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UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n

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Washington, D.C. 20549\n

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Form 10-K/A\n

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(Amendment No. 1)\n

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

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For the fiscal year ended July 31, 2009

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

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For the transition period from to

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\nCommission file number 1-14959\n

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BRADY CORPORATION\n

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\n(Exact name of registrant as specified in charter)

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

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

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

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

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

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule\n405 of the Securities Act. Yes þ No o\n

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Indicate by check mark if the registrant is not required to file reports pursuant to Section\n13 or Section 15(d) of the Act. Yes o No þ\n

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

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Indicate by check mark 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 during the preceding 12 months (or four such shorter period\nthat the registrant was required to submit and post such files). Yes o No o\n

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation\nS-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge,\nin definitive proxy or information statements incorporated by reference in Part III of this Form\n10-K or any amendment to this Form 10-K. þ\n

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

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Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller Reporting Company o

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

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The aggregate market value of the non-voting common stock held by non-affiliates of the\nregistrant as of January 30, 2009, was approximately $959,932,645 (based on closing sale price of\n$20.92 per share on that date as reported for the New York Stock Exchange). As of September 23,\n2009, there were outstanding 48,800,759 shares of Class A Nonvoting Common Stock (the “Class A\nCommon Stock”), and 3,538,628 shares of Class B Common Stock. The Class B Common Stock, all of\nwhich is held by affiliates of the registrant, is the only voting stock.\n

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PART I\n

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

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Item 1. Business\n

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(a) General Development of Business\n\n

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The Company, a Wisconsin corporation founded in 1914, currently operates 59 manufacturing or\ndistribution facilities in Australia, Belgium, Brazil, Canada, China, France, Germany, India,\nItaly, Japan, Malaysia, Mexico, the Netherlands, Norway, Poland, Singapore, South Korea, Sweden,\nThailand, the United Kingdom and the United States. The Company also sells through subsidiaries or\nsales offices in these countries, with additional sales through a dedicated team of international\nsales representatives in Hong Kong, the Philippines, Slovakia, Spain, Taiwan, Turkey and the United\nArab Emirates. The Company further markets its products to parts of Eastern Europe, the Middle\nEast, Africa and Russia. The Company’s corporate headquarters are located at 6555 West Good Hope\nRoad, Milwaukee, Wisconsin 53223, and the telephone number is (414) 358-6600. The Company’s\nInternet address is http://www.bradycorp.com.\n

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(b) Financial Information About Industry Segments\n

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

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(c) Narrative Description of Business\n

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Overview\n\n

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

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

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

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

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Competitive Strengths\n

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

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Leader in Niche Markets. Brady competes in niche markets where it believes it is often the\nleading supplier with the manufacturing expertise, infrastructure, channels and sales resources\nnecessary to provide the required product or comprehensive solution. For example, the Company\nbelieves it is the leading supplier of wire identification products to the North American MRO\n(Maintenance, Repair and Operations) market and of precision die-cut components to the mobile\ntelecommunications market. The Company believes its leadership positions make it a preferred\nsupplier to many of its customers and enables it to be successful in its markets, which are\ngenerally fragmented and populated with smaller or regional competitors.\n

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Differentiated Solutions and Commitment to Innovation. The Company believes its sophisticated\nengineering and manufacturing capabilities, as well as its expertise in materials, give it a\ncompetitive advantage in supplying customized or high specification product solutions to meet\nindividualized customer needs. The Company has been successful in identifying and incorporating\ninnovative technologies to create integrated and precise solutions. Additionally, it is able to use\nits materials expertise and its investment in research and development to provide unique products\nto meet the demands of end-customers in new, faster growing markets adjacent to its traditional\nmarkets, such as laboratory identification, aerospace, defense, and mass transit.\n

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

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Broad Customer Base and Geographic Diversity. Brady believes its global infrastructure and\ndiverse market presence provide a solid platform for further expansion, and enable it to act as a\nprimary supplier to many of its global customers. Sales from international operations increased\nfrom 44.4% of net sales in fiscal 2000 to 61.8% of net sales in fiscal 2009. The Company’s broad\nproduct offering and global presence benefit many of its customers who seek a single or primary\nsupplier. Brady has over 500,000 end-customers that operate in multiple industries.\n

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

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

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Deep and Talented Team. The Company believes that its team of employees has substantial depth in\ncritical operational areas and has demonstrated success in reducing costs, integrating acquisitions\nand improving processes through economic cycles. The international experience of its management\nteam and its commitment to developing strong management teams in each of the local operations is a\ncompetitive advantage. In addition, the Company believes it employs a world-class team of people\nand dedicates significant resources to recruiting people committed to excellence and investing in\ntheir potential. The depth and breadth of knowledge within the entire Brady organization\nstrengthens relationships with its customers and suppliers and enables the Company to provide its\ncustomers with a high level of product and industry expertise.\n

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Key Strategies\n

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

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Improve Profitability. The Company plans to continue its focus on improving operating\nefficiency, reducing costs, and improving productivity and return on invested capital. To this end,\nBrady is continuing to implement its Brady Business Performance System (“BBPS”) initiative and\nexpanding it to most of its operations globally. This approach to improving profitability focuses\non strategy deployment, operational efficiencies and lean manufacturing principles to drive\ncost-savings, enhance customer service and overall business performance. Productivity improvement\ninvestments made in 2009 include tools such as software systems that enhance efficiencies in the\nareas of accounts receivables, human resources and sales. In addition, each acquisition the Company\nmakes provides additional opportunities to improve its own performance as well as the performance\nof the acquired company. The Company often continues to realize synergies with acquired companies\nseveral years after the acquisition date.\n

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New Product Development. Through product innovation and development activities, Brady seeks to\nintroduce new technologies and differentiated products that leverage its capabilities in specialty\nmaterials, die-cutting, software and printing systems. The Company continues to invest in research\nand development activities, and employs approximately 235 R&D professionals in the United States,\nEurope and Asia. In 2009 the Company expanded its R&D operations in Singapore and Beijing, China.\nAmounts incurred for research and development activities were 2.8% and 2.7% of sales in fiscal 2009\nand 2008, respectively.\n

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

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

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Enter New Markets. The Company looks to leverage its quality products, global infrastructure,\nchannel relationships and selling capabilities to effectively enter new markets, many of which are\nfragmented and populated with smaller competitors. The Company is also considering entering\nadjacent markets where its core competencies can be successfully leveraged. The Company reviews its\nproduct and market portfolio on a regular basis through its standardized review process in order to\nidentify new opportunities.\n

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Expand Geographically. Brady’s long-term strategy involves the pursuit of growth\nopportunities in a number of markets outside of the United States. The Company is committed to\nbeing in close proximity to its customers and to low-cost manufacturing. Brady currently operates\nin 34 countries and employs approximately 6,800 people. Of the approximately 6,800 global\nemployees, Asia-Pacific accounts for 43%, with the Americas (including Corporate and R&D resources)\nand Europe employing 37%, and 20% of the workforce, respectively. Brady has made strategic\nacquisitions and has invested heavily in its global infrastructure and flexible manufacturing\ncapacity in order to follow its customers into new geographies. Brady’s regional management\nstructure is a key component in effectively entering and competing in new geographies.\n

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Pursue Strategic Acquisitions. The Company intends to continue to make complementary\nstrategic acquisitions to further its goals of strengthening its market positions and entering new\nmarkets and geographies. In addition, the Company is developing strategies for acquiring companies\nin adjacent markets where Brady competencies can be applied and social, economic and cultural\ntrends can be positively leveraged. Brady works to drive substantial value creation through\ncapitalizing on its acquisition and integration acumen.\n

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Improve Working Capital. Brady continues to keep a strong focus on working capital\nmanagement. The Company intends to drive increases in operating cash flow by heightened focus on\ninventory, accounts receivable, and accounts payable management. This focus is further evidenced\nby the incorporation of working capital targets in the majority of employee incentive plans.\n

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Products\n

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The Company is largely vertically integrated by designing, developing, and producing most of\nits identification products and printing systems. Brady materials are developed internally and\nmanufactured out of a variety of films, many of which are coated by Brady, for applications in the\nfollowing markets: electronic, industrial, electrical, utility, laboratory, safety and security.\nBrady also manufactures specialty tapes and related products that are characterized by\nhigh-performance printable top coats and adhesives, most of which are formulated by the Company, to\nmeet high-tolerance requirements of the industries in which they are used.\n

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

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

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Facility Identification

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Informational signs, tags and labels, and do-it-yourself printers for use in a broad range of\nindustrial, utility, commercial, governmental and institutional applications. These products are\neither self-adhesive or mechanically mounted, designed for both indoor and outdoor use and are\nmanufactured to meet standards issued by the National Safety Council, OSHA and a variety of\nindustry associations in the United States and abroad. The Company’s sign products include\nadmittance, directional and exit signs; electrical hazard warnings; energy conservation messages;\nfire protection and fire equipment signs; hazardous waste labels; hazardous and toxic material\nwarning signs; transformers and power pole markers; personal hazard warnings; housekeeping and\noperational warnings; pictograms; radiation and laser signs; safety practices signs and regulatory\nmarkings; employment law posters; and photo luminescent (glow-in-the-dark) products.\n

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

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

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

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Safety and Security Products

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

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

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

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Wire and Cable Identification

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

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People Identification

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

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High Performance Identification

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

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Precision Die-Cut Parts

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

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Other Products

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

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Marketing and Sales\n

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

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

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Brands\n

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The Company’s products go to market under a variety of brand names. The Brady brand includes\nhigh-performance labels, wire identification products, printers, software, safety and facility\nidentification products, lock-out/tag-out products, people identification products, precision\ndie-cut parts and specialty materials. Other die-cut materials are marketed as Balkhausen products.\nSafety and facility identification products are also marketed under the Safety Signs Service brand,\nwith some lockout/tagout products offered under the Prinzing and Scafftag brands. In addition,\nidentification products for the utility industry are marketed under the Electromark brand and\nspill-control products are marketed under the SPC and D.A.W.G. brands; poster printers and cutting\nsystems for education and government markets are offered under the Varitronics brand; wire\nidentification products are marketed under the Modernotecnica brand and the Carroll brand; direct\nmarketing safety and facility identification products are offered under the Seton, Emedco, Signals,\nSafetyshop, Clement and Personnel Concepts names; security and identification badges and systems\nare included in the Temtec, B.I.G., Identicard/Identicam, STOPware, J.A.M. Plastics, PromoVision,\nand Quo-Luck brands; hand-held regulatory documentation systems are available under the Tiscor\nname; automatic identification and bar-code software is offered under the Teklynx brand; and\nsecurity sealing and transportation identification is offered under the Transposafe Systems name.\n

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Manufacturing Process and Raw Materials\n

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The Company manufactures the majority of the products it sells, while purchasing certain items\nfrom other manufacturers. Products manufactured by the Company generally require a high degree of\nprecision and the application of adhesives with chemical and physical properties suited for\nspecific uses. The Company’s manufacturing processes include compounding, coating, converting,\nprinting, melt-blown operations, software development and printer design and assembly. The\ncompounding process involves the mixing of chemical batches\n

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for primers, top coatings and adhesives. The coatings and adhesives are applied to a wide\nvariety of materials including polyester, polyimide, cloth, paper, metal and metal foil. The\nconverting process may include embossing, perforating, laminating, die cutting, slitting, and\nprinting or marking the materials as required.\n

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

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

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Technology and Product Development\n

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

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

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The Company conducts much of its research and development activities at the Frederic S. Tobey\nResearch and Innovation Center (approximately 39,600 sq. ft.) in Milwaukee, Wisconsin.\nAdditionally, the Company has expanded its focus on research and development activity at its R&D\nfacilities in Singapore and Beijing, China. The Company spent approximately $34.2 million, $40.6\nmillion, and $36.0 million during the fiscal years ended July 31, 2009, 2008, and 2007,\nrespectively, on its research and development activities. In fiscal 2009, approximately 235\nemployees were engaged in research and development activities for the Company. Additional research\nprojects were conducted in Company facilities in other locations in the United States, Europe and\nAsia and under contract with universities, other institutions and consultants.\n

\n\n

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

\n\n

9\n

\n\n

International Operations\n

\n\n\n

In fiscal 2009, 2008, and 2007, sales from international operations accounted for 61.8%,\n62.9%, and 60.9%, respectively, of the Company’s sales. Its global infrastructure includes\nsubsidiaries in Australia, Belgium, Brazil, Canada, China, France, Germany, India, Italy, Japan,\nMalaysia, Mexico, the Netherlands, Norway, Poland, Singapore, South Korea, Sweden, Thailand, the\nUnited Kingdom and the United States. The Company also sells through subsidiaries or sales offices\nin these countries, with additional sales through a dedicated team of international sales\nrepresentatives in Hong Kong, the Philippines, Slovakia, Spain, Taiwan, Turkey and the United Arab\nEmirates. The Company further markets its products to parts of Eastern Europe, the Middle East,\nAfrica and Russia.\n

\n\n

Competition\n

\n\n\n

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

\n\n

Backlog\n

\n\n\n

As of July 31, 2009, the amount of the Company’s backlog orders believed to be firm was $27.5\nmillion. This compares with $32.0 million and $25.3 million of backlog orders as of July 31, 2008\nand 2007, respectively. Average delivery time for the Company’s orders varies from same day\ndelivery to one month, depending on the type of product, customer request or demand, and whether\nthe product is stock or custom-designed and manufactured. The Company’s backlog does not provide\nmuch visibility for future business.\n

\n\n

Environment\n

\n\n\n

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

\n\n

Employees\n

\n\n\n

As of September 23, 2009, the Company employed approximately 6,800 individuals. Brady has never\nexperienced a material work stoppage due to a labor dispute and considers its relations with\nemployees to be good. The mix of employees is changing as the Company employs more people in\ndeveloping countries where wage rates are lower and employee turnover tends to be higher than in\ndeveloped countries.\n

\n\n

Acquisitions\n

\n\n\n

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

\n\n

10\n

\n\n

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

\n\n\n

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

\n\n

(e) Information Available on the Internet\n

\n\n\n

The Company’s Corporate Internet address is http://www.bradycorp.com. The Company makes\navailable, free of charge, on or through its Internet website copies of its Annual Report on Form\n10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 reports filed by the\nCompany’s insiders, and amendments to all such reports as soon as reasonably practicable after such\nreports are electronically filed with or furnished to the SEC. The Company is not including the\ninformation contained on or available through its website as part of, or incorporating such\ninformation by reference into, this Annual Report on Form 10-K.\n

\n\n

Item 1A. Risk Factors\n

\n\n\n

Before making an investment decision with respect to the Company’s stock, you should carefully\nconsider the risks set forth below and all other information contained in this report. If any of\nthe events contemplated by the following risks actually occur, then the Company’s business,\nfinancial condition, results of operations, cash flow, or liquidity could be materially adversely\naffected.\n

\n\n

The Company’s operating results, cash flows, and liquidity are susceptible to uncertainties\narising from the length and severity of the current worldwide economic downturn, as well as the\ntiming and strength of the subsequent recovery.\n

\n\n

The global economic downturn has negatively impacted the Company’s sales volumes and results\nof operations. All of the segments and most of the major product lines, channels, and markets\nserved by the Company, have experienced significant declines in the current global economic\ndownturn. As a result of the slowing economy, the credit market crisis, declining consumer and\nbusiness confidence, increased unemployment, reduced levels of capital expenditures, fluctuating\ncommodity prices, bankruptcies, and other challenges affecting the global economy, customers may\nexperience deterioration of their businesses, cash flow shortages, and difficulty obtaining\nfinancing. As a result, customers already have reduced or canceled orders and may continue to\ndelay, cancel or further reduce their orders. In addition customers’ ability to pay their invoices\nmay be reduced resulting in increased past due receivables or bad debt. Further, the Company’s\nvendors may be experiencing similar conditions, which may impact their ability to fulfill their\nobligations leading to longer days sales outstanding. Although governments around the world are\nenacting various economic stimulus programs, there can be no assurance as to the timing or\neffectiveness of such programs. If the worldwide economic downturn continues for a significant\nperiod or there is further deterioration in the global economy, the Company’s results of\noperations, financial position, and cash flows could be materially adversely affected. In response\nto the severe downturn, the Company has reduced its worldwide workforce by approximately 25%. This\nmay cause disruptions in our operations, customer service, quality, and profitability.\n

\n\n

Market demand for the Company’s products may be susceptible to fluctuations in the economy\nthat may cause volatility in its results of operations, cash flows, and liquidity.\n

\n\n

Sales of the Company’s products may be susceptible to changes in general economic conditions,\nnamely general downturns in the regional economies in which the Company competes. The Company’s\nbusiness in the facility & safety identification and wire identification product lines tend to vary\nwith the nominal GDP of the local economies in which the Company manufactures and sells. As a\nresult, in periods of economic contraction, the business is likely to decline. In the\ncurrent economic downturn, the Company’s business has contracted severely, well in excess of GDP.\nIn addition, the significant drop in non-residential construction has impacted the Company’s MRO\nbusiness. In the precision die-cut and high performance label product lines, the Company may be\nadversely affected by reduced demand for products due to downturns in the global economy as this is\na more volatile business. This can result in higher degrees of volatility in the Company’s net\nsales, results of operations, cash flows, and liquidity. These more volatile markets include, but\nare not limited to, mobile telecommunication devices, hard disk drives and electronics in personal\ncomputers and other electronic devices.\n

\n\n

11\n

\n\n

Uncertainties in the global economy may put pressure on the Company’s ability to maintain\ncompliance with its debt covenants.\n

\n\n

The Company’s debt and revolving loan agreements require it to maintain certain financial\ncovenants. The June 2004, February 2006, and March 2007 debt agreements require the Company to\nmaintain a ratio of debt to the trailing twelve months 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). The October 2006 revolving loan agreement requires the Company to\nmaintain a ratio of debt to trailing twelve months EBITDA, as defined by the debt agreement, of not\nmore than a 3.0 to 1.0 ratio. Additionally, the revolving loan agreement requires the trailing\ntwelve months earnings before interest and taxes (“EBIT”) to interest expense of not less than a\n3.0 to 1.0 ratio (interest expense coverage). The debt agreements also require the aggregate net\nbook value of the assets sold or otherwise disposed of by the Company and its subsidiaries in all\ndispositions, as defined in the agreement, in any fiscal year of the Company shall not exceed 15%\nof consolidated tangible net worth. Depending on the severity and duration of the current global\neconomic crisis, uncertainties in the market may put pressure on the Company’s ability to maintain\ncompliance with its covenants.\n

\n\n

The Company may experience unforeseen tax consequences.\n

\n\n

The Company periodically reviews the probability of the realization of its deferred tax\nassets based on forecasts of taxable income in both the U.S. and foreign jurisdictions. As part\nof this review, the Company utilizes historical results, projected future operating results,\neligible carry forward periods, tax planning opportunities, and other relevant considerations.\nAdverse changes in profitability and financial outlook in both the U.S. and foreign jurisdictions,\nor changes in its geographic footprint may require changes in the valuation allowances to reduce\nits deferred tax assets or increase tax payments. Such changes could result in material non-cash\nexpenses in the period in which the changes are made and could have a material adverse impact on\nthe Company’s results of operations or financial condition.\n

\n\n

Income tax regulations may change, thus negatively impacting the Company’s future operating\nresults.\n

\n\n

The Company conducts business internationally. As a result, its financial results may be\nnegatively impacted by changes in international taxation rules in the United States. If United\nStates international tax law changes are enacted as currently outlined (for example, if the tax on\ndeferred income generated outside the U.S. were enacted), it may have a significant negative impact\non the Company’s reported financial results and cash flows from operations.\n

\n\n

The Company may be adversely impacted by an inability to identify, complete and integrate\nacquisitions.\n

\n\n

A large part of the Company’s growth since fiscal 2003 has come through acquisitions and a key\ncomponent of its growth strategy is based upon acquisitions. The Company may not be able to\nidentify acquisition targets or successfully complete acquisitions in the future due to the absence\nof quality companies, economic conditions, or price expectations from sellers. If the Company is\nunable to complete additional acquisitions, its growth may be limited.\n

\n\n

Additionally, as the Company grows through acquisitions, it will continue to place significant\ndemands on its management, operational and financial resources. Since the beginning of fiscal year\n2004, the Company has acquired 28 companies. These recent and future acquisitions will require\nintegration of sales and marketing, information technology, finance and administrative operations\nand information of the newly acquired business. The successful integration of acquisitions will\nrequire substantial attention from its management and the management of the acquired businesses,\nwhich could decrease the time management has to serve and attract customers. The Company cannot\nassure that it will be able to successfully integrate these recent or any future acquisitions, that\nthese acquisitions will operate profitably or that it will be able to achieve the financial or\noperational success expected from the acquisitions. The Company’s financial condition, cash flows\nand operational results could be adversely affected if it does not successfully integrate the newly\nacquired businesses or if its other businesses suffer on account of the increased focus on the\nnewly acquired businesses.\n

\n\n

12\n

\n\n

If the Company fails to develop new products or its customers do not accept the new products\nit develops, the Company’s business could be affected adversely.\n

\n\n

Development of proprietary products is key to the success of the Company’s core growth and\nhigh gross margins now and in the future. Therefore, the Company must continue to develop new and\ninnovative products and acquire and retain the necessary intellectual property rights in these\nproducts on an ongoing basis. If it fails to make innovations, launches products with quality\nproblems, or the market does not accept its new products, then the Company’s financial condition,\nresults of operations, cash flows, and liquidity could be adversely affected. The Company continues\nto invest in the development and marketing of new products. These expenditures do not always result\nin products that will be accepted by the market. Failure to develop successful new products may\nalso cause its customers to buy from a competitor or may cause the Company to lower its prices in\norder to compete. This could have an adverse impact on the Company’s profitability.\n

\n\n

The Company operates in competitive markets and may be forced to cut its prices or incur\nadditional costs to remain competitive, which may have a negative impact on its profitability.\n

\n\n

The Company faces substantial competition throughout its entire business, but particularly in\nthe precision die-cut business. Competition may force the Company to cut its prices or incur\nadditional costs to remain competitive. The Company competes on the basis of production\ncapabilities, engineering and R&D capabilities, materials expertise, its global footprint, customer\nservice and price. Present or future competitors may have greater financial, technical or other\nresources, lower production costs or other pricing advantages, any of which could put the Company\nat a disadvantage in the affected business by threatening its market share in some markets or\nreducing its profit margins. Additionally, in some of its other businesses, the Company’s\ndistributors/customers may seek lower cost sourcing opportunities, which could cause a loss of\nbusiness that may adversely impact the Company’s revenues.\n

\n\n

Foreign currency fluctuations could adversely affect the Company’s sales, profits, and cash\nbalances.\n

\n\n

More than 60 percent of the Company’s revenues are derived outside the United States. As\nsuch, fluctuations in foreign currency exchange rates can have an adverse impact on its sales and\nprofits as amounts that are measured in foreign currency are translated back to U.S. dollars. Any\nincrease in the value of the U.S. dollar in relation to the value of the local currency will\nadversely affect operating results from the Company’s foreign operations when translated into U.S.\ndollars. Similarly, any decrease in the value of the U.S. dollar in relation to the value of the\nlocal currency will increase operating results in the Company’s foreign operations when translated\ninto U.S. dollars. During fiscal year 2009, the strengthening U.S. dollar versus the majority of\nother currencies decreased sales by approximately $73.2 million.\n

\n\n

As of July 31, 2009, approximately 79% of the Company’s cash and cash equivalents were held\noutside the United States. As a result, fluctuations in foreign currency can have an adverse\nimpact on the Company’s cash balances. Any increase in the value of the U.S. dollar in relation\nto the value of various foreign currencies will have a negative impact on cash balances when\ntranslated into U.S. dollars. Weakening of the U.S. dollar against foreign currencies will have a\npositive impact on cash balances when foreign currencies are translated into U.S. dollars.\n

\n\n

The Company’s goodwill or other intangible assets may become impaired, which may negatively\nimpact its results of operations.\n

\n\n

The Company has a substantial amount of goodwill and other intangible assets on its balance\nsheet as a result of its acquisitions. As of July 31, 2009, the Company had $751.2 million of\ngoodwill on its balance sheet, representing the excess of the total purchase price for its\nacquisitions over the fair value of the net assets it acquired, and $115.8 million of other\nintangible assets, primarily representing the fair value of the customer relationships, patents\nand trademarks it acquired in its acquisitions. At July 31, 2009, goodwill and other intangible\nassets represented approximately 54.8% of its total assets. The Company evaluates goodwill at\nleast annually for impairment based on the fair value of each operating segment. It assesses the\nimpairment of other intangible assets at least annually based upon the expected future cash flows\nof the respective assets. These valuations include management’s estimates of sales,\nprofitability, cash flow generation, capital structure, cost of debt, interest rates, capital\nexpenditures, and other assumptions. A worldwide economic downturn, credit crisis, or uncertainty\nin the\n

\n\n

13\n

\n\n\n\n

markets the Company serves can adversely impact the assumptions in these valuations. If the\nestimated fair values of the Company’s operating segments change in future periods, it may be\nrequired to record an impairment charge related to goodwill or other intangible assets, which\nwould have the effect of decreasing its earnings in such period.\n

\n\n

The Company has a concentration of business with several large key customers and distributors\nand loss of one or more of these customers could significantly affect the Company’s results of\noperations, cash flows, and liquidity.\n

\n\n

Several of the Company’s large key customers in the precision die-cut business together\ncomprise a significant portion of its revenues. The Company’s largest customer represents\napproximately 6% of its net sales. Additionally, the Company does business with several large\ndistribution companies. The Company’s dependence on these large customers makes its relationships\nwith these customers important to its business. The Company cannot guarantee that it will be able\nto maintain these relationships and retain this business in the future. Because these large\ncustomers account for a significant portion of the Company’s revenues, they possess relatively\ngreater capacity to negotiate a reduction in the prices the Company charges for its products. If\nthe Company is unable to provide products to its customers at the quality and prices acceptable to\nthem or adapt to technological changes, some of its customers may in the future elect to shift some\nor all of this business to competitors or to substitute other manufacturer’s products. If one of\nthe Company’s key customers consolidates, is acquired by another company or loses market share, the\nresult of that event may have an adverse impact on the Company’s business. The loss of or\nreduction of business from one or more of these large key customers could have a material adverse\nimpact on the Company’s financial condition, results of operations, cash flows, and liquidity.\n

\n\n

The Company increasingly conducts a sizable amount of its manufacturing outside of the United\nStates, which may present additional risks to its business.\n

\n\n

As a result of its strong growth in developing economies, particularly in Asia, a significant\nportion of the Company’s sales are attributable to products manufactured outside of the United\nStates. More than half of the Company’s approximately 6,800 employees and more than half of its\nmanufacturing locations are outside of the United States. The Company’s international operations\nare generally subject to various risks including political, economic and societal instability, the\nimposition of trade restrictions, local labor market conditions, the effects of income taxes, and\ndifferences in business practices. The Company may incur increased costs and experience delays or\ndisruptions in product deliveries and payments in connection with international manufacturing and\nsales that could cause loss of revenue. Unfavorable changes in the political, regulatory and\nbusiness climate in countries where the Company has operations could have a material adverse effect\non its financial condition, results of operations, and cash flows.\n

\n\n

The Company depends on its key personnel and the loss of these personnel could have an\nadverse effect on the Company’s operations.\n

\n\n

The Company’s success depends to a large extent upon the continued services of its key\nexecutives, managers and other skilled personnel. The Company cannot ensure that it will be able to\nretain its key officers and employees. The departure of key personnel without adequate replacement\ncould severely disrupt business operations. Additionally, the Company needs qualified managers and\nskilled employees with technical and manufacturing industry experience to operate its business\nsuccessfully. If it is unable to attract and retain qualified individuals or the costs to do so\nincrease significantly, the Company’s operations would be materially adversely affected. Due to\nthe severe economic downturn, the Company reduced its workforce by approximately 25%. While the\nCompany believes it can adequately operate the business at current staffing levels, sudden changes\nin demand may be difficult to react to with a reduced workforce. Additionally, the potential\nimpact of a serious virus such as H1N1 may affect the Company’s workforce and its ability to\noperate the business successfully.\n

\n\n

The Company may be unable to successfully implement anticipated changes to its information\ntechnology system.\n

\n\n

The Company is in the process of upgrading certain portions of its information technology.\nPart of this upgrade includes continued implementations of SAP and additional functionality for\nfinancial systems. The Company expects that these migrations will enable it to more effectively and\nefficiently manage its operations and further improve business\nprocesses. The Company is also in the process of upgrading its\n

\n\n

14\n

\n\n\n\n

e-business and\nsales force applications in fiscal 2010. The Company expects these upgrades will enable\nimprovements of its on-line business and increase productivity. The Company’s failure to\nsuccessfully manage these improvements as scheduled could cause it to incur unexpected costs or to\nlose customers or sales, which could have a material adverse effect on its financial results.\n

\n\n

An increase in the Company’s level of indebtedness could adversely affect its financial\nhealth and make it vulnerable to adverse economic conditions.\n

\n\n

Any increase in the Company’s level of indebtedness, which historically has occurred to\nfinance acquisitions and for other general corporate purposes, could have adverse consequences,\nsuch as:\n

\n\n

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

	•		it may be difficult for the Company to fulfill its obligations under its credit or other\ndebt agreements;

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

	•		the Company may be more vulnerable to future interest rate fluctuations;

	•		the Company may be required to dedicate a substantial portion of its cash flows to\nservice its debt, thereby reducing the amount of cash available to fund new product\ndevelopment, capital expenditures, working capital and other general corporate activities;

	•		it may place the Company at a competitive disadvantage relative to its competitors that\nhave less debt; and

	•		it may limit the Company’s flexibility in planning for and reacting to changes in its\nbusiness.

\n\n

Environmental, health and safety laws and regulations could adversely affect the Company’s\nbusiness.\n

\n\n

The Company’s facilities and operations are subject to numerous laws and regulations relating\nto air emissions, wastewater discharges, the handling of hazardous materials and wastes,\nmanufacturing and disposal of certain materials, and regulations otherwise relating to health,\nsafety and the protection of the environment. The Company’s products may also be governed by\nregulations in the countries where they are sold. As a result, the Company may need to devote\nmanagement time or expend significant resources on compliance, and has incurred and will continue\nto incur capital and other expenditures to comply with these regulations. Any significant costs may\nhave a material adverse impact on the Company’s financial condition, results of operations or cash\nflows. Further, these laws and regulations are constantly evolving and it is impossible to predict\naccurately the effect they may have upon the Company’s financial condition, results of operations\nor cash flows.\n

\n\n

The Company’s businesses are subject to regulation; failure to comply with those regulations\ncould adversely affect its financial condition, results of operations and reputation.\n

\n\n

In addition to the environmental regulations noted above, the Company’s businesses are subject\nto extensive regulation by U.S. and non-U.S. governmental and self-regulatory entities at the\nfederal, state and local levels, including the following:\n

\n\n

The Company is required to comply with various import laws and export control and economic\nsanctions laws, which may affect its transactions with certain customers, business partners and\nother persons and dealings with or between its employees and subsidiaries. In certain\ncircumstances, export control and economic sanctions regulations may prohibit the export of certain\nproducts, services and technologies, and in other circumstances the Company may be required to\nobtain an export license before exporting the controlled item.\n

\n\n

The Company also has agreements relating to the sale of products to government entities or\nsupply products to companies who resell these products to government entities and are subject to\nvarious statutes and regulations that apply to companies doing business with the government. The\nlaws governing government contracts differ from the laws governing private contracts. The Company\nis also subject to investigation and audit for compliance with the\nrequirements governing government contracts, including requirements related to procurement integrity, export\n

\n\n

15\n

\n\n\n\n

control, employment practices, the accuracy of records and the recording of\ncosts. A failure to comply with these requirements might result in suspension of these contracts\nand suspension or debarment from government contracting or subcontracting.\n

\n\n

The Company may be unable to successfully complete its restructuring plans to reduce costs and increase efficiencies in its businesses and, therefore, it may not achieve projected financial statement benefits.\n\n\n

\n\n\n

The Company continues to initiate several measures to address its cost structure and projected operational and market requirements. Successful implementation of such initiatives is critical to the Company’s future\ncompetitiveness and its ability to improve profitability. Further actions to reduce the Company’s cost structure and the charges related to these actions may have a material adverse effect on the Company’s results of operations and financial condition.\n

\n\n

Item 1B. Unresolved Staff Comments\n

\n\n\n

None.\n

\n\n

Item 2. Properties\n

\n\n\n

The Company currently operates 59 manufacturing or distribution facilities in the following\nregions:\n

\n\n

Americas: Sixteen are located in the United States; three in Brazil, two in Mexico; and one\nin Canada.\n

\n\n

Europe: Four each located in the United Kingdom and Germany; three each located in Belgium\nand France; two each in Italy and the Netherlands; and one each in Norway, Poland, and Sweden.\n

\n\n

Asia-Pacific: Seven are located in China; three in Australia; and one each in Japan,\nThailand, Singapore, India, South Korea, and Malaysia.\n

\n\n

The Company’s present operating facilities contain a total of approximately 3.5 million square\nfeet of space, of which approximately 2.4 million square feet is leased. The Company believes that\nits equipment and facilities are modern, well maintained and adequate for present needs.\n

\n\n

Item 3. Legal Proceedings\n

\n\n\n

The Company is, and may in the future be, party to litigation arising in the normal course of\nbusiness. The Company is not currently a party to any material pending legal proceedings in which\nmanagement believes the ultimate resolution would have a material adverse effect on the Company’s\nconsolidated financial statements.\n

\n\n

Item 4. Submission of Matters to a Vote of Security Holders\n

\n\n\n

There were no matters submitted to a vote of security holders during the fourth quarter of the\nfiscal year ended July 31, 2009.\n

\n\n

See Part II, Item 9B for a description of actions taken by unanimous written consent of the\nholders of the Company’s Class B Voting Common Stock on September 24, 2009.\n

\n\n

16\n

\n\n

PART II\n

\n\n

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

\n\n\n

(a) Market Information\n\n

\n\n

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


	2009		2008	2007
	High		Low	High		Low	High		Low
4th Quarter	$	29.41		$	21.33		$	39.04		$	32.99	$	37.73	$	32.73
3rd Quarter	$	23.08		$	14.61		$	34.00		$	28.58	$	38.37	$	30.91
2nd Quarter	$	31.07		$	16.38		$	40.03		$	29.44	$	40.52	$	35.70
1st Quarter	$	39.68		$	25.18		$	43.78		$	34.04	$	38.68	$	33.16

\n\n\n

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

\n\n

(b) Holders\n

\n\n\n

As\nof September 23, 2009, there were 715 Class A Common Stock shareholders of record and\napproximately 4,100 beneficial shareholders. There are three Class B Common Stock shareholders.\n

\n\n

(c) Issuer Purchases of Equity Securities\n

\n\n\n

No share repurchases were made in the quarter ended July 31, 2009.\n

\n\n

(d) Dividends\n

\n\n\n

The Company has followed a practice of paying quarterly dividends on outstanding common stock.\nBefore any dividend may be paid on the Class B Common Stock, holders of the Class A Common Stock\nare entitled to receive an annual, noncumulative cash dividend of $0.01665 per share (subject to\nadjustment in the event of future stock splits, stock dividends or similar events involving shares\nof Class A Common Stock). Thereafter, any further dividend in that fiscal year must be paid on all\nshares of Class A Common Stock and Class B Common Stock on an equal basis. The Company’s revolving\ncredit agreement restricts the amount of certain types of payments, including dividends, that can\nbe made annually to $50 million plus 75% of the consolidated net\nincome excluding all extraordinary non-cash items for the prior fiscal year.\nThe Company believes that based on its historic dividend practice, this restriction will not impede\nit in following a similar dividend practice in the future.\n

\n\n

During the two most recent fiscal years and for the first quarter of fiscal 2010, the Company\ndeclared the following dividends per share on its Class A and Class B Common Stock for the years\nended July 31:\n


	2010		2009	2008
	1st Qtr		1st Qtr	2nd Qtr		3rd Qtr	4th Qtr		1st Qtr	2nd Qtr		3rd Qtr	4th Qtr
Class A	$	0.175		$	0.17		$	0.17		$	0.17		$	0.17	$	0.15	$	0.15	$	0.15	$	0.15
Class B		0.15835			0.15335			0.17			0.17			0.17		0.13335		0.15		0.15		0.15

\n\n\n

17\n

\n\n\n

(e) Common Stock Price Performance Graph\n

\n\n\n

The graph below shows a comparison of the cumulative return over the last five fiscal years\nhad $100 been invested at the close of business on July 31, 2004, in each of Brady Corporation\nClass A Common Stock, The Standard & Poor’s (S&P) 500 index, the Standard and Poor’s SmallCap 600\nindex, and the Russell 2000 index.\n

\n\n

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

\n\n\n

$\"(PERFORMANCE$ \n\n

\n\n\n

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


*		$100 invested on 7/31/04 in stock or index — including reinvestment of dividends. Fiscal year ended July 31.

