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, 1997 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, 1997, there were outstanding 5,187,792 shares of common stock
without par value, including 600,000 shares held by the Mine Safety Appliances
Company Stock Compensation Trust
PART I FINANCIAL INFORMATION
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET
(Thousands of dollars, except shares data)
March 31 December 31
1997 1996
ASSETS
Current assets
Cash $ 4,485 $ 7,963
Temporary investments, at cost plus accrued interest 31,658 17,133
Accounts receivable, less allowance (1997 - $2,944;
1996 - $2,993) 87,032 101,740
Inventories:
Finished products 33,122 32,042
Work in process 14,390 15,311
Raw materials and supplies 28,475 29,687
--------- ---------
Total inventories 75,987 77,040
--------- ---------
Other current assets 24,508 24,531
--------- ---------
Total current assets 223,670 228,407
--------- ---------
Property, plant and equipment 346,596 347,432
Accumulated depreciation (199,147) (200,374)
--------- ---------
Net property 147,449 147,058
--------- ---------
Other assets 31,085 32,217
--------- ---------
TOTALS $ 402,204 $ 407,682
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and accounts payable $ 42,244 $ 35,823
Federal, foreign, state and local income taxes 8,240 9,156
Other current liabilities 43,983 46,835
--------- ---------
Total current liabilities 94,467 91,814
--------- ---------
Long-term debt 12,666 13,278
Noncurrent liabilities (principally employee/retiree
benefits) and deferred credits 56,646 61,158
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 6,767,413 and 6,749,733 (outstanding
4,591,137 and 4,611,125) 11,701 10,866
Common Stock Compensation Trust (600,000 shares) (28,200) (28,200)
Cumulative translation adjustments (3,834) 1,430
Retained earnings 329,502 325,898
Less treasury shares, at cost:
Preferred - 49,313 and 49,913 shares (1,595) (1,595)
Common - 1,576,273 and 1,538,608 shares (72,718) (70,536)
--------- ---------
Total shareholders' equity 238,425 241,432
--------- ---------
TOTALS $ 402,204 $ 407,682
========= =========
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Thousands of dollars, except earnings per share and shares outstanding)
Three Months Ended
March 31
1997 1996
Net sales $ 113,473 $ 115,371
Other income 1,026 1,341
---------- ----------
114,499 116,712
---------- ----------
Costs and expenses
Cost of products sold 70,399 74,046
Selling, general and administrative 32,108 31,465
Depreciation 5,389 5,579
Interest 411 346
Currency exchange (gains)/losses 71 146
---------- ----------
108,378 111,582
---------- ----------
Income from operations before income taxes 6,121 5,130
Income taxes 2,517 1,991
---------- ----------
Net income $ 3,604 $ 3,139
========== ==========
Earnings per common share $ 0.78 $ 0.61
========== ==========
Weighted average number of common
shares outstanding 4,595,672 5,093,704
========== ==========
Dividends paid on preferred stock $ 12 $ 13
========== ==========
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Thousands of dollars)
Three Months Ended
March 31
1997 1996
OPERATING ACTIVITIES
Income from operations $ 3,604 $ 3,139
Depreciation 5,389 5,579
Deferred taxes,pensions, and other non-cash
charges/(credits) (1,509) (876)
Changes in operating assets and liabilities 8,140 6,171
Other - principally currency exchange adjustments (4,123) (107)
--------- ---------
Cash flow from operating activities 11,501 13,906
--------- ---------
INVESTING ACTIVITIES
Property additions (7,857) (2,967)
Property disposals 135 933
Acquisitions and other investing (232) (147)
--------- ---------
Cash flow from investing activities (7,954) (2,181)
--------- ---------
FINANCING ACTIVITIES
Additions to long-term debt 23 0
Reductions of long-term debt (453) (491)
Cash dividends (1,623) (1,399)
Company stock sold and purchased (1,347) (9,811)
Changes in short term debt and notes payable 12,896 620
--------- ---------
Cash flow from financing activities 9,496 (11,081)
--------- ---------
Effect of exchange rate changes on cash (1,996) (259)
--------- ---------
Increase/(decrease) in cash and cash equivalents 11,047 385
Beginning cash and cash equivalents 25,096 31,950
--------- ---------
Ending cash and cash equivalents $ 36,143 $ 32,335
========= =========
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-month periods ended March 31,
1997 and 1996. 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.
