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Item 1. Financial Statements

2022-10-27 compared with 2022-07-28 · 187 added, 164 removed, 661 unchanged (35% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

Three Months Ended September 30, Nine Months Ended September 30,

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

5 unchanged sentences

Restructuring charges (Note 3) 899 3,853 3,146 12,239

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

Currency exchange losses (gains), net 2,979 100 4,788 ( 359 )

Product liability expense (Note 18) 4,035 10,688 9,733 25,235

2 unchanged sentences

Other income, net ( 2,359 ) ( 2,266 ) ( 15,121 ) ( 8,773 )

Total other income, net ( 1,841 ) ( 121 ) ( 4,566 ) ( 2,424 )

Total other expense (income), net 3,603 1,498 ( 963 ) ( 926 )

Income before income taxes 60,710 30,904 169,480 112,545

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

Net income $ 44,906 $ 21,180 $ 128,141 $ 83,264

Other comprehensive income (loss), net of tax:

Other comprehensive loss, net of tax:

Foreign currency translation adjustments (Note 6) ( 32,361 ) ( 13,868 ) ( 58,075 ) ( 18,073 )

Pension and post-retirement plan actuarial gains, net of tax (Note 6) 2,299 3,701 6,893 11,070

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

Unrealized gains (losses) on available-for-sale securities (Note 6) 13 ( 11 ) ( 5 ) ( 15 )

Reclassifications of currency translation from accumulated other comprehensive (loss) into net income (Note 6) 2,912 — 2,912 —

Total other comprehensive loss, net of tax ( 27,137 ) ( 10,178 ) ( 48,275 ) ( 7,018 )

Comprehensive income 17,769 11,002 79,866 76,246

5 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

Cash and cash equivalents $ 159,613 $ 140,895

14 unchanged sentences

Intangible assets, net (Note 13) 281,461 306,948

Notes receivable, insurance companies, noncurrent (Note 18) 45,161 44,626

Notes receivable, insurance companies (Note 18) 38,428 44,626

Insurance receivables (Note 18) and other noncurrent assets 139,852 158,649

29 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2022 2021

5 unchanged sentences

Deferred income tax benefit (Note 10) ( 2,451 ) ( 5,548 )

Loss on asset dispositions, net 124 48

Loss on asset write-down and dispositions, net 4,776 423

Pension contributions (Note 15) ( 5,743 ) ( 5,768 )

12 unchanged sentences

Capital expenditures ( 28,753 ) ( 30,963 )

Acquisition, net of cash acquired (Note 14) — ( 62,992 )

Purchase of short-term investments (Note 17) ( 54,793 ) ( 74,955 )

Proceeds from maturities of short-term investments (Note 17) 94,000 135,000

Purchase of short-term investments (Note 17) ( 69,680 ) ( 108,938 )

Property disposals and other investing 38 ( 5,249 )

Acquisitions, net of cash acquired (Note 14) — ( 392,437 )

Cash Flow Used in Investing Activities ( 4,395 ) ( 402,587 )

2 unchanged sentences

Payments on long-term debt (Note 12) ( 771,000 ) ( 1,032,875 )

Debt issuance costs — ( 1,494 )

Cash dividends paid ( 53,447 ) ( 51,322 )

2 unchanged sentences

Employee stock purchase plan (Note 7) 486 452

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

Acquisition of noncontrolling interest in consolidated subsidiaries

Distributions to noncontrolling interests — ( 5,632 )

Debt issuance costs — ( 2,080 )

Cash Flow (Used In) From Financing Activities ( 56,163 ) 233,430

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 23,498 ) ( 4,177 )

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

Increase (Decrease) in cash, cash equivalents and restricted cash 19,847 ( 43,191 )

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

13 unchanged sentences

(Loss) Noncontrolling Interests

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

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

Net income 21,180 — —

1 unchanged sentence

Pension and post-retirement plan adjustments, net of tax of $ 1,095

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

Income attributable to noncontrolling interests ( 262 ) 127 135

Unrealized net losses on available-for-sale securities (Note 17) — ( 11 ) —

Acquisition of noncontrolling interest in consolidated subsidiaries — — ( 8,349 )

Distributions to noncontrolling interests ( 5,632 ) — —

Common dividends ($ 0.44 per share)

1 unchanged sentence

Preferred dividends ($ 0.5625 per share)