\n\n\n


	7/31/2004		7/31/2005	7/31/2006		7/31/2007	7/31/2008		7/31/2009
Brady Corporation		100.00			153.59			153.94		162.08	172.85	142.48
S&P 500 Index		100.00			114.05			120.19		139.58	124.10	99.33
S&P SmallCap 600 Index		100.00			127.25			132.04		150.66	138.19	111.57
Russell 2000 Index		100.00			124.78			130.08		145.84	136.05	108.06

\n\n\n

\n\n\n\n\n

18\n

\n\n\n\n

\n\n

Item 6. Selected Financial Data\n

\n\n\n\n

CONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL DATA
\n\nYears Ended July 31, 2005 through 2009\n

\n\n\n


	2009			2008			2007		2006		2005
	(In thousands, except per share amounts)
Operating Data (1)
Net Sales	$	1,208,702			$	1,523,016		$	1,362,631		$	1,018,436		$	816,447
Gross Margin		577,583				744,195			657,044			525,755			433,276
Operating Expenses:
Research and development		34,181				40,607			35,954			30,443			25,078
Selling, general and administrative		397,180				495,904			449,103			338,796			285,746
Restructuring charge (2)		25,849				—			—			—			—

Total operating expenses		457,210				536,511			485,057			369,239			310,824

Operating Income		120,373				207,684			171,987			156,516			122,452
Other Income (Expense):
Investment and other income — net		1,800				4,888			2,875			2,403			1,369
Interest expense		(24,901	)			(26,385	)		(22,934	)		(14,231	)		(8,403	)

Net other expense		(23,101	)			(21,497	)		(20,059	)		(11,828	)		(7,034	)

Income before income taxes		97,272				186,187			151,928			144,688			115,418
Income Taxes (2)		27,150				53,999			42,540			40,513			33,471

Net Income	$	70,122			$	132,188		$	109,388		$	104,175		$	81,947

Net Income Per Common Share — (Diluted):
Class A nonvoting	$	1.33			$	2.41		$	2.00		$	2.07		$	1.64
Class B voting	$	1.31			$	2.39		$	1.98		$	2.05		$	1.63
Cash Dividends on:
Class A common stock	$	0.68			$	0.60		$	0.56		$	0.52		$	0.44
Class B common stock	$	0.66			$	0.58		$	0.54		$	0.50		$	0.42
Balance Sheet at July 31:
Working capital	$	286,955			$	390,524		$	303,359		$	240,537		$	141,560
Total assets		1,583,267				1,850,513			1,698,857			1,365,186			850,147
Long-term obligations, less current maturities		346,457				457,143			478,575			350,018			150,026
Stockholders’ investment		951,092				1,021,808			891,012			746,046			497,274
Cash Flow Data:
Net cash provided by operating activities		126,645				225,554			136,018			114,896			119,103
Depreciation and amortization		54,851				60,587			53,856			35,144			26,822
Capital expenditures		(24,027	)			(26,407	)		(51,940	)		(39,410	)		(21,920	)

\n\n\n\n\n

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


(1)		Financial data has been impacted by the acquisitive nature of the\nCompany as two, seven, eleven and four acquisitions were completed in\nfiscal years ended July 31, 2008, 2007, 2006 and 2005, respectively.\nThere were no acquisitions in fiscal 2009. See Note 2 in Item 8 for\nfurther information on the acquisitions that were completed in each of\nthe years.

(2)		In fiscal 2009, in response to the global economic downturn, the\nCompany initiated several measures to address its cost structure,\nincluding the reduction in its workforce and decreased discretionary\nspending. In addition to the restructuring charges, $1.6 million of\nincome tax expense was incurred related to the anticipated repayment\nof certain tax holidays due to site consolidation actions.

\n\n\n

19\n

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

\n\n

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

\n\n\n

Overview\n\n

\n\n

In fiscal 2009, the Company posted sales of $1,208.7 million and net income of $70.1 million,\na decrease of 20.6% and 47.0%, respectively, from fiscal 2008. Of the 20.6% decrease in sales,\norganic sales declined 16.4%, the effects of fluctuations in the exchange rates used to translate\nfinancial results into the United States dollar reduced sales by 4.8%, partially offset by a 0.6%\nincrease from acquisitions. Regionally, sales in the Americas, Europe, and Asia-Pacific decreased\n19.9%, 26.1%, and 14.5%, respectively.\n

\n\n

Net income for fiscal 2009 declined 47.0% to $70.1 million or $1.33 per diluted share of Class\nA Common Stock, compared to $132.2 million, or $2.41 per diluted share of Class A Common Stock in\nfiscal 2008. Fiscal 2009 net income before restructuring related expenses was $90.3 million, or\n$1.71 per diluted share of Class A Common Stock.\n

\n\n

In fiscal 2009, the Company generated $126.6 million of cash from operations, a decrease of\n$98.9 million from the prior fiscal year. The decrease was the result of decreased net income as\ndiscussed above and the increase in working capital. The increase in working capital was due to\nthe decrease in other current liabilities resulting from the cash payment of the fiscal 2008 bonus\nand the elimination of the fiscal 2009 bonus accrual, offset by decreases in inventory and accounts\nreceivable.\n

\n\n

Results of Operations\n

\n\n\n

Year Ended July 31, 2009, Compared to Year Ended July 31, 2008\n\n

\n\n

The comparability of the operating results for the fiscal years ended July 31, 2009 to July\n31, 2008, has been impacted by the annualized impact of the following acquisitions completed in\nfiscal 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

Fiscal 2009 sales decreased $314.3 million, or 20.6% from fiscal 2008. Organic sales, defined\nas sales in the Company’s existing core businesses and regions (exclusive of acquisitions owned\nless than one year and foreign currency translation effects), were down 16.4% compared to fiscal\n2008. The decrease in organic sales was primarily due to the effects of the economic downturn in\nfiscal 2009. The acquisitions listed above increased sales by $9.0 million or 0.6% in fiscal 2009.\nFluctuations in the exchange rates used to translate financial results into the United States\nDollar decreased sales by $73.2 million or 4.8% for the year.\n

\n\n

The gross margin as a percentage of sales decreased to 47.8% in fiscal 2009 from 48.9% in\nfiscal 2008. The decrease in gross margin as a percentage of sales was primarily due to the sales\ndecline, partially offset by the result of cost reduction actions taken during fiscal 2008 and\nfiscal 2009.\n

\n\n

Research and development expenses decreased to $34.2 million in fiscal 2009 from $40.6 million\nin fiscal 2008, and increased slightly as a percentage of sales in fiscal 2009 to 2.8% compared to\n2.7% in fiscal 2008, reflecting the reduced discretionary spending and the Company’s continued\ncommitment to investing in new product development.\n

\n\n

Selling, general, and administrative (“SG&A”) expenses decreased to $397.2 million in fiscal\n2009 as compared to $495.9 million in fiscal 2008. The decrease in SG&A expenses was primarily\nrelated to the savings resulting from restructuring activities that took place during fiscal 2009,\na decline in discretionary spending, and reduced incentive compensation expense compared to the\nprior year. As a percentage of sales, SG&A increased to 32.9% in fiscal 2009 from 32.6% in fiscal\n2008.\n

\n\n

Restructuring charges were $25.8 million during fiscal 2009. Additionally, $1.6 million of\nincome tax expense was also incurred related to the anticipated repayment of certain tax holidays\ndue to site consolidation actions. In response to the global economic downturn, the\n

\n\n

20\n

\n\n\n\n\n

Company implemented\na plan to reduce its cost\nstructure. During fiscal 2009, the Company incurred costs related to the reduction of its\nworkforce and facility consolidations. Restructuring costs related primarily to employee\nseparation costs, consisting of severance pay, outplacement services, medical, and other related\nbenefits for approximately 25 percent of the Company’s work\nforce.\n

\n\n

Other income decreased $3.1 million in fiscal 2009 to $1.8 million from $4.9 million in the\nprior year. The income recorded in fiscal 2009 and fiscal 2008 was primarily due to interest\nincome earned on cash and marketable securities investments. The $1.8 million of other income\nrecorded in fiscal 2009 consisted of $2.5 million of interest income and $0.9 million in foreign\nexchange gains, partially offset by the $1.6 million loss of securities held in executive deferred\ncompensation plans. The decrease in interest income in fiscal 2009 was the result of both lower\ninterest rates and decreased cash generated from the operating activities and lower average cash\nbalances.\n

\n\n

Interest expense decreased to $24.9 million from $26.4 million for fiscal 2009 as compared to\nfiscal 2008. In fiscal 2009, the Company repaid approximately $87.2 million of debt. As a result\nof the lower principle balance under the related debt agreement, the Company’s interest expense\ndecreased as compared to the prior year.\n

\n\n

The Company’s effective tax rate was 27.9% for fiscal 2009 as compared to 29.0% for fiscal\n2008. The decreased tax rate in fiscal 2009 was primarily due to decreased profits in higher tax\ncountries.\n

\n\n

Net income for the fiscal year ended July 31, 2009, decreased 47% to $70.1 million, compared\nto $132.2 million for the fiscal year ended July 31, 2008, as a result of the factors noted above.\nNet income as a percentage of sales decreased to 5.8% from 8.7% for the fiscal year ended July\n31, 2009 compared the same period in the prior year. Diluted net income per share decreased\n44.8% to $1.33 per share for fiscal 2009 compared to $2.41 per share for the fiscal year ended\nJuly 31, 2008. Fiscal 2009 net income before restructuring related expenses was $90.3 million, or\n$1.71 per diluted share of Class A Common Stock.\n

\n\n

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

\n\n\n

The comparability of the operating results for the fiscal years ended July 31, 2008 to July\n31, 2007, has been impacted by the following acquisitions completed in fiscal 2008, as well as the\nannualized impact of the acquisitions completed in fiscal 2007.\n

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


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

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

\n\n

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

\n\n

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

\n\n

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

\n\n\n

21\n

\n\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

Business Segment Operating Results\n

\n\n\n

The Company is organized and managed on a geographic basis by region. Each of these regions,\nAmericas, Europe and Asia Pacific, has a President that reports directly to the Company’s chief\noperating decision maker, its Chief Executive Officer. Each region has its own distinct operations,\nis managed locally by its own management team, maintains its own financial reports and is evaluated\nbased on regional segment profit. In applying the criteria set forth in Statement of Financial\nAccounting Standards (“SFAS”) No. 131 “Disclosures about Segments of an Enterprise and Related\nInformation,” the Company has determined that these regions comprise its reportable segments based\non the information used by the Chief Executive Officer to allocate resources and assess\nperformance. Segment results are as follows:\n


							Asia-		Total	Corporate and		Total
(Dollars in thousands)	Americas		Europe	Pacific		Regions	Eliminations		Company
SALES TO EXTERNAL\nCUSTOMERS
Years ended:
July 31, 2009	$	534,440		$	367,156		$	307,106		$	1,208,702		$	—	$	1,208,702
July 31, 2008		667,106			496,715			359,195			1,523,016			—		1,523,016
July 31, 2007		609,855			416,514			336,262			1,362,631			—		1,362,631
SALES GROWTH\nINFORMATION
Year ended July 31, 2009:
Organic		(18.5	)%		(18.1	)%		(10.3	)%		(16.4	)%		—		(16.4)	%
Currency		(1.7	)%		(9.4	)%		(4.2	)%		(4.8	)%		—		(4.8)	%
Acquisitions		0.3	%		1.4	%		0.0	%		0.6	%		—		(0.6)	%
Total		(19.9	)%		(26.1	)%		(14.5	)%		(20.6	)%		—		(20.6)	%
Year ended July 31, 2008:
Organic		0.9	%		(0.4	)%		(1.1	)%		0.0	%		—		0.0	%
Currency		2.0	%		10.6	%		7.6	%		6.0	%		—		6.0	%
Acquisitions		6.5	%		9.1	%		0.3	%		5.8	%		—		5.8	%
Total		9.4	%		19.3	%		6.8	%		11.8	%		—		11.8	%

\n\n

\n\n\n

22\n

\n\n


							Asia-		Total			Corporate and		Total
(Dollars in thousands)	Americas		Europe			Pacific		Regions		Eliminations			Company
SEGMENT PROFIT
Years ended:
July 31, 2009	$	114,404		$	99,875		$	42,575		$	256,854			$ (7,952	)	$	248,903
July 31, 2008		157,523			135,426			58,234			351,183			(9,048	)		342,135
July 31, 2007		144,583			107,552			57,236			309,371			(10,485	)		298,886

\n\n\n

NET INCOME RECONCILIATION\n

\n\n


	Years ended:
	July 31,			July 31,			July 31,
(Dollars in thousands)	2009			2008			2007
Total profit for reportable segments	$	256,854			$	351,183		$	309,371
Corporate and eliminations		(7,952	)			(9,048	)		(10,485	)
Unallocated amounts:
Administrative costs		(102,680	)			(134,451	)		(126,899	)
Restructuring costs		(25,849	)			—			—
Investment and other income — net		1,800				4,888			2,875
Interest expense		(24,901	)			(26,385	)		(22,934	)

Income before income taxes		97,272				186,187			151,928
Income taxes (1)		(27,150	)			(53,999	)		(42,540	)

Net income	$	70,122			$	132,188		$	109,388

\n\n\n\n

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


(1)		In fiscal 2009, in response to the global economic downturn, the\nCompany initiated several measures to address its cost structure,\nincluding the reduction in its workforce and decreased discretionary\nspending. In addition to the restructuring charges, $1.6 million of\nincome tax expense was incurred related to the anticipated repayment\nof certain tax holidays due to site consolidation actions.

\n\n\n\n

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

\n\n

Americas\n

\n\n\n

Sales in the Americas region decreased 19.9% from fiscal 2008 to fiscal 2009, and increased\n9.4% from fiscal 2007 to fiscal 2008. Organic sales declined 18.5% in 2009 and grew 0.9% in 2008.\nThe segment experienced declines in organic sales in fiscal 2009 due to the global economic\ndownturn. The decrease in sales also resulted from the declining volumes of the manufacturing and\nconstruction sectors, as well as the impact of declining inventories of the Company’s distribution\npartners and other customers. The organic growth in fiscal 2008 was due to strong performance in\nthe education and OEM markets, offset partially by the softness in the manufacturing, construction,\nand utility markets. The acquisition of DAWG, Inc. (“DAWG”) in fiscal 2008 added 0.3% to fiscal\n2009 sales. The acquisitions of Comprehensive Identification Products, Inc. (“CIPI”), Precision\nConverters L.P (“Precision Converters”), Scafftag Ltd., Safetrak, Ltd. And Scafftag Pty., Ltd\n(collectively “Scafftag”), Asterisco Artes Graficas Ltda. (“Asterisco”), Clement Communications,\nInc. (“Clement”) and Sorbent Products Co., Inc. (“SPC) in fiscal 2007 and DAWG in fiscal 2008 added\n6.5% to fiscal 2008 sales. Fluctuations in the exchange rates used to translate financial results\ninto U.S. dollars decreased sales in the segment by 1.7% in fiscal 2009 and increased sales by 2.0%\nin fiscal 2008, when compared to the prior fiscal years.\n

\n\n

In the Americas region, segment profit decreased 27.4% to $114.4 million in fiscal 2009 from\n$157.5 million in fiscal 2008. Segment profit as a percentage of sales decreased to 21.4% in 2009\nfrom 23.6% in 2008. This decrease was primarily due to the decrease in sales volume, impacting the\nsegment’s ability to absorb fixed costs. Cost savings partially offset this decrease. Costs\nsavings came from the restructuring activities in addition to reductions in discretionary spending.\nComparing fiscal 2008 to 2007, segment profit as a percentage of sales decreased slightly to 23.6%\nin 2008 from 23.7% in 2007. This decrease was primarily due to the slowing growth in high margin\norganic sales during fiscal 2008, mostly offset by cost control efforts and improvements made in\nthe prior year to lower performing businesses.\n

\n\n

23\n

\n\n

Europe\n

\n\n\n

Sales in the European region decreased 26.1% in fiscal 2009 from fiscal 2008, and increased\n19.3% in fiscal 2008 from fiscal 2007. Organic sales declined 18.1% in fiscal 2009 and 0.4% in\nfiscal 2008 as compared to prior years. The segment’s organic sales continued to be adversely\nimpacted by the global economic downturn in fiscal 2009. Organic sales in the private sector to\nthe automotive and electronics markets declined in the Europe segment, with sales to governments\nand public utilities partially offsetting these declines. The decline in organic sales in\nfiscal 2008 was primarily the result of a weakening European economy as well as tough comparables\nover the prior year due to the implementation of “No Smoking” legislation in the U.K. and France,\nas these sales did not recur in fiscal 2008. Sales were negatively affected by fluctuations in\nthe exchange rates used to translate financial results into the United States dollar, which\ndecreased sales within the segment by 9.4% in fiscal 2009. Foreign currency translation increased\nthe segment’s sales 10.6% in 2008. The acquisition of Transposafe Systems B.V. and Holland\nMounting Systems B.V. (collectively “Transposafe”) in fiscal 2008 added 1.4% to the region’s sales\nin fiscal 2009 and the acquisitions of CIPI, Scafftag, Modernotecnica SpA (“Moderno”), and SPC in\nfiscal 2007 and Transposafe in fiscal 2008 added 9.1% to the region’s sales in fiscal 2008.\n

\n\n

In the Europe region, segment profit decreased 26.3% to $99.9 million in fiscal 2009 from\n$135.4 million in fiscal 2008. Segment profit as a percentage of sales decreased slightly to 27.2%\nin fiscal 2009 from 27.3% in fiscal 2008. The decline in segment profit in fiscal 2009 was\nattributable to the declining sales volumes and the impact of foreign currency translation. In\nresponse to the sales downturn, the segment implemented various cost saving measures during fiscal\nyear 2009 that have generated savings to partially offset the impact of lower sales volumes.\nComparing fiscal 2008 to 2007, segment profit as a percentage of sales increased to 27.3% in 2008\nfrom 25.8% in 2007. The increase in segment profit in fiscal 2008 was driven by the sales\nincreases noted above in addition to the realization of savings from cost reduction activities\ntaken at the end of fiscal 2007.\n

\n\n

Asia-Pacific\n

\n\n\n

Asia-Pacific sales decreased 14.5% in fiscal 2009, and increased 6.8% in fiscal 2008 from\nfiscal 2007. Organic sales declined 10.3% in fiscal 2009 and declined 1.1% in fiscal 2008. The\ndecline in organic sales in fiscal 2009 was primarily due to the overall decline in the electronics\nand mobile handset markets and aggressive pricing demands from customers, slightly offset by\nincreased demand for MRO products to support infrastructure development sponsored by government\nstimulus spending in the region. The decline in organic sales in fiscal 2008 primarily resulted\nfrom a drop in sales to OEM customers in the mobile handset market, in addition to the competitive,\nless profitable business the Company chose to deemphasize. Declines in the mobile handset business\nwere partially offset by solid growth in the smaller business lines of high performance labels,\nsafety and facility identification, and hard disk drives during fiscal 2008. Foreign currency\ntranslation decreased the region’s sales by 4.2% from fiscal 2009 and increased the region’s sales\nby 7.6% in fiscal 2008, as compared to prior years.\n

\n\n

In the Asia-Pacific region, segment profit decreased 26.9% to $42.6 million in fiscal 2009\nfrom $58.2 million in fiscal 2008. Segment profit as a percentage of sales decreased to 13.9% in\nfiscal 2009 from 16.2% in fiscal 2008. The decline in the profit in fiscal 2009 was primarily the\nresult of decreased sales, offset by savings generated from restructuring activities, shortened\nwork weeks, and reduced discretionary spending. Comparing fiscal 2008 to 2007, segment profit as a\npercentage of sales declined to 16.2% in 2008 from 17.0% in 2007. The decline in segment profit\nas a percentage of sales in fiscal 2008 was due to the industry mix shift from high-end, feature\nrich mobile phones to low-end basic mobile phones and continued pricing pressures within the mobile\nhandset supply chain, partially offset by activities initiated in fiscal 2007.\n

\n\n

Liquidity and Capital Resources\n

\n\n\n

Cash and cash equivalents were $188.2 million at July 31, 2009, compared to $258.4 million at\nJuly 31, 2008. The decrease in the cash of $70.2 million was the result of cash provided by\noperations of $126.6 million, offset by cash used in investing activities of $19.0 million, cash\nused in financing activities of $160.3 million, including $87.2 million related to debt payments,\n$40.3 million related to the repurchase of treasury stock, and $35.8 million dividend payments, and\nthe effects on the fluctuations of the U.S. dollar against other currencies, which negatively\nimpacted cash in the amount of $17.5 million during fiscal 2009.\n

\n\n

24\n

\n\n

Accounts receivable balances decreased $71.3 million from July 31, 2008 to July 31, 2009. The\ndecrease in accounts receivable was due primarily to the decline in sales volumes and the impact of\nforeign currency translation on the Company’s foreign accounts receivables. Inventories decreased\n$40.8 million from July 31, 2008 to July 31, 2009 due to reduced business activity, focused\ninventory reduction initiatives, and the impact of foreign currency translation. Current\nliabilities decreased $86.1 million over the same period primarily due to a reduction in wages\npayable resulting from reduced headcount, cancellation of incentive compensation plans for fiscal\n2009, and reduction of accrued income taxes, offset by an increase in the Company’s current\nmaturities on long term debt.\n

\n\n

The Company has maintained strong operating cash flow, which totaled $126.6 million for fiscal\n2009, $225.6 million for fiscal 2008 and $136.0 million for fiscal 2007. The decrease in operating\ncash flow from fiscal 2008 to fiscal 2009 was the result of a decline in net income of $62.1\nmillion and the changes in working capital discussed above.\n

\n\n

The Company did not complete any acquisitions during fiscal 2009, compared to $29.3 million\nand $159.5 million of cash used for acquisitions in fiscal 2008 and 2007, respectively. The\nCompany has reached a settlement with the former owners of Tradex related to the purchase price of\nthe Tradex acquisition. The Company received approximately $3.5 million as the result of the\nsettlement during fiscal 2009. Payments of $0.7 million and $0.7 million were made during fiscal\n2009 to satisfy the earnout and holdback liabilities of the Transposafe and Asterisco acquisitions,\nrespectively. Contingent consideration payments of $4.4 million, $1.2 million, and $0.2 million\nwere made during fiscal 2008 to satisfy the earnout and holdback liabilities of the fiscal 2006\nacquisitions of Daewon Industry Corporation and STOPware, Inc., and the fiscal 2007 acquisition of\nAsterisco, respectively.\n

\n\n

Capital expenditures were $24.0 million in fiscal 2009, $26.4 million in fiscal 2008 and $51.9\nmillion in fiscal 2007. Capital expenditures in fiscal 2009 were similar to fiscal 2008 reflecting\na normalized spend rate. The Company’s capital expenditures slowed in fiscal 2008, following two\nyears of significant spending due to the global implementation of SAP in addition to the expansion\nof facilities in various countries. Fiscal 2007 capital expenditures included $9.8 million in\nspending on implementing SAP in 16 of Brady’s global operations and ultimately increasing the\ncoverage of business units operating SAP to approximately 80% of total revenue in fiscal 2009. The\nremainder of the increase in capital expenditures in fiscal 2007 was due to expansions in China,\nCanada, India, Mexico, the Philippines, Slovakia and other locations.\n

\n\n

Financing activities used $160.3 million in fiscal 2009, used $76.9 million in fiscal 2008 and\nprovided $129.4 million in fiscal 2007. Cash used for dividends to shareholders was $35.8 million\nin fiscal 2009, $32.5 million in fiscal 2008, and $30.1 million in fiscal 2007. Cash received from\nthe exercise of stock options was $1.7 million in fiscal 2009, $14.5 million in fiscal 2008, and\n$6.8 million in fiscal 2007. The Company purchased treasury stock of $40.3 in fiscal 2009 and $42.2\nmillion in fiscal 2008; however, it did not purchase treasury stock in fiscal 2007. During fiscal\n2008 and fiscal 2009, the Company’s Board of Directors authorized share repurchase plans for the\nCompany’s Class A Nonvoting Common Stock. The share repurchase plans were implemented by\npurchasing shares in the open market, with repurchased shares available for use in connection with\nthe Company’s stock-based plans and for other corporate purposes. The Company reacquired\napproximately 1,345,000 shares of its Class A Common Stock for $40.3 million in fiscal 2009 in\nconnection with its stock repurchase plans. The Company reacquired approximately 1,349,000 shares\nof its Class A Common Stock for $42.2 million in fiscal 2008. As of July 31, 2009, the Company was\nauthorized to purchase up to approximately 306,000 additional shares in connection with the share\nrepurchase plans.\n

\n\n

On May 28, 2009, the Company commenced a cash tender offer to purchase up to $100 million\naggregate principal amount of its outstanding Series 2004-A Senior Notes due 2014, Series 2006-A\nSenior Notes due 2016, and Series 2007-A Senior Notes due 2017. On June 29, 2009, the Company\ncompleted the purchase of approximately $65.8 million aggregate principal amount of its senior\nnotes pursuant to this tender offer. The purchase price for the notes included the payment of the\nface value of the notes plus accrued and unpaid interest from the last interest payment date to and\nincluding the date of close. The Company utilized cash on hand to fund the purchase of the notes.\n

\n\n

25\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

On March 23, 2007, the Company completed the private placement of $150 million in ten-year\nfixed notes at 5.33% interest to institutional investors. The notes will be amortized in equal\ninstallments over seven years, beginning in 2011 with interest payable on the notes semiannually\non September 23 and March 23, which began in September 2007. The notes have been fully and\nunconditionally guaranteed on an unsecured basis by the Company’s U.S.- based subsidiaries. The\nCompany used the net proceeds of the offering to reduce outstanding indebtedness under the\nCompany’s revolving loan agreement and fund its ongoing strategic growth plans. This private\nplacement was exempt from the registration requirements of the Securities Act of 1933. The notes\nwere not registered for resale and may not be resold absent such registration or an applicable\nexemption from the registration requirements of the Securities Act of 1933 and applicable state\nsecurities laws. The notes have certain prepayment penalties for repaying them prior to the\nmaturity date. The penalties under the agreement have been waived for early prepayment. The\nagreement also requires the Company to maintain a financial covenant. On June 29, 2009, the\nCompany purchased $35.4 million of the outstanding aggregate principal amount of the Series 2007-A\nSenior Notes from certain note-holders.\n

\n\n

On October 5, 2006, the Company entered into a $200 million multi-currency revolving loan\nagreement with a group of five banks that replaced the Company’s previous credit agreement. At the\nCompany’s option, and subject to certain standard conditions, the available amount under the new\ncredit facility may be increased from $200 million up to $300 million. Under the credit agreement,\nthe Company has the option to select either a base interest rate (based upon the higher of the\nfederal funds rate plus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency\ninterest rate (at the LIBOR rate plus a margin based on the Company’s consolidated leverage ratio).\nA commitment fee is payable on the unused amount of the facility. The agreement restricts the\namount of certain types of payments, including dividends, which can be made annually to $50 million\nplus an amount equal to 75% of consolidated net income excluding all extraordinary non-cash items for the prior fiscal year of the Company.\nThe Company believes that based on historic dividend practice, this restriction would not impede\nthe Company 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 July 31, 2009, there were no outstanding borrowings under the credit facility.\n

\n\n

On February 14, 2006, the Company completed the private placement of $200 million in ten-year\nfixed notes at 5.3% interest to institutional investors. The notes will be amortized in equal\ninstallments over seven years, beginning in 2010 with interest payable on the notes semiannually on\nAugust 14 and February 14, which began in August 2006. The notes have been fully and\nunconditionally guaranteed on an unsecured basis by the Company’s domestic subsidiaries. The\nCompany used the net proceeds of the offering to finance acquisitions completed in fiscal 2006 and\n2007 and for general corporate purposes. This private placement was exempt from the registration\nrequirements of the Securities Act of 1933. The notes were not registered for resale and may not be\nresold absent such registration or an applicable exemption from the registration requirements of\nthe Securities Act of 1933 and applicable state securities laws. The notes have certain prepayment\npenalties for repaying them prior to the maturity date. The penalties under the agreement have been\nwaived for early prepayment. The agreement also requires the Company to maintain a financial\ncovenant. On June 29, 2009, the Company purchased $17.0 million of the outstanding aggregate\nprincipal amount of the Series 2006-A Senior Notes from certain note-holders.\n

\n\n

On June 30, 2004, the Company finalized a debt offering of $150 million of 5.14% unsecured\nsenior notes due in 2014 in an offering exempt from the registration requirements of the Securities\nAct of 1933. The debt offering was in conjunction with the Company’s acquisition of EMED. The notes\nwill be paid over seven years beginning in 2008, with interest payable on the notes being due\nsemiannually on June 28 and December 28, which began in December 2004. The Company used the\nproceeds of the offering to reduce outstanding indebtedness under the Company’s revolving credit\nfacilities used to initially fund the EMED acquisition. The debt has certain prepayment penalties\nfor repaying the debt prior to its maturity date. Under the debt agreement, the Company paid equal\n

\n\n

26\n

\n\n\n\n

installments of $21.4 million in June 2008 and June 2009. The penalties under the agreement have\nbeen waived for\nearly prepayment. The agreement also requires the Company to maintain a financial covenant.\nOn June 29, 2009, the Company purchased $13.4 million of the outstanding aggregate principal amount\nof the Series 2004-A Senior Notes from certain note-holders.\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 trailing twelve months 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). The Company’s October 2006 revolving loan agreement requires the\nCompany to maintain a ratio of debt to trailing twelve months EBITDA, as defined by the debt\nagreement, of not more than a 3.0 to 1.0 ratio. As of July 31, 2009, the Company was in compliance\nwith the financial covenant of these debt agreements, with the ratio of debt to EBITDA, as defined\nby the agreements, equal to 2.1 to 1.0. Additionally, the revolving loan agreement requires the\nCompany’s trailing twelve months earnings before interest and taxes (“EBIT”) to interest expense of\nnot less than a 3.0 to 1.0 ratio (interest expense coverage). As of July 31, 2009, the Company was\nin compliance with the financial covenants of the revolving loan agreement, with the ratio of debt\nto EBITDA, as defined by the agreement, equal to 2.1 to 1.0 and the interest expense coverage ratio\nequal to 5.2 to 1.0.\n

\n\n

Long-term obligations as a percentage of long-term obligations plus stockholders’ investment\nwere 26.7% at July 31, 2009, and 30.9% at July 31, 2008. Long-term obligations decreased by $110.7\nmillion from July 31, 2008 to July 31, 2009 due to the debt repayments in fiscal 2009. The debt\nrepayments consisted of the scheduled $21.4 million on the 2004 private placement in addition to\nthe prepayment of $65.8 million. An additional $23.5 million was reclassified to current maturities\non long-term obligations. Stockholders’ investment decreased $70.7 million during fiscal 2009\nprimarily due to dividends on Class A and Class B Common Stock of $33.5 million and $2.3 million,\nrespectively, the repurchase of treasury shares of $40.3 million, and changes in accumulated other\ncomprehensive income of $75.1 million, partially offset by net earnings of $70.1 million and the\nstock-based compensation expense of $8.1 million in additional paid in capital. The decrease in\nthe accumulated other comprehensive income was primarily due to the foreign currency translation.\n

\n\n

The Company intends to fund its short-term and long-term operating cash requirements,\nincluding its fiscal 2010 dividend payments and 2010 debt payments, primarily through net cash\nprovided by operating activities.\n

\n\n

While the Company strives to maximize investment income on its cash, preservation of principal\nis the first priority. Especially in volatile markets, as the Company has recently experienced,\nthe Company’s investment policy is intended to preserve principal as its primary goal, resulting in\ninvestment yields lower than those 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 borrowings, 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-K,\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 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\nacquisitions.\n

\n\n

Subsequent Events Affecting Liquidity and Capital Resources\n

\n\n\n

The Company has evaluated subsequent events through the date these financial statements were\nissued, September 28, 2009.\n

\n\n

On September 10, 2009, the Board of Directors announced an increase in the annual dividend to\nshareholders of the Company’s Class A Common Stock, from $0.68 to $0.70 per share. A quarterly\ndividend of $0.175 will be paid on October 30, 2009, to shareholders of record at the close of\nbusiness on October 9, 2009. This dividend represents an increase of 3% and is the 24th consecutive\nannual increase in dividends since the Company went public in 1984.\n

\n\n

27\n

\n\n

By unanimous written consent effective September 24, 2009, the holders of the Company’s Class\nB Common\nStock approved the Brady Corporation 2010 Omnibus Incentive Stock Plan (the “2010 Omnibus Plan”) and\nthe Brady Corporation 2010 Nonqualified Stock Option Plan for Non-employee Directors (the “2010\nDirectors Plan”). Under the terms of the 2010 Omnibus Plan, pursuant to which 3,000,000 shares of\nthe Company’s Class A Common Stock have been authorized for issuance, the Company may grant\nnonqualified stock options, incentive stock options, shares of restricted stock and restricted\nstock units to eligible employees of the Company and its affiliates. The 2010 Omnibus Plan, which\nbecame effective upon shareholder approval, provides that after December 31, 2009, no further\nawards or grants shall be made under the Company’s 2006 Omnibus Incentive Stock Plan. Under the\nterms of the 2010 Directors Plan, pursuant to which 200,000 shares of the Company’s Class A Common\nStock have been authorized for issuance, each non-employee Director is granted an option to\npurchase 10,000 shares of the Company’s common stock two weeks after first becoming a director and\n8,400 shares of the Company’s common stock on an annual basis thereafter. The 2010 Directors Plan\nbecame effective upon shareholder approval.\n

\n\n

Off-Balance Sheet Arrangements\n

\n\n\n

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

\n\n

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

\n\n

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

\n\n

Due to the proprietary nature of many of the Company’s materials and processes, certain supply\ncontracts contain penalty provisions for early termination. The Company does not believe a material\namount of penalties will be incurred under these contracts based upon historical experience and\ncurrent expectations.\n

\n\n

Other Contractual Obligations — The Company does not have material financial guarantees or\nother contractual commitments that are reasonably likely to adversely affect liquidity other than\nthose discussed below under “Payments Due Under Contractual Obligations.”\n

\n\n

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

\n\n

Payments Due Under Contractual Obligations\n

\n\n\n

The Company’s future commitments at July 31, 2009, for long-term debt, operating lease\nobligations, purchase obligations, interest obligations and other obligations are as follows\n(dollars in thousands):\n


	Payments Due by Period
				Less than			1-3			3-5		More than		Uncertain
Contractual Obligations	Total		1 Year			Years			Years		5 Years		Timeframe
Long-Term Debt Obligations	$	391,350		$	44,893			$	122,529		$	122,528		$	101,400	$	—
Operating Lease Obligations		67,172			22,613				29,865			11,468			3,226		—
Purchase Obligations (1)		55,879			29,864				11,640			14,375			—		—
Interest Obligations		83,926			21,469				33,331			20,444			8,682		—
Tax Obligations		19,462			—				—			—			—		19,462
Other Obligations (2)		14,311			825				1,755			2,009			9,722		—

Total	$	632,100		$	119,664			$	199,120		$	170,824		$	123,030	$	19,462

\n\n\n\n

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


(1)		Purchase obligations include all open purchase orders as of July 31, 2009.

