MSA Safety Annual Report 2018

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FY2018 Annual Report · MSA Safety

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Our Mission
That men and women may work in safety and that they, their families and their

communities may live in health throughout the world.

Our Vision
To be the world’s leading provider of safety solutions that protect workers when life is on

the line. We pursue this vision with an unsurpassed commitment to integrity, customer

service and product innovation that creates exceptional value for all MSA stakeholders.

2018 ANNUAL SALES
BY REGION

10%

26%

54%

10%

North America
Europe, Middle East,
Africa, and India

Asia and Pacifi c Rim
Latin America

2018 ANNUAL SALES
BY PRODUCT GROUP

11%

24%

12%

13%

19%

13%

Breathing Apparatus
Fixed Gas and Flame Detection

Firefi ghter Helmets and
Protective Apparel

Non-core Products
Portable Gas Detection
Industrial Head Protection
Fall Protection

Business of MSA
MSA is in the business of developing,
manufacturing and selling innovative
products that enhance the safety and
health of workers and help protect
facility infrastructures throughout the
world. MSA’s Core Products include self-
contained breathing apparatus, fi xed gas
and fl ame detection systems, portable
gas detection instruments, industrial
head protection products, fi refi ghter
helmets and protective apparel, and fall
protection devices.

MSA was founded in 1914 by John T. Ryan
and George H. Deike, two mine rescue
engineers who had fi rsthand knowledge
of the terrible human loss that was
occurring in underground coal mines at
that time. Their knowledge of the mining
industry provided the foundation for the
development of safety equipment to
better protect miners. While the range
of markets served by MSA has evolved
greatly over the years, the founding
philosophy of understanding customer
safety needs, and designing innovative
safety equipment that addresses those
needs, remains unchanged.

MSA is headquartered in Cranberry
Township, Pennsylvania, with operations
employing 4,800 associates throughout
the world. A publicly held company, MSA’s
stock is traded on the New York Stock
Exchange under the symbol MSA.

About the Cover
One of the four pillars of MSA’s
Growth in Focus initiative — highlighted
in this year’s annual report — is market
leadership. Our ability to succeed in
this area is driven by the collective work
of our dedicated associates around
the world. This includes our talented
team of engineers, one of whom is
Dr. Meghan Swanson. Featured on the
cover, Meghan was our 2018 Inventor of
the Year, recognized for her pioneering
work in gas sensing technology. As a
lead developer on MSA’s XCELL® catalytic
bead sensor, Meghan’s expertise has
led to fi ve patent applications, further
solidifying MSA’s position as a global leader
in gas detection technology. Creating
advancements through the use of science
is what energizes our product developers
like Meghan. But most of all, it’s what fuels
their passion to develop products that help
protect the lives of workers around the
world every day.

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2018 Financial Highlights

In 2018 we continued to execute our corporate strategy with a focus on driving profi table growth, productivity
and cash fl ow. Investments in new product development supported strong organic revenue growth, and the
strategic acquisition of Globe a year ago provided further upside. For the third consecutive year, we realized
double-digit earnings growth and exceeded our target of converting more than 100 percent of net income to
free cash fl ow. Our strong fi nancial performance provides a solid foundation and positions us well to continue
creating value for shareholders.

– Ken Krause, MSA SVP and CFO

GROWTH

NET SALES

$1.4B

+13% AS REPORTED
+8% ORGANIC CONSTANT
CURRENCY

64%

CORE PRODUCT
GROWTH

12% 11% 10% 10%

■ Firefi ghter Helmets and Protective Apparel 1
■ Industrial Head Protection
■ Breathing Apparatus
■ Fall Protection
■ Portable Gas Detection
■ Fixed Gas and Flame Detection

GROWTH RATES STATED IN CONSTANT CURRENCY

38%

SALES VITALITY

% OF SALES FROM PRODUCTS DEVELOPED AND
LAUNCHED OVER THE PAST 5 YEARS

PRODUCTIVITY & CASH FLOW

CAPITAL ALLOCATION

ADJUSTED EARNINGS

+24%

YEAROVERYEAR GROWTH

ADJUSTED OPERATING MARGIN

+120 BPS

YEAROVERYEAR GROWTH

FREE CASH FLOW
CONVERSION

>100%

FREE CASH FLOW

$230M

$108M DEBT PAYMENTS

$57M DIVIDEND PAYMENTS

$53M R&D INVESTMENT

▲

VALUE CREATION

TOTAL SHAREHOLDER RETURN

MSA

S&P 500

106%

50%

RUSSELL 2000

24%

FOR THE 5 YEARS ENDED 12/31/2018

DIVIDENDS PER SHARE

$1.23

$1.27

$1.31

$1.38

$1.49

2014

2015

2016

2017

2018

Committed to delivering top-tier ﬁ nancial performance that drives
superior value for all stakeholders of MSA.

This page includes certain non-GAAP ﬁ nancial measures. These ﬁ nancial measures include organic constant currency revenue growth, adjusted operating margin,
adjusted earnings and free cash ﬂ ow conversion. For an explanation of these measures, together with a reconciliation to the most directly comparable GAAP
measures, please visit http://investors.MSAsafety.com and click on Quarterly Results (Q4 2018) under the Financial Information header.

1Fireﬁ ghter helmets and protective apparel includes the impact of the Globe acquisition, completed on July 31, 2017.

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TO OUR SHAREHOLDERS, CUSTOMERS,
CHANNEL PARTNERS AND ASSOCIATES

and feedback, and then using those insights to develop
innovative and superior safety technology.

In 2018 the MSA team built upon the company’s solid ﬁ nancial
foundation by executing against four pillars of our Growth in
Focus platform — Market Leadership, Proﬁ tability, People, and
Capital Allocation.

Through the eﬀ orts of our 4,800 dedicated associates around
the world, we generated 13 percent revenue growth in 2018.
Annual revenue is now almost $1.4 billion, another record
in our 104-year history.

There were many drivers of this success. We
saw growth in every one of our Core Product
lines, exceeding the mid-single digit revenue
target we communicated at our March 2018
Investors Day in New York City. To support
our fall protection growth and new product
development eﬀ orts, we doubled our plant
capacity in Mexico, and we took a signiﬁ cant
step forward in a multi-year project focused on
improving our proﬁ tability in MSA International.

We also established Safety io™ — a new subsidiary focused
on leveraging wireless technology to enable a broad range
of “connected” capabilities that enhance worker safety.
And ﬁ nally, we launched the M1™ SCBA — a derivative of our
successful G1 SCBA platform, with a modular design developed
to meet the unique requirements of the international ﬁ re
service market.

MARKET LEADERSHIP

Today, our total addressable market reﬂ ects about $7 billion of
the broader global safety market. Our goal is to have market-
leading positions in each of our Core Product categories,
as well as a diﬀ erentiated brand recognized for providing a
consistent and unmatched customer experience. That eﬀ ort
begins with an intense focus on listening to customer needs

In 2018 we introduced many great new innovations in safety:
products like the M1 SCBA, our XF1 Fire Helmet, and the
V-Series™ family of fall protection products. Many of our other
product launches from recent years were also signiﬁ cant
contributors to our success in 2018 — products like the G1
SCBA, the 5000 ULTIMA® X and S Series transmitters for ﬁ xed gas
detection systems, and the ALTAIR® 4XR Portable Gas Monitor.

Overall, nearly 40 percent of our revenue in 2018

was derived from products launched within the

past ﬁ ve years. That’s a signiﬁ cant improvement

over the last several years and reﬂ ects the
great work being done by individuals in our
New Product Development, Operations
and Marketing teams who design, develop,
manufacture, and market those industry-
leading products.

Another highlight was our focus on enhancing
customer satisfaction, as measured in four critical

areas: Channel Partner Support, Channel Partner

Delivery, End-User Quality, and End-User Support. In 2018
we achieved year-over-year improvement in all four of these
attributes — and in all regions of the world.

PROFITABILITY

Another key area of our Growth in Focus initiative was
generating proﬁ table growth and free cash ﬂ ow that, in turn,
funds our market-leading product development work, our
ability to pay dividends to our shareholders, and programs
that support the development and engagement of our people.
I was proud that our team was able to generate 24 percent
adjusted earnings growth on 13 percent revenue growth.
This marks our third consecutive year of generating double-
digit earnings improvements.

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Growth in Focus | MSA 2018 Annual Report

We’ve also improved SG&A expense from 28 percent of
revenue in 2015 to 24 percent of revenue in 2018. With a three-
year adjusted earnings CAGR of more than 20 percent, there
has been a step-change in our proﬁ tability proﬁ le, reﬂ ecting
the team’s focus on growth while also managing MSA’s cost
structure.

In 2018 we reduced working capital — as a percent of sales —
by 220 basis points, with the 13 percent growth in revenue.
As a result, 2018 marked our third consecutive year of
exceeding our goal of 100 percent free cash ﬂ ow conversion.
This is a signiﬁ cant improvement from several years ago,
when 70 to 80 percent conversion was our standard run-rate.

One of the tailwinds behind this improvement was the
progress we made in improving proﬁ tability in the MSA
International segment, a key focus area for our entire
leadership team. We generated 10 percent revenue growth
for the full year in that segment, driven in large part by our
channels optimization program. Our progress on the channels
front supports our ability to better serve customers with a
more eﬃ cient and eﬀ ective go-to-market strategy.

PEOPLE

We take great pride in our ability to attract, develop and
retain the industry’s best talent. Likewise, we understand
the importance of sustaining
MSA’s reputation as a top
workplace. For these reasons,
we implemented MOVE, a
performance management
process that focuses on monthly
one-on-one development
conversations that drive the

personal and professional growth of our associates, all
centered around the MSA Operating System.

I am also very proud of the fact that MSA was recognized in
2018 with the Board Diversity Ambassador Award at the 2020
Women on Boards National Conversation on Board Diversity.
With three female directors on our Board, this regional award
from the National Association of Corporate Directors recognizes
our commitment to creating a diverse Board and establishing
a strong female talent pipeline. This includes implementing
the EDGE Women’s Leadership Program — a 12-month program
focused on helping mid-level, high-potential women at MSA
accelerate their professional and personal growth.

I truly believe our strong ﬁ nancial results in 2018 are reﬂ ective
of these and many other cultural changes at MSA. Today,
our workforce is better educated, more diverse and more
engaged than ever, with a very strong connection to our
mission and core values. Moving forward, we must continue
to challenge the status quo by welcoming a wide variety of
perspectives and ideas, which will ultimately, I believe, enrich
the performance of MSA.

CAPITAL ALLOCATION

The fourth element of our Growth in Focus initiative is the
use and allocation of capital to fuel investments that fulﬁ ll
our mission and create value for all MSA stakeholders.

Our strong cash ﬂ ow trends have enabled even greater
capacity to invest in future growth initiatives while continuing
the MSA legacy of more than 50 consecutive years of dividend
increases. Looking ahead to 2019 and beyond, our balance
sheet is well positioned to continue investing heavily in R&D as
well as pursuing acquisition opportunities that ﬁ t our strategic
and ﬁ nancial criteria.

OUTLOOK

As the ninth CEO in MSA’s history, I am privileged to lead an
organization that lives and breathes the very same mission
that motivated and inspired our founders more than a century
ago — that men and women may work in safety and that
they, their families and their communities may live in health
throughout the world. Our focus on that one mission is the
basis for everything we do, and because we realize those three
letters — M-S-A — represent to our customers a level of trust
that we must never take for granted.

As we look to 2019, our team is focused on the execution
of our strategic priorities, the most important of which
is enhancing worker safety throughout the world. We
accomplished much in 2018, but as an organization focused
on growth, we understand more work remains, as do the
opportunities to expand upon our successes. That’s the
mindset of a high-performance organization, and that’s the
mindset we embrace today, in this, our 105th year in business.

In closing, I would like to thank all of our customers, channel
partners and shareholders for your continued conﬁ dence in our
company. I also want to thank the dedicated MSA associates
who come to work every day to carry on the MSA mission.
And ﬁ nally, I want to recognize and thank our Board of Directors
and the MSA Executive Leadership Team for their commitment
and support as we work together to execute our Growth in
Focus priorities. Together, we will carry on our founders’ mission
to make our world a safer place to live and work.

Nish Vartanian
President and CEO

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A key element of MSA’s success has been a keen focus on

“Value Creation,” be it in the form of profi table growth, cash
fl ow improvements, or strategic acquisitions. But underpinning
our strong fi nancial results are the meaningful strides we have
made as an organization in fostering a high-performance
culture focused on safety and health, sustainability, diversity
and professional growth. Our shared commitment to our
mission, our workplace and our communities is deeply
entrenched in this MSA culture.

Since 1914, the impact of MSA’s mission has literally been
immeasurable. Consider this: our first product — the Edison
Electric Cap Lamp — reduced fatalities in coal mines by 75 percent
over the next 25 years, representing thousands of lives saved.

Today, MSA products are either saving or helping to protect lives
in more than 140 countries. They are relied upon by millions of
workers every day. We are proud of this heritage, and we are very
proud of the lasting impact we make each day for our customers,
our employees, and the communities in which we operate.

In a fi rst for our annual report, you will read on the following
pages just some of the many ways MSA is making a diff erence
in our world today, in ways we can measure. I am proud of this
work and believe these strategic programs play a key role in our
ability to create long-term value for our shareholders and those
who rely upon or support the MSA brand.

– Nish Vartanian, President and CEO

E M P L O Y E E S A F E T Y A N D H E A L T H

We live our mission on a daily basis. Safety is our brand and our
identity. We have an unwavering commitment to training and
protecting our own workforce to ensure that they — along with
our customers — live in safety and health throughout the world.

2018
KEY SAFETY
METRICS

Total Recordable Injury Rate 1

Days Away, Restricted or Transferred 2
(DART)

2.2

1.3

1.0

MSA

Industry Benchmark 3

0.6

MSA

Industry Benchmark 3

Cranberry Township, Pa.

Celebrated 5 million hours and
1 million hours without a Lost Time Incident
in our Cranberry Township, Pa., and Querétaro,
Mexico facilities, respectively.

“I work in a safe and
healthy environment.”

The #1 statement that resonated
most with MSA associates in the 2018
“Your Voice Matters” Engagement Survey.

At MSA, we’re committed to a
Culture of Safety. This means
we engage and train our associates
to proactively identify, report and
correct hazardous situations that
could result in a potential injury.
This NEAR HIT process is a critical
aspect of our safety culture.

Querétaro, Mexico

1 Total recordable injury rate measures the number of workplace injuries and illnesses that require medical treatment, normalized per 100 workers per year.
2 DART injury rate measures the workplace recordable injuries that result in Days Away, Restrictions, or Transfers, normalized per 100 workers per year.
3 Industry Benchmark reﬂ ects an average of the NAICS manufacturing codes in which MSA operates. Source: U.S. Bureau of Labor Statistics.

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Growth in Focus | MSA 2018 Annual Report

E N V I R O N M E N T A L S U S T A I N A B I L I T Y

We are committed to conducting our business in a manner that
is environmentally sustainable and ensures the protection of
our natural resources. Continuous improvement of our global
processes is managed through the MSA Operating System and
our environmental management systems.

The following are a few highlights of our sustainability practices:

MSA refreshed its enterprise-wide environmental policy in 2018 to ensure continuous improvement

in sustainability. While the nature of MSA’s operations consists of light manufacturing and assembly,
our limited environmental footprint does not diminish our commitment to be a responsible partner

to the communities in which we live and work.

MSA is the ﬁ rst and only manufacturer to oﬀ er a hard hat made
from renewable resources. MSA’s V-Gard® Green is produced from
“green” high-density polyethylene (HDPE), which is made from sugarcane-
based ethanol rather than traditional HDPE, which is made with fossil fuels.

MSA recycled over 1,000 tons of
materials globally in 2018. At our
Murrysville, Pa., facility alone, we recycled
approximately 200 tons of HDPE in our
hard hat manufacturing process, resulting
in CO reductions of 164 metric tons. This
is equal to the emissions of 35 passenger
vehicles driven per year.

At our Devizes, U.K., facility, we recently installed
solar panels that generated more than
90,000 KWH in 2018, which we used to
provide energy to the facility as well as
return energy to "the grid." We also have
car charging ports available at this facility and
are investing in more units to encourage “green”
transportation options.

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A N E M P L O Y E R O F C H O I C E

Organizations with a highly engaged workforce consistently
demonstrate stronger fi nancial results. In addition to providing
our associates with formal and informal opportunities for
professional development, we strive to create a diverse and
inclusive environment that enables global collaboration,
innovation and better business outcomes.

B U I L D I N G O U R P I P E L I N E O F L E A D E R S

Graduated the ﬁ rst class of EDGE — a women’s
leadership program designed to increase female
representation at the executive level.

Graduated the ﬁ rst class of Project Leader — a development
program designed to improve project management skills.

~400

Over the past ﬁ ve years, more than
400 associates have advanced their
development through MSA’s tuition
reimbursement program.

F O S T E R I N G A N I N C L U S I V E C U L T U R E

MSA completed an Unconscious Bias workshop with all U.S.-based leaders and,
in addition, hosted Men as Allies workshops in the U.S. and Europe to inform male
leaders on how to advocate for and empower women to reach their potential
in leadership roles. Beyond these initiatives, MSA expanded its paid parental leave
policy, providing equal time-oﬀ beneﬁ ts for both parents.

Recognized as
one of the top
workplaces in
the Pittsburgh
region for the
5th time.

T R A C K I N G P R O G R E S S

32%

of MSA executive leaders
are diverse.

+10%

increase in diversity of executive
leaders over the past 3 years.

82%

global participation rate of MSA’s 2018
Employee Engagement Survey;
+2% from a year ago.

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Growth in Focus | MSA 2018 Annual Report

C O M M U N I T Y I N V O L V E M E N T

We are committed to engaging with our surrounding
communities through charitable giving and volunteer work
to build a strong and healthy atmosphere for our
business operations.

When disaster strikes, MSA has a history of
responding quickly — sending equipment and
safety expertise when and where it’s needed
most. This support is simply part of who we
are and what we do. We aim to help workers
throughout the world, but we believe our
position as the global leader in safety provides
us with a unique opportunity to enhance
safety, and improve lives, around the world.

Partnered with iRelaunch as the ﬁ rst company in
the Pittsburgh area to host a workforce re-entry
event speciﬁ cally designed to ease the transition
after time away from the workforce.

Recognized with the 2018 Board Diversity
Ambassador Award at the 2020 Women on
Boards National Conversation on Board Diversity.

$2M donated to local
schools and organizations
through Educational
Improvement Tax
Credits over the last
10 years, targeting
STEM education programs.

$1M

2018 MSA Corporate Donations

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2018 Financial Contents

Business of MSA

Management’s Discussion and Analysis

Financial Statements and Supplementary Data

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Retained Earnings and
Accumulated Other Comprehensive Loss

Notes to Consolidated Financial Statements

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

Commission File No. 1-15579

MSA SAFETY INCORPORATED

(Exact name of registrant as specified in its charter)

Pennsylvania
(State or other jurisdiction of
incorporation or organization)

1000 Cranberry Woods Drive
Cranberry Township, Pennsylvania
(Address of principal executive offices)

(Title of each class)
Common Stock, no par value

Registrant’s telephone number, including area code: (724) 776-8600

Securities registered pursuant to Section 12(b) of the Act:

46-4914539
(IRS Employer Identification No.)

16066-5207
(Zip code)

(Name of each exchange on which registered)
New York Stock Exchange

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in the definitive proxy statement incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Emerging growth company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes

As of February 14, 2019, there were outstanding 38,529,585 shares of common stock, no par value. The aggregate market value of voting
stock held by non-affiliates as of June 30, 2018 was approximately $3.3 billion.

Portions of the Proxy Statement for the May 15, 2019 Annual Meeting of Shareholders are incorporated by reference into Part III.

DOCUMENTS INCORPORATED BY REFERENCE

6783_10K_C1.pdf March 13, 2019 pg 1

Table of Contents

Page

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosures

Executive Officers of the Registrant

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures About Market Risk

Financial Statements and Supplementary Data

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures

Other Information

Directors, Executive Officers and Corporate Governance

Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accountant Fees and Services

Exhibits and Financial Statement Schedules

Item No.
Part I
1.

1A.

1B.

Part II
5.

7A.

8.
9.

9A.

9B.
Part III
10.

11.

12.

13.

14.
Part IV
15.

16.

Form 10-K Summary

Signatures

88
88

6783_10K_C1.pdf March 13, 2019 pg 2

Forward-Looking Statements

This report may contain (and verbal statements made by MSA Safety Incorporated (MSA) may contain) forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events
or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our
actual results, levels of activity, performance or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors
include, but are not limited to, those listed in this report under “Risk Factors,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” and elsewhere in this report. In some cases, you can identify forward-looking
statements by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential” or other comparable words. Actual results, performance or outcomes may differ materially from those
expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-
looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are
under no duty to update publicly any of the forward-looking statements after the date of this report, whether as a result of new
information, future events or otherwise.

6783_10K_C1.pdf March 13, 2019 pg 3

Item 1. Business

PART I

Overview—Established in 1914, MSA Safety Incorporated is the global leader in the development, manufacture and
supply of safety products that protect people and facility infrastructures. Recognized for their market leading innovation, many
MSA products integrate a combination of electronics, mechanical systems and advanced materials to protect users against
hazardous or life-threatening situations. The Company's comprehensive product line, which is governed by rigorous safety
standards across highly regulated industries, is used by workers around the world in a broad range of markets, including the oil,
gas and petrochemical industry, fire service, construction, industrial manufacturing applications, utilities, mining and the
military. The Company's core products include breathing apparatus where self-contained breathing apparatus ("SCBA") is the
principal product, fixed gas and flame detection systems, portable gas detection instruments, industrial head protection
products, firefighter helmets and protective apparel and fall protection devices.

The company’s leading market positions across nearly all of its core products are supported and enabled by a strong
commitment to investing in new product development that continually raises the bar for safety equipment performance, all
while upholding an unwavering commitment to integrity. We dedicate significant resources to research and development,
which allows us to produce innovative safety products that are often first to market. Our global product development teams
include cross-functional associates throughout the Company, including research and development, marketing, sales, operations
and quality management. Our engineers and technical associates work closely with the safety industry’s leading standards-
setting groups and trade associations to develop industry specific product standards and to anticipate their impact on our
product lines.

Segments—We tailor our product offerings and distribution strategy to satisfy distinct customer preferences that vary

across geographic regions. To best serve these customer preferences, we have organized our business into six geographic
operating segments that are aggregated into three reportable geographic segments: Americas, International and Corporate.
Segment information is presented in Note 7 of the consolidated financial statements in Part II Item 8 of this Form 10-K.

Because our financial statements are stated in U.S. dollars and much of our business is conducted outside the U.S.,
currency fluctuations may affect our results of operations and financial position and may affect the comparability of our results
between financial periods.

Products—We manufacture and sell a comprehensive line of safety products to protect the health and safety of workers

and facility infrastructures around the world in the oil, gas and petrochemical industry, fire service, construction, industrial
manufacturing applications, utilities, mining and the military. Our products protect people against a wide variety of hazardous
or life-threatening situations.

The following is a brief description of each of our product categories:

Core products. MSA's corporate strategy includes a focus on driving sales of core products, where we have leading
market positions and a distinct competitive advantage. Core products, as mentioned above, include breathing apparatus where
SCBA is the principal product, fixed gas and flame detection systems, portable gas detection instruments, industrial head
protection products, firefighter helmets and protective apparel and fall protection devices. These products receive the highest
levels of investment and resources as they typically realize higher levels of return on investment than non-core products. Core
products comprised approximately 87% and 86% of sales in 2018 and 2017, respectively.

The following is a brief description of our core product offerings:

Breathing apparatus products. Breathing apparatus products include SCBA, face masks and respirators, where SCBA is

the primary product offering. SCBA are used by first responders, petrochemical plant workers and anyone entering an
environment deemed immediately dangerous to life and health. Our primary breathing apparatus product, the MSA G1 SCBA,
is a revolutionary platform that offers many customizable and differentiated features, including the first and only Integrated
Thermal Imaging Camera available on the market. We currently have 11 patents issued and an additional 3 patents pending for
the MSA G1 SCBA. Our newest breathing apparatus product, the MSA M1 SCBA, represents the most advanced and
ergonomic SCBA we have ever launched for our international markets. We sell breathing apparatus across both the Americas
and International segments.

6783_10K_C1.pdf March 13, 2019 pg 4

Fixed gas and flame detection instruments ("FGFD"). Our permanently installed fixed gas and flame detection

instruments are used in oil, gas and petrochemical facilities and general industrial production facilities to detect the presence or
absence of various gases in the air. Typical applications of these instruments include the detection of an oxygen deficiency in
confined spaces or the presence of combustible or toxic gases. FGFD product lines generate a meaningful portion of overall
revenue from recurring business including replacement components and related service. A portion of business from this
product line is project-oriented and more closely associated with upstream exploration and production activity. We sell these
instruments in both our Americas and International segments. Key products include:

•

Permanently installed gas detection monitoring systems. This product line is used to monitor for combustible and
toxic gases and oxygen deficiency in virtually any application where continuous monitoring is required. Our systems
are used for gas detection in the oil and gas industry, petrochemical, pulp and paper, wastewater, refrigerant
monitoring, pharmaceutical production and general industrial applications. These systems utilize a wide array of
sensor technologies including electrochemical, catalytic, infrared and ultrasonic. During 2017, we launched a new line
of advanced gas detection monitors. The S5000 and Ultima®X5000 gas monitors – known collectively as MSA's
Series 5000 Transmitters – enhance facility and worker safety while lowering overall cost of ownership for our
customers.

Flame detectors and open-path infrared gas detectors. These instruments are used for plant-wide monitoring of toxic
gases and for detecting the presence of flames. These systems use infrared optics to detect potentially hazardous
conditions across long distances, making them suitable for use in such applications as offshore oil rigs, storage vessels,
refineries, pipelines and ventilation ducts.

Portable gas detection instruments. Our hand-held portable gas detection instruments are used to detect the presence or

absence of various gases in the air. The product is used by oil, gas and petrochemical workers, general industrial workers,
miners, utility workers, first responders or anyone working in a confined space environment. Typical applications of these
instruments include the detection of an oxygen deficiency in confined spaces or the presence of combustible or toxic gases.
Our single- and multi-gas detectors provide portable solutions for detecting the presence of oxygen, combustible gases and
various toxic gases, including hydrogen sulfide, carbon monoxide, ammonia and chlorine, either singularly or up to six gases at
once. Our ALTAIR® 2X, ALTAIR® 4XR and ALTAIR® 5X Multigas Detectors, with our internally developed XCell® sensor
technology, provide faster response times and unsurpassed durability. We sell portable gas detection instruments in both our
Americas and International segments.

In 2018, MSA launched Safety io, LLC, its first subsidiary focused on using wireless technology and cloud-based

computing to enable a broad range of “connected” safety services. Our Safety io Grid product supports MSA portable gas
detection fleet management and live monitoring efforts.

Industrial head protection. We offer a complete line of industrial head protection and accessories that includes the iconic

V-Gard® helmet brand, a bellwether product in MSA's portfolio for over 50 years. We offer customers a wide range of color
choices and we are a world leader in the application of customized logos. Our industrial head protection products have a wide
user base, including oil, gas and petrochemical workers, steel and construction workers, miners and industrial workers. Our
Fas-Trac® III Suspension system was designed to provide enhanced comfort without sacrificing safety. Our strongest sales of
head protection products have historically been in North America and Latin America.

Firefighter helmets and protective apparel. We offer a complete line of fire helmets that includes our Cairns® and Gallet®

helmet brands. Our Cairns helmets are primarily used by firefighters in North America while the Gallet helmets are primarily
used by firefighters across our International segment. The acquisition of Globe Holding Company, LLC ("Globe"), a leading
innovator and provider of firefighter protective clothing and boots, strengthens our position as a leader in the North American
market for firefighter personal protective equipment (PPE). We can now help protect firefighters from head to toe, with Cairns
Helmets, our industry leading G1 SCBA, and Globe turnout gear and boots.

Fall protection. Our broad line of fall protection equipment includes harnesses, lanyards, self-retracting lifelines,
engineered systems and confined space equipment. Fall protection equipment is used by workers in the construction industry,
oil, gas and petrochemical market, utilities industry, aerospace industry, general industrial applications and anyone working at
height.

Non-core products. MSA maintains a portfolio of non-core products. Non-core products reinforce and extend the core

offerings, drawing upon our customer relationships, distribution channels, geographical presence and technical experience.
These products are complementary to the core offerings and have their roots within the core product value chain. Key non-core
products include respirators, eye and face protection, ballistic helmets and gas masks. Ballistic helmet and gas mask sales are
the primary sales to our military customers and were approximately $47 million globally in 2018 compared to $36 million in
2017.

6783_10K_C1.pdf March 13, 2019 pg 5

Customers—Our customers generally fall into two categories: distributors and end-users. In our Americas segment, the

majority of our sales are made through distribution. In our International segment, sales are made through both indirect and
direct sales channels. For the year ended December 31, 2018, no individual customer represented more than 10% of our sales.

Sales and Distribution—Our sales and distribution team consists of marketing, field sales and customer service
organizations. In most geographic areas, our field sales organizations work jointly with select distributors to call on end-users
and educate them about hazards, exposure limits, safety requirements and product applications, as well as the specific
performance attributes of our products. We believe that understanding end-user requirements is critical to increasing MSA's
market share.

The in-depth customer training and education provided by our sales associates to our customers is critical to ensuring

proper use of many of our products, such as SCBA and gas detection instruments. As a result of our sales associates working
closely with end-users, they gain valuable insight into customer preferences and needs. To better serve our customers and to
ensure that our sales associates are among the most knowledgeable and professional in the industry, we place significant
emphasis on training our sales associates in product application, industry standards and regulations.

We believe our sales and distribution strategy allows us to deliver a customer value proposition that differentiates our

products and services from those of our competitors, resulting in increased customer loyalty and demand.

In areas where we use indirect selling, we promote, distribute and service our products to general industry through
authorized national, regional and local distributors. Some of our key distributors include W.W. Grainger Inc., Airgas, Casco
Industries, Sonepar, Witmer Public Safety Group, Ten-8 Fire Equipment, Essendant and Fastenal. In North America, we
distribute fire service products primarily through specially trained local and regional distributors who provide advanced training
and service capabilities to volunteer and paid municipal fire departments. In our International segment, we primarily sell to and
service the fire service market directly. Because of our broad and diverse product line and our desire to reach as many markets
and market segments as possible, we have over 3,200 authorized distributor locations worldwide. No individual distributor
accounts for more than 10% of our sales.

Competition—The global safety products market is broad and highly fragmented with few participants offering a
comprehensive line of safety products. The sophisticated safety products market in which we compete is comprised of both
core and non-core offerings and is a subset of the larger PPE market. We maintain leading positions in nearly all of our core
products. Over the long-term, we believe global demand for safety products will continue to grow. Purchases of these products
are non-discretionary, protecting workers' health in hazardous and life-threatening work environments. Their use is often
mandated by government and industry regulations, which are increasingly enforced on a global basis.

The safety products market is highly competitive, with participants ranging in size from small companies focusing on a
single type of PPE to several large multinational corporations that manufacture and supply many types of sophisticated safety
products. Our main competitors vary by region and product. We believe that participants in this industry compete primarily on
the basis of product characteristics (such as functional performance, technology, agency approvals, design and style), brand
name recognition and after-market service support.

We believe we compete favorably within each of our operating segments as a result of our high quality, innovative

offerings and strong brand trust and recognition.

Research and Development—To achieve and maintain our market leading positions, we operate several sophisticated

research and development facilities. We believe our dedication and commitment to innovation and research and development
allows us to produce state-of-the-art safety products that are often first to market and exceed industry standards. Our primary
engineering groups are located in the United States, Germany, China and France. Our global product development teams
include cross-geographic and cross-functional members from various areas throughout the company, including research and
development, marketing, sales, operations and quality management. These teams are responsible for setting product line
strategies based on their understanding of customers' needs and available technology, as well as the opportunities and
challenges they foresee in each product area. We believe our team-based, cross-geographical and cross-functional approach to
new product development is a source of competitive advantage. Our approach to the new product development process allows
us to tailor our product offerings and product line strategies to satisfy distinct customer preferences and industry regulations
that vary across our operating segments.

6783_10K_C1.pdf March 13, 2019 pg 6

We believe another important aspect of our approach to new product development is that our engineers and technical
associates work closely with the safety industry’s leading standards-setting groups and trade associations. These organizations
include the National Institute for Occupational Safety and Health ("NIOSH"), the National Fire Protection Association
("NFPA"), American National Standards Institute ("ANSI"), International Safety Equipment Association ("ISEA") and their
overseas counterparts. Key members of our management team understand the impact that these standard-setting organizations
have on our new product development pipeline. As such, management devotes significant time and attention to anticipating a
new standard’s impact on our sales and operating results. Because of our understanding of customer needs, membership on
global standards-setting bodies, investment in research and development and our unique new product development process, we
believe we are well positioned to anticipate and adapt to changing product standards. While we acknowledge that the length of
the approval process can be unpredictable, we also believe that we are well positioned to gain the approvals and certifications
necessary to meet new government and multinational product regulations.

