
discount rate from 7.5% to 8.25%, offset by the addition of a new non-qualified
Supplemental Executive Retirement Plan, as well as the normal one year's
additional accrual of benefit under all plans. In addition, the increase in the
ABO for the foreign plans is largely due to the restructuring of some of the
plans, as well as the normal one year's accrual of additional benefits, offset
by a change in the weighted average discount rate from 7.5% to 8.2% in 1994.

Assumptions used in accounting for the defined benefit plans as of December
31, 1994 and 1993 for both the U.S. and Non-U.S. plans were as follows:

U.S. NON-U.S.
PLANS PLANS
------------- -------------
1994 1993 1994 1993
---- ---- ---- ----

Weighted-average discount rates............................... 8.25% 7.5 % 8.2 % 7.5 %
Projected rates of increase in compensation................... 5.50% 4.1 % 4.8 % 4.2 %
Expected rates of return on plan assets....................... 9.00% 9.0 % 8.5 % 9.1 %

Plan assets for the U.S. plans consist principally of deposit
administration contracts and an investment contract with an insurance company.
Other assets held by the U.S. plans not under insurance contracts are invested
in equity and fixed income securities. Plan assets for the non-U.S. plans are
invested in non-U.S. insurance contracts and non-U.S. equity and fixed income
securities.

The Company does not have and does not provide for any postretirement or
postemployment benefits other than pensions.

F-18
61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE F -- RETIREMENT ANNUITY AND GUARANTEED CONTINUOUS EMPLOYMENT
PLANS -- (CONTINUED)

The Cleveland, Ohio area operations have a Guaranteed Continuous Employment
Plan covering substantially all employees, which, in general, provides that the
Company will provide work for at least 75% of every standard work week
(presently 40 hours). This plan does not guarantee employment when the Company's
ability to continue normal operations is seriously restricted by events beyond
the control of the Company. The Company has reserved the right to terminate this
plan effective at the end of a calendar year by giving notice of such
termination not less than six months prior to the end of such year.

NOTE G -- INDUSTRY AND GEOGRAPHIC SEGMENT INFORMATION

The Company's primary business is the design, manufacture and sale, in the
domestic and international markets of arc and other welding products and related
gases used in the welding process. The Company also designs, manufactures and
sells integral horsepower industrial electric motors. Financial information by
geographic areas follows:

UNITED OTHER
STATES EUROPE COUNTRIES ELIMINATIONS TOTAL
-------- -------- --------- ------------ --------

1994:
Net sales to unaffiliated
customers................. $641,607 $156,803 $108,194 $ $906,604
Inter-geographic sales....... 40,876 10,558 7,060 (58,494) --
-------- -------- --------- ------------ --------
Total................ $682,483 $167,361 $115,254 $(58,494) $906,604
======== ======== ======== =========== ========
Pre-tax profit (loss)........ $ 68,316 $ 7,891 $ 4,062 $ (101) $ 80,168
Identifiable assets.......... 350,012 165,722 76,129 (35,006) 556,857

1993:
Net sales to unaffiliated
customers................. $543,458 $211,268 $ 91,273 $ $845,999
Inter-geographic sales....... 29,077 6,663 4,806 (40,546) --
-------- -------- --------- ------------ --------
Total................ $572,535 $217,931 $ 96,079 $(40,546) $845,999
======== ======== ======== =========== ========
Pre-tax profit (loss)........ $ 42,570 $(68,865) $(22,903 ) $ 2,248 $(46,950)
Identifiable assets.......... 389,247 172,136 69,871 (71,711) 559,543

1992:
Net sales to unaffiliated
customers................. $487,145 $275,520 $ 90,342 $ $853,007
Inter-geographic sales....... 30,466 6,811 4,944 (42,221) --
-------- -------- --------- ------------ --------
Total................ $517,611 $282,331 $ 95,286 $(42,221) $853,007
======== ======== ======== =========== ========
Pre-tax profit (loss)........ $ 24,860 $(52,828) $ (7,183 ) $ 721 $(34,430)
Identifiable assets.......... 294,730 246,457 86,839 (24,679) 603,347

Intercompany sales between geographic regions are accounted for at prices
comparable to normal, customer sales and are eliminated in consolidation.

Export sales (excluding intercompany sales) from the United States were
$64,400 in 1994, $58,100 in 1993 and $67,100 in 1992.

