e10vq

\n\n\n

\n\n\n\n\n

UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n

\n\n

Washington, DC 20549\n

\n\n

FORM 10-Q\n

\n\n

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


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

\n\n

For\nthe Quarterly Period Ended April 30, 2009\n\n

\n\n

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


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

\n\n

For\nthe Transition Period from\n to \n\n

\n\n

Commission File Number 1-14959

\n\n

BRADY CORPORATION\n

\n\n

(Exact name of registrant as specified in its charter)

\n\n\n

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


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

\n\n

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

\n\n

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

\n\n

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

\n\n

Indicate by check mark whether the registrant has submitted electronically and posted on its\ncorporate Web site, if any, every Interactive Data File required to be submitted and posted\npursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months\n(or for such shorter period that the registrant was required to submit and post such files).\nYes o No o\n

\n\n

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

\n\n\n\n

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


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

\n\n\n

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

\n\n

APPLICABLE ONLY TO CORPORATE ISSUERS

\n\n

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of\nthe latest practicable date. As of June 2, 2009, there were outstanding 48,763,894 shares of Class A Nonvoting Common Stock and\n3,538,628 shares of Class B Voting Common Stock. The Class B Common Stock, all of which is held by\naffiliates of the Registrant, is the only voting stock.\n

\n\n\n

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

\n\n\n\n

\n\n

PART I. FINANCIAL INFORMATION\n

\n\n

ITEM 1. FINANCIAL STATEMENTS\n

\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONDENSED CONSOLIDATED BALANCE SHEETS

\n\n\n\n

(DOLLARS IN THOUSANDS)\n

\n\n


	April 30, 2009			July 31, 2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	232,901			$	258,355
Accounts receivable, less allowance for losses ($8,138 and $10,059, respectively)		183,287				262,461
Inventories:
Finished products		58,417				75,665
Work-in-process		15,569				21,187
Raw materials and supplies		32,201				37,767

Total inventories		106,187				134,619
Prepaid expenses and other current assets		42,167				43,650

Total current assets		564,542				699,085
Other assets:
Goodwill		726,944				789,107
Other intangible assets		116,275				144,791
Deferred income taxes		26,145				25,943
Other		16,555				21,381
Property, plant and equipment:
Cost:
Land		6,215				6,490
Buildings and improvements		93,584				98,646
Machinery and equipment		274,091				282,232
Construction in progress		7,301				6,040

		381,191				393,408
Less accumulated depreciation		232,035				223,202

Net property, plant and equipment		149,156				170,206

Total	$	1,599,617			$	1,850,513

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	79,129			$	118,209
Wages and amounts withheld from employees		40,722				82,354
Taxes, other than income taxes		6,190				10,234
Accrued income taxes		2,533				21,523
Other current liabilities		43,413				54,810
Current maturities on long-term obligations		50,000				21,431

Total current liabilities		221,987				308,561
Long-term obligations, less current maturities		428,572				457,143
Other liabilities		57,359				63,001

Total liabilities		707,918				828,705
Stockholders’ investment:
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares,\nrespectively and outstanding 48,747,494 and 50,005,296 shares, respectively		513				513
Class B voting common stock — Issued and outstanding 3,538,628 shares		35				35
Additional paid-in capital		298,172				292,769
Earnings retained in the business		663,069				639,059
Treasury stock — 2,303,993 and 1,046,191 shares, of Class A nonvoting common\nstock, at cost		(70,841	)			(33,234	)
Accumulated other comprehensive income		5,480				128,161
Other		(4,729	)			(5,495	)

Total stockholders’ investment		891,699				1,021,808

Total	$	1,599,617			$	1,850,513

\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

\n\n\n

3\n

\n\n\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

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

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


	Three Months Ended April 30,			Nine Months Ended April 30,
	(Unaudited)			(Unaudited)
								Percentage										Percentage
	2009			2008			Change		2009		2008			Change
Net sales	$	276,733			$	381,909			(27.5	%)	$	921,499			$	1,126,167			(18.2	%)
Cost of products sold		142,560				192,333			(25.9	%)		480,038				573,901			(16.4	%)

Gross margin		134,173				189,576			(29.2	%)		441,461				552,266			(20.1	%)

Operating expenses:
Research and development		7,766				10,274			(24.4	%)		25,325				29,323			(13.6	%)
Selling, general and administrative		94,906				126,720			(25.1	%)		302,776				369,579			(18.1	%)
Restructuring charge — (See Note K)		2,229				—			N/A			23,276				—			N/A

Total operating expenses		104,901				136,994			(23.4	%)		351,377				398,902			(11.9	%)

Operating income		29,272				52,582			(44.3	%)		90,084				153,364			(41.3	%)

Other income (expense):
Investment and other income — net		989				920			7.5	%		1,143				3,307			(65.4	%)
Interest expense		(6,307	)			(6,962	)		(9.4	%)		(18,982	)			(20,429	)		(7.1	%)


Income before income taxes		23,954				46,540			(48.5	%)		72,245				136,242			(47.0	%)

Income taxes		5,994				12,187			(50.8	%)		21,325				38,829			(45.1	%)


Net income	$	17,960			$	34,353			(47.7	%)	$	50,920			$	97,413			(47.7	%)


Per Class A Nonvoting Common Share:
Basic net income	$	0.34			$	0.64			(46.9	%)	$	0.97			$	1.79			(45.8	%)
Diluted net income	$	0.34			$	0.63			(46.0	%)	$	0.96			$	1.77			(45.8	%)
Dividends	$	0.17			$	0.15			13.3	%	$	0.51			$	0.45			13.3	%

Per Class B Voting Common Share:
Basic net income	$	0.34			$	0.64			(46.9	%)	$	0.95			$	1.78			(46.6	%)
Diluted net income	$	0.34			$	0.63			(46.0	%)	$	0.95			$	1.76			(46.0	%)
Dividends	$	0.17			$	0.15			13.3	%	$	0.49			$	0.43			14.0	%

Weighted average common shares
outstanding (in thousands):
Basic		52,286				54,021						52,642				54,294
Diluted		52,594				54,627						52,961				54,992

\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

\n\n\n

4\n

\n\n\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

\n\n\n

(Dollars in Thousands)

\n\n\n


	Nine Months Ended
	April 30,
	(Unaudited)
	2009			2008
Operating activities:
Net income	$	50,920			$	97,413
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		40,672				45,682
Non-cash portion of restructuring charges		2,229				—
Non-cash portion of stock-based compensation expense		6,281				7,797
Other		1,495				(234	)
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable		52,276				4,014
Inventories		16,793				15,012
Prepaid expenses and other assets		(3,593	)			(6,193	)
Accounts payable and accrued liabilities		(73,381	)			(6,175	)
Income taxes		(17,571	)			(6,358	)
Other liabilities		908				1,157

Net cash provided by operating activities		77,029				152,115

Investing activities:
Acquisition of businesses, net of cash acquired		—				(28,871	)
Purchase price adjustment		3,514				—
Payments of contingent consideration		(1,405	)			(5,798	)
Purchases of short-term investments		—				(10,350	)
Sales of short-term investments		—				29,550
Purchases of property, plant and equipment		(16,035	)			(19,029	)
Other		2,893				1,808

Net cash used in investing activities		(11,033	)			(32,690	)

Financing activities:
Payment of dividends		(26,910	)			(24,341	)
Proceeds from issuance of common stock		1,321				9,517
Principal payments on debt		(3	)			(14	)
Purchase of treasury stock		(40,267	)			(28,531	)
Income tax benefit from the exercise of stock options and deferred compensation distribution		860				4,620

Net cash used in financing activities		(64,999	)			(38,749	)

Effect of exchange rate changes on cash		(26,451	)			3,837

Net (decrease) increase in cash and cash equivalents		(25,454	)			84,513
Cash and cash equivalents, beginning of period		258,355				142,846

Cash and cash equivalents, end of period	$	232,901			$	227,359


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest	$	21,899			$	22,450
Income taxes, net of refunds		32,995				39,505
Acquisitions:
Fair value of assets acquired, net of cash and goodwill	$	—			$	18,547
Liabilities assumed		—				(6,566	)
Goodwill		—				16,890

Net cash paid for acquisitions	$	—			$	28,871

\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

\n\n\n

5\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n

\n\n

Nine Months Ended April 30, 2009\n\n

\n\n

(Unaudited)\n\n

\n\n

(In thousands, except share and per share amounts)\n\n

\n\n

NOTE A — Basis of Presentation\n

\n\n\n

The condensed consolidated financial statements included herein have been prepared by\nBrady Corporation and subsidiaries (the “Company” or “Brady”) without audit, pursuant to the rules\nand regulations of the Securities and Exchange Commission. In the opinion of the Company, the\nforegoing statements contain all adjustments, consisting only of normal recurring adjustments\nnecessary to present fairly the financial position of the Company as of April 30, 2009 and July 3l,\n2008, its results of operations for the three and nine months ended April 30, 2009 and 2008, and\nits cash flows for the nine months ended April 30, 2009 and 2008. The condensed consolidated\nbalance sheet as of July 31, 2008, has been derived from the audited consolidated financial\nstatements of that date. The preparation of financial statements in conformity with accounting\nprinciples generally accepted in the United States of America (“GAAP”) requires management to make\nestimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty\ninvolved in making estimates, actual results in future periods may differ from the estimates.\n

\n\n

Certain information and footnote disclosures normally included in financial statements\nprepared in accordance with GAAP have been omitted pursuant to rules and regulations of the\nSecurities and Exchange Commission. Accordingly, the condensed consolidated financial statements\ndo not include all of the information and footnotes required by GAAP for complete financial\nstatement presentation. It is suggested that these condensed consolidated financial statements be\nread in conjunction with the consolidated financial statements and the notes thereto included in\nthe Company’s latest annual report on Form 10-K for the year ended July 31, 2008.\n