\n\n\n

28\n

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


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

\n\n\n\n

Inflation and Changing Prices\n

\n\n\n

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

\n\n

Critical Accounting Estimates\n

\n\n\n

Income Taxes\n

\n\n

The Company’s effective tax rate is based on pre-tax income and the tax rates applicable to\nthat income in the various jurisdictions in which the Company operates. Significant judgment is\nrequired in determining the Company’s effective income tax rate and in evaluating its tax\npositions. The Company adopted Financial Accounting Standards Board Interpretation No. 48,\n“Accounting for Uncertainty in Income Taxes” (“FIN 48”) on August 1, 2007. The Company\nestablishes FIN 48 liabilities when it is not more likely than not that the Company will realize\nthe full tax benefit of the position. The Company adjusts these FIN 48 liabilities in light of\nchanging facts and circumstances.\n

\n\n

Tax regulations may require items of income and expense to be included in a tax return in\ndifferent periods than the items are reflected in the consolidated financial statements. As a\nresult, the effective income tax rate reflected in the consolidated financial statements may be\ndifferent than the tax rate reported in the income tax return. Some of these differences are\npermanent, such as expenses that are not deductible on the income tax return, and some are\ntemporary differences, such as depreciation expense. Temporary differences create deferred tax\nassets and liabilities. Deferred tax assets generally represent items that can be used as tax\ndeductions or credits in the tax return in future years for which the Company has already recorded\nthe tax benefit in the consolidated financial statements. The Company establishes valuation\nallowances against its deferred tax assets when it is more likely than not that the amount of\nexpected future taxable income will not support the use of the deduction or credit. Deferred tax\nliabilities generally represent tax expense recognized in the consolidated financial statements for\nwhich payment has been deferred or expense for which the Company has already taken a deduction on\nan income tax return, but has not yet recognized as expense in the consolidated financial\nstatements.\n

\n\n

Goodwill and Intangible Assets\n

\n\n

The allocation of purchase price for business combinations requires management estimates and\njudgment as to expectations for future cash flows of the acquired business and the allocation of\nthose cash flows to identifiable intangible assets in determining the estimated fair value for\npurchase price allocation purposes. If the actual results differ from the estimates and judgments\nused in these estimates, the amounts recorded in the financial statements could result in a\npossible impairment of the intangible assets and goodwill or require acceleration of the\namortization expense of finite-lived intangible assets. In addition, SFAS No. 142, “Goodwill and\nOther Intangible Assets,” requires that goodwill and other indefinite-lived intangible assets be\ntested at least annually for impairment. Changes in management’s estimates or judgments could\nresult in an impairment charge, and such a charge could have an adverse effect on the Company’s\nfinancial condition and results of operations. To aid in establishing the value of goodwill and\nother intangible assets at the time of acquisition, Company policy requires that all acquisitions\nwith a purchase price above $5 million must be further evaluated in a more detailed review.

\n\n\n

The Company has identified five reporting units within its three reportable segments in\naccordance with SFAS No. 142. The Company’s methodologies for valuing goodwill are applied\nconsistently on a year-over-year basis; the assumptions used in performing the 2009 impairment\ncalculations were evaluated in light of market and business conditions. Brady continues to\nbelieve that the discounted cash flow model provides a reasonable and meaningful fair value\nestimate based upon the reporting units’ projections of future operating results and cash flows\nand replicates how market participants would value the Company’s reporting units.\n

\n\n\n

In\nperforming the Company’s annual impairment assessment the Company performed a sensitivity analysis\non the material assumptions used in the discounted cash flow valuation models for each of its\nreporting units. Based on the Company’s fiscal 2009 impairment testing and assuming a hypothetical\n10% decrease in the estimated fair values of each of its reporting units, the hypothetical fair\nvalue of each of the Company’s reporting units would have been greater than the carrying value.\nSee Note 1 of the Notes to Consolidated Financial Statements contained in Item 8 — Financial\nStatements and Supplementary Data for further information about goodwill and intangible assets.\n

\n\n\n

29\n

\n\n

Reserves and Allowances\n

\n\n

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

\n\n

New Accounting Standards\n

\n\n\n

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

\n\n

Forward-Looking Statements\n

\n\n\n

Brady believes that certain statements in this Form 10-K are “forward-looking statements”\nwithin the meaning of the Private Securities Litigation Reform Act of 1995. All statements related\nto future, not past, events included in this Form10-K, including, without limitation, statements\nregarding Brady’s future financial position, business strategy, targets, projected sales, costs,\nearnings, capital expenditures, debt levels and cash flows, and plans and objectives of management\nfor future operations are forward-looking statements. When used in this Form 10-K, words such as\n“may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or\n“plan” or similar terminology are generally intended to identify forward-looking statements. These\nforward-looking statements by their nature address matters that are, to different degrees,\nuncertain and are subject to risks, assumptions and other factors, some of which are beyond Brady’s\ncontrol, that could cause actual results to differ materially from those expressed or implied by\nsuch forward-looking statements. For Brady, uncertainties arise from 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 this Form 10-K. These uncertainties may cause\nBrady’s actual future results to be materially different than those expressed in its\nforward-looking statements. Brady does not undertake to update its forward-looking statements.\n

\n\n

Risk Factors\n

\n\n\n

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

\n\n

Item 7A. Quantitative and Qualitative Disclosures About Market Risk\n

\n\n\n

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

\n\n

The global nature of the Company’s business requires active participation in the foreign\nexchange markets. As a result of investments, production facilities and other operations on a\nglobal scale, the Company has assets, liabilities\n

\n\n

30\n

\n\n\n\n

and cash flows in currencies other than the U.S.\ndollar. The primary objective of the Company’s foreign-currency\nexchange risk management is to minimize the impact of currency movements of foreign product\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, Swedish Krona and Chinese Yuan currency. As of July 31, 2009,\nthe amount of outstanding foreign exchange contracts was $30.9 million.\n

\n\n\n

The Company could be exposed to interest rate risk through its corporate borrowing activities.\nThe objective of the Company’s interest rate risk management activities is to manage the levels of\nthe Company’s fixed and floating interest rate exposure to be consistent with the Company’s\npreferred mix. The interest rate risk management program allows the Company to enter into approved\ninterest rate derivatives if there is a desire to modify the Company’s exposure to interest rates.\nSuch activities require Board approval. As of July 31, 2009, the Company had no interest rate\nderivatives.\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 and 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, changes\nbetween the U.S dollar and the Singapore dollar, and changes between the U.S. dollar and the\nChinese Yuan. Changes in foreign currency exchange rates for the Company’s foreign subsidiaries\nreporting in local currencies are generally reported as a component of shareholders’ equity. The\nCompany’s unfavorable currency translation adjustment recorded in fiscal 2009 was $(75.5) million.\nThe Company’s favorable currency translation adjustment recorded in fiscal 2008 was $46.8 million.\nAs of July 31, 2009 and 2008, the Company’s foreign subsidiaries had net current assets (defined\nas current assets less current liabilities) subject to foreign currency translation risk of $242.9\nmillion and $294.5 million, respectively. The potential decrease in the net current assets as of\nJuly 31, 2009 from a hypothetical 10 percent adverse change in quoted foreign currency exchange\nrates would be approximately $24.3 million. This sensitivity analysis assumes a parallel shift in\nall major foreign currency exchange rates versus the U.S. dollar. Exchange rates rarely move in\nthe same direction relative to the U.S. dollar. This assumption may overstate the impact of\nchanging exchange rates on individual assets and liabilities denominated in a foreign currency.\n

\n\n

31\n

\n\n

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n

\n\n\n

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

\n\n\n

We have audited the accompanying consolidated balance sheets of Brady Corporation and\nsubsidiaries (the “Company”) as of July 31, 2009 and 2008, and the related consolidated statements\nof income, stockholders’ investment, and cash flows for each of the three years in the period ended\nJuly 31, 2009. Our audits also included the financial statement schedule listed in the Index at\nItem 15. These consolidated financial statements and financial statement schedule are the\nresponsibility of the Company’s management. Our responsibility is to express an opinion on the\nconsolidated financial statements and financial statement schedule based on our audits.\n

\n\n

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

\n\n

In\nour opinion, such consolidated financial statements present fairly, in all material\nrespects, the financial position of Brady Corporation and subsidiaries at July 31, 2009 and 2008,\nand the results of their operations and their cash flows for each of the three years in the period\nended July 31, 2009, in conformity with accounting principles generally accepted in the United\nStates of America. Also, in our opinion, such financial statement schedule when considered in\nrelation to the basic consolidated financial statements taken as a\nwhole, presents fairly, in all\nmaterial respects, the information set forth therein.\n

\n\n

We have also audited, in accordance with the standards of the Public Company Accounting\nOversight Board (United States), the Company’s internal control over financial reporting as of July\n31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by\nthe Committee of Sponsoring Organizations of the Treadway Commission and our report dated September\n28, 2009, expressed an unqualified opinion on the Company’s internal control over financial\nreporting.\n

\n\n

/s/ DELOITTE & TOUCHE LLP
\nMilwaukee, WI
\nSeptember 28, 2009\n

\n\n\n\n

33\n

\n\n

\n\n\n

BRADY CORPORATION AND SUBSIDIARIES
\n\nCONSOLIDATED BALANCE SHEETS
\n\nJuly 31, 2009 and 2008\n

\n\n\n


	2009			2008
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	188,156			$	258,355
Accounts receivable, less allowance for losses ($7,931 and $10,059, respectively)		191,189				262,461
Inventories:
Finished products		53,244				75,665
Work-in-process		13,159				21,187
Raw materials and supplies		27,405				37,767

Total inventories		93,808				134,619
Prepaid expenses and other current assets		36,274				43,650

Total current assets		509,427				699,085

Other assets:
Goodwill		751,173				789,107
Other intangibles assets		115,754				144,791
Deferred income taxes		36,374				25,943
Other non-current assets		18,551				21,381
Property, plant and equipment:
Cost:
Land		6,335				6,490
Buildings and improvements		96,968				98,646
Machinery and equipment		283,301				282,232
Construction in progress		7,869				6,040

		394,473				393,408
Less accumulated depreciation		242,485				223,202

Property, plant and equipment — net		151,988				170,206

Total	$	1,583,267			$	1,850,513

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	83,793			$	118,209
Wages and amounts withheld from employees		36,313				82,354
Taxes, other than income taxes		6,262				10,234
Accrued income taxes		5,964				21,523
Other current liabilities		45,247				54,810
Current maturities on long-term obligations		44,893				21,431

Total current liabilities		222,472				308,561
Long-term obligations, less current maturities		346,457				457,143
Other liabilities		63,246				63,001

Total liabilities		632,175				828,705

Commitments and contingencies (See Note 9)
Stockholders’ investment:
Common stock:
Class A Nonvoting — Issued 51,261,487and 51,261,487 shares, respectively;\n(aggregate liquidation preference of $42,803 and $42,628 at July 31, 2009 and\n2008, respectively)		513				513
Class B Voting — Issued and outstanding 3,538,628 shares		35				35
Additional paid-in capital		298,466				292,769
Earnings retained in the business		673,342				639,059
Treasury stock — 2,270,927 and 1,046,191 shares, respectively of Class A\nnonvoting common stock, at cost		(69,823	)			(33,234	)
Accumulated other comprehensive income		53,051				128,161
Other		(4,492	)			(5,495	)

Total stockholders’ investment		951,092				1,021,808

Total	$	1,583,267			$	1,850,513

\n\n\n\n

See notes\nto consolidated financial statements.\n

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

34\n

\n\n\n\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES
\n\nCONSOLIDATED STATEMENTS OF INCOME
\n\nYears Ended July 31, 2009, 2008 and 2007\n

\n\n\n


	2009			2008			2007
	(In thousands, except per share amounts)
Net sales	$	1,208,702			$	1,523,016		$	1,362,631
Cost of products sold		631,119				778,821			705,587

Gross margin		577,583				744,195			657,044
Operating expenses:
Research and development		34,181				40,607			35,954
Selling, general and administrative		397,180				495,904			449,103
Restructuring charges		25,849				—			—

Total operating expenses		457,210				536,511			485,057

Operating income		120,373				207,684			171,987
Other income (expense):
Investment and other income — net		1,800				4,888			2,875
Interest expense		(24,901	)			(26,385	)		(22,934	)

Net other expense		(23,101	)			(21,497	)		(20,059	)

Income before income taxes		97,272				186,187			151,928
Income taxes		27,150				53,999			42,540

Net income	$	70,122			$	132,188		$	109,388

Net income per common share:
Class A Nonvoting:
Basic	$	1.33			$	2.45		$	2.03

Diluted	$	1.33			$	2.41		$	2.00

Dividends	$	0.68			$	0.60		$	0.56

Class B Voting:
Basic	$	1.32			$	2.43		$	2.01

Diluted	$	1.31			$	2.39		$	1.98

Dividends	$	0.66			$	0.58		$	0.54

Weighted average Class A and Class B common shares outstanding\n
Basic		52,559				54,168			53,907

Diluted		52,866				54,873			54,741

\n\n\n\n

See notes to consolidated financial statements.\n

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

35\n

\n\n\n\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES
\n\nCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT
\n\nYears Ended July 31, 2009, 2008 and 2007\n

\n\n\n

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


								Earnings						Accumulated
				Additional			Retained						Other							Total
	Common		Paid-In			in the			Treasury		Comprehensive							Comprehensive
	Stock		Capital			Business			Stock		Income			Other			Income
	(In thousands, except per share amounts)
Balances at July 31, 2006	$	540		$	258,922			$	460,991		$	(10,865	)		$	35,696			$	762

Net income		—			—				109,388			—				—				—		$	109,388
Net currency translation\nadjustment and other		—			—				—			—				44,256				—			44,256

Total comprehensive income																						$	153,644

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

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

Net income		—			—				132,188			—				—				—		$	132,188
Net currency translation\nadjustment and other		—			—				—			—				44,785				—			44,785

Total comprehensive income																						$	176,973

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

Net income		—			—				70,122			—				—				—		$	70,122
Net currency translation\nadjustment and other		—			—				—			—				(75,110	)			—			(75,110	)

Total comprehensive income																						$	(4,988	)

Issuance of 138,934 shares of\nClass A Common Stock under stock\noption plan		—			(1,995	)			—			3,678				—				—
Other (Note 6)		—			(1,744	)			—			—				—				1,003
Tax benefit from exercise of stock\noptions and deferred compensation\ndistributions		—			1,336				—			—				—				—
Stock-based compensation expense\n(Note 1)		—			8,099				—			—				—				—
Purchase of 1,344,664 shares of\nClass A Common Stock		—			—				—			(40,267	)			—				—
Cash dividends on Common Stock
Class A — $.68 per share		—			—				(33,492	)		—				—				—
Class B — $.66 per share		—			—				(2,347	)		—				—				—
Balances at July 31, 2009	$	548		$	298,466			$	673,342		$	(69,823	)		$	53,051			$	(4,492	)

\n\n\n

See notes to consolidated financial statements.\n

\n\n\n\n

36\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES
\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS
\n\nYears Ended July 31, 2009, 2008 and 2007\n

\n\n\n


	2009			2008			2007
	(Dollars in thousands)
Operating activities:
Net income	$	70,122			$	132,188		$	109,388
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		54,851				60,587			53,856
Deferred income taxes		(8,640	)			(2,759	)		70
Loss on sale of property, plant and equipment		383				1,672			13
Non-cash portion of stock-based compensation expense		7,731				10,228			6,907
Non-cash portion of restructuring		2,469				—			—
Changes in operating assets and liabilities (net of effects of business\nacquisitions):
Accounts receivable		53,389				(3,704	)		(17,021	)
Inventories		34,749				16,224			(12,323	)
Prepaid expenses and other assets		(2,423	)			(629	)		(13,307	)
Accounts payable and accrued liabilities		(78,684	)			18,641			8,058
Income taxes		(9,673	)			(7,234	)		(6,821	)
Other liabilities		2,371				340			7,198

Net cash provided by operating activities		126,645				225,554			136,018

Investing activities:
Acquisitions of businesses, net of cash acquired		—				(29,346	)		(159,475	)
Purchase price adjustment		3,514				—			—
Payments of contingent consideration		(1,405	)			(5,798	)		(10,906	)
Purchases of short-term investments		—				(10,350	)		(68,100	)
Sales of short-term investments		—				29,550			60,400
Purchases of property, plant and equipment		(24,027	)			(26,407	)		(51,940	)
Proceeds from sale of property, plant and equipment		796				880			2,166
Other		2,078				2,263			(9,184	)

Net cash used in investing activities		(19,044	)			(39,208	)		(237,039	)

Financing activities:
Payment of dividends		(35,839	)			(32,464	)		(30,141	)
Proceeds from issuance of common stock		1,683				14,500			6,829
Principal payments on debt		(87,224	)			(39,443	)		(110,870	)
Proceeds from issuance of debt		—				18,000			259,300
Purchase of treasury stock		(40,267	)			(42,175	)		—
Excess income tax benefit from the exercise of stock options and deferred\ncompensation distributions		1,336				4,638			4,303

Net cash (used in) provided by financing activities		(160,311	)			(76,944	)		129,421

Effect of exchange rate changes on cash		(17,489	)			6,107			1,438

Net (decrease) increase in cash and cash equivalents		(70,199	)			115,509			29,838
Cash and cash equivalents, beginning of year		258,355				142,846			113,008

Cash and cash equivalents, end of year	$	188,156			$	258,355		$	142,846


Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of capitalized interest	$	26,047			$	26,308		$	19,842
Income taxes, net of refunds		48,766				51,834			49,233

Acquisitions:
Fair value of assets acquired, net of cash	$	—				21,508		$	87,398
Liabilities assumed		—				(9,038	)		(33,248	)
Goodwill		—				16,876			105,325

Net cash paid for acquisitions	$	—			$	29,346		$	159,475

\n\n

See notes\nto consolidated financial statements.

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

37\n

\n\n

\n\n\n

BRADY CORPORATION AND SUBSIDIARIES
\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
\nYears Ended July 31, 2009, 2008 and 2007
\n(In thousands except share and per share amounts)\n

\n\n\n\n

1. Summary of Significant Accounting Policies\n

\n\n\n

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

\n\n

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

\n\n

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

\n\n

Subsequent Events — The Company has evaluated subsequent events through the date these\nfinancial statements were issued, September 28, 2009.\n

\n\n

On September 10, 2009, the Board of Directors announced an increase in the annual dividend to\nshareholders of the Company’s Class A Common Stock, from $0.68 to $0.70 per share. A quarterly\ndividend will be paid on October 30, 2009, to shareholders of record at the close of business on\nOctober 9, 2009. This dividend represents an increase of 3% and is the 24th consecutive annual\nincrease in dividends since the Company went public in 1984.\n

\n\n

By unanimous written consent effective September 24, 2009, the holders of the Company’s Class\nB Common Stock approved the Brady Corporation 2010 Omnibus Incentive Stock Plan (the “2010 Omnibus\nPlan”) and the Brady Corporation 2010 Nonqualified Stock Option Plan for Non-employee Directors (the\n“2010 Directors Plan”). Under the terms of the 2010 Omnibus Plan, pursuant to which 3,000,000\nshares of the Company’s Class A Common Stock have been authorized for issuance, the Company may\ngrant nonqualified stock options, incentive stock options, shares of restricted stock and\nrestricted stock units to eligible employees of the Company and its affiliates. The 2010 Omnibus\nPlan, which became effective upon shareholder approval, provides that after December 31, 2009, no\nfurther awards or grants shall be made under the Company’s 2006 Omnibus Incentive Stock Plan.\nUnder the terms of the 2010 Directors Plan, pursuant to which 200,000 shares of the Company’s Class\nA Common Stock have been authorized for issuance, each non-employee Director is granted an option\nto purchase 10,000 shares of the Company’s common stock two weeks after first becoming a director\nand 8,400 shares of the Company’s common stock on an annual basis thereafter. The 2010 Directors\nPlan became effective upon shareholder approval.\n

\n\n

Fair Value of Financial Instruments — The Company believes the carrying amount of its\nfinancial instruments (cash and cash equivalents, accounts receivable and accounts payable) is a\nreasonable estimate of the fair value of these instruments due to their short-term nature. The\nCompany adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value\nMeasurements”, on August 1, 2008 as it relates to financial assets and liabilities. The impact of\nthis adoption has not been material to the Company’s consolidated financial statements. SFAS No.\n157 (“SFAS 157”) will be effective for the Company’s nonfinancial assets and liabilities on August\n1, 2009, the first day of the Company’s next fiscal year. See Note 5 for more information\nregarding the fair value of long-term debt and Note 10 for fair value measurements.\n

\n\n

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

\n\n

38\n

\n\n

Inventories — Inventories are stated at the lower of cost or market. Cost has been determined\nusing the last-in, first-out (“LIFO”) method for certain domestic inventories (approximately 19% of\ntotal inventories at July 31, 2009 and approximately 22% of total inventories at July 31, 2008) and\nthe first-in, first-out (“FIFO”) or average cost methods for other inventories. Had all domestic\ninventories been accounted for on a FIFO basis instead of on a LIFO basis, the carrying value would\nhave increased by $9,348 and $9,530 at July 31, 2009 and 2008, respectively.\n

\n\n

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

\n\n

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



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

\n\n\n

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

\n\n

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

\n\n

Changes in the carrying amount of goodwill for the years ended July 31, 2009 and 2008, are as\nfollows:\n


								Asia-
	Americas			Europe			Pacific		Total
Balance as of July 31, 2007	$	404,074			$	163,699		$	169,677		$	737,450
Goodwill acquired during the period		3,615				13,261			—			16,876
Adjustments for prior year acquisitions		2,564				(2,928	)		3,902			3,538
Translation adjustments		2,724				15,618			12,901			31,243

Balance as of July 31, 2008	$	412,977			$	189,650		$	186,480		$	789,107

Adjustments for prior year acquisitions		275				(52	)		(2,713	)		(2,490	)
Translation adjustments and other		(3,117	)			(23,347	)		(8,980	)		(35,444	)

Balance as of July 31, 2009	$	410,135			$	166,251		$	174,787		$	751,173

\n\n\n

In November 2008, the Company reached a settlement of the original purchase price with the\nformer owners of Tradex Converting AB (“Tradex”), which the Company acquired in May 2006, resulting\nin a purchase price decrease of $3,514, which decreased goodwill in Europe and Asia Pacific,\naccordingly. Goodwill increased $1,024 during fiscal 2009 as a result of the $749 payment of an\nearnout to the former owners of Transposafe Systems B.V. and Holland Mounting Systems B.V.\n(collectively, “Transposafe”), and the $275 final tax adjustments for Sorbent Products Company\n(“SPC”). Goodwill decreased $35,444 during fiscal 2009 due to the effects of foreign currency\ntranslation.\n

\n\n

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


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

Total				$	16,876

\n\n\n

Goodwill also increased in fiscal 2008 as a result of adjustments to the preliminary\nallocation of purchase price for the acquisitions completed in fiscal 2007, of which the largest\nadjustment related to the final purchase price adjustments for Comprehensive Identification\n

\n\n

39\n

\n\n\n\n\n

Products, Inc (“CIPI”), which added $3,948. Of\nthe $3,948 increase in goodwill attributed to the allocation of the purchase price for CIPI,\n$1,246 related to the adoption of Financial Accounting Standards Board Interpretation No. 48,\n“Accounting for Uncertainty in Income Taxes, (“FIN 48”), $1,250 related to an accrual for employee\ntermination costs, $809 related to various exit costs associated with the closure of a facility,\nand the remaining $643 related to tax and other liabilities existing at the time of acquisition.\nAs of July 31, 2009 and 2008, the remaining liability from these charges was approximately $612 and $769, respectively. Goodwill\nincreased $1,467 related to the fiscal 2007 acquisition of Sorbent Products Co., Inc. (“SPC”),\nprimarily due to an adjustment in income taxes. The increase in goodwill related to the\nacquisitions of CIPI and SPC was partially offset by a tax adjustment of $1,893 associated with\nthe fiscal 2006 acquisition of Identicam Systems relating to a deferred tax asset existing at the\ntime of acquisition. During fiscal year 2008, the Company finalized the purchase price allocation\nof the SPC acquisition between the segments, resulting in a transfer of goodwill from Europe to\nthe Americas.\n

\n\n

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

\n\n

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 SFAS No. 142, “Goodwill and Other Intangible Assets.” The net book value of these\nassets was as follows:\n


	July 31, 2009		July 31, 2008
	Weighted												Weighted
	Average		Gross									Average		Gross
	Amortization		Carrying			Accumulated		Net Book		Amortization			Carrying		Accumulated		Net Book
	Period (Years)		Amount			Amortization		Value		Period (Years)			Amount		Amortization		Value
Amortized other intangible assets:
Patents		5		$	8,976		$	(7,165	)	$	1,811			5		$	8,603	$	(6,592	)	$	2,011
Trademarks and other		7			7,703			(5,121	)		2,582			7			8,079		(4,688	)		3,391
Customer relationships		7			144,625			(76,912	)		67,713			7			151,704		(59,101	)		92,603
Non-compete agreements		4			11,502			(9,656	)		1,846			4			12,222		(8,446	)		3,776
Other		4			3,311			(3,296	)		15			4			3,299		(3,294	)		5
Unamortized other intangible assets:
Trademarks		N/A			41,787			—			41,787			N/A			43,005		—			43,005

Total				$	217,904		$	(102,150	)	$	115,754					$	226,912	$	(82,121	)	$	144,791

\n\n\n

The value of other intangible assets in the Consolidated Balance Sheet at July 31, 2009,\ndiffers from the value assigned to them in the allocation of purchase price due to the effect of\nfluctuations in the exchange rates used to translate financial statements into the United States\ndollar between the date of acquisition and July 31, 2009.\n

\n\n

Amortization expense of intangible assets during fiscal 2009, 2008, and 2007 was $22,828,\n$25,422, and $21,882, respectively. The amortization over each of the next five fiscal years is\nprojected to be $22,652, $19,087, $11,914, $8,616, and $4,038 for the years ending July 31, 2010,\n2011, 2012, 2013 and 2014, respectively.\n

\n\n

Impairment of Long-Lived and Other Intangible Assets — The Company evaluates whether events\nand circumstances have occurred that indicate the remaining estimated useful life of long-lived and\nother finite-lived intangible assets may warrant revision or that the remaining balance of an asset\nmay not be recoverable. The measurement of possible impairment is based on fair value of the assets\ngenerally estimated by the ability to recover the balance of assets from expected future operating\ncash flows on an undiscounted basis. If impairment is determined to exist, any related impairment\nloss is calculated based on the fair value of the asset. Based on the assessments completed in\nfiscal 2009, there have been no indications of impairment in the Company’s long-lived and other\nintangible assets.\n

\n\n

Impairment\nof Goodwill and Indefinite-lived Intangible Assets— The Company evaluates goodwill\nand indefinite-lived intangible assets under\n

\n\n

40\n

\n\n\n\n\n

SFAS No. 142, “Goodwill and Other Intangible Assets”\nwhich addresses the financial accounting and reporting standards for the acquisition of intangible\nassets outside of a business combination and for goodwill and other intangible assets subsequent to\ntheir acquisition. This accounting standard requires that goodwill and indefinite-lived intangible\nassets not be amortized, but instead be tested for impairment on at least an annual basis.\n

\n\n

During the third quarter of fiscal 2009, the Company conducted a 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. Due to the economic conditions during the second quarter of\nfiscal 2009, the Company completed its assessment prior to the Company’s annual assessment date of\nMay 1, 2009. The Company further conducted an assessment as of the annual assessment date\nand concluded that no impairment existed as of May 1, 2009. No indications of impairment\nhave been identified between the date of the interim assessments and July 31, 2009.\n

\n\n

During the fourth quarter of fiscal 2009, the Company conducted an indefinite-lived intangible asset\nimpairment analysis in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” The\nassessment included comparing the carry amount of the indefinite-lived intangible asset to the fair\nvalue of those assets as of May 1, 2009, the Company’s assessment date. Fair value was determined\nusing the weighted average of a discounted revenue stream and market participant analysis for each\nindefinite-lived intangible. Because the estimated fair value of each of the Company’s indefinite-lived\nintangibles exceeded its carrying amount, management concluded that no impairment existed as of\nMay 1, 2009. No indications of impairment have been identified between the date of the interim\nassessments and July 31, 2009.\n\n

\n\n

Catalog Costs and Related Amortization — The Company accumulates all direct costs incurred,\nnet of vendor cooperative advertising payments, in the development, production, and circulation of\nits catalogs on its balance sheet until such time as the related catalog is mailed. The catalogs\nare subsequently amortized into selling, general, and administrative expense over the expected\nsales realization cycle, which is one year or less. Consequently, any difference between the\nestimated and actual revenue stream for a particular catalog and the related impact on amortization\nexpense is neutralized within a period of one year or less. The estimate of the expected sales\nrealization cycle for a particular catalog is based on the Company’s historical sales experience\nwith identical or similar catalogs, an assessment of prevailing economic conditions and various\ncompetitive factors. The Company tracks subsequent sales realization, reassesses the marketplace,\nand compares its findings to the previous estimate, and adjusts the amortization of future\ncatalogs, if necessary. At July 31, 2009 and 2008, $13,511 and $13,214, respectively, of prepaid\ncatalog costs were included in prepaid expenses and other current assets.\n

\n\n

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

\n\n

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

\n\n

41\n

\n\n\n\n\n

to its customers or resellers as a reduction of\nrevenue rather than an operating expense.\n

\n\n

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

\n\n

Advertising Costs — Advertising costs are expensed as incurred, except catalog and mailer\ncosts as outlined above. Advertising expense for the years ended July 31, 2009, 2008 and 2007 were\n$77,395, $85,908 and $75,452, respectively.\n

\n\n

Stock-Based Compensation — The Company has an incentive stock plan under which the Board of\nDirectors may grant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock\nor restricted shares of Class A Nonvoting Common Stock to employees. Additionally, the Company has\na nonqualified stock option plan for non-employee directors under which stock options to purchase\nshares of Class A Nonvoting Common Stock are available for grant. The options have an exercise\nprice equal to the fair market value of the underlying stock at the date of grant and generally\nvest ratably over a three-year period, with one-third becoming exercisable one year after the grant\ndate and one-third additional in each of the succeeding two years. Options issued under these\nplans, referred to herein as “service-based” options, generally expire 10 years from the date of\ngrant. The Company also grants stock options to certain executives and key management employees\nthat vest upon meeting certain financial performance conditions over the vesting schedule described\nabove; these options are referred to herein as “performance-based” options. Performance-based\noptions granted in fiscal 2006 expire five years from the grant date. All other performance-based\noptions expire 10 years from the date of grant. Restricted shares have an issuance price equal to\nthe fair market value of the underlying stock at the date of grant. They vest at the end of a\nfive-year period and upon meeting certain financial performance conditions; these shares are\nreferred to herein as “performance-based restricted shares.”\n

\n\n

As of July 31, 2009, the Company has reserved 4,296,875 shares of Class A Nonvoting Common\nStock for outstanding stock options and restricted shares and 660,330 shares of Class A Nonvoting\nCommon Stock for future issuance of stock options and restricted shares under the various plans.\nThe Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver shares\nunder these plans.\n

\n\n

Effective August 1, 2005, the Company adopted SFAS No. 123(R), “Share-Based Payment.” In\naccordance with this standard, the Company recognizes the compensation cost of all share-based\nawards using the grant-date fair value of those awards (the “fair-value-based” method). The expense\nis recognized on a straight-line basis over the vesting period of the award. Total stock\ncompensation expense recognized by the Company during the years ended July 31, 2009, 2008, and 2007\nwas $7,731 ($4,716 net of taxes), $10,228 ($6,239 net of taxes), and $6,907 ($4,213 net of taxes),\nrespectively. As discussed in Note 11, an additional $368 ($224 net of taxes) of non-cash stock\noption expense was taken related to the restructuring in fiscal 2009. As of July 31, 2009, total\nunrecognized compensation cost related to share-based compensation awards was $11,757, net of\nestimated forfeitures, which the Company expects to recognize over a weighted-average period of 2.5\nyears.\n

\n\n

The Company adopted the fair value recognition provisions of SFAS No. 123(R) using the\nmodified-prospective-transition method. Under that transition method, compensation cost recognized\nduring fiscal 2009, 2008, and 2007 included: (a) compensation costs for all share-based payments\ngranted prior to, but not yet vested as of August 1, 2005, based on the grant date fair value\nestimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for\nall share-based payments granted subsequent to August 1, 2005, based on the grant date fair value\nestimated in accordance with the provisions of SFAS No. 123(R). Prior periods are not restated\nunder this method of adoption.\n

\n\n

42\n

\n\n\n

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


	2009		2008	2007
	Performance-					Performance-				Performance-
	Based		Service-Based	Based		Service-Based	Based		Service-Based
Black-Scholes Option Valuation Assumptions	Options		Options	Options		Options	Options		Options
Expected term (in years)		N/A			5.96			6.57			6.04			6.57			6.07
Expected volatility		N/A			36.07	%		33.68	%		32.05	%		34.66	%		33.99	%
Expected dividend yield		N/A			2.03	%		1.58	%		1.62	%		1.51	%		1.46	%
Risk-free interest rate		N/A			1.75	%		4.66	%		3.44	%		4.90	%		4.52	%
Weighted-average market value of\nunderlying stock at grant date		N/A		$	21.26		$	35.35		$	38.22		$	33.32		$	38.17
Weighted-average exercise price		N/A		$	21.26		$	35.35		$	38.22		$	33.32		$	38.17
Weighted-average fair value of options\ngranted		N/A		$	6.30		$	12.83		$	11.94		$	12.57		$	13.56

\n\n\n

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

\n\n

Effective March 4, 2009, the Compensation Committee of the Board of Directors of the Company\napproved an amendment to the granting agreement under which the Company issued performance-based\nstock options on August 2, 2004. Pursuant to the amendment, the exercise period for the\nperformance-based stock options was extended to ten years from five years resulting in an\nincremental expense of $191 ($116 net of taxes) in fiscal 2009. Also, the amendment provided that\nduring the extension period, executives may exercise the performance-based stock options following\na termination only if the termination is as a result of the executive’s death or disability or\nqualifies as a retirement. The Company’s Chief Executive Officer, Chief Financial Officer, and two\nof its named executive officers currently have the following exercisable performance-based stock\noptions affected by this amendment: Frank M. Jaehnert, 60,000 options; Thomas J. Felmer, 20,000\noptions; Peter C. Sephton, 30,000 options; and Matthew O. Williamson, 30,000 options.\n

\n\n

The Company granted 210,000 performance-based restricted shares during fiscal 2008, with a\ngrant price and fair value of $32.83. As of July 31, 2009, 210,000 performance-based shares were\noutstanding.\n

\n\n

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

\n\n

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


	July 31, 2009			July 31, 2008
Unrealized (loss) gain on cash\nflow hedges and securities in\ndeferred compensation plans, net of\ntax of $17 and $263, respectively	$	(53	)		$	(971	)
Unamortized gain on post-retirement\nmedical, dental and vision plan, net\nof tax of $1,964 and $2,663,\nrespectively		1,942				2,493
Cumulative translation adjustments		51,162				126,639

Accumulated other comprehensive income	$	53,051			$	128,161

\n\n\n

43\n

\n\n\n\n

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

\n\n

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

\n\n

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

\n\n

Currency Rate Hedging — The primary objectives of the foreign exchange risk\nmanagement activities are to mitigate the impact of potential foreign exchange fluctuations on the\nCompany’s financial results and its economic well-being. While the Company’s risk management\nobjectives and strategies are driven from an economic perspective, the Company attempts, where\npossible and practical, to ensure that the hedging strategies it engages in can be treated as\n“hedges” from an accounting perspective or otherwise result in accounting treatment where the\nearnings effect of the hedging instrument provides substantial offset (in the same period) to the\nearnings effect of the hedged item. Generally, these risk management transactions will involve the\nuse of foreign currency derivatives to protect against exposure resulting from products purchased\nin a currency differing from the selling unit’s currency.\n

\n\n

The Company primarily utilizes forward exchange contracts with maturities of less than 12\nmonths, which are designated as cash flow hedges. These are intended to offset the effect of\nexchange rate fluctuations on products purchased in a currency differing from the selling unit’s\ncurrency. The fair value of these instruments at July 31, 2009 and 2008 was $(248) and $(96),\nrespectively. As of July 31, 2009, the notional amount of outstanding forward exchange contracts\nwas $30.9 million. See Note 12 for more information regarding the Company’s derivative instruments\nand hedging activities.\n

\n\n

The Company accounts for its hedges in accordance with SFAS No. 133, “Accounting for\nDerivative Instruments and Hedging Activities.” For derivative instruments designated as cash flow\nhedges under SFAS No. 133, the Company records these contracts at fair value on the Consolidated\nBalance Sheets. The effective portion of the gain or loss on these derivatives is reported as a\ncomponent of other comprehensive income (“OCI”) and reclassified into earnings in the same period\nor periods during which the hedged transaction affects earnings.\n

\n\n

The Company also enters into cash flow hedge contracts to create economic hedges to manage\nforeign exchange risk exposure. The fair value of these instruments at July 31, 2009 was $130.\nThe Company has not designated these derivative contracts as hedge transactions under SFAS No. 133,\nand accordingly, the mark-to-market impact of these derivatives is recorded each period in current\nearnings.\n

\n\n

Hedge effectiveness is determined by how closely the changes in the fair value of the hedging\ninstrument offset the changes in the fair value or cash flows of the hedged item. Hedge accounting\nis permitted only if the hedging relationship is expected to be highly effective at the inception\nof the hedge and on an on-going basis. Any ineffective portions are to be recognized in earnings\nimmediately as a component of investment and other income. The amount of hedge ineffectiveness was not significant for\nthe years ended July 31, 2009, 2008 and 2007.\n

\n\n

New Accounting Standards — The Company adopted SFAS No. 157, “Fair Value Measurements,” on\nAugust 1, 2008 as it relates to financial assets and liabilities. The impact of this adoption was\nnot material to the Company’s\n

\n\n

44\n

\n\n\n\n\n

financial statements. SFAS No. 157 will be effective for the Company’s nonfinancial assets and\nliabilities on August 1, 2009, the first day of the Company’s next fiscal year. SFAS No. 157\napplies to other accounting pronouncements that require or permit fair value measurements, defines\nfair value based upon an exit price model, establishes a framework for measuring fair value, and\nexpands the applicable disclosure requirements. SFAS No. 157 indicates, among other things, that a\nfair value measurement assumes that a transaction to sell an asset or transfer a liability occurs\nin the principal market for the asset or liability or, in the absence of a principal market, the\nmost advantageous market for the asset or liability. See Note 10 for more information regarding\nthe Company’s fair value measurements.\n

\n\n

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

\n\n

In March 2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and\nHedging Activities.” SFAS No. 161 requires expanded quantitative, qualitative, and credit-risk\ndisclosures about an entity’s derivative instruments and hedging activities. This statement is\neffective for fiscal years and interim periods beginning after November 15, 2008. The Company\nadopted SFAS No. 161 during fiscal 2009. See Note 12 for more information regarding the Company’s\nderivative instruments and hedging activities.\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\nnon-forfeitable dividends be considered participating securities in undistributed earnings with\ncommon shareholders. This staff position will be effective for fiscal years and interim periods\nbeginning after December 15, 2008. The Company is in the process of evaluating the impact that will\nresult from adopting FSP 03-6 on the Company’s results of operations and financial disclosures when\nthe standard is adopted during the first quarter of fiscal 2010.\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)		Non-controlling 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.