F-19
62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE H -- ACQUISITIONS

In June 1993, the Company purchased the outstanding minority interest in
its subsidiary in Spain for approximately $8,500. In January and May of 1992,
respectively, the Company purchased the remaining 29 percent interest in Lincoln
Norweld and a small Mexican company for an aggregate of $37,300. These
transactions were accounted for as purchases and their results of operations and
the increased interest in their results of operations, were included in the
consolidated statements of operations from the respective transaction dates.

NOTE I -- FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company has various financial instruments, including cash, cash
equivalents and short and long-term debt. The Company has determined the
estimated fair value of these financial instruments by using available market
information and appropriate valuation methodologies which require judgment.
Accordingly, the use of different market assumptions or estimation methodologies
could have a material effect on the estimated fair value amounts. The Company
believes the carrying values of its financial instruments approximate their fair
value.

NOTE J -- OPERATING LEASES

The Company leases sales offices, warehouses, office equipment and data
processing equipment. Such leases, some of which are noncancellable, and in many
cases, include renewals, expire at various dates. The Company pays most
maintenance, insurance and tax expenses relating to leased assets. Rental
expense was $9,226 in 1994, $9,864 in 1993 and $9,840 in 1992.

At December 31, 1994, total minimum lease payments for noncancellable
operating leases are as follows:

1995 $ 8,624
1996 6,855
1997 4,626
1998 3,887
1999 2,723
Thereafter 4,176
-------
Total $30,891
=======

NOTE K -- CONTINGENCIES

The Company and its subsidiaries are involved in various litigation in the
ordinary conduct of its business. Based on information known to the Company,
Management believes the outcome of all pending litigation will not have a
material effect upon the financial position of the Company.

F-20
63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE L -- QUARTERLY FINANCIAL DATA (UNAUDITED)

1994 MAR 31 JUN 30 SEP 30 DEC 31
- --------------------------------------------- -------- -------- -------- ---------

Net sales.................................... $210,525 $234,173 $230,752 $ 231,154
Gross profit................................. 81,966 90,316 89,904 88,159
Income before income taxes................... 17,785 21,494 21,499 19,390(a)
Net income................................... 10,407 12,307 11,669 13,625(a)
Net income per share......................... $ 0.48 $ 0.56 $ 0.53 $ 0.62

1993 MAR 31 JUN 30 SEP 30 DEC 31
- --------------------------------------------- -------- -------- -------- ---------

Net sales.................................... $211,168 $215,441 $209,173 $ 210,217
Gross profit................................. 79,756 79,415 80,300 73,733
Income (loss) before income taxes and
cumulative effect of accounting change..... 10,106 7,167 10,459 (74,682)(c)
Income (loss) before cumulative effect of
accounting change.......................... 4,806 995 3,706 (50,043)(c)
Net income (loss)............................ 7,274(b) 995 3,706 (50,043)(c)
Per share data: (d)
Income (loss) before cumulative effect of
accounting change.......................... $ 0.22 $ 0.05 $ 0.17 $ (2.30)
Net income (loss)............................ $ 0.34 $ 0.05 $ 0.17 $ (2.30)

- ---------------

(a) - Includes $2,500 of net adjustments to various expense accruals and $3,140
for the devaluation of the Mexican peso, offset partially by net favorable
inventory adjustments of $1,900 and adjustments to restructuring accruals
of $3,235. Also includes a favorable $2,000 adjustment to income taxes to
reflect the annual effective income tax rate.

(b) - The first quarter of 1993 includes an increase in net income of $2,468
($.12 per share) for the cumulative effect on prior years for a change in
accounting principle effective January 1, 1993.

(c) - Includes a $70,100 ($40,900 after tax or $1.88 per share) charge for
restructuring and other pretax adjustments of $6,365.

(d) - Quarterly per share amounts do not aggregate to the total for the year due
to rounding.

NOTE M -- SUBSEQUENT EVENTS

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.

F-21
64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

NOTE M -- SUBSEQUENT EVENTS -- (CONTINUED)

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 and
Class B Common Share. 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.

The Company has filed a preliminary registration statement with the
Securities and Exchange Commission for the sale of up to $100 million of shares
of the new class of non-voting shares designated as Class A Common Shares.

