To Our Shareholders, Customers, Channel Partners, and Associates:

I am pleased to report that MSA delivered record net income of $91 million, or $2.45 per share, in 2012 as we successfully executed our long-term growth strategy to drive the company’s profit and enhance shareholder value.

Our growth strategy is built around three key pillars:

• Focus on the Core Safety Products that are the strength of MSA;
• Penetrate Emerging Markets where demand is growing; and
• Achieve Operational Excellence to enhance performance, productivity and customer satisfaction.

Overall, 2012 was a year in which we gained solid traction from our strategy, as sales of MSA’s Core Products increased year-over-year by 10 percent, and now account for two thirds of MSA’s total sales. Sales across these same Core Product groups in Emerging Markets grew by 21 percent for the year, with particularly strong performance in Latin America.

For the year, MSA reported sales of $1.2 billion. Excluding the impact of currency translation and the divestiture of our ballistic vest and North American ballistic helmet businesses, our sales grew seven percent in 2012 despite a challenging global economic environment.

Importantly we delivered record net income that grew 30 percent from the prior year, making 2012 far and away the most profitable year in MSA’s history.

Growing the Core

As The Safety Company, MSA is building a strong foundation for future growth by focusing on and investing in the “Core of MSA” – in other words the “Core Products” that provide a distinct and sustainable competitive advantage. These product groups include Portable Gas Detection instruments and sensors; Industrial Head Protection products; Fixed Gas and Flame Detection (FGFD) systems; Supplied-Air Respirators; and Fall Protection products. In essence, these Core Products represent a set of capabilities, channels and geographies that drive growth at MSA, provide economic value for our company and shareholders, and best leverage our expertise to keep customers safe. Accordingly, they receive the highest levels of investment and resources at MSA, because they promise the greatest return for all.

Across these lines, the MSA brand stands for four things: superior quality, superior reliability, superior durability, and an exceptional customer experience. It’s no accident MSA is a leader in safety products and technology – it’s what we do best.

With a keen eye on the future, MSA is focusing our investment behind these proven product areas, with an emphasis on driving innovation that meets the needs – and expectations – of our customers globally.

To sharpen this focus on our core portfolio, MSA exited product lines that did not fit with our strategic plan. These included the divestitures of our ballistic vest and North American ballistic helmet businesses in 2011 and 2012, respectively.

As another aspect of this “value realization” process, MSA and its shareholders continued to benefit in 2012 from strategic acquisitions focused on enhancing our core portfolio.

A great example is our acquisition of General Monitors (GM) in 2010, which significantly strengthened and expanded our growing Fixed Gas and Flame Detection business. Overall, stronger sales of General Monitors’ branded products helped MSA realize a solid 11 percent increase in local currency sales for our global FGFD portfolio in 2012. We are driving this growth by leveraging the breadth of MSA’s global channels of distribution, establishing new distribution channels and capitalizing on opportunities in the energy market as the oil, gas and petrochemical industries returned solidly to a growth trajectory.

Growing in Emerging Markets

The second pillar of our long-term strategy is to drive MSA’s growth and penetration in Emerging Markets, especially in highly populated regions with growing economies such as Asia, Mexico and Latin America. Our goal is simple and straightforward: to be well-positioned in Emerging Markets with Core Products that meet the growing demand for safety products and drive growth at MSA for years to come.

Reflecting the momentum of this focus, MSA’s 2012 sales to Emerging Markets grew by 13 percent in real terms, highlighted by the previously mentioned 21 percent increase in Core Product sales to these same markets.

While I see these results as encouraging, I also believe we have only scratched the surface of our growth potential in Emerging Markets. At a high level, we’ve seen sales and profitability expand in many regions, not always in a straight line, but nonetheless demonstrating continued success in just a few years. For example, our business in Southeast Asia has delivered a 19 percent compound annual growth rate over the last four years, while Latin America and China have delivered 28 percent and 11 percent growth rates, respectively, over the same period as well.

In addition, we have expanded our manufacturing operations and added depth to our engineering resources in places like Brazil and China. Also in Brazil, we recently initiated “Projeto Real,” a multi-year investment and growth strategy that aims to double our sales and operating income in the world’s fifth most populated country.

And in Russia and the former CIS countries, we are focused on becoming a major player in protecting the safety of workers in the region’s expanding oil and gas production industry. Overall, we’re taking these actions to ensure our global growth strategy in Emerging.

Operational Excellence

Our third key strategic pillar is Operational Excellence, which I see as the foundation for sustainable growth and success. Accordingly, this continues to be a major focus of ours and one that is having a clear and positive impact on our results. As an example, we are implementing strategy-driven actions like consolidating our global spend, streamlining logistics and leveraging our IT resources to be more efficient. You can read about these and other 2012 highlights in the Year-in-Review section that begins on page 6.

In particular, the operational effectiveness of our European business is a keen area of focus for us. Historically, MSA Europe has functioned as a relatively independent network of affiliated companies. Years ago, this structure served MSA well. However, today’s environment demands that we manage Europe functionally, not geographically, to take full advantage of the trade benefits associated with the European Union. This must then be enabled by a common, integrated IT platform to improve transparency of information and service to our customers.

To address this need, in 2012, we launched Europe 2.0 – a multi-faceted initiative highlighted by, among other things, the adoption of standardized pan-European business processes, enabled by the deployment of a new common IT platform and the consolidation of distribution facilities from 10 sites to just two. When completed, Europe 2.0 will create a truly Pan-European organization that is better connected, more agile and cost efficient, and more structurally and functionally aligned – all in an effort to improve our responsiveness to customer needs.

These efforts are already bearing fruit. In 2012, we saw improvement in the profitability of our European operations, despite the challenging economic conditions that continue throughout the region. We still have a long way to go, and we are accelerating our efforts. However, through these and other changes, I believe MSA is well positioned to grow in Europe and in a better position to react to any economic hurdles that lay ahead.

Overall, as we continue to look for ways to strengthen our global operations, we do so with the full understanding that customers expect and deserve the highest quality products, delivered on time, and procured at the lowest possible cost. At the same time, we know shareholders expect improved profitability and good cash flow. Taking into consideration the progress we made in 2012 in the operations area, I believe we are making solid progress on each of these fronts. Further, we are on track to achieve our goal of a 15 percent operating margin by 2015, after delivering 12 percent in 2012.

Enhancing Shareholder Value

Of course, the ultimate goal of our long-term growth strategy – which we first embarked upon in 2009 – is to enhance shareholder value. I am pleased to report that MSA is doing that. The company has delivered a total shareholder return (TSR) of 107 percent over the last four years compared with a TSR of 72 percent for the S&P 500 Index. In 2012, our TSR was 34 percent and outperformed 83 percent of the 23 industrial companies in our selected peer group.

At the end of 2012, MSA’s common stock closed at $42.71, up nearly 30 percent from $33.12 at the end of 2011.

Finally, the company’s record profitability – driven in large part by our “Core Product” focus and our commitment to achieving Operational Excellence – helped MSA achieve a record net cash flow of $138 million in 2012. This enabled us to pay down debt while returning $51 million to shareholders via our common quarterly dividend – as well as a special year-end dividend – that reached its highest level ever.

In summary, MSA continues to successfully execute a long-term growth strategy that is driving stronger operating margins and operating income by focusing on our core portfolio and expanding our presence in Emerging Markets, all of which is supported by our commitment to Operational Excellence in everything we do.

I believe the MSA brand is one of the most trusted brands in the industry. We are meeting the changing needs of our customers by manufacturing safety products and developing technology second to none, and we’re doing it more efficiently.

As we have demonstrated for decades, MSA is the leader in safety. In a world that is ever-changing, the need for safety remains constant and MSA is well positioned to meet that need in key developed markets like North America and Europe, and in emerging economies where industrial growth is expected to fuel demand.

In closing, I want to thank our shareholders for your investment in MSA and our distributors and customers around the world for your continued trust and loyalty to our company.

I also want to thank our 5,300 associates, our company’s greatest asset, as well as our Board of Directors and our Executive Leadership Team, for their outstanding efforts in making 2012 a most successful year.

With our great brand, great products, a great team and our proven long-term strategy, I am confident MSA’s best years are still to come.

Sincerely,

William M. Lambert

President and Chief Executive Officer