SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2011

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 4 — SEGMENT INFORMATION

The Company’s primary business is the design and manufacture of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products.  The Company also has a leading global position in the brazing and soldering alloys market.  The Company has aligned its business units into five operating segments to enhance the utilization of the Company’s worldwide resources and global sourcing initiatives.  The operating segments consist of North America Welding, Europe Welding, Asia Pacific Welding, South America Welding and The Harris Products Group.  The North America Welding segment includes welding operations in the United States, Canada and Mexico.  The Europe Welding segment includes welding operations in Europe, Russia and Africa.  The other two welding segments include welding operations in Asia Pacific and South America, respectively.  The fifth segment, The Harris Products Group, includes the Company’s global cutting, soldering and brazing businesses as well as the retail business in the United States.

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

Financial information for the reportable segments follows:

	North America Welding		Europe Welding		Asia Pacific Welding			South America Welding		The Harris Products Group			Corporate / Eliminations			Consolidated
Three months ended September 30, 2011
Net sales	$	345,182	$	128,294	$	97,790		$	44,169	$	86,189		$	—		$	701,624
Inter-segment sales	33,070		3,238		4,111			254		2,485			(43,158		)	—
Total	$	378,252	$	131,532	$	101,901		$	44,423	$	88,674		$	(43,158	)	$	701,624
EBIT, as adjusted	$	53,436	$	10,282	$	1,899		$	4,025	$	5,010		$	1,806		$	76,458
Special items charge (gain)	—		—		—			—		—			—			—
EBIT	$	53,436	$	10,282	$	1,899		$	4,025	$	5,010		$	1,806		$	76,458
Interest income																1,167
Interest expense																(1,752		)
Income before income taxes																$	75,873
Three months ended September 30, 2010
Net sales	$	255,636	$	85,892	$	79,657		$	34,065	$	64,088		$	—		$	519,338
Inter-segment sales	28,291		3,242		4,224			662		1,518			(37,937		)	—
Total	$	283,927	$	89,134	$	83,881		$	34,727	$	65,606		$	(37,937	)	$	519,338
EBIT, as adjusted	$	43,187	$	5,664	$	(1,488	)	$	3,170	$	4,119		$	(3,680	)	$	50,972
Special items charge (gain)	—		370		(101		)	815		—			—			1,084
EBIT	$	43,187	$	5,294	$	(1,387	)	$	2,355	$	4,119		$	(3,680	)	$	49,888
Interest income																602
Interest expense																(1,671		)
Income before income taxes																$	48,819
Nine months ended September 30, 2011
Net sales	$	947,594	$	381,750	$	288,072		$	116,011	$	266,669		$	—		$	2,000,096
Inter-segment sales	105,419		13,375		10,721			374		6,735			(136,624		)	—
Total	$	1,053,013	$	395,125	$	298,793		$	116,385	$	273,404		$	(136,624	)	$	2,000,096
EBIT, as adjusted	$	158,192	$	27,267	$	3,281		$	9,600	$	20,750		$	1,697		$	220,787
Special items charge (gain)	—		392		(110		)	—		—			—			282
EBIT	$	158,192	$	26,875	$	3,391		$	9,600	$	20,750		$	1,697		$	220,505
Interest income																2,436
Interest expense																(5,037		)
Income before income taxes																$	217,904
Total assets	$	1,105,952	$	461,574	$	372,017		$	115,638	$	280,579		$	(372,883	)	$	1,962,877
Nine months ended September 30, 2010
Net sales	$	740,780	$	255,773	$	233,965		$	85,009	$	190,353		$	—		$	1,505,880
Inter-segment sales	81,381		9,787		9,310			1,064		4,877			(106,419		)	—
Total	$	822,161	$	265,560	$	243,275		$	86,073	$	195,230		$	(106,419	)	$	1,505,880
EBIT, as adjusted	$	114,484	$	14,721	$	1,051		$	5,506	$	9,378		$	(6,474	)	$	138,666
Special items charge (gain)	—		2,079		(4,222		)	3,123		(416		)	—			564
EBIT	$	114,484	$	12,642	$	5,273		$	2,383	$	9,794		$	(6,474	)	$	138,102
Interest income																1,781
Interest expense																(4,751		)
Income before income taxes																$	135,132
Total assets	$	913,608	$	389,893	$	330,163		$	96,847	$	269,208		$	(201,027	)	$	1,798,692

In the third quarter of 2010, special items include a rationalization charge of $370 for the Europe Welding segment, primarily related to costs associated with the consolidation of manufacturing operations.  The Asia Pacific Welding segment includes a gain of $101, primarily related to the sale of assets at rationalized operations.  The South America Welding segment includes a charge of $815 for the impact to the Company’s operations in Venezuela resulting from the change in functional currency to the U.S. dollar and devaluation of the Venezuelan currency.

In the nine months ended September 30, 2011, special items include net charges of $188 and $93 for rationalization actions in the Europe Welding and Asia Pacific Welding segments, respectively, primarily related to employee severance and other costs associated with the consolidation of manufacturing operations.  The Europe Welding and Asia Pacific Welding segments special items also include a loss of $204 and a gain of $203, respectively, on the sale of assets at rationalized operations.

For the nine months ended September 30, 2010, special items include a rationalization charge of $2,079 for the Europe Welding segment, primarily related to costs associated with the consolidation of manufacturing operations.  The Asia Pacific Welding segment includes a gain of $4,555 related to the sale of assets at rationalized operations and charges of $333 for costs associated with the consolidation of manufacturing operations.  The South America Welding segment includes a net charge of $3,123 for the impact to the Company’s operations in Venezuela resulting from the change in functional currency to the U.S. dollar and devaluation of the Venezuelan currency.  The Harris Products Group segment includes a gain of $416 on the sale of a property of a rationalized operation.