Balances September 30, 2021 $ 1,128,954 $ ( 189,323 ) $ —

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

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

Net income 44,906 — —

1 unchanged sentence

Pension and post-retirement plan adjustments, net of tax of $ 981

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

Unrealized net gains on available-for-sale securities (Note 17) — 13 —

Reclassifications of currency translation from accumulated other comprehensive (loss) into net income (Note 6) — 2,912 —

Common dividends ($ 0.46 per share)

1 unchanged sentence

Preferred dividends ($ 0.5625 per share)

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

Balances September 30, 2022 $ 1,124,908 $ ( 197,415 ) $ —

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

4 unchanged sentences

Income attributable to noncontrolling interests ( 448 ) 92 356

Acquisition of noncontrolling interest in consolidated subsidiaries — — ( 8,349 )

Distributions to noncontrolling interests ( 5,632 ) — —

Common dividends ($ 1.31 per share)

1 unchanged sentence

Preferred dividends ($ 1.6875 per share)

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

Balances September 30, 2021 $ 1,128,954 $ ( 189,323 ) $ —

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

3 unchanged sentences

Unrecognized net losses on available-for-sale securities (Note 17) — ( 5 ) —

Reclassifications of currency translation from accumulated other comprehensive (loss) into net income (Note 6) — 2,912 —

Common dividends ($ 1.36 per share)

1 unchanged sentence

Preferred dividends ($ 1.6875 per share)

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

Balances September 30, 2022 $ 1,124,908 $ ( 197,415 ) $ —

*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.

14 unchanged sentences

Note 2— Cash and Cash Equivalents

Several of the Company's affiliates participate in a notional cash pooling arrangement to manage global liquidity requirements.

Several of the Company's subsidiaries participate in a notional cash pooling arrangement to manage global liquidity requirements.

As part of a master netting arrangement, the participants combine their cash balances in pooling accounts at the same financial institution with the ability to offset bank overdrafts of one participant against positive cash account balances held by another participant.

3 unchanged sentences

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

(In thousands) June 30, 2022

(In thousands) September 30, 2022

Gross cash pool position $ 60,019

2 unchanged sentences

Note 3— Restructuring Charges

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:

During the three and nine months ended September 30, 2022, we recorded restructuring charges of $ 0.9 million and $ 3.1 million, respectively.

International segment restructuring charges of $ 2.2 million during the nine months ended September 30, 2022, were primarily related to the implementation of our new European Shared Service Center in Warsaw, Poland.

Americas segment restructuring charges of $ 1.0 million during the nine months ended September 30, 2022, were related to various optimization activities.

During the three and nine months ended September 30, 2021, we recorded restructuring charges of $ 3.9 million and $ 12.2 million, respectively.

International segment restructuring charges of $ 10.0 million during the nine months ended September 30, 2021, were primarily related to our ongoing initiatives to drive profitable growth and rightsize our operations.

Americas segment restructuring charges of $ 2.1 million during the nine months ended September 30, 2021, were primarily related to integration activities and 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 by segment were as follows:

(In millions) Americas International Corporate Total

7 unchanged sentences

Cash payments ( 3.2 ) ( 6.2 ) ( 0.2 ) ( 9.6 )

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

Reserve balances at September 30, 2022 $ 1.2 $ 11.2 $ — $ 12.4

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) June 30, 2022 December 31, 2021

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

Finished products $ 97,758 $ 87,657

4 unchanged sentences

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

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

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

Land $ 4,697 $ 5,131

9 unchanged sentences

Three Months Ended

June 30, Three Months Ended

September 30, Three Months Ended

September 30,

(In thousands) 2022 2021 2022 2021

9 unchanged sentences

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

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

Unrealized net gains (losses) on available-for-sale securities (Note 17) 13 ( 11 ) — —

Balance at end of period $ ( 10 ) $ ( 16 ) $ — $ —

1 unchanged sentence

Balance at beginning of period $ ( 117,553 ) $ ( 70,957 ) $ — $ 280

Reclassification from accumulated other comprehensive loss into net income 2,912 (b)

Acquisition of noncontrolling interest in consolidated subsidiaries

— — — ( 280 )

Foreign currency translation adjustments ( 32,361 ) ( 13,868 ) —

1 unchanged sentence

(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).

(b) Reclassifications out of accumulated other comprehensive loss and into net income relate primarily to the approval of our plan to close a foreign subsidiary.

