Greetings and welcome to the Lincoln Electric 2012 Fourth Quarter and Full Year Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vincent Petrella, CFO. Thank you, sir. You may begin.

Thank you, Dan, and good morning to all of you and welcome to Lincoln Electric 2012 fourth quarter conference call. We released financial results for 2012 fourth quarter and full year this morning prior to the market's open. Copies are available on the Lincoln Electric website or by contacting our Investor Relations office at 216-383-4893. Joining me on the call today are, John Stropki, Lincoln’s Executive Chairman and Chris Mapes, President and CEO. John will start the discussion this morning and provide an overview commentary while Chris will review results for the segments and markets and then I will cover the numbers in some more detail. Part of today's call and webcast includes the slide presentation which is available on the Lincoln website under the Company Investor tab. The presentation will also be posted along with a replay of call later today. But before we start our discussion, please be reminded that certain statements made during this call and in our discussions may be forward-looking, and actual results may differ from our expectations. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the company's operating results. Risks and uncertainties that may affect our results are provided in our press release and in our SEC filings on Forms 10-K and 10-Q. With that let me turn the call over to John Stropki.

Thank you, Vince, and good morning to everyone joining us on the call today. We finished the 2012 fourth quarter and the full year on a very positive note with annual sales and earnings per share at the highest level in Lincoln’s 118 year history. We also expanded margins, significantly increased return on invested capital and we generated record cash flow. In my role as Executive Chairman of the Board, I will stay actively involved in working with Chris and the senior management team on achieving these long term objectives. It’s been a great honor and a privilege to lead Lincoln for these past 10 years; working with an outstanding work force, serving our shareholders and providing our end-user customers with the most innovative welding solutions and best service in the welding industry. During 2012, we continued our strong track record of improved profitability and consistent shareholder value creation. As you can see, the numbers for 2012 full year and the fourth quarter clearly air this out. For the full-year, sales were up 5.9% to $2.9 billion. Operating income increased $65.4 million to $362 million or 12.7% of sales. Net income increased 18.5% to $257 million or $3.06 per diluted share. Adjusted net income was up 25% to $265.8 million or $3.16 per diluted share. Now Chris will give you some more color on the quarter and the reporting segments.

Thank you, John. And I look forward to continuing to work with you in your new role and continuing the excellent progress we have achieved through your leadership. As John said, we ended the year on positive with record sales and profits. These results reflect the hard work of our employees and workforce around the world and its part of our 2020 strategic program, the successful execution of our ongoing global growth and operational improvement strategies. We took a number of steps globally to reduce costs and sharpen our operations. The end results will help us become a stronger and more agile company as we implement our strategy around the world. So let’s take a quick look at our operating segments. During the fourth quarter in North America business conditions remained stable, although industrial activity in United States is running slightly ahead of last year, and was essential flat for third quarter 2012, there continuous to be uneasiness about the macro economic landscape due to the international weakness. Third party sales for North America improved 8.6% from the prior year to $393 million with a 7.3% favorable impact from acquisitions. The acquisition impact is significant as we continue to execute on our strategy of aggressively pursuing opportunities. As you are aware, earlier in 2012 we acquired Weartech a cobalt wielding consumables business and Wayne Trail a wielding automation company. During the 2012 fourth quarter, we acquired Kaliburn and Burny and CMC located in Ladson, South Carolina, designers and manufacturers of shape cutting, control systems and solutions. The final acquisition in 2012 was Tennessee Rand located in Chattanooga. Tennessee Rand designs and manufactures tooling and robotic systems for automated wielding applications. Since Tennessee Rand was acquired on the last day of the year it’s sales did not contribute to the sales…

