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MSA Reports 2008 Results

Mine Safety Appliances Company (MSA), a anesthesia and respiratory devices company, has reported revenue of $1.3 billion for the full year of 2008, up 15%, compared with the revenue of $144 million in the previous year-end. It also reported net income of $70.4 million, or $1.96 per diluted share, for the full year of 2008, compared with net income of $67.6 million, or $1.86 per diluted share, in the previous year-end.

Net income in 2007 benefited from a $7.7 million after-tax gain on the sale of real estate, providing a gain of $0.22 per basic share.

Net sales for the fourth quarter of 2008 were $288.8 million compared with $267.5 million for the fourth quarter of 2007, an increase of $21.3 million, or 8 percent. Net income for the fourth quarter of 2008 was $16.5 million, or 46 cents per basic share, a decrease of $1.0 million, or 5 percent, compared with $17.5 million, or 49 cents per basic share, for the same quarter last year.

“I am pleased to report the highest fourth quarter and full year sales in MSA’s history,” said William M. Lambert, MSA president and chief executive officer. “Our revenue performance in the fourth quarter was especially satisfying considering the current economic environment. This growth in revenue reflects strong shipments against government contracts, the diversified nature of our end-user markets and our continuing focus on expanding our geographic presence,” he said.

Sales in the company’s North American segment increased $29.4 million, or 23 percent, in the fourth quarter of 2008. Self-contained breathing apparatus (SCBA) sales were up $28.9 million in the current quarter, primarily due to $28.0 million in shipments of Firehawk® M7 Responder SCBAs to the U.S. Air Force. Fourth quarter 2008 sales of ballistic helmets to Canadian Forces were up $3.0 million. Sales of instruments increased $3.8 million in the current quarter, reflecting strong shipments of portable and permanent gas detection instruments to the oil and gas industry. Head protection shipments declined $2.1 million in the quarter as the effects of the economic slowdown reduced demand from construction and industrial distributors. Shipments of gas masks were down $3.9 million, reflecting the completion of certain military orders.

Sales in the company’s European segment were $70.5 million in the fourth quarter of 2008 compared to $70.4 million in the fourth quarter of 2007. Local currency sales, however, increased $9.8 million, primarily due to a $4.2 million increase in shipments of ballistic helmets and vests to law enforcement agencies in France. The remainder of the improvement in European segment sales was primarily related to stronger shipments of SCBAs in Germany and Eastern Europe. Currency translation effects reduced European segment sales, when stated in U.S. dollars, by $9.7 million during the current quarter, reflecting a weaker euro.

Sales in MSA’s International segment were down $8.3 million, or 12 percent, in the fourth quarter of 2008. However, local currency sales in the International segment increased $2.4 million, primarily due to MSA’s continued focus on growth initiatives in South Africa and Latin America. Currency translation effects decreased International segment sales for the current quarter, when stated in U.S. dollars, by $10.7 million, largely due to the weakening of the South African rand, Australian dollar and Brazilian real.

Net income in MSA’s North American segment improved $1.9 million, or 14 percent, in the fourth quarter of 2008. Fourth quarter 2007 net income in North America benefited from a gain of $1.2 million after-tax on the sale of property. Excluding this one-time gain, North American segment net income improved $3.1 million in the fourth quarter of 2008 versus a year earlier. The improvement reflects higher gross margin dollars on the increase in sales, and lower operating expenses, partially offset by currency exchange losses associated with weakening currencies in Canada and Mexico.

Net income in the European segment was $1.6 million lower in the fourth quarter of 2008, primarily due to higher research and development and selling, general and administrative expenses. Currency translation effects decreased current quarter European segment net income, when stated in U.S. dollars, by approximately $0.3 million, due to the weaker euro.

Net income in the International segment was $0.8 million lower in the fourth quarter of 2008. The decrease reflects higher selling and administrative expenses associated with growth initiatives, substantially offset by an improvement in gross margins. Currency translation effects decreased current quarter International segment net income, when stated in U.S. dollars, by approximately $0.6 million, largely due to the weakening of the Australian dollar.

“During 2008, we saw meaningful sales growth in each of our three geographic segments and we achieved new performance benchmarks for the company,” Mr. Lambert commented. “However, the global economic recession has deepened in recent months and MSA is not immune to its effects. These are uncertain economic times, to be sure, requiring our global teams to closely monitor the markets we serve and continuously adjust our response to meet market realities. We have recently intensified our efforts to reduce costs across MSA and we have taken actions to reduce staff and better align our factory workforce with customer demand. While I am pleased that we saw strength in our core business throughout most of 2008, we must continue to be diligent in our efforts to reduce costs and manage our business in ways that allow us to weather the current downturn and seize opportunity when recovery occurs,” Lambert concluded.