\n\n

NOTE B — Goodwill and Intangible Assets\n

\n\n\n

Changes in the carrying amount of goodwill for the nine months ended April 30, 2009, are\nas follows:\n


	Americas			Europe			Asia-Pacific		Total
Balance as of July 31, 2008	$	412,977			$	189,650		$	186,480		$	789,107
Adjustments for prior\nyear acquisitions		275				(52	)		(2,713	)		(2,490	)
Translation adjustments		(5,885	)			(38,669	)		(15,119	)		(59,673	)

Balance as of April 30, 2009	$	407,367			$	150,929		$	168,648		$	726,944

\n\n\n

In November 2008, the Company reached a settlement with the former owners of Tradex Converting\nAB (“Tradex”), which the Company acquired in May 2006, resulting in a purchase price decrease of\n$3,514 which decreased goodwill accordingly. Goodwill increased $1,024 during the nine months\nended April 30, 2009 as a result of adjustments to the preliminary allocation of the purchase price\nfor the acquisitions of Transposafe Systems B.V. and Holland Mounting Systems B.V. (collectively,\n“Transposafe”) and Sorbent Products Company (“SPC”). Of the $1,024 increase in goodwill relating\nto prior year acquisitions, $703 related to the payment of an earnout to the former owners of\nTransposafe and $275 related to the final tax adjustment for the SPC acquisition. Goodwill\ndecreased $59,673 during the nine months ended April 30, 2009 due to the effects of foreign\ncurrency translation.\n

\n\n\n

During the third quarter of fiscal 2009, the Company conducted an interim goodwill impairment\nassessment in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”. The\nassessment included comparing the carrying amount of net assets, including goodwill, of each\nreporting unit to its respective fair value as of February 28, 2009, the date of the assessment.\nFair value was determined using the weighted average of a discounted cash flow and market\nparticipant analysis for each reporting unit. Because the estimated fair value of each of the\nCompany’s reporting units exceeded its carrying amount, management concluded that no impairment\nexisted as of February 28, 2009. No indications of impairment have been identified between the\ndate of the interim assessment and April 30, 2009.\n

\n\n

6\n

\n\n\n\n\n

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


	April 30, 2009		July 31, 2008
	Weighted												Weighted
	Average												Average
	Amortization		Gross									Amortization		Gross
	Period		Carrying			Accumulated		Net Book		Period			Carrying		Accumulated		Net Book
	(Years)		Amount			Amortization		Value		(Years)			Amount		Amortization		Value
Amortized other\nintangible assets:
Patents		15		$	8,713		$	(6,918	)	$	1,795			15		$	8,603	$	(6,592	)	$	2,011
Trademarks and\nother		7			7,309			(4,734	)		2,575			7			8,079		(4,688	)		3,391
Customer\nrelationships		7			138,319			(69,388	)		68,931			7			151,704		(59,101	)		92,603
Non-compete\nagreements		4			10,862			(8,828	)		2,034			4			12,222		(8,446	)		3,776
Other		4			3,309			(3,294	)		15			4			3,299		(3,294	)		5
Unamortized other\nintangible assets:
Trademarks		N/A			40,925			—			40,925			N/A			43,005		—			43,005

Total				$	209,437		$	(93,162	)	$	116,275					$	226,912	$	(82,121	)	$	144,791

\n\n\n

The value of goodwill and other intangible assets in the Condensed Consolidated Balance\nSheet at April 30, 2009, differs from the value assigned to them in the allocation of purchase\nprice due to the effect of fluctuations in the exchange rates used to translate financial\nstatements into the United States Dollar between the date of acquisition and April 30, 2009.\n

\n\n

Amortization expense on intangible assets was $5,559 and $7,260 for the three-month\nperiods ended April 30, 2009 and 2008, respectively and $17,089 and $20,003 for the nine-month\nperiods ended April 30, 2009 and 2008, respectively. Annual amortization is projected to be\n$22,752, $21,779, $18,306, $11,228 and $8,033 for the years ending July 31, 2009, 2010, 2011, 2012\nand 2013, respectively.\n

\n\n

7\n

\n\n\n\n\n

NOTE C — Comprehensive Income (Loss)\n

\n\n\n

Total comprehensive income (loss), which was comprised of net income, foreign currency\nadjustments, net unrealized gains and losses from cash flow hedges, the unrealized gain on the\npost-retirement medical, dental, and vision plans, and their related tax effects amounted to\n$32,867 and $61,735 for the three months ended April 30, 2009 and 2008, respectively and ($71,761)\nand $148,454 for the nine months ended April 30, 2009 and 2008, respectively. The decrease in\ntotal comprehensive income for the three and nine months ended April 30, 2009 as compared to the\nsame period in the previous year was primarily the result of the appreciation of the U.S. dollar\nagainst other currencies and a reduction in net income.\n

\n\n

NOTE D — Net Income Per Common Share\n

\n\n\n

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


	Three Months Ended April 30,		Nine Months Ended April 30,
	2009		2008			2009		2008
Numerator:
Net income (numerator for basic and\ndiluted Class A net income per share)	$	17,960		$	34,353		$	50,920		$	97,413
Less:
Preferential dividends		—			—			(823	)		(847	)
Preferential dividends on\ndilutive stock options		—			—			(11	)		(13	)

Numerator for basic and diluted\nClass B net income per share	$	17,960		$	34,353		$	50,086		$	96,553


Denominator (in thousands):
Denominator for basic net income per\nshare for both Class A and Class B		52,286			54,021			52,642			54,294
Plus: Effect of dilutive stock options		308			606			319			698

Denominator for diluted net income\nper share for both Class A and\nClass B		52,594			54,627			52,961			54,992


Class A Nonvoting Common Stock net income\nper share:
Basic	$	0.34		$	0.64		$	0.97		$	1.79
Diluted	$	0.34		$	0.63		$	0.96		$	1.77

Class B Voting Common Stock net income per\nshare:
Basic	$	0.34		$	0.64		$	0.95		$	1.78
Diluted	$	0.34		$	0.63		$	0.95		$	1.76

\n\n\n

Options to purchase approximately 2,920,000 and 2,058,000 shares of Class A Nonvoting Common\nStock for the three and nine months ended April 30, 2009, respectively, and 2,171,000 and\n1,874,200 shares of Class A Nonvoting Common Stock for the three and nine months ended April 30,\n2008, respectively, were not included in the computations of diluted net income per share because\nthe option exercise price was greater than the average market price of the common shares and,\ntherefore, the effect would be anti-dilutive.\n

\n\n

8\n

\n\n\n\n\n

NOTE E — Segment Information\n

\n\n\n

The Company evaluates segment performance based on segment profit or loss and customer sales.\nSegment profit or loss does not include certain administrative costs, restructuring charges,\ninterest, foreign exchange gain or loss, other expenses not allocated to a segment, and income\ntaxes.\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 results. In applying the criteria set forth in SFAS No.\n131 “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\nchanged the number of reporting segments from four to three during the fourth quarter of fiscal\n2008. Following is a summary of segment information for the three and nine months ended April 30,\n2009 and 2008:\n


												Corporate
												And
	Americas		Europe	Asia-Pacific		Sub-Totals	Eliminations		Totals
Three months ended April 30, 2009:
Revenues from external customers	$	125,688		$	85,172		$	65,873		$	276,733		—		$	276,733
Intersegment revenues		9,842			541			2,430			12,813		(12,813	)		—
Segment profit		28,540			23,773			6,979			59,292		(1,717	)		57,575

Three months ended April 30, 2008:
Revenues from external customers	$	166,407		$	133,422		$	82,080		$	381,909		—		$	381,909
Intersegment revenues		14,835			1,732			6,194			22,761		(22,761	)		—
Segment profit		40,169			36,245			11,055			87,469		(1,816	)		85,653

Nine months ended April 30, 2009:
Revenues from external customers	$	409,573		$	280,589		$	231,337		$	921,499		—		$	921,499
Intersegment revenues		33,759			3,338			15,488			52,585		(52,585	)		—
Segment profit		86,104			77,857			33,502			197,463		(6,631	)		190,832

Nine months ended April 30, 2008:
Revenues from external customers	$	497,803		$	364,951		$	263,413		$	1,126,167		—		$	1,126,167
Intersegment revenues		45,929			6,985			18,655			71,569		(71,569	)		—
Segment profit		116,312			97,212			43,105			256,629		(6,400	)		250,229

\n\n

Following is a reconciliation of segment profit to net income for the three months and nine months\nended April 30, 2009 and 2008.\n

\n\n


	Three months ended:			Nine months ended:
	April 30,			April 30,
	2009			2008			2009		2008
Total profit from reportable segments	$	59,292			$	87,469		$	197,463		$	256,629
Corporate and eliminations		(1,717	)			(1,816	)		(6,631	)		(6,400	)
Unallocated amounts:
Administrative costs		(26,074	)			(33,071	)		(77,472	)		(96,865	)
Restructuring charges		(2,229	)			—			(23,276	)		—
Investment and other income		989				920			1,143			3,307
Interest expense		(6,307	)			(6,962	)		(18,982	)		(20,429	)

Income before income taxes		23,954				46,540			72,245			136,242
Income taxes		(5,994	)			(12,187	)		(21,325	)		(38,829	)

