<PAGE>
(COVER PAGE)
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999 Commission file number 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
- ----------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, no par value American Stock Exchange
-------------------------- --------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
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(Title of Class)
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 _____
-----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
As of February 25, 2000, there were outstanding 4,857,673 shares of common
stock, no par value, including 567,630 shares held by the Mine Safety Appliances
Company Stock Compensation Trust. Total market value of outstanding voting
stock as of February 25, 2000 was $305,450,478. The aggregate market value of
voting stock held by non-affiliates as of February 25, 2000 was $159,731,109.
1
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(COVER PAGE)
DOCUMENTS INCORPORATED BY REFERENCE
The following documents have been incorporated by reference:
FORM 10-K
DOCUMENT PART NUMBER
- -------- -----------
(1) Annual Report to Shareholders
for the year ended
December 31, 1999 I, II, IV
(2) Proxy Statement filed
pursuant to Regulation 14A
in connection with the registrant's
Annual Meeting of Shareholders to
be held on May 10, 2000 III
2
<PAGE>
PART I
Item 1. Business
- -----------------
Operating Segments:
------------------
The company is organized into three geographic operating segments - United
States, Europe and Other non-U.S. Further information with respect to the
registrant's operating segments is reported at Note 7 of Notes to Consolidated
Financial Statements contained in the registrant's Annual Report to Shareholders
for the year ended December 31, 1999, incorporated herein by reference.
Products and Markets:
--------------------
The primary business of the registrant and its affiliated companies is the
manufacture and sale of products designed to protect the safety and health of
workers throughout the world.
Principal products include respiratory protective equipment that is air-
purifying, air-supplied and self-contained in design. The registrant also
produces instruments that monitor and analyze workplace environments and control
industrial processes. Personal protective products include head, eye and face,
body and hearing protectors. Many of these products are sold under the
registered trademark "MSA", and have wide application for workers in industries
that include manufacturing, fire service, power generation, telecommunications,
mining, chemicals, petroleum, construction, pulp and paper processing,
transportation, government, automotive, aerospace, asbestos abatement, and
hazardous materials clean-up.
Other products manufactured and sold, which do not fall within the category
of safety and health equipment, include boron-based and other specialty
chemicals. Additional information concerning the registrant's products is
reported at Note 7 of Notes to Consolidated Financial Statements contained in
the registrant's Annual Report to Shareholders for the year ended December 31,
1999, incorporated herein by reference.
The registrant and its affiliated companies are in competition with many
large and small enterprises. For most of the registrant's products and in most
markets, principal methods of competition include product features, quality and
price. In the opinion of management, the registrant is a leader in the
manufacture of safety and health equipment.
3
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Orders, except under contracts with U.S. government agencies, are generally
filled promptly after receipt and the production period for special items is
usually less than one year. The year-end backlog of orders under contracts with
U.S. government agencies was $10,225,000 in 1999, $18,265,000 in 1998 and
$19,600,000 in 1997. Approximately $1,025,000 under contracts with U.S.
government agencies is expected to be shipped after December 31, 2000.
Sales of products to U.S. government agencies increased in 1999; however,
incoming orders were lower than shipments in 1999, and were slightly lower than
1998 incoming orders. The company's business is not dependent upon a single
customer or group of related customers, the loss of which would have a material
adverse effect on the registrant's results.
Research:
--------
The registrant and its affiliated companies engage in applied research with
a view to developing new products and new applications for existing products.
Most of the products are designed and manufactured to meet currently applicable
performance and test standards published by groups such as ANSI (American
National Standards Institute), MSHA (Mine Safety & Health Administration), NIOSH
(National Institute for Occupational Safety and Health), UL (Underwriters'
Laboratories), SEI (Safety Equipment Institute), FM (Factory Mutual), CEN
(European Committee for Standardization) and CSA (Canadian Standards
Association). The registrant also from time to time engages in research
projects for others such as the Bureau of Mines and the Department of Defense or
its prime contractors. Registrant-sponsored research and development costs were
$17,097,000 in 1999, $17,415,000 in 1998, and $16,668,000 in 1997.
In the aggregate, patents have represented an important element in building
the business of the registrant and its affiliates, but in the opinion of
management no one patent or group of patents is of material significance to the
business as presently conducted.
General:
-------
The company was founded in 1914 and is headquartered in Pittsburgh,
Pennsylvania. As of December 31, 1999, the registrant and its affiliated
companies had approximately 4,100 employees, of which 2,200 were employed by
international affiliates. None of the U.S. employees are subject to the
provisions of a collective bargaining agreement.
4
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In the United States and in those countries in which the registrant has
affiliates, its products are sold by its own salespersons, independent
distributors and/or manufacturers' representatives. In international countries
where the registrant has no affiliate, products are sold primarily through
independent distributors located in those countries.
The registrant is cognizant of environmental responsibilities and has taken
affirmative action regarding this responsibility. There are no current or
expected legal proceedings or expenditures with respect to environmental matters
which would materially affect the operations of the registrant and its
affiliates.
Generally speaking, the operations of the registrant and its affiliates are
such that it is possible to maintain sufficient inventories of raw materials and
component parts on the manufacturing premises.
Equipment and machinery for processing chemicals and rubber, plastic
injection molding equipment, molds, metal cutting, stamping and working
equipment, assembly fixtures and similar items are regularly acquired, repaired
or replaced in the ordinary course of business at prevailing market prices as
necessary.
Further information about the registrant's business is included in
Management's Discussion and Analysis at pages 12 to 15 of the Annual Report to
Shareholders, incorporated herein by reference.
5
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Executive Officers:
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All Positions and Offices
Name Age Presently Held
---- --- -------------------------
J. T. Ryan III 56 Chairman and Chief Executive Officer
T. B. Hotopp 58 President
J. H. Baillie 53 Vice President
J. M. Barendt 40 Vice President
J. A. Bigler 50 Vice President
D. H. Cuozzo 66 Vice President and Secretary
B. V. DeMaria 52 Vice President
J. E. Herald 58 Vice President - Finance
(Chief Financial Officer)
W. M. Lambert 41 Vice President
G. W. Steggles 65 Senior Vice President
D. L. Zeitler 51 Vice President and Treasurer
All the executive officers have been employed by the registrant since prior
to January 1, 1995 and have held their present positions since prior to that
date except as follows:
(a) Mr. Hotopp was elected President on December 18, 1996. Prior to that
time, he was Senior Vice President and General Manager, Safety
Products.
(b) Mr. Baillie was employed by the registrant on January 21, 1999 and was
elected Vice President. From prior to January 1, 1995 until October
8, 1996, he was Vice President, Europe of Teledyne Industries
International. Until November 1, 1997, he was Executive Vice
President of Sylvania Lighting International.
(c) Mr. Barendt was elected Vice President on January 9, 1998. From prior
to January 1, 1995 until April 1996, he was Manager, Research and
Development at the Company's Callery Chemical Division. From
April 1996 until December 1996, he was Acting General Manager of
Callery Chemical Division. From December 1996, he was General Manager
of the Callery Chemical Division.
6
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(d) Mr. Bigler was elected Vice President on January 9, 1998. Prior to
that time, he was Director of Sales.
(e) Mr. Cuozzo was elected Vice President on April 27, 1995.
(f) Mr. DeMaria was elected Vice President on January 9, 1998. Prior to
that time, he was Director, Human Resources.
(g) Mr. Lambert was elected Vice President on January 9, 1998. From prior
to January 1, 1995 until March 1995, he was a Senior Product Line
Manager. From March 1995 until August 1996, he was Marketing Manager.
From August 1996 until December 1996, he was Director of Marketing.
From December 1996 he was General Manager of the Safety Products
Division.
(h) Mr. Steggles was elected Senior Vice President on January 1,1999.
Prior to that time he was Vice President.
(i) Mr. Zeitler was elected Vice President on January 9, 1998. Prior to
that time, he was Treasurer.
The executive officers of the registrant serve at the pleasure of the Board
of Directors and are not elected to any specified term of office.
7
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The primary responsibilities of these officers follow:
Individual Responsibilities
- ---------- ----------------
Mr. Hotopp U. S. operations
Mr. Baillie European operations
Mr. Barendt Research, product development, manufacturing and
marketing of specialty chemical products
Mr. Bigler U.S. sales and distribution
Mr. Cuozzo General Counsel and corporate taxes
Mr. DeMaria Human resources and corporate communications
Mr. Lambert Research, product development, manufacturing and
marketing of safety products in the U.S.
Mr. Steggles International operations outside the U.S. and
Europe
Mr. Zeitler Treasury and risk insurance management
Item 2. Properties
- ------------------
World Headquarters:
------------------
The registrant's executive offices are located at 121 Gamma Drive, RIDC
Industrial Park, O'Hara Township, Pittsburgh, Pennsylvania 15238. This facility
contains approximately 138,000 sq. ft.
Production and Research Facilities:
----------------------------------
The registrant's principal U.S. manufacturing and research facilities are
located in the Greater Pittsburgh area in buildings containing approximately
951,000 square feet. Other U.S. manufacturing and research facilities of the
registrant are located in Jacksonville, North Carolina (107,000 sq. ft.),
Sparks, Maryland (54,000 sq. ft.), Lawrence, Massachusetts (62,000 sq. ft.), and
Englewood, Colorado (41,000 sq. ft.).
Manufacturing facilities of the European operating segment of the
registrant are located in France, Germany, Italy, Scotland and Sweden. The most
significant is located in Germany (approximately 390,000 sq. ft., excluding
168,000 sq. ft. leased to others); research activities are also conducted at
most of these facilities. Manufacturing facilities for the Other non-U.S.
operating segment are located in Australia, Brazil, Canada, Chile, China, Japan,
Mexico, Peru and South Africa.
8
<PAGE>
Virtually all of these buildings are owned by the registrant and its
affiliates and are constructed of granite, brick, concrete block, steel or
other fire-resistant materials. The German facility is owned subject to
encumbrances collateralizing indebtedness in the aggregate amount of $773,000 as
of December 31, 1999.
Sales Offices and Warehouses:
----------------------------
Sales offices and distribution warehouses are owned or leased in the United
States and 27 other countries in which the registrant's affiliates are located.
Item 3. Legal Proceedings
- --------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
No matters were submitted to a vote of security holders during fourth
quarter 1999.
9
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 8. Financial Statements and Supplementary Data
________________________________________________________________________________
Incorporated by reference herein pursuant to Rule 12b - 23 are
Item 5 - "Common Stock" appearing at page 15
Item 6 - "Five-Year Summary of Selected Financial Data" appearing at page
28
Item 7 - "Management's Discussion and Analysis" appearing at pages 12 to 15
Item 8 - "Financial Statements and Notes to Consolidated Financial
Statements" appearing at pages 16 to 27
of the Annual Report to Shareholders for the year ended December 31, 1999. Said
pages of the Annual Report are submitted with this report and pursuant to Item
601(b)(13) of Regulation S-K shall be deemed filed with the Commission only to
the extent that material contained therein is expressly incorporated by
reference in Items 1, 5, 6, 7, 8 and 14 (a) hereof.
Item 7a. Quantitative and qualitative disclosures about market risk
- -------------------------------------------------------------------
Incorporated by reference to "Financial Instrument Market Risk" appearing
on page 15 of the Annual Report to the Shareholders for the year ended December
31, 1999.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------------------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
10
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
________________________________________________________________________________
Incorporated by reference herein pursuant to Rule 12b - 23 are (1)
"Election of Directors" appearing at pages 1 to 3, (2) "Other Information
Concerning Directors and Officers" appearing at pages 6 to 12 (except as
excluded below), and (3) "Stock Ownership" appearing at pages 14 to 16 of the
Proxy Statement filed pursuant to Regulation 14A in connection with the
registrant's Annual Meeting of Shareholders to be held on May 10, 2000. The
information appearing in such Proxy Statement under the caption "Compensation
Committee Report on Executive Compensation," and the other information appearing
in such Proxy Statement and not specifically incorporated by reference herein is
not incorporated herein.
11
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- --------------------------------------------------------------------------
(a) 1 and 2. Financial Statements
The following information appearing on pages 16 to 27 inclusive in the
Annual Report to Shareholders of the registrant for the year ended December 31,
1999, is incorporated herein by reference pursuant to Rule 12b-23.
Report of Independent Accountants
Consolidated Balance Sheet - December 31, 1999 and 1998
Consolidated Statement of Income - three years ended December 31, 1999
Consolidated Statement of Changes in Retained Earnings and Accumulated
Other Comprehensive Income - three years ended December 31, 1999
Consolidated Statement of Cash Flows - three years ended December 31, 1999
Notes to Consolidated Financial Statements
Said pages of the Annual Report are submitted with this report and, pursuant to
Item 601(b)(13) of Regulation S-K shall be deemed to be filed with the
Commission only to the extent that material contained therein is expressly
incorporated by reference in Items 1, 5, 6, 7, 8 and 14 (a)(1) and (2) hereof.
The following additional financial information for the three years ended
December 31, 1999 is filed with the report and should be read in conjunction
with the above financial statements:
Report of Independent Accountants on Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, not material or
the required information is shown in the financial statements and notes to the
financial statements listed above.
12
<PAGE>
(a) 3. Exhibits
(3)(i) Restated Articles of Incorporation as amended to April 27,
1989, filed as Exhibit 3(i) to Form 10-Q on August 12, 1999,
are incorporated herein by reference.
(3)(ii) By-laws of the registrant, as amended to August 29, 1990,
filed as Exhibit 3 to Form 10-Q on November 13, 1995, are
incorporated herein by reference.
(4) Rights Agreement dated as of February 10, 1997 between the
registrant and Norwest Bank Minnesota, N.A., as Rights
Agent, filed as Exhibit 1 to the registrant's Form 8-A on
February 25, 1997, is incorporated herein by reference.
(10)(a) * 1987 Management Share Incentive Plan, filed as Exhibit 10(a)
to Form 10-K on March 26, 1999, is incorporated herein by
reference.
(10)(b) * 1998 Management Share Incentive Plan, incorporated herein by
reference to Annex A to the registrant's Definitive Proxy
Statement filed March 24, 1998 for its 1998 Annual Meeting.
(10)(c) * Retirement Plan for Directors, as amended on December 15,
1999 is filed herewith.
(10)(d) * Supplemental Pension Plan as of May 5, 1998, filed as
Exhibit 10(g) to Form 10-Q on August 14, 1998, is
incorporated herein by reference.
(10)(e) * 1990 Non-Employee Directors' Stock Option Plan as amended to
May 5, 1998, filed as Exhibit 10(h) to Form 10-Q on August
14, 1998, is incorporated herein by reference.
(10)(f) * Form of First Amendment dated June 2, 1998 to the Restricted
Stock Agreements dated as of March 15, 1996, under the 1987
Management Share Incentive Plan, filed as Exhibit 10(i) to
Form 10-Q on August 14, 1998, is incorporated herein by
reference.
13
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(10)(g) * Executive Insurance Program as Amended and Restated as of
May 5, 1998, filed as Exhibit 10(j) to Form 10-Q on August
14, 1998, is incorporated herein by reference.
(10)(h) * Annual Incentive Bonus Plan as of May 5, 1998, filed as
Exhibit 10(k) to Form 10-Q on August 14, 1998, is
incorporated herein by reference.
(10)(i) * Form of Severance Agreement as of May 20, 1998 between the
registrant and John T. Ryan III, filed as Exhibit 10(m) to
Form 10-Q on August 14, 1998, is incorporated herein by
reference.
(10)(j) * Form of Severance Agreement as of May 20, 1998 between the
registrant and the other executive officers filed as Exhibit
10(n) to Form 10-Q on August 14, 1998, is incorporated
herein by reference.
(10)(k) * First Amendment to the 1998 Management Share Incentive Plan
as of March 10, 1999, filed as Exhibit 10(l) to Form 10-K on
March 26, 1999, is incorporated herein by reference.
(10)(l) Trust Agreement as of June 1, 1996 between the registrant
and PNC Bank, N.A. re the Mine Safety Appliances Company
Stock Compensation Trust, filed as Exhibit 10(f) to Form 10-
K on March 26, 1997, is incorporated herein by reference.
(10)(m) * MSA Supplemental Savings Plan, filed as Exhibit 10(n) to
Form 10-Q on November 12, 1999, is incorporated herein by
reference.
(10)(n) * Employment Agreement dated as of January 18, 1999 between
the registrant and James H. Baillie re the registrant's
operations outside Germany is filed herewith.
(10)(o) * Employment Agreement dated as of January 18, 1999 between
the registrant and James H. Baillie re the registrant's
operations in Germany is filed herewith.
* The exhibits marked by an asterisk are management contracts or compensatory
plans or arrangements.
14
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(13) Annual Report to Shareholders for year ended December 31,
1999
(21) Affiliates of the registrant
(23) Consent of PricewaterhouseCoopers LLP, independent
accountants
(27) Financial Data Schedule (filed in electronic format only)
The registrant agrees to furnish to the Commission upon request copies
of all instruments with respect to long-term debt referred to in Note
6 of the Notes to Consolidated Financial Statements filed as part of
Exhibit 13 to this annual report which have not been previously filed
or are not filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the year
ended December 31, 1999.
