MSA Announces Record Third Quarter Sales

PITTSBURGH, Nov. 1 /PRNewswire-FirstCall/ -- MSA (NYSE: MSA) today announced that net sales for the third quarter of 2007 were $247.7 million compared with $209.8 million for the third quarter of 2006, an increase of $37.9 million, or 18 percent. Net income for the third quarter of 2007 was $16.7 million, or 47 cents per basic share, an increase of $4.1 million, or 33 percent, compared with $12.6 million, or 35 cents per basic share, for the same quarter last year.

Sales in the North American segment grew $16.6 million, or 15 percent, in the current quarter. Shipments of Advanced Combat Helmets and related communications systems to the military were up $5.6 million and $2.3 million, respectively, and sales of ballistic protection products, including those made by Paraclete Armor and Equipment, were up $1.3 million in the current quarter. Third quarter 2007 sales of self-contained breathing apparatus (SCBA) were flat against a low 2006 third quarter, primarily due to sluggish demand from the U.S. fire service market as customers waited for the implementation of new National Fire Protection Association (NFPA) standards that all manufacturers had to meet by August 31, 2007. MSA was the first SCBA manufacturer to have a product fully certified as meeting the new NFPA performance requirements, but this occurred after the August 31 deadline, meaning the company was unable to ship SCBA to the North American fire service in September. Shipments of the new breathing apparatus have subsequently begun. Sales of thermal imaging cameras to the fire service improved $1.6 million reflecting improved availability of funding under the Federal Assistance to Firefighters Grant (AFG) Program. Continued strength in North American construction and industrial markets was reflected in sales of fall protection and head protection products, which improved $2.5 million in the current quarter.

Sales in MSA's European segment improved $10.7 million, or 22 percent, for the current quarter. Currency translation effects increased European sales by $5.1 million, when stated in U.S. dollars. Local currency sales in Europe improved $5.6 million reflecting higher shipments in most markets, but particularly in Eastern Europe.

Sales in the company's International segment improved $10.6 million, or 22 percent, in the current quarter. Local currency sales increased $4.0 million in South Africa, primarily due to strong growth in the mining industry, and $2.7 million in Latin America. Currency translation effects increased International segment sales by $2.5 million, when stated in U.S. dollars.

Third quarter net income in the North American segment was $6.9 million higher. The increase was primarily related to an after tax gain of $6.5 million on the sale of Cranberry Woods property. Excluding this gain, North American segment net income improved slightly in the quarter, with higher gross margin dollars as a result of higher sales being largely offset by increased selling, general and administrative expenses.

MSA Europe reported a $0.4 million loss for the current quarter compared to net income of $1.0 million in the prior year quarter. The entire loss and most of the decrease in income compared to 2006 was due to a one-time income tax charge of $1.6 million related to a write-down in net deferred tax assets, which resulted from a reduction of approximately 9% in the German statutory tax rate that was enacted during the current quarter.

Net income in the International segment was down $0.6 million in the quarter, reflecting higher selling, general and administrative expenses associated with the expansion in activities in South Africa, China, and Southeast Asia, partially offset by higher sales and gross margin dollars.

"I am pleased with the sales improvements that we continued to make in the third quarter from the comparable sales in 2006, particularly in our important industrial products of head protection and ballistic protection," said John T. Ryan III, MSA Chairman and CEO. "Aspects of our third quarter performance were somewhat to be expected due to the transition from the previous to the new NFPA standards in SCBA."

"Early in September, our next generation breathing apparatus for firefighters -- the FireHawk(R) M7 Air Mask -- was the first device to be certified by the Safety Equipment Institute as compliant to both 2007 edition NFPA standards covering breathing apparatus performance and Personal Alert Safety System (PASS) performance. As we have previously discussed, the new standards were challenging and the approval process for all manufacturers was quite extended. I am pleased that we were the first to achieve full certification, as we were on all previous cycles of this standard, but the process of getting approval and adjusting production and the supply chain for the new devices kept us from meaningful invoicing of SCBA to the North American Fire Service in September and from getting samples to customers for fire ground evaluations. We are now back into production, have delivered evaluation samples and are shipping the new apparatus. As I noted at the end of the second quarter, our experience has been that the transition to a new NFPA standard generally causes a considerable part of the market to defer decisions until devices that meet the new standard are available and can be evaluated. This was particularly the case this time," Mr. Ryan said. "We are confident in the competitiveness of our new device and in the entire market for breathing apparatus in North America, and I expect that we will begin to see improved SCBA sales in late 2007 and early 2008."

"Progress has been made in our International and European segments. The improvement in operating results in Europe this year has been masked by the tax provision adjustments. But going forward, our European segment results should benefit from the lower German income tax rate. Continuing expansion of our sales and operational capabilities in our International segment has held down earnings performance. I look forward to more clear progress in these areas," Mr. Ryan continued.

