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Item 1. Financial Statements

2023-10-25 compared with 2023-08-01 · 128 added, 114 removed, 611 unchanged (28% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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 values) 2023 2022 2023 2022

5 unchanged sentences

Restructuring charges (Note 3) 3,285 899 8,382 3,146

Currency exchange losses (gains), net 3,110 ( 1,463 ) 7,285 1,809

Currency exchange losses, net 1,496 2,979 8,781 4,788

Loss on divestiture of MSA LLC (Note 17) — — 129,211 —

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

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

(In thousands) 2023 2022 2023 2022

4 unchanged sentences

Pension and post-retirement plan actuarial gains, net of tax (Note 6) 188 2,299 742 6,893

Unrealized (loss) gain on available-for-sale securities (Note 6) — ( 9 ) 2 ( 18 )

Total other comprehensive income (loss), net of tax 5,154 ( 29,285 ) 16,789 ( 21,138 )

Unrealized gain (loss) on available-for-sale securities (Note 6) — 13 2 ( 5 )

Reclassifications of currency translation from accumulated other comprehensive loss into net income (Note 6) 101 2,912 101 2,912

Total other comprehensive loss, net of tax ( 18,482 ) ( 27,137 ) ( 1,693 ) ( 48,275 )

Comprehensive income (loss) $ 46,774 $ 17,769 $ ( 19,520 ) $ 79,866

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) June 30, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Cash and cash equivalents $ 164,499 $ 162,902

46 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2023 2022

36 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 14,152 ) ( 23,498 )

Decrease in cash, cash equivalents and restricted cash ( 15,551 ) ( 5,869 )

Increase in cash, cash equivalents and restricted cash 2,009 19,847

Beginning cash, cash equivalents and restricted cash 164,428 141,438

11 unchanged sentences

Comprehensive

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

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

Net income 44,906 —

Foreign currency translation adjustments — ( 32,361 )

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

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

Unrealized net losses on available-for-sale securities (Note 16) — 13

Reclassification from accumulated other comprehensive loss into net income — 2,912

Common dividends ($ 0.46 per share)

Preferred dividends ($ 0.5625 per share)

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

Balances June 30, 2023 $ 1,038,750 $ ( 141,928 )

Balances March 31, 2023 $ 990,129 $ ( 147,082 )

Net income 65,256 —

Foreign currency translation adjustments — ( 18,771 )

Pension and post-retirement plan adjustments, net of tax of $ 46

Pension and post-retirement plan adjustments, net of tax expense of $ 27

Reclassification from accumulated other comprehensive loss into net income (Note 6) — 101

Common dividends ($ 0.47 per share)

Preferred dividends ($ 0.5625 per share)

Balances June 30, 2023 $ 1,038,750 $ ( 141,928 )

Balances September 30, 2023 $ 1,085,521 $ ( 160,410 )

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

1 unchanged sentence

Foreign currency translation adjustments — ( 58,075 )

Pension and post-retirement plan adjustments, net of tax of $ 1,966

Pension and post-retirement plan adjustments, net of tax benefit of $ 2,947

Unrecognized net losses on available-for-sale securities (Note 16) — ( 5 )

Reclassification from accumulated other comprehensive loss into net income (Note 6) — 2,912

Common dividends ($ 1.36 per share)

Preferred dividends ($ 1.6875 per share)

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

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

Balances December 31, 2022 $ 1,158,347 $ ( 158,717 )

1 unchanged sentence

Foreign currency translation adjustments — ( 2,538 )

Pension and post-retirement plan adjustments, net of tax of $ 232

Pension and post-retirement plan adjustments, net of tax expense of $ 259

Unrecognized net gains on available-for-sale securities (Note 16) — 2

Reclassification from accumulated other comprehensive loss into net income (Note 6) — 101

Common dividends ($ 1.40 per share)

Preferred dividends ($ 1.6875 per share)

Balances June 30, 2023 $ 1,038,750 $ ( 141,928 )

Balances September 30, 2023 $ 1,085,521 $ ( 160,410 )

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

15 unchanged sentences

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

(In thousands) June 30, 2023

(In thousands) September 30, 2023

Gross cash pool position $ 103,618

2 unchanged sentences

Note 3— Restructuring Charges

During the three and six months ended June 30, 2023, we recorded restructuring charges of $ 3.4 million and $ 5.1 million, respectively.

