What changed in this filing

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Item 1. Financial Statements

2023-04-27 compared with 2022-10-27 · 184 added, 297 removed, 364 unchanged (57% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net sales (Note 2)

4 unchanged sentences

Interest expense, net

Other income (expense) (Note 14)

Other income (Note 11)

Income before income taxes

1 unchanged sentence

Net income including non-controlling interests

Non-controlling interests in subsidiaries’ income (loss)

Non-controlling interests in subsidiaries’ income

Basic earnings per share (Note 3)

3 unchanged sentences

LINCOLN ELECTRIC HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net income including non-controlling interests

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax of $ 3,234 and $ 8,079 in the three and nine months ended September 30, 2022;

$ 707 and $ 1,493 in the three and nine months ended September 30, 2021

Defined benefit pension plan activity, net of tax of $ 47 and $ 506 in the three and nine months ended September 30, 2022;

$ 18,759 and $ 19,005 in the three and nine months ended September 30, 2021

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax of $ 1,043 and $ 2,051 in the three months ended March 31, 2023 and 2022

Defined benefit pension plan activity, net of tax

Currency translation adjustment

1 unchanged sentence

Comprehensive income

Comprehensive income (loss) attributable to non-controlling interests

Comprehensive income attributable to non-controlling interests

Comprehensive income attributable to shareholders

3 unchanged sentences

(In thousands)

September 30, 2022

March 31, 2023

December 31, 2022

45 unchanged sentences

( 2,519,299 )

Unrecognized amounts from defined benefit pension plans, net of tax

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax

Currency translation adjustment

Cash dividends declared – $ 0.56 per share

Stock-based compensation activity

Purchase of shares for treasury

Balance at June 30, 2022

( 2,438,144 )

Unrecognized amounts from defined benefit pension plans, net of tax

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax

Currency translation adjustment

Cash dividends declared – $ 0.56 per share

Stock-based compensation activity

Purchase of shares for treasury

Balance at September 30, 2022

( 2,464,460 )

LINCOLN ELECTRIC HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share amounts)

Comprehensive

10 unchanged sentences

( 2,413,171 )

Unrecognized amounts from defined benefit pension plans, net of tax

Unrealized loss on derivatives designated and qualifying as cash flow hedges, net of tax

Currency translation adjustment

Cash dividends declared – $ 0.51 per share

Stock-based compensation activity

Purchase of shares for treasury

Balance at June 30, 2021

( 2,201,397 )

Unrecognized amounts from defined benefit pension plans, net of tax

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax

Currency translation adjustment

Cash dividends declared – $ 0.51 per share

Stock-based compensation activity

Purchase of shares for treasury

Balance at September 30, 2021

( 2,251,193 )

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Non-controlling interests in subsidiaries' income (loss)

Non-controlling interests in subsidiaries' income

Net income including non-controlling interests

Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:

Rationalization and asset impairment net charges (gains) (Note 6)

Rationalization and asset impairment net charges (Note 6)

Depreciation and amortization

Equity earnings (loss) in affiliates, net

Equity earnings in affiliates, net

Deferred income taxes

Stock-based compensation

Pension settlement charges

Changes in operating assets and liabilities, net of effects from acquisitions:

Increase in accounts receivable

Increase in inventories

Decrease (increase) in inventories

Increase in other current assets

7 unchanged sentences

Proceeds from sale of property, plant and equipment

Other investing activities

Purchase of marketable securities

NET CASH USED BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Net change in borrowings

(Payments on) proceeds from short-term borrowings

Payments on long-term borrowings

Proceeds from exercise of stock options

Purchase of shares for treasury (Note 8)

Purchase of shares for treasury

Cash dividends paid to shareholders

Other financing activities

NET CASH USED BY FINANCING ACTIVITIES

Effect of exchange rate changes on Cash and cash equivalents

DECREASE IN CASH AND CASH EQUIVALENTS

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Cash and cash equivalents at beginning of period

11 unchanged sentences

However, in the opinion of management, these unaudited consolidated financial statements contain all the adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods.

Operating results for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023.

The accompanying Consolidated Balance Sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

In March 2022, i n response to Russia’s invasion of Ukraine, the Company announced it was ceasing operations in Russia and implementing plans to support its Russian employees.

Although the Company’s Net sales and Total assets in Russia are less than 1 % of consolidated Net sales for the year ended December 31, 2021 and less than 1 % of consolidated Total assets as of December 31, 2021, the Russia-Ukraine conflict and sanctions imposed globally may result in economic and supply chain disruptions, the ultimate financial impact of which cannot be reasonably estimated at this time.

The Company continues to monitor the Russia-Ukraine conflict and its potential impacts.

Turkey – Highly Inflationary Economy

An economy is considered highly inflationary under GAAP if the cumulative inflation rate for a three-year period meets or exceeds 100 percent.

The Turkish economy exceeded the three-year cumulative inflation rate of 100 percent during the second quarter of 2022.

As a result, the financial statements of the Company’s Turkish operation are reported under highly inflationary accounting rules as of April 1, 2022.

Under highly inflationary accounting, the financial statements of the Company’s Turkish operation have been remeasured into the Company’s reporting currency (U.S.

Beginning April 1, 2022, the exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than “Accumulated other comprehensive loss” on the balance sheet.

