Form 10-K

\n\n

\n\n\n\n\n

UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n

\n\n

Washington, D.C. 20549\n

\n\n

Form 10-K\n

\n\n

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


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

\n\n

For the fiscal year ended July 31, 2010\n\n

\n\n\n

OR\n

\n\n

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


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

\n\n

For\nthe transition period from ________ to ________\n\n

\n\n\n

Commission file number 1-14959\n

\n\n

BRADY CORPORATION\n

\n\n

(Exact name of registrant as specified in charter)

\n\n\n

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


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

\n\n\n

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

\n\n\n

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

\n\n\n

Securities registered pursuant to Section 12(b) of the Act:\n

\n\n

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


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

\n\n\n

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

\n\n\n

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

\n\n

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

\n\n

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

\n\n

Indicate by check mark whether the registrant has submitted electronically and posted on its\ncorporate Web site, if any, every Interactive Data File required to be submitted and posted\npursuant to Rule 405 of Regulation S-T 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

\n\n

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. o\n

\n\n

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

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


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

\n\n\n

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

\n\n

The aggregate market value of the non-voting common stock held by non-affiliates of the\nregistrant as of January 29, 2010, was approximately $1,281,152,775 (based on closing sale price of\n$28.26 per share on that date as reported for the New York Stock Exchange). As of September 15,\n2010, there were outstanding 48,894,883 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

\n\n

\n\n\n\n\n

\n\n

INDEX\n

\n\n


	Page
PART I	3

Item 1. Business		3

General Development of Business		3

Financial Information About Industry Segments		3

Narrative Description of Business		3

Overview		3

Competitive Strengths		3

Key Strategies		4

Products		5

Marketing and Sales		7

Brands		7

Manufacturing Process and Raw Materials		8

Technology and Product Development		8

International Operations		9

Competition		9

Backlog		9

Environment		9

Employees		9

Acquisitions		9

Financial Information About Foreign and Domestic Operations and Export Sales		9

Information Available on the Internet		10

Item 1A. Risk Factors		10

Item 1B. Unresolved Staff Comments		13

Item 2. Properties		13

Item 3. Legal Proceedings		14

Item 4. (Removed and Reserved)		14

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		15

Item 6. Selected Financial Data		17

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 7A. Quantitative and Qualitative Disclosures About Market Risk		27

Item 8. Financial Statements and Supplementary Data		29

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		58

Item 9A. Controls and Procedures		58

Item 9B. Other Information		60

PART III

Item 10. Directors and Executive Officers of the Registrant		61

Item 11. Executive Compensation		64

Compensation Discussion and Analysis		64

Compensation Committee Interlocks and Insider Participation		71

Compensation Committee Report		71

Summary Compensation Table		72

Grants of Plan-Based Awards for 2010		73

Outstanding Equity Awards at 2010 Fiscal Year End		74

Option Exercises and Stock Vested for Fiscal 2010		75

Non-Qualified Deferred Compensation for Fiscal 2010		75

Potential Payments Upon Termination or Change in Control		76

Compensation of Directors		79

Director Compensation Table		80

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		80

Item 13. Certain Relationships, Related Transactions, and Director Independence		82

Item 14. Principal Accounting Fees and Services		83

PART IV

Item 15. Exhibits, Financial Statement Schedules		84

Signatures

Exhibit 21
Exhibit 23
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

\n\n\n

\n\n

2\n

\n\n

PART I\n

\n\n\n\n

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

\n\n

Item 1. Business\n

\n\n

(a) General Development of Business\n

\n\n\n

The Company, a Wisconsin corporation founded in 1914, currently operates globally in\nAustralia, Belgium, Brazil, Canada, the Cayman Islands, China, Denmark, France, Germany, Hong Kong,\nIndia, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, the Philippines,\nPoland, Singapore, Slovakia, South Korea, Spain, Sweden, Thailand, Turkey, the United Arab\nEmirates, 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 New Zealand, Russia, Taiwan, Turkey, Vietnam and the United Arab Emirates.\nThe Company further markets its products to parts of Eastern Europe, the Middle East, Africa and\nRussia. The Company’s corporate headquarters are located at 6555 West Good Hope Road, Milwaukee,\nWisconsin 53223, and the telephone number is (414) 358-6600. The Company’s Internet address is\nhttp://www.bradycorp.com.\n

\n\n

(b) Financial Information About Industry Segments\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

(c) Narrative Description of Business\n

\n\n

Overview\n

\n\n\n

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, brand protection, 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 many of its\nmarkets.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

Competitive Strengths\n

\n\n\n

The Company believes the following competitive strengths will allow it to achieve its growth\nand profitability strategies:\n

\n\n

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

\n\n

3\n

\n\n

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

\n\n

Operational Excellence. Brady continues to improve in operational productivity. It employs\nwell-developed problem solving techniques through the Brady Business Performance System (“BBPS”)\nand invests in state-of-the-art equipment to capture efficiencies. The Company is largely\nvertically integrated and designs, manufactures and markets a majority of the products it sells.\nThe Company has consistently generated positive cash flow from operations by continually reducing\ncosts, improving working capital, and optimizing the efficiency of its manufacturing operations.\n

\n\n

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 63.4% of net sales in fiscal 2010. The Company’s broad\nproduct offering and global presence benefit many of its customers who seek a single or primary\nsupplier. Brady has more than one million end-customers that operate in multiple industries.\n

\n\n

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 companies to track progress toward results expected at\nthe time of acquisition. Since 1996, the Company has acquired and integrated 56 companies to\nincrease market share in existing and new geographies, expand the product range it offers to both\nexisting and new customers, as well as add new technological capabilities.\n

\n\n

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

\n\n

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

\n\n

Key Strategies\n

\n\n\n

The Company’s primary objectives are to build upon its leading market positions, to improve\nits performance and profitability and to expand its existing activities through a multi-pronged\nstrategic approach that focuses on improved productivity and revenue expansion. The Company’s key\nstrategies include:\n

\n\n

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

•

Revenue Expansion

\n\n

Capitalize on Growing Niche Markets. The Company seeks to leverage its distribution network,\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

\n\n

Increase Market Share. Many Brady markets are fragmented and populated with smaller regional\nor local 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

\n\n

4\n

\n\n

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

\n\n

Expand Geographically. Brady’s long-term strategy involves the pursuit of growth opportunities\nin a number of markets outside of the United States. The Company is committed to being in close\nproximity to its customers and to low-cost manufacturing. Brady currently operates in 30 countries\nand employs approximately 6,600 people. Of the approximately 6,600 global employees, Asia-Pacific\naccounts for 41%, with the Americas and Europe employing 38%, and 21% of the workforce,\nrespectively. Brady has made strategic acquisitions and has invested heavily in its global\ninfrastructure and flexible manufacturing capacity in order to follow its customers into new\ngeographies. Brady’s regional management structure is a key component in effectively entering and\ncompeting in new geographies.\n

\n\n

Market/Customer Segmentation and Voice of the Customer. In fiscal 2010, the Company launched a\nsystematic process to facilitate its goals for growth into new and/or adjacent market spaces and\nfocus Company resources on the best and most promising business development opportunities. Market\nand Customer Segmentation identifies fast growing, profitable market segments and the most\nattractive customers within these segments, while Voice of the Customer provides a more complete\nunderstanding of what these customers want and need in terms of products, services, and delivery\noptions.\n

\n\n

Pursue Strategic Acquisitions. The Company intends to continue to make complementary strategic\nacquisitions to further its goals of strengthening its market positions and entering new markets,\nnew geographies and adjacent markets, where Brady competencies can be applied and social, economic\nand cultural trends can be positively leveraged. Brady works to drive substantial value creation\nthrough capitalizing on its acquisition and integration acumen.\n

\n\n

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 worldwide. In fiscal\n2009 and 2010, the Company expanded its R&D operations in Singapore and Beijing, China. Amounts\nincurred for research and development activities were 3.4% and 2.8% of sales in fiscal 2010 and\n2009, respectively.\n

\n\n

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

•

Improve Productivity

\n\n

Brady Business Performance System. The Company plans to continue its focus on improving\noperating efficiency and customer service, reducing costs, and improving productivity and return on\ninvested capital. To this end, Brady is continuing the expansion of its Brady Business Performance\nSystem (“BBPS”) in most of its operations globally. This approach to improving profitability\nfocuses on strategy deployment, operational efficiencies and lean manufacturing principles to drive\ncost savings, enhance customer service and improve overall business performance. In fiscal 2010,\nBrady accelerated the use of BBPS and its underlying principles beyond the manufacturing floor to\nfunctions such as human resources, information technology, finance, and sales and marketing which\nwill continue in fiscal 2011.\n

\n\n

Strategic Sourcing. Through coordinated supply chain management, the Company looks to increase\nproductivity and efficiency in the process of procuring goods and services ranging from raw\nmaterials and products for resale, to travel and other services, as well as energy, communication\nand building lease costs. Brady’s strategic sourcing initiative, launched in fiscal 2010, focuses\non reducing both direct and indirect spending while also implementing standard processes globally.\n

\n\n

Sales and Marketing Productivity and Effectiveness. In fiscal 2010, the Company created a\nglobal team to focus on improving the effectiveness and efficiency of its sales and marketing\nprofessionals and processes to better service our existing customers and prospective customers\nwhile better managing our sales and marketing costs.\n

\n\n

General and Administrative Expense Controls. The Company is focusing on the automation,\nstandardization, and simplification of its back-office activities including finance, information\ntechnology, and other functions. This includes the centralization of certain functions in global\nand regional shared service centers to better leverage talent and gain economies of scale.\n

\n\n

Products\n

\n\n\n

The Company is largely vertically integrated by designing, developing, and producing the\nmajority of its products internally. Brady materials are developed internally and manufactured out\nof a variety of films, many of which are coated by Brady, for applications in the following\nmarkets: electronic, industrial, electrical, utility, laboratory, safety and security. Brady also\nmanufactures specialty tapes and related products that are characterized by high-performance\nprintable top coats and adhesives, most of which are formulated by the Company, to meet\nhigh-tolerance requirements of the industries in which they are used.\n

\n\n

5\n

\n\n

The Company has thousands of stock and custom products which consist of complete\nidentification 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

\n\n

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

\n\n

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

•

Safety and Facility Identification

\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

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

•

Wire and Cable Identification

\n\n

Brady manufactures a broad range of wire and cable-marking products, including labels,\nsleeves, printers and software that allow customers to create their own labels, and printers to\nprint and apply them. These products mark and identify wires, cables and their termination points\nto facilitate manufacturing, construction, repair or maintenance of equipment, and data\ncommunication and electrical wiring systems used in virtually every industrial, power and\ncommunication market.\n

\n\n

6\n

\n\n

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

•

High Performance Identification

\n\n

Brady produces a complete line of label materials and printing systems to meet customers’\nneeds for identification requirements for product identification, brand protection labeling,\ntamper-evident labeling, work in process labeling, finished product identification and bar coding\nthat perform under harsh or demanding conditions. Brady prints stock and custom labels and also\nsells unprinted materials to enable customers to print their own labels.\n

\n\n

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

•

Precision Die-Cut Parts

\n\n

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

\n\n

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

•

People Identification

\n\n

The\nCompany offers identification systems and products including photo ID card systems that\ncombine biometrics, digital imaging and other technologies to positively identify people;\nself-expiring name tags that make use of migratory ink technology which, upon activation, starts a\ntimed process resulting in an altered message, color or design to indicate expiration; software for\nvisitor and employee identification; and identification accessories including lanyards, badge\nholders, badge reels and attachments, as well as photo identification kits.\n

\n\n

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

•

Other Products

\n\n

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

\n\n

Marketing and Sales\n

\n\n\n

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

\n\n

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

\n\n

Brands\n

\n\n\n

The Company goes 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 Sorbent Products Company and D.A.W.G. brands; poster\nprinters and cutting systems for education and government markets are offered under the Varitronics\nbrand; wire identification products are marketed under the Modernotecnica brand and the Carroll\nbrand; and custom labels and nameplates under the Stickolor brand. Direct marketing safety and\nfacility identification products are offered under the Seton, Emedco, Signals, Safetyshop, Clement\nand Personnel Concepts names; direct supplies under the Accidental Health and Safety, Trafalgar,\nand Securimed brands. Security and identification badges and systems are included in the Temtec,\nB.I.G., Identicard/Identicam, STOPware, J.A.M. Plastics, PromoVision, and Quo-Luck\nbrands; hand-held regulatory documentation systems are available under the Tiscor name;\nautomatic identification and bar-code software is offered under the Teklynx name.\n

\n\n

7\n

\n\n

Manufacturing Process and Raw Materials\n

\n\n\n

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

\n\n

The Company produces the majority of its pressure sensitive materials through vertically\nintegrated manufacturing processes. These integrated manufacturing processes permit greater\nflexibility to meet customer needs in product design and manufacture, and an improved ability to\nprovide specialized products designed to meet the needs of specific applications. Brady’s\nmanufacturing processes and inventory controls 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, 9002, or 14001 certification.\n

\n\n

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

\n\n

Technology and Product Development\n

\n\n\n

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

\n\n

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

\n\n

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 and its\nresearch and development facilities in Singapore and Beijing, China. The Company spent\napproximately $42.6 million, $34.2 million, and $40.6 million during the fiscal years ended July\n31, 2010, 2009, and 2008, respectively, on its research and development activities. In fiscal 2010,\napproximately 235 employees were engaged in research and development activities for the Company.\nAdditional research projects were conducted in Company facilities in other locations in the United\nStates, Europe and Asia 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

8\n

\n\n

International Operations\n

\n\n\n

In fiscal 2010, 2009, and 2008, sales from international operations accounted for 63.4%,\n61.8%, and 62.9%, respectively, of the Company’s sales. Its global infrastructure includes\nsubsidiaries in Australia, Belgium, Brazil, Canada, the Cayman Islands, China, Denmark, France,\nGermany, Hong Kong, India, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, the\nPhilippines, Poland, Singapore, Slovakia, South Korea, Spain, Sweden, Thailand, Turkey, the United\nArab Emirates, the United Kingdom and the United States. The Company also sells through\nsubsidiaries or sales offices in these countries, with additional sales through a dedicated team of\ninternational sales representatives in New Zealand, Russia, Taiwan, Turkey, Vietnam and the United\nArab Emirates. The Company further markets its products to parts of Eastern Europe, the Middle\nEast, Africa and Russia\n

\n\n

Competition\n

\n\n\n

The markets for all of the Company’s products are competitive. Brady believes that it is one\nof the leading producers in its specific markets of wire markers, safety signs, pipe markers, label\nprinting systems, die-cut products and bar-code-label-generating software. Brady competes for\nbusiness principally on the basis of production capabilities, engineering, and research and\ndevelopment capabilities, materials expertise, its global footprint, global account management\nwhere needed, customer service and price. Product quality is determined by factors such as\nsuitability of component materials for various applications, adhesive properties, graphics quality,\ndurability, product consistency and workmanship. Competition in many of its product markets is\nhighly fragmented, ranging from smaller companies offering only one or a few types of products, to\nsome of the world’s major adhesive and electrical product companies offering some competing\nproducts as part of their overall product lines. A number of Brady’s competitors are larger than\nthe Company and have greater resources. Notwithstanding the resources of these competitors,\nmanagement believes that Brady provides a broader range of identification solutions than any of\nthem, and that its global infrastructure is a significant competitive advantage in serving large\nmulti-national customers.\n

\n\n

Backlog\n

\n\n\n

As of July 31, 2010, the amount of the Company’s backlog orders believed to be firm was $35.3\nmillion. This compares with $27.5 million and $32.0 million of backlog orders as of July 31, 2009\nand 2008, respectively. The increase in the backlog is primarily due to an increase in the brand\nprotection orders. Average delivery time for the Company’s orders varies from same day delivery to\none month, depending on the type of product, customer request or demand, and whether the product is\nstock or custom-designed and manufactured. The Company’s backlog does not provide much visibility\nfor 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 15, 2010, the Company employed approximately 6,600 individuals. Brady has\nnever experienced 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

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

\n\n\n

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

\n\n

9\n

\n\n

(e) Information Available on the Internet\n

\n\n\n

The Company’s Corporate Internet address is http://www.bradycorp.com. The Company makes\navailable, free of charge, on or through its Internet website copies of its Annual Report on 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 financial condition, results of operations, cash flows, or liquidity may be\nadversely affected by a prolonged economic downturn or economic uncertainty.\n

\n\n

The Company’s business and operating results have been and will continue to be affected by\nglobal economic conditions. As global economic conditions deteriorate or economic uncertainty\nincreases, our customers and potential customers may experience deterioration of their businesses,\nwhich may result in the delay or cancellation of plans to purchase our products. Our sensitivity to\neconomic cycles and any related fluctuations in the businesses of our customers or potential\ncustomers may have a material adverse effect on our financial condition, results of operations,\ncash flows, or liquidity.\n

\n\n

Demand for the Company’s products may be susceptible to fluctuations in the major markets\nserved that 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 market conditions. The\nCompany’s business in the safety and facility identification and wire and cable identification\nproduct lines tends to vary with the nominal GDP of the local economies in which the Company\nmanufactures and sells. As a result, in periods of economic contraction, the business is likely to\ndecline. In the precision die-cut and high performance identification product lines, the Company\nmay be adversely affected by reduced demand for products due to downturns in the global economy as\nthis is a more volatile business. This can result in higher degrees of volatility in the Company’s\nnet sales, results of operations, cash flows, and liquidity. These more volatile markets include,\nbut are not limited to, mobile telecommunication devices, hard disk drives and electronics in\npersonal computers and other electronic devices.\n

\n\n

Failure to meet certain financial covenants required by our debt agreements may adversely\naffect our assets, financial position, cash flows, and liquidity.\n

\n\n

The Company’s debt and revolving loan agreements require it to maintain certain financial\ncovenants. The June 2004, February 2006, March 2007 and May 2010 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 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 that the aggregate\nnet book value of the assets sold or otherwise disposed of by the Company and its subsidiaries, as\ndefined in the agreement, in any fiscal year of the Company shall not exceed 15% of consolidated\ntangible net worth.\n

\n\n

If we breach any of these restrictions or covenants and do not obtain a waiver from the\nlenders, then, subject to applicable cure periods, the outstanding indebtedness (and any other\nindebtedness with cross-default provisions) could be declared immediately due and payable, which\nwould adversely affect our liquidity and financial condition.\n

\n\n\n

An increase in the Company’s level of debt could adversely affect our financial health.\n

\n\n

An increase in the Company’s level of debt, which historically has occurred to finance\nacquisitions and for other general corporate purposes, could adversely impact: obligations under\nexisting debt agreements; ability to obtain additional financing for future growth; future interest\nrates; cash flows available to fund new product development; capital expenditures; working capital\nand other general corporate activities; and the Company’s flexibility in planning and reacting to\nchanges in the business.\n

\n\n

10\n

\n\n

The Company’s net earnings could be affected by changes in tax legislation or tax rates.\nAdditionally, audits by taxing authorities could result in tax payments for prior periods.\n

\n\n

The Company is subject to income taxes in the U.S. and in many non-U.S. jurisdictions. As\nsuch the Company’s net earnings are subject to risk due to changing tax laws and tax rates around\nthe world. In the U.S., as of July 31, 2010, there are a number of tax proposals at various stages\nof legislation as well as certain legislation that recently passed but has not yet been fully\nanalyzed. Some of the proposals would eliminate provisions that historically benefited the\nCompany’s effective tax rate. Additionally, certain tax provisions in the U.S. recently lapsed,\nincluding the Research and Development Tax Credit and the controlled foreign corporation\nlook-through rule. If these provisions are not extended it could negatively impact the Company’s\nfinancial results. While it is impossible for us to predict whether some or all of these proposals\nwill be enacted, it is likely they will have an impact on our net earnings.\n

\n\n

The Company’s tax filings are subject to audit by U.S. federal, state and local tax\nauthorities and by non-U.S. tax authorities. If these audits result in payments or assessments\ndifferent from our reserves, our future net earnings may be adversely impacted.\n

\n\n

The Company reviews the probability of the realization of its deferred tax assets on a\nquarterly basis based on forecasts of taxable income in both the U.S. and foreign jurisdictions. As\npart of 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. Such changes could result in material non-cash expenses in the period in\nwhich the changes are made and could have a material adverse impact on the Company’s net earnings.\n

\n\n

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

\n\n

Our historical growth has included, and our future growth strategy includes, acquisitions. The\nCompany may not be able to identify acquisition targets or successfully complete acquisitions in\nthe future due to the absence of quality companies, economic conditions, or price expectations from\nsellers. If the Company is unable 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. Recent and future acquisitions will\nrequire integration of operations, sales and marketing, information technology, finance and\nadministrative operations. The successful integration of acquisitions will require substantial\nattention from the Company’s management and the management of the acquired businesses, which could\ndecrease the time management has to serve and attract customers. The Company cannot assure that it\nwill be able to successfully integrate these recent or any future acquisitions, that these\nacquisitions 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

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 adversely affected.\n

\n\n

Development of proprietary products is key to the success of the Company’s core growth and\nhigh gross profit margins now and in the future. Therefore, the Company must continue to develop\nnew and innovative products and acquire and retain the necessary intellectual property rights in\nthese products 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 or reducing its profit\nmargins. Additionally, in some of its other businesses, the Company’s distributors/customers may\nseek lower cost sourcing opportunities, which could cause a loss of business that may adversely\nimpact the Company’s revenues.\n

\n\n

11\n

\n\n

The global nature of our business exposes us to foreign currency fluctuations that could\nadversely affect the Company’s sales, profits, and cash balances.\n

\n\n

More than 60 percent of the Company’s revenues are derived outside the United States. As such,\nfluctuations in foreign currency exchange rates can have an adverse impact on its sales and profits\nas amounts that are measured in foreign currency are translated back to U.S. dollars. Any increase\nin the value of the U.S. dollar in relation to the value of the local currency will adversely\naffect operating results from the Company’s foreign operations when translated into U.S. dollars.\nSimilarly, any decrease in the value of the U.S. dollar in relation to the value of the local\ncurrency will increase operating results in the Company’s foreign operations when translated into\nU.S. dollars. During fiscal 2010, the weakening U.S. dollar versus the majority of other currencies\nincreased the Company’s sales by $32.3 million.\n

