Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the fiscal year ended
December 31, 1994
Commission file number 0-2504
MINE SAFETY APPLIANCES COMPANY
A Pennsylvania Corporation
IRS Employer Identification No. 25-0668780
121 Gamma Drive
RIDC Industrial Park
O'Hara Township
Pittsburgh, Pennsylvania 15238
Telephone 412/967-3000
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(COVER PAGE)
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission File No. 0-2504
MINE SAFETY APPLIANCES COMPANY
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(Exact name of registrant as specified in its charter)
Pennsylvania 25-0668780
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
121 Gamma Drive
RIDC Industrial Park
O'Hara Township
Pittsburgh, Pennsylvania 15238
----------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412/967-3000
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
--------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]
As of February 17, 1995, there were outstanding 5,816,016 shares of common
stock, no par value.
The aggregate market value of voting stock held by non-affiliates as of
February 17, 1995 was $158,185,000. .
1
(COVER PAGE)
DOCUMENTS INCORPORATED BY REFERENCE
The following documents have been incorporated by reference:
FORM 10-K
DOCUMENT PART NUMBER
-------- -----------
(1) Annual Report to Shareholders
for the year ended
December 31, 1994 I, II, IV
(2) Proxy Statement filed
pursuant to Regulation 14A
in connection with the registrant's
Annual Meeting of Shareholders to
be held on April 26, 1995 III
2
PART I
Item 1. Business
-----------------
Products and Markets:
--------------------
The primary business of the registrant and its affiliated companies is the
manufacture and sale of products designed to protect the safety and health of
workers throughout the world.
Principal products include respiratory protective equipment that is air-
purifying, air-supplied and self-contained in design. The registrant also
produces instruments that monitor and analyze workplace environments and control
industrial processes. Personal protective products include head, eye and face,
body and hearing protectors. For the mining industry, the registrant provides
mine lighting, rockdusting equipment, fire-fighting foam and foam application
equipment. Health-related products include emergency care items and hospital
instruments.
Many of these products are sold under the registered trademark "MSA", and
have wide application for workers in industries that include manufacturing, fire
service, public utilities, mining, chemicals, petroleum, construction, pulp and
paper processing, transportation, government, automotive, aerospace, asbestos
abatement, and hazardous materials clean-up.
Other products manufactured and sold, which do not fall within the category
of safety and health equipment, include boron-based and other specialty
chemicals.
The registrant and its affiliated companies are in competition with many
large and small enterprises. In the opinion of management, the registrant is a
leader in the manufacture of safety and health equipment.
3
Orders, except under contracts with the Department of Defense and with
international governments, are generally filled promptly after receipt and the
production period for special items is usually less than one year. The backlog
of orders under contracts with the Department of Defense and certain
international governments is summarized as follows:
December 31
-------------------------
1994 1993 1992
------- ------- -------
(In thousands)
-------------------------
Department of Defense $36,200 $54,900 $65,600
International Governments 8,800 12,500 12,500
Approximately $8,900,000 under contracts with the Department of Defense and
$3,800,000 with international governments are expected to be shipped after
December 31, 1995.
Further information with respect to the registrant's products, operations
in different geographic areas, equity in earnings and assets of international
affiliated companies, and significant customers is reported at Note 6 of Notes
to Consolidated Financial Statements contained in the registrant's Annual Report
to Shareholders for the year ended December 31, 1994, incorporated herein by
reference.
4
Research:
--------
The registrant and its affiliated companies engage in applied research with
a view to developing new products and new applications for existing products.
Most of its products are designed and manufactured to meet currently applicable
performance and test standards published by groups such as ANSI (American
National Standards Institute), MSHA (Mine Safety & Health Administration), NIOSH
(National Institute for Occupational Safety and Health), UL (Underwriters'
Laboratories), SEI (Safety Equipment Institute) and FM (Factory Mutual). The
registrant also from time to time engages in research projects for others such
as the Bureau of Mines and the Department of Defense or its prime contractors.
Registrant-sponsored research and development costs were $20,575,000 in 1994,
$21,000,000 in 1993, and $20,938,000 in 1992.
In the aggregate, patents have represented an important element in building
up the business of the registrant and its affiliates, but in the opinion of
management no one patent or group of patents is of material significance to the
business as presently conducted.
General:
-------
The company was founded in 1914 and is headquartered in Pittsburgh,
Pennsylvania. As of December 31, 1994, the registrant and its affiliated
companies had approximately 4,500 employees, of which 2,000 were employed by
international affiliates. None of the U.S. employees are subject to the
provisions of a collective bargaining agreement.
In the United States and in those countries in which the registrant has
affiliates, its products are sold primarily by its own salespersons,
supplemented in the case of certain markets by independent distributors and/or
manufacturers' representatives. In international countries where the registrant
has no affiliate, products are sold primarily through independent distributors
located in those countries.
5
The registrant is cognizant of environmental responsibilities and has taken
affirmative action regarding this responsibility. There are no current or
expected legal proceedings or expenditures with respect to environmental matters
which would materially affect the operations of the registrant and its
affiliates. Generally speaking, the operations of the registrant and its
affiliates are such that it is possible to maintain sufficient inventories of
raw materials and component parts on the manufacturing premises. Equipment and
machinery for processing chemicals and rubber, plastic injection molding
equipment, molds, metal cutting, stamping and working equipment, assembly
fixtures and similar items are regularly acquired, repaired or replaced in the
ordinary course of business at prevailing market prices as necessary.
As of the end of 1992, the registrant decided to discontinue the operation
of Transfer-Metallisierte Produkte GmbH (TMP), a joint venture in Germany to
produce metallized paper. This venture, unrelated to the registrant's safety
products, had been a financial drain on the registrant. Operating activities
ceased during 1993; the registrant continues to dispose of its assets and settle
its liabilities, and continues to believe that this action will not have a
significant effect on the registrant's financial condition. In the third
quarter of 1993, the registrant acquired HAZCO Services, a U.S. based
distribution and rental supplier serving the hazardous materials/environmental
market. No material changes in the registrant's commercial operations are
expected to occur during 1995. Sales of defense products, which continue to be
an important market segment, increased in 1994. Incoming orders were
significantly less than shipments in 1994, and lower than 1993 incoming orders.
In January 1995 the registrant was awarded an additional contract for gas masks
totalling $15,200,000, for which deliveries are scheduled over a one year period
from October 1995. Further information about the registrant's business is
included in Discussion and Analysis of Financial Condition and Results of
Operations at pages 10 to 12 of the Annual Report to Shareholders, incorporated
herein by reference.
(Item 1 continued at page 7)
6
Executive Officers and Significant Employees:
--------------------------------------------
All Positions and Offices
Name Age Presently Held
---- --- -------------------------
J. T. Ryan III 51 President, Chairman and
Chief Executive Officer
T. B. Hotopp 53 Senior Vice President
J. E. Herald 54 Vice President - Finance
(Chief Financial Officer)
W. E. Christen 50 Vice President
J. W. Joy 62 Vice President
W. B. Miller, Jr. 61 Vice President
G. W. Steggles 60 Vice President
F. Tepper 60 Vice President
D. H. Cuozzo 61 Secretary
D. L. Zeitler 46 Treasurer
B. V. DeMaria 47 Director of Human Resources
J. R. Heggestad 58 Director of Operations, Safety Products
All the executive officers and significant employees have been employed by
the registrant since prior to January 1, 1990 and have held their present
positions since prior to that date except as follows:
(a) Mr. Ryan III was elected Chief Executive Officer and Chairman of the
Board on August 28, 1991, effective from October 1, 1991. On April 25,
1990 he was elected President. He previously was the Executive Vice
President.
(b) Mr. Hotopp was employed by the registrant on July 29, 1991 and elected
Senior Vice President and General Manager, Safety Products. From prior
to January 1, 1990 until he joined the registrant, Mr. Hotopp was
Senior Vice President, Sales and Marketing and later President of
Kingston Warren Corporation, a manufacturer of rubber-metal composites
for automotive, computer and material handling industries.
7
(c) Mr. Christen was elected a corporate Vice President on October 31,
1991. He was previously General Director, Auergesellschaft, an
affiliate of the registrant, and Vice President and Managing Director
of MSA Europe, a division of the registrant.
(d) Mr. Joy was elected Vice President on October 31, 1991. He was
previously Director, Sales and Market Development.
(e) Mr. Steggles was employed by the registrant on May 4, 1992 and elected
Vice President. From prior to January 1, 1990 until he joined the
registrant, Mr. Steggles was Vice President of International Marketing
and Sales with the BMY Division of Harsco Corp., a manufacturer of
tracked and wheeled vehicles.
(f) Mr. DeMaria was appointed Director, Human Resources on September 1,
1994. He previously was Manager, Employee Benefits.
8
The primary responsibilities of these officers and significant employees
follows:
Individual Responsibilities
---------- ----------------
Mr. Hotopp Product planning and engineering,
manufacturing development and sales of safety
products in the U.S.
Mr. Christen European operations
Mr. Joy Sales and marketing of safety products in the
U.S.
Mr. Miller Product planning and engineering for safety
products in the U.S.
Mr. Steggles International operations outside the U.S. and
Europe.
Mr. Tepper Product planning and engineering,
manufacturing development and sales of instrument
and battery products in the U.S.
Mr. Cuozzo General Counsel and corporate taxes
Mr. Zeitler Cash and risk insurance management
Mr. DeMaria Personnel, benefits, training
Mr. Heggestad Manufacturing operations, safety products in
the U.S.
Item 2. Properties
------------------
World Headquarters:
------------------
The registrant's executive offices are located at 121 Gamma Drive, RIDC
Industrial Park, O'Hara Township, Pittsburgh, Pennsylvania 15238. This facility
contains approximately 138,000 sq. ft.
Production and Research Facilities:
----------------------------------
The registrant's principal U.S. manufacturing and research facilities are
located in the Greater Pittsburgh area in buildings containing approximately
1,104,000 square feet. Other U.S. manufacturing and research facilities of the
registrant are located in Esmond, Rhode Island (186,000 sq. ft.), Jacksonville,
North Carolina (107,000 sq. ft.), Lyons, Colorado (10,000 sq. ft.), Sparks,
Maryland (37,000 sq. ft.), and Dayton, Ohio (23,000 sq. ft.).
9
Manufacturing facilities of international affiliates of the registrant are
located in major cities in Australia, Brazil, Canada, France, Germany, Italy,
Japan, Mexico, Peru, Scotland, Spain, and Sweden. The most significant are
located in Germany (approximately 430,000 sq. ft., excluding 127,000 sq. ft.
leased to others), and in Glasgow, Scotland (approximately 141,000 sq. ft.);
research activities are also conducted at these facilities.
Virtually all of these buildings are owned by the registrant and its
affiliates and are constructed of granite, brick, concrete block, steel or other
fire-resistant materials. The German facility is owned subject to encumbrances
securing indebtedness in the aggregate amount of $5,587,000 as of December 31,
1994.
Sales Offices and Warehouses:
----------------------------
The registrant and its U.S. affiliates own seven warehouses and lease 13
other distribution warehouses with aggregate floor space of approximately
279,000 sq. ft. in or near principal cities in 13 states in the United States.
Leases expire at various dates through 1998. Sales offices and distribution
warehouses are owned or leased in or near principal cities in 22 other countries
in which the registrant's affiliates are located.
Item 3. Legal Proceedings
--------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
No matters were submitted to a vote of security holders during fourth
quarter 1994.
10
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 8. Financial Statements and Supplementary Data
--------------------------------------------------------------------------------
Incorporated by reference herein pursuant to Rule 12b - 23 are
Item 5 - "Common Stock" appearing at page 12
Item 6 - "Five-Year Summary of Selected Financial Data" appearing at page
23
Item 7 - "Discussion and Analysis of Financial Condition and Results of
Operations" appearing at pages 10 to 12
Item 8 - "Financial Statements and Notes to Consolidated Financial
Statements" appearing at pages 13 to 22
of the Annual Report to Shareholders for the year ended December 31, 1994. Said
pages of the Annual Report are submitted with this report and pursuant to Item
601(b)(13) of Regulation S-K shall be deemed filed with the Commission only to
the extent that material contained therein is expressly incorporated by
reference in Items 1, 5, 6, 7, 8 and 14 (a) hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
--------------------
Not applicable.
11
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
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Incorporated by reference herein pursuant to Rule 12b - 23 are
(1) "Election of Directors" appearing at pages 1 to 3, (2) "Other Information
Concerning Directors and Officers" appearing at pages 4 to 9 (except as excluded
below), and (3) "Security Ownership" appearing at pages 10 to 12 (except as
excluded below) of the Proxy Statement filed pursuant to Regulation 14A in
connection with the registrant's Annual Meeting of Shareholders to be held on
April 26, 1995. The information appearing in such Proxy Statement under the
captions "Compensation Committee Report on Executive Compensation" and
"Comparison of Five-Year Cumulative Total Return" is not incorporated herein.
12
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
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(a) 1 and 2. Financial Statements
The following information appearing on pages 13 to 22
inclusive in the Annual Report to Shareholders of the registrant for the year
ended December 31, 1994, is incorporated herein by reference pursuant to Rule
12b-23.
Report of Independent Accountants
Consolidated Balance Sheet - December 31, 1994 and 1993
Consolidated Statement of Income - three years ended December 31, 1994
Consolidated Statement of Earnings Retained in the Business - three years
ended December 31, 1994
Consolidated Statement of Cash Flows - three years ended December 31, 1994
Notes to Consolidated Financial Statements
Said pages of the Annual Report are submitted with this report and, pursuant to
Item 601(b)(13) of Regulation S-K shall be deemed to be filed with the
Commission only to the extent that material contained therein is expressly
incorporated by reference in Items 1, 5, 6, 7, 8 and 14 (a)(1) and (2) hereof.
The following additional financial information for the three years ended
December 31, 1994 is filed with the report and should be read in conjunction
with the above financial statements:
Report of Independent Accountants on Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, not material or
the required information is shown in the financial statements listed above.
13
(a) 3. Exhibits
(3)(i) Restated Articles of Incorporation as amended to April 27,
1989, filed in Form 10-Q on August 5, 1994, are incorporated
herein by reference.
(3)(ii) By-laws of the registrant, as amended to August 29, 1990,
filed in Form 10-Q on November 9, 1990, are incorporated
herein by reference.
(10)(a) * 1987 Management Share Incentive Plan, filed in Form 10-K on
March 25, 1994, is incorporated herein by reference.
(10)(b) * 1990 Non-Employee Directors' Stock Option Plan, as amended
to April 27, 1994, filed in Form 10-Q on August 5, 1994, is
incorporated herein by reference.
(10)(c) * Executive Insurance Program, filed in Form 10-Q on August 5,
1994, is incorporated herein by reference.
(10)(d) * Extension of Consulting Agreement for the period January 1,
1992 through December 31, 1996, and June 30, 1977 Consulting
Agreement with John T. Ryan, Jr. filed in Form 10-K on March
27, 1992, is incorporated herein by reference.
(10)(e) * December 29, 1993 Consulting agreement with Leo N. Short,
Jr., filed in Form 10-K on March 25, 1994, is incorporated
herein by reference.
(10)(f) * Board of Directors April 24, 1984 Resolution providing for
payment by the Company to officers the difference between
amounts payable under terms of the Company's
Non-Contributory Pension Plan and the benefit limitations of
Section 415 of the Internal Revenue Code, filed in Form 10-K
on March 28, 1990 is incorporated herein by reference.
* The exhibits marked by an asterisk are management contracts or compensatory
plans or arrangements.
14
(a) 3. Exhibits (continued)
(13) Annual Report to Shareholders for year ended December 31, 1994
(21) Affiliates of the registrant
(23) Consent of Price Waterhouse LLP, independent accountants
(27) Financial Data Schedule (filed in electronic format only)
The registrant agrees to furnish to the Commission upon request copies
of all instruments with respect to long-term debt referred to in Note
12 of the Notes to Consolidated Financial Statements filed as part of
Exhibit 13 to this annual report which have not been previously filed
or are not filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
year ended December 31, 1994.
15
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MINE SAFETY APPLIANCES COMPANY
March 27, 1995 By /s/ John T. Ryan III
-------------------- --------------------------------
(Date) John T. Ryan III
President, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
----------------- --------- --------
/s/ John T. Ryan III Director; President, March 27, 1995
--------------------------- Chairman of the Board
John T. Ryan III and Chief Executive Officer
/s/ James E. Herald Vice President--Finance; March 27, 1995
--------------------------- Principal Financial and
James E. Herald Accounting Officer
/s/ Joseph L. Calihan Director March 27, 1995
---------------------------
Joseph L. Calihan
/s/ Calvin A. Campbell, Jr. Director March 27, 1995
---------------------------
Calvin A. Campbell, Jr.
/s/ G. Donald Gerlach Director March 27, 1995
---------------------------
G. Donald Gerlach
/s/ Helen Lee Henderson Director March 27, 1995
---------------------------
Helen Lee Henderson
/s/ John T. Ryan, Jr. Director March 27, 1995
---------------------------
John T. Ryan, Jr.
/s/ Leo N. Short, Jr. Director March 27, 1995
---------------------------
Leo N. Short, Jr.
Report of Independent Accountants
on Financial Statement Schedule
To the Board of Directors of
Mine Safety Appliances Company
Our audits of the consolidated financial statements referred to in our report
dated February 17, 1995, appearing on page 13 of the 1994 Annual Report to
Shareholders of Mine Safety Appliances Company (which report and consolidated
financial statements are incorporated by reference in this Annual Report
on Form 10-K), also included an audit of the Financial Statement Schedule
listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
Price Waterhouse LLP
Pittsburgh, Pennsylvania
February 17, 1995
F-1
SCHEDULE II
MINE SAFETY APPLIANCES COMPANY AND AFFILIATES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS)
1994 1993 1992
------ ------ ------
Allowance for doubtful accounts:
Balance at beginning of year $2,516 $2,453 $1,601
Additions-
Charged to costs and expenses 741 644 1,383
Deductions from reserves (1) 1,155 581 531
------ ------ ------
Balance at end of year $2,102 $2,516 $2,453
====== ====== ======
(1) Bad debts written off, net of recoveries.
F-2