15
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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
March 24, 2000 By /s/ John T. Ryan III
- ----------------------- ---------------------------------
(Date) John T. Ryan III
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
------------- --------- --------
/s/ John T. Ryan III Director; Chairman of the Board March 24, 2000
- ---------------------------
John T. Ryan III and Chief Executive Officer
/s/ James E. Herald Vice President - Finance; March 24, 2000
- ---------------------------
James E. Herald Principal Financial and
Accounting Officer
/s/ Joseph L. Calihan Director March 24, 2000
- ---------------------------
Joseph L. Calihan
/s/ Calvin A. Campbell, Jr. Director March 24, 2000
- ---------------------------
Calvin A. Campbell, Jr.
/s/ G. Donald Gerlach Director March 24, 2000
- ---------------------------
G. Donald Gerlach
/s/ Helen Lee Henderson Director March 24, 2000
- ---------------------------
Helen Lee Henderson
/s/ Thomas B. Hotopp Director March 24, 2000
- ---------------------------
Thomas B. Hotopp
/s/ L. Edward Shaw, Jr. Director March 24, 2000
- ---------------------------
L. Edward Shaw, Jr.
/s/ Thomas H. Witmer Director March 24, 2000
- ---------------------------
Thomas H. Witmer
<PAGE>
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors
of Mine Safety Appliances Company:
Our audits of the consolidated financial statements referred to in our report
dated February 17, 2000 appearing in the 1999 Annual Report to Shareholders of
Mine Safety Appliances Company (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 17, 2000
F-1
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SCHEDULE II
MINE SAFETY APPLIANCES COMPANY AND AFFILIATES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ---------- ------------
<S> <C> <C> <C>
Allowance for doubtful accounts:
Balance at beginning of year $3,004 $3,704 $2,993
Additions -
Charged to costs and expenses 878 588 1,229
Balance from acquisitions 45 288
Deductions -
Deductions from reserves (1) 928 1,135 806
Reversal of allowance (2) 632
Reduction from divestitures 198
----------- ---------- ------------
Balance at end of year $2,322 $3,004 $3,704
=========== ========== ============
</TABLE>
(1) Bad debts written off, net of recoveries.
(2) Reversal of allowance due to sale of accounts receivable.
F-2
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EXHIBIT (10)(c)
---------------
MINE SAFETY APPLIANCES COMPANY
RETIREMENT PLAN FOR DIRECTORS,
As Amended Effective as of December 15, 1999
--------------------------------------------
1. Purpose. The purpose of this plan, originally established
--------
December 17, 1987, is to provide to each individual serving as a member of the
Board of Directors from time to time (individually referred to as a "Director"
and collectively as the "Board") of Mine Safety Appliances Company (the
"Company"), a lifetime retirement benefit following the attainment of certain
age and service requirements described hereafter.
2. Eligibility. A Director who has terminated his or her service
-----------
on the Board after completing at least 5 years of service as a Director shall be
entitled to an annual "Retirement Allowance" during his or her lifetime, as
described below, when his or her combined age and service as a Director satisfy
the "Rule of 75". The "Rule of 75" shall be satisfied when the sum of the
Director's age (measured in full and partial years, in increments of one-twelfth
(1/12) year) and the Director's years of service as a Director (measured in full
and partial years, in increments of one-twelfth (1/12) year) equals or exceeds
75. A Director who has not terminated his or her service but has satisfied the
"Rule of 75" as described herein shall have a vested right to an annual
"Retirement Allowance" during his or her lifetime, as described below.
3. Retirement Allowance. Subject to Section 4 hereof, the amount of
--------------------
the annual Retirement Allowance paid to a retired Director shall be equal to the
amount of the annual Director's retainer payable at the time of the Director's
termination of service. The annual Retirement Allowance shall be paid in four
equal installments as of the first day of each calendar quarter, beginning with
the calendar quarter following the Director's termination of service and
including the calendar quarter in which the Director's death occurs. No
Retirement Allowance payments shall be made following the death of a retired
Director.
4. Effect of Change in Control. Notwithstanding any other provision
---------------------------
of this Plan, if a Director is vested in his or her Retirement Allowance on the
date of the Director's termination of service and that termination date occurs
on, or within the three-year period immediately following, a Change in Control
(as defined in this Section 4), then, not later than the fifth (5/th/) business
day following such termination date, the Company shall pay the Director a lump
sum amount equal to the actuarial equivalent of the Director's Retirement
Allowance (in lieu of making payment of such Retirement Allowance in accordance
with Section 3 hereof). For purposes of this Section 4, "actuarial equivalent"
shall be determined using the same assumptions utilized under the Non-
Contributory Pension Plan for Employees of
<PAGE>
Mine Safety Appliances Company (or successor plan thereto) immediately prior to
the Director's termination date, or, if more favorable to the Director,
immediately prior to the Change in Control.
Change in Control shall be deemed to have occurred if the event set
-----------------
forth in any one of the following paragraphs shall have occurred:
(I) any Person (as defined in this Section 4) is or
becomes the Beneficial Owner (as defined in this Section 4), directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates (which term shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12 of the
Exchange Act, as defined in this Section 4)) representing thirty
percent (30%) or more of the combined voting power of the Company's
then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause
(I) of paragraph (III) below; or
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on May 5, 1998, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board
or nomination for election by the Company's shareholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on May 5, 1998 or whose
appointment, election or nomination for election was previously so
approved or recommended; or
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
2
<PAGE>
holding securities under an employee benefit plan of the Company or
any subsidiary of the Company, at least fifty-one percent (51%) of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities; or
(IV) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least fifty-one percent (51%) of the
combined voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the
----------------
Exchange Act.
Exchange Act shall mean the Securities and Exchange Act of 1934, as amended
------------
from time to time.
Person shall have the meaning given in Section 3(a)(9) of the Exchange Act,
------
as modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of
3
<PAGE>
such securities, or (iv) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company, or (v) any individual or entity [including
the trustees (in such capacity) of any such entity which is a trust] which is,
directly or indirectly, the Beneficial Owner of securities of the Company
representing five percent (5%) or more of the combined voting power of the
Company's then outstanding securities immediately before the date hereof or any
Affiliate of any such individual or entity, including, for purposes of this
Plan, any of the following: (A) any trust (including the trustees thereof in
such capacity) established by or for the benefit of any such individual; (B) any
charitable foundation (whether a trust or a corporation, including the trustees
or directors thereof in such capacity) established by any such individual; (C)
any spouse of any such individual; (D) the ancestors (and spouses) and lineal
descendants (and spouses) of such individual and such spouse; (E) the brothers
and sisters (whether by the whole or half blood or by adoption) of either such
individual or such spouse; or (F) the lineal descendants (and their spouses) of
such brothers and sisters.
5. Source of Payments. This plan shall not be formally funded; a
------------------
Director's right to the payment of a Retirement Allowance hereunder, if any,
shall be entirely contractual. The sole source of payment of Retirement
Allowances shall be the general assets of the Company.
6. Amendment and Termination. This plan may be amended or
-------------------------
terminated at any time by the Board, except that no such amendment or
termination shall limit or impair the right of any retired Director to the
payment of the Retirement Allowance hereunder or the vested right of any
Director to the payment of the Retirement Allowance.
IN WITNESS WHEREOF, Mine Safety Appliances Company has caused this
plan, as amended effective as of December 15, 1999, to be executed by its duly
authorized officers this 1st day of March, 1999.
ATTEST: MINE SAFETY APPLIANCES COMPANY
/s/ Donald H. Cuozzo By /s/ John T. Ryan III
- ----------------------- ------------------------------------
Secretary Chairman and Chief Executive Officer
4
<PAGE>
EXHIBIT (10)(n)
---------------
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 18th day of January, 1999 by and
between MINE SAFETY APPLIANCES COMPANY, a Pennsylvania corporation ("Company")
and JAMES H. BAILLIE ("Employee").
RECITAL:
Simultaneously with the execution of this Agreement, Employee will
enter into an Employment Agreement with the Company, under which Employee, as
President of MSA Europe, will devote 35% of his time, to the operations of
Auergesellschaft GmbH ("AUER"), (the "AUER Agreement").
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties agree as follows:
(1) Duties and Term. The Company hereby agrees to employ Employee,
---------------
and Employee agrees to be so employed, in the capacity of President, MSA Europe
for a term effective as of January 18, 1999 and terminating December 31, 2001
(the "Initial Term") unless terminated earlier pursuant to Section 11 of this
Agreement. At the end of the Initial Term, Employer may continue Employee's
employment with the Company on terms as are mutually agreeable by Employee and
Company.
Employee shall diligently devote 65% of his best efforts, time and
attention outside of Germany in all matters
<PAGE>
concerning the operations of the Company's non-German European affiliates.
Employee will be a member of the Company's Strategic Planning Committee that
meets periodically, usually in the United States. At the next meeting of the
Board of Directors, the Chairman of the Company will nominate Employee for
election as a Vice President of the Company subject to the approval of said
Board.
(2) Supervision and Place of Employment. Employee shall at all times
-----------------------------------
discharge his duties in consultation with, and under the supervision of the
Chairman and Chief Executive Officer of the Company. Employee shall be based at
the principal offices of MSA Europe (currently in Berlin) and shall have his
principal residence within the metropolitan area of Berlin. Employee
understands that he will be required to travel to the United States and to the
offices and business locations of the Company's non-German European affiliates.
(3) Salary, Benefits, Variable Compensation and Stock Compensation.
--------------------------------------------------------------
(a) Base Salary. Employee shall receive an annual salary of
-----------
$162,500, payable pursuant to the then current payroll practices of the Company.
The Employee's base salary paid by the Company pursuant to this paragraph 3(a)
shall be allocated to the Company and to the Company's non-German European
affiliates. Employee will be entitled to annual salary reviews similar to the
annual review policies of the Company for other executives. If, during the term
of this Agreement, Employee shall become so disabled as to be unable to perform
his regular duties on a full-time basis, he shall continue to receive, for a
period of six (6) months from the date the disability commences the salary he
was receiving immediately prior to such disability. If any such disability
continues for
-2-
<PAGE>
more than six (6) months, Employee shall not be entitled to any further salary
or benefits (except for long-term disability benefits of Company in effect at
such time), and Company shall have the right to terminate this Agreement and
Employee's employment hereunder upon written notice to Employee.
(b) Variable Compensation. Beginning with the 1999 variable
---------------------
compensation plan year (the "1999 Plan Year") for MSA Europe and for each year
thereafter during the term of this Agreement, Employee will be eligible for
variable compensation under the Company's annual bonus policy administered by
the Compensation Committee of its Board of Directors (the "Committee"). The
determination of the amount of Employee's annual bonus is subject to the sole
discretion of the Committee and will be made by the Committee taking into
consideration the income of the Company's European affiliates and evaluation of
Employee's individual performance. The target level used for Employee's
position is 30% of his median market level which is equal to his salary under
this Agreement plus his salary under the AUER Agreement ("annual par bonus").
For the 1999 Plan Year, Employee shall be guaranteed a payment under the annual
bonus plan of at least one-half of the amount of his annual par bonus. Thirty-
five (35%) percent of the amount paid to Employee under this paragraph 3(b)
shall be considered to be payment for services to AUER and shall be paid by AUER
and treated as compensation to Employee in Germany. The remaining 65% shall be
allocated to the Company and to the Company's non-German European affiliates.
Under the variable compensation plan of the Company, payments are normally made
to the Employee during March of the year following the variable compensation
plan year for which the annual bonus is earned.
(c) Stock-based Compensation. Beginning with awards made in the year
------------------------
2000, Employee shall be eligible for awards having an annual par value of
$54,000 for stock options
-3-
<PAGE>
and $54,000 for restricted stock awarded under the Company's 1998 Management
Share Incentive Plan ("MSIP"), subject to adjustments upward or downward based
on Employee's personal performance factor. The number of shares awarded under
the MSIP shall be determined under the valuation methods established by the
Committee. No stock compensation has been earned by the Employee for 1998 awards
to be made by the Committee at its meeting in March, 1999. Any stock awards to
Employee under the MSIP are subject to the sole discretion of the Committee.
(4) Vacation. Employee shall be entitled to 13 days of paid vacation
--------
during each year of the term of this Agreement.
(5) Reimbursement for Expenses. The Company shall reimburse Employee
--------------------------
for all reasonable and necessary expenses incurred in carrying out his duties
and responsibilities under this Agreement. Employee shall present to the
Company from time to time an itemized account of such expenses required by the
Company. Employee shall keep a diary of the time spent with respect to the
operations of the Company and each of its European affiliates and present a copy
of such diary to the Company at least quarter-annually.
(6) Tax Return Services. Company shall reimburse Employee for his
-------------------
reasonable costs for the preparation of any tax return required to be filed in
the United States.
(7) Inventions.
-----------
(a) Any and all inventions and discoveries, whether or not
patentable, which Employee may have made or may make, either alone or in
conjunction with others, during the term of his employment hereunder relating or
in any way appertaining to or connected with any of the assets or
-4-
<PAGE>
operations of Company or any of its subsidiaries or matters which are, or may
during the term of his employment become, the subject of its business or
investigation, shall be promptly and fully disclosed to Company or and to the
extent of Employee's interest therein shall be the sole and exclusive property
of Company.
(b) Whenever requested to do so and at the Company's sole cost
and expense, Employee shall testify in any proceeding or suit, and promptly
execute and assign any and all applications, assignments or other instruments
which the Company shall deem necessary in order to apply for, obtain or protect
letters patent of foreign countries for said inventions or discoveries, and, in
order to assign and convey to Company the sole and exclusive right, title and
interest in and to said inventions, discoveries or any applications or patents
thereon.
(c) This Section (7) shall survive the termination of this
Agreement.
(8) Confidential Information/Non-competition.
-----------------------------------------
(a) During the term of his employment and thereafter, Employee
shall keep secret and confidential all secret and confidential information
received by him prior to or during the course of his employment ("Confidential
Information"), including, but not limited to, trade secrets, know-how, designs,
plans, blueprints, trademarks, copyrights, patents, patent applications,
manufacturing processes, lists of customers, suppliers of jobs, bidding and
contract information and any other proprietary commercial information of
Company, except to the extent that the information is now or hereafter becomes
available (other than through him) as public knowledge or literature, patented
or otherwise. Employee confirms that all Confidential Information is the
exclusive property of Company.
-5-
<PAGE>
(b) Employee shall deliver to Company promptly at the
termination of his employment or at any other time Company may request, all
memoranda, notes, records, sketches, plans or other documents wholly or partly
made or compiled by or delivered to Employee and which are in his possession or
under his control concerning costs, uses, applications or purchasers of products
made or sold by Company or any of its subsidiaries, or any product, apparatus,
process, formula or method used, developed, produced or investigated by it
during his employment hereunder.
(c) (i) Employee shall not for a period of one (1) year after
termination of employment with Company engage directly or indirectly, whether as
principal, agent, officer, director, employee, consultant or otherwise, in a
COMPETING ACTIVITY. COMPETING ACTIVITY means a work or activity directed to the
development, manufacture, sale or rental of a product, process or service which
is competitive with or similar to any product, process or service of Company on
which Employee worked during the last one (1) year of employment by Company, or
about which Employee acquired Confidential Information.
(ii) Employee shall not during his employment or for a period of
one (1) year after termination of employment by Company, solicit, directly or
indirectly, any employee of Company to engage in COMPETING ACTIVITY.
(d) This Section (8) shall survive the termination of this
Agreement.
(9) Employee Benefits.
-----------------
(a) Pension. As additional compensation, the Company shall pay
-------
Employee $30,000 during each year during the
-6-
<PAGE>
term of this Agreement in lieu of a pension benefit, reduced by the Company's
annual cost for medical and dental coverage provided to Employee. The Company's
annual cost for such medical and dental coverage is $3,895 and $528 respectively
for the year 1999, but such cost may change from time to time after 1999.
Commencing in 2000, in each year during Employee's employment in which the
National Consumer Price Index, for the month of July, published by the United
States Bureau of Labor Statistics, shows a rise in cost of living index for
Pittsburgh, Pennsylvania over the level of such cost of living index in July,
1999, the Company shall increase such pension benefit as is proportional to the
rise in such index from its level for July 1999, to its level for July of such
later year. The amount payable to Employee under this Section 9(a) shall be paid
by the Company not later than January 15 of the year following the year to which
the payment relates.
(b) No Other Benefits. Except as contemplated in paragraph 9(a)
-----------------
hereof, and except for the benefits listed on Exhibit 1 attached hereto, this
Agreement shall be in lieu of any rights, benefits and privileges to which
Employee may be entitled as an employee of the Company under any retirement,
pension, profit-sharing, savings plan, insurance, disability, hospital or other
plans which may now be in effect or which may hereafter be adopted by the
Company or any of its subsidiaries.
(10) Covenants of Employee. Employee agrees that during the term of
----------------------
this Agreement, he will comply with MSA's Policy No. 10-I on Business Ethics -
International, Policy No. 20 on Environmental Law Compliance and Management, and
Policy No. 40 on Antitrust Compliance, all of which are attached as Exhibit 2
hereto.
-7-
<PAGE>
(11) Termination of Employment.
-------------------------
(a) Employee is an employee-at-will and the Company or Employee
may terminate this Agreement by giving sixty (60) days' written notice to the
other party.
