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Item 9A. Controls and Procedures

2024-02-27 compared with 2023-02-21 · 227 added, 271 removed, 1275 unchanged (28% of the section changed)

5 unchanged sentences

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, 2022 based on the 2013 framework in "Internal Control – Integrated Framework"

issued by the Committee of Sponsoring

Organizations of the Treadway Commission.

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, 2023 based on the 2013 framework in "Internal Control – Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on the Company’s evaluation under such framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023.

During 2022, the Company completed the acquisition of Fori.

Fori’s assets are included in the Company’s Consolidated Balance Sheet from the date of the acquisition and constituted approximately 14.6% of total assets as of December 31, 2022.

As permitted by guidance issued by the Securities and Exchange Commission, the Company has elected to exclude Fori from our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2022.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included elsewhere in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

In December 2022, the Company acquired Fori.

The acquired business operated under its own set of systems and internal controls and the Company is currently maintaining those systems and much of that control environment until it is able to incorporate its processes into the Company’s own systems and control environment.

The Company expects to complete the incorporation of the acquired business’ operations into the Company’s systems and control environment in 2023.

Except for changes in connection with the Company’s acquisition of Fori business noted above, there have been no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2023 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

During the quarter ended December 31, 2023, none of the Company’s directors or officers adopted , modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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The Company is expected to file its 2024 proxy statement pursuant to Regulation 14A of the Exchange Act within 120 days after December 31, 2023.

Except for the information set forth within Part I, Item 1C section of this Annual Report on Form 10-K concerning our Executive Officers, the information required by this item is incorporated by reference from the 2023 proxy statement.

Except for the information set forth within Part I, Item 1D section of this Annual Report on Form 10-K concerning our Executive Officers, the information required by this item is incorporated by reference from the 2024 proxy statement.

EXECUTIVE COMPENSATION

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(a)(3) Exhibits

Amended and Restated Articles of Incorporation of Lincoln Electric Holdings, Inc., as amended on October 19, 2021 (filed as Exhibit 3.1 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on October 22, 2021, SEC File No.

Amended and Restated Articles of Incorporation of Lincoln Electric Holdings, Inc.

(filed as Exhibit 3.1 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on September 27, 2011, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

8 unchanged sentences

0-1402, and incorporated herein by reference and made a part hereof).

First Amendment to Second Amendment and Restated Credit Agreement, dated as of March 8, 2023, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Electric Automation, Inc., Lincoln Global, Inc., the Lenders and KeyBank National Association (filed as Exhibit 10.1 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended March 31, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Credit Agreement, dated as of November 29, 2022, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

19 unchanged sentences

0-1402, and incorporated herein by reference and made a part hereof).

Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., MetLife Investment Advisors, LLC and/or one or more of its affiliates or related funds, as purchasers thereunder (filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on November 29, 2018, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., Voya Retirement Insurance and Annuity Company and/or one or more of its affiliates or related funds, as purchasers thereunder (filed as Exhibit 10.2 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on November 29, 2018, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., State Farm Life Insurance Company and/or one or more of its affiliates or related funds, as purchasers thereunder (filed as Exhibit 10.3 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on November 29, 2018, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., AIG Asset Management (U.S.), LLC and/or one or more of its affiliates or related funds, as purchasers thereunder (filed as Exhibit 10.4 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on November 29, 2018, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., John Hancock Life Insurance Company (U.S.A.) and/or one or more of its affiliates or related funds, as purchasers thereunder (filed as Exhibit 10.5 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on November 29, 2018, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., Thrivent Financial for Lutherans and/or one or more of its affiliates or related funds, as purchasers thereunder (filed as Exhibit 10.6 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on November 29, 2018, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.

Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., Allianz Life Insurance Company of North America and/or one or more of its affiliates or related funds, as purchasers thereunder (filed as Exhibit 10.7 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on November 29, 2018, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Supplemental Executive Retirement Plan (Amended and Restated as of December 31, 2008) (filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on January 7, 2009, SEC File No.

0-1402, and incorporated herein by reference and made part hereof).

Amendment No.

1 to Supplemental Executive Retirement Plan (As Amended and Restated as of December 31, 2008) (filed as Exhibit 10.6 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2016, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Amendment No.

2 to Supplemental Executive Retirement Plan (As Amended and Restated as of December 31, 2008) (filed as Exhibit 10.4 to Form10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended September 30, 2020, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Deferred Compensation Plan for Certain Retention Agreements and Other Contractual Arrangements (Amended and Restated as of January 1, 2004) (filed as Exhibit 10(i) to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2003, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Non-Employee Directors’ Deferred Compensation Plan (Amended and Restated as of January 1, 2021) (filed as Exhibit 10.18 to Form 10-K of Lincoln Electric Holdings, Inc.

11 unchanged sentences

0-1402, and incorporated herein by reference and made a part hereof).

The Lincoln Electric Company Employee Savings Plan As Amended and Restated Effective January 15, 2021 (filed as Exhibit 10.20 to Form 10 K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2021, SEC File No.

0 1402, and incorporated herein by reference and made a part hereof).

The Lincoln Electric Company Employee Savings Plan As Amended and Restated Effective April 25, 2022 (filed herewith).

Amendment No.

1 to The Lincoln Electric Company Employee Savings Plan As Amended and Restated Effective January 15, 2021 (filed as Exhibit 10.21 to Form 10 K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2021, SEC File No.

0 1402, and incorporated herein by reference and made a part hereof).

1 to The Lincoln Electric Company Employee Savings Plan As Amended and Restated Effective April 25, 2022 (filed herewith).

Amendment No.

