The following discussion and analysis should be read in conjunction with the historical financial statements and other financial information included elsewhere in this report on Form 10-Q. 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. These factors include, but are not limited to, spending patterns of government agencies, competitive pressures, product liability claims and our ability to collect related insurance receivables, the success of new product introductions, currency exchange rate fluctuations, the identification and successful integration of acquisitions, and the risks of doing business in foreign countries. For a discussion of risk factors affecting our business, see Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2011.

BUSINESS OVERVIEW

We are a global leader in the development, manufacture and supply of products that protect people's health and safety. Our safety products typically integrate any combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life threatening situations. Our comprehensive lines of safety products are used by workers around the world in the fire service, oil, gas, and petrochemical, mining, construction and other industries, as well as the military and homeland security. 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. We believe that we best serve these customer preferences by organizing our business into three reportable geographic segments: North America, Europe and International. Each segment includes a number of operating companies. In 2011, 48%, 24% and 28% of our net sales were made by our North American, European and International segments, respectively.

North America. Our largest manufacturing and research and development facilities are located in the United States. We serve our North American markets with sales and distribution functions in the U.S., Canada, and Mexico.

Europe. Our European segment includes companies in most Western European countries and a number of Eastern European and Middle Eastern locations. Our largest European companies, based in Germany and France, develop, manufacture, and sell a wide variety of products. Operations in other European countries focus primarily on sales and distribution in their respective home country markets. While some of these companies may perform limited production, most of their sales are of products that are manufactured in our plants in Germany, France, the U.S., and China, or are purchased from third party vendors.

International. Our International segment includes companies in South America, Africa and the Asia Pacific region, some of which are in developing regions of the world. Principal International segment manufacturing operations are located in Australia, Brazil, China and South Africa. These companies manufacture products that are sold primarily in each company's home country and regional markets. The other companies in the International segment focus primarily on sales and distribution in their respective home country markets. While some of these companies may perform limited production, most of their sales are of products that are manufactured in our plants in China, Germany, France and the U.S., or are purchased from third party vendors.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Net sales. Net sales for the three months ended June 30, 2012 were steady at
$294.7 million. Improvements in local currency sales were offset by the
unfavorable translation effects of weaker European and International currencies
when stated in U.S. dollars.




                           Three Months Ended          Dollar           Percent
                                June 30,              Increase          Increase
         (In millions)      2012          2011       (Decrease)        (Decrease)
         North America   $    145.3      $ 137.7     $       7.6                 6 %
         Europe                67.3         74.9            (7.6 )             (10 %)
         International         82.1         82.2            (0.1 )               -

Net sales by the North American segment were $145.3 million for the second quarter of 2012, an increase of $7.6 million, or 6%, compared to $137.7 million for the second quarter of 2011. During the current quarter, we continued to see growing demand in the oil and gas market, as well as other core industrial markets, which resulted in higher shipments of instruments and head protection, up $10.6 million and $1.6 million, respectively. These increases were partially offset by a $5.0 million decrease in shipments of ballistic vests and Advanced Combat Helmets (ACH) to the military. We divested our ballistic vest and North American ACH businesses during the fourth quarter of 2011 and the second quarter of 2012, respectively.

Net sales for the European segment were $67.3 million for the second quarter of 2012, a decrease of $7.6 million, or 10%, compared to $74.9 million for the second quarter of 2011. Local currency sales in Europe increased $0.2 million, reflecting modest improvements in fire helmet sales mostly offset by weakness in core industrial and military markets. The unfavorable translation effects of a weaker euro in the current quarter decreased European segment sales, when stated in U.S. dollars, by $7.8 million.

Net sales for the International segment were $82.1 million in the second quarter of 2012, a decrease of $0.1 million, compared to $82.2 million for the second quarter of 2011. Local currency sales in the International segment increased $7.4 million in the current quarter due to strong demand in mining and core industrial markets. Local currency sales increased in most product lines, with the strongest improvements in SCBAs, head protection, and eye and face protection, up $4.3 million, $1.5 million, and $1.5 million, respectively. Currency translation effects decreased International segment sales, when stated in U.S. dollars, by $7.5 million, primarily related to a weaker Australian dollar, Brazilian real, and South African rand.

Other income. Other income for the second quarter of 2012 was $8.3 million, an increase of $7.1 million, compared to $1.2 million for the second quarter of 2011. The increase was primarily related to a gain of $5.7 million on the sale of land in our Cranberry Woods office park during the current quarter.

Cost of products sold. Cost of products sold was $171.6 million in the second quarter of 2012, compared to $175.7 million in the second quarter of 2011. Cost of products sold as a percentage of sales was 58.2% in the second quarter of 2012 compared to 59.6% in the second quarter of 2011. The improvement in cost of products sold as a percentage of sales was primarily due to improved pricing, lower manufacturing costs, and changes in product mix.