(b) Employee may be terminated by the Company for cause (a
"Termination For Cause") by reason of:
(i) Employee's willful breach of any material term of
this Agreement continuing for a period of ten (10) business days after
receipt of written notice thereof,
(ii) The perpetration by Employee of a serious dishonest
act or fraud against the Company, or
(iii) the failure, continuing for ten (10) business days or
more after receipt of notice, to comply with reasonable directives of the
Chairman and Chief Executive Officer of the Company.
(c) In the event of termination of employment for whatever
cause, the Company shall pay Employee the amount of his annual salary, bonus,
stock-based compensation and substitute pension payment under Section 9(a)
prorated to the end of the month in which employment is terminated.
(d) In the event Employee's employment with the Company is
-
terminated, for whatever reason except by reason of (i) Employee's voluntary
termination, (ii) Employee's disability which extends for more than six (6)
months, (iii) Employee's death, or (iv) Employee's Termination For Cause,
Employee shall be entitled also to severance compensation equal to one (1)
-8-
<PAGE>
year's salary in effect immediately prior to the date of such termination.
(12) Withholdings. All compensation to Employee hereunder shall be
------------
reduced by all taxes and other charges required to be withheld by the Company
under applicable federal, state and local laws.
(13) Injunction. Employee agrees that a breach on his part of any of
----------
the terms, provisions and conditions of this Agreement will cause such damage to
Company as will be irreparable and the exact amount of which will be impossible
to ascertain and for that reason agrees that the Company shall be entitled, as a
matter of right, to an injunction from any court of competent jurisdiction,
restraining any threatened or further violation of this Agreement. Such right
to an injunction, however, shall be cumulative, and in addition to whatever
other remedies the Company may have to protect its rights.
(14) Notices. For the purpose of this Agreement, notices and all
--------
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, or by prepaid
courier, addressed, if to the Employee, to the address inserted below the
Employee's signature on the final page hereof and, if to the Company, to the
address set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Mine Safety Appliances Company
-9-
<PAGE>
RIDC Industrial Park
121 Gamma Drive
Pittsburgh, Pennsylvania 15238
ATTENTION: Mr. John T. Ryan III
Chairman and Chief Executive Officer
with a copy to
Mine Safety Appliances Company
121 Gamma Drive
Pittsburgh, PA 15238
ATTENTION: General Counsel
(15) Governing Law. This Agreement shall be construed in accordance
-------------
with the laws of the Commonwealth of Pennsylvania.
(16) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(17) Separability. Each covenant or agreement or portion thereof
------------
contained in this Agreement shall be independent and separable from all of the
other covenants and agreements or portions thereof contained in this Agreement,
and the invalidity of such covenant or agreement or portion thereof shall in no
way affect the enforceability of any of the other covenants and agreements or
portions thereof.
(18) Amendments and Waivers. This Agreement and the provisions hereof
----------------------
may not be terminated, modified, amended or waived orally or by any act or
failure to act, but only by a writing signed by the party to be affected
thereby. Any waiver of any violation of a condition, term or other provision
hereunder shall not constitute a waiver thereof in general or a waiver of any
subsequent violation thereof.
-10-
<PAGE>
(19) Cooperation. The parties agree to execute any further
-----------
instruments and to perform any further acts incidental to the performance of
this Agreement or as necessary to carry out its provisions.
(20) Effect Of Agreement. All rights and obligations hereunder shall
-------------------
inure to the benefit of and be binding upon the heirs, personal representatives,
permitted assigns, and successors and affiliates of the parties hereto.
(21) Arbitration.
-----------
(a) Subject to the right of the Company to bring an injunction
as provided in Section (13) hereof, if a controversy or claim arises between
Employee and the Company relating to this Agreement, such controversy or claim
shall be fully and finally settled before a panel of three arbitrators appointed
in accordance with the Rules of the American Arbitration Association, pursuant
to its Commercial Arbitration Rules then in effect. The Company and Employee
shall bear the costs of their own counsel and witnesses and the other costs,
which are normally borne solely by a party to arbitration; but otherwise the
Company and Employee shall share equally the charges and fees of the American
Arbitration Association and arbitrators.
(b) Any arbitration pursuant to this Section 21 shall be held
in Pittsburgh, Pennsylvania or at such other place as agreed by the parties.
Pennsylvania law shall be used by the arbitrators in resolving any dispute.
-11-
<PAGE>
(c) Any judgment upon the award rendered by the arbitrators
shall be final and binding and may be entered in any court having jurisdiction
thereof.
(22) Service of Process. Employee and the Company irrevocably submit
------------------
themselves to the personal jurisdiction of the courts of the Commonwealth of
Pennsylvania with respect to any action arising out of, or in connection with,
the execution, delivery or performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: MINE SAFETY APPLIANCES COMPANY
/s/ Donald H. Cuozzo By /s/ John T. Ryan III
- -------------------- --------------------
Secretary John T. Ryan III
Chairman and Chief
Executive Officer
WITNESS: EMPLOYEE
/s/ Gary D. Trozzo /s/ James H. Baillie
- ------------------ --------------------
James H. Baillie
MSA Europe
P. O. Box 333
D-12033 Berlin, Germany
-12-
<PAGE>
James H. Baillie
----------------
EMPLOYMENT AGREEMENT
--------------------
EXHIBIT 1
=========
MSA POLICIES
------------
Nos 10-I, 20 and 40 attached
----------------------------
<PAGE>
Policy No. 10-I
Effective Date:
11-01-95
Supersedes:
4-19-93
Business Ethics - International
Approved by:
President, Chairman
& CEO
A. Compliance
----------
1. Laws
----
An employee, officer and director (hereinafter collectively
referred to as "associates") of the Company, its divisions and
affiliates (hereinafter collectively referred to as "Company")
shall adhere to the laws of the United States and to those of
other countries in which the Company affiliates operates. Where
conflicts or ambiguities exist in these laws, or more
particularly the regulations issued thereunder, Corporate Law
Department should be consulted for guidance.
2. Honesty
-------
An associate shall adhere to honest standards and practices in
all business dealings.
3. Accounting
----------
Established accounting procedures are to be followed at all times
including the recording of all forms of funds or assets of the
Company. No false entries shall be made in the books and records
of the Company for any reason. No payment on behalf of the
Company shall be approved or made with the intention or
understanding that any part of such payment is to be used for any
purpose other than that described by the documents supporting the
payment.
4. Bribes
------
Under no circumstances shall any payments, gifts, rendering of
services or any other form of value be directly or indirectly
given by an associate of the Company to any public official,
employees of customers, or employees of suppliers, particularly
to influence the public official's exercise of judgment and
discretion in disposing of matters on behalf of the Government or
to assist the Company in obtaining or retaining business
contracts. Such consideration provided to a member of the
immediate family of a public official are to be considered and
treated as though provided directly to the public official.
<PAGE>
5. Audits
------
The Company's internal auditors, as well as its independent
public accountants, shall examine the adherence to these policies
as part of their periodic reviews.
6. Appearance of Impropriety
-------------------------
An associate must avoid actions that might appear improper in
regard to the ethical matters discussed here and in other
corporate policies.
7. Reporting
---------
The Company shall provide appropriate means for associates to
report violations of this policy.
8. Management Responsibility
-------------------------
The General Manager shall be responsible for the monitoring of
compliance with these policies in the areas under their
supervision. Any infraction of these policies will subject an
associate to disciplinary action which, depending upon the
seriousness of the violation, may include warning, reprimand,
suspension or dismissal. Any violation of these policies must
reported to the associate's supervisor.
B. Public Responsibility
---------------------
1. Civic Obligations
-----------------
An associate shall be cognizant of and perform the Company's
obligations to the community.
2. Providing Services
------------------
An associate shall maintain cordial and cooperative relationships
with the community in which operations are based by participating
in community undertakings when appropriate.
C. Conflict of Interest
--------------------
1. Freedom from Constraints
------------------------
An associate shall be free from any personal influence, interest,
or relationship, or appearance thereof, in situations that might
conflict with the best interests of the Company.
<PAGE>
2. Disclosure
----------
An associate shall fully disclose to the Company any circumstance
that may contravene this policy. Prompt recognition of conflicts
of interest by the associate permits corrective steps to be taken
by the Company.
3. Financial Interests
-------------------
An associate or a member of the associates' immediate family may
not have a substantial financial interest in an organization that
has current or prospective dealings with the Company as a
supplier, contractor or customer, or competes directly with the
Company when the associate may be able to influence the dealings
of the Company to benefit the associates' private interests.
4. Acceptance of Gifts or Entertainment
------------------------------------
An associate shall not accept any gifts or entertainment from an
organization having current or prospective dealings with the
Company as a supplier, contractor or customer, if such gifts or
entertainment are of such significance that they could tend to
prevent the associate from acting solely in the best interests of
the Company. Gifts or entertainment provided to a member of the
immediate family of the associate shall be considered and treated
as though provided directly to the associate.
5. Offering of Gifts or Entertainment
----------------------------------
An associate shall not offer any gifts or entertainment to a
current or prospective customer if such gifts or entertainment
are of such significance that acceptance could tend to prevent
the recipient from acting solely in the best interests of the
recipient's organization. Such gifts or entertainment provided
to a member of the immediate family of a customer or its employee
shall be considered and treated as though provided directly to
the customer or its employee.
6. Non-Competition
---------------
An associate shall not receive compensation for services rendered
as an associate or a consultant to another organization or for
services as a director or officer of another organization that
competes directly with the Company or where the other
organization has current or prospective dealings with the Company
that may be influenced by the associate.
7. Employment
----------
An associate may not accept concurrent employment with another
company if the organization is a competitor or supplier or one
that may become a competitor or supplier in the foreseeable
future.
<PAGE>
8. Loans
-----
An associate or a member of the associate's immediate family may
not borrow money from individuals or organizations that conduct
or may conduct business with the Company, either as a customer or
supplier. This does not apply to public lending institutions,
e.g., banks, savings and loan associations, etc.
D. Code of Ethical Conduct
-----------------------
The provisions of MSA's Code of Ethical Conduct are included as part
of this Business Ethics Policy. The terms of the Code encompass and
enhance the provisions of the Business Ethics Policy and should be
adhered to as if included in the Business Ethics Policy.
<PAGE>
Policy No. 20
Effective Date:
11-01-95
Supersedes:
04-19-93
Approved by:
President, Chairman
& CEO
Environmental Law Compliance and Management
1. Mine Safety Appliances Company, its divisions and affiliates
(hereinafter collectively referred to as the "Company") shall comply
with the letter and spirit of all environmental laws and regulations
and, by its actions, protect public health, public enjoyment and the
world in which we live. Where questions arise concerning these laws,
the Corporate Law Department should be consulted for guidance.
2. The Company shall pledge commitment and support for a strong
environmental management program.
3. The Company shall minimize the production of waste, effluents and
emissions and recycle wastes after minimization efforts.
4. The Company shall reduce environmental risks and future liabilities.
5. The Company shall design, operate and maintain each plant consistent
with the Company's environmental objectives.
6. The Company shall charge plant management with responsibility for the
environmental performance of its plants and operations.
7. The Company shall charge the corporate environmental protection staff
with the responsibility for providing the leadership necessary to
implement these policies.
8. The Company shall assure that its associates understand their
responsibilities and the actions that are necessary to achieve
compliance and to protect the environment.
9. The Company shall make the necessary expenditures to implement these
policies.
10. The Company shall continually evaluate, enhance and communicate the
Company's Environmental Law Compliance and Management Policy.
<PAGE>
Policy No. 40
Effective Date:
11-01-95
Supersedes:
04-19-93
Approved by:
President, Chairman
& CEO
Antitrust Compliance
1. Mine Safety Appliances Company, its divisions and affiliates
(hereinafter collectively referred to as the "Company") shall comply
with the letter and spirit of all antitrust laws of the nations,
states, provinces and communities in which the Company operates in the
course of conduct of its business. Where questions arise concerning
these laws, the Corporate Law Department should be consulted for
guidance.
2. The Company shall forbid collusion or conspiring with competitors or
distributors of products sold by the Company whereby prices are fixed
and controlled to any class or type of customer or organization.
3. The Company shall forbid unfair or deceptive trade practices.
4. The Company shall avoid any actions with competitors or distributors
that may give an impression of improper conduct.
5. The Company shall forbid resale price maintenance.
6. The Company shall forbid price discrimination.
7. The Company shall forbid contract bid rigging.
8. The Company shall forbid the initiation of any predatory pricing or
business practices.
9. The Company shall strive to meet each competitive situation as it
develops in conducting its business.
10. The Company shall evaluate for appointment all potential distributors
and other organizations that may resell the Company's products and
will treat those distributors and organizations that are appointed by
the Company in an equal and fair manner according to the marketing
plans established by the Company.
11. The Company shall provide proper antitrust training for all associates
who have responsibility for the sale of the Company's products and the
organization of the Company's sales channels.
12. The Company shall continually enhance, evaluate and communicate its
Antitrust Compliance Policy.
<PAGE>
EXHIBIT (10)(o)
---------------
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 18th day of January, 1999 by and
between MINE SAFETY APPLIANCES COMPANY, a Pennsylvania corporation ("Company")
and JAMES H. BAILLIE ("Employee").
RECITAL:
Simultaneously with the execution of this Agreement, Employee will
enter into an Employment Agreement with the Company, under which Employee, as
President of MSA Europe, will devote 65% of his time outside Germany, to the
operations of the Company and the Company's non-German European affiliates
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties agree as follows:
(1) Duties and Term. The Company hereby agrees to employ Employee,
---------------
and Employee agrees to be so employed, in the capacity of President, MSA Europe
for a term effective as of January 18, 1999 and terminating December 31, 2001
(the "Initial Term") unless terminated earlier pursuant to Section 12 of this
Agreement. At the end of the Initial Term, Employer may continue Employee's
employment with the Company on terms as are mutually agreeable by Employee and
Company.
Employee shall diligently devote 35% of his best efforts, time and
attention in all matters concerning the operations of Auergesellschaft GmbH
("Auer")
<PAGE>
(2) Supervision and Place of Employment. Employee shall at all times
-----------------------------------
discharge his duties in consultation with, and under the supervision of the
Chairman and Chief Executive Officer of the Company. Employee shall be based at
the principal offices of MSA Europe (currently in Berlin, Germany) and shall
have his principal residence within the metropolitan area of Berlin, Germany.
Employee understands that he will be required to travel from time to time on the
business of Auer.
(3) Salary. Employee shall receive an annual salary of 75,250 euros,
------
for his services payable by Auer in installments pursuant to the then current
payroll practices of Auer. During the term of this Agreement, Employee will be
entitled to annual salary reviews similar to the annual review policies of the
Company for other executives. If, during the term of this Agreement, Employee
shall become so disabled as to be unable to perform his regular duties on a
full-time basis, he shall continue to receive, for a period of six (6) months
from the date the disability commences the salary he was receiving immediately
prior to such disability. If any such disability continues for more than six
(6) months, Employee shall not be entitled to any further salary or benefits
(except for long-term disability benefits of Company in effect at such time),
and Company shall have the right to terminate this Agreement and Employee's
employment hereunder upon written notice to Employee.
(4) Vacation. Employee shall be entitled to 7 days of paid vacation
--------
during each year of the term of this Agreement.
(5) Automobile. The Company shall provide the Employee with an
----------
automobile, including all related maintenance, repairs, insurance and other
costs. Such automobile shall be
-2-
<PAGE>
returned to the Company at the termination of his employment and in such case,
the right to the use of such automobile will cease immediately without a right
of retention. Employee shall bear the responsibility to pay any taxes due under
German law or regulations on the monetary benefit of the private use of such
automobile.
(6) Reimbursement for Expenses. The Company shall reimburse Employee
--------------------------
for all reasonable and necessary expenses incurred in carrying out his duties
and responsibilities under this Agreement. Employee shall present to the
Company from time to time an itemized account of such expenses required by the
Company.
(7) Tax Return Services. Company shall reimburse Employee for his
-------------------
reasonable costs for the preparation of any tax return required to be filed in
Germany by virtue of his employment hereunder.
(8) Inventions.
-----------
(a) Any and all inventions and discoveries, whether or not
patentable, which Employee may have made or may make, either alone or in
conjunction with others, during the term of his employment hereunder relating or
in any way appertaining to or connected with any of the assets or operations of
Company or any of its subsidiaries or matters which are, or may during the term
of his employment become, the subject of its business or investigation, shall be
promptly and fully disclosed to Company or and to the extent of Employee's
interest therein shall be the sole and exclusive property of Company or Auer.
-3-
<PAGE>
(b) Whenever requested to do so and at the Company's sole cost
and expense, Employee shall testify in any proceeding or suit, and promptly
execute and assign any and all applications, assignments or other instruments
which the Company shall deem necessary in order to apply for, obtain or protect
letters patent of foreign countries for said inventions or discoveries, and, in
order to assign and convey to Company or Auer the sole and exclusive right,
title and interest in and to said inventions, discoveries or any applications or
patents thereon.
(c) This Section (8) shall survive the termination of this
Agreement.
(9) Confidential Information/Non-competition.
-----------------------------------------
(a) During the term of his employment and thereafter, Employee
shall keep secret and confidential all secret and confidential information
received by him prior to or during the course of his employment ("Confidential
Information"), including, but not limited to, trade secrets, know-how, designs,
plans, blueprints, trademarks, copyrights, patents, patent applications,
manufacturing processes, lists of customers, suppliers of jobs, bidding and
contract information and any other proprietary commercial information of Company
or any of its subsidiaries, except to the extent that the information is now or
hereafter becomes available (other than through him) as public knowledge or
literature, patented or otherwise. Employee confirms that all Confidential
Information is the exclusive property of Company or its subsidiaries.
