What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-28 compared with 2022-04-29 · 250 added, 143 removed, 575 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands, except per share amounts) 2022 2021 2022 2021

5 unchanged sentences

Restructuring charges (Note 3) 57 7,078 2,247 8,385

Currency exchange losses (gains), net 3,271 ( 2,099 )

Currency exchange (gains) losses, net ( 1,463 ) 1,640 1,809 ( 459 )

Product liability expense (Note 18) 2,926 11,751 5,698 14,547

12 unchanged sentences

Dividends per common share $ 0.46 $ 0.44 $ 0.90 $ 0.87

*Prior period has been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

*Prior periods have been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

3 unchanged sentences

Pension and post-retirement plan actuarial gains, net of tax (Note 6) 2,330 3,657 4,594 7,369

Unrealized losses on available-for-sale securities (Note 6) ( 9 ) ( 5 )

Total other comprehensive income (loss), net of tax 8,147 ( 6,516 )

Unrealized (losses) gains on available-for-sale securities (Note 6) ( 9 ) 1 ( 18 ) ( 4 )

Total other comprehensive (loss) income, net of tax ( 29,285 ) 9,676 ( 21,138 ) 3,160

Comprehensive income 18,408 35,124 62,097 65,244

1 unchanged sentence

Comprehensive income attributable to MSA Safety Incorporated $ 18,408 $ 34,989 $ 62,097 $ 64,888

*Prior period has been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

*Prior periods have been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

Cash and cash equivalents $ 134,047 $ 140,895

46 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2022 2021

3 unchanged sentences

Stock-based compensation (Note 11) 8,358 10,695

Pension expense (Note 15) ( 2,652 ) ( 480 )

Pension (income) expense (Note 15) ( 5,304 ) 919

Deferred income tax benefit (Note 10) ( 1,526 ) ( 3,415 )

18 unchanged sentences

Property disposals and other investing — 60

Cash Flow From (Used in) Investing Activities 1,051 ( 52,509 )

Cash Flow Used in Investing Activities ( 5,598 ) ( 58,175 )

Financing Activities

1 unchanged sentence

Payments on long-term debt (Note 12) ( 535,000 ) ( 578,729 )

Debt issuance costs — ( 1,494 )

Cash dividends paid ( 35,401 ) ( 34,067 )

1 unchanged sentence

Exercise of stock options (Note 7) 298 2,161

Cash Flow (Used In) From Financing Activities ( 15,900 ) 31,639

Employee stock purchase plan (Note 7) 486 452

Cash Flow Used In Financing Activities ( 29,773 ) ( 11,455 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 10,474 ) ( 907 )

Increase in cash, cash equivalents and restricted cash 6,313 24,026

(Decrease) Increase in cash, cash equivalents and restricted cash ( 5,869 ) 13,377

Beginning cash, cash equivalents and restricted cash 141,438 161,034

9 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS AND NONCONTROLLING INTERESTS

(In thousands) Retained

(In thousands, except per share amounts) Retained

Earnings Accumulated

1 unchanged sentence

(Loss) Noncontrolling Interests

Balances March 31, 2021 $ 1,122,722 $ ( 188,948 ) $ 8,214

Net income 25,448 — —

Foreign currency translation adjustments — 6,018 —

Pension and post-retirement plan adjustments, net of tax of $ 1,139

Unrealized net gains on available-for-sale securities (Note 17) — 1 —

Income attributable to noncontrolling interests ( 262 ) 127 135

Common dividends ($ 0.44 per share)

( 17,237 ) — —

Preferred dividends ($ 0.5625 per share)

Balances June 30, 2021 $ 1,130,661 $ ( 179,145 ) $ 8,349

Balances March 31, 2022 $ 1,068,464 $ ( 140,993 ) $ —

Net income 47,693 — —

Foreign currency translation adjustments — ( 31,606 ) —

Pension and post-retirement plan adjustments, net of tax of $ 950

Unrealized net losses on available-for-sale securities (Note 17) — ( 9 ) —

Common dividends ($ 0.46 per share)

( 18,099 ) — —

Preferred dividends ($ 0.5625 per share)

Balances June 30, 2022 $ 1,098,048 $ ( 170,278 ) $ —

Balances December 31, 2020 $ 1,103,092 $ ( 182,397 ) $ 7,993

4 unchanged sentences

Income attributable to noncontrolling interests ( 448 ) 92 356

Common dividends ( 16,810 ) — —

Common dividends ($ 0.87 per share)

( 34,047 ) — —

Preferred dividends ($ 0.5625 per share)

Balances March 31, 2021 $ 1,122,722 $ ( 188,948 ) $ 8,214

Balances June 30, 2021 $ 1,130,661 $ ( 179,145 ) $ 8,349

Balances December 31, 2021 $ 1,050,214 $ ( 149,140 ) $ —

3 unchanged sentences

Unrecognized net losses on available-for-sale securities (Note 17) — ( 18 ) —

Common dividends ( 17,282 ) — —

Common dividends ($ 0.90 per share)

( 35,381 ) — —

Preferred dividends ($ 0.5625 per share)

Balances March 31, 2022 $ 1,068,464 $ ( 140,993 ) $ —

Balances June 30, 2022 $ 1,098,048 $ ( 170,278 ) $ —

*Prior periods have been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

7 unchanged sentences

The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire year.

The December 31, 2021, Balance Sheets data was derived from the audited Consolidated Balance Sheets, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S.

The December 31, 2021, Balance Sheet data was derived from the audited Consolidated Balance Sheet, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S.

This Form 10-Q report should be read in conjunction with MSA's Form 10-K for the year ended December 31, 2021, which includes all disclosures required by U.S.

10 unchanged sentences

The Company's net cash pool position consisted of the following:

(In thousands) March 31, 2022

(In thousands) June 30, 2022

Gross cash pool position $ 62,496

2 unchanged sentences

Note 3— Restructuring Charges

During the three months ended March 31, 2022, we recorded restructuring charges of $ 2.2 million.

International segment restructuring charges of $ 2.0 million during the three months ended March 31, 2022, were primarily related to the expansion of our European Shared Service Center in Warsaw, Poland.