\n\n

As of July 31, 2010, approximately 54% 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 impact\non the Company’s cash balances. Any increase in the value of the U.S. dollar in relation to the\nvalue of various foreign currencies will have a negative impact on cash balances when translated\ninto U.S. dollars. Weakening of the U.S. dollar against foreign currencies will have a positive\nimpact 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 the Company’s profitability.\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, 2010, the Company had $768.6 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 $103.5 million of other\nintangible assets, primarily representing the fair value of the customer relationships, patents and\ntrademarks it acquired in its acquisitions. At July 31, 2010, goodwill and other intangible assets\nrepresented approximately 49.9% of the Company’s 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, profitability,\ncash flow generation, capital structure, cost of debt, interest rates, capital expenditures, and\nother assumptions. A worldwide economic downturn, credit crisis, or uncertainty in the markets the\nCompany serves can adversely impact the assumptions in these valuations. If the estimated fair\nvalue of the Company’s operating segments change in future periods, it may be required to record an\nimpairment charge related to goodwill or other intangible assets, which would have the effect of\ndecreasing 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 reduction\nof business from one or more of these large key customers could have a material adverse impact on\nthe 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 South America and\nAsia, a significant portion of the Company’s sales are attributable to products manufactured\noutside of the United States. More than half of the Company’s approximately 6,600 employees and\nmore than half of its manufacturing locations are outside of the United States. The Company’s\ninternational operations are generally subject to various risks including political, economic and\nsocietal instability, the imposition of trade restrictions, local labor market conditions, the\neffects of income taxes, and differences in business practices. The Company may incur increased\ncosts and experience delays or disruptions in product deliveries and payments in connection with\ninternational manufacturing and sales that could cause loss of revenue. Unfavorable changes in the\npolitical, regulatory and business climate in countries where the Company has operations could have\na material adverse effect on its financial condition, results of operations, and cash flows\n

\n\n

12\n

\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 climate change, air emissions, wastewater discharges, the handling of hazardous materials and\nwastes, manufacturing and disposal of certain materials, and regulations otherwise relating to\nhealth, safety and the protection of the environment. The Company’s products may also be governed\nby regulations 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, cash flows, 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 requirements of government\ncontracts, including requirements related to procurement integrity, export control, employment\npractices, the accuracy of records and the recording of costs. A failure to comply with these\nrequirements might result in suspension of these contracts and suspension or debarment from\ngovernment contracting or subcontracting.\n

\n\n

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

\n\n

The Company continues to initiate several measures to address its cost structure and market\nrequirements. 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\ncost structure and the charges related to these actions may have a material adverse effect on the\nCompany’s results of operations and financial condition.\n

\n\n

Item 1B. Unresolved Staff Comments\n

\n\n\n\n

None.\n

\n\n

Item 2. Properties\n

\n\n\n

The Company currently operates 56 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 in\nCanada.\n

\n\n

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

\n\n

Asia-Pacific: Six are located in China; two in Australia; and one each in Japan, Thailand,\nSingapore, India, South Korea, and Malaysia.\n

\n\n

The Company’s present operating facilities contain a total of approximately 3.3 million square\nfeet of space, of which approximately 2.3 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

13\n

\n\n

PART II\n

\n\n

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


	2010		2009			2008
	High		Low			High		Low	High		Low
4th Quarter	$	34.75		$	24.37		$	29.41	$	21.33		$	39.04	$	32.99
3rd Quarter	$	35.28		$	27.19		$	23.08	$	14.61		$	34.00	$	28.58
2nd Quarter	$	31.22		$	26.77		$	31.07	$	16.38		$	40.03	$	29.44
1st Quarter	$	33.06		$	27.08		$	39.68	$	25.18		$	43.78	$	34.04

\n\n\n\n

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

\n\n

(b) Holders\n

\n\n\n

As of September 15, 2010, there were 691 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

During fiscal 2008 and fiscal 2009, the Company’s Board of Directors authorized share\nrepurchase plans for the Company’s Class A Nonvoting Common Stock. The share repurchase plans were\nimplemented by purchasing shares in the open market or privately negotiated transaction, with\nrepurchased shares available for use in connection with the Company’s stock-based plans and for\nother corporate purposes. The Company reacquired approximately 1,345,000 and 1,349,000 shares of\nits Class A Common Stock for $40.3 million and $42.2 in fiscal 2009 and 2008, respectively, in\nconnection with its stock repurchase plans. The Company reacquired 102,067 shares of its Class A\nCommon Stock for $2.5 million in the fourth quarter of fiscal 2010. As of July 31, 2010, there\nremained 204,133 shares to purchase in connection with this share repurchase plan.\n

\n\n

The following table provides information with respect to the purchase of Class A Nonvoting\nCommon Stock during the fourth quarter of fiscal 2010.\n


								Total Number of			Maximum Number
				Average			Shares Purchased			of Shares that May
	Total Number of		Price Paid			as Part of Publicly			Yet Be Purchased
Period	Shares Purchased		per Share			Announced Plans			Under the Plans
May 1, 2010 – May 31, 2010		—		$	—				—			306,200
June 1, 2010 – June 30, 2010		—		$	—				—			306,200
July 1, 2010 – July 31, 2010		102,067		$	24.86				102,067			204,133

Total		102,067		$	24.86				102,067			204,133

\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 be\nmade annually to $50 million plus 75% of the consolidated net income excluding all extraordinary\nnon-cash items for the prior fiscal year. The Company believes that based on its historic dividend\npractice, this restriction will not impede it in following a similar dividend practice in the\nfuture.\n

\n\n

15\n

\n\n

During the two most recent fiscal years and for the first quarter of fiscal 2011, the Company\ndeclared the following dividends per share on its Class A and Class B Common Stock for the years\nended July 31:\n


	2011		2010			2009
	1st Qtr		1st Qtr			2nd Qtr		3rd Qtr	4th Qtr		1st Qtr			2nd Qtr		3rd Qtr	4th Qtr
Class A	$	0.18		$	0.175		$	0.175	$	0.175		$	0.175		$	0.17	$	0.17	$	0.17	$	0.17
Class B		0.16335			0.15835			0.175		0.175			0.175			0.15335		0.17		0.17		0.17

\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, 2005, 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

$\"(LINE$ \n

\n\n\n

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


*		$100 invested on 7/31/05 in stock or index — including reinvestment of dividends. Fiscal\nyear ended July 31.

\n\n


	7/31/2005		7/31/2006		7/31/2007	7/31/2008	7/31/2009		7/31/2010
Brady Corporation		100.00		100.23		105.53		112.54		92.77	89.85
S&P 500 Index		100.00		105.38		122.38		108.81		87.09	99.14
S&P SmallCap 600 Index		100.00		103.76		118.40		108.60		87.67	104.48
Russell 2000 Index		100.00		104.24		116.88		109.03		86.44	102.29

\n\n\n

\n\n

16\n

\n\n

Item 6. Selected Financial Data\n

\n\n\n

CONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL DATA
\nYears Ended July 31, 2006 through 2010\n

\n\n


	2010			2009			2008		2007		2006
Operating Data (1)
Net Sales	$	1,259,096			$	1,208,702		$	1,523,016		$	1,362,631		$	1,018,436
Gross Margin		623,297				577,583			744,195			657,044			525,755
Operating Expenses:
Research and development		42,621				34,181			40,607			35,954			30,443
Selling, general and administrative		435,906				397,180			495,904			449,103			338,796
Restructuring charge (2)		15,314				25,849			—			—			—

Total operating expenses		493,841				457,210			536,511			485,057			369,239

Operating Income		129,456				120,373			207,684			171,987			156,516
Other Income (Expense):
Investment and other income — net		1,168				1,800			4,888			2,875			2,403
Interest expense		(21,222	)			(24,901	)		(26,385	)		(22,934	)		(14,231	)

Net other expense		(20,054	)			(23,101	)		(21,497	)		(20,059	)		(11,828	)

Income before income taxes		109,402				97,272			186,187			151,928			144,688
Income Taxes		27,446				27,150			53,999			42,540			40,513

Net Income	$	81,956			$	70,122		$	132,188		$	109,388		$	104,175

Net Income Per Common Share — (Diluted):
Class A nonvoting	$	1.55			$	1.32		$	2.41		$	2.00		$	2.07
Class B voting	$	1.53			$	1.31		$	2.39		$	1.98		$	2.05
Cash Dividends on:
Class A common stock	$	0.70			$	0.68		$	0.60		$	0.56		$	0.52
Class B common stock	$	0.68			$	0.66		$	0.58		$	0.54		$	0.50
Balance Sheet at July 31:
Working capital	$	375,184			$	286,955		$	390,524		$	303,359		$	240,537
Total assets		1,746,231				1,583,267			1,850,513			1,698,857			1,365,186
Long-term obligations, less current maturities		382,940				346,457			457,143			478,575			350,018
Stockholders’ investment		1,005,027				951,092			1,021,808			891,012			746,046
Cash Flow Data:
Net cash provided by operating activities		165,238				126,645			225,554			136,018			114,896
Depreciation and amortization		53,022				54,851			60,587			53,856			35,144
Capital expenditures		(26,296	)			(24,027	)		(26,407	)		(51,940	)		(39,410	)

\n\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 Company as three, two,\nseven, and eleven acquisitions were completed in fiscal years ended July 31, 2010, 2008, 2007,\nand 2006, respectively. There were no acquisitions in fiscal 2009. See Note 2 in Item 8 for\nfurther information on the acquisitions that were completed.

(2)		In fiscal 2009, in response to the global economic downturn, the Company initiated several\nmeasures to address its cost structure, including the reduction in its workforce and decreased\ndiscretionary spending. The Company continued such measures during fiscal 2010.

\n\n

17\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 2010, the Company posted sales of $1,259.1 million and net income of $82.0 million,\nan increase of 4.2% and 16.9%, respectively, from fiscal 2009. Of the 4.2% increase in sales,\norganic sales increased 0.2%, the effects of fluctuations in the exchange rates used to translate\nfinancial results into the United States dollar increased sales by 2.7%, and fiscal 2010\nacquisitions increased sales 1.3%. Regionally, fiscal 2010 sales in the Americas, Europe, and\nAsia-Pacific increased 3.1%, 3.5%, and 6.7%, respectively, as compared to fiscal 2009.\n

\n\n

Net income for fiscal 2010 increased 16.9% to $82.0 million or $1.55 per diluted share of\nClass A Common Stock, compared to $70.1 million, or $1.32 per diluted share of Class A Common Stock\nin fiscal 2009. Fiscal 2010 net income before restructuring related expenses was $93.4 million, or\n$1.76 per diluted share of Class A Common Stock compared to 2009 net income before restructuring\nrelated expenses of $90.2 million, or $1.71 per diluted share of Class A Common Stock.\n

\n\n

In fiscal 2010, the Company generated $165.2 million of cash from operations, an increase of\n$38.6 million from the prior fiscal year. The increase was primarily due to the Company’s\nimprovements in working capital and net income.\n

\n\n

Results of Operations\n

\n\n\n

Year Ended July 31, 2010, Compared to Year Ended July 31, 2009\n

\n\n\n

The comparability of the operating results for the fiscal years ended July 31, 2010 to July\n31, 2009, has been impacted by the following acquisitions completed in fiscal 2010.\n

\n\n

\n\n\n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \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
Welconstruct Group Limited (“Welco”)	Europe	October	2009
Stickolor Industria e Comerciao de Auto Adesivos Ltd (“Stickolor”)	Americas	December	2009
Securimed SAS (“Securimed”)	Europe	March	2010

\n\n\n

Fiscal 2010 sales increased $50.4 million, or 4.2% from fiscal 2009. The 4.2% increase\nconsisted of 0.2% growth in organic sales, 1.3% growth due to acquisitions, and 2.7% growth\nresulting from the effects of foreign currency translation.\n

\n\n

Organic sales, defined as sales in the Company’s existing core businesses and regions\n(exclusive of acquisitions owned less than one year and foreign currency translation effects), were\nup 0.2% compared to fiscal 2009. The annual organic sales growth of 0.2% varied significantly by\nquarter. In the first quarter of the year the Company experienced a 15.9% decline in organic\nsales as the prior year quarter had not yet been impacted by the economic recession. Subsequent to\nthe first quarter the Company experienced sequential growth over the prior period each quarter.\n

\n\n

The acquisitions listed above increased sales by $16.2 million or 1.3% in fiscal 2010. The\ncurrency growth reflects fluctuations in the exchange rates used to translate financial results\ninto the United States Dollar which increased sales by $32.3 million or 2.7% for the year.\n

\n\n

The gross margin as a percentage of sales increased to 49.5% in fiscal 2010 from 47.8% in\nfiscal 2009. The increase in gross margin as a percentage of sales was primarily due to the cost\nsavings generated from restructuring activities as well as lean and continuous improvement\nactivities in fiscal 2010 and 2009.\n

\n\n

Research and development expenses increased to $42.6 million in fiscal 2010 from $34.2 million\nin fiscal 2009, and increased as a percentage of sales in fiscal 2010 to 3.4% compared to 2.8% in\nfiscal 2009. The increase was due to the Company’s continued commitment to investing in new\nproduct development as well as the increased incentive compensation expenses during fiscal 2010.\n

\n\n

Selling, general, and administrative (“SG&A”) expenses increased to $435.9 million in fiscal\n2010 as compared to $397.2 million in fiscal 2009. The increase in SG&A expenses was primarily due\nto the resumption of payment of certain incentive compensation expenses during fiscal 2010, as well\nas the effects of the fluctuations in the exchange rates used to translate financial results into\nthe United States dollar. In fiscal 2009, the Company experienced a reduction in SG&A due to the\nelimination of certain incentive compensation plans during the year. As a percentage of sales, SG&A\nincreased to 34.6% in fiscal 2010 from 32.9% in fiscal 2009.\n

\n\n

18\n

\n\n

Restructuring charges were $15.3 and $25.8 million during fiscal 2010 and 2009, respectively.\nIn fiscal 2009, $1.6 million of income tax expense was also incurred related to the anticipated\nrepayment of certain tax holidays due to site consolidation actions. In\nresponse to the global economic downturn, the Company implemented a plan to reduce its cost\nstructure. During fiscal 2009 and 2010, 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 the Company’s work force.\n

\n\n

Interest expense decreased to $21.2 million from $24.9 million for fiscal 2010 compared to\nfiscal 2009. In fiscal 2010, the Company repaid approximately $44.9 million of debt. Interest\nexpense decreased due to the Company’s lower principal balance under the previously outstanding\ndebt agreements. The decrease was partially offset by additional interest on the May 2010 private\nplacement, as compared to the prior year.\n

\n\n

Other income and expense decreased $0.6 million in fiscal 2010 to $1.2 million from $1.8\nmillion in the prior year. The decrease was primarily due to a decrease in foreign exchange gains,\noffset by gains on securities held in executive deferred compensation plans.\n

\n\n

The Company’s effective tax rate was 25.1% for fiscal 2010 compared to 27.9% for fiscal 2009.\nThe decrease in the Company’s effective tax rate during fiscal 2010 was primarily due to the mix of\nprofits in low and high tax countries as well as positive impacts from foreign and U.S. income tax\naudits. The Company anticipates that its fiscal 2011 tax rate will approximate 26%, subject to\npotential effects of pending and proposed U.S. tax legislation.\n

\n\n

On August 10, 2010, the Education Jobs and Medicaid Assistance Act of 2010 was passed in the\nUnited States. This law included certain international tax provisions that could increase the\nCompany’s tax rate. However, the Company has not yet completed analyzing the impact that this\nlegislation may have on its earnings or financial position.\n

\n\n

Net income for the fiscal year ended July 31, 2010, increased 16.9% to $82.0 million, compared\nto $70.1 million for the fiscal year ended July 31, 2009, as a result of the factors noted above.\nNet income as a percentage of sales increased to 6.5% from 5.8% for the fiscal year ended July 31,\n2010 compared the same period in the prior year. Diluted net income per share increased 17.4% to\n$1.55 per share for fiscal 2010 compared to $1.32 per share for the fiscal year ended July 31,\n2009. Fiscal 2010 and 2009 net income before restructuring related expenses was $93.4 million, or\n$1.76 per diluted share of Class A Common Stock, and $90.2 million, or $1.71 per diluted share of\nClass A Common Stock, respectively.\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\n


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

19\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 Company\nimplemented a plan to reduce its cost structure. During fiscal 2009, the Company incurred costs\nrelated to the\nreduction of its workforce and facility consolidations. Restructuring costs related primarily\nto employee separation costs, consisting of severance pay, outplacement services, medical, and\nother related benefits for approximately 25 percent of the Company’s work force.\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 income\nearned on cash and marketable securities investments. The $1.8 million of other income recorded in\nfiscal 2009 consisted of $2.5 million of interest income and $0.9 million in foreign exchange\ngains, 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 compared to\nfiscal 2008. In fiscal 2009, the Company repaid approximately $87.2 million of debt. As a result of\nthe lower principal 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 compared to 29.0% for fiscal 2008.\nThe 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 31,\n2009 compared the same period in the prior year. Diluted net income per share decreased 45.2% to\n$1.32 per share for fiscal 2009 compared to $2.41 per share for the fiscal year ended July 31,\n2008. Fiscal 2009 net income before restructuring related expenses was $90.2 million, or $1.71 per\ndiluted share of Class A Common Stock.\n

\n\n

20\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. The Company has determined that these regions comprise its\noperating and reportable segments based on the information used by the Chief Executive Officer to\nallocate resources and assess performance. Segment results are as follows:\n


								Asia-			Total			Corporate and			Total
(Dollars in thousands)	Americas			Europe			Pacific		Regions			Eliminations			Company
SALES TO EXTERNAL CUSTOMERS
Years ended:
July 31, 2010	$	551,185			$	380,121		$	327,790			$	1,259,096				—		$	1,259,096
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
SALES GROWTH INFORMATION
Year ended July 31, 2010:
Organic		0.1	%			(0.3	)%		0.8	%			0.2	%			—			0.2	%
Currency		1.6	%			1.4	%		5.9	%			2.7	%			—			2.7	%
Acquisitions		1.4	%			2.4	%		0.0	%			1.3	%			—			1.3	%
Total		3.1	%			3.5	%		6.7	%			4.2	%			—			4.2	%
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	)%
SEGMENT PROFIT
Years ended:
July 31, 2010	$	125,169			$	103,316		$	52,105			$	280,590			$	(14,131	)	$	266,459
July 31, 2009		114,404				99,875			42,575				256,854				(7,952	)		248,902
July 31, 2008		157,523				135,426			58,234				351,183				(9,048	)		342,135

\n\n\n

NET INCOME RECONCILIATION\n

\n\n


	Years ended:
	July 31,			July 31,			July 31,
(Dollars in thousands)	2010			2009			2008
Total profit for reportable segments	$	280,590			$	256,854		$	351,183
Corporate and eliminations		(14,131	)			(7,952	)		(9,048	)
Unallocated amounts:
Administrative costs		(121,689	)			(102,680	)		(134,451	)
Restructuring costs		(15,314	)			(25,849	)		—
Investment and other income — net		1,168				1,800			4,888
Interest expense		(21,222	)			(24,901	)		(26,385	)

Income before income taxes		109,402				97,272			186,187
Income taxes		(27,446	)			(27,150	)		(53,999	)

Net income	$	81,956			$	70,122		$	132,188

\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, and acquisitions. Segment profit or loss does not include certain\nadministrative costs, such as the cost of finance, information technology and human resources,\nwhich are managed as global functions. Restructuring charges, stock options, interest, investment\nand other income and income taxes are also excluded when evaluating segment performance.\n

\n\n

21\n

\n\n

Americas\n

\n\n\n

Sales in the Americas region increased 3.1% from fiscal 2009 to fiscal 2010, and decreased\n19.9% from fiscal 2008 to fiscal 2009. Organic sales grew 0.1% in 2010 and declined 18.5% in 2009.\nThe annual organic sales growth of 0.1% in fiscal 2010 varied significantly during the year. In\nthe first quarter the Americas experienced a 15.2% decline in organic sales as the prior year\nquarter had not yet been impacted by the economic recession. In the second quarter the Americas\nexperienced a 4.3% decline in organic sales as the economic recession began in the prior year\nquarter. Subsequent to the first half of the year, Americas experienced sequential growth over\nthe prior period each quarter due to modest improvements in the cable and wire ID, industrial\nidentification, and safety and facility identification markets. The Company’s sales volumes of\nsorbent products increase in the fourth quarter of fiscal 2010 as a result of the clean-up of the\nGulf of Mexico oil spill. The acquisition of Stickolor increased sales of the segment by 1.4% and\nthe fluctuations of the exchange rates used to translate financial results into U.S. dollars\nincreased sales by 1.6% in fiscal 2010. The segment experienced declines in organic sales in\nfiscal 2009 due to the global economic downturn. The decrease in sales also resulted from the\ndeclining volumes of the manufacturing and construction sectors, as well as the impact of declining\ninventories of the Company’s distribution partners and other customers. Fluctuations in the\nexchange rates used to translate financial results into U.S. dollars decreased sales by 1.7% in\nfiscal 2009 when compared to the prior fiscal year.\n

\n\n

In the Americas region, segment profit increased 9.4% to $125.2 million in fiscal 2010 from\n$114.4 million in fiscal 2009. Segment profit as a percentage of sales increased to 22.7% in 2010\nfrom 21.4% in 2009. This increase was primarily due to the segment’s commitment to its productivity\ninitiatives including lean manufacturing and strategic sourcing initiatives. Comparing fiscal 2009\nto 2008, segment profit decreased 27.4% to $114.4 million in fiscal 2009 from $157.5 million in\nfiscal 2008. Segment profit as a percentage of sales decreased to 21.4% in 2009 from 23.6% in\n2008. This decrease was primarily due to the decrease in sales volume, impacting the segment’s\nability to absorb fixed costs. Cost savings partially offset this decrease. Costs savings came from\nthe restructuring activities in addition to reductions in discretionary spending.\n

\n\n

Europe\n

\n\n\n

Sales in the European region increased 3.5% from fiscal 2009 to fiscal 2010, and decreased\n26.1% in fiscal 2009 from fiscal 2008. Organic sales declined 0.3% in fiscal 2010 and 18.1% in\nfiscal 2009 as compared to prior years. The annual organic sales decline of 0.3% varied\nsignificantly during the year. In the first quarter Europe experienced a 12.3% decline in organic\nsales as the prior year quarter had not yet been impacted by the economic recession. In the\nsecond quarter Europe experienced a 1.6% decline in organic sales as the economic recession began\nin the prior year quarter. Subsequent to the first half of the year, Europe experienced\nsequential growth over the prior period each quarter. The segment’s organic sales volumes in direct\nmarketing businesses and electronic industries improved modestly. The increase was offset by the\ndecline in sales to governmental and public utilities. The acquisitions of Welco and Securimed in\nfiscal 2010 increased sales by 2.4%. Sales were positively affected by fluctuations in the\nexchange rates used to translate financial results into the United States dollar, which increased\nsales within the segment by 1.4% in fiscal 2010. In fiscal 2009 the segment was negatively\naffected by the fluctuations in the exchange rates, reducing sales by 9.4% as compared to prior\nperiods. Organic sales declined 18.1% in fiscal 2009 as compared to the prior year. The segment’s\norganic sales continued to be adversely impacted by the global economic downturn in fiscal 2009.\nOrganic sales in the private sector to the automotive and electronics markets declined in the\nEurope segment, with sales to governments and public utilities partially offsetting these declines.\n

