e10vq

\n\n\n

\n\n\n\n\n

UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n

\n\n

Washington, DC 20549\n

\n\n

FORM 10-Q\n

\n\n

\n\n\n \n \n \n\n\n \n \n \n\n


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE\nSECURITIES EXCHANGE ACT OF 1934

\n\n\n

For the Quarterly Period Ended April 30, 2007\n\n

\n\n

OR\n\n

\n\n\n \n \n \n\n\n \n \n \n\n


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE\nSECURITIES EXCHANGE ACT OF 1934

\n\n\n

For the Transition Period from ____________ to ____________\n\n

\n\n

Commission File Number 1-14959\n

\n\n

BRADY CORPORATION\n

\n\n

(Exact name of registrant as specified in its charter)

\n\n\n

\n\n\n\n \n \n \n\n\n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n


Wisconsin\n		39-0178960
\n
(State or other jurisdiction of \nincorporation or organization)\n		(I.R.S. Employer \nIdentification No.)

\n\n\n

6555 West Good Hope Road, Milwaukee, Wisconsin 53223
\n(Address of principal executive offices)
\n(Zip Code)\n

\n\n\n

(414) 358-6600
\n(Registrant’s telephone number, including area code)\n

\n\n\n

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by\nSection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for\nsuch shorter period that the registrant was required to file such reports), and (2) has been\nsubject to such filing requirements for the past 90 days. Yes þ No o\n

\n\n

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,\nor a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in\nRule 12b-2 of the Exchange Act.\n

\n\n

Large accelerated filer þ Accelerated filer o Non-accelerated filer o\n\n

\n\n

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the\nExchange Act). Yes o No þ\n

\n\n

APPLICABLE ONLY TO CORPORATE ISSUERS\n\n

\n\n

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of\nthe latest practicable date.\n

\n\n

As of June 4, 2007, there were outstanding 50,481,786 shares of Class A Nonvoting Common Stock and\n3,538,628 shares of Class B Voting Common Stock. The Class B Common Stock, all of which is held by\naffiliates of the Registrant, is the only voting stock.\n

\n\n

\n\n\n\n\n\n\n\n

\n\n\n\n

\n\n

PART I. FINANCIAL INFORMATION\n\n

\n\n

ITEM 1. FINANCIAL STATEMENTS\n\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n\n

\n\n

CONDENSED CONSOLIDATED BALANCE SHEETS
\n(DOLLARS IN THOUSANDS)\n\n


	April 30, 2007			July 31, 2006
	(Unaudited)

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		159,384				134,111
Deferred income taxes		37,185				34,135
Other		20,633				10,235

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 obligations		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:
Class A nonvoting common stock — Issued 50,481,743 and 50,481,743 shares,\nrespectively and outstanding 50,423,441 and 50,188,842 shares, respectively		505				505
Class B voting common stock — Issued and outstanding 3,538,628 shares		35				35
Additional paid-in capital		260,342				258,922
Earnings retained in the business		521,567				460,991
Treasury stock — 58,302 and 292,901 shares, respectively of Class A nonvoting\ncommon 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

See Notes to Condensed Consolidated Financial Statements.\n

\n\n\n\n

3\n

\n\n\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n\n

\n\n

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
\n(Dollars in Thousands, Except Per Share Amounts)\n\n

\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n


	Three Months Ended April 30,			Nine Months Ended April 30,
	(Unaudited)			(Unaudited)
								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 (expense):
Investment and other income — net		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			-7.2	%
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			-6.7	%
Diluted net income	$	0.53			$	0.61			-13.1	%	$	1.50			$	1.62			-6.8	%
Dividends	$	0.14			$	0.13			7.7	%	$	0.40			$	0.37			8.1	%

Weighted average common shares\noutstanding (in thousands):
Basic		53,953				48,923						53,860				49,039
Diluted		54,717				49,833						54,704				49,962

\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

\n\n\n\n\n

4\n

\n\n\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n\n

\n\n

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
\n(Dollars in Thousands)\n\n


	Nine Months Ended
	April 30,
	(Unaudited)
	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	)
(Gain) 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 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 of cash flow information:
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 and goodwill	$	87,224			$	61,602
Liabilities assumed		(33,037	)			(23,188	)
Goodwill		103,756				116,869


Net cash paid for acquisitions	$	157,943			$	155,283

\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

\n\n\n\n

5\n

\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
\nNine Months Ended April 30, 2007
\n(Unaudited)
\n(In thousands, except share and per share amounts)\n

\n\n\n

NOTE A — Basis of Presentation\n

\n\n\n

The condensed consolidated financial statements included herein have been prepared by Brady\nCorporation and subsidiaries (the “Company” or “Brady”) without audit, pursuant to the rules and\nregulations of the Securities and Exchange Commission. In the opinion of the Company, the\nforegoing statements contain all adjustments, consisting only of normal recurring adjustments,\nnecessary to present fairly the financial position of the Company as of April 30, 2007 and July\n3l, 2006, its results of operations for the three and nine months ended April 30, 2007 and 2006,\nand its cash flows for the nine months ended April 30, 2007 and 2006. The condensed consolidated\nbalance sheet as of July 31, 2006 has been derived from the audited consolidated financial\nstatements of that date. The preparation of financial statements in conformity with accounting\nprinciples generally accepted in the United States of America (“GAAP”) requires management to make\nestimates and assumptions that affect the reported amounts therein. Due to the inherent\nuncertainty involved in making estimates, actual results in future periods may differ from the\nestimates.\n

\n\n

Certain information and footnote disclosures normally included in financial statements\nprepared in accordance with GAAP have been omitted pursuant to rules and regulations of the\nSecurities and Exchange Commission. Accordingly, the condensed consolidated financial statements\ndo not include all of the information and footnotes required by GAAP for complete financial\nstatement presentation. It is suggested that these condensed consolidated financial statements be\nread in conjunction with the consolidated financial statements and the notes thereto included in\nthe Company’s latest annual report on Form 10-K for the year ended July 31, 2006.\n

\n\n

Reclassifications — Certain prior period amounts have been reclassified to conform with the\ncurrent period presentation.\n

\n\n

NOTE B — Goodwill and Intangible Assets\n

\n\n\n

Changes in the carrying amount of goodwill for the nine months ended April 30, 2007, are as\nfollows:\n


	Americas		Europe			Asia-Pacific		Total

Balance as of July 31, 2006	$	322,759		$	111,792		$	153,091	$	587,642
Goodwill acquired during the period		74,078			28,459			1,219		103,756
Adjustments for prior year acquisitions		1,159			10,151			4,239		15,549
Translation adjustments		764			9,344			7,349		17,457

Balance as of April 30, 2007	$	398,760		$	159,746		$	165,898	$	724,404

\n\n\n

The following acquisitions completed during the nine months ended April 30, 2007 increased\ngoodwill by the following amounts:\n

\n\n


	Segment	Goodwill

Comprehensive Identification Products, Inc. (“CIPI”)\n	Americas, Europe and Asia-Pacific\n	$	19,472
Precision Converters, L.P. (“Precision Converters”)\n	Americas\n		9,574
Scafftag, Ltd., Safetrak, Ltd. and Scafftag Pty., Ltd.\n(collectively “Scafftag”)\n	Americas, Europe and Asia-Pacific\n		6,386
Asterisco Artes Graficas Ltda. (“Asterisco”)\n	Americas\n		8,436
Modernotecnica SpA (“Moderno”)\n	Europe\n		10,534
Clement Communications, Inc. (“Clement”)\n	Americas\n		14,466
Sorbent Products Co., Inc. (“Sorbent”)\n	Americas, Europe and Asia-Pacific\n		34,888
\n
Total\n		$	103,756
\n

\n\n\n

6\n

\n\n\n

Goodwill also increased $15,549 during the nine months ended April 30, 2007, as a result of\nadjustments to the preliminary allocation of the purchase price for acquisitions completed in\nfiscal 2006 and the recording of $1,577 for the contingent payment due to the previous owners of\nQDP Thailand Co., Ltd. (“QDPT”), which was acquired in fiscal 2006 (see Note E for more\ninformation). The largest components of the increase were as a result of adjustments to the\npreliminary allocation of purchase price related to Tradex Converting AB (“Tradex”) and Daewon\nIndustry Corporation (“Daewon”), which added $10,412 and $2,515, respectively.\n

\n\n

Of the $10,412 increase in goodwill related to the preliminary allocation of the purchase\nprice for Tradex, $6,461 of the increase was due to the accrual for planned cost reduction\nactivities contemplated at the date of the acquisition. The accrual consists of $2,511 for\nseverance and other employee termination costs, $2,714 for contract termination and facility exit\ncosts, and $1,236 for changes in the valuation of fixed assets. As of April 30, 2007, the\nremaining liability from such charges was approximately $4,037.\n

\n\n

Of the $2,515 increase in goodwill related to the preliminary allocation of the purchase\nprice for Daewon, $1,829 of the increase was due to the finalization and payment of the purchase\nprice adjustment owed to the former owners of Daewon.\n

\n\n

The remaining $17,457 increase to goodwill during the nine months ended April 30, 2007 was\nattributable to the effects of foreign currency translation.\n

\n\n

Other intangible assets include patents, trademarks, customer relationships, purchased\nsoftware, non-compete agreements and other intangible assets with finite lives being amortized in\naccordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other\nIntangible Assets.” The net book value of these assets was as follows:\n


	April 30, 2007			July 31, 2006
	Weighted												Weighted
	Average												Average
	Amortization		Gross									Amortization		Gross
	Period		Carrying			Accumulated	Net Book			Period		Carrying			Accumulated		Net Book
	(Years)		Amount			Amortization	Value			(Years)		Amount			Amortization		Value

Amortized\nother \nintangible\nassets:
Patents		15			$	8,516	$	(5,741	)		$	2,775				15		$	7,885	$	(5,134	)	$	2,751
Trademarks and\nother		5				4,270		(3,046	)			1,224				6			3,328		(2,106	)		1,222
Customer\nrelationships		7				139,428		(31,684	)			107,744				7			109,955		(17,693	)		92,262
Purchased\nsoftware		5				3,292		(2,378	)			914				5			3,288		(1,887	)		1,401
Non-compete\nagreements		4				12,151		(6,016	)			6,135				4			9,757		(4,448	)		5,309
Unamortized other\nintangible assets:
Trademarks		N/A				40,592		—				40,592				N/A			31,166		—			31,166

Total					$	208,249	$	(48,865	)		$	159,384						$	165,379	$	(31,268	)	$	134,111

\n\n\n

The acquisitions completed during the nine months ended April 30, 2007 (see Note E\nfor more information) contributed to the increases in each of the categories of other intangible\nassets listed above. The increase in customer relationships relates to the acquisitions of CIPI,\nPrecision Converters, Scafftag, Asterisco, Moderno, Clement and Sorbent which added $5,633,\n$1,415, $3,279, $5,133, $6,570, $1,400, and $880 respectively. These assets will be amortized over\na weighted average amortization period of 6.4 years. The increase in unamortized trademarks\nprimarily relates to the acquisition of Sorbent, which added $8,510.\n

\n\n

The value of goodwill and other intangible assets in the Condensed Consolidated Financial\nStatements at April 30, 2007, differs from the value assigned to them in the allocation of\npurchase price due to the effect of fluctuations in the exchange rates used to translate financial\nstatements into the United States Dollar between the date of acquisition and April 30, 2007.\n

\n\n

Amortization expense on intangible assets was $5,673 and $4,084 for the three-month periods\nended April 30, 2007 and 2006, respectively and $16,634 and $9,414 for the nine-month periods\nended April 30, 2007 and 2006, respectively. The amortization over each of the next five fiscal\nyears is projected to be $24,154, $24,299, $23,377, $22,187 and $18,560 for the years ending July\n31, 2007, 2008, 2009, 2010 and 2011, respectively.\n

\n\n

7\n

\n\n

NOTE C — Comprehensive Income\n

\n\n\n

Total comprehensive income, which was comprised of net income, foreign currency adjustments\nand net unrealized gains and losses from cash flow hedges, amounted to approximately $49,365 and\n$34,579 for the three months ended April 30, 2007 and 2006, respectively, and $116,868 and $89,399\nfor the nine months ended April 30, 2007 and 2006, respectively.\n

\n\n

NOTE D — Net Income Per Common Share\n

\n\n\n

Reconciliations of the numerator and denominator of the basic and diluted per share\ncomputations for the Company’s Class A and Class B common stock are summarized as follows:\n


	Three Months Ended April 30,		Nine Months Ended April 30,
	2007		2006			2007		2006

Numerator:
Net income (numerator for basic and\ndiluted Class A net income per share)	$	28,987		$	30,246		$	83,144		$	81,698
Less:
Preferential dividends		—			—			(836	)		(758	)
Preferential dividends on\ndilutive stock options		—			—			(15	)		(16	)

Numerator for basic and diluted\nClass B net income per share	$	28,987		$	30,246		$	82,293		$	80,924


Denominator:
Denominator for basic net income per\nshare for both Class A and Class B		53,953,000			48,923,000			53,860,000			49,039,000
Plus: Effect of dilutive stock options		764,000			910,000			844,000			923,000

Denominator for diluted net\nincome per share for both Class A and\nClass B		54,717,000			49,833,000			54,704,000			49,962,000


Class A Nonvoting Common Stock net income\nper share:
Basic	$	0.54		$	0.62		$	1.54		$	1.67
Diluted	$	0.53		$	0.61		$	1.52		$	1.64

Class B Voting Common Stock net income per\nshare:
Basic	$	0.54		$	0.62		$	1.53		$	1.65
Diluted	$	0.53		$	0.61		$	1.50		$	1.62

\n\n

Options to purchase 1,259,500 and 1,052,833 shares of Class A Nonvoting Common Stock for the\nthree and nine months ended April 30, 2007, respectively, and 614,500 and 621,500 shares of Class\nA Nonvoting Common Stock for the three and nine months ended April 30, 2006, respectively, were\nnot included in the computations of diluted net income per share because the option exercise price\nwas greater than the average market price of the common shares and, therefore, the effect would be\nanti-dilutive.\n

\n\n\n

NOTE E — Acquisitions\n

\n\n\n

During the nine months ended April 30, 2007, the Company acquired the following companies for\na total combined purchase price, net of cash acquired, of $157,943. A brief description of each\ncompany acquired during the nine months is included below.\n

\n\n\n

CIPI is headquartered in Burlington, Massachusetts,\nwith operations in Hong Kong, China and the\nNetherlands. CIPI is a market leader in badging\naccessories used to identify and track employees and\nvisitors in a variety of settings including\nbusinesses, healthcare facilities, special events and\ngovernment buildings. CIPI was acquired in August\n2006.\n

\n\n\n

Precision Converters is located in Dallas, Texas and\nis a supplier of die-cut products to the medical\nmarket with a specific focus on disposable, advanced\nwound-care products. Precision Converters was acquired\nin October 2006.\n

\n\n\n

Scafftag is located in Barry, Wales, U.K., with\noperations in Australia and in the United States and a\nsales office in the United Arab Emirates. Scafftag is\nan industry leader in safety identification and\nfacility management products in the U.K., specializing\nin products that help companies meet legislative\nrequirements for safety standards in the oil and gas,\nconstruction and scaffolding industries. Scafftag was\nacquired in December 2006.\n

\n\n

8\n

\n\n\n

Asterisco is located in Sao Paulo, Brazil and is a leading manufacturer of\nindustrial high-performance labels in Brazil, specializing in custom labels\nprinted on film materials for the electronics, automotive, pharmaceutical and\nother industries. Asterisco was acquired in December 2006.\n

\n\n\n

Moderno is located in Milan, Italy and is a wire-identification manufacturer\nserving the Maintenance, Repair and Operations market with products used\nprimarily in the electrical industry. Moderno was acquired in December 2006.\n

\n\n\n

Clement is located in Concordville, Pennsylvania and is a direct marketer of\nposters, newsletters, guides and handbooks that address safety, quality,\nteamwork, sales employment practices, customer service and OSHA regulations.\nClement was acquired in February 2007.\n

\n\n\n

Sorbent is headquartered in Somerset, New Jersey, with operations in Belgium\nand Hong Kong. Sorbent is a leading manufacturer and marketer of synthetic\nsorbent materials used in a variety of industrial maintenance and environmental\napplications for spill clean-up, containment and control. Sorbent was acquired\nin April 2007.\n

\n\n

The purchase agreements for Scafftag and Asterisco each include provisions for contingent\npayments based upon meeting certain performance conditions over a period of time subsequent to the\nacquisition. The total maximum contingent payments of $5.2 million have not been accrued as\nliabilities in the accompanying consolidated financial statements as the payments are based on\nattaining certain financial results which have not been achieved as of April 30, 2007.\nApproximately $4.9 million of the contingency related to the Asterisco acquisition has been placed\nin an escrow account in compliance with the terms of the purchase agreement. This cash outflow\nhas been recorded in other investing activities on the accompanying consolidated statement of cash\nflows for the nine months ended April 30, 2007. The purchase agreement of Asterisco also includes\na holdback provision of approximately $2.3 million that has been recorded as a liability in the\naccompanying consolidated financial statements.\n

\n\n

The allocation of the purchase price of each company acquired during the nine months ended\nApril 30, 2007, is preliminary pending the final valuation of intangible assets as well as certain\ntangible assets and liabilities. The following table summarizes the combined estimated fair values\nof the assets acquired and liabilities assumed as of the date of the acquisitions.\n


Current assets	$	37,983
Property, plant & equipment		12,579
Goodwill		103,756
Customer relationships		24,310
Non-compete agreements		1,908
Patents		300
Trademarks and other intangible assets		10,144

Total assets acquired		190,980
Liabilities assumed		(33,037	)

Net assets acquired	$	157,943

\n\n\n

Of the $103,756 allocated to goodwill, $65,060 is expected to be deductible for tax\npurposes based on preliminary analysis.\n

\n\n

The purchase agreement for the acquisition of QDPT that was completed in fiscal 2006 included\na provision for contingent payments based upon meeting certain performance conditions over a\nperiod of time subsequent to the acquisition. As the performance conditions of the agreement have\nbeen met in fiscal 2007, $1,577 has been recorded as goodwill on the accompanying condensed\nconsolidated financial statements and paid in the nine months ended April 30, 2007.\n

\n\n

9\n

\n\n

NOTE F — Segment Information\n

\n\n\n

The Company’s reportable segments are geographical regions that are each managed separately.\nThe Company has three reportable segments: Americas, Europe and Asia-Pacific. Following is a\nsummary of segment information for the three months and nine months ended April 30, 2007 and 2006:\n


												Corporate
												And
	Americas		Europe			Asia-Pacific		Subtotals	Eliminations		Totals

Three months\nended April 30,\n2007:
Revenues from\nexternal customers	$	153,861		$	111,266		$	81,205	$	346,332		$	—		$	346,332
Intersegment revenues		13,378			1,954			6,131		21,463			(21,463	)		—
Segment profit (loss)		37,465			29,370			11,861		78,696			(1,310	)		77,386
Three months ended\nApril 30, 2006:
Revenues from\nexternal customers	$	137,438		$	80,420		$	48,636	$	266,494		$	—		$	266,494
Intersegment revenues		12,152			1,052			964		14,168			(14,168	)		—
Segment profit (loss)		35,026			21,304			12,397		68,727			(2,724	)		66,003
Nine months ended\nApril 30, 2007:
Revenues from\nexternal customers	$	440,792		$	302,478		$	256,596	$	999,866		$	—		$	999,866
Intersegment revenues		37,876			4,404			16,824		59,104			(59,104	)		—
Segment profit (loss)		103,163			74,978			46,391		224,532			(5,733	)		218,799
Nine months ended\nApril 30, 2006:
Revenues from\nexternal customers	$	363,446		$	230,466		$	136,191	$	730,103		$	—		$	730,103
Intersegment revenues		42,560			3,199			4,778		50,537			(50,537	)		—
Segment profit (loss)		92,188			62,071			37,124		191,383			(7,741	)		183,642

\n\n\n

Following is a reconciliation of segment profit to net income for the three months and nine months\nended April 30, 2007 and 2006.\n


	Three months ended:			Nine months ended:
	April 30,			April 30,
	2007			2006			2007		2006

Total profit from 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

\n\n\n

10\n

\n\n\n

NOTE G —Stock-Based Compensation\n

\n\n\n

The Company has an incentive stock plan under which the Board of Directors may grant\nnonqualified stock options to purchase shares of Class A Nonvoting Common Stock to employees.\nAdditionally, the Company has a nonqualified stock option plan for non-employee directors under\nwhich stock options to purchase shares of Class A Nonvoting Common Stock are available for grant.\nThe options have an exercise price equal to the fair market value of the underlying stock at the\ndate of grant and generally vest ratably over a three-year period, with one-third becoming\nexercisable one year after the grant date and one-third additional in each of the succeeding two\nyears. Options issued under these plans, referred to herein as “service-based” options, generally\nexpire 10 years from the date of grant. The Company also grants stock options to certain\nexecutives and key management employees that vest upon meeting certain financial performance\nconditions over the vesting schedule described above. These options are referred to herein as\n“performance-based” options. All performance-based options that were granted in fiscal 2006 and in\nprior years expire five years from the date of grant. Beginning in fiscal 2007, any performance\noptions granted expire 10 years from the date of grant.\n