Americas segment restructuring charges of $ 0.4 million during the three months ended March 31, 2022, were primarily related to programs to adjust our operations in response to current business conditions.

During the three months ended March 31, 2021, we recorded restructuring charges of $ 1.3 million.

International segment restructuring charges of $ 1.0 million during the three months ended March 31, 2021, were primarily related to our ongoing initiatives to drive profitable growth and right size our operations.

Americas segment restructuring charges of $ 0.2 million during the three months ended March 31, 2021, were primarily related to costs associated with our global Fixed Gas & Flame Detection manufacturing footprint optimization as well as programs to adjust our operations in response to current business conditions.

During the three and six months ended June 30, 2022, we recorded restructuring charges of $ 0.1 million and $ 2.2 million, respectively.

International segment restructuring charges of $ 2.1 million during the six months ended June 30, 2022, were primarily related to the implementation of our new European Shared Service Center in Warsaw, Poland.

Americas segment restructuring charges of $ 0.3 million during the six months ended June 30, 2022, were primarily related to initiatives to optimize our manufacturing footprint.

During the three and six months ended June 30, 2021, we recorded restructuring charges of $ 7.1 million and $ 8.4 million, respectively.

International segment restructuring charges of $ 7.6 million during the six months ended June 30, 2021, were primarily related to our ongoing initiatives to drive profitable growth and rightsize our operations.

Americas segment restructuring charges of $ 0.8 million during the six months ended June 30, 2021, were primarily related to costs associated with our global Fixed Gas & Flame Detection manufacturing footprint optimization as well as programs to adjust our operations in response to current business conditions.

Activity and reserve balances for restructuring charges by segment were as follows:

6 unchanged sentences

Restructuring charges (releases) 0.3 2.1 ( 0.2 ) 2.2

Currency translation — ( 0.2 ) — ( 0.2 )

Currency translation and other adjustments 0.1 ( 1.4 ) — ( 1.3 )

Cash payments ( 2.2 ) ( 3.8 ) — ( 6.0 )

Reserve balances at March 31, 2022 $ 2.6 $ 17.1 $ 0.1 $ 19.8

Reserve balances at June 30, 2022 $ 1.5 $ 14.3 $ 0.1 $ 15.9

Restructuring reserves are included in Accrued restructuring and other current liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets.

1 unchanged sentence

The following table sets forth the components of inventory:

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

Finished products $ 92,068 $ 87,657

4 unchanged sentences

The following table sets forth the components of property, plant and equipment, net:

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

Land $ 4,888 $ 5,131

9 unchanged sentences

Three Months Ended

March 31, Three Months Ended

June 30, Three Months Ended

(In thousands) 2022 2021 2022 2021

9 unchanged sentences

Balance at beginning of period $ ( 14 ) $ ( 6 ) $ — $ —

Unrealized loss on available-for-sale securities (Note 17) ( 9 ) ( 5 ) — —

Unrealized net (losses) gains on available-for-sale securities (Note 17) ( 9 ) 1 — —

Balance at end of period $ ( 23 ) $ ( 5 ) $ — $ —

4 unchanged sentences

(a) Reclassifications out of accumulated other comprehensive loss and into net income are included in the computation of net periodic pension and other post-retirement benefit costs (refer to Note 15—Pensions and Other Post-retirement Benefits).

MSA Safety Incorporated Noncontrolling Interests

Six Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

Pension and other post-retirement benefits (a)

Balance at beginning of period $ ( 57,296 ) $ ( 115,552 ) $ — $ —

Amounts reclassified from accumulated other comprehensive loss into net income:

Amortization of prior service credit (Note 15) ( 96 ) ( 48 ) — —

Recognized net actuarial losses (Note 15) 6,656 9,640 — —

Tax benefit ( 1,966 ) ( 2,223 ) — —

Total amount reclassified from accumulated other comprehensive loss, net of tax, into net income 4,594 7,369 — —

Balance at end of period $ ( 52,702 ) $ ( 108,183 ) $ — $ —

Available-for-sale securities

Balance at beginning of period $ ( 5 ) $ ( 1 ) $ — $ —

Unrealized net losses on available-for-sale securities (Note 17) ( 18 ) ( 4 ) — —

Balance at end of period $ ( 23 ) $ ( 5 ) $ — $ —

Foreign currency translation

Balance at beginning of period $ ( 91,839 ) $ ( 66,844 ) $ — $ 582

Foreign currency translation adjustments ( 25,714 ) ( 4,113 ) — ( 92 )

Balance at end of period $ ( 117,553 ) $ ( 70,957 ) $ — $ 490

Note 7— Capital Stock

Preferred Stock - The Company has authorized 100,000 shares of $ 50 par value 4.5 % cumulative preferred nonvoting stock which is callable at $ 52.50 .

There are 71,340 shares issued and 52,998 shares held in treasury at March 31, 2022.

There are 71,340 shares issued and 52,998 shares held in treasury at June 30, 2022.

The Treasury shares at cost line in the unaudited Condensed Consolidated Balance Sheets includes $ 1.8 million related to preferred stock.

There were no treasury purchases of preferred stock shares during both the three months ended March 31, 2022 and 2021.

There were no treasury purchases of preferred stock shares during both the six months ended June 30, 2022 and 2021.

The Company has also authorized 1,000,000 shares of $ 10 par value second cumulative preferred voting stock.

No shares have been issued as of March 31, 2022.

No shares have been issued as of June 30, 2022.

Common Stock - The Company has authorized 180,000,000 shares of no par value common stock.

There were 62,081,391 shares issued as of December 31, 2021.

No new shares were issued during the three months ended March 31, 2022, or 2021.

There were 39,335,816 and 39,276,518 shares outstanding at March 31, 2022 and December 31, 2021, respectively.

No new shares were issued during the six months ended June 30, 2022, or 2021.

There were 39,124,837 and 39,276,518 shares outstanding at June 30, 2022 and December 31, 2021, respectively.

Treasury Shares - The Company's share repurchase program authorizes up to $ 100.0 million to repurchase MSA common stock in the open market and in private transactions.