2 to The Lincoln Electric Company Employee Savings Plan As Amended and Restated Effective January 15, 2021 (filed as Exhibit 10.22 to Form 10 K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2021, SEC File No.

0 1402, and incorporated herein by reference and made a part hereof).

2 to The Lincoln Electric Company Employee Savings Plan As Amended and Restated Effective April 25, 2022 (filed herewith).

Form of Change in Control Severance Agreement (as entered into by the Company and its executive officers) (filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc.

18 unchanged sentences

0-1402, and incorporated by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Non-Employee Directors (filed as Exhibit 10.30 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2021, SEC File No.

2023 Equity and Incentive Compensation Plan (filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on April 21, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Non-Employee Directors (filed herewith).

Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.4 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended September 30, 2010, SEC File No.

2023 Stock Plan for Non-Employee Directors (filed as Exhibit 10.2 to Form 8-K of Lincoln Electric Holdings, Inc.

filed on April 21, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.37 to Form 10-K of the Lincoln Electric Holdings, Inc.

Form of Restricted Stock Unit Agreement for Non-Employee Directors (filed as Exhibit 10.31 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2022, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Non-Employee Directors under 2023 Stock Plan for Non-Employee Directors (filed as Exhibit 10.1 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended June 30, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Non-Employee Directors under 2023 Stock Plan for Non-Employee Directors (filed herewith).

Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.27 to Form 10-K of Lincoln Electric Holdings, Inc.

16 unchanged sentences

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.33 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2013, SEC File No.

Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.2 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended March 31, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.21 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2015, SEC File No.

Form of Stock Option Agreement for Executive Officers under 2023 Equity and Incentive Compensation Plan (filed as Exhibit 10.2 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended June 30, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

2 unchanged sentences

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.43 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2019, SEC File No.

Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.2 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended March 31, 2021, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.2 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended March 31, 2021, SEC File No.-0-1402, and incorporated herein by reference and made a part hereof).

for the quarter ended March 31, 2022, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.3 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended March 31, 2022, SEC File No.-0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.44 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2018, SEC File No.

for the quarter ended March 31, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.47 to Form 10-K of Lincoln Electric Holdings, Inc.

for the year ended December 31, 2019, SEC File No.

Form of Restricted Stock Unit Agreement for Executive Officers under 2023 Equity and Incentive Compensation Plan (filed as Exhibit 10.3 to Form 10-Q of Lincoln Electric Holdings, Inc.

for the quarter ended June 30, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.3 to Form 10-Q of Lincoln Electric Holdings, Inc., for the quarter ended March 31, 2021, SEC File No.-0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.3 to Form 10-Q of Lincoln Electric Holdings, Inc., for the quarter ended March 31, 2022, SEC File No.-0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.3 to Form 10-Q of Lincoln Electric Holdings, Inc., for the quarter ended March 31, 2021, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.3 to Form 10-Q of Lincoln Electric Holdings, Inc., for the quarter ended March 31, 2022, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.4 to Form 10-Q of Lincoln Electric Holdings, Inc., for the quarter ended March 31, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Performance Share Award Agreement for Executive Officers under 2023 Equity and Incentive Compensation Plan (filed as Exhibit 10.4 to Form 10-Q of Lincoln Electric Holdings, Inc., for the quarter ended June 30, 2023, SEC File No.

0-1402, and incorporated herein by reference and made a part hereof).

Form of Officer Indemnification Agreement (effective February 23, 2012) (filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

Lincoln Electric Holdings, Inc.

Clawback Policy (Effective October 2, 2023) (filed herewith).

Inline XBRL Instance Document

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Christopher L.

/s/ Steven B.

/s/ Gabriel Bruno

Christopher L.

Gabriel Bruno,

Chairman, President and Chief Executive Officer

President and Chief Executive Officer

Executive Vice President, Chief Financial Officer and

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Attorney-in-Fact for

Fetch, Director

Goris, Director

February 27, 2024

/s/ Gabriel Bruno

Gabriel Bruno as

Attorney-in-Fact for

Hilton, Director

Howze, Director

February 27, 2024

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Kathryn Jo Lincoln, Director

Mason, Director

Christopher L.

Mapes, Executive Chairman of the Board

February 27, 2024

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Attorney-in-Fact for

Mason, Director

Patel, Director

Runtagh, Director

February 27, 2024

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/s/ Gabriel Bruno

Gabriel Bruno as

Attorney-in-Fact for

Runtagh, Director

Walker, Director

February 27, 2024

Report of Independent Registered Public Accounting Firm

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

Goodwill impairment evaluation – Reporting Unit within International Welding Segment

Goodwill impairment evaluation – Reporting Unit within Americas Welding Segment

Description of the Matter

As disclosed in Note 5 to the consolidated financial statements, at December 31, 2022, the Company’s total goodwill was $665.3 million, of that, $129.9 million relates to the International Welding segment.

As disclosed in Note 5 to the consolidated financial statements, at December 31, 2023, the Company’s total goodwill was $694.5 million, of that, $497.6 million relates to the Americas Welding segment.

As disclosed in Note 1 to the consolidated financial statements, goodwill is tested for impairment in the fourth quarter using the same date each year or more frequently if changes in circumstances or the occurrence of events indicate potential impairment.

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The Company may perform a quantitative test in instances where the more-likely-than-not threshold has not been met, including when general macroeconomic conditions or changes to the reporting unit warrant a refresh of the baseline used in a qualitative test.

The Company performed a quantitative assessment for a reporting unit within the International Welding segment and determined that the fair value of the reporting unit was in excess of the carrying value.