\n\n

In the Europe region, segment profit increased 3.4% to $103.3 million in fiscal 2010 from\n$99.9 million in fiscal 2009. Segment profit as a percentage of sales remained constant at 27.2% in\nfiscal 2010 and 2009. The segment maintained its segment profit percent in fiscal 2010 and was able\nto offset the increased expenses with cost savings initiatives put in place in fiscal 2009 and\n2010. Comparing fiscal 2009 to 2008, segment profit as a percentage of sales decreased slightly to\n27.2% in 2009 from 27.3% in 2008. The decline in segment profit in fiscal 2009 was attributable to\nthe declining sales volumes and the impact of foreign currency translation. In response to the\nsales downturn, the segment implemented various cost saving measures during fiscal year 2009 that\nhave generated savings to partially offset the impact of lower sales volumes.\n

\n\n

Asia-Pacific\n

\n\n\n

Asia-Pacific sales increased 6.7% from fiscal 2009 to fiscal 2010, and decreased 14.5% in\nfiscal 2009 from fiscal 2008. Organic sales increased 0.8% in fiscal 2010 and declined 10.3% in\nfiscal 2009 as compared to prior years. The annual organic sales growth of 0.8% varied\nsignificantly during the year. In the first quarter Asia experienced a 20.4% decline in organic\nsales as the prior year quarter had not yet been impacted by the economic recession. In the\nsecond quarter Asia experienced a 25.7% growth in organic sales as the impact of the economic\nrecession in the prior quarter was offset by a heightened focus on high end mobile electronics and\nstrong growth in the data storage market. In the third and fourth quarters Asia experienced growth\nof 9.4% and 5.2%, respectively. The increase in organic sales in fiscal 2010 was primarily due to\nthe success in higher-end solutions in both the mobile electronics and computer and storage\nmarkets. The decline in organic sales in fiscal 2009 was primarily due to the overall decline in\nthe 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. Foreign currency translation positively impacted the segment’s\nsales by 5.9% in 2010 whereas in fiscal 2009 the segment’s sales were negatively impacted by 4.2%,\nas compared to prior years.\n

\n\n

22\n

\n\n

In the Asia-Pacific region, segment profit increased 22.4% to $52.1 million in fiscal 2010\nfrom $42.6 million in fiscal 2009. Segment profit as a percentage of sales increased to 15.9% in\nfiscal 2010 from 13.9% in fiscal 2009. The increase in the segment’s profit was primarily due to\nthe commitment to lean manufacturing at all of the segment’s facilities. Comparing fiscal 2009 to\n2008, segment profit as a percentage of sales declined to 13.9% in 2009 from 16.2% in 2008. The\ndecline in the profit in fiscal 2009 was primarily the result of decreased sales, offset by savings\ngenerated from restructuring activities, shortened work weeks, and reduced discretionary spending.\n

\n\n

Liquidity and Capital Resources\n

\n\n\n

Cash and cash equivalents were $314.8 million at July 31, 2010, compared to $188.2 million at\nJuly 31, 2009. The increase of $126.6 million was the result of cash provided by operations of\n$165.2 million, offset by cash used in investing activities of $48.7 million, and cash provided by\nfinancing activities of $15.3 million. The financing activities included $94.9 million in\nproceeds from debt issuance, $44.9 million debt principal payments, $2.5 million related to the\nrepurchase of treasury stock, and $36.8 million in dividend payments. The effects on the\nfluctuations of the U.S. dollar against other currencies negatively impacted cash by $5.1 million\nduring fiscal 2010.\n

\n\n

The Company’s working capital excluding cash as a percentage of sales decreased to 5% in\nfiscal 2010 from 8% in fiscal 2009. Accounts receivable balances increased $30.4 million from July\n31, 2009 to July 31, 2010. The increase in accounts receivable was due primarily to the impact of\nforeign currency translation as well as the increase in sales volumes. Inventories increased $0.9\nmillion from July 31, 2009 to July 31, 2010 due to increased business activity, partially offset by\nfocused inventory reduction initiatives, and the impact of foreign currency translation. Current\nliabilities increased $71.3 million over the same period due to the return of the annual incentive\ncompensation plans in fiscal 2010 as well as the impact of foreign currency translation. Annual\nincentive compensation plans were cancelled for fiscal 2009 due to the Company’s financial\nperformance resulting from the economic downturn and as such, no payouts for incentive compensation\nwere made during the first quarter of fiscal 2010. The current maturities of long-term debt also\nincreased to $61.3 million during fiscal 2010 as principal payments on outstanding debt become due\nin the next twelve months.\n

\n\n

In fiscal 2010, the Company generated $165.2 million of cash from operations, an increase of\n$38.6 million from the prior fiscal year. The increase was primarily due to improvements in the\nCompany’s net income and working capital, as discussed above.\n

\n\n

Cash\nused for investing activities totaled $48.7 million and $19.0 million in fiscal 2010 and\n2009, respectively. Cash used for acquisitions totaled $30.4 million during fiscal 2010, as\ncompared to $0.0 and $29.3 million of cash used for acquisitions in fiscal 2009 and 2008,\nrespectively. The Company did not complete any acquisitions in fiscal 2009. The cash paid in\nfiscal 2010 for Welco, Stickolor, and Securimed was $1.8 million, $18.5 million, and $10.1 million,\nrespectively. The investing activities also include the settlement of the net investment foreign\nexchange contract resulting in proceeds of $6.2 million which is accounted for as component of\nother comprehensive income (“OCI”) on the Consolidated Balance Sheet. In fiscal 2009 the Company\nreached a settlement with the former owners of Tradex related to the purchase price of the Tradex\nacquisition. The Company received approximately $3.5 million as the result of the settlement during\nfiscal 2009. Payments of $0.7 million and $0.7 million were made during fiscal 2009 to satisfy the\nearnout and holdback liabilities of the Transposafe and Asterisco acquisitions, respectively.\n

\n\n

Capital expenditures were $26.3 million in fiscal 2010, $24.0 million in fiscal 2009, and\n$26.4 million in fiscal 2008. Capital expenditures in fiscal 2010 were similar to fiscal 2009\nreflecting a normalized spend rate.\n

\n\n

Financing activities provided $15.3 million in fiscal 2010, and used $160.3 million and $76.9\nmillion in fiscal 2009 and fiscal 2008, respectively. Cash used for dividends to shareholders was\n$36.8 million in fiscal 2010, $35.8 million in fiscal 2009, and $32.5 million in fiscal 2008. Cash\nreceived from the exercise of stock options was $3.7 million in fiscal 2010, $1.7 million in fiscal\n2009, and $14.5 million in fiscal 2008. The Company purchased treasury stock of $2.5 million in\nfiscal 2010, $40.3 million in fiscal 2009 and $42.2 million in fiscal 2008. The Company received\nproceeds of $94.9 million from the May 2010 private placement as discussed below.\n

\n\n

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

\n\n

23\n

\n\n

On May 13, 2010, the Company completed a private placement of €75.0 million (approximately\n$95.0 million USD) aggregate principal amount of senior unsecured notes to accredited institutional\ninvestors. The €75.0 million of senior notes consists of €30.0 million aggregate principal amount\nof 3.71% Series 2010-A Senior Notes, due May 13, 2017 and €45.0 million aggregate principal amount\nof 4.24% Series 2010-A Senior Notes, due May 13, 2020, with interest payable on the notes\nsemiannually. This private placement was exempt from the registration requirements of the\nSecurities Act of 1933. The notes were not registered for resale and may not be resold absent such\nregistration or an applicable exemption from the registration requirements of the Securities Act of\n1933 and applicable state securities laws. The notes have certain prepayment penalties for\nprepaying them prior to maturity. The notes have been fully and unconditionally guaranteed on an\nunsecured basis by the Company’s domestic subsidiaries. These unsecured notes were issued pursuant\nto a note purchase agreement, dated May 13, 2010. The note purchase agreement requires the Company\nto maintain a ratio of debt to the trailing twelve months EBITDA, as defined by the agreement, of\nnot more than a 3.5 to 1.0 ratio.\n

\n\n

During fiscal 2004 through fiscal 2007, the Company completed three private placement note\nissuances totaling $500 million in ten-year fixed rate notes with varying maturity dates to\ninstitutional investors at interest rates varying from 5.14% to 5.33%. The notes must be repaid\nequally over seven years, with initial payment due dates ranging from 2008 to 2011, with interest\npayable on the notes due semiannually on various dates throughout the year, which began in December\n2004. The private placements were exempt from the registration requirements of the Securities Act\nof 1933. The notes were not registered for resale and may not be resold absent such registration or\nan applicable exemption from the registration requirements of the Securities Act of 1933 and\napplicable state securities laws. The notes have certain prepayment penalties for repaying them\nprior to the maturity date. Under the debt agreement, the Company made scheduled principal payments\nof $44.9 million, $21.4 million, and $21.4 million, during the years ended July 31, 2010, 2009, and\n2008, respectively. In June 2009, the Company also completed a cash tender offer to purchase\napproximately $65.8 million of its outstanding notes at par without penalty.\n

\n\n

On October 5, 2006, the Company entered into a $200 million multi-currency revolving loan\nagreement with a group of five banks that replaced the Company’s previous credit agreement. At the\nCompany’s option, and subject to certain standard conditions, the available amount under the credit\nfacility may be increased from $200 million up to $300 million. Under the credit agreement, the\nCompany has the option to select either a base interest rate (based upon the higher of the federal\nfunds rate plus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency interest\nrate (at the LIBOR rate plus a margin based on the Company’s consolidated leverage ratio). A\ncommitment fee is payable on the unused amount of the facility. The agreement restricts the amount\nof certain types of payments, including dividends, which can be made annually to $50 million plus\nan amount equal to 75% of consolidated net income for the prior fiscal year of the Company. The\nCompany believes that based on historic dividend practice, this restriction would not impede the\nCompany in following a similar dividend practice in the future. On March 18, 2008, the Company\nentered into an amendment to the revolving loan agreement which extended the maturity date from\nOctober 5, 2011 to March 18, 2013. All other terms of the revolving loan agreement remained the\nsame. As of July 31, 2010, there were no outstanding borrowings 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, March 2007, and May 2010 private placement debt\nagreements require the Company to maintain a ratio of debt to the trailing twelve months EBITDA, as\ndefined in the debt agreements, of not more than a 3.5 to 1.0 ratio (leverage ratio). As of July\n31, 2010, the Company was in compliance with the financial covenant of these debt agreements, with\nthe ratio of debt to EBITDA, as defined by the agreements, equal to 2.2 to 1.0. Additionally, the\nCompany’s October 2006 revolving loan agreement requires the Company to maintain a ratio of debt to\ntrailing twelve months EBITDA, as defined by the debt agreement, of not more than a 3.0 to 1.0\nratio. The revolving loan agreement requires the Company’s trailing twelve months earnings before\ninterest and taxes (“EBIT”) to interest expense of not less than a 3.0 to 1.0 ratio (interest\nexpense coverage). As of July 31, 2010, the Company was in compliance with the financial covenants\nof the revolving loan agreement, with the ratio of debt to EBITDA, as defined by the agreement,\nequal to 2.3 to 1.0 and the interest expense coverage ratio equal to 6.6 to 1.0.\n

\n\n

Long-term obligations as a percentage of long-term obligations plus stockholders’ investment\nwere 27.6% at July 31, 2010 and 26.7% at July 31, 2009. Long-term obligations increased by $36.5\nmillion from July 31, 2009 to July 31, 2010 due to the private placement completed in fiscal 2010\noffset by the debt repayments made during the year. The debt repayments consisted of the scheduled\ninstallment of $26.1 million on the 2004 private placement and an installment of $18.8 million on\nthe 2006 private placement. An additional $16.4 million was reclassified to current maturities on\nlong-term obligations during fiscal 2010. The decrease in debt was partially offset by the\nnegative impact of foreign currency translation on our euro denominated debt.\n

\n\n

Stockholders’ investment increased $53.9 million during fiscal 2010 due to net income of $82.0\nmillion offset by the dividends paid on Class A and Class B Common Stock of $34.4 million and $2.4\nmillion, respectively. The decrease in the accumulated other comprehensive income of $2.1 million\nwas primarily due to foreign currency translation.\n

\n\n

24\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, the\nCompany’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 borrowing capacity and ability to obtain additional financing, are sufficient to\nfund its anticipated requirements for working capital, capital expenditures, restructuring\nactivities, acquisitions, common stock repurchases, scheduled debt repayments, and dividend\npayments. As of the date of this Form 10-K, the credit and financial markets are in a period of\ninstability and uncertainty that is affecting the availability of credit to borrowers. The Company\nbelieves that its current credit arrangements are sound and that the strength of its balance sheet\nwill allow the Company the financial flexibility to respond to both internal growth opportunities\nand those available through acquisition.\n

\n\n

Subsequent Events Affecting Liquidity and Capital Resources\n

\n\n\n

On September 9, 2010, the Company announced an increase in the annual dividend to shareholders\nof the Company’s Class A Common Stock, from $0.70 to $0.72 per share. A quarterly dividend of $0.18\nwill be paid on October 29, 2010, to shareholders of record at the close of business on October 8,\n2010. This dividend represents an increase of 2.9% and is the 25th consecutive annual increase in\ndividends.\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.\n

\n\n

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

\n\n

Other Contractual Obligations — The Company does not have material financial guarantees 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 evaluated its affiliated party transactions for the\nperiod ended July 31, 2010. Based on the evaluation the Company does not have material related\nparty transactions that 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, 2010, 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	$	444,204		$	61,264			$	122,528		$	103,778		$	156,634	$	—
Operating Lease Obligations		64,086			21,258				27,874			9,970			4,984		—
Purchase Obligations (1)		73,173			46,490				11,093			12,380			3,210		—
Interest Obligations		103,664			22,909				36,153			22,555			22,047		—
Tax Obligations		17,668			—				—			—			—		17,668
Other Obligations (2)		13,763			1,060				2,361			2,666			7,676		—

Total	$	716,558		$	152,981			$	200,009		$	151,349		$	194,551	$	17,668

\n\n

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


(1)		Purchase obligations include all open purchase orders as of July 31, 2010.

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

\n\n

25\n

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

Inflation and Changing Prices\n

\n\n\n

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

\n\n

Critical Accounting Estimates\n

\n\n\n\n

Income Taxes\n

\n\n

The Company’s effective tax rate is based on pre-tax income and the tax rates applicable to\nthat income in the various jurisdictions in which the Company operates. Significant judgment is\nrequired in determining the Company’s effective income tax rate and in evaluating its tax\npositions. The Company adopted the accounting guidance related to the accounting for uncertainty in\nincome taxes on August 1, 2007. The Company establishes liabilities when it is not more likely than\nnot that the Company will realize the full tax benefit of the position. The Company adjusts these\nliabilities in light of changing 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\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, accounting guidance requires\nthat goodwill and other indefinite-lived intangible assets be tested at least annually for\nimpairment. Changes in management’s estimates or judgments could result in an impairment charge,\nand such a charge could have an adverse effect on the Company’s financial condition and results of\noperations. To aid in establishing the value of goodwill and other intangible assets at the time of\nacquisition, Company policy requires that all acquisitions with a purchase price above $5 million\nrequire the use of external valuations.\n

\n\n

The Company has identified five reporting units within its three reportable segments. The\nCompany’s methodologies for valuing goodwill are applied consistently on a year-over-year basis;\nthe assumptions used in performing the 2010 impairment calculations were evaluated in light of\nmarket and business conditions. Brady continues to believe that the discounted cash flow model and\nmarket multiples model provide a reasonable and meaningful fair value estimate based upon the\nreporting units’ projections of future operating results and cash flows and replicates how market\nparticipants would value the Company’s reporting units.\n

\n\n

In performing the Company’s annual impairment assessment the Company performed a sensitivity\nanalysis on the material assumptions used in the discounted cash flow valuation models for each of\nits reporting units. Based on the Company’s fiscal 2010 impairment testing and assuming a\nhypothetical 10% decrease in the estimated fair values of each of its reporting units, the\nhypothetical fair value of each of the Company’s reporting units would have been greater than the\ncarrying value. See Note 1 of the Notes to Consolidated Financial Statements contained in Item 8 —\nFinancial Statements and Supplementary Data for further information about goodwill and intangible\nassets.\n

\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 uncertain tax positions. These accounts 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

26\n

\n\n\n

New Accounting Standards\n

\n\n

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

\n\n

Forward-Looking Statements\n

\n\n\n

Brady believes that certain statements in this Form 10-K are “forward-looking statements”\nwithin the meaning of the Private Securities Litigation Reform Act of 1995. All statements related\nto future, not past, events included in this Form 10-K, including, without limitation, statements\nregarding Brady’s future financial position, business strategy, targets, projected sales, costs,\nearnings, capital expenditures, debt levels and cash flows, and plans and objectives of management\nfor future operations are forward-looking statements. When used in this Form 10-K, words such as\n“may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or\n“plan” or similar terminology are generally intended to identify forward-looking statements. These\nforward-looking statements by their nature address matters that are, to different degrees,\nuncertain and are subject to risks, assumptions and other factors, some of which are beyond Brady’s\ncontrol, that could cause actual results to differ materially from those expressed or implied by\nsuch forward-looking statements. For Brady, uncertainties arise from 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 develop and successfully market\nnew products; changes in the supply of, or price for, parts and components; increased price\npressure from suppliers and customers; fluctuations in currency rates versus the US dollar;\nunforeseen tax consequences; potential write-offs of Brady’s substantial intangible assets; Brady’s\nability to retain significant contracts and customers; risks associated with international\noperations; Brady’s ability to maintain compliance with its debt covenants; technology changes;\nbusiness interruptions due to implementing business systems; environmental, health and safety\ncompliance costs and liabilities; future competition; interruptions to sources of supply; Brady’s\nability to realize cost savings from operating initiatives; difficulties associated with exports;\nrisks associated with restructuring plans; risks associated with obtaining governmental approvals\nand maintaining regulatory compliance; and numerous other matters of national, regional and global\nscale, including those of a political, economic, business, competitive and regulatory nature\ncontained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including,\nbut not limited to, those factors listed in the “Risk Factors” section located in Item 1A of Part I\nof this Form 10-K. These uncertainties may cause Brady’s actual future results to be materially\ndifferent than those expressed in its forward-looking statements. Brady does not undertake to\nupdate its forward-looking statements.\n

\n\n

Risk Factors\n

\n\n\n\n

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

\n\n

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

\n\n\n

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

\n\n

The global nature of the Company’s business requires active participation in the foreign\nexchange markets. As a result of investments, production facilities and other operations on a\nglobal scale, the Company has assets, liabilities and cash flows in currencies other than the U.S.\nDollar. The objective of the Company’s foreign currency exchange risk management is to minimize the\nimpact of currency movements on non-functional currency transactions and minimize the foreign\ncurrency translation impact on the Company’s European operations. To achieve this objective, the\nCompany hedges a portion of known exposures using forward contracts. Main exposures are related to\ntransactions denominated in the British Pound, the Euro, Canadian Dollar, Australian Dollar,\nSingapore Dollar, Swedish Krona, Danish Krone, Japanese Yen, Swiss Franc, and the Korean Won\ncurrency. As of July 31, 2010, the notional amount of outstanding forward contacts designated as\ncash flow hedges was $45.3 million. Beginning in the third quarter of fiscal 2010, the Company also\nused forward foreign exchange currency contracts and euro-denominated debt of €75.0 million\n(approximately $95.0 million USD) designated as a hedge instrument to hedge portions of the\nCompany’s net investments in its European foreign operations.\n

\n\n

27\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 approval of the Board of Directors. As of July 31, 2010, the Company had no\ninterest rate derivatives.\n

\n\n

The Company is subject to the risk of changes in foreign currency exchange rates due to its\noperations in foreign countries. The Company has manufacturing facilities and sells and distributes\nits products throughout the world. As a result, the Company’s financial results could be\nsignificantly 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 Australian dollar, changes between the U.S. dollar and the Canadian\ndollar, changes between the U.S dollar and the Singapore dollar, and changes between the U.S.\ndollar and the Chinese Yuan. Changes in foreign currency exchange rates for the Company’s foreign\nsubsidiaries reporting in local currencies are generally reported as a component of stockholders’\ninvestment. The Company’s unfavorable currency translation adjustment recorded in fiscal 2010 and\n2009 as a separate component of stockholders’ investment was ($5.0) million and ($75.5) million,\nrespectively. As of July 31, 2010 and 2009, the Company’s foreign subsidiaries had net current\nassets (defined as current assets less current liabilities) subject to foreign currency translation\nrisk of $141.4 million and $242.9 million, respectively. The potential decrease in the net current\nassets as of July 31, 2010 from a hypothetical 10 percent adverse change in quoted foreign currency\nexchange rates would be approximately $14.1 million. This sensitivity analysis assumes a parallel\nshift in all major foreign currency exchange rates versus the U.S. dollar. Exchange rates rarely\nmove in the same direction relative to the U.S. dollar considering the offset of the\neuro-denominated debt designated as a net investment hedge of the Company’s European foreign\noperations. This assumption may overstate the impact of changing exchange rates on individual\nassets and liabilities denominated in a foreign currency.\n

\n\n

28\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 subsidiaries\n(the “Company”) as of July 31, 2010 and 2009, and the related consolidated statements of income,\nstockholders’ investment, and cash flows for each of the three years in the period ended July 31,\n2010. Our audits also included the financial statement schedule listed in the Index at Item 15.\nThese consolidated financial statements and financial statement schedule are the responsibility of the Company’s\nmanagement. Our responsibility is to express an opinion on the\nconsolidated financial statements and financial\nstatement schedule based on our audits.\n

\n\n

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight\nBoard (United States). Those standards require that we plan and perform the audit to obtain\nreasonable assurance about whether the financial statements are free of material misstatement. An\naudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the\nfinancial statements. An audit also includes assessing the accounting principles used and\nsignificant estimates made by management, as well as evaluating the overall financial statement\npresentation. We believe that our audits provide a reasonable basis for our opinion.\n

\n\n

In our opinion, such consolidated financial statements present fairly, in all material respects,\nthe consolidated financial position of the Company at July 31, 2010 and 2009, and the\nresults of their operations and their cash flows for each of the three years in the period ended\nJuly 31, 2010, in conformity with accounting principles generally accepted in the United States of\nAmerica. Also, in our opinion, such financial statement schedule, when considered in relation to\nthe basic consolidated financial statements taken as a whole, presents fairly, in all material\nrespects, the information set forth therein.\n

\n\n

We have also audited, in accordance with the standards of the Public Company Accounting Oversight\nBoard (United States), the Company’s internal control over financial reporting as of July 31, 2010,\nbased on the criteria established in Internal Control—Integrated Framework issued by the Committee\nof Sponsoring Organizations of the Treadway Commission and our report dated September 21, 2010,\nexpressed an unqualified opinion on the Company’s internal control over financial reporting.\n