-4-
<PAGE>
(b) Employee shall deliver to Company promptly at the termination
of his employment or at any other time Company may request, all memoranda,
notes, records, sketches, plans or other documents wholly or partly made or
compiled by or delivered to Employee and which are in his possession or under
his control concerning costs, uses, applications or purchasers of products made
or sold by Company, or any of its subsidiaries, or any product, apparatus,
process, formula or method used, developed, produced or investigated by it
during his employment hereunder.
(c) (i) Employee shall not for a period of one (1) year after
termination of employment with Company engage directly or indirectly, whether as
principal, agent, officer, director, employee, consultant or otherwise, in a
COMPETING ACTIVITY. COMPETING ACTIVITY means a work or activity directed to the
development, manufacture, sale or rental of a product, process or service which
is competitive with or similar to any product, process or service of Company or
its subsidiaries on which Employee worked during the last one (1) year of
employment by Company, or about which Employee acquired Confidential
Information.
(ii) Employee shall not during his employment or for a period of
one (1) year after termination of employment by Company, solicit, directly or
indirectly, any employee of Company or any of its subsidiaries to engage in
COMPETING ACTIVITY.
(d) This Section (9) shall survive the termination of this
Agreement.
-5-
<PAGE>
(10) Employee Benefits. This Agreement shall be in lieu of any
-----------------
rights, benefits and privileges to which Employee may be entitled as an employee
of the Company under any retirement, pension, profit-sharing, insurance,
hospital, disability or other plans which may now be in effect or which may
hereafter be adopted by the Company or any of its subsidiaries.
(11) Covenants of Employee. Employee agrees that during the term of
---------------------
this Agreement, he will comply with MSA's Policy No. 10-I on Business Ethics -
International, Policy No. 20 on Environmental Law Compliance and Management, and
Policy No. 40 on Antitrust Compliance, all of which are attached as Exhibit 1
hereto.
(12) Termination of Employment.
-------------------------
(a) Employee is an employee-at-will and the Company or Employee
may terminate this Agreement by giving sixty (60) days' written notice to the
other party.
(b) Employee may be terminated by the Company for cause (a
"Termination For Cause") by reason of:
(i) Employee's willful breach of any material term of
this Agreement continuing for a period of ten (10) business days after
receipt of written notice thereof,
(ii) The perpetration by Employee of a serious dishonest
act or fraud against the Company, or
-6-
<PAGE>
(iii) the failure, continuing for ten (10) business days or
more after receipt of notice, to comply with reasonable directives of the
Chairman and Chief Executive Officer of the Company.
(c) In the event of termination of employment for whatever
cause, the Company shall pay Employee the amount of his annual salary prorated
to the end of the month in which employment is terminated.
(d) In the event Employee's employment with the Company is
terminated, for whatever reason, except by reason of (i) Employee's voluntary
termination, (ii) Employee's disability which extends for more than six (6)
months, (iii) Employee's death, or (iv) Employee's Termination For Cause,
Employee shall be entitled also to severance compensation equal to one (1)
year's salary in effect on the date of such termination.
(13) Outside Activities. The Employee shall be permitted to serve on
------------------
not more than two (2) outside Boards as a non-executive director.
(14) Withholdings. All compensation to Employee hereunder shall be
------------
reduced by all taxes and other charges required to be withheld by the Auer under
applicable laws.
(15) Injunction. Employee agrees that a breach on his part of any of
----------
the terms, provisions and conditions of this Agreement will cause such damage to
Company as will be irreparable and the exact amount of which will be impossible
to ascertain and for that reason agrees that the Company shall be entitled, as a
matter of right, to an injunction from any court
-7-
<PAGE>
of competent jurisdiction, restraining any threatened or further violation of
this Agreement. Such right to an injunction, however, shall be cumulative, and
in addition to whatever other remedies the Company may have to protect its
rights.
(16) Notices. For the purpose of this Agreement, notices and all
-------
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, or by prepaid
courier, addressed, if to the Employee, to the address inserted below the
Employee's signature on the final page hereof and, if to the Company, to the
address set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Mine Safety Appliances Company
RIDC Industrial Park
121 Gamma Drive
Pittsburgh, Pennsylvania 15238
ATTENTION: Mr. John T. Ryan III
Chairman and Chief Executive Officer
with a copy to
Mine Safety Appliances Company
121 Gamma Drive
Pittsburgh, PA 15238
ATTENTION: General Counsel
(17) Governing Law. This Agreement shall be construed in accordance
-------------
with the laws of the Commonwealth of Pennsylvania.
-8-
<PAGE>
(18) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(19) Separability. Each covenant or agreement or portion thereof
------------
contained in this Agreement shall be independent and separable from all of the
other covenants and agreements or portions thereof contained in this Agreement,
and the invalidity of such covenant or agreement or portion thereof shall in no
way affect the enforceability of any of the other covenants and agreements or
portions thereof.
(20) Amendments and Waivers. This Agreement and the provisions hereof
----------------------
may not be terminated, modified, amended or waived orally or by any act or
failure to act, but only by a writing signed by the party to be affected
thereby. Any waiver of any violation of a condition, term or other provision
hereunder shall not constitute a waiver thereof in general or a waiver of any
subsequent violation thereof.
(21) Cooperation. The parties agree to execute any further
-----------
instruments and to perform any further acts incidental to the performance of
this Agreement or as necessary to carry out its provisions.
(22) Effect Of Agreement. All rights and obligations hereunder shall
-------------------
inure to the benefit of and be binding upon the heirs, personal representatives,
permitted assigns, and successors and affiliates of the parties hereto.
-9-
<PAGE>
(23) Arbitration.
-----------
(a) Subject to the right of the Company to bring an injunction
as provided in Section (15) hereof, if a controversy or claim arises between
Employee and the Company relating to this Agreement, such controversy or claim
shall be fully and finally settled before a panel of three arbitrators appointed
in accordance with the Rules of the American Arbitration Association, pursuant
to its Commercial Arbitration Rules then in effect. The Company and Employee
shall bear the costs of their own counsel and witnesses and the other costs,
which are normally borne solely by a party to arbitration; but otherwise the
Company and Employee shall share equally the charges and fees of the American
Arbitration Association and arbitrators.
(b) Any arbitration pursuant to this Section 23 shall be held in
Pittsburgh, Pennsylvania or at such other place as agreed by the parties.
Pennsylvania law shall be used by the arbitrators in resolving any dispute.
(c) Any judgment upon the award rendered by the arbitrators
shall be final and binding and may be entered in any court having jurisdiction
thereof.
(24) Service of Process. Employee and the Company irrevocably submit
------------------
themselves to the personal jurisdiction of the courts of the Commonwealth of
Pennsylvania with respect to
-10-
<PAGE>
any action arising out of, or in connection with, the execution, delivery or
performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: MINE SAFETY APPLIANCES COMPANY
/s/ Donald H. Cuozzo By /s/ John T. Ryan III
- -------------------- -----------------------------
Secretary John T. Ryan III
Chairman and Chief
Executive Officer
WITNESS: EMPLOYEE
/s/ Gary D. Trozzo /s/ James H. Baillie
- ------------------ ----------------------------
James H. Baillie
MSA Europe
P. O. Box 333
D-12033 Berlin, Germany
-11-
<PAGE>
James H. Baillie
EMPLOYMENT AGREEMENT
EXHIBIT 1
---------
Other Benefits.
---------------
1. Company's standard change of control Severance Agreement.
2. Expenses for storage fees not to exceed $1,500 incurred from January 18,
1999 to October 1, 1999 or until Employee has moved to Berlin, whichever
first occurs.
3. Outplacement services in the event of Employee's termination of employment
pursuant to Section 10(b) of this Agreement.
4. Relocation expenses in Employee's move to Berlin under the Company's
standard United States relocation plan.
5. (a) Expenses to return Employee and his family to the United States, under
the Company's standard United States relocation plan provided (i)
Employee's employment with the Company is terminated prior to the date in
which he attains 61 under circumstances which entitle Employee to the
payment of severance benefits by the Company and (ii) he is employed by the
Company or one of its affiliates immediately prior to such relocation, or
(b) Expenses to return Employee and his family to the United States, at
any time after the Employee attains age 61, under the Company's standard
United States relocation plan provided he is employed by the Company or one
of its affiliates immediately prior to such relocation.
6. Signing bonus of $20,834
7. Participation in the Company's disability plan covering his salary and
previous year's bonus under this Agreement and the AUER Agreement, subject
to plan maximums currently at $320,000.
8. Participation in the Company's medical plan.
9. Group term life insurance equal to two-times salary plus previous year's
bonus under this Agreement and the AUER Agreement, subject to plan maximums
currently at $500,000.
10. Travel and accident insurance. covering his salary and previous year's
bonus under this Agreement and the AUER Agreement, subject to plan maximums
currently at $1,000,000.
<PAGE>
James H. Baillie
----------------
EMPLOYMENT AGREEMENT
--------------------
EXHIBIT 2
=========
MSA POLICIES
------------
Nos. 10-I, 20 and 40 attached
-----------------------------
<PAGE>
Policy No. 10-I
Effective Date:
11-01-95
Supersedes:
4-19-93
Approved by:
Business Ethics - International
President,Chairman
& CEO
A. Compliance
----------
1. Laws
----
An employee, officer and director (hereinafter collectively
referred to as "associates") of the Company, its divisions and
affiliates (hereinafter collectively referred to as "Company")
shall adhere to the laws of the United States and to those of
other countries in which the Company affiliates operates. Where
conflicts or ambiguities exist in these laws, or more
particularly the regulations issued thereunder, Corporate Law
Department should be consulted for guidance.
2. Honesty
-------
An associate shall adhere to honest standards and practices in
all business dealings.
3. Accounting
----------
Established accounting procedures are to be followed at all times
including the recording of all forms of funds or assets of the
Company. No false entries shall be made in the books and records
of the Company for any reason. No payment on behalf of the
Company shall be approved or made with the intention or
understanding that any part of such payment is to be used for any
purpose other than that described by the documents supporting the
payment.
4. Bribes
------
Under no circumstances shall any payments, gifts, rendering of
services or any other form of value be directly or indirectly
given by an associate of the Company to any public official,
employees of customers, or employees of suppliers, particularly
to influence the public official's exercise of judgment and
discretion in disposing of matters on behalf of the Government or
to assist the Company in obtaining or retaining business
contracts. Such consideration provided to a member of the
immediate family of a public official are to be considered and
treated as though provided directly to the public official.
<PAGE>
5. Audits
------
The Company's internal auditors, as well as its independent
public accountants, shall examine the adherence to these policies
as part of their periodic reviews.
6. Appearance of Impropriety
-------------------------
An associate must avoid actions that might appear improper in
regard to the ethical matters discussed here and in other
corporate policies.
7. Reporting
---------
The Company shall provide appropriate means for associates to
report violations of this policy.
8. Management Responsibility
-------------------------
The General Manager shall be responsible for the monitoring of
compliance with these policies in the areas under their
supervision. Any infraction of these policies will subject an
associate to disciplinary action which, depending upon the
seriousness of the violation, may include warning, reprimand,
suspension or dismissal. Any violation of these policies must
reported to the associate's supervisor.
B. Public Responsibility
---------------------
1. Civic Obligations
-----------------
An associate shall be cognizant of and perform the Company's
obligations to the community.
2. Providing Services
------------------
An associate shall maintain cordial and cooperative relationships
with the community in which operations are based by participating
in community undertakings when appropriate.
C. Conflict of Interest
--------------------
1. Freedom from Constraints
------------------------
An associate shall be free from any personal influence, interest,
or relationship, or appearance thereof, in situations that might
conflict with the best interests of the Company.
<PAGE>
2. Disclosure
----------
An associate shall fully disclose to the Company any circumstance
that may contravene this policy. Prompt recognition of conflicts
of interest by the associate permits corrective steps to be taken
by the Company.
3. Financial Interests
-------------------
An associate or a member of the associates' immediate family may
not have a substantial financial interest in an organization that
has current or prospective dealings with the Company as a
supplier, contractor or customer, or competes directly with the
Company when the associate may be able to influence the dealings
of the Company to benefit the associates' private interests.
4. Acceptance of Gifts or Entertainment
------------------------------------
An associate shall not accept any gifts or entertainment from an
organization having current or prospective dealings with the
Company as a supplier, contractor or customer, if such gifts or
entertainment are of such significance that they could tend to
prevent the associate from acting solely in the best interests of
the Company. Gifts or entertainment provided to a member of the
immediate family of the associate shall be considered and treated
as though provided directly to the associate.
5. Offering of Gifts or Entertainment
----------------------------------
An associate shall not offer any gifts or entertainment to a
current or prospective customer if such gifts or entertainment
are of such significance that acceptance could tend to prevent
the recipient from acting solely in the best interests of the
recipient's organization. Such gifts or entertainment provided
to a member of the immediate family of a customer or its employee
shall be considered and treated as though provided directly to
the customer or its employee.
6. Non-Competition
---------------
An associate shall not receive compensation for services rendered
as an associate or a consultant to another organization or for
services as a director or officer of another organization that
competes directly with the Company or where the other
organization has current or prospective dealings with the Company
that may be influenced by the associate.
7. Employment
----------
An associate may not accept concurrent employment with another
company if the organization is a competitor or supplier or one
that may become a competitor or supplier in the foreseeable
future.
<PAGE>
8. Loans
-----
An associate or a member of the associate's immediate family may
not borrow money from individuals or organizations that conduct
or may conduct business with the Company, either as a customer or
supplier. This does not apply to public lending institutions,
e.g., banks, savings and loan associations, etc.
D. Code of Ethical Conduct
-----------------------
The provisions of MSA's Code of Ethical Conduct are included as part
of this Business Ethics Policy. The terms of the Code encompass and
enhance the provisions of the Business Ethics Policy and should be
adhered to as if included in the Business Ethics Policy.
<PAGE>
Policy No. 20
Environmental Law Compliance and Effective Date:
Management 11-01-95
Supersedes:
04-19-93
Approved by:
President, Chairman
& CEO
1. Mine Safety Appliances Company, its divisions and affiliates (hereinafter
collectively referred to as the "Company") shall comply with the letter and
spirit of all environmental laws and regulations and, by its actions,
protect public health, public enjoyment and the world in which we live.
Where questions arise concerning these laws, the Corporate Law Department
should be consulted for guidance.
2. The Company shall pledge commitment and support for a strong environmental
management program.
3. The Company shall minimize the production of waste, effluents and emissions
and recycle wastes after minimization efforts.
4. The Company shall reduce environmental risks and future liabilities.
5. The Company shall design, operate and maintain each plant consistent with
the Company's environmental objectives.
6. The Company shall charge plant management with responsibility for the
environmental performance of its plants and operations.
7. The Company shall charge the corporate environmental protection staff with
the responsibility for providing the leadership necessary to implement
these policies.
8. The Company shall assure that its associates understand their
responsibilities and the actions that are necessary to achieve compliance
and to protect the environment.
9. The Company shall make the necessary expenditures to implement these
policies.
10. The Company shall continually evaluate, enhance and communicate the
Company's Environmental Law Compliance and Management Policy.
<PAGE>
Policy No. 40
Effective Date:
11-01-95
Supersedes:
04-19-93
Approved by:
President, Chairman
& CEO
Antitrust Compliance
1. Mine Safety Appliances Company, its divisions and affiliates
(hereinafter collectively referred to as the "Company") shall comply
with the letter and spirit of all antitrust laws of the nations,
states, provinces and communities in which the Company operates in the
course of conduct of its business. Where questions arise concerning
these laws, the Corporate Law Department should be consulted for
guidance.
2. The Company shall forbid collusion or conspiring with competitors or
distributors of products sold by the Company whereby prices are fixed
and controlled to any class or type of customer or organization.
3. The Company shall forbid unfair or deceptive trade practices.
4. The Company shall avoid any actions with competitors or distributors
that may give an impression of improper conduct.
5. The Company shall forbid resale price maintenance.
6. The Company shall forbid price discrimination.
7. The Company shall forbid contract bid rigging.
8. The Company shall forbid the initiation of any predatory pricing or
business practices.
9. The Company shall strive to meet each competitive situation as it
develops in conducting its business.
10. The Company shall evaluate for appointment all potential distributors
and other organizations that may resell the Company's products and
will treat those distributors and organizations that are appointed by
the Company in an equal and fair manner according to the marketing
plans established by the Company.
11. The Company shall provide proper antitrust training for all associates
who have responsibility for the sale of the Company's products and the
organization of the Company's sales channels.
12. The Company shall continually enhance, evaluate and communicate its
Antitrust Compliance Policy.
<PAGE>
Exhibit 13
----------
Management's Discussion
and Analysis
----------------------------------------------------------------------
Forward-looking Statements
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements may include, without limitation, statements regarding expectations
for future product introductions, cost reduction and restructuring plans,
liquidity, sales and earnings, Year 2000 issues, and market risk. Actual results
may differ from expectations contained in such forward-looking statements and
can be affected by any number of factors, many of which are outside of
management's direct control. Among the factors that could cause such differences
are the effects of cost reduction efforts, new product introductions, market and
operating conditions affecting specialty chemical customers, availability of
critical materials and components, the economic environment, and interest and
currency exchange rates. Also contained herein is information concerning Year
2000 readiness as defined in the Federal Year 2000 Information and Readiness
Disclosure Act.
