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UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n

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Washington, D.C. 20549
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Form 10-K\n

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þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES\nEXCHANGE ACT OF 1934

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For the fiscal year ended July 31, 2008\n\n

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OR\n\n

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

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For the transition period from to \n\n

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Commission file number 1-14959
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BRADY CORPORATION\n

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(Exact name of registrant as specified in charter)

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Wisconsin\n		39-0178960
(State or other jurisdiction of\n		(IRS Employer Identification No.)
incorporation or organization)

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

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(414) 358-6600
\n(Registrant’s telephone number, including area code)
\nSecurities registered pursuant to Section 12(b) of the Act:

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Title of each class\n		Name of each exchange on which registered
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Class A Nonvoting Common Stock, Par\n		New York Stock Exchange
Value $.01 per share

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Securities registered pursuant to Section 12(g) of the Act:
\nNone

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in\nRule 405 of the Securities Act. Yes þ No o\n

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Indicate by check mark if the registrant is not required to file reports pursuant to\nSection 13 or Section 15(d) of the Act. Yes o No þ\n

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed\nby Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or\nfor such 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

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of\nRegulation S-K is not contained herein, and will not be contained, to the best of the registrant’s\nknowledge, in definitive proxy or information statements incorporated by reference in Part III of\nthis Form 10-K or any amendment to this Form 10-K. o\n

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Indicate by check mark whether the registrant is a large\n accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions\n of “large accelerated filer,” “accelerated filer” and “smaller reporting\n company” in Rule 12b-2 of the\n Exchange Act. (Check one):

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Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o \n(Do not check if a smaller reporting company)		Smaller Reporting Company o

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

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The aggregate market value of the non-voting common stock held by non-affiliates of the\nregistrant as of January 31, 2008, was approximately $1,432,768,457 (based on closing sale price of\n$30.49 per share on that date as reported for the New York Stock Exchange). As of September 22,\n2008, there were outstanding 49,855,020 shares of Class A Nonvoting Common Stock (the “Class A\nCommon Stock”), and 3,538,628 shares of Class B Common Stock. The Class B Common Stock, all of\nwhich is held by affiliates of the registrant, is the only voting stock.\n

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PART I\n

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Brady Corporation and Subsidiaries are referred to herein as the “Company,” “Brady,” or “we”.\n

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Item 1. Business\n

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(a) General Development of Business\n\n

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The Company, a Wisconsin corporation founded in 1914, currently operates 63 manufacturing or\ndistribution facilities in Australia, Belgium, Brazil, Canada, China, Denmark, France, Germany,\nIndia, Italy, Japan, Malaysia, Mexico, the Netherlands, Norway, Poland, Singapore, Slovakia, South\nKorea, Sweden, Thailand, the United Kingdom and the United States. The Company also sells through\nsubsidiaries or sales offices in these countries, with additional sales through a dedicated team of\ninternational sales representatives in Hong Kong, the Philippines, Spain, Taiwan, Turkey and the\nUnited Arab Emirates. The Company further markets its products to parts of Eastern Europe, the\nMiddle East, Africa and Russia. The Company’s corporate headquarters are located at 6555 West Good\nHope Road, Milwaukee, Wisconsin 53223, and the telephone number is (414) 358-6600. The Company’s\nInternet address is http://www.bradycorp.com.\n

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(b) Financial Information About Industry Segments\n

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The information required by this Item is provided in Note 7 of the Notes to Consolidated\nFinancial Statements contained in Item 8 — Financial Statements and Supplementary Data.\n

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(c) Narrative Description of Business\n

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Overview\n\n

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Brady Corporation is an international manufacturer and marketer of identification solutions\nand specialty products which identify and protect premises, products and people. Brady’s core\ncapabilities in manufacturing, channel management, printing systems, precision engineering and\nmaterials expertise make it a leading supplier to customers in general manufacturing, maintenance\nand safety, process industries, construction, electrical, telecommunications, electronics,\nlaboratory/healthcare, airline/transportation, security/brand education, governmental, public\nutility, and a variety of other industries. The Company’s ability to provide customers with a broad\nrange of differentiated solutions both through the organic development of its existing business and\nthe acquisition of complementary and adjacent businesses, its commitment to quality and service,\nits global footprint and its diversified sales channels have made it a world leader in its markets.\n

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Brady manufactures and markets a wide range of products for use in diverse applications. Major\nproduct lines include facility identification; safety and complementary products; wire and cable\nidentification products; sorbent materials; people identification products, regulatory publishing;\nhigh-performance identification products for product identification, and work-in-process\nidentification; bar code labels and precision die-cut components for mobile telecommunications\ndevices, hard disk drives, medical devices and supplies, automotive electronics and other\nelectronics. Products are marketed through multiple channels, including distributors, resellers,\nbusiness-to-business direct marketing and a direct sales force.\n

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The need for the Company’s products is driven, in part, by customer specifications, by\nregulatory compliance requirements imposed by agencies such as the Occupational Safety & Health\nAdministration (“OSHA”) and the Environmental Protection Agency (“EPA”) in the United States and\nsimilar regulatory agencies around the world, and by the need to identify and track assets or to\nidentify, direct, warn, inform, train and protect people or products.\n

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The Company has a broad customer base, with its largest customer representing approximately 6%\nof net sales.\n

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Competitive Strengths\n

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The Company believes the following competitive strengths will allow it to achieve its\nstrategy:\n

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Leader in Niche Markets. Brady competes in niche markets where it believes it is often the\nleading supplier with the manufacturing expertise, infrastructure, channels and sales resources\nnecessary to provide the required product or comprehensive solution. For\n

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example, the Company believes it is the leading supplier of wire identification products to\nthe North American MRO (Maintenance, Repair and Operations) market and of precision die-cut\ncomponents to the mobile telecommunications market. The Company believes its leadership positions\nmake it a preferred supplier to many of its customers and enables it to be successful in its\nmarkets, which are generally fragmented and populated with smaller or regional competitors.\n

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Differentiated Solutions and Commitment to Innovation. The Company believes its sophisticated\nengineering and manufacturing capabilities, as well as its expertise in materials, give it a\ncompetitive advantage in supplying customized or high specification product solutions to meet\nindividualized customer needs. The Company has been successful in identifying and incorporating\ninnovative technologies to create integrated and precise solutions. Additionally, it is able to use\nits materials expertise and its investment in research and development to provide unique products\nto meet the demands of end-customers in new, faster growing markets adjacent to its traditional\nmarkets, such as laboratory identification, aerospace, defense, and mass transit. Brady’s\ncommitment to product innovation is reflected in its research and development efforts that include\napproximately 250 employees primarily dedicated to research and development activities mainly in\nthe United States, but also in Belgium, China, Germany, Singapore, Sweden and South Korea.\n

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Operational Excellence. Brady has achieved continuous improvement in operational\nproductivity. It employs well-developed problem solving techniques and invests in state-of-the-art\nequipment to capture efficiencies. The Company is largely vertically integrated and designs,\nmanufactures and markets a majority of the products it sells. The Company has invested heavily over\nthe last several years to centralize its North American distribution network and to standardize its\nSAP software applications. It has consistently generated positive cash flow from operations by\ncontinually reducing costs and optimizing inventory management and the efficiency of its\nmanufacturing operations.\n

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Broad Customer Base and Geographic Diversity. Brady believes its global infrastructure and\ndiverse market presence limit the impact of an economic downturn on its business in any particular\ncountry or region, enables it to act as a primary supplier to many of its global customers and\nprovides a solid platform for further expansion. Sales from international operations increased from\n44.4% of net sales in fiscal 2000 to 62.9% of net sales in fiscal 2008. The Company’s broad product\noffering and global presence benefit many of its customers who seek a single or primary supplier.\nBrady has over 500,000 end-customers that operate in multiple industries.\n

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Disciplined Acquisition and Integration Strategy. The Company has a dedicated team of\nexperienced professionals that employ a disciplined acquisition strategy and process to acquire\ncompanies. It applies strict financial standards to evaluate all acquisitions using an expected\nreturn model based on a modified return on invested capital calculation. It also conducts\ndisciplined integration reviews of acquired firms to track progress toward results expected at the\ntime of acquisition. Since 1996, the Company has acquired and integrated 53 companies to increase\nmarket share in existing and new geographies, expand the product range it offers to both existing\nand new customers, as well as add new technological capabilities.\n

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Channel Diversity and Strength. Brady utilizes a wide range of channels to reach customers\nacross a broad array of industries. It employs direct marketing expertise to meet its customers’\nneed for convenience. The Company also has long-standing relationships with, and is a preferred\nsupplier to, many of its largest distributors. In addition, the Company employs a global sales team\nto support both distributors and end users and to serve their productivity, tracking and safety\nrequirements. The Company believes its strong brands and reputation for quality, innovation and\non-time delivery contribute to the popularity of its products with distributors, original equipment\nmanufacturers (“OEMs”), resellers and other customers.\n

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Deep and Talented Team. The Company believes that its team of employees has substantial depth\nin critical operational areas and has demonstrated success in reducing costs, integrating\nacquisitions and improving processes through economic cycles. The international experience of its\nmanagement team and its commitment to developing strong management teams in each of the local\noperations is a competitive advantage. In addition, the Company believes it employs a world-class\nteam of people and dedicates significant resources to recruiting people committed to excellence and\ninvesting in their potential. The depth and breadth of knowledge within the entire Brady\norganization strengthens relationships with its customers and suppliers and enables the Company to\nprovide its customers with a high level of product and industry expertise.\n

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Key Strategies\n

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The Company’s primary growth objectives are to build upon its leading market positions, to\nimprove its performance and profitability and to expand its existing activities through a\nmulti-pronged strategic approach that incorporates both organic growth and acquisitions. The\nCompany’s key strategies include:\n

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Improve Profitability. The Company plans to continue its focus on improving operating\nefficiency, reducing costs, and improving productivity and return on invested capital. To this end,\nBrady has launched the Brady Business Performance System (“BBPS”) in most of its operations\nglobally. This approach to improving profitability focuses on strategy deployment, operational\nefficiencies and lean manufacturing principles to drive cost-savings, enhance customer service and\noverall business performance. In addition, each acquisition the Company makes provides additional\nopportunities to improve its performance as well as the performance of the acquired company. The\nCompany often continues to realize synergies with acquired companies several years after the\nacquisition date.\n

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Capitalize on Growing Niche Markets. The Company seeks to leverage its premier reputation,\nglobal footprint and strength in manufacturing and materials expertise to capitalize on growth in\nexisting niche markets. Growth prospects are driven primarily by the general health of regional\neconomies, changes in legal and regulatory compliance requirements and the increased need of\ncustomers to identify their assets and protect their employees, as well as technological advances\nin markets such as mobile telecommunications, computers and other electronic devices.\n

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Increase Market Share. Many Brady markets are fragmented and populated with smaller or\nregional competitors. The Company seeks to leverage its investment in new product development and\nits global sales, operations and distribution capabilities to increase market share, as well as\nexpand its distribution channels to capture new customers. The Company employs a dedicated and\nexperienced sales team that works closely with existing distributors and customers to identify and\ncapture new opportunities. In addition, Brady plans to leverage the strength of its brands, the\nquality of its products and its long-standing relationships with key customers to build upon\ncurrent market positions.\n

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Enter New Markets. The Company looks to leverage its quality products, global infrastructure,\nchannel relationships and selling capabilities to effectively enter new markets, many of which are\nfragmented and populated with smaller competitors. For example, Brady is expanding its precision\ndie-cut capabilities into the medical market and is leveraging its common distribution networks\ninto the sorbent materials market. Through product innovation and development activities, Brady\nseeks to introduce new technologies and differentiated products as well as seek additional\napplications for products in existing and new markets. The Company reviews its product and market\nportfolio on a regular basis through its standardized review process in order to identify new\nopportunities.\n

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Expand Geographically. Brady’s long-term strategy involves the pursuit of growth\nopportunities in a number of markets outside of the United States. The Company is committed to\nbeing in close proximity to its customers and to low-cost manufacturing. Brady currently operates\nin 30 countries and employs approximately 7,800 people. Of the approximately 7,800 global\nemployees, Asia-Pacific accounts for 42%, with North America, Europe, and Latin America employing\n31%, 20%, and 7% of the workforce, respectively. Brady has made strategic acquisitions and has\ninvested heavily in its global infrastructure and flexible manufacturing capacity in order to\nfollow its customers into new geographies. Brady’s regional management structure is a key component\nin effectively entering and competing in new geographies.\n

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Pursue Strategic Acquisitions. The Company intends to continue to make complementary\nstrategic acquisitions to further its goals of strengthening its market positions and entering new\nmarkets and geographies. Brady works to drive substantial value creation through capitalizing on\nits acquisition and integration acumen.\n

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Improve Working Capital. Over the past fiscal year, the Company has sharpened its focus on\nworking capital management. The Company intends to drive increases in operating cash flow by\nheightened focus on inventory, accounts receivable, and accounts payable management. This focus is\nfurther evidenced by the incorporation of working capital targets in the majority of employee\nincentive plans.\n

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Products\n

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The Company is largely vertically integrated by designing, developing, coating and producing\nmost of its identification products and printing systems. Brady materials are developed internally\nand manufactured out of a variety of films, many of which are coated by Brady, for applications in\nthe following markets: electronic, industrial, electrical, utility, laboratory, safety and\nsecurity. Brady also manufactures specialty tapes and related products that are characterized by\nhigh-performance printable top coats and adhesives, most\n

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of which are formulated by the Company, to meet high-tolerance requirements of the industries\nin which they are used.\n

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The Company’s stock and custom products consist of over 500,000 stock-keeping units, including\ncomplete identification systems and other products used to create a safer work environment, improve\noperating efficiencies, and increase the utilization of assets through tracking and inventory\nprocess controls. Major product categories include: facility and safety signs, identification tags\nand markers, pipe and valve markers, asset identification labels, lockout/tagout products, security\nand traffic control products, printing systems and software for creating safety and regulatory\nlabels and signs, spill control and clean up products, wire and cable markers, high-performance\nlabels, laboratory identification labels and printing systems, stand-alone printing systems,\nbar-code and other software, automatic identification and data collection systems, personal\nidentification products, and precision die-cut solutions.\n

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Some of the Company’s stock products were originally designed, developed and manufactured as\ncustom products for a specific customer. However, such products have frequently created wide\nindustry acceptance and have become stock items offered by the Company through direct marketing and\ndistributor sales. The Company’s most significant types of products are described below.\n

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Facility Identification

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Informational signs and do-it-yourself printers for use in a broad range of industrial,\nutility, commercial, governmental and institutional applications. These signs are either\nself-adhesive or mechanically mounted, designed for both indoor and outdoor use and are\nmanufactured to meet standards issued by the National Safety Council, OSHA and a variety of\nindustry associations in the United States and abroad. The Company’s sign products include\nadmittance, directional and exit signs; electrical hazard warnings; energy conservation messages;\nfire protection and fire equipment signs; hazardous waste labels; hazardous and toxic material\nwarning signs; transformers and power pole markers; personal hazard warnings; housekeeping and\noperational warnings; pictograms; radiation and laser signs; safety practices signs and regulatory\nmarkings; employment law posters; and photo luminescent (glow-in-the-dark) products.\n

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Warehouse identification products including labels, tags, and printing systems used to locate\nand identify inventory in storage facilities such as warehouses, factories, stockrooms and other\nindustrial facilities.\n

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Pipe markers and valve tags including plastic or metal, self-adhesive or mechanically applied,\nstock or custom-designed pieces for the identification of pipes and control valves in the\nmechanical contractor and process industry markets. These products are designed to help identify\nand provide information as to the contents, direction of flow and special hazardous properties of\nmaterials contained in piping systems, and to facilitate repair or maintenance of the systems.\n

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Asset-identification products that are an important part of an effective asset-management\nprogram in a wide variety of markets. These include self-adhesive or mechanically mounted labels or\ntags made of aluminum, brass, stainless steel, polycarbonate, vinyl, polyester, mylar and paper.\nThese products are also offered in tamper-evident varieties, and can be custom designed to ensure\nbrand protection from counterfeiting.\n

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Safety and Security Products

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Lockout/tagout products — under OSHA regulations, all energy sources must be “locked out”\nwhile machines are being serviced or maintained to prevent accidental engagement and injury. The\nCompany’s products allow its customers to comply with these regulations and to ensure worker safety\nfor a wide variety of energy- and fluid-transmission systems and operating machinery.\n

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Security and traffic control products including a variety of security seals, parking permits\nand wristbands designed for visitor control in financial, governmental, educational and commercial\nfacilities including meeting and convention sites. The Company also offers a wide variety of\ntraffic control devices including traffic signs, directional and warning signs, parking tags and\npermits, barriers, cones and other products including barricading, visual warning systems,\nfloor-marking products, safety badges, and first aid cabinets/kits, among others.\n

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Spill control and clean-up products including synthetic sorbent materials in a variety of\nshapes, sizes and configurations; spill kits, containment booms, industrial rugs, absorbing pillows\nand pads, barrier spill matting and granular absorbents; and other products for absorbing and\ncontrolling chemical, oil-based and water-based spills.\n

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Wire and Cable Identification\n

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Brady manufactures a broad range of wire and cable-marking products, including labels,\nsleeves, software that allows customers to create their own labels, and printers to print and apply\nthem. These products mark and identify wires, cables and their termination points to facilitate\nmanufacturing, construction, repair or maintenance of equipment, and data communication and\nelectrical wiring systems used in virtually every industrial, power and communication market.\n

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People Identification

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Identification systems and products including photo ID card systems that combine biometrics,\ndigital imaging and other technologies to positively identify people; self-expiring name tags that\nmake use of migratory ink technology which, upon activation, starts a timed process resulting in an\naltered message, color or design to indicate expiration; software for visitor and employee\nidentification; and identification accessories including lanyards, badge holders, badge reels and\nattachments, as well as photo identification kits.\n

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High Performance Identification

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Brady produces a complete line of label materials and printing systems to meet customers’\nneeds for identification requirements for product identification, work in process labeling and bar\ncoding that perform under harsh or demanding conditions, such as extreme temperatures, or\nenvironmental or chemical exposure. Brady prints stock and custom labels and also sells unprinted\nmaterials to enable customers to print their own labels.\n

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Precision Die-Cut Parts

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The Company manufactures customized precision die-cut products that are used to seal,\ninsulate, protect, shield or provide other mechanical performance properties in the assembly of\nelectronic, telecommunications and other equipment, including mobile phones, personal data\nassistants, computer hard disk drives, computers and other devices. Solutions not only include the\nmaterials and converting, but also automatic placement and other value-added services. The Company\nalso provides converting services to the medical market for materials used in in-vitro diagnostic\nkits, patient monitoring, and bandaging applications.\n

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Other Products

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The Company also designs and produces software for bar-coding and inspection automation,\nindustrial thermal-transfer printers and other electromechanical devices to serve the growing and\nspecialized needs of customers in a wide variety of markets. Industrial labeling systems, software,\ntapes, ribbons and label stocks provide customers with the resources and flexibility to produce\nsigns and labels on demand at their site. The Company also offers poster printers, cutting systems,\nlaminators and supplies to education and training markets.\n

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Marketing and Sales\n

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Brady seeks to offer high quality products with rapid response and superior service so that it\ncan provide solutions to customers that are better, faster and more economical than those available\nfrom the Company’s competitors. The Company markets and sells its products domestically and\ninternationally through multiple channels including distributors, direct sales, mail-order-catalog\nmarketing, retail, and electronic access through the Internet. The Company has long-standing\nrelationships with a broad range of electrical, safety, industrial and other domestic and\ninternational distributors. The Company’s sales force seeks to establish and foster ongoing\nrelationships with the end-users and distributors by providing technical application and product\nexpertise.\n

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The Company also direct markets certain products and those of other manufacturers by catalog\nsales, outbound telemarketing, and electronic access via the Internet in both domestic and\ninternational markets. Such products include industrial and facility identification products,\nsafety and regulatory-compliance products and original equipment manufacturer component products,\namong others. Catalogs are distributed in the United States, Australia, Brazil, Canada, China,\nFrance, Germany, Italy, Spain, Sweden, Switzerland and the United Kingdom, and include\nforeign-language catalogs.\n

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Brands\n

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The Company’s products go to market under a variety of brand names. The Brady brand includes\nhigh-performance labels, printers, software, safety and facility identification products,\nlock-out/tag-out products, people identification products, and precision die-cut parts and\nspecialty materials. Other die-cut materials are marketed as Balkhausen products. Safety and\nfacility identification products are also marketed under the Safety Signs Service brand, with some\nlockout/tagout products offered under the Prinzing and Scafftag brands. In addition, identification\nfor the utility industry is marketed under the Electromark brand and spill-control products are\n

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marketed under the SPC and D.A.W.G. brands; poster printers and cutting systems for education\nand government markets are offered under the Varitronics name brand; wire identification products\nare marketed under the Modernotecnica brand and the Carroll brand; direct marketing safety and\nfacility identification products are offered under the Seton, Emedco, Signals, Safetyshop, Clement\nand Personnel Concepts names; security and identification badges and systems are included in the\nTemtec, B.I.G., Identicard/Identicam, STOPware, J.A.M. Plastics, PromoVision, and Quo-Luck brands;\nhand-held regulatory documentation systems are available under the Tiscor name; automatic\nidentification and bar-code software is offered under the Teklynx brand; and security sealing and\ntransportation identification is offered under the Transposafe Systems name.\n

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Manufacturing Process and Raw Materials\n

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The Company manufactures the majority of the products it sells, while purchasing certain items\nfrom other manufacturers. Products manufactured by the Company generally require a high degree of\nprecision and the application of adhesives with chemical and physical properties suited for\nspecific uses. The Company’s manufacturing processes include compounding, coating, converting,\nprinting, melt-blown operations, software development and printer design and assembly. The\ncompounding process involves the mixing of chemical batches for primers, top coatings and\nadhesives. The coatings and adhesives are applied to a wide variety of materials including\npolyester, polyimide, cloth, paper, metal and metal foil. The converting process may include\nembossing, perforating, laminating, die cutting, slitting, and printing or marking the materials as\nrequired.\n

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The Company produces the majority of the pressure sensitive materials through an integrated\nmanufacturing process. These integrated manufacturing processes permit greater flexibility to meet\ncustomer needs in product design and manufacture, and an improved ability to provide specialized\nproducts designed to meet the needs of specific applications. Brady’s “cellular” manufacturing\nprocesses and “just-in-time” inventory control are designed to attain profitability in small orders\nby emphasizing flexibility and the maximization of assets through quick turnaround and delivery,\nbalanced with optimization of lot sizes. Many of the Company’s manufacturing facilities have\nreceived ISO 9001 or 9002 certification.\n

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The materials used in the products manufactured by the Company consist primarily of plastic\nsheets and films, paper, metal and metal foil, cloth, fiberglass, polypropylene, inks, dyes,\nadhesives, pigments, natural and synthetic rubber, organic chemicals, polymers, solvents and\nelectronic components and subassemblies. In addition, the Company purchases finished products for\nresale. The Company purchases raw materials, components and finished products from many suppliers.\nOverall, the Company is not dependent upon any single supplier for its most critical base materials\nor components; however the Company has chosen in certain situations to sole source materials,\ncomponents or finished items for design or cost reasons. As a result, disruptions in supply could\nhave an impact on results for a period of time, but generally these disruptions would simply\nrequire qualification of new suppliers and the disruption would be modest. In certain instances,\nthe qualification process could be more costly or take a longer period of time and in rare\ncircumstances, such as a global shortage of a critical material or component, the financial impact\ncould be significant.\n

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Technology and Product Development\n

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The Company focuses its research and development efforts on material development, printing\nsystems design and software development. Material development involves the application of surface\nchemistry concepts for top coatings and adhesives applied to a variety of base materials. Systems\ndesign integrates materials, embedded software and a variety of printing technologies to form a\ncomplete solution for customer applications or the Company’s own production requirements. The\nCompany’s research and development team also supports production and marketing efforts by providing\napplication and technical expertise.\n

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The Company possesses patents covering various aspects of adhesive chemistry, electronic\ncircuitry, printing systems for wire markers, systems for aligning letters and patterns, and\nvisually changing paper. Although the Company believes that its patents are a significant factor in\nmaintaining market position for certain products, technology in the areas covered by many of the\npatents is evolving rapidly and may limit the value of such patents. The Company’s business is not\ndependent on any single patent or group of patents.\n

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The Company conducts much of its research and development activities at the Frederic S. Tobey\nResearch and Innovation Center (approximately 39,600 sq. ft.) in Milwaukee, Wisconsin. The Company\nspent approximately $40.6 million, $36.0 million, and $30.4 million during the fiscal years ended\nJuly 31, 2008, 2007, and 2006, respectively, on its research and development activities. In fiscal\n2008, approximately 250 employees were engaged in research and development activities for the\nCompany. Additional research projects were conducted in Company facilities in other locations in\nthe United States, Europe and Asia and under contract with universities, other institutions and\nconsultants.\n

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The Company’s name and its registered trademarks are important to each of its business\nsegments. In addition, the Company owns other important trademarks applicable to only certain of\nits products.\n

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International Operations\n

\n\n\n

In fiscal 2008, 2007, and 2006, sales from international operations accounted for 62.9%,\n60.9%, and 57.6%, respectively, of the Company’s sales. Its global infrastructure includes\nsubsidiaries in Australia, Belgium, Brazil, Canada, China, Denmark, France, Germany, Hong Kong,\nIndia, Italy, Japan, Malaysia, Mexico, the Netherlands, Norway, Poland, Singapore, Slovakia, South\nKorea, Spain, Sweden, Thailand, Turkey and the United Kingdom. Most of these locations manufacture\nor have the capability to manufacture some of the products they sell. In addition, Brady has sales\noffices in Hong Kong, the Philippines, Spain, Taiwan, Turkey and the United Arab Emirates. Brady\nfurther markets its products to parts of Eastern Europe, the Middle East, Africa and Russia.\n

\n\n

Competition\n

\n\n\n

The markets for all of the Company’s products are competitive. Brady believes that it is one\nof the leading producers of wire markers, safety signs, pipe markers, label printing systems, and\nbar-code-label-generating software. Brady competes for business principally on the basis of\nproduction capabilities, engineering, and research and development capabilities, materials\nexpertise, its global footprint, global account management where needed, customer service and\nprice. Product quality is determined by factors such as suitability of component materials for\nvarious applications, adhesive properties, graphics quality, durability, product consistency and\nworkmanship. Competition in many of its product markets is highly fragmented, ranging from smaller\ncompanies offering only one or a few types of products, to some of the world’s major adhesive and\nelectrical product companies offering some competing products as part of their overall product\nlines. A number of Brady’s competitors are larger than the Company and have greater resources.\nNotwithstanding the resources of these competitors, management believes that Brady provides a\nbroader range of identification solutions than any of them, and that its global infrastructure is a\nsignificant competitive advantage in serving large multi-national customers.\n

\n\n

Backlog\n

\n\n\n

As of July 31, 2008, the amount of the Company’s backlog orders believed to be firm was $32.0\nmillion. This compares with $25.3 million and $42.3 million of backlog orders as of July 31, 2007\nand 2006, respectively. Average delivery time for the Company’s orders varies from same day\ndelivery to one month, depending on the type of product, and whether the product is stock or\ncustom-designed and manufactured. The Company’s backlog does not provide much visibility for\nfuture business.\n

\n\n

Environment\n

\n\n\n

At present, the manufacturing processes for our adhesive-based products utilize certain\nevaporative solvents, which, unless controlled, would be vented into the atmosphere. Emissions of\nthese substances are regulated at the federal, state and local levels. The Company has implemented\na number of systems and procedures to reduce atmospheric emissions and/or to recover solvents.\nManagement believes the Company is substantially in compliance with all environmental regulations.\n

\n\n

Employees\n

\n\n\n

As of July 31, 2008, the Company employed approximately 7,800 individuals. Brady has never\nexperienced a material work stoppage due to a labor dispute and considers its relations with\nemployees to be strong. The mix of employees is changing as the Company employs more people in\ndeveloping countries where wage rates are lower and employee turnover tends to be higher than in\ndeveloped countries.\n

\n\n

Acquisitions\n

\n\n\n

Information about the Company’s acquisitions is provided in Note 2 of the Notes to\nConsolidated Financial Statements contained in Item 8 — Financial Statements and Supplementary\nData.\n

\n\n

(d) Financial Information About Foreign and Domestic Operations and Export Sales\n

\n\n\n

The information required by this Item is provided in Note 7 of the Notes to Consolidated\nFinancial Statements contained in Item 8 — Financial Statements and Supplementary Data.\n

\n\n

9\n

\n\n

(e) Information Available on the Internet\n

\n\n\n

The Company’s Corporate Internet address is http://www.bradycorp.com. The Company makes\navailable, free of charge, on or through its Internet website copies of its Annual Report on\nForm 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 reports filed by\nthe Company’s insiders, and amendments to all such reports as soon as reasonably practicable after\nsuch reports are electronically filed with or furnished to the SEC. The Company is not including\nthe information contained on or available through its website as part of, or incorporating such\ninformation by reference into, this Annual Report on Form 10-K.\n

\n\n

Item 1A. Risk Factors\n

\n\n\n

Before making an investment decision with respect to our stock, you should carefully consider\nthe risks set forth below and all other information contained in this report. If any of the events\ncontemplated by the following risks actually occur, then our business, financial condition, results\nof operations, cash flow, or liquidity could be materially adversely affected.\n

\n\n\n

Market demand for our products may be susceptible to fluctuations in the economy that may cause\nvolatility in our results of operations, cash flows, and liquidity.\n

\n\n

Sales of our products may be susceptible to changes in general economic conditions, namely\ngeneral downturns in the regional economies in which we compete. Our business in the facility &\nsafety identification and wire identification product lines tend to vary with the nominal GDP of\nthe local economies in which we manufacture and sell. As a result, in periods of economic\ncontraction, our business may not grow or may decline. In the precision die-cut and high\nperformance label product lines, we may be adversely affected by reduced demand for our products\ndue to downturns in the global economy as this is a more volatile business. This can result in\nhigher degrees of volatility in our net sales, results of operations, cash flows, and liquidity.\nThese more volatile markets include, but are not limited to, mobile telecommunication devices, hard\ndisk drives and electronics in personal computers and other electronic devices.\n

\n\n\n

We may be adversely impacted by an inability to identify, complete and integrate acquisitions.\n

\n\n

A large part of our growth since fiscal 2003 has come through acquisitions and a key component\nof our growth strategy is based upon acquisitions. We may not be able to identify acquisition\ntargets or successfully complete acquisitions in the future due to the absence of quality\ncompanies, economic conditions, or price expectations from sellers. If we are unable to complete\nadditional acquisitions, our growth may be limited.\n

\n\n

Additionally, as we grow through acquisitions, it will continue to place significant demands\non our management, operational and financial resources. Since the beginning of fiscal year 2004, we\nhave acquired 28 companies. These recent and future acquisitions will require integration of sales\nand marketing, information technology, finance and administrative operations and information of the\nnewly acquired business. The successful integration of acquisitions will require substantial\nattention from our management and the management of the acquired businesses, which could decrease\nthe time they have to serve and attract customers. We cannot assure that we will be able to\nsuccessfully integrate these recent or any future acquisitions, that these acquisitions will\noperate profitably or that we will be able to achieve the financial or operational success expected\nfrom the acquisitions. Our financial condition, cash flows and operational results could be\nadversely affected if we do not successfully integrate the newly acquired businesses or if our\nother businesses suffer on account of our increased focus on the newly acquired businesses.\n

\n\n\n

If we fail to develop new products or our customers do not accept the new products we develop, our\nbusiness could be affected adversely.\n

\n\n

Development of proprietary products is key to the success of our core growth and our high\ngross margins now and in the future. Therefore, we must continue to develop new and innovative\nproducts and acquire and retain the necessary intellectual property rights in these products on an\nongoing basis. If we fail to make innovations, or the market does not accept our new products, then\nour financial condition, results of operations, cash flows, and liquidity could be adversely\naffected. We continue to invest in the development and marketing of new products. These\nexpenditures do not always result in products that will be accepted by the market. Failure to\ndevelop successful new products may also cause our customers to buy from a competitor or may cause\nus to lower our prices in order to compete. This could have an adverse impact on our profitability.\n

\n\n

10\n

\n\n

We operate in competitive markets and may be forced to cut our prices or incur additional\ncosts to remain competitive, which may have a negative impact on our profitability.\n

\n\n

We face substantial competition throughout our entire business, but particularly in the\nprecision die-cut business. Competition may force us to cut our prices or incur additional costs to\nremain competitive. We compete on the basis of production capabilities, engineering and R&D\ncapabilities, materials expertise, our global footprint, customer service and price. Present or\nfuture competitors may have greater financial, technical or other resources, lower production costs\nor other pricing advantages, any of which could put us at a disadvantage in the affected business\nby threatening our market share in some markets or reducing our profit margins. Additionally, in\nsome of our other businesses, our distributors/customers may seek lower cost sourcing\nopportunities, which could cause a loss of business that may adversely impact our revenues.\n

\n\n\n

Foreign currency fluctuations could adversely affect our sales and profits.\n

\n\n

More than 60% of our revenues are derived outside of the United States. As such, fluctuations\nin foreign currency can have an adverse impact on our sales and profits as amounts that are\nmeasured in foreign currency are translated back to U.S. dollars. Any increase in the value of the\nU.S. dollar in relation to the value of the local currency will adversely affect our revenues from\nour foreign operations when translated into U.S. dollars. Similarly, any decrease in the value of\nthe U.S. dollar in relation to the value of the local currency will increase our development costs\nin our foreign operations, to the extent such costs are payable in foreign currency, when\ntranslated into U.S. dollars. During fiscal year 2008, the weakening U.S. dollar versus the\nmajority of other currencies increased sales by approximately $81.7 million.\n

\n\n\n

Our goodwill or other intangible assets may become impaired, which may negatively impact our\nresults of operations.\n

\n\n

We have a substantial amount of goodwill and other intangible assets on our balance sheet as a\nresult of our acquisitions. As of July 31, 2008, we had $789.1 million of goodwill on our balance\nsheet, representing the excess of the total purchase price for our acquisitions over the fair value\nof the net assets we acquired, and $144.8 million of other intangible assets, primarily\nrepresenting the fair value of the customer relationships, patents and trademarks we acquired in\nour acquisitions. At July 31, 2008, goodwill and other intangible assets represented approximately\n50.5% of our total assets. We evaluate goodwill at least annually for impairment based on the fair\nvalue of each operating segment. We assess the impairment of other intangible assets at least\nannually based upon the expected future cash flows of the respective assets. These valuations could\nchange if there were to be future changes in our capital structure, cost of debt, interest rates,\ncapital expenditures, or our ability to perform in accordance with our forecasts. If this estimated\nfair value changes in future periods, we may be required to record an impairment charge related to\ngoodwill or other intangible assets, which would have the effect of decreasing our earnings or\nincreasing our losses in such period.\n

\n\n\n

We have a concentration of business with several large key customers and distributors and loss of\none or more of these customers could significantly affect our results of operations, cash flows,\nand liquidity.\n

\n\n

Several of our large key customers in the precision die-cut business together comprise a\nsignificant portion of our revenues. Our largest customer represents approximately 6% of our net\nsales. Additionally, we do business with several large distribution companies. Our dependence on\nthese large customers makes our relationships with these customers important to our business. We\ncannot guarantee that we will be able to maintain these relationships and retain this business in\nthe future. Because these large customers account for such a significant portion of our revenues,\nthey possess relatively greater capacity to negotiate a reduction in the prices we charge for our\nproducts. If we are unable to provide products to our customers at the quality and prices\nacceptable to them or adapt to technological changes, some of our customers may in the future elect\nto shift some or all of this business to competitors or to substitute other manufacturer’s\nproducts. If one of our key customers consolidates, is acquired by another company or loses market\nshare, the result of that event may have an adverse impact on our business. The loss of or\nreduction of business from one or more of these large key customers could have a material adverse\nimpact on our financial condition, results of operations, cash flows, and liquidity.\n

\n\n\n

We increasingly conduct a sizable amount of our manufacturing outside of the United States, which\nmay present additional risks to our business.\n

\n\n

As a result of our strong growth in developing economies, particularly in Asia, a significant\nportion of our sales is attributable to products manufactured outside of the United States. More\nthan half of our approximately 7,800 employees and more than half of our manufacturing locations\nare outside of the United States. Our international operations are generally subject to various\nrisks including\n

\n\n

11\n

political, economic and societal instability, the imposition of trade restrictions, local\nlabor market conditions, the effects of income taxes, and differences in business practices. We may\nincur increased costs and experience delays or disruptions in product deliveries and payments in\nconnection with international manufacturing and sales that could cause loss of revenue. Unfavorable\nchanges in the political, regulatory and business climate in countries where we have operations\ncould have a material adverse effect on our financial condition, results of operations, and cash\nflows.\n

\n\n\n\n

We depend on our key personnel and the loss of these personnel could have an adverse effect on our\noperations.\n

\n\n

Our success depends to a large extent upon the continued services of our key executives,\nmanagers and other skilled personnel. We cannot ensure that we will be able to retain our key\nofficers and employees. The departure of our key personnel without adequate replacement could\nseverely disrupt our business operations. Additionally, we need qualified managers and skilled\nemployees with technical and manufacturing industry experience to operate our business\nsuccessfully. If we are unable to attract and retain qualified individuals or our costs to do so\nincrease significantly, our operations would be materially adversely affected.\n

\n\n\n

We may be unable to successfully implement anticipated changes to our information technology\nsystem.\n

\n\n

We are in the process of upgrading certain portions of our information technology. Part of\nthis upgrade includes continued implementations of SAP in our facilities in China, Europe,\nMalaysia, Singapore, Mexico, India and the United States. In fiscal years 2007 and 2008, we\ncompleted SAP implementations at 24 of our facilities in these regions, and expect to continue with\nadditional implementations in future years. We expect that the implementation of the SAP platform\nwill enable us to more effectively and efficiently manage our supply chain and business processes.\nOur failure to successfully manage the SAP implementation process or implement these upgrades as\nscheduled could cause us to incur unexpected costs or to lose customers or sales, which could have\na material adverse effect on our financial results.\n

\n\n

The increase in our level of indebtedness could adversely affect our financial health and make us\nvulnerable to adverse economic conditions.\n

\n\n

We have incurred indebtedness to finance acquisitions and for other general corporate\npurposes. Any increase in our level of indebtedness could have adverse consequences, such as:\n

\n\n

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

	•		it may be difficult for us to fulfill our obligations under our credit or other debt\nagreements;

	•		it may be more challenging or costly to obtain additional financing to fund our future\ngrowth;

	•		we may be more vulnerable to future interest rate fluctuations;

	•		we may be required to dedicate a substantial portion of our cash flows to service our\ndebt, thereby reducing the amount of cash available to fund new product development, capital\nexpenditures, working capital and other general corporate activities;

	•		it may place us at a competitive disadvantage relative to our competitors that have less\ndebt; and

	•		it may limit our flexibility in planning for and reacting to changes in our business.

\n\n\n

Environmental, health and safety laws and regulations could adversely affect our business.\n

\n\n

Our facilities and operations are subject to numerous laws and regulations relating to air\nemissions, wastewater discharges, the handling of hazardous materials and wastes, manufacturing and\ndisposal of certain materials, and regulations otherwise relating to health, safety and the\nprotection of the environment. Our products may also be governed by regulations in the countries\nwhere they are sold. As a result, we may need to devote management time or expend significant\nresources on compliance, and we have incurred and will continue to incur capital and other\nexpenditures to comply with these regulations. Any significant costs may have a material adverse\nimpact on our financial condition, results of operations or cash flows. Further, these laws and\nregulations are constantly evolving and it is impossible to predict accurately the effect they may\nhave upon our financial condition, results of operations or cash flows.\n

\n\n

Item 1B. Unresolved Staff Comments\n

\n\n

12\n

\n\n

PART II\n

\n\n

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities\n

\n\n\n

(a) Market Information\n\n

\n\n

Brady Corporation Class A Nonvoting Common Stock trades on the New York Stock Exchange under\nthe symbol BRC. The quarterly stock price history on the New York Stock Exchange is as follows for\neach of the quarters in the fiscal years ended July 31:\n


	2008		2007	2006
	High		Low	High		Low	High		Low
4th Quarter	$	39.04		$	32.99		$	37.73		$	32.73	$	42.79	$	32.94
3rd Quarter	$	34.00		$	28.58		$	38.37		$	30.91	$	40.49	$	34.67
2nd Quarter	$	40.03		$	29.44		$	40.52		$	35.70	$	39.98	$	28.20
1st Quarter	$	43.78		$	34.04		$	38.68		$	33.16	$	34.22	$	26.98

\n\n\n

There is no trading market for the Company’s Class B Voting Common Stock.\n

\n\n

(b) Holders\n

\n\n\n

As of September 22, 2008, there were 713 Class A Common Stock shareholders of record and\napproximately 4,100 beneficial shareholders. There are three Class B Common Stock shareholders.\n

\n\n

(c) Issuer Purchases of Equity Securities\n

\n\n\n

\n\n

In March 2008, the Company announced that the Board of Directors of the Company authorized a\nshare repurchase plan for up to an additional one million shares of the Company’s Class A Nonvoting\nCommon Stock. The share repurchase plan may be implemented by purchasing shares on the open market\nor in privately negotiated transactions, with repurchased shares available for use in connection\nwith the Company’s stock-based plans and for other corporate purposes.\n

\n\n

The following table provides information with respect to the purchases of Class A Nonvoting\nCommon Stock during the fourth quarter of fiscal year 2008.\n


								Total Number of			Maximum Number
				Average			Shares Purchased			of Shares that May
	Total Number of		Price Paid			as Part of Publicly			Yet Be Purchased
\n Period	Shares Purchased		per Share			Announced Plans			Under the Plans
May 1, 2008 – May 31, 2008		—		$	—				—			1,056,204
June 1, 2008 – June 30, 2008		—		$	—				—			1,056,204
July 1, 2008 – July 31, 2008		405,340		$	33.66				405,340			650,864

Total		405,340		$	33.66				405,340			650,864

\n\n\n

(d) Dividends\n

\n\n\n

The Company has followed a practice of paying quarterly dividends on outstanding common stock.\nBefore any dividend may be paid on the Class B Common Stock, holders of the Class A Common Stock\nare entitled to receive an annual, noncumulative cash dividend of $0.01665 per share (subject to\nadjustment in the event of future stock splits, stock dividends or similar events involving shares\nof Class A Common Stock). Thereafter, any further dividend in that fiscal year must be paid on all\nshares of Class A Common Stock and Class B Common Stock on an equal basis. The Company’s revolving\ncredit agreement restricts the amount of certain types of payments, including dividends, that can\nbe made annually to $50 million plus 75% of the consolidated net income for the prior\n

\n\n

14\n

fiscal year. The Company believes that based on its historic dividend practice, this\nrestriction will not impede it in following a similar dividend practice in the future.\n

\n\n\n

During the two most recent fiscal years and for the first quarter of fiscal 2009, the Company\ndeclared the following dividends per share on its Class A and Class B Common Stock for the years\nended July 31:\n


	Year Ending
	2009		2008	2007
	1st Qtr		1st Qtr	2nd Qtr		3rd Qtr	4th Qtr		1st Qtr	2nd Qtr		3rd Qtr	4th Qtr
Class A	$	0.17		$	0.15		$	0.15		$	0.15		$	0.15	$	0.14	$	0.14	$	0.14	$	0.14
Class B		0.15335			0.13335			0.15			0.15			0.15		0.123		0.14		0.14		0.14

\n\n\n

(e) Common Stock Price Performance Graph\n

\n\n\n

The graph below shows a comparison of the cumulative return over the last five fiscal years\nhad $100 been invested at the close of business on July 31, 2003, in each of Brady Corporation\nClass A Common Stock, The Standard & Poor’s (S&P) 500 index, the Standard and Poor’s Small Cap 600\nindex, and the Russell 2000 index.\n

\n\n

Comparison of 5 Year Cumulative Total Return*
\nAmong Brady Corporation, The S&P 500 Index,
\nThe S&P Smallcap 600 Index and The Russell 2000 Index\n

\n\n\n

$\"(PERFORMANCE$ \n\n

\n\n\n

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


*		$100 invested on 7/31/03 in stock or index — including reinvestment of dividends. Fiscal year ended July 31.