\n\n

/s/ DELOITTE & TOUCHE LLP\n

\n\n\n

Milwaukee, WI
\nSeptember 21, 2010\n

\n\n

30\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED BALANCE SHEETS

\n\n\n

July 31, 2010 and 2009

\n\n\n


	2010			2009
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	314,840			$	188,156
Accounts receivable — net		221,621				191,189
Inventories:
Finished products		52,906				53,244
Work-in-process		13,146				13,159
Raw materials and supplies		28,620				27,405

Total inventories		94,672				93,808
Prepaid expenses and other current assets		37,839				36,274

Total current assets		668,972				509,427

Other assets:
Goodwill		768,600				751,173
Other intangibles assets		103,546				115,754
Deferred income taxes		39,103				36,374
Other non-current assets		20,808				18,551
Property, plant and equipment:
Cost:
Land		6,265				6,335
Buildings and improvements		101,138				96,968
Machinery and equipment		289,727				283,301
Construction in progress		9,873				7,869

		407,003				394,473
Less accumulated depreciation		261,501				242,485

Property, plant and equipment — net		145,502				151,988

Total	$	1,746,531			$	1,583,267

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	96,702			$	83,793
Wages and amounts withheld from employees		67,285				36,313
Taxes, other than income taxes		7,537				6,262
Accrued income taxes		10,138				5,964
Other current liabilities		50,862				45,247
Current maturities on long-term obligations		61,264				44,893

Total current liabilities		293,788				222,472
Long-term obligations, less current maturities		382,940				346,457
Other liabilities		64,776				63,246

Total liabilities		741,504				632,175

Commitments and contingencies (See Note 9)
Stockholders’ investment:
Common stock:
Class A Nonvoting — Issued 51,261,487 and 51,261,487\nshares, respectively; (aggregate liquidation preference\nof $42,628 and $42,628 at July 31, 2010 and 2009,\nrespectively)		513				513
Class B Voting — Issued and outstanding 3,538,628 shares		35				35
Additional paid-in capital		304,205				298,466
Earnings retained in the business		718,512				673,342
Treasury stock — 2,175,771 and 2,270,927 shares,\nrespectively of Class A nonvoting common stock, at cost		(66,314	)			(69,823	)
Accumulated other comprehensive income		50,905				53,051
Other		(2,829	)			(4,492	)

Total stockholders’ investment		1,005,027				951,092

Total	$	1,746,531			$	1,583,267

\n\n\n

See notes to consolidated financial statements.\n

\n\n

31\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF INCOME

\n\n\n

Years Ended July 31, 2010, 2009 and 2008

\n\n\n


	2010			2009			2008
	(In thousands, except per share amounts)
Net sales	$	1,259,096			$	1,208,702		$	1,523,016
Cost of products sold		635,799				631,119			778,821

Gross margin		623,297				577,583			744,195
Operating expenses:
Research and development		42,621				34,181			40,607
Selling, general and administrative		435,906				397,180			495,904
Restructuring charges		15,314				25,849			—

Total operating expenses		493,841				457,210			536,511

Operating income		129,456				120,373			207,684
Other income (expense):
Investment and other income — net		1,168				1,800			4,888
Interest expense		(21,222	)			(24,901	)		(26,385	)

Net other expense		(20,054	)			(23,101	)		(21,497	)

Income before income taxes		109,402				97,272			186,187
Income taxes		27,446				27,150			53,999

Net income	$	81,956			$	70,122		$	132,188

Net income per common share:
Class A Nonvoting:
Basic	$	1.56			$	1.33		$	2.44

Diluted	$	1.55			$	1.32		$	2.41

Dividends	$	0.70			$	0.68		$	0.60

Class B Voting:
Basic	$	1.55			$	1.32		$	2.42

Diluted	$	1.53			$	1.31		$	2.39

Dividends	$	0.68			$	0.66		$	0.58

Weighted average Class A and Class B common shares outstanding
Basic		52,402				52,559			54,168

Diluted		52,946				52,866			54,873

\n\n\n

See notes to consolidated financial statements.\n

\n\n

32\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT

\n\n\n

Years Ended July 31, 2010, 2009 and 2008

\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, 2007	$	541		$	266,203			$	540,238		$	—			$	83,376			$	654

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

Total comprehensive income																						$	176,973

Issuance of 464,963 shares of Class A Common Stock\nunder stock option plan		5			5,553				—			8,941				—				—
Other (Note 6)		2			6,147				—			—				—				(6,149	)
Cumulative impact of adoption of FIN 48		—			—				(903	)		—				—				—
Tax benefit from exercise of stock options and\ndeferred compensation distributions		—			4,638				—			—				—				—
Stock-based compensation expense		—			10,228				—			—				—				—
Purchase of 1,349,136 shares of Class 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 adjustment and other		—			—				—			—				(75,110	)			—			(75,110	)

Total comprehensive income																						$	(4,988	)

Issuance of 138,934 shares of Class A Common Stock\nunder stock option plan		—			(1,995	)			—			3,678				—				—
Other (Note 6)		—			(1,744	)			—			—				—				1,003
Tax benefit from exercise of stock options and\ndeferred compensation distributions		—			1,336				—			—				—				—
Stock-based compensation expense (Note 1)		—			8,099				—			—				—				—
Purchase of 1,344,664 shares of Class 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	)

Net income		—			—				81,956			—				—				—		$	81,956
Net currency translation adjustment and other		—			—				—			—				(2,146	)			—			(2,146	)

Total comprehensive income																						$	79,810

Issuance of 215,447 shares of Class A Common Stock\nunder stock option plan		—			(2,788	)			—			6,505				—				—
Other (Note 6)		—			(2,512	)			—			(459	)			—				1,663
Tax benefit from exercise of stock options and\ndeferred compensation distributions		—			1,318				—			—				—				—
Stock-based compensation expense (Note 1)		—			9,721				—			—				—				—
Purchase of 102,067 shares of Class A Common Stock		—			—				—			(2,537	)			—				—
Cash dividends on Common Stock
Class A — $.70 per share		—			—				(34,368	)		—				—				—
Class B — $.68 per share		—			—				(2,418	)		—				—				—
Balances at July 31, 2010	$	548		$	304,205			$	718,512		$	(66,314	)		$	50,905			$	(2,829	)

\n\n\n

See notes to consolidated financial statements.\n

\n\n

33\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF CASH FLOWS

\n\n\n

Years Ended July 31, 2010, 2009 and 2008

\n\n\n


	2010			2009			2008
	(Dollars in thousands)
Operating activities:
Net income	$	81,956			$	70,122		$	132,188
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		53,022				54,851			60,587
Deferred income taxes		(6,834	)			(8,640	)		(2,759	)
Loss on sale of property, plant and equipment		20				383			1,672
Non-cash portion of stock-based compensation expense		9,721				7,731			10,228
Non-cash portion of restructuring		2,260				2,469			—
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable		(29,479	)			53,389			(3,704	)
Inventories		426				34,749			16,224
Prepaid expenses and other assets		(3,502	)			(2,423	)		(629	)
Accounts payable and accrued liabilities		51,268				(78,684	)		18,641
Income taxes		5,258				(9,673	)		(7,234	)
Other liabilities		1,122				2,371			340

Net cash provided by operating activities		165,238				126,645			225,554

Investing activities:
Acquisitions of businesses, net of cash acquired		(30,431	)			—			(29,346	)
Purchase price adjustment		—				3,514			—
Payments of contingent consideration		—				(1,405	)		(5,798	)
Purchases of short-term investments		—				—			(10,350	)
Sales of short-term investments		—				—			29,550
Purchases of property, plant and equipment		(26,296	)			(24,027	)		(26,407	)
Proceeds from net investment hedge		6,248				—			—
Other		1,798				2,874			3,143

Net cash used in investing activities		(48,681	)			(19,044	)		(39,208	)

Financing activities:
Payment of dividends		(36,786	)			(35,839	)		(32,464	)
Proceeds from issuance of common stock		3,717				1,683			14,500
Principal payments on debt		(44,893	)			(87,224	)		(39,443	)
Proceeds from issuance of debt		94,915				—			18,000
Purchase of treasury stock		(2,537	)			(40,267	)		(42,175	)
Income tax benefit from the exercise of stock options and deferred compensation\ndistributions		1,318				1,336			4,638
Other		(459	)			—			—

Net cash provided by (used in) financing activities		15,275				(160,311	)		(76,944	)

Effect of exchange rate changes on cash		(5,148	)			(17,489	)		6,107

Net (decrease) increase in cash and cash equivalents		126,684				(70,199	)		115,509
Cash and cash equivalents, beginning of year		188,156				258,355			142,846

Cash and cash equivalents, end of year	$	314,840			$	188,156		$	258,355

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of capitalized interest	$	21,626			$	26,047		$	26,308
Income taxes, net of refunds		30,870				48,766			51,834
Acquisitions:
Fair value of assets acquired, net of cash	$	15,366			$	—		$	21,508
Liabilities assumed		(5,201	)			—			(9,038	)
Goodwill		20,266				—			16,876

Net cash paid for acquisitions	$	30,431			$	—		$	29,346

\n\n\n

See notes to consolidated financial statements.\n

\n\n

34\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

\n\n\n

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

\n\n

Years Ended July 31, 2010, 2009 and 2008

\n\n\n

(In thousands except share and per share amounts)

\n\n\n\n

1. Summary of Significant Accounting Policies\n

\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

Basis of Presentation — The Company has reclassified certain prior year financial statement\namounts to conform to their current year presentation. The Company reclassified the “Proceeds from\nsale of property, plant, and equipment” line item to the “Other” Investing activities line item on\nthe Consolidated Statements of Cash Flows for the years ended July 31, 2009 and 2008. This\nreclassification had no effect on total assets, net income, or earnings per share.\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 — On September 9, 2010, the Company announced an increase in the annual\ndividend to shareholders of the Company’s Class A Common Stock, from $0.70 to $0.72 per share. A\nquarterly dividend of $0.18 will be paid on October 29, 2010, to shareholders of record at the\nclose of business on October 8, 2010. This dividend represents an increase of 2.9% and is the 25th\nconsecutive annual increase in dividends.\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 guidance related to fair value measurements on August 1, 2008 as it relates to\nfinancial assets and liabilities. The Company adopted the new accounting guidance on fair value\nmeasurements for its nonfinancial assets and liabilities on August 1, 2009. See Note 5 for more\ninformation regarding 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. The Company’s cash equivalents include variable rate demand note (“VRDN”) securities issued\nby various agencies that include a put feature to the original issuer or the issuer’s agent. The\nCompany’s VRDN investments are generally federal tax-exempt instruments of high credit quality,\nsecured by direct-pay letters of credit from major financial institutions. These investments have\nvariable rates tied to short-term interest rates. Interest rates are reset weekly and these VRDN\ninvestments can be tendered for sale upon notice (generally no longer than seven days). Although\nthe Company’s VRDN securities are issued and rated as long-term securities (with maturities through\n2029), they are priced and traded as short-term investments.\n

\n\n

The Company classifies the variable rate demand note securities with put features, where the\nissuer holds the obligation, as cash equivalents. The investments are carried at cost or par\nvalue, which approximates the fair value. As of July 31, 2010, the recorded value of the VRDNs held\nby the Company was $66.1 million and there were no realized or unrealized gains or losses related\nto the Company’s securities. As of July 31, 2010, all VRDNs held by the Company were classified as\n“cash and cash equivalents” on the Consolidated Balance Sheets. The Company did not hold any\nVRDNs as of July 31, 2009.\n

\n\n

Accounts Receivables — Accounts receivables are stated net of allowances for doubtful\naccounts of $7,137 and $7,931 as of July 31, 2010 and 2009, respectively. No single customer\ncomprises more than 10% of the Company’s consolidated net sales in 2010, 2009, or 2008, or 10% of\nthe Company’s consolidated accounts receivable as of July 31, 2010 or 2009. Specific customer\nprovisions are made when a review of significant outstanding amounts, utilizing information about\ncustomer creditworthiness and current economic trends, indicates that collection is doubtful. In\naddition, provisions are made at different rates, based upon the age of the receivable and the\nCompany’s historical collection experience.\n

\n\n

35\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 20% of\ntotal inventories at July 31, 2010 and approximately 19% of total\ninventories at July 31, 2009) and the first-in, first-out (“FIFO”) or average cost methods for\nother inventories. Had all domestic inventories been accounted for on a FIFO basis instead of on a\nLIFO basis, the carrying value would have increased by $9,178 and $9,348 at July 31, 2010 and 2009,\nrespectively.\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 \n \n \n \n\n


Asset Category	Range of Useful Lives
Buildings and improvements		10 to 33 Years
Computer systems		5 Years
Machinery and equipment		3 to 10 Years

\n\n\n

Leasehold improvements are depreciated over the shorter of the lease term or the estimated\nuseful life of the 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. Goodwill at July 31, 2010 and 2009 did not include any accumulated impairment\nlosses.\n

\n\n

Changes in the carrying amount of goodwill for the years ended July 31, 2010 and 2009 are as\nfollows:\n


								Asia-
	Americas			Europe			Pacific		Total
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

Current year acquisitions		13,370				6,896			—			20,266
Translation adjustments and other		1,513				(9,958	)		5,606			(2,839	)

Balance as of July 31, 2010	$	425,018			$	163,189		$	180,393		$	768,600

\n\n\n

Goodwill increased $17,427 during fiscal 2010 due to the recent acquisition activity and the\nnet effects of foreign currency translation. Of the $17,427 increase in goodwill, $778 resulted\nfrom the acquisition of certain assets of Welco, a division of Welconstruct Group Limited (“Welco”)\nin the first quarter of fiscal 2010, $13,370 resulted from the acquisition of Stickolor Industria e\nComerciao de Auto Adesivos Ltda. (“Stickolor”) in the second quarter of fiscal 2010, and $6,118\nresulted from the acquisition of Securimed SAS (“Securimed”) in the third quarter of fiscal 2010.\nThe increase in goodwill was offset by the negative net effect of foreign currency translation of\n$2,839 during fiscal 2010.\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

Adjustments to the preliminary allocation of purchase price for the acquisitions completed in\nfiscal 2007 were made in fiscal 2008, of which the largest adjustment related to the final purchase\nprice adjustments for Comprehensive Identification Products, Inc (“CIPI”), which added $3,948. Of\nthe $3,948 increase in goodwill attributed to the allocation of the purchase price for CIPI, $1,246\nrelated to the accounting for uncertainty in income taxes, $1,250 related to an accrual for\nemployee termination costs, $809 related to various exit costs associated with the closure of a\nfacility, and the remaining $643 related to tax and other liabilities existing at the time of\nacquisition. As of July 31, 2010 and 2009, the remaining liability from these charges was\napproximately $374 and $612, respectively.\n

\n\n

36\n

\n\n

Other intangible assets include patents, trademarks, customer relationships, non-compete\nagreements and other intangible assets with finite lives being amortized in accordance with\naccounting guidance for goodwill and other intangible assets. The net book value of these assets\nwas as follows:\n

\n\n


	July 31, 2010		July 31, 2009
	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		$	9,314		$	(7,855	)	$	1,459			5		$	8,976	$	(7,165	)	$	1,811
Trademarks and other		7			8,823			(5,685	)		3,138			7			7,703		(5,121	)		2,582
Customer relationships		7			152,720			(95,996	)		56,724			7			144,625		(76,912	)		67,713
Non-compete agreements		4			11,930			(11,059	)		871			4			11,502		(9,656	)		1,846
Other		4			3,309			(3,297	)		12			4			3,311		(3,296	)		15
Unamortized other intangible assets:
Trademarks		N/A			41,342			—			41,342			N/A			41,787		—			41,787

Total				$	227,438		$	(123,892	)	$	103,546					$	217,904	$	(102,150	)	$	115,754

\n\n\n

The value of other intangible assets in the Consolidated Balance Sheet at July 31, 2010,\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, 2010.\n

\n\n

Amortization expense of intangible assets during fiscal 2010, 2009, and 2008 was $21,462,\n$22,828, and $25,422, respectively. The amortization over each of the next five fiscal years is\nprojected to be $20,194; $13,128; $9,894; $5,137; and $4,532 for the years ending July 31, 2011,\n2012, 2013, 2014 and 2015, 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 2010, there has been no impairment of the Company’s long-lived and other intangible assets.\n

\n\n

Impairment of Goodwill and Indefinite-lived Intangible Assets— Goodwill and other\nindefinite-lived intangible assets are tested for impairment annually or more frequently if events\nor changes in circumstances indicate that the assets might be impaired. Annual impairment tests are\nperformed by the Company in the fourth quarter of each year.\n

\n\n

During the fourth quarter of fiscal 2010, the Company conducted a goodwill impairment\nassessment. The assessment included comparing the carrying amount of net assets, including\ngoodwill, of each reporting unit to its respective fair value as of May 1, 2010, the Company’s\nassessment date. Fair value was determined using the weighted average of a discounted cash flow and\nmarket participant analysis for each reporting unit. As the estimated fair value of each of the\nCompany’s reporting units exceeded its carrying amount, management concluded that no impairment\nexisted as of May 1, 2010. The Company’s methodologies for valuing goodwill are applied\nconsistently on a year-over-year basis. No indications of impairment have been identified between\nthe date of the interim assessments and July 31, 2010.\n

\n\n

During the fourth quarter of fiscal 2010, the Company conducted an indefinite-lived intangible\nasset impairment assessment. The assessment included comparing the carry amount of the\nindefinite-lived intangible asset to the fair value of those assets as of May 1, 2010, the\nCompany’s assessment date. Fair value was determined using the weighted average discounted revenue\nstream analysis for each indefinite-lived intangible. Because the estimated fair value of each of\nthe Company’s indefinite-lived intangibles exceeded its carrying amount, management concluded that\nno impairment existed as of May 1, 2010. The Company’s methodologies for valuing indefinite-lived\nintangible assets are applied consistently on a year-over-year basis. No indications of impairment\nhave been identified between the date of the interim assessments and July 31, 2010.\n

\n\n

37\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, 2010 and 2009, $11,496 and $13,511, 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 and credit memos. The\nCompany provides for an allowance for estimated product returns and credit memos which is\nrecognized as a deduction from sales at the time of the sale. As of July 31, 2010 and 2009, the\nCompany had a reserve of $3,963 and $6,208, respectively.\n

\n\n

Sales Incentives — The Company accounts for cash consideration (such as sales incentives and\ncash discounts) given to its customers or resellers as a reduction of revenue rather than an\noperating expense.\n

\n\n

Shipping and Handling Fees and Costs —Amounts billed to a customer in a sale transaction\nrelated to shipping and handling fees are reported as net sales and the related costs incurred for\nshipping and handling 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, 2010, 2009, and 2008 were\n$72,000, $77,395, and $85,908, 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 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. The Company also granted\nrestricted shares in fiscal 2008 that have an issuance price equal to the fair market value of the\nunderlying stock at the date of grant. The restricted shares vest at the end of a five-year period\nand upon meeting certain financial performance conditions; these shares are referred to herein as\n“performance-based restricted shares.”\n

\n\n

As of July 31, 2010, the Company has reserved 5,108,736 shares of Class A Nonvoting Common\nStock for outstanding stock options and restricted shares and 2,210,000 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

The Company recognizes the compensation cost of all share-based awards on a straight-line\nbasis over the vesting period of the award. Total stock compensation expense recognized by the\nCompany during the years ended July 31, 2010, 2009, and 2008 was $9,721 ($5,930 net of taxes),\n$7,731 ($4,716 net of taxes), and $10,228 ($6,239 net of taxes), respectively. As of July 31,\n2010, total unrecognized compensation cost related to share-based compensation awards was $12,941\npre-tax, net of estimated forfeitures, which the Company expects to recognize over a\nweighted-average period of 2.0 years.\n

\n\n

38\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


	2010			2009			2008
	Performance-							Performance-				Performance-
	Based			Service-Based			Based		Service-Based	Based			Service-Based
Black-Scholes Option Valuation Assumptions	Options			Options			Options		Options	Options			Options
Expected term (in years)		6.57				5.94			N/A		5.96				6.57			6.04
Expected volatility		38.72	%			39.88	%		N/A		36.07	%			33.68	%		32.05	%
Expected dividend yield		3.02	%			3.01	%		N/A		2.03	%			1.58	%		1.62	%
Risk-free interest rate		3.03	%			2.63	%		N/A		1.75	%			4.66	%		3.44	%
Weighted-average market value of underlying\nstock at grant date	$	28.73			$	28.68			N/A	$	21.26			$	35.35		$	38.22
Weighted-average exercise price	$	29.78			$	28.68			N/A	$	21.26			$	35.35		$	38.22
Weighted-average fair value of options granted	$	8.70			$	8.77			N/A	$	6.30			$	12.83		$	11.94

\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 February 17, 2010, the Compensation Committee of the Board of Directors of the\nCompany approved an amendment to the performance-based stock options issued on August 1, 2005.\nPursuant to the amendment, the term of the performance-based stock options has been extended to ten\nyears from five years resulting in an incremental expense of $354 ($216 net of taxes), which was\nrecorded in the quarter ended April 30, 2010. Also, the amendment provides that during the\nextension period, executives may exercise the performance-based stock options following a\ntermination 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 its\nthree 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; Allan J. Klotsche, 30,000 shares; Peter C. Sephton, 30,000 options; and Matthew O.\nWilliamson, 30,000 options.\n

\n\n

The Company granted 525,000 performance-based options during fiscal 2010, with a weighted\naverage exercise price of $29.78 and a weighted average fair value of $8.70. The Company also\ngranted 921,500 service-based options during fiscal 2010, with a weighted average exercise price of\n$28.68 and a weighted average fair value of $8.77.\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. The Company did not grant any performance-based restricted\nshares during fiscal 2010 or 2009. As of July 31, 2010, all of the performance-based restricted\nshares granted in fiscal 2008 remain outstanding.\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 net investment\nhedges, the unamortized gain on the post-retirement medical, dental and vision plans and their\nrelated tax effects. The components of accumulated other comprehensive income were as follows:\n


	July 31, 2010			July 31, 2009
Unrealized gain (loss) on cash flow hedges, net of tax of $172 and $17, respectively	$	(321	)		$	(53	)
Proceeds from net investment hedge, net of tax of $2,437 and $0, respectively		3,811				—
Unamortized gain on post-retirement medical, dental and vision plan, net of tax of\n$1,480 and $1,964, respectively		1,357				1,942
Cumulative translation adjustments		46,058				51,162

Accumulated other comprehensive income	$	50,905			$	53,051

\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 accounting guidance,\nwhich requires an asset and liability approach to financial accounting and reporting for income\ntaxes. Deferred income tax assets and liabilities are computed for differences between the\nfinancial statement and tax basis of assets and liabilities that will result in taxable or\ndeductible amounts in the future based on enacted tax laws and rates applicable to the periods in\nwhich the differences are expected to affect taxable income. Valuation allowances are established\nwhen necessary to reduce deferred tax assets to the amount expected to be realized. Income tax\nexpense is the tax payable or refundable for the period plus or minus the change during the period\nin deferred tax assets and liabilities. The Company recognizes the effect of income tax positions only if sustaining those positions\nis more likely than not. Changes in recognition or measurement are reflected in the period in which\na change in judgment occurs.\n

