Net Sales Increase 8 Percent for the Year PITTSBURGH, Feb. 29
/PRNewswire-FirstCall/ -- MSA (NYSE) today announced that net sales
for the year ended December 31, 2007 were $990.3 million compared
with $913.7 million in 2006, an increase of $76.6 million, or 8
percent. Net income for the year ended December 31, 2007 was $67.6
million, or $1.89 per basic share, an increase of $3.7 million, or
6 percent, compared with $63.9 million, or $1.76 per basic share,
for 2006. Net sales for the fourth quarter of 2007 were $267.5
million compared with $256.9 million for the fourth quarter of
2006, an increase of $10.6 million, or 4 percent. Net income for
the fourth quarter of 2007 was $17.5 million, or 49 cents per basic
share, a decrease of $2.0 million, or 10 percent, compared with
$19.5 million, or 54 cents per basic share, for the same quarter
last year. The company's record fourth quarter sales reflect strong
growth in MSA's International segment, partially offset by somewhat
lower sales in North America and Europe. Fourth quarter
International sales increased $14.9 million, driven by local
currency sales growth in multiple markets, including Australia
where local currency sales increased $3.6 million primarily on the
strength of a large breathing apparatus order for the Australian
Navy. Local currency sales also improved $2.5 million in Latin
America, $1.6 million in Asia and $1.5 million in South Africa,
primarily due to MSA's continued focus on growth initiatives in
these markets. Currency translation effects increased International
segment sales by $4.7 million, when stated in U.S. dollars. Fourth
quarter sales in Europe were $2.7 million lower, reflecting lower
local currency sales in Eastern Europe, partially offset by
favorable currency translation effects when stated in U.S. dollars.
Fourth quarter 2006 sales included an $8.8 million order for
chemical suits for the Slovakian government. For the year, sales by
MSA Europe increased 9 percent, though this increase was due to
currency translation effects. Local currency orders and sales in
Europe were flat to slightly down for the full year in 2007 after
very strong growth in the previous year. In 2006 MSA Europe had a
large buildup of backlog during the first three quarters of the
year, followed by exceptionally strong invoicing in the fourth
quarter to liquidate the backlog buildup. In 2007, invoicing was
somewhat more timely and left less catch-up invoicing for the
fourth quarter. In the fourth quarter of 2007, MSA's European
orders and shipments met expectations but were down compared to the
exceptional levels of the previous year. Fourth quarter 2007
earnings in Europe were 74 percent above the comparable earnings of
the four quarter of 2005. In North America, fourth quarter sales
were $1.6 million lower than in the same quarter last year,
reflecting lower shipments of self-contained breathing apparatus
(SCBA). Fourth quarter net income in MSA's International segment
improved $0.5 million on higher sales, partially offset by higher
operating expenses and a one-time income tax charge of $1.7 million
for the quarter in Japan. In North America, fourth quarter net
income was up $0.5 million, reflecting improved gross margins.
Additionally, fourth quarter 2006 net income in North America
benefited from a more favorable income tax profile than in the
current quarter. In Europe, fourth quarter net income was $1.3
million lower, reflecting the previously mentioned reduction in
exceptional shipments of backlog. The fourth quarter net loss of
$1.4 million in reconciling items relates primarily to currency
exchange losses and income taxes on intercompany items that are
reported at the corporate level. Overall, MSA's income before taxes
in the fourth quarter of 2007 was 16 percent greater than in the
fourth quarter of 2006. However, the swing in the tax rates caused
the decline in quarterly net income. Tax issues were the previously
mentioned Japanese tax charge in 2007 while, in the fourth quarter
of 2006, the company booked a reduced tax charge of about $3
million due to a lower state tax profile and the reinstatement of
the R&D tax credit. For the year 2007, sales growth in North
America was impacted by reduced sales to the U.S. fire service,
driven largely by purchasing delays brought forth by a new
breathing apparatus standard promulgated by the National Fire
Protection Association (NFPA). In Europe, MSA sales growth was due
to currency translation as discussed above, while International
sales increased 24 percent, most of which was attributable to
higher business in local currencies. Profitability in North America
in 2007 was helped by the sale of real estate in the third quarter
and a $1.9 million pre-tax gain on the sale the company's Clifton,
New Jersey, plant. Overall for the company, however, the gains on
these sales were roughly offset by the costs of exceptional items,
including charges related to Project Magellan factory consolidation
programs and the realignment of the European management team, major
tax charges in Japan and Germany, and other one-time items.