The Company performed a quantitative assessment for a reporting unit within the Americas Welding segment and determined that the fair value of the reporting unit was in excess of the carrying value.

Auditing the annual goodwill impairment test for the aforementioned reporting unit under the quantitative assessment was complex and judgmental due to the significant estimation required in determining the fair value of the reporting unit.

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We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment evaluation, including controls over the significant assumptions mentioned above.

To test the estimated fair value used in the Company’s annual goodwill impairment test for the reporting unit within the International Welding segment, our audit procedures included, among others, assessing the valuation methodology, testing the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data used by the Company in its analysis.

To test the estimated fair value used in the Company’s annual goodwill impairment test for the reporting unit within the Americas Welding segment, our audit procedures included, among others, assessing the valuation methodology, testing the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data used by the Company in its analysis.

As it pertains to the terminal period revenue growth rate, we compared the significant assumptions used by management to third party industry data and economic trends, changes to the Company’s business model, customer base or product mix, as applicable.

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Fori Automation, LLC (Fori), which is included in the 2022 consolidated financial statements of the Company and constituted 14.6% of total assets as of December 31, 2022.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Fori.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2023 consolidated financial statements of the Company and our report dated February 27, 2024 expressed an unqualified opinion thereon.

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Income taxes (Note 13)

Net income including non-controlling interests

Non-controlling interests in subsidiaries’ income

Basic earnings per share (Note 3)

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Year Ended December 31,

Net income including non-controlling interests

Other comprehensive income (loss), net of tax:

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax of $ 3,099 in 2022;

$ 1,523 in 2021;

$ 605 in 2020

Defined pension plan activity, net of tax of $ 964 in 2022;

$ 33,214 in 2021;

$( 10,622 ) in 2020

Unrealized gain on derivatives designated and qualifying as cash flow hedges

Defined pension plan activity

Currency translation adjustment

Other comprehensive (loss) income:

Other comprehensive income (loss):

Comprehensive income

Comprehensive income (loss) attributable to non-controlling interests

Comprehensive income attributable to shareholders

See notes to these consolidated financial statements.

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( 2,488,776 )

Total Shareholders' Equity

Non-controlling interests

TOTAL LIABILITIES AND TOTAL EQUITY

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CASH FLOWS FROM OPERATING ACTIVITIES

Non-controlling interests in subsidiaries' income (loss)

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 7)

Adjustments to reconcile Net income to Net cash provided by operating activities:

Rationalization and asset impairment net charges (Note 7)

Depreciation and amortization

Equity earnings in affiliates, net

Gain on sale of property

Deferred income taxes (Note 13)

Stock-based compensation

Pension settlement charges

Pension settlement net charges

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

(Increase) decrease in accounts receivable

(Increase) decrease in inventories

(Increase) decrease in other current assets

Increase (decrease) in trade accounts payable

(Decrease) increase in other current liabilities

Decrease (increase) in accounts receivable

Decrease (increase) in inventories

(Increase) in other current assets

(Decrease) increase in trade accounts payable

Increase (decrease) in other current liabilities

Net change in other assets and liabilities

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CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from (payments on) short-term borrowings

Proceeds from (payments on) long-term borrowings

(Payments on) proceeds from short-term borrowings

(Payments on) proceeds from long-term borrowings

Proceeds from exercise of stock options

2 unchanged sentences

Other financing activities

NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES

NET CASH (USED BY) PROVIDED BY FINANCING ACTIVITIES

Effect of exchange rate changes on Cash and cash equivalents

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The consolidated financial statements include the accounts of Lincoln Electric Holdings, Inc.

and its wholly-owned and majority-owned subsidiaries for which it has a controlling interest (the "Company") after elimination of all inter-company accounts, transactions and profits.

Certain reclassifications have been made to the prior period amounts to conform to the current period presentation, none of which are material.

General Information

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In March 2022, in 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 and Total assets as of December 31, 2022, 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.

Although the Company’s Net sales and Total assets in Russia are less than 1 % of consolidated Net sales and Total assets as of December 31, 2023 and 2022, 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.

10 unchanged sentences

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.

For the year ended December 31, 2022, this impact was not significant to the Company’s results.

For the years ended December 31, 2023 and 2022, this impact was not significant to the Company’s results.

The translation of assets and liabilities originally denominated in foreign currencies into U.S.

2 unchanged sentences

dollar value of the net equity of its foreign operations to shareholders.

Foreign currency transaction gains and losses are included in Selling, general & administrative expenses and were gains of $ 3,633 , $ 1,332 and $ 4,229 in 2022, 2021 and 2020, respectively.

Foreign currency transaction gains and losses are included in Selling, general & administrative expenses and were losses of $ 1,744 in 2023 and gains of $ 3,633 and $ 1,332 in 2022 and 2021, respectively.

Cash Equivalents

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Cost of other inventories is determined by costing methods that approximate a first-in, first-out (“FIFO”) basis.

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

Refer to Note 16 for additional details.

Reserves are maintained for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions.

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If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows.

Refer to Notes 5, 7 and 17 to the consolidated financial statements for additional details.

Refer to Notes 5, 7 and 17 for additional details.

Goodwill and Intangibles

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Changes in economic and operating conditions, actual growth below the assumed market participant assumptions or an increase in the discount rate could result in an impairment charge in a future period.

Refer to Note 5 to the consolidated financial statements for additional details.

Refer to Note 5 for additional details.

Fair Value Measurements

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Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Refer to Notes 11 and 15 to the consolidated financial statements for additional details.

Refer to Notes 11 and 15 for additional details.

Revenue Recognition

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The Company does not offer any payment terms that would meet the requirements for consideration as a financing component under Topic 606.