\n\n\n



	7/31/2003		7/31/2004	7/31/2005	7/31/2006		7/31/2007	7/31/2008
Brady Corporation		100.00		134.21		206.13			206.60	217.53	231.99
S&P 500 Index		100.00		113.17		129.08			136.02	157.97	140.44
S&P SmallCap 600 Index		100.00		121.52		154.64			160.46	183.09	167.94
Russell 2000 Index		100.00		117.06		146.07			152.27	170.73	159.26

\n\n\n

15\n

\n\n\n\n

\n\n

Item 6. Selected Financial Data\n

\n\n\n

CONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL DATA
\nYears Ended July 31, 2004 through 2008\n

\n\n


	2008			2007			2006		2005		2004
	(In thousands, except per share amounts)
Operating Data (1)
Net Sales	$	1,523,016			$	1,362,631		$	1,018,436		$	816,447		$	671,219
Gross Margin		744,195				657,044			525,755			433,276			345,361
Operating Expenses:
Research and development		40,607				35,954			30,443			25,078			23,028
Selling, general and administrative		495,904				449,103			338,796			285,746			248,171
Restructuring charge — net		—				—			—			—			3,181

Total operating expenses		536,511				485,057			369,239			310,824			274,380

Operating Income		207,684				171,987			156,516			122,452			70,981
Other Income (Expense):
Investment and other income — net		4,888				2,875			2,403			1,369			577
Interest expense		(26,385	)			(22,934	)		(14,231	)		(8,403	)		(1,231	)

Net other expense		(21,497	)			(20,059	)		(11,828	)		(7,034	)		(654	)

Income before income taxes		186,187				151,928			144,688			115,418			70,327
Income Taxes		53,999				42,540			40,513			33,471			19,456

Net Income	$	132,188			$	109,388		$	104,175		$	81,947		$	50,871

Net Income Per Common Share —\n(Diluted):
Class A nonvoting	$	2.41			$	2.00		$	2.07		$	1.64		$	1.07
Class B voting	$	2.39			$	1.98		$	2.05		$	1.63		$	1.05
Cash Dividends on:
Class A common stock	$	0.60			$	0.56		$	0.52		$	0.44		$	0.42
Class B common stock	$	0.58			$	0.54		$	0.50		$	0.42		$	0.40
Balance Sheet at July 31:
Working capital	$	390,524			$	303,359		$	240,537		$	141,560		$	131,706
Total assets		1,850,513				1,698,857			1,365,186			850,147			697,900
Long-term obligations, less current maturities		457,143				478,575			350,018			150,026			150,019
Stockholders’ investment		1,021,808				891,012			746,046			497,274			403,315
Cash Flow Data:
Net cash provided by operating activities		225,554				136,018			114,896			119,103			87,646
Depreciation and amortization		60,587				53,856			35,144			26,822			20,190
Capital expenditures		(26,407	)			(51,940	)		(39,410	)		(21,920	)		(14,892	)

\n\n\n\n

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


(1)		Financial data has been impacted by the acquisitive nature of the\nCompany as two, seven, eleven and four acquisitions were completed in\nfiscal years ended July 31, 2008, 2007, 2006 and 2005, respectively.\nSee Note 2 in Item 8 for further information on the acquisitions that\nwere completed in each of the years.

\n\n\n

\n\n

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations\n

\n\n\n

Overview\n\n

\n\n

In fiscal 2008, the Company posted record sales of $1,523.0 million and record net income of\n$132.2 million, an increase of 11.8% and 20.8%, respectively, over fiscal 2007. Of the 11.8%\nincrease in sales, organic sales were flat. In addition to the impact from the seven acquisitions\ncompleted in fiscal 2007, the Company completed two acquisitions in fiscal 2008, which added 5.8%\ngrowth while foreign currency translation increased sales by 6.0%. Sales in the Americas increased\n9.4%, European sales rose 19.3%, and sales from the Asia-Pacific segment increased 6.8%.\n

\n\n

Net income for fiscal 2008 rose 20.8% to $132.2 million or $2.41 per diluted share of Class A\nCommon Stock, compared to $109.4 million, or $2.00 per diluted share of Class A Common Stock in\nfiscal 2007.\n

\n\n

16\n

\n\n

Brady acquired two companies in fiscal 2008 including businesses located in the Americas and\nEurope. The Company has added strategically driven acquisitions in spill containment products in\nthe Americas and security sealing and asset protection in Europe. During fiscal 2008, the Company\ncontinued to integrate prior year acquisitions.\n

\n\n

In fiscal 2008, the Company generated $225.6 million of cash from operations, an increase of\n$89.5 million from the prior fiscal year. The increase was the result of increased net income as\ndiscussed above, in addition to the impact of company-wide working capital initiatives focused on\naccounts receivable, inventory, and accounts payable.\n

\n\n

Brady remains a financially strong company, with a solid balance sheet and strong cash flows.\nIn September 2008, the Company announced that it will be increasing its cash dividend payment for\nthe 23rd straight year.\n

\n\n

Results of Operations\n

\n\n\n

Year Ended July 31, 2008, Compared to Year Ended July 31, 2007\n

\n\n\n

The comparability of the operating results for the fiscal years ended July 31, 2008 to\nJuly 31, 2007, has been impacted by the following acquisitions completed in fiscal 2008, as well as\nthe annualized impact of the acquisitions completed in fiscal 2007.\n

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


Acquisitions:	Segment	Date Completed
Transposafe Systems B.V. and Holland Mounting Systems B.V.\n(collectively “Transposafe”)	Europe	November 2007
DAWG, Inc. (“DAWG”)	Americas	March 2008

\n\n\n

Fiscal 2008 sales increased $160.4 million, or 11.8% from fiscal 2007. Organic sales, defined\nas sales in the Company’s existing core businesses and regions (exclusive of acquisitions owned\nless than one year and foreign currency effects), were flat compared to fiscal 2007. The\nacquisitions listed above and the annualized impact of the fiscal 2007 acquisitions increased sales\nby $78.7 million or 5.8% in fiscal 2008 compared to fiscal 2007. Fluctuations in the exchange rates\nused to translate financial results into the United States Dollar resulted in a sales increase of\n$81.7 million or 6.0% for the year.\n

\n\n

The gross margin as a percentage of sales increased to 48.9% in fiscal 2008 from 48.2% in\nfiscal 2007. The increase in gross margin as a percentage of sales was primarily the result of\ncost reduction actions taken during fiscal 2007 and fiscal 2008.\n

\n\n

Research and development expenses increased to $40.6 million in fiscal 2008 from $36.0 million\nin fiscal 2007, and increased slightly as a percentage of sales in fiscal 2008 to 2.7% compared to\n2.6% in fiscal 2007, reflecting the Company’s continued commitment to investing in new product\ndevelopment.\n

\n\n

Selling, general, and administrative (“SG&A”) expenses increased to $495.9 million in fiscal\n2008 as compared to $449.1 million in fiscal 2007. The increase in SG&A expenses was primarily the\nresult of the effect of currencies and acquisitions made during fiscal 2007 and fiscal 2008. As a\npercentage of sales, SG&A decreased to 32.6% in fiscal 2008 from 33.0% in fiscal 2007.\n

\n\n

Investment and other income increased $2.0 million in fiscal 2008 to $4.9 million from $2.9\nmillion in the prior year. The income recorded in fiscal 2008 and fiscal 2007 was primarily due to\ninterest income earned on cash and marketable securities investments. The $4.9 million of\ninvestment and other income recorded in fiscal 2008 consisted of $5.9 million of interest income,\npartially offset by $1.0 million in foreign exchange losses. The increase in interest income in\nfiscal 2008 was the result of both increased net income and working capital initiatives that have\nincreased cash balances.\n

\n\n

Interest expense increased to $26.4 million from $22.9 million for fiscal 2008 as compared to\nfiscal 2007. The increase in interest expense was mainly due to interest on the $150 million\nprivate placement of senior notes that the Company completed in the third quarter of fiscal 2007.\n

\n\n

The Company’s effective tax rate was 29.0% for fiscal 2008 as compared to 28.0% for fiscal\n2007. The increased tax rate in fiscal 2008 was primarily due to increased profits in higher tax\ncountries.\n

\n\n

Net income for the fiscal year ended July 31, 2008, increased 20.8% to $132.2 million,\ncompared to $109.4 million for the fiscal year ended July 31, 2007, as a result of the factors\nnoted above. Diluted net income per share increased 20.5% to $2.41 per share for fiscal 2008\ncompared to $2.00 per share for the fiscal year ended July 31, 2007.\n

\n\n

17\n

\n\n

Year Ended July 31, 2007, Compared to Year Ended July 31, 2006\n

\n\n\n

The comparability of the operating results for the fiscal years ended July 31, 2007 to\nJuly 31, 2006, has been impacted by the following acquisitions completed in fiscal 2007, as well as\nthe annualized impact of the acquisitions completed in fiscal 2006.\n

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


Acquisitions:	Segment	Date Completed
Comprehensive Identification Products, Inc. (“CIPI”)\n	Americas, Europe\nand Asia-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, Europe\nand Asia-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. (“SPC”)\n	Americas, Europe\nand Asia-Pacific\n	April 2007

\n\n\n

Sales for fiscal 2007 increased by $344.2 million, or 33.8% from fiscal 2006. Organic sales,\ndefined as sales in the Company’s existing core businesses and regions (exclusive of acquisitions\nand foreign currency effects), increased $42.3 million or 4.2% for the same period. The\nacquisitions listed above and the annualized impact of the fiscal 2006 acquisitions increased sales\nby $260.2 million or 25.5% in fiscal 2007 compared to fiscal 2006. Fluctuations in the exchange\nrates used to translate financial results into the United States Dollar resulted in a sales\nincrease of $41.7 million or 4.1% for the year.\n

\n\n

The gross margin as a percentage of sales decreased from 51.6% in fiscal 2006 to 48.2% in\nfiscal 2007. This decline was driven by the results in our OEM electronics business, primarily in\nthe mobile handset business in Asia-Pacific. The decline was also driven by the acquisitions that\nBrady completed in the last 12 months, which were more heavily weighted towards OEM electronics,\nwhich is generally characterized by lower gross margins and lower selling, general and\nadministrative (“SG&A”) expenses.\n

\n\n

Research and development expenses grew to $36.0 million in fiscal 2007 from $30.4 million in\nfiscal 2006, but decreased as a percentage of sales from 3.0% in fiscal 2006 to 2.6% in fiscal\n2007. Brady continues to expand its investment in new product development.\n

\n\n

SG&A expenses of $449.1 million in fiscal 2007, as compared to $338.8 million in fiscal 2006,\ndecreased as a percentage of sales from 33.3% in fiscal 2006 to 33.0% in fiscal 2007. The decrease\nwas due to changes in the Company’s sales mix towards the OEM electronics business, which typically\nhas lower SG&A expense.\n

\n\n

The Company recorded expenses of $11.4 million in fiscal year 2007 for cost reduction actions,\nwhich are primarily recorded in SG&A expenses in the consolidated statements of income. These\nactions consisted of $9.2 million for severance and other employee termination costs, $1.8 million\nfor asset write-offs and $0.4 million for facility closure costs.\n

\n\n

Investment and other income increased $0.5 million in fiscal 2007 from the prior year. The\nincome recorded in fiscal 2007 was primarily due to interest income earned on cash and marketable\nsecurities investments, while the income recorded in fiscal 2006 was primarily due to a gain of\napproximately $1.5 million on a currency option that the Company purchased to hedge against\nincreases in the purchase price in U.S. dollar terms of Tradex Converting AB as the transaction was\ndenominated in Swedish Krona.\n

\n\n

Interest expense increased $8.7 million in fiscal 2007 due to interest on the $150 million\nprivate placement of senior notes that the Company completed in the third quarter of fiscal 2007\nand the $200 million private placement of senior notes that the Company completed in second quarter\nof fiscal 2006, as well as interest on the borrowings under our revolving credit facility in fiscal\n2007.\n

\n\n

The Company’s effective tax rate was 28.0% in both fiscal 2007 and 2006.\n

\n\n

Net income for the fiscal year ended July 31, 2007, increased 5.0% to $109.4 million,\ncompared to $104.2 million for fiscal year ended July 31, 2006, as a result of the factors noted\nabove. Diluted net income per share comparisons between fiscal 2007 of $2.00 per share and 2006\nof $2.07 per share were also affected by the greater number of shares outstanding in fiscal 2007\nas a result of the Company’s July 2006 sale of an additional 4.6 million shares of Class A\nNonvoting Common Stock in a public offering.\n

\n\n

18\n

\n\n

Business Segment Operating Results\n

\n\n\n

The Company is organized and managed on a geographic basis by region. Each of these regions,\nBrady Americas, Brady Europe and Brady Asia Pacific, has a President that reports directly to the\nCompany’s chief operating decision maker, its Chief Executive Officer. Each region has its own\ndistinct operations, is managed locally by its own management team, maintains its own financial\nreports and is evaluated based on regional segment profit. In applying the criteria set forth in\nSFAS 131 “Disclosures about Segments of an Enterprise and Related Information”, the Company has\ndetermined that these regions comprise its reportable segments based on the information used by the\nChief Executive Officer to allocate resources and assess performance.\n

\n\n

Subsequent to the first quarter of fiscal 2008, the Company made several reporting and\norganizational changes in which the leadership, operations, and administrative functions of the two\nbusinesses in the Americas region were consolidated. As a result of the changes, the Company\nhas changed the number of reporting segments from four to three during the fourth quarter of fiscal\n2008.\n


															Corporate and
(Dollars in thousands)	Americas			Europe			Asia-Pacific		Subtotals		Eliminations			Total
SALES TO EXTERNAL\nCUSTOMERS
Years ended:
July 31, 2008	$	667,106			$	496,715		$	359,195		$	1,523,016			$	—		$	1,523,016
July 31, 2007		609,855				416,514			336,262			1,362,631				—			1,362,631
July 31, 2006		498,916				319,432			200,088			1,018,436				—			1,018,436
SALES GROWTH\nINFORMATION
Year ended July 31,\n2008:
Organic		0.9	%			(0.4	)%		(1.1	)%		0.0	%			—			0.0	%
Currency		2.0	%			10.6	%		7.6	%		6.0	%			—			6.0	%
Acquisitions		6.5	%			9.1	%		0.3	%		5.8	%			—			5.8	%

Total		9.4	%			19.3	%		6.8	%		11.8	%			—			11.8	%
Year ended July 31,\n2007:
Organic		3.3	%			8.3	%		(0.4	)%		4.2	%			—			4.2	%
Currency		0.5	%			9.0	%		5.2	%		4.1	%			—			4.1	%
Acquisitions		18.4	%			13.1	%		63.3	%		25.5	%			—			25.5	%

Total		22.2	%			30.4	%		68.1	%		33.8	%			—			33.8	%

SEGMENT PROFIT
Years ended:
July 31, 2008	$	157,523			$	135,426		$	58,234		$	351,183			$	(9,048	)	$	342,135
July 31, 2007		144,583				107,552			57,236			309,371				(10,485	)		298,886
July 31, 2006		125,065				83,970			49,316			258,351				(13,173	)		245,178

\n\n\n

19\n

\n\n\n

NET INCOME RECONCILIATION\n

\n\n


	Years ended:
	July 31,			July 31,			July 31,
	2008			2007			2006
Total profit for reportable segments	$	351,183			$	309,371		$	258,351
Corporate and eliminations		(9,048	)			(10,485	)		(13,173	)
Unallocated amounts:
Administrative costs		(134,451	)			(126,899	)		(88,662	)
Investment and other income – net		4,888				2,875			2,403
Interest expense		(26,385	)			(22,934	)		(14,231	)

Income before income taxes		186,187				151,928			144,688
Income taxes		(53,999	)			(42,540	)		(40,513	)

Net income	$	132,188			$	109,388		$	104,175

\n\n\n

The Company evaluates segment performance using sales and segment profit. Segment profit or\nloss does not include certain administrative costs, such as the cost of finance, stock options,\ninformation technology and human resources, which are managed as global functions. Corporate\nresearch and development, interest, investment and other income and income taxes are also excluded\nwhen evaluating regional performance.\n

\n\n

Americas\n

\n\n\n

Sales in the Americas region increased 9.4% from fiscal 2007 to fiscal 2008, and 22.2% from\nfiscal 2006 to fiscal 2007. Organic growth accounted for 0.9% in 2008 and 3.3% in 2007. The\nslowing growth in organic sales for fiscal 2008 was driven by softness in the manufacturing,\nconstruction, and utility markets, partially offset by solid performance in the education and OEM\nmarkets. The organic growth in fiscal 2007 was due to strong growth in the United States in both\nthe Brady and direct marketing brands, with strong results from the electrical and wire\nidentification products. The 2007 growth was partially offset by the planned transfer of die-cut\nbusiness to Asia-Pacific in the early part of fiscal 2007. Canada and Brazil also experienced\norganic growth from fiscal 2006 to fiscal 2007. The acquisitions of CIPI, Precision Converters,\nScafftag, Asterisco, Clement and SPC in fiscal 2007 and DAWG in fiscal 2008 added 6.5% to fiscal\n2008 sales. The acquisitions of TruMed, J.A.M., Personnel Concepts and Identicard in fiscal 2006\nand CIPI, Precision Converters, Scafftag, Asterisco, Clement and SPC in fiscal 2007 added 18.4% to\nfiscal 2007 sales. The positive effect of fluctuations in the exchange rates used to translate\nfinancial results into U.S. currency increased sales in the region by 2.0% and 0.5% in fiscal 2008\nand 2007, respectively, when compared to the prior fiscal years.\n

\n\n

In the Americas region, segment profit as a percentage of sales decreased slightly to 23.6% in\n2008 from 23.7% in 2007. This decrease was primarily due to the slowing growth in high margin\norganic sales during fiscal 2008, mostly offset by cost control efforts and improvements made in\nthe prior year to lower performing businesses. Comparing fiscal 2007 to 2006, segment profit as a\npercentage of sales decreased to 23.7% in 2007 from 25.1% in 2006. This decrease was due to the\neffect of the recent acquisitions. As expected, the segment’s recent acquisitions have produced an\ninitial rate of profit that is below the average rate of profit of the segment.\n

\n\n

Europe\n

\n\n\n

Sales in the European region increased 19.3% in fiscal 2008 from fiscal 2007 and 30.4% in\nfiscal 2007 from fiscal 2006. Organic sales declined 0.4% in fiscal 2008 compared to an increase of\n8.3% in fiscal 2007. The decline in organic sales in fiscal 2008 was primarily the result of a\nweakening European economy as well as tough comparables over the prior year due to the\nimplementation of “No Smoking” legislation in the U.K. and France, as these sales did not recur in\nfiscal 2008. The organic growth reported in fiscal 2007 was due to growth in the majority of the\nbusinesses with a more focused approach to market segments, in addition to “No Smoking” legislation\nimplemented in the U.K. and France. The strength of the European economy benefited the segment as\nwell. Foreign currency translation increased the region’s sales by 10.6% in 2008 and increased the\nsegment’s sales 9.0% in 2007. The acquisitions of CIPI, Scafftag, Moderno and SPC in fiscal 2007\nand Transposafe in fiscal 2008 added 9.1% to the region’s sales in fiscal 2008 and the acquisitions\nof Texit and Tradex in fiscal 2006 and CIPI, Scafftag, Moderno and SPC in fiscal 2007 added 13.1%\nto the region’s sales in fiscal 2007.\n

\n\n

Segment profit as a percentage of sales increased to 27.3% in fiscal 2008 from 25.8% in fiscal\n2007 and decreased to 25.8% in fiscal 2007 from 26.3% in fiscal 2006. The increase in segment\nprofit in fiscal 2008 was driven by the sales increases noted above in\n

\n\n

20\n

addition to the realization of savings from cost reduction activities taken at the end of\nfiscal 2007. The decrease experienced in fiscal 2007 from 2006 was due to the global headquarter\ncosts of Tradex, partially offset by the strong performance of the direct marketing businesses in\nthe region.\n

\n\n\n

Asia-Pacific\n

\n\n\n

Asia-Pacific sales increased 6.8% in fiscal 2008 from fiscal 2007 and 68.1% in fiscal 2007\nfrom fiscal 2006. Organic sales declined 1.1% in fiscal 2008 and declined 0.4% in fiscal 2007. The\ndecline in organic sales in fiscal 2008 was primarily the result of a drop in sales to OEM\ncustomers in the mobile handset market who lost significant market share, in addition to the\ncompetitive, less profitable business the Company chose to deemphasize. Declines in the mobile\nhandset business were partially offset by solid growth in the smaller business lines of high\nperformance labels, safety and facility identification, and hard disk drives during fiscal 2008.\nThe decline in organic sales in fiscal 2007 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. Foreign currency translation increased\nthe region’s sales by 7.6% from fiscal 2007 to 2008 compared to an increase of 5.2% from fiscal\n2006 to 2007. The acquisitions of CIPI, Scafftag and SPC in fiscal 2007 added 0.3% to the segment’s\nsales in fiscal 2008, whereas the acquisitions of QDPT, Accidental Health, Tradex, Carroll and\nDaewon in fiscal 2006 and CIPI, Scafftag and SPC in fiscal 2007 added 63.3% to the region’s sales\nin fiscal 2007.\n

\n\n

Segment profit as a percentage of sales decreased to 16.2% in fiscal 2008 from 17.0% in fiscal\n2007 and to 17.0% in fiscal 2007 from 24.7% in fiscal 2006. The decline in segment profit as a\npercentage of sales in fiscal 2008 was due to the industry mix shift from high-end, feature rich\nmobile phones to low-end basic mobile phones and continued pricing pressures within the mobile\nhandset supply chain, partially offset by cost reduction activities initiated in fiscal 2007. The\ndecrease in fiscal 2007 was due to the slowdown in our OEM electronics business, excess capacity at\nour facilities and lower margins from acquisitions.\n

\n\n

Liquidity and Capital Resources\n

\n\n\n

Cash and cash equivalents were $258.4 million at July 31, 2008, compared to $142.8 million at\nJuly 31, 2007. The Company did not hold any short-term investments at July 31, 2008, compared to\n$19.2 million of auction rate securities at July 31, 2007. Accounts receivable balances increased\n$22.9 million from July 31, 2007 to July 31, 2008. The increase in accounts receivable was due\nprimarily to the effects of foreign currency translation, the acquisitions of Transposafe and DAWG,\nand sales growth, partially offset by the impact of working capital initiatives. Inventories\ndecreased $5.2 million from July 31, 2007 to July 31, 2008 due to the impact of working capital\ninitiatives, partially offset by the acquisitions of Transposafe and DAWG, as well as foreign\ncurrency translation. Current liabilities increased $28.5 million primarily due to a significant\nincrease in accounts payable driven by both working capital initiatives and foreign currency\ntranslation.\n

\n\n

The Company has maintained significant cash balances due in large part to its strong operating\ncash flow, which totaled $225.6 million for fiscal 2008, $136.0 million for fiscal 2007 and\n$114.9 million for fiscal 2006. The increase in operating cash flow from fiscal 2007 to fiscal 2008\nwas the result of the impact of working capital initiatives on inventory, accounts receivable, and\naccounts payable, in addition to a $22.8 million increase in net income and a $6.7 million increase\nin depreciation and amortization resulting from capital investments and acquisitions made during\nfiscal 2007 and 2008.\n

\n\n

The Company\nbelieves its cash position is strong. While the Company strives to\nmaximize investment income on its excess cash, preservation of\nprincipal is the first priority of the Company’s investment\npolicy. In volatile markets, as the Company has recently experienced,\nthe Company’s investment policy is intended to preserve principal\nas its primary goal, possibly at the expense of the yields\nhistorically achieved.\n

\n\n

The acquisitions of businesses used $29.3 million in fiscal 2008, $159.5 million in fiscal\n2007, and $351.3 million in fiscal 2006. Contingent consideration payments of $4.4 million,\n$1.2 million, and $0.2 million were made during fiscal 2008 to satisfy the earnout and holdback\nliabilities of the fiscal 2006 acquisitions of Daewon Industry Corporation and STOPware, Inc., and\nthe fiscal 2007 acquisition of Asterisco, respectively.\n

\n\n

Capital expenditures were $26.4 million in fiscal 2008, $51.9 million in fiscal 2007 and\n$39.4 million in fiscal 2006. The Company’s capital expenditures slowed in fiscal 2008, following\ntwo years of significant spending due to the global implementation of SAP in addition to the\nexpansion of facilities in various countries. Fiscal 2007 capital expenditures included $9.8\nmillion in spending on implementing SAP in 16 of Brady’s global operations and ultimately\nincreasing the coverage of SAP from 60% of total revenue in fiscal 2006 to nearly 80% of total\nrevenue in fiscal 2009. The remainder of the increase in capital expenditures in fiscal 2007 was\ndue to expansions in China, Canada, India, Mexico, the Philippines, Slovakia and other locations.\nCapital expenditures in\n

\n\n

21\n

2006 were driven by the completion of the central distribution warehouse in Milwaukee,\nWisconsin, continued expansion in Asia, new facilities in Slovakia and in Canada and by upgrading\nexisting plant and machinery.\n

\n\n\n

Financing activities used $76.9 million of cash in fiscal 2008, provided $129.4 million of\ncash in fiscal 2007 and provided $319.0 million in fiscal 2006. In fiscal 2006, the Company\ncompleted a secondary public offering of 4.6 million shares of its Class A nonvoting common stock\nand received proceeds of $157.7 million. Cash used for dividends to shareholders was $32.5 million\nin fiscal 2008, $30.1 million in fiscal 2007, and $26.1 million in fiscal 2006. Cash received from\nthe exercise of stock options was $14.5 million in fiscal 2008, $6.8 million in fiscal 2007, and\n$8.9 million in fiscal 2006. The Company purchased treasury stock of $42.2 million in fiscal 2008;\nhowever, it did not purchase treasury stock in fiscal 2007, and purchased treasury stock of\n$24.7 million in fiscal 2006. In fiscal 2008, two stock repurchase plans were authorized pursuant\nto which the Company can purchase up to two million shares on the open market or in privately\nnegotiated transactions, with repurchased shares available for use in connection with the Company’s\nstock option plan and for other corporate purposes. The Company reacquired approximately\n1,349,000 shares of its Class A Common Stock for\n$42.2 million in fiscal 2008. As of July 31, 2008, the Company\nwas authorized to purchase up to approximately 651,000 additional shares in connection with the share repurchase\nplans. In fiscal 2006, a similar stock repurchase plan was implemented, with repurchased shares\navailable for use in connection with the Company’s stock option plan and for other corporate\npurposes. The Company completed the repurchase of 800,000 shares of its Class A Common Stock for\n$26.5 million in fiscal 2006.\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 that replaced the Company’s previous credit agreement. At the\nCompany’s option, and subject to certain standard conditions, the available amount under the new\ncredit facility may be increased from $200 million up to $300 million. Under the credit agreement,\nthe Company has the option to select either a base interest rate (based upon the higher of the\nfederal 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 ratio).\nA commitment fee is payable on the unused amount of the facility. The agreement requires the\nCompany to maintain two financial covenants. As of July 31, 2008, the Company was in compliance\nwith the covenants of the agreement. The agreement restricts the amount of certain types of\npayments, including dividends, which can be made annually to $50 million plus an amount equal to\n75% of consolidated net income for the prior fiscal year of the Company. The Company believes that\nbased on historic dividend practice, this restriction would not impede the Company in following a\nsimilar dividend practice in the future. On March 18, 2008, the Company entered into an amendment\nto the revolving loan agreement which extended the maturity date from October 5, 2011 to March 18,\n2013. All other terms of the revolving loan agreement remained the same. During fiscal 2008, the\nCompany borrowed $18 million and repaid $18 million under the revolving loan agreement. In fiscal\n2007, the Company borrowed $109.3 million and repaid $109.3 million under the revolving loan\nagreement. As of July 31, 2008, there were no outstanding 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, which began 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\nJuly 31, 2008, the Company was in compliance with this covenant.\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 on\nAugust 14 and February 14, which began 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 and for general corporate purposes. This private placement was exempt from the registration\nrequirements of the Securities Act of 1933. The notes were not registered for resale and may not be\nresold absent such registration or an applicable exemption from the registration requirements of\nthe Securities Act of 1933 and applicable state securities laws. The notes have certain prepayment\npenalties for repaying them prior to the maturity date. The agreement also requires the Company to\nmaintain a financial covenant. As of July 31, 2008, the Company was in compliance with this\ncovenant.\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 Securities\nAct of 1933. The debt offering was in conjunction with the\n

\n\n

22\n

Company’s acquisition of EMED. The notes will be paid over seven years beginning in 2008, with\ninterest payable on the notes being due semiannually on June 28\nand December 28, which began in December 2004. The Company used the proceeds of the offering to reduce outstanding indebtedness\nunder the Company’s revolving credit facilities used to initially fund the EMED acquisition. The\ndebt has certain prepayment penalties for repaying the debt prior to its maturity date. The\nCompany paid its first installment under the debt agreement in June 2008 for $21.4 million. The\nagreement also requires the Company to maintain a financial covenant. As of July 31, 2008, the\nCompany was in compliance with this covenant.\n

\n\n\n

Long-term obligations as a percentage of long-term obligations plus stockholders’ investment\nwere 30.9% at July 31, 2008, and 34.9% at July 31, 2007. Long-term obligations decreased by\n$21.4 million from July 31, 2007 to July 31, 2008 due to the portion of long-term obligations that\nis due for payment in fiscal 2009 that is recorded in current liabilities. Stockholders’\ninvestment increased $130.8 million during this period primarily due to net earnings for fiscal\n2008 and changes in accumulated other comprehensive income.\n

\n\n

The Company intends to fund its short-term and long-term operating cash requirements,\nincluding its fiscal 2009 dividend payments and 2009 debt payments, primarily through net cash\nprovided by operating activities.\n

\n\n

The Company believes that its continued strong cash flows from operations, existing borrowing\ncapacity and continued access to capital markets will enable it to execute its long-term strategic\nplan. This strategic plan includes investments, which expand its current market share, open new\nmarkets and geographies, develop new products and distribution channels and continue to improve our\nprocesses through the Brady Business Performance System. This strategic plan also includes\nexecuting key acquisitions.\n

\n\n

Subsequent Events Affecting Liquidity and Capital Resources\n

\n\n\n

On September 16, 2008, the Board of Directors announced an increase in the quarterly dividend\nto shareholders of the Company’s Class A Common Stock, from $0.15 to $0.17 per share. The dividend\nwill be paid on October 31, 2008, to shareholders of record at the close of business on October 10,\n2008. This dividend represents an increase of 13% and is the 23rd consecutive annual increase in\ndividends since the Company went public in 1984.\n

\n\n

In\nfiscal 2009 through September 22, 2008, under the share\nrepurchase plans authorized by the Company’s Board of\nDirectors in fiscal 2008, the Company repurchased approximately 256,000 shares on the open market for $8.6\nmillion. Under the share repurchase plans, the Company is authorized\nto purchase up to an additional 395,000 shares.\n

\n\n

Off-Balance Sheet Arrangements\n

\n\n\n

The Company does not have material off-balance sheet arrangements or related party\ntransactions. The Company is not aware of factors that are reasonably likely to adversely affect\nliquidity trends, other than the risks discussed in this filing and presented in other Company\nfilings. However, the following additional information is provided to assist financial statement\nusers.\n

\n\n

Operating Leases — These leases generally are entered into for investments in facilities such\nas manufacturing facilities, warehouses and office space, computer equipment and Company vehicles,\nwhen the economic profile is favorable.\n

\n\n

Purchase Commitments — The Company has purchase commitments for materials, supplies, services,\nand property, plant and equipment entered into in the ordinary course of business. Such commitments\nare not in excess of current market prices.\n

\n\n

Due to the proprietary nature of many of the Company’s materials and processes, certain supply\ncontracts contain penalty provisions for early termination. The Company does not believe a material\namount of penalties will be incurred under these contracts based upon historical experience and\ncurrent 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 other than\nthose discussed below under “Payments Due Under Contractual Obligations.”\n

\n\n

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

\n\n

23\n

\n\n

Payments Due Under Contractual Obligations\n

\n\n

The Company’s future commitments at July 31, 2008, for long-term debt, operating lease\nobligations, purchase obligations, interest obligations and other obligations are as follows\n(dollars in thousands):\n

\n\n


	Payments Due by Period
				Less than			1-3			3-5		More than		Uncertain
Contractual Obligations	Total		1 Year			Years			Years		5 Years		Timeframe
Long-Term Debt Obligations	$	478,574		$	21,431			$	121,429		$	142,858		$	192,856	$	0
Operating Lease Obligations		77,937			26,151				34,607			12,431			4,748		0
Purchase Obligations(1)		31,570			31,208				362			0			0		0
Interest Obligations		124,100			25,204				45,589			31,699			21,608		0
Tax Obligations		16,017			0				0			0			0		16,017
Other Obligations(2)		11,552			511				1,382			1,857			7,802		0

Total	$	739,750		$	104,505			$	203,369		$	188,845		$	227,014	$	16,017

\n\n\n\n

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


(1)		Purchase obligations include all open purchase orders as of July 31, 2008.

(2)		Other obligations represent expected payments under the Company’s postretirement medical,\ndental, and vision plans as disclosed in Note 3 to the consolidated financial statements,\nunder Item 8 of this report.

\n\n\n\n

Inflation and Changing Prices\n

\n\n\n

Essentially all of the Company’s revenue is derived from the sale of its products in\ncompetitive markets. Because prices are influenced by market conditions, it is not always possible\nto fully recover cost increases through pricing. Changes in product mix from year to year, timing\ndifferences in instituting price changes and the large amount of part numbers make it impracticable\nto accurately define the impact of inflation on profit margins.\n

\n\n

Critical Accounting Estimates\n

\n\n\n\n

Income Taxes\n

\n\n

The Company’s effective tax rate is based on pre-tax income and the tax rates applicable to\nthat income in the various jurisdictions in which the Company operates. The Company considers the\nresolution of prior-year tax matters to be such items. Significant judgment is required in\ndetermining the Company’s effective tax rate and in evaluating its tax positions. The Company\nestablishes FIN 48 liabilities when it is not more likely than not that the Company will realize\nthe full tax benefit of the position. The Company adjusts these FIN 48 liabilities in light of\nchanging facts and circumstances.\n

\n\n

Tax regulations may require items of income and expense to be included in a tax return in\ndifferent periods than the items are reflected in the consolidated financial statements. As a\nresult, the effective tax rate reflected in the consolidated financial statements may be different\nthan the tax rate reported in the income tax return. Some of these differences are permanent, such\nas expenses that are not deductible on the tax return, and some are temporary differences, such as\ndepreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred\ntax assets generally represent items that can be used as tax deductions or credits in the tax\nreturn in future years for which the Company has already recorded the tax benefit in the\nconsolidated financial statements. The Company establishes valuation allowances for its deferred\ntax assets when it is more likely than not that the amount of expected future taxable income will\nnot support the use of the deduction or credit. Deferred tax liabilities generally represent tax\nexpense recognized in the consolidated financial statements for which payment has been deferred or\nexpense for which the Company has already taken a deduction on an income tax return, but has not\nyet recognized as expense in the consolidated financial statements.\n

\n\n\n

Goodwill and Intangible Assets\n

\n\n

The allocation of purchase price for business combinations requires management estimates and\njudgment as to expectations for future cash flows of the acquired business and the allocation of\nthose cash flows to identifiable intangible assets in determining the estimated fair value for\npurchase price allocation purposes. If the actual results differ from the estimates and judgments\nused in these estimates, the amounts recorded in the financial statements could result in a\npossible impairment of the intangible assets and goodwill or require acceleration of the\namortization expense of finite-lived intangible assets. In addition, SFAS No. 142, “Goodwill and\nOther Intangible Assets,” requires that goodwill and other indefinite-lived intangible assets be\ntested at least annually for impairment. Changes in management’s estimates or judgments could\nresult in an impairment charge, and such a charge could have an adverse effect on the Company’s\nfinancial condition and results of operations. To aid in establishing the value of goodwill and\nother intangible\n

\n\n

24\n

assets at the time of acquisition, Company policy requires that all acquisitions with a\npurchase price above $5 million must be further evaluated in a more detailed review.\n

\n\n\n\n

Reserves and Allowances\n

\n\n

The Company has recorded reserves or allowances for inventory obsolescence, uncollectible\naccounts receivable, returns, credit memos, and income tax contingencies. These reserves require\nthe use of estimates and judgment. The Company bases its estimates on historical experience and on\nvarious other assumptions that are believed to be reasonable under the circumstances. The Company\nbelieves that such estimates are made with consistent and appropriate methods. Actual results may\ndiffer from these estimates under different assumptions or conditions.\n

\n\n

New Accounting Standards\n

\n\n\n

The information required by this Item is provided in Note 1 of the Notes to Consolidated\nFinancial Statements contained in Item 8 — Financial Statements and Supplementary Data.\n

\n\n

Forward-Looking Statements\n

\n\n\n

Brady believes that certain statements in this Form 10-K 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-K, 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-K, 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 Brady’s\ncontrol, that could cause actual results to differ materially from those expressed or implied by\nsuch forward-looking statements. For Brady, uncertainties arise from future financial performance\nof major markets Brady serves, which include, without limitation, telecommunications,\nmanufacturing, electrical, construction, laboratory, education, governmental, public utility,\ncomputer, transportation; difficulties in making and integrating acquisitions; risks associated\nwith newly acquired businesses; Brady’s ability to retain significant contracts and customers;\nfuture competition; Brady’s ability to develop and successfully market new products; changes in the\nsupply of, or price for, parts and components; increased price pressure from suppliers and\ncustomers; interruptions to sources of supply; environmental, health and safety compliance costs\nand liabilities; Brady’s ability to realize cost savings from operating initiatives; Brady’s\nability to attract and retain key talent; difficulties associated with exports; risks associated\nwith international operations; fluctuations in currency rates versus the US dollar; technology\nchanges; potential write-offs of Brady’s substantial intangible assets; risks associated with\nobtaining governmental approvals and maintaining regulatory compliance for new and existing\nproducts; business interruptions due to implementing business systems; and numerous other matters\nof national, regional and global scale, including those of a political, economic, business,\ncompetitive and regulatory nature contained from time to time in Brady’s U.S. Securities and\nExchange Commission filings, including, but not limited to, those factors listed in the “Risk\nFactors” section located in Item 1A of Part I of this Form 10-K. These uncertainties may cause\nBrady’s actual future results to be materially different than those expressed in its\nforward-looking statements. Brady does not undertake to update its forward-looking statements.\n

\n\n

Risk Factors\n

\n\n\n

Please see the information contained in Item 1A — Risk Factors.\n

\n\n

Item 7A. 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\nU.S. Dollar. 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\n

\n\n

25\n

objective, we hedge a portion of known exposures using forward contracts. Main exposures are\nrelated to transactions denominated in the British Pound, the Euro, Canadian Dollar, Australian\nDollar, Swedish Krona and Chinese Yuan currency. In the third quarter of fiscal 2006, we purchased\na currency option to hedge against increases in the purchase price in U.S. dollar terms of Tradex,\nas the transaction was denominated in the Swedish Krona. A gain of approximately $1.5 million was\nrecorded in fiscal 2006 due to this option.\n

\n\n\n

The Company could be exposed to interest rate risk through its corporate borrowing activities.\nThe objective of the Company’s interest rate risk management activities is to manage the levels of\nthe Company’s fixed and floating interest rate exposure to be consistent with the Company’s\npreferred mix. The interest rate risk management program allows the Company to enter into approved\ninterest rate derivatives if there is a desire to modify the Company’s exposure to interest rates.\nAs of July 31, 2008, the Company had no interest rate derivatives.\n

\n\n

The Company is subject to the risk of changes in foreign currency exchange rates due to its\noperations in foreign countries. The Company has manufacturing facilities in Australia, Brazil,\nCanada, China, Mexico, South Korea, Thailand, India and throughout Europe. It sells and\ndistributes its products throughout the world. As a result, the Company’s financial results could\nbe significantly affected by factors such as changes in foreign currency exchange rates or weak\neconomic conditions in the foreign markets in which the Company manufactures, distributes and sells\nits products. The Company’s operating results are principally exposed to changes in exchange rates\nbetween the dollar and the European currencies, primarily the euro, changes between the dollar and\nthe Australian dollar, changes between the dollar and the Canadian dollar, and changes between the\ndollar and the Chinese yuan. Changes in foreign currency exchange rates for the Company’s foreign\nsubsidiaries reporting in local currencies are generally reported as a component of shareholders’\nequity. The Company’s favorable currency translation adjustments recorded in fiscal 2008 and\nfiscal 2007 were $128.0 million and $79.8 million, respectively. As of July 31, 2008 and 2007, the\nCompany’s foreign subsidiaries had net current assets (defined as current assets less current\nliabilities) subject to foreign currency translation risk of $294.5 million and $203.8 million,\nrespectively. The potential decrease in the net current\nassets as of July 31, 2008 from a hypothetical 10 percent\nadverse change in quoted foreign currency exchange rates would be approximately $29.5\nmillion. This sensitivity analysis assumes a parallel shift in foreign currency exchange\nrates. Exchange rates rarely move in the same direction relative to the dollar. This assumption\nmay overstate the impact of changing exchange rates on individual assets and liabilities\ndenominated in a foreign currency.\n

\n\n

26\n

\n\n

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n

\n\n\n

To the Board of Directors and Stockholders of
\nBrady Corporation
\nMilwaukee, WI\n\n

\n\n

We have audited the accompanying consolidated balance sheets of Brady Corporation and\nsubsidiaries (the “Company”) as of July 31, 2008 and 2007, and the related consolidated statements\nof income, stockholders’ investment, and cash flows for each of the three years in the period ended\nJuly 31, 2008. Our audits also included the financial statement schedule listed in the Index at\nItem 15. These financial statements and financial statement schedule are the responsibility of the\nCompany’s management. Our responsibility is to express an opinion on the financial statements and\nfinancial statement schedule based on our audits.\n

\n\n

We conducted our audits in accordance with the standards of the Public Company Accounting\nOversight Board (United States). Those standards require that we plan and perform the audit to\nobtain reasonable assurance about whether the financial statements are free of material\nmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and\ndisclosures in the financial statements. An audit also includes assessing the accounting principles\nused and significant estimates made by management, as well as evaluating the overall financial\nstatement presentation. We believe that our audits provide a reasonable basis for our opinion.\n

\n\n

In our opinion, such consolidated financial statements present fairly, in all material\nrespects, the financial position of Brady Corporation and subsidiaries at July 31, 2008 and 2007,\nand the results of their operations and their cash flows for each of the three years in the period\nended July 31, 2008, in conformity with accounting principles generally accepted in the United\nStates of America. Also, in our opinion, such financial statement schedule when considered in\nrelation to the basic consolidated financial statements taken as a whole, present fairly, in all\nmaterial respects, the information set forth therein.\n

\n\n

We have also audited, in accordance with the standards of the Public Company Accounting\nOversight Board (United States), the Company’s internal control over financial reporting as of\nJuly 31, 2008, based on the criteria established in Internal Control — Integrated Framework issued\nby the Committee of Sponsoring Organizations of the Treadway Commission and our report dated\nSeptember 26, 2008, expressed an unqualified opinion on the Company’s internal control over\nfinancial reporting.\n

\n\n

/s/ Deloitte & Touche LLP
\nMilwaukee, WI
\nSeptember 26, 2008\n\n

\n\n\n

28\n

\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED BALANCE SHEETS\n\n

July 31, 2008 and 2007

\n\n\n


	2008			2007
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	258,355			$	142,846
Short term investments		—				19,200
Accounts receivable, less allowance for losses ($10,059 and $9,109, respectively)		262,461				239,569
Inventories:
Finished products		75,665				80,486
Work-in-process		21,187				21,309
Raw materials and supplies		37,767				37,983

Total inventories		134,619				139,778
Prepaid expenses and other current assets		43,650				42,020

Total current assets		699,085				583,413

Other assets:
Goodwill		789,107				737,450
Other intangibles assets		144,791				149,761
Deferred income taxes		25,943				32,508
Other		21,381				21,111
Property, plant and equipment:
Cost:
Land		6,490				6,332
Buildings and improvements		98,646				90,688
Machinery and equipment		282,232				248,356
Construction in progress		6,040				18,107

		393,408				363,483
Less accumulated depreciation		223,202				188,869

Property, plant and equipment — net		170,206				174,614

Total	$	1,850,513			$	1,698,857

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	118,209			$	91,596
Wages and amounts withheld from employees		82,354				73,622
Taxes, other than income taxes		10,234				8,461
Accrued income taxes		21,523				24,677
Other current liabilities		54,810				60,254
Current maturities on long-term obligations		21,431				21,444

Total current liabilities		308,561				280,054
Long-term obligations, less current maturities		457,143				478,575
Other liabilities		63,001				49,216

Total liabilities		828,705				807,845

Commitments and contingencies (See Note 9)
Stockholders’ investment:
Common stock:
Class A Nonvoting — Issued 51,261,487 and 50,586,524 shares, respectively; (aggregate\nliquidation preference of $42,628 and $42,240 at July 31, 2008 and 2007, respectively)		513				506
Class B Voting — Issued and outstanding 3,538,628 shares		35				35
Additional paid-in capital		292,769				266,203
Earnings retained in the business		639,059				540,238
Treasury stock — 1,046,191 and 0 shares, respectively of Class A nonvoting common stock,\nat cost		(33,234	)			—
Accumulated other comprehensive income		128,161				83,376
Other		(5,495	)			654

Total stockholders’ investment		1,021,808				891,012

Total	$	1,850,513			$	1,698,857

\n\n\n

See notes to consolidated financial statements.\n

\n\n\n

29\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF INCOME\n\n

Years Ended July 31, 2008, 2007 and 2006

\n\n\n


	2008			2007			2006
	(In thousands, except per share amounts)
Net sales	$	1,523,016			$	1,362,631		$	1,018,436
Cost of products sold		778,821				705,587			492,681

Gross margin		744,195				657,044			525,755
Operating expenses:
Research and development		40,607				35,954			30,443
Selling, general and administrative		495,904				449,103			338,796

Total operating expenses		536,511				485,057			369,239

Operating income		207,684				171,987			156,516
Other income (expense):
Investment and other income — net		4,888				2,875			2,403
Interest expense		(26,385	)			(22,934	)		(14,231	)

Net other expense		(21,497	)			(20,059	)		(11,828	)

Income before income taxes		186,187				151,928			144,688
Income taxes		53,999				42,540			40,513

Net income	$	132,188			$	109,388		$	104,175

Net income per common share:
Class A Nonvoting:
Basic	$	2.45			$	2.03		$	2.10

Diluted	$	2.41			$	2.00		$	2.07

Dividends	$	0.60			$	0.56		$	0.52

Class B Voting:
Basic	$	2.43			$	2.01		$	2.09

Diluted	$	2.39			$	1.98		$	2.05

Dividends	$	0.58			$	0.54		$	0.50

Weighted average Class A and Class B common shares outstanding
Basic		54,168				53,907			49,494

Diluted		54,873				54,741			50,385

\n\n\n\n

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


See notes to consolidated financial statements.