\n\n

39\n

\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

Foreign Currency Hedging —The objective of the Company’s foreign currency exchange risk\nmanagement is to minimize the impact of currency movements on non-functional currency transactions\nand minimize the foreign currency translation impact on the Company’s European operations. While\nthe Company’s risk management objectives and strategies are driven from an economic perspective,\nthe Company attempts, where possible and practical, to ensure that the hedging strategies it\nengages in can be treated as “hedges” from an accounting perspective or otherwise result in\naccounting treatment where the earnings effect of the hedging instrument provides substantial\noffset (in the same period) to the earnings effect of the hedged item. Generally, these risk\nmanagement transactions will involve the use of foreign currency derivatives to protect against\nexposure resulting from products purchased in a currency differing from the selling unit’s\ncurrency.\n

\n\n

The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate\nrisk of specific foreign currency denominated transactions. These contracts typically require the\nexchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities\nof less than 12 months, which qualify as cash flow hedges under the accounting guidance for\nderivative instruments and hedging activities. The primary objective of the Company’s foreign\ncurrency exchange risk management is to minimize the impact of currency movements due to products\npurchased in other than the respective subsidiaries’ functional currency. To achieve this\nobjective, the Company hedges a portion of known exposures using forward foreign exchange currency\ncontracts. The fair value of these instruments at July 31, 2010 and 2009 was a liability of\n$(673) and $(248), respectively. As of July 31, 2010, the notional amount of outstanding forward\nexchange contracts was $45.3 million. See Note 12 for more information regarding the Company’s\nderivative instruments and hedging activities.\n

\n\n

The Company has designated a portion of its foreign exchange contracts as cash flow hedges and\nrecorded these contracts at fair value on the Consolidated Balance Sheets. For these instruments,\nthe effective portion of the gain or loss on the derivative is reported as a component of other\ncomprehensive income (“OCI”) and reclassified into earnings in the same period or periods during\nwhich the hedged transaction affects earnings. At July 31, 2010 and July 31, 2009, unrealized\nlosses of $493 and $35 have been included in OCI, respectively. All balances are expected to be\nreclassified from OCI to earnings during the next twelve months when the hedged transactions impact\nearnings.\n

\n\n

The Company also utilizes foreign currency denominated debt designated as hedge instruments to\nhedge portions of the Company’s net investments in European foreign operations. As of July 31,\n2010, the Company had €75.0 million foreign denominated debt outstanding designated as a net\ninvestment hedge of the Company’s net investment in its European foreign operations. See Note 12\nfor more information regarding the Company’s derivative instruments and hedging activities. For\nnet investment hedges that meet the effectiveness requirements, the net gains or losses\nattributable to changes in spot exchange rates are recorded in cumulative translation within other\ncomprehensive income. Any ineffective portions are to be recognized in earnings. Recognition in\nearnings of amounts previously recorded in cumulative translation is limited to circumstances such\nas complete or substantially complete liquidation of the net investment in the hedged foreign\noperation.\n

\n\n

The Company also enters into forward exchange contracts to create economic hedges to manage\nforeign exchange risk exposure. The fair value of these instruments at July 31, 2010 and 2009 was\n$40 and $130, respectively. The Company has not designated these derivative contracts as hedge\ntransactions, and accordingly, the mark-to-market impact of these derivatives is recorded each\nperiod in current earnings.\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. Gains or losses on the derivative related to hedge\nineffectiveness are recognized in current earnings. The amount of hedge ineffectiveness was not\nsignificant for the fiscal years ended July 31, 2010, 2009, and 2008, respectively.\n

\n\n

New Accounting Standards — In October 2009, the Financial Accounting Standards Board (“FASB”)\nissued new accounting guidance that provides amendments to the criteria for separating\nconsideration in multiple-deliverable revenue arrangements. As a result of these amendments,\nmultiple-deliverable revenue arrangements will be separated in more circumstances than under\nexisting GAAP. Expanded disclosures of qualitative and quantitative information regarding\napplication of the multiple-deliverable revenue arrangement guidance are also required under the\nguidance. The Company adopted the guidance on August 1, 2010. Based on the Company’s evaluation,\nthe new guidance will not have a material impact on the Company’s consolidated results of\noperations and financial condition.\n

\n\n

40\n

\n\n

In March 2010, the FASB ratified a consensus of the FASB Emerging Issues Task Force that\nrecognizes the milestone method as an acceptable revenue recognition method for substantive\nmilestones in research or development arrangements. This consensus would\nrequire its provisions be met in order for an entity to recognize consideration that is contingent\nupon achievement of a substantive milestone as revenue in its entirety in the period in which the\nmilestone is achieved. In addition, this consensus would require disclosure of certain information\nwith respect to arrangements that contain milestones. The Company adopted the guidance on August 1,\n2010. Based on the Company’s evaluation, the new guidance will not have an impact on the Company’s\nconsolidated results of operations and financial condition.\n

\n\n

2. Acquisitions of Businesses\n

\n\n\n\n

The Company completed three business acquisitions during the fiscal year ended July 31, 2010\nand did not complete any business acquisitions during the fiscal year ended July 31, 2009. The\nCompany also completed two business acquisitions during the fiscal year ended July 31, 2008. All\nof these transactions were accounted for using the purchase method of accounting; therefore, the\nresults of operations are included in the accompanying consolidated financial statements only since\ntheir acquisition dates.\n

\n\n

Fiscal 2010\n

\n\n\n

In March 2010, the Company acquired Securimed SAS (“Securimed”), based in Coudekerque, France\nfor $10,132. Securimed is a leading French supplier and distributor of customized first-aid kits\nand supplies, and related healthcare products including personal protection, disinfection and\nhygiene products, diagnosis materials, and products for emergency response. The Securimed business\nis included in the Company’s Europe segment.\n

\n\n

In December 2009, the Company acquired Stickolor Industria e Comercio de Auto Adesivos Ltda.\n(“Stickolor”), based in Saõ Paulo, Brazil for $18,459. Stickolor manufactures screen-printed\ncustom labels, overlays and nameplates for automobiles, tractors, motorcycles, electronics, white\ngoods and general industrial markets. The Stickolor business is included in the Company’s Americas\nsegment.\n

\n\n

In October 2009, the Company acquired certain assets of the Welco division of Welconstruct\nGroup Limited, based in the United Kingdom for $1,840. The Welco division conducts a direct\nmarketing business consisting of sales of storage, handling, office and workplace products, and\nequipment via catalog and the internet to industrial and commercial markets under the name and\ntitle “Welco.” The Welco business is included in the Company’s Europe segment.\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	$	5,313
Property, plant & equipment		743
Goodwill		20,266
Customer relationships		7,970
Trademarks		1,340

Total assets acquired net of cash		35,632
Liabilities assumed		5,201

Net assets acquired	$	30,431

\n\n\n

Purchased identifiable intangible assets for the three business acquisitions closed during the\ntwelve months ended July 31, 2010 totaled $9,310 and will be amortized on a straight-line basis\nover lives ranging from three to ten years.\n

\n\n

The results of the operations of the acquired businesses have been included since the\nrespective dates of acquisition in the accompanying consolidated financial statements. The Company\nhas evaluated the initial purchase price allocations for the acquisitions completed within the past\n12 months as additional information relative to the fair value of assets and liabilities of the\nacquired businesses becomes known. As a result of the review no significant changes have resulted\nto the initial purchase price allocations. Pro forma information related to the acquisitions\nduring the twelve months ended July 31, 2010 is not included because the impact on the Company’s\nconsolidated results of operations is considered to be immaterial.\n

\n\n

41\n

\n\n

Fiscal 2009\n

\n\n\n

The Company did not complete any business acquisitions in fiscal 2009.\n

\n\n

Fiscal 2008\n

\n\n\n

In November 2007 the Company acquired Tranposafe, based near Amsterdam, the Netherlands with\noperations in Belgium, Germany, and Poland for $24,778. Transposafe specializes in security sealing\nand identification solutions for protecting assets during transport. The Transposafe business is\nincluded in the Company’s Europe segment.\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\nacquisition. The total maximum contingent payment of approximately $3,000 was placed in an escrow\naccount for the acquisition of Transposafe. During fiscal 2009, $700 was paid out of the escrow\naccount to satisfy the earnout and holdback liabilities of the Transposafe acquisition. During\nfiscal 2010, the remainder of the earnout was returned to Brady, and the holdback was released to\nthe previous owners.\n

\n\n

In March 2008, the Company acquired DAWG, based in Terryville, Connecticut for $4,568. DAWG is\nan Internet marketer of sorbents, spill containment products, safety-storage cabinets, first aid\nkits, and other products that help keep facilities safe and clean. The DAWG business is included in\nthe Company’s Americas segment.\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

Purchased identifiable intangible assets for the two business acquisitions closed during the\ntwelve months ended July 31, 2008 totaled $12,787. This included $12,637 of identifiable\nintangible assets that will be amortized on a straight-line basis over lives ranging from five to\nnine years and $150 of indefinite-lived assets related to the DAWG trademark.\n

\n\n

The results of the operations of the acquired businesses have been included since the\nrespective dates of acquisition in the accompanying consolidated financial statements. Pro forma\ninformation related to the acquisitions during the twelve months ended July 31, 2008 is not\nincluded because the impact on the Company’s consolidated results of operations is considered to be\nimmaterial.\n

\n\n

In the fiscal year ended July 31, 2007, the Company acquired Scafftag and Asterisco, amongst\nfive other businesses. The purchase agreements for Scafftag and Asterisco each included\nprovisions for contingent payments based upon meeting certain performance conditions over a period\nof time subsequent to the acquisition. The total maximum contingent payments of $5,200 have not\nbeen accrued as liabilities on the accompanying consolidated financial statements as the payments\nare based on attaining certain financial results. Approximately $4,900 of the contingency related\nto the Asterisco acquisition had been placed in an escrow account in compliance with the terms of\nthe purchase agreement. During fiscal 2008, the Company paid the former owners of Astersico $200\nto satisfy the terms of the earnout agreement, while the remaining $4,700 was returned to Brady due\nto the acquired business not meeting certain performance criteria. The purchase agreement of\nAsterisco also included a holdback provision of approximately $2,300 that was recorded as a\nliability in the accompanying consolidated financial statements at July 31, 2008. A payment of $700\nwas paid during fiscal 2009 to satisfy the holdback liabilities of the Asterisco acquisition. The remainder\nof the holdback liabilities shall be released in accordance with the terms of the agreement.\n

\n\n

3. Employee Benefit Plans\n

\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.\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 begins\naccruing at the later of age 40 or date of hire. All active employees first eligible to retire\nafter July 31, 1992, are covered by an unfunded, contributory postretirement healthcare plan where\nemployer contributions will not exceed a defined dollar benefit amount, regardless of the cost of\nthe program. Employer contributions to the plan are based on the employee’s age and service at\nretirement.\n

\n\n

The accounting guidance on defined benefit pension and other postretirement plans requires\nfull recognition of the funded status of defined benefit and other postretirement plans on the\nbalance sheet as an asset or a liability. The guidance also continues to require that unrecognized\nprior service costs/credits, gains/losses, and transition obligations/assets be recorded in\nAccumulated Other\nComprehensive Income, thus not changing the income statement recognition rules for such plans.\n

\n\n

42\n

\n\n

The Plan is unfunded and recorded as a liability in the accompanying consolidated balance\nsheets as of July 31, 2010 and 2009. The following table provides a reconciliation of the changes\nin the Plan’s accumulated benefit obligations during the years ended July 31:\n


	2010			2009
Obligation at beginning of year	$	14,311			$	12,199
Service cost		662				672
Interest cost		795				842
Actuarial loss		967				766
Benefit payments		(834	)			(667	)
Plan amendments		(169	)			—
Separation benefits		—				1,178
Curtailments		—				(679	)
Settlements		(455	)			—

Obligation at end of fiscal year	$	15,277			$	14,311

\n\n\n

The voluntary retiree medical savings account plan was terminated effective December 31, 2009.\nEmployer match account balances were prorated and paid to participants through a settlement of\n$455, and the remaining reduction in the liability resulted in a plan amendment of $169 as of July\n31, 2010.\n

\n\n

As discussed in Note 11, the fiscal 2009 restructuring charges included employee separation\ncosts. Employee separation costs of $1,178 have been included in the separation benefits above as\nthe costs directly relate to the postretirement medical, dental and vision benefits. In addition,\nthe reduction in workforce during fiscal 2009 resulted in a partial plan curtailment, reducing the\naccumulated benefit obligation by $679 as of July 31, 2009.\n

\n\n

As of July 31, 2010 and 2009, amounts recognized as liabilities in the accompanying\nconsolidated balance sheets consist of:\n


	2010		2009
Current liability	$	1,060		$	825
Noncurrent liability		14,217			13,486

	$	15,277		$	14,311

\n\n\n

As of July 31, 2010 and 2009, pre-tax amounts recognized in accumulated other comprehensive\nincome in the accompanying consolidated balance sheets consist of:\n


	2010		2009
Net actuarial gain	$	2,252		$	3,425
Prior service credit		585			481

	$	2,837		$	3,906

\n\n\n

Net periodic benefit cost for the Plan for fiscal years 2010, 2009, and 2008 includes the\nfollowing components:\n


	Years Ended July 31,
	2010			2009			2008
Net periodic postretirement benefit cost included the following components:
Service cost — benefits attributed to service during the period	$	662			$	672		$	919
Prior service cost		(64	)			(70	)		(33	)
Interest cost on accumulated postretirement benefit obligation		795				842			771
Amortization of unrecognized gain		(206	)			(308	)		(295	)
Curtailment loss		—				393			—

Periodic postretirement benefit cost	$	1,187			$	1,529		$	1,362

\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 $76 and $82, respectively. The termination of the voluntary retiree medical savings account\nplan resulted in a reduction in the liability for the one-time settlement of $455 and the one-time\nplan amendment of $169 as of July 31, 2010. The reduction in workforce resulted in a one-time\ncurtailment gain of $679 and the accelerated recognition of the previously unrecognized prior\nservice cost of $106, offset by a one-time separation benefit charge of $1,178, resulting in a net\ncurtailment loss of $393 as of July 31, 2009.\n

\n\n

43\n

\n\n\n

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


	2010			2009		2008
Weighted average discount rate used in determining accumulated\npostretirement benefit obligation liability		4.5	%		5.5	%	6.8	%
Weighted average discount rate used in determining net periodic benefit cost		5.5	%		6.8	%	6.3	%
Assumed health care trend rate used to measure APBO at July 31		8.0	%		8.0	%	8.0	%
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		2016			2015		2013

\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 \n \n\n


	One-Percentage		One-Percentage
	Point Increase		Point Decrease
Effect on future service and interest cost	$	11		$	(11	)
Effect on accumulated postretirement benefit obligation at July 31, 2010		155			(141	)

\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


2011	$	1,060
2012		1,150
2013		1,211
2014		1,283
2015		1,383
2016 through 2020		7,676

\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, 2010 and 2009, $7,540 and $5,512,\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, 2010 and 2009, $10,398 and $10,175, respectively, of\ndeferred compensation was included in current and other long-term liabilities in the accompanying\nconsolidated balance sheets.\n

\n\n

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

\n\n

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

\n\n

The amounts charged to expense for the retirement and profit sharing described above were\n$12,547, $11,765, and $17,275 during the years ended July 31, 2010, 2009, and 2008, respectively.\n

\n\n

44\n

\n\n\n

4. Income Taxes\n

\n\n\n\n\n

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


	Years Ended July 31,
	2010		2009			2008
United States	$	4,423		$	(383	)	$	46,388
Other Nations		104,979			97,655			139,799

Total	$	109,402		$	97,272		$	186,187

\n\n\n\n

Income taxes consist of the following:\n


	Years Ended July 31,
	2010			2009			2008
Current income tax expense:
United States	$	474			$	3,486		$	13,943
Other Nations		32,800				31,223			41,794
States (U.S.)		1,006				1,081			1,021

		34,280				35,790			56,758

Deferred income tax (benefit) expense:
United States		(4,929	)			(7,633	)		29
Other Nations		(1,942	)			(1,693	)		(2,793	)
States (U.S.)		37				686			5

		(6,834	)			(8,640	)		(2,759	)

Total	$	27,446			$	27,150		$	53,999

\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\n

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


	July 31, 2010
	Assets			Liabilities			Total
Inventories	$	6,666			$	—		$	6,666
Prepaid catalog costs		16				(2,299	)		(2,283	)
Employee benefits		1,910				7			1,917
Accounts receivable		2,033				—			2,033
Other, net		6,512				(1,519	)		4,993

Current		17,137				(3,811	)		13,326

Fixed Assets		1,734				(9,270	)		(7,536	)
Intangible Assets		1,970				(26,969	)		(24,999	)
Capitalized R&D expenditures		7,953				—			7,953
Deferred compensation		22,100				—			22,100
Postretirement benefits		7,573				—			7,573
Tax credit carry-forwards and net operating losses		48,140				—			48,140
Less valuation allowance		(27,510	)			—			(27,510	)
Other, net		199				(6,429	)		(6,230	)

Noncurrent		62,159				(42,668	)		19,491

Total	$	79,296			$	(46,479	)	$	32,817

\n\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

45\n

\n\n

Tax loss carry-forwards at July 31, 2010 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

	•		Foreign net operating loss carry-forwards of $84,092, of which $68,285 have no expiration\ndate and the remainder of which expire within the next 5 years.

	•		State net operating loss carry-forwards of $68,464, which expire from 2014 to 2030.

	•		Foreign tax credit carry-forwards of $16,598, which expire from 2018 to 2020.

\n\n

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

•

State research and development credit carry-forwards of $2,198, which expire from 2017 to\n2024.

\n\n

The valuation allowance increased by $1,840 and $176 for the fiscal years ended July 31, 2010\nand 2009, respectively. If realized or reversed in future periods, substantially all of the\nvaluation allowance would impact the income tax rate.\n

\n\n\n

Rate Reconciliation\n

\n\n

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


	Years Ended July 31,
	2010			2009		2008
Tax at statutory rate		35.0	%		35.0	%	35.0	%
State income taxes, net of federal tax benefit		0.6	%		1.6	%	0.2	%
International rate differential		(9.8	)%		(8.6	)%	(5.9	)%
Non-creditable withholding taxes		1.8	%		—		—
Rate variances arising from foreign subsidiary distributions		(2.6	)%		(3.4	)%	(1.3	)%
Adjustments to tax accruals and reserves		(0.5	)%		5.8	%	1.2	%
Research and development tax credits		(0.3	)%		(1.5	)%	(0.2	)%
Other, net		0.9	%		(1.0	)%	—

Effective tax rate		25.1	%		27.9	%	29.0	%

\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 2.3%, 3.3%, and 1.9%\nduring the years ended July 31, 2010, 2009, and 2008, respectively. These tax holidays are in the\nprocess of expiring and are anticipated to be fully exhausted by December 31, 2012.\n

\n\n\n

Uncertain Tax Positions\n

\n\n

On August 1, 2007, the Company adopted guidance regarding uncertain tax positions. The\nguidance requires application of a “more likely than not” threshold to the recognition and\nderecognition of tax positions. The adoption resulted in a $903 reduction to earnings retained in\nthe business as of August 1, 2007. Upon adoption, the Company also reclassified $15,907 from\naccrued income taxes to other liabilities in the Company’s consolidated balance 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 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 with tax authorities		60
Cumulative Translation Adjustments and other		(1,319	)

Balance at July 31, 2009	$	19,462
Additions based on tax positions related to the current year		1,989
Additions for tax positions of prior years		3,934
Reductions for tax positions of prior years		(6,672	)
Lapse of statute of limitations		(194	)
Settlements with tax authorities		(1,054	)
Cumulative Translation Adjustments and other		203

Balance at July 31, 2010	$	17,668

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


(1)		Includes acquisitions.