Patents and Intellectual Property—We own significant intellectual property, including a number of domestic and foreign

patents, patent applications and trademarks related to our products, processes and business. Although our intellectual property
plays an important role in maintaining our competitive position in a number of markets that we serve, no single patent, or patent
application, trademark or license is, in our opinion, of such value to us that our business would be materially affected by the
expiration or termination thereof, other than the “MSA” trademark. Our patents expire at various times in the future not
exceeding 20 years. Our general policy is to apply for patents on an ongoing basis in the United States and other countries, as
appropriate, to perfect our patent development. In addition to our patents, we have also developed or acquired a substantial
body of manufacturing know-how that we believe provides a significant competitive advantage over our competitors.

Raw Materials and Suppliers—Many of the components of our products are formulated, machined, tooled or molded in-

house from raw materials, which comprise approximately two-thirds of our cost of sales. For example, we rely on integrated
manufacturing capabilities for breathing apparatus, gas masks, ballistic helmets, hard hats and circuit boards. The primary raw
materials that we source from third parties include electronic components, rubber, high density polyethylene, chemical filter
media, eye and face protective lenses, air cylinders, certain metals and ballistic resistant, flame resistant and non-ballistic
fabrics. We purchase these materials both domestically and internationally, and we believe our supply sources are both well
established and reliable. We have close vendor relationship programs with the majority of our key raw material suppliers.
Although we generally do not have long-term supply contracts, thus far we have not experienced any significant problems in
obtaining adequate raw materials. Please refer to MSA's Form SD filed on May 31, 2018 for further information on our
conflict minerals analysis. Form SD may be obtained free of charge at www.sec.gov.

Associates—At December 31, 2018, we employed approximately 4,800 associates, of which approximately 2,000 were

employed by our International segment. None of our U.S. associates are subject to the provisions of a collective bargaining
agreement. Some of our associates outside the United States are members of unions. We have not experienced a significant
work stoppage in over 10 years and believe our relations with our associates are strong.

Environmental Matters—Our facilities and operations are subject to laws and regulations relating to environmental
protection and human health and safety. In the opinion of management, compliance with current environmental protection laws
will not have a material adverse effect on our financial condition. See Item 1A, Risk Factors, for further information regarding
our environmental risks which could impact the Company.

Seasonality—Our operating results are not significantly affected by seasonal factors. Sales are generally higher during
the second and fourth quarters. During periods of economic expansion or contraction and following significant catastrophes,
our sales by quarter have varied from this seasonal pattern. Government-related sales tend to spike in the fourth quarter.
Americas sales tend to be strong during the oil and gas market turnaround seasons late in the first quarter, early in the second
quarter and then again at the end of the third quarter and beginning of the fourth quarter. International segment sales are
typically weaker for the Europe region in the summer holiday months of July and August and seasonality can be affected by the
timing of delivery of larger orders. Invoicing and the delivery of larger orders can affect sales patterns variably across all
reporting segments.

Available Information—Our Internet address is www.MSAsafety.com. We make the following filings available free of

charge on the Investor Relations page on our website as soon as reasonably practicable after they have been electronically filed
with or furnished to the Securities and Exchange Commission ("SEC"): our annual reports on Form 10-K, our quarterly reports
on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as our proxy statement. Information contained on our
website is not part of this annual report on Form 10-K or our other filings with the SEC. The SEC maintains an Internet site at
www.sec.gov that contains reports, proxy and information statements and other information regarding issuers like us who file
electronically with the SEC.

6783_10K_C1.pdf March 13, 2019 pg 7

Item 1A. Risk Factors

Claims of injuries from our products, product defects or recalls of our products could have a material adverse effect
on our business, operating results, financial condition and liquidity.

MSA 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. In the event the
parties using our products are injured or any of our products prove to be defective, we could be subject to claims with respect
to such injuries. In addition, we may be required to or may voluntarily recall or redesign certain products that could
potentially be harmful to end users. Any claim or product recall that results in significant expense or negative publicity
against us could have a material adverse effect on our business, operating results, financial condition and liquidity, including
any successful claim brought against us in excess or outside of available insurance coverage.

Our subsidiary, Mine Safety Appliances Company, LLC, may experience losses from cumulative trauma product
liability claims. The inability to collect insurance receivables and the transition to becoming largely self-insured for
cumulative trauma product liability claims could have a material adverse effect on our business, operating results,
financial condition and liquidity.

Our subsidiary, Mine Safety Appliances Company, LLC (“MSA LLC”) was named as a defendant in 1,481 cumulative
trauma lawsuits comprised of 2,355 claims at December 31, 2018. Cumulative trauma product liability claims involve
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. The
products at issue were manufactured many years ago and are not currently offered by MSA LLC. A reserve has been
established with respect to cumulative trauma product liability claims currently asserted and estimated incurred but not
reported (“IBNR”) cumulative trauma product liability claims. Because our cumulative trauma product liability risk is
subject to inherent uncertainties, including unfavorable trial rulings or developments, an increase in newly filed claims, or
more aggressive settlement demands, and since MSA LLC is largely self-insured, there can be no certainty that MSA LLC
may not ultimately incur losses in excess of presently recorded liabilities. These losses could have a material adverse effect
on our business, operating results, financial condition and liquidity. We will adjust the reserve relating to cumulative trauma
product liability claims from time to time based on whether the actual numbers, types, and settlement values of claims
asserted differ from current projections and estimates or there are significant changes in the facts underlying the assumptions
used in establishing the reserve. These adjustments may be material and could materially impact future periods in which the
reserve is adjusted.

In the normal course of business, MSA LLC makes payments to settle these types of cumulative trauma product liability
claims and for related defense costs, and records receivables for the amounts believed to be recoverable under insurance.
MSA LLC has recorded insurance receivables totaling $71.7 million and notes receivable of $59.6 million at December 31,
2018. As described in greater detail in Note 19 of the consolidated financial statements in Part II Item 8 of this Form 10-K,
MSA LLC is now largely self-insured for cumulative trauma product liability claims. As a result, additional amounts
recorded as insurance receivables will be limited and based on calculating the amounts to be reimbursed pursuant to
negotiated Coverage-in-Place Agreements. Various factors could affect the timing and amount of recovery of the insurance
receivables, including: assumptions regarding claims composition (which are relevant to calculating reimbursement under the
terms of certain Coverage-in-Place Agreements) and the extent to which insurers may become insolvent in the future. Failure
to recover amounts due from MSA LLC’s insurance carriers would result in MSA LLC being unable to recover for amounts
already paid to resolve claims (and recorded as insurance receivables) and could have a material adverse effect on our
business, operating results, financial condition and liquidity.

Going forward, most of MSA LLC's cumulative trauma product liability costs will be expensed without the expectation of
insurance reimbursement. MSA LLC expects to obtain some limited insurance reimbursement from negotiated Coverage-in-
Place Agreements (although that coverage may not be immediately triggered or accessible) or from other sources of
coverage, but the precise amount of insurance reimbursement that may be available cannot be determined with specificity at
this time.

6783_10K_C1.pdf March 13, 2019 pg 8

Unfavorable economic and market conditions could materially and adversely affect our business, results of operations
and financial condition.

We are subject to risks arising from adverse changes in global economic conditions. We have significant operations in a
number of countries outside the U.S., including some in emerging markets. Long-term economic uncertainty in some of the
regions of the world in which we operate, such as Asia, Latin America, the Middle East and Europe, could result in declines
in revenue, profitability and cash flow due to reduced orders, payment delays, supply chain disruptions or other factors
caused by the economic challenges faced by our customers and suppliers.

A portion of MSA's sales are made to customers in the oil, gas and petrochemical market. These sales expose MSA to the
risks of doing business in that global market. We estimate that between 25% - 30% of our global business is sold into the
energy market vertical with the most significant exposure in industrial head protection, portable gas detection and FGFD.
Approximately 10% - 15% of consolidated revenue, primarily in industrial head protection and portable gas detection, is
more exposed to a pullback in employment trends across the energy market. Another 5% - 10% of consolidated revenue,
primarily in FGFD is more exposed to a pullback in capital equipment spending within the energy market. It is possible that
the volatility in upstream, midstream and downstream markets, could negatively impact our business and could result in
declines in our consolidated results of operations and cash flow.

A reduction in the spending patterns of government agencies or delays in obtaining government approval for our
products could materially and adversely affect our net sales, earnings and cash flow.

The demand for our products sold to the fire service market, the homeland security market and other government agencies is,
in large part, driven by available government funding. Government budgets are set annually and we cannot assure that
government funding will be sustained at the same level in the future. A significant reduction in available government funding
could result in declines in our consolidated results of operations and cash flow.

Our inability to successfully identify, consummate and integrate current and future acquisitions or to realize
anticipated cost savings and other benefits could adversely affect our business.

One of our operating strategies is to selectively pursue acquisitions. On July 31, 2017, we completed the acquisition of Globe
Holding Company, LLC ("Globe"), which is a leading innovator and provider of firefighter protective clothing and boots.
Please refer to Note 13 of the consolidated financial statements in Part II Item 8 of this Form 10-K for further details. Any
future acquisitions will depend on our ability to identify suitable acquisition candidates and successfully consummate such
acquisitions. Acquisitions involve a number of risks including:

•

failure of the acquired businesses to achieve the results we expect;

diversion of our management’s attention from operational matters;

our inability to retain key personnel of the acquired businesses;

risks associated with unanticipated events or liabilities;

potential disruption of our existing business; and

customer dissatisfaction or performance problems at the acquired businesses.

If we are unable to integrate or successfully manage businesses that we have recently acquired, including Globe, or may
acquire in the future, we may not realize anticipated cost savings, improved manufacturing efficiencies and increased
revenue, which may result in material adverse short- and long-term effects on our consolidated operating results, financial
condition and liquidity. Even if we are able to integrate the operations of our acquired businesses into our operations, we may
not realize the full benefits of the cost savings, revenue enhancements or other benefits that we may have expected at the time
of acquisition. In addition, even if we achieve the expected benefits, we may not be able to achieve them within the
anticipated time frame, and such benefits may be offset by costs incurred in integrating the acquired companies and increases
in other expenses.

6783_10K_C1.pdf March 13, 2019 pg 9

Our plans to continue to improve productivity and reduce complexity may not be successful, which could adversely
affect our ability to compete.

MSA has integrated parts of its European operating segment that have historically been individually managed entities, into a
centrally managed organization model. We have begun to and plan to continue to leverage the benefits of scale created from
this approach and are in the process of implementing a more efficient and cost-effective enterprise resource planning system
in additional locations across the International Segment. MSA runs the risk that these and similar initiatives may not be
completed substantially as planned, may be more costly to implement than expected, or may not have the positive effects
anticipated. In addition, these various initiatives require MSA to implement a significant amount of organizational change
which could divert management’s attention from other concerns, and if not properly managed, could cause disruptions in our
day-to-day operations and have a negative impact on MSA's financial results. It is also possible that other major productivity
and streamlining programs may be required in the future.

Our plans to improve future profitability through restructuring programs may not be successful and could lead to
unintended consequences.

We have incurred and may incur restructuring charges primarily related to severance costs for staff reductions associated with
our ongoing initiatives to drive profitable growth and right size our operations. For example in 2016, certain employees in
the Americas segment were offered a voluntary retirement incentive package (“VRIP”). Non-cash special termination benefit
expense of approximately $11.4 million was recorded in the first quarter of 2017 related to elections under the VRIP. Our
cost structure in future periods is somewhat dependent upon our ability to maintain increased productivity without backfilling
certain positions. If our programs are not successful, there could be a material adverse effect on our business and
consolidated results of operations.

Our future results are subject to the risk that purchased components and materials are unavailable or available at
excessive cost due to material shortages, excessive demand, currency fluctuation, inflationary pressure and other
factors.

We depend on various components and materials to manufacture our products. Although we have not experienced any
substantial difficulty in obtaining components and materials, it is possible that any of our supplier relationships could be
terminated or otherwise disrupted. Any sustained interruption in our receipt of adequate supplies could have a material
adverse effect on our business, results of operations and financial condition. Our inability to successfully manage price
fluctuations due to market demand, currency risks or material shortages, or future price fluctuations could have a material
adverse effect on our business and our consolidated results of operations and financial condition.

A failure of our information systems or a cybersecurity breach could materially and adversely affect our business,
results of operations and financial condition.

The proper functioning and security of our information systems is critical to the operation and reputation of our business. Our
information systems may be vulnerable to damage or disruption from natural or man-made disasters, computer viruses, power
losses or other system or network failures. In addition, hackers, cyber-criminals and other persons could attempt to gain
unauthorized access to our information systems with the intent of harming our company, harming our information systems or
obtaining sensitive information such as intellectual property, trade secrets, financial and business development information,
and customer and vendor related information. If our information systems or security fail, or if there is any compromise or
breach of our security, it could result in a violation of applicable privacy and other laws, legal and financial exposure,
remediation costs, negative impacts on our customers' willingness to transact business with us, or a loss of confidence in our
security measures, which could have an adverse effect on our business, our reputation and our consolidated results of
operations and financial condition.

Like many companies, from time to time, we have experienced attacks on our computer systems by unauthorized outside
parties. Because the techniques used by computer hackers and others to access or sabotage networks continually evolve and
generally are not recognized until launched against a target, we may be unable to anticipate, prevent or detect these attacks.
As a result, the impact of any future incident cannot be predicted, including the failure of our information systems or
misappropriation of our technologies and/or processes. Any such system failure or loss of such information could harm our
competitive position, or cause us to incur significant costs to remedy the damages caused by the incident. We routinely
implement improvements to our network security safeguards as well as cybersecurity initiatives. We also maintain a robust
cyber response plan, including an assessment of triggers for internal and external reporting of cyber incidents. We expect to
continue devoting substantial resources to the security of our information technology systems. We cannot assure that such
system improvements will be sufficient to prevent or limit the damage from any future cyber-attack or disruption to our
information systems.

6783_10K_C1.pdf March 13, 2019 pg 10

If we fail to introduce successful new products or extend our existing product lines, we could lose our market position
and our financial performance could be materially and adversely affected.

In the safety products market, there are frequent introductions of new products and product line extensions. If we are unable
to identify emerging consumer and technological trends, maintain and improve the competitiveness of our products and
introduce new products, we may lose our market position, which could have a material adverse effect on our business,
financial condition and results of operations. We continue to invest significant resources in research and development and
market research. However, continued product development and marketing efforts are subject to the risks inherent in the
development process. These risks include delays, the failure of new products and product line extensions to achieve
anticipated levels of market acceptance and the risk of failed product introductions.

If we lose any of our key personnel or are unable to attract, train and/or retain qualified personnel or plan the
succession of senior management, our ability to manage our business and continue our growth could be negatively
impacted.

Our success depends in large part on the continued contributions of our key management, engineering and sales and
marketing personnel, many of whom are highly skilled and would be difficult to replace. Our success also depends on the
abilities of new personnel to function effectively, both individually and as a group. If we are unable to attract, effectively
integrate and retain management, engineering or sales and marketing personnel, then the execution of our growth strategy and
our ability to react to changing market requirements may be impeded, and our business could suffer as a result.

In addition, hiring, training, and successfully integrating replacement critical personnel could be time consuming, may cause
additional disruptions to our operations, and may be unsuccessful, which could negatively impact future revenues.
Competition for personnel is intense, and we cannot assure you that we will be successful in attracting and retaining qualified
personnel. The hiring of new personnel may also result in increased costs and we do not currently maintain key person life
insurance.

Our success also depends on effective succession planning. Failure to ensure effective transfer of knowledge and smooth
transitions involving senior management could hinder our strategic planning and execution. From time to time, senior
management or other key employees may leave our company. While we strive to reduce the negative impact of such changes,
the loss of any key employee could result in significant disruptions to our operations, including adversely affecting the
timeliness of product releases, the successful implementation and completion of company initiatives, the effectiveness of our
disclosure controls and procedures and our internal control over financial reporting, and the results of our operations.

The markets in which we compete are highly competitive, and some of our competitors have greater financial and
other resources than we do. The competitive pressures faced by us could materially and adversely affect our business,
results of operations and financial condition.

The safety products market is highly competitive, with participants ranging in size from small companies focusing on single
types of safety products, to large multinational corporations that manufacture and supply many types of safety products. Our
main competitors vary by region and product. We believe that participants in this industry compete primarily on the basis of
product characteristics (such as functional performance, agency approvals, design and style), price, service and delivery,
customer support, the ability to meet the special requirements of customers, brand name trust and recognition, and e-
business capabilities. Some of our competitors have greater financial and other resources than we do and our business could
be adversely affected by competitors’ new product innovations, technological advances made to competing products and
pricing changes made by us in response to competition from existing or new competitors. We may not be able to compete
successfully against current and future competitors and the competitive pressures faced by us could have a material adverse
effect our business, consolidated results of operations and financial condition. In addition, e-business is a rapidly developing
area, and the execution of a successful e-business strategy involves significant time, investment and resources. If we are
unable to successfully expand e-business capabilities in support of our customer needs, our brands may lose market share,
which could negatively impact revenue and profitability.

6783_10K_C1.pdf March 13, 2019 pg 11

We are subject to various federal, state and local laws and regulations across our global organization and any
violation of these laws and regulations could adversely affect our results of operations.

We are subject to numerous, and sometimes conflicting, laws and regulations on matters as diverse as anticorruption, import/
export controls, product content requirements, trade restrictions, tariffs, taxation, sanctions, internal and disclosure control
obligations, securities regulation, anti-competition, data privacy and labor relations, among others. This includes laws and
regulations in emerging markets where legal systems may be less developed or familiar to us. Compliance with diverse legal
requirements is costly, time consuming and requires significant resources. Violations of one or more of these laws or
regulations in the conduct of our business could result in significant fines, criminal sanctions against us or our officers,
prohibitions on doing business and damage to our reputation. These actions could result in liability for significant monetary
damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage and have a material adverse
effect on our business, consolidated results of operations and financial condition.

We are subject to various environmental laws and any violation of these laws could adversely affect our results of
operations.

Included in the extensive laws, regulations and ordinances, to which we are subject, are those relating to the protection of the
environment. Examples include those governing discharges to air and water, handling and disposal practices for solid and
hazardous wastes and the maintenance of a safe workplace. These laws impose penalties for noncompliance and liability for
response costs and certain damages resulting from past and current spills, disposals, or other releases of hazardous materials.
We could incur substantial costs as a result of noncompliance with or liability for cleanup pursuant to these environmental
laws. Such laws continue to change, and we may be subject to more stringent environmental laws in the future. If more
stringent environmental laws are enacted, these future laws could have a material adverse effect on our business, consolidated
results of operations and financial condition.

We benefit from free trade laws and regulations, such as the United States-Mexico-Canada Agreement and any
changes to these laws and regulations could adversely affect our results of operations.

Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement (“USMCA”), provide certain
beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and
other requirements. Changes in laws or policies governing the terms of foreign trade, and in particular increased trade
restrictions, tariffs or taxes on imports from countries where we manufacture products, such as China and Mexico, could have
a material adverse effect on our business, consolidated results of operations and financial condition.

We are subject to various U.S and foreign tax laws and any changes in these laws related to the taxation of businesses
and resolutions of tax disputes could adversely affect our results of operations.

The U.S. Congress, the Organization for Economic Co-operation and Development (or, OECD) and other government
agencies in jurisdictions in which we and our affiliates invest or do business have maintained a focus on issues related to the
taxation of multinational companies. The OECD has changed numerous long-standing tax principles through its base erosion
and profit shifting (“BEPS”) project which could adversely impact our effective tax rate.

We are subject to regular review and audit by both foreign and domestic tax authorities. While we believe our tax positions
will be sustained, the final outcome of tax audits and related litigation may differ materially from the tax amounts recorded in
our consolidated financial statements, which could have a material adverse effect on our consolidated results of operations,
financial condition and cash flows.

Our ability to market and sell our products is subject to existing government regulations and standards. Changes in
such regulations and standards or our failure to comply with them could materially and adversely affect our results of
operations.

Most of our products are required to meet performance and test standards designed to protect the safety of people and
infrastructures around the world. Our inability to comply with these standards could result in declines in revenue, profitability
and cash flow. Changes in regulations could reduce the demand for our products or require us to re-engineer our products,
thereby creating opportunities for our competitors. Regulatory approvals for our products may be delayed or denied for a
variety of reasons that are outside of our control. Additionally, market anticipation of significant new standards can cause
customers to accelerate or delay buying decisions.

6783_10K_C1.pdf March 13, 2019 pg 12

Damage to the reputation of MSA or to one or more of our product brands could adversely affect our business.

Developing and maintaining our reputation, as well as the reputation of our brands, is a critical factor in our relationship with
customers, distributors and others. Our inability to address negative publicity or other issues, including concerns about
product safety or quality, real or perceived, could negatively impact our business which could have a material adverse effect
on our business, consolidated results of operations and financial condition.

We have significant international operations and are subject to the risks of doing business in foreign countries.

We have business operations in over 40 foreign countries. In 2018, approximately half of our net sales were made by
operations located outside the United States. Those operations are subject to various political, economic and other risks and
uncertainties, which could have a material adverse effect on our business. These risks include the following:

•

unexpected changes in regulatory requirements;

changes in trade policy or tariff regulations;

changes in tax laws and regulations;

changes to the Company's legal structure could have unintended tax consequences;

inability to generate sufficient profit in certain foreign jurisdictions could lead to additional valuation allowances on
deferred tax assets;

intellectual property protection difficulties;

difficulty in collecting accounts receivable;

complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S.
laws;

foreign privacy laws and regulations;

trade protection measures and price controls;

trade sanctions and embargoes;

nationalization and expropriation;

increased international instability or potential instability of foreign governments;

effectiveness of worldwide compliance with MSA's anti-bribery policy, local laws and the U.S. Foreign Corrupt
Practices Act;

difficulty in hiring and retaining qualified employees;

the ability to effectively negotiate with labor unions in foreign countries;

the need to take extra security precautions for our international operations;

costs and difficulties in managing culturally and geographically diverse international operations; and

risks associated with the United Kingdom's decision to exit the European Union, including disruptions to trade and
free movement of goods, services and people to and from the United Kingdom; increased foreign exchange volatility
with respect to the British pound; and additional legal and economic uncertainty.

Any one or more of these risks could have a negative impact on the success of our international operations and, thereby, have
a material adverse effect our business, consolidated results of operations and financial condition.

6783_10K_C1.pdf March 13, 2019 pg 13

Because we derive a significant portion of our sales from the operations of our foreign subsidiaries, future currency
exchange rate fluctuations could adversely affect our results of operations and financial condition, and could affect the
comparability of our results between financial periods.

In 2018, our operations outside of the United States accounted for approximately half of our net sales. The results of our
foreign operations are generally reported in the local currency of the affiliate and then translated into U.S. dollars at the
applicable exchange rates for inclusion in our consolidated financial statements. The exchange rates between some of these
currencies and the U.S. dollar have fluctuated significantly in recent years and may continue to do so in the future. A
weakening of the currencies in which sales are generated relative to the currencies in which costs are denominated would
decrease our results of operations and cash flow. Although the Company uses instruments to hedge certain foreign currency
risks, these hedges only offset a portion of the Company’s exposure to foreign currency fluctuations.

In addition, because our consolidated financial statements are stated in U.S. dollars, such fluctuations may affect our
consolidated results of operations and financial position, and may affect the comparability of our results between financial
periods. Our inability to effectively manage our exchange rate risks or any volatility in currency exchange rates could have a
material adverse effect on our business, consolidated results of operations and financial condition.

Our continued success depends on our ability to protect our intellectual property. If we are unable to protect our
intellectual property, our business could be materially and adversely affected.

Our success depends, in part, on our ability to obtain and enforce patents, maintain trade secret protection and operate
without infringing on the proprietary rights of third parties. We have been issued patents and have registered trademarks with
respect to many of our products, but our competitors could independently develop similar or superior products or
technologies, duplicate any of our designs, trademarks, processes or other intellectual property or design around any
processes or designs on which we have or may obtain patents or trademark protection. In addition, it is possible that third
parties may have, or will acquire, licenses for patents or trademarks that we may use or desire to use, so that we may need to
acquire licenses to, or to contest the validity of, such patents or trademarks of third parties. Such licenses may not be made
available to us on acceptable terms, if at all, and we may not prevail in contesting the validity of third party rights.

We also protect trade secrets, know-how and other confidential information against unauthorized use by others or disclosure
by persons who have access to them, such as our employees, through contractual arrangements. These agreements may not
provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any
unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. Our
inability to maintain the proprietary nature of our technologies could have a material adverse effect on our consolidated
results of operations and financial condition.

If our goodwill, other intangible assets and long-lived assets become impaired, we may be required to record
significant charges to earnings.

We review our long-lived assets for impairment when events or changes in circumstances indicate the carrying amount may
not be recoverable. Goodwill and indefinite-lived intangible assets are required to be assessed for impairment at least
annually. Factors that may be considered a change in circumstances, indicating that the carrying amount of our goodwill,
indefinite-lived intangible assets or long-lived assets may not be recoverable, include slower growth rates in our markets,
reduced expected future cash flows, increased country risk premiums as a result of political uncertainty and a decline in stock
price and market capitalization. We consider available current information when calculating our impairment charge. If there
are indicators of impairment, our long-term cash flow forecasts for our operations deteriorate or discount rates increase, we
may be required to recognize additional impairment charges in later periods. See Note 12 of the consolidated financial
statements in Part II Item 8 of this Form 10-K for the carrying amounts of goodwill in each of our reporting segments and
details on indefinite-lived intangible assets that we hold.

6783_10K_C1.pdf March 13, 2019 pg 14

Risks related to our defined benefit pension and other post-retirement plans could adversely affect our results of
operations and cash flow.

Significant changes in actual investment return on pension assets, discount rates, and other factors could adversely affect our
results of operations and pension contributions in future periods. U.S. generally accepted accounting principles require that
we calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions about financial
markets and interest rates, which may change based on economic conditions. Funding requirements for our pension plans
may become more significant. However, the ultimate amounts to be contributed are dependent upon, among other things,
interest rates, underlying asset returns and the impact of legislative or regulatory changes related to pension funding
obligations. For further information regarding our pension plans, refer to "Pensions and Other Post-retirement Benefits" in
Note 14 of the consolidated financial statements in Part II Item 8 of this Form 10-K.

If we fail to meet our debt service requirements or the restrictive covenants in our debt agreements or if interest rates
increase, our results of operations and financial condition could be materially and adversely affected.

We have a substantial amount of debt upon which we are required to make scheduled interest and principal payments and we
may incur additional debt in the future. A significant portion of our debt bears interest at variable rates that may increase in
the future. Our debt agreements require us to comply with certain restrictive covenants. If we are unable to generate sufficient
cash to service our debt or if interest rates increase, our consolidated results of operations and financial condition could be
materially and adversely affected. Additionally, a failure to comply with the restrictive covenants contained in our debt
agreements could result in a default, which if not waived by our lenders, could substantially increase borrowing costs and
require accelerated repayment of our debt. Please refer to Note 11 of the consolidated financial statements in Part II Item 8 of
this Form 10-K for commentary on our compliance with the restrictive covenants.

Item 1B. Unresolved Staff Comments

None.

6783_10K_C1.pdf March 13, 2019 pg 15

Item 2. Properties

Our principal executive offices are located at 1000 Cranberry Woods Drive, Cranberry Township, PA 16066 in a 212,000

square-foot building owned by us. We own or lease our primary facilities in the United States and in a number of other
countries. We believe that all of our facilities, including the manufacturing facilities, are in good repair and in suitable
condition for the purposes for which they are used. The following table sets forth a list of our primary facilities:

Function

Square Feet

Owned or Leased

Location

Americas

Murrysville, PA

Cranberry Twp., PA

New Galilee, PA

Jacksonville, NC

Queretaro, Mexico

Sao Paulo, Brazil

Cranberry Twp., PA

Lake Forest, CA

Lima, Peru

Santiago, Chile

Office and Manufacturing

Office, Research and Development and Manufacturing

Distribution

Manufacturing

Office and Manufacturing

Office, Manufacturing and Distribution

Research and Development

Office, Research and Development and Manufacturing

Office and Distribution

Cundinamarca, Colombia

Office

Corona, CA

Pittsfield, NH

Pasadena, TX

Torreon, Mexico

Houston, TX

Santiago, Chile

Edmonton, Canada

Manufacturing

Office and Manufacturing

Office and Distribution

Office

Office and Distribution

Office

Distribution

Buenos Aires, Argentina

Office and Distribution

São Paulo, Brazil

Antofagasta, Chile

International

Berlin, Germany

Suzhou, China

Devizes, UK

Distribution

Office

Office, Research and Development, Manufacturing and Distribution

Office and Manufacturing

Office, Manufacturing and Distribution

Châtillon-sur-Chalaronne, France Office, Research and Development, Manufacturing and Distribution

Beijing, China

Milan, Italy

Office

Mohammedia, Morocco

Manufacturing

Barcelona, Spain

Bucharest, Romania

Galway, Ireland

Office

Office and Manufacturing

Woodlands, Singapore

Distribution

Warsaw, Poland

Sydney, Australia

Kozina, Slovenia

Essen, Germany

Office and Distribution

Office and Manufacturing

Office and Distribution

Jakarta Utara, Indonesia

Office

Puchong, Malaysia

Office and Distribution

Rapperswil, Switzerland

Berlin, Germany

Ostrava, Czechia

Office

6783_10K_C1.pdf March 13, 2019 pg 16

295,000

212,000

120,000

107,000

79,000

77,000

74,000

68,000

62,000

34,000

32,000

22,000

19,000

16,000

15,000

13,000

9,000

340,000

193,000

115,000

94,000

56,000

43,000

24,000

23,000

20,000

19,000

18,000

13,000

10,000

9,000

8,000

7,000

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Item 3. Legal Proceedings

Please refer to Note 19 to the consolidated financial statements in Part II Item 8 of this Form 10-K.

Item 4. Mine Safety Disclosures

Not applicable.

Executive Officers of the Registrant

The following sets forth the names and ages of our executive officers as of February 22, 2019:

Name
Nishan J. Vartanian(a)
Steven C. Blanco(b)
Kenneth D. Krause(c)
Bob Leenen(d)
Douglas K. McClaine(e)

Age Title
59 President and Chief Executive Officer since May 2018.
52 Vice President and President, MSA Americas segment since August 2017.
44 Senior Vice President, Chief Financial Officer and Treasurer since February 2018.
45 Vice President and President, MSA International segment since September 2017.
61 Senior Vice President, Secretary and Chief Legal Officer since March 2016.

(a) Prior to his present position, Mr. Vartanian was President and Chief Operating Officer since June 2017; Senior Vice

President and President, MSA Americas since July 2015; and prior thereto served as Vice President and President, MSA
North America.

(b) Prior to his present position, Mr. Blanco served as Vice President and General Manager, Northern North America since

August 2015 and prior thereto was Vice President, Global Operational Excellence.

(c) Prior to his present position, Mr. Krause was Vice President, Chief Financial Officer and Treasurer since December
2015; Vice President, Strategic Finance since August 2015; and prior thereto served as Treasurer and Executive
Director, Global Finance and Assistant Treasurer.

(d) Prior to his present position, Mr. Leenen was Regional Chief Financial Officer, MSA International and Finance Director,

Europe.

(e) Prior to his present position, Mr. McClaine was Vice President, Secretary and General Counsel.

6783_10K_C1.pdf March 13, 2019 pg 17

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities

Our common stock is traded on the New York Stock Exchange under the symbol “MSA.” Dividends declared were as

follows:

First Quarter

Second Quarter

Third Quarter
Fourth Quarter

2018

2017

0.35 $

0.38

0.33

0.35

On February 14, 2019, there were 184 registered holders of our shares of common stock.

Issuer Purchases of Equity Securities

Period
October 1 — October 31, 2018

November 1 — November 30, 2018

December 1 — December 31, 2018

Total Number of
Shares Purchased

Average Price Paid
Per Share

1,256

2,619

1,103

106.29

109.53

95.32

Total Number of
Shares Purchased
as Part of Publicly
Announced
Plans or Programs

Maximum Number
of Shares that
May Yet Be
Purchased
Under the Plans or
Programs

—

776,668

744,244

860,456

The share repurchase program authorizes up to $100.0 million in repurchases of MSA common stock in the open market
and in private transactions. The share purchase program has no expiration date. The maximum number of shares that may be
purchased is calculated based on the dollars remaining under the program and the respective month-end closing share price. We
have purchased a total of 318,941 shares, or $18.9 million, since this program's inception.

The above shares purchased during the quarter relate to stock compensation transactions.

We do not have any other share repurchase programs.

6783_10K_C1.pdf March 13, 2019 pg 18

Comparison of Five-Year Cumulative Total Return

The following paragraph compares the most recent five year performance of MSA stock with (1) the Standard & Poor’s

500 Composite Index and (2) the Russell 2000 Index. Because our competitors are principally privately held concerns or
subsidiaries or divisions of corporations engaged in multiple lines of business, we do not believe it feasible to construct a peer
group comparison on an industry or line-of-business basis. The Russell 2000 Index, while including corporations both larger
and smaller than MSA in terms of market capitalization, is composed of corporations with an average market capitalization
similar to us.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100

Among MSA Safety Incorporated, the S&P 500 Index, and the Russell 2000 Index

Assumes $100 invested on December 31, 2013 in stock or index, including reinvestment of dividends. Fiscal year ending
December 31.

