SEC Filings

10-Q
LINCOLN ELECTRIC HOLDINGS INC filed this Form 10-Q on 10/30/2017
Entire Document
 

Non-GAAP Financial Measures
The Company reviews Adjusted operating income, Adjusted net income, Adjusted diluted earnings per share and Return on invested capital, all non-GAAP financial measures, in assessing and evaluating the Company's underlying operating performance. These non-GAAP financial measures exclude the impact of special items on the Company's reported financial results. Non-GAAP financial measures should be read in conjunction with the generally accepted accounting principles in the United States ("GAAP") financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.
The following table presents a reconciliation of Operating income, Net income and Diluted earnings per share as reported to Adjusted operating income, Adjusted net income and Adjusted earnings per share:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Operating income as reported
$
133,070

 
$
81,829

 
$
302,198

 
$
205,203

Special items (pre-tax):
 
 
 
 
 
 
 
Pension settlement charges (1)
5,283

 

 
5,283

 

Loss on deconsolidation of Venezuelan subsidiary (2)

 

 

 
34,348

Acquisition transaction and integration costs (4)
3,273

 

 
11,386

 

Amortization of step up in value of
    acquired inventories (4)
2,314

 

 
2,314

 

Bargain purchase gain (4)
(51,585
)
 

 
(51,585
)
 

Adjusted operating income
$
92,355

 
$
81,829

 
$
269,596

 
$
239,551

 
 
 
 
 
 
 
 
Net income as reported
$
106,126

 
$
60,049

 
$
223,322

 
$
145,004

Special items (after-tax):
 
 
 
 
 
 
 
Pension settlement charges (1)
3,260

 

 
3,260

 

Loss on deconsolidation of Venezuelan subsidiary (2)

 

 

 
33,251

Income tax valuation reversal (3)

 

 

 
(7,196
)
Acquisition transaction and integration costs (4)
2,229

 

 
8,457

 

Amortization of step up in value of
    acquired inventories (4)
1,745

 

 
1,745

 

Bargain purchase gain (4)
(51,585
)
 

 
(51,585
)
 

Adjusted net income
$
61,775

 
$
60,049

 
$
185,199

 
$
171,059

 
 
 
 
 
 
 
 
Diluted earnings per share as reported
$
1.59

 
$
0.89

 
$
3.35

 
$
2.11

Special items
(0.66
)
 

 
(0.57
)
 
0.38

Adjusted diluted earnings per share
$
0.93

 
$
0.89

 
$
2.78

 
$
2.49

(1) Three and nine months ended September 30, 2017 includes pension settlement charges related to lump sum pension payments.
(2) Nine months ended September 30, 2016 includes a loss on the deconsolidation of the Venezuelan subsidiary as discussed in Note 1 to the consolidated financial statements.
(3) Nine months ended September 30, 2016 includes the reversal of an income tax valuation allowance as a result of a legal entity change.
(4) Three and nine months ended September 30, 2017 include costs and a bargain purchase gain related to the Air Liquide Welding acquisition as discussed in Note 3 to the consolidated financial statements.

Liquidity and Capital Resources
The Company’s cash flow from operations can be cyclical.  Operational cash flow is a key driver of liquidity, providing cash and access to capital markets.  In assessing liquidity, the Company reviews working capital measurements to define areas for improvement.  Management anticipates the Company will be able to satisfy cash requirements for its ongoing businesses for

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