EXHIBIT 13 ---------- DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SALES AND EARNINGS Sales were $429,220,000 in 1993, a 15% decline from the prior year's $502,366,000. Sales in 1991 were $499,240,000. Income from continuing operations declined 37% in 1993 to $10,555,000 from $16,703,000 in 1992, which was 25% lower than 1991's income of $22,424,000. Income from continuing operations, per share of common stock, was $1.73 in 1993, $2.67 in 1992, and $3.52 in 1991. The decrease in consolidated sales in 1993 is attributed primarily to a significant drop in sales to the U.S. Defense Department and lower international sales, particularly in Europe. U.S. commercial sales in 1993 were minimally higher than 1992. Defense product sales of gas masks and parts were especially high in late 1991 and early 1992 due to orders relating to the Middle East conflict. Shipments of defense products to U.S. government agencies in 1993 were $43,234,000, a 57% decrease from 1992 shipments of $99,991,000. Shipments in 1992 were 7 1/2% higher than 1991 shipments of $93,034,000. These sales represent 10% of consolidated sales in 1993, as compared to 20% in 1992 and 18 1/2% in 1991. New contracts received in 1993 were $32,558,000 as compared to $48,510,000 in 1992. The 1993 year-end backlog was $54,889,000, a 16% decrease from the 1992 year-end backlog of $65,565,000. Domestic sales of commercial products increased in shipments of instrument products in 1993 and 1992, along with increased chemical products sales in 1992. Sales of commercial safety products were about the same as in 1992 and 1991. Sales by international operations, stated in U.S. dollars, decreased 10 1/2% in 1993, after having decreased 3 1/2% in 1992. These decreases are due primarily to currency exchange rate shifts and the widespread economic recession, particularly in Europe. The 1993 gross profit rate was 36.3%, an increase over the 34.8% and 35.0% experienced in 1992 and 1991, respectively. Historically and currently, commercial sales carry much greater margins than military sales; thus the change of sales mix has contributed to higher profit margins. Furthermore, military sales profit rates dropped significantly in 1992 and 1991, reflecting the impacts of development and start-up costs for new model designs and the results of competitive bidding pressures. Results in 1991 were also adversely affected by operating losses at the Catalyst Research Division. Depreciation, selling and administrative expenses approximated 30% of sales in each of the years 1993, 1992 and 1991. Income from continuing operations in 1993 was not materially affected by relocation and restructuring activities, whereas in 1992 there was an after-tax charge of $3,163,000 or $ .51 per share. In 1992 the company consolidated certain U.S. manufacturing operations. The medical instruments, specialty sensor and battery operations at the Catalyst Research Division in Owings Mills, Maryland were transferred to the Instrument Division in Cranberry, Pa., and the Owings Mills facility offered for sale. Safety products manufacturing is now concentrated in three principal locations after a reduction in the scope of operations at Evans City, Pa. In 1993, the German affiliate closed one factory and a distribution center and now conducts all its operations from Berlin. Major reductions in the work forces have been instituted, particularly in Europe and Latin America. It is expected that these changes will enable the company to serve its commercial and military customers more efficiently and maintain ample capacity to meet future growth potential. Net income in 1993 was $10,555,000 or $1.73 per share of common stock, compared to 1992 net income of $2,672,000 or $.42 per share (includes special charges for accounting changes and discontinued operations) and $18,651,000 or $2.92 per share in 1991. The accounting changes in 1992 resulted in an after-tax cumulative effect charge, as of January 1, 1992, of $8,964,000 or $1.44 per share of common stock. SFAS No. 106--"Employers' Accounting for Postretirement Benefits Other Than Pensions" was implemented on an immediate recognition basis rather than spreading the accumulated obligation over 20 years (see note 16). This one-time transition effect decreased net income $8,672,000 ($1.39 per share). SFAS No. 112--"Employers' Accounting for Postemployment Benefits," pertaining to benefits such as workers' compensation and other disability expenses, reduced earnings $2,440,000 ($.39 per share). SFAS No. 109--"Accounting for Income Taxes" increased earnings $2,148,000 ($.34 per share). This Standard requires that deferred tax balances be stated at tax rates expected to be in effect when taxes are actually paid or recovered. This asset/liability method may have a more volatile effect on future earnings than the previous method which provided deferred taxes at tax rates prevailing during the periods that timing differences occurred. Although these three new Standards significantly reduced 1992 net income, they did not have any cash flow impact. The company decided, as of the end of 1992, to discontinue the operation of Transfer-Metallisierte Produkte GmbH (TMP), a joint venture in Germany to produce metallized paper. This venture, unrelated to the company's safety products, has been a financial drain on the company. Operating activities ceased during 1993; the company is in the process of disposing of its assets and settling its liabilities. TMP's cumulative losses since inception in the company's consoli- 7 dated results, adjusted for the after-tax effects of intercompany transactions, aggregate approximately $10.9 million. The company estimates that any losses that may be incurred from the disposition of TMP, including provision for operating losses during the phase-out period, will not affect 1993 and 1992 net income or cash flows after deducting the aforementioned accumulated losses already recognized and the tax benefits associated with any write-off. The after-tax effects of foreign currency exchange losses charged to income in 1993 reduced net income $3,204,000 or $.53 per share, as compared to $5,022,000 or $.81 per share in 1992 and $2,408,000 or $.38 per share in 1991. The more significant losses resulted from the currency valuation changes that occurred in Brazil in each of the