2013

2014

2015

2016

2017

2018

MSA Safety Incorporated

100.00

106.04

89.24

146.17

166.55

S&P 500 Index

Russell 2000 Index

100.00

113.69

104.89

115.26

100.26

129.05

121.63

157.22

129.44

205.83

150.33

124.09

Value at December 31,

6783_10K_C1.pdf March 13, 2019 pg 19

Item 6. Selected Financial Data

(In thousands, except as noted)
Statement of Income Data:

Net sales
Income from continuing operations

(Loss) income from discontinued operations

Net income attributable to MSA Safety Incorporated
Earnings per share attributable to MSA common
shareholders:

Basic per common share (in dollars):

Income from continuing operations

(Loss) income from discontinued operations

Net income

Diluted per common share (in dollars):

Income from continuing operations

(Loss) income from discontinued operations

Net income

Dividends paid per common share (in dollars)

Weighted average common shares outstanding—basic

Weighted average common shares outstanding—diluted

2018

2017(a)

2016(b)

2015(c)

2014

$ 1,358,104

$ 1,196,809

$ 1,149,530

$ 1,130,783

$ 1,133,885

125,115

26,956

—

124,150

26,027

94,107

(755)

91,936

69,590

1,217

70,807

87,447

1,059

88,506

3.23

0.68

2.47

—

3.23

—

0.68

(0.02)

2.45

3.18

0.67

2.44

—

3.18

1.49

38,362

38,961

—

0.67

1.38

37,997

38,697

(0.02)

2.42

1.31

37,456

37,986

1.86

0.03

1.89

1.84

0.03

1.87

1.27

2.34

0.03

2.37

2.30

0.03

2.33

1.23

37,293

37,710

37,138

37,728

633,882

447,832

363,836

341,311

$ 1,684,826

$ 1,353,920

$ 1,608,012

$ 1,422,863

$ 1,263,412

Balance Sheet Data:
Total assets(d)
Long-term debt, net(d)
533,809
Total MSA Safety Incorporated shareholders’ equity
(a) Includes Globe from the date of acquisition on July 31, 2017. In addition, we were able to reasonably estimate the potential
liability for IBNR cumulative trauma product liability claims in the fourth quarter of 2017 and recognized a significant charge
which reduced net income by approximately $85 million as compared to prior years as we became substantially self insured for
cumulative trauma product liability claims during 2017. See Note 19 to the Consolidated Financial Statements in Part II Item 8
of this Form 10-K for additional information.
(b) Includes Senscient from the date of acquisition on September 19, 2016.
(c) Includes Latchways from the date of acquisition on October 21, 2015.
(d) The Company adopted Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest and ASU No.
2015-15, Interest - Imputation of Interest on January 1, 2016, which requires an entity to present the debt issuance costs related
to a recognized debt liability as a direct deduction from the carrying amount of that debt liability, consistent with debt
discounts. All prior periods presented in this Annual Report on Form 10-K were recast to reflect the change in accounting
principle retrospectively applied as of December 31, 2015.

516,496

243,620

458,022

558,165

597,601

The data presented in the Selected Financial Data table should be read in conjunction with comments provided in
Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 and the Consolidated
Financial Statements in Part II Item 8 of this Form 10-K.

6783_10K_C1.pdf March 13, 2019 pg 20

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the historical financial statements and other
financial information included elsewhere in this annual report on Form 10-K. This discussion may contain forward-looking
statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on
current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our
actual results could differ materially from the results contemplated by these forward-looking statements due to a number of
factors, including those discussed in the sections of this annual report entitled “Forward-Looking Statements” and “Risk
Factors.”

MSA Safety Incorporated ("MSA") is organized into six geographical operating segments that are aggregated into three

reportable geographic segments: Americas, International and Corporate. The Americas segment is comprised of our
operations in North America and Latin America geographies. The International segment is comprised of our operations of all
geographies outside of the Americas. Certain global expenses are allocated to each segment in a manner consistent with where
the benefits from the expenses are derived. Please refer to Note 7—Segment Information of the consolidated financial
statements in Part II Item 8 of this Form 10-K for further information.

MSA's South African personal protective equipment distribution business and MSA's Zambian operations had historically
been part of the International reportable segment. On February 29, 2016, the Company sold 100% of the stock associated with
these operations. In accordance with generally accepted accounting principles, these operations and related results are
excluded from continuing operations and are presented as discontinued operations in all periods presented. Please refer to
Note 20—Discontinued Operations of the consolidated financial statements in Part II Item 8 of this Form 10-K for further
commentary on these discontinued operations.

On September 19, 2016, the Company acquired 100% of the common stock of Senscient, Inc. for $19.1 million in cash.

Senscient, which is headquartered in the United Kingdom, is a leader in laser-based gas detection technology. The acquisition
of Senscient expands and enhances MSA’s technology offerings in the global market for fixed gas and flame detection systems,
as the Company continues to execute its core product growth strategy. The acquisition was funded through borrowings on our
unsecured senior revolving credit facility. The data presented in Part II Item 6 of this Form 10-K should be read in conjunction
with the following comments. Additionally, please refer to Note 13—Acquisitions of the consolidated financial statements in
Part II Item 8 of this Form 10-K for further information.

On July 31, 2017, the Company acquired 100% of the common stock of Globe Holding Company, LLC ("Globe") for $215

million in cash plus a working capital adjustment of $1.4 million. Based in Pittsfield, NH, Globe is a leading innovator and
provider of firefighter protective clothing and boots. This acquisition aligns with the Company's corporate strategy in that it
strengthens our leading position in the North American fire service market. The transaction was funded through borrowings on
our unsecured senior revolving credit facility. The data presented in Part II Item 6 of this Form 10-K should be read in
conjunction with the following comments. Additionally, please refer to Note 13—Acquisitions of the consolidated financial
statements in Part II Item 8 of this Form 10-K for further information.

6783_10K_C1.pdf March 13, 2019 pg 21

BUSINESS OVERVIEW

We are a global leader in the development, manufacture and supply of safety products that protect people and facility

infrastructures. Recognized for their market leading innovation, many MSA products integrate a combination of electronics,
mechanical systems and advanced materials to protect users against hazardous or life-threatening situations. The Company's
comprehensive product line, which is governed by rigorous safety standards across highly regulated industries, is used by
workers around the world in a broad range of markets, including the oil, gas and petrochemical industry, fire service,
construction, industrial manufacturing applications, utilities, mining and the military. MSA's core products include breathing
apparatus where self-contained breathing apparatus ("SCBA") is the principal product, fixed gas and flame detection systems,
portable gas detection instruments, industrial head protection products, firefighter helmets and protective apparel, and fall
protection devices. We are committed to providing our customers with service unmatched in the safety industry and, in the
process, enhancing our ability to provide a growing line of safety solutions for customers in key global markets.

We tailor our product offerings and distribution strategy to satisfy distinct customer preferences that vary across

geographic regions. To best serve these customer preferences, we have organized our business into six geographical operating
segments that are aggregated into three reportable geographic segments: Americas, International and Corporate. In 2018, 63%
and 37% of our net sales were made by our Americas and International segments, respectively.

Americas. Our largest manufacturing and research and development facilities are located in the United States. We serve

our markets across the Americas with manufacturing facilities in the U.S., Mexico and Brazil. Operations in other Americas
segment countries focus primarily on sales and distribution in their respective home country markets.

International. Our International segment includes companies in Europe, Middle East, Africa, and the Asia Pacific region,

some of which are in developing regions of the world. In our largest International affiliates (in Germany, France, United
Kingdom, Ireland and China), we develop, manufacture and sell a wide variety of products. In China, the products
manufactured are sold primarily in the home country as well as regional markets. Operations in other International segment
countries focus primarily on sales and distribution in their respective home country markets. Although some of these
companies may perform limited production, most of their sales are of products manufactured in our plants in Germany, France,
the U.S., United Kingdom, Ireland and China or are purchased from third party vendors.

Corporate. The Corporate segment primarily consists of general and administrative expenses incurred in our corporate
headquarters, costs associated with corporate development initiatives, legal expense, interest expense, foreign exchange gains
or losses, and other centrally-managed costs. Corporate general and administrative costs comprise the majority of the expense
in the Corporate segment. During the years ended December 31, 2018, 2017 and 2016 corporate general and administrative
costs were $31.2 million, $37.6 million, and $38.9 million, respectively.

RESULTS OF OPERATIONS

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Net Sales

(In millions)
Consolidated
Americas

International

2018
$1,358.1

854.3

503.8

2017
$1,196.8

736.8

460.0

Dollar
Increase
$161.3

117.5

43.8

Percent
Increase
13.5%

15.9%

9.5%

Net Sales from continuing operations. Net sales for the year ended December 31, 2018 were $1.4 billion, an increase of $161
million, from $1.2 billion for the year ended December 31, 2017. Organic constant currency sales increased by 8.0% for the
year ended December 31, 2018, ahead of what we targeted for the year. As we start 2019, we are targeting mid-single digit
revenue growth. Please refer to the Net Sales table below for a reconciliation of the year over year sales change.

6783_10K_C1.pdf March 13, 2019 pg 22

Net Sales

(Percent Change)
GAAP reported sales change
Currency translation effects

Constant currency sales change

Acquisitions

Organic constant currency change

Year Ended December 31, 2018 versus December 31, 2017

Americas
15.9%

(1.1)%

17.0%

8.8%

8.2%

International
9.5%

Consolidated
13.5%

1.9%

7.6%

0.1%

7.5%

0.1%

13.4%

5.4%

8.0%

Note: Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of
the Company's underlying business performance. Organic constant currency sales change is calculated by removing the percentage impact
from acquisitions and currency translation effects from the overall percentage change in net sales.

Net sales for the Americas segment were $854.3 million for the year ended December 31, 2018, an increase of $117.5

million, or 16%, compared to $736.8 million for the year ended December 31, 2017. During 2018, constant currency sales in
the Americas segment increased 17% compared to 2017, driven primarily by the acquisition of Globe, which increased sales in
the Americas segment by 9% during the period. The 8% organic growth during 2018, was driven by growth throughout our
core product portfolio.

Net sales for the International segment were $503.8 million for the year ended December 31, 2018, an increase of $43.8

million, or 10%, compared to $460.0 million for the year ended December 31, 2017. During the year ended December 31,
2018, constant currency sales in the International segment increased 8% as we recognized stronger sales driven by growth
throughout our product portfolio.

Gross profit. Gross profit for the year ended December 31, 2018 was $611.9 million, an increase of $73.0 million, or 14%,
compared to $538.9 million for the year ended December 31, 2017. The ratio of gross profit to net sales was 45.1% in 2018
compared to 45.0% in 2017. The slightly higher gross profit ratio is attributable to improved price realization and improved
leverage on indirect costs, offset by inflationary pressures and dilution associated with a less favorable product mix from the
Globe acquisition. The impact of the Globe acquisition reduced the gross profit percentage by 1% or 100 basis points.

Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses were $324.8 million for
the year ended December 31, 2018, an increase of $24.7 million, or 8%, compared to $300.1 million for the year ended
December 31, 2017. The increase is related to increased SG&A expenses related to the Globe acquisition, higher variable
compensation cost due to stronger revenue, profitability and cash flow performance as well as higher selling and marketing
costs to invest resources in driving revenue growth. Selling, general and administrative expenses were 23.9% of net sales in
2018, compared to 25.1% of net sales in 2017. Please refer to the Selling, general and administrative expenses table for a
reconciliation of the year over year expense change.

Selling, general, and administrative expenses

Year Ended December 31, 2018 versus December 31, 2017

(Percent Change)
GAAP reported change
Less: Currency translation effects

Constant currency change

Less: Acquisitions and related strategic transaction costs

Organic constant currency change

Consolidated
8.2%
(1.0)%

9.2%
0.6%

8.6%

Note: Organic constant currency change is a non-GAAP financial measure provided by the Company to give a better understanding of the
Company's underlying business performance. Organic constant currency change in selling, general, and administrative expenses is calculated
by deducting the percentage impact from acquisitions and related strategic transaction costs as well as the currency translation effects from
the overall percentage change in selling, general, and administrative expense. Management believes excluding acquisitions and currency
translation effects provides investors with a greater level of clarity into spending levels on a year-over-year basis.

6783_10K_C1.pdf March 13, 2019 pg 23

Research and development expense. Research and development expense was $52.7 million for the year ended December 31,
2018, an increase of $2.6 million, or 5%, compared to $50.1 million for the year ended December 31, 2017. Research and
development expense was 3.9% of net sales in 2018, compared to 4.2% of net sales in 2017. We continue to develop new
products for global safety markets, including the newly unveiled M1 SCBA for which we began production at the end of 2018,
as well as the V Series product family of fall protection for the industrial market. During 2018, we capitalized $1.6 million of
software development costs. Please refer to Note 1—Significant Accounting Policies of the consolidated financial statements
in Part II Item 8 of this Form 10-K for additional information.

Restructuring, net of adjustments. During the year ended December 31, 2018, the Company recorded restructuring charges of
$13.2 million, primarily related to severance costs for staff reductions associated with our ongoing initiatives to drive profitable
growth in Europe and the legal and operational realignment of our U.S. and Canadian operations. This compared to charges of
$17.6 million during the year ended December 31, 2017, primarily related to non-cash special termination benefit expense of
$11.4 million for the voluntary retirement incentive package elected by certain employees in the Americas segment and
severance costs for staff reductions associated with our ongoing initiatives to drive profitable growth in Europe and right size
our operations in Australia and Africa. We expect to make progress on our International segment footprint rationalization
project in the first quarter of 2019. While these actions may drive noncash restructuring charges associated with the write-off of
cumulative currency translation, we expect these actions to drive a more efficient business model and are similar to the steps we
took to reduce our footprint and improve our efficiency in other areas of the International segment.

Currency exchange. Currency exchange losses were $2.3 million during the year ended December 31, 2018, compared to
losses of $5.1 million during the year ended December 31, 2017. Currency exchange losses in both years were related to
management of foreign currency exposure on unsettled intercompany balances. Refer to Note 17—Derivative Financial
Instruments of the consolidated financial statements in Part II Item 8 of this Form 10-K for information regarding our currency
exchange rate risk management strategy.

Other operating expense. Other operating expense during the year ended December 31, 2018 was $45.3 million and was
primarily related to an increase in our reserve for cumulative trauma product liability claims. That increase resulted from the
Company’s revision of its estimates of potential liability for cumulative trauma product liability claims as part of its annual
review process. This compared to Other operating expense during the year ended December 31, 2017 of $126.4 million. In the
fourth quarter of 2017, MSA LLC determined that a reasonable estimate of the liability for incurred but not reported ("IBNR")
cumulative trauma liability claims was $111.1 million as of December 31, 2017. MSA LLC recorded a total charge of $126.4
million before tax ($85.0 million after tax) during 2017 representing the estimated liability in excess of available insurance
coverage for both asserted and IBNR cumulative trauma product liability claims. Please refer to Note 19—Contingencies of the
consolidated financial statements in Part II Item 8 of this Form 10-K for additional information.

GAAP operating income. Consolidated operating income for the year ended December 31, 2018 was $173.5 million compared
to $39.6 million for the year ended December 31, 2017. The increase in operating results was primarily driven by higher sales
volumes, lower restructuring and other operating expense, partially offset by higher SG&A costs.

Adjusted operating income. Americas adjusted operating income for the year ended December 31, 2018 was $206.8 million,
an increase of $31.2 million, or 18%, compared to $175.6 million for the year ended December 31, 2017. The increase was
primarily related to the higher level of sales partially offset by higher SG&A costs as a result of higher variable compensation
cost due to stronger revenue performance, and higher selling and marketing costs to invest resources in driving revenue growth.

International adjusted operating income for the year ended December 31, 2018 was $59.9 million, an increase of $9.5

million, or 19%, compared to $50.4 million for the year ended December 31, 2017. The increase was primarily attributable to
higher sales volumes and improvements associated with our ongoing initiatives to right size our operations in Europe.

Corporate segment adjusted operating loss for the year ended December 31, 2018 was $31.9 million, an improvement of

$1.1 million, or 3%, compared to an operating loss of $33.0 million for the year ended December 31, 2017, reflecting lower
legal expenses.

6783_10K_C1.pdf March 13, 2019 pg 24

The following tables reconcile GAAP operating income to adjusted operating income (loss). Adjusted operating margin % is
calculated as adjusted operating income divided by net sales.

Adjusted operating income

(In thousands)
Net sales

GAAP operating income

Restructuring charges (Note 2)

Currency exchange losses, net

Other operating expense (Note 19)

Strategic transaction costs (Note 13)
Adjusted operating income (loss)

Adjusted operating margin %

Adjusted operating income

(In thousands)
Net sales
GAAP operating income

Restructuring charges (Note 2)
Currency exchange losses, net

Other operating expense (Note 19)

Strategic transaction costs (Note 13)

Adjusted operating income (loss)

Adjusted operating margin %

Year Ended December 31, 2018

Americas

International

Corporate

Consolidated

854,287

503,817

— $

1,358,104

173,479

13,247

2,330

45,327

421

206,839

59,866

(31,901) $

234,804

24.2%

11.9%

Year Ended December 31, 2017

Americas

International

Corporate

Consolidated

736,847

459,962

— $

1,196,809
39,577

17,632

5,127

126,432

4,225

175,589

50,391

(32,987) $

192,993

23.8%

11.0%

Note: Adjusted operating income is a non-GAAP financial measure used by the chief operating decision maker to evaluate segment
performance and allocate resources. Adjusted operating income is reconciled above to the nearest GAAP financial measure, Operating
income (loss) and excludes restructuring, currency exchange, other operating expense and strategic transaction costs.

Total other expense, net. Other expense for the year ended December 31, 2018 was $11.1 million, an increase of $1.3 million,
or 14%, compared to $9.8 million for the year ended December 31, 2017. The increase was related to higher interest expense
and the loss on extinguishment of debt which were only partially offset by higher interest income.

Income taxes. The reported effective tax rate for the the year ended December 31, 2018, was 22.9%, which included a benefit
of 1.6% for certain share-based payments related to the application of ASU 2016-09 09 as discussed in Note 1—Significant
Accounting Policies of the consolidated financial statements in Part II Item 8 of this Form 10-K and a charge of 1.1%
associated with to exit taxes related to our U.S., Canadian and European realignment. This compared to a reported effective tax
rate of 9.5% for the year ended December 31, 2017, which included a benefit of 28.0% for certain share-based payments related
to the adoption of ASU 2016-09 and a benefit of 8.4% associated with the reduction of exit taxes related to our European
reorganization. The remaining effective tax rate change was primarily due to the decrease in the U.S. federal statutory rate and
benefits associated with the foreign provisions of U.S. tax reform, partially offset by the increased profitability in less favorable
tax jurisdictions, higher entity losses in jurisdictions where we cannot take tax benefits and reduced manufacturing deduction
benefits.

During 2018, the Company recorded $1.8 million of foreign income tax reserves related to the legal and operational

realignment of our U.S., Canadian and European operations.

On December 22, 2017, SAB 118 was issued to address the application of U.S. GAAP in situations when a registrant does

not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain
income tax effects of the Act. In accordance with SAB 118, the Company calculated its best estimate of the impact of the Act
and recorded income tax expense of $19.8 million during the fourth quarter of 2017. At December 31, 2018, the Company has
now completed its accounting for all of the enactment-date income tax effects of the Act. Accordingly, we reduced our estimate
for the one-time transition tax by $2.0 million and increased our estimate for the revaluation of U.S. deferred tax assets and
liabilities by $2.5 million and a $2.0 million increase associated with prepaid taxes for updated regulations related to the Act.

6783_10K_C1.pdf March 13, 2019 pg 25

Net income from continuing operations attributable to MSA Safety Incorporated. Net income from continuing operations
was $124.2 million for the year ended December 31, 2018, or $3.18 per diluted share, compared to $26.0 million, or $0.67 per
diluted share, for the year ended December 31, 2017 as a result of the factors described above.

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Net Sales

(In millions)
Consolidated Continuing Operations
Americas

International

2017
$1,196.8

736.8

460.0

2016
$1,149.5

678.4

471.1

Dollar
Increase
(Decrease)
$47.3

58.4

(11.1)

Percent
Increase
(Decrease)
4.1%

8.6%

(2.4)%

Net Sales from continuing operations. Net sales for the year ended December 31, 2017, were $1,196.8 million, an increase of
$47.3 million, from $1,149.5 million for the year ended December 31, 2016. Organic constant currency sales decreased by 1%
for the year ended December 31, 2017. Please refer to the Net Sales from Continuing Operations table below for a
reconciliation of the year over year sales change.

Net Sales from Continuing Operations

Year Ended December 31, 2017 versus December 31, 2016

(Percent Change)
GAAP reported sales change
Currency translation effects

Constant currency sales change

Acquisitions and related strategic transaction costs

Organic constant currency change

Americas

International

8.6%

0.3%

8.3%

6.9%

1.4%

(2.4)%

1.5%

(3.9)%

0.7%

(4.6)%

Consolidated
Continuing
Operations
4.1%

0.8%

3.3%

4.3%

(1.0)%

Note: Organic constant currency sales change is a non-GAAP financial measure provided by the Company to give a better understanding of
the Company's underlying business performance. Organic constant currency sales change is calculated by removing the percentage impact
from acquisitions and related strategic transaction costs as well as currency translation effects from the overall percentage change in net sales.

Net sales for the Americas segment were $736.8 million for the year ended December 31, 2017, an increase of $58.4
million, or 9%, compared to $678.4 million for the year ended December 31, 2016. During 2017, constant currency sales in the
Americas segment increased 8% compared to the prior year period, driven primarily by the acquisition of Globe on July 31,
2017, which provided a 7% increase in sales. We also saw growth in head protection and fall protection on improving
conditions in industrial markets. These increases were partially offset by a lower level of shipments of self-contained breathing
apparatus ("SCBA"). At December 31, 2017, we entered 2018 with a strong pipeline of business secured in the fire service
market as the fourth quarter order book for SCBA reflected our highest incoming order total of this entire replacement cycle.

Net sales for the International segment were $460.0 million for the year ended December 31, 2017, a decrease of $11.1

million, or 2%, compared to $471.1 million for the year ended December 31, 2016. Constant currency sales in the International
segment decreased 4% during 2017, primarily due to a lower volume of non-core military helmet sales in Europe as well as less
breathing apparatus, fall protection, and portable instruments sales across the segment. These decreases were partially offset by
a higher volume of FGFD sales in the Middle East and head protection across the segment.

Gross profit. Gross profit for the year ended December 31, 2017, was $538.9 million, an increase of $16.6 million, or 3%,
compared to $522.2 million for the year ended December 31, 2016. The ratio of gross profit to net sales was 45.0% in 2017
compared to 45.4% in 2016. The slightly lower gross profit ratio during 2017 is primarily attributable to lower product margins
from our Globe acquisition mostly offset by improved margins across many of our core products.

Selling, general and administrative expenses. Selling, general and administrative expenses were $300.1 million for the year
ended December 31, 2017, a decrease of $8.2 million, or 3%, compared to $308.2 million for the year ended December 31,
2016. Selling, general and administrative expenses were 25.1% of net sales in 2017 compared to 26.8% of net sales in 2016.
Excluding acquisitions and related strategic transaction costs of $9.9 million, organic constant currency selling, general and
administrative expenses decreased 6%, or $16.3 million, in the current period exceeding our $10 million full year savings
target. Lower payroll expense, variable compensation expense and corporate legal costs were key drivers of cost savings. The
following table presents a reconciliation of the year over year expense change for selling, general, and administrative expenses.

6783_10K_C1.pdf March 13, 2019 pg 26

Selling, general, and administrative expenses

(Percent Change)
GAAP reported change
Currency translation effects

Constant currency change

Acquisitions and related strategic transaction costs

Organic constant currency change

Year Ended
December 31, 2017 versus December 31, 2016

Consolidated Continuing Operations
(2.7)%

0.8%

(3.5)%

2.0%

(5.5)%

Note: Organic constant currency change is a non-GAAP financial measure provided by the Company to give a better understanding of the
Company's underlying business performance. Organic constant currency change in selling, general, and administrative expenses is calculated
by removing the percentage impact from acquisitions and related strategic transaction costs as well as currency translation effects from the
overall percentage change in GAAP selling, general, and administrative expense. Management believes excluding acquisitions and currency
translation effects provide investors with a greater level of clarity into spending levels on a year-over-year basis.

Research and development expense. Research and development expense was $50.1 million for the year ended December 31,
2017, an increase of $3.3 million, or 7%, compared to $46.8 million for the year ended December 31, 2016. Research and
development expense was 4.2% of net sales in 2017, compared to 4.1% of net sales in 2016.

Restructuring charges. During the year ended December 31, 2017, the Company recorded restructuring charges of $17.6
million, primarily related to the voluntary retirement incentive package discussed below as well as to severance costs for staff
reductions associated with our ongoing initiatives to drive profitable growth in Europe and right size our operations in Australia
and Africa. This compared to charges of $5.7 million during the year ended December 31, 2016, primarily related to severance
costs for staff reductions associated with ongoing initiatives to right size our operations in Europe, Brazil, and Japan.

In September 2016, certain employees in the Americas segment were offered a voluntary retirement incentive package

(“VRIP”). The election window for participation closed on October 17, 2016. The employees were required to render service
through January 31, 2017, to receive the VRIP and had until February 6, 2017, to revoke their election. None of the 83
employees who accepted the VRIP revoked their election to retire under the terms of the plan. Non-cash special termination
benefit expense of $11.4 million was incurred in the first quarter of 2017 related to these elections. All benefits were paid from
our over funded North America pension plan.

Currency exchange. Currency exchange losses were $5.1 million during the year ended December 31, 2017, compared to $0.8
million during the year ended December 31, 2016. Currency exchange losses in both years were mostly unrealized and related
primarily to the effect of the strengthening U.S. dollar on intercompany balances. Refer to Note 17—Derivative Financial
Instruments of the consolidated financial statements in Part II Item 8 of this Form 10-K for information regarding our currency
exchange rate risk management strategy.

Other operating expense. Other operating expense during the year ended December 31, 2017, was $126.4 million. In August
2017, MSA LLC agreed to resolve certain asserted cumulative trauma product liability claims. This charge is related to legacy
products designed, manufactured and sold years ago and are not currently sold by the Company. Additionally, in the fourth
quarter of 2017, MSA LLC determined that a reasonable estimate of the liability for incurred but not reported ("IBNR")
cumulative trauma liability claims is $111.1 million as of December 31, 2017. MSA LLC recorded a total charge of $126.4
million before tax ($85.0 million after tax) representing the estimated liability in excess of available insurance coverage for
both asserted and IBNR cumulative trauma liability claims. Cumulative trauma product liability claims incurred in the year
ended December 31, 2016 were covered by insurance. Please refer to Note 19—Contingencies of the consolidated financial
statements in Part II Item 8 of this Form 10-K for additional information.

GAAP operating income. Consolidated operating income for the year ended December 31, 2017, was $39.6 million compared
to $160.7 million for the year ended December 31, 2016. The reduction in operating income was primarily driven by the Other
operating expense and restructuring charges associated with the voluntary retirement incentive package, partially offset by
lower selling, general, and administrative expenses resulting from our cost reduction programs as discussed above.

Adjusted operating income. Americas adjusted operating income for the year ended December 31, 2017, was $175.6 million,
an increase of $21.3 million, or 14%, compared to $154.3 million for the year ended December 31, 2016. The improvement
was driven by higher sales volumes and lower selling, general and administrative costs resulting from effective cost
management. Additionally, we continued to see strength in gross margins during 2017 from improvements in margins across
many of our core products.

6783_10K_C1.pdf March 13, 2019 pg 27

International adjusted operating income for the year ended December 31, 2017 was $50.4 million, a decrease of $1.1
million, or 2%, compared to $51.5 million for the year ended December 31, 2016. The decrease in adjusted operating income is
primarily attributable to lower sales volumes.

Corporate segment adjusted operating loss for the year ended December 31, 2017, was $33.0 million, a decrease of $3.1

million, or 9%, compared to an operating loss of $36.1 million for the year ended December 31, 2016, reflecting lower legal
expenses and variable compensation expense partially offset by higher stock compensation and corporate development
expenses.

The following table reconciles GAAP operating income to adjusted operating income. Adjusted operating margin % is
calculated as adjusted operating income divided by net sales.

Adjusted operating income

Year Ended December 31, 2017

(In thousands)
Net sales

GAAP operating income

Restructuring charges (Note 2)

Currency exchange losses, net
Other operating expense (Note 19)

Strategic transaction costs (Note 13)
Adjusted operating income

Adjusted operating margin %

Americas

International

Corporate

Consolidated
Continuing
Operations

736,847

459,962

— $

1,196,809

39,577

17,632

5,127
126,432

4,225

192,993

175,589

50,391

(32,987)

23.8%

11.0%

Adjusted operating income

Year Ended December 31, 2016

(In thousands)
Net sales

GAAP operating income

Restructuring and other charges

Currency exchange losses, net

Strategic transaction costs (Note 13)

Adjusted operating income

Adjusted operating margin %

Americas

International

Corporate

Consolidated
Continuing
Operations

678,433

471,097

— $

1,149,530

160,702

5,694

766

2,531

154,298

51,490

(36,095)

169,693

22.7%

10.9%

Note: Adjusted operating income (loss) is a non-GAAP financial measure used by the chief operating decision maker to evaluate segment
performance and allocate resources. Adjusted operating income (loss) is reconciled above to the nearest GAAP financial measure, Operating
income (loss) and excludes restructuring, currency exchange, other operating expense and strategic transaction costs.

Total other expense, net. Other expense for the year ended December 31, 2017, was $9.8 million, an increase of $1.0 million,
or 12%, compared to $8.8 million for the year ended December 31, 2016.

Income taxes. The reported effective tax rate for the year ended December 31, 2017, was 9.5%, which included a benefit of
28.0% for certain share-based payments related to the adoption of ASU 2016-09 as discussed in Note 1—Significant
Accounting Policies of the consolidated financial statements in Part II Item 8 of this Form 10-K and a benefit of 8.4%
associated with the reduction of exit taxes related to our European reorganization as well as benefits related to higher
profitability in more favorable tax jurisdictions and additional manufacturing deduction benefits. The unfavorable effects of
U.S. tax reform partially offset these benefits. The reported effective tax rate for the year ended December 31, 2016, was
38.1%, inclusive of 4.3% associated with exit taxes related to our European reorganization. The remaining effective tax rate
change was primarily due to additional manufacturing deduction benefits and the release of a valuation allowance on foreign
losses.

The Tax Cuts and Jobs Act of 2017 ("the Act"), which was signed into law on December 22, 2017, resulted in significant
changes to the U.S. corporate income tax system including reducing the U.S. corporate rate to 21% starting in 2018. The Act
also created a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries.
28

6783_10K_C1.pdf March 13, 2019 pg 28

The Company finalized its European reorganization during 2016. The reorganization was designed to drive optimal

performance by aligning certain strategic planning and decision making into a single location enabled by a common IT
platform. During the year ended December 31, 2017, the Company had a benefit due to the reduction of $2.5 million of
charges associated with exit taxes related to our European reorganization, compared to expense of $6.5 million for the year
ended December 31, 2016.

In October 2016, the FASB issued ASU 2016-16, Intra-entity Transfers of Assets Other than Inventory. This ASU states

that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the
transfer occurs. We early adopted this ASU on January 1, 2017 using the modified retrospective approach which resulted in a
$6.2 million cumulative-effect adjustment directly to retained earnings during the year ended December 31, 2017, for any
previously deferred income tax effects.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which we

adopted effective January 1, 2017. From an income tax perspective, this ASU requires that all excess tax benefits and
deficiencies that pertain to share-based payment arrangements be recognized as a component of income tax expense rather than
as a component of additional paid-in-capital. We expect this to create volatility in the effective tax rate on a go-forward basis as
the impact is treated as a discrete item within our quarterly tax provision. The adoption of this standard resulted in an $8.3
million tax benefit during the year ended December 31, 2017.

Please refer to Note 1—Significant Accounting Policies of the consolidated financial statements in Part II Item 8 of this

Form 10-K for additional information regarding the two standards adopted.

Net income from continuing operations attributable to MSA Safety Incorporated. Net income from continuing operations
was $26.0 million for the year ended December 31, 2017, or $0.67 per diluted share, compared to $92.7 million, or $2.44 per
diluted share, for the year ended December 31, 2016, as a result of the factors described above.

Net loss from discontinued operations attributable to MSA Safety Incorporated. Net loss from discontinued operations was
$0.8 million, or $0.02 per diluted share, for the year ended December 31, 2016. Please refer to Note 20—Discontinued
Operations of the consolidated financial statements in Part II Item 8 of this Form 10-K for additional information.

Non-GAAP Financial Information

We may provide information regarding organic constant currency changes, financial measures excluding the impact of
acquisitions and related strategic transaction costs, adjusted operating income, and adjusted operating margin percentage, which
are not recognized terms under U.S. GAAP and do not purport to be alternatives to net sales, selling, general and administrative
expense, operating income or net income as a measure of operating performance. We believe that the use of these non-GAAP
financial measures provide investors with additional useful information and provide a more complete understanding of the
underlying results. Because not all companies use identical calculations, these presentations may not be comparable to
similarly titled measures from other companies. For more information about these non-GAAP measures and a reconciliation to
the nearest GAAP measure, please refer to the reconciliations referenced above in Management's Discussion & Analysis section
and in Note 7—Segment Information of the consolidated financial statements in Part II Item 8 of this Form 10-K.

We may also provide financial information on a constant currency basis, which is a non-GAAP financial measure. These

references to a constant currency basis do not include operational impacts that could result from fluctuations in foreign
currency rates, which are outside of management's control. To provide information on a constant currency basis, the applicable
financial results are adjusted by translating current and prior period results in local currency to a fixed foreign exchange rate.
This approach is used for countries where the functional currency is the local country currency. This information is provided so
that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby facilitating
period-to-period comparisons of business performance. Constant currency information is not recognized under U.S. GAAP and
it is not intended as an alternative to U.S. GAAP measures.