\n\n\n

30\n

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

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT\n\n

Years Ended July 31, 2008, 2007 and 2006

\n\n\n

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


								Earnings						Accumulated
				Additional			Retained						Other							Total
	Common		Paid-In			in the			Treasury		Comprehensive							Comprehensive
	Stock		Capital			Business			Stock		Income			Other			Income
	(In thousands, except per share amounts)
Balances at July 31, 2005	$	493		$	99,029			$	382,880		$	(1,575	)		$	17,497			$	(1,050	)

Net income		—			—				104,175			—				—				—		$	104,175
Net currency translation adjustment\nand other		—			—				—			—				18,199				—			18,199

Total comprehensive income																						$	122,374

Issuance of 4,600,000 shares of\nClass A Common Stock from equity\noffering		46			157,699				—			—				—				—
Issuance of 4,200 shares of Class A\nCommon Stock under stock option plan		1			(8,286	)			—			17,205				—				—
Other (Note 6)		—			—				—			—				—				1,812
Tax benefit from exercise of stock\noptions		—			4,912				—			—				—				—
Purchase of 800,000 shares of Class A\nCommon Stock		—			—				—			(26,495	)			—				—
Stock-based compensation expense		—			5,568				—			—				—				—
Cash dividends on Common Stock:
Class A — $.52 per share		—			—				(24,283	)		—				—				—
Class B — $.50 per share		—			—				(1,781	)		—				—				—

Balances at July 31, 2006	$	540		$	258,922			$	460,991		$	(10,865	)		$	35,696			$	762

Net income		—			—				109,388			—				—				—		$	109,388
Net currency translation adjustment\nand other		—			—				—			—				44,256				—			44,256

Total comprehensive income																						$	153,644

Issuance of 104,781 shares of Class A\nCommon Stock under stock option plan		1			(4,037	)			—			10,865				—				—
Other (Note 6)		—			108				—			—				—				(108	)
Tax benefit from exercise of stock\noptions and deferred compensation\ndistributions		—			4,303				—			—				—				—
Stock-based compensation expense		—			6,907				—			—				—				—
Adjustment to adopt SFAS No. 158, net\nof tax of $1,551		—			—				—			—				3,424				—
Cash dividends on Common Stock:
Class A — $.56 per share		—			—				(28,218	)		—				—				—
Class B — $.54 per share		—			—				(1,923	)		—				—				—

Balances at July 31, 2007	$	541		$	266,203			$	540,238		$	—			$	83,376			$	654

Net income		—			—				132,188			—				—				—		$	132,188
Net currency translation adjustment\nand other		—			—				—			—				44,785				—			44,785

Total comprehensive income																						$	176,973

Issuance of 464,963 shares of Class A\nCommon Stock under stock option plan		5			5,553				—			8,941				—				—
Other (Note 6)		2			6,147				—			—				—				(6,149	)
Cumulative impact of adoption of FIN 48		—			—				(903	)		—				—				—
Tax benefit from exercise of stock\noptions and deferred compensation\ndistributions		—			4,638				—			—				—				—
Stock-based compensation expense		—			10,228				—			—				—				—
Purchase of 1,349,136 shares of Class\nA Common Stock		—			—				—			(42,175	)			—				—
Cash dividends on Common Stock
Class A — $.60 per share		—			—				(30,400	)		—				—				—
Class B — $.58 per share		—			—				(2,064	)		—				—				—
Balances at July 31, 2008	$	548		$	292,769			$	639,059		$	(33,234	)		$	128,161			$	(5,495	)

\n\n

\n\n\n

See notes to consolidated financial statements.\n

\n\n\n

31\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF CASH FLOWS\n\n

Years Ended July 31, 2008, 2007 and 2006

\n\n\n


	2008			2007			2006
	(Dollars in thousands)
Operating activities:
Net income	$	132,188			$	109,388		$	104,175
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		60,587				53,856			35,144
Gain on foreign currency contract		—				—			(1,516	)
Deferred income taxes		(2,759	)			70			(1,843	)
Loss on sale of property, plant and equipment		1,672				13			124
Non-cash portion of stock-based compensation expense		10,228				6,907			5,568
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable		(3,704	)			(17,021	)		(12,468	)
Inventories		16,224				(12,323	)		(16,961	)
Prepaid expenses and other assets		(629	)			(13,307	)		(2,163	)
Accounts payable and accrued liabilities		18,641				8,058			10,421
Income taxes		(7,234	)			(6,821	)		58
Other liabilities		340				7,198			(5,643	)

Net cash provided by operating activities		225,554				136,018			114,896

Investing activities:
Acquisitions of businesses, net of cash acquired		(29,346	)			(159,475	)		(351,331	)
Payments of contingent consideration		(5,798	)			(10,906	)		—
Purchases of short-term investments		(10,350	)			(68,100	)		(150,900	)
Sales of short-term investments		29,550				60,400			146,500
Purchases of property, plant and equipment		(26,407	)			(51,940	)		(39,410	)
Net settlement of foreign currency contract		—				—			1,516
Proceeds from sale of property, plant and equipment		880				2,166			546
Other		2,263				(9,184	)		(2,203	)

Net cash used in investing activities		(39,208	)			(237,039	)		(395,282	)

Financing activities:
Payment of dividends		(32,464	)			(30,141	)		(26,064	)
Proceeds from issuance of common stock		14,500				6,829			166,664
Principal payments on debt		(39,443	)			(110,870	)		(417,601	)
Proceeds from issuance of debt		18,000				259,300			615,730
Purchase of treasury stock		(42,175	)			—			(24,683	)
Excess income tax benefit from the exercise of stock options and deferred compensation\ndistributions		4,638				4,303			4,912

Net cash (used in) provided by financing activities		(76,944	)			129,421			318,958

Effect of exchange rate changes on cash		6,107				1,438			1,466

Net increase in cash and cash equivalents		115,509				29,838			40,038
Cash and cash equivalents, beginning of year		142,846				113,008			72,970

Cash and cash equivalents, end of year	$	258,355			$	142,846		$	113,008

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of capitalized interest	$	26,308			$	19,842		$	8,991
Income taxes, net of refunds		51,834				49,233			37,661
Acquisitions:
Fair value of assets acquired, net of cash	$	21,508			$	87,398		$	167,900
Liabilities assumed		(9,038	)			(33,248	)		(63,667	)
Goodwill		16,876				105,325			247,098

Net cash paid for acquisitions	$	29,346			$	159,475		$	351,331

\n\n

See notes to consolidated financial statements.\n

\n\n\n

32\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n

Years Ended July 31, 2008, 2007 and 2006
\n(In thousands except share and per share amounts)

\n\n\n\n

1. Summary of Significant Accounting Policies\n

\n\n\n

Nature of Operations — Brady Corporation (“Brady” or the “Company”) is an international\nmanufacturer and marketer of identification solutions and specialty products which identify and\nprotect premises, products and people. Brady’s core capabilities in manufacturing, printing\nsystems, precision engineering and materials expertise make it a leading supplier to the\nMaintenance, Repair and Operations (“MRO”) market and to the Original Equipment Manufacturing\n(“OEM”) market.\n

\n\n

Principles of Consolidation — The accompanying consolidated financial statements include the\naccounts of Brady Corporation and its subsidiaries (the “Company”), all of which are wholly-owned.\nAll intercompany accounts and transactions have been eliminated in consolidation.\n

\n\n

Use of Estimates — The preparation of financial statements in conformity with accounting\nprinciples generally accepted in the United States of America requires management to make estimates\nand assumptions that affect the reported amounts of assets and liabilities, and disclosure of\ncontingent assets and liabilities at the date of the financial statements and the reported amounts\nof revenues and expenses during the reporting period. Actual results could differ from those\nestimates.\n

\n\n

Fair Value of Financial Instruments — The Company believes the carrying amount of its\nfinancial instruments (cash and cash equivalents, accounts receivable and accounts payable) is a\nreasonable estimate of the fair value of these instruments due to their short-term nature. See\nNote 5 for more information regarding the fair value of long-term debt.\n

\n\n

Cash Equivalents — The Company considers all highly liquid investments with original\nmaturities of three months or less when acquired to be cash equivalents, which are recorded at\ncost.\n

\n\n

Available-for-Sale Securities — Prior to January 2008, the Company had invested in certain\nmarketable securities that are categorized as available-for-sale.\nThese investments consisted of\nauction-rate securities and were classified as short-term investments available-for-sale for all\nperiods presented. The amount of available-for-sale securities included in the consolidated balance\nsheets as of July 31, 2008 and July 31, 2007 was $0 and $19,200, respectively, and consisted solely\nof auction rate securities. The securities held at July 31, 2007\nwere sold at par value during fiscal 2008.\n

\n\n

Inventories — Inventories are stated at the lower of cost or market. Cost has been determined\nusing the last-in, first-out (“LIFO”) method for certain domestic inventories (approximately 22% of\ntotal inventories at July 31, 2008 and approximately 27% of total inventories at July 31, 2007) and\nthe first-in, first-out (“FIFO”) or average cost methods for other inventories. Had all domestic\ninventories been accounted for on a FIFO basis instead of on a LIFO basis, the carrying value would\nhave increased by $9,530 and $8,228 at July 31, 2008 and 2007, respectively.\n

\n\n

Depreciation — The cost of buildings and improvements and machinery and equipment is being\ndepreciated over their estimated useful lives using primarily the straight-line method for\nfinancial reporting purposes. The estimated useful lives range from 3 to 33 years as shown 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


Asset Category		Range of Useful Lives
Buildings and improvements		10 to 33 Years
Mainframe computing equipment\n		5 Years
Machinery and equipment		3 to 10 Years

\n\n\n

Leasehold improvements are depreciated over the shorter of the lease term or the estimated\nuseful life of the asset.\n

\n\n

Goodwill and other Intangible Assets — The cost of intangible assets with determinable useful\nlives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis,\nover the estimated periods benefited. Intangible assets with indefinite useful lives and goodwill\nare not subjected to amortization. These assets are assessed for impairment annually and when\ndeemed necessary.\n

\n\n

33\n

\n\n

Changes in the carrying amount of goodwill for the years ended July 31, 2008 and 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		76,944			26,696			1,685		105,325
Adjustments for prior year acquisitions		2,161			15,005			4,239		21,405
Translation adjustments		2,210			10,206			10,662		23,078

Balance as of July 31, 2007	$	404,074		$	163,699		$	169,677	$	737,450

Goodwill acquired during the period		3,615			13,261			—		16,876
Adjustments for prior year acquisitions		2,563			(2,928	)		3,902		3,538
Translation adjustments		2,724			15,618			12,901		31,243

Balance as of July 31, 2008	$	412,976		$	189,650		$	186,480	$	789,107

\n\n\n

The following acquisitions completed in fiscal 2008 increased goodwill during the year ended\nJuly 31, 2008 by the following amounts:\n


	Segment		Goodwill
Transposafe Systems B.V. and Holland Mounting\nSystems B.V. (collectively “Transposafe”)	Europe	$	13,261
DAWG, Inc. (“DAWG”)	Americas		3,615

Total				$	16,876

\n\n\n

Goodwill also increased as a result of adjustments to the preliminary allocation of purchase\nprice for the acquisitions completed in fiscal 2007, of which the largest adjustment related to\nthe final purchase price adjustments for Comprehensive Identification Products, Inc (“CIPI”),\nwhich added $3,948. Of the $3,948 increase in goodwill attributed to the allocation of the\npurchase price for CIPI, $1,246 related to the adoption of Financial Accounting Standards Board\nInterpretation No. 48, “Accounting for Uncertainty in Income Taxes, (“FIN 48”), $1,250 related to\nthe accrual for employee termination costs, $809 related to various exit costs associated with the\nclosure of a facility, and the remaining $643 related to tax and other liabilities existing at the\ntime of acquisition. As of July 31, 2008, the remaining liability from these charges was\napproximately $769. Goodwill increased $1,467 related to the fiscal 2007 acquisition of Sorbent\nProducts Co., Inc. (“SPC”), primarily due to an adjustment in income taxes. The increase in\ngoodwill related to the acquisitions of CIPI and SPC was partially offset by a tax adjustment of\n$1,893 associated with the fiscal 2006 acquisition of Identicam Systems relating to a deferred tax\nasset existing at the time of acquisition. During fiscal year 2008, the Company finalized the\npurchase price allocation of the SPC acquisition between the segments, resulting in a transfer of\ngoodwill from Europe to the Americas.\n

\n\n

The remaining $31,243 increase to goodwill during fiscal 2008 was attributable to the effects\nof foreign currency translation.\n

\n\n

The following acquisitions completed in fiscal 2007 increased goodwill during the year ended\nJuly 31, 2007 by the following amounts:\n


	Segment		Goodwill
Comprehensive Identification Products, Inc. (“CIPI”)	Americas, Europe and Asia-Pacific	$	20,451
Precision Converters, L.P. (“Precision Converters”)	Americas		9,665
Scafftag, Ltd., Safetrak, Ltd. and Scafftag Pty.,\nLtd. (collectively “Scafftag”)	Americas, Europe and Asia-Pacific		7,030
Asterisco Artes Graficas Ltda. (“Asterisco”)	Americas		8,508
Modernotecnica SpA (“Moderno”)	Europe		11,285
Clement Communications, Inc. (“Clement”)	Americas		12,960
Sorbent Products Co., Inc. (“SPC”)	Americas, Europe and Asia-Pacific		35,426

Total				$	105,325

\n\n\n

34\n

\n\n\n

Goodwill also increased $21,405 during the year ended July 31, 2007, as a result of\nadjustments to the allocation of the purchase price for acquisitions completed in fiscal 2006 and\nthe recording of $1,577 for the contingent payment due to the previous owners of QDP Thailand Co.,\nLtd. (“QDPT”) and $1,000 for the contingent payment due to the previous owners of STOPware, Inc.\n(“Stopware”), which were both acquired in fiscal 2006 (see Note 2 for more information). The\nlargest components of the increase were as a result of adjustments to the allocation of purchase\nprice related to Tradex Converting AB (“Tradex”) and Daewon Industry Corporation (“Daewon”), which\nadded $14,843 and $2,940, respectively.\n

\n\n

Of the $14,843 increase in goodwill related to the allocation of the purchase price for\nTradex, $6,788 of the increase was due to the accrual for planned cost reduction activities\ncontemplated at the date of the acquisition. The accrual consists of $2,639 for severance and\nother employee termination costs, $2,885 for contract termination and facility exit costs, and\n$1,264 for changes in the valuation of fixed assets. As of July 31, 2008, the remaining liability\nfrom such charges was approximately $1,316.\n

\n\n

Of the $2,940 increase in goodwill related to the allocation of the purchase price for Daewon,\n$1,829 of the increase was due to the finalization and payment of the purchase price adjustment\nowed to the former owners of Daewon and $1,013 of the increase was due to the accrual for planned\ncost reduction activities contemplated at the date of the acquisition. The accrual consists of\n$289 for severance and other employee termination costs, $277 for contract termination and facility\nexit costs, and $447 for changes in the valuation of assets. As of July 31, 2008, the Company had\nno remaining liability from these charges.\n

\n\n

The remaining $23,078 increase to goodwill during fiscal 2007 was attributable to the effects\nof 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


	July 31, 2008		July 31, 2007
	Weighted												Weighted
	Average		Gross									Average		Gross
	Amortization		Carrying			Accumulated		Net Book		Amortization			Carrying		Accumulated		Net Book
	Period (Years)		Amount			Amortization		Value		Period (Years)			Amount		Amortization		Value
Amortized other\nintangible assets:
Patents		15		$	8,603		$	(6,592	)	$	2,011			15		$	8,392	$	(5,913	)	$	2,479
Trademarks and other		7			8,079			(4,688	)		3,391			5			4,510		(3,250	)		1,260
Customer relationships		7			151,704			(59,101	)		92,603			7			134,125		(36,674	)		97,451
Non-compete agreements		4			12,222			(8,446	)		3,776			4			11,364		(6,294	)		5,070
Other		4			3,299			(3,294	)		5			5			3,297		(2,554	)		743
Unamortized other\nintangible assets:
Trademarks		N/A			43,005			—			43,005			N/A			42,758		—			42,758

Total				$	226,912		$	(82,121	)	$	144,791					$	204,446	$	(54,685	)	$	149,761

\n\n\n

The acquisitions completed in fiscal 2008 (see Note 2 for more information) attributed to the\nincreases in amortizable trademarks and customer relationships. The largest components of the\nincrease in customer relationships relate to the acquisitions of Transposafe and DAWG, which added\n$9,349 and $659, respectively. The increase in amortized trademarks primarily relates to the\nacquisition of Transposafe which added $2,191.\n

\n\n

The value of goodwill and other intangible assets in the consolidated balance sheet at\nJuly 31, 2008 differs from the value assigned to them in the allocation of purchase price due to\nthe effect of fluctuations in the exchange rates used to translate financial statements into the\nUnited States Dollar between the date of acquisition and July 31, 2008.\n

\n\n

Amortization expense of intangible assets during fiscal 2008, 2007, and 2006 was $25,422,\n$21,882, and $13,633, respectively. The amortization over each of the next five fiscal years is\nprojected to be $24,685, $23,677, $19,937, $12,478 and $9,201 for the years ending July 31, 2009,\n2010, 2011, 2012 and 2013, respectively.\n

\n\n

Impairment of Long-Lived and Other Intangible Assets — The Company evaluates whether events\nand circumstances have occurred that indicate the remaining estimated useful life of long-lived and\nother finite-lived intangible assets may warrant revision or that the remaining balance of an asset\nmay not be recoverable. The measurement of possible impairment is based on fair value of the\n

\n\n

35\n

\n\n\n\n

assets generally estimated by the ability to recover the balance of assets from expected\nfuture operating cash flows on an undiscounted basis. If an impairment is determined to exist, any\nrelated impairment loss is calculated based on the fair value of the asset. Based on the\nassessments completed in fiscal 2008, there have been no indications of impairment in the Company’s\nlong-lived and other intangible assets.\n

\n\n

Impairment of Goodwill — The Company evaluates goodwill under SFAS No. 142, which addresses\nthe financial accounting and reporting standards for the acquisition of intangible assets outside\nof a business combination and for goodwill and other intangible assets subsequent to their\nacquisition. This accounting standard requires that goodwill and long-lived intangible assets not\nbe amortized, but instead be tested for impairment on at least an annual basis.\n

\n\n

The Company performed its annual assessments in the fourth quarter of the fiscal year. The\nassessments included comparing the carrying amount of net assets, including goodwill, of each\nreporting unit to its respective fair value as of the date of the assessment. Fair value was\nestimated based upon discounted cash flow analyses. Because the estimated fair value of each of the\nCompany’s reporting units exceeded its carrying amount, management believes that no impairment\nexisted as of the date of the latest assessment. No indications of impairment have been identified\nbetween the date of the latest assessment and July 31, 2008.\n

\n\n

Catalog Costs and Related Amortization — The Company accumulates all direct costs incurred,\nnet of vendor cooperative advertising payments, in the development, production, and circulation of\nits catalogs on its balance sheet until such time as the related catalog is mailed. The catalogs\nare subsequently amortized into SG&A expense over the expected sales realization cycle, which is\none year or less. Consequently, any difference between the estimated and actual revenue stream for\na particular catalog and the related impact on amortization expense is neutralized within a period\nof one year or less. The estimate of the expected sales realization cycle for a particular catalog\nis based on the Company’s historical sales experience with identical or similar catalogs, an\nassessment of prevailing economic conditions and various competitive factors. The Company tracks\nsubsequent sales realization, reassesses the marketplace, and compares its findings to the previous\nestimate, and adjusts the amortization of future catalogs, if necessary. At July 31, 2008 and\n2007, $13,214 and $15,292, respectively, of prepaid catalog costs were included in prepaid expenses\nand other current assets.\n

\n\n

Revenue Recognition — Revenue is recognized when it is both earned and realized or realizable.\nThe Company’s policy is to recognize revenue when title to the product, ownership and risk of loss\nhave transferred to the customer, persuasive evidence of an arrangement exits and collection of the\nsales proceeds is reasonably assured, all of which generally occur upon shipment of goods to\ncustomers. The majority of the Company’s revenue relates to the sale of inventory to customers, and\nrevenue is recognized when title and the risks and rewards of ownership pass to the customer. Given\nthe nature of the Company’s business and the applicable rules guiding revenue recognition, the\nCompany’s revenue recognition practices do not contain estimates that materially affect the results\nof operations, with the exception of estimated returns. The Company provides for an allowance for\nestimated product returns and credit memos which is recognized as a deduction from sales at the\ntime of the sale.\n

\n\n

Sales Incentives — In accordance with the Financial Accounting Standard Board’s Emerging\nIssues Task Force Issue (“EITF”) No. 01-9, “Accounting for Consideration Given by a Vendor to a\nCustomer or a Reseller of the Vendor’s Product,” the Company accounts for cash consideration (such\nas sales incentives and cash discounts) given to its customers or resellers as a reduction of\nrevenue rather than an operating expense.\n

\n\n

Shipping and Handling Fees and Costs — The Company accounts for shipping and handling fees and\ncosts in accordance with EITF Issue No. 00-10, “Accounting for Shipping and Handling Fees and\nCosts.” Under EITF No. 00-10 amounts billed to a customer in a sale transaction related to shipping\ncosts are reported as net sales and the related costs incurred for shipping are reported as cost of\ngoods sold.\n

\n\n

Advertising Costs — Advertising costs are expensed as incurred, except catalog and mailer\ncosts as outlined above. Advertising expense for the years ended July 31, 2008, 2007 and 2006 were\n$85,908, $75,452 and $57,253, respectively.\n

\n\n

Stock-Based Compensation — Effective August 1, 2005, the Company adopted SFAS No. 123(R),\n“Share-Based Payment.” In accordance with this standard, the Company recognizes the compensation\ncost of all share-based awards using the grant-date fair value of those awards (the\n“fair-value-based” method). The expense is recognized on a straight-line basis over the vesting\nperiod of the award. Total stock compensation expense recognized by the Company during the years\nended July 31, 2008, 2007, and 2006 was $10,228 ($6,239 net of taxes), $6,907 ($4,213 net of\ntaxes), and $5,568 ($3,396 net of taxes), respectively. As of July 31, 2008, total unrecognized\ncompensation cost related to share-based compensation awards was $17,900, net of estimated\nforfeitures, which the Company expects to recognize over a weighted-average period of 2.7 years.\n

\n\n

36\n

\n\n

The Company adopted the fair value recognition provisions of SFAS No. 123(R) using the\nmodified-prospective-transition method. Under that transition method, compensation cost recognized\nduring fiscal 2008, 2007, and 2006 included: (a) compensation costs for all share-based payments\ngranted prior to, but not yet vested as of August 1, 2005, based on the grant date fair value\nestimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for\nall share-based payments granted subsequent to August 1, 2005, based on the grant date fair value\nestimated in accordance with the provisions of SFAS No. 123(R). Prior periods are not restated\nunder this method of adoption.\n

\n\n

The Company has estimated the fair value of its performance-based and service-based option\nawards granted after August 1, 2005 using the Black-Scholes option-pricing model. The\nweighted-average assumptions used in the Black-Scholes valuation model are reflected in the\nfollowing table:\n

\n\n\n\n


	2008		2007	2006
	Performance-					Performance-				Performance-
	Based		Service-Based	Based		Service-Based	Based		Service-Based
Black-Scholes Option Valuation Assumptions	Options		Options	Options		Options	Options		Options
Expected term (in years)		6.57			6.04			6.57			6.07			3.39			5.72
Expected volatility		33.68	%		32.05	%		34.66	%		33.99	%		31.10	%		34.54	%
Expected dividend yield		1.58	%		1.62	%		1.51	%		1.46	%		1.50	%		1.52	%
Risk-free interest rate		4.66	%		3.44	%		4.90	%		4.52	%		4.09	%		4.53	%
Weighted-average market value of underlying\nstock at grant date	$	35.35		$	38.22		$	33.32		$	38.17		$	33.89		$	37.62
Weighted-average exercise price	$	35.35		$	38.22		$	33.32		$	38.17		$	33.89		$	37.62
Weighted-average fair value of options granted	$	12.83		$	11.94		$	12.57		$	13.56		$	8.34		$	13.11

\n\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\ngrant.\n

\n\n

Research and Development — Amounts expended for research and development are expensed as\nincurred.\n

\n\n

Other comprehensive income — Other comprehensive income consists of foreign currency\ntranslation adjustments, net unrealized gains and losses from cash flow hedges and other\ninvestments, the unamortized gain on the post-retirement medical, dental and vision plan and their\nrelated tax effects. The components of accumulated other comprehensive income were as follows:\n


	July 31, 2008			July 31, 2007
Unrealized (loss) gain on cash flow\nhedges and securities in deferred\ncompensation plans, net of tax of $263\nand $93, respectively	$	(971	)		$	145
Unamortized gain on post-retirement\nmedical, dental and vision plan, net of\ntax of $2,663 and $1,551, respectively		2,493				3,424
FIN 48\ncontingency reserve		(1,356	)			0
Cumulative translation adjustments		127,995				79,807

Accumulated other comprehensive income	$	128,161			$	83,376

\n\n\n

Foreign Currency Translation — Foreign currency assets and liabilities are translated into\nUnited States dollars at end of period rates of exchange, and income and expense accounts are\ntranslated at the weighted average rates of exchange for the period. Resulting translation\nadjustments are included in other comprehensive income.\n

\n\n

Income Taxes — The Company accounts for income taxes in accordance with SFAS No. 109,\n“Accounting for Income Taxes,” which requires an asset and liability approach to financial\naccounting and reporting for income taxes. Deferred income tax assets and liabilities are computed\nannually for differences between the financial statement and tax basis of assets and liabilities\nthat will result in taxable or deductible amounts in the future based on enacted tax laws and rates\napplicable to the periods in which the differences are expected to affect taxable income. Valuation\nallowances are established when necessary to reduce deferred tax assets to the amount expected to\nbe realized. Income tax expense is the tax payable or refundable for the period plus or minus the\nchange during the period in deferred tax assets and liabilities. Beginning August 1, 2007, the\nCompany recognizes the effect of income tax positions only if sustaining those positions is more\nlikely than not. Changes in recognition or measurement are reflected in the period in which a\nchange in judgment occurs. Prior to August 1, 2007, the Company recognized the effect of income\ntax positions only if such positions\n

\n\n

37\n

\n\n

were probable of being sustained.\n

\n\n

Risk Management Activities — The Company is exposed to market risk, such as changes in\ninterest rates and currency exchange rates. The Company does not hold or issue derivative financial\ninstruments for trading purposes.\n

\n\n

Currency Rate Hedging — The primary objectives of the foreign exchange risk management\nactivities are to understand and mitigate the impact of potential foreign exchange fluctuations on\nthe Company’s financial results and its economic well-being. While the Company’s risk management\nobjectives and strategies will be driven from an economic perspective, the Company will attempt,\nwhere possible and practical, to ensure that the hedging strategies it engages in can be treated as\n“hedges” from an accounting perspective or otherwise result in accounting treatment where the\nearnings effect of the hedging instrument provides substantial offset (in the same period) to the\nearnings effect of the hedged item. Generally, these risk management transactions will involve the\nuse of foreign currency derivatives to protect against exposure resulting from intercompany sales\nand identified inventory or other asset purchases.\n

\n\n

The Company primarily utilizes forward exchange contracts with maturities of less than\n12 months, which qualify as cash flow hedges. These are intended to offset the effect of exchange\nrate fluctuations on forecasted sales, inventory purchases and intercompany charges. The fair value\nof these instruments at July 31, 2008 and 2007 was $(96) and\n$(421), respectively. As of July 31, 2008, the notional amount of\noutstanding forward exchange contracts was $18.3 million.\n

\n\n

Hedge effectiveness is determined by how closely the changes in the fair value of the hedging\ninstrument offset the changes in the fair value or cash flows of the hedged item. Hedge accounting\nis permitted only if the hedging relationship is expected to be highly effective at the inception\nof the hedge and on an on-going basis. Any ineffective portions are to be recognized in earnings\nimmediately as a component of investment and other income. The amount of hedge ineffectiveness\nwas not significant for the years ended July 31, 2008, 2007 and 2006.\n

\n\n

New Accounting Standards — The Company adopted Financial Accounting Standards Board (“FASB”)\nInterpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”) effective August 1,\n2007. Among other things, FIN 48 prescribes a “more-likely-than-not” threshold to the recognition\nand derecognition of tax positions, provides guidance on the accounting for interest and penalties\nrelating to the positions and requires the cumulative effect of applying the provisions of FIN 48\nbe reported as an adjustment to the opening balance of retained earnings or other appropriate\ncomponents of equity or net assets in the statement of financial position. The adoption of FIN 48\nresulted in a $903 reduction to earnings retained in the business as of August 1, 2007. Upon\nadoption of FIN 48, the Company also reclassified $15,907 from accrued income taxes to other\nliabilities in the Company’s consolidated balance sheet.\n

\n\n

Effective August 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,” to\ndefine fair value, establish a framework for measuring fair value in accordance with generally\naccepted accounting principles, and expand disclosures about fair value measurements. The Company\ndoes not believe the adoption of SFAS No. 157 will have a material impact on the Company’s\nconsolidated financial statements.\n

\n\n

Effective August 1, 2008, the Company adopted SFAS No. 159, “The Fair Value Option for\nFinancial Assets and Financial Liabilities, Including an amendment of SFAS No. 115,” to allow\ncompanies to choose to elect, at specified dates, to measure eligible financial instruments at fair\nvalue. At the date of adoption of SFAS No. 159, the Company did not elect the fair value option\nfor any of its financial assets or financial liabilities.\n

\n\n

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” SFAS No. 141(R)\nrequires acquiring entities to recognize all the assets and liabilities assumed in a transaction at\nfair values as of the acquisition date, but changes the accounting treatment for certain items,\nincluding:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \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)		Acquisition costs will generally be expensed as incurred;

	b)		Noncontrolling interests in subsidiaries will be valued at fair value at the acquisition\ndate and classified as a separate component of equity;

	c)		Liabilities related to contingent consideration will be re-measured at fair value in each\nsubsequent reporting period;

	d)		Restructuring costs associated with a business combination will generally be expensed\nafter the acquisition date; and

38\n

\n\n\n

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

In-process research and development will be recorded at fair value as an indefinite-lived\nintangible asset at the acquisition date.

SFAS No. 141(R) applies to business combinations for which the acquisition date is on or after the\nbeginning of the first annual reporting period beginning on or after December 15, 2008. The Company\nis in the process of evaluating the impact that will result from\nadopting SFAS No. 141(R), and\ntherefore, the Company is unable to disclose the impact that SFAS No. 141(R) will have on its\nfinancial position and results of operations when such statement is adopted.\n

\n\n\n

In March 2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and\nHedging Activities.” SFAS No. 161 requires expanded quantitative, qualitative, and credit-risk\ndisclosures about an entity’s derivative instruments and hedging activities. This statement will\nbe effective for fiscal years and interim periods beginning after November 15, 2008. The Company\nexpects that the adoption of SFAS No. 161 will not have a material impact on its financial position\nand results of operations. The Company is in the process of evaluating the impact that will result\nfrom adopting SFAS No. 161 on the Company’s financial disclosures when such statement is adopted.\n

\n\n

In June 2008, the FASB issued Staff Position on EITF Issue 03-6 (“FSP 03-6”), “Determining\nWhether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” FSP\n03-6 requires that all outstanding unvested share-based payment awards that contain rights to\nnonforfeitable dividends be considered participating securities in undistributed earnings with\ncommon shareholders. This staff position will be effective for fiscal years and interim periods\nbeginning after December 15, 2008. The Company is in the process of evaluating the impact that\nwill result from adopting FSP 03-6 on the Company’s results of operations and financial disclosures\nwhen such statement is adopted.\n

\n\n

2. Acquisitions of Businesses\n

\n\n\n

The Company completed two business acquisitions during the fiscal year ended July 31, 2008,\nseven business acquisitions during the fiscal year ended July 31, 2007 and eleven acquisitions\nduring the fiscal year ended July 31, 2006. All of these transactions were accounted for using the\npurchase method of accounting; therefore, the results of operations are included in the\naccompanying consolidated financial statements only since their acquisition dates. The Company is\ncontinuing to evaluate the initial purchase price allocations for the acquisitions completed during\nthe fiscal year ended July 31, 2008, and will adjust the allocations as additional information\nrelative to the fair values of assets and liabilities of the acquired businesses become known.\n

\n\n

Fiscal 2008\n

\n\n

The Company acquired the following companies in fiscal 2008 for a total combined purchase\nprice, net of cash acquired, of $29,346. A brief description of each company acquired during the\nyear is included below:\n

\n\n

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

	•		Transposafe is headquartered near Amsterdam, Netherlands with operations in Belgium,\nGermany, and Poland. Transposafe specializes in security sealing and identification\nsolutions for protecting assets during transport. Transposafe was acquired in November\n2007.

	•		DAWG is headquartered in Terryville, Connecticut. DAWG is an Internet marketer of\nsorbents, spill-containment products, safety-storage cabinets, first aid kits, and other\nproducts that help keep facilities safe and clean. DAWG was acquired in March 2008.

\n\n

The purchase agreement for Transposafe includes a provision for contingent payments based upon\nmeeting certain performance conditions over a two-year period of time subsequent to the\nacquisition. The total maximum contingent payment of approximately $3,000 has been placed in an\nescrow account for the acquisition of Transposafe. The Company has recorded the contingent payment\nas an other long- term asset on the accompanying consolidated balance sheet.\n

\n\n

The allocation of the purchase price of each company acquired during fiscal 2008 is\npreliminary pending the final valuation of intangible assets as well as certain tangible assets and\nliabilities. The following table summarizes the combined estimated fair values of the assets\nacquired and liabilities assumed at the date of the acquisitions.\n

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


Current assets net of cash	$	8,373
Property, plant & equipment		348
Goodwill		16,876
Customer relationships		10,008
Trademarks		2,341

\n\n\n

39\n

\n\n

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


Other intangible assets		438

Total assets acquired net of cash		38,384
Liabilities assumed		9,038

Net assets acquired	$	29,346

\n\n\n

Of the $16,876 allocated to goodwill, approximately $3,600 is expected to be deductible for\ntax purposes based on preliminary analysis.\n

\n\n

The fiscal 2008 acquisitions were determined to be immaterial individually and in the\naggregate, so no pro-forma disclosures are required.\n

\n\n

Fiscal 2007\n

\n\n

The Company acquired the following companies in fiscal 2007 for a total combined purchase\nprice, net of cash acquired, of $159,475. A brief description of each company acquired during the\nyear is included 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

	•		CIPI is headquartered in Burlington, Massachusetts, with operations in Hong Kong, China\nand the Netherlands. CIPI is a market leader in badging accessories used to identify and\ntrack employees and visitors in a variety of settings including businesses, healthcare\nfacilities, special events and government buildings. CIPI was acquired in August 2006.

	•		Precision Converters is located in Dallas, Texas and is a supplier of die-cut products to\nthe medical market with a specific focus on disposable, advanced wound-care products.\nPrecision Converters was acquired in October 2006.

	•		Scafftag is located in Barry, Wales, U.K., with operations in Australia and in the United\nStates and a sales office in the United Arab Emirates. Scafftag is an industry leader in\nsafety identification and facility management products in the U.K., specializing in products\nthat help companies meet legislative requirements for safety standards in the oil and gas,\nconstruction and scaffolding industries. Scafftag was acquired in December 2006.

	•		Asterisco is located in Sao Paulo, Brazil and is a leading manufacturer of industrial\nhigh-performance labels in Brazil, specializing in custom labels printed on film materials\nfor the electronics, automotive, pharmaceutical and other industries. Asterisco was\nacquired in December 2006.

	•		Moderno is located in Milan, Italy and is a wire-identification manufacturer serving the\nMaintenance, Repair and Operations market with products used primarily in the electrical\nindustry. Moderno was acquired in December 2006.

	•		Clement is located in Concordville, Pennsylvania and is a direct marketer of posters,\nnewsletters, guides and handbooks that address safety, quality, teamwork, sales employment\npractices, customer service and OSHA regulations. Clement was acquired in February 2007.

	•		SPC is headquartered in Somerset, New Jersey, with operations in Belgium and Hong Kong.\nSPC is a leading manufacturer and marketer of synthetic sorbent materials used in a variety\nof industrial maintenance and environmental applications for spill clean-up, containment and\ncontrol. SPC was acquired in April 2007.

\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 on the accompanying consolidated financial statements as the payments are based on\nattaining certain financial results. Approximately $4.9 million of the contingency related to the\nAsterisco acquisition had been placed in an escrow account in compliance with the terms of the\npurchase agreement. During fiscal 2008, the Company paid the former owners of Astersico $0.2\nmillion to satisfy the terms of the earnout agreement, while the remaining $4.7 million was\nreturned to Brady due to the acquired business not meeting certain performance criteria. The\npurchase agreement of Asterisco also includes a holdback provision of approximately $2.3 million\nthat has been recorded as a liability in the accompanying consolidated financial statements at July\n31, 2008.\n

\n\n

The following table summarizes the combined estimated fair values of the assets acquired and\nliabilities assumed at the date of the acquisitions.\n

\n\n

40\n


Current assets	$	38,148
Property, plant & equipment		12,158
Goodwill		105,325
Customer relationships		23,897
Trademarks		11,232
Non-compete agreements		967
Other intangible assets		996

Total assets acquired		192,723
Liabilities assumed		33,248

Net assets acquired	$	159,475

\n\n\n

Of the $105,325 allocated to goodwill, $72,134 is expected to be deductible for tax purposes\nbased on preliminary analysis.\n

\n\n

The fiscal 2007 acquisitions were determined to be immaterial individually and in the\naggregate, so no pro-forma disclosures were required.\n

\n\n

Fiscal 2006\n

\n\n

The Company acquired the following companies in fiscal 2006 for a total combined purchase\nprice, net of cash acquired, of $351,331. A brief description of each company acquired during the\nyear is included below:\n

\n\n

	•		Stopware is located in San Jose, California and is a manufacturer of visitor-badging and\nlobby-security software used to identify and track visitors. Stopware was acquired in August\n2005.

