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 June 30, 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 July 31, 1995, there were outstanding 5,779,503 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)
June 30 December 31
1995 1994
ASSETS
Current assets
Cash $ 9,693 $ 10,108
Temporary investments, at cost plus accrued interest 43,401 44,312
Accounts receivable, less allowance (1995 - $2,401;
1994 - $2,102) 82,208 88,698
Inventories:
Finished products 39,713 33,576
Work in process 17,626 14,013
Raw materials and supplies 29,924 29,377
--------- ---------
Total inventories 87,263 76,966
--------- ---------
Other current assets 21,279 17,232
--------- ---------
Total current assets 243,844 237,316
--------- ---------
Property, plant and equipment 336,425 322,109
Accumulated depreciation (183,266) (170,153)
--------- ---------
Net property 153,159 151,956
--------- ---------
Other assets 32,078 27,779
--------- ---------
TOTALS $ 429,081 $ 417,051
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and accounts payable $ 28,397 $ 35,607
Federal, foreign, state and local income taxes (910) (1,090)
Other current liabilities 39,975 36,305
--------- ---------
Total current liabilities 67,462 70,822
--------- ---------
Long-term debt 17,166 16,564
Noncurrent liabilities (principally employee/retiree
benefits) and deferred credits
67,509 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 and 6,713,503 (outstanding
5,812,105 and 5,815,672) 8,068 8,048
Cumulative translation adjustments 3,751 (699)
Retained earnings 303,688 296,993
Less treasury shares, at cost:
Preferred - 47,885 and 47,775 shares (1,552) (1,548)
Common - 901,898 and 897,831 shares (40,580) (40,388)
--------- ---------
Total shareholders' equity 276,944 265,975
--------- ---------
TOTALS $ 429,081 $ 417,051
========= =========
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Thousands of dollars, except earnings per share and shares outstanding)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
Net sales $ 125,207 $ 115,133 $ 243,369 $ 224,655
Other income 1,512 1,810 3,084 3,242
---------- ---------- ---------- ----------
126,719 116,943 246,453 227,897
---------- ---------- ---------- ----------
Costs and expenses
Cost of products sold 76,684 71,559 148,500 142,072
Selling, general and administrative 34,650 31,867 66,424 61,454
Depreciation 5,188 4,946 10,174 9,831
Interest 579 786 1,004 1,394
Currency exchange (gains)/losses 314 1,697 1,136 2,353
---------- ---------- ---------- ----------
117,415 110,855 227,238 217,104
---------- ---------- ---------- ----------
Income from operations
before income taxes 9,304 6,088 19,215 10,793
Income taxes 3,693 2,620 7,886 4,765
---------- ---------- ---------- ----------
Net income $ 5,611 $ 3,468 $ 11,329 $ 6,028
========== ========== ========== ==========
Earnings per common share (1) $ 0.96 $ 0.57 $ 1.94 $ 1.00
========== ========== ========== ==========
Weighted average number of common
shares outstanding 5,814,042 5,963,238 5,814,042 5,963,238
========== ========== ========== ==========
Dividends paid on preferred stock $ 14 $ 13 $ 27 $ 27
========== ========== ========== ==========
(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)
Six Months Ended
June 30
1995 1994
OPERATING ACTIVITIES
Income from operations $ 11,329 $ 6,028
Depreciation 10,174 9,831
Deferred taxes,pensions, and other non-cash
charges/(credits) (1,173) 801
Changes in operating assets and liabilities (8,797) (1,128)
Other - principally currency exchange adjustments 3,321 2,771
--------- ---------
Cash flow from operating activities 14,854 18,303
--------- ---------
INVESTING ACTIVITIES
Property additions (9,455) (9,295)
Property disposals 403 1,009
Acquisitions and other investing (3,895) 5,839
--------- ---------
Cash flow from investing activities (12,947) (2,447)
--------- ---------
FINANCING ACTIVITIES
Additions to long-term debt 851 1,629
Reductions of long-term debt (702) (8,978)
Cash dividends (3,052) (2,774)
Stock options and purchases of company's stock (176) (3,259)
Changes in notes payable and short term debt (2,198) 346
--------- ---------
Cash flow from financing activities (5,277) (13,036)
--------- ---------
Effect of exchange rate changes on cash 2,044 824
--------- ---------
Increase/(decrease) in cash and cash equivalents (1,326) 3,644
Beginning cash and cash equivalents 54,420 46,434
--------- ---------
Ending cash and cash equivalents $ 53,094 $ 50,078
========= =========
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 six-
month periods ended June 30, 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 growth is due to several factors. U.S. commercial safety
equipment revenues are moderately up, led by increases in sales of self-
contained breathing apparatus to fire services, of protective helmets to general
safety markets and of exports. Sales of gas detection and monitoring instruments
continue to increase, especially to the industrial cooling market. Rental
revenues to the environmental services market also are higher. Shipments of gas
masks to the U.S. military have declined somewhat, as expected. (However, the
effect of this was more than offset by better production cost performance.)
