Mine Safety Appliances (NYSE:MSA)

F4Phanatic (72.10) Submitted: 9/17/2006 4:56:11 AM : Start Price: $29.44 MSA Score: +33.60

Mine Safety Appliances, established in 1914, provides products, technologies and services that protect peoples health, safety and the environment. MSA has 3 business segments, MSA North America; MSA Europe; MSA International. MSA provides a comprehensive line of products for fireifhgters, homeland security, law enforcement, military, construction , oil and gas, as well as, other industries. MSA also offers a wide range of consumer and contractor safety products available through select retail outlets. These products are marketed for the "do it yourself" and small contractor market. MSA's product line includes,

Air-Purifying Products
Supplied-Air Respirators
Portable & Permanent Gas Detection Instruments
Thermal Imaging Cameras
Fire Helmets
Body Armor
Head, Eye, Face and Hearing Protection
Fall Protection
Mining and Specialty Products

MSA builds its products with an "integrated system" capability that ensures compatibility with individual MSA products. MSA's components for it's products are mostly formulated, machined, moldedand built in-house for raw materials. This gives MSA greater manufacturing control and unequaled quality assurance for it's products. MSA has it's headquarters and R&D facility in Pittsburgh, PA. It's manufacturing facilities are located in the United States and various other countries.

MSA North America 2005 sales rose to a record $575.9 million from $564.6 million in 2004. Income increased 12% to 62.1 million. MSA North America generated 63% of the company's total revenue of $907.9 million in 2005. Delays in federal funding for fire departments reduced sales of self-contained breathing apparatus (SCBA) for the fire service, while sales of military gas masks to the U.S. military declined from peak levels due to government contracts expiring. MSA made up for the gas mask decline with contracts received for over $53 million to manufacture a quarter million Advanced Combat Helmets (ACH) for the U.S. Army.

MSA also earned $22 million to ship the Modular Integrated Communications Headset System (MICH) in 2005. The MICH is an innovative hands-free, two way radio system that seamlessly integrates with the ACH. MSA also had higher sales of Cairns Fire Helmets and it's line of protective headgear. The largest head gear order in 2005 was placed by the District of Columbia Council of Governments for Cairns fire helmets totaling $1.2 million in December 2005.

Department of Homeland Security placed a $1.4 million contract for the SafeSite Multi-Threat detection System. The SafeSite system provides wireless monitoring of chenical warfare agents, toxic chemicals and other hazardous materials at public events and mass transit systems.

Major contracts in 2005 included,

$4.5 million from the New York City Police Department for Millenium gas masks and Response Escape Hoods.

A $1.3 million contract from the California Highway Patrol for Millenium gas masks.

A $1.1 million contract from the State of Pennsylvania for air-purifying respirators and thermal imaging cameras.

In September 2005 MSA acquired MicroSensor Systems, Inc. of Bowling Green, Ky. This now gives MSA Surface Accoustic Wave based chemical sensing technology used to detect chemical warfare agents.

2005 sales at MSA Europe rose 8% to 87.2 million from $173 million in 2004, income increased 65% to $11.1 million from $6.7 million in 2004. MSA Europe's sales account for 21% of the company's sales of $907.9 million in 2005.

MSA Europe launched the Alpha Series of SCBA in Europe. MSA also launched the AirElite 4H SCBA, a closed circuit device that supplies oxygen for up to 4 hours. The AirElite is designed for firefighters, miners and oil and chemical workers who need a long-term air supply.

In 2005 MSA International's sales rose 26% to a record $144.8 million from $114.9 million in 2004. Income in 2005 increased to $9.2 million from $8.5 million in 2004. MSA International's sales account for 16% of MSA's net sales of $907.9 million in 2005.

MSA International has key markets in Latin America, China, Asia-Pacific, the Middle East and Africa. In the Mid-East, MSA received $5.5 million from the government of Iraq for SCBA's. To enhance future growth in South Africa, MSA formed a new holding company in January of 2006 with Mine Workers Investment Company to ensure compliance with government-established Black Economic Empowerment requirements. This venture marks the culmination of a strategic opportunity indentified by MSA in 2004.

BEE is a South African government program similar to affirmative action in the United States. Companies that are BEE-certified are better positioned to compete for public sector contracts. The MSA and Mineworkers Investment Company venture will pursue oportunities to create a safer environment for South African miners while serving customer needs as an approved BEE supplier.

Although the mining segment generates less than 5% of MSA's worldwide sales, it remains a leading market for MSA International, accounting for 20% of total sales in 2005. In 2005 MSA spent $21.9 million on R&D activities.

I'm definitely buying as much MSA as I can. The only downside is a reduction in the spending patterns of government agencies could materially and adversely affect net sales, earings and cash flow.