1 unchanged sentence

The maximum number of shares that may be repurchased is calculated based on the dollars remaining under the program and the respective month-end closing share price.

During the three months ended March 31, 2022 and 2021, no shares were repurchased under this program.

There were 22,745,575 and 22,804,873 Treasury Shares at March 31, 2022 and December 31, 2021, respectively.

During the six months ended June 30, 2022, 231,835 shares were repurchased under this program.

During the six months ended June 30, 2021, no shares were repurchased under this program.

There were 22,956,554 and 22,804,873 Treasury Shares at June 30, 2022 and December 31, 2021, respectively.

The Company issues Treasury Shares for all stock-based compensation plans.

Shares are issued from Treasury at the average Treasury Share cost on the date of the transaction.

There were 28,366 and 32,650 Treasury Shares issued for these purposes during the three months ended March 31, 2022 and 2021, respectively.

There were 110,696 and 33,625 Treasury Shares issued for these purposes during the six months ended June 30, 2022 and 2021, respectively.

Common stock activity is summarized as follows:

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

(In thousands) Common

5 unchanged sentences

Stock options exercised 166 80 244 126

Treasury shares purchased — ( 3,659 ) — ( 5,348 )

Treasury shares purchased for stock compensation programs — ( 272 ) — ( 163 )

Employee stock purchase program 424 62 409 43

Share repurchase program — ( 28,225 ) — —

Balance at end of period $ 267,645 $ ( 359,314 ) $ 253,773 $ ( 329,439 )

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

(In thousands) Common

Stock Treasury

Balance at beginning of period $ 260,121 $ ( 328,776 ) $ 242,693 $ ( 326,156 )

Stock compensation expense 8,358 — 10,695 —

Restricted and performance stock awards ( 1,461 ) 1,461 ( 1,502 ) 1,502

Stock options exercised 203 95 1,478 683

Treasury shares purchased for stock compensation programs — ( 3,931 ) — ( 5,511 )

Employee stock purchase program 424 62 409 43

Share repurchase program — ( 28,225 ) — —

Balance at end of period $ 267,645 $ ( 359,314 ) $ 253,773 $ ( 329,439 )

Note 8— Segment Information

We are organized into four geographical operating segments that are based on management responsibilities:

Northern North America, Latin America, Europe, Middle East & Africa ("EMEA"), and Asia Pacific ("APAC").

Northern North America, Latin America, Europe, Middle East & Africa, and Asia Pacific.

The operating segments have been aggregated (based on economic similarities, the nature of their products, end-user markets and methods of distribution) into three reportable segments:

15 unchanged sentences

(In thousands, except percentage amounts) Americas International Corporate Consolidated

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Sales to external customers $ 252,386 $ 119,927 $ — $ 372,313

1 unchanged sentence

Restructuring charges (Note 3) 57

Currency exchange gains, net ( 1,463 )

Product liability expense (Note 18) 2,926

Acquisition related costs (a)

Adjusted operating income (loss) 57,141 17,207 ( 8,735 ) 65,613

Adjusted operating margin % 22.6 % 14.3 %

Depreciation and amortization (a)

Adjusted EBITDA 65,461 20,370 ( 8,614 ) 77,217

Adjusted EBITDA margin % 25.9 % 17.0 %

Six Months Ended June 30, 2022

Sales to external customers $ 478,034 $ 224,971 $ — $ 703,005

Operating income 104,204

Restructuring charges (Note 3) 2,247

Currency exchange losses, net 1,809

Product liability expense (Note 18) 5,698

Acquisition related costs (a) (Note 14)

Acquisition related costs (a)

Adjusted operating income (loss) 109,577 26,196 ( 16,316 ) 119,457

Adjusted operating margin % 22.9 % 11.6 %

Depreciation and amortization 11,829

Depreciation and amortization (a)

Adjusted EBITDA 126,256 32,698 ( 16,077 ) 142,877

Adjusted EBITDA margin % 26.4 % 14.5 %

(a) Acquisition related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during due diligence and integration.

These costs are included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Income.

Acquisition related costs also include the acquisition related amortization, which is included in Cost of products sold in the unaudited Condensed Consolidated Statements of Income.

(In thousands, except percentage amounts) Americas International Corporate Consolidated

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Sales to external customers $ 217,707 $ 123,582 $ — $ 341,289

1 unchanged sentence

Restructuring charges (Note 3) 7,078

Currency exchange losses, net 1,640

Product liability expense (Note 18) 11,751

Acquisition related costs (a)

Adjusted operating income (loss) 49,319 20,444 ( 10,991 ) 58,772

Adjusted operating margin % 22.7 % 16.5 %

Depreciation and amortization 11,584

Adjusted EBITDA 57,218 24,024 ( 10,886 ) 70,356

Adjusted EBITDA margin % 26.3 % 19.4 %

Six Months Ended June 30, 2021

Sales to external customers $ 426,046 $ 223,671 $ — $ 649,717

Operating income 79,217

Restructuring charges (Note 3) 8,385

Currency exchange gains, net ( 459 )

6 unchanged sentences

Adjusted EBITDA margin % 25.7 % 16.2 %

*Prior period has been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

*Prior periods have been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

Adjustments were made to Americas and International.

1 unchanged sentence

These costs are included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Income.

Acquisition related costs also include the acquisition related amortization, which is included in Cost of products sold in the unaudited Condensed Consolidated Statements of Income.

Acquisition-related costs also include the acquisition related amortization, which is included in Cost of products sold in the Condensed Consolidated Statements of Income.