\n\n

As of April 30, 2007, the Company has reserved 4,454,452 shares of Class A Nonvoting Common\nStock for outstanding stock options and 1,974,000 shares of Class A Nonvoting Common Stock remain\nfor future issuance of stock options under the various plans. The Company uses treasury stock or\nwill issue new Class A Nonvoting Common Stock to deliver shares under these plans.\n

\n\n

The Company accounts for share-based compensation awards in accordance with Statement of\nFinancial Accounting Standards (“SFAS”) No. 123(R), “Share Based Payment”. In accordance with this\nstandard, the Company recognizes the compensation cost of all share-based awards on a\nstraight-line basis over the vesting period of the award. Total stock compensation expense\nrecognized by the Company during the three months ended April 30, 2007 and 2006 was $1,353 ($825\nnet of taxes) and $1,448 ($884 net of taxes), respectively, and expense recognized during the nine\nmonths ended April 30, 2007 and 2006 was $5,022 ($3,063 net of taxes) and $4,275 ($2,608 net of\ntaxes), respectively. As of April 30, 2007, total unrecognized compensation cost related to\nshare-based compensation awards was approximately $14,618 pre-tax, net of estimated forfeitures,\nwhich the Company expects to recognize over a weighted-average period of approximately 2.1 years.\n

\n\n

The Company has estimated the fair value of its service-based and performance-based option\nawards granted during the nine months ended April 30, 2007 and 2006, using the Black-Scholes\noption valuation model. The weighted-average assumptions used in the Black-Scholes valuation model\nare reflected in the following table:\n


	Nine Months Ended		Nine Months Ended
	April 30, 2007		April 30, 2007
				Performance-					Performance-
	Service-Based		Based Option	Service-Based		Based Option
Black-Scholes Option Valuation Assumptions	Option Awards		Awards	Option Awards		Awards

Expected term (in years)		6.07			6.57			5.72			3.39
Expected volatility		34.01	%		34.66	%		34.56	%		31.10	%
Expected dividend yield		1.46	%		1.51	%		1.52	%		1.50	%
Risk-free interest rate		4.52	%		4.90	%		4.50	%		4.09	%
Weighted-average market value of underlying\nstock at grant date	$	38.19		$	33.32		$	37.64		$	33.89
Weighted-average exercise price	$	38.19		$	33.32		$	37.64		$	33.89
Weighted-average fair value of options\ngranted during the period	$	13.57		$	12.57		$	13.10		$	8.34

\n\n\n

The Company uses historical data regarding stock option exercise behaviors to estimate the\nexpected term of options granted based on the period of time that options granted are expected to\nbe outstanding. Expected volatilities are based on the historical volatility of the Company’s\nstock. The expected dividend yield is based on the Company’s historical dividend payments and\nhistorical yield. The risk-free interest rate is based on the U.S. Treasury yield curve in effect\non the grant date for the length of time corresponding to the expected term of the option. The\nmarket value is obtained by taking the average of the high and the low stock price on the date of\nthe grant.\n

\n\n

11\n

\n\n

A summary of stock option activity under the Company’s share-based compensation plans for the\nnine months ended April 30, 2007 is presented below:\n


									Weighted
									Average
					Weighted			Remaining			Aggregate
					Average			Contractual			Intrinsic
Options	Shares			Exercise Price			Term			Value

Outstanding at July 31, 2006		3,815,052			$	23.27
New grants		905,000			$	36.76
Exercised		(240,599	)		$	17.67
Forfeited or expired		(25,001	)		$	31.77

Outstanding at April 30, 2007		4,454,452			$	26.20				7.0		$	36,242

Exercisable at April 30, 2007		2,444,456			$	20.69				5.8		$	30,729

\n\n\n

The total intrinsic value of options exercised during the nine months ended April 30, 2007\nand 2006, based upon the average market price during the period, was approximately $5,016 and\n$10,752, respectively. The total fair value of stock options vested during the nine months ended\nApril 30, 2007 and 2006, was approximately $4,592 and $3,100, respectively.\n

\n\n

NOTE H — Debt\n

\n\n\n

On October 5, 2006, the Company entered into a $200 million multi-currency revolving loan\nagreement with a group of five banks. At the Company’s option, and subject to certain standard\nconditions, the available amount under the credit facility may be increased from $200 million up\nto $300 million. Under the five-year agreement, which has a final maturity date of October 5,\n2011, the Company has the option to select either a base interest rate (based upon the higher of\nthe federal funds rate plus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency\ninterest rate (at the LIBOR rate plus a margin based on the Company’s consolidated leverage\nratio). A commitment fee is payable on the unused amount of the facility. The agreement requires\nthe Company to maintain two financial covenants. As of April 30, 2007, the Company was in\ncompliance with the covenants of the agreement. The agreement restricts the amount of certain\ntypes of payments, including dividends, which can be made annually to $50 million plus an amount\nequal to 75% of consolidated net income for the prior fiscal year of the Company. The Company\nbelieves that based on historic dividend practice, this restriction would not impede the Company\nin following a similar dividend practice in the future. As of April 30, 2007, there were no\noutstanding borrowings under the credit facility.\n

\n\n

On March 23, 2007, the Company completed the private placement of $150 million in ten-year\nfixed notes at 5.33% interest to institutional investors. The notes will be amortized in equal\ninstallments over seven years, beginning in 2011, with interest payable on the notes semiannually\non September 23 and March 23, beginning in September 2007. The notes have been fully and\nunconditionally guaranteed on an unsecured basis by the Company’s domestic subsidiaries. The\nCompany used the net proceeds of the offering to reduce outstanding indebtedness under the\nCompany’s revolving loan agreement and fund its ongoing strategic growth plan. The private\nplacement was exempt from the registration requirements of the Securities Act of 1933. The notes\nwere not registered for resale and may not be resold absent such registration or an applicable\nexemption from the registration requirements of the Securities Act of 1933 and applicable state\nsecurities laws. The notes have certain prepayment penalties for repaying them prior to the\nmaturity date. The agreement also requires the Company to maintain a financial covenant. As of\nApril 30, 2007, the Company was in compliance with this covenant.\n

\n\n

NOTE I — Employee Benefit Plans\n

\n\n\n

The Company provides post-retirement medical, dental and vision benefits for all regular full\nand part-time domestic employees (including spouses) who retire on or after attainment of age 55\nwith 15 years of credited service. Credited service begins accruing at the later of age 40 or date\nof hire. All active employees first eligible to retire after July 31, 1992, are covered by an\nunfunded, contributory post-retirement healthcare plan where employer contributions will not\nexceed a defined dollar benefit amount, regardless of the cost of the program. Employer\ncontributions to the plan are based on the employee’s age and service at retirement.\n

\n\n

The Company accounts for post-retirement benefits other than pensions in accordance with SFAS\nNo. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions.” The Company\nfunds benefit costs on a pay-as-you-go basis. There have been no changes to the components of net\nperiodic benefit cost or the amount that the Company expects to fund in fiscal 2007 from those\nreported thereto in Note 3 to the consolidated financial statements included in the Company’s\nlatest annual report on Form 10-K for the year ended July 31, 2006.\n

\n\n

12\n

\n\n

NOTE J — New Accounting Pronouncements\n

\n\n\n

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FIN 48, “Accounting\nfor Uncertainty in Income Taxes.” This interpretation clarifies the accounting for uncertainty in\nincome taxes recognized in an enterprise’s financial statements in accordance with FASB Statement\nNo. 109, “Accounting for Income Taxes.” This interpretation establishes a threshold condition that\na tax position must meet for any part of the benefit of that position to be recognized in the\nfinancial statements. This interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.\nThis interpretation is effective for fiscal years beginning after December 15, 2006. The Company\nhas not yet completed the process of evaluating the impact that will result from adopting FIN 48\nand therefore is unable to disclose the impact that adopting FIN 48 will have on its financial\nposition and results of operations when such statement is adopted.\n

\n\n

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157,\n“Fair Value Measurements.” This statement provides guidance on how to measure the fair value of\nassets and liabilities utilizing a fair value hierarchy to classify the sources of information\nused in the measurement calculation. SFAS No. 157 also provides new disclosure rules for assets\nand liabilities measured at fair value based on their level in the fair value hierarchy. This new\nstatement will be effective for fiscal years beginning after November 15, 2007. The Company\nexpects that the adoption of SFAS No. 157 will not have a material effect on its consolidated\nfinancial statements.\n

\n\n

In October 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit\nPension and Other Postretirement Plans.” This statement requires full recognition of the funded\nstatus of defined benefit and other postretirement plans on the balance sheet as an asset or a\nliability. SFAS No. 158 also continues to require that unrecognized prior service costs/credits,\ngains/losses, and transition obligations/assets be recorded in Accumulated Other Comprehensive\nIncome, thus not changing the income statement recognition rules for such plans. This new\nstatement will be effective for fiscal years ending after December 15, 2006. The Company expects\nthat the adoption of SFAS No. 158 will not have a material effect on its consolidated financial\nstatements.\n

\n\n

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets\nand Financial Liabilities.” This statement permits entities to choose to use the fair value\noption to measure many financial instruments and certain other items at fair value that are not\ncurrently required to be measured at fair value. The objective is to improve financial reporting\nby providing entities with the opportunity to mitigate volatility in earnings caused by measuring\nrelated assets and liabilities differently without having to apply complex hedge accounting. This\nnew statement will be effective for fiscal years beginning after November 15, 2007. The Company\nexpects that the adoption of SFAS No. 159 will not have a material effect on its consolidated\nfinancial statements.\n

\n\n\n

13\n

\n\n

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS\n

\n\n\n

Overview\n

\n\n\n

Brady is an international manufacturer and marketer of identification solutions and specialty\nmaterials that identify and protect premises, products, and people. Its products include\nhigh-performance labels and signs, printing systems and software, label-application and\ndata-collection systems, safety devices and precision die-cut materials. Founded in 1914, the\nCompany serves customers in electronics, telecommunications, manufacturing, electrical,\nconstruction, laboratory, education, governmental, public utility, computer, transportation and a\nvariety of other industries. The Company manufactures and sells products domestically and\ninternationally through multiple channels including distributor sales, direct sales, mail-order\ncatalogs, telemarketing, retail and electronic access through the Internet. The Company operates\nmanufacturing or distribution facilities in Australia, Belgium, Brazil, Canada, China, Denmark,\nFrance, Germany, Hong Kong, India, Italy, Korea, Malaysia, Mexico, Norway, Singapore, Slovakia,\nSweden, Thailand, the United Kingdom and the United States. Brady sells through subsidiaries or\nsales offices in these countries, with additional sales through a dedicated team of international\nsales representatives in Japan, the Netherlands, the Philippines, Spain, Taiwan, Turkey and the\nUnited Arab Emirates and further markets it products to parts of Eastern Europe, the Middle East,\nAfrica and Russia. The Company believes that its reputation for innovation, commitment to quality\nand service, and dedicated employees have made it a world leader in the markets it serves.\n

\n\n

Sales for the quarter ended April 30, 2007, were up 30.0% to $346.3 million, compared to\n$266.5 million in the same period of fiscal 2006. Of the increase in sales, organic growth\naccounted for 1.4%, acquisitions added 23.8% and the effects of fluctuations in the exchange rates\nused to translate financial results into the United States dollar added 4.8%. Net income for the\nquarter ended April 30, 2007, was $29.0 million or $0.53 per diluted Class A Nonvoting Common\nShare, down 4.2% and 13.1%, respectively, from $30.2 million, or $0.61 per diluted Class A\nNonvoting Common Share reported in the third quarter of last fiscal year. Net income per share\ncomparisons were negatively affected by the Company’s July 2006 sale of an additional 4.6 million shares of\nClass A Nonvoting Common Stock in a public offering.\n

\n\n

Sales for the nine months ended April 30, 2007, increased 36.9% to $999.9 million, compared\nto $730.1 million in the same period of fiscal 2006. Organic growth accounted for 3.8%,\nacquisitions added 29.1% and the effects of fluctuations in the exchange rates used to translate\nfinancial results into the United States dollar added 4.0%. Net income for the nine months ended\nApril 30, 2007, was $83.1 million or $1.52 per diluted Class A Nonvoting Common Share, up 1.8% and\ndown 7.3%, respectively, from $81.7 million, or $1.64 per diluted Class A Nonvoting Common Share\nreported in the same period of the prior fiscal year. Net income per share comparisons were\nnegatively affected by the Company’s July 2006 sale of an additional 4.6 million shares of Class A Nonvoting\nCommon Stock in a public offering.\n

\n\n

Results of Operations\n

\n\n\n

The comparability of the operating results for the three and nine months ended April 30,\n2007, to the same periods of the prior year has been significantly impacted by the following\nacquisitions completed in fiscal 2007 and fiscal 2006.\n


Acquisitions	Segment	Date Completed

STOPware, Inc. (“Stopware”)\n	Americas\n	August 2005
Texit Danmark AS and Texit Norge AS (collectively “Texit”)\n	Europe\n	September 2005
TruMed Technologies, Inc. (“TruMed”)\n	Americas\n	October 2005
QDP Thailand Co., Ltd (“QDPT”)\n	Asia-Pacific\n	October 2005
J.A.M. Plastics Inc. (“J.A.M.”)\n	Americas\n	December 2005
Personnel Concepts\n	Americas\n	January 2006
IDenticard Systems, Inc. and Identicam Systems (collectively “Identicard”)\n	Americas\n	February 2006
Accidental Health & Safety Pty. Ltd and Trafalgar First Aid Pty. Ltd.\n(collectively “Accidental Health”)\n	Asia-Pacific\n	March 2006
Tradex Converting AB (“Tradex”)\n	Americas,\nEurope and\nAsia-Pacific\n	May 2006
Carroll Australasia Pty. Ltd. (“Carroll”)\n	Asia-Pacific\n	June 2006
Daewon Industry Corporation (“Daewon”)\n	Asia-Pacific\n	July 2006
Comprehensive Identification Products, Inc. (“CIPI”)\n	Americas,\nEurope and\nAsia-Pacific\n	August 2006
Precision Converters, L.P. (“Precision Converters”)\n	Americas\n	October 2006
Scafftag Ltd., Safetrak, Ltd. and Scafftag Pty., Ltd. (collectively “Scafftag”)\n	Americas,\nEurope and\nAsia-Pacific\n	December 2006
Asterisco Artes Graficas Ltda. (“Asterisco”)\n	Americas\n	December 2006
Modernotecnica SpA (“Moderno”)\n	Europe\n	December 2006
Clement Communications, Inc. (“Clement”)\n	Americas\n	February 2007
Sorbent Products Co., Inc. (“Sorbent”)\n	Americas,\nEurope and\nAsia-Pacific\n	April 2007

\n\n\n

14\n

\n\n\n

Sales for the three months ended April 30, 2007, were up 30.0% compared to the same period in\nfiscal 2006. The increase was comprised of an increase of 1.4% attributed to organic growth, an\nincrease of 4.8% due to the effect of currencies on sales, and an increase of 23.8% due to the\nacquisitions listed in the above table. The organic growth for the quarter ended April 30, 2007,\nwas due to strong growth in the Europe segment, generating 10.1% organic growth, while the\nAmericas segment was flat and the Asia-Pacific segment contracted 10.1%. The decline in\nAsia-Pacific was due to the loss of certain programs in the hard disk drive business due to\nindustry consolidations and softening in Brady’s high performance labeling businesses.\n

\n\n

Sales for the nine months ended April 30, 2007, increased 36.9% compared to the same period\nin fiscal 2006. The increase was comprised of an increase of 3.8% attributed to organic growth,\nan increase of 4.0% due to the effect of currencies on sales, and an increase of 29.1% due to the\nacquisitions listed above. The organic growth was due to continued growth in Europe and Americas.\nThe organic growth in Asia-Pacific for the nine-month period was slightly negative as the first\nquarter’s double-digit organic growth was offset by the softening of Brady’s high-performance\nlabeling business experienced in the second and third quarters.\n

\n\n

Gross margin as a percentage of sales decreased from 52.8% to 48.8% for the quarter and from\n52.3% to 48.4% for the nine months ended April 30, 2007, compared to the same periods of the\nprevious year. This decline was driven by the results in our OEM electronics business, primarily\nin the mobile handset business, and the high performance labeling business in Asia, as well as the\nacquisitions that Brady completed in the last 12 months, which were more heavily weighted towards\nOEM electronics, which is generally characterized by lower gross margins and lower selling,\ngeneral and administrative (“SG&A”) expenses.\n

\n\n

Research and development (“R&D”) expenses increased 19.5% to $8.7 million for the quarter and\n27.5% to $26.4 million for the nine months ended April 30, 2007, compared to $7.3 million and\n$20.7 million for the same periods in the prior year, respectively. As a percentage of sales, R&D\nexpenses represented a lower percentage of sales, declining from 2.7% in the third quarter of\nfiscal 2006 to 2.5% in the third quarter for fiscal 2007, and from 2.8% in the first nine months\nof fiscal 2006 to 2.6% in the first nine months of fiscal 2007. Brady continues to expand its\ninvestment in new product development.\n

\n\n

SG&A expenses increased 27.9% to $114.1 million for the three months ended April 30, 2007,\ncompared to $89.2 million for the same period in the prior year and 35.0% to $326.1 million for\nthe nine months ended April 30, 2007, compared to $241.5 million for the same period in the prior\nyear. These increases were expected due to acquisitions and a number of initiatives taking place\nthis year, such as the continued integration of the acquisitions completed in fiscal 2006 and\n2007, roll-out of SAP to an additional 18 of our locations around the world, creation of a\nbusiness process shared service center in India, development of a customer call center in the\nPhilippines, and geographic expansions in Eastern Europe, Mexico, China and India. As a percentage\nof sales, SG&A expenses declined from 33.5% to 32.9% for the quarter and from 33.1% to 32.6% for\nthe nine months ended April 30, 2007, compared to the same periods in the prior year. The decline\nas a percentage of sales was due to changes in our sales mix towards the OEM electronics business,\nwhich typically has lower SG&A expenses.\n

\n\n

The Company recorded expenses of $2.7 million and $3.9 million for the three and nine months\nended April 30, 2007, respectively, for cost reduction actions, which are primarily recorded in\nSG&A. For the three months ended April 30, 2007, these actions consisted of $2.4 million for\nseverance and other employee termination costs, $0.2 million for facility closure costs and $0.1\nmillion for asset write-offs. For the nine months ended April 30, 2007, the cost reduction\nactions consisted of $3.5 million for severance and other employee termination costs, $0.3 million\nfor facility closure costs and $0.1 million for asset write-offs. Pre-tax savings from these\nactions, and the charges for planned integration activities of acquisitions completed in the last\n12 months that increased goodwill by $6.6 million for the quarter and $8.2 million for the\nnine-month period, are expected to be approximately $10 million in fiscal 2008.\n

\n\n

Investment and other income decreased from $2.3 million to $0.4 million for the quarter and\nfrom $2.8 million to $0.9 million for the nine months ended April 30, 2007, compared to the same\nperiods in the prior year. The decrease was primarily due to a gain of approximately $1.5 million\non the currency option that the Company purchased in fiscal 2006 to hedge against increases in the\npurchase price in U.S. dollar terms of Tradex as the transaction was denominated in Swedish Krona.\n

\n\n

Interest expense increased from $4.5 million to $6.4 million for the quarter and from $8.9\nmillion to $16.4 million for the nine months ended April 30, 2007, compared to the same periods in\nthe prior year. The increase in interest expense was due to the interest on the $200 million\nprivate placement of senior notes that was completed in the third quarter of fiscal 2006, interest\non the $150 million private placement of senior notes that was completed in the third quarter of\nfiscal 2007, as well as interest on the borrowings under our revolving credit facility in the\nfirst nine months of fiscal 2007.\n

\n\n

The Company’s effective tax rate was 28.0% for the quarter and nine months ended April 30,\n2007 and April 30, 2006.\n

\n\n

15\n

\n\n

Net income for the three months ended April 30, 2007, decreased 4.2% to $29.0 million,\ncompared to $30.2 million for the same quarter of the previous year. Net income as a percentage of\nsales decreased from 11.3% to 8.4% for the quarter ended April 30, 2007, compared to the same\nperiod in the prior year, due to the factors noted above. For the nine months ended April 30,\n2007, net income increased 1.8% to $83.1 million, compared to $81.7 million for the same period in\nthe previous year. Similar to the results for the quarter, as a percentage of sales, net income\ndecreased from 11.2% to 8.3% for the nine months ended April 30, 2007, compared to the same period\nin the previous year. The decreases as a percentage of sales were due to the factors noted above.\nResults for the quarter and the nine months ended April 30, 2007 were also positively impacted by\nfluctuations in the exchange rates used to translate financial results into the United States\ndollar, increasing net income by $0.04 per diluted Class A Nonvoting Common Share and $0.06 per\ndiluted Class A Nonvoting Common Share, respectively. Net income per share comparisons were\ndiluted by the Company’s July 2006 sale of an additional 4.6 million shares of Class A Nonvoting\nCommon Stock in a public offering.\n

\n\n

Business Segment Operating Results\n

\n\n\n

Management of the Company evaluates results based on the following geographic regions:\nAmericas, Europe, and Asia-Pacific.\n

\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \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
								Asia-						And
(Dollars in thousands)	Americas			Europe			Pacific		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	%

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		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		11.9	%			20.8	%		25.0	%		17.3	%			-25.9	%		19.1	%

\n\n\n

16\n

\n\n\n

NET INCOME RECONCILIATION (Dollars in thousands)\n

\n\n


	Three months ended:			Nine months ended:
	April 30,			April 30,			April 30,		April 30,
	2007			2006			2007		2006