Results of Operations
Corporate initiatives - The company continues to focus on cost control
initiatives designed to improve its competitive position and profitability. In
the U.S., staff reductions resulting from a voluntary retirement incentive
program (VRIP) and other workforce reduction programs are expected to lower
pre-tax operating costs by approximately $5.5 million annually.
In Europe, a new management team has been implementing organizational
changes which are expected to reduce operating costs and establish a more
integrated approach to business in that area. In 1999 the company incurred pre-
tax restructuring charges totaling $4.0 million, primarily severance costs in
Germany, related to the workforce reduction initiatives. These reductions are
expected to lower pre-tax operating costs in Europe by approximately $3.0
million annually.
In the U.S., the company is also actively pursuing opportunities to
consolidate office space in Pittsburgh as a means of reducing operating costs
and improving communications and productivity.
The second quarter 1999 acquisition of Campbell Gardwel, a South African
maker of personal protective equipment, made MSA the largest safety products
supplier on the African continent. The acquisition combines MSA's strength in
mining markets with Campbell Gardwel's focus in industrial markets.
To further enhance its position in the rapidly-growing thermal imaging
camera market, the company acquired ISI Group, Inc. (ISIG) in February 2000.
Based in Albuquerque, New Mexico, ISIG is an established manufacturer of
infrared cameras for the fire service and predictive and preventive maintenance
markets.
1999 versus 1998 - Sales for 1999 were $494.2 million, a decrease of $1.9
million, or less than 1%, from $496.1 million in 1998. Sales in the prior year
included the HAZCO Services, Inc. and Baseline Industries, Inc. business units
until they were divested on June 30, 1998. Sales of ongoing operations improved
by $11.8 million in 1999, but were partially offset by the negative currency
translation effects in international operations of the strong U.S. dollar.
Sales by U.S. operations were $278.3 million in 1999, a decrease of $1.5
million, or 1%, from $279.8 million in 1998. U.S. sales in 1998 included HAZCO
Services, Inc. and Baseline Industries, Inc., through mid-year. The divestitures
resulted in approximately $13.6 million less sales in 1999 compared to 1998. The
improvements in sales from ongoing businesses in 1999 reflect growth in safety
products sales, partially offset by lower specialty chemical sales. Shipments of
self-contained breathing apparatus and thermal imaging cameras to the fire
service market were particularly strong in 1999. Delays in new product
introductions depressed instrument product sales for most of the year. The
company began shipping the improved Passport FiveStar(R) Alarm multigas
detector late in 1999 and is placing priority efforts on other new instrument
product introductions. Specialty chemicals are sold to a limited number of large
pharmaceutical and chemical companies and short-term sales levels are highly
dependent on the performance of these customers' products in their respective
markets. The company believes that lower specialty chemical sales in 1999 were
largely due to a number of special situations with individual customer's
production and marketing activities. Specialty chemical shipments improved
somewhat in the fourth quarter of 1999 and further recovery is expected in 2000.
Sales by European operations, stated in U.S. dollars, were $114.1 million
in 1999, a decrease of $7.9 million, or 6%, from $122.0 million in 1998. The
decrease reflects a slight decline in local currency sales and negative currency
translation effects when stated in U.S. dollars. Flat or somewhat improved local
currency sales in most European countries were partially offset by lower sales
in Britain.
Sales by MSA's operations outside the U.S. and Europe were $102.3 million
in 1999 compared to $92.0 million in 1998, an increase of $10.3 million, or 11%.
Significant improvements in local currency sales in most countries were
partially offset by unfavorable currency translation effects when stated in U.S.
dollars. Local currency sales increased in 1999 at almost all operations, but
particularly in Africa and Canada. Sales at MSA Africa were significantly higher
as a result of the previously-mentioned acquisition of Campbell Gardwel.
Gross profit for 1999 was $179.7 million, a decrease of $4.7 million, or
3%, from $184.4 million in 1998. Approximately $1.0 million of the decrease was
volume related. The remainder of the decrease in gross profit dollars was
related to a decline in the ratio of gross profit to sales to 36.4% in 1999
compared to 37.2% in 1998.
Research and development expenses were largely unchanged in 1999 at $17.1
million, compared to $17.4 million in 1998. These expenses relate primarily to
safety and health equipment research and development activities in the U.S and
Germany.
Depreciation, selling and administrative expenses decreased $4.9 million to
$152.8 million in 1999, and decreased as a percent of sales to 30.9% from 31.8%
in 1998. The decrease
12
<PAGE>
- --------------------------------------------------------------------------------
reflects cost savings resulting from restructuring initiatives in the U.S. and
the mid-1998 divestitures of HAZCO Services, Inc. and Baseline Industries, Inc.
Depreciation, selling and administrative expenses at international operations
were slightly higher than in 1998.
Cost of products sold and selling, general and administrative expenses
include net periodic pension benefit costs and credits. As described in note 13,
pension credits, combined with pension costs, resulted in net pension credits of
$10.2 million in 1999 and $10.3 million in 1998. Net pension credits in 1999
included a net credit of $2.8 million resulting from the termination benefit
costs and settlement gains associated with the previously-mentioned voluntary
retirement incentive program. In 1998 net pension credits included a $4.0
million settlement gain. Future net pension credits can be volatile depending on
future marketplace performance of plan assets, changes in actuarial assumptions
regarding such factors as the selection of discount rates and rates of return on
plan assets, changes in the amortization levels of actuarial gains and losses,
plan amendments affecting benefit payout levels, and profile changes in the
participant populations being valued. Changes in any of these factors could
cause net pension credits to change. To the extent net pension credits decline
in the future, income would be adversely affected.
Currency exchange gains were $694,000 in 1999, compared to losses of
$315,000 in 1998. The most significant gains from currency valuation changes in
1999 occurred in Latin America.
Restructuring charges in 1999 were $4.0 million compared to $1.0 million in
1998. The charges in both years relate primarily to severance and early
retirement costs associated with workforce reductions in Germany.
Other income, for which further information is included in note 4, was $3.8
million in 1999 compared to $6.0 million in 1998. Other income for 1999 included
pre-tax gains of $2.2 million on sales of real estate. Other income for 1998
included $2.8 million pre-tax gains related to the divestitures of the HAZCO
Services, Inc. and Baseline Industries, Inc. affiliates. The operating results
of these two affiliates were not material to the consolidated financial
statements during the two years ended December 31, 1998.
The effective income tax rate, for which further information is included in
note 8, was 29.6% in 1999 and 35.2% in 1998. The lower effective rate in 1999
reflects tax benefits on international operating losses, primarily in Germany,
and adjustments to prior years' taxes in the U.S., mainly due to foreign sales
corporation tax benefits.
As further described in note 15, during 1999 the company changed the
reporting periods of a number of international affiliates, including Germany
which is the company's largest affiliate. This change was made to improve the
consistency of consolidated operating results and to more effectively utilize
the global information technology infrastructure. The effect of this change is
reported as a change in accounting principle.
Income before change in reporting period was $16.3 million in 1999 compared
to $18.3 million in 1998. Basic earnings per share of common stock before change
in reporting period declined in 1999 to $3.76, compared to $4.11 in 1998.
The change in reporting period reduced 1999 net income by $1.2 million and
earnings per share of common stock by $0.27 and represents the after-tax results
of the affected affiliates for the one month period ended December 31, 1999.
This net loss included severance costs related to ongoing workforce reductions
in Germany combined with the results of seasonally low December operating
activity in the units affected, due to extended holiday shutdowns in Europe.
Net income for 1999 was $15.1 million compared to $18.3 million in 1998.
Basic earnings per share of common stock declined in 1999 to $3.49, compared to
$4.11 in 1998. Earnings per share benefited from share repurchases that reduced
average shares outstanding by 2% in 1999.
1998 versus 1997 - Sales for 1998 were $496.1 million, a decrease of $3.0
million, or 1%, from $499.1 million in 1997. Relatively flat sales levels
reflect divestitures and the negative currency translation effects of the strong
U.S. dollar, largely offset by modest growth in U.S sales and local currency
sales in international markets.
Sales by U.S. operations were $279.8 million in 1998 compared to $278.4
million in 1997. Flat sales levels reflect strong growth in specialty chemicals
sales and modest improvements in personal protective equipment sales. These
gains were largely offset by the mid-year divestitures of HAZCO Services, Inc.
and Baseline Industries, Inc., which were sold on June 30, 1998, as part of
ongoing initiatives to rationalize distribution channels and improve operating
performance. The divestitures resulted in $16.8 million lower sales in 1998
compared to 1997.
Sales by European operations, stated in U.S. dollars were $122.0 million in
both 1998 and 1997. Although local currency sales in Europe improved slightly in
1998, negative currency translation effects throughout Europe offset these gains
when stated in U.S. dollars.
Sales by MSA's operations outside the U.S. and Europe were $92.0 million in
1998 compared to $97.6 million in 1997, a 6% decrease. Modest overall
improvements in local currency sales were more than offset by significant
unfavorable currency translation effects. Strong local currency sales growth was
reported in Canada and Australia. The inclusion of Wuxi-MSA Safety Equipment
Co., Ltd., which became majority-owned during 1998, was also a factor in
improved local currency sales.
Gross profit for 1998 was $184.4 million, a decrease of $12.5 million, or
6%, from $196.9 million in 1997. The 1998 ratio of gross profit to sales
declined to 37.2% from 39.5%. The lower gross profit percentage in 1998 reflects
somewhat lower margins in the U.S., while the margins of international
operations were relatively stable. Lower margins at U.S. operations reflect the
full transition to an indirect sales strategy and competitive pricing and
promotions in personal protective equipment markets, somewhat higher low-margin
government sales, and lower specialty chemical margins, primarily related to
product mix.
13
<PAGE>
Management's Discussion
and Analysis
----------------------------------------------------------------------
Research and development expenses in 1998 were $17.4 million, compared to
$16.7 million in 1997, reflecting modest increases in safety and health
equipment research activity in the U.S and Germany.
Depreciation, selling and administrative expenses decreased $4.8 million to
$157.7 million in 1998, and decreased as a percent of sales to 31.8% from 32.6%
in 1997. The decrease reflects the mid-year divestitures of HAZCO Services, Inc.
and Baseline Industries, Inc., partially offset by higher expenses in other U.S.
operations. Depreciation, selling and administrative expenses at international
operations were slightly lower than in 1997, due in part to currency translation
effects.
Cost of products sold and selling, general and administrative expenses
include net periodic pension benefit costs and credits. As described in note 13,
pension credits, combined with pension costs, resulted in net pension credits of
$10.3 million in 1998 and $10.9 million in 1997. Net pension credits in 1998
included a $4.0 million settlement gain. In 1997 the net pension credits
included credits of $5.7 million for settlement and curtailment gains associated
with the 1996 closing of the Esmond, Rhode Island plant.
Currency exchange losses charged to income in 1998 were $315,000, compared
to $40,000 in 1997. The most significant losses from currency valuation changes
in 1998 occurred in Latin America.
Restructuring charges in 1998 were $1.0 million compared to $2.2 million in
1997. The charges in both years relate primarily to severance and phased
retirement costs associated with workforce reductions in Germany.
Other income was $6.0 million in 1998 compared to $6.8 million in 1997. The
decrease reflects lower interest income and equity earnings, due to the 1998
consolidation of Wuxi-MSA Safety Equipment Co., Ltd. Other income for 1998
includes $2.8 million related to the divestitures of the HAZCO Services, Inc.
and Baseline Industries, Inc. affiliates.
The effective income tax rate, for which further information is included in
note 8, was 35.2% in 1998 and 39.7% in 1997. The lower effective rate in 1998
reflects tax benefits associated with U.S. divestitures and operating losses in
various international countries.
Net income in 1998 was $18.3 million compared to $21.9 million in 1997.
Basic earnings per share of common stock declined in 1998 to $4.11, compared to
$4.81 in 1997. Earnings per share benefited from share repurchases that reduced
average shares outstanding by 2% in 1998.
Liquidity and Financial Condition
Cash and cash equivalents decreased $6.9 million during 1999, compared to a
$4.1 million increase in 1998. The company's principal source of financing
capital expenditures and internal growth is cash flow from operations.
Operations provided cash of $39.4 million in 1999 compared to $20.8 million in
1998. The most significant reasons for improved operating cash flow were reduced
inventory levels and a reduction in trade receivables, primarily due to the sale
of trade receivables in the U.S. As more fully described in note 14, the
accounts receivable facility provided a net $18.7 million in cash during the
year. These effects were somewhat offset by unfavorable currency exchange
effects on working capital balances in 1999. Cash used by other operating
activities in 1999 included $3.2 million of development costs for the Cranberry
Woods office park. Cash provided by operations in 1998 was $8.4 million lower
than in 1997, reflecting increased receivables in 1998 compared to a significant
decrease in receivables in 1997.
Investing activities used cash of $29.6 million in 1999 compared to $10.5
million in 1998. Cash flow from investing in 1998 benefited from net proceeds of
$22.9 million received on the sales of HAZCO Services, Inc. and Baseline
Industries, Inc. business units. In 1999 acquisitions and other investing
included $3.0 million related to the acquisition of Campbell Gardwel in South
Africa. Capital expenditures totaled $26.2 million in 1999 and $34.3 million in
1998. Both 1998 and 1997 included increased expenditures for information systems
and manufacturing facility improvements associated with U.S. restructuring
activities. In the past five years, approximately $136 million has been spent on
new facilities, equipment, and information systems.
Cash used by financing activities was $15.4 million in 1999 compared to
$4.5 million in 1998. The additional use of cash in 1999 reflects reductions in
short-term borrowings during the year. Dividends paid on the common stock during
1999 (the 82nd consecutive year of dividend payment) were $1.36 per share, up
from the $1.33 per share in 1998 and $1.24 per share in 1997. Cash dividends are
paid at a conservative percentage of income, which is consistent with the
company's practice of financing growth internally. During 1999, the company
repurchased 91,263 common shares for $5.7 million. As of December 31, 1999, an
additional 132,663 shares may be repurchased under current authorizations.
Short term debt decreased $28.8 million during 1999 to $4.1 million. The
decrease reflects the use of proceeds from the issuance of long term debt and
the sale of receivables. The average amount of short term debt outstanding
during 1999 and 1998 was $38.9 million and $31.3 million, respectively. Credit
available at year-end with financial institutions was the U.S. dollar equivalent
of $34.4 million, of which $30.3 million was unused.
Long-term debt, including the current portion, increased $24.5 million
during 1999 to $36.9 million, or 13.2% of total capital. Total capital is
defined as long-term debt plus the current portion of long-term debt and
shareholders' equity. The increase is due to the issuance of $25 million in
fixed rate senior notes payable in installments through 2006. Proceeds of the
notes were used to reduce short term variable rate debt.
Receivables decreased $35.9 million to $58.9 million at December 31, 1999.
As more fully described in note 14, the decrease reflects the sale of accounts
receivable under a securitization facility. Trade receivables expressed in
number of days' sales outstanding was 43 days at December 31, 1999, compared to
70 days in 1998. Other receivables were $22.7 million at December 31, 1999,
representing a retained interest in the securitized receivables. Inventories
decreased $3.4 million to
14
<PAGE>
- --------------------------------------------------------------------------------
$82.1 million at December 31, 1999. Inventory measured against sales turned 6.0
times in 1999 and 5.8 times in 1998. The working capital ratio was 2.5 to 1 at
the end of 1999 and 2.1 to 1 at the end of 1998. The improvement is largely due
to the refinancing of short-term debt during 1999.
The company's financial position remains strong and is expected to provide
adequate capital resources for operations, capital expansion and dividends to
shareholders.
Cumulative Translation Adjustments
The year-end position of the U.S. dollar relative to international
currencies resulted in translation losses of $5.1 million being charged to the
cumulative translation adjustments shareholders' equity account in 1999,
compared to losses of $3.6 million in 1998 and $7.2 million in 1997. Translation
losses in 1999 occurred primarily in Brazil, Germany and Italy. Significant 1998
translation losses occurred in Germany, Canada and Australia. Charges for 1998
also include effects related to the consolidation of Wuxi-MSA Safety Equipment
Co., Ltd.
Financial Instrument Market Risk
Market risk represents the risk of adverse changes in the value of a
financial instrument caused by changes in currency exchange rates, interest
rates, and equity prices. The company is exposed to market risks related to
currency exchange rates and interest rates. The company does not enter into
derivatives or other financial instruments for hedging or trading purposes, nor
does it engage in currency exchange rate hedges or interest rate swap
agreements.
Currency exchange rate sensitivity - By the very nature of its global
operations, the company's cash flow and earnings are subject to fluctuations due
to exchange rate changes. However, because the company operates in a number of
locations around the world, currency exchange risk is well diversified. Short-
term debt of international affiliates is payable in local currencies, which is
in keeping with the company's policy of reducing currency exchange exposures by
offsetting local currency assets with local currency debt.