F-22
65

STATEMENT OF CONSOLIDATED FINANCIAL CONDITION (UNAUDITED)

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
MARCH 31, 1995
(IN THOUSANDS OF DOLLARS)

ASSETS
CURRENT ASSETS
Cash and cash equivalents........................................................ $ 10,524
Accounts receivable (less allowance for doubtful accounts of $4,414)............. 150,602
Inventories: (Note B)
Raw materials and in-process........................................ $ 79,648
Finished goods...................................................... 92,617 172,265
--------
Deferred income taxes............................................................ 10,924
Prepaid expenses................................................................. 3,197
Other current assets............................................................. 7,840
--------
TOTAL CURRENT ASSETS............................................................... 355,352
OTHER ASSETS
Notes receivable from employees........................................ 2,952
Goodwill, net.......................................................... 39,469
Other.................................................................. 17,640 60,061
--------
PROPERTY, PLANT AND EQUIPMENT
Land................................................................... 13,072
Buildings.............................................................. 121,702
Machinery, tools and equipment......................................... 327,526
--------
462,300
Less allowances for depreciation and amortization...................... (270,592) 191,708
-------- --------
TOTAL ASSETS............................................................. $607,121
========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable........................................................... $ 62,600
Notes payable to banks........................................................... 16,229
Salaries, wages and amounts withheld............................................. 13,101
Taxes, including income taxes.................................................... 43,232
Dividends payable................................................................ 2,241
Current portion of long-term debt................................................ 2,065
Accrued restructuring charges.................................................... 9,045
Other current liabilities (Note C)............................................... 47,140
--------
TOTAL CURRENT LIABILITIES.......................................................... 195,653
Long-term debt, less current portion............................................... 174,526
Deferred income taxes, long-term................................................... 6,358
Other long-term liabilities........................................................ 10,597
Minority interest in subsidiaries.................................................. 6,887
SHAREHOLDERS' EQUITY
Common Stock........................................................... $ 2,103
Class A Common Stock................................................... 100
Additional paid-in-capital............................................. 25,546
Retained earnings...................................................... 190,816
Cumulative translation adjustments..................................... (5,465) 213,100
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......................................... $607,121
========

See notes to consolidated financial statements (unaudited).

F-23
66

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)

THREE MONTHS ENDED
MARCH 31,
---------------------
1995 1994
-------- --------

Net sales.............................................................. $263,407 $210,525
Cost of goods sold..................................................... 161,545 128,559
-------- --------
Gross profit........................................................... 101,862 81,966
Distribution cost/selling, general & administrative expenses........... 71,815 61,024
-------- --------
Operating income....................................................... 30,047 20,942
Other income/(expense):
Interest income...................................................... 392 293
Other income......................................................... 394 448
Interest expense..................................................... (3,977) (3,898)
-------- --------
Total other income/(expense)........................................... (3,191) (3,157)
-------- --------
Income before income taxes............................................. 26,856 17,785
Income taxes........................................................... 10,802 7,378
-------- --------
Net income............................................................. $ 16,054 $ 10,407
======== ========
Net income per share................................................... $ 0.73 $ 0.48
Dividends paid......................................................... $ 0.10 $ 0.09
Average number of shares outstanding: (in 000's of shares)............. 22,031 21,791

See notes to consolidated financial statements (unaudited).

F-24
67

STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)