\n\n

46\n

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

Included\nin the balance of total unrecognized tax benefits (excluding interest\nand penalties) at\nJuly 31, 2010 and 2009 are potential benefits of approximately\n$17,668 and $19,117, respectively,\nthat if recognized, would lower the Company’s effective income tax rate.\n

\n\n

The Company recognized interest and penalties related to unrecognized tax benefits within the\nprovision for income taxes on the consolidated statements of income.\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, 2010, 2009, and 2008 the Company recognized $33, $427, and $96 of interest expense,\nrespectively, and $780, $414, and $208 of penalties, respectively, related to the reserve for\nuncertain tax positions, net of amounts reversing due to reductions for tax positions of prior\nyears, statute of limitations, and settlements. At July 31, 2010, 2009, and 2008 the Company had\n$2,473, $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, 2010, 2009, and 2008, the Company had $1,592, $776, and $384,\nrespectively, accrued for penalties on unrecognized tax benefits.\n

\n\n

The Company estimates that it is reasonably possible that the unrecognized tax benefits may be\nreduced by $3,000 within twelve months as a result of the resolution of worldwide tax matters, tax\naudit settlements, and/or statue expirations.\n

\n\n

During the year ended July 31, 2010, the Company recognized tax benefits associated with\ncertain international and domestic tax positions being resolved and the lapse of statutes of\nlimitations, including the conclusion of the U.S. Internal Revenue Service audit of the Company’s\nfiscal year ended July 31, 2006, 2007, and 2008.\n

\n\n

The Company and its subsidiaries file income tax returns in the U.S., various state, and\nforeign jurisdictions. The following table summarizes the open tax years for the Company’s major\njurisdictions:\n

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


Jurisdiction		Open Tax Years
United States — Federal		F’09 – F’10
France		F’06 – F’10
Germany		F’03 – F’10
United Kingdom		F’08 – F’10

\n\n\n\n

Unremitted Earnings\n

\n\n

The\nCompany does not provide for U.S. deferred taxes on cumulative\nearnings of non-U.S. affiliates and associated companies that have\nbeen reinvested indefinitely. These earnings relate to ongoing\noperations and at July 31, 2010, were approximately $442,815. These\nearnings have been reinvested in non-U.S. business operations and the\nCompany does not intend to repatriate these earnings to fund U.S.\noperations.\n

\n\n

5. Long-Term Obligations\n

\n\n\n\n

On May 13, 2010, the Company completed a private placement of €75.0 million (approximately\n$95.0 million USD) aggregate principal amount of senior unsecured notes to accredited institutional\ninvestors. The €75.0 million of senior notes consists of €30.0 million aggregate principal amount\nof 3.71% Series 2010-A Senior Notes, due May 13, 2017 and €45.0 million aggregate principal amount\nof 4.24% Series 2010-A Senior Notes, due May 13, 2020, with interest payable on the notes\nsemiannually. This private placement was exempt from the registration requirements of the\nSecurities Act of 1933. The notes were not registered for resale and may not be resold absent such\nregistration or an applicable exemption from the registration requirements of the Securities Act of\n1933 and applicable state securities laws. The notes have certain prepayment penalties for\nrepaying them prior to maturity. The notes have been fully and unconditionally guaranteed on an\nunsecured basis by the Company’s domestic subsidiaries. These unsecured notes were issued pursuant\nto a note purchase agreement, dated May 13, 2010. The note purchase agreement requires the Company\nto maintain a ratio of debt to the trailing twelve months EBITDA, as defined by the agreement, of\nnot more than a 3.5 to 1.0 ratio.\n

\n\n

47\n

\n\n

During fiscal 2004 through fiscal 2007, the Company completed three private placement note\nissuances totaling $500 million in ten-year fixed rate notes with varying maturity dates to\ninstitutional investors at interest rates varying from 5.14% to 5.33%. The notes must be repaid\nequally over seven years, with initial payment due dates ranging from 2008 to 2011, with interest\npayable on the notes due semiannually on various dates throughout the year, which began in December\n2004. The private placements were exempt from the registration requirements of the Securities Act\nof 1933. The notes were not registered for resale and may not be resold absent such registration or\nan applicable exemption from the registration requirements of the Securities Act of 1933 and\napplicable state securities laws. The notes have certain prepayment penalties for repaying them\nprior to the maturity date. Under the debt agreement, the Company made scheduled principal payments\nof $21.4 million, $21.4 million, and $44.9 million during the years ended July 31, 2008, 2009, and\n2010, respectively. In June 2009, the Company also completed a cash tender offer to purchase\napproximately $65.8 million of its outstanding notes at par without penalty.\n

\n\n

\n\n\n

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


	2010			2009
Euro-denominated notes payable in 2017 at a fixed rate of 3.71%	$	45,615			$	—
Euro-denominated notes payable in 2020 at a fixed rate of 4.24%		52,132				—
USD-denominated notes payable through 2017 at a fixed rate of 5.33%		75,000				93,750
USD-denominated notes payable through 2016 at a fixed rate of 5.30%		156,857				183,000
USD-denominated notes payable through 2014 at a fixed rate of 5.14%		114,600				114,600


	$	444,204			$	391,350

Less current maturities	$	(61,264	)		$	(44,893	)

	$	382,940			$	346,457

\n\n\n

The estimated fair value of the Company’s long-term obligations, based on the quoted market\nprices for similar issues and on the current rates offered for debt of similar maturities, was\n$467,479 and $412,678 at July 31, 2010 and July 31, 2009, respectively, as compared to the carrying\nvalue of $444,204 and $391,350 at July 31, 2010 and July 31, 2009, respectively.\n

\n\n\n

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


Years Ending July 31,
2011	$	61,264
2012		61,264
2013		61,264
2014		61,264
2015		42,514
Thereafter		156,634

Total	$	444,204

\n\n\n

The Company had outstanding letters of credit of $1,564, and $1,674 at July 31, 2010 and 2009,\nrespectively.\n

\n\n

48\n

\n\n\n

6. Stockholders’ Investment\n

\n\n\n\n\n

Information as to the Company’s capital stock at July 31, 2010 and 2009 is as follows:\n


	July 31, 2010		July 31, 2009
	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

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

During fiscal 2008 and fiscal 2009, the Company’s Board of Directors authorized share\nrepurchase plans for the Company’s Class A Nonvoting Common Stock. The share repurchase plans were\nimplemented by purchasing shares in the open market or privately negotiated transaction, with\nrepurchased shares available for use in connection with the Company’s stock-based plans and for\nother corporate purposes. The Company reacquired approximately 1,345,000 and 1,349,000 shares of\nits Class A Common Stock for $40.3 million and $42.2 in fiscal 2009 and 2008, respectively, in\nconnection with its stock repurchase plans. The Company reacquired 102,067 shares of its Class A\nCommon Stock for $2.5 million in fiscal 2010. As of July 31, 2010, there remained 204,133 shares to\npurchase in connection with this share repurchase plan.\n

\n\n

The following is a summary of other activity in stockholders’ investment for the years ended\nJuly 31, 2010, 2009, and 2008:\n


	Unearned							Shares Held
	Restricted			Deferred			in Rabbi
	Stock			Compensation			Trust, at cost			Total
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

Sale of shares at cost		—				(1,247	)			1,536			289
Purchase of shares at cost						813				(813	)		—
Amortization of restricted stock		1,374				—				—			1,374

Balances at July 31, 2010	$	(3,373	)		$	12,848			$	(12,304	)	$	(2,829	)

Shares at July 31, 2010						614,988				614,988

\n\n

49\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, 2010, the deferred compensation balance in stockholders’\ninvestment represents the investment at the original cost of shares held in the Company’s Class A\nNonvoting Common Stock for the deferred compensation plan prior to 2002 and the investment at the\ncost of shares held in the Company’s Class A Nonvoting Common Stock for the plan subsequent to\n2002, adjusted for the plan amendment on May 1, 2006. The balance of shares held in the Rabbi Trust\nrepresents the investment in the Company’s Class A Nonvoting Common Stock at the original cost of\nall the Company’s Class A Nonvoting Common Stock held in deferred compensation plans.\n

\n\n

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

\n\n

The Company has an incentive stock plan under which the Board of Directors may grant\nnonqualified stock options to purchase shares of Class A Nonvoting Common Stock or restricted\nshares of Class A Nonvoting Common Stock to employees. Additionally, the Company has a nonqualified\nstock option plan for non-employee directors under which stock options to purchase shares of Class\nA Nonvoting Common Stock are available for grant. The options have an exercise price equal to the\nfair market value of the underlying stock at the date of grant and generally vest ratably over a\nthree-year period, with one-third becoming exercisable one year after the grant date and one-third\nadditional in each of the succeeding two years. Options issued under these plans, referred to\nherein as “service-based” options, generally expire 10 years from the date of grant. The Company\nalso grants stock options to certain executives and key management employees that vest upon meeting\ncertain financial performance conditions over the vesting schedule described above. These options\nare referred to herein as “performance-based” options. Performance-based options granted in fiscal\n2006 expire five years from the grant date. All other performance-based options expire 10 years\nfrom the date of grant. Restricted shares have an issuance price equal to the fair market value of\nthe underlying stock at the date of grant. The shares generally vest at the end of a five-year\nperiod and upon meeting certain financial performance conditions. These shares are referred to\nherein as “performance-based restricted shares.”\n

\n\n

As of July 31, 2010, the Company has reserved 5,108,736 shares of Class A Nonvoting Common\nStock for outstanding stock options and restricted shares and 2,210,000 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\n

Changes in the options are as follows:\n


								Weighted
								Average
				Options			Exercise
	Option Price		Outstanding			Price
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

Options granted		24.78 - 33.28			1,446,500				29.08
Options exercised		14.16 - 31.54			(241,403	)			18.16
Options cancelled		15.28 - 38.31			(76,967	)			31.91

Balance, July 31, 2010	$	13.31 - $40.37			5,108,736			$	28.69

\n\n

50\n

\n\n

The total fair value of options vested during the fiscal years ended July 31, 2010, 2009, and\n2008 was $5,548, $6,559, and $8,626, respectively. The total intrinsic value of options exercised\nduring the fiscal years ended July 31, 2010, 2009, and 2008 was $3,004, $2,156, and $14,479,\nrespectively.\n

\n\n

There were 3,100,955, 2,831,311, and 2,399,742 options exercisable with a weighted average\nexercise price of $28.85, $27.46, and $24.42 at July 31, 2010, 2009, and 2008, respectively. The\ncash received from the exercise of options during the fiscal years ended July 31, 2010, 2009, and\n2008 was $3,717, $1,683, and $14,500 respectively. The tax benefit on options exercised during the\nfiscal years ended July 31, 2010, 2009, and 2008 was $866, $779, and $4,185, respectively.\n

\n\n

The following table summarizes information about stock options outstanding at July 31, 2010:\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, 2010		(in years)			Price			2010		Price
Up to $14.99		275,000			1.9			$	13.55			275,000	$	13.55
$15.00 to $29.99		3,076,233			6.9				25.16			1,274,929		21.18
$30.00 and up		1,757,503			5.9				37.23			1,551,026		37.16

Total		5,108,736			6.3				28.69			3,100,955		28.85

\n\n\n

As of July 31, 2010, the aggregate intrinsic value of the number of options outstanding and\nthe number of options exercisable was $14,097 and $11,520, respectively. The Company granted\n210,000 performance-based restricted shares during fiscal 2008, with a grant price and fair value\nof $32.83. As of July 31, 2010, 210,000 performance-based restricted shares were outstanding.\n

\n\n\n

7. Segment Information\n

\n\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, and acquisitions. Segment profit or loss does not include certain\nadministrative costs, such as the cost of finance, information technology, human resources and\nother administration, which are managed as global functions. Restructuring charges, stock options,\ninterest, investment and other income and income taxes are also excluded when evaluating\nperformance.\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, it’s Chief Executive Officer. Each region has its own distinct\noperations, is managed locally by its own management team, maintains its own financial reports and\nis evaluated based on regional segment profit. The Company has determined that these regions\ncomprise its operating and reportable segments based on the information used by the Chief Executive\nOfficer to allocate resources and assess performance.\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, 2010:
Revenues from external customers	$	551,185		$	380,121		$	327,790	$	1,259,096			—		$	1,259,096
Intersegment revenues		43,136			4,456			18,188		65,780		$	(65,780	)		—
Depreciation and amortization expense		21,142			8,088			15,749		44,979			8,043			53,022
Segment profit		125,169			103,316			52,105		280,590			(14,131	)		266,459
Assets		754,753			313,204			362,653		1,430,610			315,921			1,746,531
Expenditures for property, plant and equipment		8,502			1,535			9,946		19,983			6,313			26,296
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 equipment		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 equipment		7,535			4,714			5,269		17,518			8,889			26,407

\n\n

51\n


	Years Ended July 31,
	2010			2009			2008
Net income reconciliation:
Total profit for reportable segments	$	280,590			$	256,854		$	351,183
Corporate and eliminations		(14,131	)			(7,952	)		(9,048	)
Unallocated amounts:
Administrative costs		(121,689	)			(102,680	)		(134,451	)
Restructuring costs		(15,314	)			(25,849	)		—
Investment and other income — net		1,168				1,800			4,888
Interest expense		(21,222	)			(24,901	)		(26,385	)

Income before income taxes		109,402				97,272			186,187
Income taxes		(27,446	)			(27,150	)		(53,999	)

Net income	$	81,956			$	70,122		$	132,188

\n\n


	Revenues*			Long-Lived Assets**
	Years Ended July 31,			As of Years Ended July 31,
	2010			2009			2008		2010		2009		2008
Geographic information:
United States	$	521,318			$	510,703		$	622,618		$	507,481		$	519,932	$	532,273
China		156,842				199,893			192,048			118,953			123,078		131,810
Other		646,716				566,589			794,036			391,214			375,905		440,021
Eliminations		(65,780	)			(68,483	)		(85,686	)		—			—		—

Consolidated total	$	1,259,096			$	1,208,702		$	1,523,016		$	1,017,648		$	1,018,915	$	1,104,104

\n\n\n

\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\ngoodwill.

\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\n52,402,387 for 2010, 52,558,657 for 2009, and 54,167,746 for 2008. 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

In June 2008, the Financial Accounting Standards Board (“FASB”) issued accounting guidance\naddressing whether instruments granted in share-based payment transactions are participating\nsecurities prior to vesting, and therefore need to be included in the earnings allocation in\ncomputing earnings per share. This guidance requires that all outstanding unvested share-based\npayment awards that contain rights to non-forfeitable dividends be considered participating\nsecurities in undistributed earnings with common shareholders. The Company adopted the guidance\nduring the first quarter of fiscal 2010. As a result of the adoption, the dividends on the\nCompany’s performance-based restricted shares, granted in fiscal 2008, are included in the basic\nand diluted net income per share calculations for all periods presented. The adoption and\nretrospective application of this guidance reduced Class A diluted net income per share as\npreviously reported for fiscal year 2009 by $0.01 and reduced Class A and Class B basic net income\nper share for fiscal year 2008 by $0.01.\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,
	2010			2009			2008
Numerator
Net income (numerator for basic and diluted Class A net income per share)	$	81,956			$	70,122		$	132,188
Less:
Restricted stock dividends		(147	)			(144	)		(95	)

Numerator for basic and diluted Class A net income per share	$	81,809			$	69,978		$	132,093

Less:
Preferential dividends		(816	)			(823	)		(847	)
Preferential dividends on dilutive stock options		(11	)			(11	)		(13	)

Numerator for basic and diluted Class B net income per share	$	80,982			$	69,144		$	131,233

Denominator:
Denominator for basic net income per share for both Class A and B		52,402				52,559			54,168
Plus: effect of dilutive stock options		544				307			705

Denominator for diluted net income per share for both Class A and B		52,946				52,866			54,873

Class A common stock net income per share calculation:
Basic	$	1.56			$	1.33		$	2.44
Diluted	$	1.55			$	1.32		$	2.41
Class B common stock net income per share calculation:
Basic	$	1.55			$	1.32		$	2.42
Diluted	$	1.53			$	1.31		$	2.39

\n\n

52\n

\n\n

Options to purchase 2,832,337, 2,764,308, and 1,599,792, shares of Class A common stock were\nexcluded from the computations of diluted net income per share for years ended July 31, 2010, 2009,\nand 2008, 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 $23,712, $25,971, and $27,443 for the\nyears ended July 31, 2010, 2009, and 2008, respectively. Future minimum lease payments required\nunder such leases in effect at July 31, 2010 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


2011	$	21,258
2012		16,799
2013		11,075
2014		6,696
2015		3,274
Thereafter		4,984

	$	64,086

\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\n

10. Fair Value Measurements\n

\n\n\n\n

The Company adopted new accounting guidance on fair value measurements on August 1, 2008 as it\nrelates to financial assets and liabilities. The Company adopted the new accounting guidance on\nfair value measurements for its nonfinancial assets and liabilities on August 1, 2009. The\naccounting guidance applies to other accounting pronouncements that require or permit fair value\nmeasurements, defines fair value based upon an exit price model, establishes a framework for\nmeasuring fair value, and expands the applicable disclosure requirements. The accounting guidance\nindicates, among other things, that a fair value measurement assumes that a transaction to sell an\nasset or transfer a liability occurs in the principal market for the asset or liability or, in the\nabsence of a principal market, the most advantageous market for the asset or liability.\n

\n\n

The Company also adopted new guidance on disclosure requirements for fair value measurements\non February 1, 2010. The guidance requires previous fair value hierarchy disclosures to be further\ndisaggregated by class of assets and liabilities. A class is often a subset of assets or\nliabilities within a line item in the statement of financial position. In addition, significant\ntransfers between Levels 1 and 2 of the fair value hierarchy are required to be disclosed. The\nadoption did not have an impact on the Consolidated Financial Statements of the Company. In\naddition, the fair value disclosure amendments also require more detailed disclosures of the\nchanges in Level 3 instruments. These changes will not become effective until interim and annual\nperiods beginning after December 15, 2010 and are not expected to have an impact on the\nConsolidated Financial Statements of the Company.\n

\n\n

The accounting guidance on fair value measurements establishes a fair market value hierarchy\nfor the pricing inputs used to measure fair market value. The Company’s assets and liabilities\nmeasured at fair market value are classified in one of the following categories:\n

\n\n\n

Level 1 — Assets or liabilities for which fair value is based on quoted market prices in\nactive markets for identical instruments as of the reporting date.\n

\n\n\n

Level 2 — Assets or liabilities for which fair value is based on valuation models for\nwhich pricing inputs were either directly or indirectly observable.\n

\n\n\n

Level 3 — Assets or liabilities for which fair value is based on valuation models with\nsignificant unobservable pricing inputs and which result in the use of management estimates.\n

\n\n

53\n

\n\n

The following tables set forth by level within the fair value hierarchy, our financial assets\nand liabilities that were accounted for at fair value on a recurring basis at July 31, 2010, and\nJuly 31, 2009, according to the valuation techniques the Company used to determine their fair\nvalues.\n


	Fair Value Measurements Using Inputs
	Considered as
	Quoted Prices
	in Active
	Markets		Significant
	for		Other			Significant
	Identical		Observable			Unobservable
	Assets		Inputs			Inputs		Fair
	(Level 1)		(Level 2)			(Level 3)		Value	Balance Sheet Classification
July 31, 2009:
Trading Securities	$	8,239		$	—		$	—	$	8,239	Other assets
Foreign exchange contracts — cash flow hedges		—			—			—		—	Prepaid expenses and other current assets
Foreign exchange contracts		—			130			—		—	Prepaid expenses and other current assets

Total Assets	$	8,239		$	130		$	—	$	8,239

Foreign exchange contracts — cash flow hedges	$	—		$	248			—	$	248	Other current liabilities

Total Liabilities	$	—		$	248		$	—	$	248

July 31, 2010:
Trading Securities	$	8,757		$	—		$	—	$	8,757	Other assets
Foreign exchange contracts — cash flow hedges		—			156			—		156	Prepaid expenses and other current assets
Foreign exchange contracts					24					24	Prepaid expenses and other current assets

Total Assets	$	8,757		$	180		$	—	$	8,937

Foreign exchange contracts — cash flow hedges	$	—		$	829		$	—	$	829	Other current liabilities
Foreign exchange contracts					64					64	Other current liabilities
Foreign currency denominated debt — net investment hedge		—			97,747			—		97,747	Long term obligations, less current maturities


Total Liabilities	$	—		$	98,640		$	—	$	98,640

\n\n\n

The following methods and assumptions were used to estimate the fair value of each class of\nfinancial instrument:\n

\n\n\n

Trading Securities: The Company’s deferred compensation investments consist of investments in\nmutual funds. These investments were classified as Level 1 as the shares of these investments\ntrade with sufficient frequency and volume to enable us to obtain pricing information on an\nongoing basis.\n

\n\n\n

Foreign currency exchange contacts: The Company’s foreign currency exchange contracts were\nclassified as Level 2, as the fair value was based on the present value of the future cash flows\nusing external models that use observable inputs, such as interest rates, yield curves and\nforeign currency exchange rates. See Note 12, “Derivatives and Hedging Activities” for\nadditional information.\n

\n\n\n

Foreign currency denominated debt — net investment hedge: The Company’s foreign currency\ndenominated debt designated as a net investment hedge was classified as Level 2, as the fair\nvalue was based on the present value of the future cash flows using external models that use\nobservable inputs, such as interest rates, yield curves and foreign currency exchange rates. See\nNote 12, “Derivatives and Hedging Activities” for additional information.\n

\n\n

There have been no transfers of assets or liabilities between the fair value hierarchy levels,\noutlined above, during the fiscal years ended July 31, 2010 and 2009.\n

\n\n

The Company’s financial instruments, other than those presented in the disclosures above,\ninclude cash, accounts receivable, accounts payable, accrued liabilities and short-term and\nlong-term debt. The fair values of cash, accounts receivable, accounts payable, accrued liabilities\nand short-term debt approximated carrying values because of the short-term nature of these\ninstruments.\n

\n\n

Disclosures for nonfinancial assets and liabilities that are measured at fair value, but are\nrecognized and disclosed at fair value on a nonrecurring basis, were required prospectively\nbeginning August 1, 2009. During the three and twelve months ended July 31, 2010, the Company had\nno significant measurements of assets or liabilities at fair value on a nonrecurring basis\nsubsequent to their initial recognition other than the acquisitions of Welco, Stickolor, and\nSecurimed which are valued using level 2 inputs. See Note 2, “Acquisitions” for further\ninformation.\n

\n\n

54\n

\n\n\n

11. Restructuring\n

\n\n\n\n\n

In fiscal 2009, in response to the global economic downturn, the Company took several measures\nto address its cost structure. In addition to a company-wide salary freeze and decreased\ndiscretionary spending, the Company reduced its workforce by 25%. The Company reduced its\nworkforce through voluntary and involuntary separation programs, voluntary retirement programs, and\nfacility consolidations. As a result of these actions, the Company recorded restructuring charges\nof $25,849 in fiscal 2009. The restructuring charges included $20,911 of employee separation costs,\n$2,101 of non-cash fixed asset write-offs, $1,194 of other facility closure related costs, $1,275\nof contract termination costs, and $368 of non-cash stock option expense.\n

\n\n

The Company continued executing its restructuring actions that were announced in the fiscal\nyear ended July 31, 2009 throughout the fiscal year ended July 31, 2010. As a result of these\nactions, the Company recorded restructuring charges of $5,717 and $15,314 during the three and\ntwelve months ended July 31, 2010, respectively. The fiscal 2010 restructuring charges consisted\nof $10,850 of employee separation costs, $2,260 of non-cash fixed asset write-offs, $1,493 of other\nfacility closure related costs, and $711 of contract termination costs. Of the $15,314 of\nrestructuring charges recorded during the fiscal year ended July 31, 2010, $7,158 was incurred in\nthe Americas, $5,350 was incurred in Europe, and $2,806 was incurred in Asia-Pacific. The costs\nrelated to these restructuring activities have been recorded on the consolidated statements of\nincome as restructuring charges. The Company expects the majority of the remaining cash payments\nto be made within the next twelve months.\n

\n\n

A reconciliation of the Company’s restructuring activity for fiscal 2009 and 2010 is as\nfollows:\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

Restructuring charge		10,850				2,260			2,204			15,314
Non-cash write-offs		—				(2,260	)		—			(2,260	)
Cash payments		(9,240	)			—			(2,975	)		(12,215	)

Ending balance, July 31, 2010	$	6,055			$	—		$	106		$	6,161

\n\n\n

The other separation benefits for the period ended July 31, 2009 include charges of\napproximately $1,178 directly related to postretirement medical, dental and vision benefits. See\nNote 3 for discussion on employee benefits.\n

\n\n\n

12. Derivatives and Hedging Activities\n

\n\n\n\n

The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate\nrisk of specific foreign currency denominated transactions. These contracts typically require the\nexchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities\nof less than 12 months, which qualify as cash flow hedges under the accounting guidance for\nderivative instruments and hedging activities. The primary objective of the Company’s foreign\ncurrency exchange risk management is to minimize the impact of currency movements due to products\npurchased in other than the respective subsidiaries’ functional currency. To achieve this\nobjective, the Company hedges a portion of known exposures using forward foreign exchange currency\ncontracts. As of July 31, 2010 and 2009, the notional amount of outstanding forward exchange\ncontracts was $45,328 and $30,929, respectively.\n

\n\n

The Company hedges a portion of known exposure using forward exchange contracts. Main\nexposures are related to transactions denominated in the British Pound, the Euro, Canadian Dollar,\nAustralian Dollar, Singapore Dollar, Swedish Krona, Danish Krone, Japanese Yen, Swiss Franc, and\nthe Korean Won. Generally, these risk management transactions will involve the use of foreign\ncurrency derivatives to protect against exposure resulting from sales and identified inventory or\nother asset purchases.\n