Americas segment restructuring charges of $ 2.2 million during the six months ended June 30, 2023, were related to manufacturing footprint optimization activities.

International segment restructuring charges of $ 1.5 million during the six months ended June 30, 2023, were related to ongoing initiatives to drive profitable growth and rightsize our operations including the expansion of our European Shared Service Center in Warsaw, Poland.

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 expansion of our 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 nine months ended September 30, 2023, we recorded restructuring charges of $ 3.3 million and $ 8.4 million, respectively.

Americas segment restructuring charges of $ 2.7 million during the nine months ended September 30, 2023, were related to manufacturing footprint optimization activities.

International segment restructuring charges of $ 3.6 million during the nine months ended September 30, 2023, were related to ongoing initiatives to drive profitable growth and improve productivity.

Corporate segment restructuring charges of $ 2.1 million during the nine months ended September 30, 2023, were related to footprint optimization activities and management restructuring.

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 European Shared Service Center in Warsaw, Poland.

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

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

9 unchanged sentences

Cash payments ( 3.2 ) ( 6.5 ) ( 2.3 ) ( 12.0 )

Reserve balances at June 30, 2023 $ 1.0 $ 10.3 $ 0.7 $ 12.0

Reserve balances at September 30, 2023 $ 1.0 $ 9.7 $ 0.3 $ 11.0

Note 4— Inventories

The following table sets forth the components of inventory:

(In thousands) June 30, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Finished products $ 99,588 $ 97,142

4 unchanged sentences

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

(In thousands) June 30, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Land $ 4,253 $ 4,884

7 unchanged sentences

Changes in accumulated other comprehensive loss were as follows:

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

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

(In thousands) 2023 2022 2023 2022

4 unchanged sentences

Recognized net actuarial losses (Note 14) 185 3,328 555 9,984

Tax (benefit) expense ( 46 ) ( 950 ) 232 ( 1,966 )

Tax expense (benefit) 27 ( 981 ) 259 ( 2,947 )

Total amount reclassified from accumulated other comprehensive loss, net of tax, into net income (loss) 188 2,299 742 6,893

2 unchanged sentences

Balance at beginning of period $ — $ ( 23 ) $ ( 2 ) $ ( 5 )

Unrealized net (losses) gains on available-for-sale securities (Note 16) — ( 9 ) 2 ( 18 )

Unrealized net gains (losses) on available-for-sale securities (Note 16) — 13 2 ( 5 )

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

1 unchanged sentence

Balance at beginning of period $ ( 92,147 ) $ ( 117,553 ) $ ( 108,380 ) $ ( 91,839 )

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

101 2,912 101 2,912

Foreign currency translation adjustments ( 18,771 ) ( 32,361 ) ( 2,538 ) ( 58,075 )

1 unchanged sentence

(a) Reclassifications out of accumulated other comprehensive loss and into net income (loss) are included in the computation of net periodic pension and other post-retirement benefit costs (refer to Note 14—Pensions and Other Post-retirement Benefits).

(b) Reclassifications out of accumulated other comprehensive loss and into net income (loss) 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 both June 30, 2023 and December 31, 2022.

There were 71,340 shares issued and 52,998 shares held in treasury at both September 30, 2023 and December 31, 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 shares of preferred stock purchased and subsequently held in treasury during the six months ended June 30, 2023 or 2022.

There were no shares of preferred stock purchased and subsequently held in treasury during the nine months ended September 30, 2023 or 2022.

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, 2023.

No shares have been issued as of September 30, 2023.

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 June 30, 2023 and December 31, 2022.

No new shares were issued during the six months ended June 30, 2023 or 2022.

There were 39,290,833 and 39,213,064 shares outstanding at June 30, 2023 and December 31, 2022, respectively.

There were 62,081,391 shares issued as of September 30, 2023 and December 31, 2022.

No new shares were issued during the nine months ended September 30, 2023 or 2022.

There were 39,310,511 and 39,213,064 shares outstanding at September 30, 2023 and December 31, 2022, respectively.

Treasury Shares - The Company's stock 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, 2023, no shares were repurchased under the program.

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

There were 22,790,558 and 22,868,327 Treasury shares at June 30, 2023 and December 31, 2022, respectively.

During the nine months ended September 30, 2023, no shares were repurchased under this program.