Excluding the exceptional tax charges and the increase in European
restructuring costs in 2007, European net profit for the year would
have shown a percentage increase roughly comparable to the sales
increase. Likewise, without the Japanese tax charge of about $1.3
million, International net profit would have had an annual percent
increase of 20 percent, close to the percent sales increase. "I am
very pleased we were able to report record sales for the fourth
quarter and the full year," commented John T. Ryan III, MSA
Chairman and CEO. "The sales growth in our International segment is
especially satisfying because it is the direct result of our recent
initiatives to expand MSA's presence in these markets. Head
protection and fall protection in North America and permanent
instruments in Europe made good contributions. Sales growth in
North America was achieved despite continuing disruptions in the
fire service market that resulted from delays in late 2006 and
early 2007 in government funding to fire departments under the
Assistance to Firefighters Grant (AFG) program and the transition
to new NFPA standards." "I am, however, disappointed that we did
not achieve our goal of record earnings for the year. Almost all of
this shortfall is due to sales below our expectations to the U.S.
Fire Service and to exceptional tax charges in Germany and Japan.
In the U.S. Fire Service we have in the past identified four major
factors in the timing of our business in this sector: -- U.S.
Federal Government funding of the Fire Service (AFG). -- MSA
getting compliance certification of our breathing apparatus to new
NFPA standards and producing orders and evaluation samples. --
MSA's market share in breathing apparatus orders that have been
placed. -- Customer timing of their purchase decisions." Mr. Ryan
continued, "Of these factors, the first three worked out well, for
the most part, by the end of the fourth quarter. AFG funding is
catching up. MSA was the first supplier to achieve compliance
certification of our breathing apparatus to the new NFPA standards
covering models representing over 80 percent of our sales in this
line. We produced the needed customer evaluation samples by
mid-fourth quarter and our production is catching up with demand.
And our share of customer orders that have been placed is quite
satisfactory. The negatives are that the positive factors started
too late to generate the results we wanted in calendar year 2007
and there was a significant tendency for customers to hold off
making purchase decisions in late 2007. The latter was due to
multiple factors, particularly the inability of customers to do
comparative breathing apparatus evaluations because our competitors
either did not have certified products meeting the new NFPA
standards or samples for evaluation, the need for customers to
figure out how to handle new AFG administrative procedures and
delays surrounding the holiday season." "In the end, our incoming
orders for fire service products in North America were up a little
in 2007 over 2006, but not up to our expectations. Our North
American military business was higher in 2007 than 2006, but some
invoicing opportunities slipped to 2008 due to constraints by
external suppliers. MSA business outside of the U.S. Fire Service
and the North American military, roughly 80 percent of our total
2007 sales, met our goal of 10 percent growth for the year,
particularly helped by strong performance by MSA International, the
other good contributors that I noted earlier and a little
assistance from favorable changes in exchange rates." Mr. Ryan
said. "Looking at 2008, our prospects at the present time look
favorable in all three of the above markets. We expect that the
delay in utilization of AFG funding and in fire department
evaluations of equipment meeting the new NFPA standards -- factors
that have recently constrained our U.S. Fire Service business --
are diminishing and that we will benefit with better sales in the
first half of 2008. The strong level of incoming orders in this
segment in the first two months of 2008 supports this. We also
believe that our North American military sales will be higher in
2008 than 2007, and we continue to pursue our long term goal of
having our total sales, less North American military and U.S. Fire
Service, grow at 10 percent annually. A global recession would
significantly hinder this, but this has not yet after two months
been evident in the markets that are important to us. Of course, we
are only beginning 2008 and the year has a long way to go." "During
2007, we made significant progress on Project Magellan to improve
the efficiency of our North American manufacturing operations.
