SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 10, 2006
MINE SAFETY APPLIANCES COMPANY
(Exact name of registrant as specified in its charter)
| Pennsylvania | 1-15579 | 25-0668780 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (IRS Employer Identification No.) |
| 121 Gamma Drive | ||
| RIDC Industrial Park | ||
| O’Hara Township | ||
| Pittsburgh, Pennsylvania | 15238 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 412-967-3000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On May 10, 2006 the Company issued a press release announcing its financial results for the quarter
ended March 31, 2006. A copy of the press release is furnished herewith as Exhibit 99.1 to this report.
Item 9.01. Exhibits
| Exhibit Number |
Description | |
| 99.1 | Mine Safety Appliances Company Press Release dated May 10, 2006, announcing financial results for the quarter ended March 31, 2006. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MINE SAFETY APPLIANCES COMPANY | ||
| (Registrant) | ||
| By | /s/ Dennis L. Zeitler | |
| Dennis L. Zeitler | ||
| Vice President - Finance | ||
Date: May 10, 2006
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EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Mine Safety Appliances Company Press Release dated May 10, 2006, announcing financial results for the quarter ended March 31,2006. |
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Exhibit 99.1
FROM: MSA (Mine Safety Appliances Company)
Ticker: MSA (NYSE)
Contact: Mark Deasy – (412) 967-3357
FOR IMMEDIATE RELEASE
MSA Announces Record First Quarter Sales
Commercial Sales Increase 10%
PITTSBURGH, May 10, 2006 – MSA (NYSE) today announced that net sales for the first quarter of 2006 were $228.4 million compared with $228.0 million for the first quarter of 2005. Net income for the first quarter of 2006 was $15.7 million, or 43 cents per basic share, compared with $21.4 million, or 58 cents per basic share, for the same quarter last year.
The decrease in net income was due to a one-time restructuring charge, the newly-required accounting for stock-based compensation, and a higher effective tax rate that partially reflects the delay in Congress on renewing the R&D tax credit. Specifically, first quarter 2006 results include after-tax charges of approximately $3.7 million associated with the previously-announced Project Outlook restructuring plan in North America. These costs were related to workforce reductions that were largely achieved through a voluntary retirement incentive program during the quarter. With the adoption of the new accounting standard, first quarter 2006 results also included approximately $1.1 million after-tax of additional expense related to stock options and restricted stock awards granted during the quarter.
First quarter 2006 sales reflect strong local currency growth in MSA’s International and European business segments and in North American sales to commercial markets. Overall sales to MSA’s commercial customers grew 10 percent this quarter, more than offsetting an $18 million decrease in military shipments.
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Net sales in the International segment improved $7.5 million in the current quarter. Approximately $4.3 million of the sales increase was related to the January 2006 acquisition of Select PPE, an established supplier of safety equipment and solutions to the mining industry in South Africa. Currency exchange differences did not have a significant effect on International segment sales when stated in U.S. dollars.
Local currency sales improved approximately 20%, or $8.1 million, in the company’s European segment, but were substantially offset when stated in U.S. dollars by an unfavorable currency translation effect of approximately $6.2 million reflecting a weaker euro.
In North America, first quarter 2006 sales declined $9.0 million. North American shipments of Advanced Combat Helmets (ACH) and related communication equipment were down $12.3 million due to the completion of certain government contracts and to the U.S. government’s decision to split ACH contracts evenly among three producers over a 12-month period. U.S. military gas mask sales were down $4.8 million due to the fulfillment of contracts for long-term customer needs. These sales decreases were partially offset by continuing improvements in North American segment shipments of instrument and head protection products, which were up $5.6 million and $2.7 million, respectively.
First quarter net income for the North American segment declined $4.8 million, primarily due to the previously mentioned restructuring charge and incremental stock-based compensation expense. Excluding these items, North American segment income was generally flat quarter-to quarter, reflecting improved gross margins on proportionately lower government sales and
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controlled operating expenses. Net income in the European segment was down $0.9 million on higher operating costs. European segment net income in the first quarter of 2005 also benefited from a gain of approximately $0.5 million on the sale of production equipment from a discontinued line in Germany. International segment income was up $0.2 million in the current quarter, reflecting the sales improvement, partially offset by higher selling expenses.
“Given the significant decreases in sales of Advanced Combat Helmets and gas masks in North America, I am pleased to report our highest first quarter sales ever,” said John T. Ryan III, MSA Chairman and CEO. “As I have noted in the past, we have known for some time that our ACH and gas mask business with the U.S. government would be lower this quarter. Our ability to replace these military sales by improving sales to our commercial customers by 10% is particularly satisfying.”
“I am also pleased that after removing the effects of restructuring and the change in stock-based compensation expense, our operating income for the quarter increased and the significant impact of each of these expenses is now behind us. While we will have some modest charges associated with Project Outlook in future months, primarily for the relocation of various work groups, they are not expected to be material. Also, stock-based compensation expense was high in the first quarter of 2006 because the new accounting standard requires the immediate expensing of grants made to retirement-eligible employees. Stock compensation expense during the remainder of 2006 will not be material,” Mr. Ryan added. “From the outset of 2006 we have stated our challenge this year will be to adjust for the reduction of certain military contracts that we knew would eventually come. Recognizing this reality, our objectives are to grow our commercial sales at a rate
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that more than offsets the reduction in U.S. military contracts and, in the process, increase operating profits. In the first quarter we took a significant first step toward achieving these goals as we reached our quarterly target for operating profit. While 2006 has a long way to go, I am pleased to see us get off to a positive start.”