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

There were 22,770,880 and 22,868,327 treasury shares at September 30, 2023 and December 31, 2022, respectively.

The Company issues treasury shares for all stock-based benefit plans.

Shares are issued from treasury at the average treasury share cost on the date of the transaction.

There were 105,894 and 110,696 Treasury shares issued for these purposes during the six months ended June 30, 2023 and 2022, respectively.

There were 125,967 and 203,619 Treasury shares issued for these purposes during the nine months ended September 30, 2023 and 2022, respectively.

Common stock activity is summarized as follows:

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

(In thousands) Common

6 unchanged sentences

Treasury shares purchased for stock compensation programs — ( 70 ) — ( 59 )

Employee stock purchase program 432 65 424 62

Share repurchase program — — — ( 2,150 )

Balance at end of period $ 303,417 $ ( 361,773 ) $ 273,010 $ ( 360,056 )

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

(a) Excludes treasury cost related to preferred stock.

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

(In thousands) Common

9 unchanged sentences

Balance at end of period $ 303,417 $ ( 361,773 ) $ 273,010 $ ( 360,056 )

(a) Excludes treasury cost related to preferred stock.

Note 8— Segment Information

The Company is organized into four geographical operating segments that are based on management responsibilities:

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

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:

5 unchanged sentences

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 (loss) excluding restructuring charges, currency exchange (gains) losses, product liability expense, loss on divestiture of MSA LLC, transaction costs and acquisition-related amortization.

Adjusted operating income (loss) is defined as operating income (loss) excluding restructuring charges, currency exchange (gains) losses, product liability expense, loss on divestiture of Mine Safety Appliances Company, LLC ("MSA LLC"), transaction costs and acquisition-related amortization.

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

5 unchanged sentences

(In thousands, except percentages) Americas International Corporate Consolidated

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Net sales to external customers $ 314,273 $ 132,455 $ — $ 446,728

3 unchanged sentences

Amortization of acquisition-related intangible assets 2,315

Transaction costs (a)

Adjusted operating income (loss) 93,918 22,577 ( 15,198 ) 101,297

3 unchanged sentences

Adjusted EBITDA margin % 32.8 % 19.8 %

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

1 unchanged sentence

Restructuring charges (Note 3) 899

Currency exchange gains, net ( 1,463 )

Currency exchange losses, net 2,979

Product liability expense (Note 17) 4,035

9 unchanged sentences

(In thousands, except percentages) Americas International Corporate Consolidated

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Net sales to external customers $ 902,918 $ 389,372 $ — $ 1,292,290

5 unchanged sentences

Amortization of acquisition-related intangible assets 6,936

Transaction costs (a)

Adjusted operating income (loss) 260,428 60,099 ( 38,066 ) 282,461

3 unchanged sentences

Adjusted EBITDA margin % 31.9 % 18.1 %

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

13 unchanged sentences

Total sales by product group was as follows:

Three Months Ended June 30, 2023 Consolidated Americas International

Three Months Ended September 30, 2023 Consolidated Americas International

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

7 unchanged sentences

Total $ 446,728 100 % $ 314,273 100 % $ 132,455 100 %

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

7 unchanged sentences

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

Six Months Ended June 30, 2023 Consolidated Americas International

Nine Months Ended September 30, 2023 Consolidated Americas International

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

7 unchanged sentences

Total $ 1,292,290 100 % $ 902,918 100 % $ 389,372 100 %

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

11 unchanged sentences

Participating securities are defined as unvested stock-based compensation awards that contain nonforfeitable rights to dividends.

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 values) 2023 2022 2023 2022

15 unchanged sentences

Note 10— Income Taxes

The Company's effective tax rate for the three months ended June 30, 2023, was 23.3 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to state income taxes.

The Company's effective tax rate for the three months ended June 30, 2022, was 24.7 %, which differs from the 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 six months ended June 30, 2023, was 520.8 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to the divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets.

The Company's effective tax rate for the three months ended September 30, 2023, was 25.6 %, which differs from the United States of America ("U.S.") federal statutory rate of 21% primarily due to higher earnings in higher tax jurisdictions and nondeductible compensation.

The Company's effective tax rate for the three months ended September 30, 2022, was 26.0 %, 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, 2023, was 116.6 %, which differs from the "U.S." federal statutory rate of 21% primarily due to the divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets.