Total profit from 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

\n\n\n

The Company evaluates regional performance using sales and segment profit. Segment\nprofit or loss does not include certain administrative costs, such as the cost of finance,\ninformation technology and human resources, which are managed as global functions, interest,\ninvestment and other income and income taxes.\n

\n\n

Americas:\n

\n\n\n

Americas sales increased 12.0% for the quarter and 21.3% for the nine months ended April 30,\n2007, compared to the same periods in the prior year. Organic growth accounted for 0.4% and 2.7%\nof the growth in the quarter and year-to-date, respectively, as compared to the same periods in\nthe previous year. Fluctuations in the exchange rates used to translate financial results into\nthe United States dollar had a minimal impact on sales, increasing it by 0.1% in the quarter and\n0.4% for the nine-month period. Sales in the region were increased by the current year\nacquisitions of CIPI, Precision Converters, Scafftag, Asterisco, Clement and Sorbent and the prior\nyear acquisitions of TruMed, J.A.M., Personnel Concepts and Identicard, which increased sales by\n11.5% for the quarter and 18.2% for the nine-month period. We believe our business in the current\nyear quarter was impacted by the slowing economy in the United States.\n

\n\n

Segment profit for the region increased 7.0% to $37.5 million from $35.0 million for the\nquarter and 11.9% to $103.2 million from $92.2 million for the nine months ended April 30, 2007,\ncompared to the same periods in the prior year. As a percentage of sales, segment profit\ndecreased from 25.5% to 24.3% in the third quarter of fiscal 2007 and from 25.4% to 23.4% in the\nnine months ended April 30, 2007, compared to the same periods in the prior year. The declines\nwere due to the effect of recent acquisitions. As expected, the segment’s recent acquisitions have\nproduced an initial rate of profit that is below the average rate of profit of the segment. As we\nintegrate the businesses and achieve synergies, the profit percentages are expected to increase.\n

\n\n

Europe:\n

\n\n\n

European sales increased 38.4% for the quarter and 31.3% for the nine months ended April 30,\n2007, compared to the same periods in the prior year. Organic growth accounted for 10.1% and 8.2%\nof the growth in the quarter and year-to-date, respectively, compared to the same periods in the\nprevious year. Sales were positively affected by fluctuations in the exchange rates used to\ntranslate financial results into the United States dollar, which increased sales within the region\nby 12.2% in the quarter and 9.5% for the nine-month period. The fiscal 2007 acquisitions of CIPI,\nScafftag, Moderno and Sorbent and the fiscal 2006 acquisitions of Texit and Tradex increased sales\nby 16.1% for the quarter and 13.6% for the nine-month period. The organic growth in the quarter\nwas due to growth in the majority of the businesses and countries as the European economy\ncontinues to strengthen. The region is benefiting from recent “No Smoking” legislation enacted in\nFrance and in the United Kingdom, which stimulates demand for certain of our product lines.\n

\n\n

Segment profit for the region increased 37.9% to $29.4 million from $21.3 million for the\nquarter and 20.8% to $75.0 million from $62.1 million for the nine months ended April 30, 2007,\ncompared to the same periods in the prior year. As a percentage of sales, segment profit\ndecreased slightly from 26.5% to 26.4% in the third quarter of fiscal 2007 and from 26.9% to 24.8%\nin the nine months ended April 30, 2007, compared to the same periods in the prior year. The\ndeclines were due to the global headquarter costs of Tradex, offset by the strong performance of\nthe direct marketing businesses in the region.\n

\n\n

17\n

\n\n

Asia-Pacific:\n

\n\n\n

Asia-Pacific sales increased 67.0% for the quarter and 88.4% for the nine months ended April\n30, 2007, compared to the same periods in the prior year. Organic sales in local currency\ndecreased 10.1% in the quarter and declined 0.7% year-to-date, compared to the same periods in the\nprevious year. Sales were positively affected by fluctuations in the exchange rates used to\ntranslate financial results into the United States dollar, which increased sales within the region\nby 5.7% in the quarter and 4.4% for the nine-month period. The fiscal 2007 acquisitions of CIPI,\nScafftag and Sorbent and the fiscal 2006 acquisitions of QDPT, Accidental Health, Tradex, Carroll\nand Daewon increased sales by 71.4% for the quarter and 84.7% for the nine-month period. The\ndecline in organic sales for the quarter was due to a slowdown in our OEM electronics business,\nled by the loss of certain programs in the hard disk drive business related to industry\nconsolidation and a slowdown in high performance labeling. In the third quarter of fiscal 2006,\nAsia-Pacific reported 48.9% organic growth, thus providing very strong comparisons for the current\nquarter of fiscal 2007.\n

\n\n

Segment profit for the region decreased 4.3% to $11.9 million from $12.4 million for the\nquarter and increased 25.0% to $46.4 million from $37.1 million for the nine months ended April\n30, 2007, compared to the same periods in the prior year. As a percentage of sales, segment\nprofit decreased from 25.5% to 14.6% in the third quarter of fiscal 2007 and from 27.3% to 18.1%\nin the nine months ended April 30, 2007, compared to the same periods in the prior year. The\ndeclines were due to the slowdown in our OEM electronics business and excess capacity at our\nfacilities. We continue to focus on consolidating our facilities in order to rebalance our\ncapacity, reduce our cost structure, and to be closer to our customers’ facilities.\n

\n\n

Financial Condition\n

\n\n\n

The Company’s current ratio as of April 30, 2007, was 2.2 compared to 2.1 at July 31, 2006.\nCash and cash equivalents were $119.3 million at April 30, 2007, compared to $113.0 million at\nJuly 31, 2006. Additionally, there were short-term investments of $1.2 million outstanding at\nApril 30, 2007, compared to $11.5 million outstanding at July 31, 2006. Working capital increased\n$59.8 million during the nine months ended April 30, 2007, to $300.3 million from $240.5 million\nat July 31, 2006. Accounts receivable increased $52.1 million during the nine months ended April\n30, 2007, due to increased organic sales volume, acquisitions and foreign currency translation.\nInventories increased $34.4 million in the current year, due to acquisitions and increased\ninventory levels to support the launch of new products and to maintain adequate service levels for\nour customers. The net increase in current liabilities was $27.7 million for the nine-month\nperiod. The increase was composed of an increase in accounts payable from the fiscal 2007\nacquisitions and an increase in other current liabilities as a result of our consolidation and\nrebalancing activities.\n

\n\n

Cash flow from operating activities totaled $79.7 million for the nine months ended April 30,\n2007, compared to $63.3 million for the same period last year. The increase was the result of a\n$1.4 million increase in net income and a $16.4 million increase in depreciation and amortization\nof the intangible assets acquired in fiscal 2006 and 2007, partially offset by cash requirements\nfor changes in accounts receivable, inventories, prepaid expenses and other assets and income\ntaxes.\n

\n\n

The acquisitions of businesses used $158.0 million of cash for the nine months ended April\n30, 2007. Contingent consideration payments of $10.9 million were paid during the nine months\nended April 30, 2007, to satisfy the $6.5 million holdback requirement of the ID Technologies\nacquisition completed in fiscal 2005, the $1.0 million earnout liability of the Stopware\nacquisition completed in fiscal 2006, the $1.8 million purchase price adjustment of the Daewon\nacquisition completed in fiscal 2006 and the $1.6 million earnout liability of the QDPT\nacquisition completed in fiscal 2006. Capital expenditures were $42.1 million for the nine months\nended April 30, 2007, compared to $26.3 million in the same period last year. Approximately $9\nmillion was spent on implementing SAP in 18 of Brady’s global operations and ultimately bringing\nthe number of users up from approximately 2,300 to 6,700 in the next three years. The remainder\nof the increase in capital expenditures was due to the expansions in China, Canada, India,\nSlovakia, and other locations. Net cash provided by financing activities was $131.6 million for\nthe nine months ended April 30, 2007, due to the proceeds from the private placement of $150\nmillion of senior notes completed in the third quarter, partially offset by the payment of\ndividends. Net cash provided by financing activities for the same period last year was $163.6\nmillion, due to the proceeds from the private placement of $200 million of senior notes completed\nin the third quarter of fiscal 2006, partially offset by the repurchase of the Company’s stock and\nthe payment of dividends.\n

\n\n

On March 23, 2007, the Company completed the private placement of $150 million in ten-year\nfixed notes at 5.33% interest to institutional investors. The notes will be amortized in equal\ninstallments over seven years, beginning in 2011 with interest payable on the notes semiannually\non September 23 and March 23, beginning in September 2007. The notes have been fully and\nunconditionally guaranteed on an unsecured basis by the Company’s domestic subsidiaries. The\nCompany used the net proceeds of the offering to reduce outstanding indebtedness under the\nCompany’s revolving loan agreement and fund its ongoing strategic growth plan. This private\nplacement was exempt from the registration requirements of the Securities Act of 1933. The notes\nwere not registered for resale and may not be resold absent such registration or an applicable\nexemption from the registration requirements of the Securities Act of 1933 and applicable state\nsecurities laws. The notes have certain prepayment penalties for repaying them prior to the\nmaturity date. The agreement also requires the Company to maintain a financial covenant. As of\nApril 30, 2007, the Company was in compliance with this covenant.\n

\n\n

18\n

\n\n

Under the 5-year agreement, which has a final maturity date of October 5, 2011, the Company\nhas the option to select either a base interest rate (based upon the higher of the federal funds\nrate plus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency interest rate (at\nthe LIBOR rate plus a margin based on the Company’s consolidated leverage ratio). A commitment fee\nis payable on the unused amount of the facility. The agreement requires the Company to maintain\ntwo financial covenants. As of April 30, 2007, the Company was in compliance with the covenants of\nthe agreement.\n

\n\n

The credit agreement restricts the amount of certain types of payments, including dividends,\nwhich can be made annually to $50 million plus an amount equal to 75% of consolidated net income\nfor the prior fiscal year. The Company believes that based on historic dividend practice, this\nrestriction would not impede the Company in following a similar dividend practice in the future.\nDuring the nine months ended April 30, 2007, the Company borrowed and repaid $109.3 million,\nrespectively. As of April 30, 2007, there were no outstanding borrowings under the credit\nagreement.\n

\n\n

On February 14, 2006, the Company completed the private placement of $200 million in ten-year\nfixed notes at 5.3% interest to institutional investors. The notes will be amortized in equal\ninstallments over seven years, beginning in 2010 with interest payable on the notes semiannually\non August 14 and February 14, beginning in August 2006. The notes have been fully and\nunconditionally guaranteed on an unsecured basis by the Company’s domestic subsidiaries. The\nCompany used the net proceeds of the offering to finance acquisitions completed in fiscal 2006 and\n2007. This private placement was exempt from the registration requirements of the Securities Act\nof 1933. The notes were not registered for resale and may not be resold absent such registration\nor an applicable exemption from the registration requirements of the Securities Act of 1933 and\napplicable state securities laws. The notes have certain prepayment penalties for repaying them\nprior to the maturity date. The agreement also requires the Company to maintain a financial\ncovenant. As of April 30, 2007, the Company was in compliance with this covenant.\n

\n\n

On June 30, 2004, the Company finalized a debt offering of $150 million of 5.14% unsecured\nsenior notes due in 2014 in an offering exempt from the registration requirements of the\nSecurities Act of 1933. The notes will be amortized over seven years beginning in 2008, with\ninterest payable on the notes semiannually on June 28 and December 28, beginning in December 2004.\nThe Company used the proceeds of the offering to reduce outstanding indebtedness under the\nCompany’s revolving credit facilities used to initially fund the EMED acquisition. The debt has\ncertain prepayment penalties for repaying the debt prior to its maturity date. The agreement also\nrequires the Company to maintain a financial covenant. As of April 30, 2007, the Company was in\ncompliance with this covenant.\n

\n\n

On May 16, 2007, the Board of Directors declared a quarterly cash dividend to shareholders of\nthe Company’s Class A Common Stock of $0.14 per share payable on July 31, 2007, to shareholders of\nrecord at the close of business on July 10, 2007.\n

\n\n

The Company believes that its continued strong cash flows from operations and existing\nborrowing capacity will enable it to execute its long-term strategic plan. This strategic plan\nincludes investments, which expand its current market share, open new markets and geographies,\ndevelop new products and distribution channels and continue to improve our processes. This\nstrategic plan also includes executing key acquisitions.\n

\n\n

Off-Balance Sheet Arrangements — The Company does not have material off-balance sheet\narrangements or related-party transactions. The Company is not aware of factors that are\nreasonably likely to adversely affect liquidity trends, other than the risk factors described in\nthis and other Company filings. However, the following additional information is provided to\nassist those reviewing the Company’s financial statements.\n

\n\n

Operating Leases — These leases generally are entered into for investments in facilities,\nsuch as manufacturing facilities, warehouses and office buildings, computer equipment and Company\nvehicles, for which the economic profile is favorable.\n

\n\n

Purchase Commitments — The Company has purchase commitments for materials, supplies,\nservices, and property, plant and equipment as part of the ordinary conduct of its business. In\nthe aggregate, such commitments are not in excess of current market prices and are not material to\nthe financial position of the Company. Due to the proprietary nature of many of the Company’s\nmaterials and processes, certain supply contracts contain penalty provisions for early\ntermination. The Company does not believe a material amount of penalties will be incurred under\nthese contracts based upon historical experience and current expectations.\n

\n\n

Other Contractual Obligations — The Company does not have material financial guarantees or\nother contractual commitments that are reasonably likely to adversely affect liquidity.\n

\n\n

Related-Party Transactions — The Company does not have any related-party transactions that\nmaterially affect the results of operations, cash flow or financial condition.\n

\n\n

19\n

\n\n

Forward-Looking Statements\n

\n\n\n

Brady believes that certain statements in this Form 10-Q 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 Form 10-Q, including, without limitation, statements\nregarding Brady’s future financial position, business strategy, targets, projected sales, costs,\nearnings, capital expenditures, debt levels and cash flows, and plans and objectives of management\nfor future operations are forward-looking statements. When used in this Form 10-Q, words such as\n“may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or\n“plan” or similar terminology are generally intended to identify forward-looking statements. These\nforward-looking statements by their nature address matters that are, to different degrees,\nuncertain and are subject to risks, assumptions and other factors, some of which are beyond\nBrady’s control, that could cause actual results to differ materially from those expressed or\nimplied by such forward-looking statements. For Brady, uncertainties arise from future financial\nperformance of major markets Brady serves, which include, without limitation, telecommunications,\nconsumer electronics, mobile handset, manufacturing, electrical, construction, laboratory,\neducation, governmental, public utility, computer, transportation; difficulties in making and\nintegrating acquisitions; risks associated with newly acquired businesses; Brady’s ability to\nretain significant contracts and customers; future competition; Brady’s ability to develop and\nsuccessfully market new products; changes in the supply of, or price for, parts and components;\nincreased price pressure from suppliers and customers; interruptions to sources of supply;\nenvironmental, health and safety compliance costs and liabilities; Brady’s ability to realize cost\nsavings from operating initiatives; Brady’s ability to attract and retain key talent; difficulties\nassociated with exports; risks associated with international operations; fluctuations in currency\nrates versus the U.S. dollar; technology changes; potential write-offs of Brady’s substantial\nintangible assets; risks associated with obtaining governmental approvals and maintaining\nregulatory compliance for new and existing products; business interruptions due to implementing\nbusiness systems; and numerous other matters of national, regional and global scale, including\nthose of a political, economic, business, competitive and regulatory nature contained from time to\ntime in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to,\nthose factors listed in the “Risk Factors” section located\nin Item 1A of Part II of this Form 10-Q and Item 1A of Part I of Brady’s Form\n10-K for the year ended July 31, 2006. These uncertainties may cause Brady’s actual future results\nto be materially different than those expressed in its forward-looking statements. Brady does not\nundertake to update its forward-looking statements.\n

\n\n

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK\n

\n\n\n

The Company’s business operations give rise to market risk exposure due to changes in foreign\nexchange rates. To manage that risk effectively, the Company enters into hedging transactions,\naccording to established guidelines and policies that enable it to mitigate the adverse effects of\nthis financial market risk.\n

\n\n

The global nature of the Company’s business requires active participation in the foreign\nexchange markets. As a result of investments, production facilities and other operations on a\nglobal scale, the Company has assets, liabilities and cash flows in currencies other than the U.S.\nDollar. The primary objective of the Company’s foreign currency exchange risk management is to\nminimize the impact of currency movements on intercompany transactions and foreign raw-material\nimports. To achieve this objective, the Company hedges a portion of known exposures using forward\ncontracts. Main exposures are related to transactions denominated in the British Pound, the Euro,\nCanadian Dollar, Australian Dollar, Singapore Dollar, Swedish Krona, Korean Won and Chinese Yuan\ncurrency.\n

\n\n

The Company could be exposed to interest rate risk through its corporate borrowing\nactivities. The objective of the Company’s interest rate risk management activities is to manage\nthe levels of the Company’s fixed and floating interest rate exposure to be consistent with the\nCompany’s preferred mix. The interest rate risk management program allows the Company to enter\ninto approved interest rate derivatives, with the approval of the Board of Directors, if there is\na desire to modify the Company’s exposure to interest rates. As of April 30, 2007, the Company had\nno interest rate derivatives.\n

\n\n

ITEM 4. CONTROLS AND PROCEDURES\n

\n\n\n

The Company maintains disclosure controls and procedures designed to ensure that the\ninformation the Company must disclose in its filings with the Securities and Exchange Commission\nis recorded, processed, summarized and reported on a timely basis. The Company’s Chief Executive\nOfficer and Chief Financial Officer have reviewed and evaluated the Company’s disclosure controls\nand procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of\n1934, as amended (the “Exchange Act’’) as of the end of the period covered by this report (the\n“Evaluation Date’’). Based on such evaluation, such officers have concluded that, as of the\nEvaluation Date, the Company’s disclosure controls and procedures are effective in bringing to\ntheir attention on a timely basis material information relating to the Company required to be\nincluded in the Company’s periodic filings under the Exchange Act.\n

\n\n

The Company is in the process of implementing its enterprise resource planning system, SAP,\nto many of its locations around the world. This implementation has resulted in certain changes to\nbusiness processes and internal controls impacting financial reporting. Management is taking the\nnecessary steps to monitor and maintain appropriate internal controls during this period of\nchange.\n

\n\n

There were no other changes in the Company’s internal control over financial reporting (as\ndefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most\nrecently completed fiscal quarter that have materially affected, or are reasonably likely to\nmaterially affect, the Company’s internal control over financial reporting.\n

\n\n

20\n

\n\n

PART II. OTHER INFORMATION\n

\n\n

ITEM 1A. Risk Factors\n

\n\n\n

Our business involves risk. The following information and the information contained in Item\n1A, Risk Factors, of our Form 10-K for the fiscal year ended July 31, 2006, about these risks\nshould be considered carefully together with the other information contained in this report. The\nfollowing risk replaces the risk entitled “We have a concentration of business with several large\nkey customers in the OEM market and loss of one or more of these customers could significantly\naffect our results of operations” in our Form 10-K for the fiscal year ended July 31, 2006.\n

\n\n

We\nhave a concentration of business with several large key customers in\nthe OEM market and loss of one or more of these customers could\nsignificantly affect our results of operations.\n

\n\n

Several of our large key customers in the OEM markets, specifically the precision die-cut\nbusiness, together comprise a significant portion of our revenues. As a result of our\nacquisition of Tradex Converting AB in May 2006, our largest customer represents approximately\n7% of our net sales. Our dependence on these large customers makes our relationships with\nthese customers important to our business. We cannot assure you that we will be able to\nmaintain these relationships and retain this business in the future. Because these large\ncustomers account for such a significant portion of our revenues, they possess relatively\ngreater capacity to negotiate a reduction in the prices we charge for our products. If we are\nunable to provide products to our customers at prices acceptable to them, some of our\ncustomers may in the future elect to shift some or all of this business to competitors or to\nother sources. If one of our key customers consolidates, is acquired by another company or\nloses market share, the result of that event may have an adverse impact on our business. The\nloss of or reduction in business from one or more of these large key customers could have a\nmaterial adverse impact on our financial condition and results of operations.\n

\n\n

ITEM 6. Exhibits\n

\n\n

(a) Exhibits

\n\n\n\n

\n\n\n\n \n \n \n\n\n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n



10.1\n		Brady Corporation 1989 Non-Qualified Stock Option Plan, as amended
10.2\n		Brady Corporation 1997 Omnibus Incentive Stock Plan, as amended
10.3\n		Brady Corporation 2001 Omnibus Incentive Stock Plan, as amended
10.4\n		Brady Corporation 2003 Omnibus Incentive Stock Plan, as amended
10.5\n		Brady Corporation 2004 Omnibus Incentive Stock Plan, as amended
31.1\n		Rule 13a-14(a)/15d-14(a) Certification of Frank M. Jaehnert
31.2\n		Rule 13a-14(a)/15d-14(a) Certification of David Mathieson
32.1\n		Section 1350 Certification of Frank M. Jaehnert
32.2\n		Section 1350 Certification of David Mathieson

\n\n\n

21\n

\n\n\n

Exhibit 10.1\n

\n\n\n

W. H. BRADY CO.
\n1989
\nNONQUALIFIED STOCK OPTION PLAN\n

\n\n\n

1. Purpose. The purpose of this Plan is to promote the growth and development of W.\nH. Brady Co. (the “Company”) by (a) providing increased long-term incentives for key salaried\nemployees of the Company and any present or future Subsidiary of the Company and (b) facilitating\nthe efforts of the Company and its Subsidiaries to obtain and retain employees of outstanding\nability. This Plan provides for the granting of nonqualified stock options which are intended not\nto qualify for the treatment provided under Section 422A of the Internal Revenue Code.\n

