UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 17, 2004
LINCOLN ELECTRIC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
0-1402
(Commission File Number)
| Ohio (State or other jurisdiction of incorporation) |
34-1860551 (I.R.S. Employer Identification No.) |
22801 St Clair Avenue
Cleveland, Ohio 44117
(Address of principal executive offices, with zip code)
(216) 481-8100
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01
|
Entry into a Material Definitive Agreement. |
|
| On December 17, 2004, Lincoln Electric Holdings, Inc. (the
“Company”), The Lincoln Electric Company, Lincoln Electric
International Holding Company, Harris Calorific, Inc. and
Lincoln Global, Inc. (collectively, the “Other Borrowers”)
(the Company and the Other Borrowers are collectively
referred to as the “Borrowers”) entered into a $175 million
revolving credit facility (the “Credit Facility”) to be
used for general corporate purposes pursuant to the terms
and conditions of a Credit Agreement dated December 17,
2004 (the “Credit Agreement”) entered into by and among the
Borrowers and the Lenders (as defined in the Credit
Agreement) with KeyBank National Association as Letter of
Credit Issuer and Administrative Agent for the Lenders.
The Credit Facility has a five-year term and may be
increased, subject to certain conditions, by an additional
amount up to $75 million at any time not later than 180
days prior to the last day of the term. The interest rate
on borrowings under the Credit Agreement is based on either
LIBOR plus a spread based on the Company’s leverage ratio
or the prime rate, at the Company’s election. A quarterly
facility fee is payable based upon the daily aggregate
amount of commitments and the Company’s leverage ratio. |
||
| The Credit Agreement contains customary affirmative and
negative covenants for credit facilities of this type,
including limitations on the Company and its subsidiaries
with respect to indebtedness, liens, investments,
distributions, mergers and acquisitions, dispositions of
assets, subordinated debt and transactions with affiliates. |
||
| The Credit Agreement provides for customary events of
default, including failure to pay principal or interest
when due, failure to comply with covenants, the fact that
any representation or warranty made by the Borrowers is
false in any material respect, certain insolvency or
receivership events affecting the Company or its
subsidiaries, defaults relating to indebtedness of at least
$100 million in the aggregate and a change in control of
the Company (as defined in the Credit Agreement). For
certain events of default, the commitments of the Lenders
will be automatically terminated and all outstanding
obligations of the Borrowers will become immediately due
and payable. |
||
| As of the date of this report, the Company had no
borrowings under the Credit Facility and was in compliance
with all applicable financial covenants and other
restrictions under the Credit Agreement. |
||
| The Credit Facility replaces the Company’s existing $125
million revolving credit facility entered into on April 24,
2002 and maturing in April 2005 (the “Old Credit
Facility”). The Company had no outstanding borrowings
under the Old Credit Facility and was in compliance with
all applicable financial covenants and other restrictions
as of the effective date of its termination (December 17,
2004). Item 1.02 below contains a more detailed discussion
of the Old Credit Facility and is incorporated herein by
reference. |
||
| The foregoing is merely a summary of the terms and
conditions of the Credit Agreement and not a complete
discussion of the document. Accordingly, the foregoing is
qualified in its entirety by reference to the full text of
the Credit Agreement attached to this Form 8-K as Exhibit
10.1, which is incorporated herein by reference. |
||
Item 1.02
|
Termination of a Material Definitive Agreement. |
|
| Effective December 17, 2004, the Credit Agreement dated April 24, 2002 (the “Old Credit Agreement”) entered into by and among the Company, The Lincoln Electric Company, Lincoln Electric International Holding Company, Harris Calorific, Inc., Lincoln Global, Inc. (collectively, |
| the “Other Borrowers”) (the Company and the Other Borrowers are
collectively referred to as the “Borrowers”) and the
Lenders (as defined in the Old Credit Agreement), with
KeyBank National Association as Letter of Credit Issuer and
Administrative Agent for the Lenders, was terminated. The
Old Credit Agreement was due to expire in April 2005 and
was replaced with the Credit Agreement described under Item
1.01 above. The Old Credit Agreement provided for maximum
borrowings of $125 million and was subject to an interest
rate on borrowings based on either LIBOR plus a spread
based on the Company’s leverage ratio or the prime rate, at
the Company’s election. A quarterly facility fee was
payable based on the daily aggregate amount of commitments
and the Company’s leverage ratio. The Old Credit Agreement
contained customary financial and other covenants and
events of default. |
||
| As of December 17, 2004, no borrowings were outstanding
under the Old Credit Agreement and the Company did not
incur any early termination penalties in connection with
the termination of the Old Credit Agreement. |
||
Item 2.03
|
Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant. |
|
| The disclosure set forth above under Item 1.01 is hereby
incorporated by reference into this Item 2.03. |
||
Item 2.05
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Costs Associated with Exit or Disposal Activities. |
|
| On December 21, 2004, the Company committed to a plan to
rationalize machine manufacturing and to increase flux
production (the “Rationalization”) at Lincoln Electric
France, S.A.S. (“LE France”). In connection with the
Rationalization, the Company intends to transfer machine
manufacturing currently taking place at LE France to other
facilities. The Company has committed to the
Rationalization as a result of the region’s decreased
demand for locally-manufactured machines and the Company’s
desire to increase flux production at the LE France
facility. |
||
| In connection with the Rationalization, the Company expects
to incur a charge of approximately $4.6 million (pre-tax).
Employee severance costs associated with the termination of
approximately 43 of LE France’s 179 employees represent
approximately $2.8 million (pre-tax) of the total.
Approximately $1.0 million (pre-tax) of the employee
severance costs will be incurred in the fourth quarter of
2004 and the remaining costs will be incurred in 2005.
Costs not related to employee severance of approximately
$1.8 million (pre-tax) will be expensed as incurred, and
include warehouse relocation costs, professional fees and
other expenses. Future cash expenditures resulting from
the Rationalization will be approximately $4.2 million and
non-cash charges related to expected asset write-downs are
expected to total $0.4 million. |
||
| The Company expects the Rationalization to be completed by
the end of the third quarter of 2005. |
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Item 9.01
|
Financial Statements and Exhibits. |
|
| (c) Exhibits |
| 10.1 | Credit Agreement dated December 17, 2004 by and among the Company, The Lincoln Electric Company, Lincoln Electric International Holding Company, Harris Calorific, Inc., Lincoln Global, Inc., the Lenders and KeyBank National Association. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LINCOLN ELECTRIC HOLDINGS, INC |
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Date: December 22, 2004
|
By: | /s/ Vincent K. Petrella | ||
| Vincent K. Petrella Vice President, Chief Financial Officer and Treasurer |
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LINCOLN ELECTRIC HOLDINGS, INC.
INDEX TO EXHIBITS
| Exhibit Number | Description | |
10.1
|
Credit Agreement dated December 17, 2004 by and among the Company, The Lincoln Electric Company, Lincoln Electric International Holding Company, Harris Calorific, Inc., Lincoln Global, Inc., the Lenders and KeyBank National Association. |