International sales are higher, assisted in part by changes in currency transla-
tion rates. In local currency, the most notable sales increases have occurred in
Brazil and Europe.
The growth in net income has occurred in several areas. The profitability
of U.S. operations has improved with higher sales and manufacturing levels com-
bined with cost reductions from enhanced productivity and careful expense
management. Earnings from European operations remain at relatively low levels,
but are slowly improving with increased sales and lower costs. Profits from
MSA's Brazil operation have improved substantially following governmental
economic reforms implemented in July of 1994. Improvement in Latin American
earnings accounts for a significant proportion of the corporate earnings growth.
Consolidated earnings per share benefitted from higher net income and reduced
shares outstanding as a result of a share repurchase program.
A higher level of performance has been achieved so far in 1995. The
company is going at a pace to reach our short term goals for this year,
although our longer term objectives are still a good journey ahead. The
company's profits in the first half of 1994 were relatively low, but were
stronger in the second half of that year. While we are working for further
performance improvements, it is not realistic to expect quarterly earnings
percentage growth above last year's results to be as high for the remainder of
this year.
The higher effective tax rates for the quarter and the six months ended
June 30,1994 were primarily the result of currency translation losses
not deductible for tax purposes. Excluding the effects of currency translations,
the comparative 1995 effective tax rate would be higher for both the quarter
and the six-month period, due primarily to the impact of taxes being provided
in 1995 by an international affiliate that previously was in a tax-loss-
carryforward status.
Comparative foreign currency exchange losses charged to income are as
follows:
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Thousands of dollars)(Thousands of dollars)
Transaction (gains)/losses 148 437 485 548
Translation (gains)/losses 166 1,260 651 1,805
--------- --------- --------- ---------
314 1,697 1,136 2,353
========= ========= ========= =========
Currency exchange adjustments charged directly to the equity cumulative
translation adjustments account are shown below. Significant second quarter
1995 gains relate to Germany and Japan; year to date translation gains relate
also to Germany and Japan.
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Thousands of dollars)(Thousands of dollars)
Translation (gains)/losses (1,907) (2,048) (4,450) (2,335)
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 June 30, 1995 were 3.6 and 6.5%,
respectively, as compared to 3.4 and 7.5% at December 31, 1994.
PART II OTHER INFORMATION
MINE SAFETY APPLIANCES COMPANY
Item 1. Legal Proceedings
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
(a) April 26, 1995 - Annual Meeting
(b) Directors elected at Annual Meeting:
Helen Lee Henderson
John T. Ryan III
Leo N. Short, Jr.
Directors whose term of office continued after the meeting:
Joseph L. Calihan
Calvin A. Campbell, Jr.
G. Donald Gerlach
John T. Ryan, Jr. (Died July 31, 1995)
(c) Election of two Directors for a term of three years and one
Director for a term of one year
Three-Year Term
Helen Lee Henderson For 5,450,166
Withhold 26,317
Broker Nonvotes -0-
John T. Ryan III For 5,452,900
Withhold 23,583
Broker Nonvotes -0-
One-Year Term
Leo N. Short, Jr. For 5,450,216
Withhold 26,267
Broker Nonvotes -0-
Selection of Price Waterhouse as Auditors for the year ending
December 31, 1995
For 5,047,061
Against 5,100
Abstain 424,322
Broker Nonvotes -0-
(d) 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 June 30, 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: AUGUST 7, 1995 By S/James E. Herald
James E. Herald
Vice President - Finance;
Principal Financial and
Accounting Officer
5
6-MOS
DEC-31-1995
JUN-30-1995
9,693
43,401
84,609
(2,401)
87,263
21,279
336,425
(183,266)
429,081
67,462
17,166
8,068
0
3,569
265,307
429,081
243,369
246,453
148,500
158,674
1,136
0
1,004
19,215
7,886
11,329
0
0
0
11,329
1.94
1.94