	•		Texit is a manufacturer and distributor of wire markers and cable-management products\nheadquartered in Odense, Denmark, with operations in Alesund, Norway. Texit was acquired in\nSeptember 2005.

	•		TruMed is a converter of disposable products and components for manufacturers in the\nmedical device, diagnostic, personal care and industrial markets and is located in\nBurnsville, Minnesota. TruMed was acquired in October 2005. During fiscal 2008, TruMed\ncombined its operations with Precision Converters in a facility in Dallas, Texas.

	•		QDPT was formerly located in Wangnoi, Ayutthaya, Thailand and designs and manufactures\nhigh-precision components for the electronic, medical and automotive industries,\nspecializing in precision laminating, stamping and contract assembly. QDPT was acquired in\nOctober 2005. In fiscal 2007, QDPT combined its operations with TPS in a facility in\nKlongluang, Pathumthani, Thailand.

	•		J.A.M. was formerly located in Anaheim, California and specializes in the sale and\nmanufacture of security-related accessory products including patented badge holders,\nlanyards and retractable badge reels. J.A.M. was acquired in December 2005. In fiscal 2007,\nthe operations of J.A.M. were merged with CIPI.

	•		Personnel Concepts is located in Pomona, California and is a direct marketer of labor-law\ncompliance posters and related products. Personnel Concepts also offers consultative\nexpertise on required communication of federal and state minimum wages, HIPAA privacy\nregulations, and EEO compliance, among other regulatory areas. Personnel Concepts was\nacquired in January 2006.

	•		IDenticard is located in Lancaster, Pennsylvania and its affiliate Identicam is located\nin Markham, Ontario. The companies are market leaders in personal identification, access\ncontrol and consumable identification badges. IDenticard and Identicam were acquired in\nFebruary 2006.

	•		Accidental Health was formerly located in Glendenning, New South Wales, Australia and is\na supplier and distributor of customized first-aid kits, related safety products and signage\nfor commercial enterprises. Accidental Health was acquired in March 2006. In fiscal 2007,\nAccidental Health combined its operations with Brady Australia Pty. Ltd. in Sydney,\nAustralia.

	•		Tradex is headquarterd in Kungalv, Sweden with operations in Sweden, China, Korea,\nMexico, the United States, Brazil, and Taiwan. Tradex is a leading manufacturer and supplier\nof pressure sensitive, die-cut adhesive components for the mobile handset and electronics\nindustries. Tradex was acquired in May 2006. In fiscal 2007, the operations in Suzhou,\nChina and

41\n

\n\n\n

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

			Brazil were closed.

	•		Carroll is located in Sydney, New South Wales, Australia and is a supplier and\ndistributor of identification products for the electrical industry, with a complete line of\nwiring accessory products including prepared wire and cable markers, termination and\nconnection supplies, wire-bundling materials and electrical circuit protection products.\nCarroll also markets to the automotive and marine markets. Carroll was acquired in June\n2006.

	•		Daewon is based in Seoul, South Korea with additional operations in Gumi, South Korea and\nformer operations in Suzhou, China. Daewon is a manufacturer and supplier of pressure\nsensitive, die-cut adhesive components for the mobile handset and electronics industry and\nwas acquired in July 2006. In fiscal 2007, the operations in Suzhou, China were closed.

\n\n

The following table summarizes the combined estimated fair values of the assets acquired and\nliabilities assumed at the date of the acquisitions.\n


Current assets	$	72,882
Property, plant & equipment		22,159
Goodwill		247,098
Customer relationships		56,538
Trademarks		10,619
Non-compete agreements		3,206
Purchased software		378
Patents		610
Other intangible assets		1,508

Total assets acquired		414,998
Liabilities assumed		63,667

Net assets acquired	$	351,331

\n\n\n

Of the $247,098 allocated to goodwill, $26,209 is expected to be deductible for tax purposes\nbased on preliminary analysis.\n

\n\n

The purchase agreements for Texit, QDPT, and Stopware each included provisions for contingent\npayments based upon meeting certain performance conditions over a period of time subsequent to the\nacquisition. In fiscal 2006 and 2007, $1,800 and $2,577, respectively, of the conditions were met\nand recorded in goodwill; payments of $3,377 were made during fiscal 2007 to satisfy the contingent\npayment requirements. The remaining $1,000 liability was paid in fiscal 2008 for the acquisition\nof Stopware. The purchase agreements for QDPT, Stopware and Daewon included holdback provisions of\n$310, $200 and $4,350, respectively. The holdback provision for QDPT was paid in fiscal 2007 and\nthe holdback provisions for Stopware and Daewon were paid in fiscal 2008.\n

\n\n

3. Employee Benefit Plans\n

\n\n\n

The Company provides postretirement medical, dental and vision benefits (the “Plan”) for\neligible regular full and part-time domestic employees (including spouses) outlined by the plan.\nDuring fiscal 2008, the Plan was amended to include only employees hired prior to April 1, 2008.\nPostretirement benefits are provided only if the employee was hired prior to April 1, 2008, and\nretires on or after attainment of age 55 with 15 years of credited service. Credited service\nbegins accruing at the later of age 40 or date of hire. All active employees first eligible to\nretire after July 31, 1992, are covered by an unfunded, contributory postretirement healthcare plan\nwhere employer contributions will not exceed a defined dollar benefit amount, regardless of the\ncost of the program. Employer contributions to the plan are based on the employee’s age and service\nat retirement. The Company funds benefit costs on a pay-as-you-go basis.\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. The Company\nadopted the provisions of SFAS No. 158 for the fiscal year ended July 31, 2007.\n

\n\n

The incremental effects of the initial application of SFAS No. 158 to the consolidated balance\nsheet at July 31, 2007 were as follows:\n

\n\n\n

42\n

\n\n


	Before						After
	Application of						Application of
	SFAS No. 158		Adjustments			SFAS No. 158
Deferred income taxes	$	34,059		$	(1,551	)		$	32,508
Total assets		1,700,408			(1,551	)			1,698,857
Other current liabilities		60,254			—				60,254
Total current liabilities		280,054			—				280,054
Other liabilities		54,191			(4,975	)			49,216
Total liabilities		812,820			(4,975	)			807,845
Accumulated other comprehensive income		79,952			3,424				83,376

Total stockholders’ investment	$	887,588		$	3,424			$	891,012

\n\n\n

The adoption of SFAS No. 158 had no effect on the Company’s net earnings.\n

\n\n

The Plan is unfunded and recorded as a liability in the accompanying consolidated balance\nsheets as of July 31, 2008 and 2007. The following table provides a reconciliation of the changes\nin the Plan’s accumulated benefit obligations during the years ended July 31:\n


	2008			2007
Obligation at beginning of year	$	11,705			$	12,650
Service cost		919				967
Interest cost		771				797
Actuarial gain		(96	)			(2,097	)
Benefit payments		(687	)			(612	)
Plan\nAmendments		(413	)			—

Obligation at end of fiscal year	$	12,199			$	11,705

\n\n\n

As of July 31, 2008 and 2007, amounts recognized as liabilities in the accompanying\nconsolidated balance sheets consist of:\n


	2008		2007
Current liability	$	511		$	575
Noncurrent liability		11,688			11,130

	$	12,199		$	11,705

\n\n\n

As of July 31, 2008 and 2007, pre-tax amounts recognized in accumulated other comprehensive\nincome in the accompanying consolidated balance sheets consist of:\n


	2008		2007
Net actuarial gain	$	4,499		$	4,698
Prior service credit		657			277

	$	5,156		$	4,975

\n\n\n

Net periodic benefit cost for the Plan for fiscal years 2008, 2007 and 2006 includes the\nfollowing components:\n


	Years Ended July 31,
	2008			2007			2006
Net periodic postretirement benefit cost included the following components:
Service cost — benefits attributed to service during the period	$	919			$	967		$	1,049
Prior service cost		(33	)			(33	)		(33	)
Interest cost on accumulated postretirement benefit obligation		771				797			675
Amortization of unrecognized gain		(295	)			(119	)		(27	)

Periodic postretirement benefit cost	$	1,362			$	1,612		$	1,664

\n\n\n

The estimated actuarial gain and prior service credit that will be amortized from accumulated\nother comprehensive income into net periodic postretirement benefit cost over the next fiscal year\nare $351 and $78, respectively.\n

\n\n

The following assumptions were used in accounting for the Plan:\n

\n\n

43\n


	2008		2007	2006
Weighted average discount rate\nused in determining accumulated postretirement benefit obligation liability		6.8	%		6.3	%	6.0	%
Weighted average discount rate used in determining net periodic benefit cost		6.3	%		6.0	%	5.0	%
Assumed health care trend rate used to measure APBO at July 31		8.0	%		9.0	%	10.0	%
Rate to which cost trend rate is assumed to decline (the ultimate trend rate)		5.5	%		5.5	%	5.5	%
Fiscal year the ultimate trend rate is reached		2013			2011		2011

\n\n\n

The assumed health care cost trend rate has a significant effect on the amounts reported for\nthe Plan. A one-percentage point change in assumed health care cost trend rates would have the\nfollowing effects:\n

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


	One-Percentage		One-Percentage
	Point Increase		Point Decrease
Effect on future service and interest cost	$	(82	)	$	93
Effect on accumulated postretirement benefit obligation at July 31, 2008		91			(112	)

\n\n\n

The following benefit payments, which reflect expected future service, as appropriate, are\nexpected to be paid during the years ending July 31:\n


	Prior to		After	Impact of
	Medicare Part D		Medicare Part D	Medicare Part D
2009	$	557		$	511	$	(46	)
2010		655			655		—
2011		727			727		—
2012		864			864		—
2013		993			993		—
2014 through 2018		7,802			7,802		—

\n\n\n

The Company has retirement and profit-sharing plans covering substantially all full-time\ndomestic employees and certain of its foreign subsidiaries. Contributions to the plans are\ndetermined annually or quarterly, according to the respective plans, based on earnings of the\nrespective companies and employee contributions. At July 31, 2008 and 2007, $6,633 and $6,590,\nrespectively, of accrued profit-sharing contributions were included in other current liabilities\nand other long-term liabilities on the accompanying consolidated balance sheets.\n

\n\n

The Company also has deferred compensation plans for directors, officers and key executives\nwhich are discussed below. At July 31, 2008 and 2007, $11,095 and $10,147, respectively, of\ndeferred compensation was included in current and other long-term liabilities in the accompanying\nconsolidated balance sheets.\n

\n\n

During fiscal 1998, the Company adopted a new deferred compensation plan that invests solely\nin shares of the Company’s Class A Nonvoting Common Stock. Participants in a predecessor phantom\nstock plan were allowed to convert their balances in the old plan to this new plan. The new plan\nwas funded initially by the issuance of shares of Class A Nonvoting Common Stock to a Rabbi Trust.\nAll deferrals into the new plan result in purchases of Class A Nonvoting Common Stock by the Rabbi\nTrust. No deferrals are allowed into a predecessor plan. Shares held by the Rabbi Trust are\ndistributed to participants upon separation from the Company as defined in the plan agreement.\n

\n\n

During fiscal 2002, the Company adopted a new deferred compensation plan that allows future\ncontributions to be invested in shares of the Company’s Class A Nonvoting Common Stock or in\ncertain other investment vehicles. Prior deferred compensation deferrals must remain in the\nCompany’s Class A Nonvoting Common Stock. All participant deferrals into the new plan result in\npurchases of Class A Nonvoting Common Stock or certain other investment vehicles by the Rabbi\nTrust. Balances held by the Rabbi Trust are distributed to participants upon separation from the\nCompany as defined in the plan agreement. On May 1, 2006, the plan was amended to require that\ndeferrals into the Company’s Class A Nonvoting Common Stock must remain in the Company’s Class A\nNonvoting Common Stock and be distributed in shares of the Company’s Class A Nonvoting Common\nStock.\n

\n\n

The amounts charged to expense for the retirement, profit sharing and deferred compensation\nplans described above were $17,275, $14,990 and $9,862 during the years ended July 31, 2008, 2007\nand 2006, respectively.\n

\n\n

4. Income Taxes\n

\n\n\n

Income before income taxes consists of the following:\n

\n\n

44\n


	Years Ended July 31,
	2008		2007			2006
United States	$	46,388		$	58,538		$	46,790
Other Nations		139,799			93,390			97,898

Total	$	186,187		$	151,928		$	144,688

\n\n\n\n

Income taxes consist of the following:\n


	Years Ended July 31,
	2008			2007			2006
Current income tax expense:
United States	$	15,356			$	5,439		$	14,201
Other Nations		40,735				34,835			26,143
States (U.S.)		667				2,336			2,012

		56,758				42,610			42,356

Deferred income tax expense (benefit):
United States		29				2,728			(75	)
Other Nations		(2,793	)			(4,151	)		(472	)
States (U.S.)		5				1,353			(1,296	)

		(2,759	)			(70	)		(1,843	)

Total	$	53,999			$	42,540		$	40,513

\n\n\n

Deferred income taxes result from temporary differences in the recognition of revenues and\nexpenses for financial statement and income tax purposes.\n

\n\n

The approximate tax effects of temporary differences are as follows:\n


	July 31, 2008
	Assets			Liabilities			Total
Inventories	$	7,594				—		$	7,594
Prepaid catalog costs		—			$	(3,076	)		(3,076	)
Employee benefits		3,546				—			3,546
Allowance for doubtful accounts		2,197				—			2,197
Other, net		5,467				(45	)		5,422

Current		18,804				(3,121	)		15,683

Fixed Assets		434				(6,857	)		(6,423	)
Intangible Assets		2,656				(18,292	)		(15,636	)
Capitalized R&D expenditures		1,866				—			1,866
Deferred compensation		17,033				—			17,033
Postretirement benefits		7,017				—			7,017
Tax loss carryforwards		24,620				—			24,620
Less valuation allowance		(23,484	)			—			(23,484	)
Other, net		573				(2,308	)		(1,735	)

Noncurrent		30,715				(27,457	)		3,258

Total	$	49,519			$	(30,578	)	$	18,941

\n\n


	July 31, 2007
	Assets		Liabilities			Total
Inventories	$	6,289			—		$	6,289
Prepaid catalog costs		—		$	(1,785	)		(1,785	)
Employee benefits		2,318			—			2,318
Allowance for doubtful accounts		851			—			851
Other, net		1,939			—			1,939

Current		11,397			(1,785	)		9,612

Depreciation		—			(3,777	)		(3,777	)
Amortization		8,170			(19,629	)		(11,459	)
Capitalized R&D expenditures		2,333			—			2,333
Deferred compensation		13,799			—			13,799

\n\n\n

45\n

\n\n


	July 31, 2007
	Assets			Liabilities			Total
Postretirement benefits		6,630				—			6,630
Tax loss carryforwards		25,926				—			25,926
Less valuation allowance		(19,687	)			—			(19,687	)
Other, net		333				(1,898	)		(1,565	)

Noncurrent		37,504				(25,304	)		12,200

Total	$	48,901			$	(27,089	)	$	21,812

\n\n\n

The valuation allowance increased $3,797, $4,019 and $10,791 during the fiscal years ended\nJuly 31, 2008, 2007 and 2006, respectively.\n

\n\n

Tax loss carry forwards at July 31, 2008 are comprised of foreign net operating losses of\n$91,358, of which $66,313 have no expiration date. The remaining balance relates to $1,232 of\nforeign tax credits, state net operating losses of $42,368, and state credits of $1,256. The\nCompany expects to utilize all credits; however, state net operating losses have begun to expire.\n

\n\n\n

Rate Reconciliation\n

\n\n

A reconciliation of the tax computed by applying the statutory U.S. Federal income tax rate to\nincome before income taxes to the total income tax expense is as follows:\n


	Years Ended July 31,
	2008		2007	2006
Tax at statutory rate		35.0	%		35.0	%	35.0	%

State income taxes, net of Federal tax benefit		0.2	%		1.6	%	0.2	%
International rate differential		(5.9	)%		(3.3	)%	(6.8	)%
Rate variances arising from foreign subsidiary distributions		(1.3	)%		(2.7	)%	0.2	%
Adjustments to tax accruals and reserves		1.2	%		(2.0	)%	(0.9	)%
Other, net		(0.2	)%		(0.6	)%	0.3	%

Effective tax rate		29.0	%		28.0	%	28.0	%

\n\n\n

The Company adopted FIN 48 on August 1, 2007. The adoption resulted in a $903 reduction to\nearnings retained in the business as of August 1, 2007. Upon adoption of FIN 48, the Company also\nreclassified $15,907 from accrued income taxes to other liabilities in the Company’s consolidated\nbalance sheets.\n

\n\n

A reconciliation of unrecognized tax benefits (excluding interest and penalties) is as\nfollows:\n


	Year Ended
	July 31,
	2008
Balance at August 1, 2007	$	13,731
Additions based on tax positions related to the current year ⁽¹⁾		3,003
Additions for tax positions of prior years ⁽¹⁾		580
Reductions for tax positions of prior years		(579	)
Lapse of statute of limitations		(1,435	)
Cumulative Translation Adjustments		717

Balance at July 31, 2008	$	16,017

\n\n\n\n

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


⁽¹⁾		Includes acquisitions.

\n\n\n\n

Included in the balance of total unrecognized tax benefits at July 31, 2008 are potential\nbenefits of approximately $12,749, that if recognized, would affect the Company’s effective income\ntax rate.\n

\n\n

The Company does not anticipate any significant increases or decreases in the total amount of\nunrecognized tax benefits within the next 12 months.\n

\n\n

46\n

\n\n

Interest expense is recognized on the amount of potentially underpaid taxes associated with\nthe Company’s tax positions, beginning\nin the first period in which interest starts accruing under the respective tax law and\ncontinuing until the tax positions are settled. During fiscal 2008, the Company recognized $96 of\ninterest expense and $208 of penalties related to the reserve for uncertain tax positions, net of\namounts reversing due to statute lapses. Such interest expense and penalties are included in the\naccompanying consolidated statements of income as a component of income tax expense. At July 31,\n2008, the Company had $2,146 accrued for interest on unrecognized tax benefits. Penalties are\naccrued if the tax position does not meet the minimum statutory threshold to avoid the payment of a\npenalty. At July 31, 2008, the Company had $384 accrued for penalties on unrecognized tax\nbenefits.\n

\n\n

The Company and its subsidiaries file income tax returns in the US federal jurisdiction and\nvarious state and foreign jurisdictions. The following table summarizes the open tax years for the\nCompany’s major jurisdictions:\n

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


Jurisdiction	Open Tax Years
United States — Federal		F’05 – F’08
France		F’05 – F’08
Germany		F’03 – F’08
United Kingdom		F’06 – F’08

\n\n\n\n

Unremitted Earnings\n

\n\n

The Company’s policy is to remit earnings from foreign subsidiaries only to the extent any\nresultant foreign income taxes are creditable in the United States. Accordingly, the Company does\nnot currently provide for the additional United States and foreign income taxes which would become\npayable upon remission of undistributed earnings of foreign subsidiaries. The cumulative\nundistributed earnings of such subsidiaries at July 31, 2008 amounted to approximately $403,432.\n

\n\n

47\n

\n\n

5. Long-Term Obligations\n

\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, which began 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\nJuly 31, 2008, the Company was in compliance with this covenant.\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 that replaced the Company’s previous credit agreement. At the\nCompany’s option, and subject to certain standard conditions, the available amount under the new\ncredit facility may be increased from $200 million up to $300 million. Under the credit agreement,\nthe Company has the option to select either a base interest rate (based upon the higher of the\nfederal 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 ratio).\nA commitment fee is payable on the unused amount of the facility. The agreement requires the\nCompany to maintain two financial covenants. As of July 31, 2008, the Company was in compliance\nwith the covenants of the agreement. The agreement restricts the amount of certain types of\npayments, including dividends, which can be made annually to $50 million plus an amount equal to\n75% of consolidated net income for the prior fiscal year of the Company. The Company believes that\nbased on historic dividend practice, this restriction would not impede the Company in following a\nsimilar dividend practice in the future. On March 18, 2008, the Company entered into an amendment\nto the revolving loan agreement which extended the maturity date from October 5, 2011 to March 18,\n2013. All other terms of the revolving loan agreement remained the same. During fiscal 2008 the\nCompany borrowed $18 million and repaid $18 million under the revolving loan agreement. During\nfiscal 2007, the Company borrowed $109.3 million and repaid $109.3 million under the revolving loan\nagreement. As of July 31, 2008, there were no outstanding borrowings under the credit facility.\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 on\nAugust 14 and February 14, which began in August 2006. The notes have been fully and unconditionally\nguaranteed on an unsecured basis by the Company’s domestic subsidiaries. The Company used the net\nproceeds of the offering to finance acquisitions completed in fiscal 2006 and 2007. 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\nJuly 31, 2008, 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% fixed rate\nunsecured senior notes due in 2014 in an offering exempt from the registration requirements of the\nSecurities Act of 1933. The debt offering was in conjunction with the Company’s acquisition of\nEMED. The notes will be repaid over seven years beginning in 2008 with interest payable on the\nnotes semiannually on June 28 and December 28, which began in December 2004. The Company used the\nproceeds of the offering to reduce outstanding indebtedness under the Company’s revolving credit\nfacilities. The debt has certain prepayment penalties for repaying the debt prior to its maturity\ndate. The Company paid its first installment under the debt agreement in June 2008 for $21.4\nmillion. The agreement also requires the Company to maintain a financial covenant. As of July 31,\n2008, the Company was in compliance with this covenant.\n

\n\n

Long-term obligations consist of the following as of July 31:\n


	2008			2007
Various bank loans	$	3			$	19
Fixed debt		478,571				500,000

		478,574				500,019

Less current maturities	$	(21,431	)		$	(21,444	)

	$	457,143			$	478,575

\n\n\n

48\n

\n\n\n

The fair value of the Company’s long-term obligations approximates $495,476 at July 31, 2008.\nThe fair value of the Company’s long-term obligations is estimated based on quoted market prices\nfor the same or similar issue and on the current rates offered for debt of the same maturities.\n

\n\n

Maturities on long-term debt are as follows:\n


Years Ending July 31,
2009	$	21,431
2010		50,000
2011		71,429
2012		71,429
2013		71,429
Thereafter		192,856

Total	$	478,574

\n\n\n

The Company had outstanding letters of credit of $1,959 and $1,680 at July 31, 2008 and 2007,\nrespectively.\n

\n\n

6. Stockholders’ Investment\n

\n\n\n

Information as to the Company’s capital stock at July 31, 2008 and 2007 is as follows:\n


	July 31, 2008		July 31, 2007
	Shares		Shares					Shares		Shares
	Authorized		Issued		Amount		Authorized		Issued		Amount
Preferred Stock, $.01 par value		5,000,000								5,000,000
Cumulative Preferred Stock:
6% Cumulative		5,000								5,000
1972 Series		10,000								10,000
1979 Series		30,000								30,000
Common Stock, $.01 par value:
Class A Nonvoting		100,000,000		51,261,487		$	513			100,000,000		50,586,524	$	506
Class B Voting		10,000,000		3,538,628			35			10,000,000		3,538,628		35

						$	548						$	541

\n\n\n

Before any dividend may be paid on the Class B Common Stock, holders of the Class A Common\nStock are entitled to receive an annual, noncumulative cash dividend of $.01665 per share.\nThereafter, any further dividend in that fiscal year must be paid on each share of Class A Common\nStock and Class B Common Stock on an equal basis.\n

\n\n

Other than as required by law, holders of the Class A Common Stock are not entitled to any\nvote on corporate matters, unless, in each of the three preceding fiscal years, the $.01665\npreferential dividend described above has not been paid in full. Holders of the Class A Common\nStock are entitled to one vote per share for the entire fiscal year immediately following the third\nconsecutive fiscal year in which the preferential dividend is not paid in full. Holders of Class B\nCommon Stock are entitled to one vote per share for the election of directors and for all other\npurposes.\n

\n\n

Upon liquidation, dissolution or winding up of the Company, and after distribution of any\namounts due to holders of Cumulative Preferred Stock, holders of the Class A Common Stock are\nentitled to receive the sum of $0.835 per share before any payment or distribution to holders of\nthe Class B Common Stock. Thereafter, holders of the Class B Common Stock are entitled to receive a\npayment or distribution of $0.835 per share. Thereafter, holders of the Class A Common Stock and\nClass B Common Stock share equally in all payments or distributions upon liquidation, dissolution\nor winding up of the Company.\n

\n\n

The preferences in dividends and liquidation rights of the Class A Common Stock over the\nClass B Common Stock will terminate at any time that the voting rights of Class A Common Stock and\nClass B Common Stock become equal.\n

\n\n

In September 2007, the Company announced that the Board of Directors of the Company had\nauthorized a share repurchase plan for up to one million shares of the Company’s Class A Nonvoting\nCommon Stock. The share repurchase plan may be implemented by purchasing shares on the open market\nor in privately negotiated transactions, with repurchased shares available for use in connection\nwith the Company’s stock-based plans and for other corporate purposes. In March 2008, the Company\nannounced that the Board of Directors of the Company authorized a share repurchase plan for up to\nan additional one million shares of the Company’s Class A Nonvoting Common Stock. Under the\nrepurchase plans approved by the Board of Directors, the Company reacquired approximately\n1,349,000 shares of its Class A Common Stock for\n$42.2 million in fiscal 2008. As of July 31, 2008, the Company\nwas\nauthorized to\npurchase up to approximately 651,000 additional shares in connection with the share repurchase\nplans.\n

\n\n

49\n

\n\n

In September 2005, the Company announced that the Board of Directors of the Company approved a\nshare repurchase program for up to 800,000 shares of the Company’s Class A Common Stock during\nfiscal 2006. The share repurchase plan was implemented by purchasing shares on the open market or\nin privately negotiated transactions, with repurchased shares available for use in connection with\nthe Company’s stock option plan and for other corporate purposes. The Company completed the\nrepurchase of all 800,000 shares of its Class A Common Stock for $26,495 under the repurchase plan\napproved by the Board of Directors during the fiscal year ended July 31, 2006.\n

\n\n

In June 2006, the Company sold, pursuant to an underwritten public offering, 4,600,000 shares\nof its Class A nonvoting common stock at a price of $36 per share. Cash proceeds from the offering,\nnet of underwriting discounts, were $158,148. In addition to underwriting discounts, the Company\nincurred $403 of additional accounting, legal and other expenses related to the offering that were\ncharged to additional paid-in capital. The proceeds were used to fund acquisitions completed in\nfiscal 2006 and early fiscal 2007.\n

\n\n

The following is a summary of other activity in stockholders’ investment for the years ended\nJuly 31, 2008, 2007 and 2006:\n


	Unearned							Shares Held
	Restricted			Deferred			in Rabbi
	Stock			Compensation			Trust, at cost			Total
Balances July 31, 2005	$	0			$	14,775			$	(15,825	)	$	(1,050	)

Shares at July 31, 2005						950,222				997,034

Sale of shares at cost		—				(450	)			451			1
Purchase of shares at cost		—				573				(1,466	)		(893	)
Effect of plan amendment		—				2,704				—			2,704

Balances at July 31, 2006	$	0			$	17,602			$	(16,840	)	$	762

Shares at July 31, 2006						1,012,914				1,012,914

Sale of shares at cost		—				(5,242	)			5,134			(108	)
Purchase of shares at cost		—				1,215				(1,215	)		—

Balances at July 31, 2007	$	0			$	13,575			$	(12,921	)	$	654

Shares at July 31, 2007						724,417				724,417

Sale of shares at cost		—				(1,121	)			1,154			33
Purchase of shares at cost		—				1,189				(1,189	)		—
Issuance of restricted stock		(6,892	)			—				—			(6,892	)
Amortization of restricted stock		710				—				—			710

Balances at July 31, 2008	$	(6,182	)		$	13,643			$	(12,956	)	$	(5,495	)

Shares at July 31, 2008						690,539				690,539

\n\n\n

Prior to 2002, all Brady Corporation deferred compensation was invested in the Company’s Class\nA Nonvoting Common Stock. In 2002, the Company adopted a new deferred compensation plan which\nallowed investing in other investment funds in addition to the Company’s Class A Nonvoting Common\nStock. Under this plan, participants were allowed to transfer funds between the Company’s Class A\nNonvoting Common Stock and the other investment funds. On May 1, 2006 the plan was amended with the\nprovision that deferrals into the Company’s Class A Nonvoting Common Stock must remain in the\nCompany’s Class A Nonvoting Common Stock and be distributed in shares of the Company’s Class A\nNonvoting Common Stock. At July 31, 2008, the deferred compensation balance in stockholders’\ninvestment represents the investment at the original cost of shares held in the Company’s Class A\nNonvoting Common Stock for the deferred compensation plan prior to 2002 and the investment at the\ncost of shares held in the Company’s Class A Nonvoting Common Stock for the plan subsequent to\n2002, adjusted for the plan amendment on May 1, 2006. The balance of shares held in the Rabbi Trust\nrepresents the investment in the Company’s Class A Nonvoting Common Stock at the original cost of\nall the Company’s Class A Nonvoting Common Stock held in deferred compensation plans.\n

\n\n

The Company’s Employee Monthly Stock Investment Plan (“the Plan”) provides that eligible\nemployees may authorize a fixed dollar amount between $20 and $500 per month to be deducted from\ntheir pay. The funds deducted are forwarded to the Plan administrator and are used to purchase the\nCompany’s Class A Nonvoting Common Stock at the market price. As part of the Plan, Brady pays all\nbrokerage fees for stock purchases and dividend reinvestments.\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 or restricted\nshares of Class A Nonvoting Common Stock to employees. Additionally, the Company has a\nnonqualified stock option plan for non-employee directors under which stock options to purchase\nshares of Class A Nonvoting Common Stock are available for grant. The options have an exercise\nprice equal to the fair market value of the\n

\n\n

50\n

\n\n

Changes in the options are as follows:\n


							Weighted
							Average
				Options		Exercise
	Option Price		Outstanding	Price
Balance, July 31, 2005	$	9.59 - $31.54			3,529,331		$	18.41

Options granted		33.75 - 40.37			955,500			36.33
Options exercised		9.59 - 28.84			(596,643	)		14.95
Options cancelled		16.00 - 40.37			(73,136	)		27.20

Balance, July 31, 2006	$	9.59 - $40.37			3,815,052		$	23.27

Options granted		32.93 - 38.19			908,000			36.74
Options exercised		9.59 - 28.84			(397,682	)		17.13
Options cancelled		16.00 - 40.37			(142,631	)		35.40

Balance, July 31, 2007	$	9.59 - $40.37			4,182,739		$	26.36

Options granted		35.10 - 38.31			977,500			37.41

Options exercised		9.59 - 38.19			(763,708	)		19.02
Options cancelled		14.16 - 30.37			(411,326	)		36.42

Balance, July 31, 2008	$	9.59 - $40.37			3,985,205		$	29.43

\n\n\n

The total fair value of options vested during the fiscal years ended July 31, 2008, 2007 and\n2006 was $8,626, $4,687 and $4,744, respectively. The total intrinsic value of options exercised\nduring the fiscal years ended July 31, 2008, 2007 and 2006 was $14,479, $8,272 and $13,974,\nrespectively.\n

\n\n

There were 2,399,742, 2,300,239 and 2,062,153 options exercisable with a weighted average\nexercise price of $24.42, $21.07 and $17.02 at July 31, 2008, 2007 and 2006, respectively. The\ncash received from the exercise of options and the tax benefit on these exercises during the fiscal\nyears ended July 31, 2008, 2007, and 2006 was $18,685, $8,321, and $13,828, respectively.\n

The following table summarizes information about stock options outstanding at July 31, 2008:\n

\n\n


										Options Outstanding and
	Options Outstanding		Exercisable
				Weighted Average		Weighted	Shares		Weighted
	Number of Shares		Remaining	Average		Exercisable	Average
Range of	Outstanding at		Contractual Life	Exercise		at July 31,	Exercise
Exercise Prices	July 31, 2008		(in years)	Price		2008	Price
Up to $14.99		320,834			3.7		$	13.42			320,834	$	13.42
$15.00 to $29.99		1,396,869			5.0			21.07			1,396,869		21.07
$30.00 and up		2,267,502			8.1			36.84			682,039		36.46

Total		3,985,205			6.7			29.43			2,399,742		24.42

\n\n\n

As of July 31, 2008, the aggregate intrinsic value of the number of options outstanding and\nthe number of options outstanding and exercisable was $31,092 and $29,986, respectively. The\nCompany granted 210,000 performance-based restricted shares during fiscal 2008, with a grant price\nand fair value of $32.83. As of July 31, 2008, 210,000 performance-based restricted shares were\noutstanding.\n

\n\n

7. Segment Information\n

\n\n\n

The Company evaluates short-term segment performance based on segment profit or loss and\ncustomer sales. Corporate long-term performance is evaluated based on shareholder value enhancement\n(“SVE”), which incorporates the cost of capital as a hurdle rate for capital expenditures, new\nproduct development, acquisitions, and long-term lines of business. Segment profit or loss does not\ninclude certain administrative costs, interest, foreign exchange gain or loss, other expenses not\nallocated to a segment, and income taxes. The accounting policies of the reportable segments are\nthe same as those described in the summary of significant accounting policies.\n

\n\n

52\n

\n\n

Intersegment sales and transfers are recorded at cost plus a standard percentage markup.\nIntercompany profit is eliminated in consolidation. It is not practicable to disclose\nenterprise-wide revenue from external customers on the basis of product or service.\n


												Corporate
												and
	Americas		Europe	Asia-Pacific		Subtotals	Eliminations		Totals
Year ended July 31, 2008:
Revenues from external customers	$	667,106		$	496,715		$	359,195		$	1,523,016				$	1,523,016
Intersegment revenues		54,677			8,511			25,995			89,183	$	(89,183	)		—
Depreciation and amortization expense		24,856			11,172			15,482			51,510		9,077			60,587
Segment profit		157,523			135,426			58,234			351,183		(9,048	)		342,135
Assets		755,770			396,058			397,531			1,549,359		301,154			1,850,513
Expenditures for property, plant and\nequipment		7,535			4,714			5,269			17,518		8,889			26,407
Year ended July 31, 2007:
Revenues from external customers	$	609,855		$	416,514		$	336,262		$	1,362,631				$	1,362,631
Intersegment revenues		52,595			6,511			23,554			82,660	$	(82,660	)		—
Depreciation and amortization expense		23,643			8,363			16,913			48,919		4,937			53,856
Segment profit		144,583			107,552			57,236			309,371		(10,485	)		298,886
Assets		781,868			347,827			376,645			1,506,340		192,517			1,698,857
Expenditures for property, plant and\nequipment		19,834			5,849			15,301			40,984		10,956			51,940
Year ended July 31, 2006:
Revenues from external customers	$	498,916		$	319,432		$	200,088		$	1,018,436				$	1,018,436
Intersegment revenues		54,716			4,017			6,376			65,109	$	(65,109	)		—
Depreciation and amortization expense		20,407			6,282			7,435			34,124		1,020			35,144
Segment profit		125,065			83,970			49,316			258,351		(13,173	)		245,178
Assets		643,206			255,635			338,424			1,237,265		127,921			1,365,186
Expenditures for property, plant and\nequipment		22,838			6,397			7,303			36,538		2,872			39,410

\n\n


	Years Ended July 31,
	2008			2007			2006
Net income reconciliation:
Total profit for reportable segments	$	351,183			$	309,371		$	258,351
Corporate and eliminations		(9,048	)			(10,485	)		(13,173	)
Unallocated amounts:
Administrative costs		(134,451	)			(126,899	)		(88,662	)
Investment and other income — net		4,888				2,875			2,403
Interest expense		(26,385	)			(22,934	)		(14,231	)

Income before income taxes		186,187				151,928			144,688
Income taxes		(53,999	)			(42,540	)		(40,513	)

Net income	$	132,188			$	109,388		$	104,175

\n\n


	Revenues*			Long-Lived Assets**
	Years Ended July 31,			As of Years Ended July 31,
	2008			2007			2006		2008		2007		2006
Geographic information:
United States	$	622,618			$	589,013		$	484,387		$	532,273		$	537,182	$	439,467
China		192,048				184,413			90,519			131,810			121,181		114,653
Other		794,036				671,865			508,639			440,021			403,462		307,539
Eliminations		(85,686	)			(82,660	)		(65,109	)

Consolidated total	$	1,523,016			$	1,362,631		$	1,018,436		$	1,104,104		$	1,061,825	$	861,659

\n\n\n

53\n

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

8. Net Income Per Common Share\n

\n\n\n

Net income per Common Share is computed by dividing net income (after deducting the applicable\npreferential Class A Common Stock dividends) by the weighted average Common Shares outstanding of\n54,167,746 for 2008, 53,906,769 for 2007, and 49,493,976 for 2006. The preferential dividend on the\nClass A Common Stock of $.01665 per share has been added to the net income per Class A Common Share\nfor all years presented.\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


	Years ended July 31,
	2008			2007			2006
Numerator
Net income (numerator for basic and diluted Class A net income per share)	$	132,188			$	109,388		$	104,175
Less:
Preferential dividends		(847	)			(836	)		(758	)
Preferential dividends on dilutive stock options		(13	)			(15	)		(15	)

Numerator for basic and diluted Class B net income per share	$	131,328			$	108,537		$	103,402

Denominator:
Denominator for basic net income per share for both Class A and B		54,168				53,907			49,494
Plus: effect of dilutive stock options		705				834			850
Treasury shares — deferred compensation plan		—				—			41

Denominator for diluted net income per share for both Class A and B		54,873				54,741			50,385

Class A common stock net income per share calculation:
Basic	$	2.45			$	2.03		$	2.10

Diluted	$	2.41			$	2.00		$	2.07

Class B common stock net income per share calculation:
Basic	$	2.43			$	2.01		$	2.09

Diluted	$	2.39			$	1.98		$	2.05

\n\n\n

Options to purchase 1,599,792, 1,132,750 and 650,500 shares of Class A common stock were\nexcluded from the computations of diluted net income per share for years ended July 31, 2008, 2007\nand 2006, respectively, because the option exercise prices were greater than the average market\nprice of the common shares and, therefore, the effect would be antidilutive.\n

\n\n

9. Commitments and Contingencies\n

\n\n\n

The Company has entered into various noncancellable operating lease agreements. Rental expense\ncharged to operations on a straight-line basis was $27,443, $22,779 and $15,181 for the years ended\nJuly 31, 2008, 2007 and 2006, respectively. Future minimum lease payments required under such\nleases in effect at July 31, 2008 are as follows, for the years ending July 31:\n

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


2009	$	26,151
2010		20,515
2011		14,092
2012		7,371
2013		5,060
Thereafter		4,748

	$	77,937

\n\n\n

In the normal course of business, the Company is named as a defendant in various lawsuits in\nwhich claims are asserted against the Company. In the opinion of management, the liabilities, if\nany, which may ultimately result from lawsuits are not expected to have a material adverse effect\non the consolidated financial statements of the Company.\n

\n\n

55\n

\n\n

10. Unaudited Quarterly Financial Information\n

\n\n


	Quarters
	First		Second	Third		Fourth	Total
2008
Net Sales	$	380,134		$	364,124		$	381,909	$	396,849	$	1,523,016
Gross Margin		187,667			175,023			189,576		191,929		744,195
Operating Income		58,338			42,444			52,582		54,320		207,684
Net Income		36,370			26,690			34,353		34,775		132,188
Net Income Per Class A Common Share:
Basic		0.67			0.49			0.64		0.65		2.45
Diluted		0.66			0.48			0.63		0.64		2.41
2007
Net Sales	$	332,259		$	321,275		$	346,332	$	362,765	$	1,362,631
Gross Margin		164,128			150,161			169,151		173,604		657,044
Operating Income		51,941			32,724			46,303		41,019		171,987
Net Income		34,448			19,709			28,987		26,244		109,388
Net Income Per Class A Common Share:
Basic		0.64			0.37			0.54		0.49		2.03
Diluted		0.63			0.36			0.53		0.48		2.00

\n\n\n

56\n

\n\n

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure\n

\n\n\n

None.\n

\n\n

Item 9A. Controls and Procedures\n

\n\n\n

Disclosure Controls and Procedures:\n\n

\n\n

The Company carried out an evaluation, under the supervision and with the participation of its\nmanagement, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness\nof the Company’s “disclosure controls and procedures” (as defined in the Exchange Act\nRule 13a-15(e)) as of the end of the period covered by this report. Based on that evaluation, the\nCompany’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s\ndisclosure controls and procedures are effective as of July 31, 2008.\n

\n\n

Management’s Report on Internal Control Over Financial Reporting:\n

\n\n\n

The management of Brady Corporation and its subsidiaries is responsible for establishing and\nmaintaining adequate internal control over financial reporting for the Company, as such term is\ndefined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control\nover financial reporting is designed to provide reasonable assurance regarding the reliability of\nfinancial reporting and the preparation of financial statements for external purposes in accordance\nwith generally accepted accounting principals.\n

\n\n

With the participation of the Chief Executive Officer and the Chief Financial Officer, our\nmanagement conducted an evaluation of the effectiveness of our internal control over financial\nreporting as of July 31, 2008, based on the framework and criteria established in Internal\nControl — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway\nCommission. Based on the assessment, management concluded that, as of July 31, 2008, the Company’s\ninternal control over financial reporting is effective based on those\ncriteria. The Company’s internal control over financial reporting, as of\nJuly 31, 2008, has been audited by Deloitte & Touche LLP, an independent registered public\naccounting firm, as stated in their report, which is included herein.\n

\n\n

Because of the inherent limitations of internal control over financial reporting,\nmisstatements may not be prevented or detected on a timely basis. Also, projections of any\nevaluation of the effectiveness of internal control over financial reporting to future periods are\nsubject to the risk that the controls may become inadequate because of changes in conditions, or\nthat the degree of compliance with the policies or procedures may deteriorate.\n

\n\n

Changes in Internal Control Over Financial Reporting:\n

\n\n\n

The Company is in the process of implementing its enterprise resource planning system, SAP, to\nmany 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 change.\n

\n\n

There were no other changes in the Company’s internal control over financial reporting that\noccurred during the Company’s most recently completed fiscal quarter that have materially affected,\nor are reasonably likely to materially affect, the Company’s internal control over financial\nreporting.\n