6783_10K_C1.pdf March 13, 2019 pg 29

LIQUIDITY AND CAPITAL RESOURCES

Our main source of liquidity is operating cash flows, supplemented by borrowings. Our principal liquidity requirements
are for working capital, capital expenditures, principal and interest payments on debt, dividend payments, and acquisitions. At
December 31, 2018, approximately 32% of our long-term debt is at fixed interest rates with repayment schedules through 2031.
The remainder of our long-term debt is at variable rates on an unsecured revolving credit facility that is due in 2023. At
December 31, 2018, approximately 79% of our borrowings are denominated in US dollars, which limits our exposure to
currency exchange rate fluctuations.

At December 31, 2018, we had cash, cash equivalents and restricted cash totaling $140.6 million, which included $93.6

million of cash and cash equivalents held by our foreign subsidiaries. Cash, cash equivalents and restricted cash increased $2.7
million during the year ended December 31, 2018, compared to an increase of $22.9 million during 2017 and an increase of
$6.6 million during 2016. During the year ended December 31, 2018, we repatriated $96 million of cash from our foreign
affiliates. While cash repatriation allows us to tap into our offshore cash more efficiently, our business continues to generate
strong cash flow, and this improvement in cash flow has enabled us to continue to fund our dividend and de-lever. In July
2018, we reached a settlement on the disputed portion of our insurance receivable as discussed in Note 19—Contingencies to
the consolidated financial statements in Part II Item 8 of this Form 10-K. The settlement ensured collection of the full amount
of the insurance receivable that was previously subject to litigation. Payment was received in the third quarter of 2018. We
plan to continue to employ a balanced capital allocation strategy that prioritizes growth investments, funding our dividend and
servicing debt obligations.

Our unsecured senior revolving credit facility provides for borrowings up to $600.0 million through 2023 and is subject to

certain commitment fees. This credit facility has sub-limits for the issuance of letters of credit, swingline borrowings and
foreign currency denominated borrowings; and may be used for general corporate purposes, including working capital,
permitted acquisitions, capital expenditures and repayment of existing indebtedness. Loans under the revolving facility will
bear interest at a variable rate based on LIBOR or the federal funds rate at the Company's option. Our weighted average
interest rate was 3.47% in 2018. At December 31, 2018, $363.5 million of the $600.0 million senior revolving credit facility
was unused, including letters of credit.

The Company currently has access to approximately $514.0 million of capital at December 31, 2018. Refer to Note 11—

Short and Long-Term Debt to the consolidated financial statements in Part II Item 8 of this Form 10-K.

Operating activities. Operating activities provided cash of $263.9 million in 2018, compared to providing cash of $230.3

million in 2017. The increase in operating cash flows during the period was primarily attributable to higher net income and
improved working capital during the period as we improved inventory management in the fourth quarter. These improvements
were partially offset by decreased insurance receivable collections, net of product liability payments. We collected $40.1
million from insurance companies, net of product liability settlements paid, in the year ended December 31, 2018, while we
collected $62.6 million from insurance companies, net of product liability settlements paid, in the same period of 2017.
Historically, cumulative trauma liability payments were funded with the Company's operating cash flow, pending resolution of
disputed insurance coverage. For more than a decade, we have funded product liability settlements from operating cash flow.
The vast majority of the insurance receivable and notes receivable - insurance companies balances at December 31, 2018 is
attributable to reimbursement believed to be due under the terms of signed agreements with insurers and are not currently
subject to litigation. While the timing of cash flows for product liability and insurance receivable can and do vary from quarter
to quarter, we have been successful in establishing cash flow streams that have allowed us to fund these liabilities without a
material impact on our capital allocation priorities.

Operating activities provided cash of $230.3 million in 2017, compared to providing cash of $134.9 million in 2016. The

increase in operating cash flows during the period was primarily attributable to higher insurance receivable collections. We
collected $62.6 million from insurance companies, net of product liability settlements paid, in the year ended December 31,
2017, while we paid $27.5 million of settlements, net of collections from insurance companies, in the same period of 2016.

Subsequent to filing a Form 8-K including a Press Release dated February 20, 2019 announcing financial results for the
quarter and full year ended December 31, 2018, the Company identified an adjustment to its Consolidated Statement of Cash
Flows which reduced capital expenditures in investing activities and increased cash outflow from other noncurrent assets and
liabilities in operating activities by $2.9 million.

Investing activities. Investing activities used cash of $84.4 million for the year ended December 31, 2018, compared to

using $239.2 million in 2017. Purchase of short-term investments and capital expenditures drove cash outflows from investing
activities during the year ended December 31, 2018 while the acquisition of Globe drove cash outflows from investing in the
same period in 2017. During 2018 we spent $34 million on capital expenditures and expect to spend approximately $35 million
in 2019.

6783_10K_C1.pdf March 13, 2019 pg 30

Investing activities used cash of $239.2 million for the year ended December 31, 2017, compared to using $25.5 million
in 2016. The acquisition of Globe drove cash outflows from investing activities during 2017. Refer to Note 13—Acquisitions
to the consolidated financial statements in Part II Item 8 of this Form 10-K for additional information on the Globe acquisition.
The sale of our South African personal protective equipment distribution business and its Zambian operations offset by capital
expenditures and the acquisition of Senscient drove cash outflows from investing activities during 2016. Refer to Note 20—
Discontinued Operations to the consolidated financial statements in Part II Item 8 of this Form 10-K for a discussion of
discontinued operations.

Financing activities. Financing activities used cash of $163.3 million for the year ended December 31, 2018, compared

to providing cash of $25.6 million in 2017. During 2018, we had net payments on long-term debt of $107.7 million. This
compared to net proceeds of $77.2 million in the same period in 2017 to finance the acquisition of Globe.

We made dividend payments of $57.2 million during 2018, compared to $52.5 million during 2017. Dividends paid on
our common stock during 2018 were $1.49 per share. Dividends paid on our common stock in 2017 and 2016 were $1.38 and
$1.31 per share, respectively.

In August 2018, we repaid our 5.41% 2006 Senior Notes in the amount of $28.0 million, which included $1.5 million

related to a make-whole provision and accrued interest through the date of repayment.

Restricted cash balances were $0.5 million at December 31, 2018 compared to $3.6 million at December 31, 2017 and

were primarily used to support letter of credit balances.

The MSA Board of Directors has authorized the Company to repurchase up to $100.0 million in shares of MSA common
stock. There were no share repurchases in 2018 or 2016 and $11.8 million in repurchases made in 2017. The program seeks to
offset equity dilution associated with employee stock compensation. The Board of Directors did not set a time limitation on the
repurchase program.

Financing activities provided cash of $25.6 million for the year ended December 31, 2017, compared to using cash of
$99.3 million in 2016. During 2017, we had net proceeds from long-term debt of $77.2 million to finance the acquisition of
Globe. This compared to net payments of $60.9 million in the same period in 2016.

CUMULATIVE TRANSLATION ADJUSTMENTS

The year-end position of the U.S. dollar relative to international currencies resulted in a translation loss of $29.8 million
being recorded to cumulative translation adjustments for the year ended December 31, 2018. This compares to gains of $38.4
million in 2017 and losses of $25.9 million in 2016. The translation loss in 2018 was primarily related to the strengthening of
the U.S. dollar relative to the euro and British pound. The translation gain in 2017 was primarily related to the weakening of
the U.S. dollar against the euro, British pound and Mexican peso. The translation loss in 2016 was primarily related to the
strengthening of the U.S. dollar against the British pound, Mexican peso, Argentine peso, euro, and Brazilian real.

6783_10K_C4.pdf 31 March 20, 2019

COMMITMENTS AND CONTINGENCIES

We are obligated to make future payments under various contracts, including debt and lease agreements. Our significant

cash obligations as of December 31, 2018 are as follows:

(In millions)
Long-term debt

Operating leases

Transition tax

Totals

Total

2019

2020

2021

2022

2023

Thereafter

363.2

33.6

6.7

403.5

20.0

11.2

—

31.2

20.0

— $

241.2

7.9

0.1

28.0

6.1

0.8

26.9

3.8

1.5

5.3

2.6

1.9

245.7

62.0

2.0

2.4

66.4

The significant obligations table does not include obligations to taxing authorities due to uncertainty surrounding the

ultimate settlement of amounts and timing of these obligations.

We expect to meet our 2019 and 2020 debt service obligations through cash provided by operations. Approximately
$233.5 million of debt payable in 2023 relates to our unsecured senior revolving credit facility. We expect to generate sufficient
operating cash flow to make payments against this amount each year. To the extent that a balance remains when the facility
matures in 2023, we expect to refinance the remaining balance through new borrowing facilities. Interest expense on fixed rate
debt over the next five years is expected to be approximately $4.8 million in 2019, $4.0 million in 2020, $3.2 million in 2021,
$2.5 million in 2022, and $2.3 million in 2023.

The Company had outstanding bank guarantees and standby letters of credit with banks as of December 31, 2018 totaling
$11.4 million, of which $3.1 million relate to the senior revolving credit facility. These letters of credit serve to cover customer
requirements in connection with certain sales orders and insurance companies. No amounts were drawn on these arrangements
at December 31, 2018. The Company is also required to provide cash collateral in connection with certain arrangements. At
December 31, 2018, the Company has $0.5 million of restricted cash in support of these arrangements.

We expect to make net contributions of $7.1 million to our pension plans in 2019 which are primarily associated with our

International segment. We have not been required to make contributions to our U.S. based qualified defined benefit pension
plan in many years.

We have purchase commitments for materials, supplies, services and property, plant and equipment as part of our ordinary

conduct of business.

Please refer to Note 19 to the consolidated financial statements in Part II Item 8 of this Form 10-K for further discussion

on the Company's product liabilities.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles

(GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and the related disclosures. We evaluate these estimates and judgments on
an on-going basis based on historical experience and various assumptions that we believe to be reasonable under the
circumstances. However, different amounts could be reported if we had used different assumptions and in light of different facts
and circumstances. Actual amounts could differ from the estimates and judgments reflected in our consolidated financial
statements. A summary of the Company's significant accounting policies is included in Note 1—Significant Accounting Policies
to the consolidated financial statements in Part II, Item 8 of this Form 10-K.

We believe that the following are the more critical judgments and estimates used in the preparation of our consolidated

financial statements.

Accounting for contingencies. We accrue for contingencies when we believe that it is probable that a liability or loss has
been incurred and the amount can be reasonably estimated. Contingencies relate to uncertainties that require our judgment both
in assessing whether a liability or loss has been incurred and in estimating the amount of the probable loss. Significant
contingencies affecting our consolidated financial statements include pending or threatened litigation, including product
liability claims and product warranties.

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

6783_10K_C1.pdf March 13, 2019 pg 32

Single incident product liability claims involve incidents of short duration that are typically known when they occur and
involve observable injuries, which provide an objective basis for quantifying damages. The Company estimates its liability for
single incident product liability claims based on expected settlement costs for asserted single incident product liability claims
and an estimate of costs for single incident product liability claims incurred but not reported ("IBNR"). Single incident product
liability exposures are evaluated on an annual basis, or more frequently if changing circumstances warrant. Adjustments are
made to the reserve as appropriate.

Cumulative trauma product liability claims involve 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. MSA LLC's combined cumulative trauma product liability reserve consists of
its liability for asserted cumulative trauma product liability claims not yet resolved and for IBNR cumulative trauma product
liability claims. Management works with outside legal counsel quarterly to review and assess MSA LLC's exposure to asserted
cumulative trauma product liability claims not yet resolved. In addition, in connection with finalizing and reporting the
Company's results of operations, management works annually (unless significant changes in trends or new developments
warrant an earlier review) with an outside valuation consultant and outside legal counsel to review MSA LLC's exposure to
asserted cumulative trauma product liability claims not yet resolved and IBNR cumulative trauma product liability claims. The
review process for asserted cumulative trauma product liability claims not yet resolved takes into account available facts for
those claims including the number and composition of such claims, outcomes of matters resolved during current and prior
periods, and variances associated with different groups of claims, plaintiffs' counsel, and venues, as well as any other relevant
information. The review process for IBNR claims involves a number of key judgments and assumptions, including as to the
number and types of claims that may be asserted, the period in which claims may be asserted and resolved, the percentage of
claims that may be dismissed without payment, the average cost to resolve claims on which a payment is made, the manner in
which MSA LLC will defend claims, and the medical and legal environments that will be applicable to the assertion,
evaluation, and resolution of claims in the future.

Additional information respecting MSA LLC’s product liability claims and the accounting for such claims in the
Company’s Consolidated Financial Statements, including estimated liabilities accrued on account of such claims, is contained
in Note 19—Contingencies to the consolidated financial statements in Part II Item 8 of this Form 10-K.

Insurance receivable. In the normal course of business, the Company makes payments to settle product liability claims
and for related defense costs and records receivables for the estimated amounts that are covered by insurance. Various factors
could affect the timing and amount of recovery of the insurance receivable balances, including the terms of the settlement
agreements reached with the insurers, assumptions regarding various aspects of the composition of future claims (which are
relevant to calculating reimbursement under the terms of certain Coverage-In-Place Agreements), the financial ability of the
insurance carriers to pay the claims, and the advice of MSA LLC's outside legal counsel. As a result, MSA LLC is now largely
self-insured for costs associated with cumulative trauma product liability claims. Most of MSA LLC's cumulative trauma
product liability costs are now expensed without the expectation of insurance reimbursement.

Income taxes. We recognize deferred tax assets and liabilities using enacted tax rates to record the tax effect of temporary
differences between the book and tax basis of recorded assets and liabilities. We record valuation allowances to reduce deferred
tax assets to the amounts that we estimate are probable to be realized. When assessing the need for valuation allowances, we
consider projected future taxable income and prudent and feasible tax planning strategies. Should a change in circumstances
lead to a change in our judgments about the realizability of deferred tax assets in future years, we adjust the related valuation
allowances in the period that the change in circumstances occurs. We had valuation allowances of $5.0 million and $4.6 million
at December 31, 2018 and 2017, respectively.

We record an estimated income tax liability based on our best judgment of the amounts likely to be paid in the various tax

jurisdictions in which we operate. We record tax benefits related to uncertain tax positions taken or expected to be taken on a
tax return when such benefits meet a more likely than not threshold. We recognize interest related to unrecognized tax benefits
in interest expense and penalties in operating expenses. The tax liabilities ultimately paid are dependent on a number of factors,
including the resolution of tax audits, and may differ from the amounts recorded. Tax liabilities are adjusted through income
when it becomes probable that the actual liability differs from the amount recorded.

The Company elected to treat Global Intangible Low Taxed Income (“GILTI”), which was effective in 2018 for the

Company, as a period cost.

6783_10K_C1.pdf March 13, 2019 pg 33

The Tax Cuts and Jobs Act of 2017 (“the Act”), which was signed into law on December 22, 2017 has resulted in

significant changes to the U.S. corporate income tax system. In accordance with SAB 118, the Company calculated its best
estimate of the impact of the Act and recorded income tax expense of $19.8 million during the fourth quarter of 2017. At
December 31, 2018, the Company has now completed its accounting for all of the enactment-date income tax effects of the Act.
Accordingly, we reduced our estimate for the one-time transition tax by $2.0 million and increased our estimate for the
revaluation of U.S. deferred tax assets and liabilities by $2.5 million and a $2.0 million increase associated with prepaid taxes.

Please refer to Note 9—Income Taxes to the consolidated financial statements in Part II Item 8 of this Form 10-K for

additional information on the Act.

Pensions and other post-retirement benefits. We sponsor certain pension and other post-retirement benefit plans.
Accounting for the net periodic benefit costs and credits for these plans requires us to estimate the cost of benefits to be
provided well into the future and to attribute these costs over the expected work life of the employees participating in these
plans. These estimates require our judgment about discount rates used to determine these obligations, expected returns on plan
assets, rates of future compensation increases, rates of increase in future health care costs, participant withdrawal and mortality
rates and participant retirement ages. Differences between our estimates and actual results may significantly affect the cost of
our obligations under these plans and could cause net periodic benefit costs and credits to change materially from year-to-year.
Discount rates and plan asset valuations are point-in-time measures. The discount rate assumptions used in determining
projected benefit obligations for a majority of our U.S. and foreign plans were based on the spot rate method at December 31,
2018. The remaining plans' discount rate assumptions are based on published long-term bond indices or a company-specific
yield curve model.

We recognize, as of a measurement date, any unrecognized actuarial net gains or losses that exceed 10% of the larger of
the projected benefit obligations or the plan assets, defined as the "corridor." Amounts inside the corridor are amortized over
the plan participants' life expectancy. Expected returns on plan assets are based on our historical returns by asset class.

Please refer to Note 14 to the consolidated financial statements in Part II Item 8 of this Form 10-K for additional
information on the spot rate method and further details on the funded status of our pension and post-retirement benefit plans.

The following table summarizes the impact of changes in significant actuarial assumptions on our December 31, 2018

actuarial valuations.

(In thousands)
(Decrease) increase in net benefit cost

(Decrease) increase in projected benefit obligation

Increase (decrease) in funded status

Impact of Changes in Actuarial Assumptions

Change in Discount
Rate

Change in Expected
Return

Change in Market Value
of Assets

(1)%

(5)%

$ (6,954) $
(63,870)
63,870

8,897

$ (4,612) $

4,612

$ (1,026) $

986

78,469
(78,469)

—

22,156

—
(22,156)

Stock Compensation. We sponsor both a Management and a Non-Employee Directors' Equity Incentive plan which

provide for grants of stock options, restricted stock and other equity-based vehicles such as restricted stock units and
performance stock units; all of which are recognized as compensation expense based on grant date fair value. Except for
retirement-eligible participants, for whom there is no requisite service period, this expense is recognized ratably over the
requisite service periods following the date of grant. For retirement-eligible participants, all expense is recognized at the grant
date. Stock options are valued using the Black-Scholes option pricing model. Performance stock units that have a market
condition are valued on the grant date using a Monte Carlo simulation valuation model. We believe these valuation models are
appropriate for use based on the nature of the awards and are consistent with models used by our peer companies. Please refer
to Note 10—Stock Plans to the consolidated financial statements in Part II Item 8 of this Form 10-K for further details on the
assumptions used in these valuation models.

6783_10K_C1.pdf March 13, 2019 pg 34

Revenue Recognition. We generate revenue primarily from manufacturing and selling a comprehensive line of safety

products to protect the health and safety of workers and facility infrastructures around the world in the oil, gas and
petrochemical, fire service, construction, utilities and mining industries. Our core safety products include fixed gas and flame
detection instruments, breathing apparatus where SCBA is the principal product, portable gas detection instruments, industrial
head protection products, firefighter helmets & protective apparel and fall protection devices. Our customers generally fall into
two categories: distributors and industrial or military end-users. In our Americas segment, approximately 75% to 85% of our
sales are made through distributors. In our International segment, approximately 55% to 65% of our sales are made through
distributors. The underlying principles of revenue recognition are identical for both categories of customers and revenue is
generally recognized at a point in time as described below.

Revenue from the sale of products is recognized when there is persuasive evidence of an arrangement and control passes
to the customer, which generally occurs either when product is shipped to the customer or, in the case of most U.S. distributor
customers, when product is delivered to the distributor's delivery site. We establish our shipping terms according to local
practice and market characteristics. We do not ship product unless we have an order or other documentation authorizing
shipment to our customers. Our payment terms vary by the type and location of our customer and the products offered. The
term between invoicing and when payment is due is not significant.

Refer to Note 7—Segment Information to the consolidated financial statements in Part II Item 8 of this Form 10-K for
disaggregation of revenue by segment and product group, as we believe this best depicts how the nature, amount, timing and
uncertainty of our revenue and cash flows are affected by economic factors.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing
services. Amounts billed and due from our customers are classified as receivables on the consolidated balance sheet. We make
appropriate provisions for uncollectible accounts receivable which have historically been insignificant in relation to our net
sales. Certain contracts with customers, primarily distributor customers, have an element of variable consideration that is
estimated when revenue is recognized under the contract to the extent that it is material to the individual contract. Variable
consideration includes volume incentive rebates, performance guarantees, price concessions and returns. Rebates are based on
achieving a certain level of purchases and other performance criteria that are documented in established distributor programs.
These rebates are estimated based on projected sales to the customer and accrued as a reduction of net sales as they are earned
by the customer. The rebate accrual is reviewed monthly and adjustments are made as the estimate of projected sales changes.
Product returns, including an adjustment for restocking fees if it is material, are estimated based on historical return experience
and revenue is adjusted. Sales, value add and other taxes collected with revenue-producing activities and remitted to
governmental authorities are excluded from revenue.

Depending on the terms of the arrangement, we may defer revenue for which we have a future obligation, including

training and extended warranty and technical services, until such time that the obligation has been satisfied. We use an
observable price, or a cost plus margin approach when one is not available, to determine the stand-alone selling price for
separate performance obligations. We have elected to recognize the cost for shipping and handling as an expense when control
of the product has passed to the customer. These costs are included within the Cost of Products Sold line on the Consolidated
Statement of Income. Amounts billed to customers for shipping and handling are included in net sales.

We typically receive interim milestone payments under certain contracts, including our fixed gas and flame detection
projects, as work progresses. For some of these contracts, we may be entitled to receive an advance payment. Revenue for
these contracts is generally recognized as control passes to the customer, which is a point in time upon shipment of the product,
and if applicable, acceptance by the customer. We recognize a liability for these advance payments in excess of revenue
recognized and present it as contract liabilities on the Consolidated Balance Sheet. The advance payment is typically not
considered a significant financing component because it is used to meet working capital demands that can be higher in the early
stages of a contract and to protect us from the other party failing to adequately complete some or all of its obligations under the
contract. In some cases, the customer retains a small portion of the contract price, typically 10%, until completion of the
contract, which we present as contract assets on the Consolidated Balance Sheet. Accordingly, during the period of contract
performance, billings and costs are accumulated on the Consolidated Balance Sheet as contract assets or contract liabilities, but
no income is recognized until completion of the project and control has passed to the customer. As of December 31, 2018, there
were no material contract assets or contract liabilities recorded on the Consolidated Balance Sheet.

6783_10K_C1.pdf March 13, 2019 pg 35

Practical Expedients and Exemptions

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one
year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services
performed.

We do not assess whether a contract has a significant financing component if the expectation at contract inception is such
that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one
year or less.

We generally expense sales commissions when incurred because the amortization period would have been one year or
less. These costs are recorded within selling, general and administrative expenses in our Condensed Consolidated Statement of
Income.

Goodwill and Indefinite-lived Intangible Assets. On October 1st of each year, or more frequently if indicators of

impairment exist or if a decision is made to sell a business, we evaluate goodwill for impairment. A significant amount of
judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a decline in
expected cash flows, a significant adverse change in the business climate, unanticipated competition, slower growth rates, or
negative developments in equity and credit markets, among others.

All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating

segment or one level below an operating segment. For goodwill impairment testing purposes, we consider our operating
segments to be our reporting units. The evaluation of impairment involves using either a qualitative or quantitative approach as
outlined in Accounting Standards Codification (ASC) Topic 350. The qualitative evaluation is an assessment of factors to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including
goodwill. Factors considered as part of the qualitative assessment include entity-specific industry, market and general economic
conditions. In 2018, we elected to bypass the qualitative evaluation for all of our reporting units and performed a two-step
quantitative test at October 1, 2018. Quantitative testing involves comparing the estimated fair value of each reporting unit to its
carrying value. We estimate reporting unit fair value using a weighted average of fair values determined by discounted cash
flow (DCF) and market approach methodologies, as we believe both are equally important indicators of fair value. A number of
significant assumptions and estimates are involved in the application of the DCF model, including sales volumes and prices,
costs to produce, tax rates, capital spending, discount rates, and working capital changes. Cash flow forecasts are generally
based on approved business unit operating plans for the early years and historical relationships in later years. The betas used in
calculating the individual reporting units’ weighted average cost of capital (WACC) rate are estimated for each reporting unit
based on peer data. The market approach methodology measures value through an analysis of peer companies. The analysis
entails measuring the multiples of EBITDA at which peer companies are trading.

In the event the estimated fair value of a reporting unit per the weighted average of the DCF and market approach models

is less than the carrying value, additional analysis would be required. The additional analysis would compare the carrying
amount of the reporting unit’s goodwill with the implied fair value of that goodwill, which may involve the use of valuation
experts. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value amounts
assigned to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and
the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair
value, an impairment loss equal to such excess would be recognized, which could materially and adversely affect reported
consolidated results of operations and shareholders’ equity. At October 1, 2018, based on our quantitative test, the fair values of
all of our reporting units exceeded their carrying value by at least 89%.

Intangible assets with indefinite lives are also subject to impairment testing on October 1st of each year, or more
frequently if indicators of impairment exist. The impairment test compares the fair value of the intangible assets with their
carrying amounts. We performed a quantitative assessment of the indefinite lived trade name intangible asset as outlined in
ASC 350 by comparing the estimated fair value of the trade name intangible asset to its carrying value. We estimate the fair
value using the relief from royalty income approach. A number of significant assumptions and estimates are involved in the
application of the relief from royalty model, including sales volumes and prices, royalty rates and tax rates. Forecasts are based
on sales generated by the underlying trade name assets and are generally based on approved business unit operating plans for
the early years and historical relationships in later years. At October 1, 2018, based on our quantitative test, the fair value of the
trade name assets exceeded their carrying value by approximately 20%.

6783_10K_C1.pdf March 13, 2019 pg 36

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the FASB issued ASU 2014-09, Revenue with Contracts from Customers. This ASU establishes a single

revenue recognition model for all contracts with customers based on recognizing revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services, eliminates industry specific requirements and expands disclosure requirements. We adopted ASU
2014-09 using the modified retrospective method as of January 1, 2018. The majority of our revenue transactions consist of a
single performance obligation to transfer promised goods or services. The adoption of this new standard did not impact the
Company's consolidated statement of income or balance sheet and there was no cumulative effect of initially applying the
standard to the opening balance of retained earnings. See Note 1—Significant Accounting Policies to the consolidated financial
statements in Part II Item 8 of this Form 10-K for further information on our updated revenue recognition policy.

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to record a right of use asset and a

liability for virtually all leases. This ASU will be effective beginning January 1, 2019. The Company has developed a
transition plan and continues to evaluate the impact that the adoption of ASU 2016-02 will have on the consolidated financial
statements. During 2017, we conducted a survey to identify all leases across the organization and are currently working to
obtain all lease contracts to accumulate the necessary information for adoption. We identified that a majority of our leases fall
into one of three categories: office equipment, real estate and vehicles. We also identified that most office equipment and
vehicle leases utilize standard master leasing contracts that have similar terms. During 2018, we selected a service provider to
help us inventory and account for our leases and gathered the majority of the data necessary to prepare the transition
accounting. We are finalizing the data upload to the system and accumulating information for leases entered into at the end of
2018. We estimate that total assets and total liabilities will increase within the range of $52 million and $58 million on January
1, 2019 when the ASU is adopted. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842,
Leases. ASU 2018-10 includes certain clarifications to address potential narrow-scope implementation issues which the
Company is incorporating into its assessment and adoption of ASU 2016-02. Additionally, in July 2018, the FASB issued ASU
2018-11, Targeted Improvements to Topic 842, Leases. ASU 2018-11 which provides an additional transition method to adopt
ASU 2016-02 identified as comparative reporting at adoption. We expect to use this new transition approach and the
comparative periods presented in our consolidated financial statements will continue to be reported in accordance with ASC
840, Leases. We anticipate that we will elect the package of practical expedients allowed in the standard, which among other
things, allows us to carry forward our historical lease classification. All of our leases have historically been classified as
operating leases. We also anticipate that we will make an accounting policy election to use the practical expedient allowed in
the standard to not separate lease and non-lease components for new leases entered into after January 1, 2019 when calculating
the lease liability under ASU 2016-02.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU
simplifies the accounting for many aspects associated with share-based payment accounting, including income taxes and the use
of forfeiture rates. This ASU was adopted on January 1, 2017. The provisions of this ASU which impacted us included a
requirement that all excess tax benefits and deficiencies that pertain to share-based payment arrangements be recognized as a
component of income tax expense rather than as a component of shareholders’ equity. The Company expects this to create
volatility in its effective tax rate on a go-forward basis as the impact is treated as a discrete item within our quarterly tax
provision. The extent of excess tax benefits/deficiencies is subject to variation in our stock price and timing/extent of stock-
based compensation share vestings and employee stock option exercises. This ASU also removes the impact of the excess tax
benefits and deficiencies from the calculation of diluted earnings per share and no longer requires a presentation of excess tax
benefits and deficiencies related to the vesting and exercise of share-based compensation as both an operating outflow and
financing inflow on the statement of cash flows. We have applied all of these changes on a prospective basis and therefore,
prior years were not adjusted. Additionally, this ASU allows for an accounting policy election to estimate the number of awards
that are expected to vest or account for forfeitures when they occur. We elected to maintain our current forfeitures policy and
will continue to include an estimate of those forfeitures when recognizing stock-based compensation expense. This ASU also
requires cash payments to tax authorities when an employer uses a net-settlement feature to withhold shares to meet statutory
tax withholding provisions to be presented as a financing activity (eliminating previous diversity in practice). Adoption of this
ASU resulted in an additional discrete tax benefit of approximately $2.5 million and $8.3 million during years ended
December 31, 2018 and 2017, respectively.

In June 2016, the FASB issued ASU 2016-13, Allowance for Loan and Lease Losses. This ASU introduces an approach

based on expected losses to estimate credit losses on certain types of financial instruments, including loans, held-to-maturity
debt securities, loan commitments, financial guarantees and net investments in leases, as well as reinsurance and trade
receivables. This ASU will be effective beginning in 2020. Based on a review of its portfolio of financial instruments, the
Company does not believe the adoption of this ASU will have a material impact on the consolidated financial statements, but
does expect the adoption to result in additional disclosures.

6783_10K_C1.pdf March 13, 2019 pg 37

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Payments and Cash Receipts. This ASU

clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The
Company's adoption of this ASU on January 1, 2018 did not have a material impact on our presentation of the consolidated
statement of cash flows.

In October 2016, the FASB issued ASU 2016-16, Intra-entity Transfers of Assets Other than Inventory. This ASU states

that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the
transfer occurs. This ASU was early adopted on January 1, 2017 using the modified retrospective approach which resulted in a
$6.2 million cumulative-effective adjustment directly to retained earnings for any previously deferred income tax effects during
the year ended December 31, 2017.

In November 2016, the FASB issued ASU 2016-18, Restricted Cash. This ASU requires that amounts generally described

as restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-
of-period and end-of-period total amounts shown on the statement of cash flows. We adopted this ASU on January 1, 2018
using the retrospective method. The adoption of ASU 2016-18 had an impact on our financial statement presentation within the
Consolidated Statement of Cash Flows, as amounts generally described as restricted cash and restricted cash equivalents are
now included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown
on the statement of cash flows and transfers of these amounts between balance sheet line items are no longer presented as an
operating, investing or financing cash flow. For the years ended December 31, 2017 and 2016, cash flow from financing
activities increased by $2.5 million and cash flow used in financing activities increased by $1.5 million, respectively as a result
of the adoption of this ASU. Furthermore, adoption of ASU 2016-18 resulted in additional disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business. This

ASU provides further guidance for identifying whether a set of assets and activities is a business by providing a screen
outlining that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single
identifiable asset or a group of similar identifiable assets, the set is not a business. This ASU was adopted beginning in 2018
and was applied prospectively. The adoption of this ASU may have a material effect on our consolidated financial statements in
the event that we have an acquisition or disposal that falls within this screen.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This ASU simplifies the
accounting for goodwill impairments under Step 2 by eliminating the requirement to perform procedures to determine the fair
value of the assets and liabilities of the reporting unit, including previously unrecognized assets and liabilities, in order to
determine the fair value of the goodwill and any impairment charge to be recognized. Under this ASU, the impairment charge
to be recognized should be the amount by which the reporting unit's carrying value exceeds the reporting unit's fair value as
calculated under Step 1 provided that the loss recognized should not exceed the total amount of goodwill allocated to the
reporting unit. This ASU is effective beginning in 2019 and early adoption is permitted for interim or annual goodwill
impairment tests performed after January 1, 2017. The Company will adopt ASU 2017-04 effective January 1, 2019 and
adoption of this ASU may have a material effect on our consolidated financial statements in the event that we determine that
goodwill for any of our reporting units is impaired.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net

Periodic Post-retirement Benefit Cost, to improve the presentation of net periodic pension and net periodic post-retirement
benefit cost. This ASU requires companies to present the service cost component of net periodic benefit cost in the same
income statement line item as other compensation costs arising from services rendered during the period. Only the service cost
component will be eligible for capitalization in assets. Additionally, this ASU requires that companies present the other
components of the net periodic benefit cost separately from the line item that includes the service cost and outside of any
subtotal of income from operations, if one is presented. This ASU is effective for annual periods beginning after December 15,
2017, and early adoption is permitted. The amendments in this ASU are to be applied retrospectively for presentation in the
Consolidated Statement of Income and prospectively for the capitalization of the service cost component of net periodic
pension cost and net periodic post-retirement benefit in assets. A practical expedient allows the Company to use the amount
disclosed in its pension and other post-retirement benefit plan note for the prior comparative periods as the estimation basis for
applying the retrospective presentation requirements. The Company adopted ASU 2017-07 on January 1, 2018, using the
retrospective method and elected to use the practical expedient. The adoption of this ASU resulted in a $4.1 million, $3.8
million and $3.5 million decrease in operating income for the years ended December 31, 2018, 2017 and 2016, respectively.
The Company does not capitalize costs in assets so there is no impact from that provision of ASU 2017-07.