\n\n

2. Administration.\n

\n\n\n

(a) The Plan shall be administered by the Compensation Committee (the “Committee”) of\nthe Board of Directors of the Company. None of the members of Committee, while serving in\nsuch capacity, shall be eligible to receive options under this Plan. A majority of the\nmembers of the Committee shall constitute a quorum. The approval of such a quorum,\nexpressed by vote at a meeting, or in writing without a meeting, shall constitute the\naction of the Committee and shall be valid and effective for all purposes of the Plan.\n

\n\n\n

(b) The Committee is authorized, subject to the provisions of the Plan, to adopt,\namend and rescind such rules and regulations as it may deem appropriate for the\nadministration of the Plan, and to make determinations and interpretations which it deems\nconsistent with the Plan’s provisions. The Committee’s determinations and interpretations\nshall be final and conclusive.\n

\n\n

3. Eligibility. Key salaried employees, including officers, of the Company and of its\nSubsidiaries shall be eligible to receive options under the Plan, but no option shall be granted to\nany director of the Company who is not an officer or key employee of the Company or a Subsidiary.\n

\n\n

4. Shares Subject to Options.\n

\n\n\n

(a) The stock to be subject to options under the Plan shall be shares of the Company’s\nClass A Common Stock, $.01 par value, subject to adjustment under Paragraph 12 hereof, and\nmay be authorized but unissued Class A Common Stock or Class A Common Stock issued and\nreacquired by the Company.\n

\n\n\n

(b) The aggregate number of shares which may be issued pursuant to exercises of\noptions granted under the Plan shall not exceed Five Hundred Thousand (500,000) shares of\nthe Company’s Class A Common Stock, subject to adjustment under paragraph 12 hereof.\n

\n\n\n

(c) Shares subject to and not issued under an option which expires or terminates or is\ncancelled for any reason during the term of the Plan shall again be available for the\ngranting of options under the Plan.\n

\n\n

5. Exercise Price.\n

\n\n\n

(a) The exercise price at which shares may be purchased under each option shall be not\nless than 100 percent of the Fair Market Value of the shares on the date on which the\noption is granted. For all purposes of this Plan, the term “Fair Market Value” shall be\nthe average of the highest and lowest sale prices of the stock, on the date of grant, as\nreported by NASDAQ (the National Association of Securities Dealers, Inc. Automated\nQuotation System). However, if at any time the Class A Common Stock is listed on any\nexchange, the “Fair Market Value” shall be the average of the reported highest and lowest\nprices at which shares of Class A Common Stock are sold on such exchange on the date the\noption is granted. In the absence of reported sales on NASDAQ or on such exchange on said\ndate, the “Fair Market Value” shall be the average of the reported closing bid and asked\nprices for the shares on NASDAQ or such exchange on the date the option is granted.\n

\n\n\n

(b) The cash proceeds of the sale of stock subject to an option are to be added to the\ngeneral funds of the Company available for its corporate purposes.\n

\n\n

6. Granting of Options.\n

\n\n\n

(a) The Committee may from time to time at its discretion, subject to the provisions\nof the Plan, determine when options shall be granted and at the time of each grant\ndetermine those eligible employees to whom options shall be granted, the number of shares\nsubject to such options, the date or dates on which the options become exercisable, either\nwholly or in part, and the expiration date of the options.\n

\n\n\n

(b) Each option shall be evidenced by a written agreement containing terms and\nconditions established by the Committee consistent with the provisions of the Plan.\n

\n\n

7. Term of Plan. Options may be granted under the Plan at any time up to December 31,\n1999, on which date the Plan shall expire except as to options then outstanding, which options\nshall remain in effect until they have been exercised or have expired or terminated.\n

\n\n

8. Exercise of Options.\n

\n\n\n

(a) Options granted under the Plan may not be exercised until six months have elapsed\nfrom the date of grant, or prior to the event described in the last sentence of paragraph\n15 hereof, and then may be exercised only in accordance with the terms established by the\nCommittee, including any additional requirement as to the initial exercise date or dates\nwhen options shall first become exercisable in whole or part. Unless otherwise determined\nby the Committee at the time of grant, each option granted hereunder shall expire on a date\nwhich is ten years after the date on which the option was granted.\n

\n\n

\n\n\n

(b) Although the Company intends to exert its best efforts so that the shares\npurchasable upon the exercise of an option, when it first becomes exercisable, will be\nregistered under, or exempt from the registration requirements of, the Federal Securities\nAct of 1933 (the “Act”) and any applicable state securities law, if the exercise of an\noption would otherwise result in the violation by the Company of any provision of the Act\nor of any state securities law, the Company may require that such exercise be deferred\nuntil the Company has taken appropriate action to avoid any such violation.\n

\n\n\n

(c) The exercise price for shares purchased shall be paid in full at the time of\nexercise and no shares shall be issued until full payment therefore is made. Such payment\nmay be made either (i) in cash or (ii) by delivering shares of the Company’s common stock\nwhich have been beneficially owned by the optionee, the optionee’s spouse, or both of them\nfor a period of at least six months prior to the time of exercise (the “Delivered Stock”)\nor (iii) by delivering a combination of cash and Delivered Stock. Delivered Stock shall be\nvalued at its Fair Market Value determined as of the date of exercise of the option.\n

\n\n\n

(d) An optionee shall not be deemed the holder of any shares subject to the option\nuntil the shares are fully paid and issued to him upon exercise of such option.\n

\n\n

9. Transferability of Options. An option granted under the Plan may not be transferred\nexcept by will or the laws of descent and distribution and may be exercised during the lifetime of\noptionee (to the extent exercisable) only by him. The option and any rights and privileges\npertaining thereto shall not be transferred, assigned, pledged or hypothecated by him in any way\nwhether by operation of law or otherwise and shall not be subject to execution, attachment or\nsimilar process.\n

\n\n

10. Termination of Employment.\n

\n\n\n

(a) Upon termination of employment with the Company or a Subsidiary for any reason\nexcept death, after he shall have been continuously so employed for six months after the\ndate of grant of his option, an employee to whom an option is granted may, at any time\nwithin three months after the date of such termination but in no event later than the date\nof expiration of the option, exercise the option to the extent he was entitled to do so on\nthe date of such termination; provided, however, that if such employee is dismissed for\ncause, of which the Committee shall be the sole judge, his option shall forthwith expire.\nAny options or portions of options of terminated employees not so exercised shall\nterminate.\n

\n\n\n

(b) The Committee may determine that, for the purpose of the Plan, an employee who is\non a leave of absence will be considered as a full-time salaried employee of the Company or\na Subsidiary.\n

\n\n

\n\n\n

(c) Transfer of an employee from the Company to a Subsidiary or from a Subsidiary to\nthe Company or another Subsidiary shall not be a termination of employment or an\ninterruption of continuous employment for the purposes of the Plan.\n

\n\n\n

(d) Nothing in the Plan or in any option granted under the Plan shall confer on any\nemployee any right to continue in the employ of the Company or its Subsidiaries, or affect\nthe right of the Company or its Subsidiaries to terminate his employment at any time.\n

\n\n

11. Death. If an employee to whom an option is granted dies while in the employ of\nthe Company or a Subsidiary, or within 90 days after termination of such employment, the person or\npersons to whom the option is transferred by will or the laws of descent and distribution may, at\nany time within one year after the date of death but not later than the expiration date of the\noption, exercise the option to the extent the employee was entitled to do so on the date of death\nor termination of employment, whichever was earlier. Any options or portions of options of\ndeceased employees not so exercised shall terminate.\n

\n\n

12. Changes in Common Stock. In the event of any reorganization, recapitalization,\nstock split, stock dividend, merger, consolidation, combination or exchange of shares, rights\noffering or any other change affecting the Class A Common Stock of the Company, the Committee shall\nproportionately and appropriately adjust: (a) the aggregate number and kind of shares authorized\nfor issuance under the Plan; and (b) in the case of stock options, the price and the number and\nkind of shares subject to the stock options, without any change in the aggregate purchase price to\nbe paid for the stock options.\n

\n\n

13. Amendment or Discontinuance. The Committee may, at any time, without the approval\nof the stockholders of the Company, alter, amend, modify, suspend or discontinue the Plan, by may\nnot, without the consent of the holder of an option, make any alteration which would adversely\naffect an option previously granted under the Plan or, without the approval of the stockholders of\nthe Company, make an alteration which would (a) increase the aggregate number of shares subject to\noptions under the Plan, except for adjustments pursuant to paragraph 12; (b) decrease the minimum\nexercise price; (c) permit any member of the Committee to become eligible for options under the\nPlan; or (d) extend the term of the Plan or the maximum period during which any option may be\nexercised.\n

\n\n

14. Liability. No member of the Board of Directors, the Committee or officers or\nemployees of the Company or its Subsidiaries shall be personally liable for any action, omission of\ndetermination made in good faith in connection with the Plan.\n

\n\n

15. Effective Date. This Plan, adopted by the Board of Directors on\nMay 26, 1989, shall become effective upon such adoption, but shall be subject to\napproval by the voting stockholders of the Company. No option granted\n

\n\n

\n\n\n\n

hereunder shall be or become exercisable unless and until such stockholder approval has\noccurred.\n

\n\n

16. Dissolution or Merger. Anything contained herein to the contrary notwithstanding,\nupon the dissolution or liquidation of the Company, or upon any merger in which the Company is not\nthe surviving corporation, at any time prior to the expiration date of an option or the termination\nof an option hereunder, an optionee shall have the right within sixty (60) days prior to the\neffective date of such dissolution, liquidation or merger, to surrender then outstanding and\nunexercised options to the Company for cash, subject to the discretion of the Committee as to the\nexact timing of said surrender. Notwithstanding the foregoing, however, in the case of a retired\nor decreased optionee, the optionee’s right to surrender his outstanding and unexercised options\nunder this paragraph shall be available only to the extent that at the time of any such surrender,\nthe optionee would have been entitled to exercise his option under paragraph 10 or 11, as the case\nmay be. The amount of cash to be paid to the employee for all such surrendered options shall be\nequal to the number of shares of Class A Common Stock subject to such surrendered options,\nmultiplied by the difference between the option price per share and the Fair Market Value per share\nof Class A Common Stock of the Company at the time of surrender.\n

\n\n

17. Miscellaneous.\n

\n\n\n

(a) The term “Board of Directors” herein shall mean the Board of Directors of the\nCompany and, to the extent that any powers and discretion vested in the Board of Directors\nare delegated to any committee of the Board, the term “Board of Directors” shall also mean\nsuch committee.\n

\n\n\n

(b) The term “Subsidiary” used herein shall mean any corporation more than 50 percent\nof whose total combined voting stock of all classes is held by the Company or by another\ncorporation qualifying as a Subsidiary within this definition.\n

\n\n

18. Withholding Taxes. Pursuant to applicable Federal and state laws, the Company may\nbe required to collect withholding taxes upon the exercise of an option. The Company may require,\nas a condition to the exercise of an option, that the optionee concurrently pay to the Company the\nentire amount or a portion of any taxes which the Company is required to withhold by reason of such\nexercise, in such amount as the Committee or the Company in its discretion may determine. In lieu\nof part or all of any such payment, the optionee may elect, subject to such rules and regulations\nas the Committee may adopt from time to time, to have the Company withhold from the shares to be\nissued upon exercise of the option that number of shares having a Fair Market Value equal to the\namount which the Company is required to withhold.\n

\n\n\n

Exhibit 10.2\n

\n\n\n

W. H. BRADY CO.
\n1997 OMNIBUS INCENTIVE STOCK PLAN\n

\n\n\n

I. INTRODUCTION\n

\n\n\n

1.01 Purpose. This plan shall be known as the W. H. Brady Co. 1997 Omnibus Incentive\nStock Plan. The purpose of the Plan is to provide an incentive for employees of W. H. Brady Co.\nand its Affiliates to improve corporate performance on a long-term basis, and to attract and retain\nemployees by enabling employees to participate in the future successes of the Company, and by\nassociating the long term interests of employees with those of the Company and its shareholders.\nIt is intended that the Plan and its operation comply with the provisions of Rule 16b-3 under the\nSecurities Exchange Act of 1934 (or any successor rule). The Plan is intended to permit the grant\nof Nonqualified Stock Options and shares of Restricted Stock. The proceeds received by the Company\nfrom the sale of Company Stock pursuant to the Plan shall be used for general corporate purposes.\n

\n\n

1.02 Effective Date. The effective date of the Plan shall be May 12, 1997, subject to\napproval of the Plan by holders of a majority of the outstanding voting common stock of the Company\nprovided that such approval is given within 12 months of the effective date. Any Award granted\nprior to such shareholder approval shall be expressly conditioned upon shareholder approval of the\nPlan.\n

\n\n

II. PLAN DEFINITIONS\n

\n\n\n

For Plan purposes, except where the context clearly indicates otherwise, the following terms\nshall have the meanings set forth below:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		“Affiliates” means any “subsidiary corporation” or\n“parent corporation” as such terms are defined in Section 424 of the Code.

	(b)		“Agreement” means a written agreement (including any\namendment or supplement thereto) between the Company and a Participant\nspecifying the terms and conditions of an Award.

	(c)		“Award” shall mean the grant of any form of Stock\nOption or Restricted Stock.

	(d)		“Board” shall mean the Board of Directors of the\nCompany.

	(e)		“Code” shall mean the Internal Revenue Code of 1986, as\namended from time to time.

	(f)		“Committee” shall mean the Committee described in\nSection 4.01.

	(g)		“Company” shall mean W. H. Brady Co., a Wisconsin\ncorporation.

\n\n\n

\n\n\n\n

\n\n

	(h)		“Company Stock” shall mean the Company’s Class A\nNon-Voting Common Stock, $.01 par value, and such other stock and securities as\nmay be substituted therefor pursuant to Section 3.02.

	(i)		“Eligible Employee” shall mean any regular salaried employee of\nthe Company or an Affiliate, including an employee who is a member of the\nBoard, who satisfies the requirements of Section 5.01.

	(j)		“Exercise Period” shall mean the period of time\nprovided pursuant to Section 6.05 within which a Stock Option may be exercised.

	(k)		“Fair Market Value” on any date shall mean, with\nrespect to Company Stock, if the stock is then listed and traded on a\nregistered national securities exchange, or is quoted in the NASDAQ National\nMarket System, the average of the high and low sale prices recorded in\ncomposite transactions as reported in the Wall Street Journal (Midwest\nEdition) for such date or, if such date is not a business day or if no sales of\nCompany Stock shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the\nabsence of reported sales or if the stock is not so listed or quoted, but is\ntraded in the over-the-counter market, Fair Market Value shall be the average\nof the closing bid and asked prices for such shares on the relevant date.

	(l)		“Participant” means an Eligible Employee who has been\ngranted an Award under this Plan.

	(m)		“Person” means any individual or entity, and the heirs,\npersonal representatives, executors, administrators, legal representatives,\nsuccessors and assigns of such Person as the context may require.

	(n)		“Plan” shall mean the W. H. Brady Co. 1997 Omnibus\nIncentive Stock Plan, as set forth herein, as it may be amended from time to\ntime.

	(o)		“Restricted Stock” means shares of Company Stock\ngranted to a Participant under Article VII.

	(p)		“Stock Option” means an option to purchase a stated\nnumber of shares of Company Stock at the price set forth in an Agreement.

\n\n

III. SHARES SUBJECT TO AWARD\n

\n\n\n

3.01 Available Shares. The total number of shares of Company Stock authorized for\nissuance shall not exceed two million (2,000,000) shares, subject to adjustments under Section\n3.02. The shares authorized for issuance under the Plan may consist, in whole or in part, of\nauthorized but unissued Company Stock, or of treasury stock of the Company. Shares subject to and\nnot issued under a Stock Option that expires, terminates, is canceled or forfeited for any\n

\n\n

- 2 -\n

\n\n\n\n

reason under the Plan and shares of restricted Company Stock which have been forfeited for any\nreason shall again become available for the granting of Awards.\n

\n\n

3.02 Changes in Corporation Stock. In the event of any change in the Corporation\nStock resulting from a reorganization, recapitalization, stock split, stock dividend, merger,\nconsolidation, rights offering or like transaction, the Committee shall proportionately and\nappropriately adjust: (a) the aggregate number and kind of shares authorized for issuance under\nthe Plan; and (b) in the case of previously-granted Stock Options, the option price and the number\nand kind of shares subject to the Stock Options, without any change in the aggregate purchase price\nto be paid for the Stock Options.\n

\n\n

IV. ADMINISTRATION\n

\n\n\n

4.01 Administration by the Committee. The Plan shall be administered by the\nCommittee. The Committee shall be a committee designated by the Board to administer the Plan and\nshall initially be the Compensation Committee of the Board. The Committee shall be constituted to\npermit the Plan to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of\n1934 (or any successor rule). A majority of the members of the Committee shall constitute a\nquorum. The approval of such a quorum, expressed by a majority vote at a meeting held either in\nperson or by conference telephone call, or the unanimous consent of all members in writing without\na meeting, shall constitute the action of the Committee and shall be valid and effective for all\npurposes of the Plan.\n

\n\n

4.02 Committee Powers. Subject to Section 9.06, the Committee is empowered to adopt,\namend and rescind such rules, regulations and procedures and take such other action as it shall\ndeem necessary or proper for the administration of the Plan and, in its discretion, may modify,\nextend or renew any Award theretofore granted. The Committee shall also have authority to\ninterpret the Plan, and the decision of the Committee on any questions concerning the\ninterpretation of the Plan shall be final and conclusive. The express grant in the Plan of any\nspecific power to the Committee shall not be construed as limiting any power or authority of the\nCommittee. The Committee shall not incur any liability for any action taken in good faith with\nrespect to the Plan or any Award.\n

\n\n

Subject to the provisions of the Plan, the Committee shall have full and final authority to:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		designate the Eligible Employees to whom Awards shall be\ngranted;

	(b)		grant Awards in such form and amount as the Committee shall\ndetermine;

	(c)		impose such limitations, restrictions and conditions upon any\nsuch Award as the Committee shall deem appropriate, including conditions (in\naddition to those contained in this Plan) on the exercisability of all or any\nportion of a Stock Option or on the transferability or forfeitability of\nRestricted Stock;

	(d)		prescribe the form of Agreement with respect to each Award;

- 3 -\n

\n\n\n

\n\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(e)		waive in whole or in part any limitations, restrictions or\nconditions imposed upon any such Award as the Committee shall deem appropriate\n(including accelerating the time at which any Stock Option may be exercised or\nthe time at which Restricted Stock may become transferable or nonforfeitable);

	(f)		determine the extent to which leaves of absence for\ngovernmental or military service, illness, temporary disability and the like\nshall not be deemed interruptions of continuous employment.

\n\n

V. PARTICIPATION\n

\n\n\n

5.01 Eligibility. Any employee of the Company and its Affiliates (including officers\nand employees who may be members of the Board) who, in the sole opinion of the Committee, has\ncontributed or can be expected to contribute to the profits, growth and success of the Company\nshall be eligible for Awards under the Plan. A member of the Committee or any person who is\nexpected to become a member within one year of any Award shall not be an Eligible Employee if his\nor her status as an Eligible Employee would prevent the Committee from being “disinterested” under\nRule 16b-3 under the Securities Exchange Act of 1934. From among all such Eligible Employees, the\nCommittee shall determine from time to time those Eligible Employees to whom Awards shall be\ngranted. No Eligible Employee shall have any right whatsoever to receive an Award unless so\ndetermined by the Committee.\n

\n\n

5.02 No Employment Rights. The Plan shall not be construed as conferring any rights\nupon any person for a continuation of employment, nor shall it interfere with the rights of the\nCompany or any Affiliates to terminate the employment of any person or to take any other action\naffecting such person.\n

\n\n

VI. STOCK OPTIONS\n

\n\n\n

6.01 Stock Options; General. Stock Options granted under the Plan shall be in the\nform of Nonqualified Stock Options. Each Stock Option granted under the Plan shall be evidenced by\nan Agreement which shall contain the terms and conditions required by this Article VI, and such\nother terms and conditions, not inconsistent herewith, as the Committee may deem appropriate in\neach case.\n

\n\n

6.02 Stock Option Holder’s Rights as a Shareholder. The holder of a Stock Option\nshall not have any rights as a shareholder with respect to the shares covered by a Stock Option\nuntil such shares have been delivered to him or her.\n

\n\n

6.03 Option Price. The price at which each share of Company Stock covered by a Stock\nOption may be purchased shall be not less than 100% of the Fair Market Value of such stock on the\ndate on which the option is granted. The option price shall be subject to adjustment as provided\nin Section 3.02 hereof.\n

\n\n

6.04 Date Stock Option Granted. For purposes of the Plan, a Stock Option shall be\nconsidered as having been granted on the date on which the Committee authorized the grant of\n

\n\n

- 4 -\n

\n\n\n\n

the Stock Option except where the Committee has designated a later date, in which event the\nlater date shall constitute the date of grant of the Stock Option; provided, however, that\nnotice of the grant of the Stock Option shall be given to the Participant within a reasonable time.\n

\n\n

6.05 Exercise Period. The Committee shall have the power to set the time or times\nwithin which each Option shall be exercisable, and to accelerate the time or times of exercise;\nprovided, however, that\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		no Stock Option granted under this Plan to any Person subject\nto the reporting requirements of Section 16(b) of the Securities and Exchange\nAct of 1934 may be exercised until at least six months from the later of (i)\nthe date of grant or (ii) shareholder approval of the Plan, and

	(b)		no Stock Option shall be exercisable after the expiration of\nten (10) years from the date the Stock Option is granted. Each Agreement with\nrespect to a Stock Option shall state the period or periods of time within\nwhich the Stock Option may be exercised by the Participant, in whole or in\npart.