\n\n

57\n

\n\n

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n

\n\n\n

To the Board of Directors and Stockholders of
\nBrady Corporation
\nMilwaukee, WI\n\n

\n\n

We have audited the internal control over financial reporting of Brady Corporation and\nsubsidiaries (the “Company”) as of July 31, 2008, based on criteria established in Internal Control\n— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway\nCommission. The Company’s management is responsible for maintaining effective internal control over\nfinancial reporting and for its assessment of the effectiveness of internal control over financial\nreporting included in the accompanying management report (Management’s Report on Internal Control\nover Financial Reporting). Our responsibility is to express an opinion on the Company’s internal\ncontrol over financial reporting based on our audit.\n

\n\n

We conducted our audit in accordance with the standards of the Public Company Accounting\nOversight Board (United States). Those standards require that we plan and perform the audit to\nobtain reasonable assurance about whether effective internal control over financial reporting was\nmaintained in all material respects. Our audit included obtaining an understanding of internal\ncontrol over financial reporting, assessing the risk that a material weakness exists, testing and\nevaluating the design and operating effectiveness of internal control based on the assessed risk,\nand performing such other procedures as we considered necessary in the circumstances. We believe\nthat our audit provides a reasonable basis for our opinion.\n

\n\n

A company’s internal control over financial reporting is a process designed by, or under the\nsupervision of, the company’s principal executive and principal financial officers, or persons\nperforming similar functions, and effected by the company’s board of directors, management, and\nother personnel to provide reasonable assurance regarding the reliability of financial reporting\nand the preparation of financial statements for external purposes in accordance with generally\naccepted accounting principles. A company’s internal control over financial reporting includes\nthose policies and procedures that (1) pertain to the maintenance of records that, in reasonable\ndetail, accurately and fairly reflect the transactions and dispositions of the assets of the\ncompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit\npreparation of financial statements in accordance with generally accepted accounting principles,\nand that receipts and expenditures of the company are being made only in accordance with\nauthorizations of management and directors of the company; and (3) provide reasonable assurance\nregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the\ncompany’s assets that could have a material effect on the financial statements.\n

\n\n

Because of the inherent limitations of internal control over financial reporting, including\nthe possibility of collusion or improper management override of controls, material misstatements\ndue to error or fraud may not be prevented or detected on a timely basis. Also, projections of any\nevaluation of the effectiveness of the internal control over financial reporting to future periods\nare subject to the risk that the controls may become inadequate because of changes in conditions,\nor that the degree of compliance with the policies or procedures may deteriorate.\n

\n\n

In our opinion, the Company maintained, in all material respects, effective internal control\nover financial reporting as of July 31, 2008, based on the criteria established in Internal Control\n— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway\nCommission.\n

\n\n

We have also audited, in accordance with the standards of the Public Company Accounting\nOversight Board (United States), the consolidated financial statements and financial statement\nschedule as of and for the year ended July 31, 2008, of the Company and our report dated\nSeptember 26, 2008, expressed an unqualified opinion on those financial statements and financial\nstatement schedule.\n

\n\n

/s/ Deloitte & Touche LLP\n

\n\n

Milwaukee, WI
\nSeptember 26, 2008\n

\n\n\n

58\n

\n\n

PART III\n

\n\n

Item 10. Directors and Executive Officers of the Registrant\n

\n\n


Name	Age		Title
Frank M. Jaehnert		51		President, CEO and Director
Thomas J. Felmer\n		46		Sr. V.P., CFO
Barbara Bolens		47		V.P., Treasurer, Director of Investor Relations
Allan J. Klotsche		43		President — Brady Asia-Pacific and V.P., Brady Corporation
Peter C. Sephton		49		President — Brady Europe and V.P., Brady Corporation
Matt O. Williamson		52		President — Brady Americas and V.P., Brady Corporation
Robert L. Tatterson		43		V.P. and Chief Technology Officer
Conrad G. Goodkind		64		Director
Elizabeth Pungello		41		Director
Robert C. Buchanan		68		Director
Richard A. Bemis		67		Director
Frank W. Harris		66		Director
Gary E. Nei		64		Director
Frank R. Jarc		66		Director
Chan W. Galbato		45		Director
Patrick W. Allender		61		Director
Bradley C. Richardson\n		50		Director

\n\n\n

Frank M. Jaehnert — Mr. Jaehnert joined the Company in 1995 as Finance Director of the\nIdentification Solutions & Specialty Tapes Group. He served as Chief Financial Officer from\nNovember 1996 to January 2002. He served as Senior Vice President of the Company and President,\nIdentification Solutions and Specialty Tapes Group from January 2002 to March 2003. In February\n2003, he was appointed to his current position, effective April 1, 2003. He has served as a\nDirector of the Company since April 2003. Before joining the Company, he held various financial and\nmanagement positions for Robert Bosch GmbH from 1983 to 1995.\n

\n\n

Thomas J. Felmer — Mr. Felmer joined the Company in 1989 and has held several sales and\nmarketing positions until being named Vice President and General Manager of Brady’s U.S. Signmark\nDivision in 1994. In 1999, Mr. Felmer moved to Europe where he led the European Signmark business\nfor two years, then gained additional responsibility for the combined European Seton and Signmark\nbusinesses, which he also led for two years. In 2003, Mr. Felmer returned to Milwaukee where he was\nresponsible for Brady’s global sales and marketing processes, Brady Software businesses, and due\ndiligence/integration of the EMED acquisition. In June 2004, he was appointed President-Direct\nMarketing Americas, and was named Chief Financial Officer in January 2008.\n

\n\n

Barbara Bolens — Ms. Bolens joined the Company in 1986 and has held a wide variety of\npositions beginning in customer service and customer service management and progressing through\nproduct management and new product development. For 10 years, she had been the Assistant Treasurer\nand has held several other positions on the Corporate Finance Team throughout that time. She was\nappointed to her present position in November 2004. Ms. Bolens also holds the position of Director\nof Investor Relations.\n

\n\n

Allan J. Klotsche — Mr. Klotsche joined the Company in 1988. He served in a variety of sales,\nmarketing, technical, and management roles until 1998, when he was appointed V.P. and General\nManager of the Precision Tapes Group. He was appointed to his current position in April 2003.\n

\n\n

Peter C. Sephton — Mr. Sephton joined the Company in 1997 as Managing Director — Seton-U.K.\nFrom 2001 to 2003 he served as managing director for Brady’s Identification Solutions Business in\nEurope. In April 2003, he was appointed to his current position. Before joining Brady, he served in\na variety of international managerial roles with Tate and Lyle Plc, Sutcliffe Speakman Plc and\nMorgan Crucible Plc. He is a graduate in accountancy and law from The University of Wales (UCC).\n

\n\n

Matthew O. Williamson — Mr. Williamson joined the Company in 1979. From 1979 to 1994, he\nserved in a variety of sales and marketing leadership roles. In 1995, Mr. Williamson served as the\nV.P. and General Manager of the Specialty Tape business. From 1996 to 1998, Mr. Williamson served\nas the V.P. and General Manager of the Identification Solutions and Specialty Tapes Division. From\n1998 to 2001, he served as V.P. and General Manager of the Identification Solutions Division. From\n2001 to 2003, he served as\n

\n\n

60\n

\n\n\n\n

V.P. and General Manager of the Global High Performance Identification Business. In April\n2003, he was appointed President of the Brady Americas business. In addition to his role as\nPresident of the Brady Americas business, in January of 2008, Mr. Williamson assumed responsibility\nfor the Direct Marketing Americas, and is currently serving as President of the Americas segment.\n

\n\n

Robert L. Tatterson — Mr. Tatterson joined the Company in 2006 as Vice President and Chief\nTechnology Officer. Before joining Brady, he held a variety of positions with increasing\nresponsibility at GE since 1992. Most recently, Mr. Tatterson served as Technology General Manager\nfor GE Plastics’ Display and Optical Film business in Mt. Vernon, Indiana. He is a 6 Sigma Master\nBlackbelt and holds a Ph.D. in chemical engineering from the University of Michigan in Ann Arbor.\n

\n\n

Conrad G. Goodkind — Mr. Goodkind served as Secretary of the Company from November 1999 until\nNovember 2007, and was elected to the Board of Directors in September 2007. He serves as a member\nof the Governance and Retirement Committees, and chairs the Finance Committee. He is an attorney\nin the law firm of Quarles & Brady LLP, which he joined in 1979. He served as a member of the\nExecutive Committee of Quarles & Brady LLP from 1983 to 2005. Mr. Goodkind was a director of Cade\nIndustries, Inc. from 1989 to 1999, and a director of Able Distributing Co., Inc., from 1994 to\n2005.\n

\n\n

Elizabeth Pungello — Dr. Pungello has been a Director of the Company since November 2003. She\nis a member of the Company’s Finance, Governance and Technology Committees. Dr. Pungello is the\ngreat-granddaughter of Brady founder William H. Brady, Sr., and a developmental psychologist at the\nFrank Porter Graham Child Development Institute at the University of North Carolina at Chapel Hill.\nShe has served as president of the Brady Education Foundation (formerly the W.H. Brady Foundation)\nsince January 2001.\n

\n\n

Robert C. Buchanan — Mr. Buchanan has been a Director of the Company since November 1987.\nMr. Buchanan is chair of the Corporate Governance Committee, and serves as a member of the Audit\nand Compensation Committees. Mr. Buchanan is the retired Chairman of the Board of Fox Valley\nCorporation in Appleton, Wisconsin. He is also a trustee of The Northwestern Mutual Life Insurance\nCompany, Milwaukee, Wisconsin.\n

\n\n

Richard A. Bemis — Mr. Bemis has been a Director of the Company since January 1990 and is a\nmember of its Corporate Governance, Finance and Technology Committees. Mr. Bemis is Co-chairman of\nthe Board of Directors of Bemis Manufacturing Company, a manufacturer of molded plastic products in\nSheboygan Falls, Wisconsin. He is also a director of Integrys Corporation, Chicago, Illinois.\n

\n\n

Frank W. Harris — Dr. Harris has been a Director of the Company since November 1991.\nDr. Harris is a member of its Finance Committee, and chair of the Technology Committee. He is an\nEmeritus Distinguished Professor of Polymer Science at the University of Akron, and has been on its\nfaculty since 1983. He is also President and CEO of Akron Polymer Systems, a company that develops\nand markets polymer films, coatings and resins for high-performance applications.\n

\n\n

Gary E. Nei — Mr. Nei has been a Director of the Company since November 1992. Mr. Nei is a\nmember of the Company’s Finance Committee and Chair of its Compensation Committee. Mr. Nei is\nChairman of Nei-Turner Media, a publishing company in Williams Bay, Wisconsin. He also serves as\nChairman of the Beverage Testing Institute, a publishing company in Chicago, Illinois and Chairman\nof Tastings Imports, an importer of fine wines headquartered in Chicago, Illinois.\n

\n\n

Frank R. Jarc — Mr. Jarc has been a Director of the Company since May 2000. Mr. Jarc is chair\nof Brady’s Audit and Retirement Committees and is a member of the Compensation Committee. He is a\nconsultant specializing in corporate development and international acquisitions. From April 1999 to\nMarch 2000 he was Senior Vice President of Corporate Development at Office Depot, an operator of\noffice supply superstores. Between June 1996 and March 1999, he was Executive Vice President and\nChief Financial Officer of Viking Office Products, a direct mail marketer of office products. Prior\nto that, he was Executive Vice President and Chief Financial Officer of R.R. Donnelley and Sons, a\nglobal printing company.\n

\n\n

Chan W. Galbato — Mr. Galbato was elected to the Board of Directors in November 2006, and\nserves as a member of the Audit and Technology Committees. Since 2007, he has provided strategy\nand operations consulting services for CWG Hillside Investments. Prior to his current position, he\nserved as President and CEO of the controls division of Invensys plc from 2005 to 2007. Prior to\nhis position with Invensys, he served as president of services at Home Depot; president and chief\nexecutive officer of Armstrong Floor Products; chief executive officer of Choice Parts; and chief\nexecutive officer of Coregis Insurance Company, a GE Capital company.\n

\n\n

Patrick W. Allender — Mr. Allender was elected to the Board of Directors in September 2007 and\nserves as a member of the Audit and Compensation Committees. He is the former Executive Vice\nPresident and Chief Financial Officer of Danaher Corporation,\n

\n\n

61\n

\n\n\n\n

which he joined in 1987 as CFO and secretary. Prior to joining Danaher, Mr. Allender was a\npartner with Arthur Andersen LLP. Mr. Allender is currently a member of the Board of Directors of\nColfax Corporation.\n

\n\n

Bradley C. Richardson — Mr. Richardson was elected to the Board of Directors in November 2007\nand serves as a member of the Audit and Finance Committees. He is Executive Vice President,\nCorporate Strategy and Chief Financial Officer of Modine Manufacturing Company. Prior to his\ncurrent position, he spent more than twenty years in a variety of financial and operational\npositions at BP Amoco including CFO and VP of performance management and control for their\nWorldwide Exploration and Production division based in London, president of their businesses in\nVenezuela and CFO for Amoco Energy Group North America. Mr. Richardson currently serves on the\nBoard of Directors for Modine Manufacturing Company and Tronox Incorporated.\n

\n\n

All directors serve until their respective successors are elected at the next annual meeting\nof shareholders. Officers serve at the discretion of the Board of Directors. None of the Company’s\ndirectors or executive officers has any family relationship with any other director or executive\nofficer.\n

\n\n

Audit Committee Financial Expert — The Company’s board of directors has determined that at\nleast one audit committee financial expert is serving on its audit committee. Mr. Jarc, chair of\nthe audit committee, Mr. Allender, member of the audit committee, Mr. Richardson, member of the\naudit committee, and Mr. Galbato, member of the audit committee are financial experts and are\nindependent as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.\n

\n\n

Director Independence — A majority of the directors must meet the criteria for independence\nestablished by the Board in accordance with the rules of the New York Stock Exchange. In\ndetermining the independence of a director, the Board must find that a director has no relationship\nthat may interfere with the exercise of his or her independence from management and the Company.\nBased on these guidelines all directors, with the exception of Frank Jaehnert, President and CEO,\nare deemed independent.\n

\n\n

Meetings of Non-management Directors — The non-management directors of the Board regularly\nmeet alone without any members of management present. Mr. Buchanan, Chairman of the Corporate\nGovernance Committee, is the presiding director at these sessions. In fiscal 2008 there were six\nexecutive sessions. Interested parties can raise concerns to be addressed at these meetings by\ncalling the confidential Brady hotline at 1-800-368-3613.\n

\n\n

Audit Committee Members — The Audit Committee, which is a separately-designated standing\ncommittee of the Board of Directors, is composed of Mr. Jarc (Chairman), Mr. Buchanan, Mr. Galbato,\nMr. Richardson and Mr. Allender. Each member of the Audit Committee has been determined by the\nBoard to be independent under the rules of the SEC and NYSE. The charter for the Audit Committee is\navailable on the Company’s corporate website at www.bradycorp.com.\n

\n\n

Code of Ethics — For a number of years, the Company has had a code of ethics for its\nemployees. This code of ethics applies to all of the Company’s employees, officers and Directors.\nThe code of ethics can be viewed at the Company’s corporate website, www.bradycorp.com, or may be\nobtained in print by any person, without charge, by contacting Brady Corporation, Investor\nRelations, P.O. Box 571, Milwaukee, WI 53201. The Company intends to satisfy the disclosure\nrequirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision\nof its code of ethics by placing such information on its Internet website.\n

\n\n

Corporate Governance Guidelines — Brady’s Corporate Governance Principles as well as the\ncharters for the Audit Committee, Corporate Governance Committee, and Compensation Committee, are\navailable on the Company’s Corporate website, www.bradycorp.com. Shareholders may request printed\ncopies of these documents from Brady Corporation, Investor Relations, P.O. Box 571, Milwaukee, WI\n53201.\n

\n\n

Certifications — We have attached the required certifications under Section 302 of the\nSarbanes-Oxley Act of 2002 regarding the quality of our public disclosures as Exhibits 31.1 and\n31.2 to this report. Additionally, on November 2, 2007, the Company filed with the New York Stock\nExchange (“NYSE”) an annual certification regarding our compliance with the NYSE’s corporate\ngovernance listing standards as required by NYSE Rule 303A.12(a).\n

\n\n

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE\n

\n\n\n

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and\npersons who own more than ten percent of a registered class of the Company’s equity securities, to\nfile with the SEC initial reports of ownership and reports of changes in ownership of Common Stock\nand other equity securities of the Company. Executive officers, directors and greater than ten\npercent stockholders are required by SEC regulation to furnish the Company with copies of all\nSection 16(a) forms they file.\n

\n\n

62\n

\n\n

To the Company’s knowledge, based solely on a review of the copies of such reports furnished\nto the Company and written representations that no other reports were required, during the fiscal\nyear ended July 31, 2008, all Section 16(a) filing requirements applicable to its officers,\ndirectors and greater than 10 percent beneficial owners were complied with respect to the\nfollowing:\n

\n\n

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

	•		From September 2007 through March 2008, Richard A. Bemis, Barbara Bolens, Robert C.\nBuchanan, Mary K. Bush, Thomas J. Felmer, Conrad G. Goodkind, Frank W. Harris, David R.\nHawke, Frank M. Jaehnert, Frank R. Jarc, Allan J. Klotsche, Peter J. Lettenberger, David\nMathieson, Gary E. Nei, Michael O. Oliver, Elizabeth Pungello, Bradley C. Richardson, and\nMatthew O. Williamson inadvertently failed to file Forms 4 for the monthly acquisition of\ndeferred compensation units within the Company’s deferred compensation plans.

	•		Director Elizabeth Pungello’s Form 4 filing on April 3, 2008 contained twenty one\ntransactions made from March 19, 2008 through March 27, 2008 by the EBL GRAT No. 3 trust\nthat were inadvertently reported late.

\n\n

Item 11. Executive Compensation\n

\n\n

Compensation Discussion and Analysis\n\n

\n\n

The Compensation Discussion and Analysis explains the compensation philosophy, policies and\npractices of the Company with respect to its named executive officers. This section focuses on the\ncompensation provided to the Company’s principal executive officer, principal financial officers\nand its other three most highly compensated executives, who are collectively referred to in this\nsection as the “named executive officers.”\n

\n\n

For purposes of this section, named executive officers refers to Frank M. Jaehnert, President,\nChief Executive Officer and Director; Thomas J. Felmer, Senior Vice President and Chief Financial\nOfficer; David Mathieson, former Senior Vice President and Chief Financial Officer; Peter C.\nSephton, President — Brady Europe and Vice President, Brady Corporation; Matthew O. Williamson,\nPresident — Brady Americas and Vice President, Brady Corporation; and Robert L. Tatterson, Vice\nPresident — R&D and Chief Technology Officer.\n

\n\n

Effective December 31, 2007, David Mathieson resigned as Senior Vice President and Chief\nFinancial Officer of the Company and Thomas J. Felmer was named Senior Vice President and Chief\nFinancial Officer effective January 9, 2008.\n

\n\n

Executive Compensation Overview and Philosophy\n

\n\n\n

The goal of our executive compensation program is to build long-term value for our\nshareholders by aligning the financial interests of our management team with those of our\nshareholders. It is also intended to properly attract, motivate and retain a management team that\ncan run a top-tier performance company and ensure that executives are in possession of a meaningful\namount of Company stock.\n

\n\n

The Compensation Committee of the Board of Directors is responsible for monitoring and\napproving the compensation of the Company’s named executive officers. In compliance with this\nresponsibility, the Committee annually reviews and approves the individual performance of these\nexecutives along with any changes in their base salary, the payment of an annual cash incentive and\ngrant of equity awards. The Committee utilizes the services of an independent executive\ncompensation consulting firm to assist with the review and evaluation of our compensation levels\nand policies. Their expertise may also be utilized in modifying any existing or proposing any new\ncompensation arrangements. In addition to this professional advice, the Committee relies upon its\ncollective judgment and other available competitive information and data in making executive\ncompensation decisions. The Committee has avoided strict adherence to rigid guidelines, formulas\nor short-term fluctuations in our stock price when determining or modifying executive compensation.\n

\n\n

In order to successfully achieve our Company objectives, a combination of short-term and\nlong-term incentives has been developed. The Compensation Committee believes a proper balance\nbetween these elements is necessary and includes a combination of cash and equity, with fixed and\nvariable components. These components are heavily dependent upon Company financial performance,\nwhile also taking into account personal performance to a lesser degree. Our short-term incentive\nis in the form of cash, while the long-term incentive is equity based and includes\nperformance-based and time-based stock options, along with performance-based restricted shares. We\nbelieve these programs are designed to specifically support the achievement of the Company’s\nprofitability and sales goals. We also believe these programs further enhance the performance of\nthe Company by providing effective tools to retain, attract and motivate a group of highly skilled\nexecutives. This results in strong financial and operational performance, which supports the\npreservation and enhancement of shareholder value over time, without incurring undue risk to our\nshareholders.\n

\n\n

63\n

\n\n

Annually senior management recommends a proposal to the Compensation Committee for\ncompensation for each named executive officer, with the exception of Frank M. Jaehnert, President\nand Chief Executive Officer, with respect to whom the Compensation Committee determines\ncompensation. The Compensation Committee reviews the proposal for each officer and ultimately\napproves a compensation arrangement for them. The resulting approved compensation levels,\nincluding the President and Chief Executive Officer’s compensation, are then reported by the\nCompensation Committee to the full Board of Directors.\n

\n\n

Elements of Executive Compensation for Fiscal 2008\n

\n\n\n

As noted above, it is the Compensation Committee’s philosophy that an executive compensation\nprogram should be used to promote both the short and long-term financial objectives of the Company,\nencourage the executives to act as owners of the Company and attract and retain people who are\nqualified, motivated and committed to excellence. The Compensation Committee believes this can be\naccomplished through compensation programs that provide a balanced mix of performance-based cash\nand equity compensation. The annual bonus and equity compensation provide incentives that reward\nsuperior performance and provide financial consequences for underperformance.\n

\n\n

The Compensation Committee is responsible for reviewing the overall level of compensation, as\nwell as the various elements of compensation for each of the named executive officers. In addition\nto the specific process noted below for base salaries, annual cash incentives and long-term equity\ncompensation, the Compensation Committee reviews individual comprehensive “tally sheets” which\ninclude the annual cash and equity grants, along with all other benefits over a trailing four-year\nperiod. Stock options exercised and the impact of the issuance of stock options on earnings per\nshare dilution are monitored on a regular basis as well.\n

\n\n

Base Salary\n

\n\n\n

Individual performance and competitiveness in the market are key components in determining\nbase salary and any changes in base salary. Nationally recognized compensation surveys utilizing\nall companies and industries are obtained annually. A regression analysis is then performed by the\nCompany’s Human Resources team based on the appropriate organization level (company, group,\ndivision) and sales volume of the appropriate Brady business. The base salary is designed to\ncompensate executives for their level of responsibility and sustained individual performance. One\nconsideration is the comparison of the individual base salaries to the median for like positions\nand responsibilities based on these nationally recognized compensation surveys. Further, the\nCompensation Committee has flexibility to increase base salaries above the median to retain or\nattract key employees whose performance merits higher base salaries, or to set base salary below\nthe median where individuals are new to the job and performance is being evaluated. The\nCompensation Committee annually reviews base salaries to ensure, on the basis of responsibility and\nperformance, that executive compensation is meeting the Compensation Committee’s principles.\n

\n\n

In addition to the nationally recognized compensation surveys, the Compensation Committee uses\npeer group data for similar positions nationally to test the reasonableness and competitiveness of\nseveral components of compensation, including base salaries, annual incentives, and long term\nincentives by position, but also uses judgment to determine the appropriate level of base salary,\nwhich we believe reflects individual performance and responsibilities. The peer group utilized\nincludes 29 companies that are in a similar industry with annual revenues up to approximately $5\nbillion: Actuant Corporation, Agilent Technologies, Inc., Alliant Techsystems Inc., AMETEK, Inc.,\nAmphenol Corporation, Anixter International Inc., Barnes Group Inc., Bemis Company, Inc., Benchmark\nElectronics, Inc., Cooper Industries, Ltd., Donaldson Company, Inc., DRS Technologies, Inc.,\nEnergizer Holdings, Inc., Exide Technologies, Fastenal Company, Hubbell Incorporated, IDEX\nCorporation, Molex Incorporated, MSC Industrial Direct Company, Inc., Nordson Corporation, Pentair,\nInc., Rogers Corporation, Roper Industries, Inc., SPX Corporation, Teleflex Incorporated, Thomas &\nBetts Corporation, Vishay Intertechnology, Inc., WESCO International, Inc., and Zebra Technologies\nCorporation. Included in this peer group is a smaller subset of 13 companies that have annual\nrevenues of less than $2 billion to provide data for similar sized companies to Brady. This subset\nincludes: Actuant Corporation, AMETEK, Inc., Barnes Group Inc., Donaldson Company, Inc., DRS\nTechnologies, Inc., Fastenal Company, IDEX Corporation, MSC Industrial Direct Company, Inc.,\nNordson Corporation, Rogers Corporation, Roper Industries, Inc., Thomas & Betts Corporation, and\nZebra Technologies Corporation. This list may vary in the future due to changes in our business or\nthe business of the companies utilized as peers. The determination of base salary also affects the\nannual bonus payout since an individual’s annual bonus target is expressed as a percentage of base\nsalary. The Compensation Committee also utilizes the services of an outside consultant to assist\nin understanding the compensation levels in the market.\n

\n\n

As a result of the factors noted above, base salary increases varied for the named executive\nofficers. For fiscal 2008, the increases ranged from five to fifteen percent.\n

\n\n

64\n

\n\n

Annual Cash Incentive Bonus\n

\n\n\n

All named executive officers participate in an annual cash incentive plan. This plan has a\nshort-term focus (one year) and is mainly based on the fiscal year financial results. Corporate\nearnings per share is a major component in each individual bonus plan. Other components include\nconsolidated net sales, segment sales, segment profit, and working capital; each component is based\non the individual’s role at either the corporate or segment level. In addition, some executives\nmay have up to 20% of their bonus based on achievement of individual goals.\n

\n\n

As part of the annual review of compensation, the Compensation Committee takes into account\ntotal annual cash compensation in the marketplace, as reflected in the above mentioned peer group\nand nationally recognized compensation surveys. Salary combined with annual target bonus levels\nthat have been established as a percentage of salary are intended to approximate the median of the\nmarket total annual cash compensation, as defined in nationally recognized compensation surveys,\nprovided that Brady performs at a level to pay out at 100% of the targeted annual incentive award.\nBrady’s actual annual bonus payouts will vary above or below the targeted amount based on the\nactual performance of the Company during the fiscal year. The payouts can range from 0% to 150% of\nthe target. The Compensation Committee expects management to propose ambitious targets. Any\nbonus payment above 100% of the target requires superior performance by the Company. In order to\nbe eligible to receive a bonus payout, an employee must hold a position within the Company on the\nlast day of the fiscal year.\n

\n\n

The Compensation Committee annually reviews the components of these plans, the required\nperformance levels at each target payout level and the calculation of the individual bonus awards.\nSales and net income must exceed the prior year in order for these components of the bonus plan to\npay out, and no payment will be made on the sales component unless the Company has met a minimum\nearnings per share amount ($2.18).\n

\n\n

The individual incentive target amounts are set at a percentage of base salary and the target\namounts are larger for individuals with greater levels of responsibility. The target bonus\npercentage for Mr. Jaehnert is 100% of his base salary, and for\nMessrs. Felmer, Mathieson, Sephton, Williamson and Tatterson are 70% of their base salaries. Due to Mr. Felmer’s midyear transition\nfrom his previous regional role to that of Chief Financial Officer, he retained regional bonus\ncomponents for fiscal 2008. The following table provides the components of the target bonus\npercentages.\n


	Consolidated		Earnings Per		Working		Segment						Individual		Target
Name	Net Sales		Share		Capital		Sales (1)		Segment Profit		Goals		Payout
Frank M. Jaehnert		10.0	%			60.0	%			10.0	%		NA		NA			20.0	%			100.0	%
Thomas J. Felmer	NA			10.5	%			7.0	%			7.0	%			31.5	%			14.0	%			70.0	%
David Mathieson		7.0	%			42.0	%			7.0	%		NA		NA			14.0	%			70.0	%
Peter C. Sephton	NA			10.5	%			7.0	%			7.0	%			31.5	%			14.0	%			70.0	%
Matthew O. Williamson	NA			10.5	%			7.0	%			7.0	%			31.5	%			14.0	%			70.0	%
Robert L. Tatterson		5.2	%			31.5	%			5.3	%			14.0	%		NA			14.0	%			70.0	%

\n\n\n\n

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


(1)		Segment sales for Messrs. Felmer, Sephton, and Williamson are based on regional sales. Segment\nsales for Mr. Tatterson are based on new products launched.

\n\n\n\n

For the fiscal year ended July 31, 2008, the Company paid the following annual cash incentive\nbonuses:\n


Name	Bonus ($)		Salary %
Frank M. Jaehnert		703,554		97.3	%
Thomas J. Felmer		98,128		33.5	%
David Mathieson		0		0	%
Peter C. Sephton		314,097		78.6	%
Matthew O. Williamson		183,410		61.3	%
Robert L. Tatterson		226,647		76.7	%

\n\n\n

The 2008 allocation of the annual cash incentive bonuses by component is as follows:\n


	Consolidated		Earnings Per		Working		Segment						Individual	Actual
Name	Net Sales		Share (1)		Capital		Sales		Segment Profit		Goals		Payout
Frank M. Jaehnert		15.0	%			58.8	%			11.0	%		NA	NA			12.5	%			97.3	%
Thomas J. Felmer	NA			10.3	%			8.1	%			0	%		0	%			15.1	%			33.5	%

\n\n\n

65\n

\n\n


	Consolidated		Earnings Per		Working		Segment						Individual		Actual
Name	Net Sales		Share (1)		Capital		Sales		Segment Profit		Goals		Payout
David Mathieson		0	%			0	%			0	%		NA		NA			0	%			0	%
Peter C. Sephton	NA			10.3	%			0	%			10.5	%			47.3	%			10.5	%			78.6	%
Matthew O. Williamson	NA			10.3	%			4.6	%			9.0	%			26.2	%			11.2	%			61.3	%
Robert L. Tatterson		7.9	%			30.9	%			5.8	%			18.1	%		NA			14.0	%			76.7	%

\n\n\n\n

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


(1)		Earnings per share as utilized in the individual bonus plans is calculated using a fixed\namount of 55 million shares.

\n\n\n\n

The payouts in fiscal 2008 represent an achievement of 150% for the consolidated net sales\ntarget of $1.42 billion, 98% for the earnings per share target of $2.42, 0% to 117% for the working\ncapital targets, and 0% to 150% for the regional net sales targets and 0% to 150% for the regional\nsegment profit targets for those named executive officers with regional responsibility. A\ncomponent of the payout was also influenced by the individual’s performance against his individual\ngoals.\n

\n\n

Equity Incentives: Long-term Incentive Compensation\n

\n\n\n

The Company utilizes a combination of performance-based stock options, time-based stock\noptions and performance-based restricted shares to attract, retain and motivate key employees who\ndirectly impact the performance of the Company over a timeframe of greater than a year. The\ncombination of performance-based stock options, time-based stock options and performance-based\nrestricted shares is used to provide a balance between annual Company performance and the\ngeneration of long-term shareholder value. Stock option based plans are influenced by Brady’s\nstock price, which directly affects the amount of compensation the executive receives upon vesting\nand exercising the options. The size and type of equity awards is determined by the Compensation\nCommittee with periodic input from its outside consultant.\n

\n\n

Performance-based Stock Options:\n

\n\n\n

In order to provide greater alignment between the financial performance of the Company and the\nexecutive’s long-term incentive compensation, the named executive officers have been issued\nperformance-based stock options which require specific earnings per share target attainment over a\nthree-year period in order to vest. The earnings per share target set on the options granted in\nfiscal 2008 was $2.64 per share, which was an aggressive target to reach and was subsequently not\nmet. As the targets for the fiscal year ended July 31, 2008 were not met, one-third of these\noptions, which were tied to fiscal 2008 performance, did not vest.\n

\n\n

The grant date of the options was pre-determined in advance to coincide with the beginning of\nthe Company’s fiscal year. Consistent with the practice, the stock option grants were reviewed\nand approved by the Compensation Committee in July with an effective grant date of the first\nworking day of August. The grant price is the fair market value of the stock on the grant date and\nis calculated by taking the average of the high and low stock price on that date. These stock\noptions vest one-third each fiscal year following the grant based on attaining the predetermined\nminimum consolidated earnings per share target each year. These options have a maximum ten year\nlife following the grant date.\n

\n\n

Time-based Stock Options:\n

\n\n\n

The timing of the grant of time-based stock options is determined at the mid-November\nCompensation Committee meeting each year. The grant date is established approximately two weeks\nfollowing the release of the first quarter earnings in November. Time-based stock option grants in\nfiscal 2008 were reviewed and approved by the Compensation Committee on November 20, 2007 with an\neffective grant date of December 4, 2007. The grant price is the fair market value of the stock on\nthe grant date and is calculated by taking the average of the high and low stock price on that\ndate. The time-based stock options vest one-third each year for the first three years and have a\nten year life.\n

\n\n

Performance-based Restricted Stock\n

\n\n\n

Periodically, the Company issues restricted stock grants to key executives as an additional\nretention element of their overall compensation. In January 2008, the Compensation Committee\napproved the issuance of performance restricted stock awards to six of Brady’s senior executives.\nA total of 210,000 restricted shares were issued and included both a performance vesting\nrequirement (earnings per share) and a service vesting requirement (five years).\n

\n\n

Employment and Post-Employment Benefits\n

\n\n\n

General Benefits:\n\n

\n\n

The named executive officers receive the same basic benefits that are offered by the Company\nto other employees, including medical, dental, disability and life insurance.\n

\n\n

66\n

\n\n

Retirement Benefits:\n

\n\n\n

Most Brady employees in the United States and certain expatriate employees working for its\ninternational subsidiaries are eligible to participate in Brady Corporation’s Funded Retirement\nPlan (“Funded Retirement Plan”) and the Brady Corporation Matched 401(k) Plan (the “Employee 401(k)\nPlan”). Under these plans the Company agrees to contribute certain amounts to both Plans. Under the\nFunded Retirement Plan, the Company contributes 4% of the eligible earnings of each person covered\nby the Funded Retirement Plan. In addition, participants may elect to have their annual pay reduced\nby up to 5% and have the amount of this reduction contributed to the Employee 401(k) Plan and\nmatched by an additional 4% contribution by the Company. Participants may also elect to have up to\nanother 20% of their eligible earnings contributed to the Employee 401(k) Plan (without an\nadditional matching contribution by the Company). The assets of the Employee 401(k) Plan and Funded\nRetirement Plan credited to each participant are invested by the trustee of the Plans as directed\nby each plan participant in several investment funds as permitted by the Employee 401(k) Plan and\nFunded Retirement Plan.\n

\n\n

Due to the IRS income limitations for participating in the Employee 401(k) Plan and the Funded\nRetirement Plan, the named executive officers are eligible to participate in the Brady Restoration\nPlan, which is a non-qualified deferred compensation plan that allows an equivalent benefit to the\nEmployee 401(k) Plan and the Funded Retirement Plan for the executives on their income above the\nIRS limits.\n

\n\n

Benefits are generally payable upon the death, disability, or retirement of the participant or\nupon termination of employment before retirement, although benefits may be withdrawn from the\nemployee 401(k) Plan and paid to the participant if required for certain emergencies. Under certain\nspecified circumstances, the employee 401(k) Plan allows loans to be drawn on a participant’s\naccount. The participant is immediately fully vested with respect to the contributions attributable\nto reductions in pay; all other contributions become fully vested over a two-year period of\ncontinuous service for the employee 401(k) Plan and after six years of continuous service for the\nFunded Retirement Plan.\n

\n\n

Deferred Compensation Arrangements — During fiscal 2002, the Company adopted a deferred\ncompensation plan titled the Brady Corporation Executive Deferred Compensation Plan (“Executive\nDeferred Compensation Plan”), under which executive officers, corporate staff officers and certain\nkey management employees of the Company are permitted to defer portions of their salary and bonus\ninto a plan account, the value of which is measured by the fair value of the underlying\ninvestments. The assets of the Executive Deferred Compensation Plan are held in a Rabbi Trust and\nare invested by the trustee as directed by the participant in several investment funds as permitted\nby the Executive Deferred Compensation Plan. The investment funds available in the Executive\nDeferred Compensation Plan include Brady Corporation Class A Nonvoting Common Stock and various\nmutual funds that are provided in the Employee 401(k) Plan.\n

\n\n

At least one year prior to termination of employment, the executive must elect whether to\nreceive his account balance following termination of employment in a single lump sum payment or by\nmeans of distribution under an Annual Installment Method. If the executive does not submit an\nelection form or has not submitted one timely, then payment shall be made each year for a period of\nten years. The first payment must be one-tenth of the balance held; the second one-ninth; and so\non, with the balance held in the Rabbi Trust reduced by each payment.\n

\n\n

Effective January 1, 2008, the Executive Deferred Compensation Plan was amended and restated\nto comply with the provisions of Section 409A of the Internal Revenue Code. Amounts deferred prior\nto January 1, 2005 (which were fully vested under the terms of the plan), including past and future\nearnings credited thereon, will remain subject to the terms in place prior to January 1, 2005.\n

\n\n

Perquisites:\n

\n\n\n

Brady provides the named executive officers with the following perquisites that are not\navailable to other non-executive employees:\n

\n\n

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

	•		Annual allowance for financial and tax planning

	•		Eligibility for annual physical

	•		Company car

	•		Long-term care insurance

	•		Personal liability insurance

\n\n

Stock Ownership Guidelines\n

\n\n\n

In order to encourage our executive officers and directors to acquire and retain ownership of\na significant number of shares of the Company’s stock, stock ownership guidelines have been\nestablished. This supports our belief that stock ownership better aligns the interests of our\nexecutives and directors with the Company’s shareholders.\n

\n\n

67\n

\n\n

The Board of Directors has established the following stock ownership guidelines for our named\nexecutive officers:\n

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


Frank M. Jaehnert		100,000 shares
Thomas J. Felmer		30,000 shares
David Mathieson		30,000 shares
Peter C. Sephton		30,000 shares
Matt O. Williamson		30,000 shares
Robert L. Tatterson		30,000 shares

\n\n

Each director is required to beneficially own 5,000 shares of Company stock.\n

\n\n\n

Named executive officers have up to five years to achieve these ownership levels. If an\nexecutive does not meet the ownership level at the end of the fifth year, the executive’s after-tax\npayout on any incentive plans will be in Class A Nonvoting Common Stock to bring the executive up\nto the required level. The Compensation Committee reviews the actual stock ownership levels of\neach of the named executive officers on an annual basis to ensure the guidelines are met within the\nfive-year period.\n

\n\n

For purposes of determining whether an executive meets the required ownership level, Company\nstock owned outright, Company stock held in the Executive Deferred Compensation Plan and Company\nstock owned in the Employee 401(k) Plan is included. In addition, twenty percent of any vested\nstock options that are “in the money” are included.\n

\n\n

Employment and Change of Control Agreements\n

\n\n\n

The Board of Directors of Brady Corporation approved change of control agreements for certain\nexecutive officers of the Company, including all the named executive officers. The agreements call\nfor payment of an amount equal to two times their annual base salary and two times the average\nbonus payment received in the two years immediately prior to the date the change of control occurs\nin the event of termination or resignation upon a change of control. The agreements also call for\nreimbursement of any excise taxes imposed and up to $25,000 of attorney fees to enforce the\nexecutive’s rights under the agreement. Payments under the agreement will be spread over two years.\n

\n\n

In May 2003, the Board approved a Change of Control Agreement for Mr. Jaehnert. The agreement\ncalls for payment of an amount equal to three times the annual salary and bonus for Mr. Jaehnert in\nthe event of termination or resignation upon a change of control. The agreement also calls for\nreimbursement of any excise taxes imposed and up to $25,000 of attorney fees to enforce the\nexecutive’s rights under the agreement. Payments under the agreement will be spread over three\nyears.\n

\n\n

Compliance with Tax Regulations Regarding Executive Compensation\n

\n\n\n

Section 162(m) of the Internal Revenue Code, added by the Omnibus Budget Reconciliation Act of\n1993, generally disallows a tax deduction to public companies for compensation over $1 million paid\nto the corporation’s chief executive officer and the other named executive officers. Qualifying\nperformance-based compensation will not be subject to the deduction limit if certain requirements\nare met. The Company’s executive compensation program, as currently constructed, is not likely to\ngenerate significant nondeductible compensation in excess of these limits. The Compensation\nCommittee will continue to review these tax regulations as they apply to the Company’s executive\ncompensation program. It is the Compensation Committee’s intent to preserve the deductibility of\nexecutive compensation to the extent reasonably practicable and to the extent consistent with its\nother compensation objectives.\n

\n\n

Compensation Committee Interlocks and Insider Participation\n

\n\n\n

During fiscal 2008, the Board’s Compensation Committee was composed of Messrs. Allender,\nBuchanan, Jarc, Nei, Peirce, and Ms. Bush. None of these persons has at any time been an employee\nof the Company or any of its subsidiaries. During fiscal 2008, Mr. Peirce and Ms. Bush retired\nfrom the Board of Directors. There are no relationships among the Company’s executive officers,\nmembers of the Compensation Committee or entities whose executives serve on the Board that require\ndisclosure under applicable SEC regulations.\n

\n\n

Compensation Committee Report\n

\n\n

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis\nwith management; and

\n\n

68\n

\n\n

based on the review and discussions, the Compensation Committee, consisting of\nMessrs. Nei (Chairman), Allender, Buchanan, and Jarc, recommended to the Board of Directors that\nthe Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K.\n

\n\n

Summary Compensation Table\n

\n\n\n

The following table sets forth compensation awarded to, earned by, or paid to the named\nexecutive officers, who served as executive officers during the fiscal year ended July 31, 2008 for\nservices rendered to the Company and its subsidiaries during the fiscal years ended July 31, 2008\nand 2007.\n


													Non-Equity
							Restricted		Option	Incentive Plan		All Other
	Fiscal		Salary	Stock Awards		Awards	Compensation		Compensation	Total
Name And Principal Position	Year		($)	($)(1)		($)(1)	($)(2)		($)(3)	($)
F.M. Jaehnert		2008			723,077			191,508			804,867			703,554	134,273	2,557,279
President & Chief Executive Officer		2007			638,987			—			860,224			430,677	146,592	2,076,480

T. Felmer		2008			293,269			134,056			402,433			98,128	66,115	994,001
Senior Vice President & Chief Financial		2007			268,269			—			416,072			184,458	69,875	938,674
Officer(4)

D. Mathieson		2008			145,500			—			123,444			—	44,262	313,206
Senior Vice President & Chief Financial		2007			293,046			—			438,301			144,413	68,349	944,109
Officer(4)

P.C. Sephton(5)		2008			399,920			134,056			402,433			314,097	271,246	1,521,752
Vice President — Brady Europe		2007			352,970			—			418,232			326,886	95,539	1,193,627

M. O. Williamson		2008			299,615			134,056			402,433			183,410	71,894	1,091,408
Vice President — Brady Americas		2007			279,340			—			418,232			234,939	66,817	999,328

R. Tatterson		2008			295,962			76,603			225,333			226,647	56,258	880,803
Vice President & Chief Technology		2007			209,615			—			79,222			106,217	35,720	430,774
Officer

\n\n\n\n\n

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


(1)		Represents the amounts expensed in fiscal 2008 relating to grants of performance-based stock options, time-based stock\noptions and restricted stock awards. The Company accounts for stock-based compensation in accordance with SFAS No.\n123(R), which requires it to recognize compensation expense for stock options granted to employees and directors based\non the estimated fair value of the awards at the time of grant. The assumptions used to determine the value of the\nawards, including the use of the Black-Scholes method of valuation by the Company, are discussed in Note 1 of the\nNotes to Consolidated Financial Statements of the Company contained in Item 8 of this Form 10-K for the fiscal year\nended July 31, 2008.