Refer to Note 17—Contingencies to the unaudited condensed consolidated financial statements in Part I Item 1 of this Form 10-Q for further information on this transaction.

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.

At June 30, 2023, the Company had a gross liability for unrecognized tax benefits of $ 3.4 million.

The Company has recognized tax benefits associated with these liabilities of $ 1.8 million at June 30, 2023.

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.

At September 30, 2023, the Company had a gross liability for unrecognized tax benefits of $ 3.4 million.

The Company has recognized tax benefits associated with these liabilities of $ 1.7 million at September 30, 2023.

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

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 $ 0.3 million at June 30, 2023.

The Company's liability for accrued interest related to uncertain tax positions was $ 0.3 million at September 30, 2023.

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

2 unchanged sentences

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.

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

Stock compensation expense, included in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Operations, 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) 2023 2022 2023 2022

3 unchanged sentences

We have not capitalized any stock-based compensation expense.

A summary of stock option activity for the six months ended June 30, 2023, is as follows:

A summary of stock option activity for the nine months ended September 30, 2023, is as follows:

Shares Weighted Average

2 unchanged sentences

Exercised ( 30,735 ) 46.86

Outstanding and exercisable at June 30, 2023 46,623 $ 46.35

Forfeited ( 226 ) 49.44

Outstanding and exercisable at September 30, 2023 27,195 $ 46.02

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, 2023, is as follows:

A summary of restricted stock activity for the nine months ended September 30, 2023, is as follows:

Shares Weighted Average

Grant Date Fair Value

Unvested at January 1, 2023 145,886 $ 137.36

2 unchanged sentences

Forfeited ( 8,463 ) 141.17

Unvested at June 30, 2023 171,589 $ 140.45

Unvested at September 30, 2023 171,532 $ 141.66

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 2023 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 six months ended June 30, 2023.

The following weighted average assumptions were used in estimating the fair value of the performance stock units granted in the first quarter of 2023.

Fair value per unit $ 131.46

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, 2023, is as follows:

A summary of performance stock unit activity for the nine months ended September 30, 2023, is as follows:

Shares Weighted Average

Grant Date Fair Value

Unvested at January 1, 2023 178,760 $ 146.28

4 unchanged sentences

Forfeited ( 10,146 ) 147.83

Unvested at June 30, 2023 196,323 $ 146.04

Unvested at September 30, 2023 189,852 $ 146.14

(a) Performance adjustments relate primarily to the final number of shares issued for the 2020 performance unit awards which vested in the first quarter of 2023 at 94.9 % of the target award based on both cumulative performance against 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, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

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

14 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 6.14 % as of June 30, 2023.

At June 30, 2023, $ 637.2 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 6.72 % as of September 30, 2023.

At September 30, 2023, $ 700.8 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.

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 June 30, 2023, the Company has outstanding £ 48.8 million (approximately $ 61.9 million at June 30, 2023) of 3.4 % Series B Senior Notes due January 22, 2031.

Remaining maturities of this note are £ 6.1 million (approximately $ 7.7 million at June 30, 2023) due January 22, 2024, with annual maturities of £ 6.1 million through January 2031.

As of September 30, 2023, the Company has outstanding £ 48.8 million (approximately $ 59.6 million at September 30, 2023) of 3.4 % Series B Senior Notes due January 22, 2031.

Remaining maturities of this note are £ 6.1 million (approximately $ 7.4 million at September 30, 2023) due January 22, 2024, 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.

9 unchanged sentences

In addition, the agreements contain negative covenants limiting the ability of the Company and its subsidiaries to incur additional indebtedness or issue guarantees, create or incur liens, make loans and investments, make acquisitions, transfer or sell assets, enter into transactions with affiliated parties, make changes in its organizational documents that are materially adverse to lenders or modify the nature of the Company's or its subsidiaries' business, subject to certain exceptions and limitations, including carve-outs and baskets.

All credit facilities exclude Mine Safety Appliances Company, LLC prior to the divestiture of this subsidiary on January 5, 2023, as discussed further in Note 17.

All credit facilities exclude MSA LLC prior to the divestiture of this subsidiary on January 5, 2023, as discussed further in Note 17.

During August 2021 and June 2023, respectively, the Company amended its Revolving Credit Facility to transition from Sterling LIBOR reference rates to Sterling Overnight Interbank Average Rate ("SONIA") reference rates and from U.S.

