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UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n
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Washington, D.C. 20549\n
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FORM 8-K\n
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CURRENT REPORT
\nPursuant to Section 13 or 15(d) of the
\nSecurities Exchange Act of 1934\n
\n\n\n
Date\nof Report (Date of earliest event reported): February 20,\n2007\n\n
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BRADY CORPORATION\n
\n\n
(Exact name of registrant as specified in its charter)
\n\n\n\n
Commission File Number 1-14959\n\n
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Wisconsin\n 39-0971239
(State of Incorporation)\n (IRS Employer Identification No.)
\n
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6555 West Good Hope Road
\nMilwaukee, Wisconsin 53223
\n(Address of Principal Executive Offices and Zip Code)\n\n
\n\n
(414) 358-6600
\n(Registrant’s Telephone Number)\n\n
\n
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the\nfiling obligation of the registrant under any of the following provisions:\n
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR\n240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR\n240.13e-4(c))
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TABLE OF CONTENTS
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Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Item 5.02(e) DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
SIGNATURE
EXHIBIT INDEX
Press Release
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Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.\n
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On February 21, 2007, Brady Corporation issued a press release announcing its fiscal 2007 second\nquarter financial results. A copy of the press release is being furnished to the Securities and\nExchange Commission as Exhibit 99 attached herewith and incorporated by reference.\n
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Item 5.02(e) DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF\nCERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
\n\n
On February 20, 2007, the Compensation Committee (“the Committee”) of the Board of Directors of\nBrady Corporation approved amendments to the Brady Corporation 1989, 1997, 2001, 2003, 2004, and\n2006 Omnibus Incentive Stock Plans (the “Plans”). The amendments provide that in the event of any\nchange in the Brady Corporation Class A Common Stock resulting from reorganization,\nrecapitalization, stock split, stock dividend, merger, consolidation, rights offering or like\ntransaction affecting the Class A Common Stock, the Committee shall proportionately and appropriately adjust: (a) the aggregate number\nand kind of shares authorized for issuance under the Plans; and (b) in the case of previously\ngranted stock options, the option price and the number and kind of\nshares subject to the stock\noptions, without any change in the aggregate purchase price to be\npaid for the stock options. The amendments became effective upon\napproval by the Compensation Committee.\n
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Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS.\n
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(c) Exhibits.\n
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The following is furnished as an Exhibit to this Report.\n
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Exhibit No. Description of Exhibit
99\n
 Press Release of Brady Corporation, dated February 21, 2007.
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SIGNATURE\n
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused\nthis report to be signed on its behalf by the undersigned hereunto duly authorized.\n
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 BRADY CORPORATION
\n 		 
Date: February 23, 2007 /s/ David Mathieson\n  
 David Mathieson  
 Vice President &
\nChief Financial Officer 		 
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EXHIBIT INDEX\n
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EXHIBIT  
NUMBER DESCRIPTION
99\n
 Press Release of Brady Corporation dated February 21, 2007.
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EXHIBIT 99\n\n
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For More Information:
\nInvestor contact: Barbara Bolens 414-438-6940
\nMedia contact: Carole Herbstreit 414-438-6882\n\n
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For Immediate Release\n
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Brady Corporation reports sales and net income for its fiscal 2007 second quarter\n\n
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MILWAUKEE (February 21, 2007)—Brady Corporation (NYSE: BRC), a world leader in identification\nsolutions, reports sales and earnings for its second quarter ended January 31, 2007.\n
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     Sales for the quarter were up 39.1 percent to $321.3 million, compared to $231.0 million in\nthe second quarter of fiscal 2006. Base business growth was up 4.6 percent, acquisitions increased\nsales by 29.8 percent and currency exchange added 4.7 percent. Total sales increased 27.3 percent\nin the Americas, 29.6 percent in Europe and 84.3 percent in the Asia/Pacific region.\n
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     Net income for the quarter fell 7.3 percent to $19.7 million compared to $21.3 million in the\nquarter last year. Earnings per diluted Class A Common share were $0.36 compared to $0.43 per share\nin the fiscal 2006 second quarter. Fiscal 2007 earnings per share results include the effect of\nissuance of an additional 4.6 million shares through an equity offering in the fourth quarter of\nfiscal 2006.\n
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     Sales for the six months ended January 31, 2007, rose 41.0 percent to $653.5 million, compared\nto $463.6 million in the same period last year. Net income for the first six months of fiscal 2007\nrose 5.3 percent to $54.2 million compared to $51.5 million for the same period in fiscal 2006.\nSix-month earnings per diluted Class A Common share were $0.99 compared to $1.03 in fiscal 2006.\n
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     “We are pleased to see solid revenue growth and profitability in the quarter in both the\nAmericas and Europe. In the Asia/Pacific region, which has been exceptionally strong for a number\nof previous quarters, we are now feeling the effects of some volatility and pricing pressure in the\nmobile-handset and hard-disk-drive markets on our business,” said Frank M. Jaehnert, Brady’s\npresident and chief executive officer. “We are addressing this, in part, by re-balancing our\nglobal die-cut manufacturing capacity and accelerating the integration activities within our newly\nacquired die-cut businesses. We remain confident in our long-term plans and are making no major\nchanges to our growth strategy.”\n
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     The company reaffirms the guidance issued in its February 8 press release, for fiscal 2007\nsales of between $1.35 and $1.37 billion, net income of between $113 and $118 million, and diluted\nearnings per share between $2.06 and $2.15.\n
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     A webcast regarding fiscal 2007 second quarter results will be available at\nwww.investor.bradycorp.com beginning at 9:30 a.m. Central Standard Time today.\n
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     Brady Corporation is an international manufacturer and marketer of complete solutions that\nidentify and protect premises, products and people. Its products help customers increase safety,\nsecurity, productivity and performance and include high-performance labels and signs, safety\ndevices, printing systems and software, and precision die-cut materials. Founded in 1914, the\ncompany has more than 500,000 customers in electronics, telecommunications, manufacturing,\nelectrical, construction, education, medical and a variety of other industries. Brady is\nheadquartered in Milwaukee and employs more than 9,000 people at operations in the Americas, Europe\nand Asia/Pacific. Brady’s fiscal 2006 sales were approximately $1.018 billion.\n
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     More information is available on the Internet at www.bradycorp.com.\n
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Information by regional segment for the three and six months ended January 31, 2007 and 2006 is as follows:\n
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\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n
                         