Net income	$	17,960			$	34,353		$	50,920		$	97,413

\n\n\n

9\n

\n\n\n\n\n

NOTE F\n— Stock-Based Compensation\n

\n\n\n

The Company has an incentive stock plan under which the Board of Directors may grant\nnonqualified stock options to purchase shares of Class A Nonvoting Common Stock or restricted\nshares of Class A Nonvoting Common Stock to employees. Additionally, the Company has a nonqualified\nstock option plan for non-employee directors under which stock options to purchase shares of\nClass A Nonvoting Common Stock are available for grant. The options have an exercise price equal to\nthe fair market value of the underlying stock at the date of grant and generally vest ratably over\na three-year period, with one-third becoming exercisable one year after the grant date and\none-third additional in each of the succeeding two years. Options issued under these plans,\nreferred to herein as “service-based” options, generally expire 10 years from the date of grant.\nThe Company also grants stock options to certain executives and key management employees that vest\nupon meeting certain financial performance conditions over the vesting schedule described above;\nthese options are referred to herein as “performance-based” options. Performance-based options\ngranted in fiscal 2006 expire five years from the grant date. All other performance-based options\nexpire 10 years from the date of grant. Restricted shares have an issuance price equal to the fair\nmarket value of the underlying stock at the date of grant. They vest at the end of a five-year\nperiod and upon meeting certain financial performance conditions; these shares are referred to\nherein as “performance-based restricted shares.”\n

\n\n

As of April 30, 2009, the Company has reserved 4,248,811 shares of Class A Nonvoting\nCommon Stock for outstanding stock options and restricted shares and 510,495 shares of Class A\nNonvoting Common Stock for future issuance of stock options and restricted shares under the various\nplans. The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver\nshares under these plans.\n

\n\n

The Company accounts for share-based compensation awards in accordance with SFAS\nNo. 123(R), “Share Based Payment”. In accordance with this standard, the Company recognizes the\ncompensation cost of all share-based awards on a straight-line basis over the vesting period of the\naward. Total stock compensation expense recognized by the Company during the three months ended\nApril 30, 2009 and 2008 was $1,972 ($1,203 net of taxes) and $1,415 ($863 net of taxes),\nrespectively, and expense recognized during the nine months ended April 30, 2009 and 2008 was\n$6,281 ($3,831 net of taxes) and $7,797 ($4,756 net of taxes), respectively. As of April 30, 2009,\ntotal unrecognized compensation cost related to share-based compensation awards was approximately\n$12,906 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a\nweighted-average period of approximately 2.5 years.\n

\n\n

The Company has estimated the fair value of its service-based and performance-based\noption awards granted during the nine months ended April 30, 2009 and 2008 using the Black-Scholes\noption valuation model. The weighted-average assumptions used in the Black-Scholes valuation model\nare reflected in the following table:\n


	Nine Months Ended		Nine Months Ended
	April 30, 2009		April 30, 2008
				Performance-					Performance-
	Service-Based		Based Option	Service-Based		Based Option
Black-Scholes Option Valuation Assumptions	Option Awards		Awards	Option Awards		Awards
Expected term (in years)		5.96			N/A			6.04			6.57
Expected volatility		36.07	%		N/A			32.05	%		33.68	%
Expected dividend yield		2.03	%		N/A			1.62	%		1.58	%
Risk-free interest rate		1.75	%		N/A			3.44	%		4.66	%
Weighted-average market value of\nunderlying stock at grant date	$	21.26			N/A		$	38.22		$	35.35
Weighted-average exercise price	$	21.26			N/A		$	38.22		$	35.35
Weighted-average fair value of options\ngranted during the period	$	6.30			N/A		$	11.94		$	12.83

\n\n\n

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

\n\n

Effective March 4, 2009, the Compensation Committee of the Board of Directors of the Company\napproved an amendment to the performance-based stock options issued on August 2, 2004. Pursuant to\nthe amendment, the term of the performance-based stock options has been extended to ten years from\nfive years resulting in an incremental expense of $191 ($116 net of taxes) which was recorded in\nthe quarter ended April 30, 2009. Also, the amendment provides that during the extension period,\nexecutives may exercise the performance-based stock options following a termination only if the\ntermination is as a result of the executive’s death or disability or qualifies as a retirement.\n

\n\n

The Company granted 210,000 performance-based restricted shares during the nine months ended\nApril 30, 2008, with a grant price and fair value of $32.83. As of April 30, 2009, 210,000\nperformance-based restricted shares were outstanding.\n

\n\n

10\n

\n\n\n\n\n

A summary of stock option activity under the Company’s share-based compensation plans for\nthe nine months ended April 30, 2009 is presented below:\n


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

Outstanding at July 31, 2008		3,985,205			$	29.43
New grants		614,000			$	21.26
Exercised		(96,434	)		$	16.00
Forfeited or expired		(256,660	)		$	35.34

Outstanding at April 30, 2009		4,246,111			$	29.18				6.1		$	5,812

Exercisable at April 30, 2009		2,862,146			$	27.24				4.9		$	5,642

\n\n\n

There were 2,862,146 and 2,466,275 options exercisable with a weighted average exercise price\nof $27.24 and $25.15 at April 30, 2009 and 2008, respectively. The cash received from the exercise\nof options during the quarters ended April 30, 2009 and 2008 was $45 and $1,536, respectively. The\ncash received from the exercise of options during the nine months ended April 30, 2009 and 2008 was\n$1,479 and $9,517, respectively. The cash received from the tax benefit on options exercised\nduring the quarter ended April 30, 2008 was $419. The cash received from the tax benefit on stock\noptions exercised during the quarter ended April 30, 2009 was not significant. The cash received\nfrom the tax benefit on options exercised during the nine months ended April 30, 2009 and 2008 was\n$533 and $4,173, respectively.\n

\n\n

The total intrinsic value of options exercised during the nine months ended April 30, 2009 and\n2008, based upon the average market price during the period, was $1,730 and $10,725, respectively.\nThe total fair value of stock options vested during the nine months ended April 30, 2009 and 2008,\nwas $6,419 and $6,484, respectively.\n

\n\n

NOTE G — Stockholders’ Investment\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 1 million shares of the Company’s Class A Nonvoting Common Stock.\nThe share repurchase plan was implemented by purchasing shares on the open market or in privately\nnegotiated transactions, with repurchased shares available for use in connection with the Company’s\nstock-based plans and for other corporate purposes. As of July 31, 2008, there remained 650,864\nshares to purchase in connection with this share repurchase plan. During the nine months ended\nApril 30, 2009, the Company acquired 650,864 shares of its Class A Nonvoting Common Stock\nauthorized for repurchase under this plan for $21,539. Share repurchases under this plan were\ncompleted in the quarter ended October 31, 2008.\n

\n\n

In September 2008, the Company announced that the Board of Directors of the Company authorized\na share repurchase plan for up to 1 million shares of the Company’s Class A Nonvoting Common Stock.\nThe share repurchase plan may be implemented by purchasing shares on the open market or in\nprivately negotiated transactions, with repurchased shares available for use in connection with the\nCompany’s stock-based plans and for other corporate purposes. During the nine months ended April\n30, 2009, the Company acquired 693,800 shares of its Class A Nonvoting Common Stock under this plan\nfor $18,728. No shares were purchased under the Company’s share repurchase plan during the three\nmonths ended April 30, 2009. As of April 30, 2009, there remained 306,200 shares to purchase in\nconnection with this share repurchase plan.\n

\n\n

NOTE H — Employee Benefit Plans\n

\n\n\n

The Company provides postretirement medical, dental and vision benefits for eligible\nregular full and part-time domestic employees (including spouses) outlined by the plan.\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.\n

\n\n

The Company accounts for postretirement benefits other than pensions in accordance with SFAS\nNo. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” The\nCompany funds benefit costs on a pay-as-you-go basis. There have been no changes to the components\nof net periodic benefit cost or the amount that the Company expects to fund in fiscal 2009 from\nthose reported in Note 3 to the consolidated financial statements included in the Company’s latest\nannual report on Form 10-K for the year ended July 31, 2008.\n

\n\n

11\n

\n\n\n\n\n

The Company also has deferred compensation plans for directors, officers, and key executives.\nThe Company accounts for investments related to its deferred compensation plan in accordance with\nSFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”. In accordance\nwith SFAS No. 115, the Company recorded (income) expense of ($471) and $2,133 for the three and\nnine months ended April 30, 2009, respectively, in “Investment and other income — net” on the\nCondensed Consolidated Statements of Income related to investments held as of April 30, 2009.\n

\n\n

NOTE I — Fair Value Measurements\n

\n\n\n

The Company adopted SFAS No. 157, “Fair Value Measurements”, on August 1, 2008 as it relates\nto financial assets and liabilities. The impact of this adoption has not been material to the\nCompany’s financial statements. SFAS No. 157 will be effective for the Company’s nonfinancial\nassets and liabilities on August 1, 2009, the first day of the Company’s next fiscal year. SFAS\nNo. 157 applies to other accounting pronouncements that require or permit fair value measurements,\ndefines fair value based upon an exit price model, establishes a framework for measuring fair\nvalue, and expands the applicable disclosure requirements. SFAS No. 157 indicates, among other\nthings, that a fair value measurement assumes that a transaction to sell an asset or transfer a\nliability occurs in the principal market for the asset or liability or, in the absence of a\nprincipal market, the most advantageous market for the asset or liability.\n

\n\n

SFAS No. 157 establishes a fair market value hierarchy for the pricing inputs used to measure\nfair market value. The Company’s assets and liabilities measured at fair market value are\nclassified in one of the following categories:\n

\n\n\n

Level 1 — Assets or liabilities for which fair value is based on quoted market prices\nin active markets for identical instruments as of the reporting date. At April 30, 2009,\n$7,460 of the mutual funds held for the Company’s deferred compensation plans were valued\nusing Level 1 pricing inputs. The Company’s deferred compensation investments are included\nin “Other assets” on the accompanying Condensed Consolidated Balance Sheets.\n