THREE MONTHS ENDED
MARCH 31,
---------------------
1995 1994
-------- --------

OPERATING ACTIVITIES
Net income............................................................. $ 16,054 $ 10,407
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................ 6,469 7,189
Foreign exchange (gain) loss......................................... 2,055 483
Employee stock ownership plan........................................ 229
Minority interest.................................................... 129 121
Change in operating assets and liabilities:
(Increase) in accounts receivable.................................... (21,745) (15,482)
(Increase) decrease in inventories................................... (14,392) 5,099
(Increase) in other current assets................................... (1,652) (1,093)
Increase in accounts payable......................................... 7,495 1,655
Increase in other current liabilities................................ 40,855 23,508
Gross change in other noncurrent assets.............................. (1,066) (1,209)
Gross change in other noncurrent liabilities......................... (408) (562)
Other-net............................................................ 9 (64)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES......................... 33,803 30,281
INVESTING ACTIVITIES
Purchases of property, plant and equipment........................... (10,688) (6,466)
Proceeds from sale of property, plant and equipment.................. 160 602
-------- --------
NET CASH (USED) BY INVESTING ACTIVITIES........................... (10,528) (5,864)
FINANCING ACTIVITIES
Short-term borrowings-net............................................ (818) (8,401)
Repayment on short-term borrowings, maturities greater than three
months............................................................ (9,053) (13,770)
Proceeds on short-term borrowings, maturities greater than three
months............................................................ 9,520 10,595
Proceeds from long-term borrowings................................... 70,450 122,651
Repayments on long-term borrowings................................... (93,961) (129,435)
Dividends paid....................................................... (2,203) (1,959)
Other................................................................ 102 (840)
-------- --------
NET CASH (USED) BY FINANCING ACTIVITIES........................... (25,963) (21,159)
Effect of exchange rate changes on cash and cash equivalents........... 2,788 668
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS............................. 100 3,926
Cash and cash equivalents at beginning of period....................... 10,424 20,381
-------- --------
Cash and cash equivalents at end of period............................. $ 10,524 $ 24,307
======== ========
Cash paid during the period: Interest.................................. $ 2,400 $ 4,406
Income taxes............................ $ 1,726 $ 2,876

See notes to consolidated financial statements (unaudited).

F-25
68

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES

MARCH 31, 1995
NOTE A -- BASIS OF PRESENTATION

The accompanying unaudited consolidated 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 period. Operating results for the three months ended March 31,
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 audited Consolidated Financial Statements and notes
thereto included elsewhere in this Prospectus.

NOTE B -- INVENTORY VALUATION

The actual valuation of inventory under the 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 includes provisions for possible year-end bonuses
and related payroll taxes of $17.6 million. The payment of bonuses is wholly
discretionary and is determined each year by the Board of Directors.

NOTE D -- CONSOLIDATED SHAREHOLDERS' EQUITY

Changes in consolidated shareholders' equity for the three months ended
March 31, 1995 were as follows:

Balance, January 1, 1995............. 10,514,324 $2,103 499,840 $100 $ 25,447 $176,965 $ (10,482) $ 194,133
Shares issued under incentive
equity plan........................ 2,500 -- -- -- 99 -- -- 99
Net income........................... 16,054 16,054
Cash dividend declared $0.10 per
share.............................. (2,203) (2,203)
Adjustment for the period............ 5,017 5,017
---------- ------ ------- ------ ---------- -------- ----------- -----------
Balance, March 31, 1995.............. 10,516,824 $2,103 499,840 $100 $ 25,546 $190,816 $ (5,465) $ 213,100
========= ======= ======= ======= ========= ======== ========== ========

NOTE E -- 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.

F-26
69

[PHOTO PAGE]

[LINCOLN ELECTRIC LOGO]

Serving Customers Worldwide

[MAP]

/ / SALES OFFICES / DISTRIBUTORS

Manufacturing Sites

-United States - France - United Kingdom
-Canada - Italy - Ireland
-Mexico - Spain - Netherlands
-Australia - Norway
70

- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS, OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, THE CLASS A COMMON SHARES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

PAGE
----

Available Information................... 2
Incorporation of Certain
Documents by Reference................ 2
Prospectus Summary...................... 3
Risk Factors............................ 8
The Company............................. 11
Use of Proceeds......................... 12
Price Range of Common Stock and Dividend
Policy................................ 12
Capitalization.......................... 13
Selected Consolidated Financial
Information........................... 14
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 16
Business................................ 22
Management.............................. 30
Selling Shareholders.................... 32
Description of Capital Stock............ 33
Underwriting............................ 38
Legal Matters........................... 39
Experts................................. 39
Index to Consolidated Financial
Statements............................ F-1

- ------------------------------------------------------
- ------------------------------------------------------

4,200,000 SHARES

[LINCOLN ELECTRIC LOGO]

CLASS A COMMON SHARES
------------------------

PROSPECTUS
------------------------

MERRILL LYNCH & CO.

J.P. MORGAN SECURITIES INC.

MCDONALD & COMPANY
SECURITIES, INC.
JUNE 29, 1995
- ------------------------------------------------------
- ------------------------------------------------------
71

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is a list of the estimated expenses to be incurred by the
Company in connection with the issuance and distribution of the Class A Common
Shares being registered hereby, other than underwriting discounts and
commissions. Such expenses will be borne by the Company and the Selling
Shareholders in proportion to the number of Class A Common Shares offered by
each.