Refer to Note 2 to the consolidated financial statements for additional details.

Refer to Note 2 for additional details.

Distribution Costs

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

The effective portion of the fair value unrealized gain or loss on cash flow hedges are reported as a component of Accumulated other comprehensive income ("AOCI") with offsetting amounts recorded as Other current assets, Other assets, Other current liabilities or Other liabilities depending on the position and the duration of the contract.

At settlement, the realized gain or loss is recorded in Cost of goods sold or Net sales for hedges of purchases and sales, respectively, in the same period or periods during which the hedged transaction affects earnings.

6 unchanged sentences

The interest rate swap agreements designated as fair value hedges meet the shortcut method requirements under accounting standards for derivatives and hedging.

Accordingly, changes in the fair value of these agreements are considered to exactly offset

changes in the fair value of the underlying long-term debt.

Accordingly, changes in the fair value of these agreements are considered to exactly offset changes in the fair value of the underlying long-term debt.

Changes in fair value are recorded in Other assets or Other liabilities with offsetting amounts recorded as a fair value adjustment to the carrying value of Long-term debt, less current portion.

17 unchanged sentences

The Company elects to treat any Global Intangible Low Taxed Income inclusion as a period expense in the year incurred.

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

Refer to Note 13 for additional details.

Upon acquisition of a business, the Company uses the income, market or cost approach (or a combination thereof) for the valuation as appropriate.

The valuation inputs in these models and analyses are based on market participant

The valuation inputs in these models and analyses are based on market participant assumptions.

Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability.

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For certain items, the pre-acquisition carrying value is determined to be a reasonable approximation of fair value based on information available to the Company.

Refer to Note 4 to the consolidated financial statements for additional details.

Refer to Note 4 for additional details.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in certain circumstances that affect the amounts reported in the accompanying consolidated financial statements and notes.

1 unchanged sentence

New Accounting Pronouncements

The following section provides a description of new Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company.

The following ASUs were adopted as of January 1, 2023 and did not have a significant financial impact on the Company’s consolidated financial statements unless otherwise described within the table below:

2022-06, Reference Rate Reform (Topic 848) , issued December 2022.

dollar LIBOR rates will no longer be published and regulators have identified alternative reference rates that are more observable or transparent-based and less susceptible to manipulation.

This ASU provides optional relief in accounting for the impact of reference rate reform by deferring the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

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 19 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 ASUs:

2023-06, Disclosure Improvements , issued October 2023

Requires amending certain disclosure and presentation requirements for a variety of topics within the ASC.

The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or S-K becomes effective, or June 30, 2027, if the SEC has not removed the requirements by that date.

Early adoption is prohibited.

2023-01, Leases-Common Control Arrangements (Topic 842) , issued March 2023

Requires a lessee in a common-control arrangement to amortize leasehold improvements that it owns over the improvements’ useful life, regardless of the lease term.

The requirement of the ASU is effective January 1, 2024.

2023-07, Segment Reporting (Topic 280) , issued November 2023.

Requires enhanced disclosures about significant segment expenses, including significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the title and position of the CODM, an amount for other segment items by reportable segment, and disclosures about segment profit or loss and assets on an annual and interim basis.

The amendments are effective for annual periods beginning January 1, 2024, and interim periods beginning January 1, 2025.

Early adoption is permitted.

2023-09, Income Taxes (Topic 740) , issued December 2023.

Requires disclosure of specific categories in rate reconciliation and additional information for reconciling items that meet a quantitative threshold, additional information about income taxes paid, and disclosure of disaggregated income tax information.

The amendments are effective January 1, 2025 and early adoption is permitted.

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 programs, 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

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Year Ended December 31,

Consumable sales consist of 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;

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

Equipment sales consist of arc welding equipment, welding accessories, 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.

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The Company generally determines the standalone selling price based on the prices charged to customers or using expected cost plus margin.

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

At December 31, 2023, the Company recorded $ 40,063 related to advance customer payments and $ 52,422 related to billings in excess of revenue recognized.

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

At December 31, 2022 and 2021, $ 35,252 and $ 25,300 , respectively, related to these future customer receivables was included in Other current assets in the Consolidated Balance Sheets.

At December 31, 2023 and 2022, $ 41,816 and $ 35,252 , respectively, related to these contract assets which are included in Other current assets in the Consolidated Balance Sheets.

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

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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 $ 465,598 or $ 413,268 net of cash acquired.

On May 3, 2023, the Company acquired 100 % ownership of Powermig Automação e Soldagem Ltda.

(“Powermig”), a privately held automation engineering firm headquartered in Caxias do Sul, Rio Grande do Sul, in Brazil.

The net purchase price was $ 29,572 , net of cash acquired, and it was accounted for as a business combination.

In 2022, Powermig generated sales of approximately $ 15,000 (unaudited).

Beginning May 3, 2023, the Company’s Consolidated Statement of Income includes the results of Powermig, which were not material for the year ended December 31, 2023.

Powermig specializes in designing and engineering industrial welding automation solutions for the heavy industry and transportation sectors.

The acquisition broadened the Company’s automation portfolio and capabilities.

In 2022, the Company recognized $ 5,196 in acquisition costs related to Fori and were expensed as incurred and included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income .

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 will extend 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).

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.

The preliminary purchase price allocation is expected to be finalized within the allowable measurement period.

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

For the twelve months ended December 31, 2023, the Company’s Consolidated Statements of Income include the results of Fori, including Net Sales of $ 263,203 while net income for the year was not material.

The acquisition of Fori has been accounted for as a business combination, which requires the assets acquired 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 final fair values of the assets acquired and liabilities assumed on the acquisition date.

