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, 1994 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, 1994, there were outstanding 5,884,172 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)
September 30 December 31
1994 1993
ASSETS
Current assets
Cash $ 13,562 $ 10,953
Temporary investments, at cost plus accrued interest 37,769 35,481
Accounts receivable, less allowance (1994 - $2,867;
1993 - $2,516) 85,795 81,897
Inventories:
Finished products 31,106 30,409
Work in process 14,727 20,001
Raw materials and supplies 24,823 31,044
--------- ---------
Total inventories 70,656 81,454
--------- ---------
Other current assets 15,494 14,824
--------- ---------
Total current assets 223,276 224,609
--------- ---------
Property, plant and equipment 322,277 306,691
Accumulated depreciation (168,629) (153,162)
--------- ---------
Net property 153,648 153,529
--------- ---------
Other assets 29,929 29,746
--------- ---------
TOTALS $ 406,853 $ 407,884
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and accounts payable $ 26,289 $ 27,219
Federal, foreign, state and local income taxes (1,044) (3,474)
Other current liabilities 36,111 36,665
--------- ---------
Total current liabilities 61,356 60,410
--------- ---------
Long-term debt 18,885 27,476
Noncurrent liabilities (principally employee/retiree
benefits) and deferred credits
61,356 60,254
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 6,713,503 and 6,713,503 (outstanding
5,886,626 and 6,011,628) 8,048 8,048
Cumulative translation adjustments (1,321) (5,749)
Retained earnings 293,764 287,286
Less treasury shares, at cost:
Preferred - 47,775 and 47,268 shares (1,548) (1,532)
Common - 826,877 and 701,875 shares (37,256) (31,878)
--------- ---------
Total shareholders' equity 265,256 259,744
--------- ---------
TOTALS $ 406,853 $ 407,884
========= =========
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
1994 1993 1994 1993
Net sales $ 114,889 $ 103,899 $ 339,544 $ 316,602
Other income 997 2,861 4,239 4,919
---------- ---------- ---------- ----------
115,886 106,760 343,783 321,521
---------- ---------- ---------- ----------
Costs and expenses
Cost of products sold 72,140 68,076 214,212 202,737
Selling, general and administrative 30,421 30,257 91,875 90,453
Depreciation 4,382 4,631 14,213 12,976
Interest 274 414 1,668 1,222
Currency exchange (gains)/losses 918 1,228 3,271 2,216
---------- ---------- ---------- ----------
108,135 104,606 325,239 309,604
---------- ---------- ---------- ----------
Income from operations
before income taxes 7,751 2,154 18,544 11,917
Income taxes 3,158 743 7,923 5,027
---------- ---------- ---------- ----------
Net income $ 4,593 $ 1,411 $ 10,621 $ 6,890
========== ========== ========== ==========
Earnings per common share (1) $ 0.78 $ 0.24 $ 1.78 $ 1.13
========== ========== ========== ==========
Weighted average number of common
shares outstanding 5,944,120 6,082,039 5,944,120 6,082,039
========== ========== ========== ==========
Dividends paid on preferred stock $ 13 $ 14 $ 40 $ 42
========== ========== ========== ==========
(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)
Nine Months Ended
September 30
1994 1993
OPERATING ACTIVITIES
Income from operations $ 10,621 $ 6,890
Depreciation 14,213 12,976
Deferred taxes,pensions, and other non-cash
charges/(credits) (1,235) 1,660
Changes in operating assets and liabilities (1,052) 1,183
Other - principally currency exchange adjustments 4,813 (1,502)
--------- ---------
Cash flow from operating activities 27,360 21,207
--------- ---------
INVESTING ACTIVITIES
Property additions (13,154) (19,028)
Property disposals 1,036 405
Acquisitions and other investing 5,545 (5,799)
--------- ---------
Cash flow from investing activities (6,573) (24,422)
--------- ---------
FINANCING ACTIVITIES
Additions to long-term debt 2,319 1,349
Reductions of long-term debt (11,546) (1,237)
Cash dividends (4,144) (4,237)
Purchases of company's stock (5,394) (2,819)
Changes in notes payable and short term debt 1,467 (195)
--------- ---------
Cash flow from financing activities (17,298) (7,139)
--------- ---------
Effect of exchange rate changes on cash 1,408 (2,157)
--------- ---------
Increase/(decrease) in cash and cash equivalents 4,897 (12,511)
Beginning cash and cash equivalents 46,434 55,409
