SEGMENT INFORMATION

The Company's primary business is the design and manufacture 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, CNC and plasma cutters, wire feeding systems, robotic welding packages, integrated automation systems, fume extraction equipment, consumable electrodes, fluxes and welding accessories and specialty welding consumables and fabrication. The Company's product offering also includes 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.

During the first quarter of 2016, the Company realigned its organizational and leadership structure into three operating segments to support growth strategies and enhance the utilization of the Company's worldwide resources and global sourcing initiatives. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment primarily includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company's global cutting, soldering and brazing businesses as well as its retail business in the United States.

Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the adjusted earnings before interest and income taxes ("Adjusted EBIT") profit measure. EBIT is defined as Operating income plus Equity earnings in affiliates and Other income. Segment EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets. The accounting principles applied at the operating segment level are generally the same as those applied at the consolidated financial statement level with the exception of LIFO. Segment assets include inventories measured on a FIFO basis while consolidated inventories include inventories reported on a LIFO basis. Segment and consolidated income before interest and income taxes include the effect of inventories reported on a LIFO basis. At December 31, 2018, 2017 and 2016 approximately 37%, 32% and 40%, respectively, of total inventories were valued using the LIFO method. LIFO is used for a substantial portion of U.S. inventories included in Americas Welding. Inter-segment sales are recorded at agreed upon prices that approximate arm's length prices and are eliminated in consolidation. Corporate-level expenses are allocated to the operating segments.

Financial information for the reportable segments follows:



	Americas Welding ⁽¹⁾		International Welding ⁽²⁾		The Harris Products Group		Corporate / Eliminations ⁽³⁾			Consolidated
For the Year Ended December 31, 2018
Net sales	$	1,806,514	$	919,771	$	302,389	$	—		$	3,028,674
Inter-segment sales	118,936		18,576		6,969		(144,481		)	$	—
Total	$	1,925,450	$	938,347	$	309,358	$	(144,481	)	$	3,028,674
Adjusted EBIT	$	340,744	$	54,273	$	36,564	$	(8,887	)	$	422,694
Special items charge (gain)	6,686		25,285		—		4,498			$	36,469
EBIT	$	334,058	$	28,988	$	36,564	$	(13,385	)	$	386,225
Interest income										6,938
Interest expense										(24,503		)
Income before income taxes										$	368,660

Total assets	$	1,418,905	$	827,132	$	203,095	$	(99,307	)	$	2,349,825
Equity investments in affiliates	4,204		27,024		—		—			$	31,228
Capital expenditures	42,053		26,284		2,909		—			$	71,246
Depreciation and amortization	47,008		22,384		3,045		(91		)	$	72,346
For the Year Ended December 31, 2017
Net sales	$	1,609,779	$	724,024	$	290,628	$	—		$	2,624,431
Inter-segment sales	97,382		18,860		8,190		(124,432		)	$	—
Total	$	1,707,161	$	742,884	$	298,818	$	(124,432	)	$	2,624,431
Adjusted EBIT	$	291,866	$	41,721	$	36,442	$	309		$	370,338
Special items charge (gain)	9,242		10,076		—		(34,648		)	$	(15,330	)
EBIT	$	282,624	$	31,645	$	36,442	$	34,957		$	385,668
Interest income										4,788
Interest expense										(24,220		)
Income before income taxes										$	366,236

Total assets	$	1,253,411	$	919,995	$	175,151	$	57,990		$	2,406,547
Equity investments in affiliates	4,037		24,489		—		—			$	28,526
Capital expenditures	43,158		14,549		3,949		—			$	61,656
Depreciation and amortization	47,038		18,364		2,885		(172		)	$	68,115
For the Year Ended December 31, 2016
Net sales	$	1,494,982	$	507,289	$	272,343	$	—		$	2,274,614
Inter-segment sales	93,612		15,975		8,709		(118,296		)	$	—
Total	$	1,588,594	$	523,264	$	281,052	$	(118,296	)	$	2,274,614
Adjusted EBIT	$	266,633	$	29,146	$	32,380	$	564		$	328,723
Special items charge	—		—		—		34,348			$	34,348
EBIT	$	266,633	$	29,146	$	32,380	$	(33,784	)	$	294,375
Interest income										2,092
Interest expense										(19,079		)
Income before income taxes										$	277,388

Total assets	$	1,278,417	$	529,223	$	161,391	$	(25,594	)	$	1,943,437
Equity investments in affiliates	3,946		23,355		—		—			$	27,301
Capital expenditures	35,314		12,354		2,209		—			$	49,877
Depreciation and amortization	47,359		15,063		2,860		(209		)	$	65,073


(1)	Special items in 2018 reflect pension settlement charges of $6,686 in Americas Welding related to lump sum pension payments.

2017 special items reflect pension settlement charges of $8,150 related to lump sum pension payments, as well as non-cash charges of $1,091 related to the impairment of goodwill.


(2)	2018 special items reflect charges of $25,285 related to employee severance, asset impairments, gains or losses on disposal of assets and other related costs.

2017 special items reflect amortization of step up in value of acquired inventories of $4,578 related to the Air Liquide Welding acquisition as discussed in Note 4 to the consolidated financial statements, as well as charges of $5,498 related to employee severance, asset impairments and other related costs.


(3)	2018 special items reflect acquisition and acquisition transaction and integration costs of $4,498 related to the Air Liquide Welding acquisition as discussed in Note 4 to the consolidated financial statements.

2017 special items reflect a bargain purchase gain of $49,650 and acquisition transaction and integration costs of $15,002 related to the Air Liquide Welding acquisition as discussed in Note 4 to the consolidated financial statements.

2016 special items reflect a loss of $34,348 related to the deconsolidation of the Company's Venezuelan subsidiary.

Export sales (excluding inter-company sales) from the United States were $160,064 in 2018, $151,630 in 2017 and $134,216 in 2016. No individual customer comprised more than 10% of the Company's total revenues for any of the three years ended December 31, 2018.

The geographic split of the Company's Net sales, based on the location of the customer, and property, plant and equipment were as follows:



	Year Ended December 31,
	2018		2017		2016
Net sales:
United States	$	1,554,688	$	1,388,816	$	1,308,635
Foreign countries	1,473,986		1,235,615		965,979
Total	$	3,028,674	$	2,624,431	$	2,274,614



	December 31,
	2018			2017			2016
Property, plant and equipment, net:
United States	$	214,943		$	194,491		$	176,041
Foreign countries	264,110			282,931			196,679
Eliminations	(252		)	(391		)	(343		)
Total	$	478,801		$	477,031		$	372,377