three years. The effective income tax rates, for which further information is included at note 8, were 42.1% in 1993, 39.9% in 1992, and 41.4% in 1991. FINANCIAL CONDITION AND FUNDS FLOW Cash and cash equivalents decreased $8,975,000 during 1993. Accounts receivable of $81,897,000 at December 31, 1993 includes $10,129,000 from the sale of fixed assets. Trade receivables expressed in number of days' sales outstanding were 61 days, as compared to 55 days in 1992. Inventories decreased $6,330,000 to $81,454,000 at December 31, 1993. Inventory measured against sales turned 5.3 times in 1993 and 5.7 times in 1992. Inventories decreased primarily in the international companies. The working capital ratio was 3.7 and 4.2 to 1 at years-end 1993 and 1992, respectively. All short-term debt was owed by international affiliates. These loans are payable in local currencies, which is in keeping with the company's policy of minimizing foreign currency exposures by offsetting foreign currency assets with foreign currency debt. The average interest rate on these loans, which includes the effects of borrowing in certain countries where local inflation has resulted in high interest rates, was approximately 14%. Long-term debt and the current portion thereof decreased $1,402,000 to $30,982,000, a conservative 11% of total capital. Total capital is defined as long-term debt plus current portion of long-term debt and shareholders' equity. Capital expenditures of $20,399,000 in 1993 represent a decrease of $2,363,000 from 1992 expenditures of $22,762,000. The company has continued its program of plant and equipment modernization to increase efficiency of existing manufacturing and distribution facilities. For the most part, capital expenditures were financed internally through retained earnings. In the past five years, approximately $ 111 million has been spent on new plants, equipment and distribution facilities. Dividends paid on the common stock during 1993 (the 76th consecutive year of a dividend payment) were $.92 per share, up from the $.89 per share paid during 1992 and $.88 per share paid in 1991. The current quarterly cash dividend is $.23 per share on common stock. Cash dividends have been paid at a conservative percentage of income which has permitted the company to finance its growth almost exclusively 8 through retained earnings. Common shares are repurchased from time-to-time in keeping with the company's policy of buying back a limited number of its shares. As of December 31, 1993, an additional 129,120 shares may be repurchased under current authorizations. Credit available at year-end with banks was the U.S. dollar equivalent of $8,858,000. The company's financial position remains strong and should provide adequate capital resources for growth. CUMULATIVE CURRENCY TRANSLATION ADJUSTMENT The year-end position of the U.S. dollar relative to foreign currencies resulted in a translation loss of $5,400,000 being charged to the cumulative translation adjustments shareholders equity account in 1993, as compared to losses of $4,736,000 in 1992 and $7,527,000 in 1991. Significant translation losses occurred in Germany and Italy in 1993, in Britain, Canada, Italy and Australia in 1992 and in Germany and Britain in 1991. COMMON STOCK At December 31, 1993, there were 6,011,628 shares of common stock outstanding. There were approximately 480 identifiable common stockholders as of November 19, 1993, a recent date for dividends. The common stock last-sale price and up-to-the-minute volume information (Symbol: MNES) is included in the National Association of Security Dealers, Inc., (NASDAQ) National Market System. The quarterly high and low price quotations for common shares follow: 1993 1992 -------------------- ------------------- Quarter High Low High Low - ------- ---- --- ---- --- First $46 $39 3/4 $51 $43 1/2 Second 49 44 46 42 Third 45 3/4 41 1/4 45 3/4 41 3/4 Fourth 45 41 3/4 44 1/2 38 Common stock quarterly cash dividend information is as follows: Amount Record Payment Quarter Per Share Date Date - ------- --------- ---- ---- 1993 ------ First $ .23 Feb. 19, 1993 March 10, 1993 Second .23 May 14, 1993 June 10, 1993 Third .23 Aug. 13, 1993 Sept. 10, 1993 Fourth .23 Nov. 19, 1993 Dec. 10, 1993 ----- Total .92 ----- 1992 ------ First $ .22 Feb. 21, 1992 March 10, 1992 Second .22 May 15, 1992 June 10, 1992 Third .22 Aug. 14, 1992 Sept. 10, 1992 Fourth .23 Nov. 20, 1992 Dec. 10, 1992 ----- Total .89 ----- 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. 9 REPORT OF MANAGEMENT Mine Safety Appliances Company's consolidated financial statements and related notes that appear in this Annual Report to Shareowners 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 Shareowners 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 earnings retained in the business, and of cash flows present fairly, in all material respects, the financial position of Mine Safety Appliances Company and its subsidiaries at December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards 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 18 to these consolidated financial statements, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," SFAS No. 109, "Accounting for Income Taxes," and SFAS No. 112, "Employers' Accounting for Postemployment Benefits" in 1992. /s/ Price Waterhouse - -------------------- Price Waterhouse Pittsburgh, Pennsylvania February 16, 1994 10 Consolidated Statement of Income - -------------------------------- (In thousands, except per share amounts) Year Ended December 31 1993 1992 1991 Net sales.................................................................... $429,220 $502,366 $499,240 Other income................................................................. 5,885 9,755 8,886 -------- -------- -------- 435,105 512,121 508,126 -------- -------- -------- Costs and expenses Cost of products sold..................................................... 273,350 327,555 324,448 Selling, general and administrative....................................... 121,529 130,182 124,983 Depreciation.............................................................. 17,294 16,831 16,230 Interest.................................................................. (1,713) 1,536 1,739 Foreign currency losses................................................... 