\n\n

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 the Company’s future consolidated financial\nstatements will depend on the size and nature of future acquisitions.\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\n

\n\n

45\n

\n\n\n\n\n

from adopting FSP No. 107-1 and APB 28-1 on the Company’s financial disclosures when such\nguidance is adopted.\n

\n\n

In April 2009, the FASB issued FASB Staff Position No. FAS 141(R)-1, “Accounting for Assets\nand Liabilities Assumed in a Business Combination That Arise From Contingencies” (FSP FAS\n141(R)-1). FSP FAS 141(R)-1 amends and clarifies SFAS No. 141(R), “Business Combinations,” to\naddress application issues raised by preparers, auditors, and members of the legal profession on\ninitial recognition and measurement, subsequent measurement and accounting, and disclosure of\nassets and liabilities arising from contingencies in a business combination. This standard will be\napplied on a prospective basis for business combinations after July 31, 2009. The impact of SFAS\nNo. 141(R)-1 on our future consolidated financial statements will depend on the size and nature of\nfuture acquisitions.\n

\n\n

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events.” SFAS No. 165 defines\nsubsequent events as events or transactions that occur after the balance sheet date, but before the\nfinancial statements are issued. It defines two types of subsequent events: recognized subsequent\nevents, which provide additional evidence about conditions that existed at the balance sheet date,\nand non-recognized subsequent events, which provide evidence about conditions that did not exist at\nthe balance sheet date, but arose before the financial statements were issued. Recognized\nsubsequent events are required to be recognized in the financial statements, and non-recognized\nsubsequent events are required to be disclosed. The statement requires entities to disclose the\ndate through which subsequent events have been evaluated, and the basis for that date. SFAS No. 165\nis consistent with current practice and did not have any impact on the Company’s consolidated\nfinancial statements.\n

\n\n

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R).”\nSFAS 167 makes changes to the overall consolidation analysis. SFAS No. 167 is effective as of the\nbeginning of fiscal years that begin after November 15, 2009. The Company expects to adopt this\nstandard on August 1, 2010. The Company is in the process of evaluating the impact that will\nresult from adopting SFAS No. 167 on the Company’s results of operations and financial disclosures\nwhen such statement is adopted.\n

\n\n

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and\nthe Hierarchy of Generally Accepted Accounting Policies.” SFAS No. 168 replaces SFAS No. 162, “The\nHierarchy of Generally Accepted Accounting Policies.” SFAS No. 168 outlines the reorganization of\ncurrent GAAP into a topical format that eliminates the current GAAP hierarchy. SFAS No. 168 is\neffective for interim and annual periods ending after September 15, 2009. The Company expects to\nadopt this standard during the first quarter of fiscal 2010. The Company is in the process of\nevaluating the impact that will result from adopting SFAS No. 168 on the Company’s financial\ndisclosures when such statement is adopted.\n

\n\n\n

2. Acquisitions of Businesses\n

\n\n\n

The Company did not complete any acquisitions during the fiscal year ended July 31, 2009;\nhowever, it completed two business acquisitions during the fiscal year ended July 31, 2008, and\nseven business acquisitions during the fiscal year ended July 31, 2007. All of these transactions\nwere accounted for using the purchase method of accounting; therefore, the results of operations\nare included in the accompanying consolidated financial statements only since their acquisition\ndates.\n

\n\n

Fiscal 2008\n

\n\n\n

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

\n\n

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

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

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

46\n

\n\n\n\n

The purchase agreement for Transposafe included a provision for contingent payments based upon\nmeeting certain performance conditions over a two-year period of time subsequent to the acquisition.\nThe total maximum contingent payment of approximately $3,000 was placed in an escrow account for\nthe acquisition of Transposafe. During fiscal 2009, $700 was paid out of the escrow account to\nsatisfy the earnout and holdback liabilities of the Transposafe acquisition.\n

\n\n

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


Current assets net of cash	$	8,373
Property, plant & equipment		348
Goodwill		16,876
Customer relationships		10,008
Trademarks		2,341
Other intangible assets		438

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

Net assets acquired	$	29,346

\n\n\n

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

\n\n

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

\n\n

Fiscal 2007\n

\n\n\n

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

\n\n

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

	•		CIPI, was formerly headquartered in Burlington, Massachusetts, with operations in Hong\nKong, China and the Netherlands. CIPI is a market leader in badging accessories used to\nidentify and track employees and visitors in a variety of settings including businesses,\nhealthcare facilities, special events and government buildings. CIPI was acquired in August\n2006.

	•		Precision Converters L.P (“Precision Converters”) is located in Dallas, Texas and is a\nsupplier of die-cut products to the medical market with a specific focus on disposable,\nadvanced wound-care products. Precision Converters was acquired in October 2006.

	•		Scafftag Ltd., Safetrak, Ltd. and Scafftag Pty., Ltd (collectively “Scafftag”) is located\nin Barry, Wales, U.K., with operations in Australia and in the United States and a sales\noffice in the United Arab Emirates. Scafftag is an industry leader in safety identification\nand facility management products in the U.K., specializing in products that help companies\nmeet legislative requirements for safety standards in the oil and gas, construction and\nscaffolding industries. Scafftag was acquired in December 2006.

	•		Asterisco Artes Graficas Ltda. (“Asterisco”) is located in Sao Paulo, Brazil and is a\nleading manufacturer of industrial high-performance labels in Brazil, specializing in custom\nlabels printed on film materials for the electronics, automotive, pharmaceutical and other\nindustries. Asterisco was acquired in December 2006.

	•		Modernotecnica SpA (“Moderno”) is located in Milan, Italy and is a wire-identification\nmanufacturer serving the Maintenance, Repair and Operations market with products used\nprimarily in the electrical industry. Moderno was acquired in December 2006.

	•		Clement Communications, Inc. (“Clement”) is located in Concordville, Pennsylvania and is\na direct marketer of posters, newsletters, guides and handbooks that address safety,\nquality, teamwork, sales employment practices, customer service and OSHA regulations.\nClement was acquired in February 2007.

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

47\n

\n\n\n

The purchase agreements for Scafftag and Asterisco each included provisions for contingent\npayments based upon meeting certain performance conditions over a period of time subsequent to the\nacquisition. The total maximum contingent payments of $5,200 have not been accrued as liabilities\non the accompanying consolidated financial statements as the payments are based on attaining\ncertain financial results. Approximately $4,900 of the contingency related to the Asterisco\nacquisition had been placed in an escrow account in compliance with the terms of the purchase\nagreement. During fiscal 2008, the Company paid the former owners of Astersico $200 to satisfy the\nterms of the earnout agreement, while the remaining $4,700 was returned to Brady due to the\nacquired business not meeting certain performance criteria. The purchase agreement of Asterisco\nalso included a holdback provision of approximately $2,300 that was recorded as a liability in the\naccompanying consolidated financial statements at July 31, 2008. A payment of $700 was paid\nduring fiscal 2009 to satisfy the earnout and holdback liabilities of the Asterisco acquisition and\nthe remaining liability was eliminated.\n

\n\n

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


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

Total assets acquired		192,723
Liabilities assumed		33,248

Net assets acquired	$	159,475

\n\n\n

Of the $105,325 allocated to goodwill, approximately $72,134 was deductible for tax purposes.\n

\n\n

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

\n\n

The purchase agreements for Texit, a manufacturer and distributor of wire markers and\ncable-management products; QDP Thailand Co., Ltd. (“QDPT”), a designer and manufacturer of\nhigh-precision components for the electronic, medical and automotive industries, specializing in\nprecision laminating, stamping and contract assembly; and STOPware, Inc. (“Stopware”), a\nmanufacturer of visitor-badging and lobby-security software used to identify and track visitors\neach included provisions for contingent payments based upon meeting certain performance conditions\nover a period of time subsequent to the acquisition. In fiscal 2007, QDPT combined its operations\nwith TPS in a facility in Klongluang, Pathumthani, Thailand In fiscal 2006 and 2007, $1,800 and\n$2,577, respectively, of the conditions were met and recorded in goodwill; payments of $3,377 were\nmade during fiscal 2007 to satisfy the contingent payment requirements. The remaining $1,000\nliability was paid in fiscal 2008 for the acquisition of Stopware. The holdback provision included\nin the purchase agreements of QDPT of $310 was paid in fiscal 2007. The holdback provisions\nincluded in the purchase agreements of Daewon Industry Corporation (“Daewon”) and Stopware of $200\nand $4,350, respectively, were paid in fiscal 2008. Daewon is,a manufacturer and supplier of\npressure sensitive, die-cut adhesive components for the mobile handset and electronics industry.\nAs of July 31, 2009 all required payments have been made.\n

\n\n\n

3. Employee Benefit Plans\n

\n\n\n

The Company provides postretirement medical, dental and vision benefits (the “Plan”) for\neligible regular full and part-time domestic employees (including spouses) outlined by the plan.\nDuring fiscal 2008, the Plan was amended to include only employees hired prior to April 1, 2008.\nPostretirement benefits are provided only if the employee was hired prior to April 1, 2008, and\nretires on or after attainment of age 55 with 15 years of credited service. Credited service\nbegins accruing at the later of age 40 or date of hire. All active employees first eligible to\nretire after July 31, 1992, are covered by an unfunded, contributory postretirement healthcare plan\nwhere employer\n

\n\n

48\n

\n\n\n\n\n

contributions will not exceed a defined dollar benefit amount, regardless of the cost of the\nprogram. Employer contributions to the plan are based on the employee’s age and service at\nretirement. The Company funds benefit costs on a pay-as-you-go basis.\n

\n\n

In October 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit\nPension and Other Postretirement Plans.” This statement requires full recognition of the funded\nstatus of defined benefit and other postretirement plans on the balance sheet as an asset or a\nliability. SFAS No. 158 also continues to require that unrecognized prior service costs/credits,\ngains/losses, and transition obligations/assets be recorded in Accumulated Other Comprehensive\nIncome, thus not changing the income statement recognition rules for such plans.\n

\n\n

The Plan is unfunded and recorded as a liability in the accompanying consolidated balance\nsheets as of July 31, 2009 and 2008. The following table provides a reconciliation of the changes\nin the Plan’s accumulated benefit obligations during the years ended July 31:\n


	2009			2008
Obligation at beginning of year	$	12,199			$	11,705
Service cost		672				919
Interest cost		842				771
Actuarial loss (gain)		766				(96	)
Benefit payments		(667	)			(687	)
Plan amendments		—				(413	)
Separation benefits		1,178				—
Curtailments		(679	)			—

Obligation at end of fiscal year	$	14,311			$	12,199

\n\n\n

As discussed in Note 11, the fiscal 2009 restructuring charges included employee separation\ncosts. Approximately, $1,178 of employee separation costs have been included in the separation\nbenefits above as the costs directly relate to the postretirement medical, dental and vision\nbenefits.\n

\n\n

In November 2008, the Company announced it would take several measures to address its cost\nstructure. In addition to a reduction in its contract labor and decreased discretionary spending,\nthe Company announced it would reduce its workforce. The reduction in workforce was accounted for\nas a partial plan curtailment and reduced the accumulated benefit obligation by $679 as of July 31,\n2009.\n

\n\n

As of July 31, 2009 and 2008, amounts recognized as liabilities in the accompanying\nconsolidated balance sheets consist of:\n


	2009		2008
Current liability	$	825		$	511
Noncurrent liability		13,486			11,688

	$	14,311		$	12,199

\n\n\n

As of July 31, 2009 and 2008, pre-tax amounts recognized in accumulated other comprehensive\nincome in the accompanying consolidated balance sheets consist of:\n


	2009		2008
Net actuarial gain	$	3,425		$	4,499
Prior service credit		481			657

	$	3,906		$	5,156

\n\n\n

Net periodic benefit cost for the Plan for fiscal years 2009, 2008 and 2007 includes the\nfollowing components:\n


	Years Ended July 31,
	2009			2008			2007
Net periodic postretirement benefit cost included the following components:
Service cost — benefits attributed to service during the period	$	672			$	919		$	967
Prior service cost		(70	)			(33	)		(33	)

\n\n\n

49\n

\n\n\n


	Years Ended July 31,
	2009			2008			2007
Interest cost on accumulated postretirement benefit obligation		842				771			797
Amortization of unrecognized gain		(308	)			(295	)		(119	)
Curtailment loss		393				—			—


Periodic postretirement benefit cost	$	1,529			$	1,362		$	1,612

\n\n\n

The estimated actuarial gain and prior service credit that will be amortized from accumulated\nother comprehensive income into net periodic postretirement benefit cost over the next fiscal year\nare $202 and $64, respectively. The reduction in workforce resulted in a one-time curtailment gain\nof $679 and the accelerated recognition of the previously unrecognized prior service cost of\n$106,offset by a one-time separation benefit charge of $1,178, resulting in a net curtailment loss\nof $393 as of July 31, 2009.\n

\n\n

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


	2009		2008	2007
Weighted average discount rate used in determining accumulated\npostretirement benefit obligation liability		5.5	%		6.8	%	6.3	%
Weighted average discount rate used in determining net periodic benefit cost		6.8	%		6.3	%	6.0	%
Assumed health care trend rate used to measure APBO at July 31		8.0	%		8.0	%	9.0	%
Rate to which cost trend rate is assumed to decline (the ultimate trend rate)		5.5	%		5.5	%	5.5	%
Fiscal year the ultimate trend rate is reached		2015			2013		2011

\n\n\n

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

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


	One-Percentage		One-Percentage
	Point Increase		Point Decrease
Effect on future service and interest cost	$	73		$	(83	)
Effect on accumulated postretirement benefit obligation at July 31, 2009		110			(119	)

\n\n\n

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

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


2010	$	825
2011		840
2012		915
2013		978
2014		1,031
2015 through 2019		5,823

\n\n\n

The Company has retirement and profit-sharing plans covering substantially all full-time\ndomestic employees and certain of its foreign subsidiaries. Contributions to the plans are\ndetermined annually or quarterly, according to the respective plans, based on earnings of the\nrespective companies and employee contributions. At July 31, 2009 and 2008, $5,512 and $6,633,\nrespectively, of accrued profit-sharing contributions were included in other current liabilities\nand other long-term liabilities on the accompanying consolidated balance sheets.\n

\n\n

The Company also has deferred compensation plans for directors, officers and key executives\nwhich are discussed below. At July 31, 2009 and 2008, $10,175 and $11,095, respectively, of\ndeferred compensation was included in current and other long-term liabilities in the accompanying\nconsolidated balance sheets.\n

\n\n

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

\n\n

During fiscal 2002, the Company adopted a new deferred compensation plan that allows future\ncontributions to be invested in shares of the Company’s Class A Nonvoting Common Stock or in\ncertain other investment vehicles.\n

\n\n

50\n

\n\n\n\n\n

Prior deferred compensation deferrals must remain in the Company’s Class A Nonvoting Common\nStock. All participant deferrals into the new plan result in purchases of Class A Nonvoting Common\nStock or certain other investment vehicles by the Rabbi Trust. Balances held by the Rabbi Trust are\ndistributed to participants upon separation from the Company as defined in the plan agreement. On\nMay 1, 2006, the plan was amended to require that deferrals into the Company’s Class A Nonvoting\nCommon Stock must remain in the Company’s Class A Nonvoting Common Stock and be distributed in\nshares of the Company’s Class A Nonvoting Common Stock.\n

\n\n

The amounts charged to expense for the retirement, profit sharing and deferred compensation\nplans described above were $11,765, $17,275, and $14,990 during the years ended July 31, 2009, 2008\nand 2007, respectively.\n

\n\n\n

4. Income Taxes\n

\n\n\n

Income (loss) before income taxes consists of the following:\n

\n\n


	Years Ended July 31,
	2009			2008			2007
United States	$	(383	)		$	46,388		$	58,538
Other Nations		97,655				139,799			93,390

Total	$	97,272			$	186,187		$	151,928

\n\n\n

Income taxes consist of the following:\n

\n\n


	Years Ended July 31,
	2009			2008			2007
Current income tax expense:
United States	$	3,486			$	13,943		$	5,439
Other Nations		31,223				41,794			34,835
States (U.S.)		1,081				1,021			2,336

		35,790				56,758			42,610

Deferred income tax (benefit) expense:
United States		(7,633	)			29			2,728
Other Nations		(1,693	)			(2,793	)		(4,151	)
States (U.S.)		686				5			1,353

		(8,640	)			(2,759	)		(70	)

Total	$	27,150			$	53,999		$	42,540

\n\n\n

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

\n\n

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


	July 31, 2009
	Assets			Liabilities			Total
Inventories	$	7,229				—		$	7,229
Prepaid catalog costs		—			$	(3,363	)		(3,363	)
Employee benefits		1,682				—			1,682
Accounts receivable		1,924				—			1,924
Other, net		6,903				(1,821	)		5,082

Current		17,738				(5,184	)		12,554

Fixed Assets		1,901				(9,498	)		(7,597	)
Intangible Assets		2,134				(21,026	)		(18,892	)
Capitalized R&D expenditures		1,400				—			1,400
Deferred compensation		18,934				—			18,934
Postretirement benefits		7,202				—			7,202
Tax credit carry-forwards and net operating losses		45,057				—			45,057
Less valuation allowance		(25,670	)			—			(25,670	)
Other, net		250				(3,676	)		(3,426	)

Noncurrent		51,208				(34,200	)		17,008

Total	$	68,946			$	(39,384	)	$	29,562

\n\n\n

51\n

\n\n\n


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

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

Fixed Assets		434				(6,857	)		(6,423	)
Intangible Assets		2,656				(18,292	)		(15,636	)
Capitalized R&D expenditures		1,866				—			1,866
Deferred compensation		17,033				—			17,033
Postretirement benefits		7,017				—			7,017
Tax credit carry-forwards and net operating losses		26,630				—			26,630
Less valuation allowance		(25,494	)			—			(25,494	)
Other, net		573				(2,308	)		(1,735	)

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

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

\n\n\n

Tax loss carry forwards at July 31, 2009 are comprised of:\n

\n\n\n

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

	•		Foreign net operating loss carry-forwards of $73,450, of which $48,402 have no\nexpiration date and the remainder of which expire within the next 5 years.

	•		State net operating loss carry-forwards of $60,717, which expire from 2014 to 2029.

	•		Foreign tax credit carry-forwards of $16,028, which expire from 2018 to 2019.

	•		R&D credit carry-forwards of $800, which expire in 2029.

	•		State credit carry-forwards of $1,670, which expire from 2017 to 2024.

\n\n

Rate Reconciliation\n

\n\n\n

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


	Years Ended July 31,
	2009		2008	2007
Tax at statutory rate		35.0	%		35.0	%	35.0	%
State income taxes, net of federal tax benefit		1.6	%		0.2	%	1.6	%
International rate differential		(8.6	)%		(5.9	)%	(3.3	)%
Rate variances arising from foreign subsidiary distributions		(3.4	)%		(1.3	)%	(2.7	)%
Adjustments to tax accruals and reserves		5.8	%		1.2	%	(2.0	)%
Research and development tax credits		(1.5	)%		(0.2	)%	(0.5	)%
Other, net		(1.0	)%		—		(0.1	)%

Effective tax rate		27.9	%		29.0	%	28.0	%

\n\n\n

The valuation allowance increased by $176 and $5,807 during the fiscal years ended July 31,\n2009 and 2008, respectively. If realized or reversed in future periods, substantially all of the\nvaluation allowance would impact the income tax rate.\n

\n\n

The international rate differential for the year ended July 31, 2009 includes the recognition\nof $1,611 of tax expense related to the repayment of tax holidays due to the restructuring and\nconsolidation of certain Asian operations. Favorable geographic mix of pre-tax earnings more than\noffset the increase in income tax accruals and the tax holiday repayment, resulting in a decrease\nin the effective tax rate from 29.0% for the year ended July 31, 2008 to 27.9% for the year ended\nJuly 31, 2009.\n

\n\n

The Company is eligible for tax holidays on the earnings of certain subsidiaries in Asia,\nincluding China, India, Thailand, and the Philippines. The benefits realized as a result of these\ntax holidays reduced the consolidated effective tax rate by approximately 3.3%, 1.9%, and 1.5%\nduring the years ended July 31, 2009, 2008, and 2007, respectively. These tax holidays are in the\nprocess of expiring and are anticipated to be fully exhausted by December 31, 2012.\n

\n\n

52\n

\n\n\n

Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”)\n

\n\n\n

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

\n\n

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


Balance at August 1, 2007 (date of adoption)	$	13,731
Additions based on tax positions related to the current year (1)		3,003
Additions for tax positions of prior years (1)		580
Reductions for tax positions of prior years		(579	)
Lapse of statute of limitations		(1,435	)
Settlements and effective settlements with tax authorities		—
Cumulative Translation Adjustments and other		717
Balance at July 31, 2008	$	16,017
Additions based on tax positions related to the current year		2,526
Additions for tax positions of prior years (1)		4,056
Reductions for tax positions of prior years		(934	)
Lapse of statute of limitations		(944	)
Settlements and effective settlements with tax authorities		60
Cumulative Translation Adjustments and other		(1,319	)
Balance at July 31, 2009	$	19,462

\n\n\n\n

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


(1)		Includes acquisitions.

\n\n\n\n

Included in the balance of total unrecognized tax benefits (excluding interest and penalties)\nat July 31, 2009 and 2008 are potential benefits of approximately $19,117 and $10,952,\nrespectively, that if recognized, would affect the Company’s effective income tax rate. The\nincrease in the unrecognized tax benefits that would reverse through the Company’s effective tax\nrate is due to the pending adoption of SFAS No. 141(R), “Business Combinations.”\n

\n\n

The Company is currently in the early stages of being audited by several taxing authorities\nincluding the U.S. Internal Revenue Service for the fiscal years ended July 31, 2006 and 2007.\nAlthough the timing of resolution or closure of audits are uncertain, it is reasonably possible\nthat the balance of gross unrecognized tax benefits could change in the next 12 months. Given the\nnumber of years remaining subject to examination throughout the globe, the Company is unable to\nreasonably estimate the full range of possible adjustments to the balance of gross unrecognized tax\nbenefits.\n

\n\n

During all years presented, the Company recognized interest and penalties related to\nunrecognized tax benefits within the provision for income taxes on the consolidated statements of\nincome. Therefore, no change was necessary upon adoption of FIN 48.\n

\n\n

Interest expense is recognized on the amount of potentially underpaid taxes associated with\nthe Company’s tax positions, beginning in the first period in which interest starts accruing under\nthe respective tax law and continuing until the tax positions are settled. During the years ended\nJuly 31, 2009 and 2008, the Company recognized $427 and $96 of interest expense, respectively, and\n$414 and $208 of penalties, respectively, related to the reserve for uncertain tax positions, net\nof amounts reversing due to statute of limitations and settlements. At July 31, 2009 and 2008, the\nCompany had $2,551 and $2,146, respectively, accrued for interest on unrecognized tax benefits.\nPenalties are accrued if the tax position does not meet the minimum statutory threshold to avoid\nthe payment of a penalty. At July 31, 2009 and 2008, the Company had $776 and $384, respectively,\naccrued for penalties on unrecognized tax benefits.\n

\n\n

53\n

\n\n\n

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

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


Jurisdiction		Open Tax Years
United States — Federal\n		F’06 — F’09
France\n		F’06 — F’09
Germany\n		F’06 — F’09
United Kingdom\n		F’08 — F’09

\n\n

Unremitted Earnings

\n\n\n

The Company’s policy is to remit earnings from foreign subsidiaries only to the extent any\nresultant foreign income taxes are creditable in the United States. Accordingly, the Company does\nnot currently provide for the additional United States and foreign income taxes which would become\npayable upon remission of undistributed earnings of foreign subsidiaries. The cumulative\nundistributed earnings of such subsidiaries at July 31, 2009 amounted to approximately $449,542.\n

\n\n\n

5. Long-Term Obligations\n

\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. Under the debt\nagreement, the Company paid equal installments of $21.4 million in June 2008 and June 2009. In\nJune 2009, the Company completed a cash tender offer to purchase approximately $65.8 million of\nits outstanding notes.\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 excluding all extraordinary non-cash items for\nthe prior fiscal year of the Company. The Company believes that based on historic dividend\npractice, this restriction would not impede the Company in following a similar dividend practice in\nthe future. On March 18, 2008, the Company entered into an amendment to the revolving loan\nagreement which extended the maturity date from October 5, 2011 to March 18, 2013. All other terms\nof the revolving loan agreement remained the same. As of July 31, 2009, there were no outstanding\nborrowings under the credit facility.\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 trailing twelve months 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). The Company’s October 2006 revolving loan agreement requires the\nCompany to maintain a ratio of debt to trailing twelve months EBITDA, as defined by the debt\nagreement, of not more than a 3.0 to 1.0 ratio. Additionally, the revolving loan agreement requires\nthe Company’s trailing twelve months earnings before interest and taxes (“EBIT”) to interest\nexpense of not less than a 3.0 to 1.0 ratio (interest expense coverage). The debt agreements also\nrequire the aggregate net book value of the assets sold or otherwise disposed of by the Company and\nits subsidiaries in all dispositions, as defined in the agreements, in any fiscal year of the\nCompany not exceed 15% of consolidated tangible net worth. As of July 31, 2009, the Company was\nin compliance with the financial covenants of its debt and revolving loan agreements.\n

\n\n\n

54\n

\n\n\n

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


	2009			2008
Various bank loans	$	—			$	3
Fixed debt		391,350				478,571

		391,350				478,574

Less current maturities	$	(44,893	)		$	(21,431	)

	$	346,457			$	457,143

\n\n\n

The fair value of the Company’s long-term obligations approximates $412,678 at July 31, 2009.\nThe fair value of the Company’s long-term obligations is estimated based on quoted market prices\nfor similar issue and on the current rates offered for debt of similar maturities.\n

\n\n

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


Years Ending July 31,
2010	$	44,893
2011		61,264
2012		61,264
2013		61,264
2014		61,264
Thereafter		101,401

Total	$	391,350

\n\n\n

The Company had outstanding letters of credit of $1,674 and $1,959 at July 31, 2009 and 2008,\nrespectively.\n

\n\n\n

6. Stockholders’ Investment\n

\n\n\n\n

Information as to the Company’s capital stock at July 31, 2009 and 2008 is as follows:\n


	July 31, 2009		July 31, 2008
	Shares		Shares		(thousands)		Shares	Shares		(thousands)
	Authorized		Issued		Amount		Authorized	Issued		Amount
Preferred Stock, $.01 par value		5,000,000							5,000,000
Cumulative Preferred Stock:
6% Cumulative		5,000							5,000
1972 Series		10,000							10,000
1979 Series		30,000							30,000
Common Stock, $.01 par value:
Class A Nonvoting		100,000,000		51,261,487		$	513		100,000,000		51,261,487	$	513
Class B Voting		10,000,000		3,538,628			35		10,000,000		3,538,628		35

						$	548					$	548

\n\n\n

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

\n\n

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

\n\n

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

\n\n

55\n

\n\n\n

The preferences in dividends and liquidation rights of the Class A Common Stock over the Class\nB Common Stock will terminate at any time that the voting rights of Class A Common Stock and Class\nB Common Stock become equal.\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 one 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 year ended July 31,\n2009, the Company acquired 650,864 shares of its Class A Nonvoting Common Stock authorized for\nrepurchase under this plan for $21,539. Share repurchases under this plan were completed in the\nquarter 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 one million additional shares of the Company’s Class A Nonvoting\nCommon Stock. The share repurchase plan may be implemented by purchasing shares on the open market\nor in privately negotiated transactions, with repurchased shares available for use in connection\nwith the Company’s stock-based plans and for other corporate purposes. During the 12 months ended\nJuly 31, 2009, the Company acquired 693,800 shares of its Class A Nonvoting Common Stock under this\nplan for $18,728. As of July 31, 2009, there remained 306,200 shares to purchase in connection\nwith this share repurchase plan.\n

\n\n

The following is a summary of other activity in stockholders’ investment for the years ended\nJuly 31, 2009, 2008 and 2007:\n


	Unearned							Shares Held
	Restricted			Deferred			in Rabbi
	Stock			Compensation			Trust, at cost			Total
Balances at July 31, 2006	$	—			$	17,602			$	(16,840	)	$	762

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

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

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

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

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

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

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

Sale of shares at cost		—				(1,655	)			1,223			(432	)
Purchase of shares at cost		—				1,294				(1,294	)		—
Amortization of restricted stock		1,435				—				—			1,435

Balances at July 31, 2009	$	(4,747	)		$	13,282			$	(13,027	)	$	(4,492	)

Shares at July 31, 2009						671,650				671,650

\n\n\n

Prior to 2002, all Brady Corporation deferred compensation was invested in the Company’s Class\nA Nonvoting Common Stock. In 2002, the Company adopted a new deferred compensation plan which\nallowed investing in other investment funds in addition to the Company’s Class A Nonvoting Common\nStock. Under this plan, participants were allowed to transfer funds between the Company’s Class A\nNonvoting Common Stock and the other investment funds. On May 1, 2006 the plan was amended with the\nprovision that deferrals into the Company’s Class A Nonvoting Common Stock must remain in the\nCompany’s Class A Nonvoting Common Stock and be distributed in shares of the Company’s Class A\nNonvoting Common Stock. At July 31, 2009, the deferred compensation balance in stockholders’\ninvestment represents the investment at the original cost of shares held in the Company’s Class A\nNonvoting Common Stock for the deferred compensation plan prior to 2002 and the investment at the\ncost of shares held in the Company’s Class A Nonvoting Common Stock for the plan subsequent to\n2002, adjusted for the plan amendment on May 1, 2006. The balance of shares held in the Rabbi Trust\nrepresents the investment in the\n

\n\n

56\n

\n\n\n

Company’s Class A Nonvoting Common Stock at the original cost of all the Company’s Class A\nNonvoting Common Stock held in deferred compensation plans.\n

\n\n\n

The Company’s Employee Monthly Stock Investment Plan (“the Plan”) provides that eligible\nemployees may authorize a fixed dollar amount between $20 and $500 per month to be deducted from\ntheir pay. The funds deducted are forwarded to the Plan administrator and are used to purchase the\nCompany’s Class A Nonvoting Common Stock at the market price. As part of the Plan, Brady pays all\nbrokerage fees for stock purchases and dividend reinvestments.\n

\n\n

The Company has an incentive stock plan under which the Board of Directors may grant\nnonqualified stock options to purchase shares of Class A Nonvoting Common Stock or restricted\nshares of Class A Nonvoting Common Stock to employees. Additionally, the Company has a\nnonqualified stock option plan for non-employee directors under which stock options to purchase\nshares of Class A Nonvoting Common Stock are available for grant. The options have an exercise\nprice equal to the fair market value of the underlying stock at the date of grant and generally\nvest ratably over a three-year period, with one-third becoming exercisable one year after the\ngrant date and one-third additional in each of the succeeding two years. Options issued under\nthese plans, referred to herein as “service-based” options, generally expire 10 years from the\ndate of grant. The Company also grants stock options to certain executives and key management\nemployees that vest upon meeting certain financial performance conditions over the vesting\nschedule described above. These options are referred to herein as “performance-based” options.\nPerformance-based options granted in fiscal 2006 expire five years from the grant date. All other\nperformance-based options expire 10 years from the date of grant. Restricted shares have an\nissuance price equal to the fair market value of the underlying stock at the date of grant. They\nvest at the end of a five-year period and upon meeting certain financial performance conditions.\nThese shares are referred to herein as “performance-based restricted shares.”\n

\n\n

As of July 31, 2009, the Company has reserved 4,296,875 shares of Class A Nonvoting Common\nStock for outstanding stock options and restricted shares and 660,330 shares of Class A Nonvoting\nCommon Stock remain 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

Changes in the options are as follows:\n


							Weighted
							Average
				Options		Exercise
	Option Price		Outstanding	Price
Balance, July 31, 2006	$	9.59 - $40.37			3,815,052		$	23.27

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

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

Options granted		35.10 - 38.31			977,500			37.41
Options exercised		9.59 - 38.19			(763,708	)		19.02
Options cancelled		14.16 - 30.37			(411,326	)		36.42

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

Options granted		17.23 - 35.42			614,000			21.26
Options exercised		9.59 - 38.19			(138,934	)		15.75
Options cancelled		20.95 - 38.31			(479,665	)		35.02

Balance, July 31, 2009	$	13.31 - $40.37			3,980,606		$	27.96

\n\n\n

The total fair value of options vested during the fiscal years ended July 31, 2009, 2008 and\n2007 was $6,559, $8,626 and $4,687, respectively. The total intrinsic value of options exercised\nduring the fiscal years ended July 31, 2009, 2008 and 2007 was $2,156, $14,479, and $8,272,\nrespectively.\n