                  Corporate and  
(in Thousands) Americas Europe Asia Subtotals Eliminations Total
SALES TO EXTERNAL CUSTOMERS
                        
Three months ended:
                        
January 31, 2007
 $139,988  $98,846  $82,441  $321,275   —  $321,275 
January 31, 2006
  109,951   76,284   44,739   230,974   —   230,974 
 
                        
Six months ended:
                        
January 31, 2007
 $286,931  $191,211  $175,392  $653,534   —  $653,534 
January 31, 2006
  226,010   150,046   87,553   463,609   —   463,609 
 
                        
SALES GROWTH INFORMATION
                        
Three months ended January 31, 2007:
                        
Base
  5.6%  7.4%  -2.5%  4.6%  —   4.6%
Currency
  0.3%  10.8%  4.9%  4.7%  —   4.7%
Acquisitions
  21.4%  11.4%  81.9%  29.8%  —   29.8%
Total
  27.3%  29.6%  84.3%  39.1%  —   39.1%
 
                        
Six months ended January 31, 2007:
                        
Base
  4.1%  7.1%  4.6%  5.1%  —   5.2%
Currency
  0.6%  8.1%  3.7%  3.6%  —   3.6%
Acquisitions
  22.3%  12.2%  92.0%  32.3%  —   32.2%
Total
  27.0%  27.4%  100.3%  41.0%  —   41.0%
 
                        
SEGMENT PROFIT (LOSS)
                        
Three months ended:
                        
January 31, 2007
 $28,793  $22,604  $12,394  $63,791   ($2,228) $61,563 
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                  Corporate and  
(in Thousands) Americas Europe Asia Subtotals Eliminations Total
January 31, 2006
  24,969   19,989   11,717   56,675   (2,631)  54,044 
Percentage increase (decrease)
  15.3%  13.1%  5.8%  12.6%  -15.3%  13.9%
 
                        
Six months ended:
                        
January 31, 2007
 $65,698  $45,609  $34,531  $145,838   ($4,425) $141,413 
January 31, 2006
  57,163   40,767   24,727   122,657   (5,017)  117,640 
Percentage increase (decrease)
  14.9%  11.9%  39.6%  18.9%  -11.8%  20.2%
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NET INCOME RECONCILIATION (in thousands)\n
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  Three months ended: Six months ended:
  January 31, January 31, January 31, January 31,
  2007 2006 2007 2006
Total profit for reportable segments
 $63,791  $56,675  $145,838  $122,657 
Corporate and eliminations
  (2,228)  (2,631)  (4,425)  (5,017)
Unallocated amounts:
                