3,201 5,507 2,456 Facilities consolidation and restructuring charges........................ (223) 5,500 Contract costs recovery................................................... (2,800) -------- -------- -------- 416,864 484,311 469,856 -------- -------- -------- Income from continuing operations before income taxes........................ 18,241 27,810 38,270 Provision for income taxes................................................... 7,686 11,107 15,846 -------- -------- -------- Income from continuing operations............................................ 10,555 16,703 22,424 Losses from discontinued operations (Note 7)................................. (5,067) (3,773) Cumulative effect to January 1, 1992 of changes in accounting principles (Note 18).............................. (8,964) -------- -------- -------- Net income................................................................... $ 10,555 $ 2,672 $ 18,651 ======== ======== ======== Earnings per common share Continuing operations..................................................... $ 1.73 $ 2.67 $ 3.52 Discontinued operations................................................... (.81) (.60) Cumulative effect to January 1, 1992 of changes in accounting principles.. (1.44) -------- -------- -------- Net income................................................................ $ 1.73 $ .42 $ 2.92 ======== ======== ======== Consolidated Statement of Earnings Retained in the Business - --------------------------------- (In thousands, except per share amounts) Year Ended December 31 1993 1992 1991 At beginning of year............................................. $282,371 $285,307 $272,315 Net income....................................................... 10,555 2,672 18,651 Dividends Common--$.92, $.89 and $.88 per share......................... (5,584) (5,550) (5,600) Preferred--$2.25 per share.................................... (56) (58) (59) -------- -------- -------- At end of year................................................... $287,286 $282,371 $285,307 ======== ======== ======== See notes to consolidated financial statements 11 Consolidated Balance Sheet - -------------------------- (In thousands, except per share amounts) December 31 1993 1992 ASSETS Current Assets Cash............................................... $ 10,953 $ 13,117 Temporary investments, at cost which approximates market............................... 35,481 42,292 Receivables, less allowance for doubtful accounts $2,516 and $2,453........................ 81,897 75,779 Inventories........................................ 81,454 87,784 Prepaid expenses and other current assets.......... 14,824 13,440 --------- --------- Total current assets............................... 224,609 232,412 --------- --------- Property Land............................................... 6,766 7,566 Buildings.......................................... 104,942 107,239 Machinery and equipment............................ 183,776 181,062 Construction in progress........................... 11,207 10,041 --------- --------- Total............................................. 306,691 305,908 Less accumulated depreciation...................... (153,162) (149,763) --------- --------- Net property....................................... 153,529 156,145 --------- --------- Other Assets Assets of discontinued business.................... 7,175 6,092 Other assets....................................... 22,571 13,123 --------- --------- Total other assets................................. 29,746 19,215 --------- --------- Total.............................................. $ 407,884 $ 407,772 ========= ========= LIABILITIES Current Liabilities Notes payable and current portion of long-term debt.................................... $ 6,294 $ 6,451 Accounts payable................................... 20,925 25,215 Employees' compensation............................ 11,460 11,271 Insurance.......................................... 7,509 7,067 Taxes on income.................................... (3,474) (7,349) Other current liabilities.......................... 17,696 12,470 --------- --------- Total current liabilities.......................... 60,410 55,125 --------- --------- Long-term Debt ................................................... 27,476 28,868 --------- --------- Other Liabilities Deferred income taxes.............................. 12,142 9,794 Pensions and other employee benefits............... 46,856 49,128 Other noncurrent liabilities....................... 1,256 1,663 --------- --------- Total other liabilities............................ 60,254 60,585 --------- --------- 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: 1993--6,011,628; 1992--6,078,786)................ 8,048 6,872 Cumulative translation adjustments................. (5,749) (349) Earnings retained in the business.................. 287,286 282,371 Treasury shares, at cost........................... (33,410) (29,269) --------- --------- Total shareholders' equity......................... 259,744 263,194 --------- --------- Total.............................................. $ 407,884 $ 407,772 ========= ========= See notes to consolidated financial statements. 12 Consolidated Statement of Cash Flows - ------------------------------------ (In thousands) Year Ended December 31 1993 1992 1991 OPERATING ACTIVITIES Income from continuing operations.................................... $ 10,555 $ 16,703 $ 22,424 Depreciation......................................................... 17,294 16,831 16,230 Pensions............................................................. 151 2,600 2,799 Deferred income taxes................................................ (82) 99 (2,019) Receivables.......................................................... (6,118) 7,281 1,366 Inventories.......................................................... 6,330 11,937 (11,026) Accounts payable and accrued liabilities............................. 5,442 (12,406) (1,766) Other assets and liabilities......................................... (5,040) (2,470) (2,321) Other--including currency exchange adjustments....................... (3,956) (3,682) (4,948) -------- -------- -------- CASH FLOW FROM OPERATING ACTIVITIES.................................. 