\n\n

There were 2,831,311, 2,399,742, and 2,300,239 options exercisable with a weighted average\nexercise price of $27.46, $24.42 and $21.07 at July 31, 2009, 2008 and 2007, respectively. The\ncash received from the exercise of options during the fiscal years ended July 31, 2009, 2008, and\n2007 was $1,683, $14,500, and $6,829, respectively. The cash received from the tax benefit on\noptions exercised during the fiscal years ended July 31, 2009, 2008, and\n2007 was $779, $4,185, and $1,492, respectively.\n

\n\n

57\n

\n\n\n

The following table summarizes information about stock options outstanding at July 31, 2009:\n

\n\n


										Options Outstanding and
	Options Outstanding		Exercisable
				Weighted Average		Weighted	Shares		Weighted
	Number of Shares		Remaining	Average		Exercisable	Average
Range of	Outstanding at		Contractual Life	Exercise		at July 31,	Exercise
Exercise Prices	July 31, 2009		(in years)	Price		2009	Price
Up to $14.99		291,800			2.8		$	13.58			291,800	$	13.58
$15.00 to $29.99		1,875,469			5.8			21.26			1,285,469		21.43
$30.00 and up		1,813,337			6.4			37.20			1,254,042		36.87

Total		3,980,606			5.8			27.96			2,831,311		27.46

\n\n\n

As of July 31, 2009, the aggregate intrinsic value of the number of options outstanding and\nthe number of options outstanding and exercisable was $20,017 and $14,965, respectively. The\nCompany granted 210,000 performance-based restricted shares during fiscal 2008, with a grant price\nand fair value of $32.83. As of July 31, 2009, 210,000 performance-based restricted shares were\noutstanding.\n

\n\n\n

7. Segment Information\n

\n\n\n

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

\n\n

The Company is organized and managed on a geographic basis by region. Each of these regions,\nAmericas, Europe and Asia Pacific, has a President that reports directly to the Company’s chief\noperating decision maker, its Chief Executive Officer. Each region has its own distinct operations,\nis managed locally by its own management team, maintains its own financial reports and is evaluated\nbased on regional segment profit. In applying the criteria set forth in SFAS 131, “Disclosures\nabout Segments of an Enterprise and Related Information”, the Company has determined that these\nregions comprise its reportable segments based on the information used by the Chief Executive\nOfficer 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.\n

\n\n

58\n

\n\n\n

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


												Corporate
												and
	Americas		Europe	Asia-Pacific		Total Region	Eliminations		Total Company
Year ended July 31, 2009:
Revenues from external customers	$	534,440		$	367,156		$	307,106		$	1,208,702		—		$	1,208,702
Intersegment revenues		45,853			4,310			18,534			68,697	$	(68,697	)		—
Depreciation and amortization expense		22,022			8,467			15,957			46,446		8,405			54,851
Segment profit		114,404			99,875			42,575			256,854		(7,952	)		248,902
Assets		703,559			298,717			341,605			1,343,881		239,386			1,583,267
Expenditures for property, plant and\nequipment		8,422			3,326			5,848			17,596		6,431			24,027
Year ended July 31, 2008:
Revenues from external customers	$	667,106		$	496,715		$	359,195		$	1,523,016		—		$	1,523,016
Intersegment revenues		54,677			8,511			25,995			89,183	$	(89,183	)		—
Depreciation and amortization expense		24,856			11,172			15,482			51,510		9,077			60,587
Segment profit		157,523			135,426			58,234			351,183		(9,048	)		342,135
Assets		755,770			396,058			397,531			1,549,359		301,154			1,850,513
Expenditures for property, plant and\nequipment		7,535			4,714			5,269			17,518		8,889			26,407
Year ended July 31, 2007:
Revenues from external customers	$	609,855		$	416,514		$	336,262		$	1,362,631		—		$	1,362,631
Intersegment revenues		52,595			6,511			23,554			82,660	$	(82,660	)		—
Depreciation and amortization expense		23,643			8,363			16,913			48,919		4,937			53,856
Segment profit		144,583			107,552			57,236			309,371		(10,485	)		298,886
Assets		781,868			347,827			376,645			1,506,340		192,517			1,698,857
Expenditures for property, plant and\nequipment		19,834			5,849			15,301			40,984		10,956			51,940

\n\n


	Years Ended July 31,
	2009			2008			2007
Net income reconciliation:
Total profit for reportable segments	$	256,854			$	351,183		$	309,371
Corporate and eliminations		(7,952	)			(9,048	)		(10,485	)
Unallocated amounts:
Administrative costs		(102,680	)			(134,451	)		(126,899	)
Restructuring costs		(25,849	)			—			—
Investment and other income — net		1,800				4,888			2,875
Interest expense		(24,901	)			(26,385	)		(22,934	)

Income before income taxes		97,272				186,187			151,928
Income taxes		(27,150	)			(53,999	)		(42,540	)

Net income	$	70,122			$	132,188		$	109,388

\n\n


	Revenues*			Long-Lived Assets**
	Years Ended July 31,			As of Years Ended July 31,
	2009			2008			2007		2009		2008		2007
Geographic information:
United States	$	510,703			$	622,618		$	589,013		$	519,932		$	532,273	$	537,182
China		199,893				192,048			184,413			123,078			131,810		121,181
Other		566,589				794,036			671,865			375,905			440,021		403,462
Eliminations		(68,483	)			(85,686	)		(82,660	)		—			—		—

Consolidated total	$	1,208,702			$	1,523,016		$	1,362,631		$	1,018,915		$	1,104,104	$	1,061,825

\n\n\n\n

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


*		Revenues are attributed based on country of origin.

**		Long-lived assets consist of property, plant, and equipment, other intangible assets and goodwill.

\n\n\n

59\n

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

8. Net Income Per Common Share\n

\n\n\n\n

Net income per Common Share is computed by dividing net income (after deducting the applicable\npreferential Class A Common Stock dividends) by the weighted average Common Shares outstanding of\n52,558,657 for 2009, 54,167,746 for 2008, and 53,906,769 for 2007. The preferential dividend on the\nClass A Common Stock of $.01665 per share has been added to the net income per Class A Common Share\nfor all years presented.\n

\n\n

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


	Years ended July 31,
	2009			2008			2007
Numerator
Net income (numerator for basic and diluted Class A net income per share)	$	70,122			$	132,188		$	109,388
Less:
Preferential dividends		(823	)			(847	)		(836	)
Preferential dividends on dilutive stock options		(11	)			(13	)		(15	)

Numerator for basic and diluted Class B net income per share	$	69,288			$	131,328		$	108,537

Denominator:
Denominator for basic net income per share for both Class A and B		52,559				54,168			53,907
Plus: effect of dilutive stock options		307				705			834

Denominator for diluted net income per share for both Class A and B		52,866				54,873			54,741

Class A common stock net income per share calculation:
Basic	$	1.33			$	2.45		$	2.03
Diluted	$	1.33			$	2.41		$	2.00
Class B common stock net income per share calculation:
Basic	$	1.32			$	2.43		$	2.01
Diluted	$	1.31			$	2.39		$	1.98

\n\n\n

Options to purchase 2,764,308, 1,599,792, and 1,132,750 shares of Class A common stock were\nexcluded from the computations of diluted net income per share for years ended July 31, 2009, 2008,\nand 2007, respectively, because the option exercise prices were greater than the average market\nprice of the common shares and, therefore, the effect would be anti-dilutive.\n

\n\n\n

9. Commitments and Contingencies\n

\n\n\n\n

The Company has entered into various non-cancellable operating lease agreements. Rental\nexpense charged to operations on a straight-line basis was $25,971, $27,443 and $22,779 for the\nyears ended July 31, 2009, 2008 and 2007, respectively. Future minimum lease payments required\nunder such leases in effect at July 31, 2009 are as follows, for the years ending July 31:\n

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


2010	$	22,613
2011		16,897
2012		12,968
2013		6,898
2014		4,570
Thereafter		3,226

	$	67,172

\n\n\n

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

\n\n

60\n

\n\n\n\n

10. Fair Value Measurements\n

\n\n\n\n

As discussed in Note 1, the Company adopted SFAS No. 157, “Fair Value Measurements”, on August 1,\n2008. SFAS 157 indicates, among other things, that a fair value measurement assumes that a\ntransaction to sell an asset or transfer a liability occurs in the principal market for the asset\nor liability or, in the absence of a principal market, the most advantageous market for the asset\nor liability.\n

\n\n\n

SFAS 157 establishes a fair market value hierarchy for the pricing inputs used to measure fair\nmarket value. The Company’s assets and liabilities measured at fair market value are classified in\none of the following categories:\n

\n\n\n\n

Level 1 — Assets or liabilities for which fair value is based on quoted market\nprices in active markets for identical instruments as of the reporting date. At July 31,\n2009, $8,239 of the mutual funds held for the Company’s deferred compensation plans were\nvalued using Level 1 pricing inputs. The Company’s deferred compensation investments are\nincluded in “Other assets” on the accompanying Consolidated Balance Sheets.\n

\n\n\n

Level 2 — Assets or liabilities for which fair value is based on valuation models\nfor which pricing inputs were either directly or indirectly observable. At July 31, 2009,\n$248 of the Company’s forward exchange contracts designated as cash flow hedges under SFAS\nNo. 133, “Accounting for Derivative Instruments and Hedging Activities,” were valued using\nLevel 2 pricing inputs. These contracts are included in “Other current liabilities” on the\naccompanying Consolidated Balance Sheets. At July 31, 2009, $130 of the Company’s forward\nexchange contracts not designated as hedging instruments under SFAS No. 133 were valued\nusing Level 2 pricing inputs and are included in “Prepaid expenses and other current\nassets”, on the accompanying Consolidated Balance Sheets, respectively. See Note 12 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 July 31, 2009, none of the Company’s assets or liabilities were valued\nusing Level 3 pricing inputs.\n

\n\n

61\n

\n\n\n\n

11. Restructuring\n

\n\n\n\n

In November 2008, in response to the global economic downturn, the Company announced it would\ntake several measures to address its cost structure. In addition to a reduction in its contract\nlabor and decreased discretionary spending, the Company announced it would 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 $25,849 during fiscal 2009. The\nyear-to-date restructuring charges consisted of $20,911 of employee separation costs, $2,101 of\nnon-cash fixed asset write-offs, $1,194 of other facility closure related costs, $1,275 of contract\ntermination costs, and $368 of non-cash stock option expense. Of the $25,849 of restructuring\ncharges recorded during the year ended July 31, 2009, $13,928 was incurred in the Americas, $7,730\nwas incurred in Europe, and $4,191 was incurred in Asia-Pacific. The charges for employee\nseparation costs consisted of severance pay, outplacement services, medical and other related\nbenefits. The costs related to these restructuring activities have been recorded on the\nconsolidated statements of income as restructuring charges. An additional restructuring related\nexpense of $1,611 is included in income tax expense as it relates to the repayment of a tax\nholiday in Asia resulting from plant consolidation.\n

\n\n

The Company expects the majority of the remaining cash payments to be made within the next 12\nmonths.\n

\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		21,279				2,101			2,469			25,849
Non-cash write-offs		(368	)			(2,101	)					(2,469	)
Other separation benefits		(1,178	)									(1,178	)
Cash payments		(15,288	)			—			(1,592	)		(16,880	)

Ending balance, July 31, 2009	$	4,445			$	—		$	877		$	5,322

\n\n\n

The other separation benefits include charges of approximately $1,178 directly related to\npostretirement medical, dental and vision benefits which are included in the SFAS 106 liability.\nSee Note 3 for discussion on employee benefits.\n

\n\n\n\n

12. 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. 133,\n“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 movements\non intercompany transactions and foreign raw-material imports. To achieve this objective, the\nCompany hedges a portion of known exposures using forward foreign exchange currency contracts. As\nof July 31, 2009, the notional amount of outstanding forward exchange contracts was $30,929.\n

\n\n

Hedge effectiveness is determined by how closely the changes in the fair value of the hedging\ninstrument offset the changes in the fair value or cash flows of the hedged item. Hedge accounting\nis permitted only if the hedging relationship is expected to be highly effective at the inception\nof the hedge and on an on-going basis. Any ineffective portions are to be recognized in earnings\nimmediately as a component of investment and other income. The amount of hedge ineffectiveness was\nnot significant for the years ended July 31, 2009, 2008, and 2007.\n

\n\n

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\n

\n\n

62\n

\n\n\n

Won and Chinese Yuan currency. Generally,\nthese risk management transactions will involve the use of foreign currency derivatives to protect\nagainst exposure resulting from intercompany sales and identified inventory or other asset\npurchases.\n

\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 Consolidated Balance Sheets.\nFor these instruments, the effective portion of the gain or loss on the derivative is reported as a\ncomponent of other comprehensive income (“OCI”) and reclassified into earnings in the same period\nor periods during which the hedged transaction affects earnings. Gains or losses on the derivative\nrelated to hedge ineffectiveness are recognized in current earnings. At July 31, 2009 and 2008,\nunrealized losses of $35 and $567 have been included in OCI, respectively. All balances are\nexpected to be reclassified from OCI to earnings during the next 12 months when the hedged\nintercompany transactions impact earnings. At July 31, 2009 and at July 31, 2008, the Company\nincluded $248 and $96, respectively, of forward exchange contracts in “Other current liabilities”\non the accompanying Consolidated Balance Sheet. At July 31, 2009, the U.S. dollar equivalent of\nthese outstanding forward foreign exchange contracts totaled $21,793, including contracts to sell\nEuros, Canadian Dollars, Australian Dollars, British Pounds, Danish Krona, and U.S. Dollars.\n

\n\n

Additionally, during fiscal 2009, the Company entered into cash flow hedge contracts to create\neconomic hedges to manage foreign exchange risk exposure. The Company has not designated these\nderivative contracts as hedge transactions under SFAS No. 133, and accordingly, the mark-to-market\nimpact of these derivatives is recorded each period in current earnings. At July 31, 2009, $130 of\nthe Company’s forward exchange contracts not designated as hedging instruments under SFAS No. 133\nwere included in “Prepaid expenses and other current assets,” on the accompanying Consolidated\nBalance Sheets. At July 31, 2009, the U.S. dollar equivalent of these outstanding forward foreign\nexchange contracts totaled $9,136,consisted of contracts to buy Euros.\n

\n\n

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


	Asset Derivatives		Liability Derivatives
	July 31, 2009		July 31, 2008			July 31, 2009			July 31, 2008
	Balance Sheet						Balance Sheet					Balance Sheet					Balance Sheet
	Location		Fair Value			Location			Fair Value	Location			Fair Value	Location			Fair Value
Foreign exchange contracts	Prepaid expenses and other current assets	$	—			Prepaid expenses and other current assets		$	—		Other current liabilities	$	248		Other current liabilities	$	96

Total derivatives\ndesignated as hedging\ninstruments under\nStatement 133				$	—					$	—					$	248	$	96

Foreign exchange contracts	Prepaid expenses and other current assets	$	130			Prepaid expenses and other current assets		$	—	Other current liabilities		$	—	Other current liabilities		$	—

Total derivatives not\ndesignated as hedging\ninstruments under\nStatement 133				$	130					$	—					$	—	$	—

\n\n\n

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

\n\n

63\n

\n\n\n


Derivatives in \nStatement 133 Cash \nFlow Hedging	Amount of Gain or (Loss) \nRecognized in OCI on \nDerivative \n(Effective Portion)		Location of Gain or (Loss) Reclassified \nFrom Accumulated \nOCI into Income			Amount of Gain \nor (Loss) \nReclassified From \nAccumulated OCI \nInto Income \n(Effective Portion)		Location of \nGain or (Loss) \nRecognized in \nIncome on \nDerivative \n			Amount of Gain \nor (Loss) \nRecognized in \nIncome on Derivative \n(Ineffective Portion)
Relationships	2009		2008			(Effective Portion)		2009			2008			(Ineffective Portion)			2009		2008
Foreign exchange contracts	$	152		$	(325	)	Investment and other \nincome — net		$	(815	)		$	253			Investment and other \nincome — net	$	132	$	—

Total	$	152		$	(325	)					$	(815	)		$	253				$	132	$	—


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

Derivatives Not Designated as Hedging							Location\nof Gain or (Loss) Recognized in Income on			Amount of Gain or (Loss) Recognized in Income on Derivative
\nInstruments Under Statement 133							Derivative			2009			2008
Foreign exchange contracts							Other income (expense)		$	693			$	—

Total											$	693			$	—

\n\n\n\n

13. Unaudited Quarterly Financial Information\n

\n\n\n


	Quarters
	First		Second	Third		Fourth	Total
2009
Net Sales	$	378,317		$	266,449		$	276,733	$	287,203	$	1,208,702
Gross Margin		181,146			126,142			134,173		136,122		577,583
Operating Income*		56,194			4,618			29,272		30,289		120,373
Net Income**		37,110			(4,150	)		17,960		19,202		70,122
Net Income Per Class A Common Share:
Basic		0.70			(0.08	)		0.34		0.37		1.33
Diluted		0.69			(0.08	)		0.34		0.37		1.33

2008
Net Sales	$	380,134		$	364,124		$	381,909	$	396,849	$	1,523,016
Gross Margin		187,667			175,023			189,576		191,929		744,195
Operating Income		58,338			42,444			52,582		54,320		207,684
Net Income		36,370			26,690			34,353		34,775		132,188
Net Income Per Class A Common Share:
Basic		0.67			0.49			0.64		0.65		2.45
Diluted		0.66			0.48			0.63		0.64		2.41

\n\n\n\n

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


*		Fiscal 2009 had a net before tax restructuring charge by quarter of $1,639, $19,408, $2,229, and\n$2,573 for a total of $25,849.

**		Fiscal 2009 included a net after tax restructuring charge by quarter of $1,180, $13,974, $1,605,\nand $3,464 (including $1,611 income tax expense) for a total of $20,224.

\n\n\n\n

64\n

\n\n\n\n

\n\n

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

\n\n\n

None.\n

\n\n

Item 9A. Controls and Procedures\n

\n\n\n

Disclosure Controls and Procedures:\n\n

\n\n

The Company carried out an evaluation, under the supervision and with the participation of its\nmanagement, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness\nof the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule\n13a-15(e)) as of the end of the period covered by this report. Based on that evaluation, the\nCompany’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s\ndisclosure controls and procedures are effective as of July 31, 2009.\n

\n\n

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

\n\n\n

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

\n\n

With the participation of the Chief Executive Officer and the Chief Financial Officer, our\nmanagement conducted an evaluation of the effectiveness of our internal control over financial\nreporting as of July 31, 2009, based on the framework and criteria established in Internal Control\n— Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway\nCommission. Based on the assessment, management concluded that, as of July 31, 2009, the Company’s\ninternal control over financial reporting is effective based on those criteria. The Company’s\ninternal control over financial reporting, as of July 31, 2009, has been audited by Deloitte &\nTouche LLP, an independent registered public accounting firm, as stated in their report, which is\nincluded herein.\n

\n\n

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

\n\n

Changes in Internal Control Over Financial Reporting:\n

\n\n\n

There were no changes in the Company’s internal control over financial reporting that occurred\nduring the Company’s most recently completed fiscal quarter that have materially affected, or are\nreasonably likely to materially affect, the Company’s internal control over financial reporting.\n

\n\n\n

65\n

\n\n\n

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n

\n\n\n

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

\n\n

We have audited the internal control over financial reporting of Brady Corporation and\nsubsidiaries (the “Company”) as of July 31, 2009, based on criteria established in Internal\nControl — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway\nCommission. The Company’s management is responsible for maintaining effective internal control over\nfinancial reporting and for its assessment of the effectiveness of internal control over financial\nreporting included in the accompanying management report (Management’s Report on Internal Control\nover Financial Reporting). Our responsibility is to express an opinion on the Company’s internal\ncontrol over financial reporting based on our audit.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

In our opinion, the Company maintained, in all material respects, effective internal control\nover financial reporting as of July 31, 2009, based on the criteria established in Internal\nControl — Integrated Framework issued by the Committee of Sponsoring Organizations of the\nTreadway Commission.\n

\n\n

We have also audited, in accordance with the standards of the Public Company Accounting\nOversight Board (United States), the consolidated financial statements and financial statement\nschedule as of and for the year ended July 31, 2009, of the Company and our report dated September\n28, 2009, expressed an unqualified opinion on those consolidated financial statements and financial\nstatement schedule.\n

\n\n

/s/ DELOITTE & TOUCHE LLP\n

\n\n\n

Milwaukee, WI
\nSeptember 28, 2009\n\n

\n\n\n

66\n

\n\n

Item 9B. Other Information\n

\n\n\n

\n\n

67\n

\n\n

PART III\n

\n\n

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

\n\n


Name	Age		Title
Frank M. Jaehnert\n		51		President, CEO and Director
Thomas J. Felmer\n		47		Sr. V.P., CFO
Barbara Bolens\n		48		V.P., Treasurer, Director of Investor Relations
Allan J. Klotsche\n		44		President — Brady Asia-Pacific and V.P., Brady Corporation
Peter C. Sephton\n		50		President — Brady Europe and V.P., Brady Corporation
Matthew O. Williamson\n		53		President — Brady Americas and V.P., Brady Corporation
Robert L. Tatterson\n		44		V.P. and Chief Technology Officer
Bentley N. Curran\n		47		V.P. and Chief Information Officer
Kathleen M. Johnson\n		55		V.P. and Chief Accounting Officer
Patrick S. Ference\n		43		V.P. — Human Resources
Conrad G. Goodkind\n		65		Director
Elizabeth Pungello\n		42		Director
Robert C. Buchanan\n		69		Director
Richard A. Bemis\n		68		Director
Frank W. Harris\n		67		Director
Gary E. Nei\n		65		Director
Frank R. Jarc\n		67		Director
Chan W. Galbato\n		46		Director
Patrick W. Allender\n		62		Director
Bradley C. Richardson\n		51		Director

\n\n\n

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

\n\n

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

\n\n

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

\n\n

Allan J. Klotsche — Mr. Klotsche joined the Company in 1988. He served in a variety of sales,\nmarketing, technical, and management roles until 1998, when he was appointed V.P. and General\nManager of the Precision Tapes Group. He was appointed to his current position as President —\nBrady Asia Pacific in April 2003. He is also responsible for Brady’s global die-cut business and\nstrategic account management. He holds an MBA from the University of Wisconsin-Milwaukee.\n

\n\n

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

\n\n

68\n

\n\n

Matthew O. Williamson — Mr. Williamson joined the Company in 1979. From 1979 to 1994, he\nserved in a variety of sales and marketing leadership roles. From 1995 to 2003, Mr. Williamson\nserved as the V.P. and General Manager of Brady’s various specialty tape and identification\nsolution businesses. From 1996 to 1998, Mr. Williamson served as the V.P. and General Manager of\nthe Identification Solutions and Specialty Tapes Division. From 1998 to 2001, he served as V.P. and\nGeneral Manager of the Identification Solutions Division. From 2001 to 2003, he served as V.P. and\nGeneral Manager of the Global High Performance Identification Business. In April 2003, he was\nappointed President of the Brady Americas business. In addition to his role as President of the\nBrady Americas business, in January of 2008, Mr. Williamson assumed responsibility for the Direct\nMarketing Americas, and is currently serving as President of the Americas segment.\n

\n\n

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

\n\n

Bentley N. Curran — Mr. Curran joined the Company in 1999 as global information technology\ndirector charged with building and deploying a common technology infrastructure. Prior to joining\nBrady, he held various management and consultant positions for Compucom and Speed Queen Company.\nHe is a graduate of Marian University and holds a bachelor of business degree and an associate of\nscience degree in electronics and engineering systems.\n

\n\n

Kathleen M. Johnson — Ms. Johnson joined the Company in 1989 as controller of a division of\nBrady and became group finance director in 1996. In 2000 she was appointed Vice President. In 2008\nshe was appointed Chief Accounting Officer. Prior to joining Brady, she spent six years with Kraft\nFood Service. She started her career as a CPA with Deloitte. She holds a bachelor’s degree in\naccounting from the University of Wisconsin-Whitewater.\n

\n\n

Patrick Ference — Mr. Ference joined the Company in 2008 as Vice President — Human\nResources, responsible for Brady’s global human resources function. Prior to joining Brady, he was\nVice President, Corporate Human Resources for Cooper Industries, Ltd., where he was employed since\n1997. He holds a bachelor of science degree from Indiana University of Pennsylvania and is a\ngraduate of Cooper’s Leadership Program sponsored through the Jones Graduate School of Management\nat Rice University.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

Richard A. Bemis — Mr. Bemis has been a Director of the Company since January 1990 and is a\nmember of its Corporate Governance, Finance and Technology Committees. Mr. Bemis is Co-chairman of\nthe Board of Directors of Bemis Manufacturing Company, a\n

\n\n

69\n

\n\n\n\n

manufacturer of molded plastic products in Sheboygan Falls,\nWisconsin. He is also a director of Integrys Corporation, Chicago, Illinois.\n

\n\n

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

\n\n

Gary E. Nei — Mr. Nei has been a Director of the Company since November 1992. Mr. Nei is a\nmember of the Company’s Finance and Corporate Governance Committees and Chair of its Compensation\nCommittee. Mr. Nei is Chairman of Nei-Turner Media, a publishing company in Williams Bay,\nWisconsin. He also serves as Chairman of the Beverage Testing Institute, a publishing company in\nChicago, Illinois.\n

\n\n

Frank R. Jarc — Mr. Jarc has been a Director of the Company since May 2000. Mr. Jarc is\nchair of Brady’s Retirement Committee and is a member of the Audit and Compensation Committees. He\nis a consultant specializing in corporate development and international acquisitions. From April\n1999 to March 2000 he was Senior Vice President of Corporate Development at Office Depot, an\noperator of office supply superstores. Between June 1996 and March 1999, he was Executive Vice\nPresident and Chief Financial Officer of Viking Office Products, a direct mail marketer of office\nproducts. Prior to that, he was Executive Vice President and Chief Financial Officer of R.R.\nDonnelley and Sons, a global printing company.\n

\n\n

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

\n\n

Patrick W. Allender — Mr. Allender was elected to the Board of Directors in September 2007\nand serves as a member of the Audit and Compensation Committees. He is the former Executive Vice\nPresident and Chief Financial Officer of Danaher Corporation, which he joined in 1987 as CFO and\nsecretary. Prior to joining Danaher, Mr. Allender was a partner with Arthur Andersen LLP. Mr.\nAllender is currently a member of the Board of Directors of Colfax Corporation, and a member of the\nBoard of Visitors and Governors of Washington College.\n

\n\n

Bradley C. Richardson — Mr. Richardson was elected to the Board of Directors in November 2007\nand serves as chair of the Audit Committee and a member of the Finance Committee. He is Executive\nVice President, Corporate Strategy and Chief Financial Officer of Modine Manufacturing Company.\nPrior to his current position, he spent more than twenty years in a variety of financial and\noperational positions at BP Amoco including CFO and VP of performance management and control for\ntheir Worldwide Exploration and Production division based in London, president of their businesses\nin Venezuela and CFO for Amoco Energy Group North America. Mr. Richardson currently serves on the\nBoard of Directors for Modine Manufacturing Company and Tronox Incorporated.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

70\n

\n\n

Meetings of Non-management Directors — The non-management directors of the Board regularly\nmeet alone without any members of management present. Mr. Buchanan, Chairman of the Corporate\nGovernance Committee, is the presiding director at these sessions. In fiscal 2009, there were five\nexecutive sessions. Interested parties can raise concerns to be addressed at these meetings by\ncalling the confidential Brady hotline at 1-800-368-3613.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

Certifications — We have attached the required certifications under Section 302 of the\nSarbanes-Oxley Act of 2002 regarding the quality of our public disclosures as Exhibits 31.1 and\n31.2 to this report. Additionally, on October 20, 2008, the Company filed with the New York Stock\nExchange (“NYSE”) an annual certification regarding our compliance with the NYSE’s corporate\ngovernance listing standards as required by NYSE Rule 303A.12(a).\n

\n\n

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE\n

\n\n\n

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

\n\n

To the Company’s knowledge, based solely on a review of the copies of such reports furnished\nto the Company and written representations that no other reports were required, during the fiscal\nyear ended July 31, 2009, all Section 16(a) filing requirements applicable to its officers,\ndirectors and greater than 10 percent beneficial owners were complied with.\n

\n\n

71\n

\n\n

Item 11. Executive Compensation\n

\n\n

Compensation Discussion and Analysis\n\n

\n\n

The Compensation Discussion and Analysis explains the compensation philosophy, policies and\npractices of the Company with respect to its executives and management. The following information\nand analyses will focus primarily on the compensation provided to the Company’s principal executive\nofficer, principal financial officer and its other three most highly compensated executives, who\nare collectively referred to in this section as the “named executive officers.”\n

\n\n

For purposes of this section, named executive officers refers to Frank M. Jaehnert, President,\nChief Executive Officer and Director; Thomas J. Felmer, Senior Vice President and Chief Financial\nOfficer; Peter C. Sephton, President — Brady Europe and Vice President, Brady Corporation;\nMatthew O. Williamson, President — Brady Americas and Vice President, Brady Corporation; and Allan\nJ. Klotsche, President — Brady Asia-Pacific and Vice President, Brady Corporation.\n

\n\n

Executive Compensation Overview and Philosophy\n

\n\n\n

The goal of our executive compensation program is to build long-term value for our\nshareholders by aligning the financial interests of our management team with those of our\nshareholders. It is also intended to enable leadership to attract, motivate and retain a team of\nhighly talented individuals to run a top-tier performance company and ensure that the Company’s\nexecutives are in possession of a meaningful amount of Company stock.\n

\n\n

The Compensation Committee of the Board of Directors is responsible for monitoring and\napproving the compensation of the Company’s named executive officers. In compliance with this\nresponsibility, the Committee annually reviews the individual performance of these executives and\napproves any changes in their base salary, the payment of an annual cash incentive and grant of\nequity awards. The Committee periodically utilizes the services of an independent executive\ncompensation consulting firm to assist with the review and evaluation of our compensation levels\nand policies, although no outside review occurred in fiscal 2009. Their expertise may also be\nutilized in modifying any existing or proposing any new compensation arrangements. In addition to\nthis professional advice, the Committee relies upon its collective judgment and other available\ncompetitive information and data in making executive compensation decisions. The Committee has\navoided strict adherence to rigid guidelines or formulas when determining or modifying executive\ncompensation.\n

\n\n

In order to successfully achieve our Company objectives, a combination of short-term and\nlong-term incentives has been developed. The Compensation Committee believes a proper balance\nbetween these elements is necessary and includes a combination of cash and equity, with fixed and\nvariable components. These components are dependent upon Company financial performance. Our\nshort-term incentive is in the form of cash, while the long-term incentive is equity based and\nincludes performance-based and time-based stock options, along with performance-based restricted\nshares. We believe these programs are designed to specifically support the achievement of the\nCompany’s profitability and sales goals. We also believe these programs further enhance the\nperformance of the Company by providing effective tools to retain, attract and motivate a group of\nhighly skilled executives. This results in strong financial and operational performance, which\nsupports the preservation and enhancement of shareholder value over time, without incurring undue\nrisk to our shareholders.\n

\n\n

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

\n\n

72\n

\n\n

Elements of Executive Compensation for Fiscal 2009\n

\n\n\n

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

\n\n

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

\n\n

Base Salary\n

\n\n\n

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

\n\n

In addition to the nationally recognized compensation surveys, the Compensation Committee has\nhistorically used peer group data for similar positions nationally to test the reasonableness and\ncompetitiveness of several components of compensation, including base salaries, annual incentives,\nand long term incentives by position. Due to the global economic conditions and the related\nvolatility in executive compensation practices, a formal compensation benchmarking review of peer\ncompanies for named executive officers was not undertaken in fiscal 2009. The Compensation\nCommittee also uses judgment to determine the appropriate level of base salary, which we believe\nreflects individual performance and responsibilities, and calibrates with the most recently\navailable market compensation data. The peer group utilized includes 29 companies that are in a\nsimilar industry with annual revenues up to approximately $5 billion: Actuant Corporation, Agilent\nTechnologies, Inc., Alliant Techsystems Inc., AMETEK, Inc., Amphenol Corporation, Anixter\nInternational Inc., Barnes Group Inc., Bemis Company, Inc., Benchmark Electronics, Inc., Cooper\nIndustries, Ltd., Donaldson Company, Inc., DRS Technologies, Inc., Energizer Holdings, Inc., Exide\nTechnologies, Fastenal Company, Hubbell Incorporated, IDEX Corporation, Molex Incorporated, MSC\nIndustrial Direct Company, Inc., Nordson Corporation, Pentair, Inc., Rogers Corporation, Roper\nIndustries, Inc., SPX Corporation, Teleflex Incorporated, Thomas & Betts Corporation, Vishay\nIntertechnology, Inc., WESCO International, Inc., and Zebra Technologies Corporation. Included in\nthis peer group is a smaller subset of 13 companies that have annual revenues of less than $2\nbillion to provide data for similar sized companies to Brady. This subset includes: Actuant\nCorporation, AMETEK, Inc., Barnes Group Inc., Donaldson Company, Inc., DRS Technologies, Inc.,\nFastenal Company, IDEX Corporation, MSC Industrial Direct Company, Inc., Nordson Corporation,\nRogers Corporation, Roper Industries, Inc., Thomas & Betts Corporation, and Zebra Technologies\nCorporation. This list may vary in the future due to changes in our business or the business of\nthe companies utilized as peers.\n

\n\n

73\n

\n\n

The determination of base salary also affects the annual bonus payout since an individual’s\nannual bonus target is expressed as a percentage of base salary. The Compensation Committee also\nperiodically utilizes the services of an outside consultant to assist in understanding the\ncompensation levels in the market, although no services were utilized in fiscal 2009.\n

\n\n

In fiscal 2009, several cost reduction initiatives were effected to counter the impact of the\nglobal economic downturn on the Company’s financial performance. As a direct result of cancelling\nmerit-based salary increases for employees company-wide, none of the named executive officers\nreceived a merit-based base salary increase for fiscal 2009. Messrs. Felmer and Williamson\nreceived promotional increases in fiscal 2009 (for increased accountability and/or job\nchanges effected during fiscal 2008) ranging between eight and ten percent.\n

\n\n

Annual Cash Incentive Bonus\n

\n\n\n

All named executive officers participate in an annual cash incentive plan. This plan has a\nshort-term focus (one year) and is mainly based on the fiscal year financial results. Corporate\nearnings per share growth is a major component in each individual bonus plan. Other components\ninclude consolidated net sales, segment sales, segment profit, and working capital; each component\nis based on the individual’s role at either the corporate or segment level.\n

\n\n

As part of the annual review of compensation, the Compensation Committee takes into account\ntotal annual cash compensation in the marketplace as reflected in nationally recognized\ncompensation surveys. Salary combined with annual target bonus levels that have been established\nas a percentage of salary are intended to approximate the median of the market total annual cash\ncompensation, as defined in nationally recognized compensation surveys, provided that Brady\nperforms at a level to pay out at 100% of the targeted annual incentive award. Brady’s actual\nannual bonus payouts will vary above or below the targeted amount based on the actual performance\nof the Company during the fiscal year. The payouts for the Company’s named executives can range\nfrom 0% to 250% of the target. The Compensation Committee expects management to propose ambitious\ntargets. Any bonus payment above 100% of the target requires superior performance by the Company.\nIn order to be eligible to receive a bonus payout, an employee must hold a position within the\nCompany on the last day of the fiscal year.\n

\n\n

The Compensation Committee annually reviews the components of these plans, the required\nperformance levels at each target payout level and the calculation of the individual bonus awards.\nSales and net income must exceed the prior year in order for these components of the bonus plan to\npay out.\n

\n\n

The individual incentive target amounts are set at a percentage of base salary and the target\namounts are larger for individuals with greater levels of responsibility. The target bonus\npercentage for Mr. Jaehnert is 100% of his base salary, and for Messrs. Felmer, Sephton, Williamson\nand Klotsche are 70% of their base salaries. The following table provides the components of the\ntarget bonus percentages.\n


	Consolidated		Earnings		Working		Segment		Segment		Target
Name	Net Sales		Per Share		Capital		Sales (1)		Profit		Payout
Frank M. Jaehnert		10.0	%			80.0	%			10.0	%		NA	NA			100.0	%
Thomas J. Felmer		10.0	%			80.0	%			10.0	%		NA	NA			70.0	%
Peter C. Sephton	NA			20.0	%			10.0	%			10.0	%		60.0	%			70.0	%
Matthew O. Williamson	NA			20.0	%			10.0	%			10.0	%		60.0	%			70.0	%
Allan J. Klotsche	NA			20.0	%			10.0	%			10.0	%		60.0	%			70.0	%

\n\n\n\n

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


(1)		Segment sales for Messrs. Sephton, Williamson, and Klotsche are based on regional sales.

