Reflecting our balanced and diversified global portfolio of leading-edge safety products, MSA achieved sales growth in all three of our geographic business segments — North America, Europe and International.

In achieving record revenue, we were guided, as always, by the enduring principle that has defined our mission for 95 years. MSA protects the health and safety of working people everywhere, from firefighters, soldiers and police officers, to construction, mining, factory and oil and gas workers. We believe “Every Life has a Purpose” and that our purpose at MSA is to provide high quality products that protect people from workplace hazards so they can return, safe and sound, to their families, loved ones and friends at the end of each day.

2008 Financial Results
Sales rose 15% to a record $1.13 billion from $990 million in 2007, as MSA achieved sales growth in nearly every key market. We benefited from a strong backlog of orders at the beginning of 2008, which proved to be a major contributor for reporting record sales. The strength of our business extended for most of the year, primarily due to large orders and several significant government contracts, both in the U.S. and abroad. However, the impact of the global economic slowdown on customer orders became very apparent near the end of the year.

In North America, our largest market, sales increased 16% as MSA benefited from three major factors: consistently strong orders for our new Altair® 4 and Altair® 5 Multigas Detectors; $29 million in new contracts from the U.S. Army for additional Advanced Combat Helmets; and new contracts totaling $25 million from the U.S. Air Force for our Firehawk® M7 Responder® Air Mask, a new multi-function respirator that MSA designed to meet stringent and unique needs of air base fire brigades. North American sales of our head protection products, primarily our V-Gard® Hard Hat, showed a healthy $3 million increase over 2007, due to strength in most industrial and construction markets, at least through the third quarter of 2008.

Sales rose 18% in our European segment, reflecting favorable currency translation effects of the stronger Euro and strong shipments of ballistic helmets and body armor for police forces in France, and self-contained breathing apparatus for government agencies in Germany and Eastern Europe.

Sales in our International segment increased nearly 9%, driven primarily by continuing market penetration gains in the South African and Latin American markets. Currency translation effects were not significant on this full year performance in MSA International.

For the year, MSA’s net income rose 4% to $70.4 million, or $1.98 per basic share, from $67.6 million, or $1.89 per basic share, in 2007. It’s important to note that the 2007 results included after-tax gains of $7.7 million from the sale of real estate. Excluding those gains from non-operating activities, MSA’s adjusted net income grew by $10.5 million in 2008, reflecting the stronger performance in North America, where net income rose 8%. Net income in our Europe segment was up 6%, while net income in our International segment was up 2% from the previous year.

It was especially gratifying that MSA achieved a record year in terms of pretax profit from operations. Profit from operations, excluding extraordinary items, was $127 million, exceeding the company’s previous high, which was set in 2005. The growth in sales and profit from operations was a testament to our efforts in product leadership, customer intimacy, emerging market focus and operational excellence.

Innovations for MSA Customers
Overall, MSA’s performance in 2008 was fundamentally strong, led by our military product line and our impressive pipeline of new products. One of our greatest success stories in 2008 was the Altair® 4 Mulitgas Detector, an extremely durable, value-priced next-generation portable device that helps protect people in the oil, gas and petrochemical (OGP) industry, a key MSA market. Sales of the Altair 4 Detector exceeded our projections, earning this breakthrough product the honor of being named our “2008 Product of the Year.” MSA also introduced the Altair® 5 Multigas Detector, a sister product with expanded capabilities and features.

Overall, combined handheld and permanently installed gas detection instrument sales increased nearly $13 million for MSA in 2008, as the OGP market showed strong demand for our products throughout most of the year.

MSA launched many other innovative new products for customers in our key markets, including our “one-of-akind” Firehawk® M7 Responder® Air Mask for the U.S. Air Force; an advanced ballistic helmet for the Canadian military; firefighters saw a new stand-alone personal alert safety system, thermal imaging camera, and helmet visor for their MSA Cairns® helmets; new fall protection products were developed and introduced for the Construction and Industrial markets; new riot-control helmets and body armor for the Law Enforcement market; and a wide range of other outstanding products.

As a measure of our R&D effectiveness, roughly one third of MSA’s global sales in 2008 were from products introduced over the last three years. I invite you to learn more about MSA’s commitment to product innovation — one of the keys to our future success — on pages 4 and 5 of this annual report.