4 unchanged sentences

On January 5, 2023, the Company entered into a new $ 250 million term loan facility to fund the divestiture of MSA LLC, a wholly owned subsidiary.

Under the agreement, the Company may elect either BASE or an interest rate based on the Secured Overnight Financing Rate.

Under the agreement, the Company may elect either BASE or an interest rate based on SOFR.

The Company pays a credit spread of 0 to 200 basis points based on the Company's net EBITDA leverage ratio and elected rate.

The Company had a Term Loan interest rate of 6.76 % as of June 30, 2023.

As of June 30, 2023, 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, 2023, totaling $ 9.8 million, of which $ 1.5 million relate to the Revolving Credit Facility.

The Company had a Term Loan interest rate of 6.93 % as of September 30, 2023.

As of September 30, 2023, 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, 2023, 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, 2023, the Company has $ 2.0 million of restricted cash in support of these arrangements.

At September 30, 2023, the Company has $ 1.9 million of restricted cash in support of these arrangements.

Note 13— Goodwill and Intangible Assets, Net

Changes in goodwill during the six months ended June 30, 2023, were as follows:

Changes in goodwill during the nine months ended September 30, 2023, were as follows:

(In thousands) Goodwill

1 unchanged sentence

Currency translation ( 279 )

Balance at June 30, 2023 $ 626,262

At June 30, 2023, goodwill of $ 447.6 million and $ 178.7 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net, during the six months ended June 30, 2023, were as follows:

Balance at September 30, 2023 $ 620,343

At September 30, 2023, goodwill of $ 447.6 million and $ 172.7 million related to the Americas and International reportable segments, respectively.

Changes in intangible assets, net, during the nine months ended September 30, 2023, were as follows:

(In thousands) Intangible Assets

2 unchanged sentences

Currency translation 38

Net balance at June 30, 2023 $ 275,305

At June 30, 2023, intangible assets, net, includes a trade name related to Globe Manufacturing Company, LLC ("Globe") with an indefinite life totaling $ 60.0 million.

Net balance at September 30, 2023 $ 268,321

At September 30, 2023, intangible assets, net, includes a trade name related to Globe Manufacturing Company, LLC ("Globe") with an indefinite life totaling $ 60.0 million .

Note 14— Pensions and Other Post-retirement Benefits

2 unchanged sentences

(In thousands) 2023 2022 2023 2022

Three Months Ended June 30,

Three Months Ended September 30,

Service cost $ 1,884 $ 3,099 $ 53 $ 82

5 unchanged sentences

$ ( 2,020 ) $ ( 2,652 ) $ 403 $ 456

Six Months Ended June 30,

Nine Months Ended September 30,

Service cost $ 5,652 $ 9,297 $ 159 $ 246

6 unchanged sentences

(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 Operations.

We made contributions of $ 4.1 million and $ 3.8 million to our pension plans during the six months ended June 30, 2023, and 2022, respectively.

We made contributions of $ 4.3 million and $ 5.7 million to our pension plans during the nine months ended September 30, 2023, and 2022, respectively.

We expect to make total contributions of $ 5.7 million to our pension plans in 2023, which are primarily associated with statutorily required plans in the International reporting segment.

2 unchanged sentences

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 Operations.

The notional amount of open forward contracts was $ 106.6 million and $ 103.0 million at June 30, 2023, and December 31, 2022, respectively.

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

The notional amount of open forward contracts was $ 106.4 million and $ 103.0 million at September 30, 2023, and December 31, 2022, 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, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Derivatives not designated as hedging instruments:

3 unchanged sentences

accrued restructuring and other current liabilities 1,610 85

The following table presents the unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Cash Flows location and the (gain) loss impact of derivative financial instruments:

Six Months Ended June 30,

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

Nine Months Ended September 30,

(In thousands) 2023 2022

18 unchanged sentences

The fair value was $ 9.9 million as of December 31, 2022, which was reported in Investments, short-term in the accompanying unaudited Condensed Consolidated Balance Sheets.

Prior to the divestiture, changes in fair value were recorded in Other comprehensive (loss) income, net of tax.

Prior to the divestiture, changes in fair value were recorded in Other comprehensive income (loss), net of tax.

No impairment losses relating to these securities occurred during the three months ended March 31, 2023.

All investments in marketable securities had maturities of one year or less and were in an unrealized loss position as of December 31, 2022.