6783_10K_C1.pdf March 13, 2019 pg 38

In May 2017, the FASB issued ASU 2017-09, Stock Compensation - Scope of Modification Accounting, which amends the
scope of modification accounting for share-based payment arrangements. This ASU provides guidance on the types of changes
to the terms or conditions of share-based payment awards to which an entity would be required to apply modification
accounting. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and
classification of the awards are the same immediately before and after the modification. This ASU is effective for periods
beginning after December 31, 2017. The Company's adoption of ASU 2017-09 on January 1, 2018, did not have a material
effect on our consolidated financial statements.

In January 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220):
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which gives entities the option to
reclassify to retained earnings the tax effects resulting from the new tax reform legislation commonly known as the Tax Cuts
and Jobs Act ("the Act") related to items in AOCI that the FASB refers to as having been stranded in AOCI. The new guidance
may be applied retrospectively to each period in which the effect of the Act is recognized in the period of adoption. The
Company must adopt this guidance for fiscal years beginning after December 15, 2018, and interim periods within those fiscal
years. Early adoption is permitted for periods for which financial statements have not yet been issued or made available for
issuance, including the period the Act was enacted. The guidance, when adopted, will require new disclosures regarding a
company’s accounting policy for releasing the tax effects in AOCI and permit a company the option to reclassify to retained
earnings the tax effects resulting from the Act that are stranded in AOCI. The Company will adopt ASU 2018-02 effective
January 1, 2019 and this adoption will result in a reclassification between retained earnings and AOCI. The Company estimates
that the impact from ASU 2018-02 will increase retained earnings by approximately $4.0 million, with an offsetting increase to
accumulated other comprehensive loss for the same amount.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for

Fair Value Measurement, which improves fair value disclosure requirements by removing disclosures that are not cost
beneficial, clarifying disclosures’ specific requirements and adding relevant disclosure requirements. This ASU is effective for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in
unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair
value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the
most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied
retrospectively to all periods presented upon their effective date. Early adoption is permitted and an entity can choose to early
adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until
their effective date. The Company is still evaluating the impact that the adoption of ASU 2018-13 will have on the consolidated
financial statements and has not yet decided whether to early adopt the amendments.

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for

Defined Benefit Plans, which improves defined benefit disclosure requirements by removing disclosures that are not cost
beneficial, clarifying disclosures’ specific requirements and adding relevant disclosure requirements. This ASU is effective for
fiscal years ending after December 15, 2020 and early adoption is permitted. The amendments in this ASU are required to be
applied on a retrospective basis to all periods presented. The Company is still evaluating the impact that the adoption of ASU
2018-14 will have on the consolidated financial statements and has not yet decided whether to early adopt the amendments.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud

Computing Arrangement that is a Service Contract, which will now allow all cloud computing arrangements classified as
service contracts to capitalize certain implementation costs in accordance with ASC 350-40, Intangibles - Goodwill and Other -
Internal-Use Software, depending on the project stage within which the costs were incurred. This ASU is effective for fiscal
years beginning after December 15, 2019 and interim periods within those fiscal periods. Early adoption of the amendments in
this ASU is permitted, including adoption in any interim period and the amendments can be applied either retrospectively or
prospectively. The Company has adopted this ASU prospectively for all implementation costs incurred related to cloud
computing arrangements and the implementation did not have a material impact on our consolidated financial statements.

6783_10K_C1.pdf March 13, 2019 pg 39

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of adverse changes in the value of a financial instrument caused by changes in currency

exchange rates, interest rates and equity prices. We are exposed to market risks related to currency exchange rates and interest
rates.

Currency exchange rates. We are subject to the effects of fluctuations in currency exchange rates on various transactions

and on the translation of the reported financial position and operating results of our non-U.S. companies from local currencies
to U.S. dollars. A hypothetical 10% strengthening or weakening of the U.S. dollar would increase or decrease our reported
sales and net income for the year ended December 31, 2018 by approximately $63.6 million and $6.4 million, or 4.7% and
5.1%, respectively.

When appropriate, we may attempt to limit our transactional exposure to changes in currency exchange rates through

forward contracts or other actions intended to reduce existing exposures by creating offsetting currency exposures. At
December 31, 2018, we had open foreign currency forward contracts with a U.S. dollar notional value of $72.4 million. A
hypothetical 10% increase in December 31, 2018 forward exchange rates would result in a $7.2 million increase in the fair
value of these contracts.

Interest rates. We are exposed to changes in interest rates primarily as a result of borrowing and investing activities used
to maintain liquidity and fund business operations. Because of the relatively short maturities of temporary investments and the
variable rate nature of our revolving credit facility, these financial instruments are reported at carrying values which
approximate fair values.

At December 31, 2018, we had $129.8 million of fixed rate debt which matures at various dates through 2031. The
incremental increase in the fair value of fixed rate long-term debt resulting from a hypothetical 10% decrease in interest rates
would be approximately $11.0 million. However, our sensitivity to interest rate declines and the corresponding increase in the
fair value of our debt portfolio would unfavorably affect earnings and cash flows only to the extent that we elected to
repurchase or retire all or a portion of our fixed rate debt portfolio at prices above carrying values.

At December 31, 2018, we had $233.4 million of variable rate borrowings under our revolving credit facility. A 100 basis

point increase or decrease in interest rates could have an impact on future earnings under our current capital structure.

6783_10K_C1.pdf March 13, 2019 pg 40

Item 8. Financial Statements and Supplementary Data

Management’s Reports to Shareholders

Management’s Report on Responsibility for Financial Reporting

Management of MSA Safety Incorporated (the Company) is responsible for the preparation of the consolidated financial
statements included in this annual report. The consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America and include amounts that are based on the best estimates and
judgments of management. The other financial information contained in this annual report is consistent with the consolidated
financial statements.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The
Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.

The Company’s internal control over financial reporting includes policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with
authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,

2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on our assessment and those criteria,
management has concluded that the Company maintained effective internal control over financial reporting as of December 31,
2018.

The Company's independent registered public accounting firm that audited the consolidated financial statements included

in this annual report issued an attestation report on the Company's internal control over financial reporting.

/s/ NISHAN J. VARTANIAN

Nishan J. Vartanian
President and Chief Executive Officer

/s/ KENNETH D. KRAUSE

Kenneth D. Krause
Sr. Vice President, Chief Financial Officer and Treasurer

February 22, 2019

6783_10K_C1.pdf March 13, 2019 pg 41

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of MSA Safety Incorporated

Opinion on Internal Control over Financial Reporting

We have audited MSA Safety Incorporated’s internal control over financial reporting as of December 31, 2018, based on criteria
established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, MSA Safety Incorporated (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated statements
of income, comprehensive income, cash flows, and changes in retained earnings and accumulated other comprehensive loss for
each of the three years in the period ended December 31, 2018, and the related notes and the financial statement schedule listed
in the index at Item 15(a) and our report dated February 22, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
February 22, 2019

6783_10K_C1.pdf March 13, 2019 pg 42

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of MSA Safety Incorporated

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of MSA Safety Incorporated (the Company) as of December 31,
2018 and 2017, the related consolidated statements of income, comprehensive income, cash flows, and changes in retained earnings
and accumulated other comprehensive loss for each of the three years in the period ended December 31, 2018, and the related
notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial
statements“). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 22, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2014.
Pittsburgh, Pennsylvania
February 22, 2019

6783_10K_C1.pdf March 13, 2019 pg 43

MSA SAFETY INCORPORATED

CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per share amounts)
Net sales

Cost of products sold

Gross profit

Selling, general and administrative

Research and development

Restructuring charges (Note 2)

Currency exchange losses, net

Other operating expense (Note 19)

Operating income

Interest expense

Loss on extinguishment of debt (Note 11)

Other income, net (Note 15)

Total other expense, net

Income from continuing operations before income taxes

Provision for income taxes (Note 9)

Income from continuing operations

Loss from discontinued operations (Note 20)

Net income

Net income attributable to noncontrolling interests

Net income attributable to MSA Safety Incorporated

Year ended December 31,

2018

2017

2016

$ 1,358,104

$ 1,196,809

$ 1,149,530

746,241

611,863

657,918

538,891

324,784

300,062

52,696

13,247

2,330

45,327

173,479

18,881

1,494
(9,231)
11,144

162,335

37,220

125,115

—

125,115

50,061

17,632

5,127

126,432

39,577

15,360

—
(5,558)
9,802

29,775

2,819

26,956

—

26,956

627,283

522,247

308,238

46,847

5,694

766

—

160,702

16,411

—
(7,620)
8,791

151,911

57,804

94,107
(245)
93,862

(965) $

(929) $

(1,926)

124,150

26,027

91,936

Amounts attributable to MSA Safety Incorporated common shareholders:

Income from continuing operations

Loss from discontinued operations (Note 20)

Net income

124,150

—

26,027

—

124,150

26,027

92,691
(755)
91,936

Earnings per share attributable to MSA Safety Incorporated common
shareholders:
Basic

Income from continuing operations

Loss from discontinued operations (Note 20)

Net income

Diluted

Income from continuing operations
Loss from discontinued operations (Note 20)

Net income

Dividends per common share

$
$

3.23

— $

3.23

3.18

$
— $

3.18
1.49

$
$

0.68

— $

0.68

0.67

$
— $

0.67
1.38

$
$

2.47
(0.02)
2.45

2.44
(0.02)
2.42
1.31

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

6783_10K_C1.pdf March 13, 2019 pg 44

MSA SAFETY INCORPORATED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands)
Net income

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments (Note 5)

Pension and post-retirement plan actuarial (losses) gains, net of tax (Note 5)
Unrealized losses on available-for-sale securities (Note 5)

Reclassification from accumulated other comprehensive (loss) into net income (Note 5)

Total other comprehensive (loss) income, net of tax

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to MSA Safety Incorporated

Year ended December 31,

2018

2017

2016

$ 125,115

$ 26,956

$ 93,862

(30,103)
(17,569)
(572)
774
(47,470)
77,645
(660)
$ 76,985

41,129

20,120

—

61,249

88,205
(3,694)
$ 84,511

(24,986)
1,321

—

3,270
(20,395)
73,467
(3,578)
$ 69,889

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

6783_10K_C1.pdf March 13, 2019 pg 45

MSA SAFETY INCORPORATED

CONSOLIDATED BALANCE SHEET

(In thousands, except share amounts)
Assets
Cash and cash equivalents
Trade receivables, less allowance for doubtful accounts of $5,369 and $5,540
Inventories (Note 3)
Investments, short-term (Note 18)
Prepaid income taxes
Notes receivable, insurance companies (Note 19)
Prepaid expenses and other current assets

Total current assets

Property, plant, and equipment, net (Note 4)
Prepaid pension cost (Note 14)
Deferred tax assets (Note 9)
Goodwill (Note 12)
Intangible assets, net (Note 12)
Notes receivable, insurance companies, noncurrent (Note 19)
Insurance receivable (Note 19) and other noncurrent assets

Total assets

Liabilities
Notes payable and current portion of long-term debt (Note 11)
Accounts payable
Employees’ compensation
Insurance and product liability (Note 19)
Warranty reserve (Note 19) and other current liabilities

Total current liabilities

Long-term debt, net (Note 11)
Pensions and other employee benefits (Note 14)
Deferred tax liabilities (Note 9)
Product liability (Note 19) and other noncurrent liabilities

Total liabilities

Commitments and contingencies (Note 19)

Shareholders' Equity
Preferred stock, 4 1/2% cumulative, $50 par value (Note 6)
Common stock, no par value (180,000,000 shares authorized; 62,081,391 shares issued;
38,526,523 and 38,222,928 shares outstanding at December 31, 2018 and 2017, respectively)
Treasury shares, at cost (Note 6)
Accumulated other comprehensive loss
Retained earnings

Total MSA Safety Incorporated shareholders’ equity

Noncontrolling interests

Total shareholders’ equity
Total liabilities and shareholders’ equity

December 31,

2018

2017

140,095
245,032
156,602
55,106
10,769
3,555
45,464
656,623

134,244
244,198
153,739
—
31,448
17,333
41,335
622,297

157,940
57,568
32,522
413,640
169,515
56,012
64,192
$ 1,608,012

157,014
83,060
25,825
422,185
183,088
59,567
131,790
$ 1,684,826

20,063
78,367
51,386
48,688
83,556
282,060

341,311
166,101
7,164
171,857
968,493

26,680
87,061
39,377
59,116
77,045
289,279

447,832
170,773
9,341
165,023
$ 1,082,248

3,569

211,806
(298,143)
(218,927)
935,577
633,882
5,637
639,519
$ 1,608,012

194,953
(297,834)
(171,762)
868,675
597,601
4,977
602,578
$ 1,684,826

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

6783_10K_C1.pdf March 13, 2019 pg 46

MSA SAFETY INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)
Operating Activities
Net income
Depreciation and amortization
Restructuring charges (Note 2)
Stock-based compensation (Note 10)
Pension expense (Note 14)
Deferred income tax (benefit) provision (Note 9)
Loss (gain) on asset dispositions, net
Pension contributions (Note 14)
Currency exchange losses, net
Other operating expense (Note 19)
Collections on insurance receivable and notes receivable, insurance companies
Product liability payments
Loss on extinguishment of debt
Changes in:

Trade receivables
Inventories (Note 3)
Income taxes receivable, prepaid expenses and other current assets
Accounts payable and accrued liabilities
Other noncurrent assets and liabilities
Cash Flow From Operating Activities

Investing Activities

Capital expenditures
Purchase of short-term investments (Note 18)
Proceeds from maturities of short-term investments (Note 18)
Acquisition, net of cash acquired (Note 13)
Property disposals and other investing
Cash Flow (Used In) Investing Activities

Financing Activities

Year ended December 31,
2017

2016

2018

$ 125,115
37,852
—
12,239
5,901
(4,065)
484
(4,718)
2,330
45,327
101,552
(61,500)
1,494

(10,075)
(11,122)
10,866
17,985
(5,778)
263,887

26,956
37,877
11,384
11,758
7,142
(31,320)
557
(4,094)
5,127
126,432
111,969
(49,381)
—

(6,384)
(30,363)
(13,661)
17,870
8,467
230,336

(33,960)
(73,022)
18,000

(23,725)
—
—
— (216,308)
832
(239,201)

4,587
(84,395)

93,862
35,273
—
9,211
6,332
14,393
(1,453)
(3,878)
785
—
42,046
(69,546)
—

13,239
14,394
(14,419)
(7,603)
2,258
134,894

(25,523)
—
—
(18,156)
18,214
(25,465)

Proceeds from short-term debt, net (Note 11)
Payments on long-term debt (Note 11)
Proceeds from long-term debt (Note 11)
Debt issuance costs
Cash dividends paid
Company stock purchases (Note 6)
Exercise of stock options (Note 6)
Employee stock purchase plan (Note 6)
Other, net
Cash Flow (Used In) From Financing Activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Increase in cash, cash equivalents and restricted cash
Beginning cash, cash equivalents and restricted cash
Ending cash, cash equivalents and restricted cash

51
(570,167)
462,500
(1,216)
(57,248)
(4,824)
8,573
556
(1,494)
(163,269)
(13,508)
2,715
137,889
$ 140,604

13
(559,767)
637,000
—
(52,537)
(17,513)
18,465
532
(590)
25,603
6,189
22,927
114,962
$ 137,889

—
(443,572)
382,664
—
(49,074)
(1,881)
12,476
571
(530)
(99,346)
(3,479)
6,604
108,358
$ 114,962

Supplemental cash flow information:

Cash and cash equivalents
Restricted cash included in prepaid expenses and other current assets
Total cash, cash equivalents and restricted cash

$ 140,095
509
$ 140,604

134,244
3,645
137,889

113,759
1,203
114,962

Interest paid in cash
Income tax paid in cash

20,408
40,587

15,504
40,376

15,861
57,551

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

6783_10K_C1.pdf March 13, 2019 pg 47

MSA SAFETY INCORPORATED

CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS AND

ACCUMULATED OTHER COMPREHENSIVE LOSS

(In thousands)
Balances January 1, 2016

Net income

Foreign currency translation adjustments

Pension and post-retirement plan adjustments, net of tax of ($1,140)

Reclassification from accumulated other comprehensive (loss) into net income

Income attributable to noncontrolling interests

Common dividends

Preferred dividends

Balances December 31, 2016
Net income
Foreign currency translation adjustments

Pension and post-retirement plan adjustments, net of tax of $10,417

Income attributable to noncontrolling interests

Common dividends

Preferred dividends

Cumulative effect of the adoption of ASU 2016-16 (Note 1)

Balances December 31, 2017
Net income

Foreign currency translation adjustments

Pension and post-retirement plan adjustments, net of tax of ($6,325)
Unrecognized net losses on available-for-sale securities (Note 18)

Reclassification from accumulated other comprehensive (loss) into net income

(Income) loss attributable to noncontrolling interests

Common dividends

Preferred dividends

Balances December 31, 2018

Retained
Earnings

858,553

93,862

—

—
(1,926)
(49,032)
(42)
901,415

26,956
—
—
(929)
(52,495)
(42)
(6,230)
868,675

125,115

—
—
—

—
(965)
(57,206)
(42)
935,577

Accumulated
Other
Comprehensive
(Loss)

(208,199)
—
(24,986)
1,321

3,270
(1,652)
—

—
(230,246)
—
41,129
20,120
(2,765)
—

—

—
(171,762)
—
(30,103)
(17,569)
(572)
774

305

—

—
(218,927)

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

6783_10K_C1.pdf March 13, 2019 pg 48

MSA SAFETY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Significant Accounting Policies

Basis of Presentation—The Consolidated Financial Statements of MSA Safety Incorporated ("MSA" or "the Company")
are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and require
management to make certain judgments, estimates, and assumptions. These may affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. They also
may affect the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates
upon subsequent resolution of identified matters.

Principles of Consolidation—The consolidated financial statements include the accounts of the Company and all

subsidiaries. Intercompany accounts and transactions are eliminated.

Noncontrolling Interests—Noncontrolling interests reflect noncontrolling shareholders’ investments in certain
consolidated subsidiaries and their proportionate share of the income and accumulated other comprehensive income (loss) of
those subsidiaries.

Currency Translation—The functional currency of all significant non-U.S. subsidiaries is the local currency. Assets and

liabilities of these operations are translated at year-end exchange rates. Income statement accounts are translated using the
average exchange rates for the reporting period. Translation adjustments for these companies are reported as a component of
shareholders’ equity and are not included in income. Foreign currency transaction gains and losses are included in net income
for the reporting period.

Cash Equivalents—Cash equivalents include temporary deposits with financial institutions and highly liquid investments
with original maturities of 90 days or less. Other highly liquid investments consist of $11.4 million in money market funds that
are valued at net asset value (“NAV”). The money market funds are required to price and transact at a NAV per share that
fluctuates based upon the pricing of the underlying portfolio of securities and this requirement may impact the value of those
fund shares.

Restricted Cash—Restricted cash, which is designated for use other than current operations, is included in prepaid
expenses and other current assets in the Consolidated Balance Sheet. Restricted cash balances were $0.5 million and $3.6
million at December 31, 2018 and 2017, respectively. These balances were used to support letter of credit balances.

Inventories—Inventories are stated at the lower of cost or net realizable value. The majority of U.S. inventories are
valued on the last-in, first-out (LIFO) cost method which is used since this method provides better matching of costs and
revenues. Other inventories are valued at actual costs, at standard costs which approximate actual costs or in very rare
occasions, on the average cost method. It is the Company's general policy to write-down any inventory identified as obsolete.
Additionally, it will write-down any inventory balance in excess of the last twenty-four months of consumption.

Investment securities—The Company’s investment securities, primarily fixed income, are classified as available for sale.

The securities are recorded at fair market value and reported in “Investments, short-term” in the accompanying Consolidated
Balance Sheet with changes in fair market value recorded in other comprehensive income, net of tax. The purchases and sales
of these investments are classified as investing activities in the Consolidated Statement of Cash Flows.

Property and Depreciation—Property is recorded at cost. Depreciation is computed using straight-line and accelerated

methods over the estimated useful lives of the assets, generally as follows: buildings 20 to 40 years and machinery and
equipment 3 to 10 years. Expenditures for significant renewals and improvements are capitalized. Ordinary repairs and
maintenance are expensed as incurred. Gains or losses on property dispositions are included in other income and the cost and
related depreciation are removed from the accounts. Depreciation expense for the years ended December 31, 2018, 2017 and
2016 was $26.9 million, $28.0 million and $27.0 million, respectively. Properties, plants, and equipment are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be
recoverable. Recoverability of assets is determined by comparing the estimated undiscounted net cash flows of the operations
related to the assets to their carrying amount. An impairment loss would be recognized when the carrying amount of the assets
exceeds the estimated undiscounted net cash flows. The amount of the impairment loss to be recorded is calculated as the
excess of the carrying value of the assets over their fair value, with fair value determined using the best information available,
which generally is a discounted cash flow model.

6783_10K_C1.pdf March 13, 2019 pg 49

Software Development Costs—Software development costs consist primarily of costs incurred in software development

and related personnel compensation to create, enhance and deploy the Company’s broad range of wireless technology and
cloud-based computing safety services. Software development costs, other than software development costs qualifying for
capitalization, are expensed as incurred. Costs of computer software developed or obtained for internal use that are incurred in
the preliminary project and post implementation stages are expensed as incurred. Certain costs incurred during the application
and development stage, which primarily include compensation and related expenses, are capitalized. Additionally, costs of
upgrades and enhancements are capitalized when it is probable that the upgrades and enhancements will result in added
functionality. The estimated useful life of costs capitalized is three years. Capitalized costs are amortized using the straight-line
method over the estimated useful life, beginning in the period in which the software is ready for its intended use or when the
upgrade or enhancement is deployed. During 2018, there was approximately $1.6 million of software development costs
capitalized. During 2017, there was no software development costs capitalized.

Goodwill and Other Intangible Assets—Intangible assets with a finite useful life are amortized on a straight-line basis

over their useful lives. Indefinite lived intangible assets are assessed for possible impairment annually on October 1st or
whenever circumstances change such that the recorded value of the asset may not be recoverable. We performed a quantitative
assessment of the indefinite lived trade name intangible asset as outlined in ASC 350 by comparing the estimated fair value of
the trade name intangible asset to their carrying value. We estimate the fair value using the relief from royalty income
approach. A number of significant assumptions and estimates are involved in the application of the relief from royalty model,
including sales volumes and prices, royalty rates and tax rates. Forecasts are based on sales generated by the underlying trade
name assets and are generally based on approved business unit operating plans for the early years and historical relationships in
later years. Based on this assessment, there was no indication of impairment for 2018.

Goodwill is not amortized, but is subject to impairment assessments. On October 1st of each year, or more frequently if
indicators of impairment exist or if a decision is made to sell a business, we evaluate goodwill and indefinite lived intangible
assets for impairment. A significant amount of judgment is involved in determining if an indicator of impairment has occurred.
Such indicators may include a decline in expected cash flows, a significant adverse change in the business climate,
unanticipated competition, slower growth rates, or negative developments in equity and credit markets, among others.

All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating

segment or one level below an operating segment. For goodwill impairment testing purposes, we consider our operating
segments to be our reporting units. The evaluation of impairment involves using either a qualitative or quantitative approach as
outlined in Accounting Standards Codification (ASC) Topic 350. The qualitative evaluation is an assessment of factors to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including
goodwill. Factors considered as part of the qualitative assessment include entity-specific industry, market and general economic
conditions. In 2018, we elected to bypass the qualitative evaluation for all of our reporting units, and performed a two-step
quantitative test at October 1, 2018. Step 1 of the quantitative testing involves comparing the estimated fair value of each
reporting unit to its carrying value. We estimate reporting unit fair value using a weighted average of fair values determined by
discounted cash flow (DCF) and market approach methodologies, as we believe both are equally important indicators of fair
value. A number of significant assumptions and estimates are involved in the application of the DCF model, including sales
volumes and prices, costs to produce, tax rates, capital spending, discount rates, and working capital changes. Cash flow
forecasts are generally based on approved reporting unit operating plans for the early years and historical relationships in later
years. The betas used in calculating the individual reporting units’ weighted average cost of capital (WACC) rate are estimated
for each reporting unit based on peer data. The market approach methodology measures value through an analysis of peer
companies. The analysis entails measuring the multiples of EBITDA at which peer companies are trading.

In the event the estimated fair value of a reporting unit per the weighted average of the DCF and market approach models

is less than the carrying value, Step 2 of the analysis would be required. The additional analysis would compare the carrying
amount of the reporting unit’s goodwill with the implied fair value of that goodwill, which may involve the use of valuation
specialist. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value amounts
assigned to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and
the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair
value, an impairment loss equal to such excess would be recognized, which could materially and adversely affect reported
consolidated results of operations and shareholders’ equity. There has been no impairment of our goodwill as of December 31,
2018, 2017 or 2016.

6783_10K_C1.pdf March 13, 2019 pg 50

Revenue Recognition—We generate revenue primarily from manufacturing and selling a comprehensive line of safety

We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which we adopted

on January 1, 2018, using the modified retrospective method. Revenue from the sale of products is recognized when there is
persuasive evidence of an arrangement and control passes to the customer, which generally occurs either when product is
shipped to the customer or, in the case of most U.S. distributor customers, when product is delivered to the distributor's delivery
site. We establish our shipping terms according to local practice and market characteristics. We do not ship product unless we
have an order or other documentation authorizing shipment to our customers. Our payment terms vary by the type and location
of our customer and the products offered. The term between invoicing and when payment is due is not significant.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or

providing services. Amounts billed and due from our customers are classified as receivables on the consolidated balance sheet.
We make appropriate provisions for uncollectible accounts receivable which have historically been insignificant in relation to
our net sales. Certain contracts with customers, primarily distributor customers, have an element of variable consideration that
is estimated when revenue is recognized under the contract to the extent that it is material to the individual contract. Variable
consideration includes volume incentive rebates, performance guarantees, price concessions and returns. Rebates are based on
achieving a certain level of purchases and other performance criteria that are documented in established distributor programs.
These rebates are estimated based on projected sales to the customer and accrued as a reduction of net sales as they are earned
by the customer. The rebate accrual is reviewed monthly and adjustments are made as the estimate of projected sales changes.
Product returns, including an adjustment for restocking fees if it is material, are estimated based on historical return experience
and revenue is adjusted. Sales, value add and other taxes collected with revenue-producing activities and remitted to
governmental authorities are excluded from revenue.

Refer to Note 7—Segment Information for disaggregation of revenue by segment and product group, as we believe this best

depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Depending on the terms of the arrangement, we may defer revenue for which we have a future obligation, including

6783_10K_C1.pdf March 13, 2019 pg 51

Practical Expedients and Exemptions

Product Warranties—Estimated expenses related to product warranties and additional service actions are charged to cost

of products sold in the period in which the related revenue is recognized or when significant product quality issues are
identified.

Research and Development—Research and development costs are expensed as incurred.

Income Taxes—Deferred income taxes are recognized for temporary differences between financial and tax reporting.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset
will not be realized, a valuation allowance is recognized. We record tax benefits related to uncertain tax positions taken or
expected to be taken on a tax return when such benefits meet a more likely than not threshold. We recognize interest related to
unrecognized tax benefits in interest expense and penalties in operating expenses. Deferred taxes are booked for available cash
in excess of working capital for non-U.S. subsidiaries as these earnings are no longer considered to be permanently reinvested.

Stock-Based Compensation—We recognize compensation expense for employee and non-employee director stock-based

compensation based on the grant date fair value. Except for retirement-eligible participants, for whom there is no requisite
service period, this expense is recognized ratably over the requisite service periods following the date of grant. For retirement-
eligible participants, this expense is recognized at the grant date.

Derivative Instruments—We may use derivative instruments to minimize the effects of changes in currency exchange
rates. We do not enter into derivative transactions for speculative purposes and do not hold derivative instruments for trading
purposes. Changes in the fair value of derivative instruments designated as fair value hedges are recorded in the balance sheet
as adjustments to the underlying hedged asset or liability. Changes in the fair value of derivative instruments that do not qualify
for hedge accounting treatment are recognized in the consolidated statement of income as currency exchange losses, net in the
current period.

Commitments and Contingencies—For asserted claims and assessments, liabilities are recorded when a loss is deemed to

be probable and the amount of the loss is reasonably estimable. Management assesses the probability of an unfavorable
outcome with respect to asserted claims or assessments based on many factors such as the nature of the matter, available
defenses and case strategy, progress of the matter, views and opinions of legal counsel and other advisors, applicability and
success of appeals processes, and the outcome of similar historical matters, among others. Once an unfavorable outcome is
assessed to be probable, management evaluates estimates of the potential loss, and the most reasonable loss estimate is recorded
(or, if the estimate of the loss is a range, and no amount within the range is considered to be a better estimate than any other
amount, the minimum amount in the range is recorded). If a loss is deemed to be reasonably possible but less than probable
and/or such loss cannot be reasonably estimated, then the matter is disclosed and no liability is recorded.

With respect to unasserted claims or assessments, management first determines whether it is probable that a claim or
assessment may be asserted and then, if so, the degree of probability of an unfavorable outcome. If an unfavorable outcome is
probable, management assesses whether the amount of potential loss can be reasonably estimated and, if so, accrues the most
reasonable estimate of the loss (or, if the estimate of the loss is a range, and not amount within the range is considered to be a
better estimate than any other amount, the minimum amount in the range is recorded). If an unfavorable outcome is reasonably
possible but less than probable, or the amount of loss cannot be reasonably estimated, then the matter is disclosed and no
liability is recorded. Legal matters are reviewed on a continuous basis to determine if there has been a change in management’s
judgment regarding the likelihood and/or estimate of a potential loss. Please refer to Note 19 for further details on product
liability related matters.

6783_10K_C1.pdf March 13, 2019 pg 52

Discontinued Operations and Assets Held For Sale—For those businesses where management has committed to a plan

to divest, each business is valued at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying
amount of the business exceeds its estimated fair value, an impairment loss is recognized. Fair value is estimated using accepted
valuation techniques such as a discounted cash flow model, valuations performed by third parties, earnings multiples, or
indicative bids, when available. A number of significant estimates and assumptions are involved in the application of these
techniques, including the forecasting of markets and market share, sales volumes and prices, costs and expenses, and multiple
other factors. Management considers historical experience and all available information at the time the estimates are made;
however, the fair value that is ultimately realized upon the divestiture of a business may differ from the estimated fair value
reflected in the Consolidated Financial Statements. Depreciation and amortization expense is not recorded on assets of a
business to be divested once they are classified as held for sale.

For businesses classified as discontinued operations, the results of operations are reclassified from their historical
presentation to discontinued operations on the Consolidated Statement of Income, for all periods presented. The gains or losses
associated with these divested businesses are recorded in discontinued operations on the Consolidated Statement of Income.
Additionally, segment information does not include the operating results of businesses classified as discontinued operations for
all periods presented. Management does not expect any continuing involvement with these businesses following their
divestiture, and these businesses are expected to be disposed of within one year.

Concentration of credit and business risks - We are exposed to credit risk in the event of nonpayment by customers,

principally in the oil, gas and petrochemical, fire service, construction, utilities, and mining industries. Changes in these
industries may significantly affect our financial performance and management's estimates. We mitigate our exposure to credit
risk by performing ongoing credit evaluations and, when deemed necessary, requiring letters of credit, credit insurance,
prepayments, guarantees or other collateral. No individual customer represented more than 10% of our sales.

Reclassifications - Certain reclassifications of prior years' data have been made to conform to the current year

presentation. These reclassifications relate to (1) additional captions disclosed within the operating section of the Consolidated
Statement of Cash Flows but do not change the overall cash flow from operating activities for the prior years as previously
reported, and (2) additional captions disclosed for product warranty activity within the table that reconciles the changes in the
Company's accrued warranty reserve (Note 19).

Recently Adopted and Recently Issued Accounting Standards—In May 2014, the FASB issued ASU 2014-09, Revenue

with Contracts from Customers. This ASU establishes a single revenue recognition model for all contracts with customers
based on recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services, eliminates industry specific
requirements and expands disclosure requirements. We adopted ASU 2014-09 using the modified retrospective method as of
January 1, 2018. The majority of our revenue transactions consist of a single performance obligation to transfer promised
goods or services. The adoption of this new standard did not impact the Company's consolidated statement of income or
balance sheet and there was no cumulative effect of initially applying the standard to the opening balance of retained earnings.
See Revenue Recognition section above for further information on our updated revenue recognition policy.

6783_10K_C1.pdf March 13, 2019 pg 53

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to record a right of use asset and a

In June 2016, the FASB issued ASU 2016-13, Allowance for Loan and Lease Losses. This ASU introduces an approach

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Payments and Cash Receipts. This ASU

In October 2016, the FASB issued ASU 2016-16, Intra-entity Transfers of Assets Other than Inventory. This ASU states

6783_10K_C1.pdf March 13, 2019 pg 54

In November 2016, the FASB issued ASU 2016-18, Restricted Cash. This ASU requires that amounts generally described

In January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business. This

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net

6783_10K_C1.pdf March 13, 2019 pg 55

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud

Note 2—Restructuring Charges

During the years ended December 31, 2018, 2017 and 2016, we recorded restructuring charges, net of adjustments, of

$13.2 million, $17.6 million and $5.7 million, respectively. These charges were primarily related to our ongoing initiatives to
drive profitable growth and right size our operations.