For the twelve months ended December 31, 2023, the adjustments to the preliminary purchase price allocation did not have a material impact on the Consolidated Balance Sheets or Consolidated Statements of Income.

Assets Acquired and Liabilities Assumed

Preliminary Purchase Price Allocation

Purchase Price Allocation

Cash and cash equivalents

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A portion of the goodwill is deductible for tax purposes.

See Note 5 for additional information about goodwill and other intangible assets.

Acquisition-related transaction costs totaled $ 6,003 in 2022.

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

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

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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 (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.

In 2022, the Company recognized $ 365 in acquisition costs related to Kestra and were expensed as incurred and included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income.

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 broadened the Company’s specialty alloys portfolio and services.

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

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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 (unaudited).

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.

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

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”).

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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 (unaudited).

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

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.

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Balance as of December 31, 2023

(1) Additions to International Welding reflect goodwill recognized in the acquisition of Zeman in 2021.

Additions to The Harris Products Group reflect goodwill recognized in the acquisition of FTP in 2021.

(1) Additions to Americas Welding reflect goodwill recognized in the acquisition of Fori and Kestra in 2022.

International Welding reflect goodwill recognized in the acquisition of Fori in 2022.

(2) Adjustments to Americas Welding reflect goodwill recognized in the acquisition of Powermig offset by Fori purchase accounting adjustments in 2023.

Ad ditions to International Welding reflect Fori purchase accounting adjustments in 2023.

Gross carrying values and accumulated amortization of intangible assets other than goodwill by asset class were as follows:

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During 2023 and 2022, the Company determined that for certain intangible assets, the carrying value of the assets exceeded the fair value resulting in an impairment.

The Company recognized non-cash impairment charges of $ 1,018 and $ 45,468 in 2022 and 2020, respectively, which are recorded in Rationalization and asset impairment charges in the Company’s Consolidated Statements of Income.

The Company recognized non-cash impairment charges of $ 1,564 and $ 1,018 in 2023 and 2022, respectively, which is recorded in Rationalization and asset impairment charges in the Company’s Consolidated Statements of Income.

During 2023, the Company Estimated annual amortization expense for intangible assets for each of the next five years is $ 31,245 in 2024, $ 30,322 in 2025, $ 28,621 in 2026, $ 26,332 in 2027 and $ 23,550 in 2028.

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The Harris Products Group includes the Company’s global cutting, soldering and brazing businesses, specialty gas equipment, as well as its retail business in the United States.

Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the adjusted earnings before interest and income taxes ("Adjusted EBIT") profit measure.

EBIT is defined as Operating income plus Equity earnings in affiliates and Other income.

EBIT is defined as Operating income plus Other income.

Segment 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.

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Income before income taxes

Equity investments in affiliates

Capital expenditures

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Income before income taxes

Equity investments in affiliates

Capital expenditures

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Income before income taxes

Equity investments in affiliates

Capital expenditures

Depreciation and amortization

(1) 2022 special items reflect Rationalization and asset impairment gains of $ 431 , final settlement gains related to the termination of a pension plan of $ 3,735 and amortization of step up in value of acquired inventories of $ 1,106 .

(1) 2023 special items reflect Rationalization and asset impairment net charges of $ 468 and amortization of step up in value of acquired inventories of $ 9,390 .

2022 special items reflect Rationalization and asset impairment net gains of $ 431 , final settlement gains related to the termination of a pension plan of $ 3,735 and amortization of step up in value of acquired inventories of $ 1,106 .

2021 special items reflect pension settlement charges of $ 123,091 .

2020 special items reflect Rationalization and asset impairment charges of $ 26,870 and pension settlement charges of $ 8,119

(2) 2023 special items reflect Rationalization and asset impairment net gains of $ 11,782 , amortization of step up in value of acquired inventories of $ 2,862 , gain on asset disposal of $ 1,646 , and pension settlement charges of $ 845 .

2022 special items reflect Rationalization and asset impairment charges of $ 11,681 .

2021 special items reflect Rationalization and asset impairment charges of $ 9,804 , pension settlement charges of $ 446 and amortization of step up in value of acquired inventories of $ 4,984 .

2020 special items reflect Rationalization and asset impairment charges of $ 18,598 and amortization of step up in value of acquired inventories of $ 806 .

(3) 2021 special items reflect pension settlement charges of $ 2,965 and amortization of step up in value of acquired inventories of $ 820 .

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NOTE 7 – RATIONALIZATION AND ASSET IMPAIRMENTS

During 2020 and 2021, the Company initiated rationalization plans within the Americas Welding and International Welding segments.

The Company has rationalization plans primarily within the International Welding segment.

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

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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 $ 11,788 , $ 9,827 and $ 45,468 for the years ended December 31, 2022, 2021 and 2020, respectively, related to these plans.

The Company recorded rationalization and asset impairment net gain of $ 11,314 for the year ended December 31, 2023 and net charges of $ 11,788 and $ 9,827 for the years ended December 31, 2022 and 2021, respectively, related to these plans.

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

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The following table summarizes the activity related to the rationalization liabilities:

International

Balance at December 31, 2021

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Balance at December 31, 2023

NOTE 8 – 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:

Year Ended December 31, 2022

NOTE 8 – 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:

Unrealized gain

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Balance at December 31, 2023

(1) During 2022, this AOCI reclassification is a component of Net sales of $ 665 (net of tax of $ 297 ) and Cost of goods sold of $( 1,386 ) (net of tax of $( 351 ) );

during 2021, the reclassification is a component of Net sales of $ 1,553 (net of tax of $ 671 ) and Cost of goods sold of $ 407 (net of tax of $ 179 ).