\n\n\n

Level 2 — Assets or liabilities for which fair value is based on valuation models for\nwhich pricing inputs were either directly or indirectly observable. At April 30, 2009, $676\nof the Company’s forward exchange contracts designated as cash flow hedges under SFAS No. 133\nwere valued using Level 2 pricing inputs. These contracts are included in “Prepaid expenses\nand other current assets” on the accompanying Condensed Consolidated Balance Sheets. At\nApril 30, 2009, $405 and $3 of the Company’s forward exchange contracts not designated as\nhedging instruments under SFAS No. 133 were valued using Level 2 pricing inputs and are\nincluded in “Other current liabilities” and “Prepaid expenses and other current assets”, on\nthe accompanying Condensed Consolidated Balance Sheets, respectively. See Note L for\nadditional information regarding the Company’s hedging and derivatives activities.\n

\n\n\n

Level 3 — Assets or liabilities for which fair value is based on valuation models\nwith significant unobservable pricing inputs and which result in the use of management\nestimates. As of April 30, 2009, none of the Company’s assets or liabilities were valued\nusing Level 3 pricing inputs.\n

\n\n

NOTE J: New Accounting Pronouncements\n

\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\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

	e)		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\nAugust 1, 2009. The impact of SFAS No. 141(R) on our future consolidated financial statements will\ndepend on the size and nature of future acquisitions.\n

\n\n\n

12\n

\n\n\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 beginning after\nDecember 15, 2008 and interim periods within those fiscal years. The Company is in the process of\nevaluating the impact that will result from adopting FSP 03-6 on the Company’s results of\noperations and financial disclosures when such statement is adopted.\n

\n\n

In April 2009, the FASB issued FSP No. 107-1 and APB 28-1, “Interim Disclosures about Fair\nValue of Financial Instruments.” FSP 107-1 amends FASB Statement No. 107, “Disclosures about Fair\nValue of Financial Instruments”, and Accounting Principles Board Opinion No. 28, “Interim Financial\nReporting”, to require disclosures about fair value of financial instruments for interim periods of\npublicly traded companies as well as in annual financial statements. FSP 107-1 is effective for\ninterim reporting periods ending after June 15, 2009, with early adoption permitted for periods\nending after March 15, 2009. The Company expects to adopt this FSP for the interim period ending\nOctober 31, 2009. The Company is in the process of evaluating the impact that will result from\nadopting FSP No. 107-1 and APB 28-1 on the Company’s financial disclosures when such guidance is\nadopted.\n

\n\n

NOTE K: Restructuring\n

\n\n\n

In November 2008, in response to the global economic recession, the Company announced it would\ntake several measures to address its cost structure. In addition to a company-wide salary freeze,\na reduction in its contract labor, and decreased discretionary spending, the Company announced it\nwould reduce its workforce.\n

\n\n

The Company implemented a plan to reduce its workforce through voluntary and involuntary\nseparation programs, voluntary retirement programs, and facility consolidations. As a result of\nthese actions, the Company recorded restructuring charges of $2,229 and $23,276 during the three\nand nine months ended April 30, 2009, respectively. The year-to-date restructuring charges\nconsisted of $19,196 of employee separation costs, $1,861 of non-cash fixed asset write-offs,\n$1,025 of other facility closure related costs, $826 of contract termination costs, and $368 of\nnon-cash stock option expense. Of the $23,276 of restructuring charges recorded during the nine\nmonths ended April 30, 2009, $11,789 was incurred in the Americas, $7,534 was incurred in Europe,\nand $3,953 was incurred in Asia-Pacific. The charges for employee separation costs consisted of\nseverance pay, outplacement services, medical and other related benefits. The costs related to\nthese restructuring activities have been recorded on the condensed consolidated statements of\nincome as restructuring charges. The Company expects to incur approximately $30,000 of\nrestructuring charges during fiscal year 2009 and expects to complete this restructuring plan\nduring the remainder of fiscal 2009. The Company expects the majority of the remaining cash\npayments to be made within the next twelve months.\n

\n\n

A reconciliation of the Company’s restructuring activity for fiscal 2009 is as follows:\n


	Employee			Asset
	Related			Write-offs			Other		Total
Beginning balance, July 31, 2008	$	—			$	—		$	—		$	—
Restructuring charge		1,058				335			246			1,639
Non-cash write-offs		—				(335	)		—			(335	)
Cash payments		(595	)			—			(116	)		(711	)

Ending balance, October 31, 2008	$	463			$	—		$	130		$	593
Restructuring charge		17,035				1,213			1,160			19,408
Non-cash write-offs		(368	)			(1,213	)		—			(1,581	)
Cash payments		(5,486	)			—			(451	)		(5,937	)

Ending balance, January 31,\n2009	$	11,644			$	—		$	839		$	12,483

Restructuring charge		1,471				313			445			2,229
Non-cash write-offs		—				(313	)		—			(313	)
Cash payments		(4,891	)			—			(326	)		(5,217	)

Ending balance, April 30, 2009	$	8,224			$	—		$	958		$	9,182

\n\n\n

13\n

\n\n\n\n\n

NOTE L: DERIVATIVES AND HEDGING ACTIVITIES\n

\n\n\n

The Company primarily utilizes forward foreign exchange currency contracts to reduce the\nexchange rate risk of specific foreign currency denominated transactions. These contracts\ntypically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future\ndate, with maturities of less than 12 months, which qualify as cash flow hedges under SFAS No.\n133, “Accounting for Derivative Instruments and Hedging Activities”. The primary objective of the\nCompany’s foreign currency exchange risk management is to minimize the impact of currency\nmovements on intercompany transactions and foreign raw-material imports. To achieve this\nobjective, the Company hedges a portion of known exposures using forward foreign exchange currency\ncontracts. Main exposures are related to transactions denominated in the British Pound, the Euro,\nCanadian Dollar, Australian Dollar, Singapore Dollar, Swedish Krona, Korean Won and Chinese Yuan\ncurrency.\n

\n\n

The Company has designated a portion of its foreign exchange contracts as cash flow hedges\nunder SFAS No. 133, and recorded these contracts at fair value on the Condensed Consolidated\nBalance Sheets. For these instruments, the effective portion of the gain or loss on the derivative\nis reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in\nthe same period or periods during which the hedged transaction affects earnings. Gains or losses\non the derivative related to hedge ineffectiveness are recognized in current earnings. At April\n30, 2009, unrealized gains of $1,149 have been included in OCI. All balances are expected to be\nreclassified from OCI to earnings during the next twelve months when the hedged intercompany\ntransactions impact earnings. At April 30, 2009, the Company’s $676 of forward exchange contracts\nwere included in “Prepaid expenses and other current assets” on the accompanying Condensed\nConsolidated Balance Sheet. At July 31, 2008, the Company’s $96 of forward exchange contracts were\nincluded in “Other current liabilities” on the accompanying Condensed Consolidated Balance Sheet.\nAt April 30, 2009, the U.S. dollar equivalent of these outstanding forward foreign exchange\ncontracts totaled $5,086, including contracts to sell Euros, Canadian Dollars, and Australian\nDollars.\n

\n\n

Additionally, during fiscal 2009, the Company entered into hedge contracts to create economic\nhedges to manage foreign exchange risk exposure. The Company has not designated these derivative\ncontracts as hedge transactions under SFAS No. 133, and accordingly, the mark-to-market impact of\nthese derivatives is recorded each period in current earnings. At April 30, 2009, $405 and $3 of\nthe Company’s forward exchange contracts not designated as hedging instruments under SFAS No. 133\nwere included in “Other current liabilities” and “Prepaid expenses and other current assets”, on\nthe accompanying Condensed Consolidated Balance Sheets, respectively. At April 30, 2009, the U.S.\ndollar equivalent of these outstanding forward foreign exchange contracts totaled $12,709,\nincluding contracts to sell Euros and British Pounds.\n

\n\n

Fair values of derivative instruments in the Condensed Consolidated Balance Sheets were as\nfollows:\n


	Asset Derivatives		Liability Derivatives
	April 30, 2009		July 31, 2008			April 30, 2009		July 31, 2008
	Balance Sheet		Fair			Balance Sheet		Fair			Balance Sheet		Fair		Balance Sheet		Fair
	Location		Value			Location		Value			Location		Value		Location		Value
Foreign exchange contracts		Prepaid expenses and other current assets	$	676			Prepaid expenses and other current assets		$	—			Other current liabilities	$	—			Other current liabilities	$	96

Total derivatives\ndesignated as hedging\ninstruments under Statement 133				$	676						$	—				$	—				$	96

Foreign exchange contracts		Prepaid expenses and other current assets	$	3			Prepaid expenses and other current assets		$	—			Other current liabilities	$	405			Other current liabilities	$	—

Total derivatives not designated as\nhedging instruments under Statement 133				$	3						$	—				$	405				$	—

\n\n\n

14\n

\n\n\n\n\n

The pre-tax effects of derivative instruments designated as cash flow hedges under SFAS No.\n133 on the Condensed Consolidated Statements of Income consisted of the following:\n

\n\n

Amount of Gain or (Loss)

Recognized in OCI on

Reclassified From

Recognized in Income on

Derivative (Effective

Accumulated OCI Into

Derivative (Ineffective

Portion)

Income (Effective Portion)

Portion)

Three

Nine

Location of Gain or

Three

Nine

Three

Nine

Derivatives in

months

(Loss) Reclassified From

months

Location of Gain or

months

Statement 133 Cash

ended

Accumulated OCI into

ended

(Loss) Recognized in

ended

Flow Hedging

April 30,

Income (Effective

April 30,

Income on Derivative

April 30,

Relationships

2009

Portion)