Americas segment restructuring charges of $2.3 million during the year ended December 31, 2018, were related to

severance costs for staff reductions in our Northern North America and Latin America Regions. International segment
restructuring charges of $5.6 million during the year ended December 31, 2018, were primarily related to severance costs for
staff reductions associated with our ongoing initiatives to drive profitable growth in Europe. Corporate segment restructuring
charges of $5.3 million during the year ended December 31, 2018, related primarily to legal and operational realignment of our
U.S. and Canadian operations.

A total of 45 positions were eliminated in 2018. There were 8 positions eliminated in the Americas segment, 34 in the

International segment and 3 in the Corporate segment.

Americas segment restructuring charges of $13.0 million during the year ended December 31, 2017, related primarily to a
non-cash special termination benefit expense of $11.4 million for a voluntary retirement incentive package ("VRIP") as well as
severance from staff reductions in Brazil. All benefits were paid from our over funded North America pension plan.

6783_10K_C1.pdf March 13, 2019 pg 56

International segment restructuring charges of $4.9 million during the year ended December 31, 2017, related to severance costs
for staff reductions associated with our ongoing initiatives to drive profitable growth in Europe and right size our operations in
Africa. Favorable adjustments for changes in estimates on employee restructuring reserves of $0.3 million were recorded
during the year ended December 31, 2017.

Approximately 155 positions were eliminated in 2017. There were 90 positions eliminated in the Americas segment and

approximately 65 in the International segment.

International segment restructuring charges of $5.3 million during the year ended December 31, 2016, were related to

severance costs for staff reductions associated with ongoing initiatives to right size our operations in Europe and Japan.
Americas segment restructuring charges of $1.8 million during the year ended December 31, 2016, related primarily to
severance from staff reductions in Brazil and North America. Corporate segment restructuring charges were $0.2 million
during the year ended December 31, 2016. Favorable adjustments for changes in estimates on employee restructuring reserves
of $1.6 million were recorded during the year ended December 31, 2016.

A total of 179 positions were eliminated in 2016. There were 103 positions were eliminated in the Americas segment, 75

in the International segment and one in the Corporate segment.

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

(in millions)
Reserve balances at January 1, 2016

Restructuring charges

Currency translation and other adjustments

Cash payments
Reserve balances at December 31, 2016

Restructuring charges

Currency translation and other adjustments

Cash payments / utilization
Reserve balances at December 31, 2017

Restructuring charges

Currency translation and other adjustments

Cash payments
Reserve balances at December 31, 2018

Note 3—Inventories

The following table sets forth the components of inventory:

Americas

International

Corporate

Total

1.6

5.4

1.1

1.8
(0.5)
(2.0)
0.9

13.0
(0.2)
(13.2)
0.5

2.3
(0.3)
(2.0)
0.5

5.3
(0.6)
(7.3)
2.8

4.9
(0.1)
(4.0)
3.6

5.6
(0.3)
(4.9)
4.0

0.2
(0.5)
(0.5)
0.3

—

—
(0.3)

— $

5.3

—
(5.3)

— $

8.1

7.3
(1.6)
(9.8)
4.0

17.9
(0.3)
(17.5)
4.1

13.2
(0.6)
(12.2)
4.5

(In thousands)
Finished products

Work in process

Raw materials and supplies

Inventories at current cost

Less: LIFO valuation

Total inventories

December 31,

2018

2017

65,965

6,169

124,554

196,688
(40,086)
156,602

66,064

10,141

117,388

193,593
(39,854)
153,739

Inventories stated on the LIFO basis represent 39% of total inventories at both December 31, 2018 and 2017.

Reductions in certain inventory quantities during the year ended December 31, 2016 resulted in liquidations of LIFO

inventories carried at lower costs prevailing in prior years. The effect of LIFO liquidations during 2016 reduced cost of sales
by $0.3 million and increased net income by $0.2 million. We did not have any LIFO liquidations during the years ended
December 31, 2018 and 2017.

6783_10K_C1.pdf March 13, 2019 pg 57

Note 4—Property, Plant, and Equipment

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

(In thousands)

Land

Buildings

Machinery and equipment

Construction in progress

Total

Less accumulated depreciation

Property, plant, and equipment, net

Note 5—Reclassifications Out of Accumulated Other Comprehensive Loss

December 31,

2018

2017

3,188

117,910

386,690

24,044

531,832
(373,892)
157,940

3,312

119,970

379,747

12,036

515,065
(358,051)
157,014

(In thousands)
Pension and other post-retirement benefits
Balance at beginning of period

Unrecognized net actuarial (losses) gains

Unrecognized prior service credit

Tax benefit (expense)

Total other comprehensive (loss) income
before reclassifications, net of tax

Amounts reclassified from accumulated other
comprehensive loss:

Amortization of prior service credit(a)
Recognized net actuarial losses(a)
Tax benefit

Total amount reclassified from accumulated
other comprehensive loss, net of tax

Total other comprehensive (loss) income

Balance at end of period
Available-for-sale securities
Balance at beginning of period

Unrealized losses on available-for-sale
securities (Note 18)

Balance at end of period
Foreign currency translation
Balance at beginning of period

Reclassification into net income

MSA Safety Incorporated

Noncontrolling Interests

2018

2017

2016

2018

2017

2016

$ (97,948)
(37,977)

—

9,936

$ (118,068) $ (119,389)
(12,473)
1,092

17,659

—
(6,124)

5,033

(28,041)

11,535

(6,348)

(424)

14,507

(3,611)

(176)
13,054
(4,293)

(427)
11,989
(3,893)

10,472

(17,569)

$ (115,517)

8,585

7,669

20,120

1,321
$ (97,948) $ (118,068)

—

— $

(572)

—

$ — $ — $ —
—

—

$ — $ — $ —

—

$ (73,814)

$ (112,178) $ (88,810)

801

$ (1,964) $ (3,616)

Foreign currency translation adjustments

(29,798)

774 (b)

—

2,500 (c)

38,364

(25,868)
$ (73,814) $ (112,178)

—
(305)
496

—

2,765

770 (d)
882
$ (1,964)

$ (102,838)

Balance at end of period
(a)Included in the computation of net periodic pension and other post-retirement benefit costs (refer to Note 14).
(b)Included in Currency exchange losses, net on the Consolidated Statement of Income.
(c)Of the $2.5 million reclassified into net income, $3.4 million is included in (Loss) income from discontinued operations (refer
to Note 20) on the Consolidated Statement of Income offset by a gain of $0.9 million included in Currency exchange losses,
net.
(d)Included in Loss from discontinued operations (refer to Note 20) and Net income attributable to noncontrolling interests on
the Consolidated Statement of Income.

801

6783_10K_C1.pdf March 13, 2019 pg 58

Note 6—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 52,878 shares held in treasury at December 31, 2018. The
Treasury shares at cost line of the Consolidated Balance Sheet includes $1.8 million related to preferred stock. There were no
treasury purchases of preferred stock during the years ended December 31, 2018, 2017 or 2016. 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
December 31, 2018 or 2017.

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 both December 31, 2018 and December 31, 2017. There were 38,526,523 and 38,222,928
shares outstanding at December 31, 2018 and 2017, 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. The share repurchase program has no expiration date. The
maximum number of shares that may be purchased is calculated based on the dollars remaining under the program and the
respective month-end closing share price. There were 168,941 shares repurchased during 2017. No shares were repurchased
during 2018 or 2016. We do not have any other share repurchase programs. There were 23,554,868 and 23,858,463 Treasury
Shares at December 31, 2018 and 2017, respectively.

The Company issues Treasury Shares for all share based benefit plans. Shares are issued from Treasury at the average

Treasury Share cost on the date of the transaction. There were 357,510 and 648,164 Treasury Shares issued for these purposes
during the years ended December 31, 2018 and 2017, respectively.

6783_10K_C1.pdf March 13, 2019 pg 59

Common stock activity is summarized as follows:

Dollars

Issued

Treasury

(Dollars in thousands)
Balances January 1, 2016

Restricted stock awards

Restricted stock expense

Restricted stock forfeitures

Stock options exercised

Stock option expense

Stock option forfeitures

Performance stock issued

Performance stock expense

Performance stock forfeitures

Employee stock purchase plan

Tax benefit related to stock plans

Treasury shares purchased for stock compensation programs

Balances December 31, 2016
Restricted stock awards
Restricted stock expense

Restricted stock forfeitures

Stock options exercised

Stock option expense

Performance stock issued

Performance stock expense

Employee stock purchase plan

Treasury shares purchased for stock compensation programs

Stock Repurchase program

Acquisition of noncontrolling interest

Balances December 31, 2017
Restricted stock awards

Restricted stock expense

Restricted stock forfeitures

Stock options exercised

Stock option expense

Stock option forfeitures
Performance stock issued

Performance stock expense

Performance stock forfeitures
Employee stock purchase plan

Treasury shares purchased for stock compensation programs

62,081,391

—

—
62,081,391

—

62,081,391

—

—
—

—
—
—

—

(24,708,917) $
29,836

—
(2,800)
341,063

—

31,093

—

9,500

—
(44,588)
(24,344,813) $
34,798

—
(690)
620,646

—

72,504

—

7,127
(79,094)
(168,941)
—

(23,858,463) $
92,401

—

—
215,724

—
—
41,660

—
—
7,725
(53,915)
(23,554,868) $

Common
Stock

157,643
(355)
3,604
(148)
5,617

2,484
(25)
(371)
3,324
(28)
458

478

—
172,681
(422)
4,746
(49)
10,901

380
(866)
6,687

445

—

450

194,953
(1,079)
6,504
(283)
5,738

272
(55)
(523)
6,186
(385)
478

—

211,806

Treasury
Cost
$ (293,318)
355

—

6,859

—

371

—

113

—
(1,881)
$ (287,501)
422

—
(6)
7,564

—

866

—

87
(5,732)
(11,781)
—
$ (296,081)
1,079

—

—
2,835

—
—
523

—
—
78
(4,824)
$ (296,390)

Balances December 31, 2018

62,081,391

6783_10K_C1.pdf March 13, 2019 pg 60

Note 7—Segment Information

We are organized into six geographic operating segments based on management responsibilities. 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: Americas, International and Corporate.

The Americas segment is comprised of our operations in North America and Latin America geographies. The

International segment is comprised of our operations in all geographies outside of the Americas. 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.

Adjusted operating income (loss) and adjusted operating 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 from continuing operations excluding restructuring charges, currency exchange gains (losses), other operating expense
and strategic transaction costs. Adjusted operating margin is defined as adjusted operating income (loss) divided by segment
sales to external customers. Adjusted operating income (loss) and adjusted operating margin are not recognized terms under
U.S. GAAP, and therefore, do not purport to be alternatives to operating income or operating margin from continuing
operations as a measure of operating performance. Further, the Company's measure of adjusted operating income (loss) and
adjusted operating margin may not be comparable to similarly titled measures of other companies. Adjusted operating income
(loss) on a consolidated basis is presented in the following table to reconcile the segment operating performance measure to
operating income as presented on the Consolidated Statement of Income.

The accounting principles applied at the operating segment level in determining operating income (loss) are generally the

same as those applied at the consolidated financial statement level. Sales and transfers between operating segments are
accounted for at market-based transaction prices and are eliminated in consolidation.

6783_10K_C1.pdf March 13, 2019 pg 61

Reportable segment information is presented in the following table:

(In thousands)

2018

Sales to external customers
Intercompany sales
Operating income
Restructuring and other charges (Note 2)
Currency exchange losses, net
Other operating expense (Note 19)
Strategic transaction costs (Note 13)
Adjusted operating income (loss)
Adjusted operating margin %
Noncash items:

Depreciation and amortization
Pension (income) expense

Total Assets
Capital expenditures

2017

Depreciation and amortization
Pension (income) expense

Total Assets
Capital expenditures

2016

Depreciation and amortization
Pension (income) expense

Total Assets
Capital expenditures

Americas

International

Corporate

Reconciling
Items(1)

Consolidated
Totals

$ 854,287
136,534

$ 503,817
336,361

— $
—

206,839

24.2%

59,866

11.9%

(31,901)

(472,895)

— $1,358,104
—
173,479
13,247
2,330
45,327
421
234,804

—

24,143
(1,201)
1,077,938
25,001

13,303
7,102
522,042
8,959

406
—
10,842
—

—
—
(2,810)
—

37,852
5,901
1,608,012
33,960

$ 736,847
124,886

$ 459,962
304,376

— $
—

175,589

23.8%

50,391

11.0%

(32,987)

(429,262)

— $1,196,809
—
39,577
17,632
5,127
126,432
4,225
192,993

—

23,207
246
1,110,698
16,910

14,265
6,896
563,480
6,815

405
—
12,099
—

—
—
(1,451)
—

37,877
7,142
1,684,826
23,725

$ 678,433
113,273

$ 471,097
275,640

— $
—

154,298

22.7%

51,490

10.9%

(36,095)

(388,913)

— $1,149,530
—
160,702
5,694
766
—
2,531
169,693

—

21,046
(544)
836,243
16,306

13,821
6,876
505,278
9,217

406
—
10,903
—

—
—
1,496
—

35,273
6,332
1,353,920
25,523

(1)Reconciling items consist primarily of intercompany eliminations and items not directly attributable to operating segments.

6783_10K_C1.pdf March 13, 2019 pg 62

Geographic information on sales to external customers, based on country of origin:

(In thousands)
United States

Other

Total

Geographic information on long-lived assets, based on country of origin:

(In thousands)
United States

Other

Total

Total sales by product group was as follows:

2018

2017

2016

734,033

622,276

580,724

624,071

574,533

568,806

$ 1,358,104

$ 1,196,809

$ 1,149,530

2018

2017

2016

92,511

65,429

157,940

91,730

65,284

157,014

84,674

64,004

148,678

2018

(In thousands)

Breathing Apparatus
Fixed Gas & Flame Detection
Firefighter Helmets & Protective Apparel
Portable Gas Detection
Industrial Head Protection
Fall Protection
Other
Total

2017

(In thousands)

Breathing Apparatus
Fixed Gas & Flame Detection
Firefighter Helmets & Protective Apparel
Portable Gas Detection
Industrial Head Protection
Fall Protection
Other
Total

2016

(In thousands)

Breathing Apparatus
Fixed Gas & Flame Detection
Firefighter Helmets & Protective Apparel
Portable Gas Detection
Industrial Head Protection
Fall Protection
Other
Total

Consolidated

Americas

International

Dollars
324,672
262,432
169,679
163,716
146,388
109,472
181,745
$ 1,358,104

Percent
24%
19%
13%
12%
11%
8%
13%
100%

Dollars
$ 205,100
135,922
136,794
109,401
114,465
61,289
91,316
$ 854,287

Percent
24%
16%
16%
13%
13%
7%
11%
100%

Consolidated

Americas

Dollars
292,448
248,047
103,441
149,063
133,180
98,929
171,701
$ 1,196,809

Percent
24%
21%
9%
12%
11%
8%
15%
100%

Dollars
$ 191,457
123,414
69,767
98,580
105,514
54,468
93,647
$ 736,847

Percent
26%
17%
9%
13%
14%
7%
14%
100%

Consolidated

Americas

Dollars
303,364
239,601
52,577
142,784
118,197
97,021
195,986
$ 1,149,530

Percent
26%
21%
5%
12%
10%
8%
18%
100%

Dollars
$ 199,252
125,697
21,880
91,200
94,750
44,571
101,083
$ 678,433

Percent
29%
19%
3%
13%
14%
7%
15%
100%

Dollars
119,572
126,510
32,885
54,315
31,923
48,183
90,429
503,817

Percent
24%
25%
6%
11%
6%
10%
18%
100%

International

Dollars
100,991
124,633
33,674
50,483
27,666
44,461
78,054
459,962

Percent
22%
27%
7%
11%
6%
10%
17%
100%

International

Dollars
104,112
113,904
30,697
51,584
23,447
52,450
94,903
471,097

Percent
22%
24%
6%
11%
5%
11%
21%
100%

6783_10K_C1.pdf March 13, 2019 pg 63

Note 8—Earnings per Share

Basic earnings per share is computed by dividing net income, after the deduction of preferred stock dividends and
undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding
during the period. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share
equivalents outstanding not classified as participating securities. Participating securities are defined as unvested stock-based
payment awards that contain nonforfeitable rights to dividends.

(In thousands, except per share amounts)
Net income attributable to continuing operations

Preferred stock dividends

Income from continuing operations available to common equity

Dividends and undistributed earnings allocated to participating securities

Income from continuing operations available to common shareholders

Net loss attributable to discontinued operations

Preferred stock dividends

Loss from discontinued operations available to common equity

Dividends and undistributed earnings allocated to participating securities
Loss from discontinued operations available to common shareholders

Basic weighted-average shares outstanding

Stock options and other stock compensation

Diluted weighted-average shares outstanding

Antidilutive stock options

Earnings per share attributable to continuing operations:

Basic

Diluted

Loss per share attributable to discontinued operations:

Basic

Diluted

2018

2017

2016

124,150
(42)
124,108
(117)
123,991

26,027
(42)
25,985
(62)
25,923

— $

—

—
—

38,362

599

38,961

—

—
—

37,997

700

38,697

—

92,691
(42)
92,649
(144)
92,505

(755)
—
(755)
1
(754)

37,456

530

37,986

—

3.23

3.18

0.68

0.67

2.47

2.44

— $

(0.02)
(0.02)

6783_10K_C1.pdf March 13, 2019 pg 64

Note 9—Income Taxes

(In thousands)
Components of income (loss) before income taxes*

U.S. income (loss)

Non-U.S. income

Income before income taxes

Provision for income taxes*

Current

Federal

State

Non-U.S.

Total current provision

Deferred

Federal

State

Non-U.S.
Total deferred (benefit) provision

Provision for income taxes

2018

2017

2016

85,234

77,101

162,335

(20,555) $
50,330

29,775

100,382

51,529

151,911

13,574

22,272

4,265

23,446

41,285

813

11,054

34,139

291
(1,604)
(2,752)
(4,065)
37,220

(26,931) $
(3,630)
(759)
(31,320)
2,819

19,968

2,231

21,188

43,387

11,580

1,977

860

14,417
57,804

*The components of income before income taxes and the provision for income taxes relate to continuing operations.

The Company elected to treat Global Intangible Low Taxed Income (“GILTI”), which was effective in 2018 for the

Company, as a period cost.

The Tax Cuts and Jobs Act of 2017 ("the Act"), which was signed into law on December 22, 2017, has resulted in

significant changes to the U.S. corporate income tax system including reducing the U.S. corporate rate to 21% starting in 2018.
The Act also creates a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S.
subsidiaries.

On December 22, 2017, SAB 118 was issued to address the application of US GAAP in situations when a registrant does
not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain
income tax effects of the Act. In accordance with SAB 118, the Company calculated its best estimate of the impact of the Act
and recorded income tax expense of $19.8 million during the fourth quarter of 2017, the period in which the legislation was
enacted. Of this amount, $18.0 million related to the one-time transition tax and the remaining $1.8 million was related to the
revaluation of U.S. deferred tax assets and liabilities. The company previously considered the earnings in non-U.S. subsidiaries
to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. As as result of the Act, among other things,
the Company determined it will repatriate earnings for all non-U.S. subsidiaries with cash in excess of working capital needs.
The Company has estimated the associated tax to be $1.9 million, offset partially by $0.7 million of foreign tax credits. At
December 31, 2018, the Company has now completed its accounting for all of the enactment-date income tax effects of the Act.
Accordingly, we reduced our estimate for the one-time transition tax by $2.0 million and increased our estimate for the
revaluation of U.S. deferred tax assets and liabilities by $2.5 million and a $2.0 million increase associated with prepaid taxes
for updated regulations related to the Act.

MSA finalized its European reorganization during 2016. The reorganization is designed to drive optimal performance by
aligning certain strategic planning and decision making into a single location enabled by a common IT platform. During 2017,
the Company recognized a benefit of $2.5 million associated with the reduction of exit taxes related to our European
reorganization compared to incurring charges of $6.5 million in 2016 related to the European reorganization.

During 2018, the Company recorded $1.8 million of foreign income tax reserves related to the legal and operational

realignment of our U.S., Canadian and European operations.

Included in discontinued operations is tax expense of $0.3 million in 2016. There were no discontinued operations in

2018 or 2017.

6783_10K_C1.pdf March 13, 2019 pg 65

Reconciliation of the U.S. federal income tax rates for continuing operations to our effective tax rate:

U.S. federal income tax rate

U.S. tax reform

State income taxes—U.S.

Taxes on non-U.S. income - U.S., Canadian & European reorganization

Valuation allowances

Taxes on non-U.S. income

Employee share-based payments

Manufacturing deduction credit

Research and development credit

Other
Effective income tax rate

Components of deferred tax assets and liabilities:

(In thousands)
Deferred tax assets

Product liability

Capitalized research and development

Employee benefits

Net operating losses and tax credit carryforwards

Share-based compensation

Accrued expenses and other reserves

Other

Total deferred tax assets

Valuation allowances

Net deferred tax assets

Deferred tax liabilities

Goodwill and intangibles

Property, plant and equipment

Other

Total deferred tax liabilities

Net deferred taxes

2018

2017

2016

21.0 %

1.6 %

1.3 %

1.1 %

0.5 %

0.4 %

(1.6)%

(1.0)%

(0.9)%

0.5 %

22.9 %

35.0 %

66.6 %

(6.2)%

(8.4)%

(3.3)%

(24.6)%

(28.0)%

(15.3)%

(4.7)%

(1.6)%

9.5 %

35.0 %

— %

1.8 %

4.3 %

1.5 %

(2.5)%

— %

(1.3)%

(0.6)%

(0.1)%

38.1 %

December 31,

2018

2017

31,169

28,481

10,938

9,641

7,845

5,561

4,385

4,056

73,595
(5,039)
68,556

2,442

6,401

10,013

6,444

4,237

2,691

60,709
(4,559)
56,150

(31,290)
(9,555)
(2,353)
(43,198)
25,358

(30,368)
(8,056)
(1,242)
(39,666)
16,484

At December 31, 2018, we had net operating loss carryforwards of approximately $29.5 million, all of which are in non-

U.S. tax jurisdictions. All net operating loss carryforwards without a valuation allowance may be carried forward for a period of
at least six years. The change in valuation allowance for the year of $0.5 million is primarily due to our inability to recognize
deferred tax assets on certain foreign entities that continue to generate losses partially offset by the release of a valuation
allowance on certain losses.

6783_10K_C4.pdf 66 March 20, 2019

A reconciliation of the change in the tax liability for unrecognized tax benefits for the years ended December 31, 2018

and 2017 is as follows:

(In thousands)
Beginning balance

Adjustments for tax positions related to the current year

Adjustments for tax positions related to prior years

Statute expiration

Ending balance

2018

2017

15,055

1,869
(32)
(737)
16,155

14,393

1,921
(766)
(493)
15,055

The total amount of unrecognized tax benefits, if recognized, would reduce our future effective tax rate. We have
recognized tax benefits associated with these liabilities in the amount of $5.2 million and $5.5 million at December 31, 2018
and 2017, respectively.

We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. Our

liability for accrued interest and penalties related to uncertain tax positions was $3.3 million and $2.2 million at December 31,
2018 and 2017, respectively.

We file a U.S. federal income tax return along with various state and foreign income tax returns. Examinations of our

U.S. federal returns have been completed through 2013, with the 2014 tax year closed by statute. Various state and foreign
income tax returns may be subject to tax audits for periods after 2010.

Note 10—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, 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. Stock options are granted at market prices and expire
after ten years. Stock options are exercisable beginning three years after the grant date. Restricted stock and restricted stock
units are granted without payment to the Company and generally vest three years after the grant date. Restricted stock and
restricted stock units are valued at the market value of the stock on the grant date. Performance stock units with a market
condition are valued at an estimated fair value using the Monte Carlo model. The final number of shares to be issued for
performance stock units may range from zero to 200% of the target award based on achieving the specified performance targets
over the performance period. In general, unvested stock options, restricted stock and performance stock units are forfeited if the
participant’s employment with the Company terminates for any reason other than retirement, death or disability. We issue
Treasury shares for stock option exercises and grants of restricted stock and performance stock. Please refer to Note 6 for
further information regarding stock compensation share issuance. As of December 31, 2018, there were 1,054,730 and 114,878
shares, respectively, reserved for future grants under the management and non-employee directors’ equity incentive plans.

Stock-based compensation expense was as follows:

(In thousands)
Restricted stock

Stock options

Performance stock

Total compensation expense before income taxes

Income tax benefit

2018

2017

2016

6,221

4,691

217
5,801

12,239

2,974

380
6,687

11,758

4,440

3,456

2,459
3,296

9,211

3,375

5,836

Total compensation expense, net of income tax benefit

9,265

7,318

We did not capitalize any stock-based compensation expense, and all expense is recorded in selling, general and

administrative expense in 2018, 2017, and 2016.

Stock option expense is based on the fair value of stock option grants estimated on the grant dates using the Black-

Scholes option pricing model and the following weighted average assumptions for options granted in 2016. There were no
stock options granted in 2018 and 2017.

6783_10K_C1.pdf March 13, 2019 pg 67

Fair value per option

Risk-free interest rate

Expected dividend yield

Expected volatility

Expected life (years)

2016

11.69

1.6%

2.8%

34%

7.0

The risk-free interest rate is based on the U.S. Treasury Constant Maturity rates as of the grant date converted into an
implied spot rate yield curve. Expected dividend yield is based on the most recent annualized dividend divided by the one year
average closing share price. Expected volatility is based on the ten year historical volatility using daily stock prices. Expected
life is based on historical stock option exercise data.

A summary of option activity follows:

Outstanding January 1, 2016

Granted
Exercised

Forfeited

Outstanding December 31, 2016

Exercised

Outstanding December 31, 2017

Exercised

Forfeited

Outstanding December 31, 2018

1,694,675

235,233
(341,063)
(12,753)
1,576,092
(620,646)
955,446
(215,724)
(4,721)
735,001

Weighted
Average
Exercise Price

Exercisable at
Year-end

36.69

44.50
37.34

46.11
37.63

29.75

42.75

39.25

44.50

43.79

1,098,615

614,414

638,673

For various exercise price ranges, characteristics of outstanding and exercisable stock options at December 31, 2018 were

as follows:

Range of Exercise Prices
$17.83 – $33.00

$33.01 – $45.00

$45.01 – $51.69

$17.83 – $51.69

Range of Exercise Prices
$17.83 – $33.00

$33.01 – $45.00

$45.01 – $51.69

$17.83 – $51.69

Stock Options Outstanding

Weighted-Average

Exercise Price

Remaining Life

39,485

359,713

335,803

735,001

25.01

40.39

49.64

43.79

0.90

4.32

4.65

4.28

Stock Options Exercisable

Weighted-Average

Exercise Price

Remaining Life

39,485

263,385

335,803

638,673

25.01

38.89

49.64

43.68

0.90

3.27

4.65

3.85

Cash received from the exercise of stock options was $8.6 million, $18.5 million and $12.5 million for the years ended

December 31, 2018, 2017 and 2016, respectively. The tax benefit we realized from these exercises was $2.5 million, $7.4
million and $0.6 million for the years ended December 31, 2018, 2017 and 2016, respectively.

6783_10K_C1.pdf March 13, 2019 pg 68

Stock options become exercisable when they are vested. The aggregate intrinsic value of stock options exercisable at
December 31, 2018 was $60.2 million. The aggregate intrinsic value of all stock options outstanding at December 31, 2018 was
$69.3 million.

A summary of restricted stock and unit activity follows:

Unvested January 1, 2016

Granted

Vested

Forfeited

Unvested at December 31, 2016

Granted

Vested

Forfeited

Unvested at December 31, 2017

Granted

Vested
Forfeited

Unvested at December 31, 2018

A summary of performance stock unit activity follows:

Unvested at January 1, 2016

Granted

Vested

Performance adjustments

Forfeited

Unvested at December 31, 2016

Granted

Vested

Performance adjustments

Forfeited

Unvested at December 31, 2017

Granted

Vested

Performance adjustments

Forfeited

Unvested at December 31, 2018

Weighted Average
Grant Date
Fair Value

217,709

107,465
(76,568)
(14,014)
234,592

72,878
(76,834)
(3,475)
227,161

75,430
(92,401)
(4,741)
205,449

49.70

50.65

49.12

48.23

49.76

75.27

52.74

50.46

57.50

87.36

58.10

59.61

68.97

Weighted Average
Grant Date
Fair Value

171,644

65,355
(31,093)
(15,682)
(3,603)
186,621

98,886
(72,504)
29,183
—

242,186
62,775
(41,660)
(35,756)
(8,659)
218,886

50.24

44.28

58.54

44.47

46.18

72.73

57.19

57.27
—

55.06
84.79

40.23

45.21

44.53

68.43

The 2018 performance adjustments above relate to adjustments made relative to awards that did not meet the performance

targets when vested during 2018 including the final number of shares issued for the 2015 Management Performance Units,
which were 93.6% of the target award based on Total Shareholder Return during the three year performance period, and vested
in the first quarter of 2018.

6783_10K_C1.pdf March 13, 2019 pg 69

During the years ended December 31, 2018, 2017 and 2016, the total intrinsic value of stock options exercised (the
difference between the market price on the date of exercise and the option price paid to exercise the option) was $12.2 million,
$29.3 million and $6.4 million, respectively. The fair values of restricted stock vested during the years ended December 31,
2018, 2017 and 2016 were $5.4 million, $4.1 million and $3.7 million, respectively. The fair value of performance stock units
vested during the years ended December 31, 2018, 2017 and 2016 was $1.7 million, $4.1 million and $1.8 million, respectively.

On December 31, 2018, there was $8.1 million of unrecognized stock-based compensation expense. The weighted

average period over which this expense is expected to be recognized was approximately 1.7 years.

Note 11—Short and Long-Term Debt

Short-Term Debt

Short-term borrowings with banks, which excludes the current portion of long-term debt, was insignificant at

December 31, 2018 and 2017, respectively. The average month-end balance of total short-term borrowings during 2018 was
$0.1 million. The maximum month-end balance of $0.3 million occurred in May 2018.

Long-Term Debt

(In thousands)

2006 Senior Notes payable through 2021, 5.41%, net of debt issuance costs
2010 Senior Notes payable through 2021, 4.00%, net of debt issuance costs

2016 Senior Notes payable through 2031, 3.40%, net of debt issuance costs
Senior revolving credit facility maturing in 2023, net of debt issuance costs
Total

Amounts due within one year

Long-term debt

December 31,

2018

2017

— $

60,000

69,604

231,707

361,311

20,000

26,667
80,000

74,139

293,693

474,499

26,667

341,311

447,832

On September 7, 2018, the Company entered into a Third Amended and Restated Credit Agreement associated with our
senior revolving credit facility which extended the term of the revolving credit facility through September 2023 and increased
the capacity to $600.0 million. Under this 2018 Amended and Restated Credit Agreement, the Company may elect either a
Base rate of interest (“BASE”) or an interest rate based on the London Interbank Offered Rate (“LIBOR”). The BASE is a
daily fluctuating per annum rate equal to the highest of (i) 0.00%, (ii) the Prime Rate, (ii) the Federal Funds Open Rate plus one
half of one percent (0.5%), (iii) the Overnight Bank Funding Rate, plus one half of one percent (0.5%), or (iv) the Daily Libor
Rate plus one percent (1.00%). The Company pays a credit spread of 0 to 175 basis points based on the Company’s net
EBITDA leverage ratio and the elected rate (BASE or LIBOR). The Company has a weighted average revolver interest rate of
3.47% as of December 31, 2018. At December 31, 2018, $363.5 million of the existing $600.0 million senior revolving credit
facility was unused, including letters of credit.

On January 22, 2016, the Company entered into a Second Amended and Restated Multi-Currency Note Purchase and
Private Shelf Agreement (the "Notes"), pursuant to which MSA issued notes in an aggregate original principal amount of £54.9
million (approximately $69.7 million at December 31, 2018). The Notes are repayable in annual installments of £6.1 million
(approximately $7.7 million at December 31, 2018), commencing January 22, 2023, with a final payment of any remaining
amount outstanding on January 22, 2031. The interest rate on these Notes is fixed at 3.4%. On September 7, 2018, the
Company entered into an amended and restated agreement associated with these Notes. Under the Second Amended and
Restated Multi-Currency Note Purchase and Private Shelf Agreement, as amended ("Amended Note Purchase Agreement"), the
Company may request from time to time during a three-year period ending September 7, 2021, the issuance of up to $150
million of additional senior notes.

On January 4, 2019, the Company entered into an amended and restated agreement associated with the New York Life
master note facility dated June 2, 2014. Under this Amended and Restated Master Note Facility ("Amended Note Facility"),
the Company may request from time to time during a three-year period ending January 4, 2022, the issuance of up to $150
million of additional senior promissory notes. As of the Form 10-K filing date, there are no promissory notes outstanding.

