SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2004
Commission File No. 1-15579
MINE SAFETY APPLIANCES COMPANY
(Exact name of registrant as specified in its charter)
| Pennsylvania | 25-0668780 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| 121 Gamma Drive RIDC Industrial Park O’Hara Township Pittsburgh, Pennsylvania |
15238 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 412/967-3000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of July 31, 2004, there were outstanding 37,060,340 shares of common stock without par value, not including 3,549,719 shares held by the Mine Safety Appliances Company Stock Compensation Trust.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands, except per share amounts)
| Three Months Ended June 30 Unaudited |
Six Months Ended June 30 Unaudited |
|||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||
| Net sales |
$ | 213,114 | $ | 175,939 | $ | 407,604 | $ | 336,330 | ||||||
| Other income |
678 | 434 | 1,464 | 530 | ||||||||||
| 213,792 | 176,373 | 409,068 | 336,860 | |||||||||||
| Costs and expenses |
||||||||||||||
| Cost of products sold |
124,608 | 103,286 | 233,939 | 197,139 | ||||||||||
| Selling, general and administrative |
47,147 | 42,219 | 94,877 | 81,315 | ||||||||||
| Research and development |
5,087 | 4,854 | 10,302 | 9,896 | ||||||||||
| Depreciation and amortization |
5,761 | 5,657 | 11,581 | 11,050 | ||||||||||
| Interest |
1,215 | 1,173 | 1,729 | 2,292 | ||||||||||
| Currency exchange loss (gain) |
1,253 | (651 | ) | 1,920 | (1,801 | ) | ||||||||
| 185,071 | 156,538 | 354,348 | 299,891 | |||||||||||
| Income from continuing operations before income taxes |
28,721 | 19,835 | 54,720 | 36,969 | ||||||||||
| Provision for income taxes |
10,603 | 7,643 | 20,464 | 14,278 | ||||||||||
| Net income from continuing operations |
18,118 | 12,192 | 34,256 | 22,691 | ||||||||||
| Net income from discontinued operations |
1,273 | 2,787 | ||||||||||||
| Net income |
$ | 18,118 | $ | 13,465 | $ | 34,256 | $ | 25,478 | ||||||
| Basic earnings per common share: |
||||||||||||||
| Continuing operations |
$ | 0.49 | $ | 0.33 | $ | 0.93 | $ | 0.62 | ||||||
| Discontinued operations |
0.04 | 0.07 | ||||||||||||
| Net income |
$ | 0.49 | $ | 0.37 | $ | 0.93 | $ | 0.69 | ||||||
| Diluted earnings per common share: |
||||||||||||||
| Continuing operations |
$ | 0.48 | $ | 0.33 | $ | 0.90 | $ | 0.62 | ||||||
| Discontinued operations |
0.04 | 0.07 | ||||||||||||
| Net income |
$ | 0.48 | $ | 0.37 | $ | 0.90 | $ | 0.69 | ||||||
| Dividends per common share |
$ | 0.10 | $ | 0.06 | $ | 0.17 | $ | 0.12 | ||||||
See notes to consolidated condensed financial statements.