Refer to Note 14 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 $( 476 ) and $ 46,609 during the years ended December 31, 2022 and 2021, respectively).

Refer to Note 11 to the consolidated financial statements for additional details.

(3) The Other comprehensive income before reclassifications excludes $ 94 and $( 403 ) attributable to Non-controlling interests in the years ended December 31, 2022 and 2021, respectively.

The reclassified AOCI component is included in the computation of Non-controlling interests.

Refer to the Consolidated Statements of Equity for additional details.

(4) Includes a gain of $ 9,440 from derivatives designated as net investment hedges.

NOTE 9 – DEBT

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Senior Unsecured Notes due through 2045, interest at 2.8 % to 4.0 % (net of debt issuance costs of $ 1,270 and $ 1,585 at December 31, 2023 and 2022, respectively)

Term Loan due through 2025

Term Loan due through 2025, interest at SOFR plus a 0.85 % margin, swapped $ 150,000 to a fixed interest rate of 3.55 % plus a 0.85 % margin

Other borrowings due through 2030, interest up to 7.97 %

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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.

Interest on the Notes is paid semi-annually.

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The Company’s total weighted average effective interest rate and remaining weighted average term, inclusive of the 2015 Notes and 2016 Notes, is 3.3 % and 10.4 years, respectively.

Revolving Credit Agreement

On April 23, 2021, the Company amended and restated the agreement governing its line of credit by entering into the Second Amended and Restated Credit Agreement (“Credit Agreement”).

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.

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 December 31, 2022, the Company was in compliance with all of its covenants and had $ 45,000 of outstanding borrowings under the Credit Agreement .

The Company has other lines of credit and debt agreements totaling $ 92,078 .

As of December 31, 2022 the Company was in compliance with all of its covenants and had $ 37,444 outstanding at December 31, 2022.

Shelf Agreements

On November 27, 2018, the Company entered into seven uncommitted master note facilities (the "Shelf Agreements") that allow borrowings up to $ 700,000 in the aggregate.

The Shelf Agreements have a term of 5 years and the average life of borrowings cannot exceed 15 years .

The Company is required to comply with covenants similar to those contained in the 2015 Notes and 2016 Notes.

As of December 31, 2022, 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.

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

Revolving Credit Agreement

On April 23, 2021, the Company amended and restated the agreement governing its line of credit by entering into the Second Amended and Restated Credit Agreement (“Credit Agreement”).

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

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.

As of December 31, 2023, the Company was in compliance with all of its covenants and had no outstanding borrowings under the Credit Agreement.

The Company has other lines of credit and debt agreements totaling $ 89,145 .

As of December 31, 2023 the Company was in compliance with all of its covenants and had $ 2,435 outstanding at December 31, 2023.

Maturities of long-term debt, including payments for amounts due banks, for the five years succeeding December 31, 2023 are $ 2,439 in 2024, $ 500,005 in 2025, $ 0 in 2026, $ 0 in 2027, $ 100,000 in 2028 and $ 500,000 thereafter.

Total interest paid was $ 29,340 in 2023, $ 23,547 in 2022 and $ 23,752 in 2021.

The difference between interest paid and interest expense is due to the accrual of interest associated with the Senior Unsecured Notes and interest rate derivative contracts discussed in Note 14 to the consolidated financial statements.

The difference between interest paid and interest expense is due to the accrual of interest associated with the Senior Unsecured Notes and interest rate derivative contracts discussed in Note 14.

NOTE 10 – STOCK PLANS

On April 23, 2015, the shareholders of the Company approved the 2015 Equity and Incentive Compensation Plan ("Employee Plan").

On April 19, 2023, the shareholders of the Company approved the 2023 Equity and Incentive Compensation Plan ("2023 Employee Plan"), which replaced the 2015 Equity and Incentive Compensation Plan (“2015 Employee Plan”).

The 2023 Employee Plan provides for the granting of options, appreciation rights, restricted shares, restricted stock units and performance-based awards up to an additional 2,025,000 of the Company’s common shares.

In addition, on April 23, 2015, the shareholders of the Company approved the 2015 Stock Plan for Non-Employee Directors ("2015 Director Plan").

In addition, on April 19, 2023, the shareholders of the Company approved the 2023 Stock Plan for Non-Employee Directors ("2023 Director Plan"), which replaced the 2015 Stock Plan for Non-Employee Directors (“2015 Director Plan”).

The 2023 Director Plan provides for the granting of options, restricted shares and restricted stock units up to an additional 200,000 of the Company’s common shares.

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Exercisable at end of year

Options granted under both the Employee Plan and its predecessor plans may be outstanding for a maximum of 10 years from the date of grant.

Options granted under both the 2015 and 2023 Employee Plans and its predecessor plans may be outstanding for a maximum of 10 years from the date of grant.

The majority of options granted vest ratably over a period of 3 years from the grant date.

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The Company issued shares of common stock from treasury upon all exercises of stock options in 2023.

In 2022, all options issued were under the Employee Plan.

In 2023, all options issued were under the 2015 and 2023 Employee Plans.

The Company uses the Black-Scholes option pricing model for estimating fair values of options.

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$ 50.00 - $ 59.99

Restricted Stock Units ("RSUs") and Performance Share Units ("PSUs")

The following table summarizes RSU and PSU activity for the year ended December 31, 2023 under all Plans:

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The Company issues shares of common stock from treasury upon the vesting of RSUs and any earned dividend equivalents.

Conversion of 24,404 RSUs and PSUs to common shares in 2022 were deferred as part of the 2005 Deferred Compensation Plan for Executives (the "2005 Plan").