6783_10K_C1.pdf March 13, 2019 pg 70

Both the Amended Note Purchase Agreement and Amended Note Facility require MSA to comply with specified financial

covenants, including a requirement to maintain a minimum fixed charges coverage ratio of not less than 1.50 to 1.00 and a
consolidated net leverage ratio not to exceed 3.50 to 1.00, except during an acquisition period in which case the consolidated
net leverage ratio shall not exceed 4.00 to 1.00; in each case calculated on the basis of the trailing four fiscal quarters. In
addition, the Amended Note Purchase Agreement and Amended Note Facility both contain negative covenants limiting the
ability of MSA 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 MSA's or its subsidiaries' business.
However, the covenants contained in the Amended Note Facility do not apply until promissory notes are issued.

On August 24, 2018, we repaid our 5.41% 2006 Senior Notes. In connection with the payoff of these notes, MSA

recognized a loss on extinguishment of debt of $1.5 million which was recorded in loss on extinguishment of debt on our
consolidated statement of income.

Approximate maturities on our long-term debt over the next five years are $20.0 million in 2019, $20.0 million in 2020,

$20.0 million in 2021, none in 2022, $241.2 million in 2023, and $62.0 million thereafter. The revolving credit facilities
require the Company to comply with specified financial covenants. In addition, the credit facilities contain negative covenants
limiting the ability of the Company and its subsidiaries to enter into specified transactions. The Company was in compliance
with all covenants at December 31, 2018.

The Company had outstanding bank guarantees and standby letters of credit with banks as of December 31, 2018, totaling

$11.4 million, of which $3.1 million relate to the senior revolving credit facility. The letters of credit serve to cover customer
requirements in connection with certain sales orders and insurance companies. The full amount of the letters of credit remains
unused and available at December 31, 2018. The Company is also required to provide cash collateral in connection with certain
arrangements. At December 31, 2018, the Company has $0.5 million of restricted cash in support of these arrangements.

Note 12—Goodwill and Intangible Assets

Changes in goodwill during the years ended December 31, 2018 and 2017 were as follows:

(In thousands)
Net balance at January 1

Additions (Note 13)

Disposals

Currency translation

Net balance at December 31

2018

2017

422,185

333,276

—
(525)
(8,020)
413,640

74,453

—

14,456

422,185

At December 31, 2018, goodwill of $273.2 million and $140.4 million related to the Americas and International reporting

segments, respectively.

Changes in intangible assets, net of accumulated amortization, during the years ended December 31, 2018 and 2017 were

as follows:

(In thousands)
Net balance at January 1

Additions (Note 13)

Amortization expense

Currency translation

Net balance at December 31

2018

2017

183,088

77,015

—
(10,509)
(3,064)
169,515

110,680
(9,434)
4,827

183,088

6783_10K_C1.pdf March 13, 2019 pg 71

(In millions)

December 31, 2018

December 31, 2017

Intangible Assets:
Customer relationships

Distribution agreements

Technology related assets

Patents, trademarks and
copyrights

License agreements

Other
Total

Weighted Average
Useful Life (years)

Gross
Carrying
Amount

Accumulated
Amortization
and Reserves

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization
and Reserves

Net
Carrying
Amount

46.7

66.1

28.3

18.7

5.3

2.9
168.0

(10.6) $
(14.1)
(15.5)

(10.4)
(5.3)
(2.6)
(58.5) $

36.1

52.0

12.8

8.3

—

0.3
109.5

49.6

66.3

28.7

19.2

5.3

2.9
172.0

(7.6) $
(10.9)
(13.0)

(9.7)
(5.3)
(2.5)
(49.0) $

42.0

55.4

15.7

9.5

—

0.4
123.0

During 2017, we acquired a trade name with an indefinite life totaling $60.0 million. This intangible asset is tested for

impairment on October 1st of each year, or more frequently if indicators of impairment exist.

Intangible asset amortization expense over the next five years is expected to be approximately $10 million in 2019

through 2021, $9 million in 2022, and $8 million in 2023.

Note 13—Acquisitions

Acquisition of Globe Holding Company, LLC

On July 31, 2017, we acquired 100% of the common stock in Globe Holding Company, LLC ("Globe") in an all-cash
transaction valued at $215 million plus a working capital adjustment of $1.4 million. There is no contingent consideration.

Based in Pittsfield, NH, Globe is a leading innovator and provider of firefighter protective clothing and boots. This
acquisition aligns with our corporate strategy in that it strengthens our leading position in the North American fire service
market. The transaction was funded through borrowings on our unsecured senior revolving credit facility.

Globe operating results are included in our consolidated financial statements from the acquisition date as part of the
Americas reportable segment. The acquisition qualifies as a business combination and was accounted for using the acquisition
method of accounting.

We finalized the purchase price allocation as of June 30, 2018. The following table summarizes the fair values of the

Globe assets acquired and liabilities assumed at the date of acquisition:

(In millions)
Current assets (including cash of $58 thousand)
Property, plant and equipment
Trade name
Distributor relationships
Acquired technology and other intangible assets
Goodwill
Total assets acquired
Total liabilities assumed
Net assets acquired

July 31, 2017

28.6
8.3
60.0
40.2
10.5
74.5
222.1
5.7
216.4

Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. Fair

values were determined by management, based, in part on an independent valuation performed by a third party valuation
specialist. The valuation methods used to determine the fair value of intangible assets included the relief from royalty method
for trade name and technology related intangible assets; the excess earnings approach for distributor relationships using
distributor inputs and contributory charges; and the cost method for assembled workforce which is included in goodwill. A
number of significant assumptions and estimates were involved in the application of these valuation methods, including sales
volumes and prices, royalty rates, costs to produce, tax rates, capital spending, discount rates, and working capital changes.
Cash flow forecasts were generally based on Globe pre-acquisition forecasts coupled with estimated MSA sales synergies.

6783_10K_C1.pdf March 13, 2019 pg 72

Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives. The distributor
relationships acquired in the Globe transaction will be amortized over a period of 20 years and the remaining identifiable assets
will be amortized over 5 years. The trade name was determined to have an indefinite useful life. We will perform an
impairment assessment annually on October 1st on the trade name, or sooner if there is a triggering event. Additionally, as part
of each impairment assessment, we will reassess whether the asset continues to have an indefinite life or whether it should be
reassessed with a finite life. Estimated future amortization expense related to the identifiable intangible assets is approximately
$4.1 million in each of the next three years, $3.2 million in year four, and $2.0 million in year five. Estimated future
depreciation expense related to Globe property, plant and equipment is approximately $1.0 million in each of the next five
years.

Acquisition of Senscient, Inc.

On September 19, 2016, we acquired 100% of the common stock of Senscient, Inc. ("Senscient") for $19.1 million in
cash. There is no contingent consideration. Senscient, which is headquartered in the UK, is a leader in laser-based gas detection
technology. The acquisition of Senscient expands and enhances MSA’s technology offerings in the global market for fixed gas
and flame detection systems, as the Company continues to execute its core product growth strategy. The acquisition was
funded through borrowings on our unsecured senior revolving credit facility.

We finalized the purchase price allocation as of September 30, 2017. The following table summarizes the fair values of

the Senscient assets acquired and liabilities assumed at the date of acquisition:

(In millions)
Current assets (including cash of $0.7 million)
Property, plant and equipment and other noncurrent assets
Acquired technology
Customer-related intangibles
Goodwill
Total assets acquired
Total liabilities assumed
Net assets acquired

September 19, 2016
5.9
$
0.3
1.6
2.8
10.5
21.1
2.0
19.1

Assets acquired and liabilities assumed in connection with both acquisitions have been recorded at their fair values. Fair

values were determined by management, based, in part on an independent valuation performed by a third party valuation
specialist. The valuation methods used to determine the fair value of intangible assets included the excess earnings approach for
all customer relationships and Latchways technology related intangible assets; the relief from royalty method for the Latchways
trade name and Senscient technology related intangible assets; and the cost method for assembled workforce which is included
in goodwill for both acquisitions. A number of significant assumptions and estimates were involved in the application of these
valuation methods, including sales volumes and prices, costs to produce, tax rates, capital spending, discount rates, and working
capital changes. Cash flow forecasts were generally based on Senscient pre-acquisition forecasts coupled with estimated MSA
sales synergies. Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives. The
identifiable intangible assets for Senscient include technology and customer-related intangibles which will be amortized over
ten and five years, respectively. Estimated future amortization expense related to Senscient identifiable intangible assets is
approximately $0.7 million in years one and two, $0.5 million in year three and $0.2 million in years four and five.

Goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired and represents the
future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.
Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets
acquired were the acquisition of an assembled workforce, the expected synergies and other benefits that we believe will result
from combining the operations of Globe, Latchways and Senscient with our operations. Goodwill of $74.5 million related to the
Globe acquisition has been recorded in the Americas reportable segment and is expected to be tax deductible. Goodwill of
$10.5 million related to the Senscient acquisition was recorded in the International reportable segment and is expected to be tax
deductible.

6783_10K_C1.pdf March 13, 2019 pg 73

Our results for the year ended December 31, 2018 include strategic transaction costs of $0.4 million, including an
immaterial amount of integration costs of related to the Globe acquisition. Our results for the year ended December 31, 2017
include strategic transaction costs of $4.2 million, including transaction and integration costs of $1.8 million related to the
Globe acquisition as well as integration costs of $0.4 million related to the Senscient acquisition. Our results for the year ended
December 31, 2016, include strategic transaction costs of $2.5 million including transaction and integration costs of $0.8
million related to the Senscient acquisition. These costs are all reported in selling, general and administrative expenses.

The operating results of both acquisitions have been included in our consolidated financial statements from the acquisition
date. Our results for the year ended December 31, 2018 include Globe sales of $113.9 million and net income of $13.3 million.
These results include depreciation expense of $1.0 million and amortization expense of $4.1 million. Excluding transaction and
integration costs, Globe provided $13.6 million of net income for the year ended December 31, 2018. Our results for the year
ended December 31, 2017 include Globe sales of $46.1 million and net income of $3.7 million. These results include
depreciation expense of $0.5 million and amortization expense of $1.7 million. Excluding transaction and integration costs,
Globe provided $4.9 million of net income for the year ended December 31, 2017. Our results for the year ended December 31,
2016 include Senscient sales of $2.7 million and a net loss of $1.1 million which includes amortization, primarily related to
intangible assets, of $0.2 million.

The following unaudited pro forma information presents our combined results as if both acquisitions had occurred at the

beginning of 2016. The unaudited pro forma financial information was prepared to give effect to events that are (1) directly
attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined
company’s results. There were no material transactions between MSA and Senscient or Globe during the periods presented that
are required to be eliminated. Intercompany transactions between Senscient companies and Globe companies during the periods
presented have been eliminated in the unaudited pro forma combined financial information. The unaudited pro forma financial
information does not reflect any cost savings, operating synergies or revenue enhancements that the combined companies may
achieve as a result of the acquisitions or the costs to integrate the operations or the costs necessary to achieve cost savings,
operating synergies or revenue enhancements.

Pro forma financial information (Unaudited)

(In millions, except per share amounts)

Net sales

Income from continuing operations

Basic earnings per share from continuing operations

Diluted earnings per share from continuing operations

2017

2016

1,261 $

1,263

0.93

0.92

105

2.81

2.78

The unaudited pro forma combined financial information is presented for information purposes only and is not intended to

represent or be indicative of the combined results of operations or financial position that we would have reported had the
acquisitions been completed as of the date and for the periods presented, and should not be taken as representative of our
consolidated results of operations or financial condition following the acquisitions. In addition, the unaudited pro forma
combined financial information is not intended to project the future financial position or results of operations of the combined
company.

The unaudited pro forma financial information was prepared using the acquisition method of accounting for both

acquisitions under existing U.S. GAAP. MSA has been treated as the acquirer.

Note 14—Pensions and Other Post-retirement Benefits

We maintain various defined benefit and defined contribution plans covering the majority of our employees. Our
principal U.S. plan is funded in compliance with the Employee Retirement Income Security Act (ERISA). It is our general
policy to fund current costs for the international plans, except in Germany and Mexico, where it is common practice and
permissible under tax laws to accrue book reserves.

We provide health care benefits and limited life insurance for certain retired employees who are covered by our principal

U.S. defined benefit pension plan until they become Medicare-eligible.

6783_10K_C1.pdf March 13, 2019 pg 74

Information pertaining to defined benefit pension plans and other post-retirement benefits plans is provided in the

following table:

Pension Benefits

Other Benefits

2018

2017

2018

2017

$ 560,385

$ 503,997

22,027

23,680

11,125

17,214

—
(29,181)
(23,724)
(2,151)
(726)
—
(7,519)
525,520

492,677
(26,804)
4,718

97
(726)
(23,724)
(704)
(2,422)
443,112

(82,408)
5
(687)
178,640

95,550

11,023

18,450

100

—

27,967
(28,953)
—
(573)
11,384

16,990
560,385

433,262

81,192

4,094

100
(573)
(28,953)
(222)
3,777

492,677

(67,708)
6
(764)
162,032

93,566

57,568
(5,741)
(134,231)
(82,404)

83,060
(5,126)
(145,642)
(67,708)

178,640
(687)
5
177,958

489,159

162,032
(764)
6
161,274

525,385

369

793

302

—

7,841
(2,855)
—
—

—

—
28,477

—

2,553

302

—
(2,855)
—

—

(28,477)
—
(1,924)
12,096
(18,305)

—
(2,736)
(25,741)
(28,477)

12,096
(1,924)
—
10,172

—

403

882

264
(1,694)
1,465
(2,973)
—
—

—

—
22,027

—

2,709

264

—
(2,973)
—

—

(22,027)
—
(2,328)
5,007
(19,348)

—
(1,584)
(20,443)
(22,027)

5,007
(2,328)
—
2,679

—

(In thousands)
Change in Benefit Obligations

Benefit obligations at January 1

Service cost

Interest cost

Participant contributions

Plan amendments

Actuarial (gains) losses

Benefits paid

Curtailments
Settlements

Special termination benefits

Currency translation
Benefit obligations at December 31

Change in Plan Assets

Fair value of plan assets at January 1

Actual return on plan assets

Employer contributions

Participant contributions

Settlements

Benefits paid

Administrative Expenses Paid

Currency translation

Fair value of plan assets at December 31

Funded Status

Funded status at December 31

Unrecognized transition losses

Unrecognized prior service credit

Unrecognized net actuarial losses

Net amount recognized

Amounts Recognized in the Balance Sheet

Noncurrent assets

Current liabilities

Noncurrent liabilities

Net amount recognized

Amounts Recognized in Accumulated Other Comprehensive Loss

Net actuarial losses

Prior service credit

Unrecognized net initial obligation
Total (before tax effects)

Accumulated Benefit Obligations for all Defined Benefit Plans

6783_10K_C1.pdf March 13, 2019 pg 75

(In thousands)
Components of Net Periodic Benefit Cost

Service cost

Interest cost

Expected return on plan assets

Amortization of transition amounts

Amortization of prior service credit

Recognized net actuarial losses

Settlement/curtailment loss (credit)

Special termination charge
Net periodic benefit cost(a)

Pension Benefits

Other Benefits

2018

2017

2016

2018

2017

2016

11,125

11,023

10,417

17,214

(36,352)

(21)

13,755

179

—

5,901

18,450
(35,417)
2
(19)
12,955

148
11,384 (b)
18,526

18,752
(34,751)
2
(14)
11,921

—

369

793

—

—
(405)
752

—

403

882

—

—
(307)
100
(562)
—

426

946

—

—
(419)
68

—

6,332

1,509

516

1,021

(a) Components of net periodic benefit cost other than service cost are included in the line item "Other income, net" in the
income statement.
(b) Represents the charge for special termination benefits related to the VRIP which were paid from our over funded North
America pension plan and recorded as restructuring charges on the Consolidated Statement of Income. See further
details in Note 2—Restructuring Charges.

Effective December 31, 2017, the Company changed the method it uses to estimate the service and interest cost
components of net periodic benefit cost for pension and other post-retirement benefits for a majority of its U.S. and foreign
plans. Historically, the service and interest cost components for these plans were estimated using a single weighted-average
discount rate derived from the yield curve used to measure the projected benefit obligation at the beginning of the period. The
Company has elected to utilize a spot rate approach, which discounts the individual plan specific expected cash flows
underlying the service and interest cost using the applicable spot rates derived from a yield curve used in the determination of
the benefit obligation to the relevant projected cash flows. The Company made this change to improve the correlation between
projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of service
and interest costs. This change does not affect the measurement of total benefit obligations. Service and interest cost for the
pension and OPEB plans were reduced by an estimated $1.8 million in 2018 as a result of this change. The Company has
accounted for this change to the spot rate approach as a change in accounting estimate that is inseparable from a change in
accounting principle, pursuant to Accounting Standards Codification (ASC) 250, Accounting Changes and Error Corrections,
and accordingly, has accounted for it prospectively. For plans where the discount rate is not derived from plan specific
expected cash flows, the Company will continue to employ the current approaches for measuring both the projected benefit
obligations and the service and interest cost components of net periodic benefit cost for pension and other post-retirement
benefits.

Amounts included in accumulated other comprehensive income expected to be recognized in 2019 net periodic benefit

costs:

(In thousands)
Loss recognition

Prior service credit recognition

Transition obligation recognition

Pension Benefits

Other Benefits

12,521
(19)
2

981
(405)
—

2017

169,065
182,159

31,471

Information for pension plans with an accumulated benefit obligation in excess of plan assets:

(In thousands)
Aggregate accumulated benefit obligations (ABO)

Aggregate projected benefit obligations (PBO)

Aggregate fair value of plan assets

2018

159,545
168,819

28,876

6783_10K_C1.pdf March 13, 2019 pg 76

Assumptions used to determine benefit obligations

Average discount rate

Rate of compensation increase

Assumptions used to determine net periodic benefit cost

Average discount rate

Expected return on plan assets

Rate of compensation increase

Pension Benefits

Other Benefits

2018

2017

2018

2017

3.79%

3.00%

3.34%

7.99%

3.00%

3.34%

3.00%

3.67%

8.04%

2.99%

4.21%

—

3.57%

—

3.57%

4.05%

—

Discount rates for a majority of our U.S. and foreign plans were determined using the aforementioned spot rate

methodology for 2018 and 2017. All remaining plans' discount rates were determined using various corporate bond indexes as
indicators of interest rate levels and movements and by matching our projected benefit obligation payment stream to current
yields on high quality bonds.

The expected return on assets for the 2018 net periodic pension cost was determined by multiplying the expected returns
of each asset class (based on historical returns) by the expected percentage of the total portfolio invested in that asset class. A
total return was determined by summing the expected returns over all asset classes.

Equity securities

Fixed income securities

Pooled investment funds

Insurance contracts

Cash and cash equivalents

Total

Pension Plan Assets at
December 31,

2018

2017

58%

57%

100%

The overall objective of our pension investment strategy is to earn a rate of return over time to satisfy the benefit
obligations of the pension plans and to maintain sufficient liquidity to pay benefits and meet other cash requirements of our
pension funds. Investment policies for our primary U.S. pension plan are determined by the plan’s Investment Committee and
set forth in the plan’s investment policy. Asset managers are granted discretion for determining sector mix, selecting securities
and timing transactions, subject to the guidelines of the investment policy. An aggressive, flexible management of the portfolio
is permitted and encouraged, with shifts of emphasis among equities, fixed income securities and cash equivalents at the
discretion of each manager. No target asset allocations are set forth in the investment policy. For our non-U.S. pension plans,
our investment objective is generally met through the use of pooled investment funds and insurance contracts.

The fair values of the Company's pension plan assets are determined using net asset value (NAV) as a practical expedient,

or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value, as further
discussed in Note 18—Fair Value Measurements. The fair values at December 31, 2018, were as follows:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Fair Value

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

NAV

259,014

62,027

196,987

— $

109,876

49,823
17,033

7,366

—

49,823
—

6,259

28,312

81,564

—
—

1,107

—
—

—

—
17,033

—

443,112

118,109

226,406

81,564

17,033

(In thousands)
Equity securities

Fixed income securities

Pooled investment funds

Insurance contracts

Cash and cash equivalents

Total

6783_10K_C1.pdf March 13, 2019 pg 77

The fair values of the Company's pension plan assets at December 31, 2017, were as follows:

(In thousands)
Equity securities

Fixed income securities

Pooled investment funds

Insurance contracts

Cash and cash equivalents

Total

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Fair Value

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

NAV

278,606

64,840

213,766

— $

127,128

60,014

17,834

9,095

—

60,014

—

7,974

40,778

86,350

—

1,121

—

17,834

—

492,677

132,828

255,665

86,350

17,834

Equity securities consist primarily of publicly traded U.S. and non-U.S. common stocks. Equities are valued at closing

prices reported on the listing stock exchange.

Fixed income securities consist primarily of U.S. government and agency bonds and U.S. corporate bonds. Fixed income
securities are valued at closing prices reported in active markets or based on yields currently available on comparable securities
of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bond is valued
under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, and may
include adjustments, for certain risks that may not be observable, such as credit and liquidity risks.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. Pooled investment funds consist of mutual and collective investment funds that
invest primarily in publicly traded equity and fixed income securities. Pooled investment funds are valued using the net asset
value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the
fund, minus its liabilities, divided by the number of shares outstanding. The underlying securities are generally valued at
closing prices reported in active markets, quoted prices of similar securities, or discounted cash flows approach that maximizes
observable inputs such as current value measurement at the reporting date. These investments are not classified in the fair value
hierarchy in accordance with guidance in ASU 2015-07.

Insurance contracts are valued in accordance with the terms of the applicable collective pension contract. The fair value
of the plan assets equals the discounted value of the expected cash flows of the accrued pensions which are guaranteed by the
counterparty insurer.

Cash equivalents consist primarily of money market and similar temporary investment funds. Cash equivalents are

valued at closing prices reported in active markets.

The preceding methods may produce fair value measurements that are not indicative of net realizable value or reflective
of future fair values. Although we believe the valuation methods are appropriate and consistent with other market participants,
the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a
different fair value measurement at the reporting date.

The following table presents a reconciliation of Level 3 assets:

(In thousands)
Balance January 1, 2017

Net realized and unrealized gains

Net purchases, issuances and settlements
Balance December 31, 2017

Net realized and unrealized losses
Net purchases, issuances and settlements

Balance December 31, 2018

6783_10K_C1.pdf March 13, 2019 pg 78

Insurance
Contracts

14,948

2,741

145
17,834
(957)
156

17,033

We expect to make net contributions of $7.1 million to our pension plans in 2019, which are primarily associated with our

International segment.

For the 2018 beginning of the year measurement purposes (net periodic benefit expense), a 6.5% increase in the costs of
covered health care benefits was assumed, decreasing by 0.5% for each successive year to 4.5% in 2022 and thereafter. For the
2018 end of the year measurement purposes (benefit obligation), a 6.5% increase in the costs of covered health care benefits
was assumed, decreasing by 0.5% for each successive year to 4.5% in 2023 and thereafter. A one-percentage-point change in
assumed health care cost trend rates would have increased or decreased the other post-retirement benefit obligations and current
year plan expense by approximately $1.0 million and $0.1 million, respectively.

Expense for defined contribution pension plans was $9.0 million in 2018, $8.1 million in 2017 and $5.1 million in 2016.

Estimated pension benefits to be paid under our defined benefit pension plans during the next five years are $29.8 million

in 2019, $24.8 million in 2020, $25.7 million in 2021, $26.4 million in 2022 and $27.3 million in 2023, and an aggregated
$145.1 million for the five years thereafter. Estimated other post-retirement benefits to be paid during the next five years are
$2.8 million in 2019, $2.7 million in 2020, $2.8 million in 2021, $2.6 million in 2022, $2.3 million in 2023, and an aggregated
$10.3 million for the five years thereafter.

Note 15—Other Income, Net

(In thousands)
Interest income

Components of net periodic benefit cost other than service cost (Note 14)
Gain (Loss) on asset dispositions, net

Other, net

Total other income, net

4,641

646
(644)
9,231

3,768
(557)
(1,249)
5,558

2,827

3,490

593

710

7,620

2018

2017

2016

4,588

3,596

During the years ended December 31, 2018, 2017 and 2016, we recognized $4.6 million, $3.6 million and $2.8 million of

income, respectively, related to interest earned on cash balances, short-term investments and notes receivable from insurance
companies. Please refer to Note 19—Contingencies for further discussion on the Company's notes receivable from insurance
companies.

Note 16—Leases

We lease office space, manufacturing and warehouse facilities, automobiles and other equipment under operating lease

arrangements. Rent expense was $12.5 million in 2018, $13.7 million in 2017 and $12.6 million in 2016. Minimum rent
commitments under noncancellable leases are $11.2 million in 2019, $7.9 million in 2020, $6.1 million in 2021, $3.8 million in
2022, $2.6 million in 2023 and $2.0 million thereafter.

Note 17—Derivative Financial Instruments

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. We account for these forward contracts at fair value and report the related gains or losses in
currency exchange losses, net, in the Consolidated Statement of Income. At December 31, 2018, the notional amount of open
forward contracts was $72.4 million and the unrealized gain on these contracts was $0.5 million. All open forward contracts
will mature during the first quarter of 2019.

6783_10K_C1.pdf March 13, 2019 pg 79

The following table presents the Consolidated Balance Sheet location and fair value of assets and liabilities associated

with derivative financial instruments:

(In thousands)
Derivatives not designated as hedging instruments:

Foreign exchange contracts: other current liabilities

Foreign exchange contracts: other current assets

December 31,

2018

2017

488

314

840

The following table presents the Consolidated Statement of Income location and impact of derivative financial

instruments:

Loss (Gain) Recognized in Income

Year ended
December 31,

(In thousands)

Income Statement Location

2018

2017

Derivatives not designated as hedging instruments:

Foreign exchange contracts

Currency exchange losses, net

2,428

(5,124)

Note 18—Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value hierarchy consists of three broad levels, which
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest
priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are:

Level 1—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly or indirectly.

Level 3—Unobservable inputs for the asset or liability.

The valuation methodologies we used to measure financial assets and liabilities were limited to the pension plan assets

described in Note 14 and the derivative financial instruments described in Note 17. See Note 14 for the fair value hierarchy
classification of pension plan assets. We estimate the fair value of the derivative financial instruments, consisting of foreign
currency forward contracts, based upon valuation models with inputs that generally can be verified by observable market
conditions and do not involve significant management judgment. Accordingly, the fair values of the derivative financial
instruments are classified within Level 2 of the fair value hierarchy. With the exception of our investments in marketable
securities and fixed rate long-term debt both as disclosed below, we believe that the reported carrying amounts of our remaining
financial assets and liabilities approximate their fair values.

We value our investments in marketable securities, primarily fixed income, at fair value using quoted market prices for

similar securities or pricing models. 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 $55.4 million as of December 31, 2018 and the fair value was
$55.1 million which was reported in "Investments, short-term" in the accompanying Consolidated Balance Sheet. The change
in fair value is recorded in other comprehensive income, net of tax. The Company does not intend to sell, nor is it more likely
than not that we will be required to sell, these securities prior to recovery of their cost, as such, management believes that any
unrealized gains or losses are temporary; therefore, no impairment gains or losses relating to these securities have been
recognized. The Company did not hold any investment securities as of December 31, 2017. All investments in marketable
securities have maturities of one year or less and are currently in an unrealized loss position as of December 31, 2018.

The reported carrying amount of fixed rate long-term debt (including the current portion) was $130 million and $181

million at December 31, 2018 and 2017, respectively. The fair value of this debt was $139 million and $200 million at
December 31, 2018 and 2017, respectively. The fair value of this debt was determined using Level 2 inputs by evaluating like
rated companies with publicly traded bonds where available or current borrowing rates available for financings with similar
terms and maturities.

6783_10K_C1.pdf March 13, 2019 pg 80

Note 19—Contingencies

Product liability

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

Single incident product liability claims. Single incident product liability claims involve incidents of short duration that

are typically known when they occur and involve observable injuries, which provide an objective basis for quantifying
damages. The Company estimates its liability for single incident product liability claims based on expected settlement costs for
asserted single incident product liability claims, and an estimate of costs for single incident product liability claims incurred but
not reported ("IBNR"). The estimate for IBNR claims is based on experience, sales volumes, and other relevant information.
The reserve for single incident product liability claims, which includes asserted single incident product liability claims and
IBNR single incident product liability claims, was $3.6 million at December 31, 2018 and $5.4 million at December 31, 2017.
Single incident product liability expense was $2.0 million, $2.4 million and $0.8 million for the years ended December 31,
2018, 2017 and 2016, respectively. Single incident product liability exposures are evaluated on an annual basis, or more
frequently if changing circumstances warrant. Adjustments are made to the reserve as appropriate.

Cumulative trauma product liability claims. Cumulative trauma product liability claims involve 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 1,481 lawsuits comprised of 2,355 claims as of
December 31, 2018. These lawsuits mainly involve respiratory protection products allegedly manufactured and sold by MSA
LLC or its predecessors. The products at issue were manufactured many years ago and are not currently offered by MSA LLC.

A summary of cumulative trauma product liability lawsuits and asserted cumulative trauma product liability claims

activity is as follows:

Open lawsuits, beginning of period

New lawsuits

Settled and dismissed lawsuits

Open lawsuits, end of period

Asserted claims, beginning of period
New claims
Settled and dismissed claims
Asserted claims, end of period

2018

2017

2016

1,420

369
(308)
1,481

1,794

398
(772)
1,420

1,988

379
(573)
1,794

2018

2017

2016

2,242
479
(366)
2,355

3,023
455
(1,236)
2,242

3,779
843
(1,599)
3,023

More than half of the open lawsuits at December 31, 2018 have had a de minimis level of activity over the last 5 years. It

is possible that these cases could become active again at any time due to changes in circumstances.

6783_10K_C1.pdf March 13, 2019 pg 81

Cumulative trauma product liability litigation is inherently unpredictable and MSA LLC's expense with respect to
cumulative trauma product liability claims could vary significantly in future periods. Factors that limit MSA LLC's ability to
estimate potential liability for cumulative trauma product liability claims include low volumes in the number of claims asserted
and resolved (both in general and with respect to particular plaintiffs' counsel, as claims experience can vary significantly
among different counsel), inconsistency of claims composition, uncertainty as to if and over what time periods claims might be
asserted in the future, and other factors. With respect to the risk associated with any particular case that is filed against MSA
LLC, it has typically not been until very late in the legal process that it can be reasonably determined whether it is probable that
such a case will ultimately result in a liability. This uncertainty is caused by many factors, including consideration of the
applicable statute of limitations, the sufficiency of product identification and other defenses. The complaints initially filed
generally have not provided information sufficient to determine if a lawsuit will develop into an actively litigated case. Even
when a case is actively litigated, it is often difficult to determine if the lawsuit will be dismissed or otherwise resolved until late
in the lawsuit. Moreover, even if it is probable that such a lawsuit will result in a loss, it is often difficult to estimate the amount
of actual loss that will be incurred. These actual loss amounts are highly variable and turn on a case-by-case analysis of the
relevant facts, including the nature of the injury, the jurisdiction in which the claim is filed, the counsel for the plaintiff and the
number of parties in the lawsuit. In addition, there are uncertainties concerning the impact of bankruptcies of other companies
that are co-defendants with respect to particular claims and uncertainties surrounding the litigation process in different
jurisdictions and from case to case within a particular jurisdiction.

Management works with outside legal counsel quarterly to review and assess MSA LLC's exposure to asserted cumulative

trauma product liability claims not yet resolved. In addition, in connection with finalizing and reporting its results of
operations, management works annually (unless significant changes in trends or new developments warrant an earlier review)
with an outside valuation consultant and outside legal counsel to review MSA LLC's exposure to all cumulative trauma product
liability claims. The review process for asserted cumulative trauma product liability claims not yet resolved takes into account
available facts for those claims, including their number and composition, outcomes of matters resolved during current and prior
periods, and variances associated with different groups of claims, plaintiffs' counsel, claims filing trends, and venues, as well as
any other relevant information.

In August 2017, MSA LLC obtained additional detailed information about a significant number of claims that were then
pending against it, including the nature and extent of the alleged injuries, product identification and other factors. MSA LLC
subsequently agreed to resolve a substantial number of these claims, for $75.2 million, a portion of which was insured.
Amounts in excess of estimated insurance recoveries were reflected within Other operating expense in the Consolidated
Statement of Income. MSA LLC paid a total of $28.6 million and $25.2 million during 2018 and 2017, respectively. related to
these settlements. MSA LLC expects to pay $7.1 million ratably over each of the next three quarters ending in the third quarter
of 2019.

In the fourth quarter of 2017, MSA LLC, in consultation with an outside valuation consultant and outside legal counsel,
performed a review for IBNR cumulative trauma product liability claims. Based on that review process, which concluded in early
2018, it was determined that a reasonable estimate for the liability of MSA LLC's IBNR claims was $111.1 million. Accordingly,
the cumulative trauma product liability reserve was increased by $111.1 million for estimated IBNR cumulative trauma product
liability claims.

The ability to make a reasonable estimate of the potential liability for IBNR cumulative trauma product liability claims in
2017 resulted from recent developments affecting asbestos claims, recent developments affecting silica claims, and recent
developments affecting coal dust claims. Significant changes in MSA LLC’s claims experience over the last few years have
resulted in stabilization of a number of factors important to the estimation process and enabled greater predictability of IBNR
claims. These developments occurred as a result of changes in defense strategy implemented in recent years, increased experience
in defending, negotiating, and resolving key groups of claims, and resolutions of a substantial number of cumulative trauma product
liability claims in the last few years. These changes collectively resulted in MSA LLC having a more stable recent claims history
that could be extrapolated into the future and greater certainty as to the number of claims that might be asserted against MSA LLC
in the future, the percentage of those claims that might be resolved without payment, and the potential settlement value of those
claims that are not resolved without payment. All of these factors were considered by MSA LLC’s valuation consultant in estimating
the IBNR cumulative trauma product liability claims. MSA LLC, taking into account the analysis and estimates developed by its
consultant, concluded that reasonable estimates for its IBNR asbestos, silica and coal dust claims could be made and that the
liability described above was accrued.