Total sales by product group was as follows:

Three Months Ended March 31, 2022 Consolidated Americas International

Three Months Ended June 30, 2022 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

Breathing Apparatus $ 91,950 25 % $ 64,610 26 % 27,340 23 %

Fixed Gas & Flame Detection (a)

80,498 22 % 50,514 20 % 29,984 25 %

Firefighter Helmets & Protective Apparel 47,899 13 % 35,037 14 % 12,862 11 %

Portable Gas Detection 44,892 12 % 31,665 13 % 13,227 11 %

Industrial Head Protection 43,724 12 % 34,023 13 % 9,701 8 %

Fall Protection 26,614 7 % 17,005 7 % 9,609 8 %

36,736 9 % 19,532 7 % 17,204 14 %

Total $ 372,313 100 % $ 252,386 100 % $ 119,927 100 %

Six Months Ended June 30, 2022 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

Breathing Apparatus $ 162,901 23 % $ 115,008 24 % $ 47,893 21 %

Fixed Gas & Flame Detection (a)

163,575 23 % 105,135 22 % 58,440 26 %

Firefighter Helmets & Protective Apparel 96,360 14 % 68,513 14 % 27,847 12 %

4 unchanged sentences

Total $ 703,005 100 % $ 478,034 100 % $ 224,971 100 %

Three Months Ended March 31, 2021 Consolidated Americas International

Three Months Ended June 30, 2021 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

7 unchanged sentences

Total $ 341,289 100 % $ 217,707 100 % $ 123,582 100 %

Six Months Ended June 30, 2021 Consolidated Americas International

(In thousands, except percentages) Dollars Percent Dollars Percent Dollars Percent

Breathing Apparatus $ 146,304 23 % $ 100,234 24 % $ 46,069 21 %

Fixed Gas & Flame Detection 125,039 19 % 73,227 17 % 51,811 23 %

Firefighter Helmets & Protective Apparel 99,131 15 % 71,413 17 % 27,719 12 %

Portable Gas Detection 76,249 12 % 51,095 12 % 25,154 11 %

Industrial Head Protection 70,851 11 % 53,931 13 % 16,920 8 %

Fall Protection 56,876 9 % 33,349 8 % 23,526 11 %

75,267 11 % 42,797 9 % 32,472 14 %

Total $ 649,717 100 % $ 426,046 100 % $ 223,671 100 %

(a) Fixed Gas & Flame Detection includes sales from the Bacharach, Inc.

and its affiliated companies ("Bacharach") acquisition for periods following July 1, 2021 (Americas and International).

Please refer to Note 14 - Acquisitions.

(b) Other products include sales of Air Purifying Respirators.

4 unchanged sentences

Amounts attributable to MSA Safety Incorporated common shareholders:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands, except per share amounts) 2022 2021 2022 2021

11 unchanged sentences

Diluted $ 1.21 $ 0.64 $ 2.11 $ 1.56

*Prior period has been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

*Prior periods have been adjusted to reflect the change in inventory accounting method, as described in the Company's fiscal 2021 Annual Report on Form 10-K.

Note 10— Income Taxes

The Company's effective tax rate for the first quarter of 2022 was 21.7 % which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to state income taxes, partially offset by tax benefits on certain share-based payments.

The Company's effective tax rate for the first quarter of 2021 was 21.0 %, which is consistent with the U.S.

statutory rate of 21% as state income taxes and a one time foreign expense associated with pension was offset by tax benefits on certain share-based payments.

The Company's effective tax rate for the second quarter of 2022 was 24.7 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to state income taxes and increased profitability in higher tax jurisdictions.

The Company's effective tax rate for the second quarter of 2021 was 27.8 %, which differs from the U.S.

federal statutory rate of 21% primarily due to statutory rate increases in foreign jurisdictions and nondeductible executive compensation, partially offset by tax benefits on certain share-based payments.

On June 10, 2021 the United Kingdom ("U.K.") Parliament announced royal assent for Bill No.

2 unchanged sentences

The Company recorded this impact on its deferred tax balances in the second quarter of 2021.

At March 31, 2022, the Company had a gross liability for unrecognized tax benefits of $ 5.0 million.

The Company has recognized tax benefits associated with these liabilities of $ 2.5 million at March 31, 2022.

The Company's effective tax rate for the six months ended June 30, 2022, was 23.5 % which differs from the U.S.

federal statutory rate of 21% primarily due to state income taxes.

The Company's effective tax rate for the six months ended June 30, 2021, was 24.0 %, which differs from the U.S.

At June 30, 2022, the Company had a gross liability for unrecognized tax benefits of $ 4.8 million.

The Company has recognized tax benefits associated with these liabilities of $ 2.3 million at June 30, 2022.

The gross liability includes amounts associated with foreign tax exposure in prior periods.

The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

The Company's liability for accrued interest related to uncertain tax positions was $ 0.9 million at March 31, 2022.

The Company's liability for accrued interest related to uncertain tax positions was $ 0.9 million at June 30, 2022.

We are subject to regular review and audit by both foreign and domestic tax authorities.

7 unchanged sentences

Stock compensation expense is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

Stock compensation expense $ 4,629 $ 7,403 $ 8,358 $ 10,695

Income tax expense 914 794

Income tax benefit 1,134 1,784 2,048 2,577

Stock compensation expense, net of tax $ 3,495 $ 5,619 $ 6,310 $ 8,118

A summary of stock option activity for the three months ended March 31, 2022, follows:

A summary of stock option activity for the six months ended June 30, 2022, follows:

Shares Weighted Average

2 unchanged sentences

Exercised ( 6,439 ) 46.29

Outstanding at March 31, 2022 160,645 45.45

Exercisable at March 31, 2022 160,461 $ 45.44

Outstanding at June 30, 2022 155,262 45.44

Exercisable at June 30, 2022 155,217 $ 45.44

Restricted stock awards and restricted stock units are valued at the market value of the stock on the grant date.

A summary of restricted stock activity for the three months ended March 31, 2022, follows:

A summary of restricted stock activity for the six months ended June 30, 2022, follows:

Shares Weighted Average

4 unchanged sentences

Forfeited ( 3,308 ) 134.80

Unvested at March 31, 2022 129,044 $ 141.23

Unvested at June 30, 2022 134,974 $ 139.03

Performance stock units that have a market condition modifier are valued at an estimated fair value using a Monte Carlo model.

The final number of shares to be issued for performance stock units granted in the first quarter of 2022 may range from 0 % to 200 % of the target award based on achieving the specified performance targets over the performance period plus an additional modifier based on total shareholder return ("TSR") over the performance period.

The following weighted average assumptions were used in estimating the fair value of the performance stock units granted for the three months ended March 31, 2022.

