SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995 Commission File No. 0-2504
MINE SAFETY APPLIANCES COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0668780
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
As of April 30, 1995, there were outstanding 5,813,872 shares of common stock
without par value.
PART I FINANCIAL INFORMATION
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET
(Thousands of dollars, except shares data)
March 31 December 31
1995 1994
ASSETS
Current assets
Cash $ 6,551 $ 10,108
Temporary investments, at cost plus accrued interest 43,315 44,312
Accounts receivable, less allowance (1995 - $2,263;
1994 - $2,102) 86,380 88,698
Inventories:
Finished products 37,498 33,576
Work in process 17,559 14,013
Raw materials and supplies 27,729 29,377
--------- ---------
Total inventories 82,786 76,966
--------- ---------
Other current assets 18,319 17,232
--------- ---------
Total current assets 237,351 237,316
--------- ---------
Property, plant and equipment 329,427 322,109
Accumulated depreciation (177,295) (170,153)
--------- ---------
Net property 152,132 151,956
--------- ---------
Other assets 32,871 27,779
--------- ---------
TOTALS $ 422,354 $ 417,051
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and accounts payable $ 29,109 $ 35,607
Federal, foreign, state and local income taxes 1,600 (1,090)
Other current liabilities 36,448 36,305
--------- ---------
Total current liabilities 67,157 70,822
--------- ---------
Long-term debt 16,418 16,564
Noncurrent liabilities (principally employee/retiree
benefits) and deferred credits 66,094 63,690
Shareholders' equity
Preferred stock, 4-1/2% cumulative - authorized
100,000 shares of $50 par value; issued 71,373
shares, callable at $52.50 per share 3,569 3,569
Second cumulative preferred voting stock - authorized
1,000,000 shares of $10 par value; none issued
Common stock - authorized 20,000,000 shares of no par
value; issued 6,714,003 (outstanding 5,813,872
and 5,815,672) 8,068 8,048
Cumulative translation adjustments 1,844 (699)
Retained earnings 301,244 296,993
Less treasury shares, at cost:
Preferred - 47,875 and 47,775 shares (1,551) (1,548)
Common - 900,131 and 897,831 shares (40,489) (40,388)
--------- ---------
Total shareholders' equity 272,685 265,975
--------- ---------
TOTALS $ 422,354 $ 417,051
========= =========
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Thousands of dollars, except earnings per share and shares outstanding)
Three Months Ended
March 31
1995 1994
Net sales $ 118,162 $ 109,522
Other income 1,572 1,432
---------- ----------
119,734 110,954
---------- ----------
Costs and expenses
Cost of products sold 71,816 70,513
Selling, general and administrative 31,774 29,587
Depreciation 4,986 4,885
Interest 425 608
Currency exchange (gains)/losses 822 656
---------- ----------
109,823 106,249
---------- ----------
Income from operations before income taxes 9,911 4,705
Income taxes 4,193 2,145
---------- ----------
Net income $ 5,718 $ 2,560
========== ==========
Earnings per common share (1) $ 0.98 $ 0.43
========== ==========
Weighted average number of common
shares outstanding 5,814,801 5,990,946
========== ==========
Dividends paid on preferred stock $ 13 $ 14
========== ==========
(1) Computed after dividends paid on preferred stock. Common shares
reserved for outstanding options under the stock option and incentive
plans would have a negligible dilutive effect on earnings per common
share.
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Thousands of dollars)
Three Months Ended
March 31
1995 1994
OPERATING ACTIVITIES
Income from operations $ 5,718 $ 2,560
Depreciation 4,986 4,885
Deferred taxes,pensions, and other non-cash
charges/(credits) (784) 465
Changes in operating assets and liabilities (6,033) (2,267)
Other - principally currency exchange adjustments 2,046 1,147
--------- ---------
Cash flow from operating activities 5,933 6,790
--------- ---------
INVESTING ACTIVITIES
Property additions (4,318) (4,218)
Property disposals 384 140
Acquisitions and other investing (3,025) (165)
--------- ---------
Cash flow from investing activities (6,959) (4,243)
--------- ---------
FINANCING ACTIVITIES
Additions to long-term debt 1,581
Reductions of long-term debt (462) (742)
Cash dividends (1,467) (1,396)
Stock options and purchases of company's stock (84) (2,489)
Changes in notes payable and short term debt (2,753) 943
--------- ---------
Cash flow from financing activities (4,766) (2,103)
--------- ---------
Effect of exchange rate changes on cash 1,238 84
--------- ---------
Increase/(decrease) in cash and cash equivalents (4,554) 528
Beginning cash and cash equivalents 54,420 46,434
--------- ---------
Ending cash and cash equivalents $ 49,866 $ 46,962
========= =========
Note 1 - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
include all adjustments, which are, in the opinion of management of the
registrant, necessary for a fair statement of the operating results for the
three-month periods ended March 31, 1995 and 1994. These financial statements
have been prepared in accordance with the instructions to Form 10-Q and
therefore do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations, and changes in cash
flows in conformity with generally accepted accounting principles.