MSA Safety Incorporated Noncontrolling Interests

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

Nine Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

13 unchanged sentences

Balance at beginning of period $ ( 91,839 ) $ ( 66,844 ) $ — $ 372

Reclassification from accumulated other comprehensive loss into net income 2,912 (b)

Acquisition of noncontrolling interest in consolidated subsidiaries (Note 14)

Foreign currency translation adjustments $ ( 58,075 ) $ ( 17,981 ) $ — $ ( 92 )

1 unchanged sentence

(b) Reclassifications out of accumulated other comprehensive loss and into net income relate primarily to the approval of our plan to close a foreign subsidiary.

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 June 30, 2022.

There are 71,340 shares issued and 52,998 shares held in treasury at September 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 six months ended June 30, 2022 and 2021.

There were no treasury purchases of preferred stock shares during both the nine months ended September 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 June 30, 2022.

No shares have been issued as of September 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 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.

No new shares were issued during the nine months ended September 30, 2022 or 2021.

There were 39,197,700 and 39,276,518 shares outstanding at September 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 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.

During the nine months ended September 30, 2022, 251,408 shares were repurchased under this program.

During the nine months ended September 30, 2021, no shares were repurchased under this program.

There were 22,883,691 and 22,804,873 Treasury Shares at September 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 110,696 and 33,625 Treasury Shares issued for these purposes during the six months ended June 30, 2022 and 2021, respectively.

There were 203,619 and 37,478 Treasury Shares issued for these purposes during the nine months ended September 30, 2022 and 2021, respectively.

Common stock activity is summarized as follows:

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

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

(In thousands) Common

6 unchanged sentences

Treasury shares purchased for stock compensation programs — ( 59 ) — ( 625 )

Employee stock purchase program 424 62 409 43

Acquisition of noncontrolling interest in consolidated subsidiaries

— — ( 4,751 ) —

Share repurchase program — ( 2,150 ) — —

Balance at end of period $ 273,010 $ ( 360,056 ) $ 252,084 $ ( 329,750 )

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

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

(In thousands) Common

6 unchanged sentences

Treasury shares purchased for stock compensation programs — ( 3,990 ) — ( 6,137 )

Acquisition of noncontrolling interest in consolidated subsidiaries

— — ( 4,751 ) —

Employee stock purchase program 424 62 409 43

9 unchanged sentences

Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived.

The Company's sales are allocated to each country based primarily on the destination of the end-customer.

The Company's net sales are allocated to each country based primarily on the destination of the end-customer.

Adjusted operating income (loss), adjusted operating margin, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA margin are the measures used by the chief operating decision maker to evaluate segment performance and allocate resources.

Adjusted operating income (loss) is defined as operating income excluding restructuring charges, currency exchange gains (losses), product liability expense, acquisition related costs, including acquisition related amortization and adjusted operating margin is defined as adjusted operating income (loss) divided by segment sales to external customers.

Adjusted EBITDA is defined as adjusted operating income (loss) plus depreciation and amortization and adjusted EBITDA margin is defined as adjusted EBITDA divided by segment sales to external customers.

Adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin are not recognized terms under U.S.

GAAP, and therefore, do not purport to be alternatives to operating income or operating margin as a measure of operating performance.

Further, the Company's measure of adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin may not be comparable to similarly titled measures of other companies.

Adjusted operating income (loss) and adjusted EBITDA on a consolidated basis is presented in the following table to reconcile the segment operating performance measures to the most directly comparable GAAP measure, operating income, as presented on the unaudited Condensed Consolidated Statements of Income.

Adjusted operating income (loss) is defined as operating income excluding restructuring charges, currency exchange (gains) losses, product liability expense, acquisition related costs, including acquisition related amortization.

Adjusted operating margin is defined as adjusted operating income (loss) divided by segment net sales to external customers.

Adjusted EBITDA is defined as adjusted operating income (loss) plus depreciation and amortization.

Adjusted EBITDA margin is defined as adjusted EBITDA divided by segment net sales to external customers.

The accounting principles applied at the operating segment level in determining operating income (loss) are generally the same as those applied at the unaudited condensed consolidated financial statements level.