\n\n\n\n

For the fiscal year ended July 31, 2009, the Company did not pay an annual cash incentive\nbonus to any of the named executive officers as the components of the bonus did not exceed the\nprior year actual results. The impact of the extended global economic downturn significantly\nimpacted the income and revenue performance of the company. As a result, no bonuses were awarded\nto any of the named executive officers.\n

\n\n

74\n

\n\n

Equity Incentives: Long-term Incentive Compensation\n

\n\n\n

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

\n\n

Performance-based Stock Options:\n

\n\n\n

Prior to fiscal 2009, the Compensation Committee had established a minimum stock price ($46\nper share) that must be achieved prior to the issuance of any additional performance-based stock\noptions. As a result of not attaining a stock price at this level, no performance-based stock\noptions were granted during fiscal 2009.\n

\n\n

On account of the effects of the global economic downturn on the Company’s stock price, which\nmade the achievement of the minimum stock price unlikely in the near future, and the Compensation\nCommittee’s belief that performance-based stock options still serve as an important motivator and\nrequired component of the Company’s overall compensation program, a new three-year\nperformance-based stock option plan is being implemented in fiscal 2010. The performance criteria\nof this new plan establish minimum annual earnings per share growth targets as well as relative\nmeasure of the Company’s three year earning per share growth compared to the S&P SmallCap 600\nIndex. These options have a ten year-life.\n

\n\n

Time-based Stock Options:\n

\n\n\n

The timing of the grant of time-based stock options is determined at the mid-November\nCompensation Committee meeting each year. The grant date is established approximately two weeks\nfollowing the release of the first quarter earnings in November. Time-based stock option grants in\nfiscal 2009 were reviewed and approved by the Compensation Committee on November 20, 2008 with an\neffective grant date of December 4, 2008. The grant price is the fair market value of the stock on\nthe grant date and is calculated by taking the average of the high and low stock price on that\ndate. The time-based stock options generally vest one-third each year for the first three years\nand have a ten year life.\n

\n\n

In order to coordinate the evaluation of time-based stock options with the annual performance\nand compensation reviews, for fiscal 2010 the timing of the grant of time-based stock options were\ndetermined at the mid-September Compensation Committee meeting. The grant date will be\napproximately two weeks following the September Compensation Committee meeting. The grant price\nwill be the fair market value of the stock on the grant date and will be calculated by taking the\naverage of the high and low stock price on the date of grant. The time-based options will vest\none-third each year for the first three years and have a ten-year life.\n

\n\n

Performance-based Restricted Stock\n

\n\n\n

Periodically, the Company issues restricted stock grants to key executives as an additional\nretention element of their overall compensation. In January 2008, the Compensation Committee\napproved the issuance of performance restricted stock awards to six of Brady’s senior executives.\nA total of 210,000 restricted shares were issued and included both a performance vesting\nrequirement (earnings per share) and a service vesting requirement (five years). No new shares\nwere issued during fiscal 2009 as the Compensation Committee concluded that outstanding restricted\nshares served as a sufficient retention element.\n

\n\n

Employment and Post-Employment Benefits\n

\n\n\n

General Benefits:\n\n

\n\n

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

\n\n

75\n

\n\n

Retirement Benefits:\n

\n\n\n

Most Brady employees in the United States and certain expatriate employees working for its\ninternational subsidiaries are eligible to participate in Brady Corporation’s Funded Retirement\nPlan (“Funded Retirement Plan”) and the Brady Corporation Matched 401(k) Plan (the “Employee 401(k)\nPlan”). Under these plans the Company agrees to contribute certain amounts to both Plans. Under the\nFunded Retirement Plan, the Company contributes 4% of the eligible earnings of each person covered\nby the Funded Retirement Plan. In addition, participants may elect to have their annual pay reduced\nby up to 5% and have the amount of this reduction contributed to the Employee 401(k) Plan and\nmatched by an additional 4% contribution by the Company. Participants may also elect to have up to\nanother 45% of their eligible earnings contributed to the Employee 401(k) Plan (without an\nadditional matching contribution by the Company). The assets of the Employee 401(k) Plan and Funded\nRetirement Plan credited to each participant are invested by the trustee of the Plans as directed\nby each plan participant in several investment funds as permitted by the Employee 401(k) Plan and\nFunded Retirement Plan.\n

\n\n

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

\n\n

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

\n\n

Deferred Compensation Arrangements — During fiscal 2002, the Company adopted a deferred\ncompensation plan titled the Brady Corporation Executive Deferred Compensation Plan (“Executive\nDeferred Compensation Plan”), under which executive officers, corporate staff officers and certain\nkey management employees of the Company are permitted to defer portions of their salary and bonus\ninto a plan account, the value of which is measured by the fair value of the underlying\ninvestments. The assets of the Executive Deferred Compensation Plan are held in a Rabbi Trust and\nare invested by the trustee as directed by the participant in several investment funds as permitted\nby the Executive Deferred Compensation Plan. The investment funds available in the Executive\nDeferred Compensation Plan include Brady Corporation Class A Nonvoting Common Stock and various\nmutual funds that are provided in the Employee 401(k) Plan. On May 1, 2006, the plan was amended to\nrequire that deferrals into the Company’s Class A Nonvoting Common Stock must remain in the\nCompany’s Class A Nonvoting Common Stock and be distributed in shares of the Company’s Class A\nNonvoting Common Stock.\n

\n\n

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

\n\n

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

\n\n

Perquisites:\n

\n\n\n

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

\n\n

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

	•		Annual allowance for financial and tax planning

	•		Eligibility for annual physical

	•		Company car

	•		Long-term care insurance

	•		Personal liability insurance

76\n

\n\n\n

\n\n\n\n

\n\n

Stock Ownership Guidelines\n

\n\n\n

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

\n\n

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

\n\n

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


Frank M. Jaehnert\n		100,000 shares
Thomas J. Felmer\n		30,000 shares
Peter C. Sephton\n		30,000 shares
Matt O. Williamson\n		30,000 shares
Allan J. Klotsche\n		30,000 shares

\n\n\n

The stock ownership guideline for each director is 5,000 shares of Company stock.\n

\n\n\n

The Company’s CEO complied with these ownership levels in 2009. Named executive officers\nother than the Company’s CEO have until fiscal year 2013 to achieve these ownership levels. If an\nexecutive does not meet the above ownership level or certain interim levels, the executive’s\nafter-tax payout on any incentive plans will be in Class A Nonvoting Common Stock to bring the\nexecutive up to the required level. The Compensation Committee reviews the actual stock ownership\nlevels of each of the named executive officers on an annual basis to ensure the guidelines are met.\n

\n\n

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

\n\n

Employment and Change of Control Agreements\n

\n\n\n

The Board of Directors of Brady Corporation approved change of control agreements for certain\nexecutive officers of the Company, including all the named executive officers. The agreements\napplicable to all of the named executive officers other than Mr. Jaehnert call for payment of an\namount equal to two times their annual base salary and two times the average bonus payment received\nin the three years immediately prior to the date the change of control occurs in the event of\ntermination or resignation upon a change of control. The agreements also call for reimbursement of\nany excise taxes imposed and up to $25,000 of attorney fees to enforce the executive’s rights under\nthe agreement. Payments under the agreement will be spread over two years.\n

\n\n

In May 2003, the Board approved a Change of Control Agreement for Mr. Jaehnert, which was\nsubsequently amended and restated in December 2008 to comply with Internal Revenue Code Section\n409A. The agreement calls for payment of an amount equal to three times the annual salary and\nbonus for Mr. Jaehnert in the event of termination or resignation upon a change of control. The\nagreement also calls for reimbursement of any excise taxes imposed and up to $25,000 of attorney\nfees to enforce the executive’s rights under the agreement. Payments under the agreement will be\nspread over three years.\n

\n\n

Compliance with Tax Regulations Regarding Executive Compensation\n

\n\n\n

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

\n\n

77\n

\n\n\n\n

executive compensation program. It is the Compensation Committee’s intent to preserve the\ndeductibility of executive compensation to the extent reasonably practicable and to the extent\nconsistent with its other compensation objectives.\n

\n\n

Compensation Committee Interlocks and Insider Participation\n

\n\n\n

During fiscal 2009, the Board’s Compensation Committee was composed of Messrs. Allender,\nBuchanan, Jarc and Nei. None of these persons has at any time been an employee of the Company or\nany of its subsidiaries. There are no relationships among the Company’s executive officers,\nmembers of the Compensation Committee or entities whose executives serve on the Board that require\ndisclosure under applicable SEC regulations.\n

\n\n

Compensation Committee Report\n

\n\n\n

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis\nwith management; and based on the review and discussions, the Compensation Committee recommended to\nthe Board of Directors that the Compensation Discussion and Analysis be included in the Company’s\nannual report on Form 10-K.\n

\n\n

Gary E. Nei, Chairman
\nPatrick W. Allender
\nRobert C. Buchanan
\nFrank R. Jarc\n\n

\n\n

Summary Compensation Table\n

\n\n\n

The following table sets forth compensation awarded to, earned by, or paid to the named\nexecutive officers, who served as executive officers during the fiscal year ended July 31, 2009 for\nservices rendered to the Company and its subsidiaries during the fiscal years ended July 31, 2009,\nJuly 31, 2008 and July 31, 2007.\n


													Non-Equity
							Restricted		Option	Incentive Plan		All Other
	Fiscal		Salary	Stock Awards		Awards	Compensation		Compensation	Total
Name And Principal Position	Year		($)	($)(1)		($)(1)	($)(2)		($)(3)	($)
F.M. Jaehnert		2009			750,000			328,300			577,097			—	176,519	1,846,339
President & Chief Executive\nOfficer		2008			723,077			191,508			804,867			703,554	150,048	2,573,054
		2007			638,987			—			860,224			430,677	153,510	2,083,398

T.J. Felmer		2009			318,269			229,810			288,549			—	62,080	904,958
Senior Vice President & Chief\nFinancial Officer		2008			293,269			134,056			402,433			98,128	60,689	988,575
		2007			268,269			—			416,072			184,458	65,133	933,932

P.C. Sephton(4)		2009			325,710			229,810			288,549			—	86,787	924,070
President — Brady Europe		2008			399,920			134,056			402,433			314,097	103,042	1,353,548
		2007			352,970			—			418,232			326,886	95,539	1,193,627

M. O. Williamson		2009			326,843			229,810			288,549			—	62,023	913,665
President — Brady Americas		2008			299,615			134,056			402,433			183,410	65,794	1,085,308
		2007			279,340			—			418,232			234,939	61,322	993,833

A.J. Klotsche		2009			290,000			229,810			288,549			—	61,320	875,256
President — Brady Asia Pacific		2008			285,962			134,056			402,433			128,411	52,487	1,003,349
		2007			268,269			—			416,072			53,914	64,873	803,128

\n\n\n\n

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


(1)		Represents the amounts expensed in fiscal 2009 relating to grants of\nperformance-based stock options, time-based stock options and\nrestricted stock awards. The Company accounts for stock-based\ncompensation in accordance with SFAS No. 123(R), which requires it to\nrecognize compensation expense for stock options granted to employees\nand directors

\n\n\n

78\n

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


		based on the estimated fair value of the awards at the\ntime of grant. The assumptions used to determine the value of the\nawards, including the use of the Black-Scholes method of valuation by\nthe Company, are discussed in Note 1 of the Notes to Consolidated\nFinancial Statements of the Company contained in Item 8 of this Form\n10-K for the fiscal year\nended July 31, 2009.\n

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

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

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

(3)		The amounts in this column for Messrs. Jaehnert, Felmer, Williamson,\nand Klotsche include: matching contributions to the Company’s Matched\n401(k) Plan, Funded Retirement Plan and Restoration Plan, the costs of\ngroup term life insurance for each named executive officer, use of a\nCompany car and associated expenses, the cost of long-term care\ninsurance, the cost of personal liability insurance and other\nperquisites. The perquisites may include an annual allowance for\nfinancial and tax planning and the cost of an annual physical health\nexam.

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

\n\n\n


				Retirement		Group Term				Long-term		Personal
				Plan		Life	Company		Care	Liability
	Fiscal		Contributions	Insurance		Car	Insurance		Insurance	Other		Total
Name	Year		($)	($)		($)	($)		($)	($)		($)
F.M. Jaehnert		2009			116,284			3,042			27,698		1,621	2,654	25,220	176,519
		2008			93,254			3,042			26,129		1,683	1,520	24,420	150,048
		2007			104,230			4,259			26,935		1,683	843	15,560	153,510
T.J. Felmer		2009			32,528			890			26,401		1,621	—	640	62,080
		2008			37,434			572			20,380		1,683	—	620	60,689
		2007			41,585			872			20,993		1,683	—	—	65,133
P.C. Sephton(4)		2009			52,114			1,749			32,924		—	—	—	86,787
		2008			63,987			2,308			36,747		—	—	—	103,042
		2007			56,475			2,349			36,715		—	—	—	95,539
M. O. Williamson		2009			40,038			919			18,309		1,621	—	1,136	62,023
		2008			42,241			590			21,280		1,683	—	—	65,794
		2007			36,396			733			22,510		1,683	—	—	61,322
A. J. Klotsche		2009			33,525			816			20,033		946	—	6,000	61,320
		2008			26,798			761			24,519		409	—	—	52,487
		2007			41,163			563			22,166		982	—	—	64,873

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


(4)		The amounts in this table for Mr. Sephton, who works and lives in the\nUnited Kingdom, were paid to him in British Pounds. The amounts shown\nin U.S. dollars in the table above were converted from British Pounds\nat the average exchange rate for fiscal 2009: $1 = £0.6294, fiscal\n2008: $1 = £0.5001, fiscal 2007: $1 = £0.5135.

\n\n\n\n\n

79\n

\n\n

Grants of Plan-Based Awards for 2009\n

\n\n\n

The following table summarizes grants of plan-based awards made during fiscal 2009 to the\nnamed executive officers.\n


																All		All Other
																Other		Option
																Stock		Awards;
																Awards;		Number	Exercise
																Number		of	or Base		Grant
																of		Securities	Price of		Date Fair
				Compen-		Estimated Future Payouts Under	Shares		Under-	Stock or		Value of
				sation		Non-Equity Incentive Plan Awards	of Stocks		lying	Option		Stock and
				Committee		(1)	or Units		Options	Awards		Option
	Grant		Approval	Threshold					Maximum	(#)(2)		(#)(3)	($/Share)		Awards
Name	Date		Date	($)		Target ($)	($)		(#)	(#)		(4)	($)
F.M. Jaehnert		8/1/2008			7/22/2008			—			750,000			1,947,115			—
		12/4/2008			11/20/2008			—			—			—			—			50,000		20.9500	321,945
		8/2/2004			3/4/2009												60,000						67,421
T.J. Felmer		8/1/2008			7/22/2008			—			227,788			826,923			—
		12/4/2008			11/20/2008			—			—			—			—			25,000		20.9500	160,973
		8/2/2004			3/4/2009												20,000						22,474
P.C. Sephton		8/1/2008			7/22/2008			—			227,997			814,275			—
		12/4/2008			11/20/2008			—			—			—			—			25,000		20.9500	160,973
		8/2/2004			3/4/2009												30,000						33,710
M.O.\nWilliamson		8/1/2008			7/22/2008			—			228,790			849,308			—
		12/4/2008			11/20/2008			—			—			—			—			25,000		20.9500	160,973
		8/2/2004			3/4/2009												30,000						33,710
A.J. Klotsche		8/1/2008			7/22/2008			—			203,000			752,885			—
		12/4/2008			11/20/2008			—			—			—			—			25,000		20.9500	160,973
		8/2/2004			3/4/2009												30,000						33,710

\n\n\n\n\n

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


(1)		The awards were made under the Company’s annual cash incentive\nplan. The structure of the plan is described in Compensation\nDiscussion and Analysis above. Award levels are set prior to the\nbeginning of the fiscal year and payouts can range from 0% to\n250% of the target. The impact of the extended global economic\ndownturn significantly impacted the income and revenue\nperformance of the Company. As a result, no bonuses under the\ncash incentive plan were awarded to any of the named executive\nofficers.

(2)		Effective March 4, 2009, the Compensation Committee of the Board\nof Directors of the Company approved an amendment to the granting\nagreement under which the Company issued performance-based stock\noptions on August 2, 2004. Pursuant to the amendment, the\nexercise period for the performance-based stock options was\nextended to ten years from five years. Also, the amendment\nprovided that during the extension period, executives may\nexercise the performance-based stock options following a\ntermination only if the termination is as a result of the\nexecutive’s death or disability or qualifies as a retirement.\nThe modification value is the FAS 123R incremental fair value as\nof the modification date.

(3)		The options granted become exercisable as follows: one-third of\nthe shares on December 4, 2009, one-third of the shares on\nDecember 4, 2010 and one-third of the shares on December 4, 2011.\nThese options have a term of ten years and were calculated using\nFAS 123R grant date fair value.

(4)		The exercise price is the average of the high and low sale prices\nof the Company’s Class A Common Stock as reported by the New York\nStock Exchange on the date of the grant. The closing prices of\nthe Company’s Class A Common Stock as reported by the New York\nStock Exchange on the dates of the grants was $20.81 per share on\nDecember 4, 2008.

\n\n\n

80\n

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

\n\n

Outstanding Equity Awards at 2009 Fiscal Year End\n

\n\n

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


				Option Awards (1)							Stock Awards
							Equity							Equity Incentive
							Incentive Plan							Plan Awards;	Equity Incentive
	Number of		Number of	Awards:							Number of	Plan Awards:
	Securities		Securities	Number of							Unearned	Market or Payout
	Underlying		Underlying	Securities							Shares, Units or	Value of Unearned
	Unexercised		Unexercised	Underlying		Option			Other Rights		Shares, Units or
	Options		Options	Unexercised		Exercise			That Have Not		Other Rights That
	Exercisable		Unexercisable	Unearned		Price	Option	Vested	Have Not Vested
Name	(#)		(#)	Options (#)		($)	Expiration Date	(#)	($)
F.M. Jaehnert		60,000								33.8900			8/1/2010
		20,000								14.1575			10/24/2010
		26,000								16.0000			10/16/2011
		30,000								16.3875			11/14/2012
		200,000								13.3100			2/24/2013
		72,000								17.3250			11/20/2013
		60,000								22.6325			8/2/2014
		60,000								28.8425			11/18/2014
		50,000								37.8300			11/30/2015
		33,334			16,666	(2)				38.1900			11/30/2016
		16,667			33,333	(3)				38.3100			12/4/2017
					50,000	(5)				20.9500			12/4/2018
																50,000	(4)	1,470,500
T.J. Felmer		30,000								33.8900			8/1/2010
		8,000								14.1575			10/24/2010
		8,000								16.0000			10/16/2011
		10,000								16.3875			11/14/2012
		10,000								17.3250			11/20/2013
		20,000								22.6325			8/2/2014
		30,000								28.8425			11/18/2014
		25,000								37.8300			11/30/2015
		16,667			8,333	(2)				38.1900			11/30/2016
		8,334			16,666	(3)				38.3100			12/4/2017
					25,000	(5)				20.9500			12/4/2018
																35,000	(4)	1,029,350
P.C. Sephton		30,000								33.8900			8/1/2010
		14,000								17.3250			11/20/2013
		30,000								22.6325			8/2/2014
		30,000								28.8425			11/18/2014
		25,000								37.8300			11/30/2015
		16,667			8,333	(2)				38.1900			11/30/2016
		8,334			16,666	(3)				38.3100			12/4/2017
					25,000	(5)				20.9500			12/4/2018
																35,000	(4)	1,029,350
M.O. Williamson		30,000								33.8900			8/1/2010
		5,500								16.0000			10/16/2011
		10,000								16.3875			11/14/2012
		14,000								17.3250			11/20/2013
		30,000								22.6325			8/2/2014
		30,000								28.8425			11/18/2014
		25,000								37.8300			11/30/2015
		16,667			8,333	(2)				38.1900			11/30/2016
		8,334			16,666	(3)				38.3100			12/4/2017
					25,000	(5)				20.9500			12/4/2018
																35,000	(4)	1,029,350

\n\n\n\n

81\n

\n\n

Option Awards (1)

Stock Awards

Equity

Equity Incentive

Incentive Plan

Plan Awards;

Equity Incentive

Number of

Awards:

Number of

Plan Awards:

Securities

Number of

Unearned

Market or Payout

Underlying

Securities

Shares, Units or

Value of Unearned

Unexercised

Underlying

Option

Other Rights

Shares, Units or

Options

Unexercised

Exercise

That Have Not

Other Rights That

Exercisable

Unexercisable

Unearned

Price

Option

Vested

Have Not Vested

Name

(#)

Options (#)

($)

Expiration Date

(#)

($)

A. J. Klotsche

5,400

14.16

10/24/2010

30,000

33.8900

8/1/2010

5,400

16.0000

10/16/2011

10,000

16.3875

11/14/2012

10,000

17.3250

11/20/2013

30,000

22.6325

8/2/2014

30,000

28.8425

11/18/2014

25,000

37.8300

11/30/2015

16,667

8,333

(2)

38.1900

11/30/2016

8,334

16,666

(3)

38.3100

12/4/2017

25,000

(5)

20.9500

12/4/2018

35,000

(4)

1,029,350

\n\n\n\n\n

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


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

(2)		All vest on November 30, 2009.

(3)		One-third of the options vested on December 4, 2008, one-third of\nthe options vest on December 4, 2009 and one-third of the options\nvest on December 4, 2010.

(4)		All vest on January 8, 2013, subject to meeting performance criteria.

(5)		One-third of the options vested on December 4, 2009, one-third of\nthe options vest on December 4, 2010 and one-third of the options\nvest on December 4, 2011.

\n\n\n

\n\n

Option Exercises and Stock Vested for Fiscal 2009\n

\n\n\n

The following table summarizes option exercises completed during fiscal 2009 to the named\nexecutive officers.\n


	Option Awards
	Number of Shares
	Acquired on		Value Realized
Name	Exercise (#)		on Exercise ($)
F.M. Jaehnert		22,200		306,063
T.J. Felmer		18,000		226,425
P.C. Sephton	None		None
M.O. Williamson	None		None
A.J. Klotsche		34,734		616,156

\n\n

Non-Qualified Deferred Compensation for Fiscal 2009\n

\n\n\n

The following table summarizes the activity within the Executive Deferred Compensation Plan\nand the Brady Restoration Plan during fiscal 2009 for the named executive officers.\n


	Executive		Registrant	Aggregate		Aggregate	Aggregate
	Contributions in		Contributions in	Earnings in		Withdrawals/	Balance at
	Last Fiscal Year		Last Fiscal Year	Last Fiscal Year		Distributions	Last Fiscal Year
Name	($)		($)	($)		($)	End ($)
F.M. Jaehnert		554,586			97,284			(517,541	)	—	3,030,405
T.J. Felmer		122,909			13,758			(177,097	)	—	717,582
P.C. Sephton		—			—			—		—	—
M.O. Williamson		56,373			21,041			(112,313	)	—	575,622
A.J. Klotsche		8,636			15,073			(70,083	)	—	326,767

\n\n\n

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

\n\n\n

82\n

\n\n\n\n

\n\n

Potential Payments Upon Termination or Change in Control\n

\n\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

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

	•		The amounts shown in the tables assume that each named executive officer terminated\nemployment on July 31, 2009. Accordingly, the tables reflect amounts earned as of July 31,\n2009 and include estimates of amounts that would be paid to the named executive officer upon\nthe occurrence of a change in control. The actual amounts that would be paid to a named\nexecutive officer can only be determined at the time of termination.

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

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

83\n

\n\n\n

\n\n\n\n

\n\n

Frank M. Jaehnert\n

\n\n\n

The following table shows the amount payable assuming that the terms of the change of control\nagreement were triggered on July 31, 2009 and the named executive officer had to legally enforce\nthe terms of the agreement.\n


				Restricted Stock							Legal Fee
				Award		Stock Option	Excise Tax		Reimbursement
	Bonus ($)		Acceleration Gain	Acceleration		Reimbursement	($)
Base Salary ($)(1)	(2)		$ (3)	Gain $ (4)		($)	(5)		Total ($)
2,250,000		1,996,539			1,470,500			423,000		949,997		25,000	7,115,036

\n\n\n\n

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


(1)		Represents three times the base salary in effect at July 31, 2009.

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

(3)		Represents the closing market price of $29.41 on 50,000 unvested awards that would vest due to the\nchange in control.

(4)		Represents the difference between the closing market price of $29.41 and the exercise price on 50,000\nunvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n

Thomas J. Felmer\n

\n\n\n


				Restricted Stock							Legal Fee
				Award		Stock Option	Excise Tax		Reimbursement
				Acceleration Gain		Acceleration	Reimbursement		($)
Base Salary ($)(1)	Bonus ($) (2)		$ (3)	Gain $ (4)		($)	(5)		Total ($)
650,000		374,606			1,029,350			211,500		377,563		25,000	2,668,019

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2009.

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

(3)		Represents the closing market price of $29.41 on 35,000 unvested awards that would vest due to the\nchange in control.

(4)		Represents the difference between the closing market price of $29.41 and the exercise price on\n25,000 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n

Peter C. Sephton\n

\n\n\n


				Restricted Stock							Legal Fee
				Award		Stock Option	Excise Tax		Reimbursement
				Acceleration Gain		Acceleration	Reimbursement		($)
Base Salary ($)(1)	Bonus ($) (2)		$ (3)	Gain $ (4)		($)	(5)		Total ($)
684,905		585,023			1,029,350			211,500		387,721		25,000	2,923,499

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2009. As Mr. Sephton works and lives in\nthe United Kingdom, his base salary is paid to him in British Pounds. The amount shown in U.S.\ndollars was converted from British Pounds at the July month-end exchange rate: $1 = £0.5986.

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

(3)		Represents the closing market price of $29.41 on 35,000 unvested awards that would vest due to the\nchange in control.

(4)		Represents the difference between the closing market price of $29.41 and the exercise price on\n25,000 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n\n

84\n

\n\n\n

Matthew O. Williamson\n

\n\n\n


				Restricted Stock		Stock Option				Legal Fee
Base Salary ($)				Award Acceleration		Acceleration Gain $	Excise Tax		Reimbursement ($)
(1)	Bonus ($) (2)		Gain $ (3)	(4)		Reimbursement ($)	(5)		Total ($)
669,780		458,581			1,029,350			211,500			407,326	25,000	2,801,537

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2009.

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

(3)		Represents the closing market price of $29.41 on 35,000 unvested awards that would vest due to the\nchange in control.

(4)		Represents the difference between the closing market price of $29.41 and the exercise price on\n25,000 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n

Allan J. Klotsche\n

\n\n\n


				Restricted Stock		Stock Option				Legal Fee
Base Salary ($)				Award Acceleration		Acceleration Gain $	Excise Tax		Reimbursement ($)
(1)	Bonus ($) (2)		Gain $ (3)	(4)		Reimbursement ($)	(5)		Total ($)
580,000		277,848			1,029,350			211,500			391,443	25,000	2,515,141

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2009.

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

(3)		Represents the closing market price of $29.41 on 35,000 unvested awards that would vest due to the\nchange in control.

(4)		Represents the difference between the closing market price of $29.41 and the exercise price on\n25,000 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n

Potential Payments Upon Termination Due to Death or Disability\n

\n\n\n

In the event of termination due to death or disability, all unexercised, unexpired stock\noptions would immediately vest and all restricted stock awards would immediately become\nunrestricted and fully vested. The following table shows the amount payable to the named executive\nofficers should this event occur on July 31, 2009.\n


	Unvested Shares					Unvested Stock
	of Restricted					Options
	Stock		Restricted Stock	In-the		Stock Option
	as of		Award Acceleration	Money as of		Acceleration
Name	July 31, 2009		Gain $ (1)	July 31, 2009		Gain $ (2)
F.M. Jaehnert		50,000			1,470,500		50,000	423,000
T.J. Felmer		35,000			1,029,350		25,000	211,500
P.C. Sephton		35,000			1,029,350		25,000	211,500
M.O. Williamson		35,000			1,029,350		25,000	211,500
A.J. Klotsche		35,000			1,029,350		25,000	211,500

\n\n\n\n

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


(1)		Represents the closing market price of $29.41 on unvested shares that\nwould vest due to the change in control.

(2)		Represents the difference between the closing market price of $29.41\nand the exercise price on unvested stock options in-the-money that\nwould vest due to death or disability.

\n\n\n

85\n

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

\n\n

Compensation of Directors\n

\n\n\n

To ensure competitive compensation for the directors, surveys prepared by various consulting\nfirms and the National Association of Corporate Directors are reviewed by the Corporate Governance\nCommittee in making recommendations to the Board of Directors regarding director compensation.\nDirectors who are employees of the Company receive no additional compensation for service on the\nBoard or on any committee of the Board. Directors who were not also employees of the Company\nreceived an annual retainer of $35,000 plus $6,000 for each committee they chair ($10,000 for the\naudit committee chair) and $1,500 plus expenses for each meeting of the Board or any committee\nthereof, which they attend and are a member or $1,000 for single issue telephonic committee\nmeetings of the Board. Directors also receive $1,000 for each meeting they attend of any committee\nfor which they are not a member and $500 for each telephonic committee meeting they attend of any\ncommittee for which they are not a member. Effective with the annual Board of Directors meeting to\nbe held on November 19, 2009, the annual cash retainer paid to\neach non-management Director will\nincrease from $35,000 to $45,000.\n

\n\n

Directors have historically been granted 6,000 time-based stock options in November/December\nof each year while they are serving on the Board. Upon election to the Board, a director is\ngranted 10,000 time-based stock options. The grant price is the fair market value of the stock on\nthe grant date and is calculated by taking the average of the high and low stock price on that\ndate. The options vest one-third each year for the first three years and have a ten year life.\nEffective in fiscal 2010, the annual grant of stock options has been increased from 6,000 shares to\n8,400 shares and will occur in late September to coincide with the annual grant of time-based stock\noptions to employees of the Company.\n

\n\n

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

\n\n

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

\n\n

Director Compensation Table\n

\n\n


	Fees Earned
	or Paid in		Option
Name	Cash ($)		Awards ($) (1)	Total ($)
Elizabeth Pungello		65,000			38,822	103,822
Robert C. Buchanan		79,500			38,822	118,322
Richard A. Bemis		69,000			38,822	107,822
Frank W. Harris		63,500			38,822	102,322
Gary E. Nei		68,000			38,822	106,822
Frank R. Jarc		76,500			38,822	115,322
Chan W. Galbato		74,500			114,548	189,048
Patrick W. Allender		76,000			84,159	160,159
Conrad G. Goodkind		82,500			84,159	166,659
Bradley C. Richardson		81,000			56,860	137,860

\n\n\n

86\n

\n\n\n\n

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


(1)		Represents the amounts expensed in fiscal 2009 relating to grants of\nstock options. The Company accounts for stock-based compensation in\naccordance with SFAS No. 123(R), which requires it to recognize\ncompensation expense for stock options granted to employees and\ndirectors based on the estimated fair value of the awards at the time\nof grant. The assumptions used to determine the value of the awards,\nincluding the use of the Black-Scholes method of valuation by the\nCompany, are discussed in Note 1 of the Notes to Consolidated\nFinancial Statements of the Company contained in Item 8 of this Form\n10-K for the fiscal year ended July 31, 2009. The grant date fair\nvalue of options granted in fiscal 2009 for each director was $38,820\nfor Ms. Pungello, Mr. Buchanan, Mr. Bemis, Mr. Harris, Mr. Nei, Mr.\nJarc, Mr. Galbato, Mr. Allender, Mr. Goodkind, and for Mr. Richardson.\nThe actual value, if any, which an option holder will realize upon the\nexercise of an option will depend on the excess of the market value of\nthe Company’s common stock over the exercise price on the date the\noption is exercised, which cannot be forecasted with any accuracy.\n

(1)		\nOutstanding option awards at July 31, 2009 for each individual serving\nas a director on that date include the following: Ms. Pungello, 36,000\nshares; Mr. Buchanan, 24,000 shares; Mr. Bemis, 45,000 shares; Mr.\nHarris, 45,000 shares; Mr. Nei, 39,000 shares; Mr. Jarc, 48,000\nshares; Mr. Galbato, 22,000 shares; Mr. Allender, 22,000 shares; Mr.\nRichardson, 16,000 shares; and Mr. Goodkind, 22,000 shares.

\n\n\n

87\n

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

\n\n

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

\n\n\n

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

\n\n

The following table sets forth the current beneficial ownership of shareholders who are known\nby the Company to own more than five percent (5%) of any class of the Company’s voting shares on\nAugust 15, 2009. As of that date, nearly all of the voting stock of the Company was held by two\ntrusts controlled by direct descendants of the Company’s founder, William H. Brady, as follows:\n


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

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

\n\n\n\n\n

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


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

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

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

\n\n\n\n

(b) Security Ownership of Management\n

\n\n\n

The following table sets forth the current beneficial ownership of each class of equity\nsecurities of the Company by each Director or Nominee and by all Directors and Officers of the\nCompany as a group as of July 31, 2009. Unless otherwise noted, the address for each of the listed\npersons is c/o Brady Corporation, 6555 West Good Hope Road, Milwaukee, Wisconsin 53223. Except as\notherwise indicated, all shares are owned directly.\n


		Amount of
		Beneficial		Percent of
Title of Class	Name of Beneficial Owner & Nature of Beneficial Ownership	Ownership(6)		Ownership
Class A Common Stock	Elizabeth P. Pungello(1)		1,348,387		2.6	%
	Frank M. Jaehnert(2)		753,844		1.4
	Allan J. Klotsche		188,803		0.4
	Thomas J. Felmer		197,670		0.4
	Matthew O. Williamson		191,582		0.4
	Peter C. Sephton		189,401		0.4
	Richard A. Bemis		99,652		0.2
	Robert C. Buchanan(3)		85,031		0.2
	Frank W. Harris		72,578		0.1
	Gary E. Nei(4)		63,545		0.1
	Conrad G. Goodkind		62,226		0.1
	Frank R. Jarc		49,188		0.1
	Chan W. Galbato		8,667		*
	Patrick W. Allender		13,745		*
	Bradley C. Richardson		4,531		*
	All Officers and Directors as a Group (20 persons)(5)		3,497,019		6.7	%
Class B Common Stock	Elizabeth P. Pungello(1)		1,769,304		50.0	%

\n\n\n\n

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


*		Indicates less than one-tenth of one percent.

\n\n\n

88\n

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


(1)		Ms. Pungello’s holdings of Class A Common Stock include 445,506 shares held jointly with her\nspouse and 876,826 shares owned by trusts for which she is a trustee and has either sole or\njoint dispositive and voting authority. Ms. Pungello’s holdings of Class B Common Stock include\n1,769,304 shares owned by a trust over which she has sole dispositive and voting authority.

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

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

(4)		Of the amount reported, Mr. Nei owns 14,085 shares of Class A Common Stock directly (with\nrespect to which he shares voting and investment power with his spouse).