These efforts included the relocation of certain manufacturing
operations within the U.S. and Mexico to improve facility
utilization and efficiency. We also realigned our management team
in Europe during the year and expanded the responsibilities of a
number of corporate executives to continue our transformation to a
fully global company. These initiatives are already resulting in
improvements in product costs and more effective management of our
global business. I look forward to clear progress from these
initiatives in 2008 and future years," Mr. Ryan noted. "A milestone
in MSA's global development was reached in 2007 by our sales
outside of the United States and Canada exceeding that of these two
legacy countries of MSA's birth and early development. This fits
with our global mission and I look forward to growth in both these
halves of the world in 2008 and future years." 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 $1 billion, manufacturing operations
throughout the United States and Europe, and 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 Three Months Ended December
31, December 31, 2007 2006 2007 2006 Net sales $267,539 $256,939
$990,252 $913,714 Other income 4,683 1,975 17,396 5,384 272,222
258,914 1,007,648 919,098 Cost of products sold 166,723 169,648
616,203 568,410 Selling, general and administrative 63,427 55,872
241,138 215,663 Research and development 9,922 6,912 30,196 26,037
Restructuring and other charges 940 219 4,142 6,981 Interest 3,035
2,348 9,913 6,228 Currency exchange (gains) losses 1,127 614 (132)
3,139 245,174 235,613 901,460 826,458 Income before income taxes
27,048 23,301 106,188 92,640 Provision for income taxes 9,591 3,803
38,600 28,722 Net income 17,457 19,498 67,588 63,918 Basic earnings
per share $.49 $.54 $1.89 $1.76 Diluted earnings per share $.48
$.53 $1.86 $1.73 Dividends per common share $.22 $.18 $.84 $.68
Average number of common shares outstanding (basic) 35,470 36,138
35,651 36,366 Mine Safety Appliances Company Consolidated Condensed
Balance Sheet (Unaudited) (In thousands) December 31, December 31,
2007 2006 Current assets Cash and cash equivalents $74,981 $61,296
Trade receivables, net 205,737 174,569 Inventories 155,332 137,230
Other current assets 61,000 43,764 Total current assets 497,050
416,859 Property, net 130,445 120,651 Prepaid pension cost 212,304
211,018 Goodwill 87,011 79,360 Other non-current assets 89,496
70,732 Total 1,016,306 898,620 Current liabilities Notes payable
and current portion of long-term debt $54,676 $2,340 Accounts
payable 50,648 39,441 Other current liabilities 103,865 85,654
Total current liabilities 209,189 127,435 Long-term debt 103,726
112,541 Pensions and other employee benefits 126,790 110,966
Deferred tax liabilities 100,934 100,969 Other non-current
liabilities 14,136 8,856 Shareholders' equity 461,531 437,853 Total
1,016,306 898,620 Mine Safety Appliances Company Segment
Information (Unaudited) (In thousands) Twelve Months Ended Twelve
Months Ended December 31 December 31 2007 2006 2007 2006 Net sales
North America $130,686 $132,255 $515,142 $503,357 Europe 70,381
73,089 238,294 219,241 International 66,472 51,595 236,816 191,116
Total 267,539 256,939 990,252 913,714 Net income North America
$13,174 $12,638 $48,104 $42,658 Europe 2,764 4,045 6,829 8,851
International 2,932 2,470 14,444 13,087 Reconciling (1,413) 345
(1,789) (678) Total 17,457 19,498 67,588 63,918 DATASOURCE: MSA
CONTACT: Mark Deasy of MSA, +1-412-967-3357 Web site:
http://www.msanet.com/
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