Thank you, Chris. We finished the year by continuing to improve the quality of our earnings in the face of a softer global economic environment. Despite the slight decline in revenue, we expanded our adjusted operating profit by more than 10%. Our consolidated sales were down 1.4% compared to the fourth quarter of 2011. Our volumes decreased reported sales by 5.8% and pricing increased sales by 1%. Foreign exchange had a slight negative impact on sales and acquisitions contributed an increase of about 4%. Fourth quarter gross profit margins increased to 31.1% compared with 28% in the comparable prior year period. LIFO credits in the quarter totaled $3.7 million. There was no significant LIFO effect in the prior year’s fourth quarter. The improved gross margins were primarily attributable to a better sales mix. SG&A expense for the fourth quarter increased 180 basis points. The increase in SG&A expenses is primarily attributable to incremental SG&A from acquisitions, higher foreign exchange losses and general increases in SG&A and R&D spending. Operating income for the quarter increased 60 basis points. The quarter included rationalization charges of $5 million related to actions and asset impairments in North America, Europe and Asia Pacific. The most significant rationalization actions relate to plant closures in Australia and Italy. Operating income before these charges was $90.7 million or 13.3% of sales. The effective tax rate for the fourth quarter was 150 basis points lower than the prior year. The primary factor driving this lower effective tax rate was higher than expected earnings and lower tax rate jurisdiction. Our 2013 effective tax rate should approximate full year 2012 rate, of course subject to the mix of earnings by jurisdiction in 2013. Diluted earnings per share increased 8.8% for the fourth quarter compared to prior year. Excluding special items, diluted…

(Operator Instructions) our first question comes from Mark Douglas of Longbow Research.

This is Andy White standing in for Mark this morning. I was hoping if you could give us a little better idea of your expectations for the first half of 2013. You mentioned in your press release that you expect to see slower year-over-year growth, but I guess what is that relative to, is that relative to what you saw in the first half of this year, relative to what you saw in fourth quarter.

Yes, when we talk about 2013 we were first focused on our comps on a year-over-year basis, and certainly as the year of ’12 unfolded we saw those comps falling in terms of the year-over-year increases in sales and volumes and in the fourth quarter we saw a 1.4% decline in overall sales which was the first overall decline in sales during the course of the year and then a volume decline of about 5.8% in terms of pure volumes. We are seeing in the first quarter of 2013 a better result than the fourth quarter in terms of year-over-year comps. We are expecting a slight to moderate increase in sales volumes during the course of the year, with the back half of the year a little bit more optimistic than the front half. We still are a less optimistic about a turnaround in Europe. We are gaining some confidence that China is starting to pick up and probably most importantly our North American business which is our major profit and return driver to our businesses is forecasted to be up slightly and stable for the course of the first half of 2013.

And can you give us an idea of what your pricing expectations are for next year, particularly in North America.

As far as North America is concerned, we think any pricing increases will be slight or moderate. We are currently looking at equipment price increase that will be in the low-single digits and that will likely be instituted towards the beginning of the April timeframe.

Our next question comes from Sean Williams of BB&T Capital Markets. Sean Williams - BB&T Capital Markets: I wonder if you could talk about North America margins a bit and maybe how the seasonality in Q4 maybe has changed over time. I am just wondering you had very modest volume increase in Q4 versus Q3, but 110 basis points increase in the operating margin. Can you just help me understand what’s driving the strong operating margin relative to Q3 and it doesn’t seems like it was entirely volume driven?

Yeah, we did have in my prepared comment, Shaun, I mentioned that we had a nice LIFO credit in the fourth quarter in our North American business units. That’s all North America of about $3.7 million, but we did have a lower input cost achievement in what we have expected a little bit earlier in the year and that certainly aided our margins in the fourth quarter. Sean Williams - BB&T Capital Markets: And did that affect the - I am a little confused by the unallocated corporate expense. Looks like it kind swung traditionally $2 million drag. It swung to a $2 million profit or aid to an operating income. Can you help me understand what happen there?

Yeah, we allocated our expenses from corporate out to our operating units and we made those estimates at the beginning of the year, and we follow an allocation process during the course of the year. So there can be some differences as we experience variations in corporate cost versus what actually occur. There are some other activities that we conduct in our corporate column, including hedging activities that aren’t pushed out to the operating units until those gains or losses are realized, and so there are some hedging gains sitting in corporate now that will end up in future quarters in the operating unit when realized. So we can have some variations from quarter-to-quarter based on those two factors. Sean Williams - BB&T Capital Markets: My last question here in SG&A obviously you talked about the acquisitions had pushed that up and employee comp as well. If we move into 2013 and again in kind of fairly slow growth environment, should I expect SG&A to continue to allocated revenue growth or in line? Can you give me some any [cost] there in terms of spending for next year in a fairly modest in a growth environment.

