CLEVELAND, Aug. 19, 2015 /PRNewswire/ -- The Lincoln
Electric Company ("Lincoln Electric," "Company"), a subsidiary of
Lincoln Electric Holdings, Inc. (NASDAQ: LECO), today announced
that it has entered into an agreement to purchase a group annuity
contract from The Principal Financial Group ("The Principal") to
settle $425 million of Lincoln
Electric's approximate $900 million
in outstanding U.S. pension obligations. Under the agreement,
The Principal will assume the obligation to pay future pension
benefits starting November 1, 2015,
for specified U.S. retirees and surviving beneficiaries who retired
on or before June 1, 2015 and are
currently receiving payments from Lincoln Electric's U.S.
Retirement Annuity Program (RAP).
Lincoln Electric has been committed to meeting its pension
obligation responsibly. The Company has contributed $375 million to its pension plans over the last
ten years and its U.S. pension plans are fully funded. The
purchase of this group annuity contract allows the Company to
secure pension benefits for its approximate 1,900 retirees, reduce
volatility in pension costs and funding requirements, while
maintaining a fully-funded plan for the remaining retiree
obligations. The Principal was chosen by the RAP fiduciary
with the advice of an independent expert after a rigorous
evaluation process that reviewed several factors including
financial strength, rating of the insurance company, plan
administration and customer service capabilities.
The annuity purchase will not impact the monthly pension
benefits Lincoln Electric retirees and surviving beneficiaries
receive today. The group annuity contract includes an
irrevocable commitment by The Principal to make annuity payments to
affected retirees covered under the contract. Lincoln
Electric is notifying by mail those individuals who are affected by
the forthcoming change and will provide a customer service number
to address any questions that affected retirees may have.
Once finalized, this annuity purchase is expected to reduce
Lincoln Electric's U.S. pension obligation by approximately
$425 million, or 47 percent.
The purchase will be funded by existing plan assets and requires no
cash contribution. The Company expects to incur a non-cash
pension settlement charge of approximately $132 million in the third quarter.
About The Principal Financial Group
The Principal Financial Group® (The
Principal®)1 is a global investment
management leader offering retirement services, insurance solutions
and asset management. The Principal offers businesses, individuals
and institutional clients a wide range of financial products and
services, including retirement, asset management and insurance
through its diverse family of financial services companies. Founded
in 1879 and a member of the FORTUNE 500®, the Principal
Financial Group has $539.9 billion in
assets under management2 and serves some 20.1 million
customers worldwide from offices in Asia, Australia, Europe, Latin
America and the United
States. Principal Financial Group, Inc. is traded on the New
York Stock Exchange under the ticker symbol PFG. For more
information, visit www.principal.com.
1 "The Principal Financial Group" and "The
Principal" are registered service marks of Principal
Financial Services, Inc., a member of the Principal Financial
Group.
2 As of June 30,
2015.
About Lincoln Electric
Lincoln Electric is the world leader in the design, development
and manufacture of arc welding products, robotic arc welding
systems, plasma and oxy-fuel cutting equipment and has a leading
global position in the brazing and soldering alloys market.
Headquartered in Cleveland, Ohio,
Lincoln has 47 manufacturing locations, including operations and
joint ventures in 19 countries and a worldwide network of
distributors and sales offices covering more than 160
countries. For more information about Lincoln Electric and
its products and services, visit the Company's website at
www.lincolnelectric.com.
Forward Looking Statements
The Company's expectations and beliefs concerning the future
contained in this news release are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements reflect management's current expectations
and involve a number of risks and uncertainties. Forward-looking
statements generally can be identified by the use of words such as
"may," "will," "expect," "intend," "estimate," "anticipate,"
"believe," "forecast," "guidance" or words of similar meaning.
Actual results may differ materially from such statements due to a
variety of factors that could adversely affect the Company's
operating results. The factors include, but are not limited to:
general economic and market conditions; uncertainties inherent in
regulatory reviews; and other factors that could affect the timing
or the ability of the parties to close the transactions referenced
in this release. For additional discussion, see "Item
1A. Risk Factors" in the Company's Annual Report on Form 10-K.
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SOURCE The Lincoln Electric Company