The final number of shares to be issued for performance stock units granted in 2022 may range from 0 % to 200 % of the target award based on achieving the specified performance targets over the performance period plus an additional modifier based on total shareholder return ("TSR") over the performance period.

The following weighted average assumptions were used in estimating the fair value of the performance stock units granted during the six months ended June 30, 2022.

Fair value per unit $ 143.60

8 unchanged sentences

Expected life is based on historical stock option exercise data.

A summary of performance stock unit activity for the three months ended March 31, 2022, follows:

A summary of performance stock unit activity for the six months ended June 30, 2022, follows:

Shares Weighted Average

5 unchanged sentences

Forfeited ( 2,582 ) 147.20

Unvested at March 31, 2022 195,670 $ 146.50

Unvested at June 30, 2022 194,663 $ 146.40

The performance adjustments above relate primarily to the final number of shares issued for the 2019 performance unit awards which vested in the first quarter of 2022 at 64.2 % of the target award based on both cumulative performance against the EBITDA margin and revenue growth targets and MSA's TSR during the three-year performance period.

Note 12— Long-Term Debt

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

2016 Senior Notes payable through 2031, 3.40 %, net of debt issuance costs

12 unchanged sentences

The Company pays a credit spread of 0 to 175 basis points based on the Company’s net EBITDA leverage ratio and elected rate (BASE or LIBOR).

The Company has a weighted average revolver interest rate of 1.40 % as of March 31, 2022.

At March 31, 2022, $ 568.6 million of the existing $ 900.0 million senior revolving credit facility was unused, including letters of credit issued under the facility.

The Company has a weighted average revolver interest rate of 2.27 % as of June 30, 2022.

At June 30, 2022, $ 539.6 million of the existing $ 900.0 million Revolving Credit Facility was unused, including letters of credit issued under the Facility.

The Facility also provides an accordion feature that allows the Company to access an additional $ 400.0 million of capacity pending approval by MSA’s board of directors and from the bank group.

2 unchanged sentences

The Prudential Note Agreement provided for (i) the issuance of $ 100.0 million of 2.69 % Series C Senior Notes due July 1, 2036 and (ii) the establishment of an uncommitted note issuance facility whereby the Company may request, subject to Prudential’s acceptance in its sole discretion, the issuance of up to $ 335.0 million aggregate principal amount of senior unsecured notes.

As of March 31, 2022, the Company had issued £ 54.9 million (approximately $ 72.2 million at March 31, 2022) of 3.4 % Series B Senior Notes due January 22, 2031.

Maturities of this note are £ 6.1 million (approximately $ 8.0 million) due January 22, 2023 with annual maturities of £ 6.1 million through January 2031.

As of June 30, 2022, the Company had issued £ 54.9 million (approximately $ 66.9 million at June 30, 2022) of 3.4 % Series B Senior Notes due January 22, 2031.

Maturities of this note are £ 6.1 million (approximately $ 7.4 million at June 30, 2022) due January 22, 2023 with annual maturities of £ 6.1 million through January 2031.

On July 1, 2021, the Company entered into a Second Amended and Restated Master Note Facility (the “NYL Note Facility”) with NYL Investors.

14 unchanged sentences

LIBOR based contracts to determine whether reference rate modifications are necessary.

As of March 31, 2022, the Company was in full compliance with the restrictive covenants under its various credit agreements.

The Company had outstanding bank guarantees and standby letters of credit with banks as of March 31, 2022, totaling $ 8.9 million, of which $ 1.5 million relate to the senior revolving credit facility.

As of June 30, 2022, the Company was in full compliance with the restrictive covenants under its various credit agreements.

The Company had outstanding bank guarantees and standby letters of credit with banks as of June 30, 2022, totaling $ 9.8 million, of which $ 1.5 million relate to the Revolving Credit Facility.

The letters of credit serve to cover customer requirements in connection with certain sales orders and insurance companies.

The Company is also required to provide cash collateral in connection with certain arrangements.

At March 31, 2022, the Company has $ 0.5 million of restricted cash in support of these arrangements.

At June 30, 2022, the Company has $ 1.5 million of restricted cash in support of these arrangements.

Note 13— Goodwill and Intangible Assets

Changes in goodwill during the three months ended March 31, 2022 were as follows:

Changes in goodwill during the six months ended June 30, 2022 were as follows:

(In thousands) Goodwill

Balance at January 1, 2022 $ 636,858

Measurement Period Adjustment ( 1,041 )

Currency translation ( 16,368 )

Balance at March 31, 2022 $ 631,821

At March 31, 2022, goodwill of $ 448.6 million and $ 183.2 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net of accumulated amortization, during the three months ended March 31, 2022, were as follows:

Balance at June 30, 2022 $ 619,449

At June 30, 2022, goodwill of $ 447.6 million and $ 171.8 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net of accumulated amortization, during the six months ended June 30, 2022, were as follows:

(In thousands) Intangible Assets

2 unchanged sentences

Currency translation ( 6,254 )

Net balance at March 31, 2022 $ 299,725

At March 31, 2022, the above intangible assets balance includes a trade name related to the Globe acquisition with an indefinite life totaling $ 60.0 million.

Net balance at June 30, 2022 $ 290,221

At June 30, 2022, the above intangible assets balance includes a trade name related to the Globe acquisition with an indefinite life totaling $ 60.0 million.

Note 14— Acquisitions

Acquisition of Bacharach

On July 1, 2021, we acquired 100 % of the common stock of Bacharach in an all cash transaction valued at $ 329.4 million, net of cash acquired.

Headquartered near Pittsburgh in New Kensington, PA, Bacharach is a leader in gas detection technologies used in the heating, ventilation, air conditioning, and refrigeration ("HVAC-R") markets.

On July 1, 2021, we acquired 100 % of the common stock of Bacharach.

Bacharach, which is headquartered in New Kensington, PA, is a leader in gas detection technologies used in the heating, ventilation, air conditioning, and refrigeration ("HVAC-R") markets.

This acquisition expanded MSA’s gas detection portfolio and leverages MSA’s product and manufacturing expertise into new markets.

Bacharach's operating results are included in our unaudited condensed consolidated financial statements from the acquisition date within the Americas, International and Corporate reportable segments.