"With the recent introduction of our new NFPA-compliant FireHawk M7 Air Mask and continued success in our other markets, I continue to believe that we should achieve our 2007 goal of record sales. Reaching our goal of record earnings will require a very strong performance in the fourth quarter to make up for the time lost in the NFPA approval process," Mr. Ryan concluded.

About MSA:

Established in 1914, MSA is a global leader in the development, manufacture and supply of sophisticated safety products that protect people's health and safety. Sophisticated safety products typically integrate any combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations. The company's comprehensive line of products is used by workers around the world in the fire service, homeland security, construction and other industries, as well as the military. Principal products include self-contained breathing apparatus, gas masks, gas detection instruments, head protection, respirators and thermal imaging cameras. The company also provides a broad range of consumer and contractor safety products through retail channels. These products are marketed and sold under the MSA Safety Works brand. MSA has annual sales of approximately $950 million, manufacturing operations throughout the United States and Europe, and more than 42 international locations. Additional information is available on the company's Web site at http://www.msanet.com.

Cautionary Statement Regarding Forward-Looking Statements:

Except for historical information, certain matters discussed in this press release may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, including without limitation all projections and anticipated levels of future performance, involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Actual results can be affected by any number of factors, many of which are outside of management's control. Among the factors that could cause such differences are spending patterns of government agencies, competitive pressures, product liability claims, the success of new product introductions, currency exchange rate fluctuations, the identification and successful integration of acquisitions and the risks of doing business in foreign countries. These risks, uncertainties and other factors are detailed from time to time in our filings with the United States Securities and Exchange Commission ("SEC"). You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties. MSA's SEC filings are readily obtainable at no charge at http://www.sec.gov, as well as on a number of other commercial web sites.

    Mine Safety Appliances Company
    Consolidated Condensed Statement of Income (Unaudited)
    (In thousands, except earnings per share)

                            Three Months Ended         Nine Months Ended
                              September 30              September 30
                            2007         2006         2007         2006
    Net sales             $247,675     $209,802     $722,713     $656,775
    Other income            11,249        1,669       12,713        3,409
                           258,924      211,471      735,426      660,184

    Cost of products sold  157,407      131,652      449,480      398,762
    Selling, general and
     administrative         62,362       52,378      177,711      159,791
    Research and
     development             7,560        6,603       20,274       19,125
    Restructuring and
     other charges             707          306        3,202        6,762
    Interest                 2,653        1,481        6,878        3,880
    Currency exchange
     (gains) losses            (23)         532       (1,259)       2,525
                           230,666      192,952      656,286      590,845

    Income before
     income taxes           28,258       18,519       79,140       69,339
    Provision for
     income taxes           11,523        5,918       29,009       24,919
    Net income              16,735       12,601       50,131       44,420

    Basic earnings
     per share                $.47         $.35        $1.40        $1.22
    Diluted earnings
     per share                $.46         $.34        $1.38        $1.20
    Dividends per
     common share             $.22         $.18         $.62         $.50

    Average number of
     common shares
     outstanding (basic)    35,559       36,288       35,713       36,433



    Mine Safety Appliances Company
    Consolidated Condensed Balance Sheet (Unaudited)
    (In thousands)

                                                   September 30,  December 31,
                                                       2007           2006
    Current assets
      Cash and cash equivalents                      $83,875        $61,296
      Trade receivables, net                         194,761        174,569
      Inventories                                    153,141        137,230
      Other current assets                            50,241         43,764
        Total current assets                         482,018        416,859

    Property, net                                    125,993        120,651
    Prepaid pension cost                             219,601        211,018
    Goodwill                                          86,667         79,360
    Other non-current assets                          89,129         70,732
        Total                                      1,003,408        898,620

    Current liabilities
      Notes payable and current portion of
       long-term debt                                $49,079         $2,340
      Accounts payable                                51,697         39,441
      Other current liabilities                      102,460         85,654
        Total current liabilities                    203,236        127,435

    Long-term debt                                   111,234        112,541
    Pension and other employee benefits              118,674        110,966
    Deferred tax liabilities                         101,238        100,969
    Other non-current liabilities                     16,180          8,856
    Shareholders' equity                             452,846        437,853
      Total                                        1,003,408        898,620



    Mine Safety Appliances Company
    Segment Information (Unaudited)
    (In thousands)

                             Three Months Ended        Nine Months Ended
                               September 30              September 30
                             2007         2006         2007         2006
    Net sales
      North America        $129,737     $113,180     $384,456     $371,102
      Europe                 58,800       48,085      167,913      146,152
      International          59,138       48,537      170,344      139,521
        Total               247,675      209,802      722,713      656,775

    Net income
      North America         $13,797       $6,908      $34,930      $30,020
      Europe                   (379)       1,037        4,065        4,806
      International           3,878        4,525       11,512       10,617
      Reconciling              (561)         131         (376)      (1,023)
        Total                16,735       12,601       50,131       44,420