(5)		The amount shown for all officers and directors individually and as a group (20 persons)\nincludes options to acquire a total of 1,673,310 shares of Class A Common Stock, which are\ncurrently exercisable or will be exercisable within 60 days of July 31, 2009, including the\nfollowing: Ms. Pungello, 24,000 shares; Mr. Jaehnert, 644,668 shares; Mr. Klotsche, 179,135\nshares; Mr. Felmer, 174,335 shares; Mr. Williamson, 177,835 shares; Mr. Sephton, 154,001 shares;\nMr. Bemis, 33,000 shares; Mr. Buchanan, 12,000 shares; Mr. Harris, 33,000 shares; Mr. Nei,\n27,000 shares; Mr. Goodkind, 8,667 shares; Mr. Jarc, 36,000 shares; Ms. Bolens, 31,000 shares;\nMr. Tatterson, 25,001 shares; Ms. Johnson, 47,000 shares; Mr. Curran, 46,000; Mr. Galbato, 8,667\nshares; Mr. Allender, 8,667 shares; Mr. Richardson, 3,334 shares. It does not include other\noptions for Class A Common Stock which have been granted at later dates and are not exercisable\nwithin 60 days of July 31, 2009.

(6)		The amount shown for all officers and directors individually and as a group (20 persons)\nincludes Class A Common Stock owned in deferred compensation plans totaling 274,934 shares of\nClass A Common Stock, including the following: Ms. Pungello, 2,055 shares; Mr. Jaehnert, 79,858\nshares; Mr. Klotsche, 7,316 shares; Mr. Felmer, 10,087 shares; Mr. Williamson, 13,747 shares;\nMr. Sephton, 0 shares; Mr. Bemis, 48,652 shares; Mr. Buchanan, 56,798 shares; Mr. Harris, 80\nshares; Mr. Nei, 22,460 shares; Mr. Goodkind, 6,022 shares; Mr. Jarc, 13,188 shares; Ms. Bolens,\n2,752 shares; Mr. Tatterson, 0 shares; Ms. Johnson, 5,540; Mr. Curran, 99 shares; Mr. Galbato, 0\nshares; Mr. Allender, 5,078 shares; Mr. Richardson, 1,197 shares.

\n\n\n\n

(c) Changes in Control\n

\n\n\n

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

\n\n

(d) Equity Compensation Plan Information\n

\n\n

Number of securities

remaining available for

Number of securities

future issuance under

to be issued upon

Weighted-average

equity compensation

exercise of

exercise price of

plans (excluding

outstanding options,

securities reflected in

warrants and rights

column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders

3,980,606

27.96

660,330

Equity compensation plans not approved by security holders

None

Total

3,980,606

27.96

660,330

\n\n\n

The Company’s Nonqualified Stock Option Plans allow the granting of stock options to various\nofficers, directors and other employees of the Company at prices equal to fair market value at the\ndate of grant. The Company has reserved 300,000 and 2,000,000 shares of Class A Nonvoting Common\nStock for issuance under the 2005 and\n

\n\n

89\n

\n\n

2006 Plans, respectively. Generally, options will not be exercisable until one year after the\ndate of grant, and will be exercisable thereafter, to the extent of one-third per year and have a\nmaximum term of ten years. In August 2003, 2004, 2005, 2006, and 2007, certain executives and key\nmanagement employees were issued stock options that vest upon meeting certain financial performance\nconditions in addition to the vesting schedule described above. Performance-based options granted\nin fiscal 2006 expire five years from the grant date. All other performance-based options expire 10\nyears from the date of grant. All grants under the Option Plans are at market price on the date of\nthe grant. The Company granted 210,000 performance-based restricted shares during fiscal 2008,\nwith a grant price and fair value of $32.83. As of July 31, 2009, 210,000 performance-based\nrestricted shares were outstanding.\n

\n\n

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

\n\n\n

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

\n\n

Item 14. Principal Accounting Fees and Services\n

\n\n\n

The following table presents the aggregate fees incurred for professional services by Deloitte\n& Touche LLP and Deloitte Tax LLP during the years ended July 31, 2009 and 2008. Other than as set\nforth below, no professional services were rendered or fees billed by Deloitte & Touche LLP or\nDeloitte Tax LLP during the years ended July 31, 2009 and 2008.\n


	2009		2008
	(Dollars in thousands)
Audit, audit-related and tax compliance
Audit fees(1)	$	1,379		$	1,663
Audit-related fees(2)		—			56
Tax fees — compliance		842			863

Subtotal audit, audit-related and tax compliance fees		2,221			2,582
Non-audit related
Tax fees — planning and advice		892			1,233
Other fees (3)		340			399

Subtotal non-audit related fees		1,232			1,632

Total fees	$	3,453		$	4,214

\n\n\n\n

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


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

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

(3)		All other fees relate to expatriate activities.

\n\n\n

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


	2009		2008
Ratio of Tax Planning and Advice Fees and All\nOther Fees to Audit Fees, Audit-Related Fees and Tax\nCompliance Fees		.6 to 1		.6 to 1

\n\n\n

Pre-Approval Policy — The services performed by the Independent Registered Public Accounting\nFirm (“Independent Auditors”) in fiscal 2008 and 2009 were pre-approved in accordance with the\npre-approval policy and procedures adopted by the Audit Committee at its November 19, 2003 meeting.\nThe policy requires the Audit Committee to pre-approve the audit and non-audit services performed\nby the Independent Auditors in order to assure that the provision of such services does not impair\nthe auditor’s independence. Unless a type of service to be performed by the Independent Auditors\nhas received general pre-approval, it will require specific pre-approval by the Audit Committee.\nAny proposed services exceeding pre-approved cost levels will require specific pre-approval by the\nAudit Committee.\n

\n\n

90\n

\n\n

EXHIBIT INDEX\n

\n\n


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

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

	*10.1		Form of Change of Control Agreement, amended as of December 23, 2008, entered into with\nThomas J. Felmer, Allan J. Klotsche, Peter C. Sephton, Robert L. Tatterson, and Matthew O.\nWilliamson (12)

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

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

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

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

	*10.6		Forms of Non-Qualified Employee Stock Option Agreement, Director Stock Option Agreement,\nand Employee Performance Stock Option Agreement under 2006 Omnibus Incentive Stock Plan\n(17)

	*10.7		Brady Corporation 2004 Omnibus Incentive Stock Plan, as amended (17)

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

	10.9		Brady Corporation Automatic Dividend Reinvestment Plan (4)

	*10.10		Brady Corporation 2005 Nonqualified Plan for Non-employee Directors, as amended (3)

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

	*10.12		Brady Corporation 1997 Omnibus Incentive Stock Plan, as amended (17)

	*10.13		Brady Corporation 1997 Nonqualified Stock Option Plan for Non-Employee Directors, as\namended (17)

	10.14		Revolving Credit Facility Credit Agreement (14)

	*10.15		Brady Corporation 2006 Omnibus Incentive Stock Plan, as amended (17)

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

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

	*10.18		Form of Amendment, dated March 4, 2009, to granting agreement for performance-based stock\noptions issued on August 2, 2004 to Frank M. Jaehnert, Thomas J. Felmer, Peter C. Sephton,\nMatthew O. Williamson, and Allan J. Klotsche (12)

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

	*10.20		Change of Control Agreement, amended as of December 23, 2008, entered into with Frank M.\nJaehnert (12)

	*10.21		Restated Brady Corporation Restoration Plan (5)

	*10.22		Brady Corporation 2001 Omnibus Incentive Stock Plan, as amended (17)

	*10.23		Brady Corporation 2003 Omnibus Incentive Stock Plan, as amended (17)

	10.24		Brady Note Purchase Agreement dated June 28, 2004 (11)

	10.25		First Supplement to Note Purchase Agreement, dated February 14, 2006 (9)

	10.26		Second Supplement to Note Purchase Agreement, dated March 23, 2007 (5)

	*10.27		Form of Change of Control Agreement, amended as of December 23, 2008, entered into with\nPatrick S. Ference and Kathleen Johnson (12)

	*10.28		Brady Corporation 2010 Omnibus Incentive Stock Plan

\n\n\n

92\n

\n\n


Exhibit
Number		Description
	*10.29		Brady Corporation 2010 Nonqualified Stock Option Plan for Non-employee Directors

	*10.30		Form of Non-Qualified Employee Stock Option Agreement and Employee Performance Stock\nOption Agreement under 2010 Omnibus Incentive Stock Plan

	*10.31		Form of Director Stock Option Agreement under 2010 Nonqualified Stock Option Plan for\nNon-employee Directors

	21		Subsidiaries of Brady Corporation

	23		Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

	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


*		Management contract or compensatory plan or arrangement

(1)		Incorporated by reference to Registrant’s Registration Statement No. 333-04155 on Form S-3

(2)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 15, 2006

(3)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 25, 2008

(4)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended\nJuly 31, 1992

(5)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter\nended January 31, 2008

(6)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed March 19, 2008

(7)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed January 9, 2008

(8)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed December 4, 2006

(9)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 17, 2006

(10)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter\nended April 30, 2003

(11)		Incorporated by reference to Registrant’s 8-K/A filed August 3, 2004

(12)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter\nended January 31, 2009

(13)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended\nJuly 31, 2005

(14)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended\nJuly 31, 2006

(15)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 20, 2006

(16)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 17, 2007

(17)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended\nJuly 31, 2008

\n\n\n

93\n

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

BRADY CORPORATION AND SUBSIDIARIES
\nSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

\n\n


	Year ended July 31,
Description	2009			2008			2007
	(Dollars in thousands)
Valuation accounts deducted in balance sheet from assets to which they apply —
Accounts receivable — allowance for losses:
Balances at beginning of period	$	10,059			$	9,109		$	6,390
Additions — Charged to expense		1,278				2,480			3,287
Due to acquired businesses		—				34			660
Deductions — Bad debts written off, net of recoveries		(3,406	)			(1,564	)		(1,228	)

Balances at end of period	$	7,931			$	10,059		$	9,109

Inventory — reserve for slow-moving inventory:
Balances at beginning of period	$	22,148			$	18,073		$	13,555
Net charged to expense		140				3,822			2,542
Due to acquired businesses		—				253			1,976

Balances at end of period	$	22,288			$	22,148		$	18,073

\n\n\n

94\n

\n\n\n

Exhibit 10.28\n

\n\n\n

BRADY CORPORATION
\n2010 OMNIBUS INCENTIVE STOCK PLAN\n

\n\n\n

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

INTRODUCTION

\n\n

1.01 Purpose. This plan shall be known as the Brady Corporation 2010 Omnibus\nIncentive Stock Plan. The purpose of the Plan is to provide an incentive for employees of Brady\nCorporation and its Affiliates to improve corporate performance on a long-term basis, and to\nattract and retain employees by enabling employees to participate in the future successes of the\nCorporation, and by associating the long term interests of employees with those of the Corporation\nand its shareholders. It is intended that the Plan and its operation comply with the provisions of\nRule 16b-3 under the Securities Exchange Act of 1934 (or any successor rule). The Plan is intended\nto permit the grant of Nonqualified Stock Options, Incentive Stock Options, shares of Restricted\nStock and Restricted Stock Units. The proceeds received by the Corporation from the sale of\nCorporation Stock pursuant to the Plan shall be used for general corporate purposes.\n

\n\n

1.02 Effective Date. The effective date of the Plan shall be July 21, 2009, subject\nto approval of the Plan by holders of a majority of the outstanding voting common stock of the\nCorporation provided that such approval is given within 12 months of the effective date. Any Award\ngranted prior to such shareholder approval shall be expressly conditioned upon shareholder approval\nof the Plan.\n

\n\n

1.03 Effect on Prior Plans. After December 31, 2009, no further awards or grants will\nbe made under the Brady Corporation 2006 Omnibus Incentive Stock Plans.\n

\n\n

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

II.

PLAN DEFINITIONS

\n\n

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

\n\n

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

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

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

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

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

\n\n\n

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

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

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

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

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

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

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

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

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

-2-\n

\n\n\n

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

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

	(o)		“Plan” shall mean the Brady Corporation 2010 Omnibus\nIncentive Stock Plan, as set forth herein, as it may be amended from time to\ntime.

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

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

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

\n\n

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

III.

SHARES SUBJECT TO AWARD

\n\n

3.01 Available Shares. Subject to adjustments under Section 3.02, the total number of\nshares of Corporation Stock authorized for issuance shall not exceed three million (3,000,000)\nshares, provided that no individual Eligible Employee may be granted an Award or Awards under the\nPlan covering more than two hundred thousand (200,000) shares of Corporation Stock in any calendar\nyear (determined without regard to grants under any other plan or program). The shares authorized\nfor issuance under the Plan may consist, in whole or in part, of authorized but unissued\nCorporation Stock, or of treasury stock of the Corporation. Shares subject to and not issued under\nan Award that expires, terminates, is canceled or forfeited for any reason under the Plan shall\nagain become available for the granting of Awards.\n

\n\n

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

\n\n

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

IV.

ADMINISTRATION

\n\n

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

\n\n

-3-\n

\n\n

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

\n\n

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

\n\n

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

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

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

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

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

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

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

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

-4-\n

\n\n\n

\n\n\n\n

\n\n

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

PARTICIPATION

\n\n

5.01 Eligibility. Any employee of the Corporation and its Affiliates (including\nofficers and employees who may be members of the Board) who, in the sole opinion of the Committee,\nhas contributed or can be expected to contribute to the profits, growth and success of the\nCorporation shall be eligible for Awards under the Plan. From among all such Eligible Employees,\nthe Committee shall determine from time to time those Eligible Employees to whom Awards shall be\ngranted. No Eligible Employee shall have any right whatsoever to receive an Award unless so\ndetermined by the Committee.\n

\n\n

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

\n\n

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

VI.

STOCK OPTIONS

\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

6.05 Exercise Period. The Committee shall have the power to set the time or times\nwithin which each Option shall be exercisable, and to accelerate the time or times of exercise;\nprovided, however, that no Stock Option shall be exercisable after the expiration of ten (10) years\nfrom the date the Stock Option is granted. Each Agreement with respect to a Stock Option shall\nstate the period or periods of time within which the Stock Option may be exercised by the\nParticipant, in whole or in part.\n

\n\n

-5-\n

\n\n

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

\n\n

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


Years After
Date of Grant	Percentage of Shares
Less than 1		0	%
1 but less than 2		33-1/3	%
2 but less than 3		66-2/3	%
3 or more		100	%

\n\n\n

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

\n\n

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

\n\n

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

\n\n

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

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

	(b)		Employees who own, directly or indirectly, within the meaning\nof Code Section 425(d), more than 10% of the voting power of all classes of\nstock of the Corporation or any parent or subsidiary corporation shall not be\neligible to receive an ISO hereunder unless the purchase price per share

-6-\n

\n\n\n

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

			under such option is at least 110% of the Fair Market Value of the stock\nsubject to the option and such option by its terms is not exercisable after\nthe expiration of five (5) years from the date such option is granted

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

\n\n

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

VII.

RESTRICTED STOCK

\n\n

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

\n\n

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

\n\n\n

“The transferability of this certificate and the shares of stock represented hereby are\nsubject to the terms and conditions (including forfeiture) of the Brady Corporation 2010\nOmnibus Incentive Stock Plan and a Restricted Stock Agreement. Copies of such Plan and\nAgreement are on file at the offices of the Brady Corporation.”\n

\n\n

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

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

-7-\n

\n\n\n\n\n

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

\n\n

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

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

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

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

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

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

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

\n\n

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

VIII.

RESTRICTED STOCK UNITS

\n\n

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

\n\n

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

\n\n

-8-\n

\n\n

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

IX.

WITHHOLDING TAXES

\n\n

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

\n\n

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

\n\n

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

GENERAL

\n\n

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

\n\n

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

\n\n

-9-\n

\n\n

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

\n\n

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

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

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

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

	(d)		if the Participant’s employment is terminated as a result of\nthe Participant’s retirement (after age 55 with ten years of employment with\nthe Corporation or an Affiliate or after age 65), any unexercised, unexpired\nStock Options granted hereunder to the Participant shall continue to vest as\nprovided in Section 6.05 hereof and any Stock Option that is or becomes vested\nmay be exercised in whole or in part prior to the expiration date of such Stock\nOption; and

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

-10-\n

\n\n\n

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

\n\n

10.04 Merger, Consolidation or Reorganization. In the event of (a) the merger or\nconsolidation of the Corporation with or into another corporation or corporations in which the\nCorporation is not the surviving corporation, (b) the adoption of any plan for the dissolution of\nthe Corporation, or (c) the sale or exchange of all or substantially all the assets of the\nCorporation for cash or for shares of stock or other securities of another corporation, all\nthen-unexercised Stock Options shall become fully exercisable, and all restrictions imposed on any\nthen-Restricted Stock and Restricted Stock Units shall terminate (such that any Restricted Stock\nshall become fully transferable) immediately prior to any such merger or consolidation in which the\nCorporation is not the surviving corporation. The Committee may elect to cancel any\nthen-unexercised Stock Options. If any Stock Option is canceled, the Corporation, or the\ncorporation assuming the obligations of the Corporation hereunder, shall pay the Participant an\namount of cash or stock, as determined by the Committee, equal to the Fair Market Value per share\nof the Corporation Stock immediately preceding such cancellation over the option price, multiplied\nby the number of shares subject to such cancelled Stock Option.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

-11-\n

\n\n\n

Exhibit 10.29\n

\n\n\n

BRADY CORPORATION
\n2010 NONQUALIFIED STOCK OPTION PLAN
\nFOR NON-EMPLOYEE DIRECTORS\n

\n\n\n

1. Purpose.\n

\n\n\n

The 2010 Stock Option Plan for Non-Employee Directors (the “Plan) is intended to attract and\nretain the services of experienced and knowledgeable non-employee directors of Brady Corporation\n(the “Corporation”) for the benefit of the Corporation and its shareholders and to provide\nadditional incentive for such directors to continue to work for the best interest of the\nCorporation and its shareholders.\n

\n\n

2. Shares Subject to the Plan.\n

\n\n\n

There are reserved for issuance upon the exercise of options granted under the Plan 200,000\nClass A Non-Voting Common Shares $.01 par value, of the Corporation (the “Stock”). Such Stock may\nbe authorized and unissued Stock or previously outstanding Stock then held in the Corporation’s\ntreasury. If any option granted under the Plan shall expire or terminate for any reason without\nhaving been exercised in full, the Stock subject to the unexercised portion thereof shall again be\navailable for the purposes of issuance upon the exercise of options granted under the Plan.\n

\n\n

3. Administration.\n

\n\n\n

The Plan shall be administered by the Board of Directors of the Corporation (the “Board”),\nwhich may delegate any or all of its authority to a Committee of the Board. Subject to the express\nprovisions of the Plan, the Board shall have authority to interpret the Plan, to prescribe, amend\nand rescind rules and regulations relating to it, to determine the terms and provisions of the\noption grants and agreements (which shall comply with and be subject to the terms and conditions of\nthe Plan) and to make all other determinations necessary or advisable for the administration of the\nPlan. The Board’s determination of the matters referred to in this Paragraph 3 shall be\nconclusive.\n

\n\n

4. Eligibility.\n

\n\n\n

For purposes of the Plan, “Non-Employee Director” means a member of the Board who is not an\nemployee of the Corporation or a subsidiary of the Corporation. After the effective date of the\nPlan, each Non-Employee Director who first becomes a Director on an annual meeting date after July\n21, 2009 shall automatically be granted an option to purchase 10,000 shares of Stock on a date that\nis 14 days after the annual meeting date, or if such person first becomes a Director on a date\nother than the annual meeting date, the option shall automatically be granted on a date that is 14\ndays after first becoming a Director. Subsequently, each Non-Employee Director shall automatically\nbe granted an option to purchase 8,400 shares of Stock on a date that is 14 days after the\nCorporation’s release of its fiscal fourth quarter earnings.\n

\n\n

Only non-statutory stock options shall be granted under the Plan.\n

\n\n

5. Option Grants.\n

\n\n\n

(a) The purchase price of the Stock under each option granted under the Plan shall be 100% of\nthe Fair Market Value of the Stock on the date such option is granted. For purposes of the Plan\n“Fair Market Value” on any date shall mean, with respect to Stock, if the stock is then listed and\ntraded on a registered national securities exchange, or is quoted in the NASDAQ National Market\nSystem, the average of the high and low sale prices recorded in composite transactions for such\ndate or, if such date is not a business day or if no sales of the Stock shall have been reported\nwith respect to such date, the next preceding business date with respect to which sales were\nreported. In the absence of reported sales or if the stock is not so listed or quoted, but is\ntraded in the over-the-counter market, Fair Market Value shall be the average of the closing bid\nand asked prices for such Stock on the relevant date.\n

\n\n

(b) All options shall be exercisable in accordance with the following schedule:\n

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


Years After
Date of Grant	Percentage of Shares

Less than 1		0	%
1 but less than 2		33-1/3	%
2 but less than 3		66-2/3	%
3 or more		100	%

\n\n\n

The term of each option shall be ten years from the date of grant, or such shorter period as\nis prescribed in Paragraphs 5(c) and 5(d). Except as provided in Paragraphs 5(c) and 5(d), no\noption may be exercised at any time unless the holder is then a director of the Corporation.\n

\n\n

Each option may be exercised in whole or in part from time to time as specified in the\nagreements provided, however, that each holder may exercise an option in whole or in part by giving\nwritten notice of the exercise to the Corporation, specifying the number of shares to be purchased\nby payment in full of the purchase price therefor. The purchase price may be paid (a) in cash, (b)\nby check, (c) with the approval of the Board, or if the applicable agreement so provides, by\ndelivering shares of Stock (“Delivered Stock”), (d) by surrendering to the Corporation shares of\nStock otherwise receivable upon exercise of the option (a “Net Exercise”), or (e) any combination\nof the foregoing. For purposes of the foregoing, Delivered Stock shall be valued at its Fair\nMarket Value determined as of the business day immediately preceding the date of exercise of the\noption and shares of Stock used in a Net Exercise shall be valued at their Fair Market Value\ndetermined as of the date of exercise of the option. No holder shall be under any obligation to\nexercise any option hereunder.\n

\n\n

Upon exercise, the option price is to be paid in full in cash or, at the discretion of the\nBoard, in Stock owned by the optionee having a Fair Market Value on the date of exercise equal to\nthe aggregate option price or, at the discretion of the Board, in a combination of cash and Stock.\n

\n\n

-2-\n

\n\n

(c) All rights under any option shall terminate on the date such Participant ceases to be a\nDirector of the Corporation, except that (a) if the Directorship is terminated by the death of the\nDirector, any unexercised, unexpired Stock Options granted hereunder to the Director shall be 100%\nvested and fully exercisable, in whole or in part, at any time within one year after the date of\ndeath, by the Director’s personal representative or by the person to whom the options are\ntransferred under the Director’s last will and testament or the applicable laws of descent and\ndistribution; (b) if the Directorship is terminated as a result of the disability of the Director\n(a disability means that the Director is disabled as a result of sickness or injury, such that he\nor she is unable satisfactorily to perform the Director duties, as determined by the Board of\nDirectors, on the basis of medical evidence satisfactory to it), any unexercised, unexpired options\ngranted hereunder to the Director shall become 100% vested and fully exercisable, in whole or in\npart, at any time within one year after the date of disability; (c) if the Directorship is\nterminated and the Director has been a member of the Board of Directors for at least three years,\nany unexercised, unexpired options granted hereunder to the Director shall continue to vest as\nprovided in Paragraph 5(b) and any option that is or becomes vested may be exercised within the\nterm of such option; and (d) if the Directorship is terminated for any reason other than (a), (b)\nor (c) above, any unexercised, unexpired options granted hereunder and exercisable as of the date\nof such termination shall be exercisable in whole or in part at any time within 90 days after such\ndate of termination.\n

\n\n

(d) In the event of (a) a merger, consolidation, or reorganization with another corporation in\nwhich the Corporation is not the surviving corporation or a merger, consolidation or reorganization\nwith another corporation in which the Corporation is the surviving corporation, but the Stock\nceases to be publicly traded, (b) the adoption of any plan for the dissolution of the Corporation,\nor (c) the sale or exchange of all or substantially all the assets of the Corporation for cash or\nfor shares of stock or other securities of another corporation, all then-unexercised options shall\nbecome fully exercisable immediately prior to any such event.\n

\n\n

(e) Nothing in the Plan or in any option granted pursuant to the Plan shall confer on any\nindividual any right to continue as a director of the Corporation.\n

\n\n

6. Transferability and Shareholder Rights of Holders of Options.\n

\n\n\n

No options granted under the Plan shall be transferable otherwise than by will or by the laws\nof descent and distribution, and an option may be exercised, during the lifetime of an optionee,\nonly by the optionee or optionee’s guardian or legal representative. An optionee shall have none\nof the rights of a shareholder of the Corporation until the option has been exercised and the Stock\nsubject to the option has been registered in the name of the optionee on the transfer books of the\nCorporation.\n

\n\n

7. Adjustments upon Changes in Capitalization.\n

\n\n\n

Notwithstanding any other provisions of the Plan, the number and class of shares subject to\nthe options and the option prices of options covered thereby shall be proportionately adjusted in\nthe\n

\n\n

-3-\n

\n\n\n\n

event of changes in the outstanding Stock by reason of stock dividends, stock splits,\nrecapitalizations, mergers, consolidations, combinations or exchanges of shares, split-ups,\nsplit-offs, spin-offs, liquidations or other similar changes in capitalization, or any distribution\nto common shareholders other than cash dividends and, in the event of any such change in the\noutstanding Stock, the aggregate number and class of shares available under the Plan and the number\nof shares as to which options may be granted shall be appropriately adjusted by the Board.\n

\n\n

8. Amendment and Termination.\n

\n\n\n

Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall\nterminate on, and no awards of options shall be made after, the tenth anniversary of the effective\ndate of the Plan; provided, however, that such termination shall have no effect on options granted\nprior thereto. The Plan may be terminated, modified or amended by the shareholders of the\nCorporation. The Board may also terminate the Plan or modify or amend the Plan in such respects as\nit shall deem advisable in order to conform to any change in any law or regulation applicable\nthereto, or in other respects which shall not change (i) the total number of shares of Stock as to\nwhich options may be granted, (ii) the class of persons eligible to receive options under the Plan,\n(iii) the manner of determining the option prices, (iv) the period during which options may be\ngranted or exercised or (v) the provisions relating to the administration of the Plan by the Board.\n

\n\n

9. Withholding.\n

\n\n\n

Upon the issuance of Stock as a result of the exercise of an option, the Corporation shall\nhave the right to retain or sell without notice sufficient Stock to cover the amount of any tax\nrequired by any government to be withheld or otherwise deducted and paid with respect to such Stock\nbeing issued, remitting any balance to the optionee; provided, however, that the optionee shall\nhave the right to provide the Corporation with the funds to enable it to pay such tax.\n

\n\n

10. Effectiveness of the Plan.\n

\n\n\n

The Plan shall become effective on the day following the date the Plan is approved by the vote\nof the holders of a majority of the outstanding shares of the Corporation’s Class B Voting Common\nStock. The Board may in its discretion authorize the granting of options which shall be expressly\nsubject to the conditions that (i) the Stock reserved for issue under the Plan shall have been duly\nlisted, upon official notice of issuance, upon each stock exchange in the United States upon which\nthe Stock is traded and (ii) a registration statement under the Securities Act of 1933 with respect\nto such shares shall have become effective.\n

\n\n\n

-4-\n

\n\n\n

Exhibit 10.30\n

\n\n\n

BRADY CORPORATION
\nNONQUALIFIED STOCK OPTION\n

\n\n\n

Upon management’s recommendation, the Compensation Committee (the “Committee”) of the Brady\nCorporation Board of Directors has awarded to __________________ (“Employee”) a\nnon-qualified stock option (the “Option”) effective _________, ___, pursuant to the terms of\nthe Brady Corporation 2010 Omnibus Incentive Stock Plan (the “Plan”). The Corporation’s records\nshall be the official record of the Option grant described herein and, in the event of any conflict\nbetween this description and the Corporation’s records, the Corporation’s records shall control.\n

\n\n

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

1.		Number of Shares Optioned; Option Price

		The Corporation grants to the Employee the right and option to purchase, on the terms and\nconditions hereof, all or any part of an aggregate of ____________(___) shares of the\npresently authorized Class A Common Stock of the Corporation, $.01 par value, whether\nunissued or issued and reacquired by the Corporation, at the price of $___.___ per share (the\n“Option Price”).

2.		Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

		Except as provided in this paragraph and in paragraph 3, this Option may not be exercised\n(a) unless Employee is at the date of the exercise in the employ of the Corporation or a\nSubsidiary, and (b) until Employee shall have been continuously so employed for a period of\nat least one year from the date hereof. Thereafter, this Option shall be exercisable for\nany amount of shares up to the maximum percentage of shares covered by this Option (rounded\nup to the nearest whole share), as follows (but in no event shall this Option be exercisable\nfor any shares after the expiration date provided in paragraph 7):

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


	Maximum
	Percentage
	of Shares For
Number of Completed Years After	Which Option is
Date of Grant of this Option	Exercisable

Less than 1	Zero
At least 1 but less than 2		33-1/3	%
At least 2 but less than 3		66-2/3	%
At least 3		100	%

\n\n\n

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

If Employee shall cease to be employed by the Corporation or a Subsidiary for any reason\nother than as provided in paragraph 3 after Employee shall have been continuously so\nemployed for one year after the grant of this Option, Employee may, at any time within 90\ndays of such termination, but in no event later than the date of expiration of this Option,\nexercise this Option to the extent Employee was entitled to do so on the date of such\ntermination. However, if Employee was dismissed for cause, of

\n\n\n

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

which the Committee shall be the sole judge, this Option shall forthwith expire. This\nAgreement does not confer upon Employee any right of continuation of employment by the\nCorporation or a Subsidiary, nor does it impair any right the Corporation or any Subsidiary\nmay have to terminate the Employee’s employment at any time.

\n\n

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

3.		Termination of Employment

		Notwithstanding the provisions of paragraph 2 hereof, if the Employee:

\n\n

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

	(a)		is terminated by the death of the Employee, any unexercised, unexpired Stock\nOptions granted hereunder to the Employee shall be 100% vested and fully exercisable,\nin whole or in part, at any time within one year after the date of death, by the\nEmployee’s personal representative or by the person to whom the Stock Options are\ntransferred under the Employee’s last will and testament or the applicable laws of\ndescent and distribution;

	(b)		dies within 90 days after termination of employment by the Corporation or its\nAffiliates, other than for cause, any unexercised, unexpired Stock Options granted\nhereunder to the Employee and exercisable as of the date of such termination of\nemployment shall be exercisable, in whole or in part, at any time within one year after\nthe date of death, by the Employee’s personal representative or by the person to whom\nthe Stock Options are transferred under the Employee’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		is terminated as a result of the disability of the Employee (a disability means\nthat the Employee is disabled as a result of sickness or injury, such that he or she is\nunable to satisfactorily perform the material duties of Employee’s job, as determined\nby the Board of Directors, on the basis of medical evidence satisfactory to it), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall become\n100% vested and fully exercisable, in whole or in part, at any time within one year\nafter the date of disability; or

	(d)		is terminated as a result of the Employee’s retirement (after age 55 with ten\nyears of employment with the Corporation or an Affiliate or after age 65), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall continue\nto vest as provided in paragraph 2 hereof and any option that is or becomes vested may\nbe exercised in whole or in part prior to the expiration date of such option.

\n\n

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

4.		Deferral of Exercise

		Although the Corporation intends to exert its best efforts so that the shares purchasable\nupon the exercise of this Option will be registered under, or exempt from, the registration\nrequirements of, the Securities Act of 1933 (the “Act”) and any applicable state securities\nlaw at the time or times this Option (or any portion of this Option) first becomes\nexercisable, if the exercise of this Option would otherwise result in a violation by the\nCorporation of any provision of the Act or of any state securities law, the Corporation

-2-\n

\n\n\n

		may require that such exercise be deferred until the Corporation has taken appropriate\naction to avoid any such violation.
5.		Method of Exercising Option

		This Option shall be exercised by delivering to the Corporation, at the office of its\nTreasurer, a written notice of the number of shares with respect to which this Option is at\nthe time being exercised and by paying the Corporation in full the Option Price of the\n shares being acquired at the time.

6.		Method of Payment

		Payment shall be made either (i) in cash; (ii) by delivering shares of the Corporation’s\nClass A Common Stock which have been beneficially owned by the Employee, the spouse of the\nEmployee, or both of them, for a period of at least six months prior to the time of exercise\n(“Delivered Stock”); (iii) by surrendering to the Corporation shares of Class A Common Stock\notherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination\nof the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair\nMarket Value of the stock at the date of exercise, determined in accordance with paragraph\n9.

7.		Expiration Date

		This Option shall expire ten years after the date on which this Option was granted.

8.		Withholding Taxes

		The Corporation may require, as a condition to the exercise of this Option, that the\nEmployee concurrently pay to the Corporation any taxes which the Corporation is required to\nwithhold by reason of such exercise. In lieu of part or all of any such payment, the\nEmployee may elect, subject to such rules and regulations as the Committee may adopt from\ntime to time, to have the Corporation withhold from the shares to be issued upon exercise\nthat number of shares having a Fair Market Value, determined in accordance with paragraph 9,\nequal to the amount which the Corporation is required to withhold.

9.		Method of Valuation of Stock

		The “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall\nmean, if the stock is then listed and traded on a registered national securities exchange,\nor is quoted in the NASDAQ National Market System, the average of the high and low sales\nprice recorded in composite transactions for such date or, if such date is not a business\nday or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of\nreported sales or if the stock is not so listed or quoted, but is traded in the\nover-the-counter market, Fair Market Value shall be the average of the closing bid and asked\nprices for such shares on the relevant date.

-3-\n

\n\n\n

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

10.		No Rights in Shares Until Certificates Issued

		Neither the Employee nor his heirs nor his personal representative shall have any of the\nrights or privileges of a stockholder of the Corporation in respect of any of the shares\nissuable upon the exercise of the Option herein granted, unless and until certificates\nrepresenting such shares shall have been issued or shares in book entry form shall have been\nrecorded in the records of the Corporation’s transfer agent.

11.		Option Not Transferable

		No portion of the Option granted hereunder shall be transferable or assignable (or made\nsubject to any pledge, lien, obligation or liability of an Employee) except (a) by last will\nand testament or the laws of descent and distribution (and upon a transfer or assignment\npursuant to an Employee’s last will and testament or the laws of descent and distribution,\nany Option must be transferred in accordance therewith); (b) during the Employee’s lifetime,\nnonqualified stock Options may be transferred by an Employee to the Employee’s spouse,\nchildren or grandchildren or to a trust for the benefit of such spouse, children or\ngrandchildren, provided that the terms of any such transfer prohibit the resale of shares\nacquired upon exercise of the option at a time during which the transferor would not be\npermitted to sell such shares under the Corporation’s policy on trading by insiders.

12.		Prohibition Against Pledge, Attachment, Etc.

		Except as otherwise herein provided, the Option herein granted and the rights and privileges\npertaining thereto shall not be transferred, assigned, pledged or hypothecated in any way\n(whether by operation of law or otherwise) and shall not be subject to execution, attachment\nor similar process.

13.		Changes in Stock

		In the event there are any changes in the Class A Common Stock of the Corporation through\nmerger, consolidation, reorganization, recapitalization, stock dividend, stock split,\ncombination or exchange of shares, rights offering or any other change affecting the Class A\nCommon Stock of the Corporation, appropriate changes will be made by the Committee in the\naggregate number of shares and the purchase price and kind of shares subject to this Option,\nto prevent substantial dilution or enlargement of the rights granted to or available for\nEmployee.

14.		Dissolution or Merger

		Anything contained herein to the contrary notwithstanding, upon the dissolution or\nliquidation of the Corporation, or upon any merger in which the Corporation is not the\nsurviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Employee shall have the right within 60 days prior to the effective date of such\ndissolution, liquidation or merger, to surrender all or any unexercised portion of this\nOption to the Corporation for cash, subject to the discretion of the Committee as to the\nexact timing of said surrender. Notwithstanding the foregoing, however, in the event\n

-4-\n

\n\n

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

		Employee has retired or died, Employee’s right to surrender all or any unexercised portion\nof this Option under this paragraph shall be available only to the extent that at the time\nof any such surrender, Employee would have been entitled to exercise this Option under\nparagraphs 2 or 3 hereof, as the case may be. The amount of cash to be paid to Employee for\nthe portion of this Option so surrendered, shall be equal to the number of shares of Class A\nCommon Stock subject to the surrendered Option multiplied by the difference between the\nOption Price per share, as described in paragraph 1 hereof, and the Fair Market Value per\nshare, determined in accordance with paragraph 9 hereof, as of the time of surrender.