The acquisition qualified as a business combination and was accounted for using the acquisition method of accounting.

The following table summarizes the preliminary fair values of the Bacharach assets acquired and liabilities assumed at the date of the acquisition:

The Company finalized the purchase price allocation during the second quarter of 2022.

The following table summarizes the fair values of the Bacharach assets acquired and liabilities assumed at the date of the acquisition:

(In millions) July 1, 2021

8 unchanged sentences

Net assets acquired $ 341.1

The amounts in the table above are subject to change upon completion of the valuation of the assets acquired and liabilities assumed.

This valuation is expected to be completed by the second quarter of 2022.

Assets acquired and liabilities assumed in connection with the acquisition were recorded at their preliminary fair values.

Fair values were determined by management, based in part on an independent valuation performed by a third party valuation specialist.

The valuation methods used to determine the fair value of intangible assets included the excess earnings approach for customer relationships using customer inputs and contributory charges;

the relief from royalty method for trade name and developed technologies;

and the cost method for assembled workforce which is included in goodwill.

A number of significant assumptions and estimates were involved in the application of these valuation methods, including forecasted sales volumes and prices, royalty rates, costs to produce, tax rates, capital spending, discount rates, attrition rates and working capital changes.

Cash flow forecasts were generally based on Bacharach pre-acquisition forecasts, coupled with estimated MSA sales synergies.

Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives.

The customer relationships, developed technology and trade name acquired in the Bacharach transaction are being amortized over periods of 21 years, 7 to 9 years and 20 years, respectively.

Estimated future amortization expense related to the identifiable intangible assets is approximately $ 6.7 million for the remainder of 2022, $ 9.0 million annually for 2023 through 2026, and $ 109.0 million thereafter.

Goodwill was calculated as the excess of the purchase price over the fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, the expected synergies and other benefits that we believe will result from combining the operations of Bacharach with our operations.

Goodwill of $ 194.5 million related to the Bacharach acquisition was recorded, with $ 155.6 million and $ 38.9 million allocated to the Americas and International reportable segments, respectively.

This Goodwill is non-deductible for tax purposes.

Acquisition of Bristol Uniforms and Bell Apparel ("Bristol")

16 unchanged sentences

(In thousands) 2022 2021 2022 2021

Three Months Ended March 31,

Three Months Ended June 30,

Service cost $ 3,099 $ 3,242 $ 82 $ 99

3 unchanged sentences

Recognized net actuarial losses 3,018 4,421 310 399

Net periodic benefit (income) cost (a)

$ ( 2,652 ) $ 1,399 $ 456 $ 524

Six Months Ended June 30,

Service cost $ 6,198 $ 6,484 $ 164 $ 198

Interest cost 7,226 5,634 296 232

Expected return on plan assets ( 24,836 ) ( 18,294 ) — —

Amortization of prior service cost (credit) 72 132 ( 168 ) ( 180 )

Recognized net actuarial losses 6,036 8,842 620 798

Settlements — ( 1,879 )

Net periodic benefit cost (a)

Net periodic benefit (income) cost (a)

$ ( 5,304 ) $ 919 $ 912 $ 1,048

(a) Components of net periodic benefit cost other than service cost are included in the line item Other income, net, and service costs are included in the line items Cost of products sold and Selling, general and administrative in the unaudited Condensed Consolidated Statements of Income.

We made contributions of $ 1.9 million to our pension plans during both the three months ended March 31, 2022 and 2021, respectively.

We expect to make net contributions of $ 7.7 million to our pension plans in 2022, which are primarily associated with statutorily required plans in the International reporting segment.

We made contributions of $ 3.8 million to our pension plans during both the six months ended June 30, 2022 and 2021, respectively.

We expect to make total contributions of $ 7.7 million to our pension plans in 2022, which are primarily associated with statutorily required plans in the International reporting segment.

Note 16— Derivative Financial Instruments

2 unchanged sentences

We account for these forward contracts at fair value and report the related gains or losses in currency exchange losses (gains), net, in the unaudited Condensed Consolidated Statements of Income.

The notional amount of open forward contracts was $ 99.9 million and $ 99.0 million at March 31, 2022, and December 31, 2021, respectively.

The notional amount of open forward contracts was $ 102.5 million and $ 99.0 million at June 30, 2022, and December 31, 2021, respectively.

The following table presents the unaudited Condensed Consolidated Balance Sheets location and fair value of assets and liabilities associated with derivative financial instruments:

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

Derivatives not designated as hedging instruments:

3 unchanged sentences

prepaid expenses and other current assets 33 619

The following table presents the unaudited Condensed Consolidated Statements of Income location and impact of derivative financial instruments:

The following table presents the unaudited Condensed Consolidated Statements of Income and unaudited Condensed Consolidated Statements of Cash Flows location and impact of derivative financial instruments:

Loss Recognized in Income

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2022 2021

1 unchanged sentence

Foreign exchange contracts:

currency exchange (gains) losses, net $ 8,449 $ 1,474

Note 17— Fair Value Measurements

11 unchanged sentences

Accordingly, the fair values of the investments are classified within Level 2 of the fair value hierarchy.

The amortized cost basis of our investments was $ 40.0 million and $ 49.0 million as of March 31, 2022 and December 31, 2021, respectively.

The fair value was $ 40.0 million and $ 49.0 million as of March 31, 2022 and December 31, 2021, respectively, which was reported in Investments, short-term in the accompanying unaudited Condensed Consolidated Balance Sheets.

The amortized cost basis of our investments was $ 34.9 million and $ 49.0 million as of June 30, 2022 and December 31, 2021, respectively.

The fair value was $ 34.9 million and $ 49.0 million as of June 30, 2022 and December 31, 2021, respectively, which was reported in Investments, short-term in the accompanying unaudited Condensed Consolidated Balance Sheets.

The change in fair value is recorded in Other comprehensive income, net of tax.

The Company does not intend to sell, nor is it more likely than not that we will be required to sell, these securities prior to recovery of their cost, as such, management believes that any unrealized gains or losses are temporary;

therefore, no impairment gains or losses relating to these securities have been recognized.