Interest rate sensitivity - The company is exposed to changes in interest
rates primarily as a result of borrowing and investing activities used to
maintain liquidity and fund business operations. Because of the relatively short
maturities of temporary investments and the variable rate nature of industrial
development debt, these financial instruments were reported at carrying values
which approximate fair value at December 31, 1999. The incremental increase in
the fair value of fixed rate long term debt resulting from a hypothetical 10%
decrease in interest rates would be approximately $500,000. However, the
company's sensitivity to interest rate declines and the corresponding increase
in the fair value of its debt portfolio would unfavorably affect earnings and
cash flows only to the extent that the company elected to repurchase or retire
all or a portion of its fixed rate debt portfolio at prices above carrying
values.
Year 2000
The company did not experience significant disruptions to operations as a
result of the Year 2000 rollover. To date, no significant Year 2000 related
problems have been encountered with third parties. The company believes that
substantially all critical processes and systems have operated successfully
since the date rollover.
Costs of Year 2000 remediation, all of which were funded from operating
cash flow and expensed as incurred each year, were less than $5 million.
In management's opinion, the ongoing risk of Year 2000-related operating
disruptions is minimal.
Common Stock
At December 31, 1999, there were 4,291,671 shares of common stock
outstanding. There were at least 875 identifiable common stockholders on
November 19, 1999, a recent date for dividends. Common stock price and volume
information is included on the American Stock Exchange under the symbol MSA. The
quarterly high and low price quotations for common shares follow:
1999 1998
- ------------------------------------------------------------
Quarter High Low High Low
- ------------------------------------------------------------
First $74 3/4 $53 $70 1/2 $57 1/4
Second 81 50 1/2 76 1/2 69
Third 74 7/8 60 87 64
Fourth 67 56 3/4 81 7/8 64 1/2
Common stock quarterly cash dividend information is as follows:
Amount
Per Record Payment
Quarter Share Date Date
- ------------------------------------------------------------
1999
----------------------------------------------
First $ .34 Feb. 26, 1999 Mar. 10, 1999
Second .34 May 28, 1999 Jun. 10, 1999
Third .34 Aug. 13, 1999 Sep. 10, 1999
Fourth .34 Nov. 19, 1999 Dec. 10, 1999
-----
Total 1.36
-----
1998
----------------------------------------------
First $ .31 Feb. 27, 1998 Mar. 10, 1998
Second .34 May 22, 1998 Jun. 10, 1998
Third .34 Aug. 14, 1998 Sep. 10, 1998
Fourth .34 Nov. 20, 1998 Dec. 10, 1998
-----
Total 1.33
-----
The company's stock transfer agent is Norwest Bank Minnesota, N.A., 161
North Concord Exchange, P.O. Box 738, South St.Paul, MN 55075-0738.
15
<PAGE>
MSA 1999
Financial Review
----------------------------------------------------------------------
Report of Management
Mine Safety Appliances Company's consolidated financial statements and related
notes that appear in this Annual Report to Shareholders were prepared by the
company in accordance with generally accepted accounting principles. In
fulfilling its responsibilities for the integrity and objectivity of the
consolidated financial statements, management maintains accounting procedures
designed to provide accurate books, records and accounts which reasonably and
fairly reflect the transactions of the company in a consistent manner on the
accrual basis of accounting.
Company personnel are trained and given responsibilities to ensure adequate
internal accounting controls at a cost commensurate with the risks involved.
Internal accounting controls, monitored by an internal audit staff, provide
reasonable assurances that transactions are executed in accordance with proper
authorization and that adequate accountability for the company's assets is
maintained.
The Board of Directors, through its Audit Committee, is responsible for
assuring that management fulfills its responsibilities in the preparation of the
financial statements. The Audit Committee meets at least twice a year with the
company's independent accountants to discuss the scope of their examination and
any significant findings resulting therefrom.
/s/ James E. Herald
- -------------------
James E. Herald
Vice President--Finance
Chief Financial Officer
Report of Independent Accountants
To the Shareholders and Board of Directors of Mine Safety Appliances Company
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in retained earnings and
accumulated other comprehensive income, and of cash flows present fairly, in all
material respects, the financial position of Mine Safety Appliances Company and
its subsidiaries at December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 15 to the financial statements, the Company changed the
reporting period for certain subsidiaries in 1999.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 17, 2000
16
<PAGE>
Consolidated
Statement of Income
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
Year Ended December 31 1999 1998 1997
<S> <C> <C> <C>
Net sales ........................................... $ 494,227 $496,104 $ 499,136
Other income ........................................ 3,824 6,026 6,802
--------------------------------------
498,051 502,130 505,938
--------------------------------------
Costs and expenses
Cost of products sold ............................ 314,493 311,672 302,225
Selling, general and administrative .............. 129,478 135,258 139,256
Depreciation and amortization..................... 23,356 22,398 23,233
Interest ......................................... 4,273 3,258 2,781
Currency exchange (gains)/losses ................. (694) 315 40
Facilities consolidation and restructuring charges 3,960 1,021 2,164
--------------------------------------
474,866 473,922 469,699
--------------------------------------
Income before income taxes .......................... 23,185 28,208 36,239
Provision for income taxes .......................... 6,859 9,933 14,385
--------------------------------------
Income before change in reporting period ............ 16,326 18,275 21,854
Change in reporting period, net of tax .............. (1,192)
--------------------------------------
Net income .......................................... $ 15,134 $ 18,275 $ 21,854
======================================
Basic earnings per common share:
Income before change in reporting period ......... $ 3.76 $ 4.11 $ 4.81
Change in reporting period ....................... (.27)
--------------------------------------
Net income ....................................... $ 3.49 $ 4.11 $ 4.81
======================================
Diluted earnings per common share:
Income before change in reporting period ......... $ 3.75 $ 4.10 $ 4.80
Change in reporting period ....................... (.27)
--------------------------------------
Net income ....................................... $ 3.48 $ 4.10 $ 4.80
======================================
</TABLE>
See notes to consolidated financial statements.
17
<PAGE>
Consolidated
Balance Sheet
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
December 31 1999 1998
<S> <C> <C>
Assets
Current Assets Cash ........................................................................ $ 8,898 $ 10,084
Temporary investments, at cost which approximates market .................... 8,210 13,936
Trade receivables, less allowance for doubtful accounts $2,322 and $3,004.... 58,911 94,850
Other receivables ........................................................... 22,716
Inventories ................................................................. 82,097 85,491
Deferred tax assets ......................................................... 13,348 14,349
Prepaid expenses and other current assets ................................... 8,910 10,499
------------------------
Total current assets ........................................................ 203,090 229,209
------------------------
Property Land ........................................................................ 4,655 4,999
Buildings ................................................................... 105,022 102,211
Machinery and equipment ..................................................... 260,664 255,286
Construction in progress .................................................... 8,154 9,191
------------------------
Total ....................................................................... 378,495 371,687
Less accumulated depreciation ............................................... (214,986) (207,126)
------------------------
Net property ................................................................ 163,509 164,561
------------------------
Other Assets Prepaid pension cost ........................................................ 61,357 46,162
Deferred tax assets ......................................................... 4,152 1,005
Other noncurrent assets ..................................................... 19,633 16,784
------------------------
Total ....................................................................... $ 451,741 $ 457,721
========================
Liabilities
Current
Liabilities Notes payable and current portion of long-term debt ......................... $ 4,477 $ 33,450
Accounts payable ............................................................ 29,056 34,966
Employees' compensation ..................................................... 11,048 11,891
Insurance ................................................................... 10,402 8,932
Taxes on income ............................................................. 3,878 991
Other current liabilities ................................................... 21,144 19,776
------------------------
Total current liabilities ................................................... 80,005 110,006
------------------------
Long-term Debt ............................................................................. 36,550 11,919
------------------------
Other
Liabilities Pensions and other employee benefits......................................... 54,111 60,550
Deferred tax liabilities .................................................... 35,961 29,554
Other noncurrent liabilities ................................................ 2,657 2,846
------------------------
Total other liabilities ..................................................... 92,729 92,950
------------------------
Shareholders' Equity
Preferred stock, 4 1/2% cumulative, $50 par value (callable at $52.50)....... 3,569 3,569
Common stock, no par value (shares outstanding:
1999--4,291,671; 1998--4,378,874) ......................................... 12,596 12,564
Stock compensation trust .................................................... (26,679) (26,869)
Treasury shares, at cost .................................................... (96,762) (91,089)
Deferred stock compensation ................................................. (504) (951)
Accumulated other comprehensive income....................................... (14,831) (10,240)
Earnings retained in the business ............................................ 365,068 355,862
------------------------
Total shareholders' equity .................................................. 242,457 242,846
------------------------
Total ....................................................................... $ 451,741 $ 457,721
========================
</TABLE>
See notes to consolidated financial statements.
18
<PAGE>
Consolidated
Statement of Cash Flows
----------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31 1999 1998 1997
<S> <C> <C> <C>
Operating Activities
Net income ......................................... $ 15,134 $ 18,275 $ 21,854
Depreciation and amortization ...................... 23,625 22,398 23,233
Pensions ........................................... (10,175) (10,344) (10,881)
Gain on divestitures ............................... (2,238)
Deferred income taxes .............................. 3,269 7,599 7,445
Receivables and other receivables .................. 15,013 (7,730) 10,352
Inventories ........................................ 5,272 (7,764) (4,026)
Accounts payable and accrued liabilities ........... (1,892) 317 (4,079)
Other assets and liabilities ....................... (4,592) (417) (4,891)
Other--including currency exchange adjustments...... (6,218) 666 (9,800)
------------------------------------------
Cash Flow From Operating Activities ................ 39,436 20,762 29,207
------------------------------------------
Investing Activities
Property additions ................................. (26,247) (34,285) (35,304)
Property disposals ................................. 1,567 2,834 4,388
Net proceeds from divestitures ..................... 22,865
Acquisitions and other investing ................... (4,892) (1,955) (1,876)
------------------------------------------
Cash Flow From Investing Activities ................ (29,572) (10,541) (32,792)
------------------------------------------
Financing Activities
Additions to long-term debt ........................ 25,336 402 295
Reductions of long-term debt ....................... (589) (710) (1,037)
Changes in notes payable and short-term debt ....... (28,767) 8,776 17,438
Cash dividends ..................................... (5,928) (5,947) (5,655)
Company stock purchases and sales .................. (5,451) (6,999) (9,907)
------------------------------------------
Cash Flow From Financing Activities ................ (15,399) (4,478) 1,134
------------------------------------------
Effect of exchange rate changes on cash ............... (1,377) (1,644) (2,724)
------------------------------------------
(Decrease) increase in cash and cash equivalents....... (6,912) 4,099 (5,175)
Beginning cash and cash equivalents ................... 24,020 19,921 25,096
------------------------------------------
Ending cash and cash equivalents ...................... $ 17,108 $ 24,020 $ 19,921
==========================================
Supplemental cash flow information:
Interest payments .................................. $ 4,299 $ 3,299 $ 2,328
Income tax payments ................................ 3,648 7,513 15,762
</TABLE>
See notes to consolidated financial statements
19
<PAGE>
Consolidated Statement of Changes
in Retained Earnings And Accumulated
Other Comprehensive Income
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands)
Accumulated
Other
Retained Comprehensive Comprehensive
Earnings Income Income
-----------------------------------------------------
<S> <C> <C> <C>
Balances January 1, 1997 ............................ $325,898 $ 1,430
Net income ....................................... 21,854 $ 21,854
Cumulative translation adjustments (a) ........... (7,174) (7,174)
Minimum pension liability adjustments (b)......... (538) (538)
---------
Comprehensive income .......................... $ 14,142
=========
Common dividends ................................. (4,181)
Preferred dividends .............................. (37)
-------------------------------
Balances December 31, 1997 .......................... 343,534 (6,282)
Net income ....................................... 18,275 $ 18,275
Cumulative translation adjustments (a) ........... (3,625) (3,625)
Minimum pension liability adjustments (b)......... (333) (333)
---------
Comprehensive income .......................... $ 14,317
=========
Common dividends ................................. (5,898)
Preferred dividends .............................. (49)
--------------------------------
Balances December 31, 1998 .......................... 355,862 (10,240)
Net income ....................................... 15,134 $ 15,134
Cumulative translation adjustments ............... (5,141) (5,141)
Minimum pension liability adjustments (b)......... 550 550
---------
Comprehensive income .......................... $ 10,543
=========
Common dividends ................................. (5,878)
Preferred dividends .............................. (50)
================================
Balances December 31, 1999 .......................... $ 365,068 $(14,831)
================================
</TABLE>
(a) - Charges to cumulative translation adjustments in 1998 and 1997 include tax
expense of $30,000 and $670,000, respectively.
(b) - The 1999 credit to minimum pension liability adjustments is net of tax
expense of $367,000. Charges in 1998 and 1997 are net of tax benefit of
$221,000 and $360,000, respectively.
Components of accumulated other comprehensive income are as follows:
<TABLE>
<CAPTION>
(In thousands)
-------------------------------------------
1999 1998 1997
-------------------------------------------
<S> <C> <C> <C>
Cumulative translation adjustments............................ $(14,510) $ (9,369) $(5,744)
Minimum pension liability adjustments......................... (321) (871) (538)
-------------------------------------------
Accumulated other comprehensive income........................ $(14,831) $(10,240) $(6,282)
-------------------------------------------
</TABLE>
See notes to consolidated financial statements.
20
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1--Basis of Presentation
Certain prior year balances have been reclassified to conform with the current
year presentation.
Significant accounting policies are stated in ITALICS at the applicable notes to
Consolidated Financial Statements.
THE PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES REQUIRES MANAGEMENT TO MAKE ESTIMATES AND
ASSUMPTIONS THAT AFFECT THE REPORTED AMOUNTS OF ASSETS AND LIABILITIES AND
DISCLOSURE OF CONTINGENT ASSETS AND LIABILITIES AT THE DATE OF THE FINANCIAL
STATEMENTS AND THE REPORTED AMOUNTS OF REVENUES AND EXPENSES DURING THE
REPORTING PERIOD. ACTUAL RESULTS COULD DIFFER FROM THOSE ESTIMATES.
ALL SIGNIFICANT MAJORITY-OWNED COMPANIES, EXCEPT MINE SAFETY FUNDING
CORPORATION, ARE INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS. INVESTMENTS
IN WHICH THE COMPANY HAS AN EQUITY INTEREST OF 20% TO 50% ARE CARRIED AT EQUITY
IN NET ASSETS. INTERCOMPANY TRANSACTIONS ARE ELIMINATED IN CONSOLIDATION.
PROPERTY IS STATED AT COST. DEPRECIATION IS BASED ON ESTIMATED USEFUL LIVES
USING ACCELERATED AND STRAIGHT-LINE METHODS. MAINTENANCE AND REPAIRS ARE CHARGED
TO EXPENSE. RENEWALS AND BETTERMENTS WHICH SUBSTANTIALLY EXTEND THE USEFUL LIFE
OF PROPERTY ARE CAPITALIZED. PROFITS OR LOSSES RESULTING FROM DISPOSITIONS ARE
INCLUDED IN INCOME.
INTANGIBLE ASSETS, INCLUDING GOODWILL AND PATENTS, ARE AMORTIZED ON A
STRAIGHT LINE OR UNITS OF PRODUCTION BASIS OVER PERIODS NOT EXCEEDING 20 YEARS.
THE FINANCIAL STATEMENTS OF COMPANIES FOR WHICH THE UNITED STATES DOLLAR IS
DETERMINED TO BE THE FUNCTIONAL CURRENCY ARE TRANSLATED USING CURRENT AND
HISTORIC EXCHANGE RATES; ADJUSTMENTS RELATED THERETO ARE INCLUDED IN INCOME FOR
THE CURRENT PERIOD. THE FINANCIAL STATEMENTS OF ALL OTHER COMPANIES ARE
TRANSLATED FROM THEIR FUNCTIONAL CURRENCY INTO UNITED STATES DOLLARS USING
CURRENT EXCHANGE RATES; THE RESULTANT TRANSLATION ADJUSTMENTS ARE NOT INCLUDED
IN INCOME BUT ARE ACCUMULATED IN A SEPARATE EQUITY ACCOUNT. TRANSACTION GAINS
AND LOSSES ARE RECOGNIZED IN INCOME FOR THE CURRENT PERIOD.
CASH AND CASH EQUIVALENTS IN THE CONSOLIDATED STATEMENT OF CASH FLOWS
INCLUDES TEMPORARY INVESTMENTS THAT ARE READILY MARKETABLE AND HAVE MINIMAL RISK
AS TO CHANGE IN VALUE. CERTAIN SECURITIES HAVE MATURITIES IN EXCESS OF NINETY
DAYS; BUT, AS PART OF THE COMPANY'S CASH MANAGEMENT PROGRAM, MATURITIES ARE
SCHEDULED BASED ON EXPECTED CASH NEEDS FOR THE ENSUING TWELVE MONTHS.
COMPREHENSIVE INCOME, DETERMINED IN ACCORDANCE WITH STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS NO. 130, INCLUDES NET INCOME AND CHANGES IN OTHER
COMPREHENSIVE INCOME ITEMS WHICH ARE REPORTED IN SHAREHOLDERS' EQUITY. OTHER
COMPREHENSIVE INCOME IS REPORTED NET OF RELATED INCOME TAX EXPENSE OR BENEFIT.
Note 2--Restructuring
Restructuring charges of $3,960,000 in 1999, $1,021,000 in 1998 and $2,164,000
in 1997 relate to workforce reductions, primarily in Germany.