Striving for Operational Excellence
As MSA delivered growth in sales and earnings in 2008, we continued to implement a comprehensive operations plan that we believe will enhance customer loyalty and our competitive strength for years to come. Major initiatives under our plan to achieve Operational Excellence included:

• The implementation of Demand Flow Technology and application of global best practices to reduce costs, improve productivity, maximize efficiency and enhance our competitive ability to create innovative products that deliver greater value for our customers. Our conversion to Demand Flow Technology is vital because it is a process and system that is expected to enable MSA factories and warehouses worldwide to respond faster to the needs of our customers while reducing inventory and equipment costs. We have seen encouraging early results from this ongoing initiative, about which more detail is provided on page 6 of this report.
• The grand opening of a world class factory and technology center in Suzhou, China that began operations in November 2008. As our new hub for meeting the growing demand in Asia for safety products, our new Suzhou facility provides the foundation needed for MSA to significantly increase its brand presence in China — a key geographic market for the future of our company.
• The continued implementation of Project Magellan, a multi-year initiative that was launched at the start of 2007 to improve manufacturing efficiency and utilization in North America and reduce operating costs. More information about the progress we are making with Project Magellan is provided on page 7 of this report.

Focused on Key Markets
In 2008, MSA did a superb job of meeting ever-changing customer needs and product performance standards that exist within the key markets core to our mission: Fire Service, OGP, Law Enforcement, Military, Construction and General Industry. In select regions of the world, such as China, Australia and South Africa, MSA was also a leader in providing mine safety products to continue the longstanding mission that first put MSA on the map in 1914.

Our major market wins in 2008 included new contracts to supply additional Advanced Combat Helmets to the U.S. military and the Firehawk® M7 Responder® Air Mask to the U.S. Air Force; orders from the Canadian military for our new CG634 ballistic helmets; and orders from the German defense forces for protective respiratory equipment. Our wins in the Law Enforcement market included orders in France for riot-control helmets and ballistic body armor, while orders to the OGP market fueled our gas detection instrument sales.

Despite the current economic downturn, MSA increased our market penetration in Asia, Australia, China, Europe, South America and Africa as more than half of our MSA International affiliates achieved sales growth of at least 20% for the year. Including the European and International segments, about 48% of MSA’s sales in 2008 were outside of North America, a trend that we are determined to grow in the future with our aggressive global approach in marketing, sales and distribution.

One of the keys to driving such growth, today and in the future, is our heightened focus on building Customer Loyalty. A key metric MSA adopted in 2008 to assess our effectiveness in this area is the Net Promoter Score (NPS). Used today by many Fortune 500 companies, it is a straightforward measure to assess the gap between a brand’s most vocal advocates (Promoters) and its detractors. More importantly, it holds all of us at MSA accountable for how we treat customers. I’m pleased to report that MSA earned high NPS marks in 2008. In 2009, our goal is to build on this success, and we will. Through focus on our Voice of the Customer processes, we are listening to our customers and working more closely with them than ever before. That’s smart business that represents a “win-win” for MSA and our customers over the long haul.

Milestones and Achievements
Beyond receiving high marks for customer satisfaction, I’m also proud to report that MSA was recognized on several other important fronts in 2008. In February, MSA received the 2007 Pittsburgh Business Ethics Award from the Pittsburgh chapter of the Society of Financial Service Professionals and the University of Pittsburgh’s David Berg Center for Ethics and Leadership. This award affirmed one of the greatest strengths of MSA — our commitment to conducting business in an ethical and socially responsible manner.

In June, MSA announced that the Occupational Safety and Health Administration had designated our Cranberry Township, Pennsylvania manufacturing plant as a national Voluntary Protection Program Star Site in recognition of the facility’s health and safety practices and its exemplary safety record. Of the approximate seven million workplaces in the U.S. — large and small — fewer than 1,500 have earned this distinction since OSHA created the program in 1982. The Cranberry plant was the second MSA facility to receive this prestigious Star Site designation; our Murrysville, Pennsylvania plant was the first in 2006.

Other milestones in 2008 included celebrating MSA 50th anniversaries in Italy and Germany, two of our outstanding business affiliates in Europe, which ranks as our second largest market, after North America. Our teams in Italy and Germany personify the talent, dedication and ingenuity that make MSA a safety product leader around the world.

