This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company's unaudited consolidated financial statements and other financial information included elsewhere in this Quarterly Report on Form 10-Q.

General

The Company is the world's largest designer and manufacturer of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products. Welding products include arc welding power sources, wire feeding systems, robotic welding packages, fume extraction equipment, consumable electrodes and fluxes. The Company's product offering also includes computer numeric controlled plasma and oxy-fuel cutting systems and regulators and torches used in oxy-fuel welding, cutting and brazing. In addition, the Company has a leading global position in the brazing and soldering alloys market.

The Company's products are sold in both domestic and international markets. In North America, products are sold principally through industrial distributors, retailers and also directly to users of welding products. Outside of North America, the Company has an international sales organization comprised of Company employees and agents who sell products from the Company's various manufacturing sites to distributors and product users.

Results of Operations



Three Months Ended September 30, 2012 Compared with Three Months Ended
September 30, 2011



                                               Three Months Ended September 30,
                                       2012                     2011                 Change
                               Amount     % of Sales    Amount     % of Sales    Amount      %
Net sales                     $ 697,552       100.0%   $ 701,624       100.0%   $ (4,072 )  (0.6% )
Cost of goods sold              484,190        69.4%     516,172        73.6%    (31,982 )  (6.2% )
Gross profit                    213,362        30.6%     185,452        26.4%     27,910    15.0%
Selling, general &
administrative expenses         121,602        17.4%     110,629        15.8%     10,973     9.9%
Rationalization and asset
impairment charges                3,059         0.4%           -            -      3,059   100.0%
Operating income                 88,701        12.7%      74,823        10.7%     13,878    18.5%
Interest income                     916         0.1%       1,167         0.2%       (251 ) (21.5% )
Equity earnings in
affiliates                        1,566         0.2%       1,488         0.2%         78     5.2%
Other income                        746         0.1%         147            -        599   407.5%
Interest expense                 (1,040 )      (0.1% )    (1,752 )      (0.2% )      712    40.6%
Income before income taxes       90,889        13.0%      75,873        10.8%     15,016    19.8%
Income taxes                     26,153         3.7%      20,515         2.9%      5,638    27.5%
Net income including
noncontrolling interests         64,736         9.3%      55,358         7.9%      9,378    16.9%
Noncontrolling interests in
subsidiaries' loss                  (29 )          -        (172 )          -        143    83.1%
Net income                    $  64,765         9.3%   $  55,530         7.9%   $  9,235    16.6%

Net Sales: Net sales for the third quarter of 2012 decreased 0.6% from the third quarter 2011. The sales decrease reflects volume decreases of 2.2%, price increases of 0.8%, increases from acquisitions of 3.8% and unfavorable impacts from foreign exchange of 3.0%. Sales volumes decreased as a result of softening demand in the international markets offset by growth in the U.S. markets. Product pricing increased from prior year levels due to the realization of price increases implemented in response to increases in raw material costs.

Gross Profit: Gross profit increased 15.0% to $213,362 for the third quarter 2012 compared with $185,452 in the third quarter 2011. As a percentage of Net sales, Gross profit increased to 30.6% in the third quarter 2012 from 26.4% in the third quarter 2011. The increase was the result of increased product pricing and favorable regional mix partially offset by lower margins from recent acquisitions. Foreign currency exchange rates had a $4,832 unfavorable translation impact in the third quarter 2012.

Selling, General & Administrative ("SG&A") Expenses: SG&A expenses were higher by $10,973, or 9.9%, in the third quarter 2012 compared with the third quarter of 2011. As a percentage of Net sales, SG&A expenses were 17.4% and 15.8% in the third quarter 2012 and 2011, respectively. The increase in SG&A expenses was predominantly due to higher bonus expense of $5,004, higher general and administrative spending primarily related to additional employee compensation costs of $4,680, increased SG&A expenses from acquisitions of $3,647 and increased U.S. retirement costs of $946 partially offset by foreign currency translations of $3,076 and foreign currency transaction gains of $2,156.

Interest Income: Interest income decreased to $916 in the third quarter 2012 from $1,167 in the third quarter of 2011. The decrease was largely due to less favorable interest rates globally offset by higher average cash balances.

Equity Earnings in Affiliates: Equity earnings in affiliates were $1,566 in the third quarter 2012 compared with earnings of $1,488 in the third quarter of 2011. The increase was due to an increase in earnings of $111 in Turkey partially offset by a decrease in earnings of $33 in Chile.