\n\n

Subject to the foregoing, unless the Agreement with respect to a Stock Option expressly provides\notherwise, a Stock Option shall be exercisable in accordance with the following schedule:\n


Years After
Date of Grant	Percentage of Shares

Less than 1\n		0	%

1 but less than 2\n		33-1/3	%

2 but less than 3\n		66-2/3	%

3 or more\n		100	%

\n\n\n

6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be exercised\nin whole or in part from time to time as specified in the Agreements provided, however, that each\nParticipant may exercise a Stock Option in whole or in part by giving written notice of the\nexercise to the Company, specifying the number of shares to be purchased by payment in full of the\npurchase price therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the\napproval of the Committee, or if the applicable Agreement so provides, by delivering shares of\nCompany Stock (“Delivered Stock), or (d) with a combination of cash, check and Delivered Stock.\nFor purposes of the foregoing, Delivered Stock shall be valued at its Fair Market Value determined\nas of the business day immediately preceding the date of exercise of the Stock Option. No\nParticipant shall be under any obligation to exercise any Stock Option hereunder.\n

\n\n

6.07 Dissolution or Liquidation. Anything contained herein to the contrary\nnotwithstanding, on the effective date of any dissolution or liquidation of the Company, any\n

\n\n

- 5 -\n

\n\n\n\n

unexercised Stock Options shall be deemed cancelled, and the holder of any such unexercised Stock\nOptions shall be entitled to receive payment under Section 9.04.\n

\n\n

VII. RESTRICTED STOCK\n

\n\n\n

7.01 Administration. Shares of Restricted Stock may be issued either alone or in\naddition to other Awards granted under the Plan. The Committee shall determine the Eligible\nEmployees to whom and the time or times at which grants of Restricted Stock will be made, the\nnumber of shares to be granted, the time or times within which such Awards may be subject to\nforfeiture or otherwise restricted and any other terms and conditions of the Awards. By way of\nexample and not of limitation, the restrictions may provide that the shares will be forfeited if\nthe Participant’s employment with the Company or its Affiliates terminates before the expiration of\na stated term or if the Company fails to attain specified performance goals or such other factors\nor criteria as the Committee shall determine. Subject to Sections 7.02 and 7.03 hereof the\nprovisions of Restricted Stock Awards need not be the same with respect to each recipient.\n

\n\n

7.02 Certificates. Each individual receiving a Restricted Stock Award shall be issued\na certificate in respect of such shares of Restricted Stock which certificate shall be held in\ncustody by the Company until the restrictions thereon shall have lapsed. In addition, each\nindividual receiving a Restricted Stock Award shall, as a condition of any such Restricted Stock\nAward, have delivered to the Company a stock power, endorsed in blank, with respect to the Company\nStock covered by such Award. Each certificate in respect of shares of Restricted Stock shall be\nregistered in the name of the Participant to whom such Restricted Stock has been granted and shall\nbear an appropriate legend referring to the terms, conditions, and restrictions applicable to such\nAward, substantially in the following form:\n

\n\n\n

“The transferability of this certificate and the shares of stock represented hereby are\nsubject to the terms and conditions (including forfeiture) of the W. H. Brady Co. 1997\nOmnibus Incentive Stock Plan and a Restricted Stock Agreement. Copies of such Plan and\nAgreement are on file at the offices of W. H. Brady Co.”\n

\n\n

In addition each certificate in respect of shares of Restricted Stock may bear such legends and\nstatements as the Committee may deem advisable to assure compliance with the federal and state laws\nand regulations.\n

\n\n

7.03 Terms and Conditions. Shares of Restricted Stock shall be subject to the\nfollowing terms and conditions:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		Until the applicable restrictions lapse, the Participant shall\nnot be permitted to sell, assign, transfer, exchange, pledge, hypothecate or\notherwise dispose of or encumber shares of Restricted Stock.

	(b)		Unless and until a forfeiture of the Restricted Stock, the\nParticipant shall have, with respect to the shares of Restricted Stock, all of\nthe rights of a shareholder of the Company, including the right to vote the\nshares (if applicable) and the right to receive any cash dividends. Unless otherwise

- 6 -\n

\n\n\n

\n\n \n \n \n \n\n\n

determined by the Committee, cash dividends shall be automatically\npaid in cash and dividends payable in Company Stock shall be paid in the form\nof additional Restricted Stock.

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(c)		Except to the extent otherwise provided in the applicable\nRestricted Stock Agreement and (d) below, all shares still subject to\nrestriction shall be forfeited by the Participant upon termination of a\nParticipant’s employment for any reason.

	(d)		In the event of hardship or other special circumstances of a\nParticipant whose employment is involuntarily terminated (other than for\ncause), the Committee may waive in whole or in part any or all remaining\nrestrictions with respect to such Participant’s shares of Restricted Stock.

	(e)		If and when the applicable restrictions lapse, unlegended\ncertificates for such shares shall be delivered to the Participant.

	(f)		Each Award shall be confirmed by, and be subject to the terms\nof, a Restricted Stock Agreement.

\n\n

VIII. WITHHOLDING TAXES\n

\n\n\n

8.01 General Rule. Pursuant to applicable federal and state laws, the Company is or\nmay be required to collect withholding taxes upon the exercise of a Stock Option or the lapse of\nstock restrictions. The Company may require, as a condition to the exercise of a Stock Option or\nthe issuance of a stock certificate, that the Participant concurrently pay to the Company (either\nin cash or, at the request of Participant, but subject to such rules and regulations as the\nCommittee may adopt from time to time, in shares of Delivered Stock) the entire amount or a portion\nof any taxes which the Company is required to withhold by reason of such exercise or lapse of\nrestrictions, in such amount as the Committee or the Company in its discretion may determine. If\nand to the extent that withholding of any federal, state or local tax is required in connection\nwith the exercise of an Option or the lapse of stock restrictions, the Participant may, subject to\nsuch rules and regulations as the Company may adopt from time to time, elect to have the Company\nhold back from the shares to be issued upon the exercise of the Stock Option or the lapse of stock\nrestrictions, the number of shares of Company Stock having a Fair Market Value equal to such\nwithholding obligation.\n

\n\n

8.02 Special Rule for Insiders. Any such request or election (to satisfy a\nwithholding obligation using shares) by an individual who is subject to the provisions of Section\n16 of the Securities Exchange Act of 1934 shall be made in accordance with the rules and\nregulations of the Securities and Exchange Commission promulgated thereunder.\n

\n\n

IX. GENERAL\n

\n\n\n

9.01 Nontransferability. No Award granted under the Plan shall be transferable or\nassignable (or made subject to any pledge, lien, obligation or liability of a Participant) except by last will and testament or the laws of descent and distribution. Upon a transfer or assignment\n

\n\n

- 7 -\n

\n\n\n\n

\npursuant to a Participant’s last will and testament or the laws of descent and distribution, any\nStock Option must be transferred in accordance therewith. During the Participant’s lifetime, Stock\nOptions shall be exercisable only by the Participant or by the Participant’s guardian or legal\nrepresentative.\n

\n\n

9.02 General Restriction. Each Award shall be subject to the requirement that if at\nany time the Board or the Committee shall determine, in its discretion, that the listing,\nregistration, or qualification of securities upon any securities exchange or under any state or\nfederal law, or the consent or approval of any government regulatory body, is necessary or\ndesirable as a condition of, or in connection with, the granting of such Stock Option or the issue\nor purchase of securities thereunder, such Stock Option may not be exercised in whole or in part\nunless such listing, registration, qualification, consent or approval shall have been effected or\nobtained free of any conditions not acceptable to the Board or the Committee. The Committee shall\nhave the right to rely on an opinion of its counsel as to whether any such listing, registration,\nqualification, consent or approval shall have been effected or obtained.\n

\n\n

9.03 Effect of Termination of Employment, Disability or Death. Except as otherwise\nprovided by the Committee upon any Award, all rights under any Stock Option granted to a\nParticipant shall terminate and any Restricted Stock granted to a Participant shall be forfeited on\nthe date such Participant ceases to be employed by the Company or its subsidiaries, except that (a)\nif the Participant’s employment is terminated by the death of the Participant, any unexercised,\nunexpired Stock Options granted hereunder to the Participant shall be 100% vested and fully\nexercisable, in whole or in part, at any time within one year after the date of death, by the\nParticipant’s personal representative or by the person to whom the Stock Options are transferred\nunder the Participant’s last will and testament or the applicable laws of descent and distribution;\n(b) if the Participant’s employment is terminated as a result of the disability of the Participant\n(a disability means that the Participant is disabled as a result of sickness or injury, such that\nhe or she is unable to satisfactorily perform the material duties of his or her job, as determined\nby the Board of Directors, on the basis of medical evidence satisfactory to it), any unexercised,\nunexpired Stock Options granted hereunder to the Participant shall become 100% vested and fully\nexercisable, in whole or in part, at any time within one year after the date of disability; and (c)\nif the Participant’s employment is terminated for any reason other than the death or disability of\nthe Participant, any unexercised, unexpired Stock Options granted hereunder and exercisable as of\nthe date of such termination of employment shall be exercisable in whole or in part at any time\nwithin 90 days after such date of termination. If a Participant’s employment is terminated because\nof the Participant’s voluntary separation from the Company, or for cause (as determined by the\nCommittee in its sole discretion), all of the Participant’s unexercised Stock Options shall expire\nand all of the Participant’s Restricted Stock shall be forfeited. Notwithstanding the foregoing,\nno Stock Option shall be exercisable after the date of expiration of its term.\n

\n\n

9.04 Merger, Consolidation or Reorganization. In the event of (a) the merger or\nconsolidation of the Company with or into another corporation or corporations in which the Company\nis not the surviving corporation, (b) the adoption of any plan for the dissolution of the Company,\nor (c) the sale or exchange of all or substantially all the assets of the Company for cash or for\nshares of stock or other securities of another corporation, all then-unexercised Stock Options shall become fully exercisable, and all restrictions imposed on any then-Restricted Stock\n

\n\n

- 8 -\n

\n\n\n\n

shall\nterminate (such that any Restricted Stock shall become fully transferable) immediately prior to any\nsuch merger or consolidation in which the Company is not the surviving corporation.\nNotwithstanding the foregoing, in the case of then-unexercised Stock Options held by persons\nsubject to the reporting requirements of Section 16(a) of the 1934 Act, the Committee may elect to\ncancel any then-unexercised Stock Option. If any Stock Option is canceled, the Company, or the\ncorporation assuming the obligations of the Company hereunder, shall pay the Participant an\namount of cash or stock, as determined by the Committee, equal to the Fair Market Value per\nshare of the Company Stock immediately preceding such cancellation over the option price,\nmultiplied by the number of shares subject to such cancelled Stock Option.\n

\n\n

9.05 Expiration and Termination of the Plan. This Plan shall remain in effect until\nall of the Awards made under the Plan have been exercised, the restrictions thereon have lapsed or\nthe Awards have expired, terminated, or been canceled or forfeited. Notwithstanding the foregoing,\nno Awards shall be granted under the Plan, after that date which is ten years after the Plan is\napproved by the Board; or such earlier date as the Board determines in its sole discretion.\n

\n\n

9.06 Limitation on Awards. No individual Eligible Employee may be granted an Award or\nAwards covering more than 300,000 shares of Company Stock in any calendar year.\n

\n\n

9.07 Amendments. The Board may from time to time amend, modify, suspend or terminate\nthe Plan; provided, however, that no such action shall (a) impair without the Participant’s consent\nany Award theretofore granted under the Plan or deprive any Participant of any shares of Company\nStock which he may have acquired through or as a result of the Plan or (b) be made without\nshareholder approval where such approval would be required as a condition of compliance with Rule\n16b-3.\n

\n\n

9.08 Wisconsin Law. Except as otherwise required by applicable federal laws, the Plan\nshall be governed by, and construed in accordance with, the laws of the State of Wisconsin.\n

\n\n

9.09 Unfunded Plan. The Plan, insofar as it provides for Awards, shall be unfunded\nand the Company shall not be required to segregate any assets that may at any time be represented\nby Awards under this Plan. Any liability of the Company to any Person with respect to any Award\nunder this Plan shall be based solely upon any contractual obligations that may be created pursuant\nto this Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or\nother encumbrance on, any property of the Company.\n

\n\n

9.10 Rules of Construction. Headings are given to the articles and sections of this\nPlan solely as a convenience to facilitate reference. The reference to any statute, regulation, or\nother provision of law shall be construed to refer to any amendment to or successor of such\nprovision of law.\n

\n\n

9.11 Gender and Number. Except when otherwise required by the context, words in the\nmasculine gender shall include the feminine, the singular shall include the plural, and the plural\nthe singular.\n

\n\n\n

- 9 -\n

\n\n\n

Exhibit 10.3\n

\n\n\n

BRADY CORPORATION
\n2001 OMNIBUS INCENTIVE STOCK PLAN\n

\n\n\n

I. INTRODUCTION\n

\n\n\n

1.01 Purpose. This plan shall be known as the Brady Corporation 2001 Omnibus\nIncentive Stock Plan. The purpose of the Plan is to provide an incentive for employees of Brady\nCorporation and its Affiliates to improve corporate performance on a long-term basis, and to\nattract and retain employees by enabling employees to participate in the future successes of the\nCorporation, and by associating the long term interests of employees with those of the Corporation\nand its shareholders. It is intended that the Plan and its operation comply with the provisions of\nRule 16b-3 under the Securities Exchange Act of 1934 (or any successor rule). The Plan is intended\nto permit the grant of Nonqualified Stock Options, Incentive Stock Options, shares of Restricted\nStock and Restricted Stock Units. The proceeds received by the Corporation from the sale of\nCorporation Stock pursuant to the Plan shall be used for general corporate purposes.\n

\n\n

1.02 Effective Date. The effective date of the Plan shall be October 16, 2001,\nsubject to approval of the Plan by holders of a majority of the outstanding voting common stock of\nthe Corporation provided that such approval is given within 12 months of the effective date. Any\nAward granted prior to such shareholder approval shall be expressly conditioned upon shareholder\napproval of the Plan.\n

\n\n

II. PLAN DEFINITIONS\n

\n\n\n

For Plan purposes, except where the context clearly indicates otherwise, the following terms\nshall have the meanings set forth below:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n

	(a)		“Affiliates” means any “subsidiary corporation” or\n“parent corporation” as such terms are defined in Section 424 of the Code.

	(b)		“Agreement” means a written agreement (including any\namendment or supplement thereto) between the Corporation and a Participant\nspecifying the terms and conditions of an Award.

	(c)		“Award” shall mean the grant of any form of Stock\nOption, Restricted Stock or Restricted Stock Units.

	(d)		“Board” shall mean the Board of Directors of the\nCorporation.

	(e)		“Code” shall mean the Internal Revenue Code of 1986, as\namended from time to time.

	(f)		“Committee” shall mean the Committee described in\nSection 4.01.

- 1 -\n

\n\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(g)		“Corporation” shall mean Brady Corporation, a Wisconsin\ncorporation.

	(h)		“Corporation Stock” shall mean the Corporation’s Class\nA Non-Voting Common Stock, $.01 par value, and such other stock and securities\nas may be substituted therefor pursuant to Section 3.02.

	(i)		“Eligible Employee” shall mean any regular salaried\nemployee of the Corporation or an Affiliate, including an employee who is a\nmember of the Board, who satisfies the requirements of Section 5.01.

	(j)		“Exercise Period” shall mean the period of time\nprovided pursuant to Section 6.05 within which a Stock Option may be exercised.

	(k)		“Fair Market Value” on any date shall mean, with\nrespect to Corporation Stock, if the stock is then listed and traded on a\nregistered national securities exchange, or is quoted in the NASDAQ National\nMarket System, the average of the high and low sale prices recorded in\ncomposite transactions for such date or, if such date is not a business day or\nif no sales of Corporation Stock shall have been reported with respect to such\ndate, the next preceding business date with respect to which sales were\nreported. In the absence of reported sales or if the stock is not so listed or\nquoted, but is traded in the over-the-counter market, Fair Market Value shall\nbe the average of the closing bid and asked prices for such shares on the\nrelevant date.

	(l)		“Participant” means an Eligible Employee who has been\ngranted an Award under this Plan.

	(m)		“Performance Goals” means the performance goals\nestablished by the Committee prior to the grant of any Award of Restricted\nStock or Restricted Stock Units intended to qualify as “performance-based\ncompensation” under Section 162(m) of the Code and which are based on the\nattainment of goals relating to one or more of the following business criteria\nmeasured on an absolute basis or in terms of growth or reduction: net income\n(pre-tax or after-tax and with adjustments as stipulated), earnings per share,\nreturn on equity, return on assets, return on tangible book value, operating\nincome, earnings before depreciation, interest, taxes and amortization\n(EBDITA), loss ratio, expense ratio, increase in stock price, total shareholder\nreturn, economic value added and operating cash flow. The Committee may\nestablish other subjective or objective performance goals, including individual\ngoals, which it deems appropriate.

	(n)		“Person” means any individual or entity, and the heirs,\npersonal representatives, executors, administrators, legal representatives,\nsuccessors and assigns of such Person as the context may require.

- 2 -\n

\n\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(o)		“Plan” shall mean the Brady Corporation 2001 Omnibus\nIncentive Stock Plan, as set forth herein, as it may be amended from time to\ntime.

	(p)		“Restricted Stock” means shares of Corporation Stock\ngranted to a Participant under Article VII.

	(q)		“Restricted Stock Unit” means an Award granted to a\nParticipant under Article VIII.

	(r)		“Stock Option” means an option to purchase a stated\nnumber of shares of Corporation Stock at the price set forth in an Agreement.\nA Stock Option may be either a Nonqualified Stock Option or an Incentive Stock\nOption.

\n\n

III. SHARES SUBJECT TO AWARD\n

\n\n\n

3.01 Available Shares. Subject to adjustments under Section 3.02, the total number of\nshares of Corporation Stock authorized for issuance shall not exceed five hundred thousand\n(500,000) shares, provided that no individual Eligible Employee may be granted an Award or Awards\ncovering more than one hundred thousand (100,000) shares of Corporation Stock in any calendar year.\nThe shares authorized for issuance under the Plan may consist, in whole or in part, of authorized\nbut unissued Corporation Stock, or of treasury stock of the Corporation. Shares subject to and not\nissued under an Award that expires, terminates, is canceled or forfeited for any reason under the\nPlan shall again become available for the granting of Awards.\n

\n\n

IV. ADMINISTRATION\n

\n\n\n

4.01 Administration by the Committee. The Plan shall be administered by the\nCommittee. The Committee shall be a committee designated by the Board to administer the Plan and\nshall initially be the Compensation Committee of the Board. The Committee shall be constituted to\npermit the Plan to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of\n1934 (or any successor rule) and Section 162(m) of the Code. A majority of the members of the\nCommittee shall constitute a quorum. The approval of such a quorum, expressed by a majority vote\nat a meeting held either in person or by conference telephone call, or the unanimous consent of all\nmembers in writing without a meeting, shall constitute the action of the Committee and shall be\nvalid and effective for all purposes of the Plan.\n

\n\n

- 3 -\n

\n\n\n\n

modify,\nextend or renew any Award theretofore granted. The Committee shall also have authority to\ninterpret the Plan, and the decision of the Committee on any questions concerning the\ninterpretation of the Plan shall be final and conclusive. The express grant in the Plan of any\nspecific power to the Committee shall not be construed as limiting any power or authority of\nthe Committee. The Committee shall not incur any liability for any action taken in good faith with\nrespect to the Plan or any Award.\n

\n\n

Subject to the provisions of the Plan, the Committee shall have full and final authority to:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		designate the Eligible Employees to whom Awards shall be\ngranted;

	(b)		grant Awards in such form and amount as the Committee shall\ndetermine;

	(c)		impose such limitations, restrictions and conditions upon any\nsuch Award as the Committee shall deem appropriate, including conditions (in\naddition to those contained in this Plan) on the exercisability of all or any\nportion of a Stock Option or on the transferability or forfeitability of\nRestricted Stock;

	(d)		prescribe the form of Agreement with respect to each Award;

	(e)		waive in whole or in part any limitations, restrictions or\nconditions imposed upon any such Award as the Committee shall deem appropriate\n(including accelerating the time at which any Stock Option may be exercised or\nthe time at which Restricted Stock may become transferable or nonforfeitable);\nand

	(f)		determine the extent to which leaves of absence for\ngovernmental or military service, illness, temporary disability and the like\nshall not be deemed interruptions of continuous employment.