2009

(Ineffective Portion)

2009

Foreign exchange contracts

(930

)

1,716

Investment and other
\n income — net

(48

)

(1,027

)

Investment and other
\n income — net

(155

)

Total

(930

)

1,716

(48

)

(1,027

)

(155

)

\n\n\n

The pre-tax effects of derivative instruments not designated as hedging instruments under SFAS\nNo. 133 on the Condensed Consolidated Statements of Income consisted of the following:\n

Amount of Gain or (Loss)

Recognized in Income on

Derivative

Three

Nine

months

Derivatives Not Designated as

Location of Gain or (Loss)

ended

Hedging Instruments Under

Recognized in Income on

April 30,

Statement 133

Derivative

2009

Foreign exchange contracts

Other income (expense)

401

(402

)

Total

401

(402

)

\n\n\n

15\n

\n\n\n\n

\n\n

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

\n\n\n

Overview
\n

\n\n

Brady is an international manufacturer and marketer of identification solutions and\nspecialty materials that identify and protect premises, products, and people. Its products include\nhigh-performance labels and signs, printing systems and software, safety devices, precision die-cut\nmaterials, and label-application and data-collection systems. Founded in 1914, the Company serves\ncustomers in manufacturing, electrical, telecommunications, electronics, construction, laboratory,\neducation, governmental, public utility, computer, transportation and a variety of other\nindustries. The Company manufactures and sells products domestically and internationally through\nmultiple channels including distributor sales, direct sales, mail-order catalogs, telemarketing,\nretail and electronic access through the Internet. The Company believes that its reputation for\ninnovation, commitment to quality and service, and dedicated employees have made it a world leader\nin the markets it serves. The Company operates manufacturing or distribution facilities in\nAustralia, Belgium, Brazil, Canada, China, Denmark, France, Germany, Hong Kong, India, Italy,\nJapan, Korea, Malaysia, Mexico, the Netherlands, Norway, Poland, Singapore, Sweden, Thailand, the\nUnited Kingdom and the United States. Brady sells through subsidiaries or sales offices in these\ncountries, with additional sales through a dedicated team of international sales representatives in\nthe Philippines, Slovakia, Spain, Taiwan, Turkey, and the United Arab Emirates and further markets\nits products to parts of Eastern Europe, the Middle East, Africa and Russia.\n

\n\n

Sales for the quarter ended April 30, 2009, decreased 27.5% to $276.7 million, compared\nto $381.9 million in the same period of fiscal 2008. Of the decrease in sales, organic sales\ndeclined 19.9%, acquisitions added 0.1% and the effects of fluctuations in the exchange rates used\nto translate financial results into the United States dollar decreased sales 7.7%. Net income for\nthe quarter ended April 30, 2009, was $18.0 million or $0.34 per diluted Class A Nonvoting Common\nShare, down 47.7% and 46.0%, respectively, from $34.4 million or $0.63 per diluted Class A\nNonvoting Common Share reported in the third quarter of last fiscal year.\n

\n\n

Sales for the nine months ended April 30, 2009, decreased 18.2% to $921.5 million, compared\nto $1,126.2 million in the same period of fiscal 2008. Of the decrease in sales, organic sales\ndeclined 14.3%, acquisitions added 0.8% and the effects of fluctuations in the exchange rates used\nto translate financial results into the United States dollar decreased sales 4.7%. Net income for\nthe nine months ended April 30, 2009, was $50.9 million or $0.96 per diluted Class A Nonvoting\nCommon Share, down 47.7% and 45.8%, respectively, from $97.4 million or $1.77 per diluted Class A\nNonvoting Common Share reported in the same period of the prior fiscal year.\n

\n\n

Results of Operations\n

\n\n\n

The comparability of the operating results for the three and nine months ended April 30,\n2009, to the same periods of the prior year has been impacted by the following acquisitions\ncompleted in fiscal 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\n


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

\n\n\n

16\n

\n\n\n\n\n

Sales for the three months ended April 30, 2009, decreased 27.5% compared to the same period\nin fiscal 2008. The decrease was comprised of a decline in organic sales of 19.9%, an increase of\n0.1% due to the acquisitions listed in the above table, and a decrease of 7.7% due to the effect\nof currencies on sales. Declining organic sales in the quarter were primarily the result of the\nglobal economic recession. Organic sales were adversely impacted during the third quarter of\nfiscal 2009 across each of the Company’s three segments, with declines of 22.2%, 22.8%, and 10.8%\nfor the Americas, Europe, and Asia-Pacific segments, respectively. The organic sales decline\nexperienced in the Americas was due primarily to continued softness in the manufacturing and\nconstruction sectors. Geographically, the organic decline in sales for the Americas was primarily\nattributable to the U.S., Canada, and Brazil, slightly offset by modest gains in Mexico. Europe\nexperienced declines in organic sales across most of its geographic units due to the economic\nrecession, with Southern Europe suffering the largest organic losses. While organic sales to the\nprivate sector declined in the Europe segment, sales to governments and public utilities have\npartially offset these losses. The decrease in organic sales for the Asia-Pacific segment was due\nto the overall decline in the electronics and mobile handset markets and aggressive pricing\ndemands from customers, slightly offset by increased demand for MRO products to support\ninfrastructure development sponsored by government stimulus spending in the region.\n

\n\n

Sales for the nine months ended April 30, 2009, decreased 18.2% compared to the same period\nin fiscal 2008. The decrease was comprised of a decline in organic sales of 14.3%, an increase of\n0.8% due to the acquisitions listed above, and a decrease of 4.7% due to the effect of currencies\non sales. The decrease in organic sales was due to declines of 16.4% in the Americas segment,\n15.6% in Europe, and 8.7% in Asia-Pacific. The decline in organic sales in the Americas segment\nwas primarily driven by weakness in the manufacturing and construction markets. Organic sales for\nthe nine months ended April 30, 2009 were adversely impacted in Europe by declining sales in the\nprivate sector to the automotive and electronics industries. The decrease in organic sales in the\nAsia-Pacific segment was the result of declines experienced in the electronics and mobile handset\nmarkets, primarily during the second and third quarters of fiscal 2009. All segments were\nnegatively impacted by the current economic recession during the nine months ended April 30, 2009.\n

\n\n

Gross margin as a percentage of sales decreased to 48.5% from 49.6% for the quarter and\nto 47.9% from 49.0% for the nine months ended April 30, 2009, compared to the same periods of the\nprevious year. This decrease in gross margin as a percentage of sales was primarily the result of\ndecreased sales volumes, partially offset by savings generated from the reduction in the Company’s\nworkforce and other restructuring activities that took place during the second and third quarters\nof fiscal 2009, the cancellation of fiscal 2009 incentive compensation plans, and efficiencies\ngained from the implementation of the Brady Business Performance System (“BBPS”) throughout the\nCompany.\n

\n\n

Research and development (“R&D”) expenses decreased 24.4% to $7.8 million for the\nquarter and 13.6% to $25.3 million for the nine months ended April 30, 2009, compared to\n$10.3 million and $29.3 million for the same periods in the prior year, respectively. The decline\nin R&D spending during the third quarter of fiscal 2009 was reflective of the benefit of\nrestructuring actions taken during the second and third quarters of fiscal 2009, as well as\nreduced incentive compensation expense compared to the prior year. As a percentage of sales, R&D\nexpenses represented a slightly higher percentage of sales, increasing to 2.8% in the third\nquarter of fiscal 2009 from 2.7% in the third quarter of fiscal 2008, and increased slightly to\n2.7% in the first nine months of fiscal 2009 compared to 2.6% in the first nine months of fiscal\n2008, reflective of the Company’s commitment to new product development.\n

\n\n

Selling, general and administrative (“SG&A”) expenses decreased 25.1% to $94.9 million\nfor the three months ended April 30, 2009, compared to $126.7 million for the same period in the\nprior year and 18.1% to $302.8 million for the nine months ended April 30, 2009, compared to\n$369.6 million for the same period in the prior year. The decrease in SG&A expenses was primarily\nrelated to the savings resulting from restructuring activities that took place during the second\nand third quarters of fiscal 2009, a decline in discretionary spending, and reduced incentive\ncompensation expense compared to the prior year. As a percentage of sales, SG&A expenses\nincreased to 34.3% from 33.2% for the quarter and to 32.9% from 32.8% for the nine months ended\nApril 30, 2009, compared to the same periods in the prior year.\n

\n\n

Restructuring expenses were $2.2 million and $23.3 million for the three and nine months ended\nApril 30, 2009, respectively. In response to the global recession, the Company implemented a plan\nto address its cost structure. During the three and nine months ended April 30, 2009, the Company\nincurred costs related to the reduction of its workforce and facility consolidations.\nRestructuring costs related primarily to employee separation costs, consisting of severance pay,\noutplacement services, medical and other related benefits for approximately 15 percent of its\nemployees. The Company expects to complete its current restructuring plan during the remainder of\nfiscal 2009.\n

\n\n

Interest expense decreased to $6.3 million from $7.0 million for the quarter and to $19.0\nmillion from $20.4 million for the nine months ended April 30, 2009, compared to the same periods\nin the prior year. In June 2008, the Company paid the first installment of $21.4 million related\nto the debt securities issued in June 2004. As a result of a lower principal balance under the\nrelated debt agreement, the Company’s interest expense decreased for the three and nine months\nended April 30, 2009 as compared to the same periods in the prior year.\n