Interest Expense: Interest expense decreased to $1,040 in the third quarter 2012 from $1,752 in the third quarter of 2011 as a result of lower levels of debt in the current period.

Income Taxes: The Company recognized $26,153 of tax expense on pre-tax income of $90,889, resulting in an effective income tax rate of 28.8% for the three months ended September 30, 2012. The effective income tax rate is lower than the Company's statutory rate primarily due to income earned in lower tax rate jurisdictions and the utilization of foreign tax loss carryforwards for which valuation allowances had been previously provided.

The effective income tax rate of 27.0% for the three months ended September 30, 2011 was lower than the Company's statutory rate primarily due to income earned in lower tax rate jurisdictions.

Net Income: Net income for the third quarter 2012 was $64,765 compared with Net income of $55,530 in the third quarter of 2011. Diluted earnings per share for the third quarter 2012 were $0.77 compared with $0.66 in the third quarter of 2011. Foreign currency exchange rate movements had an unfavorable translation effect of $1,183 on Net income for the third quarter of 2012.

Segment Results



Net Sales:  The table below summarizes the impacts of volume, acquisitions,
price and foreign currency exchange rates on Net sales for the three months
ended September 30, 2012:



                                                         Change in Net Sales due to:
                              Net Sales                                                  Foreign     Net Sales
                                2011          Volume       Acquisitions      Price      Exchange        2012
Operating Segments
North America Welding        $   345,182    $    9,479            26,804    $  9,267    $    (405 )  $  390,327
Europe Welding                   128,294       (11,366 )               -        (630 )    (11,818 )     104,480
Asia Pacific Welding              97,790       (18,989 )               -      (1,035 )     (1,503 )      76,263
South America Welding             44,169        (1,237 )               -       5,114       (3,501 )      44,545
The Harris Products Group         86,189         6,440                 -      (7,220 )     (3,472 )      81,937
Consolidated                 $   701,624    $ (15,673)    $       26,804    $  5,496    $ (20,699 )  $  697,552

% Change
North America Welding                             2.7%              7.8%        2.7%        (0.1% )       13.1%
Europe Welding                                   (8.9% )               -       (0.5% )      (9.2% )      (18.6% )
Asia Pacific Welding                            (19.4% )               -       (1.1% )      (1.5% )      (22.0% )
South America Welding                            (2.8% )               -       11.6%        (7.9% )        0.9%
The Harris Products Group                         7.5%                 -       (8.4% )      (4.0% )       (4.9% )
Consolidated                                     (2.2% )            3.8%        0.8%        (3.0% )       (0.6% )

Net Sales: Net sales volumes for the third quarter of 2012 increased for the North America Welding and The Harris Products Group segments because of growth within the domestic markets. Volume decreases for the Europe Welding, Asia Pacific Welding and South America Welding segments is the result of softening demand in international markets. Product pricing increased for the North America Welding and South America Welding segments due to the realization of price increases implemented in response to increases in raw material costs. Product pricing increase for the South America Welding segment also reflects a higher inflationary environment, particularly in Venezuela. Product pricing decreased for the Europe Welding and Asia Pacific Welding segments due to declining raw material costs within those regions. Product pricing decreased for The Harris Products Group segment because of significant decreases in the costs of silver and copper as compared to the prior year period. With respect to changes in Net sales due to foreign exchange, all segments decreased due to a stronger U.S. dollar.

Earnings Before Interest and Income Taxes ("EBIT"), as Adjusted: Segment performance is measured and resources are allocated based on a number of factors, the primary profit measure being EBIT, as adjusted. The following table presents EBIT, as adjusted for the three months ended September 30, 2012 by segment compared with the comparable period in 2011:

                                Three Months Ended
                                  September 30,
                                 2012        2011      $ Change   % Change
North America Welding:
Net sales                     $  390,327   $ 345,182     45,145      13.1%
Inter-segment sales               28,186      33,070     (4,884 )   (14.8% )
Total Sales                   $  418,513   $ 378,252     40,261      10.6%

EBIT, as adjusted             $   70,797   $  53,436     17,361      32.5%
As a percent of total sales        16.9%       14.1%                  2.8%

Europe Welding:
Net sales                     $  104,480   $ 128,294    (23,814 )   (18.6% )
Inter-segment sales                3,261       3,238         23       0.7%
Total Sales                   $  107,741   $ 131,532    (23,791 )   (18.1% )

EBIT, as adjusted             $    8,515   $  10,282     (1,767 )   (17.2% )
As a percent of total sales         7.9%        7.8%                  0.1%