As of September 30, 2022, this impact was not significant to the Company’s results.

Management has evaluated and disclosed all material events occurring subsequent to the date of the financial statements up to October 27, 2022, the filing date of this Quarterly Report on Form 10-Q.

Effective April 1, 2022, the financial statements of the Company’s Turkish operation are reported under highly inflationary accounting rules.

As a result, the financial statements of the Company’s Turkish operation have been remeasured into the Company’s reporting currency (U.S.

dollar) and the exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than “Accumulated other comprehensive loss” on the balance sheet.

As of March 31, 2023, this impact was not significant to the Company’s results.

Management has evaluated and disclosed all material events occurring subsequent to the date of the financial statements up to April 27, 2023, the filing date of this Quarterly Report on Form 10-Q.

New Accounting Pronouncements:

This section provides a description of new accounting pronouncements (“Accounting Standard Update” or “ASU”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company.

This section provides a description of new accounting pronouncements (“Accounting Standards Update” or “ASU”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company.

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

The following ASUs were adopted as of January 1, 2023:

2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50) , issued September 2022.

Requires disclosure about a company’s supplier finance program, including key terms, amount outstanding, assets pledged, as applicable, and presentation on the balance sheet.

Refer to Note 15 for the impacts on the Company’s consolidated financial statements.

2021-08, Business Combinations (Subtopic 805) , issued October 2021.

Requires the acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

The adoption did not have a material impact on the Company’s consolidated financial statements.

The Company is currently evaluating the impact on its financial statements of the following ASU:

2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50) , issued September 2022.

Requires disclosure about a company’s supplier finance program, including key terms, amount outstanding, assets pledged as applicable, presentation on the balance sheet and a period-over-period balance roll forward.

Except for the roll forward requirement, the ASU is effective for interim and annual periods beginning January 1, 2023 and should be applied retrospectively.

The roll forward requirement is effective January 1, 2024 and should be applied prospectively.

Early adoption of the roll forward requirement is permitted.

Requires disclosure about a company’s supplier finance program, including a period-over-period balance roll forward.

This requirement of the ASU is effective January 1, 2024 and should be applied prospectively.

NOTE 2 — REVENUE RECOGNITION

The following table presents the Company’s Net sales disaggregated by product line:

Three Months Ended September 30,

Nine Months Ended September 30,

Consumable sales consist of electrodes, fluxes, specialty welding consumables and brazing and soldering alloys.

Equipment sales consist of arc welding power sources, welding accessories, fabrication, plasma cutters, wire feeding systems, automated joining, assembly and cutting systems, fume extraction equipment, CNC plasma and oxy-fuel cutting systems and regulators and torches used in oxy-fuel welding, cutting and brazing.

Three Months Ended March 31,

Consumable sales consist of welding, brazing and soldering filler metals.

Equipment sales consist of arc welding, welding accessories, arc welding equipment, wire feeding systems, fume control equipment, plasma and oxy-fuel cutting systems, specialty gas regulators, and education solutions;

as well as a comprehensive portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing.

Consumable and Equipment products are sold within each of the Company’s operating segments.

3 unchanged sentences

Less than 10 % of the Company’s Net sales are recognized over time.

At September 30, 2022, the Company recorded $ 42,552 related to advance customer payments and $ 31,772 related to billings in excess of revenue recognized.

At March 31, 2023, the Company recorded $ 72,363 related to advance customer payments and $ 34,144 related to billings in excess of revenue recognized.

These contract liabilities are included in Other current liabilities in the Condensed Consolidated Balance Sheets.

2 unchanged sentences

The Company records an asset for contracts where it has recognized revenue, but has not yet invoiced the customer for goods or services.

At September 30, 2022 and December 31, 2021, the Company recorded $ 37,488 and $ 25,300 , respectively, related to these contract assets which are included in Other current assets in the Condensed Consolidated Balance Sheets.

At March 31, 2023 and December 31, 2022, the Company recorded $ 43,130 and $ 35,252 , respectively, related to these contract assets which are included in Other current assets in the Condensed Consolidated Balance Sheets.

Contract asset amounts are expected to be billed within the next twelve months.

4 unchanged sentences

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Denominator (shares in 000's):

4 unchanged sentences

Diluted earnings per share

For the three months ended September 30, 2022 and 2021, common shares subject to equity-based awards of 52,495 and 2,126 , respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

For the nine months ended September 30, 2022 and 2021, common shares subject to equity-based awards of 120,106 and 150,254 , respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

For the three months ended March 31, 2023 and 2022, common shares subject to equity-based awards of 29,112 and 69,614 , respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

NOTE 4 — ACQUISITIONS

On December 1, 2022, the Company acquired 100 % ownership of Fori Automation, LLC (“Fori”) for an agreed upon purchase price of $ 427,000 , which was adjusted for certain debt like obligations, for total purchase price consideration of $ 468,683 , or $ 416,353 net of cash acquired, before final and customary adjustments.

In 2022, the Company recognized $ 5,196 in acquisition costs related to Fori and were expensed as incurred.

Fori is a leading designer and manufacturer of complex, multi-armed automated welding systems, with an extensive range of automated assembly systems, automated material handling solutions, automated large-scale, industrial guidance vehicles, and end of line testing systems.

The acquisition of Fori extends the Company’s market presence within the automotive sector as well as its automation footprint in the International Welding segment.