--------- ---------
Ending cash and cash equivalents $ 51,331 $ 42,898
========= =========
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 nine
month periods ended September 30, 1994 and 1993. 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
Third quarter sales compare favorably to the same period of 1993 which
were low due to adverse economic conditions. The main factor in the nine
months sales growth is the inclusion of HAZCO Services, Inc., which was
acquired in the last half of 1993. Equipment rentals to the hazardous
materials/environmental market by HAZCO have grown significantly since the
acquisition. The U.S. market for safety products is generally flat. Shipments
to the U.S. military are essentially even with the prior year. Sales of
instruments and specialty chemicals have continued to grow. Economic conditions
have stabilized in Europe, and sales have recovered somewhat in Germany, Sweden
and Spain. Other international markets are generally firm, with notable growth
occurring in Australia, Canada, Brazil, Chile and Japan.
The decrease in the third quarter 1994 other income as compared to the
third quarter of 1993 is primarily the result of fixed asset losses and
decreased research subsidies.
Net income in 1994 reflects higher sales in the areas previously described
and cost reductions in our major operations achieved through restructuring.
These results compare favorably to 1993 which was depressed by adverse economic
conditions and the timing impact of inventory adjustments. Ongoing process
reengineering has resulted in significant reductions in U.S. manufacturing
inventories. Some of these reductions resulted in a liquidation of LIFO values
calculated at lower costs incurred prior to 1994. The approximate effect of
this liquidation in 1994 has been to reduce cost of sales by $2,000,000 and to
increase net income by $1,200,000, or 20 cents per share. Earnings per share
have benefitted from higher net income and reduced shares outstanding as a
result of the share repurchase program.
These results show further improvement towards higher levels of
performance. The company maintains its strategy of particularly emphasizing
innovation in products, services and business processes with the goals of
improved customer response and lower cost. This will enhance growth in
expanding markets and improve profitability in weak markets. The company will
also continue selective geographic extension of its activities.
The lower third quarter 1993 effective tax rate is due primarily to the
more proportionate impact of the tax benefit of foreign subsidiaries losses
which have higher effective tax rates.
Comparative foreign currency exchange losses charged to income are as
follows:
Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
(Thousands of dollars)(Thousands of dollars)
Transaction (gains)/losses 180 157 728 (144)
Translation (gains)/losses 738 1,071 2,543 2,360
--------- --------- --------- ---------
918 1,228 3,271 2,216
========= ========= ========= =========
Currency exchange adjustments charged directly to the equity cumulative
translation adjustments account are shown below. Significant third quarter 1994
gains relate to Germany and Britain; year to date translation gains relate
to Germany and Australia. Significant third quarter 1993 translation losses
relate to Germany, Italy and Britain; year to date translation losses relate
to Germany and Italy.
Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
(Thousands of dollars)(Thousands of dollars)
Translation (gains)/losses (2,093) 3,585 (4,428) 4,403
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, 1994 were 3.6 and 7.6%,
respectively, as compared to 3.7 and 11.0% at December 31, 1993.
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
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended September 30, 1994.
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 11, 1994 By S/James E. Herald
James E. Herald
Vice President - Finance;
Principal Financial and
Accounting Officer
5
1000
9-MOS
DEC-31-1994
SEP-30-1994
51,331
0
88,662
2,867
70,656
223,276
322,277
168,629
406,853
61,356
18,885
8,048
0
3,569
253,639
406,853
339,544
343,783
214,212
228,425
3,271
0
1,668
18,554
7,923
10,621
0
0
0
10,621
1.78
1.78