In May, John T. Ryan III retired as MSA’s Chief Executive Officer after leading this company for 17 years. Under his strong leadership, MSA grew dramatically to become the world’s leading manufacturer of sophisticated safety equipment. With steadfast integrity and energy, John transformed MSA with a strategic vision that accelerated our global growth and focused the company on innovative new product development, a vision that continues today. All of us at MSA wish John well in his retirement and are pleased that John continues to serve as non-executive chairman of MSA’s Board of Directors. In his new role, John continues to share his wisdom and insights with me and with our strong management team, for which I am most grateful.

MSA’s Future in 2009 and Beyond
When I was elected the eighth Chief Executive Officer in MSA’s remarkable 95-year history as part of a planned management succession, I accepted this position knowing that MSA would face new challenges, as it has many times before. Frankly, the continuing global recession is our greatest immediate challenge in 2009.

With many challenges still in front of us, we are focused more intently than ever on implementing our multi-year strategy to achieve operational excellence, improve the efficiency and productivity of our global manufacturing network, reduce costs, enhance product quality and accelerate our introduction of innovative new products that deliver even better value, performance and protection for our customers.

To that point and in light of the global economic recession, we have implemented significant cost control measures on operating expenses across MSA and have taken actions to reduce staff and better align our factory workforce with customer demand. At the outset of 2009, MSA completed a voluntary retirement incentive program which resulted in an 8% decrease in our U.S. salaried workforce. This initiative is expected to deliver an estimated $5 million in annual savings. MSA also implemented a pay freeze for all salaried U.S. and Canadian-based employees, which will serve to reduce annual expenses by an additional $1.9 million. We also suspended hiring except for those positions deemed truly mission critical, and we implemented salary increase restrictions on a global basis. In our factories around the world, and while always difficult, MSA took steps to reduce overtime and responded to decreases in demand by adjusting our hourly workforce through what we hope will be temporary layoffs. Tight discretionary spending restrictions are also in effect around the world for MSA.

I can assure you that MSA has intensified our efforts to manage and reduce costs in all areas of the company. In these uncertain economic times, our global teams are closely monitoring the markets served by MSA, and we will continuously adjust our response to meet the market realities and challenges facing MSA.

Economic cycles are a fact of life, and MSA has contended with severe “down cycles” a number of times over our long history. We are meeting today’s challenges head on, with our continuing initiatives to reduce manufacturing costs, improve operating margins, enhance our competitiveness in key product areas, and strengthen customer relationships by providing the best value in safety products.

Overall, I believe that MSA is well positioned for longterm growth in earnings and sales, once the global economy rebounds. Our strengths are many. MSA is a strong global brand that we are protecting through our uncompromising commitment to quality, innovation and customer satisfaction. We have a strong, balanced and diversified portfolio of superb safety products to help MSA weather the storm of volatile economic cycles. We have a growing global reach, with a strong network of manufacturing facilities and a growing number of distributors. We have proven expertise in advanced safety technology and know what it takes to create innovative safety products that are built to perform exceptionally well and built to last. We have earned a strong track record of customer satisfaction, loyalty and retention, backed by our strong team of MSA associates in more than 40 countries around the world.

MSA is determined to protect and build MSA’s brand equity during this economic downturn. We will protect our core product lines, such as respiratory protection, gas detection and head protection, and nurture the development of new areas of strength. We will continue to focus on operational excellence to decrease our costs while increasing efficiencies. And we will do what we have always done best: drive product development through advanced technology and innovation.

Most of all, I am confident about the future of MSA because we have a “roll up our sleeves” culture; a strong, deep and experienced management team; and dedicated hard-working MSA associates who share a common bond — a personal commitment to the mission and principles that have propelled the global growth and success of MSA for almost a century. Much has changed at MSA since I joined the Company in 1981, but my vision stays true to MSA’s vision — “That men and women may work in safety and that they, their families and their communities may live in health throughout the world.”

I want to extend my thanks to the many people of MSA who are working around the world to build a strong foundation for the future of our company. I also want to thank the Board of Directors for their stewardship of the company, and our Executive Leadership team for their tireless efforts and support. I am proud to lead this great company and I am honored to work with the best people in the safety industry.

Finally, I want to thank our distributors and customers around the world for your continued loyalty to MSA, and our shareholders. MSA is focused on enhancing longterm value for our customers and for our shareholders in the years to come. Sincerely,


William M. Lambert
President and Chief Executive Officer