The reported carrying amount of our fixed rate long-term debt was $ 311.9 million and $ 266.5 million at June 30, 2023, and December 31, 2022, respectively.

The fair value of this debt was $ 268.3 million and $ 218.3 million at June 30, 2023, and December 31, 2022, respectively.

The reported carrying amount of our fixed rate long-term debt was $ 309.6 million and $ 266.5 million at September 30, 2023, and December 31, 2022, respectively.

The fair value of this debt was $ 255.1 million and $ 218.3 million at September 30, 2023, and December 31, 2022, 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 at June 30, 2023, and $ 1.4 million December 31, 2022.

Single incident product liability expense was $ 0.1 million during both the six months ended June 30, 2023 and the six months ended June 30, 2022.

The reserve for single incident product liability claims was $ 1.3 million at September 30, 2023 and $ 1.4 million at December 31, 2022.

Single incident product liability benefit was $ 0.1 million for the nine months ended September 30, 2023, and expense was $ 0.1 million for the nine months ended September 30, 2022.

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.

Prior to the divestiture described below, one of the Company's former subsidiaries, Mine Safety Appliances Company, LLC ("MSA LLC"), was named as a defendant in various lawsuits related to such claims.

Prior to the divestiture described below, one of the Company's former subsidiaries, MSA LLC, was named as a defendant in various lawsuits related to such claims.

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

1 unchanged sentence

Prior to its divestiture, MSA LLC's total cumulative trauma product liability reserve was $ 395.1 million, including $ 13.4 million for claims settled but not yet paid and related defense costs, as of December 31, 2022.

The reserve includes estimated amounts related to asserted and IBNR asbestos, silica, and coal dust claims expected to be resolved through the year 2075.

The reserve included estimated amounts related to asserted and IBNR asbestos, silica, and coal dust claims expected to be resolved through the year 2075.

The reserve was not discounted to present value and did not include future amounts which will be spent to defend the claims.

15 unchanged sentences

R&Q and Obra's joint venture has assumed management of the divested subsidiary, including the management of its claims and associated assets.

Below is a summary of the impact of the divestiture of MSA LLC on our unaudited Condensed Consolidated Statements of Operations for the quarter ended March 31, 2023 (no additional impact for the quarter ended June 30, 2023):

Below is a summary of the impact of the divestiture of MSA LLC on our unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 (no additional impact for the three months ended September 30, 2023):

(In millions) Three Months Ended March 31, 2023

17 unchanged sentences

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

(In millions) Six Months Ended June 30, 2023 Year Ended

(In millions) Nine Months Ended September 30, 2023 Year Ended

December 31, 2022

6 unchanged sentences

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

(In millions) Six Months Ended June 30, 2023 Year Ended

(In millions) Nine Months Ended September 30, 2023 Year Ended

December 31, 2022

14 unchanged sentences

Globe is also pursuing insurance coverage and indemnification related to the lawsuits.

As of July 27, 2023, Globe was named as a defendant in 137 lawsuits comprised of approximately 8,231 claims, plus one action filed on behalf of a putative class of Florida firefighters and certain of their dependents.

MSA LLC is also a defendant in a number of PFAS lawsuits and Sag Main Holdings, LLC (the "Buyer") assumed responsibility for these and any similar future claims specific to MSA LLC in connection with the divestiture on January 5, 2023.

As of October 20, 2023, Globe was named as a defendant in 165 lawsuits comprised of approximately 8,432 claims, plus one action filed on behalf of a putative class of Florida firefighters and certain of their dependents.

MSA LLC is also a defendant in a number of PFAS lawsuits and the Buyer assumed responsibility for these and any similar future claims specific to MSA LLC in connection with the divestiture on January 5, 2023.

Product Warranty

5 unchanged sentences

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

(In thousands) Six Months Ended June 30, 2023 Year Ended

(In thousands) Nine Months Ended September 30, 2023 Year Ended

December 31, 2022

4 unchanged sentences

Ending warranty reserve $ 14,607 $ 15,230

Warranty expense was $ 4.7 million and $ 4.8 million for the six months ended June 30, 2023, and 2022, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Operations.

Warranty expense was $ 6.7 million and $ 9.0 million for the nine months ended September 30, 2023, and 2022, respectively, and is included in Costs of products sold on the unaudited Condensed Consolidated Statements of Operations.

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