\n\n

V. PARTICIPATION\n

\n\n\n

5.01 Eligibility. Any employee of the Corporation and its Affiliates (including\nofficers and employees who may be members of the Board) who, in the sole opinion of the Committee,\nhas contributed or can be expected to contribute to the profits, growth and success of the\nCorporation shall be eligible for Awards under the Plan. A member of the Committee or any person\nwho is expected to become a member within one year of any Award shall not be an Eligible Employee\nif his or her status as an Eligible Employee would prevent the Committee from being “disinterested”\nunder Rule 16b-3 under the Securities Exchange Act of 1934. From among all such Eligible\nEmployees, the Committee shall determine from time to time those Eligible Employees to whom Awards\nshall be granted. No Eligible Employee shall have any right whatsoever to receive an Award unless\nso determined by the Committee.\n

\n\n

5.02 No Employment Rights. The Plan shall not be construed as conferring any rights\nupon any person for a continuation of employment, nor shall it interfere with the rights of the\n

\n\n

- 4 -\n

\n\n\n\n

Corporation or any Affiliates to terminate the employment of any person or to take any other action\naffecting such person.\n

\n\n

VI. STOCK OPTIONS\n

\n\n\n

6.01 Stock Options; General. Stock Options granted under the Plan shall be in the\nform of Nonqualified Stock Options (“NSOs”), Incentive Stock Options (“ISOs”) or a combination\nthereof. Each Stock Option granted under the Plan shall be evidenced by an Agreement which shall\ncontain the terms and conditions required by this Article VI, and such other terms and conditions,\nnot inconsistent herewith, as the Committee may deem appropriate in each case. A Stock Option\ngranted under the Plan shall not be treated as an Incentive Stock Option unless the Stock Option\nAgreement specifically designates the option as an Incentive Stock Option.\n

\n\n

6.03 Option Price. The price at which each share of Corporation Stock covered by a\nStock Option may be purchased shall be not less than 100% of the Fair Market Value of such stock on\nthe date on which the option is granted. The option price shall be subject to adjustment as\nprovided in Section 3.02 hereof.\n

\n\n

6.04 Date Stock Option Granted. For purposes of the Plan, a Stock Option shall be\nconsidered as having been granted on the date on which the Committee authorized the grant of the\nStock Option except where the Committee has designated a later date, in which event the later date\nshall constitute the date of grant of the Stock Option; provided, however, that notice of the grant\nof the Stock Option shall be given to the Participant within a reasonable time.\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n

	(a)		no Stock Option granted under this Plan to any Person subject\nto the reporting requirements of Section 16(b) of the Securities and Exchange\nAct of 1934 may be exercised until at least six months from the later of (i)\nthe date of grant or (ii) shareholder approval of the Plan, and

	(b)		no Stock Option shall be exercisable after the expiration of\nten (10) years from the date the Stock Option is granted. Each Agreement with\nrespect to a Stock Option shall state the period or periods of time within\nwhich the Stock Option may be exercised by the Participant, in whole or in\npart.

- 5 -\n

\n\n\n

\n\n\n\n

Subject to the foregoing, unless the Agreement with respect to a Stock Option expressly provides\notherwise, a Stock Option shall be exercisable in accordance with the following schedule:\n

\n\n

\n\n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n \n \n \n\n\n


Years After
Date of Grant		Percentage of Shares

Less than 1\n		0%

1 but less than 2\n		33-1/3%

2 but less than 3\n		66-2/3%

3 or more\n		100%

\n\n

6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be exercised\nin whole or in part from time to time as specified in the Agreements provided, however, that each\nParticipant may exercise a Stock Option in whole or in part by giving written notice of the\nexercise to the Corporation, specifying the number of shares to be purchased by payment in full of\nthe purchase price therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the\napproval of the Committee, or if the applicable Agreement so provides, by delivering shares of\nCorporation Stock (“Delivered Stock), or (d) with a combination of cash, check and Delivered Stock.\nFor purposes of the foregoing, Delivered Stock shall be valued at its Fair Market Value determined\nas of the business day immediately preceding the date of exercise of the Stock Option. No\nParticipant shall be under any obligation to exercise any Stock Option hereunder.\n

\n\n

6.07 Dissolution or Liquidation. Anything contained herein to the contrary\nnotwithstanding, on the effective date of any dissolution or liquidation of the Corporation, any\nunexercised Stock Options shall be deemed cancelled, and the holder of any such unexercised Stock\nOptions shall be entitled to receive payment under Section 10.04.\n

\n\n

6.08 Special Rules for Incentive Stock Options. For so long as Section 422 ( or any\nsuccessor provision) of the Code so provides:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n

	(a)		The aggregate Fair Market Value of Corporation Stock\n(determined as of the date the stock option is granted) with respect to which\nISOs are exercisable for the first time during a calendar year may not exceed\n$100,000. To the extent that the value of the stock subject to options exceeds\nthat amount, the excess shall be considered to be NSOs, with the determination\nto be made in the order the options are granted.

	(b)		Employees who own, directly or indirectly, within the meaning of Code\nSection 425(d), more than 10% of the voting power of all classes of stock of\nthe Corporation or any parent or subsidiary corporation shall not be eligible\nto receive an ISO hereunder unless the purchase price per share under such\noption is at least 110% of the Fair Market Value of the stock

- 6 -\n

\n\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

			subject to the\noption and such option by its terms is not exercisable after the expiration of\nfive (5) years from the date such option is granted

	(c)		To obtain favorable ISO tax treatment, the option must be\nexercised while the Participant is an employee, or within three months after\nthe Participant’s termination as an employee; provided that, in the case of\ntermination on account of disability (as defined in Section 22(e)(3) of the\nCode), the exercise period may be extended to one year; and further provided\nthat the employment requirement is waived in the case of the participant’s\ndeath.

\n\n

VII. RESTRICTED STOCK\n

\n\n\n

7.01 Administration. Shares of Restricted Stock may be issued either alone or in\naddition to other Awards granted under the Plan. The Committee shall determine the Eligible\nEmployees to whom and the time or times at which grants of Restricted Stock will be made, the\nnumber of shares to be granted, the time or times within which such Awards may be subject to\nforfeiture or otherwise restricted and any other terms and conditions of the Awards. The\nrestrictions may be based upon specified Performance Goals, the Participant’s continued employment\nwith the Corporation or its Affiliates or such other factors or criteria as the Committee shall\ndetermine. Subject to Sections 7.02 and 7.03 hereof the provisions of Restricted Stock Awards need\nnot be the same with respect to each recipient.\n

\n\n

7.02 Certificates. Each individual receiving a Restricted Stock Award shall be issued\na certificate in respect of such shares of Restricted Stock which certificate shall be held in\ncustody by the Corporation until the restrictions thereon shall have lapsed. In addition, each\nindividual receiving a Restricted Stock Award shall, as a condition of any such Restricted Stock\nAward, have delivered to the Corporation a stock power, endorsed in blank, with respect to the\nCorporation Stock covered by such Award. Each certificate in respect of shares of Restricted Stock\nshall be registered in the name of the Participant to whom such Restricted Stock has been granted\nand shall bear an appropriate legend referring to the terms, conditions, and restrictions\napplicable to such Award, substantially in the following form:\n

\n\n\n

“The transferability of this certificate and the shares of stock represented hereby are\nsubject to the terms and conditions (including forfeiture) of the Brady Corporation 2001\nOmnibus Incentive Stock Plan and a Restricted Stock Agreement. Copies of such Plan and\nAgreement are on file at the offices of the Brady Corporation.”\n

\n\n\n

7.03 Terms and Conditions. Shares of Restricted Stock shall be subject to the\nfollowing terms and conditions:\n

\n\n

- 7 -\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		Until the applicable restrictions lapse, the Participant shall\nnot be permitted to sell, assign, transfer, exchange, pledge, hypothecate or\notherwise dispose of or encumber shares of Restricted Stock.

	(b)		Unless and until a forfeiture of the Restricted Stock, the\nParticipant shall have, with respect to the shares of Restricted Stock, all of\nthe rights of a shareholder of the Corporation, including the right\nto vote the shares (if applicable) and the right to receive any cash dividends. Unless\notherwise determined by the Committee, cash dividends shall be automatically\npaid in cash and dividends payable in Corporation Stock shall be paid in the\nform of additional Restricted Stock.

	(c)		Except to the extent otherwise provided in the applicable\nRestricted Stock Agreement and (d) below, all shares still subject to\nrestriction shall be forfeited by the Participant upon termination of a\nParticipant’s employment for any reason.

	(d)		In the event of hardship or other special circumstances of a\nParticipant whose employment is involuntarily terminated (other than for\ncause), the Committee may waive in whole or in part any or all remaining\nrestrictions with respect to such Participant’s shares of Restricted Stock.

	(e)		If and when the applicable restrictions lapse, unlegended\ncertificates for such shares shall be delivered to the Participant.

	(f)		Each Award shall be confirmed by, and be subject to the terms\nof, a Restricted Stock Agreement.

\n\n

VIII. RESTRICTED STOCK UNITS\n

\n\n\n

8.01 Administration. Restricted Stock Units may be issued either alone or in addition\nto other Awards granted under the Plan. The Committee shall determine the Eligible Employees to\nwhom and the time or times at which grants of Restricted Stock Units will be made, the number of\nunits to be granted, the time or times within which such Awards may be subject to forfeiture or\notherwise restricted and any other terms and conditions of the Awards. The restrictions may be\nbased upon specified Performance Goals, the Participant’s continued employment with the Corporation\nor its Affiliates or such other factors or criteria as the Committee shall determine. The\nprovisions of Restricted Stock Awards need not be the same with respect to each recipient.\n

\n\n

8.02 Form and Timing of Payment of Restricted Stock Units. Timing of payment of\nearned Restricted Stock Units shall be determined by the Committee at its sole discretion. The\nCommittee, in its sole discretion, may pay earned Restricted Stock Units in the form of cash or in\nshares of Corporation Stock (or in a combination thereof), which have an aggregate Fair Market\nValue equal to the value of the earned Restricted Stock Units.\n

\n\n

- 8 -\n

\n\n

IX. WITHHOLDING TAXES\n

\n\n\n

9.01 General Rule. Pursuant to applicable federal and state laws, the Corporation is\nor may be required to collect withholding taxes upon the exercise of a Stock Option or the lapse of\nstock restrictions. The Corporation may require, as a condition to the exercise of a Stock Option\nor the issuance of a stock certificate, that the Participant concurrently pay to the Corporation\n(either in cash or, at the request of Participant, but subject to such rules and regulations\nas the Committee may adopt from time to time, in shares of Delivered Stock) the entire amount or a\nportion of any taxes which the Corporation is required to withhold by reason of such exercise or\nlapse of restrictions, in such amount as the Committee or the Corporation in its discretion may\ndetermine. If and to the extent that withholding of any federal, state or local tax is required in\nconnection with the exercise of an Option or the lapse of stock restrictions, the Participant may,\nsubject to such rules and regulations as the Corporation may adopt from time to time, elect to have\nthe Corporation hold back from the shares to be issued upon the exercise of the Stock Option or the\nlapse of stock restrictions, the number of shares of Corporation Stock having a Fair Market Value\nequal to such withholding obligation.\n

\n\n

9.02 Special Rule for Insiders. Any such request or election (to satisfy a\nwithholding obligation using shares) by an individual who is subject to the provisions of Section\n16 of the Securities Exchange Act of 1934 (an “Insider”) shall be made in accordance with the rules\nand regulations of the Securities and Exchange Commission promulgated thereunder.\n

\n\n

X. GENERAL\n

\n\n\n

10.01 Nontransferability. No Award granted under the Plan shall be transferable or\nassignable (or made subject to any pledge, lien, obligation or liability of a Participant) except\nby last will and testament or the laws of descent and distribution. Upon a transfer or assignment\npursuant to a Participant’s last will and testament or the laws of descent and distribution, any\nStock Option must be transferred in accordance therewith. During the Participant’s lifetime, Stock\nOptions shall be exercisable only by the Participant or by the Participant’s guardian or legal\nrepresentative. Notwithstanding the foregoing, NSOs may be transferred by a Participant to the\nParticipant’s spouse, children or grandchildren or to a trust for the benefit of such spouse,\nchildren or grandchildren; provided that the terms of any such transfer prohibit the resale of\nshares acquired upon exercise of the option at a time during which the transferor would not be\npermitted to sell such shares under the Corporation’s policy on trading by insiders.\n

\n\n

10.02 General Restriction. Each Award shall be subject to the requirement that if at\nany time the Board or the Committee shall determine, in its discretion, that the listing,\nregistration, or qualification of securities upon any securities exchange or under any state or\nfederal law, or the consent or approval of any government regulatory body, is necessary or\ndesirable as a condition of, or in connection with, the granting of such Stock Option or the issue\nor purchase of securities thereunder, such Stock Option may not be exercised in whole or in part\nunless such listing, registration, qualification, consent or approval shall have been effected or\nobtained free of any conditions not acceptable to the Board or the Committee. The Committee shall\nhave the right to rely on an opinion of its counsel as to whether any such listing, registration,\nqualification, consent or approval shall have been effected or obtained.\n

\n\n

- 9 -\n

\n\n

10.03 Effect of Termination of Employment, Disability or Death. Except as otherwise\nprovided by the Committee upon any Award, all rights under any Stock Option granted to a\nParticipant shall terminate and any Restricted Stock or Restricted Stock Unit granted to a\nParticipant shall be forfeited on the date such Participant ceases to be employed by the\nCorporation or its subsidiaries, except that\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		if the Participant’s employment is terminated by the death of\nthe Participant, any unexercised, unexpired Stock Options granted hereunder to\nthe Participant shall be 100% vested and fully exercisable, in whole or in\npart, at any time within one year after the date of death, by the Participant’s\npersonal representative or by the person to whom the Stock Options are\ntransferred under the Participant’s last will and testament or the applicable\nlaws of descent and distribution;

	(b)		if the Participant dies within 90 days after termination of\nemployment by the Corporation or its Affiliates, other than for cause, any\nunexercised, unexpired Stock Options granted hereunder to the Participant and\nexercisable as of the date of such termination of employment shall be\nexercisable, in whole or in part, at any time within one year after the date of\ndeath, by the Participant’s personal representative or by the person to whom\nthe Stock Options are transferred under the Participant’s last will and\ntestament or the applicable laws of descent and distribution;

	(c)		if the Participant’s employment is terminated as a result of\nthe disability of the Participant (a disability means that the Participant is\ndisabled as a result of sickness or injury, such that he or she is unable to\nsatisfactorily perform the material duties of his or her job, as determined by\nthe Board of Directors, on the basis of medical evidence satisfactory to it),\nany unexercised, unexpired Stock Options granted hereunder to the Participant\nshall become 100% vested and fully exercisable, in whole or in part, at any\ntime within one year after the date of disability;

	(d)		if the Participant’s employment is terminated as a result of\nthe Participant’s retirement (after age 55 with ten years of employment with\nthe Corporation or an Affiliate or after age 65), any unexercised, unexpired\nStock Options granted hereunder to the Participant and exercisable as of the\ndate of such retirement may be exercised by the Participant at any time within\none year after the date of retirement; and

	(e)		if the Participant’s employment is terminated by the Company or\nan Affiliate for any reason other than the Participant’s death, disability or\nretirement of the Participant, any unexercised, unexpired Stock Options granted\nhereunder and exercisable as of the date of such termination of employment\nshall be exercisable in whole or in part at any time within 90 days after such\ndate of termination.

- 10 -\n

\n\n\n

\n\n\n\n

If a Participant’s employment is terminated because of the Participant’s voluntary separation from\nthe Corporation, or for cause (as determined by the Committee in its sole discretion), all of the\nParticipant’s unexercised Stock Options shall expire and all of the Participant’s Restricted Stock\nand Restricted Stock Units shall be forfeited. Notwithstanding the foregoing, no Stock Option\nshall be exercisable after the date of expiration of its term.\n

\n\n\n

10.04 Merger, Consolidation or Reorganization. In the event of (a) the merger or\nconsolidation of the Corporation with or into another corporation or corporations in which the\nCorporation is not the surviving corporation, (b) the adoption of any plan for the dissolution of\nthe Corporation, or (c) the sale or exchange of all or substantially all the assets of the\nCorporation for cash or for shares of stock or other securities of another corporation, all\nthen-unexercised Stock Options shall become fully exercisable, and all restrictions imposed on any\nthen-Restricted Stock shall terminate (such that any Restricted Stock shall become fully\ntransferable) immediately prior to any such merger or consolidation in which the Corporation is not\nthe surviving corporation. Notwithstanding the foregoing, in the case of then-unexercised Stock\nOptions held by persons subject to the reporting requirements of Section 16(a) of the 1934 Act, the\nCommittee may elect to cancel any then-unexercised Stock Option. If any Stock Option is canceled,\nthe Corporation, or the corporation assuming the obligations of the Corporation hereunder, shall\npay the Participant an amount of cash or stock, as determined by the Committee, equal to the Fair\nMarket Value per share of the Corporation Stock immediately preceding such cancellation over the\noption price, multiplied by the number of shares subject to such cancelled Stock Option.\n

\n\n

10.05 Expiration and Termination of the Plan. This Plan shall remain in effect until\nall of the Awards made under the Plan have been exercised, the restrictions thereon have lapsed or\nthe Awards have expired, terminated, or been canceled or forfeited. Notwithstanding the foregoing,\nno Awards shall be granted under the Plan, after that date which is ten years after the Plan is\napproved by the Board; or such earlier date as the Board determines in its sole discretion.\n

\n\n

10.06 Amendments. The Board may from time to time amend, modify, suspend or terminate\nthe Plan; provided, however, that no such action shall (a) impair without the Participant’s consent\nany Award theretofore granted under the Plan or deprive any Participant of any shares of\nCorporation Stock which he may have acquired through or as a result of the Plan or (b) be made\nwithout shareholder approval where such approval would be required as a condition of compliance\nwith Rule 16b-3.\n

\n\n

10.07 Wisconsin Law. Except as otherwise required by applicable federal laws, the\nPlan shall be governed by, and construed in accordance with, the laws of the State of Wisconsin.\n

\n\n

10.08 Unfunded Plan. The Plan, insofar as it provides for Awards, shall be unfunded\nand the Corporation shall not be required to segregate any assets that may at any time be\nrepresented by Awards under this Plan. Any liability of the Corporation to any Person with respect\nto any Award under this Plan shall be based solely upon any contractual obligations that may be\ncreated pursuant to this Plan. No such obligation of the Corporation shall be deemed to be secured\nby any pledge of, or other encumbrance on, any property of the Corporation.\n

\n\n

- 11 -\n

\n\n\n

Exhibit 10.4\n

\n\n\n

BRADY CORPORATION
\n2003 OMNIBUS INCENTIVE STOCK PLAN\n

\n\n\n

I. INTRODUCTION\n

\n\n\n

1.01 Purpose. This plan shall be known as the Brady Corporation 2003 Omnibus\nIncentive Stock Plan. The purpose of the Plan is to provide an incentive for employees of Brady\nCorporation and its Affiliates to improve corporate performance on a long-term basis, and to\nattract and retain employees by enabling employees to participate in the future successes of the\nCorporation, and by associating the long term interests of employees with those of the Corporation\nand its shareholders. It is intended that the Plan and its operation comply with the provisions of\nRule 16b-3 under the Securities Exchange Act of 1934 (or any successor rule). The Plan is intended\nto permit the grant of Nonqualified Stock Options, Incentive Stock Options, shares of Restricted\nStock and Restricted Stock Units. The proceeds received by the Corporation from the sale of\nCorporation Stock pursuant to the Plan shall be used for general corporate purposes.\n

\n\n

1.02 Effective Date. The effective date of the Plan shall be July 22, 2003, subject\nto approval of the Plan by holders of a majority of the outstanding voting common stock of the\nCorporation provided that such approval is given within 12 months of the effective date. Any Award\ngranted prior to such shareholder approval shall be expressly conditioned upon shareholder approval\nof the Plan.\n

\n\n

1.03 Effect on 2001 Plan. If the Plan is approved, no further awards or grants will be\nmade under the Brady Corporation 2001 Omnibus Incentive Stock Plan (the “2001 Plan”). Awards under\nthe 2001 Plan will remain in effect until they have been exercised or have expired.\n

\n\n

II. PLAN DEFINITIONS\n

\n\n\n

For Plan purposes, except where the context clearly indicates otherwise, the following terms\nshall have the meanings set forth below:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		“Affiliates” means any “subsidiary corporation” or\n“parent corporation” as such terms are defined in Section 424 of the Code.

	(b)		“Agreement” means a written agreement (including any\namendment or supplement thereto) between the Corporation and a Participant\nspecifying the terms and conditions of an Award.

	(c)		“Award” shall mean the grant of any form of Stock\nOption, Restricted Stock or Restricted Stock Units.

	(d)		“Board” shall mean the Board of Directors of the\nCorporation.

	(e)		“Code” shall mean the Internal Revenue Code of 1986, as\namended from time to time.

- 1 -\n

\n\n\n

\n\n\n\n

\n\n

	(f)		“Committee” shall mean the Committee described in\nSection 4.01.

	(g)		“Corporation” shall mean Brady Corporation, a Wisconsin\ncorporation.

	(h)		“Corporation Stock” shall mean the Corporation’s Class\nA Non-Voting Common Stock, $.01 par value, and such other stock and securities\nas may be substituted therefor pursuant to Section 3.02.

	(i)		“Eligible Employee” shall mean any regular salaried\nemployee of the Corporation or an Affiliate, including an employee who is a\nmember of the Board, who satisfies the requirements of Section 5.01.

	(j)		“Exercise Period” shall mean the period of time\nprovided pursuant to Section 6.05 within which a Stock Option may be exercised.