Note 3--Research and Development Expense
RESEARCH AND DEVELOPMENT COSTS, CHARGED AGAINST INCOME AS INCURRED, were
$17,097,000 in 1999, $17,415,000 in 1998, and $16,668,000 in 1997.
Note 4--Other Income
(In thousands)
----------------------------------
1999 1998 1997
----------------------------------
Interest ....................... $ 914 $ 1,293 $ 2,068
Rent ........................... 1,310 1,226 1,108
Dispositions of assets ......... 1,796 807 2,568
Equity in earnings of affiliates 45 (6) 516
Divestiture of affiliates ...... 2,807
Other, net ..................... (241) (101) 542
----------------------------------
Total .......................... 3,824 6,026 6,802
----------------------------------
Note 5--Inventories
MOST U.S. INVENTORIES ARE VALUED ON THE LAST-IN, FIRST-OUT (LIFO) COST METHOD.
OTHER INVENTORIES ARE VALUED AT THE LOWER OF COST, USING AVERAGE OR CURRENT
STANDARD COSTS WHICH APPROXIMATE ACTUAL COSTS ON A FIRST-IN, FIRST-OUT (FIFO)
BASIS, OR MARKET, DETERMINED BY REPLACEMENT COST OR NET REALIZABLE VALUE.
Reductions in certain inventory quantities during 1999, 1998, and 1997
resulted in liquidations of LIFO inventory quantities carried at lower costs
prevailing in prior years. The effect of these liquidations reduced cost of
sales by $216,000 in 1999, $320,000 in 1998, and $572,000 in 1997, and increased
net income by $132,000 ($.03 per share), $195,000 ($.04 per share), and $349,000
($.08 per share), respectively.
(In thousands)
-------------------
1999 1998
-------------------
Finished products .............................. $37,604 $36,956
Work in process ................................ 7,500 12,445
Raw materials and supplies ..................... 36,993 36,090
-------------------
Total inventories .............................. 82,097 85,491
-------------------
Excess of FIFO costs over LIFO costs............ 44,919 43,732
-------------------
Inventories stated on the LIFO basis represent 48%, 51%, and 45% of the
total inventories at December 31, 1999, 1998, and 1997, respectively.
Note 6--Long-Term Debt
(In thousands)
-------------------
1999 1998
-------------------
U.S.
Industrial development debt issues
payable through 2022, 5.7% ........ $10,750 $10,750
Series A Senior Notes
payable through 2001, 7.3% ........ 5,000
Series B Senior Notes
payable through 2006, 7.69% ....... 20,000
Other, 18% ........................... 89 6
International
Various notes payable through 2002,
3.9% to 8% ($773 collateralized
by pledge of assets located
abroad)............................ 1,110 1,654
-------------------
Total .................................. 36,949 12,410
Amounts due within one year ............ 399 491
-------------------
Long-term debt ......................... 36,550 11,919
-------------------
Approximate maturities of these obligations over the next five years are
$399,000 in 2000, $5,340,000 in 2001, $4,292,000 in 2002, $4,005,000 in 2003 and
$4,000,000 in 2004. International notes payable include $163,000 with no fixed
maturity date. Some debt agreements require the company to maintain certain
financial ratios and minimum net worth and contain restrictions on the total
amount of debt.
21
<PAGE>
Notes to Consolidated
Financial Statements
--------------------------------------------------------------------------
Note 7--Segment Information
IN 1998, THE COMPANY ADOPTED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS)
NO. 131, WHICH DESIGNATES THE INTERNAL FINANCIAL INFORMATION THAT IS USED BY
MANAGEMENT FOR MAKING OPERATING DECISIONS AND ASSESSING PERFORMANCE AS THE
SOURCE FOR IDENTIFYING THE COMPANY'S OPERATING SEGMENTS.
The company is organized into three geographic operating segments (U.S.,
Europe, and other non-U.S.), each of which includes a number of operating
companies. The company is engaged in the manufacture and sale of safety and
health equipment, including respiratory protective equipment, head protection,
eye and face protection, hearing protectors, safety clothing, industrial
emergency care products, mining safety equipment, and monitoring instruments. In
addition, the company manufactures and sells specialty chemicals, including
boron-based chemicals.
Reportable segment information is presented in the following table:
<TABLE>
<CAPTION>
(In thousands)
-----------------------------------------------------------------
Other Reconciling Consolidated
U.S. Europe non-U.S. items totals
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999
Sales to external customers................................ $278,273 $114,138 $102,251 $(435) $ 494,227
Intercompany sales ........................................ 33,638 17,637 2,181 (53,456)
Net income ................................................ 13,117 (1,726) 4,737 (994) 15,134
Total assets .............................................. 298,842 88,393 70,986 (6,480) 451,741
Interest income ........................................... 590 406 327 (409) 914
Interest expense .......................................... 3,411 285 926 (349) 4,273
Noncash items:
Depreciation and amortization........................... 16,991 4,386 1,822 157 23,356
Pension income (expense) ............................... 12,928 (3,149) 396 10,175
Equity in earnings of affiliates........................... 45 45
Income tax provision (benefit)............................. 7,461 (2,097) 2,431 (936) 6,859
Investments in affiliates ................................. 1,358 70 1,428
Property additions ........................................ 19,320 4,662 2,255 10 26,247
Fixed assets .............................................. 132,531 21,679 9,275 24 163,509
1998
Sales to external customers ............................... 279,788 121,964 92,042 2,310 496,104
Intercompany sales ........................................ 33,430 16,922 1,635 (51,987)
Net income ................................................ 14,855 214 1,838 1,368 18,275
Total assets .............................................. 294,637 109,288 62,768 (8,972) 457,721
Interest income ........................................... 377 503 450 (37) 1,293
Interest expense .......................................... 2,308 211 1,074 (335) 3,258
Noncash items:
Depreciation and amortization .......................... 15,685 4,893 1,663 157 22,398
Pension income (expense) ............................... 13,694 (3,126) (224) 10,344
Equity in earnings of affiliates........................... (6) (6)
Income tax provision (benefit) ............................ 8,026 (398) 1,868 437 9,933
Investments in affiliates ................................. 358 31 389
Property additions ........................................ 26,662 4,010 3,610 3 34,285
Fixed assets .............................................. 130,484 24,793 9,257 27 164,561
1997
Sales to external customers ............................... 278,354 121,949 97,620 1,213 499,136
Intercompany sales ........................................ 37,160 17,803 1,325 (56,288)
Net income ................................................ 16,503 220 4,312 819 21,854
Total assets .............................................. 287,397 118,133 59,475 (27,852) 437,153
Interest income ........................................... 661 1,185 469 (247) 2,068
Interest expense .......................................... 1,850 302 926 (297) 2,781
Noncash items:
Depreciation and amortization .......................... 16,785 4,853 1,413 182 23,233
Pension income (expense) ............................... 14,705 (3,318) (506) 10,881
Equity in earnings of affiliates........................... 516 516
Income tax provision ...................................... 10,589 841 1,999 956 14,385
Investments in affiliates ................................. 2,386 1,009 3,395
Property additions ........................................ 28,145 3,998 3,143 18 35,304
Fixed assets .............................................. 124,831 24,983 8,106 37 157,957
Sales by product line: (In thousands)
1999 1998 1997
---------------------------------
Safety and health equipment ............................... $458,927 $456,605 $467,340
Specialty chemicals ....................................... 35,300 39,499 31,796
---------------------------------
494,227 496,104 499,136
---------------------------------
</TABLE>
Reconciling items consist primarily of intercompany eliminations and items
reported at the corporate level. Sales are attributed to countries based on the
location of the selling company. Sales in Germany were $56,017,000 in 1999,
$58,239,000 in 1998, and $62,343,000 in 1997.
22
<PAGE>
________________________________________________________________________________
Note 8--Income Taxes
INCOME TAXES ARE ACCOUNTED FOR IN ACCORDANCE WITH STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS NO. 109. DEFERRED TAX BALANCES ARE STATED AT ENACTED TAX
RATES EXPECTED TO BE IN EFFECT WHEN TAXES ARE ACTUALLY PAID OR DEDUCTIONS ARE
TAKEN. NO PROVISION IS MADE FOR UNDISTRIBUTED EARNINGS OF INTERNATIONAL
AFFILIATES SINCE LITTLE OR NO TAX WOULD RESULT UNDER APPLICABLE EXISTING
STATUTES OR BECAUSE MANAGEMENT INTENDS THAT THESE EARNINGS BE PERMANENTLY
REINVESTED FOR WORKING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS.
The U.S. and non-U.S. components of income before income taxes, and
provisions for income taxes are summarized as follows:
<TABLE>
<CAPTION>
(In thousands)
------------------------------------
1999 1998 1997
------------------------------------
<S> <C> <C> <C>
Income Before Income Taxes
U.S. income.......................................................................... $ 23,790 $ 25,811 $ 43,735
Non-U.S. income...................................................................... 3,225 5,083 7,510
Currency translation (losses)........................................................ (95) (487) (437)
Eliminations......................................................................... (3,735) (2,199) (14,569)
------------------------------------
Income Before Income Taxes........................................................... 23,185 28,208 36,239
------------------------------------
Provisions For Income Taxes
Current
Federal............................................................................ (834) (146) 2,686
State.............................................................................. 367 (328) 479
Non-U.S............................................................................ 3,281 2,808 3,775
------------------------------------
Total current provision............................................................ 2,814 2,334 6,940
------------------------------------
Deferred
Federal............................................................................ 5,779 7,364 6,595
State.............................................................................. 921 1,382 1,256
Non-U.S............................................................................ (2,655) (1,147) (406)
------------------------------------
Total deferred provision........................................................... 4,045 7,599 7,445
------------------------------------
Provisions for Income Taxes.......................................................... 6,859 9,933 14,385
------------------------------------
The following is a reconciliation of income taxes calculated at the U.S. Federal
income tax rate of 35% to the provision for income taxes:
Provision for income taxes at statutory rate......................................... 8,115 9,873 12,684
State income taxes, net of federal benefit........................................... 837 685 1,128
Adjustment of prior years' income taxes.............................................. (954) (469) (44)
Non-U.S. taxes....................................................................... (774) (332) 418
Other--net........................................................................... (365) 176 199
------------------------------------
Provision for income taxes........................................................... 6,859 9,933 14,385
------------------------------------
<CAPTION>
The components of deferred taxes are as follows:
(In thousands)
----------------------
1999 1998
----------------------
<S> <C> <C>
Deferred tax assets
Postretirement benefits............................................................ $ 5,399 $ 5,979
Inventory reserves and unrealized profits.......................................... 4,568 4,339
Vacation allowances................................................................ 1,986 2,032
Loss and credit carryforwards...................................................... 6,574
Liability insurance................................................................ 3,111 3,080
Accrued liabilities................................................................ 1,948 1,861
Allowance for doubtful accounts.................................................... 409 783
Trademarks and license fees........................................................ 608 564
Warranties......................................................................... 856 765
Other.............................................................................. 417 860
----------------------
Total deferred tax assets.......................................................... 25,876 20,263
----------------------
Deferred tax liabilities
Depreciation....................................................................... (25,585) (22,119)
Pension............................................................................ (18,752) (12,344)
----------------------
Total deferred tax liabilities..................................................... (44,337) (34,463)
----------------------
Net deferred taxes................................................................... (18,461) (14,200)
----------------------
</TABLE>
Undistributed earnings of international companies for which U.S. income
taxes have not been provided were $68,871,000 at December 31, 1999.
The company has tax credit carryforwards of $2,455,000 that expire between
2003 and 2018. The company also has net operating loss carryforwards of
$3,053,000 with no expiration date and $1,066,000 that expire between 2004 and
2008.
23
<PAGE>
Notes to Consolidated
Financial Statements
-------------------------------------------------------------------------
Note 9--Capital Stock
. Common stock, no par value--20,000,000 shares authorized
. Second cumulative preferred voting stock, $10 par value--1,000,000 shares
authorized; none issued
. 4 1/2% cumulative preferred stock, $50 par value--100,000 shares
authorized; 71,373 shares issued and 49,713 shares ($1,608,000) held in
treasury (400 shares, $13,000, purchased for treasury in 1999: no activity
in 1998 and 1997)
Common stock activity is summarized as follows:
<TABLE>
<CAPTION>
Shares Dollars (In thousands)
----------------------------------- ---------------------------------
Stock Stock
Shares Compensation Shares In Shares Compensation Treasury
Issued Trust Treasury Issued Trust Cost
----------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances January 1, 1997 ............................... 6,749,101 (600,000) (1,537,976) $ 10,839 $(28,200) $(70,509)
Management Share Incentive Plan forfeitures ............ (147) (7)
Stock options exercised ................................ 29,645 1,438
Purchased for treasury ................................. (184,708) (11,338)
----------------------------------- ---------------------------------
Balances December 31, 1997 ............................. 6,778,599 (600,000) (1,722,684) 12,270 (28,200) (81,847)
Management Share Incentive Plan issues ................. 16,130 219 758
Stock options exercised ................................ 12,180 75 573
Purchased for treasury ................................. (105,351) (7,647)
----------------------------------- ---------------------------------
Balances December 31, 1998 ............................. 6,778,599 (571,690) (1,828,035) 12,564 (26,869) (89,494)
Stock options exercised ................................ 4,060 32 190
Purchased for treasury ................................. (91,263) (5,660)
----------------------------------- ---------------------------------
Balances December 31, 1999 6,778,599 (567,630) (1,919,298) 12,596 (26,679) (95,154)
----------------------------------- ---------------------------------
</TABLE>
The Mine Safety Appliances Company Stock Compensation Trust was
established to fund certain benefit plans, including employee stock options and
awards. The company sold 600,000 treasury shares, at market value, to the Trust,
in exchange for a $28,200,000 promissory note, 8% interest, payable to the
company.
The company has a Shareholder Rights Plan under which each outstanding
share of common stock is granted one preferred share purchase right. The rights
are exercisable for a fraction of a share of preferred stock, only if a person
or group acquires or commences a tender offer for 15% or more of the company's
common stock. In the event a person or group acquires 15% or more of the
outstanding common stock, each right not owned by that person or group will
entitle the holder to purchase that number of shares of common stock having a
value equal to twice the $225 exercise price. The Board of Directors may redeem
the rights for $.01 per right at any time until ten days after the announcement
that a 15% position has been acquired. The rights expire on February 21, 2007.
Note 10--Leases
The company leases office space, manufacturing and warehouse facilities,
automobiles and other equipment under operating leases expiring at various dates
through 2004. Rent expense was $5,813,000 in 1999, $5,846,000 in 1998, and
$6,751,000 in 1997. Future minimum rental payments under noncancelable leases
are not significant.
Note 11--Earnings per Share
BASIC EARNINGS PER SHARE IS COMPUTED ON THE WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD. DILUTED EARNINGS PER SHARE INCLUDES THE
EFFECT OF THE WEIGHTED AVERAGE STOCK OPTIONS OUTSTANDING DURING THE PERIOD,
USING THE TREASURY STOCK METHOD. ANTIDILUTIVE OPTIONS ARE NOT CONSIDERED IN
COMPUTING DILUTED EARNINGS PER SHARE.
<TABLE>
<CAPTION>
(In thousands)
---------------------------------
1999 1998 1997
---------------------------------
<S> <C> <C> <C>
Net income ................................................................................ $ 15,134 $18,275 $21,854
Preferred stock dividends ................................................................. (50) (49) (37)
---------------------------------
Income available to common shareholders.................................................... 15,084 18,226 21,817
---------------------------------
Basic shares outstanding .................................................................. 4,324 4,430 4,536
Stock options ............................................................................. 11 17 13
---------------------------------
Diluted shares outstanding ................................................................ 4,335 4,447 4,549
---------------------------------
Antidilutive stock options ................................................................ 36 3
---------------------------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
Note 12--Short-Term Debt
Short-term bank lines of credit amounted to $34,355,000 of which $30,284,000 was
unused at December 31, 1999. Generally, these short-term lines of credit are
renewable annually, and there are no significant commitment fees or compensating
balance requirements. Short-term borrowings with banks, which exclude the
current portion of long-term debt, were $4,071,000 and $32,957,000 at December
31, 1999 and 1998, respectively. The average month-end balance of total
short-term borrowings during 1999 was $38,884,000 while the maximum month-end
balance of $49,611,000 occurred at June 30,1999. The average interest rate
during 1999 was approximately 8% based upon total short-term interest expense
divided by the average month-end balance outstanding, and 17% at year-end.
Note 13--Pensions and Other Postretirement Benefits
THE COMPANY'S NON-CONTRIBUTORY PENSION PLANS ARE ACCOUNTED FOR IN ACCORDANCE
WITH STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 87 WHICH REQUIRES USE OF
THE PROJECTED UNIT CREDIT COST METHOD TO DETERMINE THE PROJECTED BENEFIT
OBLIGATION AND PLAN COST. THE PRINCIPAL U.S. PLAN IS FUNDED IN COMPLIANCE WITH
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA). IT IS THE GENERAL POLICY TO
FUND CURRENT COSTS FOR THE INTERNATIONAL PLANS EXCEPT IN GERMANY AND MEXICO,
WHERE IT IS COMMON PRACTICE AND PERMISSIBLE UNDER TAX LAWS TO ACCRUE BOOK
RESERVES. A minimum liability is recognized for unfunded defined benefit plans
for which the accumulated benefit obligation exceeds accrued pension costs. The
amount of the minimum liability in excess of unrecognized prior service cost,
net of tax benefit, is recorded as a reduction in shareholders' equity. Non-
contributory plan benefits are generally based on years of service and
employees' compensation during the last years of employment. Benefits are paid
from funds previously provided to trustees or are paid by the company and
charged to the book reserves.