2 unchanged sentences

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

Three Months Ended June 30, 2022

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

Three Months Ended September 30, 2022

Net sales to external customers $ 276,082 $ 105,612 $ — $ 381,694

Operating income 64,313

Restructuring charges (Note 3) 899

Currency exchange gains, net ( 1,463 )

Currency exchange losses, net 2,979

Product liability expense (Note 18) 4,035

5 unchanged sentences

Adjusted EBITDA margin % 30.4 % 10.4 %

Six Months Ended June 30, 2022

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

Nine Months Ended September 30, 2022

Net sales to external customers $ 754,116 $ 330,583 $ — $ 1,084,699

Operating income 168,517

12 unchanged sentences

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

Three Months Ended June 30, 2021

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

Three Months Ended September 30, 2021

Net sales to external customers $ 229,076 $ 111,121 $ — $ 340,197

Operating income 32,402

5 unchanged sentences

Adjusted operating margin % 20.8 % 11.5 %

Depreciation and amortization 11,584

Depreciation and amortization (a)

Adjusted EBITDA 55,774 16,323 ( 5,880 ) 66,217

Adjusted EBITDA margin % 24.3 % 14.7 %

Six Months Ended June 30, 2021

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

Nine Months Ended September 30, 2021

Net sales to external customers $ 655,123 $ 334,792 $ — $ 989,915

Operating income 111,619

5 unchanged sentences

Adjusted operating margin % 21.7 % 12.5 %

Depreciation and amortization 22,088

Depreciation and amortization (a)

Adjusted EBITDA 165,243 52,283 ( 23,185 ) 194,341

4 unchanged sentences

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 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.

Total sales by product group was as follows:

Three Months Ended June 30, 2022 Consolidated Americas International

Three Months Ended September 30, 2022 Consolidated Americas International

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

8 unchanged sentences

Total $ 381,694 100 % $ 276,082 100 % $ 105,612 100 %

Six Months Ended June 30, 2022 Consolidated Americas International

Nine Months Ended September 30, 2022 Consolidated Americas International

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

8 unchanged sentences

Total $ 1,084,699 100 % $ 754,116 100 % $ 330,583 100 %

Three Months Ended June 30, 2021 Consolidated Americas International

Three Months Ended September 30, 2021 Consolidated Americas International

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

Breathing Apparatus $ 70,790 21 % $ 46,095 20 % $ 24,695 22 %

Fixed Gas & Flame Detection 64,920 19 % 36,950 17 % 27,970 23 %

Fixed Gas & Flame Detection (a)

79,786 23 % 53,787 23 % 25,999 23 %

Firefighter Helmets & Protective Apparel 49,366 15 % 34,101 15 % 15,265 14 %

4 unchanged sentences

Total $ 340,197 100 % $ 229,076 100 % $ 111,121 100 %

Six Months Ended June 30, 2021 Consolidated Americas International

Nine Months Ended September 30, 2021 Consolidated Americas International

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

Breathing Apparatus $ 217,094 22 % $ 146,329 22 % $ 70,765 21 %

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

Fixed Gas & Flame Detection (a)

204,825 21 % 127,014 19 % 77,811 23 %

Firefighter Helmets & Protective Apparel 148,497 15 % 105,513 16 % 42,984 13 %

12 unchanged sentences

Amounts attributable to MSA Safety Incorporated common shareholders:

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

Three Months Ended September 30, Nine Months Ended September 30,

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

7 unchanged sentences

Diluted weighted-average shares outstanding 39,299 39,430 39,414 39,424

Antidilutive stock options — — — —

Earnings per share:

3 unchanged sentences

Note 10— Income Taxes

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.

12, on the Finance Act of 2021.

This bill will increase the statutory rate from 19% to 25% in April 2023.

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

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.

The Company's effective tax rate for the third quarter of 2022 was 26.0 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to state income taxes and nondeductible foreign exchange on entity closures.

The Company's effective tax rate for the third quarter of 2021 was 31.5 %, which differs from the U.S.

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

tax on foreign dividends, and nondeductible transaction costs, partially offset by tax benefits on certain share-based payments.

The Company's effective tax rate for the nine months ended September 30, 2022, was 24.4 % which differs from the U.S.

federal statutory rate of 21% primarily due to state income taxes and nondeductible foreign exchange on entity closures.

The Company's effective tax rate for the nine months ended September 30, 2021, was 26.0 %, 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.

At September 30, 2022, the Company had a gross liability for unrecognized tax benefits of $ 4.6 million.

The Company has recognized tax benefits associated with these liabilities of $ 2.2 million at September 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 June 30, 2022.