		The actual value of a restricted stock award will depend on the market value of the Company’s common stock on the date\nthe stock is sold.

		The actual value, if any, which an option holder will realize upon the exercise of an option will depend on the excess\nof the market value of the Company’s common stock over the exercise price on the date the option is exercised, which\ncannot be forecasted with any accuracy.

(2)		Reflects incentive plan compensation earned during the listed fiscal years, which was paid during the next fiscal year.

(3)		The amounts in this column for Messrs. Jaehnert, Felmer, Mathieson, Williamson, and Tatterson include: matching\ncontributions to the Company’s Matched 401(k) Plan, Funded Retirement Plan and Restoration Plan, the costs of group\nterm life insurance for each named executive officer, use of a Company car and associated expenses, the cost of\nlong-term care insurance, the cost of personal liability insurance and other perquisites. The perquisites may include\nan annual allowance for financial and tax planning and the cost of an annual physical health exam.

\n\n\n

69\n

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


		The amounts in this column for Mr. Sephton include: contributions for the Brady U.K. Pension Plan, the cost of group\nterm life insurance, vehicle allowance and associated expenses and other perquisites as listed above.

\n\n\n


				Retirement		Group Term				Long-term		Personal
				Plan		Life	Company		Care	Liability
	Fiscal		Contributions	Insurance		Car	Insurance		Insurance	Other		Total
Name	Year		($)	($)		($)	($)		($)	($)		($)
F.M. Jaehnert		2008			93,254			3,042			26,129		1,683	9,505	660	134,273
		2007			104,230			4,259			26,935		1,683	7,885	1,600	146,592

T. Felmer(4)		2008			37,434			572			20,380		1,683	5,426	620	66,115
		2007			41,585			872			20,993		1,683	4,742	—	69,875

D. Mathieson(4)		2008			30,629			318			9,892		570	2,853	—	44,262
		2007			36,801			744			23,149		1,368	5,362	925	68,349

P.C. Sephton(5)		2008			232,191			2,308			36,747		—	—	—	271,246
		2007			56,475			2,349			36,715		—	—	—	95,539

M. O. Williamson		2008			42,241			590			21,280		1,683	6,100	—	71,894
		2007			36,396			733			22,510		1,683	5,495	—	66,817

R. Tatterson		2008			29,443			356			18,795		1,881	5,143	640	56,258
		2007			9,750			381			16,693		1,568	4,170	3,158	35,720

\n\n\n\n

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


(4)		Mr. Mathieson resigned as Senior Vice President & Chief Financial\nOfficer effective December 31, 2007. Mr. Felmer served as President –\nDirect Marketing Americas through January 8, 2008, at which time he\nwas named Senior Vice President & Chief Financial Officer.

(5)		The amounts in this table for Mr. Sephton, who works and lives in the\nUnited Kingdom, were paid to him in British Pounds. The amounts shown\nin U.S. dollars in the table above were converted from British Pounds\nat the average exchange rate for fiscal 2008: $1 = £0.5001 and fiscal\n2007: $1 = £0.5135.

\n\n\n

\n\n

Grants of Plan-Based Awards for 2008\n

\n\n\n

The following table summarizes grants of plan-based awards made during fiscal 2008 to the\nnamed executive officers.\n

All Other

Stock

Option

Exercise

Awards;

or Base

Grant

Number

Number of

Price of

Date Fair

Estimated Future Payouts

of Shares

Securities

Stock or

Value of

Under Non-Equity Incentive

Under Equity Incentive Plan

of Stocks

Underlying

Option

Stock and

Compensation

Plan Awards (1)

Awards (2)

or Units

Options

Awards

Option

Grant

Committee

Threshold

Target

Maximum

Threshold

Target

Maximum

(#)(3)

(#)(4)

($/Share)

Awards

Name

Date

Approval Date

($)

(#)

(5)

($)

F.M. Jaehnert

8/1/2007

7/23/2007

—

723,077

1,084,616

—

60,000

35.3500

769,800

12/4/2007

11/15/2007

50,000

38.3100

639,000

1/8/2008

12/21/2007

50,000

32.6050

1,641,500

T. Felmer

8/1/2007

7/23/2007

—

205,288

307,932

—

25,000

35.3500

320,750

12/4/2007

11/15/2007

25,000

38.3100

319,500

1/8/2008

12/21/2007

35,000

32.6050

1,149,050

P.C. Sephton

8/1/2007

7/23/2007

—

277,270

415,905

—

25,000

35.3500

320,750

12/4/2007

11/15/2007

25,000

38.3100

319,500

1/8/2008

12/21/2007

35,000

32.6050

1,149,050

\n\n\n\n

70\n

\n\n

All Other

Stock

Option

Exercise

Awards;

or Base

Grant

Number

Number of

Price of

Date Fair

Estimated Future Payouts

of Shares

Securities

Stock or

Value of

Under Non-Equity Incentive

Under Equity Incentive Plan

of Stocks

Underlying

Option

Stock and

Compensation

Plan Awards (1)

Awards (2)

or Units

Options

Awards

Option

Grant

Committee

Threshold

Target

Maximum

Threshold

Target

Maximum

(#)(3)

(#)(4)

($/Share)

Awards

Name

Date

Approval Date

($)

(#)

(5)

($)

M.O. Williamson

8/1/2007

7/23/2007

—

209,730

314,595

—

25,000

35.3500

320,750

12/4/2007

11/15/2007

25,000

38.3100

319,500

1/8/2008

12/21/2007

35,000

32.6050

1,149,050

R. Tatterson

8/1/2007

7/23/2007

—

207,173

310,760

—

20,000

35.3500

256,600

12/4/2007

11/15/2007

25,000

38.3100

319,500

1/8/2008

12/21/2007

20,000

32.6050

656,600

\n\n\n\n\n

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


(1)		The awards were made under the Company’s annual cash incentive plan.\nThe structure of the plan is described in Compensation Discussion and\nAnalysis above. Award levels are set prior to the beginning of the\nfiscal year and payouts can range from 0% to 150% of the target.

(2)		The options granted equally vest upon meeting certain financial goals\nin fiscal 2008, 2009 and 2010. The structure of the grants is\ndescribed in Compensation Discussion and Analysis above. The\nfinancial goals in 2008 have not been met so one-third of the options\nhave not vested and were cancelled. The options have a term of ten\nyears.

(3)		The awards granted vest upon meeting certain performance-based and\nservice-based requirements. These requirements are described in the\nCompensation Discussion and Analysis above.

(4)		The options granted become exercisable as follows: one-third of the\nshares on December 4, 2008, one-third of the shares on December 4,\n2009 and one-third of the shares on December 4, 2010. These options\nhave a term of ten years.

(5)		The exercise price is the average of the highest and lowest sale\nprices of the Company’s Class A Common Stock as reported by the New\nYork Stock Exchange on the date of the grant. The closing prices of\nthe Company’s Class A Common Stock as reported by the New York Stock\nExchange on the dates of the grants were $35.57 per share on August\n1, 2007, $38.34 per share on December 4, 2007 and $31.68 per share on\nJanuary 8, 2008, respectively.

\n\n\n

\n\n

Outstanding Equity Awards at 2008 Fiscal Year End\n

\n\n


	Option Awards (1)			Stock Awards
								Equity Incentive								Equity Incentive	Equity Incentive
		Number of		Number of	Plan Awards:								Plan Awards;	Plan Awards:
		Securities		Securities	Number of								Number of	Market or Payout
		Underlying		Underlying	Securities								Unearned Shares,	Value of Unearned
		Unexercised		Unexercised	Underlying								Units or Other	Shares, Units or
		Options		Options	Unexercised		Option				Rights That Have		Other Rights That
		Exercisable		Unexercisable	Unearned		Exercise Price	Option		Not Vested	Have Not Vested
Name		(#)		(#)	Options (#)		($)	Expiration Date		(#)	($)
F.M. Jaehnert			5,000									10.1719			8/3/2008
			60,000									22.6325			8/2/2009
			17,200									15.2813			10/14/2009
			40,000						20,000	(2)		33.8900			8/1/2010
			20,000									14.1575			10/24/2010
			26,000									16.0000			10/16/2011
			30,000									16.3875			11/14/2012
			200,000									13.3100			2/24/2013
			72,000									17.3250			11/20/2013
			60,000									28.8425			11/18/2014
			33,333			16,667	(3)					37.8300			11/30/2015
									16,667	(4)		33.2250			8/1/2016
			16,667			33,333	(5)					38.1900			11/30/2016
									40,000	(6)		35.3500			8/1/2017
						50,000	(7)					38.3100			12/4/2017
																		50,000	(8)	1,833,500

T. Felmer			30,000									22.6325			8/2/2009
			8,000									15.2813			10/14/2009
			20,000						10,000	(2)		33.8900			8/1/2010
			8,000									14.1575			10/24/2010
			8,000									160000			10/16/2011
			10,000									16.3875			11/14/2012
			10,000									17.3250			11/20/2013
			30,000									28.8425			11/18/2014

\n\n\n

71\n

\n\n

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


	Option Awards (1)			Stock Awards
								Equity Incentive								Equity Incentive	Equity Incentive
		Number of		Number of	Plan Awards:								Plan Awards;	Plan Awards:
		Securities		Securities	Number of								Number of	Market or Payout
		Underlying		Underlying	Securities								Unearned Shares,	Value of Unearned
		Unexercised		Unexercised	Underlying								Units or Other	Shares, Units or
		Options		Options	Unexercised		Option				Rights That Have		Other Rights That
		Exercisable		Unexercisable	Unearned		Exercise Price	Option		Not Vested	Have Not Vested
Name		(#)		(#)	Options (#)		($)	Expiration Date		(#)	($)
			16,667			8,333	(3)					37.8300			11/30/2015
									8,334	(4)		33.2250			8/1/2016
			8,333			16,667	(5)					38.1900			11/30/2016
									16,667	(6)		35.3500			8/1/2017
						25,000	(7)					38.3100			12/4/2017
																		35,000	(8)	1,283,450

P.C. Sephton			30,000									22.6325			8/2/2009
			20,000						10,000	(2)		33.8900			8/1/2010
			14,000									17.3250			11/20/2013
			30,000									28.8425			11/18/2014
			16,667			8,333	(3)					37.8300			11/30/2015
									8,334	(4)		33.2250			8/1/2016
			8,333			16,667	(5)					38.1900			11/30/2016
									16,667	(6)		35.3500			8/1/2017
						25,000	(7)					38.3100			12/4/2017
																		35,000	(8)	1,283,450

M.O. Williamson			30,000									22.6325			8/2/2009
			20,000						10,000	(2)		33.8900			8/1/2010
			5,500									16.0000			10/16/2011
			10,000									16.3875			11/14/2012
			14,000									17.3250			11/20/2013
			30,000									28.8425			11/18/2014
			16,667			8,333	(3)					37.8300			11/30/2015
									8,334	(4)		33.2250			8/1/2016
			8,333			16,667	(5)					38.1900			11/30/2016
									16,667	(6)		35.3500			8/1/2017
						25,000	(7)					38.3100			12/4/2017
																		35,000	(8)	1,283,450

R. Tatterson									5,000	(9)		34.9510			10/2/2016
			8,333			16,667	(5)					38.1900			11/30/2016
									13,333	(6)		35.3500			8/1/2017
						25,000	(7)					38.3100			12/4/2017
																		20,000	(8)	733,400

\n\n\n\n

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


(1)		Adjusted for a two-for-one stock split in the form of a 100% stock dividend, effective December 31, 2004.

(2)		All vested on August 1, 2008 as the performance criteria for fiscal 2008 consolidated net income of $115\nmillion have been met.

(3)		All vest on November 30, 2008.

(4)		All will vest on August 1, 2009 if the performance criteria for fiscal 2009 net income are met.

(5)		One-half vest on November 30, 2008 and one-half vest on November 30, 2009.

(6)		One-half of the options will vest on August 1, 2009 if the performance criteria for fiscal 2009 earnings\nper share are met and one-half will vest on August 1, 2010 if the performance criteria for fiscal 2010\nearnings per share are met.

(7)		One-third of the options vest on December 4, 2008, one-third of the options vest on December 4, 2009 and\none-third of the options vest on December 4, 2010.

(8)		All vest on January 8, 2013.

(9)		All will vest on October 2, 2009 if the performance criteria for fiscal 2009 net income are met.

\n\n\n

72\n

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

\n\n

Option Exercises and Stock Vested for Fiscal 2008\n

\n\n\n

The following table summarizes option exercises completed during fiscal 2008 to the named\nexecutive officers.\n


	Option Awards
	Number of Shares
	Acquired on		Value Realized
Name	Exercise (#)		on Exercise ($)
F.M. Jaehnert		81,895		2,414,874

T. Felmer		48,000		975,814

D. Mathieson		115,600		1,869,572

P.C. Sephton		25,000		557,023

M.O. Williamson	None		None

R. Tatterson	None		None

\n\n

Non-Qualified Deferred Compensation for Fiscal 2008\n

\n\n\n

The following table summarizes the activity within the Executive Deferred Compensation Plan\nand the Brady Restoration Plan during fiscal 2008 for the named executive officers.\n


	Executive		Registrant	Aggregate		Aggregate	Aggregate
	Contributions in		Contributions in	Earnings in		Withdrawals/	Balance at
Name	Last Fiscal Year ($)		Last Fiscal Year ($)	Last Fiscal Year ($)		Distributions ($)	Last Fiscal Year ($)
F.M. Jaehnert		381,153			75,485			90,129		0	2,896,075

T. Felmer		119,511			19,064			(11,225	)	0	758,282

D. Mathieson		124,491			17,922			23,298		0	816,056

P.C. Sephton		0			0			0		0	0

M.O. Williamson		58,909			23,841			8,596		0	610,522

R. Tatterson		40,671			12,112			(729	)	0	52,056

\n\n

See discussion of the Company’s nonqualified deferred compensation plan in the Compensation\nDiscussion and Analysis. The executive contribution amounts reported here are reported in the\nsalary and non-equity incentive plan compensation columns of the Summary Compensation Table.\n

\n\n

Potential Payments Upon Termination or Change in Control\n

\n\n\n

As described in the Employment and Change of Control Agreements section of the Compensation\nDiscussion and Analysis above, the Company has entered into change of control agreements with each\nof the named executive officers. The terms of the change of control agreement are triggered if\nwithin a 24 month period beginning with the date a change of control occurs, (i) the executive’s\nemployment with the Company is involuntarily terminated other than by reason of death, disability\nor cause or (ii) the executive’s employment with the Company is voluntarily terminated by the\nexecutive subsequent to (a) any reduction in the total of the executive’s annual base salary,\nexclusive of fringe benefits, and the executive’s target bonus in comparison with the executive’s\nannual base salary and target bonus immediately prior to the date the change of control occurs, (b)\na significant diminution in the responsibilities or authority of the executive in comparison with\nthe executive’s responsibility and authority immediately prior to the date the change of control\noccurs, or (c) the imposition of a requirement by the Company that the executive relocate to a\nprincipal work location more than 50 miles from the executive’s principal work location immediately\nprior to the date the change of control occurs.\n

\n\n

73\n

\n\n

Following termination due to a change in control, the executive shall be paid a multiplier of\nhis annual base salary in effect immediately prior to the date the change of control occurs, plus a\nmultiplier of his average bonus payment received over either a two or three-year period, depending\non the terms of the agreement, prior to the date the change of control occurs. The Company will\nalso reimburse the executive for any excise tax incurred by the executive as a result of Section\n280(G) of the Internal Revenue Code. The Company will also reimburse a maximum of $25,000 of legal\nfees incurred by the executive in order to enforce the change of control agreement, in which the\nexecutive prevails.\n

\n\n

The following information and tables set forth the amount of payments to each named executive\nofficer in the event of termination of employment as a result of a change of control. No other\nemployment agreements have been entered into between the Company and any of the named executive\nofficers.\n

\n\n

Assumptions and General Principles. The following assumptions and general principles apply\nwith respect to the tables that follow in this section.\n

\n\n

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

	•		The amounts shown in the tables assume that each named executive officer terminated\nemployment on July 31, 2008. Accordingly, the tables reflect amounts earned as of July 31,\n2008 and include estimates of amounts that would be paid to the named executive officer upon\nthe occurrence of a change in control. The actual amounts that would be paid to a named\nexecutive officer can only be determined at the time of termination.

	•		The tables below include amounts the Company is obligated to pay the named executive\nofficer as a result of the executed change in control agreement. The tables do not include\nbenefits that are paid generally to all salaried employees or a broad group of salaried\nemployees. Therefore, the named executive officers would receive benefits in addition to\nthose set forth in the tables.

	•		A named executive officer is entitled to receive base salary earned during his term of\nemployment regardless of the manner in which the named executive officer’s employment is\nterminated. As such, this amount is not shown in the tables.

\n\n

Frank M. Jaehnert\n

\n\n

The following table shows the amount payable assuming that the terms of the change of control\nagreement were triggered on July 31, 2008 and the named executive officer had to legally enforce\nthe terms of the agreement.\n

Restricted Stock

Stock Option

Legal Fee

Base Salary ($)

Bonus ($)

Award Acceleration

Acceleration Gain $

Excise Tax

Reimbursement ($)

(1)

(2)

Gain $ (3)

(4)

Reimbursement ($)

(5)

Total ($)

2,250,000\n

2,027,887\n

1,833,500\n

165,818\n

1,036,959\n

25,000\n

7,339,164

\n\n\n\n

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


(1)		Represents three times the base salary in effect at July 31, 2008.

(2)		Represents three times the average bonus payment received in the last three fiscal years ended July 31.

(3)		Represents the closing market price of $36.67 on 50,000 unvested awards that would vest due to the change in control.

(4)		Represents the difference between the closing market price of $36.67 and the exercise price on 76,667 unvested stock\noptions in-the-money that would vest due to the change in control.

(5)		Represents the maximum reimbursement of legal fees allowed.

\n\n\n

74\n

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

Thomas J. Felmer\n

\n\n

Restricted Stock

Stock Option

Legal Fee

Base Salary ($)

Award Acceleration

Acceleration Gain $

Excise Tax

Reimbursement ($)

(1)

Bonus ($) (2)

Gain $ (3)

(4)

Reimbursement ($)

(5)

Total ($)

600,000\n

463,781\n

1,283,450\n

78,511\n

454,851\n

25,000\n

2,905,593

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2008.

(2)		Represents two times the average bonus payment received in the last two fiscal years ended July 31.

(3)		Represents the closing market price of $36.67 on 35,000 unvested awards that would vest due to the change in control.

(4)		Represents the difference between the closing market price of $36.67 and the exercise price on 35,000 unvested stock\noptions in-the-money that would vest due to the change in control.

(5)		Represents the maximum reimbursement of legal fees allowed.

\n\n\n\n

David Mathieson\n

\n\n

Mr. Mathieson resigned as Senior Vice President and Chief Financial Officer of the Company\neffective December 31, 2007. His resignation did not accelerate the vesting of any unvested\nrestricted stock awards or unvested stock options and did not result in any payment under his\nchange of control agreement.\n

\n\n

Peter C. Sephton\n

\n\n

Restricted Stock

Stock Option

Legal Fee

Base Salary ($)

Award Acceleration

Acceleration Gain $

Excise Tax

Reimbursement ($)

(1)

Bonus ($) (2)

Gain $ (3)

(4)

Reimbursement ($)

(5)

Total ($)

812,005\n

615,133\n

1,283,450\n

78,511\n

467,443\n

25,000\n

3,281,542

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2008. As Mr. Sephton works and lives in the United\nKingdom, his base salary is paid to him in British Pounds. The amount shown in U.S. dollars was converted from\nBritish Pounds at the July month-end exchange rate: $1 = £0.5050.

(2)		Represents two times the average bonus payment received in the last two fiscal years ended July 31.

(3)		Represents the closing market price of $36.67 on 35,000 unvested awards that would vest due to the change in control.

(4)		Represents the difference between the closing market price of $36.67 and the exercise price on 35,000 unvested stock\noptions in-the-money that would vest due to the change in control.

(5)		Represents the maximum reimbursement of legal fees allowed.

\n\n\n\n

Matthew O. Williamson\n

\n\n

Restricted Stock

Stock Option

Legal Fee

Base Salary ($)

Award Acceleration

Acceleration Gain $

Excise Tax

Reimbursement ($)

(1)

Bonus ($) (2)

Gain $ (3)

(4)

Reimbursement ($)

(5)

Total ($)

610,000\n

504,462\n

1,283,450\n

78,511\n

442,801\n

25,000\n

2,944,224

\n\n\n\n

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


(1)		Represents two times the base salary in effect at\nJuly 31, 2008.

\n\n\n

75\n

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


(2)		Represents two times the average bonus payment received in the last two fiscal years ended July 31.

(3)		Represents the closing market price of $36.67 on 35,000 unvested awards that would vest due to the change in control.

(4)		Represents the difference between the closing market price of $36.67 and the exercise price on 35,000 unvested stock\noptions in-the-money that would vest due to the change in control.

(5)		Represents the maximum reimbursement of legal fees allowed.

\n\n\n\n

Robert Tatterson\n

\n\n

Restricted Stock

Stock Option

Legal Fee

Base Salary ($)

Award Acceleration

Acceleration Gain $

Excise Tax

Reimbursement ($)

(1)

Bonus ($) (2)

Gain $ (3)

(4)

Reimbursement ($)

(5)

Total ($)

600,000\n

212,434\n

733,400\n

26,374\n

282,934\n

25,000\n

1,880,142

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2008.

(2)		Represents two times the bonus payment received in the last fiscal year ended July 31.

(3)		Represents the closing market price of $36.67 on 20,000 unvested awards that would vest due to the change in control.

(4)		Represents the difference between the closing market price of $36.67 and the exercise price on 18,333 unvested stock\noptions in-the-money that would vest due to the change in control.

(5)		Represents the maximum reimbursement of legal fees allowed.

\n\n\n\n

Potential Payments Upon Termination Due to Death or Disability\n

\n\n\n

In the event of termination due to death or disability, all unexercised, unexpired stock\noptions would immediately vest and all restricted stock awards would immediately become\nunrestricted and fully vested. The following table shows the amount payable to the named executive\nofficers should this event occur on July 31, 2008.\n


	Unvested Shares of					Unvested Stock Options
	Restricted Stock as of		Restricted Stock Award	In-the Money as of		Stock Option
Name	July 31, 2008		Acceleration Gain $ (1)	July 31, 2008		Acceleration Gain $ (2)
F.M. Jaehnert		50,000			1,833,500		76,667	165,818

T. Felmer		35,000			1,283,450		35,000	78,511

P.C. Sephton		35,000			1,283,450		35,000	78,511

M.O. Williamson		35,000			1,283,450		35,000	78,511

R. Tatterson		20,000			733,400		18,333	26,374

\n\n\n\n

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


(1)		Represents the closing market price of $36.67 on unvested shares that would vest due to the change in control.

(2)		Represents the difference between the closing market price of\n$36.67 and the exercise price on unvested stock\noptions in-the-money that would vest due to death or disability.

\n\n\n

\n\n

Compensation of Directors\n

\n\n\n

To ensure competitive compensation for the directors, surveys prepared by various consulting\nfirms and the National Association of Corporate Directors are reviewed by the Corporate Governance\nCommittee in making recommendations to the Board of Directors regarding director compensation.\nDirectors who are employees of the Company receive no additional compensation for service on the\nBoard or on any committee of the Board. Directors who were not also employees of the Company\nreceived an annual retainer of\n

\n\n

76\n

$35,000 plus $6,000 for each committee they chair ($10,000 for the audit committee chair) and\n$1,500 plus expenses for each meeting of the Board or any committee thereof, which they attend and\nare a member or $1,000 for single issue telephonic committee meetings of the Board. Directors also\nreceive $1,000 for each meeting they attend of any committee for which they are not a member and\n$500 for each telephonic committee meeting they attend of any committee for which they are not a\nmember. Effective December 1, 2008, the annual retainer will increase from $35,000 to $45,000.\n

\n\n\n

Directors are also granted 6,000 time-based stock options in November/December of each year\nwhile they are serving on the Board. Effective December 1, 2008, the annual grant will increase\nfrom 6,000 to 6,600 time-based stock options. Upon election to the Board, a director is granted\n10,000 time-based stock options. The grant price is the fair market value of the stock on the\ngrant date and is calculated by taking the average of the high and low stock price on that date.\nThe options vest one-third each year for the first three years and have a ten year life.\n

\n\n

Directors are also eligible to defer portions of their fees into the Brady Corporation\nDirector Deferred Compensation Plan (“Director Deferred Compensation Plan”), the value of which is\nmeasured by the fair value of the underlying investments. The assets of the Director Deferred\nCompensation Plan are held in a Rabbi Trust and are invested by the trustee as directed by the\nparticipant in several investment funds as permitted by the Director Deferred Compensation Plan.\nThe investment funds available in the Director Deferred Compensation Plan include Brady Corporation\nClass A Nonvoting Common Stock and various mutual funds that are provided in the Employee 401(k)\nPlan.\n

\n\n

At least one year prior to termination from the Board, the director must elect whether to\nreceive his/her account balance following termination in a single lump sum payment or by means of\ndistribution under an Annual Installment Method. If the director does not submit an election form\nor has not submitted one timely, then payment shall be made each year for a period of ten years.\nThe first payment must be one-tenth of the balance held; the second one-ninth; and so on, with the\nbalance held in the Trust reduced by each payment.\n

\n\n

Director Compensation Table\n


	Fees Earned
	or Paid in		Option
Name	Cash ($)		Awards ($) (1)	Total ($)
Elizabeth Pungello		65,500			75,512	141,012

Peter J. Lettenberger (2)		16,708			58,338	75,046

Robert C. Buchanan		89,000			75,512	164,512

Roger D. Peirce (2)		16,708			58,338	75,046

Richard A. Bemis		73,000			75,512	148,512

Frank W. Harris		70,000			75,512	145,512

Gary E. Nei		73,500			75,512	149,012

Mary K. Bush (2)		4,500			58,338	62,838

Frank R. Jarc		104,250			75,512	179,762

Chan W. Galbato		72,000			64,974	136,974

Patrick W. Allender		71,000			53,778	124,778

Conrad G. Goodkind		95,250			53,778	149,028

Bradley C. Richardson		60,542			28,622	89,164

\n\n\n

77\n

\n\n\n\n

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


(1)		Represents the amounts expensed in fiscal 2008 relating to grants of stock options. The\nCompany accounts for stock-based compensation in accordance with SFAS No. 123(R), which\nrequires it to recognize compensation expense for stock options granted to employees and\ndirectors based on the estimated fair value of the awards at the time of grant. The\nassumptions used to determine the value of the awards, including the use of the\nBlack-Scholes method of valuation by the Company, are discussed in Note 1 of the Notes\nto Consolidated Financial Statements of the Company contained in Item 8 of this Form\n10-K for the fiscal year ended July 31, 2008. The grant date fair value of options\ngranted in fiscal 2008 for each director was $77,280 for Ms. Pungello, Mr. Buchanan, Mr.\nBemis, Mr. Harris, Mr. Nei, Mr. Jarc and Mr. Galbato, $202,780 for Mr. Allender and Mr.\nGoodkind and $128,800 for Mr. Richardson. No options were granted in fiscal 2008 to Mr.\nLettenberger, Mr. Peirce and Ms. Bush.

		The actual value, if any, which an option holder will realize upon the exercise of an\noption will depend on the excess of the market value of the Company’s common stock over\nthe exercise price on the date the option is exercised, which cannot be forecasted with\nany accuracy.

		Outstanding option awards at July 31, 2008 for each individual serving as a director on\nthat date include the following: Ms. Pungello, 30,000 shares; Mr. Buchanan, 18,000\nshares; Mr. Bemis, 41,000 shares; Mr. Harris, 39,000 shares; Mr. Nei, 39,000 shares; Mr.\nJarc, 42,000 shares; Mr. Galbato, 16,000 shares; Mr. Allender, 16,000 shares; Mr.\nRichardson, 10,000 shares; and Mr. Goodkind, 16,000 shares.

(2)		Served as Director through the Annual Meeting of Shareholders occurring in November 2007.

\n\n\n

\n\n

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder\nMatters\n

\n\n\n

(a) Security Ownership of Certain Beneficial Owners\n\n

\n\n

The following table sets forth the current beneficial ownership of shareholders who are known\nby the Company to own more than five percent (5%) of any class of the Company’s voting shares on\nAugust 15, 2008. As of that date, nearly all of the voting stock of the Company was held by two\ntrusts controlled by direct descendants of the Company’s founder, William H. Brady, as follows:\n


		Amount of
		Beneficial		Percent of
Title of Class	Name and Address of Beneficial Owner	Ownership		Ownership(2)
Class B Common Stock	Brady Corporation Class B Common Stock Trust(1)		1,769,304		50	%
	c/o Elizabeth P. Pungello
	2002 S. Hawick Ct.
	Chapel Hill, NC 27516

	William H. Brady III Revocable Trust of 2003(3)		1,769,304		50	%
	c/o William H. Brady III
	249 Rosemont Ave.
	Pasadena, CA 91103

\n\n\n\n\n

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


(1)		The trustee is Elizabeth P. Pungello, who has sole voting and dispositive\npower and who is the remainder beneficiary. Elizabeth Pungello is the\ngreat-granddaughter of William H. Brady and currently serves on the\nCompany’s Board of Directors.

(2)		An additional 20 shares are owned by a third trust with different trustees.

(3)		William H. Brady III is special trustee of this trust and has sole voting\nand dispositive powers with respect to these shares. William H. Brady III\nis the grandson of William H. Brady.

\n\n\n\n

(b) Security Ownership of Management\n

\n\n\n

The following table sets forth the current beneficial ownership of each class of equity\nsecurities of the Company by each Director or Nominee and by all Directors and Officers of the\nCompany as a group as of July 31, 2008. Unless otherwise noted, the address for\n

\n\n

78\n

\n\n\n\n

each of the listed persons is c/o Brady Corporation, 6555 West Good Hope Road, Milwaukee,\nWisconsin 53223. Except as otherwise indicated, all shares are owned directly.\n

\n\n\n\n


		Amount of
		Beneficial		Percent of
Title of Class	Name of Beneficial Owner & Nature of Beneficial Ownership	Ownership(6)		Ownership
Class A Common Stock	Elizabeth P. Pungello(1)		1,048,945		2.1	%
	Frank M. Jaehnert(2)		725,698		1.4
	Allan J. Klotsche		189,824		0.4
	Thomas J. Felmer		169,581		0.3
	Matthew O. Williamson		156,618		0.3
	Peter C. Sephton		129,001		0.3
	Richard A. Bemis		94,448		0.2
	Robert C. Buchanan(3)		77,625		0.2
	Frank W. Harris		66,488		0.1
	Gary E. Nei(4)		62,937		0.1
	Conrad G. Goodkind		52,195		0.1
	Frank R. Jarc		42,861		0.1
	Barbara Bolens		27,696		0.1
	Robert L. Tatterson		8,334		*
	Chan W. Galbato		3,334		*
	Patrick W. Allender		3,334		*
	Bradley C. Richardson		379		*
	All Officers and Directors as a Group (17 persons)(5)		2,859,298		5.6	%
Class B Common Stock	Elizabeth P. Pungello(1)		1,769,304		50.0	%

\n\n\n\n

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


*		Indicates less than one-tenth of one percent.

(1)		Ms. Pungello’s holdings of Class A Common Stock include 300,000 shares held jointly with her\nspouse and 728,999 shares owned by trusts for which she is a trustee and has either sole or\njoint dispositive and voting authority. Ms. Pungello’s holdings of Class B Common Stock include\n1,769,304 shares owned by a trust over which she has sole dispositive and voting authority.

(2)		Of the amount reported, Mr. Jaehnert’s spouse owns 5,446 shares of Class A Common Stock directly.

(3)		Of the amount reported, Mr. Buchanan owns 14,534 shares as co-trustee of three separate trusts.

(4)		Of the amount reported, Mr. Nei owns 9,665 shares of Class A Common Stock directly (with respect\nto which he shares voting and investment power with his spouse).

(5)		The amount shown for all officers and directors individually and as a group (17 persons)\nincludes options to acquire a total of 1,393,475 shares of Class A Common Stock, which are\ncurrently exercisable or will be exercisable within 60 days of July 31, 2008, including the\nfollowing: Ms. Pungello, 18,000 shares; Mr. Jaehnert, 600,201 shares; Mr. Klotsche, 180,535\nshares; Mr. Felmer, 159,001 shares; Mr. Williamson, 144,501 shares; Mr. Sephton, 129,001 shares;\nMr. Bemis, 29,000 shares; Mr. Buchanan, 6,000 shares; Mr. Harris, 27,000 shares; Mr. Nei, 27,000\nshares; Mr. Goodkind, 3,334 shares; Mr. Jarc, 30,000 shares; Ms. Bolens, 24,900 shares; Mr.\nTatterson, 8,334 shares; Mr. Galbato, 3,334 shares; Mr. Allender, 3,334 shares; Mr. Richardson,\n0 shares. It does not include other options for Class A Common Stock which have been granted at\nlater dates and are not exercisable within 60 days of July 31, 2008.

(6)		The amount shown for all officers and directors individually and as a group (17 persons)\nincludes Class A Common Stock owned in deferred compensation plans totaling 238,271 shares of\nClass A Common Stock, including the following: Ms. Pungello, 1,946 shares; Mr. Jaehnert, 60,023\nshares; Mr. Klotsche, 7,128 shares; Mr. Felmer, 9,837 shares; Mr. Williamson, 12,117 shares; Mr.\nSephton, 0 shares; Mr. Bemis, 47,448 shares; Mr. Buchanan, 55,391 shares; Mr. Harris, 79 shares;\nMr. Nei, 26,272 shares; Mr. Goodkind, 2,533 shares; Mr. Jarc, 12,861 shares; Ms. Bolens, 2,257\nshares; Mr. Tatterson, 0 shares; Mr. Galbato, 0 shares; Mr. Allender, 0 shares; Mr. Richardson,\n379 shares.

\n\n\n\n

(c) Changes in Control\n

\n\n\n

No arrangements are known to the Company, which may, at a subsequent date, result in a change\nin control of the Company.\n

\n\n

(d) Equity Compensation Plan Information\n

\n\n\n

79\n

\n\n\n\n

Number of securities

remaining available for

Number of securities

future issuance under

to be issued upon

Weighted-average

equity compensation

exercise of

exercise price of

plans (excluding

outstanding options,

securities reflected in

warrants and rights

column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders

3,985,205

29.43

972,500

Equity compensation plans not approved by security holders

None

Total

3,985,205

29.43

972,500

\n\n\n

The Company’s Nonqualified Stock Option Plans allow the granting of stock options to various\nofficers, directors and other employees of the Company at prices equal to fair market value at the\ndate of grant. The Company has reserved 300,000 and 2,000,000 shares of Class A Nonvoting Common\nStock for issuance under the 2005 and 2006 Plans, respectively. Generally, options will not be\nexercisable until one year after the date of grant, and will be exercisable thereafter, to the\nextent of one-third per year and have a maximum term of ten years. In August 2003, 2004, 2005,\n2006, and 2007, certain executives and key management employees were issued stock options that vest\nupon meeting certain financial performance conditions in addition to the vesting schedule described\nabove. The options granted in 2003, 2004 and 2005 have a maximum term of five years and the options\ngranted in 2006 and 2007 have a maximum term of ten years. All grants under the Option Plans are at\nmarket price on the date of the grant. The Company granted 210,000 performance-based restricted\nshares during fiscal 2008, with a grant price and fair value of $32.83. As of July 31, 2008,\n210,000 performance-based restricted shares were outstanding.\n

\n\n

Item 13. Certain Relationships and Related Transactions, and Director Independence\n

\n\n\n

Conrad G. Goodkind has been a member of the Board of Directors of the Company since September\n2007, and the Company’s Secretary until November 2007. Until October 2007, he was an equity\npartner of Quarles & Brady LLP, which provides legal services to the Company.\n

\n\n

See Item 10 — Directors and Executive Officers of the Registrant for a discussion of director\nindependence.\n

\n\n

Item 14. Principal Accounting Fees and Services\n

\n\n\n

The following table presents the aggregate fees incurred for professional services by\nDeloitte & Touche LLP and Deloitte Tax LLP during the years ended July 31, 2008 and 2007. Other\nthan as set forth below, no professional services were rendered or fees billed by Deloitte & Touche\nLLP or Deloitte Tax LLP during the years ended July 31, 2008 and 2007.\n


	2008		2007
	(Dollars in thousands)
Audit, audit-related and tax compliance
Audit fees(1)	$	1,663		$	2,014
Audit-related fees(2)		56			60
Tax fees — compliance		863			600

Subtotal audit, audit-related and tax compliance fees		2,582			2,674
Non-audit related
Tax fees — planning and advice		1,233			1,699
Other fees (3)		399			195

Subtotal non-audit related fees		1,632			1,894

Total fees	$	4,214		$	4,568

\n\n\n\n

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


(1)		Audit fees consist of professional services rendered for the audit of the Company’s\nannual financial statements, attestation of management’s assessment of internal control,\nreviews of the quarterly financial statements and statutory reporting compliance.

(2)		Audit-related fees include fees related to due diligence and employee benefit plan audits.

(3)		All other fees relate to expatriate activities.

\n\n\n

80\n

\n\n\n\n\n

EXHIBIT INDEX\n

\n\n


Exhibit
Number		Description
3.1\n		Restated Articles of Incorporation of Brady Corporation (1)

3.2\n		By-laws of Brady Corporation, as amended (2)

*10.1\n		Form of Brady Corporation (2004) Change of Control Agreement entered into with Tom Felmer,\nDavid Mathieson, Peter Sephton, and Matthew Williamson (12)

*10.2\n		Brady Corporation BradyGold Plan, as amended (2)

*10.3\n		Executive Additional Compensation Plan, as amended (2)

*10.4\n		Executive Deferred Compensation Plan, as amended (16)

*10.5\n		Directors’ Deferred Compensation Plan, as amended (16)

*10.6\n		Forms of Non-Qualified Employee Stock Option Agreement, Director Stock Option Agreement,\nand Employee Performance Stock Option Agreement under 2006 Omnibus Incentive Stock Plan

*10.7\n		Brady Corporation 2004 Omnibus Incentive Stock Plan, as amended

*10.8\n		Form of Brady Corporation 2004 Nonqualified Stock Option Agreement under the 2004 Omnibus\nIncentive Stock Plan, as amended (13)

10.9\n		Brady Corporation Automatic Dividend Reinvestment Plan (4)

*10.10\n		Brady Corporation 2005 Nonqualified Plan for Non-employee Directors, as amended

*10.11\n		Forms of Nonqualified Stock Option Agreements under 2005 Non-qualified Plan for\nNon-employee Directors, as amended (8)

*10.12\n		Brady Corporation 1997 Omnibus Incentive Stock Plan, as amended

*10.13\n		Brady Corporation 1997 Nonqualified Stock Option Plan for Non-Employee Directors, as amended

10.14\n		Revolving Credit Facility Credit Agreement (14)

*10.15\n		Brady Corporation 2006 Omnibus Incentive Stock Plan, as amended

*10.16\n		Brady Corporation Incentive Compensation Plan for Elected Corporate Officers (15)

10.17\n		First Amendment to Revolving Credit Facility Credit Agreement (6)

*10.18\n		Complete and Permanent Release and Retirement Agreement, dated July 9, 2007, between Brady\nCorporation and David R. Hawke (3)

*10.19\n		Form of Performance-based Restricted Stock Agreement under Brady Corporation 2006 Omnibus\nIncentive Stock Plan (7)

*10.20\n		Amendment to Change of Control Agreement dated May 20, 2003, between Brady Corporation and\nFrank M. Jaehnert (10)

*10.21\n		Restated Brady Corporation Restoration Plan (5)

*10.22\n		Brady Corporation 2001 Omnibus Incentive Stock Plan, as amended

*10.23\n		Brady Corporation 2003 Omnibus Incentive Stock Plan, as amended

10.24\n		Brady Note Purchase Agreement dated June 28, 2004 (11)

10.25\n		First Supplement to Note Purchase Agreement, dated February 14, 2006 (9)

10.26\n		Second Supplement to Note Purchase Agreement, dated March 23, 2007 (5)

*10.27\n		Change of Control Agreement entered into with Robert Tatterson

21\n		Subsidiaries of Brady Corporation

23\n		Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

31.1\n		Rule 13a-14(a)/15d-14(a) Certification of Frank M. Jaehnert

\n\n\n

82\n

\n\n

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


Exhibit
Number		Description
31.2\n		Rule 13a-14(a)/15d-14(a) Certification of Thomas J. Felmer

32.1\n		Section 1350 Certification of Frank M. Jaehnert

32.2\n		Section 1350 Certification of Thomas J. Felmer

\n\n


*		Management contract or compensatory plan or arrangement

(1)		Incorporated by reference to Registrant’s Registration Statement No. 333-04155 on Form S-3

(2)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 15, 2006

(3)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 2007

(4)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 1992

(5)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal\nquarter ended January 31, 2008

(6)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed March 19, 2008

(7)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed January 9, 2008

(8)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed December 4, 2006

(9)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 17, 2006

(10)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal\nquarter ended April 30, 2003

(11)		Incorporated by reference to Registrant’s 8-K/A filed August 3, 2004

(12)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 24, 2004

(13)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 2005

(14)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 2006

(15)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 20, 2006

(16)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 17, 2007

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

83\n

\n\n

SIGNATURES\n

\n\n\n

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,\nthe Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto\nduly authorized this 26th day of September 2008.\n

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


	Brady Corporation \n
	By:	/s/ Thomas J. Felmer\n
		Thomas J. Felmer
		Senior Vice President & Chief Financial Officer \n(Principal Accounting Officer) \n(Principal Financial Officer)

\n\n\n

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been\nsigned below by the following persons on behalf of the Registrant and in the capacities and on the\ndates indicated.\n


/s/ F. M. Jaehnert\n	President and Director\n	September 26, 2008
\nF. M. Jaehnert\n	(Principal\nExecutive Officer)

/s/ B.C. Richardson\n	Director\n	September 26, 2008
\nB.C. Richardson\n

/s/ R. A. Bemis\n	Director\n	September 26, 2008
\nR. A. Bemis\n

/s/ F. W. Harris\n	Director\n	September 26, 2008
\nF. W. Harris\n

/s/ R. C. Buchanan\n	Director\n	September 26, 2008
\nR. C. Buchanan\n

/s/ G. E. Nei\n	Director\n	September 26, 2008
\nG. E. Nei\n

/s/ F. R. Jarc\n	Director\n	September 26, 2008
\nF. R. Jarc\n

/s/ E. P. Pungello\n	Director\n	September 26, 2008
\nE. P. Pungello\n

/s/ C. W. Galbato\n	Director\n	September 26, 2008
\nC. W. Galbato\n

/s/ C.G. Goodkind\n	Director\n	September 26, 2008
\nC. G. Goodkind\n

/s/ P. W. Allender\n	Director\n	September 26, 2008
\nP. W. Allender\n

\n\n\n\n

85\n

\n\n\n

EXHIBIT 10.6\n

\n\n\n

BRADY CORPORATION
\nNONQUALIFIED STOCK OPTION\n

\n\n\n

Upon management’s recommendation, the Compensation Committee (the “Committee”) of the Brady\nCorporation Board of Directors has awarded to (“Employee”) a\nnon-qualified stock option (the “Option”) effective , , pursuant to the terms of\nthe Brady Corporation 2006 Omnibus Incentive Stock Plan (the “Plan”). The Corporation’s records\nshall be the official record of the Option grant described herein and, in the event of any conflict\nbetween this description and the Corporation’s records, the Corporation’s records shall control.\n

\n\n

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

1.		Number of Shares Optioned; Option Price

		The Corporation grants to the Employee the right and option to purchase, on the terms and\nconditions hereof, all or any part of an aggregate of ( ) shares of the\npresently authorized Class A Common Stock of the Corporation, $.01 par value, whether\nunissued or issued and reacquired by the Corporation, at the price of\n$___.___ per share (the\n“Option Price”).