Securities and Exchange Commission registration fee............ $ 53,449
National Association of Securities Dealers, Inc. filing fee.... 16,000
NASDAQ National Market listing fee............................. 50,000
Transfer Agent's and Registrar's fees.......................... 2,000
Printing and engraving costs................................... 325,000
Accounting fees and expenses................................... 145,551
Legal fees and expenses (not including Blue Sky)............... 300,000
Blue Sky fees and expenses..................................... 7,500
Miscellaneous expenses......................................... 500
--------
Total.......................................................... $900,000
========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under certain circumstances provided in Article IV of the Company's Amended
and Restated Code of Regulations, as amended, and subject to Section 1701.13 of
the Ohio Revised Code (which sets forth certain conditions and limitations
governing the indemnification of officers, directors and other persons), the
Company will indemnify any director or officer or any former director or officer
of the Company to the fullest extent permitted by Ohio law for claims arising
because he is or was such director or officer of the Company or served in
certain capacities at the request of the Company in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative. A copy of Article IV of the Company's
Amended and Restated Code of Regulations, as amended, is included herein as
Exhibit 4.2.

The Company has entered into indemnity agreements (the "Indemnity
Agreements") with the current directors of the Company and expects to enter into
similar agreements with any director elected or appointed in the future at the
time of their election or appointment.

Pursuant to the Indemnity Agreements, the Company will, upon the
authorization by either a majority of disinterested directors (or a legal
opinion in the absence of a quorum), shareholders or a judicial body, indemnify
a director of the Company (the "Indemnitee") if the Indemnitee is a party to any
threatened, completed or pending legal proceeding by reason of the fact that the
Indemnitee is or was a director of the Company, or is or was serving at the
request of the Company in certain capacities with another entity, against all
expenses, judgments, settlements and fines, actually and reasonably incurred by
the Indemnitee in connection with the defense or settlement of such proceeding.
Indemnification will not be available if it is proved by clear and convincing
evidence that the Indemnitee's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the Company or
undertaken with reckless disregard for the best interests of the Company.
Indemnification in criminal actions will only be available if the Indemnitee had
no reasonable cause to believe his conduct was unlawful. The same coverage is
provided whether or not the suit or proceeding is brought by or in the right of
the Company, except that no indemnification will be made for any action in which
the only liability asserted against the Indemnitee is pursuant to Section
1701.95 of the Ohio Revised Code.

II-1
72

The Indemnity Agreements provide that in addition to the indemnification
provisions in the proceeding paragraph the Company will, absent a procedural
determination by a majority of the directors that the Indemnitee is not entitled
to indemnification, indemnify the Indemnitee against any amount which he is or
becomes obligated to pay relating to or arising out of any claim against him
because of an act, failure to act or neglect or breach of duty, including any
actual or alleged error, misstatement or misleading statement, which he commits,
suffers, permits or acquiesces in while acting in his capacity as a director.
The Company will not be obligated to make any payment in connection with any
claim against the Indemnitee to the extent of any fine or similar governmental
imposition which the Company is prohibited by law from paying or to the extent
such claim is based upon the Indemnitee having actually realized a personal gain
or profit to which he was not legally entitled, including without limitation
profit from transactions which are recoverable or effected by Sections 16(b) and
10(b) of the Exchange Act, or Rule 10b-5 promulgated thereunder.

The Indemnity Agreements mandate advancement of expenses to the Indemnitee
if the Indemnitee provides the Company with a written promise to repay the
advanced amounts in the event that it is determined that the conduct of the
Indemnitee has not met the applicable standard of conduct. In addition, the
Indemnity Agreements provide various procedures and presumptions in favor of the
Indemnitee's right to receive indemnification under the Indemnity Agreement.

Reference is made to Section 6 of the Underwriting Agreements (Exhibit 1 to
this Registration Statement) which provides for indemnification of the Company's
officers, directors and controlling persons by the Underwriters against certain
civil liabilities, including liabilities under the Securities Act.

Under the Company's director and officer liability insurance policy, each
director and certain officers of the Company are insured against certain
liabilities.

II-2
73

ITEM 16. EXHIBITS.