In 2022, Fori generated sales of approximately $ 200,000 (unaudited).

For the three months ended March 31, 2023, the Company’s Consolidated Statement of Income includes the results of Fori, including Net sales of $ 49,215 for the three months ended March 31, 2023, while net income for the period was not material.

The acquisition of Fori has been accounted for as a business combination which requires the assets and liabilities assumed be recognized at their respective fair values as of the acquisition date.

The process of estimating the fair values of certain tangible assets, identifiable intangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates.

The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date.

These preliminary estimates are based on available information and may be revised during the measurement period, not to exceed 12 months from the acquisition date, as third-party valuations are finalized, further information becomes available and additional analyses are performed.

The Company does not expect any such revisions to have a material impact on the Company's preliminary purchase price allocation.

As of and for the three months ended March 31, 2023, these revisions did not have a material impact on the Consolidated Balance Sheets or Consolidated Statement of Income.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

Assets acquired and liabilities assumed

Preliminary Purchase Price Allocation

Cash and cash equivalents

Accounts receivable

Property, plant and equipment (1)

Intangible assets (2)

Accounts payable

Net other assets and liabilities (3)

Total purchase price consideration

Property, plant and equipment acquired includes a number of manufacturing and distribution sites, including the related facilities, land and leased sites, and machinery and equipment for use in manufacturing operations.

Intangible asset balances of $ 22,000 and $ 18,778 , respectively, were assigned to trade names and customer relationships ( 15 year weighted average useful life).

Of the remaining amount, $ 24,900 was assigned to technology know-how ( 10 year weighted average useful life) and $ 4,250 was assigned to restrictive covenants ( 4 year weighted average life).

Consists primarily of goodwill of $ 245,749 .

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Fori.

A portion of the goodwill is deductible for tax purposes.

On March 1, 2022, the Company acquired 100 % ownership of Kestra Universal Soldas, Industria e Comercio, Imporacao e Exportacao Ltda.

1 unchanged sentence

The net purchase price was $ 22,294 , net of cash acquired and accounted for as a business combination.

In 2021, Kestra generated sales of approximately $ 15,000 .

Beginning March 1, 2022, the Company’s Consolidated Statements of Income include the results of Kestra, including Net sales of $ 11,906 through September 30, 2022 and the impact on net income for the three and nine months ended September 30, 2022 was not material.

In 2022, the Company recognized $ 365 in acquisition costs related to Kestra and were expensed as incurred.

In 2021, Kestra generated sales of approximately $ 15,000 (unaudited).

Beginning March 1, 2022, the Company’s Consolidated Statements of Income include the results of Kestra, including Net sales of $ 17,602 through December 31, 2022 and the impact on net income for the year ended December 31, 2022 was not material.

Kestra manufactures and provides specialty welding consumables, wear plates and maintenance and repair services for alloy and wear-resistant products commonly used in mining, steel, agricultural and industrial mill applications.

The acquisition broadens the Company’s specialty alloys portfolio and services.

On July 28, 2021, the Company acquired 100 % ownership of Overstreet-Hughes Company, Inc.

and Shoals Tubular, Inc.

The net purchase price was $ 71,716 , net of cash acquired and accounted for as a business combination.

The Company recognized $ 346 in acquisition transaction costs in 2021 which were expensed as incurred and are included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income.

In 2020, FTP generated sales of approximately $ 50,000 .

Beginning July 28, 2021, the Company’s Consolidated Statements of Income include the results of FTP, including Net sales of $ 24,953 through December 31, 2021 and the impact on net income for the year ended December 31, 2021 was not material.

FTP manufactures copper and aluminum headers, distributor assemblies and manifolds in the United States and Mexico for the heating, ventilation, and air conditioning sector (“HVAC”).

The acquisition further differentiated The Harris Products Group’s competitive position serving HVAC original equipment manufacturers with a comprehensive portfolio of solutions for the fabrication of HVAC coils and accelerates growth in this market.

On April 1, 2021, the Company acquired 100 % ownership of Zeman Bauelemente Produktionsgesellschaft m.b.H.

(“Zeman"), a division of the Zeman Group.

The net purchase price was $ 84,390 , net of cash acquired and accounted for as a business combination.

The Company recognized $ 1,577 in acquisition transaction costs in 2021 which were expensed as incurred and are included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income.

In 2020, Zeman generated sales of approximately $ 40,000 .

Beginning April 1, 2021, the Company’s

The acquired companies discussed above are not material individually, or in the aggregate, to the actual or pro forma Consolidated Statements of Income or Consolidated Statements of Cash Flows;

as such, pro forma information related to these acquisitions have not been presented.

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

Consolidated Statements of Income include the results of Zeman, including Net sales of $ 24,473 through December 31, 2021 and the impact on net income for the year ended December 31, 2021 was not material.

Zeman, based in Vienna, Austria, is a leading designer and manufacturer of robotic assembly and arc welding systems that automate the tacking and welding of steel beams.

The acquisition expanded the Company’s international automation capabilities to serve customers in the structural steel and infrastructure sectors.

The acquired companies discussed above are not material individually, or in the aggregate, to the actual or pro forma Consolidated Statements of Income or Consolidated Statements of Cash Flows;

as such, pro forma information related to these acquisitions have not been presented.