	(k)		“Fair Market Value” on any date shall mean, with\nrespect to Corporation Stock, if the stock is then listed and traded on a\nregistered national securities exchange, or is quoted in the NASDAQ National\nMarket System, the average of the high and low sale prices recorded in\ncomposite transactions for such date or, if such date is not a business day or\nif no sales of Corporation Stock shall have been reported with respect to such\ndate, the next preceding business date with respect to which sales were\nreported. In the absence of reported sales or if the stock is not so listed or\nquoted, but is traded in the over-the-counter market, Fair Market Value shall\nbe the average of the closing bid and asked prices for such shares on the\nrelevant date.

	(l)		“Participant” means an Eligible Employee who has been\ngranted an Award under this Plan.

	(m)		“Performance Goals” means the performance goals\nestablished by the Committee prior to the grant of any Award of Stock Options,\nRestricted Stock or Restricted Stock Units intended to qualify as\n“performance-based compensation” under Section 162(m) of the Code. Performance\nGoals may be established at the Company or business unit level and may be based\nupon the attainment of goals relating to one or more of the following business\ncriteria measured on an absolute basis or in terms of growth or reduction:\nrevenue, expenses, net income (pre-tax or after-tax and with adjustments as\nstipulated), earnings per share, return on equity, return on assets, return on\ntangible book value, operating income, earnings before depreciation, interest,\ntaxes and amortization (EBDITA), loss ratio, expense ratio, increase in stock\nprice, total shareholder return, economic value added and operating cash flow.\nThe Committee may establish other subjective or objective performance goals,\nincluding individual goals, which it deems appropriate.

	(n)		“Person” means any individual or entity, and the heirs,\npersonal representatives, executors, administrators, legal representatives,\nsuccessors and assigns of such Person as the context may require.

- 2 -\n

\n\n\n

\n\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(o)		“Plan” shall mean the Brady Corporation 2003\nOmnibus Incentive Stock Plan, as set forth herein, as it may be amended from\ntime to time.

	(p)		“Restricted Stock” means shares of Corporation Stock\ngranted to a Participant under Article VII.

	(q)		“Restricted Stock Unit” means an Award granted to a\nParticipant under Article VIII.

	(r)		“Stock Option” means an option to purchase a stated\nnumber of shares of Corporation Stock at the price set forth in an Agreement.\nA Stock Option may be either a Nonqualified Stock Option or an Incentive Stock\nOption.

\n\n

III. SHARES SUBJECT TO AWARD\n

\n\n\n

3.01 Available Shares. Subject to adjustments under Section 3.02, the total number of\nshares of Corporation Stock authorized for issuance shall not exceed seven hundred fifty thousand\n(750,000) shares, provided that no individual Eligible Employee may be granted an Award or Awards\nunder the Plan covering more than one hundred thousand (100,000) shares of Corporation Stock in any\ncalendar year (determined without regard to grants under any other plan or program). The shares\nauthorized for issuance under the Plan may consist, in whole or in part, of authorized but unissued\nCorporation Stock, or of treasury stock of the Corporation. Shares subject to and not issued under\nan Award that expires, terminates, is canceled or forfeited for any reason under the Plan shall\nagain become available for the granting of Awards.\n

\n\n

IV. ADMINISTRATION\n

\n\n\n

4.01 Administration by the Committee. The Plan shall be administered by the\nCommittee. The Committee shall be a committee designated by the Board to administer the Plan and\nshall initially be the Compensation Committee of the Board. The Committee shall be constituted to\npermit the Plan to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of\n1934 (or any successor rule) and Section 162(m) of the Code. A majority of the members of the\nCommittee shall constitute a quorum. The approval of such a quorum, expressed by a majority vote\nat a meeting held either in person or by conference telephone call, or the unanimous consent of all\nmembers in writing without a meeting, shall constitute the action of the Committee and shall be\nvalid and effective for all purposes of the Plan.\n

\n\n

- 3 -\n

\n\n\n\n

authority to interpret the Plan, and the decision of the Committee on any questions concerning\nthe interpretation of the Plan shall be final and conclusive. The express grant in the Plan of any\nspecific power to the Committee shall not be construed as limiting any power or authority of the\nCommittee. The Committee shall not incur any liability for any action taken in good faith with\nrespect to the Plan or any Award.\n

\n\n

Subject to the provisions of the Plan, the Committee shall have full and final authority to:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		designate the Eligible Employees to whom Awards shall be\ngranted;

	(b)		grant Awards in such form and amount as the Committee shall\ndetermine;

	(c)		impose such limitations, restrictions and conditions upon any\nsuch Award as the Committee shall deem appropriate, including conditions (in\naddition to those contained in this Plan) (i) on the exercisability of all or\nany portion of a Stock Option, (ii) on the transferability or forfeitability of\nRestricted Stock or (iii) requiring an Eligible Employee to retain all or a\nportion of the Corporation Stock for a period of time following the exercise of\na Stock Option, the vesting of Restricted Stock or the payment of Restricted\nStock Units;

	(d)		prescribe the form of Agreement with respect to each Award;

	(e)		waive in whole or in part any limitations, restrictions or\nconditions imposed upon any such Award as the Committee shall deem appropriate\n(including accelerating the time at which any Stock Option may be exercised or\nthe time at which Restricted Stock may become transferable or nonforfeitable);

	(f)		make adjustments in the terms and conditions of a Performance\nGoal in recognition of unusual or nonrecurring events affecting the Company or\nthe financial statements of the Company or of changes in applicable laws,\nregulations, or accounting principles, whenever the Committee determines that\nsuch adjustments are appropriate in order to prevent dilution or enlargement of\nthe benefits or potential benefits intended to be made available under the\nPlan, provided that no such adjustment shall be authorized to the extent that\nsuch adjustment would be inconsistent with the Plan’s or any Performance Award\nmeeting the requirements of Section 162(m) of the Code; and

	(g)		determine the extent to which leaves of absence for\ngovernmental or military service, illness, temporary disability and the like\nshall not be deemed interruptions of continuous employment.

\n\n

V. PARTICIPATION\n

\n\n\n

\n\n

- 4 -\n

\n\n\n\n

Corporation shall be eligible for Awards under the Plan. A member of the Committee or any\nperson who is expected to become a member within one year of any Award shall not be an Eligible\nEmployee if his or her status as an Eligible Employee would prevent the Committee from being\n“disinterested” under Rule 16b-3 under the Securities Exchange Act of 1934. From among all such\nEligible Employees, the Committee shall determine from time to time those Eligible Employees to\nwhom Awards shall be granted. No Eligible Employee shall have any right whatsoever to receive an\nAward unless so determined by the Committee.\n

\n\n

5.02 No Employment Rights. The Plan shall not be construed as conferring any rights\nupon any person for a continuation of employment, nor shall it interfere with the rights of the\nCorporation or any Affiliates to terminate the employment of any person or to take any other action\naffecting such person.\n

\n\n

VI. STOCK OPTIONS\n

\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n

(a)

no Stock Option granted under this Plan to any Person subject\nto the reporting requirements of Section 16(b) of the Securities and Exchange\nAct of 1934 may be exercised until at least six months from the later of (i)\nthe date of grant or (ii) shareholder approval of the Plan, and

- 5 -\n

\n\n\n

\n\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n

(b)

no Stock Option shall be exercisable after the expiration of\nten (10) years from the date the Stock Option is granted. Each Agreement with\nrespect to a Stock Option shall state the period or periods of time within\nwhich the Stock Option may be exercised by the Participant, in whole or in\npart.

Subject to the foregoing, unless the Agreement with respect to a Stock Option expressly provides\notherwise, a Stock Option shall be exercisable in accordance with the following schedule:\n

\n\n


Years After
Date of Grant	Percentage of Shares

Less than 1\n		0	%

1 but less than 2\n		33-1/3	%

2 but less than 3\n		66-2/3	%

3 or more\n		100	%

\n\n

6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be exercised\nin whole or in part from time to time as specified in the Agreements provided, however, that each\nParticipant may exercise a Stock Option in whole or in part by giving written notice of the\nexercise to the Corporation, specifying the number of shares to be purchased by payment in full of\nthe purchase price therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the\napproval of the Committee, or if the applicable Agreement so provides, by delivering shares of\nCorporation Stock (“Delivered Stock), or (d) with a combination of cash, check and Delivered Stock.\nFor purposes of the foregoing, Delivered Stock shall be valued at its Fair Market Value determined\nas of the business day immediately preceding the date of exercise of the Stock Option. No\nParticipant shall be under any obligation to exercise any Stock Option hereunder.\n

\n\n

6.08 Special Rules for Incentive Stock Options. For so long as Section 422 ( or any\nsuccessor provision) of the Code so provides:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		The aggregate Fair Market Value of Corporation Stock\n(determined as of the date the stock option is granted) with respect to which\nISOs are exercisable for the first time during a calendar year may not exceed\n$100,000. To the extent that the value of the stock subject to options exceeds\nthat amount, the excess shall be considered to be NSOs, with the determination\nto be made in the order the options are granted.

	(b)		Employees who own, directly or indirectly, within the meaning of Code\nSection 425(d), more than 10% of the voting power of all classes of stock of\nthe Corporation or any parent or subsidiary corporation shall not be

- 6 -\n

\n\n\n

\n\n \n \n \n \n\n\n

eligible to receive an ISO hereunder unless the purchase price per share\nunder such option is at least 110% of the Fair Market Value of the stock\nsubject to the option and such option by its terms is not exercisable after\nthe expiration of five (5) years from the date such option is granted

\n\n

\n\n\n\n \n \n \n \n\n\n

(c)

To obtain favorable ISO tax treatment, the option must be\nexercised while the Participant is an employee, or within three months after\nthe Participant’s termination as an employee; provided that, in the case of\ntermination on account of disability (as defined in Section 22(e)(3) of the\nCode), the exercise period may be extended to one year; and further provided\nthat the employment requirement is waived in the case of the participant’s\ndeath.

\n\n

VII. RESTRICTED STOCK\n

\n\n\n

7.01 Administration. Shares of Restricted Stock may be issued either alone or in\naddition to other Awards granted under the Plan. The Committee shall determine the Eligible\nEmployees to whom and the time or times at which grants of Restricted Stock will be made, the\nnumber of shares to be granted, the time or times within which such Awards may be subject to\nforfeiture or otherwise restricted and any other terms and conditions of the Awards. The\nrestrictions may be based upon specified Performance Goals, the Participant’s continued employment\nwith the Corporation or its Affiliates or such other factors or criteria as the Committee shall\ndetermine. Subject to Sections 7.02 and 7.03 hereof the provisions of Restricted Stock Awards need\nnot be the same with respect to each recipient.\n

\n\n

7.02 Certificates. Each individual receiving a Restricted Stock Award shall be issued\na certificate in respect of such shares of Restricted Stock which certificate shall be held in\ncustody by the Corporation until the restrictions thereon shall have lapsed. In addition, each\nindividual receiving a Restricted Stock Award shall, as a condition of any such Restricted Stock\nAward, have delivered to the Corporation a stock power, endorsed in blank, with respect to the\nCorporation Stock covered by such Award. Each certificate in respect of shares of Restricted Stock\nshall be registered in the name of the Participant to whom such Restricted Stock has been granted\nand shall bear an appropriate legend referring to the terms, conditions, and restrictions\napplicable to such Award, substantially in the following form:\n

\n\n\n

“The transferability of this certificate and the shares of stock represented hereby are\nsubject to the terms and conditions (including forfeiture) of the Brady Corporation 2003\nOmnibus Incentive Stock Plan and a Restricted Stock Agreement. Copies of such Plan and\nAgreement are on file at the offices of the Brady Corporation.”\n

\n\n\n

7.03 Terms and Conditions. Shares of Restricted Stock shall be subject to the\nfollowing terms and conditions:\n

\n\n

- 7 -\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		Until the applicable restrictions lapse, the Participant shall\nnot be permitted to sell, assign, transfer, exchange, pledge, hypothecate or\notherwise dispose of or encumber shares of Restricted Stock.

	(b)		Unless and until a forfeiture of the Restricted Stock, the\nParticipant shall have, with respect to the shares of Restricted Stock, all of\nthe rights of a shareholder of the Corporation, including the right to vote the\nshares (if applicable) and the right to receive any cash dividends. Unless\notherwise determined by the Committee, cash dividends shall be automatically\npaid in cash and dividends payable in Corporation Stock shall be paid in the\nform of additional Restricted Stock.

	(c)		Except to the extent otherwise provided in the applicable\nRestricted Stock Agreement and (d) below, all shares still subject to\nrestriction shall be forfeited by the Participant upon termination of a\nParticipant’s employment for any reason.

	(d)		In the event of hardship or other special circumstances of a\nParticipant whose employment is involuntarily terminated (other than for\ncause), the Committee may waive in whole or in part any or all remaining\nrestrictions with respect to such Participant’s shares of Restricted Stock.

	(e)		If and when the applicable restrictions lapse, unlegended\ncertificates for such shares shall be delivered to the Participant.

	(f)		Each Award shall be confirmed by, and be subject to the terms\nof, a Restricted Stock Agreement.

\n\n

VIII. RESTRICTED STOCK UNITS\n

\n\n\n

\n\n

- 8 -\n

\n\n

IX. WITHHOLDING TAXES\n

\n\n\n

9.01 General Rule. Pursuant to applicable federal and state laws, the Corporation is\nor may be required to collect withholding taxes upon the exercise of a Stock Option or the lapse of\nstock restrictions. The Corporation may require, as a condition to the exercise of a Stock Option\nor the issuance of a stock certificate, that the Participant concurrently pay to the Corporation\n(either in cash or, at the request of Participant, but subject to such rules and regulations as the\nCommittee may adopt from time to time, in shares of Delivered Stock) the entire amount or a portion\nof any taxes which the Corporation is required to withhold by reason of such exercise or lapse of\nrestrictions, in such amount as the Committee or the Corporation in its discretion may determine.\nIf and to the extent that withholding of any federal, state or local tax is required in connection\nwith the exercise of an Option or the lapse of stock restrictions, the Participant may, subject to\nsuch rules and regulations as the Corporation may adopt from time to time, elect to have the\nCorporation hold back from the shares to be issued upon the exercise of the Stock Option or the\nlapse of stock restrictions, the number of shares of Corporation Stock having a Fair Market Value\nequal to such withholding obligation.\n

\n\n

X. GENERAL\n

\n\n\n

\n\n

- 9 -\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		if the Participant’s employment is terminated by the death of\nthe Participant, any unexercised, unexpired Stock Options granted hereunder to\nthe Participant shall be 100% vested and fully exercisable, in whole or in\npart, at any time within one year after the date of death, by the Participant’s\npersonal representative or by the person to whom the Stock Options are\ntransferred under the Participant’s last will and testament or the applicable\nlaws of descent and distribution;

	(b)		if the Participant dies within 90 days after termination of\nemployment by the Corporation or its Affiliates, other than for cause, any\nunexercised, unexpired Stock Options granted hereunder to the Participant and\nexercisable as of the date of such termination of employment shall be\nexercisable, in whole or in part, at any time within one year after the date of\ndeath, by the Participant’s personal representative or by the person to whom\nthe Stock Options are transferred under the Participant’s last will and\ntestament or the applicable laws of descent and distribution;

	(c)		if the Participant’s employment is terminated as a result of\nthe disability of the Participant (a disability means that the Participant is\ndisabled as a result of sickness or injury, such that he or she is unable to\nsatisfactorily perform the material duties of his or her job, as determined by\nthe Board of Directors, on the basis of medical evidence satisfactory to it),\nany unexercised, unexpired Stock Options granted hereunder to the Participant\nshall become 100% vested and fully exercisable, in whole or in part, at any\ntime within one year after the date of disability;

	(d)		if the Participant’s employment is terminated as a result of\nthe Participant’s retirement (after age 55 with ten years of employment with\nthe Corporation or an Affiliate or after age 65), any unexercised, unexpired\nStock Options granted hereunder to the Participant and exercisable as of the\ndate of such retirement may be exercised by the Participant at any time within\none year after the date of retirement; and

	(e)		if the Participant’s employment is terminated by the Company or\nan Affiliate for any reason other than the Participant’s death, disability or\nretirement of the Participant or for cause, any unexercised, unexpired Stock\nOptions granted hereunder and exercisable as of the date of such termination of\nemployment shall be exercisable in whole or in part at any time within 90 days\nafter such date of termination.

If a Participant’s employment is terminated for cause (as determined by the Committee in its sole\ndiscretion), all of the Participant’s unexercised Stock Options shall expire and all of the\n

- 10 -\n

\n\n\n

Participant’s Restricted Stock and Restricted Stock Units shall be forfeited. Notwithstanding the\nforegoing, no Stock Option shall be exercisable after the date of expiration of its term.\n

\n\n\n

\n\n

10.07 Wisconsin Law. Except as otherwise required by applicable federal laws, the\nPlan shall be governed by, and construed in accordance with, the laws of the State of Wisconsin.\n

\n\n

10.09 Rules of Construction. Headings are given to the articles and sections of this\nPlan solely as a convenience to facilitate reference. The reference to any statute, regulation, or\nother provision of law shall be construed to refer to any amendment to or successor of such\nprovision of law.\n

\n\n

- 11 -\n

\n\n\n

Exhibit 10.5\n

\n\n\n

BRADY CORPORATION
\n2004 OMNIBUS INCENTIVE STOCK PLAN\n

\n\n\n

I. INTRODUCTION\n

\n\n\n

1.01 Purpose. This plan shall be known as the Brady Corporation 2004 Omnibus\nIncentive Stock Plan. The purpose of the Plan is to provide an incentive for employees of Brady\nCorporation and its Affiliates to improve corporate performance on a long-term basis, and to\nattract and retain employees by enabling employees to participate in the future successes of the\nCorporation, and by associating the long term interests of employees with those of the Corporation\nand its shareholders. It is intended that the Plan and its operation comply with the provisions of\nRule 16b-3 under the Securities Exchange Act of 1934 (or any successor rule). The Plan is intended\nto permit the grant of Nonqualified Stock Options, Incentive Stock Options, shares of Restricted\nStock and Restricted Stock Units. The proceeds received by the Corporation from the sale of\nCorporation Stock pursuant to the Plan shall be used for general corporate purposes.\n

\n\n

1.02 Effective Date. The effective date of the Plan shall be November 18, 2004,\nsubject to approval of the Plan by holders of a majority of the outstanding voting common stock of\nthe Corporation provided that such approval is given within 12 months of the effective date. Any\nAward granted prior to such shareholder approval shall be expressly conditioned upon shareholder\napproval of the Plan.\n

\n\n

II. PLAN DEFINITIONS\n

\n\n\n

For Plan purposes, except where the context clearly indicates otherwise, the following terms\nshall have the meanings set forth below:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		“Affiliates” means any “subsidiary corporation” or\n“parent corporation” as such terms are defined in Section 424 of the Code.

	(b)		“Agreement” means a written agreement (including any\namendment or supplement thereto) between the Corporation and a Participant\nspecifying the terms and conditions of an Award.

	(c)		“Award” shall mean the grant of any form of Stock\nOption, Restricted Stock or Restricted Stock Units.

	(d)		“Board” shall mean the Board of Directors of the\nCorporation.

	(e)		“Code” shall mean the Internal Revenue Code of 1986, as\namended from time to time.

	(f)		“Committee” shall mean the Committee described in\nSection 4.01.

	(g)		“Corporation” shall mean Brady Corporation, a Wisconsin\ncorporation.

- 1 -\n

\n\n\n

\n\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(h)		“Corporation Stock” shall mean the Corporation’s Class\nA Non-Voting Common Stock, $.01 par value, and such other stock and securities\nas may be substituted therefor pursuant to Section 3.02.

	(i)		“Eligible Employee” shall mean any regular salaried\nemployee of the Corporation or an Affiliate, including an employee who is a\nmember of the Board, who satisfies the requirements of Section 5.01.

	(j)		“Exercise Period” shall mean the period of time\nprovided pursuant to Section 6.05 within which a Stock Option may be exercised.

	(k)		“Fair Market Value” on any date shall mean, with\nrespect to Corporation Stock, if the stock is then listed and traded on a\nregistered national securities exchange, or is quoted in the NASDAQ National\nMarket System, the average of the high and low sale prices recorded in\ncomposite transactions for such date or, if such date is not a business day or\nif no sales of Corporation Stock shall have been reported with respect to such\ndate, the next preceding business date with respect to which sales were\nreported. In the absence of reported sales or if the stock is not so listed or\nquoted, but is traded in the over-the-counter market, Fair Market Value shall\nbe the average of the closing bid and asked prices for such shares on the\nrelevant date.

	(l)		“Participant” means an Eligible Employee who has been\ngranted an Award under this Plan.

	(m)		“Performance Goals” means the performance goals\nestablished by the Committee prior to the grant of any Award of Stock Options,\nRestricted Stock or Restricted Stock Units intended to qualify as\n“performance-based compensation” under Section 162(m) of the Code. Performance\nGoals may be established at the Company or business unit level and may be based\nupon the attainment of goals relating to one or more of the following business\ncriteria measured on an absolute basis or in terms of growth or reduction:\nrevenue, expenses, net income (pre-tax or after-tax and with adjustments as\nstipulated), earnings per share, return on equity, return on assets, return on\ntangible book value, operating income, earnings before depreciation, interest,\ntaxes and amortization (EBDITA), loss ratio, expense ratio, increase in stock\nprice, total shareholder return, economic value added and operating cash flow.\nThe Committee may establish other subjective or objective performance goals,\nincluding individual goals, which it deems appropriate.