\n\n

17\n

\n\n\n\n\n

Other income and expense increased to $1.0 million of income for the third quarter of fiscal\n2009 compared to $0.9 million of income for the third quarter of fiscal 2008. Other income and\nexpense decreased to $1.1 million of income for the nine months ended April 30, 2009, compared to\n$3.3 million of income for the same period in the prior year. Of the $1.0 million in other income\nfor the three months ended April 30, 2009, $0.3 million was the result of interest income generated\nfrom investments of excess cash, $0.2 million of foreign exchange gains, and $0.5 million related\nto gains on investments related to its deferred compensation plan. Of the $0.9 million in other\nincome for the three months ended April 30, 2008, $1.4 million was the result of interest income\ngenerated from investments of excess cash, partially offset by $0.7 million of foreign exchange\nlosses. For the nine months ended April 30, 2009, the $1.1 million of other income consisted\nprimarily of $2.2 million related to interest income generated from investments and $1.1 million\nrelated to foreign exchange gains, partially offset by $2.4 million of expense related to the\ndecline in the value of mutual funds held in deferred compensation plans. For the nine months\nended April 30, 2008, of the $3.3 million of other income, $4.3 million was related to interest\nincome generated from investments, partially offset by $1.3 million in foreign exchange losses.\n

\n\n

The Company’s income tax rate was 25.0% for the quarter and 29.5% for the nine months ended\nApril 30, 2009, compared to 26.2% and 28.5% for the three and nine months ended April 30, 2008.\nDuring the three months ended April 30, 2009, the Company recognized approximately $1.2 million in\nincome tax benefits due to the expiration of various statutes of limitations, resulting in an\neffective tax rate of 25.0%. On a year-to-date basis, the income tax rate in fiscal 2009 has been\nnegatively impacted by certain valuation allowances recorded against deferred tax assets as a\nresult of the decline in income before taxes. The Company expects the full year income tax rate\nfor fiscal 2009 to be approximately 28%.\n

\n\n

Net income for the three months ended April 30, 2009, decreased 47.7% to $18.0 million,\ncompared to $34.4 million for the same quarter of the previous year. Net income as a percentage\nof sales decreased to 6.5% from 9.0% for the quarter ended April 30, 2009, compared to the same\nperiod in the prior year, due to the factors noted above. For the nine months ended April 30,\n2009, net income decreased 47.7% to $50.9 million, compared to $97.4 million for the same period\nin the previous year. As a percentage of sales, net income decreased to 5.5% from 8.6% for the\nnine months ended April 30, 2009, compared to the same period in the previous year.\n

\n\n

18\n

\n\n\n\n\n

Business Segment Operating Results\n

\n\n\n

The Company is organized and managed on a geographic basis by region. Effective in the fourth\nquarter of fiscal 2008, the Company has three reporting segments, Americas, Europe, and\nAsia-Pacific. Following is a summary of segment information for the three and nine months ended\nApril 30, 2009 and 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 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n


													Corporate
							Asia-					and
(Dollars in thousands)	Americas		Europe	Pacific		Subtotals	Eliminations		Total
SALES TO EXTERNAL CUSTOMERS CUSTOMERS
Three months ended:
April 30, 2009	$	125,688		$	85,172		$	65,873		$	276,733		$	—		$	276,733
April 30, 2008	$	166,407		$	133,422		$	82,080		$	381,909		$	—		$	381,909

Nine months ended:
April 30, 2009	$	409,573		$	280,589		$	231,337		$	921,499		$	—		$	921,499
April 30, 2008	$	497,803		$	364,951		$	263,413		$	1,126,167		$	—		$	1,126,167

SALES GROWTH INFORMATION
Three months ended April 30, 2009
Organic		(22.2	%)		(22.8	%)		(10.8	%)		(19.9	%)		—			(19.9	%)
Currency		(2.4	%)		(13.4	%)		(8.9	%)		(7.7	%)		—			(7.7	%)
Acquisitions		0.1	%		0.0	%		0.0	%		0.1	%		—			0.1	%
Total		(24.5	%)		(36.2	%)		(19.7	%)		(27.5	%)		—			(27.5	%)

Nine months ended April 30, 2009
Organic		(16.4	%)		(15.6	%)		(8.7	%)		(14.3	%)		—			(14.3	%)
Currency		(1.7	%)		(9.4	%)		(3.5	%)		(4.7	%)		—			(4.7	%)
Acquisitions		0.4	%		1.9	%		0.0	%		0.8	%		—			0.8	%
Total		(17.7	%)		(23.1	%)		(12.2	%)		(18.2	%)		—			(18.2	%)

SEGMENT PROFIT
Three months ended:
April 30, 2009	$	28,540		$	23,773		$	6,979		$	59,292		$	(1,717	)	$	57,575
April 30, 2008	$	40,169		$	36,245		$	11,055		$	87,469		$	(1,816	)	$	85,653
Percentage decrease		(29.0	%)		(34.4	%)		(36.9	%)		(32.2	%)		(5.5	%)		(32.8	%)

Nine months ended:
April 30, 2009	$	86,104		$	77,857		$	33,502		$	197,463		$	(6,631	)	$	190,832
April 30, 2008	$	116,312		$	97,212		$	43,105		$	256,629		$	(6,400	)	$	250,229
Percentage\n(decrease)\nincrease		(26.0	%)		(19.9	%)		(22.3	%)		(23.1	%)		3.6	%		(23.7	%)

\n\n\n

NET INCOME RECONCILIATION (Dollars in thousands)\n

\n\n


	Three months ended:			Nine months ended:
	April 30,			April 30,			April 30,		April 30,
	2009			2008			2009		2008
Total profit from reportable segments	$	59,292			$	87,469		$	197,463		$	256,629
Corporate and eliminations		(1,717	)			(1,816	)		(6,631	)		(6,400	)
Unallocated amounts:
Administrative costs		(26,074	)			(33,071	)		(77,472	)		(96,865	)
Restructuring costs		(2,229	)			—			(23,276	)		—
Investment and other income		989				920			1,143			3,307
Interest expense		(6,307	)			(6,962	)		(18,982	)		(20,429	)

Income before income taxes		23,954				46,540			72,245			136,242
Income taxes		(5,994	)			(12,187	)		(21,325	)		(38,829	)

Net income	$	17,960			$	34,353		$	50,920		$	97,413

\n\n\n

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

\n\n

19\n

\n\n\n\n\n

Americas:\n

\n\n\n

Sales in the Americas segment decreased 24.5% for the quarter and 17.7% for the nine\nmonths ended April 30, 2009, compared to the same periods in the prior year. Organic sales\ndeclined 22.2% and 16.4% in the quarter and year-to-date, respectively, as compared to the same\nperiods in the previous year. For the quarter and year-to-date period, the segment has\nexperienced declines in organic sales due to an overall softness in the manufacturing and\nconstruction sectors, as well as the impact of distribution partners and customers decreasing\ninventories. Fluctuations in the exchange rates used to translate financial results into the\nUnited States dollar decreased sales by 2.4% in the quarter and 1.7% for the nine-month period.\nSales in the segment were increased by the fiscal year 2008 acquisition of DAWG which increased\nsales by 0.1% for the quarter and 0.4% for the nine-month period.\n

\n\n

Segment profit for the region decreased 29.0% to $28.5 million from $40.2 million for\nthe quarter and 26.0% to $86.1 million from $116.3 million for the nine months ended April 30,\n2009, compared to the same periods in the prior year. Segment profit for the quarter and\nyear-to-date period was adversely impacted by decreased sales volume, impacting the segment’s\nability to absorb fixed costs. Partially offsetting the impact of decreased volumes, the segment\nrealized cost savings due to actions it took during the second and third quarters of fiscal 2009\nto reduce its workforce and discretionary spending. As a percentage of sales, segment profit\ndecreased to 22.7% from 24.1% in the third quarter of fiscal 2009 and decreased to 21.0% from\n23.4% in the nine months ended April 30, 2009, compared to the same periods in the prior year.\n

\n\n

Europe:\n

\n\n\n

Europe sales decreased 36.2% for the quarter and 23.1% for the nine months ended April\n30, 2009, compared to the same periods in the prior year. Organic sales declined 22.8% and 15.6%\nin the quarter and year-to-date, respectively, compared to the same periods in the previous year.\nThe segment’s organic sales continue to be adversely impacted by the global economic recession.\nWhile organic sales in the private sector to the automotive and electronics markets declined in the Europe segment, sales to governments and public utilities have partially offset these losses.\n\n\n Sales\nwere negatively affected by fluctuations in the exchange rates used to translate financial results\ninto the United States dollar, which decreased sales within the segment by 13.4% in the quarter\nand 9.4% for the nine-month period. The fiscal 2008 acquisition of Transposafe did not impact\nsales for the quarter, however, it increased sales 1.9% for the nine-month period.\n

\n\n

Segment profit for the region decreased 34.4% to $23.8 million from $36.2 million for\nthe quarter and 19.9% to $77.9 million from $97.2 million for the nine months ended April 30,\n2009, compared to the same periods in the prior year. The decline in segment profit was\nattributable to the declining sales volumes and the impact of foreign currency. In response to\nthe sales downturn, the segment implemented various cost savings measures during the second and\nthird quarters of fiscal 2009 that have generated savings during the quarter to partially offset\nthe impact of lower sales volumes. As a percentage of sales, segment profit increased to 27.9%\nfrom 27.2% in the third quarter of fiscal 2009 and to 27.7% from 26.6% in the nine months ended\nApril 30, 2009, compared to the same periods in the prior year.\n

\n\n

Asia-Pacific:\n

\n\n\n

Asia-Pacific sales decreased 19.7% for the quarter and 12.2% for the nine months ended\nApril 30, 2009, compared to the same periods in the prior year. Organic sales in local currency\ndecreased 10.8% in the quarter and 8.7% year-to-date, compared to the same periods in the previous\nyear. The decrease in organic sales for the Asia-Pacific segment was due to the overall decline\nin the electronics and mobile handset markets and aggressive pricing demands from customers,\nslightly offset by increased demand for MRO products to support infrastructure development\nsponsored by government stimulus spending in the region. Sales were negatively affected by\nfluctuations in the exchange rates used to translate financial results into the United States\ndollar, which decreased sales within the region by 8.9% in the quarter and 3.5% for the nine-month\nperiod.\n