The preliminary purchase price allocations are expected to be finalized within the allowable measurement period.

NOTE 5 — SEGMENT INFORMATION

7 unchanged sentences

EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The following table presents Adjusted EBIT by segment:

International

Three Months Ended September 30, 2022

Inter-segment sales

Adjusted EBIT

Special items charge (gain) (1)

Interest income

Interest expense

Income before income taxes

Three Months Ended September 30, 2021

Inter-segment sales

Adjusted EBIT

Special items charge (gain) (3)

Interest income

Interest expense

Income before income taxes

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Inter-segment sales

4 unchanged sentences

Income before income taxes

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Inter-segment sales

4 unchanged sentences

Income before income taxes

(1) In the three months ended September 30, 2022, special items exclude an adjustment to the amortization of the step up in value of acquired inventories of $ 353 in Americas Welding, Rationalization and asset impairment charges of $ 8,364 in International Welding as discussed in Note 6 and acquisition transaction costs of $ 3,068 in Corporate/Eliminations related to the contemplated acquisition discussed in Note 18.

(2) In the nine months ended September 30, 2022, special items exclude a favorable adjustment related to the termination of a pension plan of $ 3,735 , the amortization of the step up in value of acquired inventories of $ 1,106 and Rationalization and asset impairment net gains of $ 998 in Americas Welding, Rationalization and

(1) In the three months ended March 31, 2023, special items include amortization of step up in value of acquired inventories of $ 2,785 and $ 1,071 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $ 877 in International Welding and a gain on disposal of $ 1,646 in International Welding.

(2) In the three months ended March 31, 2022, special items reflect Rationalization charges of $ 1,885 in International Welding and the final settl ement related to the termination of a pension plan of $ 3,735 in Americas Welding.

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

asset impairment charges of $ 10,403 in International Welding as discussed in Note 6 and acquisition costs transaction costs of $ 3,086 in Corporate/Eliminations related to the contemplated acquisition discussed in Note 18.

(3) In the three and nine months ended September 30, 2021, special items reflect Rationalization and asset impairment charges of $ 3,484 and $ 8,277 , respectively, primarily in International Welding, amortization of the step up in value of acquired inventories of $ 3,690 and $ 5,531 , respectively , related to the acquisitions of Zeman in International Welding and FTP in The Harris Products Group, pension settlement charges of $ 73,562 and $ 79,652 , respectively, in Americas Welding and $ 446 in International Welding in the nine months ended September 30, 2021.

Also in the nine months ended September 30, 2021, special items reflect acquisition transaction costs of $ 1,923 in Corporate/Eliminations related to acquisitions as discussed in Note 4.

NOTE 6 — RATIONALIZATION AND ASSET IMPAIRMENTS

The Company recorded Rationalization and asset impairment net charges of $ 9,405 and $ 8,277 in the nine months ended September 30, 2022 and 2021, respectively.

The charges are primarily related to employee severance, non-cash asset impairments and gains or losses on the disposal of assets.

During 2021, the Company initiated rationalization plans within the International Welding segment.

The Company has rationalization plans within the International Welding segment.

The plans include headcount restructuring and the consolidation of manufacturing operations to better align the Company’s cost structure with economic conditions and operating needs.

At September 30, 2022, liabilities of $ 1,097 for International Welding were recognized in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2023, liabilities of $ 1,606 for International Welding were recognized in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet.

The Company does not anticipate significant additional charges related to the completion of these plans.

The Company recorded Rationalization and asset impairment net charges of $ 877 and charges of $ 1,885 in the three months ended March 31, 2023 and 2022, respectively.

The charges are primarily related to restructuring activities.

The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital.

The Company continues to evaluate its cost structure and additional rationalization actions may result in charges in future periods.

The following table summarizes the activity related to rationalization liabilities for the nine months ended September 30, 2022:

International

The following table summarizes the activity related to rationalization liabilities for the three months ended March 31, 2023:

Balance at December 31, 2022

1 unchanged sentence

Charged to expense

Balance at September 30, 2022

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

Balance at March 31, 2023

NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI")

The following tables set forth the total changes in accumulated other comprehensive income (loss) ("AOCI") by component, net of taxes:

Three Months Ended September 30, 2022

Unrealized gain

(loss) on derivatives

designated and

Defined benefit

qualifying as cash

Balance at June 30, 2022

Other comprehensive income (loss) before reclassification

Amounts reclassified from AOCI

Net current-period other comprehensive income (loss)

Balance at September 30, 2022

Three Months Ended September 30, 2021

The following tables set forth the total changes in AOCI by component, net of taxes:

Three Months Ended March 31, 2023

Unrealized gain

3 unchanged sentences

qualifying as cash

Balance at June 30, 2021

Other comprehensive income (loss) before reclassification

Balance at December 31, 2022

Other comprehensive income before reclassification

Amounts reclassified from AOCI

Net current-period other comprehensive income (loss)

Balance at September 30, 2021

(1) During the three months ended September 30, 2022, the AOCI reclassification is a component of Net sales of $ 155 (net of tax of $ 74 ) and Cost of goods sold of $( 210 ) (net of tax of $( 44 ) );

during the three months ended September 30, 2021, the reclassification is a component of Net sales of $ 304 (net of tax of $ 135 ) and Cost of goods sold of $ 18 (net of tax of $ 26 ).