Conversion of 28,564 RSUs and PSUs to common shares in 2023 were deferred as part of the 2005 Deferred Compensation Plan for Executives (the "2005 Plan").

As of December 31, 2023, 87,604 RSUs and PSUs, including related dividend equivalents, have been deferred under the 2005 Plan.

These units are reflected within dilutive shares in the calculation of earnings per share.

In 2022, 106,170 RSUs were issued under the Employee Plan and the 2015 Director Plan.

In 2023, 85,188 RSUs were issued under the 2015 and 2023 Employee Plan and the 2015 and 2023 Director Plan.

The remaining weighted average vesting period of all non-vested RSUs is 1.5 years as of December 31, 2023.

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Under this plan, 800,000 shares have been authorized to be purchased.

There were no shares purchased in 2022, 9,070 in 2021 and 13,667 in 2020.

There were no shares purchased in 2023 or 2022, and 9,070 shares purchased in 2021.

NOTE 11 – RETIREMENT ANNUITY AND GUARANTEED CONTINUOUS EMPLOYMENT PLANS

The Company maintains a number of defined benefit and defined contribution plans to provide retirement benefits for employees.

These plans are maintained and contributions are made in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA"), local statutory law or as determined by the Board of Directors.

The plans generally provide benefits based upon years of service and compensation.

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Benefits paid

Settlements (2)

Currency translation

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(1) Actuarial gains in 2022 were primarily the result of an increase in the Company’s pension plan discount rates.

(2) Settlements in 2022 and 2021 resulting from lump sum pension payments and the purchase of a group annuity contract in October 2021 related to the termination of a pension plan.

The after-tax amounts of unrecognized actuarial net loss, prior service costs and transition assets included in Accumulated other comprehensive loss at December 31, 2023 were $ 1,974 , $( 39 ) and $ 17 , respectively.

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The Company provided notice to participants of the intent to terminate the plan and applied and received a determination letter.

During 2021, pension obligations were distributed through a combination of lump sum payments to eligible plan participants and through the purchase of a group annuity

contract in October 2021.

During 2021, pension obligations were distributed through a combination of lump sum payments to eligible plan participants and through the purchase of a group annuity contract in October 2021.

The lump sum payments and annuity purchase resulted in pre-tax settlement charges of $ 126,056 in the twelve months ended December 31, 2021.

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(1) Included in Other assets.

In 2021, U.S.

pension plans include $ 9,776 in Other current assets and $ 58,682 in Other assets.

(2) Included in Other current liabilities.

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Expected return on plan assets

Other adjustments

Amortization of prior service cost

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Investment management practices must comply with ERISA or any other applicable regulations and rulings.

The overall investment strategy for the defined benefit pension plans’ assets is to achieve a rate of return over a normal business cycle relative to an acceptable level of risk that is consistent with the

long-term objectives of the portfolio.

Excluding the RAP plan assets, the target allocation for plan assets is 5 % to 10 % equity securities and 90 % to 95 % debt and other securities.

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Pension Plans' Assets at Fair Value as of December 31, 2022

Quoted Prices

in Active Markets

Quoted Prices in

Active Markets

for Identical

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Governmental and corporate bonds are valued using both market observable inputs for similar assets that are traded on an active market and the closing price on the active market on which the individual securities are traded.

(2) Certain assets that are measured at fair value using the net asset value ("NAV") practical expedient have not been classified in the fair value hierarchy.

(3) Common trusts and 103-12 investments (collectively "Trusts") are comprised of a number of investment funds that invest in a diverse portfolio of assets including equity securities, corporate and governmental bonds, equity and credit indexes and money markets.

(2) Certain assets that are measured at fair value using the net asset value ("NAV") practical expedient have not been classified in the fair value hierarchy.

Trusts are valued at the NAV as determined by their custodian.

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Supplemental Executive Retirement Plan

The Company maintained a domestic unfunded Supplemental Executive Retirement Plan ("SERP") under which non-qualified supplemental pension benefits are paid to certain employees in addition to amounts received under the Company’s qualified retirement plan which is subject to IRS limitations on covered compensation.

The annual cost of this program has been included in the determination of total net pension costs shown above and was $ 253 , $ 213 and

$ 1,225 in 2022, 2021 and 2020, respectively.

The Company maintained a domestic unfunded Supplemental Executive Retirement Plan ("SERP") under which non-qualified supplemental pension benefits are paid to certain employees in addition to amounts received under the Company’s terminated qualified retirement plan which was subject to IRS limitations on covered compensation.

The annual cost of this program has been included in the determination of total net pension costs shown above and was $ 650 , $ 253 and $ 213 in 2023, 2022 and 2021, respectively.

The projected benefit obligation associated with this plan is also included in the pension disclosure shown above and was $ 5,461 , $ 7,339 and $ 7,947 at December 31, 2023, 2022 and 2021, respectively.

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Other Benefits

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).

The Cleveland, Ohio, area operations have a Guaranteed Continuous Employment Plan covering substantially all local 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.

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

Other income (expense)

Other income (2)

Total Other income (expense)

(1) Other components of net periodic pension (cost) income includes pension settlements and curtailments as discussed in Note 11 to the consolidated financial statements.

(1) Other components of net periodic pension (cost) income includes pension settlements and curtailments as discussed in Note 11.

(2) In 2023, Other income primarily relates to non-recurring items such as royalty and other non-operating gains .