I would look at what our SG&A as a percentage of sales finished the year at and use that as a proxy for what our run rate might be for 2013. We do not expect significant increases in SG&A during the course of this year. We are going to be a little bit more cautious in terms of adding costs within the space of a little bit slower expected growth environment. So I think the best view of the future is how we finished off 2012.

Sean I would just add that if you go back to 2009 when we had a pretty weak market, we talked about the fact that we have a very long-term strategy in terms of investment in the business, and so we’ve hired aggressively on our sales and engineering training organization, we are hiring aggressively for our R&D program, and we have a very strong portfolio of new products that we have in the pipeline as our intention to offset any weaknesses that we see in the markets around the world and we are very optimistic that this product portfolio will capture significant share in those areas where we are targeting.

Our next question comes from Joe Mondillo of Sidoti. Please proceed.

I wanted to ask a question on the your agent business that’s obviously in a trouble spot just given sort of the activity there and also the competition in pricing and such. One of your strategies has been closing down facilities that has been realizing lower margin or the lower pricing, but that’s what swung even more negative in the fourth quarter. So just trying to sort of get a little more color on what are you seeing there going forward, what does that look like?

Yeah, this is Chris Mapes, a couple of comments. First I think that as we were looking at reshaping our business within China, we were doing that during a pretty challenging economic environment certainly for our products such as construction equipment and ship building a couple of key market segment within that space. We are probably deteriorating significantly faster than the general markets within China. So as we work throughout 2012 to make some of the improvements into that business, we also share with you that we also had an event in one of our facilities during that window where we had a situation with the buyer at our (inaudible) type facility and we have been working very quickly to recover from that. I think the exciting thing for me as I look at that business moving forward into 2013 is a lot of the heavy listing involved in making some many improvements in that business had been completed over the last 12 months. We have moved into our new facility in Nanjing, that move occurred throughout two to three quarters of 2012 that facility is up and operating; I was there in January with our executive team and very happy with that new facility there for us. Our Jin Tai facility is back up and operating after the event and I think again that much of the challenging work that we had has been completed and very excited about the management team we have in place for China. Now it is always going to continue to be in our minds a very challenged market, a very competitive market, and we feel very confident that the strategies we are employing and the products that we are bringing to that marketplace will create a value proposition for our customers in those key market segments and I think that we will continue to make improvements in that particular business.

I forgot about the fire, I think that was in October time period, how significant was that to the EBIT at the segment?

Well, we really don't look at the EBIT at that plant level, really I want to commend our management team there for making the quick and necessary decisions to serve the market while we were recovering from that event and I visited that facility in January and certainly do not see it having an impact on our business as we are moving forward in ’13.

I mean I guess I'm just trying to get an idea on margins going forward so that sort of negative 2% margin that you saw in the fourth quarter, I guess how significant was the event to the fourth quarter just trying to get an idea going forward where sort of the margins are?

Yeah, if you are looking for an idea going forward, I wouldn't focus on one particular quarter as much as looking at the progress we made during the course of the past full year of 2012 and if you look at the full year, we did improve our margin profile and profitability in the Asia Pacific segment on quite a bit lower sales levels. So looking forward I would use the full year as a better forecast for what we might be running out of the shoots in 2013.

And then my second question, just regarding sort of the acquisition that you just made of Tennessee Rand and just focusing on the automation welding technology part of the business, how much does that make of your total business now and sort of what kind of growth rates are you seeing in that business and on top of that, just additionally sort of what we you’re your exports in the North America segment?

I will add to that also we do like the scale that we bought into business with the recent acquisition of the Wayne Trail and Tennessee Rand, but when I look at the global opportunity around welding automation, there certainly is still many markets around the world where we have an opportunity to grow that model and I think that as we look throughout 2013 we will be talking internally into the market and then sharing with you where some of the other growth opportunities are for us with this product and as we continue to build that strategy out and have that a key portion of our 2020 business strategy.