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

The Company's liability for accrued interest related to uncertain tax positions was $ 1.0 million at September 30, 2022.

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

1 unchanged sentence

Note 11— Stock Plans

The 2016 Management Equity Incentive Plan provides for various forms of stock-based compensation for eligible key employees through May 2026.

Management stock-based compensation includes stock options, restricted stock awards, restricted stock units and performance stock units.

The 2016 Management Equity Incentive Plan provides for various forms of stock-based compensation for eligible employees through May 2026 including stock options, restricted stock awards, restricted stock units and performance stock units.

The 2017 Non-Employee Directors’ Equity Incentive Plan provides for grants of stock options and restricted stock to non-employee directors through May 2027.

We issue treasury shares for stock option exercises and grants of restricted stock and performance stock.

Please refer to Note 7—Capital Stock for further information regarding stock compensation share issuance.

Stock compensation expense is as follows:

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

2 unchanged sentences

Stock compensation expense, net of tax $ 2,240 $ 2,176 $ 8,550 $ 10,293

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

A summary of stock option activity for the nine months ended September 30, 2022, is as follows:

Shares Weighted Average

2 unchanged sentences

Exercised ( 92,833 ) 44.84

Outstanding at June 30, 2022 155,262 45.44

Exercisable at June 30, 2022 155,217 $ 45.44

Outstanding at September 30, 2022 68,868 46.32

Exercisable at September 30, 2022 68,861 $ 46.32

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 six months ended June 30, 2022, follows:

A summary of restricted stock activity for the nine months ended September 30, 2022, is as follows:

Shares Weighted Average

4 unchanged sentences

Forfeited ( 8,041 ) 138.63

Unvested at June 30, 2022 134,974 $ 139.03

Unvested at September 30, 2022 138,664 $ 138.07

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 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.

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

A summary of performance stock unit activity for the nine months ended September 30, 2022, is as follows:

Shares Weighted Average

5 unchanged sentences

Forfeited ( 18,180 ) 147.81

Unvested at June 30, 2022 194,663 $ 146.40

Unvested at September 30, 2022 179,065 $ 146.27

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) June 30, 2022 December 31, 2021

(In thousands) September 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 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 Company has a weighted average revolver interest rate of 3.69 % as of September 30, 2022.

At September 30, 2022, $ 552.8 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.

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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 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.

As of September 30, 2022, the Company had issued £ 54.9 million (approximately $ 61.4 million at September 30, 2022) of 3.4 % Series B Senior Notes due January 22, 2031.

Maturities of this note are £ 6.1 million (approximately $ 6.8 million at September 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.

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

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.

As of September 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 September 30, 2022, totaling $ 9.2 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 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 six months ended June 30, 2022 were as follows:

At September 30, 2022, the Company has $ 1.7 million of restricted cash in support of these arrangements.

Note 13— Goodwill and Intangible Assets, Net

Changes in goodwill during the nine months ended September 30, 2022 were as follows:

(In thousands) Goodwill

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Currency translation ( 28,656 )

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:

Balance at September 30, 2022 $ 607,161

At September 30, 2022, goodwill of $ 447.6 million and $ 159.6 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net, during the nine months ended September 30, 2022, were as follows:

(In thousands) Intangible Assets

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Currency translation ( 10,786 )

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.

Net balance at September 30, 2022 $ 281,461

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

Note 14— Acquisitions

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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.

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

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

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Net assets acquired $ 76.3

Acquisition of Noncontrolling Interest

During July 2021, the Company purchased the remaining noncontrolling interest in MSA (China) Safety Equipment Co., Ltd.

from our China partner for $ 19 million, inclusive of a $ 6 million dividend.

Note 15— Pensions and Other Post-retirement Benefits

Components of net periodic benefit cost consisted of the following:

Components of net periodic benefit (income) cost consisted of the following:

Pension Benefits Other Benefits

(In thousands) 2022 2021 2022 2021

Three Months Ended June 30,

Three Months Ended September 30,

Service cost $ 3,099 $ 3,264 $ 82 $ 99

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$ ( 2,652 ) $ 1,160 $ 456 $ 529

Six Months Ended June 30,

Nine Months Ended September 30,

Service cost $ 9,297 $ 9,748 $ 246 $ 297

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$ ( 7,956 ) $ 2,079 $ 1,368 $ 1,577

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

(a) Components of net periodic benefit (income) 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 $ 5.7 million and $ 5.8 million to our pension plans during the nine months ended September 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.