Mr. Ryan added that from a strategic standpoint, the company continues to focus on initiatives that enable MSA to develop and introduce products that anticipate market needs and take advantage of market opportunities. “Our overall sales performance in the first quarter indicates our strategies are yielding positive results and we will continue to invest in and advance these initiatives in ways that enhance our customers’ safety and reward shareholder confidence in MSA,” Mr. Ryan concluded.
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About MSA:
Established in 1914, MSA is a global leader in the development, manufacture and supply of sophisticated safety products that protect people’s health and safety. Sophisticated safety products typically integrate any combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations. The company’s comprehensive line of products is used by workers around the world in the fire service, homeland security, construction and other industries, as well as the military. Principal products include self-contained breathing apparatus, gas masks, gas detection instruments, head protection, respirators and thermal imaging cameras. The company also provides a broad range of consumer and contractor safety products through retail channels. These products are marketed and sold under the MSA Safety Works brand. MSA has more than 30 international locations. Additional information is available on the company’s Web site at www.msanet.com.
Cautionary Statement Regarding Forward-Looking Statements:
Except for historical information, certain matters discussed in this press release may be forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, including without limitation all projections and anticipated levels of future performance, involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Actual results can be affected by any number of factors, many of which are outside of management’s control. Among the factors that could cause such differences are spending patterns of government agencies, competitive pressures, product liability claims, the success of new product introductions, currency exchange rate fluctuations, the identification and successful integration of acquisitions and the risks of doing business in foreign countries. These risks, uncertainties and other factors are detailed from time to time in our filings with the United States Securities and Exchange Commission (“SEC”). You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties. MSA’s SEC filings are readily obtainable at no charge at www.sec.gov, as well as on a number of other commercial web sites.
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Mine Safety Appliances Company
Condensed Consolidated Statement of Income (Unaudited)
(In thousands, except earnings per share)
| Three Months Ended March 31 | ||||||
| 2006 | 2005 | |||||
| Net sales |
$ | 228,350 | $ | 228,048 | ||
| Other income |
285 | 1,332 | ||||
| 228,635 | 229,380 | |||||
| Cost of products sold |
135,776 | 136,274 | ||||
| Selling, general and administrative |
53,553 | 51,964 | ||||
| Research and development |
5,548 | 5,680 | ||||
| Restructuring and other charges |
5,997 | — | ||||
| Interest |
1,188 | 1,218 | ||||
| Currency exchange losses |
1,068 | 615 | ||||
| 203,130 | 195,751 | |||||
| Income before income taxes |
25,505 | 33,629 | ||||
| Provision for income taxes |
9,767 | 12,276 | ||||
| Net income |
15,738 | 21,353 | ||||
| Basic earnings per common share |
$ | .43 | $ | .58 | ||
| Diluted earnings per common share |
$ | .42 | $ | .57 | ||
| Dividends per common share |
$ | .14 | $ | .10 | ||
| Average number of common shares outstanding (basic) |
36,544 | 36,486 | ||||
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Mine Safety Appliances Company
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)
| March 31, 2006 | December 31, 2005 | |||||
| Current assets |
||||||
| Cash and cash equivalents |
$ | 46,996 | $ | 44,797 | ||
| Trade receivables, net |
170,180 | 169,436 | ||||
| Inventories |
130,491 | 119,731 | ||||
| Other current assets |
39,291 | 43,262 | ||||
| Total current assets |
386,958 | 377,226 | ||||
| Property, net |
115,248 | 116,209 | ||||
| Prepaid pension cost |
138,036 | 140,575 | ||||
| Goodwill |
60,892 | 55,654 | ||||
| Other non-current assets |
39,861 | 35,693 | ||||
| Total |
740,995 | 725,357 | ||||
| Current liabilities |
||||||
| Notes payable and current portion of long-term debt |
$ | 12,038 | $ | 8,808 | ||
| Accounts payable |
48,817 | 40,935 | ||||
| Other current liabilities |
69,564 | 81,116 | ||||
| Total current liabilities |
130,419 | 130,859 | ||||
| Long-term debt |
45,651 | 45,834 | ||||
| Pension and other employee benefits |
83,444 | 80,656 | ||||
| Deferred tax liabilities |
75,713 | 75,511 | ||||
| Other non-current liabilities |
11,017 | 10,100 | ||||
| Shareholders’ equity |
394,751 | 382,397 | ||||
| Total |
740,995 | 725,357 | ||||
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Mine Safety Appliances Company
Segment Information (Unaudited)
(In thousands)
| Three Months Ended March 31 |
||||||||
| 2006 | 2005 | |||||||
| Net Sales |
||||||||
| North America |
$ | 136,516 | $ | 145,539 | ||||
| Europe |
47,724 | 45,891 | ||||||
| International |
44,110 | 36,618 | ||||||
| Total |
228,350 | 228,048 | ||||||
| Net Income |
||||||||
| North America |
$ | 11,556 | $ | 16,330 | ||||
| Europe |
1,752 | 2,685 | ||||||
| International |
3,097 | 2,935 | ||||||
| Reconciling |
(667 | ) | (597 | ) | ||||
| Total |
15,738 | 21,353 | ||||||
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