Lincoln Electric Holdings, Inc.
Questions and Answers for Lincoln Electric Shareholders
On April 29, 2011, Lincoln’s Board of Directors approved a two-for-one stock split of the Company’s common stock. The stock split was structured in the form of a 100% stock dividend where each holder of Lincoln common stock will receive one additional share for each share held. The stock dividend is payable on May 31, 2011 to shareholders of record on May 16, 2011.
We understand that our shareholders may have questions related to the stock split announcement. To support their needs, we have compiled information below on what we believe will be frequently asked questions related to our stock split. If you have further questions, please feel free to contact our transfer agent, Wells Fargo Bank, N.A., or our investor relations contact. Contact information for both is listed below:Transfer Agent
Wells Fargo Bank, N.A.
161 North Concord Exchange
South St. Paul, Minnesota 55075-1139
800-468-9716Lincoln Electric's Investor Relations
Lincoln Electric Holdings, Inc.
Attn: Amanda Butler
22801 St. Clair Ave.
Cleveland, Ohio 44117
Frequently Asked Questions
1. Lincoln's Board of Directors recently approved a two-for-one stock split. How is the split going to be structured? On April 29, 2011, Lincoln's Board of Directors approved a two-for-one stock split in the form of a 100% stock dividend. The stock dividend is payable on May 31, 2011 to shareholders of record on May 16, 2011.
2. Why did Lincoln split the stock?A stock split makes the price of Lincoln Electric’s common stock more attractive to investors. For some time now, the market has demonstrated confidence in Lincoln’s current and future performance with an increase in the price of the stock. By splitting the stock and reducing the price, Lincoln is making it possible for more people to invest in Lincoln.
3. What does a stock split mean to a Lincoln investor? Does the split dilute the value of Lincoln shares that a shareholder owns?A two-for-one stock split means that Lincoln's shareholders will be issued one additional share of Lincoln common stock for each share of Lincoln common stock held at the close of business on the record date. The post-split shares will be priced at half of the pre-split market value, which means that the shareholder’s total investment value owned in Lincoln remains unchanged. There is no dilution in value as a result of the stock split.
For example, assume a Lincoln shareholder owns 100 shares of Lincoln common stock (Nasdaq: LECO) on May 16, 2011 (the record date). Assume the market price is $75 per share immediately prior to the stock split. Based on these assumptions, the value of the common stock owned is $7,500 (100 shares at $75 per share). Immediately following the stock split, the Lincoln shareholder will have 200 shares and the market price of that stock immediately following the split will be half of the price immediately before the split, or $37.50 per share. Therefore, the shareholder’s total investment value in Lincoln remains the same at $7,500 (200 shares at $37.50 per share) until the stock moves up or down.
4. Are there specific key dates related to this stock split that Lincoln shareholders should be aware of? If so, what exactly happens on those dates?Yes – there are several key dates of which Lincoln shareholders should be aware. Those dates include:
The Record Date – The record date for this stock split is the close of business on May 16, 2011. The record date refers to the day that determines which shareholders are entitled to receive additional shares due to the stock split.
The Payment Date – The payment date for the stock split is the close of business on May 31, 2011. The payment date refers to the date that Wells Fargo Bank, N.A., our transfer agent, mails written notice to shareholders of record indicating the split-adjusted share holdings owned by each shareholder. If a shareholder’s stock is currently held in a brokerage account, the shareholder’s broker will mail them a statement.
The Ex-Dividend Date – The ex-dividend date is June 1, 2011. The ex-dividend date refers to the date when shares of Lincoln common stock will trade on Nasdaq at the new split-adjusted price.
5. How will the stock split affect the quarterly dividend?As part of the stock split announcement, Lincoln also announced that its Board of Directors had declared a quarterly cash dividend on its common stock of $0.31 per share on a pre-split basis, or $0.155 on a post-split basis. The dividend is payable on July 15, 2011 to shareholders of record on June 30, 2011. The cash dividend of $0.155 per share on a post-split basis will be paid on both shares owned prior to the dividend date and the additional shares issued as a result of the stock split (as the additional shares will be issued before the record date for the cash dividend (June 30, 2011). Declaration of dividends and the appropriate amount of any dividend in the future will be determined by the Board of Directors on a quarterly basis.
6. Will shareholders be mailed new stock certificates for the split shares? New certificates will not be mailed (unless shareholders specifically request one). Instead, if you hold certificates now, the additional shares you receive as a result of the stock split are being distributed through the Direct Registration System (DRS). This means that you have full ownership of the shares without the responsibility of holding actual certificates. Shareholders will be mailed a statement reflecting the newly issued shares. Wells Fargo Bank, N.A., as transfer agent, will mail the statements. Keep it with your existing stock certificates and other important documents as a record of your ownership. In the event a shareholder would like to obtain a stock certificate in paper format, the shareholder should contact Wells Fargo at 800-468-9716 for more details. There is no fee for certificates.
7. Where will information related to the shareholder’s new split shares be mailed?If a shareholder currently holds stock in his or her name, then the shareholder will be notified at the address on file with Wells Fargo Bank, N.A., Lincoln’s transfer agent. If the shareholder’s Lincoln stock is currently held in a brokerage account, the shareholder’s broker will mail the shareholder a statement at the listed address for the brokerage account.
8. Should shareholders keep their current stock certificates?Yes. Shareholders should keep their current stock certificates. Do not destroy them. These stock certificates are still valid and should be maintained in a safe place.
9. What happens if I am a shareholder on the record date but sell my shares before the ex-dividend date, June 1, 2011?If a shareholder is a holder of record on the record date (May 16, 2011), that shareholder is entitled to receive the additional shares for the stock split. However, if that same shareholder sells his or her shares prior to the ex-dividend date (June 1, 2011), this seller will be transferring entitlement of the additional shares to the buyer. The seller will receive full value for the shares sold and the buyer will receive the additional shares.
10. Does this stock split affect my voting rights as a shareholder in Lincoln?No. The stock split will not impact your shareholder voting rights. Following the stock split, Lincoln shareholders will be entitled to vote on twice as many shares. However, the shareholder’s proportionate vote will remain the same relative to other shareholders, assuming that the shareholder’s holdings remain unchanged.
11. Will the shares I receive as a result of the stock split result in taxable income to me?No. There will be no U.S. taxable income to U.S. residents as a result of the stock split. The tax basis of each share owned after the stock split will be half of what it was before the stock split. For example, if you owned 100 shares of Lincoln common stock before the split with a tax basis of $75 per share, after the split you will have 200 shares of Lincoln common stock with a tax basis of $37.50 per share. Please consult with your tax advisor regarding the impact this might have on your personal tax situation. For Lincoln shareholders outside the U.S., please consult with your local tax advisor on tax impacts as they could vary by jurisdiction.
12. If I have a question, where do I call? See the above listing for our transfer agent, Wells Fargo Bank, N.A. (800-468-9716), as well as our investor relations contact, Amanda Butler (216-383-2534), if you have questions about the stock split, shareholder records or other stock-related inquiries.