24,576 36,893 20,739 -------- -------- -------- INVESTING ACTIVITIES Property additions................................................... (20,399) (22,762) (16,450) Property disposals................................................... 3,420 1,189 757 Acquisitions and other investing..................................... (4,180) 443 (2,547) -------- -------- -------- CASH FLOW FROM INVESTING ACTIVITIES.................................. (21,159) (21,130) (18,240) -------- -------- -------- FINANCING ACTIVITIES Additions to long-term debt.......................................... 1,472 6,883 11,082 Reductions of long-term debt......................................... (1,850) (1,227) (11,514) Financing funds in escrow............................................ (2,922) Cash dividends....................................................... (5,640) (5,608) (5,659) Stock options and purchases of company's stock....................... (4,141) (8,310) (5,800) Changes in notes payable and short-term debt......................... 399 (218) 1,168 -------- -------- -------- CASH FLOW FROM FINANCING ACTIVITIES.................................. (9,760) (11,402) (10,723) -------- -------- -------- Effect of exchange rate changes on cash................................. (2,632) (3,311) (4,221) -------- -------- -------- Increase (decrease) in cash and cash equivalents........................ (8,975) 1,050 (12,445) Beginning cash and cash equivalents..................................... 55,409 54,359 66,804 -------- -------- -------- Ending cash and cash equivalents........................................ $ 46,434 $ 55,409 $ 54,359 ======== ======== ======== Supplemental cash flow information: Interest payments.................................................... $ 1,467 $ 1,504 $ 1,728 Income tax payments.................................................. 9,013 25,610 16,502 See notes to consolidated financial statements. 13 Note 1--Basis of Presentation Significant accounting policies are stated in ITALICS at the applicable notes to consolidated financial statements. ALL SIGNIFICANT MAJORITY-OWNED COMPANIES 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. SALES UNDER CONTRACTS ARE RECORDED AT FIXED OR ESTIMATED CONTRACT SALES PRICES AS DELIVERIES ARE MADE. CONTRACTS REQUIRING PERFORMANCE OVER SEVERAL PERIODS ARE ACCOUNTED FOR BY THE PERCENTAGE-OF-COMPLETION METHOD OF ACCOUNTING. PROFITS EXPECTED TO BE REALIZED ARE BASED ON ESTIMATES OF TOTAL SALES AND COSTS AT COMPLETION. THESE ESTIMATES ARE PERIODICALLY REVIEWED AND REVISED DURING THE CONTRACT PERFORMANCE PERIOD. ADJUSTMENTS TO PROFITS ARE RECORDED IN THE PERIOD IN WHICH ESTIMATES ARE REVISED; LOSSES ARE RECOGNIZED IN FULL AS THEY ARE IDENTIFIED. 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. ACCUMULATED ALLOWANCES FOR DEPRECIATION OF BUILDINGS, MACHINERY AND EQUIPMENT RETIRED OR OTHERWISE DISPOSED OF ARE ELIMINATED FROM THE ACCOUNTS UPON DISPOSITION. PROFITS OR LOSSES RESULTING FROM SUCH DISPOSITIONS ARE INCLUDED IN INCOME. 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. EARNINGS PER SHARE ARE COMPUTED BASED UPON THE WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING DURING EACH YEAR. THE COMPUTATION RECOGNIZES DIVIDENDS PAID ON PREFERRED STOCK BUT DOES NOT INCLUDE A NEGLIGIBLE DILUTIVE EFFECT OF STOCK OPTIONS. Note 2--Leases The company leases warehouses, sales offices, manufacturing facilities and equipment under agreements expiring at various dates through 2003, with renewal options existing for varying periods. Rental expense for these leases charged to income was $6,438,000 in 1993, $6,500,000 in 1992, and $5,998,000 in 1991. Future minimum rental commitments under noncancelable leases are not significant. Note 3--Research and Development Expense RESEARCH AND DEVELOPMENT COSTS, CHARGED AGAINST INCOME AS INCURRED, were $21,000,000 in 1993, $20,938,000 in 1992, and $19,575,000 in 1991. Note 4--Other Income Other income is summarized as follows: (In thousands) ---------------------- 1993 1992 1991 ------ ------ ------ Interest............................. $3,732 $6,857 $6,483 Commissions, royalties and product services.............. 1,335 897 1,233 Dispositions of assets............... 127 435 308 Other................................ 691 1,566 862 ------ ------ ------ Total................................ 5,885 9,755 8,886 ------ ------ ------ Note 5--Stock Plans The company's Management Share Incentive Plan permits the granting of restricted stock awards or stock options to eligible key employees through December 1997. The 1990 Non-Employee Directors' Stock Option Plan provides for annual grants of stock options to eligible directors. As of December 31, 1993, 356,333 shares were reserved for future grants pursuant to these Plans. Shares of common stock, in the form of restricted stock bonus, have been given to employees without payment to the company in consideration of services to be performed in ensuing five-year periods. So long as certain restrictions apply, these shares may not be sold and may be subject to forfeiture under certain circumstances. THE EXPENSE TO THE COMPANY 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. The expense charged to operations was $371,000 in 1993, $318,000 in 1992, and $350,000 in 1991. A summary of the restricted stock bonus awards is as follows: Shares of Common Stock ------------ As of December 31, 1993: Awards............................. 113,103 Restrictions lapsed................ 77,531 Restrictions lapsing in: 1994 and 1995...................... 8,386 1996, 1997 and 1998................ 27,186 Stock options of 28,920 shares for key employees and 3,600 shares for non-employee directors were outstanding at December 31, 1993. These options may be exercised in whole or in part at various dates through December 18, 2001 at option prices equivalent to or higher than the market values at date of grant. Changes in stock options outstanding follow: Shares Price Per Share ------- --------------- December 31, 1990.............. 25,220 $27.00 to 61.33 Granted........................ 16,500 44.38 to 55.00 ------ December 31, 1991.............. 41,720 27.00 to 61.33 Granted........................ 1,400 44.00 Exercised...................... (4,000) 29.70 Forfeited...................... (400) 44.00 to 55.00 ------ December 31, 1992.............. 38,720 27.00 to 61.33 Granted........................ 