All investments in marketable securities have maturities of one year or less and are currently in an unrealized gain position as of March 31, 2022.

The reported carrying amount of our fixed rate long-term debt was $ 272 million and $ 274 million at March 31, 2022, and December 31, 2021, respectively.

The fair value of this debt was $ 256 million and $ 280 million at March 31, 2022, and December 31, 2021, respectively.

The Company does not intend to sell, nor is it more likely than not that we will be required to sell, these securities prior to recovery of their cost.

As such, management believes that any unrealized gains or losses are temporary and to the extent that unrealized losses are present, management has not identified such losses to be other than temporary in nature.

Accordingly, no impairment losses relating to these securities have been recognized.

All investments in marketable securities have maturities of one year or less and are currently in an unrealized gain position as of June 30, 2022.

The reported carrying amount of our fixed rate long-term debt was $ 266.9 million and $ 274.3 million at June 30, 2022, and December 31, 2021, respectively.

The fair value of this debt was $ 228.1 million and $ 279.8 million at June 30, 2022, and December 31, 2021, respectively.

The fair value of this debt was determined using Level 2 inputs by evaluating similarly rated companies with publicly traded bonds where available or current borrowing rates available for financings with similar terms and maturities.

7 unchanged sentences

To determine the reserves, Management makes reasonable estimates of losses for single incident claims based on the number and characteristics of asserted claims, historical experience, sales volumes, expected settlement costs, and other relevant information.

The reserve for single incident product liability claims was $ 1.5 million and $ 1.4 million at March 31, 2022 and December 31, 2021, respectively.

Single incident product liability expense was $ 0.1 million during both the three months ended March 31, 2022 and 2021.

The reserve for single incident product liability claims was $ 1.5 million and $ 1.4 million at June 30, 2022 and December 31, 2021, respectively.

Single incident product liability expense was $ 0.1 million during both the six months ended June 30, 2022 and 2021.

Single incident product liability exposures are evaluated on an annual basis, or more frequently if changing circumstances warrant.

3 unchanged sentences

Cumulative trauma product liability claims involve alleged exposures to harmful substances (e.g., silica, asbestos and coal dust) that occurred years ago and may have developed over long periods of time into diseases such as silicosis, asbestosis, mesothelioma, or coal worker’s pneumoconiosis.

One of the Company's affiliates, Mine Safety Appliances Company, LLC ("MSA LLC"), was named as a defendant in 1,691 lawsuits comprised of 4,595 claims as of March 31, 2022.

One of the Company's affiliates, Mine Safety Appliances Company, LLC ("MSA LLC"), was named as a defendant in 1,690 lawsuits comprised of 4,660 claims as of June 30, 2022.

These lawsuits mainly involve respiratory protection products allegedly manufactured and sold by MSA LLC or its predecessors.

1 unchanged sentence

A summary of cumulative trauma product liability lawsuits and asserted cumulative trauma product liability claims activity is as follows:

Three Months Ended March 31, 2022 Year Ended December 31, 2021

Six Months Ended June 30, 2022 Year Ended

December 31, 2021

Open lawsuits, beginning of period 1,675 1,622

2 unchanged sentences

Open lawsuits, end of period 1,690 1,675

Three Months Ended March 31, 2022 Year Ended December 31, 2021

Six Months Ended June 30, 2022 Year Ended

December 31, 2021

Asserted claims, beginning of period 4,554 2,878

3 unchanged sentences

The increases in the number of claims in 2021 were largely driven by an increase in claims alleging injuries from exposure to coal dust, including claims brought by plaintiffs' counsel with which MSA LLC does not have substantial prior experience.

Subsequent to March 31, 2022, MSA LLC agreed to enter into a process to negotiate, resolve, and dismiss several hundreds of claims over the next several months.

Amounts to resolve these claims have already been accrued as par of the product liability reserve.

If resolutions are reached, expected cash outlays of up to $ 26.3 million associated with these claims are expected to be paid over the next four quarters.

Management has established a reserve for MSA LLC's potential exposure to cumulative trauma product liability claims.

MSA LLC's total cumulative trauma product liability reserve was $ 410.8 million, including $ 3.5 million for claims settled but not yet paid and related defense costs, as of March 31, 2022 and $ 409.8 million, including $ 2.5 million for claims settled but not yet paid and related defense costs, December 31, 2021.

MSA LLC's total cumulative trauma product liability reserve was $ 411.8 million, including $ 5.0 million for claims settled but not yet paid and related defense costs, as of June 30, 2022 and $ 409.8 million, including $ 2.5 million for claims settled but not yet paid and related defense costs, December 31, 2021.

The reserve includes estimated amounts related to asserted and IBNR asbestos, silica, and coal dust claims expected to be resolved through the year 2074.

1 unchanged sentence

Defense costs are recognized in the unaudited Condensed Consolidated Statements of Income as incurred.

At March 31, 2022, $ 47.9 million of the total reserve for cumulative trauma product liability claims is recorded in the Insurance and product liability line within other current liabilities in the unaudited Condensed Consolidated Balance Sheets and the remainder, $ 362.9 million, is recorded in the Product liability and other noncurrent liabilities line.

At June 30, 2022, $ 49.3 million of the total reserve for cumulative trauma product liability claims is recorded in the Insurance and product liability line within other current liabilities in the unaudited Condensed Consolidated Balance Sheets and the remainder, $ 362.5 million, is recorded in the Product liability and other noncurrent liabilities line.

At December 31, 2021, $ 46.7 million of the total reserve for cumulative trauma product liability claims is recorded in the Insurance and product liability line within other current liabilities in the unaudited Condensed Consolidated Balance Sheets and the remainder, $ 363.1 million, is recorded in the Product liability and other noncurrent liabilities line.

Total cumulative trauma liability losses were $ 2.8 million and $ 3.0 million for the three months ended March 31, 2022 and 2021, respectively, primarily related to the defense of cumulative trauma product liability claims.

Uninsured cumulative trauma product liability losses, which were included in Product liability expense on the unaudited Condensed Consolidated Statements of Income, were $ 2.8 million and $ 2.8 million for the three months ended March 31, 2022 and 2021, respectively, and represent the total cumulative trauma liability losses net of any estimated insurance receivables as discussed below.