15.		Notices

		Any notice to be given to the Corporation under the terms of this Agreement shall be\naddressed to the Corporation in care of its Chief Financial Officer, and any notice to be\ngiven to the Employee may be addressed at the address as it appears on the Corporation’s\nrecords, or at such other address as either party may hereafter designate in writing to the\nother. Except as provided in paragraph 5 hereof, any such notice shall be deemed to have\nbeen duly given, if and when enclosed in a properly sealed envelope addressed as aforesaid,\nand deposited, postage prepaid, in the United States mail.

16.		Provisions of Plan Controlling

		This Option is subject in all respects to the provisions of the Plan. In the event of any\nconflict between any provisions of this Option and the provisions of the Plan, the\nprovisions of the Plan shall control, except to the extent the Plan permits the Committee to\nmodify the terms of an Option grant and has done so herein. Terms defined in the Plan where\nused herein shall have the meanings as so defined. Employee acknowledges receipt of a copy\nof the Plan.

17.		Wisconsin Contract

		This Option has been granted in Wisconsin and shall be construed under the laws of that\nstate.

-5-\n

\n\n\n

\n\n\n\n

\n\n

BRADY CORPORATION
\nPERFORMANCE STOCK OPTION\n

\n\n\n

Upon management’s recommendation, the Compensation Committee (the “Committee”) of the Brady\nCorporation Board of Directors has awarded to ________________________(“Employee”) a\nnon-qualified performance stock option (the “Option”) effective _______________, ______, pursuant to the\nterms of the Brady Corporation 2010 Omnibus Incentive Stock Plan (the “Plan”), including the\ncondition that this Option is subject to shareholder approval of the Plan.\n

\n\n

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

1.		Number of Shares Optioned; Option Price

		The Corporation grants to the Employee the right and option to purchase, on the terms and\nconditions hereof, all or any part of an aggregate of _________ thousand (______) shares of\nthe presently authorized Class A Common Stock of the Corporation, $.01 par value, whether\nunissued or issued and reacquired by the Corporation, at the price of $______ per share (the\n“Option Price”). The Option shall consist of two components. The “Part A Option Shares”\nshall represent two-thirds of the total shares covered by this Option, or ______ shares.\nVesting of the Part A Option Shares shall be based upon the Company’s annual year-over-year\ngrowth in earnings per share (“EPS”) for fiscal 2010, 2011 and 2012 as compared to the\nbaseline reported EPS for 2009. The “Part B Option Shares” shall represent one-third of the\ntotal shares covered by this Option, or ______ shares. Vesting of the Part B Option\nShares shall be based upon the percentile rank of the Corporation’s earnings per share\ngrowth compared to other companies in the S&P 600 Index using 2008 as the baseline.

2.		Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

		Except as provided in this paragraph and in paragraph 3, this Option may not be exercised\n(a) unless Employee is, at the date of the exercise, in the employ of the Corporation or a\nSubsidiary, and (b) the performance conditions provided below have been met; provided,\nhowever, that in no event shall this Option be exercisable for any shares after the\nexpiration date provided in paragraph 7.

		Part A Option Shares

		Vesting of the Part A Option Shares shall be determined in accordance with the\nfollowing schedule, with the vesting date for each plan year being the date the\nAudit Committee accepts the results of the fiscal year audit. Earnings per share\nwill be computed by dividing the Corporation’s net income for the year by an\nassumed 53 million shares of diluted outstanding Common Stock and assuming no\nissuance of additional shares of Common Stock other than pursuant to the\nCorporation’s Omnibus Incentive Stock Plans. In the event of any other stock\nissuance, the Compensation Committee will make an equitable adjustment of the\nearnings per share amounts.

-6-\n

\n\n\n

\n\n\n\n

Plan Year 1

Plan Year 2

Plan Year 3

Annual EPS Growth

FY 2010

FY 2011

FY 2012

15% or greater

33% of Part A Option Shares

12.5%

25% of Part A Option Shares

Minimum threshold — 10%

16.67% of Part A Option Shares

Maximum Vesting (%\nof Part A Option\nShares)

\n\n\n

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

		Vesting of shares for performance between the Annual EPS Growth percentages listed above\nwill not be interpolated.

		Part B Option Shares

		Vesting of the Part B Option Shares shall be determined in accordance with the following\nschedule, and by comparing the Corporation’s EPS Growth for Fiscal 2010, 2011, and 2012 over\nfiscal 2008 with other corporations in the S&P 600 Index using reported EPS for the baseline\nyear of 2008. The vesting date for the Part B Option Shares shall be the date the Audit\nCommittee accepts the results of the 2012 fiscal year audit.

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


EPS Growth Relative to		Plan Year 3
S&P 600		FY 2012
75^th percentile\n		100% of Part B Option Shares
67^th percentile\n		50% of Part B Option Shares
60^th percentile\n		20% of Part B Option Shares

\n\n\n

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

		Vesting of shares for performance between the percentages listed above will not be\ninterpolated.

		“EPS Growth” for the Corporation means (a) the Corporation’s earnings per share for the\nfiscal year ending July 31, 2012, divided by (b) the earnings per share of the Company for\nthe fiscal year ending July 31, 2008 ($__________). Earnings per share will be computed by\ndividing the Corporation’s net income for the year by an assumed 53 million shares of\ndiluted outstanding Common Stock and assuming no issuance of additional shares of\n

-7-\n

\n\n

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

		Common Stock other than pursuant to the Corporation’s Omnibus Incentive Stock Plans. In the\nevent of any other stock issuance, the Compensation Committee will make an equitable\nadjustment of the earnings per share amounts.

		The EPS Growth for the companies in the S&P 600 Index shall be calculated using the same\nmethod described above and shall include each company which is described by either of the\nfollowing criteria: (a) the company is included in such index as of July 31, 2008 and July\n31, 2012; or (b) the company is included in such index on July 31, 2012 and is a successor\nto a company that was included in such index on July 31, 2008. If earnings per share\ninformation is not available for any such company as of July 31, 2008 or July 31, 2012, the\nEPS Growth for such company shall be calculated using the twelve-month period immediately\npreceding the relevant July 31 for which such information is available.

		If Employee shall cease to be employed by the Corporation or a Subsidiary for any reason\nother than as provided in paragraph 3, Employee may, at any time within 90 days of such\ntermination, but in no event later than the date of expiration of this Option, exercise this\nOption to the extent Employee was entitled to do so on the date of such termination.\nHowever, if Employee was dismissed for cause, of which the Compensation Committee of the\nBoard of Directors of the Corporation shall be the sole judge, this Option shall forthwith\nexpire. This Agreement does not confer upon Employee any right of continuation of\nemployment by the Corporation or a Subsidiary, nor does it impair any right the Corporation\nor any Subsidiary may have to terminate the Employee’s employment at any time.

3.		Termination of Employment \nNotwithstanding the provisions of paragraph 2 hereof, other than in the event of a termination\nfor cause, if the Employee:

\n\n\n

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

	(a)		is terminated by the death of the Employee, any unexercised, unexpired Stock\nOptions granted hereunder to the Employee shall be 100% vested and fully exercisable,\nin whole or in part, at any time within one year after the date of death, by the\nEmployee’s personal representative or by the person to whom the Stock Options are\ntransferred under the Employee’s last will and testament or the applicable laws of\ndescent and distribution;

	(b)		dies within 90 days after termination of employment by the Corporation or its\nAffiliates, other than for cause, any unexercised, unexpired Stock Options granted\nhereunder to the Employee and exercisable as of the date of such termination of\nemployment shall be exercisable, in whole or in part, at any time within one year after\nthe date of death, by the Employee’s personal representative or by the person to whom\nthe Stock Options are transferred under the Employee’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		is terminated as a result of the disability of the Employee (a disability means\nthat the Employee is disabled as a result of sickness or injury, such that he or she is\n

-8-\n

\n\n

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

			unable to satisfactorily perform the material duties of Employee’s job, as\ndetermined by the Board of Directors, on the basis of medical evidence satisfactory\nto it), any unexercised, unexpired Stock Options granted hereunder to the Employee\nshall become 100% vested and fully exercisable, in whole or in part, at any time\nwithin one year after the date of disability;

	(d)		is terminated as a result of the Employee’s retirement (after age 55 with ten\nyears of employment with the Corporation or a Subsidiary or after age 65), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall continue\nto vest as provided in paragraph 2 hereof and any option that is or becomes vested may\nbe exercised in whole or in part prior to the expiration date of such option.

\n\n

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

4.		Deferral of Exercise

		Although the Corporation intends to exert its best efforts so that the shares purchasable\nupon the exercise of this Option will be registered under, or exempt from, the registration\nrequirements of, the Securities Act of 1933 (the “Act”) and any applicable state securities\nlaw at the time or times this Option (or any portion of this Option) first becomes\nexercisable, if the exercise of this Option would otherwise result in a violation by the\nCorporation of any provision of the Act or of any state securities law, the Corporation may\nrequire that such exercise be deferred until the Corporation has taken appropriate action to\navoid any such violation.

5.		Method of Exercising Option

		This Option shall be exercised by delivering to the Corporation, at the office of its\nTreasurer, a written notice of the number of shares with respect to which this Option is at\nthe time being exercised and by paying the Corporation in full the Option Price of the\nshares being acquired at the time.

6.		Method of Payment

		Payment shall be made either (i) in cash; (ii) by delivering shares of the Corporation’s\nClass A Common Stock which have been beneficially owned by the Employee, the spouse of the\nEmployee, or both of them, for a period of at least six months prior to the time of exercise\n(“Delivered Stock”); (iii) by surrendering to the Corporation shares of Class A Common Stock\notherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination\nof the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair\nMarket Value of the stock at the date of exercise, determined in accordance with paragraph\n9.

7.		Expiration Date

		This Option shall expire ten years after the date on which this Option was granted.

-9-\n

\n\n\n

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

8.		Withholding Taxes

		The Corporation may require, as a condition to the exercise of this Option, that the\nEmployee concurrently pay to the Corporation any taxes which the Corporation is required to\nwithhold by reason of such exercise. In lieu of part or all of any such payment, the\nEmployee may elect, subject to such rules and regulations as the Committee may adopt from\ntime to time, to have the Corporation withhold from the shares to be issued upon exercise\nthat number of shares having a Fair Market Value, determined in accordance with paragraph 9,\nequal to the amount which the Corporation is required to withhold.

9.		Method of Valuation of Stock

		The “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall\nmean, if the stock is then listed and traded on a registered national securities exchange,\nor is quoted in the NASDAQ National Market System, the average of the high and low sales\nprice recorded in composite transactions for such date or, if such date is not a business\nday or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of\nreported sales or if the stock is not so listed or quoted, but is traded in the\nover-the-counter market, Fair Market Value shall be the average of the closing bid and asked\nprices for such shares on the relevant date.

10.		No Rights in Shares Until Certificates Issued

		Neither the Employee nor his heirs nor his personal representative shall have any of the\nrights or privileges of a stockholder of the Corporation in respect of any of the shares\nissuable upon the exercise of the Option herein granted, unless and until certificates\nrepresenting such shares shall have been issued or shares in book entry form shall have been\nrecorded in the records of the Corporation’s transfer agent.

11.		Option Not Transferable

		No portion of the Option granted hereunder shall be transferable or assignable (or made\nsubject to any pledge, lien, obligation or liability of an Employee) except (a) by last will\nand testament or the laws of descent and distribution (and upon a transfer or assignment\npursuant to an Employee’s last will and testament or the laws of descent and distribution,\nany Option must be transferred in accordance therewith); (b) during the Employee’s lifetime,\nnonqualified stock Options may be transferred by an Employee to the Employee’s spouse,\nchildren or grandchildren or to a trust for the benefit of such spouse, children or\ngrandchildren, provided that the terms of any such transfer prohibit the resale of shares\nacquired upon exercise of the option at a time during which the transferor would not be\npermitted to sell such shares under the Corporation’s policy on trading by insiders and are\nsubject to the provisions of paragraph 9.

-10-\n

\n\n\n

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

12.		Prohibition Against Pledge, Attachment, Etc.

		Except as otherwise herein provided, the Option herein granted and the rights and privileges\npertaining thereto shall not be transferred, assigned, pledged or hypothecated in any way\n(whether by operation of law or otherwise) and shall not be subject to execution, attachment\nor similar process.

13.		Changes in Stock

		In the event there are any changes in the Class A Common Stock of the Corporation through\nmerger, consolidation, reorganization, recapitalization, stock dividend, stock split,\ncombination or exchange of shares, rights offering or any other change affecting the Class A\nCommon Stock of the Corporation, appropriate changes will be made by the Compensation\nCommittee in the aggregate number of shares and the purchase price and kind of shares\nsubject to this Option, to prevent substantial dilution or enlargement of the rights granted\nto or available for Employee.

14.		Dissolution or Merger

		Anything contained herein to the contrary notwithstanding upon the dissolution or\nliquidation of the Corporation, or upon any merger in which the Corporation is not the\nsurviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Employee shall have the right within sixty (60) days prior to the effective date\nof such dissolution, liquidation or merger, to surrender all or any unexercised portion of\nthis Option to the Corporation for cash, subject to the discretion of the Compensation\nCommittee as to the exact timing of said surrender. Notwithstanding the foregoing, however,\nin the event Employee has retired or died, Employee’s right to surrender all or any\nunexercised portion of this Option under this paragraph shall be available only to the\nextent at the time of any such surrender, Employee would have been entitled to exercise this\nOption under paragraphs 2 or 3 hereof, as the case may be. The amount of cash to be paid to\nEmployee for the portion of this Option so surrendered, shall be equal to the number of shares of Class A Common Stock subject to the surrendered Option multiplied by the\ndifference between the Option Price per share, as described in paragraph 1 hereof, and the\nFair Market Value per share, determined in accordance with paragraph 9 hereof, as of the\ntime of surrender.

15.		Notices

		Any notice to be given to the Corporation under the terms of this Agreement shall be\naddressed to the Corporation in care of its Chief Financial Officer, and any notice to be\ngiven to the Employee may be addressed at the address as it appears on the Corporation’s\nrecords, or at such other address as either party may hereafter designate in writing to the\nother. Except as provided in paragraph 5 hereof, any such notice shall be deemed to have\nbeen duly given, if and when enclosed in a properly sealed envelope addressed as aforesaid,\nand deposited, postage prepaid, in the United States mail.

-11-\n

\n\n\n

Exhibit 10.31\n

\n\n\n

BRADY CORPORATION
\nDIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT\n

\n\n\n

Option granted on , ___, by Brady Corporation, a Wisconsin corporation (hereinafter\ncalled the “Company”), to \n \n \n \n (hereinafter called the “Director”) pursuant to\nthe terms of the Brady Corporation 2010 Nonqualified Stock Option Plan for Non-Employee Directors.\nThe Corporation’s records shall be the official record of the Option grant described herein and, in\nthe event of any conflict between this description and Corporation’s records, the Corporation’s\nrecords shall control.\n

\n\n

1. Number of Shares Optioned; Option Price. The Company grants to the Director the\nright and option to purchase, on the terms and conditions hereof, all or any part of an aggregate\nof ( ) shares of the presently authorized Class A Common Stock of the\nCompany, $.01 par value, whether unissued or issued and reacquired by the Company, at the price of\n \n ($___) per share (the “Option Price”).\n

\n\n

2. Conditions of Exercise of Options During Director’s Lifetime; Vesting of Option.\nExcept as provided hereinafter in this paragraph and in paragraph 3, this Option may not be\nexercised (a) unless Director is at the date of the exercise a Director of the Company and (b)\nuntil Director shall have been continuously a Director for a period of at least one year from the\ndate hereof. Thereafter, this Option shall be exercisable for any amount of shares up to the\nmaximum percentage of shares covered by this Option (rounded up to the nearest whole share) as\nfollows (but in no event shall this Option be exercisable for any shares after the expiration date\nprovided in paragraph 7):\n

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


	Maximum Percentage
Number of Completed Years	of Shares for Which
After Date of Grant of this Option	Option is Exercisable

Less than 1	Zero
At least 1 but less than 2		33-1/3	%
At least 2 but less than 3		66-2/3	%
At least 3		100	%

\n\n\n

If Director shall cease to be a Director of the Company for any reason (except death or\ndisability, or if the Director has been a member of the Board of Directors for at least three\nyears) after Director shall have been continuously a Director for one year after the grant of this\nOption, Director may, at any time within three months of such termination, but in no event later\nthan the date of expiration of this Option, exercise this Option to the extent Director was\nentitled to do so on the date of such termination. This Agreement does not confer upon Director\nany right to continue as a Director of the Company.\n

\n\n

3. Termination of Directorship, Etc. A. Notwithstanding the provisions of paragraph 2\nhereof, in the event of the termination of the Directorship with the Company prior to\nthree years from date of grant, due to death or disability, this Option shall become 100%\nvested and fully exercisable.\n

\n\n

For purposes of this Agreement, “Disability” means that the Director is disabled as a result\nof sickness or injury, such that he is unable satisfactorily to perform the Director’s duties as\ndetermined by the Board of Directors, on the basis of medical evidence satisfactory to it.\n

\n\n

B. (i) If the Directorship is terminated by the death of the Director, any unexercised,\nunexpired Stock Options granted hereunder to the Director shall be exercisable, in whole or in\npart, at any time within one year after the date of death, by the Director’s personal\nrepresentative or by the person to whom the Stock Options are transferred under the Director’s last\nwill and testament or the applicable laws of descent and distribution. (ii) If the Directorship is\nterminated as a result of the disability of the Director, any unexercised, unexpired Stock Options\ngranted hereunder to the Director shall be exercisable, in whole or in part, at any time within one\nyear after the date of disability. (iii) If the Directorship is terminated after the Director has\nbeen a member of the Board for at least three years, any unexercised, unexpired Stock Options\ngranted hereunder to the Director shall continue to vest as provided in paragraph 2 and any option\nthat is or becomes vested may be exercised within the term of such option.\n

\n\n

C. In the event of (a) the merger or consolidation of the Company with or into another\ncorporation or corporations in which the Company is not the surviving corporation, (b) the adoption\nof any plan for the dissolution of the Company, or (c) the sale or exchange of all or substantially\nall the assets of the Company for cash or for shares of stock or other securities of another\ncorporation, this Option shall become fully vested and exercisable immediately prior to any such\nevent in which the Company is not the surviving corporation.\n

\n\n

4. Deferral of Exercise. Although the Company intends to exert its best efforts so\nthat the shares purchasable upon the exercise of this Option will be registered under, or exempt\nfrom the registration requirements of, the Federal Securities Act of 1933 (the “Act”) and any\napplicable state securities law at the time or times this Option (or any portion of this Option)\nfirst becomes exercisable, if the exercise of this Option would otherwise result in the violation\nby the Company of any provision of the Act or of any state securities law, the Company may require\nthat such exercise be deferred until the Company has taken appropriate action to avoid any such\nviolation.\n

\n\n

5. Method of Exercising Option. This Option shall be exercised by delivering to the\nCompany, at the office of its Treasurer, a written notice of the number of shares with respect to\nwhich this Option is at the time being exercised and by paying the Company in full the Option Price\nof the shares being acquired at the time.\n

\n\n

6. Method of Payment. Payment shall be made either (i) in cash; (ii) by delivering\nshares of the Company’s Class A Common Stock which have been beneficially owned by the Director,\nthe spouse of the Director, or both of them, for a period of at least six months prior to the time\nof exercise (“Delivered Stock”); (iii) by surrendering to the Company shares of Class A Common\nStock otherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination\nof the foregoing. Payment in the form of Delivered Stock shall be in the amount of\nthe Fair Market Value of the stock at the date of exercise, determined in accordance with\nparagraph 9.\n

\n\n

-2-\n

\n\n

7. Expiration Date. This Option shall expire ten years after the date on which this\nOption was granted.\n

\n\n

8. Withholding Taxes. The Company may require payment of or withhold any tax which it\nbelieves is payable as a result of the exercise of this Option, and the Company may defer making\ndelivery with respect to the shares until arrangements satisfactory to the Company have been made\nwith regard to any such withholding obligations. In lieu of part or all of any such payment, the\nDirector, in satisfaction of all withholding taxes (including, without limitation, Federal income,\nFICA (Social Security and Medicare) and any state and local income taxes) payable as a result of\nsuch exercise, may elect, subject to such rules and regulations as the Company may adopt from time\nto time, to have the Company withhold that number of shares (valued at Fair Market Value on the\ndate of exercise and rounded upward) required to settle such withholding taxes.\n

\n\n

9. Method of Valuation of Stock. The “Fair Market Value” of the Class A Common Stock\nof the Company on any date shall mean, if the stock is then listed and traded on a registered\nnational securities exchange, or is quoted in the NASDAQ National Market System, the average of the\nhigh and low sale prices recorded in composite transactions for such date or, if such date is not a\nbusiness day or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of reported\nsales or if the stock is not so listed or quoted, but is traded in the over-the-counter market,\nFair Market Value shall be the average of the closing bid and asked prices for such shares on the\nrelevant date.\n

\n\n

10. No Rights in Shares Until Certificates Issued. Neither the Director nor his heirs\nnor his personal representative shall have any of the rights or privileges of a stockholder of the\nCompany in respect of any of the shares issuable upon the exercise of the Option herein granted,\nunless and until certificates representing such shares shall have been issued.\n

\n\n

11. Option Not Transferable During Director’s Lifetime. This Option shall not be\ntransferable by the Director other than by his will or by the laws of descent and distribution and\nshall be exercisable during his lifetime only by him.\n

\n\n

12. Prohibition Against Pledge, Attachment, Etc. Except as otherwise herein provided,\nthe Option herein granted and the rights and privileges pertaining thereto shall not be\ntransferred, assigned, pledged or hypothecated in any way (whether by operation of law or\notherwise) and shall not be subject to execution, attachment or similar process.\n

\n\n

13. Changes in Stock. In the event there are any changes in the Class A Common Stock\nof the Company through merger, consolidation, reorganization, recapitalization, stock dividend,\nstock split, combination or exchange of shares, rights offering or any other change affecting the\nClass A Common Stock of the Company, appropriate changes shall be made by the Board of Directors of\nthe Company, in the aggregate number of shares and the purchase price\nand kind of shares subject to this Option, to prevent substantial dilution or enlargement of\nthe rights granted to or available for Director.\n

\n\n

-3-\n

\n\n

14. Dissolution or Merger. Anything contained herein to the contrary notwithstanding,\nupon the dissolution or liquidation of the Company, or upon any merger in which the Company is not\nthe surviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Director shall have the right immediately prior to the effective date of such\ndissolution, liquidation or merger, to surrender all or any unexercised portion of this Option to\nthe Company for cash, subject to the discretion of the Board of Directors as to the exact timing of\nsaid surrender. Notwithstanding the foregoing, however, in the event Director has retired or died,\nDirector’s right to surrender all or any unexercised portion of this Option under this paragraph\nshall be available only to the extent that at the time of any such surrender, Director would have\nbeen entitled to exercise this Option under paragraphs 2 or 3 hereof, as the case may be. The\namount of cash to be paid to Director for the portion of this Option so surrendered, shall be equal\nto the number of shares of Class A Common Stock subject to the surrendered Option multiplied by the\ndifference between the Option Price per share, as described in paragraph 1 hereof, and the Fair\nMarket Value per share, determined in accordance with paragraph 9 hereof, as of the time of\nsurrender.\n

\n\n

15. Notices. Any notice to be given to the Company under the terms of this Agreement\nshall be addressed to the Company in care of its Vice President and Chief Financial Officer, and\nany notice to be given to the Director may be addressed at the address as it appears on the\nCompany’s records, or at such other address as either party may hereafter designate in writing to\nthe other. Any such notice shall be deemed to have been duly given if and when enclosed in a\nproperly sealed envelope addressed as aforesaid, and deposited, postage prepaid, in the United\nStates mail.\n

\n\n

16. Provisions of Plan Controlling. This Option is subject in all respects to the\nprovisions of the Plan. In the event of any conflict between any provisions of this Option and the\nprovisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan\npermits the Committee to modify the terms of an Option grant and has done so herein. Terms defined\nin the Plan where used herein shall have the meanings as so defined. Director acknowledges receipt\nof a copy of the Plan.\n

\n\n

17. Wisconsin Contract. This Option has been granted in Wisconsin and shall be\nconstrued under the laws of that state.\n

\n\n\n

-4-\n

\n\n\n

Exhibit 21\n

\n\n\n

SCHEDULE OF SUBSIDIARIES OF BRADY CORPORATION\n

\n\n


		Percentage
		of Voting
	State (Country)	Securities
Name of Company	Of Incorporation	Owned

Brady Corporation	Wisconsin	Parent
Tricor Direct Inc.	Delaware		100	%
Doing Business As:
Seton
Seton Name Plate Company
D&G Sign and Label
Seton Identification Products
Emedco
Champion America
DAWG, Inc.
Worldmark of Wisconsin Inc.	Delaware		100	%
Brady Investment Co.	Nevada		100	%
Stopware, Inc.	California		100	%
Permar Sytems, Inc.	New York		100	%
Doing Business As Electromark
AIO Acquisition Inc.	Delaware		100	%
Doing Business As:
All-In-One Products
Personnel Concepts Limited
Personnel Concepts Ltd.
PC Limited
USA Printing & Mailing
Dual Core LLC	Wisconsin		100	%
Doing Business As:
Identicard Systems Worldwide
Brady People ID
JAM Plastics
PromoVision Palomino
Temtec
Brady Mexico Holding LLC	Delaware		100	%
Brady Precision Converting, LLC	Wisconsin		100	%
Doing Business As Brady Medical
Clement Communications, Inc.	Pennsylvania		100	%
Visual Wear LLC	Massachusetts		100	%
Doing Business As 1888LANYARD.com
Brady International Co.	Wisconsin		100	%
Brady Worldwide, Inc.	Wisconsin		100	%
Also Doing Business As:
Brandon International
Varitronic Systems
Teklynx International
Sorbent Products Company
TISCOR
Brady Australia Holdings Pty. Ltd.	Australia		100	%
Brady Australia Pty. Ltd.	Australia		100	%
Seton Australia Pty. Ltd.	Australia		100	%
Accidental Health & Safety Pty. Ltd.	Australia		100	%
Trafalgar First Aid Pty. Ltd.	Australia		100	%
Carroll Australasia Pty. Ltd.	Australia		100	%
Scafftag Australia Pty. Ltd.	Australia		100	%

\n\n\n

\n\n


		Percentage
		of Voting
	State (Country)	Securities
Name of Company	Of Incorporation	Owned
Visisign Australia Pty. Ltd.	Australia		100	%
Transposafe Systems Belgium NV/SA	Belgium		100	%
W.H. Brady, N.V.	Belgium		100	%
W.H.B. do Brasil Ltda.	Brazil		100	%
W.H.B. do Brasil Participações e Empreendimentos Ltda.	Brazil		100	%
BRC Financial	Canada		100	%
W.H.B. Identification Solutions, Inc.	Canada		100	%
Doing Business As:
Brady
GrafTek
Seton
Teklynx International
Varitronics Canada
Brady Cayman Finance Company	Cayman Islands		100	%
Brady Investment Management (Shanghai) Co., Ltd.	China		100	%
Brady (Beijing) Co. Ltd.	China		100	%
Brady (Shenzhen) Co., Ltd.	China		100	%
Brady (Dongguan) Co., Ltd.	China		100	%
Suzhou Dicel EMC Co., Ltd.	China		100	%
Brady Technology (Langfang) Co., Ltd.	China		100	%
Brady Technology (Suzhou) Co., Ltd.	China		100	%
CIPI Xiamen, Ltd.	China		100	%
PanYu Meixin Metal Company Ltd.	China		100	%
Tradex Converting (Suzhou) Co., Ltd.	China		100	%
Brady A.S.\n(Denmark)	Denmark		100	%
Braton Europe S.A.R.L	France		100	%
Braton Groupe S.A.R.L	France		100	%
Doing Business As:
Brady
Teklynx
Brady Group S.A.S	France		100	%
Doing Business As:
Seton
Signals
BIG
Brady GmbH	Germany		100	%
Doing Business As:
Seton
Balkhausen
Etimark
Teklynx
Transposafe Systems Deutschland GmbH	Germany		100	%
Quo-Luck Company Limited	Hong Kong		100	%
Bakee Metal Manufactory Company Limited	Hong Kong		100	%
Brady Corporation Hong Kong Limited	Hong Kong		100	%
Brady Company India Private Limited	India		100	%
Brady Converting (Ireland) Ltd.	Ireland		100	%
Brady Italia, S.r.l.	Italy		100	%
Nippon Brady K.K.	Japan		100	%
Brady Luxembourg SARL	Luxembourg		100	%
Brady Technology SDN, BHD	Malaysia		100	%
W. H. Brady S. de R.L. de C.V.	Mexico		100	%
Brady Servicios, S. de R.L. de C.V.	Mexico		100	%
Brady B.V.	Netherlands		100	%
Brady Finance B.V.	Netherlands		100	%
Holland Mounting Holding B.V.	Netherlands		100	%
Transposafe Systems Holland B.V.	Netherlands		100	%
Brady A.S. (Norway)	Norway		100	%
Brady Philippines Direct Marketing Inc.	Philippines		100	%

\n\n\n

\n\n


		Percentage
		of Voting
	State (Country)	Securities
Name of Company	Of Incorporation	Owned
Transposafe Systems Polska Sp. Z.o.o.	Poland		100	%
Brady Corporation S.E.A. Pte. Ltd.	Singapore		100	%
Brady Corporation Asia Pte. Ltd.	Singapore		100	%
Brady Asia Holding Pte. Ltd.	Singapore		100	%
Brady Corporation Asia Pacific Pte. Ltd.	Singapore		100	%
Brady Asia Pacific Pte. Ltd.	Singapore		100	%
Brady S.R.O.	Slovakia		100	%
Brady Korea LLP	South Korea		100	%
Brady Identification S.L.	Spain		100	%
Brady AB	Sweden		100	%
Brady Sweden Holding AB	Sweden		100	%
Brady Holding i Kungälv AB	Sweden		100	%
Brady Converting AB	Sweden		100	%
Tradex AB	Sweden		100	%
Brady Holding Co. Ltd.	Thailand		100	%
Brady (Thailand) Co. Ltd.	Thailand		100	%
Brady Technologies (Thailand) Co. Ltd.	Thailand		100	%
Brady Etiket ve Isaretleme Ticaret Ltd. Sirketi	Turkey		100	%
Brady Middle East FZE	United Arab Emirates		100	%
B.I. U.K. Limited	United Kingdom		100	%
B.I. Financial Limited	United Kingdom		100	%
Brady Corporation Limited	United Kingdom		100	%
Brady European Finance Limited	United Kingdom		100	%
Brady European Holdings Limited	United Kingdom		100	%
Scafftag Limited	United Kingdom		100	%
Safetrak Limited	United Kingdom		100	%

\n\n\n\n

\n\n

EXHIBIT 31.1\n

\n\n\n

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

\n\n\n

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

\n\n\n

(1) I\nhave reviewed this annual report on Form 10-K/A of Brady Corporation;\n

\n\n

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

\n\n

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

\n\n

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

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n

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

\n\n\n

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

\n\n\n

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

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



	/s/ FRANK M. JAEHNERT\n
	(Frank M. Jaehnert)
	President and Chief Executive Officer

\n\n

Date:\nOctober 6, 2009\n\n

\n\n

EXHIBIT 31.2\n

\n\n\n

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

\n\n\n

I, Thomas J. Felmer, certify that:\n

\n\n\n\n

(1) I\nhave reviewed this annual report on Form 10-K/A of Brady Corporation;\n

\n\n

\n\n\n

\n\n

\n\n\n

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

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



	/s/ THOMAS J. FELMER\n
	(Thomas J. Felmer)
	Senior Vice President and Chief Financial Officer

\n\n

Date: October 6, 2009\n\n

\n\n


	Page
Report of Independent Registered Public Accounting Firm\n		33
Financial Statements:
Consolidated Balance Sheets — July 31, 2009 and 2008\n		34
Consolidated Statements of Income — Years Ended July 31, 2009, 2008 and 2007\n		35
Consolidated Statements of Stockholders’ Investment — Years Ended July 31, 2009, 2008 and 2007\n		36
Consolidated Statements of Cash Flows — Years Ended July 31, 2009, 2008 and 2007\n		37
Notes to Consolidated Financial Statements — Years Ended July 31, 2009, 2008 and 2007\n		38


		Page
PART I
Item 1.	Business		3
	General Development of Business		3
	Financial Information About Industry Segments		3
	Narrative Description of Business		3
	Overview		3
	Competitive\nStrengths		4
	Key\nStrategies		5
	Products		6
	Marketing\nand Sales		8
	Brands		8
	Manufacturing\nProcess and Raw Materials		8
	Technology\nand Product Development		9
	International Operations		10
	Competition		10
	Backlog		10
	Environment		10
	Employees		10
	Acquisitions		10
	Financial Information About Foreign and Domestic Operations and Export Sales		11
	Information Available on the Internet		11
Item 1A.	Risk Factors		11
Item 1B.	Unresolved Staff Comments		16
Item 2.	Properties		16
Item 3.	Legal Proceedings		16
Item 4.	Submission of Matters to a Vote of Security Holders		16
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		17
Item 6.	Selected Financial Data		19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		30
Item 8.	Financial Statements and Supplementary Data		32
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		65
Item 9A.	Controls and Procedures		65
Item 9B.	Other Information		67
PART III
Item 10.	Directors and Executive Officers of the Registrant		68
Item 11.	Executive Compensation		72
	Compensation Discussion and Analysis		72
	Compensation Committee Interlocks and Insider Participation		78
	Compensation Committee Report		78
	Summary Compensation Table		78
	Grants of Plan-Based Awards for 2009		80
	Outstanding Equity Awards at 2009 Fiscal Year End		81
	Option Exercises and Stock Vested for Fiscal 2009		82
	Non-Qualified Deferred Compensation for Fiscal 2009		82
	Potential Payments Upon Termination or Change in Control		83
	Compensation of Directors		86
	Director Compensation Table		86
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		88
Item 13.	Certain Relationships, Related Transactions, and Director Independence		90
Item 14.	Principal Accounting Fees and Services		90
PART IV
Item 15.	Exhibits, Financial Statement Schedules		91
Signatures			95
Brady Corporation 2010 Omnibus Incentive Stock Plan
Brady Corporation 2010 Nonqualified Stock Option Plan for Non-Employee Directors
Form of Non-Qualified Employee Stock Option Agreement and Employee Performance Stock Option Agreement under 2010 Omnibus Incentive Stock Plan
Form of Director Stock Option Agreement under 2010 Nonqualified Stock Option Plan for Non-employee Directors
Subsidiaries of Brady Corporation
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
Rule 13a-14(a)/15d-14(a) Certification of Frank M. Jaehnert
Rule 13a-14(a)/15d-14(a) Certification of Thomas J. Felmer
Section 1350 Certification of Frank M. Jaehnert
Section 1350 Certification of Thomas J. Felmer


	Brady Corporation \n
	By:	/s/ Thomas J. Felmer\n
		Thomas J. Felmer
		Senior Vice President & Chief Financial Officer \n(Principal Financial Officer)

16.		Provisions of Plan and Corporate Records Controlling

		This Option is subject in all respects to the provisions of the Plan. In the event of any\nconflict between any provisions of this Option and the provisions of the Plan, the\nprovisions of the Plan shall control, except to the extent that the Plan permits the\nCommittee to modify the terms of an Option grant and has done so herein. Terms defined in\nthe Plan where used herein shall have the meanings as so defined. Employee acknowledges\nreceipt of a copy of the Plan. The Corporation’s records shall be the official record of\nthe Option grant described herein and , in the event of any conflict between this\ndescription and the Corporation’s records, the Corporation’s records shall control.

17.		Wisconsin Contract

		This Option has been granted in Wisconsin and shall be construed under the laws of that\nstate.