Administrative costs
  (28,839)  (22,768)  (56,748)  (42,235)
Investment and other income (expense)
  (106)  88   532   480 
Interest expense
  (5,244)  (2,435)  (9,979)  (4,424)
   
Income before income taxes
  27,374   28,929   75,218   71,461 
Income taxes
  (7,665)  (7,675)  (21,061)  (20,009)
   
Net income
 $19,709  $21,254  $54,157  $51,452 
   
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Brady believes that certain statements in this news release are “forward-looking statements”\nwithin the meaning of the Private Securities Litigation Reform Act of 1995. All statements related\nto future, not past, events included in this news release, including, without limitation,\nstatements regarding Brady’s future financial position, business strategy, targets, projected\nsales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives\nof management for future operations are forward-looking statements. When used in this news release,\nwords such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,”\n“project” or “plan” or similar terminology are generally intended to identify forward-looking\nstatements. These forward-looking statements by their nature address matters that are, to different\ndegrees, uncertain and are subject to risks, assumptions and other factors, some of which are\nbeyond Brady’s control, that could cause actual results to differ materially from those expressed\nor implied by such forward-looking statements. For Brady, uncertainties arise from future\nfinancial performance of major markets Brady serves, which include, without limitation,\ntelecommunications, manufacturing, electrical, construction, laboratory, education, governmental,\npublic utility, computer, transportation; difficulties in making and integrating acquisitions;\nrisks associated with newly acquired businesses; Brady’s ability to retain significant contracts\nand customers; future competition; Brady’s ability to develop and successfully market new products;\nchanges in the supply of, or price for, parts and components; increased price pressure from\nsuppliers and customers; interruptions to sources of supply; environmental, health and safety\ncompliance costs and liabilities; Brady’s ability to realize cost savings from operating\ninitiatives; Brady’s ability to attract and retain key talent; difficulties associated with\nexports; risks associated with international operations; fluctuations in currency rates versus the\nUS dollar; technology changes; potential write-offs of Brady’s substantial intangible assets; risks\nassociated with obtaining governmental approvals and maintaining regulatory compliance for new and\nexisting products; business interruptions due to implementing business systems; and numerous other\nmatters of national, regional and global scale, including those of a political, economic, business,\ncompetitive and regulatory nature contained from time to time in Brady’s U.S. Securities and\nExchange Commission filings, including, but not limited to, those factors listed in the “Risk\nFactors” section located in Item 1A of Part II of Brady’s Annual Report on Form 10-K for the period\nended July 31, 2006. These uncertainties may cause Brady’s actual future results to be materially\ndifferent than those expressed in its forward-looking statements. Brady does not undertake to\nupdate its forward-looking statements.\n
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BRADY CORPORATION AND SUBSIDIARIES
\nCONDENSED CONSOLIDATED STATEMENTS OF INCOME\n\n
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(Dollars in Thousands)\n\n
\n
\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n
                         
  (Unaudited) 
  Three Months Ended January 31,  Six Months Ended January 31, 
          Percentage          Percentage 
  2007  2006  Change  2007  2006  Change 
Net sales
 $321,275  $230,974   39.1% $653,534  $463,609   41.0%
Cost of products sold
  171,114   113,869   50.3%  339,245   222,513   52.5%
 
                    
Gross margin
  150,161   117,105   28.2%  314,289   241,096   30.4%
 
                        
Operating expenses:
                        
Research and development
  9,082   6,829   33.0%  17,614   13,363   31.8%
Selling, general and administrative
  108,355   79,000   37.2%  212,010   152,328   39.2%
 
                    
Total operating expenses
  117,437   85,829   36.8%  229,624   165,691   38.6%
 
                        
Operating income
  32,724   31,276   4.6%  84,665   75,405   12.3%
 
                        
Other income and (expense):
                        
Investment and other income (expense)
  (106)  88   -220.5%  532   480   10.8%
Interest expense
  (5,244)  (2,435)  115.4%  (9,979)  (4,424)  125.6%
 
                    
 
                        
Income before income taxes
  27,374   28,929   -5.4%  75,218   71,461   5.3%
 
                        
Income taxes
  7,665   7,675   -0.1%  21,061   20,009   5.3%
 
                    
 
                        
Net income
 $19,709  $21,254   -7.3% $54,157  $51,452   5.3%
 
                    
 
                        
Per Class A Nonvoting Common Share:
                        
Basic net income
 $0.37  $0.43   -14.0% $1.01  $1.05   -3.8%
Diluted net income
 $0.36  $0.43   -16.3% $0.99  $1.03   -3.9%
Dividends
 $0.14  $0.13   7.7% $0.28  $0.26   7.7%
 
                        
Per Class B Voting Common Share:
                        
Basic net income
 $0.37  $0.43   -14.0% $0.99  $1.03   -3.9%
Diluted net income
 $0.36  $0.43   -16.3% $0.97  $1.02   -4.9%
Dividends
 $0.14  $0.13   7.7% $0.26  $0.24   8.3%
 
                        
Weighted average common shares outstanding (in Thousands):
                        
Basic
  53,894   48,994       53,814   49,098     
Diluted
  54,789   49,813       54,697   49,891     
\n
\n\n\n

 \n

\n\n\n

\n

 

\n\n\n

\n\n\n
BRADY CORPORATION AND SUBSIDIARIES
\nCONDENSED CONSOLIDATED BALANCE SHEETS\n\n
\n\n
(IN THOUSANDS)\n\n
\n
\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n
         
  (Unaudited) 
  January 31, 2007  July 31, 2006 
ASSETS
        
Current assets:
        
Cash and cash equivalents
 $86,408  $113,008 
Short term investments
  —   11,500 
Accounts receivable, less allowance for losses ($8,340 and\n$6,390, respectively)
  218,594   187,907 
Inventories:
        
Finished products
  76,245   59,365 
Work-in-process
  18,292   12,850 
Raw materials and supplies
  39,823   37,702 
 
      
Total inventories
  134,360   109,917 
Prepaid expenses and other current assets
  43,389   36,825 
 
      
 
        
Total current assets
  482,751   459,157 
 
        
Other assets:
        
Goodwill
  655,238   587,642 
Other intangible assets, net
  145,544   134,111 
Deferred income taxes
  33,954   34,135 
Other
  16,599   10,235 
 
      
 
        
Total other assets
  851,335   766,123 
 
        
Property, plant and equipment:
        
Cost:
        
Land
  6,582   6,548 
Buildings and improvements
  81,878   78,418 
Machinery and equipment
  219,468   198,426 
Construction in progress
  28,636   12,098 
 
      
 
        
 
  336,564   295,490 
Less accumulated depreciation
  171,144   155,584 
 
      
 
        
Net property, plant and equipment
  165,420   139,906 
 
      
 
        
Total
 $1,499,506  $1,365,186 
 
      
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
        
 
        
Current liabilities:
        
Accounts payable
 $92,598  $78,585 
Wages and amounts withheld from employees
  49,555   61,778 
Taxes, other than income taxes
  6,768   6,231 
Accrued income taxes
  22,627   25,243 
Other current liabilities
  43,357   46,763 
Short-term borrowings and current maturities on long-term debt
  12   20 
 
      
 
        
Total current liabilities
  214,917   218,620 
 
        
Long-term obligations, less current maturities
  420,817   350,018 
 
        
Other liabilities
  56,968   50,502 
 
      
 
        
Total liabilities
  692,702   619,140 
 
        
Stockholders’ investment:
        
Common stock:
        
 
        
Class A nonvoting common stock — Issued 50,481,743 and 50,481,743\nshares, respectively and outstanding 50,403,641 and 50,188,842 shares,\nrespectively
  505   505 
 
        
Class B voting common stock — Issued and outstanding, 3,538,628 shares
  35   35 
Additional paid-in capital
  259,282   258,922 
Income retained in the business
  500,134   460,991 
Treasury stock - 78,102 and 292,901 shares, respectively of Class A\nnonvoting common stock, at cost
  (2,956)  (10,865)
Accumulated other comprehensive income
  49,042   35,696 
Other
  762   762 
 
      
 
        
Total stockholders’ investment
  806,804   746,046 
 
      
 
        
Total
 $1,499,506  $1,365,186 
 
      
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\n\n\n

\n\n\n
BRADY CORPORATION AND SUBSIDIARIES
\nCONSOLIDATED STATEMENTS OF CASH FLOWS

\n(Dollars in Thousands)\n\n
\n
\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n\n\n \n \n \n \n\n\n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n
         
  (Unaudited) 
  Six Months Ended 
  January 31 
  2007  2006 
Operating activities:
        
Net income
 $54,157  $51,452 
Adjustments to reconcile net income to net cash provided by operating activities:
        
Depreciation and amortization
  26,096   14,554 
Deferred income taxes
  (542)  712 
Loss on disposal of property, plant & equipment
  305   45 
Provision for losses on accounts receivable
  1,301   623 
Non-cash portion of stock-based compensation expense
  3,669   2,827 
Changes in operating assets and liabilities (net of effects of business acquisitions):
        
Accounts receivable
  (15,337)  (11,250)
Inventories
  (14,787)  (11,537)
Prepaid expenses and other assets
  (8,590)  (2,959)
Accounts payable and accrued liabilities
  (8,316)  (17,512)
Income taxes
  (3,411)  (10,127)
Other liabilities
  2,514   3,970 
 
      
Net cash provided by operating activities
  37,059   20,798 
 
        
Investing activities:
        
Acquisition of businesses, net of cash acquired
  (90,418)  (100,256)
Payments of contingent consideration
  (9,329)  — 
Purchases of short-term investments
  —   (3,800)
Sales of short-term investments
  11,500   10,900 
Purchases of property, plant and equipment
  (32,135)  (17,341)
Proceeds from sale of property, plant and equipment
  234   66 
Other
  (5,831)  (1,711)
 
      
Net cash used in investing activities
  (125,979)  (112,142)
 
        
Financing activities:
        
Payment of dividends
  (15,014)  (12,710)
Proceeds from issuance of common stock
  3,837   6,467 
Principal payments on debt
  (26,231)  (190,459)
Proceeds from issuance of debt
  97,020   289,630 
Purchase of treasury stock
  —   (27,233)
Income tax benefit from the exercise of stock options
  763   3,354 
 
      
Net cash provided by financing activities
  60,375   69,049 
Effect of exchange rate changes on cash
  1,945   67 
 
        
Net decrease in cash and cash equivalents
  (26,600)  (22,228)
Cash and cash equivalents, beginning of period
  113,008   72,970 
 
      
 
        
Cash and cash equivalents, end of period
  86,408   50,742 
 
      
 
        
Supplemental disclosures:
        
Cash paid during the period for:
        
Interest, net of capitalized interest
 $9,754  $3,907 
Income taxes, net of refunds
  23,983   24,510 
Acquisitions:
        
Fair value of assets acquired, net of cash
 $50,042  $39,422 
Liabilities assumed
  (15,617)  (9,326)
Goodwill
  55,993   70,160 
 
      
Net cash paid for acquisitions
 $90,418  $100,256 
 
      
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RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

\n(in thousands)\n\n
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  Fiscal 2006
  Q1 Q2 Q3 Q4 Total
EBITDA (1)
                    
Net income
 $30,198  $21,254          $51,452 
Interest expense
  1,989   2,435           4,424 
Income taxes
  12,334   7,675           20,009 
Depreciation and amortization
  7,360   7,194           14,554 
   
 
                    
EBITDA (non-GAAP measure)
 $51,881  $38,558  $—  $—  $90,439 
 
  Fiscal 2007
  Q1 Q2 Q3 Q4 Total
EBITDA (1)
                    
Net income
 $34,448  $19,709          $54,157 
Interest expense
  4,735   5,244           9,979 
Income taxes
  13,396   7,665           21,061 
Depreciation and amortization
  12,927   13,169           26,096 
   
 
                    
EBITDA (non-GAAP measure)
 $65,506  $45,787  $—  $—  $111,293 
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(1) Brady is presenting EBITDA because it is used by many of our investors and lenders, and is\npresented as a convenience to them. EBITDA represents net income before interest expense, income\ntaxes and depreciation and amortization. EBITDA is not a calculation based on generally accepted\naccounting principles (GAAP). The amounts included in the EBITDA calculation, however, are derived\nfrom amounts included in the Condensed Consolidated Statements of Income data. EBITDA should not\nbe considered as an alternative to net income or operating income as an indicator of the company’s\noperating performance, or as an alternative to operating cash flows as a measure of liquidity. The\nEBITDA measure presented may not always be comparable to similarly titled measures reported by\nother companies due to differences in the components of the calculation.
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