Asia Pacific Welding:
Net sales                     $   76,263   $  97,790    (21,527 )   (22.0% )
Inter-segment sales                2,748       4,111     (1,363 )   (33.2% )
Total Sales                   $   79,011   $ 101,901    (22,890 )   (22.5% )

EBIT, as adjusted             $    2,054   $   1,899        155       8.2%
As a percent of total sales         2.6%        1.9%                  0.7%

South America Welding:
Net sales                     $   44,545   $  44,169        376       0.9%
Inter-segment sales                   27         254       (227 )   (89.4% )
Total Sales                   $   44,572   $  44,423        149       0.3%

EBIT, as adjusted             $    7,587   $   4,025      3,562      88.5%
As a percent of total sales        17.0%        9.1%                  7.9%

The Harris Products Group:
Net sales                     $   81,937   $  86,189     (4,252 )    (4.9% )
Inter-segment sales                1,869       2,485       (616 )   (24.8% )
Total Sales                   $   83,806   $  88,674     (4,868 )    (5.5% )

EBIT, as adjusted             $    7,739   $   5,010      2,729      54.5%
As a percent of total sales         9.2%        5.6%                  3.6%

EBIT, as adjusted, as a percent of total sales increased for all segments in the three months ended September 30, 2012 as compared with the comparable period in the prior year. The North America Welding segment growth is primarily due to improved leverage on a 2.7% increase in volumes and price increases of 2.7%. The increase at the Europe Welding segment is primarily due to improved product mix and the decrease in raw material costs exceeding the 0.5% decrease in product pricing. The Asia Pacific Welding segment increase represents improved profitability in Australia from stronger sales volumes and lower operating costs. The South America Welding segment increase is a result of an 11.6% increase in product pricing exceeding inflation and rising material costs. The Harris Products Group segment growth is primarily a result of improved leverage on a 7.5% increase in volumes and improved product mix on machine sales volume.

In the three months ended September 30, 2012, EBIT, as adjusted, for the North America Welding, Europe Welding and Asia Pacific Welding segments excluded net special item charges of $477, $1,874 and $708, respectively, primarily related to employee severance and other costs associated with the consolidation of manufacturing operations.

Nine Months Ended September 30, 2012 Compared with Nine Months Ended
September 30, 2011



                                                   Nine Months Ended September 30,
                                        2012                       2011                   Change
                                Amount      % of Sales     Amount      % of Sales    Amount        %
Net sales                     $ 2,168,719       100.0%   $ 2,000,096       100.0%   $ 168,623      8.4%
Cost of goods sold              1,515,095        69.9%     1,457,702        72.9%      57,393      3.9%
Gross profit                      653,624        30.1%       542,394        27.1%     111,230     20.5%
Selling, general &
administrative expenses           372,931        17.2%       327,794        16.4%      45,137     13.8%
Rationalization and asset
impairment charges                  4,317         0.2%           282            -       4,035   1430.9%
Operating income                  276,376        12.7%       214,318        10.7%      62,058     29.0%
Interest income                     2,648         0.1%         2,436         0.1%         212      8.7%
Equity earnings in
affiliates                          4,264         0.2%         4,033         0.2%         231      5.7%
Other income                        2,015         0.1%         2,154         0.1%        (139 )   (6.5% )
Interest expense                   (3,338 )      (0.2% )      (5,037 )      (0.3% )     1,699     33.7%
Income before income taxes        281,965        13.0%       217,904        10.9%      64,061     29.4%
Income taxes                       86,715         4.0%        58,582         2.9%      28,133     48.0%
Net income including
noncontrolling interests          195,250         9.0%       159,322         8.0%      35,928     22.6%
Noncontrolling interests in
subsidiaries' loss                    (77 )          -          (131 )          -          54     41.2%
Net income                    $   195,327         9.0%   $   159,453         8.0%   $  35,874     22.5%

Net Sales: Net sales for the nine months ended September 30, 2012 increased 8.4% from the comparable period in 2011. The sales increase reflects volume increases of 3.8%, price increases of 1.9%, increases from acquisitions of 5.3% and unfavorable impacts from foreign exchange of 2.6%. Sales volumes increased because of growth in the U.S. market offset by lower demand in the international markets. Product pricing increased from prior year levels due to the realization of price increases implemented in response to increases in raw material costs.