\n\n

Segment profit for the region decreased 36.9% to $7.0 million from $11.1 million for the\nquarter and declined 22.3% to $33.5 million from $43.1million for the nine months ended April 30,\n2009, compared to the same periods in the prior year. As a percentage of sales, segment profit\ndecreased to 10.6% from 13.5% in the third quarter of fiscal 2009 and to 14.5% from 16.4% in the\nnine months ended April 30, 2009, compared to the same periods in the prior year. The decline in\nsegment profit during the three and nine months ended April 30, 2009 was primarily the result of\ndecreased sales, partially offset by savings generated from restructuring activities, shortened\nwork weeks, and restrictions on discretionary spending.\n

\n\n

During the three months ended April 30, 2009, each of the Company’s segments focused on\nadjusting cost structures in areas that are not expected to impact organic growth or productivity\ninitiatives. Additionally, the segments continued to address margin improvements through a deeper\nimplementation of BBPS, which has as its goal better space utilization, labor efficiency, cycle\ntimes, and working capital improvements.\n

\n\n

20\n

\n\n\n\n\n

Financial Condition\n

\n\n\n

The Company’s current ratio as of April 30, 2009, was 2.5 compared to 2.3 at July 31, 2008.\nCash and cash equivalents were $232.9 million at April 30, 2009, compared to $258.4 million at\nJuly 31, 2008. The decrease in cash of $25.5 million was the result of cash provided by operations\nof $77.0 million, offset by cash used in investing activities of $11.0 million, cash used in\nfinancing activities of $65.0 million, including $40.3 million relating to the repurchase of\noutstanding stock and $26.9 million of dividend payments, and the effects of the appreciation of\nthe U.S. dollar against other currencies, which negatively impacted cash in the amount of $26.5\nmillion during the nine months ended April 30, 2009.\n

\n\n

Accounts receivable decreased $79.2 million for the nine months ended April 30, 2009 due to\nlower sales volumes and the impact of foreign currency translation on the Company’s foreign\naccounts receivable balances. Inventories decreased $28.4 million for the nine months ended April\n30, 2009, to $106.2 from $134.6 million. The decline in inventory was due to the benefits\ngenerated from working capital initiatives and the impact of foreign currency translation. The net\ndecrease in current liabilities was $115.1 million for the current fiscal year. The primary\ncomponents of the decrease in current liabilities relate to a reduction in wages payable due to\nreduced headcount, the cancellation of incentive compensation plans for fiscal 2009, and decreased\naccounts payable balances.\n

\n\n

Cash flow from operating activities totaled $77.0 million for the nine months ended April 30,\n2009, compared to $152.1 million for the same period last year. The decrease was primarily the\nresult of a significant decrease in accounts payable balances and decreased net income for the nine\nmonths ended April 30, 2009.\n

\n\n

The Company did not complete any acquisitions of businesses during the nine months ended April\n30, 2009, compared to $28.9 million of cash used for acquisitions for the same period in the prior\nyear. The Company reached a settlement with the former owners of Tradex related to the purchase\nprice of the Tradex acquisition. The Company received approximately $3.5 million as the result of\nthe settlement during the nine months ended April 30, 2009. Payments of $0.7 million and $0.7\nmillion were paid during the nine months ended April 30, 2009 to satisfy the earnout and holdback\nliabilities of the Transposafe and Asterisco acquisitions, respectively. Payments of $4.4 million,\n$1.2 million, and $0.2 million were paid during the nine months ended April 30, 2008 to satisfy the\nearnout and holdback liabilities of the Daewon Industry Corporation, STOPware, Inc., and Asterisco\nacquisitions, respectively. Capital expenditures were $16.0 million for the nine months ended\nApril 30, 2009, compared to $19.0 million in the same period last year. Net cash used in financing\nactivities was $65.0 million for the nine months ended April 30, 2009, primarily due to the\nrepurchase of outstanding stock and the payment of dividends. Net cash used in financing\nactivities for the same period last year was $38.7 million due to the payment of dividends and the\nrepurchase of outstanding stock, partially offset by the proceeds from the exercise of stock\noptions.\n

\n\n

On November 24, 2008, the Company filed a shelf registration statement on Form S-3 with the\nSecurities and Exchange Commission (“SEC”), which will allow the Company to issue and sell, from\ntime to time in one or more offerings, an indeterminate amount of Class A Non-Voting Common Stock\nand debt securities as it deems prudent or necessary to raise capital at a later date. The shelf\nregistration statement became effective upon filing with the SEC. The Company plans to use the\nproceeds from any future offerings under the shelf registration for general corporate purposes,\nincluding, but not limited to, acquisitions, capital expenditures, and refinancing of debt.\n

\n\n

The Company has completed three private placements totaling $500 million in ten-year fixed\nnotes with varying maturity dates to institutional investors at interest rates varying from 5.14%\nto 5.33%. The notes must be repaid equally over seven years, with initial payment due dates\nranging from 2008 to 2011, with interest payable on the notes due semiannually on various dates\nthroughout the year, which began in December 2004. The private placements were exempt from the\nregistration requirements of the Securities Act of 1933. The notes were not registered for resale\nand may not be resold absent such registration or an applicable exemption from the registration\nrequirements of the Securities Act of 1933 and applicable state securities laws. The notes have\ncertain prepayment penalties for repaying them prior to the maturity date. The Company paid its\nfirst installment under the debt agreement in June 2008 for $21.4 million.\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 credit\nfacility may be increased from $200 million up to $300 million. Under the credit agreement, the\nCompany has the option to select either a base interest rate (based upon the higher of the federal\nfunds rate plus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency interest\nrate (at the LIBOR rate plus a margin based on the Company’s consolidated leverage ratio). A\ncommitment fee is payable on the unused amount of the facility. The agreement restricts the amount\nof certain types of payments, including dividends, which can be made annually to $50 million plus\nan amount equal to 75% of consolidated net income for the prior fiscal year of the Company. The\nCompany believes that based on historic dividend practice, this restriction would not impede the\nCompany in following a similar dividend practice in the future. On March 18, 2008, the Company\nentered into an amendment to the revolving loan agreement which extended the maturity date from\nOctober 5, 2011 to March 18, 2013. All other terms of the revolving loan agreement remained the\nsame. As of April 30, 2009, there were no outstanding borrowings under the credit facility.\n

\n\n

21\n

\n\n\n\n\n

The Company’s debt and revolving loan agreements require it to maintain certain financial\ncovenants. The Company’s June 2004, February 2006, and March 2007 debt agreements require the\nCompany to maintain a ratio of debt to the rolling four quarters earnings before interest, taxes,\ndepreciation and amortization (“EBITDA”), as defined in the debt agreements, of not more than a 3.5\nto 1.0 ratio (leverage ratio). As of April 30, 2009 the Company was in compliance with the\nfinancial covenant of these debt agreements, with the ratio of debt to EBITDA, as defined by the\nagreements, equal to 2.3 to 1.0. The Company’s October 2006 revolving loan agreement requires the\nCompany to maintain a ratio of debt to rolling four quarters EBITDA, as defined by the debt\nagreement, of not more than a 3.0 to 1.0 ratio. Additionally, the revolving loan agreement\nrequires the Company’s rolling four quarters earnings before interest and taxes (“EBIT”) to\ninterest expense of not less than a 3.0 to 1.0 ratio (interest expense coverage). As of April 30,\n2009 the Company was in compliance with the financial covenants of the revolving loan agreement,\nwith the ratio of debt to EBITDA, as defined by the agreement, equal to 2.3 to 1.0 and the interest\nexpense coverage ratio equal to 6.2 to 1.0.\n

\n\n

While the Company strives to maximize investment income on its cash, preservation of principal\nis the first priority of the Company’s investment policy. In volatile markets, as the Company has\nrecently experienced, the Company’s investment policy is intended to preserve principal as its\nprimary goal, possibly at the expense of the yields historically achieved.\n

\n\n

The Company’s growth has historically been funded by a combination of cash provided by\noperating activities and debt financing. The Company believes that its cash from operations, in\naddition to its sources of borrowing, are sufficient to fund its anticipated requirements for\nworking capital, capital expenditures, restructuring activities, acquisitions, common stock\nrepurchases, scheduled debt repayments, and dividend payments. As of the date of this Form 10-Q,\nthe credit and financial markets are in a period of substantial instability and uncertainty that is\naffecting the availability of credit to borrowers. The Company believes that its current credit\narrangements are sound and that the strength of its balance sheet will allow the Company the\nfinancial flexibility to respond to both internal growth opportunities and those available through\nacquisition.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

Other Contractual Obligations — The Company does not have material financial guarantees\nor other contractual commitments that are reasonably likely to adversely affect liquidity. Under\nthe guidelines established by Financial Accounting Standards Board (“FASB”) Interpretation No. 48,\n“Accounting for Uncertainty in Income Taxes” (“FIN 48”), which the Company adopted as of August 1,\n2007, the Company is unable to determine the periods in which the cash settlement of the\nliabilities associated with FIN 48 will occur with the respective taxing authority.\n

\n\n

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

\n\n

Subsequent Events Affecting Financial Condition\n

\n\n\n

On May 19, 2009, the Board of Directors declared a quarterly cash dividend to shareholders of\nthe Company’s Class A Common Stock of $0.17 per share payable on July 31, 2009 to shareholders of\nrecord at the close of business on July 10, 2009.\n