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As part of our currency exchange rate risk management strategy, we enter into certain derivative foreign currency forward contracts that do not meet the U.S.

GAAP criteria for hedge accounting but have the impact of partially offsetting certain foreign currency exposures.

GAAP criteria for hedge accounting but have the impact of partially offsetting certain of our foreign currency exposures.

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 $ 102.5 million and $ 99.0 million at June 30, 2022, and December 31, 2021, respectively.

The notional amount of open forward contracts was $ 96.3 million and $ 99.0 million at September 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) June 30, 2022 December 31, 2021

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

Derivatives not designated as hedging instruments:

Foreign exchange contracts:

other current liabilities $ 861 $ 128

Foreign exchange contracts:

prepaid expenses and other current assets $ 417 $ 619

Foreign exchange contracts:

accrued restructuring and other current liabilities 1,843 128

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

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2022 2021

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Foreign exchange contracts:

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

currency exchange losses (gains), net $ 13,586 $ 3,275

Note 17— Fair Value Measurements

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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 $ 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 amortized cost basis of our investments was $ 24.9 million and $ 49.0 million as of September 30, 2022 and December 31, 2021, respectively.

The fair value was $ 24.9 million and $ 49.0 million as of September 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.

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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.

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

The reported carrying amount of our fixed rate long-term debt was $ 261.4 million and $ 274.3 million at September 30, 2022, and December 31, 2021, respectively.

The fair value of this debt was $ 207.4 million and $ 279.8 million at September 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.

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Product liability

The Company and its subsidiaries face an inherent business risk of exposure to product liability claims arising from the alleged failure of our products to prevent the types of personal injury or death against which they are designed to protect.

The Company and its subsidiaries face an inherent business risk of exposure to legal claims arising from the alleged failure of our products to prevent the types of personal injury or death against which they are designed to protect.

Product liability claims are categorized as either single incident or cumulative trauma.

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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 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.

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

Single incident product liability expense was minimal during the nine months ended September 30, 2022 and a benefit of $ 0.1 million during the nine months ended September 30, 2021.

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

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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 1,690 lawsuits comprised of 4,660 claims as of June 30, 2022.

One of the Company's subsidiaries, Mine Safety Appliances Company, LLC ("MSA LLC"), was named as a defendant in 1,544 lawsuits comprised of 4,193 claims as of September 30, 2022.

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

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

Six Months Ended June 30, 2022 Year Ended

Nine Months Ended September 30, 2022 Year Ended

December 31, 2021

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Open lawsuits, end of period 1,544 1,675

Six Months Ended June 30, 2022 Year Ended

Nine Months Ended September 30, 2022 Year Ended

December 31, 2021

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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.

MSA LLC is also defending an action filed in 2003 by the State of West Virginia, through its Attorney General, in the Circuit Court of Lincoln County, West Virginia, against MSA LLC and two other manufacturers of respiratory protection products.

The State asserts several causes of action and seeks substantial compensatory damages—primarily for reimbursement of costs the State allegedly has incurred for worker’s compensation and healthcare benefits provided to individuals with occupational pneumoconiosis—as well as unspecified punitive damages.

The State also asserts a claim under the West Virginia Consumer Credit and Protection Act (“CCPA”), alleging that the defendants made willful misrepresentations regarding product performance in connection with sales and advertisement of respirators in West Virginia and seeks substantial civil penalties.

Although activity in the case has been minimal in the many years since inception, the CCPA claim has been severed and expedited for trial.

MSA LLC contends that the November 28, 2022 trial date is premature and has sought a continuance.

No reserve has been recorded for this matter because the Company believes that liability is unsupportable under West Virginia law, and therefore, has concluded that the loss is not probable.

In addition, the Company is not able to estimate a reasonably possible loss or range of reasonably possible losses given significant unresolved legal and factual matters.

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 $ 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.

MSA LLC's total cumulative trauma product liability reserve was $ 410.3 million, including $ 33.5 million for claims settled but not yet paid and related defense costs, as of September 30, 2022 and $ 409.8 million, including $ 2.5 million for claims settled but not yet paid and related defense costs, as of 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.

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

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 September 30, 2022, $ 58.1 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, $ 352.2 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.

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.

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

Total cumulative trauma liability losses were $ 4.0 million and $ 9.7 million for the three and nine months ended September 30, 2022 and primarily related to defense of cumulative trauma product liability claims.