Gross Profit: Gross profit increased 20.5% to $653,624 for the nine months ended September 30, 2012 compared with $542,394 in the comparable period in 2011. As a percentage of Net sales, Gross profit increased to 30.1% in the nine months ended September 30, 2012 from 27.1% in the comparable period in 2011. In the current period, the Company recorded charges of $1,439 related to the initial accounting for recent acquisitions and charges of $1,039 due to a change in Venezuelan labor law, which provides for increased employee severance obligations. Foreign currency exchange rates had a $12,623 unfavorable translation impact in the nine months ended September 30, 2012.

Selling, General & Administrative ("SG&A") Expenses: SG&A expenses were higher by $45,137, or 13.8%, in the nine months ended September 30, 2012 compared with the comparable period in 2011. As a percentage of Net sales, SG&A expenses were 17.2% and 16.4% in the nine months ended September 30, 2012 and 2011, respectively. The increase in SG&A expenses was predominantly due to higher bonus expense of $19,812, higher general and administrative spending primarily related to additional employee compensation costs of $10,700, increased SG&A expenses from acquisitions of $10,582 and increased U.S. retirement costs of $2,875 partially offset by foreign currency translations of $8,136.

Interest Income: Interest income increased to $2,648 in the nine months ended September 30, 2012 from $2,436 in the comparable period in 2011. The increase was largely due to international entities earning more favorable interest rates.

Equity Earnings in Affiliates: Equity earnings in affiliates were $4,264 in the nine months ended September 30, 2012 compared with earnings of $4,033 in the comparable period in 2011. The increase was due to an increase in earnings of $520 in Turkey partially offset by a decrease in earnings of $289 in Chile.

Interest Expense: Interest expense decreased to $3,338 in the nine months ended September 30, 2012 from $5,037 in the comparable period in 2011 as a result of lower levels of debt in the nine months ended September 30, 2012.

Income Taxes: The Company recognized $86,715 of tax expense on pre-tax income of $281,965, resulting in an effective income tax rate of 30.8% for the nine months ended September 30, 2012. The effective income tax rate is lower than the Company's statutory rate primarily due to income earned in lower tax rate jurisdictions and the utilization of foreign tax loss carryforwards for which valuation allowances had been previously provided.

The effective income tax rate of 26.9% for the nine months ended September 30, 2011 was lower than the Company's statutory rate primarily due to income earned in lower tax rate jurisdictions and a $4,844 favorable adjustment for tax audit settlements.

Net Income: Net income for the nine months ended September 30, 2012 was $195,327 compared with Net income of $159,453 in the nine months ended September 30, 2011. Diluted earnings per share for the nine months ended September 30, 2012 was $2.32 compared with $1.88 in the comparable period in 2011. Foreign currency exchange rate movements had an unfavorable translation effect of $2,934 on Net income for the nine months ended September 30, 2012.

Segment Results



Net Sales:  The table below summarizes the impacts of volume, acquisitions,
price and foreign currency exchange rates on Net sales for the nine months ended
September 30, 2012:



                                                       Change in Net Sales due to:
                             Net Sales                                                Foreign      Net Sales
                               2011         Volume      Acquisitions      Price       Exchange       2012
Operating Segments
North America Welding       $   947,594   $  115,620           98,361   $   31,052   $   (4,748 ) $ 1,187,879
Europe Welding                  381,750      (20,247 )          8,322        7,126      (32,231 )     344,720
Asia Pacific Welding            288,072      (36,151 )              -        2,075          263       254,259
South America Welding           116,011          416                -       12,690       (7,565 )     121,552
The Harris Products Group       266,669       15,741                -      (14,131 )     (7,970 )     260,309
Consolidated                $ 2,000,096   $   75,379   $      106,683   $   38,812   $  (52,251 ) $ 2,168,719

% Change
North America Welding                          12.2%            10.4%         3.3%        (0.5% )       25.4%
Europe Welding                                 (5.3% )           2.2%         1.9%        (8.4% )       (9.7% )
Asia Pacific Welding                          (12.5% )              -         0.7%         0.1%        (11.7% )
South America Welding                           0.4%                -        10.9%        (6.5% )        4.8%
The Harris Products Group                       5.9%                -        (5.3% )      (3.0% )       (2.4% )
Consolidated                                    3.8%             5.3%         1.9%        (2.6% )        8.4%

Net Sales: Net sales volumes for the nine months ended September 30, 2012 increased for the North America Welding, South America Welding and The Harris Products Group segments because of growth within the domestic and South American markets. Volume decreases for the Europe Welding and Asia Pacific Welding segments are the result of softening demand in those international markets. Product pricing increased for all operating segments from prior year levels, except for The Harris Products Group segment, due to the realization of price increases implemented in response to increases in raw material costs. Product pricing in the South America Welding segment reflects a higher inflationary environment, particularly in Venezuela. Product pricing decreased for The Harris Products Group segment because of significant decreases in the costs of silver and copper as compared to the prior year period. With respect to changes in Net sales due to foreign exchange, all segments, except for the Asia Pacific Welding segment, decreased due to a stronger U.S. dollar.