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands, except share data)
| June 30 2004 Unaudited |
December 31 2003 |
|||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 61,686 | $ | 73,244 | ||||
| Trade receivables, less allowance for doubtful accounts of $5,539 and $6,418 |
148,343 | 129,900 | ||||||
| Inventories: |
||||||||
| Finished products |
41,476 | 34,660 | ||||||
| Work in process |
19,489 | 17,476 | ||||||
| Raw materials and supplies |
44,136 | 37,967 | ||||||
| Total inventories |
105,101 | 90,103 | ||||||
| Deferred tax assets |
18,330 | 17,890 | ||||||
| Prepaid expenses and other current assets |
19,233 | 10,794 | ||||||
| Assets held for sale |
2,311 | |||||||
| Total current assets |
352,693 | 324,242 | ||||||
| Property, plant and equipment |
355,976 | 359,946 | ||||||
| Accumulated depreciation |
(237,104 | ) | (239,386 | ) | ||||
| Net property |
118,872 | 120,560 | ||||||
| Prepaid pension cost |
127,010 | 121,290 | ||||||
| Deferred tax assets |
22,814 | 23,047 | ||||||
| Goodwill |
47,595 | 44,810 | ||||||
| Other noncurrent assets |
9,779 | 9,936 | ||||||
| TOTAL |
$ | 678,763 | $ | 643,885 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Notes payable and current portion of long-term debt |
$ | 5,806 | $ | 5,666 | ||||
| Accounts payable |
45,583 | 40,029 | ||||||
| Employees’ compensation |
16,275 | 15,486 | ||||||
| Insurance and product liability |
15,360 | 13,518 | ||||||
| Taxes on income |
1,424 | 4,976 | ||||||
| Other current liabilities |
37,920 | 35,040 | ||||||
| Total current liabilities |
122,368 | 114,715 | ||||||
| Long-term debt |
58,678 | 59,915 | ||||||
| Pensions and other employee benefits |
74,471 | 74,808 | ||||||
| Deferred tax liabilities |
74,226 | 70,845 | ||||||
| Other noncurrent liabilities |
15,140 | 15,744 | ||||||
| Shareholders’ equity |
||||||||
| Preferred stock, 4 1/2% cumulative - authorized 100,000 shares of $50 par value; issued 71,373 and 71,373 shares, callable at $52.50 per share |
3,569 | 3,569 | ||||||
| Second cumulative preferred voting stock - authorized 1,000,000 shares of $10 par value; none issued |
||||||||
| Common stock - authorized 180,000,000 shares of no par value; issued 61,740,327 and 61,740,327 shares (outstanding 37,060,340 and 36,927,984 shares) |
32,645 | 31,187 | ||||||
| Stock compensation trust - 3,549,719 and 3,711,231 shares |
(18,542 | ) | (19,385 | ) | ||||
| Treasury stock, at cost: |
||||||||
| Preferred - 51,736 and 51,554 shares |
(1,698 | ) | (1,690 | ) | ||||
| Common - 21,130,268 and 21,101,112 shares |
(136,296 | ) | (135,483 | ) | ||||
| Deferred stock compensation |
(1,729 | ) | (993 | ) | ||||
| Accumulated other comprehensive loss |
(8,702 | ) | (6,037 | ) | ||||
| Earnings retained in the business |
464,633 | 436,690 | ||||||
| Total shareholders’ equity |
333,880 | 307,858 | ||||||
| TOTAL |
$ | 678,763 | $ | 643,885 | ||||
See notes to consolidated condensed financial statements.
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
| Six Months Ended June 30 Unaudited |
||||||||
| 2004 |
2003 |
|||||||
| OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 34,256 | $ | 25,478 | ||||
| Net income from discontinued operations |
(2,787 | ) | ||||||
| Net income from continuing operations |
34,256 | 22,691 | ||||||
| Depreciation and amortization |
11,581 | 11,050 | ||||||
| Pensions |
(3,906 | ) | (4,726 | ) | ||||
| Gain on sale of investments and assets |
(41 | ) | (72 | ) | ||||
| Deferred income taxes |
2,647 | 2,751 | ||||||
| Changes in operating assets and liabilities |
(34,622 | ) | (30,035 | ) | ||||
| Other - including currency exchange adjustments |
321 | (579 | ) | |||||
| Cash flow from continuing operations |
10,236 | 1,080 | ||||||
| Cash flow from discontinued operations |
2,061 | 5,631 | ||||||
| Cash flow from operating activities |
12,297 | 6,711 | ||||||
| INVESTING ACTIVITIES |
||||||||
| Property additions |
(10,743 | ) | (8,485 | ) | ||||
| Property disposals |
108 | 142 | ||||||
| Acquisitions, net of cash acquired, and other investing |
(5,912 | ) | (697 | ) | ||||
| Cash flow from investing activities |
(16,547 | ) | (9,040 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Additions to long-term debt |
16 | 95 | ||||||
| Reductions of long-term debt |
(348 | ) | (623 | ) | ||||
| Changes in notes payable and short-term debt |
203 | (8,892 | ) | |||||
| Cash dividends |
(6,313 | ) | (4,545 | ) | ||||
| Company stock purchases |
(821 | ) | (709 | ) | ||||
| Company stock sales |
1,148 | 458 | ||||||
| Cash flow from financing activities |
(6,115 | ) | (14,216 | ) | ||||
| Effect of exchange rate changes on cash |
(1,193 | ) | 1,226 | |||||
| Decrease in cash and cash equivalents |
(11,558 | ) | (15,319 | ) | ||||
| Beginning cash and cash equivalents |
73,244 | 36,477 | ||||||
| Ending cash and cash equivalents |
$ | 61,686 | ||||||