2.		Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

		Except as provided in this paragraph and in paragraph 3, this Option may not be exercised\n(a) unless Employee is at the date of the exercise in the employ of the Corporation or a\nSubsidiary, and (b) until Employee shall have been continuously so employed for a period of\nat least one year from the date hereof. Thereafter, this Option shall be exercisable for\nany amount of shares up to the maximum percentage of shares covered by this Option (rounded\nup to the nearest whole share), as follows (but in no event shall this Option be exercisable\nfor any shares after the expiration date provided in paragraph 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


		Maximum
		Percentage
		of Shares For
Number of Completed Years After		Which Option is
Date of Grant of this Option		Exercisable
Less than 1		Zero
At least 1 but less than 2		33-1/3%
At least 2 but less than 3		66-2/3%
At least 3		100%

\n\n\n

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

If Employee shall cease to be employed by the Corporation or a Subsidiary for any reason\nother than as provided in paragraph 3 after Employee shall have been continuously so\nemployed for one year after the grant of this Option, Employee may, at\nany time within 90 days of such termination, but in no event later than the date of\nexpiration of this Option, exercise this Option to the extent Employee was entitled to do so\non the date of such termination. However, if Employee was dismissed for cause, of

\n\n\n

\n\n\n\n

\n\n

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

		which the\nCommittee shall be the sole judge, this Option shall forthwith expire. This Agreement does\nnot confer upon Employee any right of continuation of employment by the Corporation or a\nSubsidiary, nor does it impair any right the Corporation or any Subsidiary may have to\nterminate the Employee’s employment at any time.

3.		Termination of Employment

		Notwithstanding the provisions of paragraph 2 hereof, if the Employee:

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \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)		is terminated by the death of the Employee, any unexercised, unexpired Stock\nOptions granted hereunder to the Employee shall be 100% vested and fully exercisable,\nin whole or in part, at any time within one year after the date of death, by the\nEmployee’s personal representative or by the person to whom the Stock Options are\ntransferred under the Employee’s last will and testament or the applicable laws of\ndescent and distribution;

	(b)		dies within 90 days after termination of employment by the Corporation or its\nAffiliates, other than for cause, any unexercised, unexpired Stock Options granted\nhereunder to the Employee and exercisable as of the date of such termination of\nemployment shall be exercisable, in whole or in part, at any time within one year after\nthe date of death, by the Employee’s personal representative or by the person to whom\nthe Stock Options are transferred under the Employee’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		is terminated as a result of the disability of the Employee (a disability means\nthat the Employee is disabled as a result of sickness or injury, such that he or she is\nunable to satisfactorily perform the material duties of Employee’s job, as determined\nby the Board of Directors, on the basis of medical evidence satisfactory to it), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall become\n100% vested and fully exercisable, in whole or in part, at any time within one year\nafter the date of disability; or

	(d)		is terminated as a result of the Employee’s retirement (after age 55 with ten\nyears of employment with the Corporation or an Affiliate or after age 65), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall continue\nto vest as provided in paragraph 2 hereof and any option that is or becomes vested may\nbe exercised in whole or in part prior to the expiration date of such option.

\n\n

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

4.		Deferral of Exercise

		Although the Corporation intends to exert its best efforts so that the shares purchasable\nupon the exercise of this Option will be registered under, or exempt from, the registration\nrequirements of, the Securities Act of 1933 (the “Act”) and any applicable state securities\nlaw at the time or times this Option (or any portion of this Option) first becomes\nexercisable, if the exercise of this Option would otherwise result in a violation by the\nCorporation of any provision of the Act or of any state securities law, the Corporation

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\n\n\n

\n\n\n\n

\n\n

		may\nrequire that such exercise be deferred until the Corporation has taken appropriate action to\navoid any such violation.

5.		Method of Exercising Option

		This Option shall be exercised by delivering to the Corporation, at the office of its\nTreasurer, a written notice of the number of shares with respect to which this Option is at\nthe time being exercised and by paying the Corporation in full the Option Price of the shares being acquired at the time.

6.		Method of Payment

		Payment shall be made either (i) in cash; (ii) by delivering shares of the Corporation’s\nClass A Common Stock which have been beneficially owned by the Employee, the spouse of the\nEmployee, or both of them, for a period of at least six months prior to the time of exercise\n(“Delivered Stock”); (iii) by surrendering to the Corporation shares of Class A Common Stock\notherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination\nof the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair\nMarket Value of the stock at the date of exercise, determined in accordance with\nparagraph 9.

7.		Expiration Date

		This Option shall expire ten years after the date on which this Option was granted.

8.		Withholding Taxes

		The Corporation may require, as a condition to the exercise of this Option, that the\nEmployee concurrently pay to the Corporation any taxes which the Corporation is required to\nwithhold by reason of such exercise. In lieu of part or all of any such payment, the\nEmployee may elect, subject to such rules and regulations as the Committee may adopt from\ntime to time, to have the Corporation withhold from the shares to be issued upon exercise\nthat number of shares having a Fair Market Value, determined in accordance with paragraph 9,\nequal to the amount which the Corporation is required to withhold.

9.		Method of Valuation of Stock

		The “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall\nmean, if the stock is then listed and traded on a registered national securities exchange,\nor is quoted in the NASDAQ National Market System, the average of the high and low sales\nprice recorded in composite transactions for such date or, if such date is not a business\nday or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of\nreported sales or if the stock is not so listed or quoted, but is traded in the\nover-the-counter market, Fair Market Value shall be the average of the closing bid and asked\nprices for such shares on the relevant date.

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\n\n\n

\n\n\n\n

\n\n

10.		No Rights in Shares Until Certificates Issued

		Neither the Employee nor his heirs nor his personal representative shall have any of the\nrights or privileges of a stockholder of the Corporation in respect of any of the shares\nissuable upon the exercise of the Option herein granted, unless and until certificates\nrepresenting such shares shall have been issued or shares in book entry form shall have been\nrecorded in the records of the Corporation’s transfer agent.

11.		Option Not Transferable

		No portion of the Option granted hereunder shall be transferable or assignable (or made\nsubject to any pledge, lien, obligation or liability of an Employee) except (a) by last will\nand testament or the laws of descent and distribution (and upon a transfer or assignment\npursuant to an Employee’s last will and testament or the laws of descent and distribution,\nany Option must be transferred in accordance therewith); (b) during the Employee’s lifetime,\nnonqualified stock Options may be transferred by an Employee to the Employee’s spouse,\nchildren or grandchildren or to a trust for the benefit of such spouse, children or\ngrandchildren, provided that the terms of any such transfer prohibit the resale of shares\nacquired 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.

12.		Prohibition Against Pledge, Attachment, Etc.

		Except as otherwise herein provided, the Option herein granted and the rights and privileges\npertaining thereto shall not be transferred, assigned, pledged or hypothecated in any way\n(whether by operation of law or otherwise) and shall not be subject to execution, attachment\nor similar process.

13.		Changes in Stock

		In the event there are any changes in the Class A Common Stock of the Corporation through\nmerger, consolidation, reorganization, recapitalization, stock dividend, stock split,\ncombination or exchange of shares, rights offering or any other change affecting the Class A\nCommon Stock of the Corporation, appropriate changes will be made by the Committee in the\naggregate number of shares and the purchase price and kind of shares subject to this Option,\nto prevent substantial dilution or enlargement of the rights granted to or available for\nEmployee.

14.		Dissolution or Merger

		Anything contained herein to the contrary notwithstanding, upon the dissolution or\nliquidation of the Corporation, or upon any merger in which the Corporation is not the\nsurviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Employee shall have the right within 60 days prior to the effective date of\nsuch dissolution, liquidation or merger, to surrender all or any unexercised portion of this\nOption to the Corporation for cash, subject to the discretion of the Committee as to the\nexact timing of said surrender. Notwithstanding the foregoing, however, in the event

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\n\n\n

\n\n\n\n

\n\n

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

		Employee has retired or died, Employee’s right to surrender all or any unexercised portion\nof this Option under this paragraph shall be available only to the extent that at the time\nof any such surrender, Employee would have been entitled to exercise this Option under\nparagraphs 2 or 3 hereof, as the case may be. The amount of cash to be paid to Employee for\nthe portion of this Option so surrendered, shall be equal to the number of shares of Class A\nCommon Stock subject to the surrendered Option multiplied by the difference between the\nOption Price per share, as described in paragraph 1 hereof, and the Fair Market Value per\nshare, determined in accordance with paragraph 9 hereof, as of the time of surrender.

15.		Notices

		Any notice to be given to the Corporation under the terms of this Agreement shall be\naddressed to the Corporation in care of its Chief Financial Officer, and any notice to be\ngiven to the Employee may be addressed at the address as it appears on the Corporation’s\nrecords, or at such other address as either party may hereafter designate in writing to the\nother. Except as provided in paragraph 5 hereof, any such notice shall be deemed to have\nbeen duly given, if and when enclosed in a properly sealed envelope addressed as aforesaid,\nand deposited, postage prepaid, in the United States mail.

16.		Provisions of Plan Controlling

		This Option is subject in all respects to the provisions of the Plan. In the event of any\nconflict between any provisions of this Option and the provisions of the Plan, the\nprovisions of the Plan shall control, except to the extent the Plan permits the Committee to\nmodify the terms of an Option grant and has done so herein. Terms defined in the Plan where\nused herein shall have the meanings as so defined. Employee acknowledges receipt of a copy\nof the Plan.

17.		Wisconsin Contract

		This Option has been granted in Wisconsin and shall be construed under the laws of that\nstate.

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\n\n\n

\n\n\n\n

\n\n

BRADY CORPORATION
\nDIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT\n

\n\n\n

Option granted on , , by Brady Corporation, a Wisconsin corporation (hereinafter\ncalled the “Company”, to\n (hereinafter called the “Director”)\npursuant to the terms of the Brady Corporation 2005 Nonqualified Stock Option Plan for Non-Employee\nDirectors. The Corporation’s records shall be the official record of the Option grant described\nherein and, in the event of any conflict between this description and Corporation’s records, the\nCorporation’s records shall control.\n

\n\n

1. Number of Shares Optioned; Option Price. The Company grants to the Director the\nright and option to purchase, on the terms and conditions hereof, all or any part of an aggregate\nof ( ) shares of the presently authorized Class A Common Stock of the\nCompany, $.01 par value, whether unissued or issued and reacquired by the Company, at the price of\n ($ ) per share (the “Option Price”).\n

\n\n

2. Conditions of Exercise of Options During Director’s Lifetime; Vesting of Option.\nExcept as provided hereinafter in this paragraph and in paragraph 3, this Option may not be\nexercised (a) unless Director is at the date of the exercise a Director of the Company and (b)\nuntil Director shall have been continuously a Director for a period of at least one year from the\ndate hereof. Thereafter, this Option shall be exercisable for any amount of shares up to the\nmaximum percentage of shares covered by this Option (rounded up to the nearest whole share) as\nfollows (but in no event shall this Option be exercisable for any shares after the expiration date\nprovided in paragraph 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


		Maximum Percentage
Number of Completed Years		of Shares for Which
After Date of Grant of this Option		Option is Exercisable
Less than 1		Zero
At least 1 but less than 2		33-1/3%
At least 2 but less than 3		66-2/3%
At least 3		100%

\n\n\n

If Director shall cease to be a Director of the Company for any reason (except death or\ndisability, or if the Director has been a member of the Board of Directors for at least three\nyears) after Director shall have been continuously a Director for one year after the grant of this\nOption, Director may, at any time within three months of such termination, but in no event later\nthan the date of expiration of this Option, exercise this Option to the extent Director was\nentitled to do so on the date of such termination. This Agreement does not confer upon Director\nany right to continue as a Director of the Company.\n

\n\n

3. Termination of Employment, Etc. A. Notwithstanding the provisions of paragraph 2\nhereof, in the event of the termination of the Directorship with the Company prior to three years\nfrom date of grant, due to death or disability, this Option shall become 100% vested and fully\nexercisable.\n

\n\n

For purposes of this Agreement, “Disability” means that the Director is disabled as a result\nof sickness or injury, such that he is unable satisfactorily to perform the Director’s duties as\ndetermined by the Board of Directors, on the basis of medical evidence satisfactory to it.\n

\n\n

B. (i) If the Directorship is terminated by the death of the Director prior to three years of\nservice, any unexercised, unexpired Stock Options granted hereunder to the Director shall be\nexercisable, in whole or in part, at any time within one year after the date of death, by the\nDirector’s personal representative or by the person to whom the Stock Options are transferred under\nthe Director’s last will and testament or the applicable laws of descent and distribution. (ii) If\nthe Directorship is terminated as a result of the disability of the Director prior to three years\nof service, any unexercised, unexpired Stock Options granted hereunder to the Director shall be\nexercisable, in whole or in part, at any time within one year after the date of disability.\n(iii) If the Directorship is terminated after the Director has been a member of the Board for at\nleast three years, any unexercised, unexpired Stock Options granted hereunder to the Director shall\ncontinue to vest as provided in paragraph 2 and any option that is or becomes vested may be\nexercised within the term of such option.\n

\n\n

C. In the event of (a) the merger or consolidation of the Company with or into another\ncorporation or corporations in which the Company is not the surviving corporation, (b) the adoption\nof any plan for the dissolution of the Company, or (c) the sale or exchange of all or substantially\nall the assets of the Company for cash or for shares of stock or other securities of another\ncorporation, this Option shall become fully vested and exercisable immediately prior to any such\nevent in which the Company is not the surviving corporation.\n

\n\n

4. Deferral of Exercise. Although the Company intends to exert its best efforts so\nthat the shares purchasable upon the exercise of this Option will be registered under, or exempt\nfrom the registration requirements of, the Federal Securities Act of 1933 (the “Act”) and any\napplicable state securities law at the time or times this Option (or any portion of this Option)\nfirst becomes exercisable, if the exercise of this Option would otherwise result in the violation\nby the Company of any provision of the Act or of any state securities law, the Company may require\nthat such exercise be deferred until the Company has taken appropriate action to avoid any such\nviolation.\n

\n\n

5. Method of Exercising Option. This Option shall be exercised by delivering to the\nCompany, at the office of its Treasurer, a written notice of the number of shares with respect to\nwhich this Option is at the time being exercised and by paying the Company in full the Option Price\nof the shares being acquired at the time.\n

\n\n

6. Method of Payment. Payment shall be made either (i) in cash; (ii) by delivering\nshares of the Company’s Class A Common Stock which have been beneficially owned by the Director,\nthe spouse of the Director, or both of them, for a period of at least six months prior to the time\nof exercise (“Delivered Stock”); (iii) by surrendering to the Company shares of Class A Common\nStock otherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination\nof the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair Market\nValue of the stock at the date of exercise, determined in accordance with paragraph 9.\n

\n\n

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\n\n

7. Expiration Date. This Option shall expire ten years after the date on which this\nOption was granted.\n

\n\n

8. Withholding Taxes. The Company may require payment of or withhold any tax which it\nbelieves is payable as a result of the exercise of this Option, and the Company may defer making\ndelivery with respect to the shares until arrangements satisfactory to the Company have been made\nwith regard to any such withholding obligations. In lieu of part or all of any such payment, the\nDirector, in satisfaction of all withholding taxes (including, without limitation, Federal income,\nFICA (Social Security and Medicare) and any state and local income taxes) payable as a result of\nsuch exercise, may elect, subject to such rules and regulations as the Company may adopt from time\nto time, to have the Company withhold that number of shares (valued at Fair Market Value on the\ndate of exercise and rounded upward) required to settle such withholding taxes.\n

\n\n

9. Method of Valuation of Stock. The “Fair Market Value” of the Class A Common Stock\nof the Company on any date shall mean, if the stock is then listed and traded on a registered\nnational securities exchange, or is quoted in the NASDAQ National Market System, the average of the\nhigh and low sale prices recorded in composite transactions for such date or, if such date is not a\nbusiness day or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of reported\nsales or if the stock is not so listed or quoted, but is traded in the over-the-counter market,\nFair Market Value shall be the average of the closing bid and asked prices for such shares on the\nrelevant date.\n

\n\n

10. No Rights in Shares Until Certificates Issued. Neither the Director nor his heirs\nnor his personal representative shall have any of the rights or privileges of a stockholder of the\nCompany in respect of any of the shares issuable upon the exercise of the Option herein granted,\nunless and until certificates representing such shares shall have been issued.\n

\n\n

11. Option Not Transferable During Director’s Lifetime. This Option shall not be\ntransferable by the Director other than by his will or by the laws of descent and distribution and\nshall be exercisable during his lifetime only by him.\n

\n\n

12. Prohibition Against Pledge, Attachment, Etc. Except as otherwise herein provided,\nthe Option herein granted and the rights and privileges pertaining thereto shall not be\ntransferred, assigned, pledged or hypothecated in any way (whether by operation of law or\notherwise) and shall not be subject to execution, attachment or similar process.\n

\n\n

13. Changes in Stock. In the event there are any changes in the Class A Common Stock\nof the Company through merger, consolidation, reorganization, recapitalization, stock dividend,\nstock split, combination or exchange of shares, rights offering or any other change affecting the\nClass A Common Stock of the Company, appropriate changes shall be made by the Board of Directors of\nthe Company, in the aggregate number of shares and the purchase price and kind of shares subject to\nthis Option, to prevent substantial dilution or enlargement of the rights granted to or available\nfor Director.\n

\n\n

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\n\n

14. 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 the termination of this\nOption, the Director shall have the right immediately prior to the effective date of such\ndissolution, liquidation or merger, to surrender all or any unexercised portion of this Option to\nthe Company for cash, subject to the discretion of the Board of Directors as to the exact timing of\nsaid surrender. Notwithstanding the foregoing, however, in the event Director has retired or died,\nDirector’s right to surrender all or any unexercised portion of this Option under this paragraph\nshall be available only to the extent that at the time of any such surrender, Director would have\nbeen entitled to exercise this Option under paragraphs 2 or 3 hereof, as the case may be. The\namount of cash to be paid to Director for the portion of this Option so surrendered, shall be equal\nto the number of shares of Class A Common Stock subject to the surrendered Option multiplied by the\ndifference between the Option Price per share, as described in paragraph 1 hereof, and the Fair\nMarket Value per share, determined in accordance with paragraph 9 hereof, as of the time of\nsurrender.\n

\n\n

15. Notices. Any notice to be given to the Company under the terms of this Agreement\nshall be addressed to the Company in care of its Vice President and Chief Financial Officer, and\nany notice to be given to the Director may be addressed at the address as it appears on the\nCompany’s records, or at such other address as either party may hereafter designate in writing to\nthe other. Any such notice shall be deemed to have been duly given if and when enclosed in a\nproperly sealed envelope addressed as aforesaid, and deposited, postage prepaid, in the United\nStates mail.\n

\n\n

16. Provisions of Plan Controlling. This Option is subject in all respects to the\nprovisions of the Plan. In the event of any conflict between any provisions of this Option and the\nprovisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan\npermits the Committee to modify the terms of an Option grant and has done so herein. Terms defined\nin the Plan where used herein shall have the meanings as so defined. Director acknowledges receipt\nof a copy of the Plan.\n

\n\n

17. Wisconsin Contract. This Option has been granted in Wisconsin and shall be\nconstrued under the laws of that state.\n

\n\n

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\n\n

BRADY CORPORATION
\nPERFORMANCE STOCK OPTION\n

\n\n\n

\n\n

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

1.		Number of Shares Optioned; Option Price

		The Corporation grants to the Employee the right and option to purchase, on the terms and\nconditions hereof, all or any part of an aggregate of thousand ( ) shares of\nthe presently authorized Class A Common Stock of the Corporation, $.01 par value, whether\nunissued or issued and reacquired by the Corporation, at the price of $ per share (the\n“Option Price”).

2.		Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

		Except as provided in this paragraph and in paragraph 3, this Option may not be exercised\n(a) unless Employee is, at the date of the exercise, in the employ of the Corporation or a\nSubsidiary, and (b) the performance conditions provided below have been met; provided,\nhowever, that in no event shall this Option be exercisable for any shares after the\nexpiration date provided in paragraph 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 \n \n \n\n\n


Number of	Vesting	Condition of Vesting;
Shares	Date	Brady Corporation Net Income
(a) \n	Acceptance by the\nAudit Committee of\nthe results of the\nfiscal audit\n	Fiscal net income per\nshare of Class A Common Stock\nof at least $ .

(b) \n	Acceptance by the\nAudit Committee of\nthe results of the\nfiscal audit\n	Fiscal net income per\nshare of Class A Common Stock\nof at least $ .

(c) \n	Acceptance by the\nAudit Committee of\nthe results of the\nfiscal audit\n	Fiscal net income per\nshare of Class A Common Stock\nof at least $ .

\n\n\n\n

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


*		Net income per share of Class A Common Stock will be computed\nby dividing the Corporation’s net income for the year by an assumed 55 million\nshares of diluted outstanding Common Stock and assuming no issuance of\nadditional shares of Common Stock other than pursuant to the Corporation’s\nOmnibus

\n\n\n

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

Incentive Stock Plans. In the event of any other stock issuance, the\nCompensation Committee will make an equitable adjustment of the earnings per share\namounts.\n

\n\n

If Employee shall cease to be employed by the Corporation or a Subsidiary for any reason other\nthan as provided in paragraph 3, Employee may, at any time within 90 days of such termination, but\nin no event later than the date of expiration of this Option, exercise this Option to the extent\nEmployee was entitled to do so on the date of such termination. However, if Employee was dismissed\nfor cause, of which the Compensation Committee of the Board of Directors of the Corporation shall\nbe the sole judge, this Option shall forthwith expire. This Agreement does not confer upon\nEmployee any right of continuation of employment by the Corporation or a Subsidiary, nor does it\nimpair any right the Corporation or any Subsidiary may have to terminate the Employee’s employment\nat any time.\n

\n\n

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

Termination of Employment

\n\n

Notwithstanding the provisions of paragraph 2 hereof, other in the event of a termination for\ncause, if the Employee:\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \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)		is terminated by the death of the Employee, any unexercised, unexpired Stock\nOptions granted hereunder to the Employee shall be 100% vested and fully exercisable,\nin whole or in part, at any time within one year after the date of death, by the\nEmployee’s personal representative or by the person to whom the Stock Options are\ntransferred under the Employee’s last will and testament or the applicable laws of\ndescent and distribution;

	(b)		dies within 90 days after termination of employment by the Corporation or its\nAffiliates, other than for cause, any unexercised, unexpired Stock Options granted\nhereunder to the Employee and exercisable as of the date of such termination of\nemployment shall be exercisable, in whole or in part, at any time within one year after\nthe date of death, by the Employee’s personal representative or by the person to whom\nthe Stock Options are transferred under the Employee’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		is terminated as a result of the disability of the Employee (a disability means\nthat the Employee is disabled as a result of sickness or injury, such that he or she is\nunable to satisfactorily perform the material duties of Employee’s job, as determined\nby the Board of Directors, on the basis of medical evidence satisfactory to it), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall become\n100% vested and fully exercisable, in whole or in part, at any time within one year\nafter the date of disability;

	(d)		is terminated as a result of the Employee’s retirement (after age 55 with ten\nyears of employment with the Corporation or a Subsidiary or after age 65), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall continue\nto vest as provided in paragraph 2 hereof and any option that is or

-2-\n

\n\n\n

\n\n\n\n

\n\n

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

becomes vested may be exercised in whole or in part prior to the expiration date of\nsuch option.

\n\n

4.		Deferral of Exercise

		Although the Corporation intends to exert its best efforts so that the shares purchasable\nupon the exercise of this Option will be registered under, or exempt from, the registration\nrequirements of, the Securities Act of 1933 (the “Act”) and any applicable state securities\nlaw at the time or times this Option (or any portion of this Option) first becomes\nexercisable, if the exercise of this Option would otherwise result in a violation by the\nCorporation of any provision of the Act or of any state securities law, the Corporation may\nrequire that such exercise be deferred until the Corporation has taken appropriate action to\navoid any such violation.

5.		Method of Exercising Option

		This Option shall be exercised by delivering to the Corporation, at the office of its\nTreasurer, a written notice of the number of shares with respect to which this Option is at\nthe time being exercised and by paying the Corporation in full the Option Price of the\nshares being acquired at the time.

6.		Method of Payment

		Payment shall be made either (i) in cash; (ii) by delivering shares of the Corporation’s\nClass A Common Stock which have been beneficially owned by the Employee, the spouse of the\nEmployee, or both of them, for a period of at least six months prior to the time of exercise\n(“Delivered Stock”); (iii) by surrendering to the Corporation shares of Class A Common Stock\notherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination\nof the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair\nMarket Value of the stock at the date of exercise, determined in accordance with\nparagraph 9.

7.		Expiration Date

		This Option shall expire ten years after the date on which this Option was granted.

8.		Withholding Taxes

		The Corporation may require, as a condition to the exercise of this Option, that the\nEmployee concurrently pay to the Corporation any taxes which the Corporation is required to\nwithhold by reason of such exercise. In lieu of part or all of any such payment, the\nEmployee may elect, subject to such rules and regulations as the Committee may adopt from\ntime to time, to have the Corporation withhold from the shares to be issued upon exercise\nthat number of shares having a Fair Market Value, determined in accordance with paragraph 9,\nequal to the amount which the Corporation is required to withhold.

\n\n

-3-\n

\n\n

9.		Method of Valuation of Stock

		The “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall\nmean, if the stock is then listed and traded on a registered national securities exchange,\nor is quoted in the NASDAQ National Market System, the average of the high and low sales\nprice recorded in composite transactions for such date or, if such date is not a business\nday or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of\nreported sales or if the stock is not so listed or quoted, but is traded in the\nover-the-counter market, Fair Market Value shall be the average of the closing bid and asked\nprices for such shares on the relevant date.

10.		No Rights in Shares Until Certificates Issued

		Neither the Employee nor his heirs nor his personal representative shall have any of the\nrights or privileges of a stockholder of the Corporation in respect of any of the shares\nissuable upon the exercise of the Option herein granted, unless and until certificates\nrepresenting such shares shall have been issued or shares in book entry form shall have been\nrecorded in the records of the Corporation’s transfer agent.

11.		Option Not Transferable

		No portion of the Option granted hereunder shall be transferable or assignable (or made\nsubject to any pledge, lien, obligation or liability of an Employee) except (a) by last will\nand testament or the laws of descent and distribution (and upon a transfer or assignment\npursuant to an Employee’s last will and testament or the laws of descent and distribution,\nany Option must be transferred in accordance therewith); (b) during the Employee’s lifetime,\nnonqualified stock Options may be transferred by an Employee to the Employee’s spouse,\nchildren or grandchildren or to a trust for the benefit of such spouse, children or\ngrandchildren, provided that the terms of any such transfer prohibit the resale of shares\nacquired 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 and are\nsubject to the provisions of paragraph 9.

12.		Prohibition Against Pledge, Attachment, Etc.

		Except as otherwise herein provided, the Option herein granted and the rights and privileges\npertaining thereto shall not be transferred, assigned, pledged or hypothecated in any way\n(whether by operation of law or otherwise) and shall not be subject to execution, attachment\nor similar process.

13.		Changes in Stock

		In the event there are any changes in the Class A Common Stock of the Corporation through\nmerger, consolidation, reorganization, recapitalization, stock dividend, stock split,\ncombination or exchange of shares, rights offering or any other change affecting the Class A\nCommon Stock of the Corporation, appropriate changes will be made by the Committee in the\naggregate number of shares and the purchase price and kind of shares

\n\n

-4-\n

\n\n

\n\n\n\n \n \n \n\n\n\n \n\n \n \n \n\n\n\n \n\n \n \n \n\n\n\n \n\n \n \n \n\n\n\n \n\n \n \n \n\n\n\n \n\n \n \n \n\n\n\n \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 this Option, to prevent substantial dilution or enlargement of the rights granted\nto or available for Employee.

14.		Dissolution or Merger

		Anything contained herein to the contrary notwithstanding upon the dissolution or\nliquidation of the Corporation, or upon any merger in which the Corporation is not the\nsurviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Employee shall have the right within sixty (60) days prior to the effective date\nof such dissolution, liquidation or merger, to surrender all or any unexercised portion of\nthis Option to the Corporation for cash, subject to the discretion of the Committee as to\nthe exact timing of said surrender. Notwithstanding the foregoing, however, in the event\nEmployee has retired or died, Employee’s right to surrender all or any unexercised portion\nof this Option under this paragraph shall be available only to the extent at the time of any\nsuch surrender, Employee would have been entitled to exercise this Option under paragraphs 2\nor 3 hereof, as the case may be. The amount of cash to be paid to Employee for the portion\nof this Option so surrendered, shall be equal to the number of shares of Class A Common\nStock subject to the surrendered Option multiplied by the difference between the Option\nPrice per share, as described in paragraph 1 hereof, and the Fair Market Value per share,\ndetermined in accordance with paragraph 9 hereof, as of the time of surrender.

15.		Notices

		Any notice to be given to the Corporation under the terms of this Agreement shall be\naddressed to the Corporation in care of its Chief Financial Officer, and any notice to be\ngiven to the Employee may be addressed at the address as it appears on the Corporation’s\nrecords, or at such other address as either party may hereafter designate in writing to the\nother. Except as provided in paragraph 5 hereof, any such notice shall be deemed to have\nbeen duly given, if and when enclosed in a properly sealed envelope addressed as aforesaid,\nand deposited, postage prepaid, in the United States mail.

16.		Provisions of Plan and Corporate Records Controlling

		This Option is subject in all respects to the provisions of the Plan. In the event of any\nconflict between any provisions of this Option and the provisions of the Plan, the\nprovisions of the Plan shall control, except to the extent that the Plan permits the\nCommittee to modify the terms of an Option grant and has done so herein. Terms defined in\nthe Plan where used herein shall have the meanings as so defined. Employee acknowledges\nreceipt of a copy of the Plan. The Corporation’s records shall be the official record of\nthe Option grant described herein and , in the event of any conflict between this\ndescription and the Corporation’s records, the Corporation’s records shall control.

17.		Wisconsin Contract

		This Option has been granted in Wisconsin and shall be construed under the laws of that\nstate.

\n\n\n

-5-\n

\n\n\n

EXHIBIT 10.7\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

	(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 2004 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 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

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) 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

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\nwith respect to the Plan or any Award.\n

\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

- 4 -\n

\n\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\nfrom 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

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

6.02 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 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

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

(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

- 5 -\n

\n\n\n

\n\n\n\n

\n\n

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

			Act 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.

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


Years After
Date of Grant			Percentage of Shares
Less than 1			0%

1 but less than 2			33-1/3%

2 but less than 3			66-2/3%

3 or more			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 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”), (d) by surrendering to the Corporation shares of Corporation\nStock otherwise receivable upon exercise of the Stock Option (a “Net Exercise”), or (e) any\ncombination of the foregoing. For purposes of the foregoing, Delivered Stock shall be valued at\nits Fair Market Value determined as of the business day immediately preceding the date of exercise\nof the Stock Option and shares of Corporation Stock used in a Net Exercise shall be valued at their\nFair Market Value determined as of the date of exercise of the Stock Option. No Participant shall\nbe 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

(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

- 6 -\n

\n\n

\n\n\n

\n\n

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\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\nof Code Section 425(d), more than 10% of the voting power of all classes of\nstock of the Corporation or any parent or subsidiary corporation shall not be\neligible to receive an ISO hereunder unless the purchase price per share under\nsuch 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

	(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 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

- 7 -\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\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\n \n\n \n \n \n \n\n\n\n \n\n \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

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 -\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

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

IX.

WITHHOLDING TAXES

\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

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\n

\n\n

- 9 -\n

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\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

	(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

- 10 -\n

\n\n\n

\n\n\n\n

\n\n

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

(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

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\n

\n\n

- 11 -\n

\n\n\n

EXHIBIT 10.10\n

\n\n\n

BRADY CORPORATION
\n2005 NONQUALIFIED STOCK OPTION PLAN
\nFOR NON-EMPLOYEE DIRECTORS \n

\n\n\n

1. Purpose.\n

\n\n\n

The 2005 Stock Option Plan for Non-Employee Directors (the “Plan) is intended to attract and\nretain the services of experienced and knowledgeable non-employee directors of Brady Corporation\n(the “Corporation”) for the benefit of the Corporation and its shareholders and to provide\nadditional incentive for such directors to continue to work for the best interest of the\nCorporation and its shareholders.\n

\n\n

2. Shares Subject to the Plan.\n

\n\n\n

There are reserved for issuance upon the exercise of options granted under the Plan 300,000\nClass A Non-Voting Common Shares $.01 par value, of the Corporation (the “Stock”). Such Stock may\nbe authorized and unissued Stock or previously outstanding Stock then held in the Corporation’s\ntreasury. If any option granted under the Plan shall expire or terminate for any reason without\nhaving been exercised in full, the Stock subject to the unexercised portion thereof shall again be\navailable for the purposes of issuance upon the exercise of options granted under the Plan.\n

\n\n

3. Administration.\n

\n\n\n

The Plan shall be administered by the Board of Directors of the Corporation (the “Board”),\nwhich may delegate any or all of its authority to a Committee of the Board. Subject to the express\nprovisions of the Plan, the Board shall have authority to interpret the Plan, to prescribe, amend\nand rescind rules and regulations relating to it, to determine the terms and provisions of the\noption grants and agreements (which shall comply with and be subject to the terms and conditions of\nthe Plan) and to make all other determinations necessary or advisable for the administration of the\nPlan. The Board’s determination of the matters referred to in this Paragraph 3 shall be conclusive.\n

\n\n

4. Eligibility.\n

\n\n\n

For purposes of the Plan, “Non-Employee Director” means a member of the Board who is not an\nemployee of the Corporation or a subsidiary of the Corporation. After the effective date of the\nPlan, each Non-Employee Director who first becomes a Director on an annual meeting date after July\n26, 2005 shall automatically be granted an option to purchase 10,000 shares of Stock on a date that\nis 14 days after the annual meeting date, or if such person first becomes a Director on a date\nother than the annual meeting date, the option shall automatically be granted\non a date that is 14 days after first becoming a Director. On a date that is 14 days after each\nsubsequent annual meeting of the shareholders of the Corporation on or subsequent to the effective\ndate of the Plan, each Non-Employee Director who will continue to serve as an Non-Employee Director\nafter such annual meeting shall automatically be granted an option to purchase 6,000 shares of\nStock (6,600 shares of Stock for any grant on or after December 1, 2008).\n

\n\n

Only non-statutory stock options shall be granted under the Plan.\n

\n\n

5. Option Grants.\n

\n\n\n

(a) The purchase price of the Stock under each option granted under the Plan shall be 100% of\nthe Fair Market Value of the Stock on the date such option is granted. For purposes of the Plan\n“Fair Market Value” on any date shall mean, with respect to Stock, if the stock is then listed and\ntraded on a registered national securities exchange, or is quoted in the NASDAQ National Market\nSystem, the average of the high and low sale prices recorded in composite transactions for such\ndate or, if such date is not a business day or if no sales of the Stock shall have been reported\nwith respect to such date, 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 quoted, but is\ntraded in the over-the-counter market, Fair Market Value shall be the average of the closing bid\nand asked prices for such Stock on the relevant date.\n

\n\n

(b) All options 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


Years After
Date of Grant		Percentage of Shares
Less than 1		0%
1 but less than 2		33-1/3%
2 but less than 3		66-2/3%
3 or more		100%

\n\n\n

The term of each option shall be ten years from the date of grant, or such shorter period as\nis prescribed in Paragraphs 5(c) and 5(d). Except as provided in Paragraphs 5(c) and 5(d), no\noption may be exercised at any time unless the holder is then a director of the Corporation.\n

\n\n

Each option may be exercised in whole or in part from time to time as specified in the\nagreements provided, however, that each holder may exercise an option in whole or in part by giving\nwritten notice of the exercise to the Corporation, specifying the number of shares to be purchased\nby payment in full of the purchase price therefor. The purchase price may be paid (a) in cash, (b)\nby check, (c) with the approval of the Board, or if the applicable agreement so provides, by\ndelivering shares of Stock (“Delivered Stock”), (d) by surrendering to the Corporation shares of\nStock otherwise receivable upon exercise of the option (a “Net Exercise”), or (e) any combination\nof the foregoing. For purposes of the foregoing, Delivered Stock shall be valued at its Fair\nMarket Value determined as of the business day immediately preceding the date of exercise of the\noption and shares of Stock used in a Net Exercise shall be valued at their\nFair Market Value determined as of the date of exercise of the option. No holder shall be under any\nobligation to exercise any option hereunder.\n

\n\n

Upon exercise, the option price is to be paid in full in cash or, at the discretion of the\nBoard, in Stock owned by the optionee having a Fair Market Value on the date of exercise equal to\nthe aggregate option price or, at the discretion of the Board, in a combination of cash and Stock.\n

\n\n

-2-\n

\n\n

(c) All rights under any option shall terminate on the date such Participant ceases to be a\nDirector of the Corporation, except that (a) if the Directorship is terminated by the death of the\nDirector, any unexercised, unexpired Stock Options granted hereunder to the Director shall be 100%\nvested and fully exercisable, in whole or in part, at any time within one year after the date of\ndeath, by the Director’s personal representative or by the person to whom the options are\ntransferred under the Director’s last will and testament or the applicable laws of descent and\ndistribution; (b) if the Directorship is terminated as a result of the disability of the Director\n(a disability means that the Director is disabled as a result of sickness or injury, such that he\nor she is unable satisfactorily to perform the Director duties, as determined by the Board of\nDirectors, on the basis of medical evidence satisfactory to it), any unexercised, unexpired options\ngranted hereunder to the Director shall become 100% vested and fully exercisable, in whole or in\npart, at any time within one year after the date of disability; (c) if the Directorship is\nterminated and the Director has been a member of the Board of Directors for at least three years,\nany unexercised, unexpired options granted hereunder to the Director shall continue to vest as\nprovided in Paragraph 5(b) and any option that is or becomes vested may be exercised within the\nterm of such option; and (d) if the Directorship is terminated for any reason other than (a), (b)\nor (c) above, any unexercised, unexpired options granted hereunder and exercisable as of the date\nof such termination shall be exercisable in whole or in part at any time within 90 days after such\ndate of termination.\n

\n\n

(d) In the event of (a) a merger, consolidation, or reorganization with another corporation in\nwhich the Corporation is not the surviving corporation or a merger, consolidation or reorganization\nwith another corporation in which the Corporation is the surviving corporation, but the Stock\nceases to be publicly traded, (b) the adoption of any plan for the dissolution of the Corporation,\nor (c) the sale or exchange of all or substantially all the assets of the Corporation for cash or\nfor shares of stock or other securities of another corporation, all then-unexercised options shall\nbecome fully exercisable immediately prior to any such event.\n

\n\n

(e) Nothing in the Plan or in any option granted pursuant to the Plan shall confer on any\nindividual any right to continue as a director of the Corporation.\n

\n\n

6. Transferability and Shareholder Rights of Holders of Options.\n

\n\n\n

No options granted under the Plan shall be transferable otherwise than by will or by the laws\nof descent and distribution, and an option may be exercised, during the lifetime of an optionee,\nonly by the optionee or optionee’s guardian or legal representative. An optionee shall have none of\nthe rights of a shareholder of the Corporation until the option has been exercised and the Stock\nsubject to the option has been registered in the name of the optionee on the transfer books of the\nCorporation.\n

\n\n

7. Adjustments upon Changes in Capitalization.\n

\n\n\n

Notwithstanding any other provisions of the Plan, the number and class of shares subject to\nthe options and the option prices of options covered thereby shall be proportionately adjusted in\nthe event of changes in the outstanding Stock by reason of stock dividends, stock splits,\nrecapitalizations, mergers, consolidations, combinations or exchanges of shares, split-ups,\nsplit-offs, spin-offs, liquidations or other similar changes in capitalization, or any distribution\nto\n

\n\n

-3-\n

common shareholders other than cash dividends and, in the event of any such change in the\noutstanding Stock, the aggregate number and class of shares available under the Plan and the number\nof shares as to which options may be granted shall be appropriately adjusted by the Board.\n

\n\n\n

8. Amendment and Termination.\n

\n\n\n

Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall\nterminate on, and no awards of options shall be made after, the tenth anniversary of the effective\ndate of the Plan; provided, however, that such termination shall have no effect on options granted\nprior thereto. The Plan may be terminated, modified or amended by the shareholders of the\nCorporation. The Board may also terminate the Plan or modify or amend the Plan in such respects as\nit shall deem advisable in order to conform to any change in any law or regulation applicable\nthereto, or in other respects which shall not change (i) the total number of shares of Stock as to\nwhich options may be granted, (ii) the class of persons eligible to receive options under the Plan,\n(iii) the manner of determining the option prices, (iv) the period during which options may be\ngranted or exercised or (v) the provisions relating to the administration of the Plan by the Board.\n

\n\n

9. Withholding.\n

\n\n\n

Upon the issuance of Stock as a result of the exercise of an option, the Corporation shall\nhave the right to retain or sell without notice sufficient Stock to cover the amount of any tax\nrequired by any government to be withheld or otherwise deducted and paid with respect to such Stock\nbeing issued, remitting any balance to the optionee; provided, however, that the optionee shall\nhave the right to provide the Corporation with the funds to enable it to pay such tax.\n

\n\n

10. Effectiveness of the Plan.\n

\n\n\n

The Plan shall become effective on the day following the date the Plan is approved by the vote\nof the holders of a majority of the outstanding shares of the Corporation’s Class B Voting Common\nStock. The Board may in its discretion authorize the granting of options which shall be expressly\nsubject to the conditions that (i) the Stock reserved for issue under the Plan shall have been duly\nlisted, upon official notice of issuance, upon each stock exchange in the United States upon which\nthe Stock is traded and (ii) a registration statement under the Securities Act of 1933 with respect\nto such shares shall have become effective.\n

\n\n\n

-4-\n

\n\n\n

EXHIBIT\n10.12\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\nand not issued under a Stock Option that expires, terminates, is canceled or forfeited for any\n

\n\n

- 2 -\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\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;

\n\n

- 3 -\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

6.03 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

the\nStock 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\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.