Total cumulative trauma liability losses were $ 16.4 million and $ 43.9 million for the three and nine months ended September 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 $ 4.0 million and $ 9.7 million for the three and nine months ended September 30, 2022 and $ 10.7 million and $ 25.2 million for the three and nine months ended September 30, 2021, respectively, and represent the total cumulative trauma liability losses net of any estimated insurance receivables as discussed below.

We will complete our annual review of MSA LLC's cumulative trauma product liability reserve in the fourth quarter as described 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.

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As more information is learned about asserted claims and potential future trends, adjustments may be made to the cumulative trauma product liability reserve as appropriate.

As a result of such uncertainties, MSA LLC’s actual claims experience may differ in one or more respects from the assumptions used in establishing the reserve, and there can be no assurance that the actuarial models employed will accurately predict future experience.

As a result of such uncertainties, MSA LLC’s actual claims experience may differ in one or more respects from the assumptions used in establishing the reserve, and there can be no assurance that the actuarial models or analysis employed will accurately predict future experience.

MSA LLC’s experience in future periods may vary from the reserve currently established, and MSA LLC may ultimately incur losses in excess of presently recorded liabilities.

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These amounts are not subject to current coverage litigation.

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 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.

Insurance receivables at September 30, 2022 totaled $ 125.9 million, of which $ 10.6 million is reported in Prepaid expenses and other current assets in the unaudited Condensed Consolidated Balance Sheets and $ 115.3 million is reported in Insurance receivables and other noncurrent assets.

The vast majority of the $ 125.9 million insurance receivables balance at September 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) Six Months Ended June 30, 2022 Year Ended

(In millions) Nine Months Ended September 30, 2022 Year Ended

December 31, 2021

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These amounts are not subject to current coverage litigation.

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 September 30, 2022, totaled $ 44.3 million, of which $ 5.9 million is reported in Notes receivable, insurance companies, current in the unaudited Condensed Consolidated Balance Sheets and $ 38.4 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) Six Months Ended June 30, 2022 Year Ended

(In millions) Nine Months Ended September 30, 2022 Year Ended

December 31, 2021

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Balance end of period $ 44.3 $ 48.5

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.

The determination that the recorded insurance receivables are probable of collection is based on the terms of the settlement agreements reached with the insurers, our history of collection, and the advice of MSA LLC's outside legal counsel and consultants.

The vast majority of the insurance and notes receivables balances at September 30, 2022, are attributable to reimbursement under the terms of signed agreements with insurers and are not currently subject to litigation.

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

The determination that the recorded insurance and notes receivables are probable of collection is based on the terms of the settlement agreements reached with the insurers, our history of collection, and the advice of MSA LLC's outside legal counsel and consultants.

Various factors could affect the timing and amount of recovery of the insurance and notes receivables, including assumptions regarding various aspects of the composition and characteristics of future claims (which are relevant to calculating reimbursement under the terms of certain Coverage-In-Place Agreements) and the extent to which the issuing insurers may become insolvent in the future.

Other Litigation

Two subsidiaries of the Company, Globe Manufacturing Company, LLC ("Globe") and MSA LLC, are defending a small number of lawsuits in which plaintiffs assert that certain of those entities’ products allegedly containing per- and polyfluoroalkyl substances (“PFAS”) have caused injury, health issues, or environmental issues.

Two subsidiaries of the Company, Globe Manufacturing Company, LLC ("Globe") and MSA LLC, are defending claims in which plaintiffs assert that certain of those entities’ products allegedly containing per- and polyfluoroalkyl substances (“PFAS”) have caused injury, health issues, or environmental issues.

PFAS are a large class of substances that are widely used in everyday products.

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At this time, no manufacturer of firefighter protective clothing is able to meet current National Fire Protection Association safety standards while offering coats or pants that are completely PFAS free.

Globe and MSA LLC believe they have valid defenses to these lawsuits.

Globe and MSA LLC believe they have valid defenses to these claims.

These matters are at a very early stage with numerous factual and legal issues to be resolved.

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

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

(In thousands) Nine Months Ended September 30, 2022 Year Ended

December 31, 2021

4 unchanged sentences

Ending warranty reserve $ 13,989 $ 12,423

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.

Warranty expense was $ 9.0 million and $ 6.8 million for the nine months ended September 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