1,400 47.13 Forfeited...................... (7,600) 55.75 ------ December 31, 1993.............. 32,520 27.00 to 61.33 ------ 14 Note 6--Business Segments and International Operations The company is primarily engaged in the manufacture and sale of safety and health equipment. Principal products include respiratory protective equipment, head protection, eye and face protection, hearing protectors, safety clothing, industrial emergency care products, mining safety equipment, monitoring instruments and heart pacemaker power cells. These safety and health products account for more than 90% of revenues, operating profits and assets. Other products which do not fall within the safety and health equipment segment of the company's business include boron-based and other specialty chemicals. Information about the company's continuing operations in different geographic areas is summarized as follows: (In thousands) --------------------------------- 1993 1992 1991 ---- ---- ---- NET SALES AND REVENUES U.S. operations........................................................ $254,823 $307,535 $297,286 European operations.................................................... 114,169 138,006 141,759 Other non-U.S. operations.............................................. 61,969 59,612 62,731 -------- -------- -------- NET SALES AND REVENUES................................................. 430,961 505,153 501,776 -------- -------- -------- INTERCOMPANY TRANSFERS U.S. operations........................................................ 17,937 18,982 18,628 European operations.................................................... 12,886 16,556 15,653 Other non-U.S. operations.............................................. 550 330 288 -------- -------- -------- INTERCOMPANY TRANSFERS................................................. 31,373 35,868 34,569 -------- -------- -------- OPERATING PROFIT AND INCOME BEFORE INCOME TAXES U.S. operations........................................................ 13,183 21,203 14,594 European operations.................................................... (1,345) 3,965 13,849 Other non-U.S. operations.............................................. 6,036 6,697 6,857 Eliminations........................................................... 922 (1,280) 816 -------- -------- -------- OPERATING PROFIT....................................................... 18,796 30,585 36,116 Interest expense....................................................... (1,713) (1,536) (1,739) Foreign currency losses................................................ (3,201) 5,507) (2,456) Corporate income/(expense)--net........................................ 4,359 4,268 6,349 -------- -------- -------- INCOME BEFORE INCOME TAXES............................................. 18,241 27,810 38,270 -------- -------- -------- IDENTIFIABLE ASSETS AND TOTAL ASSETS U.S. operations........................................................ 234,650 220,441 226,143 European operations.................................................... 96,064 102,160 107,455 Other non-U.S. operations.............................................. 33,705 36,254 35,020 Eliminations........................................................... (12,657) (15,199) (13,010) -------- -------- -------- IDENTIFIABLE ASSETS.................................................... 351,762 343,656 355,608 Corporate assets....................................................... 48,947 58,024 58,651 Discontinued operations................................................ 7,175 6,092 16,610 -------- -------- -------- TOTAL ASSETS........................................................... 407,884 407,772 430,869 -------- -------- -------- NET ASSETS OF NON-U.S. OPERATIONS (1).................................... 82,273 89,383 106,164 -------- -------- -------- NET INCOME OF NON-U.S. OPERATIONS........................................ 2,666 4,046 12,954 -------- -------- -------- (1) See Note 17 to consolidated financial statements for effects of currency translation adjustments. Transfers between geographic areas are stated at established intercompany selling prices. Operating profit is total revenues less operating expenses. Interest income and expense, equity in unconsolidated affiliates, foreign currency gains and losses, and income taxes have not been included in computing operating profit. Corporate assets not included in identifiable assets are principally cash and investments. Sales by U.S. operations to U.S. government agencies were $43,234,000 in 1993, $99,991,000 in 1992, and $93,034,000 in 1991. Note 7--Discontinued Operations In 1992 the company decided to discontinue the operations of Transfer- Metallisierte Produkte GmbH (TMP), a joint venture in Germany to produce metallized paper. Accordingly, the operating losses of TMP, adjusted for the after-tax effects of intercompany transactions, have been reported separately in the consolidated statement of income. Operating activities ceased during 1993. The company is in the process of disposing of the assets and settling its liabilities. After recognizing the accumulated operating losses of TMP included in consolidation, the company estimates a loss on disposal, including provision for operating losses during the phase-out period, of $11,550,000 which will be fully offset by tax benefits. 15 Note 8--Income Taxes EFFECTIVE AS OF JANUARY 1, 1992, THE COMPANY ADOPTED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 109-ACCOUNTING FOR INCOME TAXES. AS A RESULT OF THIS ACCOUNTING CHANGE, DEFERRED TAX BALANCES ARE STATED AT TAX RATES EXPECTED TO BE IN EFFECT WHEN TAXES ARE ACTUALLY PAID OR RECOVERED. THE CUMULATIVE EFFECT OF THIS CHANGE WAS A CREDIT TO INCOME OF $2,148,000 IN 1992. NO PROVISION IS MADE FOR UNDISTRIBUTED EARNINGS OF INTERNATIONAL COMPANIES 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 from continuing operations before income taxes, and provisions for income taxes are summarized as follows: (In thousands) ---------------------------- 1993 1992 1991 -------- -------- -------- INCOME BEFORE INCOME TAXES U.S. income.......................................................... $ 16,304 $ 32,256 $17,794 Non-U.S. income...................................................... 