	(n)		“Person” means any individual or entity, and the heirs,\npersonal representatives, executors, administrators, legal representatives,\nsuccessors and assigns of such Person as the context may require.

	(o)		“Plan” shall mean the Brady Corporation 2004 Omnibus\nIncentive Stock Plan, as set forth herein, as it may be amended from time to\ntime.

- 2 -\n

\n\n\n

\n\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(p)		“Restricted Stock” means shares of Corporation Stock\ngranted to a Participant under Article VII.

	(q)		“Restricted Stock Unit” means an Award granted to a\nParticipant under Article VIII.

	(r)		“Stock Option” means an option to purchase a stated\nnumber of shares of Corporation Stock at the price set forth in an Agreement.\nA Stock Option may be either a Nonqualified Stock Option or an Incentive Stock\nOption.

\n\n

III. SHARES SUBJECT TO AWARD\n

\n\n\n

\n\n

IV. ADMINISTRATION\n

\n\n\n

4.01 Administration by the Committee. The Plan shall be administered by the\nCommittee. The Committee shall be a committee designated by the Board to administer the Plan and\nshall initially be the Compensation Committee of the Board. The Committee shall be constituted to\npermit the Plan to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of\n1934 (or any successor rule) and Section 162(m) of the Code. A majority of the members of the\nCommittee shall constitute a quorum. The approval of such a quorum, expressed by a majority vote\nat a meeting held either in person or by conference telephone call, or the unanimous consent of all\nmembers in writing without a meeting, shall constitute the action of the Committee and shall be\nvalid and effective for all purposes of the Plan.\n

\n\n

4.02 Committee Powers. Subject to Section 10.06, the Committee is empowered to adopt,\namend and rescind such rules, regulations and procedures and take such other action as it shall\ndeem necessary or proper for the administration of the Plan and, in its discretion, may modify,\nextend or renew any Award theretofore granted. The Committee shall also have authority to\ninterpret the Plan, and the decision of the Committee on any questions concerning the\ninterpretation of the Plan shall be final and conclusive. The express grant in the Plan of any\nspecific power to the Committee shall not be construed as limiting any power or authority of the\n

\n\n

- 3 -\n

\n\n\n\n

Committee. The Committee shall not incur any liability for any action taken in good faith\nwith respect to the Plan or any Award.\n

\n\n

Subject to the provisions of the Plan, the Committee shall have full and final authority to:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		designate the Eligible Employees to whom Awards shall be\ngranted;

	(b)		grant Awards in such form and amount as the Committee shall\ndetermine;

	(c)		impose such limitations, restrictions and conditions upon any\nsuch Award as the Committee shall deem appropriate, including conditions (in\naddition to those contained in this Plan) (i) on the exercisability of all or\nany portion of a Stock Option, (ii) on the transferability or forfeitability of\nRestricted Stock or (iii) requiring an Eligible Employee to retain all or a\nportion of the Corporation Stock for a period of time following the exercise of\na Stock Option, the vesting of Restricted Stock or the payment of Restricted\nStock Units;

	(d)		prescribe the form of Agreement with respect to each Award;

	(e)		waive in whole or in part any limitations, restrictions or\nconditions imposed upon any such Award as the Committee shall deem appropriate\n(including accelerating the time at which any Stock Option may be exercised or\nthe time at which Restricted Stock may become transferable or nonforfeitable);

	(f)		make adjustments in the terms and conditions of a Performance\nGoal in recognition of unusual or nonrecurring events affecting the Company or\nthe financial statements of the Company or of changes in applicable laws,\nregulations, or accounting principles, whenever the Committee determines that\nsuch adjustments are appropriate in order to prevent dilution or enlargement of\nthe benefits or potential benefits intended to be made available under the\nPlan, provided that no such adjustment shall be authorized to the extent that\nsuch adjustment would be inconsistent with the Plan’s or any Performance Award\nmeeting the requirements of Section 162(m) of the Code; and

	(g)		determine the extent to which leaves of absence for\ngovernmental or military service, illness, temporary disability and the like\nshall not be deemed interruptions of continuous employment.

\n\n

V. PARTICIPATION\n

\n\n\n

\n\n

- 4 -\n

\n\n\n\n

from being “disinterested” under Rule 16b-3 under the Securities Exchange Act of 1934. From\namong all such Eligible Employees, the Committee shall determine from time to time those Eligible\nEmployees to whom Awards shall be granted. No Eligible Employee shall have any right whatsoever to\nreceive an Award unless so determined by the Committee.\n

\n\n

5.02 No Employment Rights. The Plan shall not be construed as conferring any rights\nupon any person for a continuation of employment, nor shall it interfere with the rights of the\nCorporation or any Affiliates to terminate the employment of any person or to take any other action\naffecting such person.\n

\n\n

VI. STOCK OPTIONS\n

\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		no Stock Option granted under this Plan to any Person subject\nto the reporting requirements of Section 16(b) of the Securities and Exchange\nAct of 1934 may be exercised until at least six months from the later of (i)\nthe date of grant or (ii) shareholder approval of the Plan, and

	(b)		no Stock Option shall be exercisable after the expiration of\nten (10) years from the date the Stock Option is granted. Each Agreement with\nrespect to a Stock Option shall state the period or periods of time within\nwhich the Stock Option may be exercised by the Participant, in whole or in\npart.

- 5 -\n

\n\n\n

\n\n\n\n

Subject to the foregoing, unless the Agreement with respect to a Stock Option expressly provides\notherwise, a Stock Option shall be exercisable in accordance with the following schedule:\n

\n\n


Years After
Date of Grant	Percentage of Shares

Less than 1\n		0	%

1 but less than 2\n		33-1/3	%

2 but less than 3\n		66-2/3	%

3 or more\n		100	%

\n\n

6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be exercised\nin whole or in part from time to time as specified in the Agreements provided, however, that each\nParticipant may exercise a Stock Option in whole or in part by giving written notice of the\nexercise to the Corporation, specifying the number of shares to be purchased by payment in full of\nthe purchase price therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the\napproval of the Committee, or if the applicable Agreement so provides, by delivering shares of\nCorporation Stock (“Delivered Stock), or (d) with a combination of cash, check and Delivered Stock.\nFor purposes of the foregoing, Delivered Stock shall be valued at its Fair Market Value determined\nas of the business day immediately preceding the date of exercise of the Stock Option. No\nParticipant shall be under any obligation to exercise any Stock Option hereunder.\n

\n\n

6.08 Special Rules for Incentive Stock Options. For so long as Section 422 ( or any\nsuccessor provision) of the Code so provides:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		The aggregate Fair Market Value of Corporation Stock\n(determined as of the date the stock option is granted) with respect to which\nISOs are exercisable for the first time during a calendar year may not exceed\n$100,000. To the extent that the value of the stock subject to options exceeds\nthat amount, the excess shall be considered to be NSOs, with the determination\nto be made in the order the options are granted.

	(b)		Employees who own, directly or indirectly, within the meaning of Code\nSection 425(d), more than 10% of the voting power of all classes of stock of\nthe Corporation or any parent or subsidiary corporation shall not be eligible\nto receive an ISO hereunder unless the purchase price per share under such\noption is at least 110% of the Fair Market Value of the stock subject to the\noption and such option by its terms is not exercisable after the expiration of\nfive (5) years from the date such option is granted

- 6 -\n

\n\n\n

\n\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n

(c)

\n\n

VII. RESTRICTED STOCK\n

\n\n\n

7.01 Administration. Shares of Restricted Stock may be issued either alone or in\naddition to other Awards granted under the Plan. The Committee shall determine the Eligible\nEmployees to whom and the time or times at which grants of Restricted Stock will be made, the\nnumber of shares to be granted, the time or times within which such Awards may be subject to\nforfeiture or otherwise restricted and any other terms and conditions of the Awards. The\nrestrictions may be based upon specified Performance Goals, the Participant’s continued employment\nwith the Corporation or its Affiliates or such other factors or criteria as the Committee shall\ndetermine. Subject to Sections 7.02 and 7.03 hereof the provisions of Restricted Stock Awards need\nnot be the same with respect to each recipient.\n

\n\n

7.02 Certificates. Each individual receiving a Restricted Stock Award shall be issued\na certificate in respect of such shares of Restricted Stock which certificate shall be held in\ncustody by the Corporation until the restrictions thereon shall have lapsed. In addition, each\nindividual receiving a Restricted Stock Award shall, as a condition of any such Restricted Stock\nAward, have delivered to the Corporation a stock power, endorsed in blank, with respect to the\nCorporation Stock covered by such Award. Each certificate in respect of shares of Restricted Stock\nshall be registered in the name of the Participant to whom such Restricted Stock has been granted\nand shall bear an appropriate legend referring to the terms, conditions, and restrictions\napplicable to such Award, substantially in the following form:\n

\n\n\n

“The transferability of this certificate and the shares of stock represented hereby are\nsubject to the terms and conditions (including forfeiture) of the Brady Corporation 2004\nOmnibus Incentive Stock Plan and a Restricted Stock Agreement. Copies of such Plan and\nAgreement are on file at the offices of the Brady Corporation.”\n

\n\n\n

7.03 Terms and Conditions. Shares of Restricted Stock shall be subject to the\nfollowing terms and conditions:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		Until the applicable restrictions lapse, the Participant shall\nnot be permitted to sell, assign, transfer, exchange, pledge, hypothecate or\notherwise dispose of or encumber shares of Restricted Stock.

	(b)		Unless and until a forfeiture of the Restricted Stock, the\nParticipant shall have, with respect to the shares of Restricted Stock, all of\nthe rights of a shareholder of the Corporation, including the right to vote the shares (if

- 7 -\n

\n\n\n

\n\n \n \n \n \n\n\n

applicable) and the right to receive any cash dividends. Unless otherwise\ndetermined by the Committee, cash dividends shall be automatically paid in\ncash and dividends payable in Corporation Stock shall be paid in the form of\nadditional Restricted Stock.

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(c)		Except to the extent otherwise provided in the applicable\nRestricted Stock Agreement and (d) below, all shares still subject to\nrestriction shall be forfeited by the Participant upon termination of a\nParticipant’s employment for any reason.

	(d)		In the event of hardship or other special circumstances of a\nParticipant whose employment is involuntarily terminated (other than for\ncause), the Committee may waive in whole or in part any or all remaining\nrestrictions with respect to such Participant’s shares of Restricted Stock.

	(e)		If and when the applicable restrictions lapse, unlegended\ncertificates for such shares shall be delivered to the Participant.

	(f)		Each Award shall be confirmed by, and be subject to the terms\nof, a Restricted Stock Agreement.

\n\n

VIII. RESTRICTED STOCK UNITS\n

\n\n\n

\n\n

IX. WITHHOLDING TAXES\n

\n\n\n

\n\n

- 8 -\n

\n\n\n\n

(either in cash or, at the request of Participant, but subject to such rules and regulations\nas the Committee may adopt from time to time, in shares of Delivered Stock) the entire amount or a\nportion of any taxes which the Corporation is required to withhold by reason of such exercise or\nlapse of restrictions, in such amount as the Committee or the Corporation in its discretion may\ndetermine. If and to the extent that withholding of any federal, state or local tax is required in\nconnection with the exercise of an Option or the lapse of stock restrictions, the Participant may,\nsubject to such rules and regulations as the Corporation may adopt from time to time, elect to have\nthe Corporation hold back from the shares to be issued upon the exercise of the Stock Option or the\nlapse of stock restrictions, the number of shares of Corporation Stock having a Fair Market Value\nequal to such withholding obligation.\n

\n\n

X. GENERAL\n

\n\n\n

\n\n

- 9 -\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n

	(a)		if the Participant’s employment is terminated by the death of\nthe Participant, any unexercised, unexpired Stock Options granted hereunder to\nthe Participant shall be 100% vested and fully exercisable, in whole or in\npart, at any time within one year after the date of death, by the Participant’s\npersonal representative or by the person to whom the Stock Options are\ntransferred under the Participant’s last will and testament or the applicable\nlaws of descent and distribution;

	(b)		if the Participant dies within 90 days after termination of\nemployment by the Corporation or its Affiliates, other than for cause, any\nunexercised, unexpired Stock Options granted hereunder to the Participant and\nexercisable as of the date of such termination of employment shall be\nexercisable, in whole or in part, at any time within one year after the date of\ndeath, by the Participant’s personal representative or by the person to whom\nthe Stock Options are transferred under the Participant’s last will and\ntestament or the applicable laws of descent and distribution;

	(c)		if the Participant’s employment is terminated as a result of\nthe disability of the Participant (a disability means that the Participant is\ndisabled as a result of sickness or injury, such that he or she is unable to\nsatisfactorily perform the material duties of his or her job, as determined by\nthe Board of Directors, on the basis of medical evidence satisfactory to it),\nany unexercised, unexpired Stock Options granted hereunder to the Participant\nshall become 100% vested and fully exercisable, in whole or in part, at any\ntime within one year after the date of disability;

	(d)		if the Participant’s employment is terminated as a result of\nthe Participant’s retirement (after age 55 with ten years of employment with\nthe Corporation or an Affiliate or after age 65), any unexercised, unexpired\nStock Options granted hereunder to the Participant and exercisable as of the\ndate of such retirement may be exercised by the Participant at any time within\none year after the date of retirement; and

	(e)		if the Participant’s employment is terminated by the Company or\nan Affiliate for any reason other than the Participant’s death, disability or\nretirement of the Participant or for cause, any unexercised, unexpired Stock\nOptions granted hereunder and exercisable as of the date of such termination of\nemployment shall be exercisable in whole or in part at any time within 90 days\nafter such date of termination.

If a Participant’s employment is terminated for cause (as determined by the Committee in its sole\ndiscretion), all of the Participant’s unexercised Stock Options shall expire and all of the\nParticipant’s Restricted Stock and Restricted Stock Units shall be forfeited. Notwithstanding the\nforegoing, no Stock Option shall be exercisable after the date of expiration of its term.\n

\n\n\n

\n\n

- 10 -\n

\n\n\n\n

the Corporation, or (c) the sale or exchange of all or substantially all the assets of the\nCorporation for cash or for shares of stock or other securities of another corporation, all\nthen-unexercised Stock Options shall become fully exercisable, and all restrictions imposed on any\nthen-Restricted Stock shall terminate (such that any Restricted Stock shall become fully\ntransferable) immediately prior to any such merger or consolidation in which the Corporation is not\nthe surviving corporation. Notwithstanding the foregoing, in the case of then-unexercised Stock\nOptions held by persons subject to the reporting requirements of Section 16(a) of the 1934 Act, the\nCommittee may elect to cancel any then-unexercised Stock Option. If any Stock Option is canceled,\nthe Corporation, or the corporation assuming the obligations of the Corporation hereunder, shall\npay the Participant an amount of cash or stock, as determined by the Committee, equal to the Fair\nMarket Value per share of the Corporation Stock immediately preceding such cancellation over the\noption price, multiplied by the number of shares subject to such cancelled Stock Option.\n

\n\n

10.07 Wisconsin Law. Except as otherwise required by applicable federal laws, the\nPlan shall be governed by, and construed in accordance with, the laws of the State of Wisconsin.\n

\n\n

10.10 Gender and Number. Except when otherwise required by the context, words in the\nmasculine gender shall include the feminine, the singular shall include the plural, and the plural\nthe singular.\n

\n\n\n

- 11 -\n

\n\n\n

EXHIBIT 31.1\n

\n\n\n

RULE 13a-14(a)/15d-14(a) CERTIFICATION\n

\n\n\n

I, Frank M. Jaehnert, certify that:\n

\n\n\n

(1) I have reviewed this quarterly report on Form 10-Q of Brady Corporation;\n

\n\n

(2) Based on my knowledge, this report does not contain any untrue statement of a material\nfact or omit to state a material fact necessary to make the statements made, in light of the\ncircumstances under which such statements were made, not misleading with respect to the period\ncovered by this report;\n

\n\n

(3) Based on my knowledge, the financial statements, and other financial information included\nin this report, fairly present in all material respects the financial condition, results of\noperations and cash flows of the registrant as of, and for, the periods presented in this report;\n

\n\n

(4) The registrant’s other certifying officer and I are responsible for establishing and\nmaintaining disclosure controls and procedures (as defined in Exchange Act\nRules 13a-15(e) and\n15d-15(e)) and internal control over financial reporting (as defined in Exchange Act \nRules 13a-15(f) and 15d-15(f)) for the registrant and have:\n

\n\n

a) Designed such disclosure controls and procedures, or caused such disclosure controls and\nprocedures to be designed under our supervision, to ensure that material information relating to\nthe registrant, including its consolidated subsidiaries, is made known to us by others within\nthose entities, particularly during the period in which this report is being prepared;\n

\n\n

b) Designed such internal control over financial reporting, or caused such internal control\nover financial reporting to be designed under our supervision to provided reasonable assurance\nregarding the reliability of financial reporting and the preparation of financial statements for\nexternal purposes in accordance with generally accepted accounting principles;\n

\n\n

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and\npresented in this report our conclusions about the effectiveness of the disclosure controls and\nprocedures, as of the end of the period covered by this report based on such evaluation; and\n

\n\n

d) Disclosed in this report any change in the registrant’s internal control over financial\nreporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s\nfourth fiscal quarter in the case of an annual report) that has materially affected, or is\nreasonably likely to materially affect, the registrant’s internal control over financial\nreporting; and\n

\n\n

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent\nevaluation of internal control over financial reporting, to the registrant’s auditors and the\naudit committee of the registrant’s board of directors (or persons performing the equivalent\nfunctions):\n

\n\n

a) All significant deficiencies and material weaknesses in the design or operation of\ninternal control over financial reporting which are reasonably likely to adversely affect the\nregistrant’s ability to record, process, summarize and report financial information; and\n

\n\n

b) Any fraud, whether or not material, that involves management or other employees who have a\nsignificant role in the registrant’s internal control over financial reporting.\n

\n\n

Date: June 7, 2007\n

\n\n\n

/s/ FRANK M. JAEHNERT
\nFrank M. Jaehnert\n

\n\n

President and Chief Executive Officer\n

\n\n

EXHIBIT 31.2\n

\n\n\n

RULE 13a-14(a)/15d-14(a) CERTIFICATION\n

\n\n\n

I, David Mathieson, certify that:\n

\n\n\n

(1) I have reviewed this quarterly report on Form 10-Q of Brady Corporation;\n

\n\n

(4) The registrant’s other certifying officer and I are responsible for establishing and\nmaintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and\n15d-15(e)) and internal control over financial reporting (as defined in Exchange Act \nRules \n13a-15(f) and 15d-15(f)) for the registrant and have:\n

\n\n

b) Any fraud, whether or not material, that involves management or other employees who have a\nsignificant role in the registrant’s internal control over financial reporting.\n

\n\n

Date: June 7, 2007\n

\n\n\n

/s/ DAVID MATHIESON
\nDavid Mathieson\n

\n\n

Senior Vice President and Chief Financial Officer\n

\n\n

EXHIBIT 32.1\n

\n\n\n

SECTION 1350 CERTIFICATION\n

\n\n\n

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley\nAct of 2002, the undersigned officer of Brady Corporation (the “Company”) certifies to his\nknowledge that:\n

\n\n

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 30,\n2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act\nof 1934; and\n

\n\n

(2) The information contained in that Form 10-Q fairly presents, in all material respects,\nthe financial conditions and results of operations of the Company.\n

\n\n

Date: June 7, 2007\n

\n\n\n

/s/ FRANK M. JAEHNERT
\nFrank M. Jaehnert\n

\n\n

President and Chief Executive Officer\n

\n\n

A signed original of this written statement required by Section 906, or other document\nauthenticating, acknowledging, or otherwise adopting the signature that appears in typed form\nwithin the electronic version of this written statement required by Section 906, has been provided\nto the Company and will be retained by the Company and furnished to the Securities and Exchange\nCommission or its staff upon request. This certification accompanies this report pursuant to\nSection 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for\npurposes of Section 18 of the Securities Exchange Act of 1934, as amended.\n

\n\n

EXHIBIT 32.2\n

\n\n\n

SECTION 1350 CERTIFICATION\n

\n\n\n

\n\n

(2) The information contained in that Form 10-Q fairly presents, in all material respects,\nthe financial conditions and results of operations of the Company.\n

\n\n

Date: June 7, 2007\n

\n\n\n

/s/ DAVID MATHIESON
\nDavid Mathieson\n

\n\n

Senior Vice President and Chief Financial Officer\n

\n\n

\n\n\n


	BRADY CORPORATION \n
Date: June 7, 2007	/s/ F. M. Jaehnert\n
	F. M. Jaehnert
	President & Chief Executive Officer


Date: June 7, 2007	/s/ David Mathieson\n
	David Mathieson
	Senior Vice President & Chief Financial Officer \n(Principal Accounting Officer) \n(Principal Financial Officer)

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	Page
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Income		4
Condensed Consolidated Statements of Cash Flows		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3. Quantitative and Qualitative Disclosures About Market Risk		20
Item 4. Controls and Procedures		20
PART II. Other Information
Item 1A. Risk Factors		21
Item 6. Exhibits		21
Brady Corporation 1989 Non-Qualified Stock Option Plan, as amended
Brady Corporation 1997 Omnibus Incentive Stock Plan, as amended
Brady Corporation 2001 Omnibus Incentive Stock Plan, as amended
Brady Corporation 2003 Omnibus Incentive Stock Plan, as amended
Brady Corporation 2004 Omnibus Incentive Stock Plan, as amended
Certification
Certification
Section 1350 Certification
Section 1350 Certification