Earnings Before Interest and Income Taxes ("EBIT"), as Adjusted: Segment performance is measured and resources are allocated based on a number of factors, the primary profit measure being EBIT, as adjusted. The following table presents EBIT, as adjusted for the nine months ended September 30, 2012 by segment compared with the comparable period in 2011:

                                  Nine Months Ended
                                    September 30,
                                 2012          2011       $ Change   % Change
North America Welding:
Net sales                     $ 1,187,879   $   947,594    240,285      25.4%
Inter-segment sales               101,386       105,419     (4,033 )    (3.8% )
Total Sales                   $ 1,289,265   $ 1,053,013    236,252      22.4%

EBIT, as adjusted             $   216,872   $   158,192     58,680      37.1%
As a percent of total sales         16.8%         15.0%                  1.8%

Europe Welding:
Net sales                     $   344,720   $   381,750    (37,030 )    (9.7% )
Inter-segment sales                12,178        13,375     (1,197 )    (8.9% )
Total Sales                   $   356,898   $   395,125    (38,227 )    (9.7% )

EBIT, as adjusted             $    32,317   $    27,267      5,050      18.5%
As a percent of total sales          9.1%          6.9%                  2.2%

Asia Pacific Welding:
Net sales                     $   254,259   $   288,072    (33,813 )   (11.7% )
Inter-segment sales                11,641        10,721        920       8.6%
Total Sales                   $   265,900   $   298,793    (32,893 )   (11.0% )

EBIT, as adjusted             $     8,641   $     3,281      5,360     163.4%
As a percent of total sales          3.2%          1.1%                  2.2%

South America Welding:
Net sales                     $   121,552   $   116,011      5,541       4.8%
Inter-segment sales                    38           374       (336 )   (89.8% )
Total Sales                   $   121,590   $   116,385      5,205       4.5%

EBIT, as adjusted             $    13,472   $     9,600      3,872      40.3%
As a percent of total sales         11.1%          8.2%                  2.9%

The Harris Products Group:
Net sales                     $   260,309   $   266,669     (6,360 )    (2.4% )
Inter-segment sales                 6,605         6,735       (130 )    (1.9% )
Total Sales                   $   266,914   $   273,404     (6,490 )    (2.4% )

EBIT, as adjusted             $    23,933   $    20,750      3,183      15.3%
As a percent of total sales          9.0%          7.6%                  1.4%

EBIT, as adjusted and as a percent of total sales increased for all segments in the nine months ended September 30, 2012 as compared with the same period of the prior year. The North America Welding segment growth is primarily due to improved leverage on a 12.2% increase in volumes and price increases of 3.3%. The increase at the Europe Welding segment is primarily due to improved product
mix. The Asia Pacific Welding segment increase is due to improved profitability resulting from prior rationalization actions in Australia and improved product
mix. The South America Welding segment increase is a result of product pricing increases of 10.9% exceeding increasing inflationary costs. The Harris Products Group segment growth is primarily a result of improved product mix on machine sales volume.

In the nine months ended September 30, 2012, EBIT, as adjusted, for the North America Welding, Europe Welding and Asia Pacific Welding segments excluded special item charges of $554, $2,466 and $1,297, respectively, primarily related to employee severance and other costs associated with the consolidation of manufacturing operations. The South America

Welding segment EBIT, as adjusted, excluded a special item charge of $1,381, which relates to a change in Venezuelan labor law, which provides for increased employee severance obligations.

In the nine months ended September 30, 2011, EBIT, as adjusted, for the Europe Welding and Asia Pacific Welding segments excluded special items net charges of $392 and net gains of $110, respectively. The Europe Welding segment special items include net charges of $188 for rationalization actions primarily related to employee severance and other costs associated with the consolidation of manufacturing operations and a charge of $204 on the sale of assets at a rationalized operation. The Asia Pacific Welding segment special items include net charges of $93 for rationalization actions primarily related to employee severance and other costs associated with the consolidation of manufacturing operations and a gain of $203 on the sale of assets at a rationalized operation.

. . .