6,055 12,592 23,861 Currency translations (losses)....................................... (3,081) (4,478) (2,432) Eliminations......................................................... (1,037) (12,560) (953) -------- -------- ------- INCOME BEFORE INCOME TAXES........................................... 18,241 27,810 38,270 -------- -------- ------- PROVISIONS FOR INCOME TAXES Current Federal........................................................... 4,427 6,422 6,074 State............................................................. 1,122 1,237 1,867 Non-U.S........................................................... 2,219 3,349 9,924 -------- -------- ------- Total current provision........................................... 7,768 11,008 17,865 -------- -------- ------- Deferred Federal........................................................... 351 1,187 (658) State............................................................. (2) 378 (197) Non-U.S........................................................... (431) (1,466) (1,164) -------- -------- ------- Total deferred provision.......................................... (82) 99 (2,019) -------- -------- ------- PROVISIONS FOR INCOME TAXES.......................................... 7,686 11,107 15,846 -------- -------- ------- The components of the net deferred tax liability are as follows: 1993 1992 -------- -------- Deferred tax assets: Postretirement benefits........................................... 5,792 5,540 Inventory reserves and unrealized profits......................... 5,027 4,441 Vacation allowances............................................... 2,059 1,925 Postemployment benefits........................................... 1,630 1,560 Liability insurance............................................... 1,749 1,524 Loss carryforwards................................................ 6,370 8,437 Other............................................................. 1,248 985 -------- -------- Total deferred tax assets......................................... 23,875 24,412 -------- -------- Deferred tax (liability)--depreciation............................... (25,065) (25,662) -------- -------- Net deferred tax (liability)......................................... (1,190) (1,250) -------- -------- The following is a reconciliation of income taxes calculated at the U.S. Federal income tax rate (35% in 1993, 34% in 1992 and 1991) to the provision for income taxes for continuing operations: 1993 1992 1991 ------ ------- ------- Provision for income taxes at statutory rate.............. 6,384 9,455 13,012 State income taxes........................................ 728 1,066 1,102 Currency translation...................................... 1,078 1,523 827 Research tax credits...................................... (50) (50) (150) Non-U.S. taxes............................................ (817) (1,321) 994 Other--net................................................ 363 434 61 ----- ------ ------ Provision for income taxes................................ 7,686 11,107 15,846 ----- ------ ------ Undistributed earnings of international companies for which U.S. income taxes have not been provided were $55,995,000 at December 31, 1993. 16 Note 9--Capital Stock The authorized capital of the company consists of: . Common stock, no par value--20,000,000 shares . Second cumulative preferred voting stock, $10 par value--1,000,000 shares . 4 1/2% cumulative preferred stock, $50 par value--100,000 shares Common stock activity is summarized as follows: (In thousands) ----------------- Shares Shares In Common Treasury Issued Treasury Stock Cost --------- --------- ------ --------- Balances January 1, 1991................ 6,682,317 284,862 $6,754 $(13,576) Purchased for treasury.................. 121,482 (5,800) --------- ------- ------ -------- Balances December 31, 1991.............. 6,682,317 406,344 6,754 (19,376) Stock options exercised................. 4,000 118 Purchased for treasury.................. 201,187 (8,403) --------- ------- ------ -------- Balances December 31, 1992.............. 6,686,317 607,531 6,872 (27,779) Management Share Incentive Plan issues.. 27,186 1,176 Purchased for treasury.................. 94,344 (4,099) --------- ------- ------ -------- Balances December 31, 1993.............. 6,713,503 701,875 8,048 (31,878) --------- ------- ------ -------- Second cumulative preferred voting stock--none has been issued. As to the 4 1/2% cumulative preferred stock, 71,373 shares have been issued (none during the three years ended December 31, 1993), while the amounts held in treasury are as follows: December 31 Shares Cost (in thousands) - ------------------------ ------ ------------------- 1991 45,164 $(1,465) 1992 46,030 (1,490) 1993 47,268 (1,532) Note 10--Inventories THE 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. Inventories are summarized as follows: (In thousands) ------------------------- 1993 1992 1991 ------- ------- ------- Finished products..................... $30,409 $33,643 $32,592 Work in process....................... 20,001 20,952 27,333 Raw materials and supplies............ 31,044 33,189 39,796 ------- ------- ------- Total inventories..................... 81,454 87,784 99,721 ------- ------- ------- Excess of FIFO costs over LIFO costs..................... 63,033 62,564 65,003 ------- ------- ------- Inventories stated on the LIFO basis represent 58%, 52%, and 56% of the total inventories at December 31, 1993, 1992, and 1991, respectively. Note 11--Long-Term Debt (In thousands) ----------------- 1993 1992 ------- ------- U.S. Industrial development debt issues payable through 2022, 3.5%........... $13,650 $13,650 Other, 4.8% to 5%...................... 950 557 International companies Various notes payable through 1998, 3 1/2% to 12.4% ($15,781 secured by pledge of assets located abroad).. 16,382 18,177 ------- ------- Total..................................... 30,982 32,384 Amounts due within one year............... 3,506 3,516 ------- ------- Long-term debt............................ 27,476 28,868 ------- ------- Approximate maturities of these obligations over the next five years are $3,506,000 in 1994, $8,915,000 in 1995, $4,092,000 in 1996, $1,455,000 in 1997, and $995,000 in 1998. Some U.S. loan agreements contain covenants to maintain specified levels of shareholders' equity. Note 12--Short-Term Debt Short-term bank lines of credit amounted to $11,476,000 of which $8,842,000 was unused at December 31, 1993. 