See Note 16 to the consolidated financial statements for additional details.

(2) This AOCI component is included in the computation of net periodic pension costs (net of tax of $ 30 and $ 18,677 ) during the three months ended September 30, 2022 and 2021, respectively.

See Note 13 to the consolidated financial statements for additional details.

(3) The Other comprehensive income (loss) before reclassifications excludes $( 13 ) and $( 58 ) attributable to Non-controlling interests in the three months ended September 30, 2022 and 2021, respectively.

Net current-period other comprehensive income

Balance at March 31, 2023

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

Nine Months Ended September 30, 2022

Unrealized gain

(loss) on derivatives

designated and

Defined benefit

qualifying as cash

Balance at December 31, 2021

Other comprehensive income (loss) before reclassification

Amounts reclassified from AOCI

Net current-period other comprehensive income (loss)

Balance at September 30, 2022

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Unrealized gain

7 unchanged sentences

Net current-period other comprehensive income (loss)

Balance at September 30, 2021

(1) During the nine months ended September 30, 2022, the AOCI reclassification is a component of Net sales of $ 409 (net of tax of $ 181 ) and Cost of goods sold of $( 939 ) (net of tax of $( 223 ) );

during the nine months ended September 30, 2021, the reclassification is a component of Net sales of $ 1,611 (net of tax of $ 692 ) and Cost of goods sold of $ 748 (net of tax of $ 270 ).

See Note 16 to the consolidated financial statements for additional details.

(2) This AOCI component is included in the computation of net periodic pension costs (net of tax of $ 209 and $ 21,578 ) during the nine months ended September 30, 2022 and 2021, respectively.

Balance at March 31, 2022

(1) During the three months ended March 31, 2023, the AOCI reclassification is a component of Net sales of $ 864 (net of tax of $ 342 ) and Cost of goods sold of $( 139 ) (net of tax of $( 43 ) );

during the three months ended March 31, 2022, the reclassification is a component of Net sales of $ 132 (net of tax of $ 48 ) and Cost of goods sold of $( 362 ) (net of tax of $( 93 ) ).

See Note 13 to the consolidated financial statements for additional details.

(3) The Other comprehensive income (loss) before reclassifications excludes $ 102 and $ ( 327 ) attributable to Non-controlling interests in the nine months ended September 30, 2022 and 2021, respectively.

NOTE 8 — COMMON STOCK REPURCHASE PROGRAM

From time to time at management’s discretion, the Company is authorized to repurchase its common shares in the open market, depending on market conditions, stock price and other factors.

During the three months ended September 30, 2022, the Company purchased a total of 0.2 million shares at an average cost per share of $ 133.74 .

During the nine months ended September 30, 2022, the Company purchased a total of 1.2 million shares at an average cost per share of $ 130.90 .

As of September 30, 2022, 9.1 million common shares remained available for repurchase.

The repurchased common shares remain in treasury and have not been retired.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

(2) The Other comprehensive income (loss) before reclassifications excludes $ 0 and $ 134 attributable to Non-controlling interests in the three months ended March 31, 2023 and 2022, respectively.

(3) Includes a gain of $ 8,599 from derivatives as net investment hedges.

NOTE 8 — INVENTORIES

Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components:

September 30, 2022

March 31, 2023

December 31, 2022

2 unchanged sentences

Finished goods

At September 30, 2022 and December 31, 2021, approximately 40 % and 36 %, respectively, of total inventories were valued using the last-in, first-out ("LIFO") method.

The excess of current cost over LIFO cost was $ 134,597 and $ 114,176 at September 30, 2022 and December 31, 2021, respectively.

At March 31, 2023 and December 31, 2022, approximately 37 % and 38 %, respectively, of total inventories were valued using the last-in, first-out ("LIFO") method.

The excess of current cost over LIFO cost was $ 136,101 and $ 133,909 at March 31, 2023 and December 31, 2022, respectively.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

NOTE 9 — LEASES

2 unchanged sentences

Balance Sheet Classification

September 30, 2022

March 31, 2023

December 31, 2022

5 unchanged sentences

Total lease liabilities

Total lease expense, which is included in Cost of goods sold and Selling, general & administrative expenses in the Company’s Consolidated Statements of Income, was $ 5,109 and $ 15,415 in the three and nine months ended September 30, 2022, respectively, and $ 5,619 and $ 16,279 in the three and nine months ended September 30, 2021, respectively.

Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2022 were $ 2,930 and $ 9,101 , respectively, and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows.

Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2021 were $ 5,896 and $ 12,548 , respectively, and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows.

Right-of-use assets obtained in exchange for operating lease liabilities were $ 4,739 and $ 8,217 during the three and nine months ended September 30, 2022, respectively, and $ 3,218 and $ 12,912 for the three and nine months ended September 30, 2021, respectively.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

Total lease expense, which is included in Cost of goods sold and Selling, general & administrative expenses in the Company’s Consolidated Statements of Income, was $ 5,851 and $ 5,198 in the three months ended March 31, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2023 and 2022, respectively, were $ 3,145 and $ 3,187 and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows.

Right-of-use assets obtained in exchange for operating lease liabilities were $ 3,896 and $ 2,737 during the three months ended March 31, 2023 and 2022, respectively.