MINE SAFETY APPLIANCES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
The sales increase occurred in several areas. Commercial safety
equipment sales in the U.S. were higher than sales in early 1994, which were
slowed partly due to the adverse effect of severe weather and earthquakes on
MSA and customer operations. Sales of gas detection and monitoring
instruments and rental services to environmental markets continued to
increase. Shipments of gas masks to the U.S. military were near prior year
levels. International sales were also higher, mostly due to currency
exchange. In local currency, notable sales increases occurred in
Germany,Sweden, Canada, and Brazil.
The increase in net income was mainly in U.S. operations due to higher
sales and production levels (which were depressed in the corresponding period
of 1994 as mentioned previously) combined with further cost reductions.
Additionally, the company's European operations have achieved a turnaround in
profitability as a result of cost reductions and some sales growth. The
profitability of MSA's operations in Brazil has also improved significantly in
an unprecedented period of economic stability. Earnings per share benefitted
from higher net income and reduced shares outstanding as a result of a share
repurchase program.
These results represent another step along the way to longer term
performance goals. International economic conditions are volatile, especially
in Latin America and in the German and Japanese currency exchange markets. It
is clear that our business is performing better in 1995, and we are generally
optimistic about future business prospects. However, the extent of the
improvement will depend upon business and customer buying patterns during the
remainder of the year,as ours is a business whose sales mostly come from
current orders.
The higher effective tax rate in 1994 was due primarily to the impact of
losses of international affiliates.
Comparative foreign currency exchange losses charged to income are as
follows:
Three Months Ended
March 31
1995 1994
(Thousands of dollars)
Transaction (gains)/losses 337 111
Translation (gains)/losses 485 545
---------- ----------
822 656
========== ==========
Currency exchange adjustments charged directly to the equity cumulative
translation adjustments account are shown below. Significant first quarter
1995 translation gains relate primarily to Germany and Netherlands.
Three Months Ended
March 31
1995 1994
(Thousands of dollars)
Translation (gains)/losses (2,543) (287)
Available credit facilities along with internal cash resources are
adequate to provide for ensuing capital requirements. The company's financial
position and liquidity continue to be adequate. The current ratio and term
debt in relation to capital as of March 31, 1995 were 3.5 and 6.4%,
respectively, as compared to 3.4 and 7.5% at December 31, 1994.
PART II OTHER INFORMATION
MINE SAFETY APPLIANCES COMPANY
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) * Board of Directors April 24, 1984 Resolution providing for
payment by the Company to officers the difference between
amounts payable under terms of the Company's Non-Contributory
Pension Plan and the benefit limitations of Section 415 of the
Internal Revenue Code.
* The exhibits marked by an asterisk are management contracts or compensatory
plans or arrangements.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1995.
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
Date: May 12, 1995 By S/James E. Herald
James E. Herald
Vice President - Finance;
Principal Financial and
Accounting Officer
5
3-MOS
DEC-31-1995
MAR-31-1995
6,551
43,315
88,643
2,263
82,786
18,319
329,427
177,295
422,354
67,157
16,418
8,068
0
3,569
261,048
422,354
118,162
119,734
71,816
76,802
822
0
425
9,911
4,193
5,718
0
0
0
5,718
.98
.98
Exhibit 10
PAGE 1 of 1
MINE SAFETY APPLIANCES COMPANY
BOARD OF DIRECTORS' MEETING - APRIL 24, 1984
Pages 2427 and 2428
RESOLVED, That the unfunded supplemental benefit account
established for Mr. Milton G. Hulme, Jr., at the organizational
meeting held April 25, 1983, be revoked and in its place the
Company hereby establishes an unfunded supplemental benefit
account for all present and future officers of the Company which
shall provide said officers with pension and/or retirement
benefits they would otherwise have received under the terms of the
Company's Non-Contributory Pension Plan and Retirement Savings
Plan but for the limitation of such benefits by Section 415 of the
Internal Revenue, such benefits to be equal to the sum of:
(a) the difference between the amount which would have been
payable to them under the benefit formula of the Company's
Pension Plan and the benefit limitations of Internal Revenue
Code Section 415; and
(b) the amount which would have been contributed from time to
time to the Company's Retirement Savings Plan for their
benefit but was not so contributed by reason of the
contribution limitations of Code Section 415, such amounts to
be adjusted from time to time to reflect the earnings and any
gains or losses which would have accrued on such
contributions; and
RESOLVED FURTHER, That each such benefit shall be payable to said
officers (or their beneficiaries) at such time and in such manner
as would otherwise have been the case and that any such payments
shall be purely unfunded contractual obligations of the Company,
payable solely from the general assets of the Company and not from
any trust or other separate account.