Okay, great, thanks a lot. And also just usually share with your exports, usually are doing in the North America part, I was wondering….?

Our export business was down double-digits. It was down approximately 13% in the quarter on a year-over-year basis and a part of that has to do with the Asia Pacific slowdown. And we did have another double-digit growth in our organic base automation business before acquisitions in the quarter.

Our next question comes from Liam Burke of Janney Capital Markets. Caller, please proceed with your question.

Thank you. Vince talked briefly about the automation and how it is growing and how does that fit in the margin mix presuming that the automation part would require more purchase of components outside the company?

Well, some of the parts of automation have higher margins and some have lower margins. Those businesses that tend to have tool of the robotic arms are on the lower side, those businesses that don’t have that are on the higher side. We think that the margins on the automation business will be as high as if not higher than our group margins once we fully integrate all these businesses and gain the synergies that we know are available in our automation strategy.

And you talked about step up in CapEx and reinvesting in the North American business, can you be a more specific on some of the projects you have in mind?

Yeah Liam, the biggest project is the relocation of our tech alloy business from Baltimore into the Cleveland based operations here in the US and there will be a significant amount of additional capital and costs associated with gaining further leverage and synergies in moving into the Cleveland operations and that’s our biggest project for 2013.

Great thank you.

William I would add just one point on the automation thing also, that the equipment side of that business as Vince said very important and represents great margin opportunities, but we are not in that business just for the capital side of it; it gives us the insight track on the wielding consumable side of the business with the large end users and that’s been one of the most important element of our tremendous success in automation.

Our next question comes from Steve Barger of KeyBanc Capital Markets. Caller, please proceed with your question.

This is actually (inaudible) for Steve. Just a quick question with regards to the pricing stability, I think one of the earlier questions got to this, but could you just kind of talk about the strength you are seeing by end market?

Well, if you look at our release, you can see pretty clearly where we breakout price and volume in the fourth quarter and the year, what we have experienced in, its no surprise that in the markets with the weakest volume or the biggest volumes declines, we had the weakest pricing environment and in those markets other South America that's highly inflationary, those markets where we have the better volume profile, we have the better pricing type of environment. So, generally that is one of the more important factors driving pricing, and then second factor is really what’s happening to inputs and in terms of our cost structure.

If I could, I guess I was looking for more like whether that would be construction the strength right now or whatever that maybe?

Yeah, this is Chris. With end market perspective and recognize that my comments are relative on a global basis, so not just particularly in one region but we continue to see on a global basis the strength in the automotive space. Automotive is strong not only in North America but continues to have strength in other regions around the world. The agricultural space has stayed relatively strong on a global basis and we continue to see some improvements there and we have had a couple of opportunities in some specific markets but I wouldn't say that those opportunities are necessarily relative to improvement in that global market. Ship building continues to be slower on a global basis, commercial flattish. So I would say when I think about strong markets globally, I still think about energy, I still think about automotive and then that kind of it would be the way we look at those markets again on a global basis.

Okay and you mentioned energy there and with regards to the pipeline business there in the construction side, you know initially it looked like it was going to be a 2014 event for the Keystone now it kind of looks like its shifted to the right, can you just talk a little bit about that?

Well, I will tell you when I think about the market segment, I'm not worried about any one contract. At the end of the day, I feel strongly and Lincoln feels strongly that we are on a long run favorable energy trend here in North America. And that long run trend is going to be favorable for our business as we support those industries as they build out that infrastructure, it's not only infrastructure of the energy but its also the infrastructure that's going to be driven from those industries that are served by the energy. So what do I mean by that, I mean the chemical processing facilities that have been announced recently in the Southwest. They are going to utilize the low natural gas as a value to their input cost. So we see that as the long run trends, Keystone may move one way or the other from a timing perspective but we are still very confident on the trends that we believe will occur from the energy market here in the US.

Okay. That helps a lot, now just another segment related question, it looks like year-over-year both Europe and Asia were down but there is margin expansion in both segments, could you kind of talk about what actions were taken and then if there is additional room for that expansion more?