The company provides certain health care benefits and limited life insurance
for retired employees and their eligible dependents, THE COSTS FOR WHICH ARE
ACCOUNTED FOR IN ACCORDANCE WITH STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
(SFAS) NO. 106. SFAS NO. 106 REQUIRES RECOGNITION OF RETIREE HEALTH AND LIFE
INSURANCE BENEFITS DURING THE EMPLOYEES' SERVICE WITH THE COMPANY.
Information pertaining to defined benefit pension plans and other
postretirement benefits plans, PREPARED IN ACCORDANCE WITH STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 132, is provided in the following table.
<TABLE>
<CAPTION>
(In thousands)
------------------------------------------------------
Pension Benefits Other Benefits
------------------------ ----------------------
1999 1998 1999 1998
------------------------ ----------------------
<S> <C> <C> <C> <C>
Change in Benefit Obligations
Benefit obligations at January 1 ............ $ 207,269 $ 195,314 $ 17,353 $ 15,283
Service cost ................................ 5,426 5,057 437 319
Interest cost ............................... 13,049 13,327 1,212 1,089
Employee contributions ...................... 65 54
Plan amendments ............................. (84)
Actuarial (gains) losses .................... (11,759) 10,967 1,048 2,161
Benefits paid ............................... (12,918) (12,883) (1,504) (1,415)
Settlements ................................. (15,923) (4,931)
Termination benefits ........................ 5,842
Currency translation effects ................ (4,165) 364
------------------------- ----------------------
Benefit obligations at December 31 .......... 186,886 207,269 18,546 17,353
------------------------- ----------------------
Change in Plan Assets
Fair value of plan assets at January 1 ...... 330,890 296,219
Actual return on plan assets ................ 35,502 50,725
Employer contributions ...................... 2,633 2,760 1,504 1,415
Employee contributions ...................... 169 162
Benefits paid ............................... (12,918) (12,883) (1,504) (1,415)
Settlements ................................. (15,276) (4,931)
Currency translation effects ................ 250 (1,162)
------------------------- ----------------------
Fair value of plan assets at December 31 .... 341,250 330,890
------------------------- ----------------------
Funded Status
Funded status at December 31 ................ 154,364 123,621 (18,546) (17,353)
Unrecognized transition gains ............... (5,320) (4,916)
Unrecognized prior service cost ............. 1,664 2,033 (69) (76)
Unrecognized net actuarial (gains) losses ... (125,933) (113,151) 2,985 2,215
------------------------- ----------------------
Prepaid (accrued) benefit cost .............. 24,775 7,587 (15,630) (15,214)
------------------------- ----------------------
Amounts Recognized in the Balance Sheet
Prepaid benefit cost ........................ 61,357 46,162
Accrued benefit liability ................... (37,479) (40,678) (15,630) (15,214)
Intangible asset ............................ 362 651
Minimum pension liability adjustments ....... 535 1,452
------------------------ ---------------------
Prepaid (accrued) benefit cost .............. 24,775 7,587 (15,630) (15,214)
------------------------ ---------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
(In thousands, except percents)
---------------------------------------------------
Pension Benefits Other Benefits
------------------------ --------------------
1999 1998 1999 1998
------------------------ --------------------
<S> <C> <C> <C> <C>
Actuarial Assumptions at December 31
Discount rate .................................................. 7% 6.5% 7.5% 6.75%
Expected return on plan assets ................................. 9% 9%
Rate of compensation increases ................................. 4% 4%
Plans with Accumulated Benefit Obligations in Excess
of Plan Assets
Projected benefit obligations .................................. $ 40,298 $ 40,825
Accumulated benefit obligations ................................ 36,818 37,214
Plan assets .................................................... 0 0
</TABLE>
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
--------------------------------- -----------------------
Components of Net Periodic Benefit Cost (Credit) 1999 1998 1997 1999 1998 1997
--------------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost ................................................... $ 5,426 $ 5,057 $ 4,897 $ 437 $ 319 $ 303
Interest cost .................................................. 13,049 13,327 13,548 1,212 1,089 1,030
Expected return on plan assets ................................. (23,061) (22,002) (20,478)
Amortization of transition obligation (asset) .................. (703) (729) (801)
Amortization of prior service cost ............................. 382 387 405 (8) (8)
Recognized net actuarial (gains) losses ........................ (2,487) (2,391) (2,726) 278 8
Settlement gain ................................................ (8,623) (3,993) (4,541)
Curtailment gain ............................................... (1,185)
Termination benefits ........................................... 5,842
--------------------------------- -----------------------
Net periodic benefit cost (credit) ............................. (10,175) (10,344) (10,881) 1,919 1,408 1,333
--------------------------------- -----------------------
</TABLE>
For measurement purposes, an 8% increase in the costs of covered health care
benefits was assumed for the year 1999, decreasing by .5% for each successive
year to 4% in 2007 and thereafter. A one-percentage-point change in assumed
health care cost trend rates would have increased or decreased the other
postretirement benefit obligations and current year plan expense by
approximately $1 million and $100,000, respectively.
Expense for defined contribution pension plans was $2,750,000 in 1999,
$3,113,000 in 1998, and $3,185,000 in 1997.
Note 14--Accounts Receivable Securitization
STATEMENT OF FINANCIAL ACCOUNTING STANDARD NO. 125 APPLIES A CONTROL-ORIENTED,
FINANCIAL COMPONENTS APPROACH TO FINANCIAL-ASSET-TRANSFER TRANSACTIONS.
FINANCIAL ASSETS, NET OF RETAINED INTERESTS, ARE REMOVED FROM THE BALANCE SHEET
WHEN THE ASSETS ARE SOLD AND CONTROL IS SURRENDERED.
In November 1999, the company and Mine Safety Funding Corporation (MSF)
entered into securitization agreements under which the company sells MSF, on a
continuous basis, an undivided interest in eligible trade accounts receivable
generated by the company, while maintaining a subordinated interest in a portion
of the receivables. MSF is an unconsolidated wholly-owned special purpose,
bankruptcy-remote subsidiary of the company. The company services the sold
receivables for MSF at market rates and, accordingly, no servicing asset or
liability has been recorded. MSF and the company have also entered into
securitization agreements with financial institutions under which MSF may sell
up to $30 million of accounts receivable to a multi-seller asset-backed
commercial paper issuer.
At December 31, 1999, accounts receivable of $43.3 million were owned by MSF.
The company held a subordinated interest in these receivables of $23.7 million,
of which $22.7 million is classified as other receivables. Net proceeds to the
company from the securitization arrangement were $18.7 million at December 31,
1999. The company incurred costs associated with the securitization facility of
$300,000 in 1999, representing the discount loss on the sale of the receivables,
partially offset by related servicing income.
Note 15--Change in Reporting Period
Beginning in 1999, certain international affiliates which had been consolidated
based on fiscal years ending November 30 changed to fiscal years ending December
31. The after-tax effect of the change in reporting period is included in the
1999 income statement as a change in accounting principle.
(In thousands)
--------------
Net sales ...................................................... $ 11,290
Cost of products sold .......................................... 8,629
Selling, general and administrative ............................ 3,497
Depreciation and amortization .................................. 372
Facilities consolidation and restructuring charges.............. 421
Other expenses, net ............................................ 258
Income tax benefit ............................................. (695)
--------
Change in reporting period, net of tax ......................... (1,192)
26
<PAGE>
- --------------------------------------------------------------------------------
Note 16--Stock Plans
The Management Share Incentive Plan permits the granting of restricted stock
awards and stock options to eligible key employees through March 2008. The 1990
Non-Employee Directors' Stock Option Plan provides for annual grants of stock
options to eligible directors. As of December 31, 1999, there were 526,338
shares and 30,300 shares, respectively, reserved for future grants pursuant to
these plans.
Stock options are generally granted at market value option prices and
expire after ten years (limited instances of option prices in excess of market
value and expiration after five years). Restricted stock awards are granted to
employees without payment to the company in consideration of services to be
performed in ensuing five-year periods. THE COMPANY APPLIES ACCOUNTING
PRINCIPLES BOARD OPINION 25 AND RELATED INTERPRETATIONS IN ACCOUNTING FOR THE
PLANS. ACCORDINGLY, NO COMPENSATION COST IS RECOGNIZED FOR STOCK OPTION GRANTS.
COMPENSATION COST FOR RESTRICTED STOCK AWARDS IS MEASURED BY THE MARKET VALUE OF
THE SHARES WHEN AWARDED AND IS AMORTIZED BY CHARGES TO OPERATIONS OVER THE
PERIOD THAT THE EMPLOYEE PROVIDES THE SERVICE. Restricted stock awards of 16,130
shares (fair value of $60.56 per share) were granted in 1998. Restricted stock
awards expense charged to operations was $448,000 in 1999, $368,000 in 1998, and
$436,000 in 1997. The company's net income and earnings per share would not be
significantly affected if compensation cost for stock option grants was
determined based on fair value at grant dates consistent with the method
provided in Statement of Financial Accounting Standards No. 123.
A summary of the two stock option plans follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------------------------------------------------------
Weighted-Average Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.. 71,905 $ 54.74 55,001 $ 50.63 58,365 $ 46.77
Granted........................... 33,948 63.72 29,084 61.86 27,451 56.80
Exercised......................... (4,060) 54.89 (12,180) 53.18 (29,645) 48.51
Forfeited......................... (1,170) 56.64
-------------------------------------------------------------------------------
Outstanding at end of year........ 101,793 57.73 71,905 54.74 55,001 50.63
-------------------------------------------------------------------------------
Options exercisable at year-end... 101,793 71,905 55,001
-------------------------------------------------------------------------------
</TABLE>
Options outstanding at December 31, 1999 have a weighted-average remaining
contractual life of approximately 7.25 years and an exercise price range of
$40.43 to $62.81 (7,090 shares at $69.09 to $71.63).
Note 17--Quarterly Financial Information (Unaudited)
(In thousands, except earnings per share)
<TABLE>
<CAPTION>
1999 1998
---------------------------------------------- ---------------------------------------------
Quarters Quarters
-------------------------------------- ------------------------------------
1st 2nd 3rd 4th Year 1st 2nd 3rd 4th Year
---------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales..................... $115,967 $123,675 $118,004 $136,581 $494,227 $123,408 $125,450 $116,060 $131,186 $496,104
Gross profit.................. 42,034 42,308 45,284 50,108 179,734 46,181 45,995 43,902 48,354 184,432
Net income.................... 2,570 737 4,341 7,486 15,134 5,488 4,802 3,073 4,912 18,275
---------------------------------------------- ---------------------------------------------
Basic earnings per share...... .59 .16 1.01 1.74 3.49 1.23 1.08 .69 1.12 4.11
---------------------------------------------- ---------------------------------------------
Diluted earnings per share.... .59 .16 1.00 1.73 3.48 1.23 1.07 .69 1.11 4.10
---------------------------------------------- ---------------------------------------------
</TABLE>
Fourth quarter 1999 net income and earnings per share include a net loss of
$1,192,000 or $.28 per share resulting from the change in reporting period. The
effect of this change on full year 1999 net income was $1,192,000 or $.27 per
share.
27
<PAGE>
Summary of Selected
Financial Data
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUMMARY OF OPERATIONS 1999 1998 1997 1996 1995
(In thousands, except as noted)
<S> <C> <C> <C> <C> <C>
Net sales $ 494,227 $ 496,104 $ 499,136 $ 505,055 $ 491,757
- ----------------------------------------------------------------------------------------------------------------------------------
Other income 3,824 6,026 6,802 7,141 5,219
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of products sold 314,493 311,672 302,225 307,112 296,845
- ----------------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative 129,478 135,258 139,256 137,141 142,276
- ----------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 23,356 22,398 23,233 23,644 21,030
- ----------------------------------------------------------------------------------------------------------------------------------
Interest expense 4,273 3,258 2,781 1,595 1,730
- ----------------------------------------------------------------------------------------------------------------------------------
Currency exchange (gains) losses (694) 315 40 735 1,233
- ----------------------------------------------------------------------------------------------------------------------------------
Facilities consolidation and restructuring charges 3,960 1,021 2,164 5,302 730
- ----------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes 6,859 9,933 14,385 13,606 14,220
- ----------------------------------------------------------------------------------------------------------------------------------
Income before change in reporting period 16,326 18,275 21,854 23,061 18,912
- ----------------------------------------------------------------------------------------------------------------------------------
Change in reporting period, net of tax (1,192)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income 15,134 18,275 21,854 23,061 18,912
- ----------------------------------------------------------------------------------------------------------------------------------
Basic per common share (in dollars) 3.49 4.11 4.81 4.74 3.32
- ----------------------------------------------------------------------------------------------------------------------------------
Diluted per common share (in dollars) 3.48 4.10 4.80 4.74 3.32
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends paid per common share (in dollars) 1.36 1.33 1.24 1.10 1.06
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding--basic 4,324 4,430 4,536 4,852 5,681
- ----------------------------------------------------------------------------------------------------------------------------------
YEAR-END POSITION
- ----------------------------------------------------------------------------------------------------------------------------------
Working capital $ 123,085 $ 119,203 $ 116,373 $ 136,593 $ 156,641
- ----------------------------------------------------------------------------------------------------------------------------------
Working capital ratio 2.5 2.1 2.1 2.5 3.2
- ----------------------------------------------------------------------------------------------------------------------------------
Property, at cost 378,495 371,687 357,422 349,577 342,412
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 451,741 457,721 437,153 422,515 416,362
- ----------------------------------------------------------------------------------------------------------------------------------
Long-term debt 36,550 11,919 12,270 13,278 14,746
- ----------------------------------------------------------------------------------------------------------------------------------
Common shareholders' equity 241,374 241,743 240,004 239,738 252,174
- ----------------------------------------------------------------------------------------------------------------------------------
Equity per common share (in dollars) 56.24 55.21 53.86 51.99 48.66
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
Exhibit 21
----------
MINE SAFETY APPLIANCES COMPANY
------------------------------
The registrant's present affiliates include the following:
State or Other
Jurisdiction of
Name Incorporation
------ ---------------
Compania MSA de Argentina S.A. Argentina
MSA (Aust.) Pty. Limited Australia
MSA-Auer Sicherheitstechnik Vertriebs GmbH Austria
MSA Export Limited Barbados
MSA Belgium NV Belgium
MSA do Brasil Ltda. Brazil
MSA Canada Canada
MSA de Chile Ltda. Chile
Wuxi-MSA Safety Equipment Co. Ltd. China
Rose Manufacturing Company Colorado
MSA International, Inc. Delaware
MSA de France France
Auergesellschaft GmbH Germany
MSA-Auer Hungaria Safety Technology Hungary
MSA Italiana S.p.A. Italy
MSA Japan Ltd. Japan
Better Breathing, Inc. Massachusetts
MSA de Mexico, S.A. de C.V. Mexico
MSA Nederland, B.V. Netherlands
MSA del Peru S.A.C. Peru
MSA-Auer Polska Sp. z o.o. Poland
MSA (Britain) Limited Scotland
MSA S.E. Asia Pte. Ltd. Singapore
MSA Africa (Pty.) Ltd. South Africa
MSA Espanola S.A. Spain
AB Tegma Sweden
MSA (Switzerland) Ltd. Switzerland
Aritron Instrument A.G. Switzerland
MSA Zimbabwe (Pvt.) Limited Zimbabwe
- --------------------------------------------------------------------------------
The above-mentioned affiliated companies are included in the consolidated
financial statements of the registrant filed as part of this annual report. The
names of certain other affiliates, which considered in the aggregate as a single
affiliate would not constitute a significant affiliate, have been omitted.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-22284), the Registration Statement on Form S-8
(No. 33-43696) and the Registration Statement on Form S-8 (No. 333-51983) of
Mine Safety Appliances Company of our report dated February 17, 2000 relating to
the financial statements, which appears in the Annual Report to Shareholders,
which is incorporated in this Annual Report on Form 10-K. We also consent to
the incorporation by reference of our report dated February 17, 2000 relating to
the Financial Statement Schedule, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
March 22, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DECEMBER 1999
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 8,898
<SECURITIES> 8,210
<RECEIVABLES> 83,949
<ALLOWANCES> (2,322)
<INVENTORY> 82,097
<CURRENT-ASSETS> 22,258
<PP&E> 378,495
<DEPRECIATION> (214,986)
<TOTAL-ASSETS> 451,741
<CURRENT-LIABILITIES> 80,005
<BONDS> 36,550
0
3,569
<COMMON> 12,596
<OTHER-SE> 226,292
<TOTAL-LIABILITY-AND-EQUITY> 451,741
<SALES> 494,227
<TOTAL-REVENUES> 498,051
<CGS> 314,493
<TOTAL-COSTS> 337,849
<OTHER-EXPENSES> 3,266
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,273
<INCOME-PRETAX> 23,185
<INCOME-TAX> 6,859
<INCOME-CONTINUING> 16,326
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (1,192)
<NET-INCOME> 15,134
<EPS-BASIC> 3.49
<EPS-DILUTED> 3.48
</TABLE>