NOTE 13 – INCOME TAXES

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Excess tax benefits resulting from exercises of stock-based compensation

Resolution and settlements to uncertain tax positions

Foreign Derived Intangible Income Deduction

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Pension plan termination adjustment

tax cost (benefit) of foreign source income

tax cost of foreign source income

Effective tax rate

The 2022 effective tax rate was higher than 2021 primarily due to a change in the mix of earnings, as well as the impact of the 2021 pension plan termination.

The effective tax rate remained consistent in 2023 and 2022.

Total income tax payments, net of refunds, were $ 180,512 in 2023, $ 151,818 in 2022 and $ 87,288 in 2021.

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The Company recognizes interest and penalties related to unrecognized tax benefits in Income taxes.

Current income tax expense included benefits of $ 486 for the year ended December 31, 2022 and benefits of $ 485 for the year ended December 31, 2021 for interest and penalties.

Current income tax expense included expense of $ 101 for the year ended December 31, 2023 and benefits of $ 486 for the year ended December 31, 2022 for interest and penalties.

For those same years, the Company’s accrual for interest and penalties related to unrecognized tax benefits totaled $ 2,364 and $ 2,292 , respectively.

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Increase related to current year tax provisions

Increase/(decrease) related to prior years' tax positions

(Decrease)/increase related to prior years' tax positions

Decrease related to settlements with taxing authorities

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

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

Fair value hedges

Certain interest rate swap agreements are qualified and designated as fair value hedges.

At December 31, 2022, the Company had no interest rate swap agreements outstanding.

The Company terminated $ 50,000 of interest rate swaps in the year ended December 31, 2020, which resulted in a gain of $ 6,629 that is amortized to interest expense over the remaining life of the underlying debt.

The Company has commodity contracts that are qualified and designated as cash flow hedges.

The notional amount of these contracts was 200,000 pounds at December 31, 2023 and 875,000 pounds at December 31, 2022.

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 9 from a variable rate based on one-month SOFR to a fixed rate.

Net investment hedges

The Company has held cross currency swaps that are qualified and designated as net investment hedges.

The dollar equivalent gross notional amount of these contracts was $ 0 and $ 25,000 , respectively, as of December 31, 2022 and 2021.

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

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Foreign exchange contracts

Interest rate swap agreements

Forward starting swap agreements

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Derivatives by hedge designation

Classification of gain (loss)

Classification of gain

Not designated as hedges:

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

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

Total gain recognized in AOCI, net of tax

December 31, 2023

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Foreign exchange contracts

Interest rate swap agreements

Forward starting swap agreements

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Foreign exchange contracts

Interest rate swap agreements

Commodity contracts

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Net investment contracts

Commodity contracts

Deferred compensation

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Foreign exchange contracts

Net investment contracts

Commodity contracts

Forward starting swap agreements

Pension surplus

Foreign exchange contracts

Net investment contracts

Commodity contracts

Deferred compensation

Total liabilities

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 December 31, 2023.

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

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

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

During the year ended December 31, 2023, there were no transfers between Levels 1, 2 or 3.

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The Company measures the fair value of the liability using the market values of the participants’ underlying investment fund elections.

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 December 31, 2022.

The fair value of Cash and cash equivalents, Marketable securities, 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 December 31, 2023 and December 31, 2022.

Refer to Note 9 to the consolidated financial statements for the fair value estimate of debt.

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

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

The fair value of Cash and cash equivalents, Accounts receivable, Amounts due banks and Trade accounts payable approximated book value due to the short-term nature of these instruments at both December 31, 2022 and December 31, 2021.

Refer to Note 9 to the consolidated financial statements for the fair value estimate of debt.

NOTE 16 – INVENTORY

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Actual year-end inventory levels and costs may differ from interim LIFO inventory valuations.

At December 31,

2022 and 2021, approximately 38 % and 36 % of total inventories, respectively, were valued using the LIFO method.

The excess of current cost over LIFO cost was $ 133,909 at December 31, 2022 and $ 114,176 at December 31, 2021.

At December 31, 2023 and 2022, approximately 37 % and 38 % of total inventories, respectively, were valued using the LIFO method.

The excess of current cost over LIFO cost was $ 129,946 at December 31, 2023 and $ 133,909 at December 31, 2022, or a b enefit of $ 3,963 in 2023 as compared with charges of $ 19,733 in 2022.

NOTE 17 – LEASES

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For claims or litigation that are material, if an unfavorable outcome is determined to be reasonably possible and the amount of loss can be reasonably estimated, or if an unfavorable outcome is determined to be probable and the amount of loss cannot be reasonably estimated, disclosure would be provided.

Many of the current cases are in differing procedural stages and information on the circumstances of each claimant,

which forms the basis for judgments as to the validity or ultimate disposition of such actions, varies greatly.

Many of the current cases are in differing procedural stages and information on the circumstances of each claimant, which forms the basis for judgments as to the validity or ultimate disposition of such actions, varies greatly.

Therefore, in many situations a range of possible losses cannot be made.

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Based on the Company’s historical experience in litigating product liability claims, including a significant number of dismissals, summary judgments and defense verdicts in many cases and immaterial settlement amounts, as well as the Company’s current assessment of the underlying merits of the claims and applicable insurance, the Company believes resolution of these claims and proceedings, individually or in the aggregate, will not have a material effect on the Company’s consolidated financial statements.

NOTE 19 – 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 Trade 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 December 31, 2023 and December 31, 2022, Trade accounts payable included $ 29,111 and $ 33,475 , respectively, payable to suppliers that have elected to participate in the supplier financing program.

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

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(In thousands)

(Credited) to

Balance at End

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UNRESOLVED STAFF COMMENTS

CYBERSECURITY

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

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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-K

Item 9A. Controls and Procedures