The following Exhibits are filed herewith and made a part hereof:

PAGINATION BY
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBIT NUMBERING SYSTEM
- ------ ----------------------------------------------------------------- -----------------

*1 Form of the Purchase Agreement.
**4.1 Restated Articles of Incorporation of The Lincoln Electric
Company.
4.2 Restated Code of Regulations of The Lincoln Electric Company
(filed as Exhibit 2 to the Registration Statement on Form 8-A for
the Class A Common Shares of The Lincoln Electric Company filed
on June 5, 1995 and incorporated herein by reference and made a
part hereof).
4.3 Note Agreement dated November 20, 1991 between The Prudential
Insurance Company of America and the Company (filed as Exhibit 4
to Form 10-K of The Lincoln Electric Company for the year ended
December 31, 1991, SEC File No. 0-1402 and incorporated by
reference and made a part hereof), as amended by letter dated
March 18, 1993; 8.98% Senior Note Due November 26, 2003 (filed as
Exhibit 4(a) to Form 10-K of The Lincoln Electric Company for the
year ended December 31, 1992, SEC File No. 0-1402 and
incorporated herein by reference and made a part hereof); as
further amended by letter dated as of November 19, 1993; 8.98%
Senior Note Due November 26, 2003 (filed as Exhibit 4(a) to Form
10-K of The Lincoln Electric Company for the year ended December
31, 1993, SEC File No. 0-1402 and incorporated herein by
reference and made a part hereof), and as further amended by
letter dated October 31, 1994 (filed as Exhibit 4(a) to Form 10-Q
of The Lincoln Electric Company for the period ended September
30, 1994, SEC File No. 0-1402 and incorporated herein by
reference and made a part of hereof).
4.4 Credit Agreement dated March 18, 1993 among the Company, the
Banks listed on the signature page thereof, and Society National
Bank, as Agent (filed as Exhibit 4(b) to Form 10-K of The Lincoln
Electric Company for the year ended December 31, 1992, SEC File
No. 0-1402 and incorporated herein by reference and made a part
hereof), as amended by Amendment No. 1 to Credit Agreement dated
November 19, 1993; 8.98% Senior Note Due November 26, 2003 (filed
as Exhibit 4(b) to Form 10-K of The Lincoln Electric Company for
the year ended December 31, 1993, SEC File No. 0-1402 and
incorporated herein by reference and made a part hereof), and as
further amended by Amendment No. 2 to Credit Agreement dated
October 31, 1994 (filed as Exhibit 4(b) to Form 10-Q of The
Lincoln Electric Company for the period ended September 30, 1994,
SEC File No. 0-1402 and incorporated herein by reference and made
a part hereof).
*5 Opinion of Jones, Day, Reavis & Pogue.
**23.1 Consent of Ernst & Young LLP.
**23.2 Consent of Price Waterhouse.
**23.3 Consent of KPMG Klynveld Peat Marwick Goerdeler.
**23.4 Consent of KPMG Accountants N.V.
*23.5 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5).
*24 Powers of Attorney.

- ---------------

* Previously filed.

** Filed herewith.

II-3
74

ITEM 17. UNDERTAKINGS.

The undersigned Company hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Company hereby undertakes that:

(1) For the purpose of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide public offering thereof.

II-4
75

SIGNATURES

Pursuant to the requirements of the Securities Act, the Company certifies
that it has reasonable grounds to believe that it meets the requirements for
filing a Form S-3 and has duly caused this Amendment No. 2 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cleveland, State of Ohio, on June 26, 1995.

THE LINCOLN ELECTRIC COMPANY

By: /s/ FREDERICK G. STUEBER

Frederick G. Stueber

Vice President, General Counsel and
Secretary

Pursuant to the requirements of the Securities Act, this Amendment No. 2 to
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ---------------------------------------- ----------------------------------- ------------------

* DONALD F. HASTINGS Chairman of the Board, President June 26, 1995
Donald F. Hastings and Chief Executive Officer
(Principal Executive Officer)
* FREDERICK W. MACKENBACH President, Chief Operating Officer, June 26, 1995
Frederick W. Mackenbach and Director

* HARRY CARLSON Vice Chairman June 26, 1995
Harry Carlson

* DAVID H. GUNNING Director June 26, 1995
David H. Gunning

* EDWARD E. HOOD, JR. Director June 26, 1995
Edward E. Hood, Jr.