6783_10K_C1.pdf March 13, 2019 pg 82

There remains considerable uncertainty in numerous aspects of MSA LLC's potential future claims experience, such as

with respect to the number of claims that might be asserted, the alleged severity of those claims and the average settlement
values of those claims, and that uncertainty may cause actual claims experience in the future to vary from the current estimate.
Numerous uncertainties also exist with respect to factors not specific to MSA LLC’s claims experience, including potential
legislative or judicial changes at the federal level or in key states concerning claims adjudication, future bankruptcy
proceedings involving key co-defendants, payments from trusts established to compensate claimants, and/or changes in medical
science relating to the diagnosis and treatment of cumulative trauma product liability claims. If future estimates of asserted
cumulative trauma product liability claims not yet resolved and/or IBNR cumulative trauma product liability claims are
materially higher (lower) than the accrued liability, we will record an appropriate charge (credit) to the Consolidated Statement
of Income to increase (decrease) the accrued liability.

Certain significant assumptions underlying the material components of the accrual for IBNR cumulative trauma product

liability claims include MSA LLC's experience related to the following:

•

The types of illnesses alleged by claimants to give rise to their claims;

The number of claims asserted against MSA LLC;

The propensity of claimants and their counsel asserting cumulative trauma product liability claims to name MSA LLC
as a defendant;

The percentage of cumulative trauma product liability claims asserted against MSA LLC that are dismissed without
payment;

The average value of settlements paid to claimants; and

The jurisdiction in which claims are asserted.

Additional assumptions include the following:

• MSA LLC will continue to evaluate and handle cumulative trauma product liability claims in accordance with its

existing defense strategy;

•

The number and effect of co-defendant bankruptcies will not materially change in the future;

No material changes in medical science occur with respect to cumulative trauma product liability claims; and

No material changes in law occur with respect to cumulative trauma product liability claims including, in particular, no
material state or federal tort reform actions affecting such claims.

Total cumulative trauma product liability reserve was $187.3 million, including $24.5 million for claims settled but not yet

paid and related defense costs, as of December 31, 2018 and $181.1 million, including $54.5 million for claims settled but not
yet paid and related defense costs, as of December 31, 2017. This reserve includes estimated amounts for asserted claims not
yet resolved and IBNR claims. Those estimated amounts reflect asbestos, silica, and coal dust claims expected to be asserted
through the year 2069 and are not discounted to present value. The Company revised its estimates of MSA LLC's potential
liability for cumulative trauma product liability claims for the current year as a result of its annual review process described
above. The revisions to the Company’s estimates of potential liability for cumulative trauma product liability claims are based
on an assessment of trends in the tort system generally and changes in MSA LLC’s claims experience over the past year,
including the number of claims asserted, average value of settlements paid to claimants, the number and percentage of claims
resolved with payment, the jurisdiction in which claims are asserted, and the counsel asserting such claims. The reserve does
not include amounts which will be spent to defend the claims covered by the reserve. Defense costs are recognized in the
Consolidated Statement of Income as incurred.

6783_10K_C1.pdf March 13, 2019 pg 83

At December 31, 2018, $38.8 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 Consolidated Balance Sheet and the remainder, $148.5
million, is recorded in the Product liability and other noncurrent liabilities line. At December 31, 2017, $48.6 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 Consolidated Balance Sheet and the remainder, $132.5 million, is recorded in the Product liability and
other noncurrent liabilities line.

Because litigation is subject to inherent uncertainties, and unfavorable rulings or developments could occur, there can be no

certainty that MSA LLC may not ultimately incur charges in excess of presently recorded liabilities. The reserve for liabilities
relating to cumulative trauma product liability claims may be adjusted from time to time based on whether the actual number,
types, and settlement value of claims differs from current projections and estimates, and other developing facts and
circumstances. These adjustments may reflect changes in estimates for asserted cumulative trauma product liability claims not
yet resolved and/or IBNR cumulative trauma product liability claims. These adjustments may be material and could materially
impact our consolidated financial statements in future periods.

Insurance Receivable and Notes Receivable, Insurance Companies

In the normal course of business, MSA LLC makes payments to settle various claims and for related defense costs and

records receivables for the estimated amounts that are covered by insurance. With respect to cumulative trauma product
liability claims, MSA LLC purchased insurance policies for the policy years from 1952-1986 from over 20 different insurance
carriers that, subject to some common contract exclusions, provided coverage for cumulative trauma product liability losses
and, in many instances, related defense costs (the "Occurrence-Based Policies"). The Occurrence-Based Policies have
significant per claim retentions and applicable exclusions for cumulative trauma product liability claims after April 1986.
While we continue to pursue reimbursement under certain policies, the vast majority of these insurance policies have been
exhausted, settled or converted into negotiated coverage-in-place agreements with the applicable insurers (the "Coverage-In-
Place Agreements"). As a result, MSA LLC is now largely self-insured for cumulative trauma product liability claims.

Since MSA LLC is now largely self-insured for cumulative trauma product liability claims, additional amounts recorded

as insurance receivables will be limited and based on calculating the amounts to be reimbursed pursuant to negotiated
Coverage-In-Place Agreements. Various factors could affect the timing and amount of recovery of the insurance receivables,
including assumptions regarding claims composition (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.

Insurance receivables at December 31, 2018 totaled $71.7 million, of which $14.8 million is reported in Prepaid expenses

and other current assets in the Consolidated Balance Sheet and $56.9 million is reported in Insurance receivable and other
noncurrent assets. Insurance receivables at December 31, 2017 totaled $134.7 million, of which $11.6 million was reported in
Prepaid expenses and other current assets in the Consolidated Balance Sheet and $123.1 million was reported in Insurance
receivable and other noncurrent assets. The vast majority of the $71.7 million insurance receivable balance at December 31,
2018 is attributable to reimbursement believed to be due under the terms of signed Coverage-In-Place Agreements.

A summary of Insurance receivable balances and activity related to cumulative trauma product liability losses is as

follows:

(In millions)
Balance beginning of period

Additions

Collections, settlements converted to notes receivable and other adjustments

Balance end of period

2018

2017

134.7
19.6
(82.6)
71.7

159.9
94.6
(119.8)
134.7

Additions to insurance receivables in the above table represent insured cumulative trauma product liability losses and

related defense costs which we believe are covered by the Occurrence-Based Policies or applicable Coverage-In-Place
Agreements. Collections of the receivables primarily occur pursuant to the terms of negotiated agreements with the insurance
companies, either in a lump sum, in installments over time, or to reimburse a portion of future expense once incurred (i.e.
pursuant to a Coverage-In-Place Agreement).

6783_10K_C1.pdf March 13, 2019 pg 84

In some cases, payment streams due pursuant to negotiated settlement agreements were converted to formal notes
receivable from insurance companies. The notes receivable were recorded as a transfer from the Insurance receivable balance
to the Notes receivable, insurance companies (current and noncurrent) in the Consolidated Balance Sheet. In cases where the
payment stream covers multiple years and there were no contingencies, the present value of the payments was recorded as a
transfer from the insurance receivable balance to the Notes receivable, insurance companies (current and long-term) in the
Consolidated Balance Sheet. Provided the remaining insurance receivable was recoverable through the insurance carriers, no
gain or loss was recognized at the time of transfer from Insurance receivable to Notes receivable, insurance companies.

Notes receivable from insurance companies at December 31, 2018 totaled $59.6 million, of which $3.6 million is reported

in Notes receivable, insurance companies, current on the Consolidated Balance Sheet and $56.0 million is reported in Notes
receivable, insurance companies, noncurrent. Notes receivable from insurance companies at December 31, 2017 totaled $76.9
million, of which $17.3 million was reported in Notes receivable, insurance companies, current on the Consolidated Balance
Sheet and $59.6 million was reported in Notes receivable, insurance companies, noncurrent.

A summary of Notes receivable, insurance companies balances is as follows:

(In millions)
Balance beginning of period

Additions
Collections

Balance end of period

December 31,

2018

2017

76.9

1.7
(19.0)
59.6

67.3

35.1
(25.5)
76.9

The collectibility of MSA LLC's insurance receivables and notes receivable 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, assumptions regarding various aspects
of the composition of future claims (which are relevant to calculating reimbursement under the terms of certain Coverage-In-
Place Agreements), the financial ability of the insurance carriers to pay the claims, and the advice of MSA LLC's outside legal
counsel.

Total cumulative trauma liability losses were $63.8 million, $219.0 million, and $30.5 million for the years ended

December 31, 2018, 2017 and 2016, respectively. Uninsured cumulative trauma product liability losses which were included in
Other operating expense on the Consolidated Statement of Income during the years ended December 31, 2018, 2017 and 2016
were $43.8 million, $124.5 million and $0.3 million, respectively.

Insurance Litigation

For more than a decade, MSA LLC was engaged in coverage litigation with many of its insurance carriers that issued
Occurrence-Based Policies. In July 2010, MSA LLC (as Mine Safety Appliances Company) filed a lawsuit in the Superior
Court of the State of Delaware seeking declaratory and other relief concerning the future rights and obligations of MSA LLC
and its excess insurance carriers under various insurance policies. During the same time period, MSA LLC was also engaged in
coverage disputes with The North River Insurance Company (“North River”) in various courts. Since 2010, MSA LLC reached
negotiated resolutions with the vast majority of the insurance carriers once in litigation, including the July 2018 settlement with
North River disclosed below.

In February 2017, MSA LLC resolved through a negotiated settlement its coverage litigation with The Hartford
("Hartford"). Additionally, in April 2017, MSA LLC resolved through negotiated settlements its coverage litigation with
Travelers Insurance Company ("Travelers") and Wausau Indemnity Company ("Wausau"). Each of the settling carriers agreed
to cash payments which were made in 2017 or January 2018. In addition, Travelers has agreed to pay a percentage of future
cumulative trauma product liability settlements paid as incurred on a claim-by-claim basis. As part of these settlements, MSA
LLC dismissed all claims against Hartford, Travelers and Wausau in the coverage litigation in the Superior Court of the State of
Delaware.

6783_10K_C1.pdf March 13, 2019 pg 85

In July 2018, MSA LLC resolved through a negotiated settlement its remaining coverage litigation with North River. As
part of this settlement, in October 2018, MSA LLC dismissed all claims and appeals against North River in each of the pending
coverage actions. This represents a settlement with MSA LLC’s last major Occurrence-Based insurance carrier. Payment under
this negotiated settlement was received in the third quarter of 2018 and was accounted for as a reduction of the insurance
receivable balance.

Product Warranty

The Company provides warranties on certain product sales. Product warranty reserves are established in the same period

that revenue from the sale of the related products is recognized, or in the period that a specific issue arises as to the
functionality of a Company's product. The determination of such reserves requires the Company to make estimates of product
return rates and expected costs to repair or to replace the products under warranty.

The amounts of the reserves are based on established terms and the Company's best estimate of the amounts necessary to

settle future and existing claims on products sold as of the balance sheet date. If actual return rates and/or repair and
replacement costs differ significantly from estimates, adjustments to recognize additional cost of sales may be required in future
periods.

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

(In thousands)
Beginning warranty reserve

Warranty payments

Warranty claims

Provision for product warranties and other adjustments

Ending warranty reserve

December 31,

2018

2017

2016

14,753
(9,955)
10,585
(1,169)
14,214

11,821
(10,905)
12,471

1,366

14,753

10,296
(12,524)
11,574

2,475

11,821

Warranty expense for the years ended December 31, 2018, 2017 and 2016 was $9.4 million, $13.8 million and $14.0

million, respectively.

6783_10K_C1.pdf March 13, 2019 pg 86

Note 20—Discontinued Operations

On February 29, 2016, the Company sold 100% of the stock associated with its South African personal protective

equipment distribution business and its Zambian operations, which were reported in the International segment.

The Company received $15.9 million from the closing of this transaction and recorded a loss of approximately $0.3

million during the first quarter of 2016.

During the second quarter of 2016, the Company corrected its gain calculation on the disposition of the South African

personal protective equipment distribution business and its Zambian operations. This resulted in a gain of approximately $2.5
million being recorded during the second quarter in discontinued operations that should have been recorded in the first quarter
of 2016. The Company evaluated materiality in accordance with SEC Staff Accounting Bulletins Topics 1.M and 1.N and
considered relevant qualitative and quantitative factors. The Company concluded that this modification was not material to the
first quarter of 2016 or the trend in earnings over the affected periods. The modification had no effect on cash flows or debt
covenant compliance.

The operations of this business qualify as a component of an entity under FASB ASC 205-20 "Presentation of Financial

Statements - Discontinued Operations", and thus, the operations have been reclassified as discontinued operations and prior
periods have been reclassified to conform to this presentation.

Summarized financial information for discontinued operations is as follows:

(In thousands)
Discontinued Operations
Net sales

Cost and expenses:

Cost of products sold

Selling, general and administrative

Restructuring and other charges

Currency exchange losses, net

Other income, net

Income from discontinued operations before income taxes

Provision for income taxes

Loss from discontinued operations, net of tax

Year ended December 31, 2016

5,261

4,819

937

—

596

328
(245)

There was no discontinued operations activity for the years ended December 31, 2018 and 2017.

The following summary provides financial information for discontinued operations related to net income related to

noncontrolling interests:

(In thousands)
Net income attributable to noncontrolling interests

Income from continuing operations

Income from discontinued operations

Net income

Year ended December 31,

2018

2017

2016

(965) $
—
(965) $

(929) $
—
(929) $

(1,416)
(510)
(1,926)

6783_10K_C1.pdf March 13, 2019 pg 87

Note 21—Quarterly Financial Information (Unaudited)

(In thousands, except earnings per share)
Continuing Operations:
Net sales

Gross profit

Net income attributable to MSA Safety Incorporated

Quarters

2018

3rd

1st

2nd

4th

Year

$ 325,894

$ 339,331

$ 331,096

$ 361,783

$1,358,104

147,339

32,371

153,836

33,179

148,302

33,717

162,386

24,883

611,863

124,150

Earnings per share(1)
Basic

Diluted

(In thousands, except earnings per share)
Continuing Operations:
Net sales

Gross profit

Net income attributable to MSA Safety Incorporated

Earnings per share(1)
Basic

Diluted

0.85

0.83

0.86

0.85

0.88

0.86

0.65

0.64

3.23

3.18

Quarters

2017

3rd

1st

2nd

4th

Year

$ 265,765

$ 288,775

$ 296,129

$ 346,140

$1,196,809

119,722
14,413

132,963
12,532

132,203
32,066

154,002
(32,984)

538,891
26,027

0.38

0.37

0.33

0.32

0.84

0.83

(0.87)
(0.87)

0.68

0.67

(1) Per share amounts are calculated independently for each period presented; therefore, the sum of the quarterly per share
amounts may not equal the per share amounts for the year.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Based on their evaluation as of the end of the period covered by this

Form 10-K, the Company’s principal executive officer and principal financial officer have concluded that the Company’s
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the
“Exchange Act”)) are effective to ensure that information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including
the principal executive officer and principle financial officer, as appropriate to allow timely decisions regarding required
disclosure.

(b) Changes in internal control. There were no changes in the Company’s internal control over financial reporting that

occurred during the Company’s most recent fiscal quarter, that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.

See Item 8. Financial Statements and Supplementary Data—“Management’s Report on Internal Control Over Financial

Reporting” and “Report of Independent Registered Public Accounting Firm.”

Item 9B. Other Information

None.

6783_10K_C1.pdf March 13, 2019 pg 88

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

With respect to this Part III, incorporated by reference herein pursuant to Rule 12b—23 are (1) “Election of

Directors,” (2) “Executive Compensation,” (3) “Other Information Concerning the Board of Directors,” (4) “Stock Ownership,”
and (5) “Selection of Independent Registered Public Accounting Firm,” appearing in the Proxy Statement filed pursuant to
Regulation 14A in connection with the registrant’s Annual Meeting of Shareholders to be held on May 15, 2019. The
information appearing in such Proxy Statement under the caption “Audit Committee Report” and the other information
appearing in such Proxy Statement and not specifically incorporated by reference herein is not incorporated herein. As to
Item 10 above, also see the information reported in Part I of this Form 10-K, under the caption “Executive Officers of the
Registrant,” which is incorporated herein by reference. As to Item 10 above, the Company has adopted a Code of Ethics
applicable to its principal executive officer, principal financial officer and principal accounting officer and other Company
officials. The text of the Code of Ethics is available on the Company’s website at www.MSAsafety.com. Any amendment to, or
waiver of, a required provision of the Code of Ethics that applies to the Company’s principal executive, financial or accounting
officer will also be posted on the Company’s Internet site at that address.

As to Item 12 above, the following table sets forth information as of December 31, 2018 concerning common stock

issuable under the Company’s equity compensation plans.

Plan Category
Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Total

Number of securities
to be issued upon
exercise of
outstanding
options,
warrants and rights
(a)

Weighted average
exercise price of
outstanding options,
warrants and rights
(b)

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c)

735,001

None

735,001

43.79

—

43.79

1,169,608 *

None

1,169,608

*Includes 1,054,730 shares available for issuance under the Amended and Restated 2016 Management Equity Incentive Plan
and 114,878 shares available for issuance under the 2017 Non-Employee Directors’ Equity Incentive Plan.

6783_10K_C1.pdf March 13, 2019 pg 89

Item 15. Exhibits and Financial Statement Schedules

PART IV

(a) 1. Financial Statements and Report of Independent Registered Public Accounting Firm (see Part II, Item 8 of this

Form 10-K).

The following information is filed as part of this Form 10-K.

Management's Report on Responsibility for Financial Reporting and Management's Report on Internal
Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Statement of Income—three years ended December 31, 2018

Consolidated Statement of Comprehensive Income—three years ended December 31, 2018

Consolidated Balance Sheet—December 31, 2018 and 2017

Consolidated Statement of Cash Flows—three years ended December 31, 2018

Consolidated Statement of Changes in Retained Earnings and Accumulated Other Comprehensive
Income—three years ended December 31, 2018

Notes to Consolidated Financial Statements

Page

(a) 2. The following additional financial information for the three years ended December 31, 2018 is filed with the report

and should be read in conjunction with the above financial statements:

Schedule II—Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable, not material or the required information is shown in the

consolidated financial statements and consolidated notes to the financial statements listed above.

(a) 3. Exhibits

Several of the following exhibits are incorporated herein by reference under Rule 12b-32 of the Securities Exchange Act

of 1934, as amended, as indicated next to the name of the exhibit. Several other instruments, which would otherwise be
required to be listed below, have not been so listed because those instruments do not authorize securities in an amount that
exceeds 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish a
copy of any instrument that was so omitted on that basis to the Commission upon request.

3(i)

3(ii)

4(a)

4(b)

4(c)

Amended and restated Articles of Incorporation, filed as Exhibit 3.1 to Form 8-K on March 7, 2014, is incorporated
herein by reference.

Amended and restated By-laws of the registrant, filed as Exhibit 3.2 to Form 8-K on March 7, 2014, is incorporated
herein by reference.

First Amendment dated September 7, 2018 to the Second Amended and Restated Multi-Currency Note Purchase and
Private Shelf Agreement dated January 22, 2016 by and among MSA Safety Incorporated, various Company
subsidiaries, as guarantors, and the noteholders named therein, including forms of Note Guarantee and Intercompany
Subordination Agreement, filed as Exhibit 4.1 to Form 8-K on September 10, 2018, is incorporated herein by
reference.

Form of Amended and Restated Guarantee Agreement entered into as of March 7, 2014 by each of General Monitors,
Inc., General Monitors Transnational, LLC and MSA International, Inc., in favor of the Note Purchasers under the
Amended and Restated Note Purchase and Private Shelf Agreement dated as of March 7, 2014 (as confirmed and
reaffirmed by such guarantors as of September 7, 2018), filed as Exhibit 4(b) to Form 10-K on February 25, 2015, is
incorporated herein by reference.

Form of Guarantee Agreement entered into as of March 7, 2014 by each of Mine Safety Appliances Company, LLC,
MSA Worldwide, LLC, MSA Advanced Detection, LLC, MSA Safety Development, LLC, MSA Technology, LLC,
and MSA Innovation, LLC, in favor of the Note Purchasers under the Amended and Restated Note Purchase and
Private Shelf Agreement dated as of March 7, 2014 (as confirmed and reaffirmed by certain of such guarantors as of
September 7, 2018), filed as Exhibit 4(c) to Form 10-K on February 25, 2015, is incorporated herein by reference.

6783_10K_C1.pdf March 13, 2019 pg 90

10(a)*

10(b)*

10(c)*

10(d)*

10(e)*

10(f)*

10(g)*

10(h)*

10(i)*

10(j)*

10(k)*

10(l)*

10(m)

31.1

31.2

MSA Safety Incorporated Amended and Restated 2016 Management Equity Incentive Plan, filed as Appendix A to the
registrant’s definitive proxy statement dated March 31, 2016, is incorporated herein by reference.

Retirement Plan for Directors, as amended effective April 1, 2001, filed as Exhibit 10(a) to Form 10-Q on May 10,
2006, is incorporated herein by reference.

Supplemental Pension Plan as of May 5, 1998, filed as Exhibit 10(d) to Form 10-Q on August 12, 2003, is
incorporated herein by reference.

Supplemental Pension Plan as amended and restated effective January 1, 2005, filed as Exhibit 10.3 to Form 10-Q on
April 30, 2009, is incorporated herein by reference.

2017 Non-Employee Directors’ Equity Incentive Plan, filed as Exhibit A to the registrant's definitive proxy statement
dated April 7, 2017, is incorporated herein by reference.

Executive Insurance Program as Amended and Restated as of January 1, 2006, filed as Exhibit 10(a) to Form 10-Q on
August 7, 2007, is incorporated herein by reference.

Annual Incentive Bonus Plan as of May 5, 1998, filed as Exhibit 10(g) to Form 10-Q on August 12, 2003, is
incorporated herein by reference.

Supplemental Executive Retirement Plan, effective January 1, 2008, filed as Exhibit 10.2 to Form 10-Q on April 30,
2009, is incorporated herein by reference.

Form of Change-in-Control Severance Agreement between the registrant and its executive officers, filed as
Exhibit 10.1 to Form 10-Q on April 30, 2009, is incorporated herein by reference.

2003 Supplemental Savings Plan, effective January 1, 2003, filed as Exhibit 10(k) to Form 10-K on February 24,
2014, is incorporated herein by reference.

2005 Supplemental Savings Plan, effective January 1, 2005, filed as Exhibit 10.4 to Form 10-Q on April 30, 2009, is
incorporated herein by reference.

Amended and Restated CEO Annual Incentive Award Plan filed as Appendix B to the registrant’s definitive proxy
statement dated March 31, 2016, is incorporated herein by reference.

Third Amended and Restated Credit Agreement dated September 7, 2018 by and among MSA Safety Incorporated,
MSA UK Holdings, Limited and MSA International Holdings, B.V., as borrowers, various Company subsidiaries, as
guarantors, various financial institutions, as lenders, and PNC Bank, National Association, as administrative agent,
including forms of Guaranty and Suretyship Agreement and Intercompany Subordination Agreement, filed as
Exhibit 10.1 to Form 8 K on September 10, 2018, is incorporated herein by reference.

Affiliates of the registrant is filed herewith.

Consent of Ernst & Young LLP, independent registered public accounting firm is filed herewith.

Certification of Nishan J. Vartanian pursuant to Rule 13a-14(a) is filed herewith.

Certification of Kenneth D. Krause pursuant to Rule 13a-14(a) is filed herewith.

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.(S)1350 is filed herewith.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

*The exhibits marked by an asterisk are management contracts or compensatory plans or arrangements.

Item 16. Form 10-K Summary

None.

6783_10K_C1.pdf March 13, 2019 pg 91

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused

this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MSA SAFETY INCORPORATED

SIGNATURES

February 22, 2019
(Date)

/s/ NISHAN J. VARTANIAN

Nishan J. Vartanian
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/S/ NISHAN J. VARTANIAN

Nishan J. Vartanian

President and Chief Executive Officer

February 22, 2019

/S/ KENNETH D. KRAUSE

Kenneth D. Krause

Sr. Vice President, Chief Financial Officer
and Treasurer

February 22, 2019

/S/ ROBERT A. BRUGGEWORTH

Robert A. Bruggeworth

Director

/S/ ALVARO GARCIA-TUNON

Alvaro Garcia-Tunon

Director

/S/ THOMAS W. GIACOMINI

Thomas W. Giacomini

Director

/S/ WILLIAM M. LAMBERT

William M. Lambert

Director

/S/ DIANE M. PEARSE

Diane M. Pearse

Director

/S/ REBECCA B. ROBERTS

Rebecca B. Roberts

Director

/S/ SANDRA PHILLIPS ROGERS

Sandra Phillips Rogers

Director

/S/ JOHN T. RYAN III

John T. Ryan III

Director

/S/ WILLIAM R. SPERRY

William R. Sperry

Director

/S/ L. EDWARD SHAW, JR.

L. Edward Shaw, Jr.

Director

6783_10K_C1.pdf March 13, 2019 pg 92

February 22, 2019

February 20, 2019

February 22, 2019

MSA SAFETY INCORPORATED AND AFFILIATES

VALUATION AND QUALIFYING ACCOUNTS

THREE YEARS ENDED DECEMBER 31, 2018

SCHEDULE II

Allowance for doubtful accounts:

Balance at beginning of year

Additions—

Charged to costs and expenses (2)

Deductions—

Deductions from reserves, net (1)(2)

Balance at end of year

Income tax valuation allowance:

Balance at beginning of year

Additions—

Charged to costs and expenses (3)

Deductions—

Deductions from reserves (3)

Balance at end of year

(1) Bad debts written off, net of recoveries.

2018

2017

(In thousands)

2016

5,540

5,610

8,189

375

546

5,369

1,649

1,719

5,540

1,471

4,050

5,610

4,559

5,303

5,153

859

379

5,039

906

1,650

4,559

3,095

2,945

5,303

(2) Activity for 2018, 2017 and 2016 includes currency translation (losses) gains of $(291), $285 and $(203), respectively.

(3) Activity for 2018, 2017 and 2016 includes currency translation (losses) gains of $(367), $248 and $113, respectively.

6783_10K_C1.pdf March 13, 2019 pg 93

Directors and Executive Leadership Team

Board of Directors

Robert A. Bruggeworth (2) (3) (5)

Sandra Phillips Rogers (1) (6)

Lead Director; President and Chief Executive Officer, Qorvo,

Group Vice President, General Counsel, Chief Legal

Inc. (high-performance RF components and compound

semiconductors manufacturer); Director, Qorvo, Inc.

Officer and Corporate Secretary, Toyota Motor North
America, Inc. (automobile manufacturer and seller)

Alvaro Garcia-Tunon (1) (4) (6)

Rebecca B. Roberts (2) (5)

Retired (2014); formerly Executive Vice President and

Chief Financial Officer, Wabtec Corporation (supplier

of technology-based products and services for rail, transit

and other global industries); Director, Matthews International

Corp.; Director, Allison Transmission Holdings, Inc.

Thomas W. Giacomini (1) (2)

Chairman, President and Chief Executive Officer,

JBT Corporation (global technology solutions provider

to food and aviation industries)

Gregory B. Jordan

Executive Vice President, General Counsel and

Chief Administrative Officer of The PNC Financial Services

Group, Inc.; Director, Highmark Health and Highmark, Inc.;

Director, the Pro Bono Institute; Director, the Extra Mile Education

Foundation; Chairman, Manchester Bidwell Corporation;

Chairman, Board of Trustees of Bethany College; PNC Observer

of the Board of Directors of BlackRock, Inc.

William M. Lambert (3)

Non-Executive Chairman; Retired (2018); formerly

Chief Executive Officer of the Company; Director,

Kennametal, Inc.; Director, EQT

Diane M. Pearse (1) (2) (4) (6)

Chief Executive Officer and President, Hickory Farms, LLC

Retired (2011); formerly President of Chevron Pipe Line

Company; Director, Black Hills Corporation; Director, AbbVie, Inc.

John T. Ryan III (3) (4) (6)

Retired (2008); formerly Chief Executive Officer and

Chairman of the Company

L. Edward Shaw, Jr. (4) (5) (6)

Retired (2010); formerly Senior Managing Director, Breeden

Capital Management LLC (investment management and

multidisciplinary professional services firm); Director,

))

Encompass Health Corporation

William R. Sperry

Senior Vice President and Chief Financial Officer of Hubbell
Incorporated (international manufacturer of quality electrical and
electronic products for a broad range of non-residential and
residential construction, industrial and utility applications

)

Nishan J. Vartanian (3)

President and Chief Executive Officer of the Company

(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Executive Committee
(4) Member of the Finance Committee
(5) Member of the Nominating and Corporate Governance Committee

(a specialty foods company)

(6) Member of the Law Committee

Executive Leadership Team

Steven C. Blanco

David McArthur

Vice President and President, MSA Americas

Vice President, Global Customer Marketing

R. Anne Herman

Douglas K. McClaine

Vice President of Global Operational Excellence and

Senior Vice President, Secretary and Chief Legal Officer

Chief Customer Officer

Kenneth D. Krause

Paul R. Uhler

Senior Vice President and Chief Human Resource Officer

Senior Vice President, Chief Financial Officer and Treasurer

Nishan J. Vartanian

Bob Leenen

President and Chief Executive Officer

Vice President and President, MSA International

Markus H. Weber

Gregory Martin

Vice President and Chief Information Officer

Vice President, Product Strategy and Development

6783_10K_C4.pdf 94 March 20, 2019

Organization

Growth in Focus | MSA 2018 Annual Report

MSA underwent a number of leadership changes in 2018 to further
enhance the company’s position as the leading global safety
equipment manufacturer and to ensure continuity of strong and
experienced leadership.

Nishan J. Vartanian was elected President and Chief Executive
Offi cer as part of a planned management succession. He succeeds
William M. Lambert, who retired as CEO and as a full time MSA
associate after 37 years with the organization. Mr. Lambert remains
Non-Executive Chairman of the Board. Mr. Vartanian joined MSA
in 1985 as a sales intern and shortly thereafter moved into a sales
position in the Atlanta, Ga., area. Over his 33-year career with the
company, he has served in a variety of capacities, including U.S.
National Sales Manager; Director of North America Commercial
Sales and Distribution; Vice President and Global Business Leader for MSA’s Fixed Gas and Flame Detection business; Vice President of MSA
North America; Senior Vice President and President, MSA Americas; and, most recently, President and Chief Operating Offi cer.

Nishan J. Vartanian

Kerry M. Bove

In addition, Kerry M. Bove elected to retire from the company after dedicating more than 38 years of his career to advancing the mission of MSA.
In 2015 Mr. Bove was named Senior Vice President and Chief Strategy Offi cer. In this role he provided oversight on a number of acquisition
and divestiture activities, and was a contributor to the successful acquisitions of Latchways and Globe Manufacturing. In 2016 Mr. Bove’s
responsibilities were expanded to include oversight of MSA’s global research and engineering organization. Mr. Bove’s commitment to honesty,
transparency and integrity have served our customers, our shareholders, and all of the associates at MSA very well.

The acquisition and divestiture activities previously managed by Mr. Bove are now under the direction of Kenneth D. Krause, Senior Vice
President, Chief Financial Offi cer and Treasurer.

As part of the company’s Board succession plan for director
retirement, in early 2019 MSA elected William R. Sperry and
Gregory B. Jordan to its Board of Directors.

Mr. Sperry serves as Senior Vice President and Chief Financial Offi cer
of Hubbell Incorporated (NYSE: HUBB).

Mr. Jordan is Executive Vice President, General Counsel and Chief
Administrative Offi cer of The PNC Financial Services Group, Inc.
(NYSE: PNC). In addition to his PNC responsibilities, Mr. Jordan
serves as a board member of Highmark Health and Highmark, Inc.
He also chairs the board of the Manchester Bidwell Corporation.

William R. Sperry

Gregory B. Jordan

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Section 302 Certifi cations and
NYSE CEO Certifi cation
In June 2018, the Company’s Chief Executive Offi cer submitted
to the New York Stock Exchange the annual certifi cation as to
compliance with the Exchange’s Corporate Governance Listing
Standards required by Section 303A.12(a) of the Exchange’s Listed
Company Manual. The certifi cation was unqualifi ed.

The Company’s reports fi led with the Securities and Exchange
Commission during the past year, including the Annual Report on
Form 10-K for the year ended December 31, 2018, have contained
the certifi cations of the Company’s Chief Executive Offi cer and Chief
Financial Offi cer regarding the quality of the Company’s public
disclosure required by Section 302 of the Sarbanes-Oxley Act.

Shareholders’ Inquiries
Additional copies of the Company’s 2018 Annual Report, including
Form 10-K, as fi led with the Securities and Exchange Commission,
may be obtained by shareholders after April 8, 2019. Printed and
electronic versions are available. Requests should be directed to the
Chief Financial Offi cer, who can be reached at one of the following:

Phone:
Internet:
U.S. Mail: MSA

724-741-8221
www.MSAsafety.com

Chief Financial Offi cer
1000 Cranberry Woods Drive
Cranberry Township, PA 16066

1000 Cranberry Woods Drive

Cranberry Township, PA 16066

724-776-8600

www.MSAsafety.com

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