\n\n\n

\n\n

55\n

\n\n

At July 31, 2010, the Company had $156 of forward exchange contracts designated as cash flow\nhedges included in “Prepaid expenses and other current assets” on the accompanying Consolidated\nBalance Sheet. At July 31, 2009, $130 of the Company’s forward exchange contracts not designated as\nhedging instruments were included in “Prepaid expenses and other current assets,” on the\naccompanying Consolidated Balance Sheet. At July 31, 2010 and July 31, 2009, the Company had\n$829 and $248 respectively, of forward exchange contracts designated as hedge instruments included\nin “Other current liabilities” on the accompanying Consolidated Balance Sheet. At July 31, 2010\nand July 31, 2009, the U.S. dollar equivalent of these outstanding forward foreign exchange\ncontracts totaled $32,020 and $21,793, respectively, including contracts to sell Euros, Canadian\nDollars, Australian Dollars, British Pounds, U.S. Dollars, and Swiss Franc.\n

\n\n

On May 13, 2010, the Company completed the private placement of €75.0 million (approximately\n$95.0 million USD) aggregate principal amount of senior unsecured notes to accredited institutional\ninvestors. The Company entered into certain foreign currency denominated debt obligations to\nselectively hedge portions of its net investment in European foreign operations. As net investment\nhedges, the currency effects of the debt obligations are reflected in the foreign currency\ntranslation adjustments component of accumulated other comprehensive income where they offset gains\nand losses recorded on the Company’s net investment in European operations. The Company’s foreign\ndenominated debt obligations are valued under a market approach using publicized spot prices.\n

\n\n

Additionally, during fiscal 2010, the Company used forward foreign exchange currency contracts\ndesignated as hedge instruments to hedge portions of the Company’s net investments in European\nforeign operations. For hedges that meet the effectiveness requirements, the net gains or losses\nattributable to changes in spot exchange rates are recorded in cumulative translation within other\ncomprehensive income. Any ineffective portions are to be recognized in earnings. Recognition in\nearnings of amounts previously recorded in cumulative translation is limited to circumstances such\nas complete or substantially complete liquidation of the net investment in the hedged foreign\noperation. At July 31, 2010, the Company had no forward foreign exchange currency contracts\ndesignated as net investment hedges included in “Prepaid expenses and other current assets” on the\nConsolidated Balance Sheet.\n

\n\n\n

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


	Asset Derivatives		Liability Derivatives
	July 31, 2010		July 31, 2009			July 31, 2010			July 31, 2009
Derivatives designated as	Balance Sheet						Balance Sheet					Balance Sheet				Balance Sheet
hedging instruments	Location		Fair Value			Location			Fair Value	Location			Fair Value	Location		Fair Value
Cash flow hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	156			Prepaid expenses and other current assets		$	—	Other current liabilities		$	829	Other current liabilities	$	248

Net investment hedges

Foreign currency denominated debt	Prepaid expenses and other current assets	$	—			Prepaid expenses and other current assets		$	—	Long term obligations, less current maturities		$	97,747	Long term obligations, less current maturities	$	—


Total derivatives designated as hedging instruments				$	156					$	—				$	98,576	$	248


Derivatives not designated as hedging instruments
Cash flow hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	24			Prepaid expenses and other current assets		$	130	Other current liabilities		$	64	Other current liabilities	$	—

Total derivatives not designated as hedging instruments				$	24					$	130				$	64	$	—

\n\n\n

The pre-tax effects of derivative instruments designated as cash flow hedges on the\nConsolidated Statements of Income consisted of the following:\n


											Amount of Gain
											or (Loss)			Location of			Amount of Gain
	Amount of Gain or (Loss)		Location of Gain or			Reclassified From		Gain or (Loss)			or (Loss)
	Recognized in OCI on		(Loss) Reclassified			Accumulated OCI		Recognized in			Recognized in
Derivatives in	Derivative		From Accumulated			Into Income		Income on			Income on Derivative
Cash Flow Hedging	(Effective Portion)		OCI into Income			(Effective Portion)		Derivative			(Ineffective Portion)
Relationships	2010		2009			(Effective Portion)		2010			2009			(Ineffective Portion)			2010		2009

Foreign exchange\ncontracts	$	493		$	152		Cost of goods sold		$	(80	)		$	(815	)		Cost of goods sold	$	—	$	132

Total	$	493		$	152						$	(80	)		$	(815	)			$	—	$	132

\n\n

56\n

\n\n

The pre-tax effects of derivative instruments designated as net investment hedges on the\nConsolidated Balance Sheet consisted of the following:\n


												Amount of Gain
												or (Loss)			Location of			Amount of Gain
	Amount of Gain or (Loss)			Location of Gain or			Reclassified From		Gain or (Loss)			or (Loss)
Derivatives in	Recognized in OCI on			(Loss) Reclassified			Accumulated OCI		Recognized in			Recognized in
Net Investment	Derivative			From Accumulated			Into Income		Income on			Income on Derivative
Hedging	(Effective Portion)			OCI into Income			(Effective Portion)		Derivative			(Ineffective Portion)
Relationships	2010			2009			(Effective Portion)		2010			2009			(Ineffective Portion)			2010		2009

Foreign exchange contracts	$	6,248			$	—		Investment and other income — net		$	—			$	—			Investment and other income — net	$	—	$	—

Foreign currency denominated debt	$	(2,833	)		$	—		Investment and other income — net		$	—			$	—			Investment and other income — net	$	—	$	—

Total	$	3,415			$	—						$	—			$	—				$	—	$	—

\n\n\n

The pre-tax effects of derivative instruments not designated as hedging instruments on the\nConsolidated Statements of Income consisted of the following:\n


	Location of Gain or		Amount of Gain or
	(Loss) Recognized		(Loss) Recognized in
Derivatives Not Designated as Hedging	in Income on		Income on Derivative
Instruments	Derivative		2010			2009
Foreign exchange contracts	Other income (expense)	$	(40	)		$	693

Total				$	(40	)		$	693

\n\n\n

13. Unaudited Quarterly Financial Information\n

\n\n


	Quarters
	First		Second			Third		Fourth	Total
2010
Net Sales	$	318,486		$	295,829		$	321,887	$	322,894	$	1,259,096
Gross Margin		157,443			146,918			160,197		158,739		623,297
Operating Income*		35,557			23,902			35,914		34,083		129,456
Net Income		21,668			15,001			23,695		21,592		81,956
Net Income Per Class A Common Share:
Basic		0.41			0.29			0.45		0.41		1.56
Diluted		0.41			0.29			0.45		0.41		1.55
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		0.36		1.32

\n\n

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


*		Fiscal 2010 had before tax restructuring charges by quarter of $3,601, $3,649, $2,347, and\n$5,717 for a total of $15,314. Fiscal 2009 had before tax restructuring charges by quarter of\n$1,639, $19,408, $2,229, and $2,573 for a total of $25,849.

\n\n\n\n\n

\n\n

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

\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

Brady Corporation maintains a set of disclosure controls and procedures that are designed to\nensure that information required to be disclosed by the Company in the reports filed by the Company\nunder the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed,\nsummarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure\ncontrols and procedures include, without limitation, controls and procedures designed to ensure\nthat information required to be disclosed by the Company in the reports the Company files under the\nExchange Act is accumulated and communicated to the Company’s management, including the Company’s\nprincipal executive and principal financial officers, or persons performing similar functions, as\nappropriate to allow timely decisions regarding required disclosure. The Company carried out an\nevaluation, under the supervision and with the participation of its management, including its\nPresident and Chief Executive Officer and its Executive Vice President and Chief Financial Officer,\nof the effectiveness of the design and operation of the Company’s disclosure controls and\nprocedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, the Company’s\nPresident and Chief Executive Officer and Executive Vice President and Chief Financial Officer\nconcluded that the Company’s disclosure controls and procedures are effective as of the end of the\nperiod covered by this report.\n

\n\n\n

\n\n

57\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\naccordance with 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, 2010, 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, 2010, 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, 2010, 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 (as defined\nin Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recently\ncompleted fiscal quarter that have materially affected, or are reasonably likely to materially\naffect, the Company’s internal control over financial reporting.\n

\n\n

58\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 subsidiaries\n(the “Company”) as of July 31, 2010, based on Internal Control — Integrated Framework issued by\nthe Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is\nresponsible for maintaining effective internal control over financial reporting and for its\nassessment of the effectiveness of internal control over financial reporting, included in the\naccompanying management report (“Management’s Report on Internal\nControl over Financial Reporting”).\nOur responsibility is to express an opinion on the Company’s internal control over financial\nreporting based on our audit.\n

\n\n

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight\nBoard (United States). Those standards require that we plan and perform the audit to obtain\nreasonable 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\naccordance with accounting principles generally accepted in the\nUnited States of America (“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 the\npossibility of collusion or improper management override of controls, material misstatements due to\nerror 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 over\nfinancial reporting as of July 31, 2010, based on the criteria established in Internal Control —\nIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway\nCommission.\n

\n\n

We have also audited, in accordance with the standards of the Public Company Accounting Oversight\nBoard (United States), the consolidated financial statements and financial statement schedule as of\nand for the year ended July 31, 2010, of the Company and our report dated September 21, 2010,\nexpressed an unqualified opinion on those consolidated financial statements and financial statement schedule.\n

\n\n

/s/ DELOITTE & TOUCHE LLP\n

\n\n\n

Milwaukee, WI
\nSeptember 21, 2010\n

\n\n

59\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		52		President, CEO and Director
Thomas J. Felmer\n		48		Sr. V.P., CFO
Aaron J. Pearce\n		39		V.P., Treasurer, Director of Investor Relations
Allan J. Klotsche\n		45		President — Brady Asia-Pacific and V.P., Brady Corporation
Peter C. Sephton\n		51		President — Brady Europe and V.P., Brady Corporation
Matthew O. Williamson\n		54		President — Brady Americas and V.P., Brady Corporation
Robert L. Tatterson\n		45		V.P. and Chief Technology Officer
Bentley N. Curran\n		48		V.P. and Chief Information Officer
Kathleen M. Johnson\n		56		V.P. and Chief Accounting Officer
Conrad G. Goodkind\n		66		Director
Elizabeth Pungello\n		43		Director
Robert C. Buchanan\n		70		Director
Frank W. Harris\n		68		Director
Chan W. Galbato\n		47		Director
Patrick W. Allender\n		63		Director
Bradley C. Richardson\n		52		Director
Gary S. Balkema\n		55		Director

\n\n\n

Frank M. Jaehnert — Mr. Jaehnert has served on the Company’s Board of Directors and as the\nCompany’s President and CEO since 2003. Mr. Jaehnert joined the Company in 1995 and served in\nleadership positions in a variety of different functions and businesses, including that of CFO from\n1996 to 2002, before his promotion to President and CEO in 2003. Previously, he served in a\nvariety of financial roles at Robert Bosch, GmbH, including treasurer of a subsidiary. His broad\noperating and functional experience and in-depth knowledge of Brady’s businesses are particularly\nvaluable given the diverse nature of Brady’s portfolio. These experiences, combined with Mr.\nJaehnert’s talent for leadership and his long-term strategic perspective, have helped drive the\nCompany’s growth and performance during his tenure as Director and CEO.\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 European direct marketing businesses,\nwhich he also led for two years. In 2003, Mr. Felmer returned to Milwaukee where he was responsible\nfor 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

Aaron J. Pearce— Mr. Pearce joined the Company in 2004 as Director of Internal Audit. He then\nserved as Finance Director for Brady’s Asia Pacific Region from June 2006 to September 2008. From\nSeptember 2008 through December 2009, he served in the role of Global Tax Director. In January\n2010, he took over the role of Treasurer and Director of Investor Relations. Prior to Brady, Mr.\nPearce worked with Deloitte & Touche LLP. He holds a bachelors degree in business administration\nfrom the University of Wisconsin-Milwaukee and is a certified public accountant.\n

\n\n

Allan J. Klotsche — Mr. Klotsche joined the Company in 1989. 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 strategic account management.\nHe 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, President-Brady Europe. Before\njoining Brady, he served in a variety of international managerial roles with Tate and Lyle Plc,\nSutcliffe Speakman Plc and Morgan Crucible Plc. He is a graduate in accountancy and law from The\nUniversity of Wales (UCC).\n

\n\n

Matthew O. Williamson — Mr. Williamson joined the Company in 1979. From 1979 to 1994, he\nserved in a variety of sales and marketing leadership roles. From 1995 to 2003, Mr. Williamson\nserved as the V.P. and General Manager of Brady’s specialty tape and identification solution\nbusinesses. From 1996 to 1998, Mr. Williamson served as the V.P. and General Manager of the\nIdentification 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\nbusiness, in January of 2008, Mr. Williamson assumed responsibility for the Direct Marketing\nAmericas, and is currently serving as President of the Americas region.\n

\n\n

61\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. He\nis 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 & Touche LLP. She holds a bachelor’s\ndegree in accounting from the University of Wisconsin-Whitewater.\n

\n\n

Conrad G. Goodkind — Mr. Goodkind was elected to the Board of Directors in 2007. He\ncurrently serves as Brady’s Lead Independent Director. He also serves as the Chair of the\nCorporate Governance Committee and as a member of the Finance Committee. He previously served as\nSecretary of the Company from 1999 to 2007. Mr. Goodkind was a partner in the law firm of Quarles\n& Brady, LLP, where his practice concentrated in corporate and securities law from 1979 to 2009.\nPrior to 1979, he served as Wisconsin’s Deputy Commissioner of Securities. Mr. Goodkind previously\nserved as a director of Cade Industries, Inc. and Able Distributing, Inc. His extensive experience\nin advising companies on a broad range of transactional matters, including mergers and acquisitions\nand securities offerings, and historical knowledge of the Company provides the Board with expertise\nand insight into governance, business and compliance issues that the Company encounters.\n

\n\n

Elizabeth Pungello, Ph. D — Dr. Pungello was elected to the Board of Directors in 2003. She\nserves as a member of the Compensation, Corporate Governance, and Technology Committees. Dr.\nPungello is a Scientist at the Frank Porter Graham Development Institute, a Research Assistant\nProfessor in the Developmental Psychology Program at the University of North Carolina at Chapel\nHill, and Mentor Faculty at the Center for Developmental Science. She serves on the editorial\nboard of the Journal of Marriage and Family and as a reviewer for several other journals. Dr.\nPungello is the President of the Brady Education Foundation in Chapel Hill, N.C. and serves on a\nnumber of other non-profit boards. She is the granddaughter of William H. Brady, Jr., the founder\nof Brady Corporation. As a result of her substantial ownership stake in the Company, as well as\nher family’s history with the Company, she is well positioned to understand, articulate and\nadvocate for the rights and interests of the Company’s shareholders.\n

\n\n

Robert C. Buchanan — Mr. Buchanan was elected to the Board of Directors in 1987. He serves\nas the Chair of the Compensation Committee and as a member of the Audit, Corporate Governance and\nFinance Committees. He is the retired non-executive chairman of the Fox Valley Corporation. He\nhas significant experience serving on corporate boards including those of a national private life\ninsurance company and a professional football team. His knowledge and experience in manufacturing,\nhis skills in financial and compensation matters, and his extensive historical knowledge of the\nCompany, provides the Board with expertise and insight. Mr. Buchanan will retire from the\nCompany’s Board of Directors at the annual meeting in November 2010 pursuant to the Board’s\nmandatory retirement age.\n

\n\n

Frank W. Harris, Ph.D — Dr. Harris was elected to the Board of Directors in 1991. He serves\nas the Chair of the Technology Committee and as a member of the Corporate Governance Committee. He\nserved as the Distinguished Professor of Polymer Science and Biomedical Engineering at the\nUniversity of Akron from 1983 to 2008 and Professor of Chemistry at Wright State University from\n1970 to 1983. He is the founder and president of several technology based companies including\nAkron Polymer Systems. Dr. Harris is the inventor of several commercialized products including an\noptical film that realized over one billion dollars in sales. His extensive experience in\ntechnology and engineering solutions provides the Board with important expertise in new product\ndevelopment.\n

\n\n

Chan W. Galbato — Mr. Galbato was elected to the Board of Directors in 2006. He serves as a\nmember of the Audit, Technology and Compensation Committees. He has extensive executive leadership\nexperience including his current role as a senior operating executive with Cerberus Operations and\nAdvisory Company, LLC. Mr. Galbato was President and CEO of the Controls division of Invensys plc.\nPrior to that, Mr. Galbato held positions as President of Services at The Home Depot, President\nand CEO of Armstrong Floor Products, CEO of Choice Parts LLC, and CEO of Coregis Insurance Company,\na GE Capital company. Mr. Galbato is Chairman of the Board of Blue Bird Corporation and North\nAmerican Bus Industries, Inc., Guilford Mills, Inc., and NewPage Corporation and is a member of the\nBoard of Tower International, Inc. His public company leadership experience gives him insight\ninto business strategy, leadership and executive compensation and his public company and\nprivate equity experience give him insight into technology trends, acquisition strategy and\nfinancing, each of which represents an area of key strategic opportunity for the Company.\n

\n\n

62\n

\n\n

Patrick W. Allender — Mr. Allender was elected to the Board of Directors in 2007. He serves\nas the Chair of the Finance Committee and as a member of the Audit and Compensation Committees. He\nserved as Executive Vice President and CFO of Danaher Corporation from 1998 to 2005 and Executive\nVice President from 2005 to 2007. Additionally, he served as principal auditor at Arthur Andersen\nLLC from 1968 to 1985. He has served as a director of Colfax Corporation since 2008. Mr. Allender\npreviously served on the board of directors of Easco Hand Tools from 1988 to 1990. Mr. Allender’s\nstrong background in finance and accounting, as well as his past experience as the CFO of other\npublic companies, provides the Board with financial expertise and insight.\n

\n\n

Bradley C. Richardson — Mr. Richardson was elected to the Board of Directors in 2007. He\nserves as the Chair of the Audit Committee and is a member of the Finance Committee. He is the\nExecutive Vice President and CFO of Diebold, Inc. He previously served as the Executive Vice\nPresident Corporate Strategy and CFO of Modine Manufacturing from 2003 to 2009. Prior to Modine,\nhe spent 21 years with BP Amoco serving in various financial and operational roles with assignments\nin North America, South America, and Europe. Mr. Richardson has served on the boards of Modine\nManufacturing and Tronox, Inc. He brings to the Company extensive knowledge and experience in the\nareas of operations, strategy, accounting, tax accounting, and finance, which are areas of critical\nimportance to the Company as a global public company.\n

\n\n

Gary S. Balkema — Mr. Balkema was elected to the Board of Directors in 2010. Since 2000, he\nhas been the President of Bayer Healthcare LLC and Worldwide Consumer Care Division, which has four\nbillion dollars in sales and over 5,400 employees. He is also responsible for overseeing Bayer LLC\nUSA’s compliance program. He has over 20 years of general management experience. Mr. Balkema\nbrings strong experience in consumer marketing skills and mergers and acquisitions and\nintegrations. His broad operating and functional experience are valuable to the Company given the\ndiverse nature of the Company’s portfolio.\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

Board Leadership Structure — The Board does not have a formal policy regarding the separation\nof the roles of Chief Executive Officer and Chairman of the Board as the Board believes it is in\nthe best interests of the Company to make that determination based on the position and direction of\nthe Company and the membership of the Board. The Board currently has not appointed a Chairman of\nthe Board. In fiscal 2010, the Board formalized the position of Lead Independent Director, which\nshall be elected on an annual basis from among the independent Directors of the Board based upon\nthe recommendation of the Corporate Governance Committee. The duties of the Lead Independent\nDirector include, among others, chairing executive sessions of the non-management Directors,\nmeeting periodically with the Chief Executive Officer on current significant issues facing the\nCompany, facilitating effective communication among the Chief Executive Officer and all members of\nthe Board, and overseeing the Board’s shareholder communication policies and procedures. Mr.\nGoodkind, Chair of the Corporate Governance Committee, currently serves as the Lead Independent\nDirector. The Board believes that its current leadership structure has enhanced the Board’s\noversight of, and independence from, Company management; the ability of the Board to carry out its\nroles and responsibilities on behalf of our shareholders; and our overall corporate governance.\n

\n\n

Risk Oversight — The Board oversees the Company’s risk management processes directly and\nthrough its committees. In general, the Board oversees the management of risks inherent in the\noperation of the Company’s businesses, the implementation of its strategic plan, its acquisition\nand capital allocation program and its organizational structure. Each of the Board’s committees\nalso oversees the management of Company risks that fall within the committee’s areas of\nresponsibility. The Company’s management is responsible for reporting significant risks to\nexecutives at the quarterly disclosure committee meeting. The significance of the risk is assessed\nby executive management and escalation to the respective board committee and Board of Directors is\ndetermined. The Company reviews its risk assessment with the Audit Committee annually.\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. Messrs. Richardson,\nChair of the Audit Committee, and Allender and Galbato, members of the Audit Committee, are\nfinancial experts and are independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A\nunder 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\non these guidelines all directors, with the exception of Mr. Jaehnert, President and CEO, are\ndeemed independent. All members of the Audit, Compensation, and Corporate Governance Committees\nare deemed independent.\n

\n\n

63\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. Goodkind, Lead Independent Director and\nChair of Corporate Governance Committee, is the presiding Director at these sessions. In fiscal\n2010, there were five executive sessions. Interested parties can raise concerns to be addressed at\nthese meetings by calling 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, and Mr. Allender. Each member of the Audit Committee has been determined by the Board to\nbe 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

Director Qualifications — Brady’s Corporate Governance Committee reviews the individual\nskills and characteristics of the Directors, as well as the composition of the Board as a whole.\nThis assessment includes a consideration of independence, diversity, age, skills, expertise, and\nindustry backgrounds in the context of the needs of the Board and the Company. Although the\nCompany has no policy regarding diversity, the Corporate Governance Committee seeks a broad range\nof perspectives and considers both the personal characteristics and experience of Directors and\nprospective nominees to the Board so that, as a group, the Board will possess the appropriate\ntalent, skills, and expertise to oversee the Company’s businesses.\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, 2010, all Section 16(a) filing requirements applicable to its officers,\ndirectors and greater than 10 percent beneficial owners were\ncomplied with, other than with respect to\nthe following:\n

\n\n

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

	•		Peter Sephton’s Form 4 filing on September 21, 2009 contained one transaction made on\nSeptember 15, 2009 that was inadvertently reported late.

	•		Director Robert Buchanan’s Form 4 filing on September 24, 2009 contained one\ntransaction made on September 15, 2009 that was inadvertently reported late.