The total future minimum lease payments for noncancelable operating leases were as follows:

September 30, 2022

March 31, 2023

Total lease payments

1 unchanged sentence

Operating lease liabilities

As of September 30, 2022, the weighted average remaining lease term is 7.9 years and the weighted average discount rate used to determine the operating lease liability is 3.0 %.

NOTE 11 — PRODUCT WARRANTY COSTS

The changes in the carrying amount of product warranty accruals are as follows:

Nine Months Ended September 30,

Balance at beginning of year

Accruals for warranties

Foreign currency translation and other adjustments

Balance at end of period

As of March 31, 2023, the weighted average remaining lease term is 7.6 years and the weighted average discount rate used to determine the operating lease liability is 3.0 %.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

NOTE 10 — DEBT

2 unchanged sentences

The Credit Agreement has a line of credit totaling $ 500,000 , has a term of 5 years with a maturity date of April 23, 2026 and may be increased, subject to certain conditions including the consent of its lenders, by an additional amount up to $ 150,000 .

The interest rate on borrowings is based on LIBOR plus a spread based on the Company’s net leverage ratio.

On March 8, 2023, the Credit Agreement was amended to replace the LIBOR rate to a term secured overnight finance rate (“SOFR”);

as such, the interest rate on borrowings is based on SOFR plus a spread of 0.85 % to 1.85 % based on (1) the Company’s net leverage ratio and (2) a credit spread adjustment.

The Credit Agreement contains customary representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of this type (subject to negotiated baskets and exceptions), including limitations on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with affiliates.

As of September 30, 2022, the Company was in compliance with all of its covenants and had $ 37,000 of outstanding borrowings under the Credit Agreement.

As of March 31, 2023, the Company was in compliance with all of its covenants and had $ 25,000 of outstanding borrowings under the Credit Agreement.

The Company has other lines of credit and debt agreements totaling $ 98,692 .

As of September 30, 2022, the Company was in compliance with all of its covenants and had $ 20,338 outstanding at September 30, 2022.

As of March 31, 2023, the Company was in compliance with all of its covenants and had $ 13,408 outstanding.

Senior Unsecured Notes

On April 1, 2015 and October 20, 2016, the Company entered into separate Note Purchase Agreements pursuant to which it issued senior unsecured notes (the "Notes") through a private placement.

The 2015 Notes and 2016 Notes each

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

have an aggregate principal amount of $ 350,000 , comprised of four different series ranging from $ 50,000 to $ 100,000 , with maturity dates ranging from August 20, 2025 through April 1, 2045, and interest rates ranging from 2.75 % to 4.02 %.

The 2015 Notes and 2016 Notes each have an aggregate principal amount of $ 350,000 , comprised of four different series ranging from $ 50,000 to $ 100,000 , with maturity dates ranging from August 20, 2025 through April 1, 2045, and interest rates ranging from 2.75 % to 4.02 %.

Interest on the Notes is paid semi-annually.

2 unchanged sentences

The Notes contain certain affirmative and negative covenants.

As of September 30, 2022, the Company was in compliance with all of its debt covenants relating to the Notes.

As of March 31, 2023, the Company was in compliance with all of its debt covenants relating to the Notes.

Shelf Agreements

2 unchanged sentences

The Company is required to comply with covenants similar to those contained in the Notes.

As of September 30, 2022, the Company was in compliance with all of its covenants and had no outstanding borrowings under the Shelf Agreements.

Fair Value of Debt

At September 30, 2022 and December 31, 2021, the fair value of long-term debt, including the current portion, was approximately $ 597,972 and $ 776,655 , respectively, which was determined using available market information and methodologies requiring judgment.

The carrying value of this debt at such dates was $ 722,287 and $ 717,855 , respectively.

Since judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a current market exchange.

NOTE 13 — RETIREMENT AND POSTRETIREMENT BENEFIT PLANS

The components of total pension cost were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

pension plans

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss

Settlement charges (gains) (1)

Defined benefit plans

Multi-employer plans

Defined contribution plans

Total pension cost

(1) Gains in the nine months ended September 30, 2022 related to the final settlement associated with the termination of a pension plan.

Charges in the three and nine months ended September 30, 2021 primarily resulting from lump sum pension payments also related to the termination of a pension plan.

The defined benefit plan components of Total pension cost, other than service cost, are included in Other income (expense) in the Company’s Consolidated Statements of Income.

As of March 31, 2023, the Company was in compliance with all of its covenants and had no outstanding borrowings under the Shelf Agreements.

On November 29, 2022, the Company entered into a term loan in the aggregate principal amount of $ 400,000 (the “Term Loan”), which was borrowed in full.

The Term Loan matures on November 29, 2025.

The Term Loan bears an interest at a rate based on SOFR, plus a margin ranging from 0.75 % to 1.75 % based on the Company’s consolidated net leverage ratio.

The proceeds of the Term Loan were used to pay a portion of the purchase price in connection with the acquisition of Fori.

As of March 31, 2023, the Company was in compliance with all of its covenants.

In March 2023, the Company entered into interest rate swap agreements to effectively convert the interest rate on $ 150,000 of the Term Loan from a variable rate to a fixed rate.

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

Fair Value of Debt

At March 31, 2023 and December 31, 2022, the fair value of long-term debt, including the current portion, was approximately $ 1,033,063 and $ 1,009,020 , respectively, which was determined using available market information and methodologies requiring judgment.

