LINCOLN ELECTRIC HOLDINGS INC Fair Value Disclosure
NOTE 15 – FAIR VALUE
The following table provides a summary of assets and liabilities as of December 31, 2025 measured at fair value on a recurring basis:
| | Quoted Prices in | | | ||||||||
Active Markets for | ||||||||||||
Identical Assets or | Significant Other | Significant | ||||||||||
Balance as of | Liabilities | Observable Inputs | Unobservable | |||||||||
Description | | December 31, 2025 | | (Level 1) | | (Level 2) | | Inputs (Level 3) | ||||
Assets: |
| |
| |
| |
| | ||||
Foreign exchange contracts | $ | 2,731 | $ | — | $ | 2,731 | $ | — | ||||
Net investment contracts | 102 | — | 102 | — | ||||||||
Pension surplus |
| 12,082 | 12,082 | — | — | |||||||
Total assets | $ | 14,915 | $ | 12,082 | $ | 2,833 | $ | — | ||||
Liabilities: |
| |
| |
| |
| | ||||
Foreign exchange contracts | $ | 759 | $ | — | $ | 759 | $ | — | ||||
Net investment contracts | 12,529 | — | 12,529 | — | ||||||||
Deferred compensation |
| 24,456 |
| — |
| 24,456 |
| — | ||||
Total liabilities | $ | 37,744 | $ | — | $ | 37,744 | $ | — | ||||
The following table provides a summary of assets and liabilities as of December 31, 2024 measured at fair value on a recurring basis:
| | Quoted Prices in | | | ||||||||
Active Markets for | ||||||||||||
Identical Assets or | Significant Other | Significant | ||||||||||
Balance as of | Liabilities | Observable Inputs | Unobservable | |||||||||
Description | | December 31, 2024 | | (Level 1) | | (Level 2) | | Inputs (Level 3) | ||||
Assets: |
| |
| |
| |
| | ||||
Foreign exchange contracts | $ | 3,223 | $ | — | $ | 3,223 | $ | — | ||||
Net investment contracts |
| 10,276 |
| — |
| 10,276 |
| — | ||||
Pension surplus | 27,059 | 27,059 | — | — | ||||||||
Total assets | $ | 40,558 | $ | 27,059 | $ | 13,499 | $ | — | ||||
Liabilities: |
| |
| |
| |
| | ||||
Foreign exchange contracts | $ | 7,223 | $ | — | $ | 7,223 | $ | — | ||||
Deferred compensation |
| 55,425 |
| — |
| 55,425 |
| — | ||||
Total liabilities | $ | 62,648 | $ | — | $ | 62,648 | $ | — | ||||
The fair value of the Company’s pension surplus assets are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The pension surplus assets were invested in money market and short-term duration bond funds at both December 31, 2025 and December 31, 2024.
The Company’s derivative contracts are valued at fair value using the market approach. The Company measures the fair value of foreign exchange contracts and net investment contracts using Level 2 inputs based on observable spot and forward rates in active markets. During the year ended December 31, 2025 there were no transfers between Levels 1, 2 or 3.
The deferred compensation liability is the Company’s obligation under its executive deferred compensation plan. The Company measures the fair value of the liability using the market values of the participants’ underlying investment fund elections.
The fair value of Cash and cash equivalents, Accounts receivable, Short-term debt excluding the current portion of Long-term debt and Trade accounts payable approximated book value due to the short-term nature of these instruments at both December 31, 2025 and December 31, 2024. Refer to Note 9 for the fair value estimate of debt.
The Company has various financial instruments, including cash and cash equivalents, short and long-term debt and forward contracts. While these financial instruments are subject to concentrations of credit risk, the Company has minimized this risk by entering into arrangements with a number of major banks and financial institutions and investing in several high-quality instruments. The Company does not expect any counterparties to fail to meet their obligations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 25, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.