Yeah, we've talked on some previous calls about our efforts to pair some business in those regions specifically in Russia and China that was not attractive to us. We are also in the process of restructuring both of those segments from a configuration and cost standpoint. So we've combined the couple of factories in Russia and we are rationalizing some of our manufacturing footprint in Asia as well as terming as much of the costs back that we can to resize those businesses for the current volume environment. So, we are lining those businesses with our strategy of trying to provide a value added approach to the market and that we are seeing some nice improvement in incremental as a result of our repositioning of the businesses.

That makes sense, and just lastly before I go, I guess what have you seen in January and if you could just kind of frame it up against 4Q ’12?

Well, as I said earlier, our January looks better than what we experienced in the fourth quarter of the year and we are down 1.4% in the fourth quarter on a total sales basis and we've seen a little bit better environment in January and February so far this year.

Our next question comes from Stanley Elliott of Stifel. Caller, please proceed with your question.

Vincent, you talked about kind of moderate to slight growth was that organic or was that kind of inclusive of the acquisition?

Our acquisitions (inaudible) of the year was about 4% and I would expect that acquisitions would continue to contribute something around that number at least in the first half of the year. Our comments were more surrounding the organic growth in our business from volume and price standpoint.

And is there any sort of LIFO of credit or anything like that we should expect or is it too hard to say at this point for 2013?

Right now, we're looking at a modest inflationary environment for 2013. So we're expecting to take some LIFO charges during the course of at least the first quarter and first half of the year. As always, subject to revision and adjustment as the year unfolds but right now we're looking at a modest inflationary environment in the New Year.

And lastly and I apologize if I missed it, but a number of machinery equipment guys talked about destocking. (Inaudible) to that and how do you think inventories are in the channel right now?

Well, in terms of our channel, we believe there is not a whole lot of inventory in the channel. We believe that our industry carries a good part of the inventory through the channel and we can’t say that we've seen a big inventory of destocking associated with the welding supply chain.

The next question comes from (inaudible). Caller, please proceed.

Can you talk just a little bit more about the gross margins, you had this LIFO gains in the fourth quarter and you are going to take a LIFO of credit, so when we think about gross margins kind of for ’13, come back to that kind of 30% range and not yet just 31% range that was an anomaly or can you just help me understand that for building a model?

Well, I would just say, I don’t like the ever focused on one quarter to build the model. So I would urge you to look at the full year in 2012 and look at what the trend lines are and use that as your best indication of what 2013 might look like.

May be if I can ask this question this way if you back up the LIFO gain then the gross margin in the quarter would have been kind of line with the rest of the year and so should we see this has more kind of a trend you have to articulate to get a get better if you get pricing like (inaudible) is that what you are trying to say?

Well, LIFO is certainly a reflection of what the current cost environment is. So, the only difference between what that credit might have been in the quarter and the full year is how it gets estimated during the course of the year. And so one could argue that may be a little bit of that, more of that should be shaded towards a smaller margin in 2013.

Got it and then just for, this policy relative to that I assume you know, I guess a very conservative for you tend to take a charge earlier in the year and then if it changes then that’s when your reverse you get a credit is that kind of how it works?

Well, we are conservative but we follow standard LIFO accounting rules which require you to make your best estimate at the beginning of the year on what you think your input are going to do and we have made that best estimate, and our best estimate today is that we are going to see some mild inflationary impact during the course of the year.

One last question if I may, you said the January and February has started off better for you. You are going up against a really tough comp in North America just because of the weather I think you said in Q2 this last year, you thought there were some pull forward in Q1. Are you seeing North America to be pretty good on that so far at this year or maybe you don’t want to get that granular, but I just know it’s a tough comparison that you are going to get?

Yes it will be. And what we have said during the course of the call is that we think that the North America is going to stable if not up slightly.

(Operator Instructions) Our next question comes from Jason Rodgers of Great Lakes Review. Caller please proceed.

Looking at Europe, you mentioned there is weakness. Are you still seeing stability or is there further weakness now in that region?

