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 September 30, 1996 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 October 31, 1996, there were outstanding 5,211,247 shares of common stock
without par value (includes shares held by Stock Compensation Trust).
PART I FINANCIAL INFORMATION
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET
(Thousands of dollars, except shares data)
September 30 December 31
1996 1995
ASSETS
Current assets
Cash $ 8,624 $ 4,807
Temporary investments, at cost plus accrued interest 19,817 27,143
Accounts receivable, less allowance (1996 - $2,996;
1995 - $2,640) 82,853 90,955
Inventories:
Finished products 30,013 34,970
Work in process 14,300 16,135
Raw materials and supplies 27,762 32,516
-------- ---------
Total inventories 72,075 83,621
--------- ---------
Other current assets 24,512 22,099
--------- ---------
Total current assets 207,881 228,625
--------- ---------
Property, plant and equipment 342,431 339,263
Accumulated depreciation (194,213) (188,157)
--------- ---------
Net property 148,218 151,106
--------- ---------
Other assets 39,162 26,869
--------- ---------
TOTALS $ 395,261 $ 406,600
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and accounts payable $ 23,909 $ 30,126
Federal, foreign, state and local income taxes 5,302 466
Other current liabilities 46,307 41,392
--------- ---------
Total current liabilities 75,518 71,984
--------- ---------
Long-term debt 13,377 14,746
Noncurrent liabilities (principally employee/retiree
benefits) and deferred credits 64,723 66,330
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 6,749,733 and 6,719,403 (outstanding
4,749,492 and 5,182,757) 10,866 8,300
Stock compensation trust (600,000 shares) (28,200)
Cumulative translation adjustments 1,913 2,177
Retained earnings 318,589 309,712
Less treasury shares, at cost:
Preferred - 48,835 and 47,935 shares (1,580) (1,553)
Common - 1,400,241 and 1,536,646 shares (63,514) (68,665)
--------- ---------
Total shareholders' equity 241,643 253,540
--------- ---------
TOTALS $ 395,261 $ 406,600
========= =========
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Thousands of dollars, except earnings per share and shares outstanding)
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
Net sales $ 121,744 $ 119,995 $ 360,994 $ 363,364
Other income 462 1,057 2,965 4,141
---------- ---------- ---------- ----------
122,206 121,052 363,959 367,505
---------- ---------- ---------- ----------
Costs and expenses
Cost of products sold 74,279 74,885 227,713 223,385
Selling, general and administrative 32,561 35,035 97,375 101,459
Depreciation 4,780 4,843 15,959 15,017
Interest 324 294 993 1,298
Currency exchange (gains)/losses 88 (304) 356 832
---------- ---------- ---------- ----------
112,032 114,753 342,396 341,991
---------- ---------- ---------- ----------
Income from operations
before income taxes 10,174 6,299 21,563 25,514
Income taxes 4,058 2,463 8,552 10,349
---------- ---------- ---------- ----------
Net income $ 6,116 $ 3,836 $ 13,011 $ 15,165
========== ========== ========== ==========
Earnings per common share $ 1.26 $ 0.67 $ 2.63 $ 2.61
========== ========== ========== ==========
Weighted average number of common
shares outstanding 4,932,145 5,803,554 4,932,145 5,803,554
========== ========== ========== ==========
Dividends paid on preferred stock $ 13 $ 13 $ 39 $ 40
========== ========== ========== ==========
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Thousands of dollars)
Nine Months Ended
September 30
1996 1995
OPERATING ACTIVITIES
Income from operations $ 13,011 $ 15,165
Depreciation 15,959 15,017
Deferred taxes,pensions, and other non-cash
charges/(credits) (2,890) (2,641)
Changes in operating assets and liabilities 24,807 (6,071)
Other - principally currency exchange adjustments 478 3,245
--------- ---------
Cash flow from operating activities 51,365 24,715
--------- ---------
INVESTING ACTIVITIES
Property additions (12,191) (12,772)
Property disposals 1,702 908
Acquisitions and other investing (16,480) (2,839)
--------- ---------
Cash flow from investing activities (26,969) (14,703)
--------- ---------
FINANCING ACTIVITIES
Additions to long-term debt 88 134
Reductions of long-term debt (1,379) (1,661)
Changes in notes payable and short term debt (1,660) (3,209)
Cash dividends (4,134) (4,625)
Company stock sold and purchased (20,510) (1,677)
--------- ---------
Cash flow from financing activities (27,595) (11,038)
--------- ---------
Effect of exchange rate changes on cash (310) 778
--------- ---------
Increase/(decrease) in cash and cash equivalents (3,509) (248)
Beginning cash and cash equivalents 31,950 54,420
--------- ---------
Ending cash and cash equivalents $ 28,441 $ 54,172
========= =========
Note 1 - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
include all adjustments,consisting of only normal recurring adjustments, which
are, in the opinion of management of the registrant, necessary for a fair
statement of the operating results for the three and nine-month periods ended
September 30, 1996 and 1995. 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
Most of the third quarter 1996 sales growth came from Germany, the
company's largest international operation, which achieved stronger local and
export sales during the quarter. Sales in most other international markets
were about the same as the prior year. In Brazil, however, sales were
notably behind 1995, which was a period of extraordinary economic activity
in that country.
Sales of portable instruments in the U.S. were also strong, boosted by
fulfillment of a large special order. Commercial safety product revenues in
the U.S. continued to lag prior year levels. Shipments of gas masks to the
U.S. military were significantly below the prior year, as expected, due to
lower levels of overall government procurement of such products.
Most of the third quarter 1996 profit gains occurred in the U.S. and
stemmed from improved manufacturing cost performance and inventory management
along with reduced selling and administrative expenses. Profits also improved
in Germany due to higher sales. Profits from Brazilian operations have fallen
to more normal levels compared to the robust activity in 1995. The newly
formed affiliate in Argentina has continued to incur very meaningful start-up
costs.
Financial results in the third quarter are a welcome improvement, driven
mostly by improved operating efficiencies and internal initiatives. Product
demand has been inconsistent in a seasonally slow quarter. The backlog of
commercial orders for future shipment is considerably higher than it was at
this time last year. This is an encouraging indication of fourth quarter
potential.
In August, the company acquired Rose Manufacturing Company, a leading
manufacturer in the growing fall protection portion of the safety products
business, and Better Breathing, Inc., a leading innovator of disposable
respiratory protection products. These acquisitions will substantially
strengthen the company's global position in these important market segments.
Currency exchange adjustments charged directly to the equity cumulative
translation adjustments account are shown below. Significant third quarter 1996
gains relate primarily to Germany and Italy. Significant third quarter 1995
losses relate to Germany and Japan; year to date translation gains relate to
Germany and Netherlands.
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
(Thousands of dollars)(Thousands of dollars)
Translation (gains)/losses (914) 2,039 264 (2,411)
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 September 30, 1996 were 2.8 and 6.3%, respec-
tively, as compared to 3.2 and 6.4% at December 31, 1995.
PART II OTHER INFORMATION
MINE SAFETY APPLIANCES COMPANY
Item 1. Legal Proceedings
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 1996.
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: NOVEMBER 12, 1996 By S/James E. Herald
James E. Herald
Vice President - Finance;
Principal Financial and
Accounting Officer
5
9-MOS
DEC-31-1996
SEP-30-1996
8,624
19,817
85,849
(2,996)
72,075
24,512
342,431
(194,213)
395,261
75,518
13,377
0
3,569
10,866
227,208
395,261
360,994
363,959
227,713
243,672
356
0
993
21,563
8,552
13,011
0
0
0
13,011
2.63
2.63