During the quarter ended June 30, 2022, MSA LLC finalized a process that could result in settlements to resolve and dismiss several hundred claims for up to $ 26.3 million with payments potentially spread across the third quarter of 2022 through the first quarter of 2023.

Amounts to resolve these claims have already been accrued as part of the product liability reserve.

Total cumulative trauma liability losses were $ 2.9 million and $ 5.7 million for the three and six months ended June 30, 2022 and primarily related to the defense of cumulative trauma product liability claims.

Total cumulative trauma liability losses were $ 24.5 million and $ 27.5 million for the three and six months ended June 30, 2021 and related to an update to our asserted cumulative trauma product liability reserve as well as the defense of cumulative trauma product liability claims.

Uninsured cumulative trauma product liability losses, which were included in Product liability expense on the unaudited Condensed Consolidated Statements of Income, were $ 2.9 million and $ 5.7 million for the three and six months ended June 30, 2022 and $ 11.8 million and $ 14.5 million for the three and six months ended June 30, 2021, respectively, and represent the total cumulative trauma liability losses net of any estimated insurance receivables as discussed below.

MSA LLC's cumulative trauma product liability reserve is based upon a reasonable estimate of MSA LLC’s current and potential future liability for cumulative trauma product liability claims, in accordance with applicable accounting principles.

2 unchanged sentences

Quarterly, management and outside legal counsel review whether significant new developments have occurred which could materially impact recorded amounts, and if warranted, management reviews changes with an outside valuation consultant.

These adjustments were largely a result of newly filed claims experienced during the year and in particular, the number of newly filed coal claims, which were well in excess of historical experience.

Numerous additional factors, data points, and developments were analyzed during the annual review process.

Numerous additional factors, data points, and developments are analyzed during the annual review process.

The estimate of MSA LLC’s potential liability for cumulative trauma product liability claims, and the corresponding reserve, are based upon numerous assumptions derived from MSA LLC’s historical experience.

18 unchanged sentences

These amounts are not subject to current coverage litigation.

Insurance receivables at March 31, 2022 totaled $ 126.4 million of which, $ 8.6 million is reported in Prepaid expenses and other current assets in the unaudited Condensed Consolidated Balance Sheets and $ 117.8 million is reported in Insurance receivable and other noncurrent assets.

Insurance receivables at June 30, 2022 totaled $ 126.4 million of which, $ 8.6 million is reported in Prepaid expenses and other current assets in the unaudited Condensed Consolidated Balance Sheets and $ 117.8 million is reported in Insurance receivable and other noncurrent assets.

Insurance receivables at December 31, 2021 totaled $ 130.2 million, of which $ 8.6 million was reported in Prepaid expenses and other current assets in the unaudited Condensed Consolidated Balance Sheets and $ 121.6 million was reported in Insurance receivable and other noncurrent assets.

The vast majority of the $ 126.4 million insurance receivables balance at March 31, 2022 is attributable to reimbursement believed to be due under the terms of signed Coverage-In-Place Agreements and a portion of this amount represents the estimated recovery of IBNR amounts not yet incurred.

The vast majority of the $ 126.4 million insurance receivables balance at June 30, 2022 is attributable to reimbursement believed to be due under the terms of signed Coverage-In-Place Agreements and a portion of this amount represents the estimated recovery of IBNR amounts not yet incurred.

A summary of insurance receivables balance and activity related to cumulative trauma product liability losses is as follows:

(In millions) Three Months Ended March 31, 2022 Year Ended December 31, 2021

(In millions) Six Months Ended June 30, 2022 Year Ended

December 31, 2021

Balance beginning of period $ 130.2 $ 97.0

4 unchanged sentences

These amounts are not subject to current coverage litigation.

Notes receivable from insurance companies at March 31, 2022, totaled $ 48.8 million, of which $ 3.9 million is reported in Notes receivable, insurance companies, current in the unaudited Condensed Consolidated Balance Sheets and $ 44.9 million is reported in Notes receivable, insurance companies, noncurrent.

Notes receivable from insurance companies at June 30, 2022, totaled $ 49.1 million, of which $ 4.0 million is reported in Notes receivable, insurance companies, current in the unaudited Condensed Consolidated Balance Sheets and $ 45.1 million is reported in Notes receivable, insurance companies, noncurrent.

Notes receivable from insurance companies at December 31, 2021 totaled $ 48.5 million of which $ 3.9 million was reported in Notes receivable, insurance companies, current in the unaudited Condensed Consolidated Balance Sheets and $ 44.6 million was reported in Notes receivable, insurance companies, noncurrent.

A summary of notes receivables from insurance companies balance is as follows:

(In millions) Three Months Ended March 31, 2022 Year Ended December 31, 2021

(In millions) Six Months Ended June 30, 2022 Year Ended

December 31, 2021

Balance beginning of period $ 48.5 $ 52.3

2 unchanged sentences

Balance end of period $ 49.1 $ 48.5

The vast majority of the insurance receivables balance at March 31, 2022, is attributable to reimbursement under the terms of signed agreements with insurers and is not currently subject to litigation.

The vast majority of the insurance receivables balance at June 30, 2022, is attributable to reimbursement under the terms of signed agreements with insurers and is not currently subject to litigation.

The collectibility of MSA LLC's insurance receivables and notes receivables is regularly evaluated and we believe that the amounts recorded are probable of collection.

18 unchanged sentences

The following table reconciles the changes in the Company's accrued warranty reserve:

(In thousands) Three Months Ended March 31, 2022 Year Ended December 31, 2021

(In thousands) Six Months Ended June 30, 2022 Year Ended

December 31, 2021

Beginning warranty reserve $ 12,423 $ 11,428

3 unchanged sentences

Ending warranty reserve $ 12,838 $ 12,423

Warranty expense was $ 1.9 million and $ 2.3 million for the three months ended March 31, 2022 and 2021, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Income.

Warranty expense was $ 4.8 million and $ 4.1 million for the six months ended June 30, 2022 and 2021, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Income.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements