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UNITED STATES
\nSECURITIES AND EXCHANGE COMMISSION\n
\n\n
Washington, D.C. 20549\n
\n\n
FORM 8-K\n
\n\n\n
CURRENT REPORT\n
\n\n\n
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934\n
\n\n\n
Date of Report (Date of earliest event reported): May 16, 2007\n
\n\n
BRADY CORPORATION\n
\n\n
(Exact name of registrant as specified in its charter)
\n\n\n\n
Commission File Number 1-14959\n
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\n\n\n\n \n \n \n\n\n\n\n \n \n \n\n\n
   
Wisconsin
\n(State of Incorporation)\n		 39-0971239
\n(IRS Employer Identification No.)
\n
\n\n\n
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
\n\n\n
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)\n\n
\n\n
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)\n\n
\n\n
o\nPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))\n\n
\n\n
o\nPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))\n\n
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Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.\n
\n\n
On May 16, 2007, Brady Corporation issued a press release announcing its fiscal 2007 third quarter\nfinancial results. A copy of the press release is being furnished to the Securities and Exchange\nCommission as Exhibit 99 attached herewith and incorporated by reference.\n
\n\n
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
\n(c) Exhibits.\n
\n\n
The following is furnished as an Exhibit to this Report.\n
\n\n
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Exhibit No. Description of Exhibit
 
  
99\n
 Press Release of Brady Corporation, dated May 16, 2007.
\n
\n\n\n
SIGNATURE\n
\n\n
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: May 21, 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 May 16, 2007.
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\n\nexv99\n\n\n\n
 

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EXHIBIT 99\n
\n\n\n
For More Information:
\nInvestor contact: Barbara Bolens 414-438-6940
\nMedia contact: Carole Herbstreit 414-438-6882\n\n
\n\n
For Immediate Release\n
\n\n\n
Brady reports F’07 third-quarter sales and earnings \n
\n\n
MILWAUKEE (May 16, 2007)—Brady Corporation (NYSE: BRC), a world leader in identification\nsolutions, today announced sales and earnings for its fiscal 2007 third quarter ended April 30,\n2007.\n
\n\n\n
     Sales for the quarter were $346.3 million, up 30 percent compared to sales of $266.5 million\nin the third quarter last year. Organic sales were up 1 percent over the prior year, acquisitions\ncontributed 24 percent to sales growth, and currency exchange added 5 percent to sales results in\nthe quarter.\n
\n\n
     Net income for the quarter was down 4 percent to $29.0 million compared to $30.2 million in\nthe same quarter last year. Earnings per diluted Class A Common Share were $0.53, down 13 percent\ncompared to $0.61 in the fiscal 2006 third quarter. Fiscal 2007 earnings per share results include\nthe effect of issuance of an additional 4.6 million shares through an equity offering in the fourth\nquarter of fiscal 2006 that reduced earnings per share by $0.05.\n
\n\n
     Sales for the nine months ended April 30, 2007, rose 37 percent to $999.9 million compared to\n$730.1 million in the same period last year. Net income for the nine-month period was $83.1\nmillion, up 2 percent compared to $81.7 million in the prior year. Nine-month earnings per share\nwere $1.52 , down 7 percent compared to $1.64 per share in the period last year.\n
\n\n
     Pre-tax charges to the income statement of $2.7 million for the quarter and $3.9 million for\nthe nine- month period were taken for cost reduction actions. In addition, in connection with\nplanned integration activities of acquisitions completed in the last 12 months, the company\nincurred severance and other charges of $6.6 million for the quarter and $8.2 million for the\nnine-month period that increased goodwill. Pre-tax savings from these actions are\nexpected to be approximately $10 million in fiscal 2008.\n
\n\n
     “We are pleased with the swift actions taken in the quarter to streamline our business and\nbest fit the needs of our customers around the world. While it is still too early to see the\nresults from these actions, we believe we are making the right adjustments to our cost structure,”\nsaid Brady President and Chief Executive Officer Frank M. Jaehnert.\n
\n\n
     “Our results this quarter clearly demonstrate the benefits of geographic diversification.\nWhile the economy is slowing in the Americas and sales in Asia-Pacific were down primarily due to\nchallenges in the OEM electronics\n
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business, strong organic growth in Europe due in part to new non-smoking legislation offset the\nother regions,” said Brady Chief Financial Officer David Mathieson. “Today we also reaffirm our\nprevious guidance for fiscal 2007 sales of between $1.35 and $1.37 billion, net income of between\n$113 and $118 million, and diluted earnings per share between $2.06 and $2.15.”\n
\n\n
     A webcast of a conference call regarding the company’s fiscal 2007 third quarter results will\nbe available at www.investor.bradycorp.com beginning at 7:00 a.m. Central Time tomorrow.\n
\n\n
     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
\n\n
     More information is available on the Internet at www.bradycorp.com.\n
\n\n
Information by regional segment for the three and nine months ended April 30, 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
                         
                  Corporate    
                  and    
(in Thousands) Americas  Europe  Asia  Subtotals  Eliminations  Total 
 
                        
SALES TO EXTERNAL CUSTOMERS
                   
 
                        
Three months ended:
                        
April 30, 2007
 $153,861  $111,266  $81,205  $346,332   —  $346,332 
April 30, 2006
  137,438   80,420   48,636   266,494   —   266,494 
 
                        
Nine months ended:
                        
April 30, 2007
 $440,792  $302,478  $256,596  $999,866   —  $999,866 
April 30, 2006
  363,446   230,466   136,191   730,103   —   730,103 
 
                        
SALES GROWTH INFORMATION
                   
 
                        
Three months ended April 30, 2007:
                        
Base
  0.4%  10.1%  -10.1%  1.4%  —   1.4%
Currency
  0.1%  12.2%  5.7%  4.8%  —   4.8%
Acquisitions
  11.5%  16.1%  71.4%  23.8%  —   23.8%
Total
  12.0%  38.4%  67.0%  30.0%  —   30.0%
 
                        
Nine months ended April 30, 2007:
                        
Base
  2.7%  8.2%  -0.7%  3.8%  —   3.8%
Currency
  0.4%  9.5%  4.4%  4.0%  —   4.0%
Acquisitions
  18.2%  13.6%  84.7%  29.1%  —   29.1%
Total
  21.3%  31.3%  88.4%  36.9%  —   36.9%
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SEGMENT PROFIT (LOSS)
                        
 
                        
Three months ended:
                        
April 30, 2007
 $37,465  $29,370  $11,861  $78,696   ($1,310) $77,386 
April 30, 2006
  35,026   21,304   12,397   68,727   (2,724)  66,003 
Percentage increase (decrease)
  7.0%  37.9%  -4.3%  14.5%  -51.9%  17.2%
 
                        
Nine months ended:
                        
April 30, 2007
 $103,163  $74,978  $46,391  $224,532   ($5,733) $218,799 
April 30, 2006
  92,188   62,071   37,124   191,383   (7,741)  183,642 
Percentage increase (decrease)
  11.9%  20.8%  25.0%  17.3%  -25.9%  19.1%
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NET INCOME RECONCILIATION (in thousands)
                   
 
                        
        
 
 Three month ended: Nine months ended:
 
             
 
          April 30, April 30, April 30, April 30,
 
          2007   2006   2007   2006 
 
                   
 
                        
Total profit for reportable segments
         $78,696  $68,727  $224,532  $191,383
Corporate and eliminations
          (1,310)  (2,724)  (5,733)  (7,741)
 
                        
Unallocated amounts:
                        
Administrative costs
          (31,083)  (21,777)  (87,831)  (64,011)
Investment and other income
          385   2,279   917   2,759
Interest expense
          (6,428)  (4,496)  (16,407)  (8,920)
Income before income taxes
          40,260   42,009   115,478   113,470
Income taxes
          (11,273)  (11,763)  (32,334)  (31,772)
        
 
  
Net income
         $28,987  $30,246  $83,144  $81,698
 
          
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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\n“Risk Factors” section located in Item 1A of Part II of Brady’s Annual Report on Form 10-K for the\nperiod ended July 31, 2006. These uncertainties may cause Brady’s actual future results to be\nmaterially different than those expressed in its forward-looking statements. Brady does not\nundertake to update its forward-looking statements.\n
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BRADY CORPORATION AND SUBSIDIARIES
\nCONDENSED CONSOLIDATED STATEMENTS OF INCOME

\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 \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \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 April 30,  Nine Months Ended April 30, 
          Percentage          Percentage 
  2007  2006  Change  2007  2006  Change 
 
                        
Net sales
 $346,332  $266,494   30.0% $999,866  $730,103   36.9%
Cost of products sold
  177,181   125,739   40.9%  516,426   348,252   48.3%
 
                    
Gross margin
  169,151   140,755   20.2%  483,440   381,851   26.6%
 
                        
Operating expenses:
                        
Research and development
  8,739   7,314   19.5%  26,353   20,677   27.5%
Selling, general and administrative
  114,109   89,215   27.9%  326,119   241,543   35.0%
 
                    
Total operating expenses
  122,848   96,529   27.3%  352,472   262,220   34.4%
 
                        
Operating income
  46,303   44,226   4.7%  130,968   119,631   9.5%
 
                        
Other income and (expense):
                        
Investment and other income
  385   2,279   -83.1%  917   2,759   -66.8%
Interest expense
  (6,428)  (4,496)  43.0%  (16,407)  (8,920)  83.9%
 
                    
Income before income taxes
  40,260   42,009   -4.2%  115,478   113,470   1.8%
 
                        
Income taxes
  11,273   11,763   -4.2%  32,334   31,772   1.8%
 
                    
 
                        
Net income
 $28,987  $30,246   -4.2% $83,144  $81,698   1.8%
 
                    
 
                        
Per Class A Nonvoting Common Share:
                        
Basic net income
 $0.54  $0.62   -12.9% $1.54  $1.67   -7.8%
Diluted net income
 $0.53  $0.61   -13.1% $1.52  $1.64   -7.3%
Dividends
 $0.14  $0.13   7.7% $0.42  $0.39   7.7%
 
                        
Per Class B Voting Common Share:
                        
Basic net income
 $0.54  $0.62   -12.9% $1.53  $1.65   -7.3%
Diluted net income
 $0.53  $0.61   -13.1% $1.50  $1.62   -7.4%
Dividends
 $0.14  $0.13   7.7% $0.40  $0.37   8.1%
 
                        
Weighted average common shares\noutstanding
\n(in Thousands):
                        
Basic
  53,953   48,923       53,860   49,039     
Diluted
  54,717   49,833       54,704   49,962     
\n
\n\n\n\n

\n

\n\n\n\n

\n

 

\n

\n\n\n
BRADY CORPORATION AND SUBSIDIARIES
\nCONDENSED CONSOLIDATED BALANCE SHEETS

\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 \n \n \n \n\n\n
         
  (Unaudited) 
  April 30, 2007  July 31, 2006 
 
        
ASSETS
Current assets:
        
Cash and cash equivalents
 $119,338  $113,008 
Short term investments
  1,200   11,500 
Accounts receivable, less allowance for losses ($8,828 and $6,390, respectively)
  240,055   187,907 
Inventories:
        
Finished products
  82,295   59,365 
Work-in-process
  20,437   12,850 
Raw materials and supplies
  41,548   37,702 
 
      
Total inventories
  144,280   109,917 
Prepaid expenses and other current assets
  41,738   36,825 
 
      
 
        
Total current assets
  546,611   459,157 
 
        
Other assets:
        
Goodwill
  724,404   587,642 
Other intangible assets, net
  159,384   134,111 
Deferred income taxes
  37,185   34,135 
Other
  20,633   10,235 
 
      
 
        
Total other assets
  941,606   766,123 
 
        
Property, plant and equipment:
        
Cost:
        
Land
  6,299   6,548 
Buildings and improvements
  85,825   78,418 
Machinery and equipment
  235,914   198,426 
Construction in progress
  24,811   12,098 
 
      
 
  352,849   295,490 
Less accumulated depreciation
  180,640   155,584 
 
      
 
        
Net property, plant and equipment
  172,209   139,906 
 
      
 
        
Total
 $1,660,426  $1,365,186 
 
      
 
        
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
 
        
Current liabilities:
        
Accounts payable
 $94,415  $78,585 
Wages and amounts withheld from employees
  62,560   61,778 
Taxes, other than income taxes
  6,881   6,231 
Accrued income taxes
  30,897   25,243 
Other current liabilities
  51,531   46,763 
Short-term borrowings and current maturities on long-term debt
  7   20 
 
      
 
        
Total current liabilities
  246,291   218,620 
 
        
Long-term obligations, less current maturities
  500,017   350,018 
 
        
Other liabilities
  63,719   50,502 
 
      
 
        
Total liabilities
  810,027   619,140 
 
        
Stockholders’ investment:
        
Common stock:
        
 
        
Class A nonvoting common stock — Issued 50,481,743 and 50,481,743 shares,
  505   505 
respectively and outstanding 50,423,441 and 50,188,842 shares, respectively
        
 
        
Class B voting common stock — Issued and outstanding, 3,538,628 shares
  35   35 
Additional paid-in capital
  260,342   258,922 
Income retained in the business
  521,567   460,991 
Treasury stock - 58,302 and 292,901 shares, respectively of Class A\nnonvoting common stock, at cost
  (2,218)  (10,865)
Accumulated other comprehensive income
  69,420   35,696 
Other
  748   762 
 
      
 
        
Total stockholders’ investment
  850,399   746,046 
 
      
 
        
Total
 $1,660,426  $1,365,186 
 
      
\n
\n\n\n\n

\n

\n\n\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 \n \n\n\n \n \n \n \n \n \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) 
  Nine Months Ended 
  April 30 
  2007  2006 
 
        
Operating activities:
        
Net income
 $83,144  $81,698 
Adjustments to reconcile net income to net cash provided by operating activities:
        
Depreciation and amortization
  40,403   23,973 
Gain on foreign currency contract
  —   (1,517)
Deferred income taxes
  (2,129)  (3,500)
Loss on disposal of property, plant & equipment
  (182)  188 
Provision for losses on accounts receivable
  1,800   1,102 
Non-cash portion of stock-based compensation expense
  5,022   4,275 
Changes in operating assets and liabilities (net of effects of business acquisitions):
        
Accounts receivable
  (21,946)  (25,570)
Inventories
  (17,544)  (14,123)
Prepaid expenses and other assets
  (14,634)  (2,604)
Accounts payable and accrued liabilities
  (2,454)  (3,748)
Income taxes
  4,008   (1,657)
Other liabilities
  4,169   4,813 
 
      
Net cash provided by operating activities
  79,657   63,330 
 
        
Investing activities:
        
Acquisition of businesses, net of cash acquired
  (157,943)  (155,283)
Payments of contingent consideration
  (10,906)  — 
Purchases of short-term investments
  (47,100)  (105,800)
Sales of short-term investments
  57,400   82,900 
Purchases of property, plant and equipment
  (42,107)  (26,291)
Purchase of foreign currency contract
  —   (2,134)
Proceeds from sale of property, plant and equipment
  1,703   (51)
Other
  (8,978)  (1,907)
 
      
Net cash used in investing activities
  (207,931)  (208,566)
 
        
Financing activities:
        
Payment of dividends
  (22,073)  (19,070)
Proceeds from issuance of common stock
  4,144   6,960 
Principal payments on debt
  (110,674)  (339,051)
Proceeds from issuance of debt
  259,300   538,330 
Purchase of treasury stock
  —   (27,299)
Income tax benefit from the exercise of stock options
  902   3,707 
 
      
Net cash provided by financing activities
  131,599   163,577 
Effect of exchange rate changes on cash
  3,005   (997)
 
        
Net increase (decrease) in cash and cash equivalents
  6,330   17,344 
Cash and cash equivalents, beginning of period
  113,008   72,970 
 
      
 
        
Cash and cash equivalents, end of period
  119,338   90,314 
 
      
 
        
Supplemental disclosures:
        
Cash paid during the period for:
        
Interest, net of capitalized interest
 $16,003  $4,572 
Income taxes, net of refunds
  33,268   30,844 
Acquisitions:
        
Fair value of assets acquired, net of cash
 $87,224  $61,602 
Liabilities assumed
  (33,037)  (23,188)
Goodwill
  103,756   116,869 
 
      
Net cash paid for acquisitions
 $157,943  $155,283 
 
      
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RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
\n(in thousands)\n\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
                     
  Fiscal 2006 
  Q1  Q2  Q3  Q4  Total 
 
                    
EBITDA (1)
                    
Net income
 $30,198  $21,254  $30,246      $81,698 
Interest expense
  1,989   2,435   4,496       8,920 
Income taxes
  12,334   7,675   11,763       31,772 
Depreciation and amortization
  7,360   7,194   9,419       23,973 
 
   
 
                    
EBITDA (non-GAAP measure)
 $51,881  $38,558  $55,924  $—  $146,363 
 
                    
  Fiscal 2007 
  Q1  Q2  Q3  Q4  Total 
 
EBITDA (1)
                    
Net income
 $34,448  $19,709  $28,987      $83,144 
Interest expense
  4,735   5,244   6,428       16,407 
Income taxes
  13,396   7,665   11,273       32,334 
Depreciation and amortization
  12,927   13,169   14,307       40,403 
 
   
 
                    
EBITDA (non-GAAP measure)
 $65,506  $45,787  $60,995  $—  $172,288 
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(1) Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to\nthem. EBITDA represents net income before interest expense, income taxes and depreciation and amortization. EBITDA is not\na calculation based on generally accepted accounting principles (GAAP). The amounts included in the EBITDA calculation,\nhowever, are derived from amounts included in the Condensed Consolidated Statements of Income data. EBITDA should not be\nconsidered as an alternative to net income or operating income as an indicator of the company’s operating performance, or as\nan alternative to operating cash flows as a measure of liquidity. The EBITDA measure presented may not always be comparable\nto similarly titled measures reported by other companies due to differences in the components of the calculation.
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