Note 2 - Earnings per Share
Earnings per common share is 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.
In February 1997, the Financial Accounting Standards Board issued FAS 128,
Earnings per Share. The company will adopt this statement for its December 31,
1997 financial statements and will restate prior period earnings per share
amounts, if necessary. Presentation of both "basic" and "dilutive" earnings per
share is required. The company does not expect any material impact on earnings
per common share.
MINE SAFETY APPLIANCES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Consolidated sales for the first quarter of 1997 were $113,473,000 compared
with $115,371,000 for the first quarter of 1996. Net income in the first
quarter of 1997 was $3,604,000, or 78 cents per share, compared with
$3,139,000, or 61 cents per share, for the same period last year.
The small decline in sales is mainly attributed to the absence of U.S.
military gas mask shipments (these contracts were completed in 1996) and
specialty chemical sales, which were especially strong in the first quarter of
last year. Specialty chemical incoming orders were good in the quarter, which
is encouraging. U.S. commercial safety equipment sales also were somewhat
below prior year levels, while instruments were about the same.
Sales from European operations stated in U.S. dollars were even with last
year. However, respectable sales growth in local currencies has been offset
by adverse exchange rate shifts. Other international markets have continued
healthy growth.
Net income rose despite lower sales, due to higher gross margins on a more
favorable product mix and improved profitability due to cost control.
First quarter results were disappointing. However, incoming order
patterns in several areas indicate improving sales later in the year. In 1996,
business was slow in the first quarter and grew stronger as the year
progressed. Maintaining year-to-year improvement will be challenging in view
of this pattern.
Restructuring efforts initiated in 1996 proceeded according to plan during
the first quarter of 1997. Although minimal during the first quarter,
significant cash outlays related to this effort are expected to occur later in
1997.
Currency exchange adjustments charged directly to the equity cumulative
translation adjustments account are shown below. Significant first quarter
1997 translation losses relate primarily to Germany and Italy.
Three Months Ended
March 31
1997 1996
(Thousands of dollars)
Translation (gains)/losses
5,264 483
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, 1997 were 2.4 and 5.9%,
respectively, as compared to 2.5 and 6.2% at December 31, 1996.
On April 1, 1997, the company acquired the controlling interest in Boart
MSA, its partnership in South Africa, providing the company a wholly-owned
affiliate in that country. With the transaction, MSA changed the name of the
affiliate to MSA Africa (Pty.) Ltd.
PART II OTHER INFORMATION
MINE SAFETY APPLIANCES COMPANY
Item 1. Legal Proceedings
On April 24, 1997 a proceeding was instituted against the registrant
by the United States Attorney in the United States District Court for
the Western District of Pennsylvania charging that from March 1993 to
December 1994, the registrant stored approximately 100 pounds of
hazardous waste in an unpermitted area at its Callery Chemical Company
facility near Evans City, Pennsylvania, in violation of 42 U.S.C.
Section 6928(d)(2)(A). On April 24, 1997 the registrant pleaded
no contest to the charge and paid a fine of $350,000.
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
March 31, 1997.
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 9, 1997 By S/James E. Herald
James E. Herald
Vice President - Finance;
Principal Financial and
Accounting Officer
5
3-MOS
DEC-31-1997
MAR-31-1997
4,485
31,658
89,976
(2,944)
75,987
24,508
346,596
(199,147)
402,204
94,467
12,666
0
3,569
11,701
223,155
402,204
113,473
114,499
70,399
75,788
71
0
411
6,121
2,517
3,604
0
0
0
3,604
.78
.78