The carrying value of this debt at such dates was $ 1,121,558 and $ 1,121,435 , respectively.

Since judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a current market exchange.

NOTE 11 — OTHER INCOME (EXPENSE)

The components of Other income (expense) were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Equity earnings (loss) in affiliates

Three Months Ended March 31,

Equity earnings in affiliates

Other components of net periodic pension (cost) income (1)

1 unchanged sentence

Total Other income (expense)

(1) Other components of net periodic pension (cost) income includes pension settlements and curtailments as discussed in Note 13 to the consolidated financial statements.

(1) In 2022, Other components of net periodic pension (cost) income includes pension settlements and curtailments .

(2) In 2023, Other income (expense) includes a gain on asset disposal of $ 1,646 .

NOTE 12 — INCOME TAXES

The Company recognized $ 93,991 of tax expense on pretax income of $ 457,069 , resulting in an effective income tax rate of 20.6 % for the nine months ended September 30, 2022.

The effective income tax rate was 20.2 % for the nine months ended September 30, 2021.

The effective tax rate was higher for the nine months ended September 30, 2022, as compared with the same period in 2021, primarily due to the geographic mix of earnings and the impact of favorable discrete tax adjustments in 2021.

As of September 30, 2022, the Company had $ 18,375 of unrecognized tax benefits.

The Company recognized $ 33,413 of tax expense on pretax income of $ 155,372 , resulting in an effective income tax rate of 21.5 % for the three months ended March 31, 2023.

The effective income tax rate was 21.1 % for the three months ended March 31, 2022.

The effective tax rate was slightly higher for the three months ended March 31, 2023, as compared with the same period in 2022, primarily due to the geographic mix of earnings and discrete tax items.

As of March 31, 2023, the Company had $ 16,226 of unrecognized tax benefits.

If recognized, approximately $ 13,217 would be reflected as a component of income tax expense.

8 unchanged sentences

Based on information currently available, management believes that additional audit activity could be completed and/or statutes of limitations may close relating to existing unrecognized tax benefits.

It is reasonably possible there could be a reduction of $ 3,655 in previously unrecognized tax benefits by the end of the third quarter 2023.

It is reasonably possible there could be a reduction of $ 1,287 in previously unrecognized tax benefits by the end of the first quarter 2024.

NOTE 13 — DERIVATIVES

The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business.

Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable.

Hedge ineffectiveness was immaterial in the nine months ended September 30, 2022 and 2021.

The Company is subject to the credit risk of the counterparties to derivative instruments.

Counterparties include a number of major banks and financial institutions.

None of the concentrations of risk with any individual counterparty was considered significant at September 30, 2022.

The Company does not expect any counterparties to fail to meet their obligations.

Both at inception and on an ongoing basis, the derivative instruments that

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

qualify for hedge accounting are assessed as to their effectiveness, when applicable.

Hedge ineffectiveness was immaterial in the three months ended March 31, 2023 and 2022.

The Company is subject to the credit risk of the counterparties to derivative instruments.

Counterparties include a number of major banks and financial institutions.

None of the concentrations of risk with any individual counterparty was considered significant at March 31, 2023.

The Company does not expect any counterparties to fail to meet their obligations.

Cash Flow Hedges

The Company has certain foreign currency forward contracts that are qualified and designated as cash flow hedges.

The dollar equivalent gross notional amount of these short-term contracts was $ 54,600 at September 30, 2022 and $ 72,630 at December 31, 2021.

Certain foreign currency forward contracts are qualified and designated as cash flow hedges.

The dollar equivalent gross notional amount of these short-term contracts was $ 65,779 at March 31, 2023 and $ 66,296 at December 31, 2022.

The Company has interest rate forward starting swap agreements that are qualified and designated as cash flow hedges.

The dollar equivalent gross notional amount of the long-term contracts was $ 100,000 at September 30, 2022 and December 31, 2021 and have a termination date of August 2025.

The Company has commodity contracts with a notional amount of 1,475,000 pounds and 975,000 pounds at September 30, 2022 and December 31, 2021, respectively, which are qualified and designated as cash flow hedges.

The dollar equivalent gross notional amount of the long-term contracts was $ 100,000 at March 31, 2023 and December 31, 2022 and have a termination date of August 2025.

The Company has commodity contracts with a notional amount of 300,000 pounds and 875,000 pounds at March 31, 2023 and December 31, 2022, respectively, which are qualified and designated as cash flow hedges.

In March 2023, the Company entered into interest rate swap agreements, which were qualified and designated as cash flow hedges, with an aggregate notional amount of $ 150,000 .

The interest rate swaps will effectively convert the interest rate on $ 150,000 of the Term Loan discussed in Note 10 from a variable rate based on one-month SOFR to a fixed rate.

Net Investment Hedges

The Company has cross currency swap agreements that are qualified and designated as net investment hedges.

The dollar equivalent gross notional amount of these contracts is $ 25,000 as of September 30, 2022 and December 31, 2021, respectively.

The Company has foreign currency forward contracts that qualify and are designated as net investment hedges.

The dollar equivalent gross notional amount of these short-term contracts was $ 81,398 at September 30, 2022 and $ 94,479 at December 31, 2021.