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 $2,722,000 and $2,935,000 at December 31, 1993 and 1992, respectively. The average month-end balance of total short- term borrowings during 1993 was $2,820,000 while the maximum month-end balance of $3,145,000 occurred at January 31, 1993. The average interest rate during 1993 was approximately 14% based upon total short-term interest expense divided by the average month-end balance outstanding, and 12% at year-end. This average interest rate is affected by borrowings in certain countries where local inflation has resulted in relatively high interest rates. Note 13--Contingencies A portion of the company's business is with departments and agencies of the United States government. Contracts related to this business are subject to profit limitations and terminations. The company also has certain contingent liabilities with respect to commitments and litigation. In the opinion of management, these contingencies will not result in any significant losses to the company. 17 Note 14--Retirement Plans Substantially all employees are covered by non-contributory pension plans. Various U.S. employees also participate in a contributory retirement savings plan wherein employees may contribute from 1% to 8% of their compensation to a trust fund, to which the company contributes an amount equal to 50% of the employees' contributions. The company's expense for these plans was $4,408,000 in 1993, $7,572,000 in 1992, and $6,433,000 in 1991. THE 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, WHERE IT IS COMMON PRACTICE AND PERMISSIBLE UNDER TAX LAWS TO ACCRUE BOOK RESERVES. 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. Information pertaining to the non-contributory defined benefit plans is provided in the following tables. COST FOR DEFINED BENEFITS PLANS (In thousands) - ------------------------------------------------------- U.S. Plans International Plans ---------------------------- --------------------------- 1993 1992 1991 1993 1992 1991 ---- ---- ---- ---- ---- ---- Service cost--benefits earned during the period..... $ 2,894 $ 2,646 $ 2,334 $ 1,361 $1,707 $ 1,383 Interest cost on projected benefit obligation....... 9,558 9,903 9,032 2,910 2,927 2,682 Actual (return)/loss on plan assets................ (22,879) (15,509) (37,599) (2,219) (898) (1,102) Net amortization and deferral....................... 9,937 3,087 25,975 1,320 (55) 62 Special pension benefit adjustments associated with early retirement programs and restructuring.. (728) (643) (1,655) -------- -------- -------- ------- ------ ------- Pension expense (income)............................ (1,218) (516) (258) 1,717 3,681 3,025 -------- -------- -------- ------- ------ ------- FUNDING STATUS AND PROJECTED BENEFIT OBLIGATION RECONCILIATION December 31 (In thousands) - ------------------------------------------------------------------- U.S. Plans International Plans ---------------------------- --------------------------- 1993 1992 1991 1993 1992 1991 ---- ---- ---- ---- ---- ---- Actuarial present value of benefit obligations: Accumulated benefit obligation Vested........................................... 108,439 97,767 90,618 22,157 21,993 19,982 Nonvested........................................ 1,917 300 275 980 762 1,112 ------- ------- ------- ------- ------ ------- Total......................................... 110,356 98,067 90,893 23,137 22,755 21,094 ------- ------- ------- ------- ------ ------- Plan assets at fair value, primarily listed stocks and bonds................................... 179,832 164,832 161,857 16,071 13,591 14,705 Projected benefit obligation.......................... 136,034 118,084 111,939 35,621 35,881 34,851 ------- ------- ------- ------- ------ ------- Plan assets in excess of (less than) projected benefit obligation........................ 43,798 46,748 49,918 (19,550) (22,290) (20,146) ------- ------- ------- ------- ------ ------- The excess (less than) consists of: Unamortized portion of transition gain (loss), being recognized over future years....................... 9,231 10,173 11,546 (886) (1,361) (1,425) Unrecognized net gain (loss) from past experience different from that assumed....................... 37,331 41,066 44,124 1,836 136 (610) Unrecognized prior service cost...................... (3,380) (3,925) (4,427) (579) (656) (840) Minimum liability for unfunded plans................. 1,097 1,369 1,369 Accrued pension cost included in the consolidated balance sheet........................ (481) (1,935) (2,694) (19,921) (20,409) (17,271) ------- ------- ------- ------- ------- ------- Total.......................................... 43,798 46,748 49,918 (19,550) (22,290) (20,146) ------- ------- ------- ------- ------- ------- Assumed long-term rates of return on assets............ 9% 9% 9% 7-9% 8-9 1/2% 8-11% Assumed discount rates for future benefits............. 7 1/2 8 1/2 8 1/2 5 3/4-9 7 3/4-9 1/2 8-11 Assumed long-term rates for compensation increases..... 5 5 5 3-6 6-6 1/2 6-8 Note 15--Quarterly Financial Information (Unaudited) (In thousands, except earnings per share) 1993 1992 ---------------------------------------------- ---------------------------------------------------- Quarters Quarters ---------------------------------------------- ---------------------------------------------------- 1st 2nd 3rd 4th Year 1st 2nd 3rd 4th Year -------- -------- -------- -------- -------- --------- --------- --------- --------- --------- Continuing operations: Net sales............... $104,863 $107,840 $103,899 $112,618 $429,220 $127,788 $128,559 $125,663 $120,356 $502,366 Gross profit............ 37,773 40,269 35,823 42,005 155,870 43,452 44,949 41,900 44,510 174,811 Income.................. 2,516 2,963 1,411 3,665 10,555 4,441 6,182 3,595 2,485 16,703 Income per share........ .41 .48 .24 .60 1.73 .71 .98 .58 .40 2.67 Discontinued operations.... (883) (1,074) (1,278) (1,832) (5,067) Cumulative effect, accounting changes...... (8,964) (8,964) -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Net income................. 