\n\n

On May 28, 2009, the Company commenced a cash tender offer to purchase up to $100,000,000\naggregate principal amount of its outstanding senior notes. The tender offer is being made\npursuant to an Offer to Purchase, dated May 28, 2009, and the related Letter of Transmittal. The\npurchase price for the notes will include the payment of the remaining principal on the notes plus\naccrued and unpaid interest on the remaining principal amount from the last interest payment date\nto, but not including, the date of purchase. The Company is making this offer as part of its\neffort to reduce its outstanding debt levels. The Company plans to use a portion of its cash on\nhand to fund the purchase of the notes pursuant to the offer, and if necessary, through available\ncredit facilities. The offer will expire on June 18, 2009, unless extended or earlier terminated.\nThe tender offer is subject to certain customary conditions, but is not conditioned upon any\nminimum principal amount of notes being tendered.\n

\n\n

22\n

\n\n\n\n\n

Forward-Looking Statements\n

\n\n\n

Brady believes that certain statements in this Form 10-Q are “forward-looking statements”\nwithin the meaning of the Private Securities Litigation Reform Act of 1995. All statements related\nto future, not past, events included in this Form10-Q, including, without limitation, statements\nregarding Brady’s future financial position, business strategy, targets, projected sales, costs,\nearnings, capital expenditures, debt levels and cash flows, and plans and objectives of management\nfor future operations are forward-looking statements. When used in this Form 10-Q, words such as\n“may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or\n“plan” or similar terminology are generally intended to identify forward-looking statements. These\nforward-looking statements by their nature address matters that are, to different degrees,\nuncertain and are subject to risks, assumptions and other factors, some of which are beyond 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 the length or severity of the\ncurrent worldwide economic downturn or timing or strength of a subsequent recovery; future\nfinancial performance of major markets Brady serves, which include, without limitation,\ntelecommunications, manufacturing, electrical, construction, laboratory, education, governmental,\npublic utility, computer, transportation; difficulties in making and integrating acquisitions;\nrisks associated with newly acquired businesses; Brady’s ability to retain significant contracts\nand customers; future competition; Brady’s ability to develop and successfully market new products;\nchanges in the supply of, or price for, parts and components; increased price pressure from\nsuppliers and customers; interruptions to sources of supply; environmental, health and safety\ncompliance costs and liabilities; Brady’s ability to realize cost savings from operating\ninitiatives; Brady’s ability to attract and retain key talent; difficulties associated with\nexports; risks associated with international operations; fluctuations in currency rates versus the\nUS dollar; technology changes; potential write-offs of Brady’s substantial intangible assets;\nBrady’s ability to maintain its debt covenants; unforeseen tax consequences; 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 Brady’s Form 10-K for the year ended July 31,\n2008, as updated by subsequently filed reports. These uncertainties may cause Brady’s actual future\nresults to be materially different than those expressed in its forward-looking statements. Brady\ndoes not undertake to update its forward-looking statements.\n

\n\n

23\n

\n\n\n\n

\n\n

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

\n\n\n

The Company’s business operations give rise to market risk exposure due to changes in\nforeign exchange rates. To manage that risk effectively, the Company enters into hedging\ntransactions, according to established guidelines and policies that enable it to mitigate the\nadverse effects of this financial market risk.\n

\n\n

The global nature of the Company’s business requires active participation in the foreign\nexchange markets. As a result of investments, production facilities and other operations on a\nglobal scale, the Company has assets, liabilities and cash flows in currencies other than the U.S.\nDollar. The primary objective of the Company’s foreign currency exchange risk management is to\nminimize the impact of currency movements on intercompany transactions and foreign raw-material\nimports. To achieve this objective, the Company hedges a portion of known exposures using forward\ncontracts. Main exposures are related to transactions denominated in the British Pound, the Euro,\nCanadian Dollar, Australian Dollar, Singapore Dollar, Swedish Krona, Korean Won and Chinese Yuan\ncurrency. As of April 30, 2009, the amount of outstanding foreign exchange contracts was $17.8\nmillion.\n

\n\n

The Company could be exposed to interest rate risk through its corporate borrowing\nactivities. The objective of the Company’s interest rate risk management activities is to manage\nthe levels of the Company’s fixed and floating interest rate exposure to be consistent with the\nCompany’s preferred mix. The interest rate risk management program allows the Company to enter into\napproved interest rate derivatives, with the approval of the Board of Directors, if there is a\ndesire to modify the Company’s exposure to interest rates. As of April 30, 2009, the Company had no\ninterest 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 U.S. Dollar and the European currencies, primarily the Euro, changes between the U.S.\nDollar and the Australian Dollar, changes between the U.S. Dollar and the Canadian Dollar, and\nchanges between the U.S. Dollar and the Chinese Yuan. The favorable impact of changes in foreign\ncurrency exchange rates on the Company’s foreign subsidiaries’ balance sheets, reported as a\ncomponent of shareholders’ equity, were $2.0 million and $132.4 million at April 30, 2009 and 2008,\nrespectively. As of April 30, 2009 and 2008, the Company’s foreign subsidiaries had net current\nassets (defined as current assets less current liabilities) subject to foreign currency translation\nrisk of $239.7 million and $280.9 million, respectively. The potential decrease in the net current\nassets as of April 30, 2009 from a hypothetical 10 percent adverse change in quoted foreign\ncurrency exchange rates would be $24.0 million. This sensitivity analysis assumes a parallel shift\nin foreign currency exchange rates. Exchange rates rarely move in the same direction relative to\nthe U.S. Dollar. This assumption may overstate the impact of changing exchange rates on individual\nassets and liabilities denominated in a foreign currency.\n

\n\n

ITEM 4. CONTROLS AND PROCEDURES\n

\n\n\n

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

\n\n

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

\n\n

24\n

\n\n\n\n

\n\n

PART II. OTHER INFORMATION\n

\n\n

ITEM 1A. Risk Factors\n

\n\n\n

There have been no material changes in risk factors involving the Company from those\npreviously disclosed in Part II, Item IA. Risk Factors of the Company’s Form 10-Q for the quarter\nended January 31, 2009.\n

\n\n

ITEM 6. Exhibits\n

\n\n\n

(a) Exhibits\n

\n\n

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

	31.1		Rule 13a-14(a)/15d-14(a) Certification of Frank M. Jaehnert

	31.2		Rule 13a-14(a)/15d-14(a) Certification of Thomas J. Felmer

	32.1		Section 1350 Certification of Frank M. Jaehnert

	32.2		Section 1350 Certification of Thomas J. Felmer

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly\ncaused this report to be signed on its behalf by the undersigned thereunto duly authorized.\n

\n\n

SIGNATURES\n

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


	\nBRADY CORPORATION \n
Date: June 5, 2009	\n/s/ F. M. Jaehnert\n
	F. M. Jaehnert
	President & Chief Executive Officer


Date: June 5, 2009	/s/ Thomas J. Felmer\n
	Thomas J. Felmer
	Senior Vice President & Chief Financial Officer\n(Principal Financial Officer)

\n\n\n

25\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 quarterly report on Form 10-Q of Brady Corporation;\n

\n\n

(2) Based on my knowledge, this report does not contain any untrue statement of a\nmaterial fact or omit to state a material fact necessary to make the statements made, in light of\nthe circumstances 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\nincluded in this report, fairly present in all material respects the financial condition, results\nof operations and cash flows of the registrant as of, and for, the periods presented in this\nreport;\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

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

\n\n

b) Designed such internal control over financial reporting, or caused such internal\ncontrol over financial reporting to be designed under our supervision to provided reasonable\nassurance regarding the reliability of financial reporting and the preparation of financial\nstatements for external purposes in accordance with generally accepted accounting principles;\n

\n\n

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

\n\n

d) Disclosed in this report any change in the registrant’s internal control over\nfinancial reporting that occurred during the registrant’s most recent fiscal quarter (the\nregistrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,\nor is reasonably likely to materially affect, the registrant’s internal control over financial\nreporting; and\n

\n\n\n

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

\n\n

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

\n\n

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

\n\n

Date: June 5, 2009\n

\n\n\n

/s/ FRANK M. JAEHNERT
\nFrank M. Jaehnert
President and Chief Executive Officer\n\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

I, Thomas Felmer, certify that:\n

\n\n\n

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

\n\n

\n\n\n

\n\n

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

\n\n

Date: June 5, 2009\n

\n\n\n

/s/ THOMAS J. FELMER
\nThomas J. Felmer\n\n

\n\n

Senior Vice President and
Chief\nFinancial Officer\n\n

\n\n

EXHIBIT 32.1\n

\n\n\n

SECTION 1350 CERTIFICATION\n

\n\n\n

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

\n\n

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended\nApril 30, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities\nExchange Act of 1934; and\n

\n\n

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

\n\n

Date: June 5, 2009\n

\n\n\n

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

\n\n

President and Chief Executive Officer\n\n

\n\n

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

\n\n\n

\n\n\n\n\n

EXHIBIT 32.2\n

\n\n\n

SECTION 1350 CERTIFICATION\n

\n\n\n

\n\n

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

\n\n

Date: June 5, 2009\n

\n\n\n

/s/ THOMAS J. FELMER
\nThomas J. Felmer\n\n

\n\n

Senior Vice President and
\nChief Financial Officer\n\n

\n\n

\n\n\n


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PART I. Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets		3

Condensed Consolidated Statements of Income		4

Condensed Consolidated Statements of Cash Flows		5

Notes to Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures About Market Risk		24

Item 4. Controls and Procedures		24

PART II. Other Information

Item 1A. Risk Factors		25

Item 6. Exhibits		25

EX-31.1
EX-31.2
EX-32.1
EX-32.2

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