* PAUL E. LEGO Director June 26, 1995
Paul E. Lego

* HUGH L. LIBBY Director June 26, 1995
Hugh L. Libby

* DAVID C. LINCOLN Director June 26, 1995
David C. Lincoln

* EMMA S. LINCOLN Director June 26, 1995
Emma S. Lincoln

* G. RUSSELL LINCOLN Director June 26, 1995
G. Russell Lincoln

II-5
76

SIGNATURE TITLE DATE
- ---------------------------------------- ----------------------------------- ------------------

* HENRY L. MEYER III Director June 26, 1995
Henry L. Meyer III

* LAWRENCE O. SELHORST Director June 26, 1995
Lawrence O. Selhorst

* CRAIG R. SMITH Director June 26, 1995
Craig R. Smith

* FRANK STEINGASS Director June 26, 1995
Frank Steingass

* H. JAY ELLIOTT Vice President, Chief Financial June 26, 1995
H. Jay Elliott Officer and Treasurer (principal
financial and accounting officer)

* The undersigned, by signing his name hereto, does hereby sign and execute this
Amendment No. 2 to Registration Statement pursuant to the Powers of Attorney
executed by the above-named officers and directors of the Company and which have
been filed with the Securities and Exchange Commission on behalf of such
officers and directors.

/s/ FREDERICK G. STUEBER June 26, 1995

Attorney-in-Fact

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77

EXHIBIT INDEX

PAGINATION BY
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBIT NUMBERING SYSTEM
- ------ ----------------------------------------------------------------- -----------------

* 1 Form of the Purchase Agreement.
**4.1 Restated Articles of Incorporation of The Lincoln Electric
Company.
4.2 Restated Code of Regulations of The Lincoln Electric Company
(filed as Exhibit 2 to the Registration Statement on Form 8-A for
the Class A Common Shares of The Lincoln Electric Company filed
on June 5, 1995 and incorporated herein by reference and made a
part hereof).
4.3 Note Agreement dated November 20, 1991 between The Prudential
Insurance Company of America and the Company (filed as Exhibit 4
to Form 10-K of The Lincoln Electric Company for the year ended
December 31, 1991, SEC File No. 0-1402 and incorporated by
reference and made a part hereof), as amended by letter dated
March 18, 1993; 8.98% Senior Note Due November 26, 2003 (filed as
Exhibit 4(a) to Form 10-K of The Lincoln Electric Company for the
year ended December 31, 1992, SEC File No. 0-1402 and
incorporated herein by reference and made a part hereof); as
further amended by letter dated as of November 19, 1993; 8.98%
Senior Note Due November 26, 2003 (filed as Exhibit 4(a) to Form
10-K of The Lincoln Electric Company for the year ended December
31, 1993, SEC File No. 0-1402 and incorporated herein by
reference and made a part hereof), and as further amended by
letter dated October 31, 1994 (filed as Exhibit 4(a) to Form 10-Q
of The Lincoln Electric Company for the period ended September
30, 1994, SEC File No. 0-1402 and incorporated herein by
reference and made a part of hereof).
4.4 Credit Agreement dated March 18, 1993 among the Company, the
Banks listed on the signature page thereof, and Society National
Bank, as Agent (filed as Exhibit 4(b) to Form 10-K of The Lincoln
Electric Company for the year ended December 31, 1992, SEC File
No. 0-1402 and incorporated herein by reference and made a part
hereof), as amended by Amendment No. 1 to Credit Agreement dated
November 19, 1993; 8.98% Senior Note Due November 26, 2003 (filed
as Exhibit 4(b) to Form 10-K of The Lincoln Electric Company for
the year ended December 31, 1993, SEC File No. 0-1402 and
incorporated herein by reference and made a part hereof), and as
further amended by Amendment No. 2 to Credit Agreement dated
October 31, 1994 (filed as Exhibit 4(b) to Form 10-Q of The
Lincoln Electric Company for the period ended September 30, 1994,
SEC File No. 0-1402 and incorporated herein by reference and made
a part hereof).
* 5 Opinion of Jones, Day, Reavis & Pogue.
**23.1 Consent of Ernst & Young LLP.
**23.2 Consent of Price Waterhouse.
**23.3 Consent of KPMG Klynveld Peat Marwick Goerdeler.
**23.4 Consent of KPMG Accountants N.V.
*23.5 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5).
* 24 Powers of Attorney.

- ---------------

* Previously filed.

** Filed herewith.