I would say its more stability at this point in time. The stability in Europe’s a little bit different than the stability in North America, and we don't necessarily at this point see a lot of indicators that might make us more optimistic about some more upside in Europe as compared to perhaps North America. We have seen during the course of the year the declines in our year-over-year volumes moderating and out of the suite in 2013 and we see that continuing. So we expect there to be a year-over-year volume declines, but not necessarily accelerating with little potential upside in our view at this point.

And then if you could just comment on the environment for future acquisitions.

Well, we've consistently said that our strategy is to continue to look for those opportunities that further our strategy and broadly speaking that strategy is to grow stronger from a global geographical standpoint, and to always look for those product additions to our portfolio that strengthened the broad offering that we have for our end users. So we are always on the look out for that, and I think you will continue to see us prudently identify and acquire businesses that further that strategies.

And then finally in your automated welding market, what would you say your market share is in that market.

Yeah, it would be very difficult for us to start talking about share in that space, because we are talking about the automation portion that's relative to welding, I mean for us its all about the arc, its all about the welding application for this business. And you could scope the segment quite a different way. I think the important thing for us to recognize is that globally there's still a lot of space for us to expand into. As John mentioned earlier, this is not just about the automation, its about getting closer to the customer, and the opportunities that are available to Lincoln Electric as we expand upon that relationship with the end user. So I'm very confident that we've got a host of expansion opportunities in a multitude of markets with this business model around the world.

And I would just reemphasize Vince’s point in terms of the combination of the three automation businesses that we have here in North America; our traditional Cleveland based automation business which really centers around great knowledge of the welding arc and the expertise to help customers use our technology to get the best performance in their welding application. You add on Wayne trails it has significant presence in plasma and hybrid laser type of activity and the full systems approach and then Tennessee Rand who is globally recognized best-in-class tooling expert, with customers who use that expertise to populate plants all over the world and that is a real one, two, three, punch combination that will be very difficult for any of our traditional welding competitors to replicate and really sets us above the class and the area of corporate capabilities in that area.

Our next question comes from Joe Mondillo of Sidoti.

I just have one quick of follow-up question. Regarding the Venezuelan currency headwind, you said its about at $2 million a quarter headwind in the first half of this year on a gross profit level. Is that a sequential headwind or year-over-year?

No that's year-over-year. So that's rolling out inventories at a different exchange rate. So our gross margins will be $4 million lower during the course of at least the first half of the year as those inventories are sold off.

So looking at it on an EBIT margin basis, are we expecting margin to be quite lower than the sort of 8% to 9% that we saw in the first half of last year.

Well, I think what we will do Joe is we will throw out as an adjustment, that 12.5 million that I talked about it in our conversations. So we'll segregate and highlight the one-time if you will valuation charges that will go to SG&A and cost of sales and we will tease that out for you as we roll through the first and second quarter. Then the other $0.02 to $0.04 that I talked about, that will be purely a result of translating those earnings at a different exchange rate. So we're going to lose, estimate at this point, $0.02 to $0.04 during the course of 2013. We work our best to try to restore that over the course of the year and in to 2014, but the way it stands right now, we're going to have 12.5 million of one-times and then another $0.02 to $0.04 as the earnings of that geography come in at a lower dollar value.

Our next question comes from Steve Barger of KeyBanc Capital Markets. Caller, please proceed.

Just a quick follow up, this is (inaudible). There has been some talk around construction picking up and indicating higher. Just wondering if you seeing any of your capacity at the related equipment guys kind of tick back up?

Well, when you talk about construction, I am assuming you are referencing residential. I will clear that we do think that the residential market in the US is improving. That’s certainly a benefit to our welding business as well to our Harris Products business. So we see some improvement in that area, but it's still very early in their season to get too excited about residential housing here in the US. So we certainly view it as being improved, but it's still very early.

And it appears to me no further questions at this time. I would now like to pass the floor back to management for closing comments.

Alright then thank you all for joining the call today and your interest Lincoln Electric. We very much look forward to talking to you again at the end of April, when we report our first quarter 2013 results. Thank you very much.

This concludes today’s teleconference. You may now disconnect your lines at this time and thank you for your participation.