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


Years After
Date of Grant			Percentage of Shares
Less than 1			0%

1 but less than 2			33-1/3%

2 but less than 3			66-2/3%

3 or more			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 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\nCompany Stock (“Delivered Stock”), (d) by surrendering to the Corporation shares of Company Stock\notherwise receivable upon exercise of the Stock Option (a “Net Exercise”), or (e) any combination\nof the foregoing. For purposes of the foregoing, Delivered Stock shall be valued at its Fair\nMarket Value determined as of the business day immediately preceding the date of exercise of the\nStock Option and shares of Company Stock used in a Net Exercise shall be valued at their Fair\nMarket Value determined as of the date of exercise of the Stock Option. No Participant shall be\nunder any obligation to exercise any Stock Option hereunder.\n

\n\n

- 5 -\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\nunexercised Stock Options shall be deemed cancelled, and the holder of any such unexercised\nStock Options 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\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

- 6 -\n

\n\n\n

\n\n\n\n

\n\n

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

			shareholder of the Company, 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\nin cash and dividends payable in Company Stock shall be paid in the form of\nadditional 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. 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

- 7 -\n

\n\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\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,\nStock Options shall be exercisable only by the Participant or by the Participant’s guardian or\nlegal representative.\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\n

\n\n

- 8 -\n

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\nshall become fully exercisable, and all restrictions imposed on any then-Restricted Stock 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\nelect to cancel any then-unexercised Stock Option. If any Stock Option is canceled, the Company,\nor the corporation 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 share\nof the Company Stock immediately preceding such cancellation over the option price, multiplied by\nthe number of shares subject to such cancelled Stock Option.\n

\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 -\n

\n\n\n

EXHIBIT 10.13\n

\n\n\n

W. H. BRADY CO.
\n1997 NONQUALIFIED STOCK OPTION PLAN
\nFOR NON-EMPLOYEE DIRECTORS\n

\n\n\n

1. PURPOSE.\n

\n\n\n

The 1997 Stock Option Plan for Non-Employee Directors (the “Plan) is intended to attract and\nretain the services of experienced and knowledgeable independent directors of W. H. Brady Co. (the\n“Company”) for the benefit of the Company and its shareholders and to provide additional incentive\nfor such directors to continue to work for the best interest of the Company and its shareholders.\n

\n\n

2. SHARES SUBJECT TO THE PLAN.\n

\n\n\n

There are reserved for issuance upon the exercise of options granted under the Plan 125,000\nClass A Non-Voting Common Shares $.01 par value, of the Company (the “Company Stock”). Such\nCompany Stock may be authorized and unissued Company Stock or previously outstanding Company Stock\nthen held in the Company’s treasury. If any option granted under the Plan shall expire or\nterminate for any reason without having been exercised in full, the Company Stock subject to the\nunexercised portion thereof shall again be available for the purposes of issuance upon the exercise\nof options granted under the Plan.\n

\n\n

3. ADMINISTRATION.\n

\n\n\n

The Plan shall be administered by the Board of Directors of the Company (the “Board). Subject\nto the express provisions of the Plan, the Board shall have authority to interpret the Plan, to\nprescribe, amend and rescind rules and regulations relating to it, to determine the terms and\nprovisions of the option grants and agreements (which shall comply with and be subject to the terms\nand conditions of the Plan) and to make all other determinations necessary or advisable for the\nadministration of the Plan. The Board’s determination of the matters referred to in this Paragraph\n3 shall be conclusive.\n

\n\n

4. ELIGIBILITY.\n

\n\n\n

For purposes of the Plan, “Outside Director” means a member of the Board who is not an\nemployee of the Company or a subsidiary of the Company. Each individual who is an Outside Director\non the effective date of the Plan shall automatically be granted an option to purchase 2,500 shares\nof Company Stock on the effective date. Each individual who first becomes an Outside Director\nafter the effective date of the Plan shall automatically be granted an option to purchase 2,500\nshares of Company Stock on the first day of such individual’s first term of office as an Outside\nDirector. On the date of each annual meeting of the shareholders of the Company subsequent to the\neffective date of the Plan, each Outside Director who first became an Outside Director prior to\nsuch annual meeting and who will continue to serve as an Outside Director after\nsuch annual meeting shall automatically be granted an option to purchase 1,000 shares of Company\nStock.\n

\n\n

1\n

\n\n

Only non-statutory stock options shall be granted under the Plan.\n

\n\n

5. OPTION GRANTS.\n

\n\n\n

(a) The purchase price of the Company Stock under each option granted under the Plan shall be\n100% of the Fair Market Value of the Company Stock on the date such option is granted. For\npurposes of the Plan “Fair Market Value” on any date shall mean, with respect to Company Stock, if\nthe stock is then listed and traded on a registered national securities exchange, or is quoted in\nthe NASDAQ National Market System, the average of the high and low sale prices recorded in\ncomposite transactions as reported in the Wall Street Journal (Midwest Edition) for such date or,\nif such date is not a business day or if no sales of Company Stock shall have been reported with\nrespect to such date, the next preceding business date with respect to which sales were reported.\nIn the absence of reported sales or if the stock is not so listed or quoted, but is traded in the\nover-the-counter market, Fair Market Value shall be the average of the closing bid and asked prices\nfor such shares on the relevant date.\n

\n\n

(b) All options shall be exercisable in accordance with the following\nschedule:\n

\n\n\n\n \n \n \n \n \n\n\n \n \n \n\n\n \n \n \n \n\n\n\n\n\n \n \n \n \n \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			0%
1 but less than 2			33-1/3%
2 but less than 3			66-2/3%
3 or more			100%

\n\n\n

\n\n

Each option may be exercised in whole or in part from time to time as specified in the\nagreements provided, however, that each holder may exercise an option in whole or in part by giving\nwritten notice of the exercise to the Company, specifying the number of shares to be purchased by\npayment in full of the purchase price therefor. The purchase price may be paid (a) in cash, (b) by\ncheck, (c) with the approval of the Board, or if the applicable agreement so provides, by\ndelivering shares of Company Stock (“Delivered Stock”), (d) by surrendering to the Company shares\nof Company Stock otherwise receivable upon exercise of the option (a “Net Exercise”), or (e) any\ncombination of the foregoing. For purposes of the foregoing, Delivered Stock shall be valued at\nits Fair Market Value determined as of the business day immediately preceding the date of exercise\nof the option and shares of Company Stock used in a Net Exercise shall be valued at their Fair\nMarket Value determined as of the date of exercise of the option. No holder shall be under any\nobligation to exercise any option hereunder.\n

\n\n

2\n

\n\n

Upon exercise, the option price is to be paid in full in cash or, at the discretion of the\nBoard, in Company Stock owned by the optionee having a Fair Market Value on the date of exercise\nequal to the aggregate option price or, at the discretion of the Board, in a combination of cash\nand Company Stock. Upon exercise of an option, the Company shall have the right to retain or sell\nwithout notice sufficient Company Stock to cover government withholding taxes or deductions, if\nany, as described in Paragraph 9.\n

\n\n

(c) All rights under any option shall terminate on the date such Participant ceases to be a\nDirector of the Company, except that (a) if the Directorship is terminated by the death of the\nDirector, any unexercised, unexpired Stock Options granted hereunder to the Director shall be 100%\nvested and fully exercisable, in whole or in part, at any time within one year after the date of\ndeath, by the Director’s personal representative or by the person to whom the options are\ntransferred under the Director’s last will and testament or the applicable laws of descent and\ndistribution; (b) if the Directorship is terminated as a result of the disability of the Director\n(a disability means that the Director is disabled as a result of sickness or injury, such that he\nor she is unable to satisfactorily perform the Director duties, as determined by the Board of\nDirectors, on the basis of medical evidence satisfactory to it), any unexercised, unexpired options\ngranted hereunder to the Director shall become 100% vested and fully exercisable, in whole or in\npart, at any time within one year after the date of disability; (c) if the Directorship is\nterminated and the Director has been a member of the Board of Directors for at least three years,\nany unexercised, unexpired options granted hereunder to the Director shall become 100% vested and\nfully exercisable, in whole or in part, at any time within one year after such date of termination;\nand (d) if the Directorship is terminated for any reason other than (a), (b) or (c) above, any\nunexercised, unexpired options granted hereunder and exercisable as of the date of such termination\nshall be exercisable in whole or in part at any time within 90 days after such date of termination.\n

\n\n

(d) In the event of (a) the merger or consolidation of the Company with or into another\ncorporation or corporations in which the Company is not the surviving corporation, (b) the adoption\nof any plan for the dissolution of the Company, or (c) the sale or exchange of all or substantially\nall the assets of the Company for cash or for shares of stock or other securities of another\ncorporation, all then-unexercised options shall become fully exercisable immediately prior to any\nsuch event in which the Company is not the surviving corporation.\n

\n\n

(e) Nothing in the Plan or in any option granted pursuant to the Plan shall confer on any\nindividual any right to continue as a director of the Company.\n

\n\n

6. TRANSFERABILITY AND SHAREHOLDER RIGHTS OF HOLDERS OF OPTIONS.\n

\n\n\n

No options granted under the Plan shall be transferable otherwise than by will or by the laws\nof descent and distribution, and an option may be exercised, during the lifetime of an optionee,\nonly by the optionee or optionee’s guardian or legal representative. An optionee shall have none\nof the rights of a shareholder of the Company until the option has been exercised and the Company\nStock subject to the option has been registered in the name of the optionee on the transfer books\nof the Company.\n

\n\n

3\n

\n\n

8. AMENDMENT AND TERMINATION.\n

\n\n\n

Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall\nterminate on, and no awards of options shall be made after, the tenth anniversary of the effective\ndate of the Plan; provided, however, that such termination shall have no effect on options granted\nprior thereto. The Plan may be terminated, modified or amended by the shareholders of the Company.\nThe Board may also terminate the Plan or modify or amend the Plan in such respects as it shall\ndeem advisable in order to conform to any change in any law or regulation applicable thereto, or in\nother respects which shall not change (i) the total number of shares of Company Stock as to which\noptions may be granted, (ii) the class of persons eligible to receive options under the Plan, (iii)\nthe manner of determining the option prices, (iv) the period during which options may be granted or\nexercised or (v) the provisions relating to the administration of the Plan by the Board.\n

\n\n

9. WITHHOLDING.\n

\n\n\n

Upon the issuance of Company Stock as a result of the exercise of an option, the Company shall\nhave the right to retain or sell without notice sufficient Company Stock to cover the amount of any\ntax required by any government to be withheld or otherwise deducted and paid with respect to such\nCompany Stock being issued, remitting any balance to the optionee; provided, however, that the\noptionee shall have the right to provide the Company with the funds to enable it to pay such tax.\n

\n\n

10. EFFECTIVENESS OF THE PLAN.\n

\n\n\n

The Plan shall become effective on the day following the date the Plan is approved by the vote\nof the holders of a majority of the outstanding voting common stock of the shareholders. The Board\nmay in its discretion authorize the granting of options which shall be expressly subject to the\nconditions that (i) the Company Stock reserved for issue under the Plan shall have been duly\nlisted, upon official notice of issuance, upon each stock exchange in the United States upon which\nthe Company Stock is traded and (ii) a registration statement under the Securities Act of 1933 with\nrespect to such shares shall have become effective.\n

\n\n

5\n

\n\n

EXHIBIT 10.15\n

\n\n\n

BRADY CORPORATION
\n2006 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 2006 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 15, 2006,\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

1.03 Effect on Prior Plans. After December 31, 2006, no further awards or grants will\nbe made under the Brady Corporation 1997, 2003 or 2004 Omnibus Incentive Stock Plans.\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.

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\n\n\n

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

	(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.

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

	(n)		“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 2006 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 two million (2,000,000)\nshares, provided that no individual Eligible Employee may be granted an Award or Awards under the\nPlan covering more than one hundred thousand (200,000) shares of Corporation Stock in any calendar\nyear (determined without regard to grants under any other plan or program). The shares authorized\nfor 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

\n\n

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\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\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.

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\n\n\n

\n\n\n\n

\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

VI. STOCK OPTIONS\n

\n\n\n

\n\n

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\n\n

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

	(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.

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


Years After
Date of Grant			Percentage of Shares
Less than 1			0%

1 but less than 2			33-1/3%

2 but less than 3			66-2/3%

3 or more			100%

\n\n\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

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\n\n

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

	(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\nof Code Section 425(d), more than 10% of the voting power of all classes of\nstock of the Corporation or any parent or subsidiary corporation shall not be\neligible to receive an ISO hereunder unless the purchase price per share under\nsuch option is at least 110% of the Fair Market Value of the stock subject to\nthe option and such option by its terms is not exercisable after the expiration\nof five (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

\n\n

\n\n\n

“The transferability of this certificate and the shares of stock represented hereby are subject\nto the terms and conditions (including forfeiture) of the Brady Corporation 2004\n

\n\n

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\n\n\n

Omnibus Incentive Stock Plan and a Restricted Stock Agreement. Copies of such Plan and Agreement are on\nfile 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\n \n\n \n \n \n \n\n\n\n \n\n \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

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Committee shall determine. The\nprovisions of Restricted Stock Awards need not be the same with respect to each recipient.\n

\n\n\n

\n\n

IX. WITHHOLDING TAXES\n

\n\n\n

\n\n

X. GENERAL\n

\n\n\n

\n\n

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\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\nqualification of securities upon any securities exchange or under any state or federal law, or\nthe consent or approval of any government regulatory body, is necessary or desirable as a condition\nof, or in connection with, the granting of such Stock Option or the issue or purchase of securities\nthereunder, such Stock Option may not be exercised in whole or in part unless such listing,\nregistration, qualification, consent or approval shall have been effected or obtained free of any\nconditions not acceptable to the Board or the Committee. The Committee shall have the right to\nrely on an opinion of its counsel as to whether any such listing, registration, qualification,\nconsent or approval shall have been effected or obtained.\n

\n\n

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

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\n\n\n

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

			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.

\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

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\n\n\n

EXHIBIT 10.22\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

	(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.

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\n\n\n

\n\n\n\n

\n\n

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

	(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.

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\n\n\n

\n\n\n\n

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

	(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

\n\n

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modify, extend 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\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

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

\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

\n\n\n\n \n \n \n \n \n\n\n \n \n \n\n\n \n \n \n \n\n\n\n\n\n \n \n \n \n\n\n\n\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			0%

1 but less than 2			33-1/3%

2 but less than 3			66-2/3%

3 or more			100%

\n\n\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\nof Code Section 425(d), more than 10% of the voting power of all classes of\nstock of the Corporation or any parent or subsidiary corporation shall not be

- 6 -\n

\n\n\n

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

	(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

\n\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 to 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

\n\n

IX. WITHHOLDING TAXES\n

\n\n\n

- 8 -\n

\n\n\n\n\n

\n\n

X. GENERAL\n

\n\n\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

\n\n\n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \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\nStock and Restricted Stock Units shall be forfeited. Notwithstanding the foregoing, no Stock\nOption 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

10.08 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 10.23\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 \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\n \n\n \n \n \n \n\n\n\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.

- 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 \n\n\n

	(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 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

\n\n

IV. ADMINISTRATION\n

\n\n\n

\n\n

- 3 - \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\nauthority 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.

- 4 - \n

\n\n\n

\n\n\n\n

\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\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

VI. STOCK OPTIONS\n

\n\n\n

\n\n

- 5 - \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.

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


Years After
Date of Grant			Percentage of Shares
Less than 1			0%

1 but less than 2			33-1/3%

2 but less than 3			66-2/3%

3 or more			100%

\n\n\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

- 6 - \n

\n\n

\n\n\n\n \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)		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\nof Code Section 425(d), more than 10% of the voting power of all classes of\nstock of the Corporation or any parent or subsidiary corporation shall not be\neligible to receive an ISO hereunder unless the purchase price per share under\nsuch option is at least 110% of the Fair Market Value of the stock subject to\nthe option and such option by its terms is not exercisable after the expiration\nof five (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

\n\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\n

\n\n

- 7 - \n

\n\n\n

Omnibus 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\n \n\n \n \n \n \n\n\n\n \n\n \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

Committee shall determine. The\nprovisions of Restricted Stock Awards need not be the same with respect to each recipient.\n

\n\n\n

\n\n

IX. WITHHOLDING TAXES\n

\n\n\n

\n\n

X. GENERAL\n

\n\n\n

\n\n

- 9 - \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\nrely on an opinion of its counsel as to whether any such listing, registration, qualification,\nconsent or approval shall have been effected or obtained.\n

\n\n

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

- 10 - \n

\n\n\n

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

			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.

\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

- 11 - \n

\n\n

EXHIBIT 10.27\n

\n\n\n

BRADY CORPORATION
\nCHANGE OF CONTROL AGREEMENT\n

\n\n\n

AGREEMENT, made as of November 15, 2006, between Brady Corporation, a Wisconsin corporation,\n(“Corporation”) and Robert Tatterson.\n

\n\n

WHEREAS, the Executive is now serving as an executive of the Corporation in a position of\nimportance and responsibility; and\n

\n\n

WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Corporation\nand its policies, markets and financial and human resources, and the Executive has acquired certain\nconfidential information and data with respect to the Corporation; and\n

\n\n

WHEREAS, the Corporation wishes to continue to receive the benefit of the Executive’s knowledge and\nexperience and, as an inducement for continued service, is willing to offer the Executive certain\npayments due to severance as a result of change of control as set forth herein;\n

\n\n

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the\nExecutive and Corporation agree as follows:\n

\n\n

SECTION 1. DEFINITIONS.\n

\n\n

(a) Change of Control. For purposes of this Agreement, a “Change of Control” shall occur if\nand when any person or group of persons (as defined in Section 13(d)(3) of the Securities and\nExchange Act of 1934) other than the members of the family of William H. Brady, Jr. and their\ndescendants, or trusts for their benefit, and the W.H. Brady Foundation, Inc., collectively,\ndirectly or indirectly controls in excess of 50% of the voting common stock of the Corporation.\n

\n\n\n

(b) Termination Due to Change of Control. A “Termination Due to Change of Control” shall\noccur if within the 24 month period beginning with the date a Change of Control occurs (i) the\nExecutive’s employment with the Corporation is involuntarily terminated (other than by reason of\ndeath, disability or Cause) or (ii) the Executive’s employment with the Corporation is voluntarily\nterminated by the Executive subsequent to (A) any reduction in the total of the Executive’s annual\nbase salary (exclusive of fringe benefits) and the Executive’s target bonus in comparison with the\nExecutive’s annual base salary and target bonus immediately prior to the date the Change of Control\noccurs, (B) a significant diminution in the responsibilities or authority of the Executive in\ncomparison with the Executive’s responsibility and authority immediately prior to the date the\nChange of Control occurs or (C) the imposition of a requirement by the Corporation that the\nExecutive relocate to a principal work location more than 50 miles from the Executive’s principal\nwork location immediately prior to the date the Change of Control occurs.\n

\n\n\n

(c) “Cause” means (i) the Executive’s willful and continued failure to substantially perform\nthe Executive’s duties with the Corporation (other than any such failure resulting from physical or\nmental incapacity) after written demand for performance is given to the Executive by the\nCorporation which specifically identifies the manner in which the\n

\n\n

1 \n

Corporation believes the\nExecutive has not substantially performed and a reasonable time to cure has transpired, (ii) the\nExecutive’s conviction of (or plea of nolo contendere for the commission\nof) a felony, or (iii) the Executive’s commission of an act of dishonesty or of any willful\nact of misconduct which results in or could reasonably be expected to result in significant injury\n(monetarily or otherwise) to the Corporation, as determined in good faith by the Board of Directors\nof the Corporation.\n

\n\n\n

(d) “Beneficiary” means any one or more primary or secondary beneficiaries designated in\nwriting by the Executive on a form provided by the Corporation to receive any benefits which may\nbecome payable under this Agreement on or after the Executive’s death. The Executive shall have\nthe right to name, change or revoke the Executive’s designation of a Beneficiary on a form provided\nby the Corporation. The designation on file with the Corporation at the time of the Executive’s\ndeath shall be controlling. Should the Executive fail to make a valid Beneficiary designation or\nleave no named Beneficiary surviving, any benefits due shall be paid to the Executive’s spouse, if\nliving; or if not living, then to the Executive’s estate.\n

\n\n\n

(e) “Code” means the Internal Revenue Code of 1986, as amended.\n

\n\n\n

SECTION 2. PAYMENTS UPON TERMINATION DUE TO CHANGE OF CONTROL.\n

\n\n

(a) Following Termination Due to Change of Control, the Executive shall be paid an amount\nequal to two times the annual base salary paid the Executive by the Corporation in effect\nimmediately prior to the date the Change of Control occurs, and two times the average bonus payment\nreceived in the two years immediately prior to the date the Change of Control occurs. Such amount\nshall be paid in 24 monthly installments beginning on the 15^th day of the month\nfollowing the month in which the Executive’s employment with the Corporation terminates.\n

\n\n\n

(b) If the scheduled payments under paragraph (a) above would result in disallowance of any\nportion of the Corporation’s deduction therefore under Section 162(m) of the Code, the payments\ncalled for under paragraph (a) shall be limited to the amount which is deductible, with the balance\nto be paid as soon as deductible by the Corporation. However, in such event, the Corporation shall\npay the Executive on a quarterly basis an amount of interest based on the prime rate recomputed\neach quarter on the unpaid scheduled payments.\n

\n\n\n

SECTION 3. EXCISE TAX, ATTORNEY FEES.\n

\n\n

(a) If the payments under Section 2 in combination with any other payments which the Executive\nhas the right to receive from the Corporation (the “Total Payments”) would result in the Executive\nincurring an excise tax as a result of Section 280(G) of the Code, the Corporation will reimburse\nthe Executive for such Excise Tax.\n

\n\n\n

(b) If the Executive is required to file a lawsuit to enforce the Executive’s rights under\nthis Agreement and the Executive prevails in such lawsuit, the Corporation will reimburse the\nExecutive for attorney fees incurred up to a maximum of $25,000.00.\n

\n\n\n

2 \n

\n\n\n\n\n

SECTION 4. DEATH AFTER THE EXECUTIVE HAS BEGUN RECEIVING PAYMENTS.\n

\n\n

Should the Executive die after Termination Due to Change of Control, but before receiving all\npayments due the Executive hereunder, any remaining payments due shall be made to the Executive’s\nBeneficiary.\n

\n\n

SECTION 5. CONFIDENTIAL INFORMATION AGREEMENT.\n

\n\n

The Executive has obligations under the separate Confidential Information Agreement between the\nExecutive and the Corporation which continue beyond the Executive’s termination of employment. The\npayments to be made hereunder are conditioned upon the Executive’s compliance with the terms of the\nConfidential Information Agreement. The payments made hereunder shall be reduced by any payments\nthe Corporation makes to the Executive under Section 3 of the Confidential Information Agreement.\nIn the event the Executive violates the provisions of the Confidential Information Agreement, no\nfurther payments shall be due hereunder and the Executive shall be obligated to repay all previous\npayments received hereunder in the same manner as provided in Section 4 of the Confidential\nInformation Agreement.\n

\n\n

SECTION 6. MISCELLANEOUS.\n

\n\n

(a) Non-Assignability. This Agreement is personal to the Executive and, without the prior\nwritten consent of the Corporation, shall not be assignable by the Executive otherwise than by will\nor the laws of descent and distribution. This Agreement shall inure to the benefit of and be\nbinding upon the Corporation and its successors and assigns and shall also be enforceable by the\nExecutive’s legal representatives.\n

\n\n\n

(b) Successors. The Corporation shall require any successor (whether direct or indirect, by\npurchase, merger, consolidation or otherwise) to all or substantially all of the business and/or\nassets of the Corporation expressly to assume and agree to perform this Agreement in the same\nmanner and to the same extent that the Corporation would have been required to perform it if no\nsuch succession had taken place. As used in this Agreement, “Corporation” shall mean both the\nCorporation as defined above and any such successor that assumes and agrees to perform this\nAgreement, by operation of law or otherwise.\n

\n\n\n

(c) Governing Law. This Agreement shall be governed by, and construed in accordance with, the\nlaws of the State of Wisconsin, without reference to principles of conflict of laws, to the extent\nnot preempted by federal law. The captions of this Agreement are not part of the provisions hereof\nand shall have no force or effect.\n

\n\n\n

(d) Notices. All notices and other communications under this Agreement shall be in writing\nand shall be given by hand delivery to the other party or by registered or certified mail, return\nreceipt requested, postage prepaid, addressed as follows:\n

\n\n

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


\n	If to the Executive:\n	Robert Tatterson
\n		2210 West Summit
\n		Evansville, IN 47712

\n\n\n

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


\n	If to the Corporation:\n	Brady Corporation
\n		6555 West Good Hope Road
\n		Milwaukee, WI 53223
\n		Attention: Corporate Secretary

\n\n

or to such other address as either party furnishes to the other in writing in accordance with this\nparagraph. Notices and communications shall be effective when actually received by the addressee.\n

\n\n\n

(e) Construction. The invalidity or unenforceability of any provision of this Agreement shall\nnot affect the validity or enforceability of any other provision of this Agreement. If any\nprovision of this Agreement shall be held invalid or unenforceable in part, the remaining portion\nof such provision, together with all other provisions of this Agreement, shall remain valid and\nenforceable and continue in full force and effect to the fullest extent consistent with law.\n

\n\n\n

(f) No Guarantee of Employment. Nothing contained in this Agreement shall give the Executive\nthe right to be retained in the employment of the Corporation or affect the right of the\nCorporation to dismiss the Executive.\n

\n\n\n

(g) Amendment; Entire Agreement. This Agreement may not be amended or modified except by a\nwritten agreement executed by the parties hereto or their respective successors and legal\nrepresentatives. This Agreement contains the entire agreement between the parties on the subjects\ncovered and replaces all prior writings, proposals, specifications or other oral or written\nmaterials relating thereto.\n

\n\n\n

(h) Impact on Other Plans. No amounts paid to the Executive under this Agreement will be\ntaken into account as “wages”, “salary”, “base pay” or any other type of compensation when\ndetermining the amount of any payment or allocation, or for any other purpose, under any other\nqualified or nonqualified plan or agreement of the Corporation, except as otherwise may be\nspecifically provided by such plan or agreement.\n

\n\n\n

(i) Other Agreements. This Agreement supersedes any other severance arrangement or Change of\nControl Agreement between the Corporation and the Executive. This Agreement does not confer any\npayments or benefits other than the payments described in Sections 2 and 3 hereof.\n

\n\n\n

(j) Withholding. To the extent required by law, the Corporation shall withhold any taxes\nrequired to be withheld with respect to this Agreement by the federal, state or local government\nfrom payments made hereunder or from other amounts paid to the Executive by the Corporation.\n

\n\n\n

(k) Facility of Payment. If the Executive or, if applicable, the Executive’s Beneficiary, is\nunder legal disability, the Corporation may direct that payments be made to a relative of such\nperson for the benefit of such person, without the intervention of any legal guardian or\nconservator, or to any legal guardian or conservator of such person. Any such distribution shall\nconstitute a full discharge with respect to the Corporation and the Corporation shall not be\nrequired to see to the application of any distribution so made.\n

\n\n\n

4 \n

\n\n\n\n\n

SECTION 7. CLAIMS PROCEDURE.\n

\n\n

(a) Claim Review. If the Executive or the Executive’s Beneficiary (a “Claimant”) believes\nthat he or she has been denied all or a portion of a benefit under this Agreement, he or she may\nfile a written claim for benefits with the Corporation. The Corporation shall review the claim and\nnotify the Claimant of the Corporation’s decision within\n60 days of receipt of such claim, unless the Claimant receives written notice prior to the end\nof the 60 day period stating that special circumstances require an extension of the time for\ndecision. The Corporation’s decision shall be in writing, sent by mail to the Claimant’s last\nknown address, and if a denial of the claim, must contain the specific reasons for the denial,\nreference to pertinent provisions of this Agreement on which the denial is based, a designation of\nany additional material necessary to perfect the claim, and an explanation of the claim review\nprocedure.\n

\n\n\n

(b) Appeal Procedure to the Board. A Claimant is entitled to request a review of any denial\nby the full Board by written request to the Chair of the Board within 60 days of receipt of the\ndenial. Absent a request for review within the 60-day period, the claim will be deemed to be\nconclusively denied. The Board shall afford the Claimant the opportunity to review all pertinent\ndocuments and submit issues and comments in writing and shall render a review decision in writing,\nall within 60 days after receipt of a request for review (provided that, in special circumstances\nthe Board may extend the time for decision by not more than 60 days upon written notice to the\nClaimant.) The Board’s review decision shall contain specific reasons for the decision and\nreference to the pertinent provisions of this Agreement.\n

\n\n\n

IN WITNESS WHEREOF, the Executive has signed this Agreement and, pursuant to the authorization of\nthe Board, the Corporation has caused this Agreement to be signed, all as of the date first set\nforth above.\n


	/s/ Robert Tatterson

	Executive – Robert Tatterson

	Brady Corporation

\n	By:\n	/s/ Conrad G. Goodkind
\n
\n		Conrad G. Goodkind, Secretary

\n	By:\n	/s/ Gary E. Nei
\n
\n		Compensation Committee

\n\n\n\n

5 \n

\n\n\n

Exhibit 21\n

\n\n\n

SCHEDULE OF SUBSIDIARIES OF BRADY CORPORATION\n

\n\n


		Percentage
		of Voting
	State (Country)	Securities
Name of Company	of Incorporation	Owned
Brady Corporation	Wisconsin	Parent
Tricor Direct Inc. —	Delaware		100	%
Doing Business As:
Seton
Seton Name Plate Company
D&G Sign and Label
Seton Identification Products
Emedco
Champion America
DAWG, Inc.
Worldmark of Wisconsin Inc.	Delaware		100	%
Brady Investment Co.	Nevada		100	%
Stopware, Inc.	California		100	%
Permar Sytems, Inc. —	New York		100	%
Doing Business As Electromark
AIO Acquisition Inc.	Delaware		100	%
Doing Business As:
All-In-One Products
Personnel Concepts Limited
Personnel Concepts Ltd.
PC Limited
USA Printing & Mailing
Dual Core LLC	Wisconsin		100	%
Doing Business As Identicard Systems Worldwide
Brady Mexico Holding LLC	Delaware		100	%
Comprehensive Identification Products, Inc.	Massachusetts		100	%
Doing Business As:
Brady People ID
Temtec
PV Acquisitions, LLC	Delaware		100	%
Doing Business As Promovision Palomino
Brady Precision Converting, LLC	Wisconsin		100	%
Doing Business As Brady Medical
Clement Communications, Inc.	Pennsylvania		100	%
Visual Wear LLC	Massachusetts		100	%
Brady International Co.	Wisconsin		100	%
Brady Worldwide, Inc.	Wisconsin		100	%
Also Doing Business As:
Brandon International
Varitronic Systems
Teklynx International
Sorbent Products Company
TISCOR
Brady Australia Pty. Ltd.	Australia		100	%
Seton Australia Pty. Ltd.	Australia		100	%
Accidental Health & Safety Pty. Ltd.	Australia		100	%
Trafalgar First Aid Pty. Ltd.	Australia		100	%
Carroll Australasia Pty. Ltd.	Australia		100	%
Scafftag Australia Pty. Ltd.	Australia		100	%
Visisign Australia Pty. Ltd.	Australia		100	%

\n\n\n

\n\n


		Percentage
		of Voting
	State (Country)	Securities
Name of Company	of Incorporation	Owned
Transposafe Systems Belgium NV/SA	Belgium		100	%
W.H. Brady, N.V.	Belgium		100	%
W.H.B. do Brasil Ltda.	Brazil		100	%
Tradex do Brasil Ltda.	Brazil		100	%
Asterisco Artes Graficas Ltda	Brazil		100	%
Brady Cayman Finance Company	Cayman Islands		100	%
W.H.B. Identification Solutions, Inc. —	Canada		100	%
Doing Business As:
Brady
GrafTek
Seton
Teklynx International
Varitronics Canada
Identicam Systems Inc.	Canada		100	%
BRC Financial	Canada		100	%
Brady (Shanghai) International Trading Co., Ltd.	China		100	%
Brady Technology (Wuxi) Co. Ltd.	China		100	%
Brady (Beijing) Co. Ltd.	China		100	%
Brady (Shenzhen) Co., Ltd.	China		100	%
Brady (Dongguan) Co., Ltd.	China		100	%
Suzhou Dicel EMC Co., Ltd.	China		100	%
Brady Technology (Langfang) Co., Ltd.	China		100	%
Brady Technology (Suzhou) Co., Ltd.	China		100	%
CIPI Xiamen, Ltd.	China		100	%
PanYu Meixin Metal Company Ltd.	China		100	%
Brady A.S (Denmark)	Denmark		100	%
Braton Europe S.A.R.L	France		100	%
Braton Groupe S.A.R.L	France		100	%
Doing Business As:
Brady
Teklynx
Brady Group S.A.S	France		100	%
Doing Business As:
Seton
Signals
BIG
Brady Holding GmbH	Germany		100	%
Brady GmbH	Germany		100	%
Doing Business As:
Seton
Balkhausen
Etimark
Teklynx
Transposafe Systems Deutschland GmbH	Germany		100	%
Quo-Luck Company Limited	Hong Kong		100	%
Bakee Metal Manufactory Company Limited	Hong Kong		100	%
Brady Corporation Hong Kong Limited	Hong Kong		100	%
Brady Company India Pte. Ltd.	India		100	%
Brady Converting (Ireland) Ltd.	Ireland		100	%
Brady Italia, S.r.l.	Italy		100	%
Modernotecnica S.r.l.	Italy		100	%
Nippon Brady K.K.	Japan		100	%
Brady Luxembourg SARL	Luxembourg		100	%
Brady Technology SDN, BHD	Malaysia		100	%
W. H. Brady S. de R.L. de C.V.	Mexico		100	%
Brady Servicios, S. de R.L. de C.V.	Mexico		100	%
Brady B.V.	Netherlands		100	%
Brady Acquisition B.V.	Netherlands		100	%
CIPI Europe, B.V.	Netherlands		100	%
Holland Mounting Holding B.V.	Netherlands		100	%

\n\n\n

\n\n


		Percentage
		of Voting
	State (Country)	Securities
Name of Company	of Incorporation	Owned
Transposafe Systems Holland B.V.	Netherlands		100	%
Brady A.S. (Norway)	Norway		100	%
Brady Philippines Direct Marketing Inc.	Philippines		100	%
Transposafe Systems Polska Sp. Z.o.o.	Poland		100	%
Brady Corporation S.E.A. Pte. Ltd.	Singapore		100	%
Brady Corporation Asia Pte. Ltd.	Singapore		100	%
Brandon Precision Pte. Ltd.	Singapore		100	%
Brady Technologies Asia Pte. Ltd.	Singapore		100	%
Brady Asia Holding Pte. Ltd.	Singapore		100	%
Brady Corporation Asia Pacific Pte. Ltd.	Singapore		100	%
Brady Asia Pacific Pte. Ltd.	Singapore		100	%
ID Technologies Pte. Ltd.	Singapore		100	%
ID Tech (China) Pte. Ltd.	Singapore		100	%
Brady S.R.O.	Slovakia		100	%
Brady Korea LLP	South Korea		100	%
Brady Identification S.L.	Spain		100	%
Brady AB	Sweden		100	%
Brady Sweden Holding AB	Sweden		100	%
Brady Holding i Kungälv AB	Sweden		100	%
Brady Converting AB	Sweden		100	%
Tradex AB	Sweden		100	%
Brady Holding Co. Ltd.	Thailand		100	%
Brady (Thailand) Co. Ltd.	Thailand		100	%
Brady Technologies (Thailand) Co. Ltd.	Thailand		100	%
Brady (Turkey) Ltd.	Turkey		100	%
B.I. U.K. Limited	United Kingdom		100	%
B.I. Financial Limited	United Kingdom		100	%
Seton Limited	United Kingdom		100	%
W.H. Brady Co. Ltd.	United Kingdom		100	%
Brady Corporation Limited	United Kingdom		100	%
Brady European Finance Limited	United Kingdom		100	%
Brady European Holdings Limited	United Kingdom		100	%
Signs & Labels Limited	United Kingdom		100	%
Scafftag Limited	United Kingdom		100	%
Safetrak Limited	United Kingdom		100	%
Scafftag USA Limited	United Kingdom		100	%

\n\n\n

\n\n

EXHIBIT 31.1\n

\n\n\n

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

\n\n

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

\n\n\n

(1) I have reviewed this annual report on Form 10-K 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 Rules 13a-15(e) and\n15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules\n13a-15(f) and 15d-15(f)) for the registrant and have:\n

\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\n

b) Designed such internal control over financial reporting, or caused such internal control\nover financial reporting to be designed under our supervision, to provide 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\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\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 audit\ncommittee of the registrant’s board of directors (or persons performing the equivalent functions):\n

\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\n

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

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



	/s/ FRANK M. JAEHNERT\n
	(Frank M. Jaehnert)
	President and Chief Executive Officer

\n\n

Date: September 26, 2008\n

\n\n\n

\n\n\n\n\n

EXHIBIT 31.2\n

\n\n\n

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

\n\n\n

I, Thomas J. Felmer, certify that:\n

\n\n\n\n

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

\n\n

\n\n\n

\n\n

\n\n\n

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

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



	/s/ THOMAS J. FELMER\n
	(Thomas J. Felmer)
	Senior Vice President and Chief Financial Officer

\n\n

Date: September 26, 2008\n

\n\n\n


		Page
Report of Independent Registered Public Accounting Firm		28
Financial Statements:
Consolidated Balance Sheets — July 31, 2008 and 2007		29
Consolidated Statements of Income — Years Ended July 31, 2008, 2007 and 2006		30
Consolidated Statements of Stockholders’ Investment — Years Ended July 31, 2008, 2007 and 2006		31
Consolidated Statements of Cash Flows — Years Ended July 31, 2008, 2007 and 2006		32
Notes to Consolidated Financial Statements — Years Ended July 31, 2008, 2007 and 2006		33


		Page
PART I
Item 1. Business		3
General Development of Business		3
Financial Information About Industry Segments		3
Narrative Description of Business		3
Overview		3
Competitive Strengths		3
Key Strategies		5
Products		5
Marketing and Sales		7
Brands		7
Manufacturing Process and Raw Materials		8
Technology and Product Development		8
International Operations		9
Competition		9
Backlog		9
Environment		9
Employees		9
Acquisitions		9
Financial Information About Foreign and Domestic Operations and Export Sales		9
Information Available on the Internet		10
Item 1A. Risk Factors		10
Item 1B. Unresolved Staff Comments		12
Item 2. Properties		13
Item 3. Legal Proceedings		13
Item 4. Submission of Matters to a Vote of Security Holders		13
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of\nEquity Securities		14
Item 6. Selected Financial Data		16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		25
Item 8. Financial Statements and Supplementary Data		27
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		57
Item 9A. Controls and Procedures		57
Item 9B. Other Information		59
PART III
Item 10. Directors and Executive Officers of the Registrant		60
Item 11. Executive Compensation		63
Compensation Discussion and Analysis		63
Compensation Committee Interlocks and Insider Participation		68
Compensation Committee Report		68
Summary Compensation Table		69
Grants of Plan-Based Awards for 2008		70
Outstanding Equity Awards at 2008 Fiscal Year End		71
Option Exercises and Stock Vested for Fiscal 2008		73
Non-Qualified Deferred Compensation for Fiscal 2008		73
Potential Payments Upon Termination or Change in Control		73
Compensation of Directors		76
Director Compensation Table		77
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		78
Item 13. Certain Relationships, Related Transactions, and Director Independence		80
Item 14. Principal Accounting Fees and Services		80
PART IV
Item 15. Exhibits, Financial Statement Schedules		81
Signatures		85
Forms of Stock Option Agreements under 2006 Omnibus Incentive Stock Plan
2004 Omnibus Incentive Stock Plan, as Amended
2005 Nonqualified Plan for Non-Employee Directors, as Amended
1997 Omnibus Incentive Stock Plan, as Amended
1997 Nonqualified Stock Option Plan for Non-Employee Directors, as Amended
2006 Omnibus Incentive Stock Plan, as Amended
2001 Omnibus Incentive Stock Plan, as Amended
2003 Omnibus Incentive Stock Plan, as Amended
Change of Control Agreement
Subsidiaires
Consent of Deloitte & Touche LLP
Rule 13a-14(a)/15d-14(a) Certification of Frank M. Jaehnert
Rule 13a-14(a)/15d-14(a) Certification of Thomas J. Felmer
Section 1350 Certification of Frank M. Jaehnert
Section 1350 Certification of Thomas J. Felmer


*		Revenues are attributed based on country of origin.

**		Long-lived assets consist of property, plant, and equipment, other intangible assets and goodwill.


	2008		2007
Ratio of Tax Planning and Advice Fees and All Other\nFees to Audit Fees, Audit-Related Fees and Tax\nCompliance Fees		.6 to 1		.7 to 1


	Year ended July 31,
Description	2008			2007			2006
	(Dollars in thousands)
Valuation accounts deducted in balance sheet from assets to which they apply —\nAccounts receivable — allowance for losses:
Balances at beginning of period	$	9,109			$	6,390		$	3,726
Additions — Charged to expense		2,480				3,287			1,152
Due to acquired businesses		34				660			2,861
Deductions — Bad debts written off, net of recoveries		(1,564	)			(1,228	)		(1,349	)

Balances at end of period	$	10,059			$	9,109		$	6,390

Inventory — reserve for slow-moving inventory:
Balances at beginning of period	$	18,073			$	13,555		$	8,573
Net charged to expense		3,822				2,542			2,441
Due to acquired businesses		253				1,976			2,541

Balances at end of period	$	22,148			$	18,073		$	13,555