The dollar equivalent gross notional amount of these short-term contracts was $ 90,105 at March 31, 2023 and $ 88,843 at December 31, 2022.

Derivatives Not Designated as Hedging Instruments

1 unchanged sentence

These derivatives are held as economic hedges of certain balance sheet exposures.

The dollar equivalent gross notional amount of these contracts was $ 260,594 and $ 301,685 at September 30, 2022 and December 31, 2021, respectively.

The dollar equivalent gross notional amount of these contracts was $ 323,519 and $ 380,443 at March 31, 2023 and December 31, 2022, respectively.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets follow:

September 30, 2022

March 31, 2023

December 31, 2022

2 unchanged sentences

Foreign exchange contracts

Interest rate swap agreements

Forward starting swap agreements

4 unchanged sentences

Total derivatives

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Derivatives by hedge designation

4 unchanged sentences

& administrative expenses

Commodity Contracts

Cost of goods sold

The effects of designated hedges on AOCI and the Company’s Consolidated Statements of Income consisted of the following:

Total gain (loss) recognized in AOCI, net of tax

September 30, 2022

Total gain recognized in AOCI, net of tax

March 31, 2023

December 31, 2022

Foreign exchange contracts

Interest rate swap agreements

Forward starting swap agreements

2 unchanged sentences

The Company expects a gain of $ 1,835 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Gain (loss) recognized in the

9 unchanged sentences

NOTE 14 - FAIR VALUE

The following table provides a summary of assets and liabilities as of September 30, 2022, measured at fair value on a recurring basis:

The following table provides a summary of assets and liabilities as of March 31, 2023, measured at fair value on a recurring basis:

Quoted Prices in

4 unchanged sentences

Observable Inputs

September 30, 2022

March 31, 2023

Inputs (Level 3)

Foreign exchange contracts

Net investment contracts

Commodity contracts

Interest rate swap agreements

Forward starting swap agreements

1 unchanged sentence

Foreign exchange contracts

Commodity contracts

Net investment contracts

Deferred compensation

10 unchanged sentences

Foreign exchange contracts

Net investment contracts

Commodity contracts

Forward starting swap agreements

Pension Surplus

Foreign exchange contracts

Net investment contracts

Commodity contracts

Deferred compensation

1 unchanged sentence

The Company’s derivative contracts are valued at fair value using the market approach.

The Company measures the fair value of foreign exchange contracts, swap agreements and net investment contracts using Level 2 inputs based on observable spot and forward rates in active markets.

The Company measures the fair value of foreign exchange contracts, swap agreements, net investment contracts and interest rate swap agreements using Level 2 inputs based on observable spot and forward rates in active markets.

The deferred compensation liability is the Company’s obligation under its executive deferred compensation plan.

3 unchanged sentences

Dollars in thousands, except per share amounts

The fair value of Cash and cash equivalents, Accounts receivable, Short-term debt excluding the current portion of long-term debt and Trade accounts payable approximated book value due to the short-term nature of these instruments at both September 30, 2022 and December 31, 2021.

The fair value of the Company’s pension surplus assets are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy.

The pension surplus assets are invested in money market and short-term duration bond funds at September 30, 2022.

The pension surplus assets are invested in money market and short-term duration bond funds at March 31, 2023.

The Company has various financial instruments, including cash and cash equivalents, short and long-term debt and forward contracts.

1 unchanged sentence

The Company does not expect any counterparties to fail to meet their obligations.

NOTE 18 – SUBSEQUENT EVENTS

On October 14, 2022, the Company entered into a definitive agreement to acquire Fori Automation, Inc.

(the “contemplated acquisition”).

Upon completion of the contemplated acquisition, the acquired business will extend the Company’s market presence within the automotive sector, better position it to capitalize on accelerating investments in automotive electric vehicle platforms, offer cross-selling growth opportunities to industrial customers and expand the Company’s international automation footprint.

The definitive agreement provides for a cash purchase price of $ 427,000 , subject to a customary working capital adjustment.

The Company intends to fund the transaction with cash on hand and arranged credit.

The contemplated acquisition is subject to regulatory approval and other customary closing conditions and is expected to close in the fourth quarter of 2022.

For the three and nine months ended September 30, 2022, the Company has incurred $ 3,068 , respectively, of acquisition transaction costs related to the contemplated acquisition.

These costs were expensed as incurred and are included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income.

NOTE 15 – SUPPLIER FINANCING PROGRAM

The Company’s suppliers, at the supplier’s sole discretion, are able to factor receivables due from the Company to a financial institution on terms directly negotiated with the financial institution without affecting the Company’s balance sheet classification of the corresponding payable.

The Company pays the financial institution the stated amount of the confirmed invoices from its designated suppliers on the original maturity dates of the invoices.

Invoices with suppliers have terms between 120 and 180 days .

The Company does not provide secured legal assets or other forms of guarantees under the arrangement and has no involvement in establishing the terms or conditions of the arrangement between its suppliers and the financial institution.

The amounts due to the financial institution for suppliers that participate in the supplier financing program are included in Accounts payable on the Company’s Consolidated Balance Sheets, and the associated payments are included in operating activities in the Consolidated Statements of Cash Flows.

At March 31, 2023 and December 31, 2022, Accounts payable included $ 27,535 and $ 33,475 , respectively, payable to suppliers that have elected to participate in the supplier financing program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements