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, 2001
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(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, no par value American Stock Exchange
-------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
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(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, 2001 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:
Title of each class Name of each exchange on which registered
Common Stock, no par value American Stock Exchange
-------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
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(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.
[X]
As of February 22, 2002, there were outstanding 12,102,227 shares of common
stock, no par value, not including 1,415,373 shares held by the Mine Safety
Appliances Company Stock Compensation Trust. Total market value of outstanding
shares as of February 22, 2002 was $462,305,000. The aggregate market value of
voting stock held by non-affiliates as of February 22, 2002 was $311,785,000.
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, 2001 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 May 7, 2002 III
2
PART I
Item 1. Business
----------------
Operating Segments:
------------------
The company is organized into three geographic operating segments - North
America, Europe and Other International. Further information with respect to the
registrant's operating segments is reported at Note 7 of Notes to Consolidated
Financial Statements contained in the registrant's Annual Report to Shareholders
for the year ended December 31, 2001, incorporated herein by reference.
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
people throughout the world.
Principal products include respiratory protective equipment that is
air-purifying, air-supplied and self-contained in design; instruments that
monitor and analyze workplace environments and control industrial processes;
thermal imaging cameras that enable firefighters and rescue workers to see
through smoke and darkness; and personal protective products including head, eye
and face, hearing protectors, and fall protection equipment.
Many of these products have wide application for workers in industries that
include manufacturing, municipal and volunteer fire departments, public
utilities, mining, chemicals, petroleum, construction, transportation, the
military, and hazardous materials clean-up. Consumer products target the
do-it-yourself market and are available through select home center retail
outlets under the MSA Safety Works(TM) brand.
Other products manufactured and sold, which do not fall within the category
of safety and health equipment, include boron-based and other specialty
chemicals. Additional information concerning the registrant's products is
reported at Note 7 of Notes to Consolidated Financial Statements contained in
the registrant's Annual Report to Shareholders for the year ended December 31,
2001, incorporated herein by reference.
The registrant and its affiliated companies compete with many large and
small enterprises. For most of the registrant's products and in most markets,
principal methods of competition are product features, quality and price. In the
opinion of management, the registrant is a leader in the manufacture of safety
and health
3
equipment.
Orders, except under contracts with U.S. government agencies, are generally
filled promptly after receipt and the production period for special items is
usually less than one year. The year-end backlog of orders under contracts with
U.S. government agencies was $27,400,000 in 2001, $14,582,000 in 2000 and
$10,225,000 in 1999.
Sales of products to U.S. government agencies increased in 2001; in
addition, incoming orders were higher than shipments in both 2001 and 2000. The
company's business is not dependent on a single customer or group of related
customers, the loss of which would have a material adverse effect on the
registrant's results.
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 the 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), FM (Factory Mutual), CEN
(European Committee for Standardization) and CSA (Canadian Standards
Association). 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
$18,195,000 in 2001, $17,241,000 in 2000, and $17,097,000 in 1999.
In the aggregate, patents have represented an important element in building
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, 2001, the registrant and its affiliated
companies had approximately 4,100 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.
4
In the United States and in those countries in which the registrant has
affiliates, its products are sold by its own salespersons, independent
distributors and/or manufacturers' representatives. In countries where the
registrant has no affiliate, products are sold primarily through independent
distributors located in those countries.
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.
Further information about the registrant's business is included in
Management's Discussion and Analysis at pages 14 to 19 of the 2001 Annual Report
to Shareholders, incorporated herein by reference.
5
Executive Officers:
------------------
All Positions and Offices
Name Age Presently Held
---- --- -------------------------
J. T. Ryan III 58 Chairman and
Chief Executive Officer
T. B. Hotopp 60 President
J. H. Baillie 55 Vice President
J. A. Bigler 52 Vice President
K. M. Bove 43 Vice President
D. H. Cuozzo 68 Vice President and Secretary
B. V. DeMaria 54 Vice President
W. M. Lambert 43 Vice President
G. W. Steggles 67 Senior Vice President
D. L. Zeitler 53 Vice President and Treasurer
(Chief Financial Officer)
All the executive officers have been employed by the registrant since prior
to January 1, 1997 and have held their present positions since prior to that
date except as follows:
(a) Mr. Baillie was employed by the registrant on January 21, 1999 and was
elected Vice President. Prior to that time, he was Executive Vice
President of Sylvania Lighting International.
(b) Mr. Bigler was elected Vice President on January 9, 1998. Prior to
that time, he was Director of Sales.
(c) Mr. Bove was elected Vice President on August 22, 2000. From prior to
January 1, 1997 until April 1997, he was Product Group Manager of Body
Protection and Mining. From April 1997 until November 1998, he was
Product Group Manager of Air Purifying Respirators for the Company.
From November 1998 until November 1999, he was Division Marketing
Manager. From November 1999, he was General Manager of the Instrument
Division.
(d) Mr. DeMaria was elected Vice President on January 9, 1998. Prior to
that time, he was Director, Human Resources.
(e) Mr. Lambert was elected Vice President on January 9, 1998. Prior to
that time, he was General Manager of the Safety Products Division.
6
(f) Mr. Steggles was elected Senior Vice President on January 1,1999.
Prior to that time he was Vice President.
(g) Mr. Zeitler was elected Chief Financial Officer on November 1, 2000.
From prior to January 1, 1997, he was Treasurer. From January 1998, he
was Vice President.
The executive officers of the registrant serve at the pleasure of the Board
of Directors and are not elected to any specified term of office.
The primary responsibilities of these officers follow:
Individual Responsibilities
---------- ----------------
Mr. Hotopp North America operations
Mr. Baillie European operations
Mr. Bigler North America sales and distribution
Mr. Bove Research, product development, manufacturing
and marketing of instrument products in North America
Mr. Cuozzo General Counsel and corporate taxes
Mr. DeMaria Human resources and corporate communications
Mr. Lambert Research, product development, manufacturing and
marketing of safety products in North America
Mr. Steggles International operations outside North America and Europe
7
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 North American manufacturing and research
facilities are located in the Greater Pittsburgh area in buildings containing
approximately 957,000 square feet. Other North American manufacturing and
research facilities of the registrant are located in Jacksonville, North
Carolina (107,000 sq. ft.), Sparks, Maryland (54,000 sq. ft.), Englewood,
Colorado (41,000 sq. ft.), Clifton, New Jersey (41,000 sq. ft.), Etobicoke,
Canada (6,500 sq. ft.), and Naucalpan, Mexico (5,800 sq. ft.).
Manufacturing facilities of the European operating segment of the
registrant are located in France, Germany, Italy and Scotland. The most
significant is located in Germany (approximately 454,000 sq. ft., excluding
104,000 sq. ft. leased to others). Research activities are also conducted in
Germany. Manufacturing facilities for the Other International operating segment
are located in Australia, Brazil, Chile, China, Japan, Peru and South Africa.
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
collateralizing indebtedness in the aggregate amount of $830,000 as of December
31, 2001.
Sales Offices and Warehouses:
-----------------------------
Sales offices and distribution warehouses are owned or leased in the United
States and 27 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 2001.
8
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 7a. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
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Incorporated by reference herein pursuant to Rule 12b - 23 are
Item 5 - "Common Stock" appearing at page 19
Item 6 - "Summary of Selected Financial Data" appearing at page 33
Item 7 and 7a - "Management's Discussion and Analysis" appearing at
pages 14 to 19
Item 8 - "Financial Statements and Notes to Consolidated Financial
Statements" appearing at pages 20 to 32
of the Annual Report to Shareholders for the year ended December 31, 2001. 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, 7a, 8 and 14 (a) hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
--------------------
Not applicable.
9
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
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 10 (except as
excluded below), and (3) "Stock Ownership" appearing at pages 13 to 16 of the
Proxy Statement filed pursuant to Regulation 14A in connection with the
registrant's Annual Meeting of Shareholders to be held on May 7, 2002. The
information appearing in such Proxy Statement under the captions "Compensation
Committee Report on Executive Compensation," "Audit Committee Report" and the
other information appearing in such Proxy Statement and not specifically
incorporated by reference herein is not incorporated herein.
10
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 20 to 32 inclusive in the
Annual Report to Shareholders of the registrant for the year ended December 31,
2001, is incorporated herein by reference pursuant to Rule 12b-23.
Report of Independent Accountants
Consolidated Statement of Income - three years ended December 31, 2001
Consolidated Balance Sheet - December 31, 2001 and 2000
Consolidated Statement of Changes in Retained Earnings and Accumulated
Other Comprehensive Income - three years ended December 31, 2001
Consolidated Statement of Cash Flows - three years ended December 31, 2001
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, 2001 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 and notes to the
financial statements listed above.
11
(a) 3. Exhibits
(3)(i) Restated Articles of Incorporation as amended to April 27,
1989, filed as Exhibit 3(i) to Form 10-Q on August 12, 1999,
are incorporated herein by reference.
(3)(ii) By-laws of the registrant, as amended on March 13, 2001,
filed as Exhibit 3(ii) to Form 10-K on March 27, 2001, is
incorporated herein by reference.
(4) Rights Agreement dated as of February 10, 1997 between the
registrant and Norwest Bank Minnesota, N.A., as Rights
Agent, is filed herewith.
(10)(a) * 1987 Management Share Incentive Plan, filed as Exhibit
10(a) to Form 10-K on March 26, 1999, is incorporated herein
by reference.
(10)(b) * 1998 Management Share Incentive Plan, incorporated herein
by reference to Annex A to the registrant's Definitive Proxy
Statement filed March 24, 1998 for its 1998 Annual Meeting.
(10)(c) * Retirement Plan for Directors, as amended effective April
1, 2001, filed as Exhibit 10(c) to Form 10-K on March 27,
2001, is incorporated herein by reference.
(10)(d) * Supplemental Pension Plan as of May 5, 1998, filed as
Exhibit 10(g) to Form 10-Q on August 14, 1998, is
incorporated herein by reference.
(10)(e) * 1990 Non-Employee Directors' Stock Option Plan as amended
effective April 1, 2001, filed as Exhibit 10(e) to Form 10-K
on March 27, 2001, is incorporated herein by reference.
(10)(f) * Executive Insurance Program as Amended and Restated as of
January 1, 2001, filed as Exhibit 10(g) to Form 10-K on
March 27, 2001, is incorporated herein by reference.
12
(10)(h) * Annual Incentive Bonus Plan as of May 5, 1998, filed as
Exhibit 10(k) to Form 10-Q on August 14, 1998, is
incorporated herein by reference.
(10)(i) * Form of Severance Agreement as of May 20, 1998 between the
registrant and John T. Ryan III, filed as Exhibit 10(m) to
Form 10-Q on August 14, 1998, is incorporated herein by
reference.
(10)(j) * Form of Severance Agreement as of May 20, 1998 between the
registrant and the other executive officers filed as Exhibit
10(n) to Form 10-Q on August 14, 1998, is incorporated
herein by reference.
(10)(k) * First Amendment to the 1998 Management Share Incentive
Plan as of March 10, 1999, filed as Exhibit 10(l) to Form
10-K on March 26, 1999, is incorporated herein by reference.
(10)(l) Trust Agreement as of June 1, 1996 between the registrant
and PNC Bank, N.A. re the Mine Safety Appliances Company
Stock Compensation Trust, filed as Exhibit 10(f) to Form
10-K on March 26, 1997, is incorporated herein by reference.
(10)(m) * MSA Supplemental Savings Plan, filed as Exhibit 10(n) to
Form 10-Q on November 12, 1999, is incorporated herein by
reference.
(10)(n) * Employment Agreement dated as of January 18, 1999 between
the registrant and James H. Baillie re the registrant's
operations outside Germany, filed as Exhibit (10)(n) to Form
10-K on March 24, 2000, is incorporated herein by reference.
(10)(o) * Employment Agreement dated as of January 18, 1999 between
the registrant and James H. Baillie re the registrant's
operations in Germany, filed as Exhibit (10)(o) to Form 10-K
on March 24, 2000, is incorporated herein by reference.
.. The exhibits marked by an asterisk are management contracts or compensatory
plans or arrangements.
13
(13) Annual Report to Shareholders for year ended December 31, 2001
(21) Affiliates of the registrant
(23) Consent of PricewaterhouseCoopers LLP, independent accountants
The registrant agrees to furnish to the Commission upon request copies of
all instruments with respect to long-term debt referred to in Note 6 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, 2001.
14
Schedule I
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 20, 2002 appearing in the 2001 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)(2) of this Form 10-K. In our opinion, this Financial Statement Schedule
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 20, 2002
F-1
SCHEDULE II
MINE SAFETY APPLIANCES COMPANY AND AFFILIATES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 2001
(IN THOUSANDS)
2001 2000 1999
------- ------- -------
Allowance for doubtful accounts:
Balance at beginning of year $2,363 $2,322 $3,004
Additions -
Charged to costs and expenses 2,016 750 878
Deductions -
Deductions from reserves (1) 1,423 709 928
Reversal of allowance (2) 632
------- ------- -------
Balance at end of year $2,956 $2,363 $2,322
======= ======= =======
(1) Bad debts written off, net of recoveries.
(2) Reversal of allowance due to sale of accounts receivable.
F-2
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, 2002 By /S/ John T. Ryan III
------------------------------- --------------------------------
(Date) John T. Ryan III
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; Chairman of the Board March 27, 2002
--------------------------- and Chief Executive Officer
John T. Ryan III
/S/ Dennis L. Zeitler Vice President - Finance; Principal March 27, 2002
--------------------------- Financial and Accounting Officer
Dennis L. Zeitler
/S/ Joseph L. Calihan Director March 27, 2002
---------------------------
Joseph L. Calihan
/S/ Calvin A. Campbell, Jr. Director March 27, 2002
---------------------------
Calvin A. Campbell, Jr.
/S/ James A. Cederna Director March 27, 2002
---------------------------
James A. Cederna
/S/ Thomas B. Hotopp Director March 27, 2002
---------------------------
Thomas B. Hotopp
/S/ L. Edward Shaw, Jr. Director March 27, 2002
---------------------------
L. Edward Shaw, Jr.
/S/ John C. Unkovic Director March 27, 2002
---------------------------
John C. Unkovic
/S/ Thomas H. Witmer Director March 27, 2002
---------------------------
Thomas H. Witmer