2,516 2,963 1,411 3,665 10,555 (5,406) 5,108 2,317 653 2,672 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Earnings per share......... .41 .48 .24 .60 1.73 (.88) .82 .37 .11 .42 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- 18 Note 16--Postretirement Benefits The company provides certain health care benefits and limited life insurance for retired employees and their eligible dependents. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS) NO. 106-"EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS" WAS IMPLEMENTED AS OF JANUARY 1, 1992, USING THE IMMEDIATE RECOGNITION TRANSITION OPTION. SFAS NO. 106 REQUIRES RECOGNITION OF RETIREE HEALTH AND LIFE INSURANCE BENEFITS DURING THE EMPLOYEES' SERVICE WITH THE COMPANY. The accumulated postretirement benefit of $14,212,000 as of January 1, 1992 was charged to 1992 earnings. Further information about these benefits is provided in the following tables: COST FOR BENEFITS (In thousands) - -------------------------------------------------------------------------------- 1993 1992 ---- ---- Service cost--benefits earned during the period............... $ 447 $ 385 Interest cost on projected benefit obligation................. 1,192 1,201 ------ ------ 1,639 1,586 ------ ------ FUNDED STATUS AND ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION RECONCILIATION December 31 (In thousands) - -------------------------- 1993 1992 1991 ---- ---- ---- Accumulated postretirement benefit obligation: Active employees........................................... 3,582 2,913 3,467 Other active participants.................................. 7,647 5,779 5,241 ------ ------ ------ 11,229 8,692 8,708 ------ ------ ------ Retirees................................................... 5,615 5,895 5,504 Total................................................... 16,844 14,587 14,212 Unamortized (loss)............................................ (2,565) (275) ------ ------ Accrued postretirement benefit cost included in consolidated balance sheet.............................. 14,279 14,312 ------ ------ Assumed discount rates for future benefits.................... 7 1/2% 8 1/2% 8 1/2% Annual rates of increase in the costs of covered health care benefits assumed for 1993 were 10%, decreasing gradually to 5% for the year 1998 and thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported; a one-percentage-point increase in each year would increase the accumulated postretirement benefit obligation by $1,326,000 and increase the current service and interest costs for the year by $270,000. Note 17--Foreign Currency Translation AN APPROPRIATE FUNCTIONAL CURRENCY IS DETERMINED FOR EACH ENTITY. THE FINANCIAL STATEMENTS OF COMPANIES FOR WHICH THE UNITED STATES DOLLAR IS DETERMINED TO BE THE FUNCTIONAL CURRENCY ARE TRANSLATED USING APPROPRIATE 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. Foreign currency effects are summarized as follows: (In thousands) ---------------------- 1993 1992 1991 ---- ---- ---- Currency (gains)/losses charged to income arising from: Translation--Latin American companies....................... $3,080 $4,478 $2,432 Transactions...................... 121 1,029 24 ------ ------ ------ Total............................. 3,201 5,507 2,456 ------ ------ ------ Currency translation (gains)/losses charged directly to equity adjustment account................ 5,400 4,736 7,527 ------ ------ ------ Note 18--Accounting Changes Effective January 1, 1992, the company adopted three new Statements of Financial Accounting Standards (SFAS). The after tax effect of these changes was a charge of $8,964,000 against 1992 net income. Aside from this cumulative effect as of January 1, 1992, adoption of these Standards did not materially affect 1992 financial results. SFAS No. 106--"Employers' Accounting for Postretirement Benefits Other Than Pensions" was implemented using the immediate recognition transition option, resulting in a charge of $8,672,000, after recognizing related deferred taxes. SFAS No. 112--"Employers' Accounting for Postemployment Benefits" pertains to benefits, such as workers' compensation and other disability expenses, for inactive employees before retirement. The after tax costs recognized for implementing this Standard were $2,440,000 (pretax $4,000,000). SFAS No. 109--"Accounting for Income Taxes" requires that deferred tax balances are stated at tax rates expected to be in effect when taxes are actually paid or recovered, whereas deferred taxes were previously provided at tax rates prevailing during the periods when timing differences between financial income and taxable income occurred. Adjustment of the previously provided deferred taxes resulted in a net credit to income of $2,148,000. 19 Five-Year Summary of Selected Financial Data - -------------------------------------------- SUMMARY OF OPERATIONS 1993 1992 1991 1990 1989 (In thousands, except as noted) Net sales $429,220 $502,366 $499,240 $473,933 $414,963 Other income 5,885 9,755 8,886 8,807 11,675 Cost of products sold 273,350 327,555 324,448 287,345 250,155 Selling, general and administrative 121,529 130,182 124,983 121,137 110,110 Depreciation 17,294 16,831 16,230 14,904 13,755 Interest expense 1,713 1,536 1,739 1,926 2,316 Foreign currency losses 3,201 5,507 2,456 4,238 4,900 Unusual items (223) 2,700 700 110 Taxes on income 7,686 11,107 15,846 21,583 17,516 Income from continuing operations 10,555 16,703 22,424 30,907 27,776 Per common share (in dollars)/(1)/ 1.73 2.67 3.52 4.77 4.23 Discontinued operations (5,067) (3,773) (1,703) (269) Cumulative effect to January 1, 1992 of changes in accounting principles (8,964) Net income 10,555 2,672 18,651 29,204 27,507 Per common share (in dollars)/(1)/ 1.73 .42 2.92 4.50 4.19 Cash dividends 5,640 5,608 5,659 5,372 4,837 Per common share (in dollars) .92 .89 .88 .82 .73 Weighted average number of common shares outstanding 6,069 6,225 6,353 6,471 6,545 YEAR-END POSITION Working capital $164,199 $177,287 $184,378 $185,371 $161,839 Working capital ratio 3.7 4.2 3.7 3.7 3.9 Property, at cost 306,691 305,908 292,338 285,961 256,467 Total assets 407,884 407,772 430,869 436,118 384,156 Long-term debt 27,476 28,868 23,009 24,606 22,544 Common shareholders' equity 258,539 261,927 277,866 278,199 247,957 Equity per common share (in dollars) 43.00 43.09 44.27 43.49 38.10 (1) Earnings per common share are calculated after deducting dividends on preferred stock and are based on the weighted average number of shares outstanding during each year. 20