Gross profit. Gross profit for the second quarter of 2012 was $123.1 million, which was $4.1 million, or 3%, higher than gross profit of $119.0 million in the second quarter of 2011. The ratio of gross profit to net sales was 41.8% in the second quarter of 2012 compared to 40.4% in the same quarter last year. The improved gross profit ratio in the current quarter reflects the previously discussed improvements in costs of products sold.

Research and development expense. Research and development expense was $10.3 million during the second quarter of 2012, an increase of $0.9 million, or 10%, compared to $9.4 million during the second quarter of 2011. This increase was primarily related to the timing of research and development project spending.

Restructuring and other charges. We did not incur any restructuring and other charges during the second quarter of 2012. During the second quarter of 2011, we recorded charges of $2.0 million ($1.3 million after tax). European segment charges of $1.4 million related primarily to staff reductions in Germany, France, and Spain and the transfer certain production activities to China and the United States. North American segment charges of $0.6 million included costs associated with the relocation of certain administrative and production activities.

Interest expense. Interest expense was $2.9 million during the second quarter of 2012, a decrease of $0.9 million, or 23%, compared to $3.8 million in the same quarter last year. The decrease in interest expense was due to lower borrowing on our revolving line of credit and lower interest rates.

Currency exchange. Currency exchange gains were $1.2 million in the second quarter of 2012, compared to gains of $0.1 million in the second quarter of 2011. Currency exchange gains in the current quarter were mostly unrealized and related primarily to euro-denominated inter-company balances and the weakening of the Mexican peso.

Income taxes. The effective tax rate for the second quarter of 2012 was 31.7% compared to 33.5% for the same quarter last year. The lower effective tax rate in the second quarter of 2012 was primarily related to the higher proportion of income in lower tax jurisdictions. This benefit was partially offset by the expiration of the U.S. research and development tax credit at the end of 2011.

Net income attributable to Mine Safety Appliances Company. Net income attributable to Mine Safety Appliances Company for the second quarter of 2012 was $28.0 million, or $0.76 per basic share, an increase of $8.4 million, or 43%, compared to $19.6 million, or $0.53 per basic share, for the same quarter last year.

North American segment net income for the second quarter of 2012 was $20.3 million, an increase of $4.2 million, or 26%, compared to $16.1 million in the second quarter of 2011. The increase in North American segment net income reflects higher sales, gross profits, and a gain on the sale of our North American ballistic helmet business, partially offset by higher research and development and selling, general, and administrative expenses.

European segment net income was $2.1 million for the second quarters of 2012 and 2011. Local currency net income in Europe increased $0.2 million in the current quarter, reflecting lower restructuring charges partially offset by increased research and development and selling, general, and administrative costs. Currency translation effects decreased current quarter European segment net income, when stated in U.S. dollars, by $0.2 million.

Net income reported in reconciling items for the second quarter of 2012 was $2.0 million compared to a net loss of $5.1 million in the second quarter of 2011. Improved net income in the second quarter of 2012 was primarily related to a gain on sale of land in our Cranberry Woods office park, higher currency exchange gains, and lower interest expense.

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

Net sales. Net sales for the six months ended June 30, 2012 were $588.2 million,
an increase of $17.0 million, or 3%, compared with $571.2 million for the six
months ended June 30, 2011.



                               Six Months Ended
                                   June 30,              Dollar        Percent
             (In millions)     2012         2011        Increase      Increase
             North America   $   282.8     $ 268.6     $     14.2             5 %
             Europe              139.8       139.7            0.1             -
             International       165.6       162.9            2.7             2 %

Net sales by the North American segment were $282.8 million for the six months ended June 30, 2012, an increase of $14.2 million, or 5%, compared to $268.6 million for the same period in 2011. During the six months ended June 30, 2012, we continued to see growth in the oil and gas markets, as well as other core industrial markets. Shipments of instruments and head protection were up $21.6 million and $3.6 million, respectively. These increases were partially offset by a $9.8 million decrease in shipments of ballistic helmets and vests to military markets. We divested our ballistic vest and North American ACH businesses during the fourth quarter of 2011 and the second quarter of 2012, respectively.

Net sales for the European segment were $139.8 million for the six months ended June 30, 2012, an increase of $0.1 million, compared to $139.7 million for the same period in 2011. Local currency sales increased $10.4 million, reflecting higher shipments of instruments, fire helmets, and respirators, up $4.1 million, $3.4 million, and $1.9 million, respectively. The translation effects of a weaker euro in the first half of 2012 decreased European segment sales, when stated in U.S. dollars, by $10.3 million.

Net sales for the International segment were $165.6 million for the six months ended June 30, 2012, an increase of $2.7 million, or 2%, compared to $162.9 million for the same period in 2011. Local currency sales in the International segment increased $12.6 million during the six months ended June 30, 2011. Growth in the fire service markets in China and Latin America lead an increase in sales of SCBAs of $4.5 million. In addition, sales of head protection and eye and face protection improved by $3.5 million and $2.4 million, respectively. Currency translation effects decreased International segment sales, when stated in U.S. dollars, by $9.9 million, primarily related to a weaker Australian dollar, South African rand, and Brazilian real.

Other income. Other income for the six months ended June 30, 2012 was $8.3 million, an increase of $6.3 million, compared to $2.0 million for the same period in 2011. The increase was primarily related to a gain of $5.7 million on the sale of land in our Cranberry Woods office park during the second quarter of 2012.

Gross profit. Gross profit for the six months ended June 30, 2012 was $250.1 million, which was $20.7 million, or 9%, higher than gross profit of $229.4 million for the same period in 2011. The ratio of gross profits to net sales was 42.5% during the six months ended June 30, 2012, compared to 40.2% for the same period last year. The higher gross profit ratio during the six months ended June 30, 2012 was primarily related to the previously discussed improvements in cost of products sold.

Selling, general and administrative expenses. Selling, general and administrative expenses were $155.0 million during the six months ended June 30, 2012, an increase of $6.2 million, or 4%, compared to $148.8 million during the same period in 2011. Selling, general and administrative expenses were 26.3% of net sales for the six months ended June 30, 2012, compared to 26.0% of net sales for the same period in 2011. Local currency selling, general and administrative expenses increased $11.5 million, with increases in all three segments, primarily to support higher sales volumes. Currency translation effects decreased selling, general and administrative expenses for the six months ended June 30, 2012, when stated in U.S. dollars, by $5.3 million, primarily related to a weaker euro, Australian dollar, Brazilian real, and South African rand.

Restructuring and other charges. We did not incur any restructuring charges during the six months ended June 30, 2012. During the six months ended June 30, 2011, we recorded charges of $5.1 million ($3.3 million after tax). European segment charges for the six months ended June 30, 2011 of $3.1 million related primarily to staff reductions in Germany, France, and Spain and the transfer of certain production activities to China and the United States. North American segment charges for the six months ended June 30, 2011 of $1.1 million included costs associated with the relocation of certain administrative and production activities. International segment charges for the six months ended June 30, 2011 of $0.9 million were related to costs associated with the relocation of our Wuxi, China operations to Suzhou, China.

Interest expense. Interest expense was $6.1 million during the six months ended June 30, 2012, a decrease of $1.1 million, or 16%, compared to $7.2 million during the same period last year. The decrease in interest expense was due to lower borrowing on our revolving line of credit and lower interest rates.

Currency exchange. Currency exchange losses were $1.2 million during the six months ended June 30, 2012, compared to losses of $0.6 million during the same period in 2011. Currency exchange losses in both periods related primarily to euro-denominated inter-company balances.

Income taxes. The effective tax rate for the six months ended June 30, 2012 was 31.2% compared to 33.7% for the same period last year. The lower effective tax rate in the first half of 2012 was primarily related to a higher proportion of income in lower tax jurisdictions. This benefit was partially offset by the expiration of the U.S. research and development tax credit at the end of 2011.

Net income attributable to Mine Safety Appliances Company. Net income attributable to Mine Safety Appliances Company for the six months ended June 30, 2012 was $51.9 million, or $1.41 per basic share, an increase of $19.0 million, or 58%, compared to $32.9 million, or $0.90 per basic share, for the same period last year.

European segment reported net income for the six months ended June 30, 2012 of $7.8 million, an improvement of $4.1 million, or 111%, compared to $3.7 million during the same period in 2011. Local currency net income increased by $4.3 million, reflecting improved gross profits and lower restructuring charges. Currency translation effects decreased European segment net income, when stated in U.S. dollars, by $0.2 million, primarily reflecting a weaker euro.

International segment net income for the six months ended June 30, 2012 was $11.9 million, a decrease of $1.9 million, or 14%, compared to $13.8 million in the same period last year. Currency translation effects decreased current period International segment net income, when stated in U.S. dollars, by approximately $1.5 million, primarily due a weaker Brazilian real and South African rand. Local currency net income decreased $0.4 million, reflecting higher operating expenses, partially offset by higher gross profits.

The net loss reported in reconciling items for the six months ended June 30, 2012 was $4.3 million compared to a net loss of $10.6 million for the same period last year. The improvement during the six months ended June 30, 2012 reflects a gain on sale of land in our Cranberry Woods office park and lower interest expense.

LIQUIDITY AND CAPITAL RESOURCES

Our main source of liquidity is operating cash flows, supplemented by borrowings to fund working capital requirements and significant transactions. Our principal liquidity requirements are for working capital, capital expenditures, principal and interest payments on debt, and acquisitions. Approximately half of our long-term debt is at fixed interest rates with repayment schedules through 2021. The remainder of our long-term debt is at variable rates, primarily on our unsecured revolving credit facility that is due in 2016. Substantially all of our borrowings originate in the U.S., which has limited our exposure to non-U.S. credit markets and to currency exchange rate fluctuations.

Cash and cash equivalents increased $5.1 million during the six months ended June 30, 2012, compared to increasing $4.0 million during the same period in 2011.

Operating activities provided cash of $65.0 million during the six months ended June 30, 2012, compared to providing cash of $18.7 million during the same period in 2011. Significantly improved operating cash flow in 2012 is primarily related to higher net income, lower use of cash to fund other non-current assets and liabilities, and improved performance related to working capital items. Trade receivables were $217.3 million at June 30, 2012, compared to $192.6 million at December 31, 2011. Inventories were $143.7 million at June 30, 2012, compared to $141.5 million at December 31, 2011. Accounts payable were $67.7 million at June 30, 2012, compared to $50.2 million at December 31, 2011. The $24.7 million increase in trade receivables reflects a $26.0 million increase in local currency balances, and a $1.3 million decrease due to currency translation effects. The change in inventories includes a reduction of $3.4 million related to the sale of our North American ballistic helmet business. Excluding this change, local currency inventories increased $6.9 million, primarily in Europe, partially offset by a $1.3 million decrease due to currency translation effects. The $17.5 million increase in accounts payable occurred primarily in North America and reflects our ongoing initiative to improve working capital cash flow. The increases in trade receivables and inventories reflect increased sales and anticipated growth in customer demand.

Financing activities used cash of $58.2 million during the six months ended June 30, 2012, compared to using $4.3 million during the same period in 2011. The change was primarily related to borrowing on our long-term line of credit. During the first half of 2012, we made payments on long-term debt of $40.0 million compared to borrowing of $15.0 million in the first half of 2011. We paid cash dividends of $19.9 million in the first half of 2012 compared to $18.7 million in the first half of 2011.

CUMULATIVE TRANSLATION ADJUSTMENTS

The position of the U.S. dollar relative to international currencies at June 30, 2012 resulted in a translation loss of $3.4 million being charged to the cumulative translation adjustments shareholders' equity account during the six months ended June 30, 2012, compared to a gain of $13.6 million during the same period in 2011. The loss during the first half of 2012 was related to the weakening of the euro, Brazilian real, and South African rand. The translation gain during the first half of 2011 was primarily related to the strengthening of the euro.

COMMITMENTS AND CONTINGENCIES

We made contributions of $2.0 million to our pension plans during the six months ended June 30, 2012. We expect to make total contributions of approximately $4.1 million to our pension plans in 2012.

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

We categorize the product liability losses that we experience into two main categories, single incident and cumulative trauma. Single incident product liability claims are discrete incidents that are typically known to us when they occur and involve observable injuries and, therefore, more quantifiable damages. Therefore, we maintain a reserve for single incident product liability claims based on expected settlement costs for pending claims and an estimate of costs for unreported claims derived from experience, sales volumes and other relevant information. Our reserve for single incident product liability claims was $4.6 million at June 30, 2012 and $4.7 million at December 31, 2011. Single incident product liability expense during the six months ended June 30, 2012 and 2011 was $0.6 million and $0.7 million, respectively. We evaluate our single incident product liability exposures on an ongoing basis and make adjustments to the reserve as new information becomes available.

Cumulative trauma product liability claims involve exposures to harmful substances (e.g., silica, asbestos and coal dust) that occurred many years ago and may have developed over long periods of time into diseases such as silicosis, asbestosis or coal worker's pneumoconiosis. We are presently named as a defendant in 2,567 lawsuits in which plaintiffs allege to have contracted certain cumulative trauma diseases related to exposure to silica, asbestos, and/or coal dust. These lawsuits mainly involve respiratory protection products allegedly manufactured and sold by us. We are unable to estimate total damages sought in these lawsuits as they generally do not specify the injuries alleged or the amount of damages sought, and potentially involve multiple defendants.

Cumulative trauma product liability litigation is difficult to predict. In our experience, until late in a lawsuit, we cannot reasonably determine whether it is probable that any given cumulative trauma

. . .