\n\n

Item 11. Executive Compensation\n

\n\n

Compensation Discussion and Analysis\n

\n\n\n

The Compensation Discussion and Analysis explains the compensation philosophy, policies and\npractices of the Company with respect to its executives and management. The following information\nand analyses focuses 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.” Brady’s named\nexecutive officers are Frank M. Jaehnert, President, Chief Executive Officer and Director; Thomas\nJ. Felmer, Senior Vice President and Chief Financial Officer; Allan J. Klotsche, President —\nBrady Asia-Pacific and Vice President, Brady Corporation; Peter C. Sephton, President — Brady\nEurope and Vice President, Brady Corporation; and Matthew O. Williamson, President — Brady\nAmericas and Vice President, Brady Corporation.\n

\n\n

64\n

\n\n

Executive Compensation Overview and Philosophy\n

\n\n\n

Our executive compensation program is designed to attract and retain exceptional leadership\ntalent and properly incentivize them to create a top-tier performance company by encouraging\nbehaviors and actions that build long-term value for our shareholders. We have structured our\ncompensation program around the following principles:\n

\n\n

\n\n\n \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)		Provide a competitive total compensation package, an important component of an overall\nemployee value proposition, to attract and retain exceptional leadership talent.

	b)		Incentivize long-term shareholder value creation by encouraging behaviors to facilitate\nlong-term success without undue risk taking.

	c)		Reinforce top-tier company performance through a merit-based, pay-for-performance culture\nthat is in-line with the Company’s values.

\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 compensation levels and\npolicies. Their expertise may also be utilized in modifying any existing or proposing any new\ncompensation arrangements. During fiscal 2010, the Compensation Committee engaged the services of\nan independent compensation consultant; however, the total fees for the consultant’s services did\nnot exceed $120,000. In addition to this professional advice, the Committee relies upon its\ncollective judgment and other available competitive information and data in making executive\ncompensation decisions. The Committee has avoided strict adherence to rigid guidelines or formulas\nwhen determining or modifying executive compensation.\n

\n\n

In order to successfully achieve our Company objectives, a combination of short-term and\nlong-term incentives has been developed. The Compensation Committee believes a proper balance\nbetween these elements is necessary and should include a combination of cash and equity, with fixed\nand variable components (dependent upon Company financial performance). Our short-term incentive is\nin the form of cash, while the long-term incentive is equity based and includes performance-based\nand time-based stock options, along with performance-based restricted shares. We believe these\nprograms are designed to specifically support the achievement of the Company’s profitability and\nsales goals. We also believe these programs further enhance the performance of the Company by\nproviding effective tools to attract, retain, and motivate a group of highly skilled executives.\nThis results in strong financial and operational performance, which supports the preservation and\nenhancement of shareholder value over time, without incurring undue risk 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 Mr. Jaehnert, President and\nChief Executive Officer, with respect to whom the Compensation Committee formulates and determines\ncompensation. The Compensation Committee reviews the proposal for each officer and ultimately\napproves a compensation arrangement for them. The resulting approved compensation levels, including\nthe President and Chief Executive Officer’s compensation, are then reported by the Compensation\nCommittee to the full Board of Directors.\n

\n\n

65\n

\n\n

Elements of Executive Compensation for Fiscal 2010\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 discussed below for base salaries, annual cash incentives and long-term\nequity compensation, the Compensation Committee reviews individual comprehensive “tally sheets”\nthat include the annual cash and equity grants, along with all other benefits over a trailing\nfour-year period.\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 in these surveys are obtained annually. The Compensation Committee\nalso periodically utilizes the services of an outside consultant to assist in understanding the\ncompensation levels in the market. A regression analysis is then performed by the Company’s Human\nResources team based on the appropriate organization level (company, group, division) and sales\nvolume of the appropriate Brady business. The base salary is designed to compensate executives for\ntheir level of responsibility and sustained individual performance. One consideration is the\ncomparison of the individual base salaries to the median for like positions and responsibilities\nbased on these nationally recognized compensation surveys. Further, the Compensation Committee has\nflexibility to increase base salaries above the median to retain or attract key employees whose\nperformance merits higher base salaries, or to set base salary below the median where individuals\nare new to the job and performance is being evaluated. The Compensation Committee annually reviews\nbase salaries to ensure, on the basis of responsibility and performance, that executive\ncompensation is meeting the Compensation Committee’s principles. The determination of base salary\nalso affects the annual bonus payout since an individual’s annual bonus target is expressed as a\npercentage of base salary.\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 to determine fiscal 2010 compensation\nlevels. The Compensation Committee also uses judgment to determine the appropriate level of base\nsalary, which we believe reflects individual performance and responsibilities, and calibrates with\nthe most recently available market compensation data. The peer group utilized in setting fiscal\n2010 compensation levels included 29 companies that are in a similar industry with annual revenues\nup to approximately $5 billion: Actuant Corporation, Agilent Technologies, Inc., Alliant\nTechsystems Inc., AMETEK, Inc., Amphenol Corporation, Anixter International Inc., Barnes Group\nInc., Bemis Company, Inc., Benchmark Electronics, Inc., Cooper Industries, Ltd., Donaldson Company,\nInc., DRS Technologies, Inc., Energizer Holdings, Inc., Exide Technologies, Fastenal Company,\nHubbell Incorporated, IDEX Corporation, Molex Incorporated, MSC Industrial Direct Company, Inc.,\nNordson Corporation, Pentair, Inc., Rogers Corporation, Roper Industries, Inc., SPX Corporation,\nTeleflex Incorporated, Thomas & Betts Corporation, Vishay Intertechnology, Inc., WESCO\nInternational, Inc., and Zebra Technologies Corporation. Included in this peer group is a smaller\nsubset of 13 companies that have annual revenues of less than $2 billion to provide data for\nsimilar sized companies to Brady. This subset includes: Actuant Corporation, AMETEK, Inc., Barnes\nGroup Inc., Donaldson Company, Inc., DRS Technologies, Inc., Fastenal Company, IDEX Corporation,\nMSC Industrial Direct Company, Inc., Nordson Corporation, Rogers Corporation, Roper Industries,\nInc., Thomas & Betts Corporation, and Zebra Technologies Corporation. This list may vary in the\nfuture due to changes in our business or the business of the companies utilized as peers. A total\ncompensation benchmarking analysis of our industry and selected peer companies, which resulted in a\nmodified listing of peer group companies, was recently conducted by an outside consultant and\nassisted the Compensation Committee in the review of fiscal 2011 compensation levels for the named\nexecutive officers.\n

\n\n

Due to the impact of the global economic downturn on the Company’s financial performance,\nmerit increases were cancelled in fiscal 2009. However, it was determined by the Compensation\nCommittee that base salary merit increases would be reinstituted for fiscal 2010. As a result,\nmerit increases for the named executive officers ranged from 3.0% to 6.2%.\n

\n\n

66\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 organic sales growth, segment organic sales growth, segment profit, and\nworking capital; each component is based on the individual’s role at either the corporate or\nsegment 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 as\na 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, Klotsche, Sephton,\nand Williamson are 70% of their base salaries. The following table provides the components of the\ntarget bonus percentages.\n


	Consolidated			Earnings						Segment Organic		Segment
	Net Organic			Per Share			Working		Sales		Profit		Target
Name	Sales Growth			Growth			Capital		Growth (1)		(1)		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	%
Allan J. Klotsche	NA				30.0	%		10.0	%		10.0	%		50.0	%		70.0	%
Peter C. Sephton	NA				30.0	%		10.0	%		10.0	%		50.0	%		70.0	%
Matthew O. Williamson	NA				30.0	%		10.0	%		10.0	%		50.0	%		70.0	%

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


(1)		Segment sales and profit for Messrs. Klotsche, Sephton, and Williamson are based on\norganic sales growth and profit for their respective segment.

\n\n\n

For the fiscal year ended July 31, 2010, the Company paid the following annual cash incentive\nbonuses:\n


Name	Bonus ($)		Salary %
Frank M. Jaehnert		1,193,891		155.4	%
Thomas J. Felmer		369,481		108.8	%
Allan J. Klotsche		359,027		120.7	%
Peter C. Sephton		188,441		56.3	%
Matthew O. Williamson		234,505		68.3	%

\n\n\n

The 2010 allocation of the annual cash incentive bonuses by component is as follows:\n


	Consolidated			Earnings Per			Working		Segment					Actual
Name	Net Organic Sales			Share (1)			Capital		Organic Sales		Segment Profit		Payout
Frank M. Jaehnert		4.0	%			169.0	%		198.0	%	NA		NA			155.4	%
Thomas J. Felmer		4.0	%			169.0	%		198.0	%	NA		NA			155.4	%
Allan J. Klotsche	NA				169.0	%		178.0	%		8.0	%		206.0	%		172.5	%
Peter C. Sephton	NA				169.0	%		212.0	%		0.0	%		17.0	%		80.4	%
Matthew O. Williamson	NA				169.0	%		250.0	%		9.0	%		42.0	%		97.6	%

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


(1)		Earnings per share as utilized in the individual bonus plans is calculated using a fixed amount of 53 million shares.

\n\n

67\n

\n\n\n\n

The payouts in fiscal 2010 represent an achievement of 4.0% for the consolidated net organic\nsales growth target of 5.0%, 169.0% for the earnings per share growth target of 10.0%, 178.0% to\n250.0% for the working capital targets, and 0.0% to 9.0% for the regional net organic sales growth\ntargets and 17.0% to 206.0% for the regional segment profit growth targets for those named\nexecutive officers with regional responsibility.\n

\n\n

Equity Incentives: Long-term Incentive Compensation\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 time frame of greater than one 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 stock\nprice, which directly affects the amount of compensation the executive receives upon vesting and\nexercising the options. The size and type of equity awards is determined by the Compensation\nCommittee with periodic input from its outside consultant. A study by the Committee’s outside\ncompensation consultant was recently conducted and assisted the Compensation Committee in the\nreview of fiscal 2011 long-term incentive awards for the named executive officers.\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”). Under the terms of the 2010 Omnibus Plan, pursuant to which 3,000,000 shares of the\nCompany’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, provided that after December 31, 2009, no further\nawards or grants will be made under the Company’s 2006 Omnibus Incentive Stock Plan.\n

\n\n

Performance-based Stock Options:\n

\n\n\n

The Compensation Committee’s belief that performance-based stock options serve as an important\nmotivator and required component of the Company’s overall compensation program resulted in a new\nthree-year performance-based stock option plan being implemented for fiscal 2010. The performance\ncriteria of this new plan establish minimum annual earnings per share growth targets as well as\nrelative measure of the Company’s three year earnings per share growth compared to the S&P SmallCap\n600 Index. These options have a ten year-life and typically are granted on the first working day of\nthe Company’s fiscal year.\n

\n\n

Time-based Stock Options:\n

\n\n\n

Time-based stock option grants in fiscal 2010 were reviewed and approved by the Compensation\nCommittee on September 9, 2009, with an effective grant date of September 25, 2009. The grant price\nwas the fair market value of the stock on the grant date and was calculated by taking the average\nof the high and low stock price on that date. The time-based stock options generally vest one-third\neach 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 element of\ntheir overall compensation. In January 2008, the Compensation Committee approved the issuance of\nperformance restricted stock awards to six of Brady’s senior executives. A total of 210,000\nrestricted shares were issued and included both a performance vesting requirement (earnings per\nshare) and a service vesting requirement (five years). No new shares were issued during fiscal 2009\nor fiscal 2010. Effective August 2, 2010 (fiscal 2011), a grant of 100,000 shares of\nperformance-based restricted stock was issued to Mr. Jaehnert and included both a performance\nvesting requirement (earnings per share) and a service vesting requirement (vesting ratably in\nyears 3, 4, and 5).\n

\n\n

68\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, vision, disability and life insurance.\n

\n\n

Retirement Benefits:\n

\n\n\n

Brady employees (including named executive officers) in the United States and certain\nexpatriate employees working for its international subsidiaries are eligible to participate in the\nBrady Corporation Matched 401(k) Plan (the “Employee 401(k) Plan”). In addition, named executive\nofficers in the United States and employees at many of our USA locations are also eligible to\nparticipate in the Brady Corporation’s Funded Retirement Plan (“Funded Retirement Plan”). Under\nthese plans the Company agrees to contribute certain amounts to both Plans. Under the Funded\nRetirement Plan, the Company contributes 4% of the eligible earnings of each person covered by the\nFunded Retirement Plan. In addition, participants may elect to have their annual pay reduced by up\nto 5% and have the amount of this reduction contributed to the Employee 401(k) Plan and matched by\nan additional 4% contribution by the Company. Participants may also elect to have up to another 45%\nof their eligible earnings contributed to the Employee 401(k) Plan (without an additional matching\ncontribution by the Company). The assets of the Employee 401(k) Plan and Funded Retirement Plan\ncredited to each participant are invested by the trustee of the Plans as directed by each plan\nparticipant in several investment funds as permitted by the Employee 401(k) Plan and the Funded\nRetirement 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 of 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 the Brady\nCorporation Executive Deferred Compensation Plan (“Executive Deferred Compensation Plan”), under\nwhich executive officers, corporate staff officers and certain key management employees of the\nCompany are permitted to defer portions of their salary and bonus into a plan account, the value of\nwhich is measured by the fair value of the underlying investments. The assets of the Executive\nDeferred Compensation Plan are held in a Rabbi Trust and are invested by the trustee as directed by\nthe participant in several investment funds as permitted by the Executive Deferred Compensation\nPlan. The investment funds available in the Executive Deferred Compensation Plan include Brady\nCorporation Class A Nonvoting Common Stock and various mutual funds that are provided in the\nEmployee 401(k) Plan. On May 1, 2006, the plan was amended to require that deferrals into the\nCompany’s Class A Nonvoting Common Stock must remain in the Company’s Class A Nonvoting Common\nStock and be distributed in shares of the Company’s Class A Nonvoting 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. Distributions of the Company\nClass A Nonvoting Common Stock are made in-kind; distributions of other assets are in cash.\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

69\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

	•		Annual allowance for financial and tax planning

	•		Enhanced long-term disability insurance

	•		Company car

	•		Long-term care insurance

	•		Personal liability insurance

\n\n

Stock Ownership Guidelines\n

\n\n\n

We believe that the interests of shareholders and executives become aligned when executives\nbecome shareholders in possession of a meaningful amount of Company stock. Furthermore, this stock\nownership encourages positive performance behaviors and discourages executive officers from taking\nundue risk. In order to encourage our executive officers and directors to acquire and retain\nownership of a significant number of shares of the Company’s stock, stock ownership guidelines have\nbeen established.\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


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

\n\n\n

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

\n\n

The Company’s CEO complied with these ownership levels in 2010. Named executive officers other\nthan 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 Compensation\nCommittee may direct that the executive’s after-tax payout on any incentive plans will be in Class\nA Nonvoting Common Stock to bring the executive up to the required level. The Compensation\nCommittee reviews the actual stock ownership levels of each of the named executive officers on an\nannual 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 of\nany 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 provide a 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 provides for reimbursement\nof any excise taxes imposed and up to $25,000 of attorney fees to enforce the executive’s rights\nunder the agreement. Payments under the agreement will be spread over two years.\n

\n\n

In May 2003, the Board approved a Change of Control Agreement for Mr. Jaehnert, which was\nsubsequently amended and restated in December 2008 to comply with Internal Revenue Code Section\n409A. The agreement applicable to Mr. Jaehnert provides a payment of an amount equal to three times\nhis annual base salary and three times the average bonus payment received in the three years\nimmediately prior to the date the change of control occurs in the event of termination or\nresignation upon a change of control. The agreement also provides for reimbursement of any excise\ntaxes imposed and up to $25,000 of attorney fees to enforce the executive’s rights under the\nagreement. Payments under the agreement will be spread over three years.\n

\n\n

70\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 executive\ncompensation program. It is the Compensation Committee’s intent to preserve the deductibility of\nexecutive compensation to the extent reasonably practicable and to the extent consistent with its\nother compensation objectives.\n

\n\n

Compensation Committee Interlocks and Insider Participation\n

\n\n\n

During fiscal 2010, the Board’s Compensation Committee was composed of board members Allender,\nBuchanan, Galbato, Jarc, Pungello and Nei. None of these persons has at any time been an employee\nof the Company or any of its subsidiaries. There are no relationships among the Company’s executive\nofficers, members of the Compensation Committee or entities whose executives serve on the Board\nthat require disclosure 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

Robert C. Buchanan, Chairman
\nPatrick W. Allender
\nChan W. Galbato
\nElizabeth Pungello\n\n

\n\n

Compensation Policies and Practices\n

\n\n\n

The Company’s compensation policies for executive officers and all other employees are\ndesigned to avoid incentives to create undue risks to the Company. The Company’s compensation\nprograms are weighted towards offering long-term incentives that reward sustainable performance; do\nnot offer significant short-term incentives that might drive high-risk investments at the expense\nof the long-term Company value; and are set at reasonable and sustainable levels, as determined by\na review of the Company’s economic position, as well as the compensation offered by comparable\ncompanies. The Company’s compensation policies and practices were evaluated to ensure that they do\nnot foster risk taking above the level of risk associated with the Company’s business model. The\nCompany has also reviewed its compensation policies and practices and determined they will not\ncreate risk that is reasonably likely to have a material adverse effect on the Company.\n

\n\n

71\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, 2010 for\nservices rendered to the Company and its subsidiaries during the fiscal years ended July 31, 2010,\nJuly 31, 2009 and July 31, 2008.\n

\n\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		2010		768,269			—			1,868,047				1,193,891		127,590	3,957,797
President & Chief Executive Officer		2009		750,000			—			389,421				—		179,761	1,319,182
		2008		723,077			1,641,500			639,000				703,554		153,414	3,860,545
T.J. Felmer		2010		339,659			—			833,224				369,481		65,242	1,607,606
Senior Vice President &		2009		318,269			—			194,710				—		65,322	578,301
Chief Financial Officer		2008		293,269			1,149,050			319,500				98,128		64,055	1,924,002
A.J. Klotsche		2010		297,417			—			833,224				359,027		51,275	1,540,943
President — Brady Asia Pacific		2009		290,000			—			194,710				—		63,212	547,922
		2008		285,962			1,149,050			319,500				128,411		53,305	1,936,228
P.C. Sephton(4)		2010		334,827			—			833,224				188,441		172,373	1,528,865
President — Brady Europe		2009		325,710			—			194,710				—		86,787	607,207
		2008		399,920			1,149,050			319,500				314,097		103,042	2,285,609
M. O. Williamson		2010		343,244			—			833,224				234,505		53,695	1,464,668
President — Brady Americas		2009		326,843			—			194,710				—		65,265	586,818
		2008		299,615			1,149,050			319,500				183,410		69,160	2,020,735

\n\n\n\n\n\n\n\n \n \n \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 grant date fair value computed in accordance with accounting guidance for\nequity grants made or modified in the applicable year for performance-based stock options and\ntime-based stock options. With respect to restricted stock awards, the grant date fair value\nis calculated based on the number of shares of Common Stock underlying the restricted stock\nawards, times the average of the high and low sale prices of Brady Common Stock on the date\nof grant. The assumptions used to determine the value of the awards, including the use of the\nBlack-Scholes method of valuation by the Company, are discussed in Note 1 of the Notes to\nConsolidated Financial Statements of the Company contained in Item 8 of this Form 10-K, for\nthe fiscal year ended July 31, 2010. The actual value of a restricted stock award will depend\non the market value of the Company’s Common Stock on the date the stock is sold. The actual\nvalue, if any, which an option holder will realize upon the exercise of an option will depend\non the excess of the market value of the Company’s Common Stock over the exercise price on the\ndate the option is exercised, which cannot be forecasted with any accuracy.

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

(3)		The amounts in this column for Messrs. Jaehnert, Felmer, Klotsche, and Williamson include:\nmatching contributions to the Company’s Matched 401(k) Plan, Funded Retirement Plan and\nRestoration Plan, the costs of group term life insurance for each named executive officer, use\nof a Company car and associated expenses, the cost of long-term care insurance, the cost of\npersonal liability insurance, the cost of disability insurance, and other perquisites. The\nperquisites may include an annual allowance for financial and tax planning and the cost of an\nannual physical health exam. The amounts in this column for Mr. Sephton include: contributions\nfor the Brady U.K. Pension Plan, the cost of group term life insurance, vehicle allowance and\nassociated expenses and other perquisites as listed above.

\n\n


				Retirement			Group Term					Long-term			Personal			Temporary/
				Plan			Life		Company		Care			Liability			Total
	Fiscal		Contributions			Insurance		Car		Insurance			Insurance			Disability			Other	Total
Name	Year		($)			($)		($)		($)			($)			($)			($)	($)
F.M. Jaehnert		2010			61,923			3,042			28,070				5,141				2,654		23,760	3,000	127,590
		2009			116,284			3,042			27,698				4,863				2,654		23,760	1,460	179,761
		2008			93,254			3,042			26,129				5,049				1,520		23,760	660	153,414
T.J. Felmer		2010			27,157			713			29,995				3,737				—		—	3,640	65,242
		2009			32,528			890			26,401				4,863				—		—	640	65,322
		2008			37,434			572			20,380				5,049				—		—	620	64,055
A. J. Klotsche		2010			23,910			629			19,455				3,506				—		—	3,775	51,275
		2009			33,525			816			20,033				2,838				—		—	6,000	63,212
		2008			26,798			761			24,519				1,227				—		—	—	53,305
P.C. Sephton(4)		2010			138,734			2,695			30,944				—				—		—	—	172,373
		2009			52,114			1,749			32,924				—				—		—	—	86,787
		2008			63,987			2,308			36,747				—				—		—	—	103,042
M. O. Williamson		2010			27,648			724			16,422				5,501				—		—	3,400	53,695
		2009			40,038			919			18,309				4,863				—		—	1,136	65,265
		2008			42,241			590			21,280				5,049				—		—	—	69,160

\n\n\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 United Kingdom, were\npaid to him in British Pounds. The amounts shown in U.S. dollars in the table above were\nconverted from British Pounds at the average exchange rate for fiscal 2010: $1 = £0.6358,\nfiscal 2009: $1 = £0.6294, fiscal 2008: $1 = £0.5001.

\n\n

72\n

\n\n\n

\n\n

Grants of Plan-Based Awards for 2010\n

\n\n\n

The following table summarizes grants of plan-based awards made during fiscal 2010 to the\nnamed executive officers.\n


																	All Other
																	Option
																	Awards;			Exercise
																	Number			or Base		Grant
																	of			Price of		Date Fair
				Compen-			Estimated Future Payouts Under		Securities		Stock or		Value of
				sation			Non-Equity Incentive Plan Awards		Under-		Option		Stock and
				Committee			(1)		lying		Awards		Option
	Grant		Approval			Threshold					Maximum		Options			($/Share)			Awards
Name	Date		Date			($)		Target ($)		($)		(2) &(3) (#)			(4)			($)
F.M. Jaehnert		8/1/2009			7/20/2009			—			768,269			1,920,673
		8/3/2009			7/20/2009			—			—			—				127,500			29.78		1,142,400
		9/25/2009			9/9/2009			—			—			—				70,000			28.73		624,400
		8/1/2005			2/17/2010													60,000					101,247
T.J. Felmer		8/1/2009			7/20/2009			—			237,761			594,402
		8/3/2009			7/20/2009			—			—			—				52,500			29.78		470,400
		9/25/2009			9/9/2009			—			—			—				35,000			28.73		312,200
		8/1/2005			2/17/2010													30,000					50,624
A.J. Klotsche		8/1/2008			7/20/2009			—			208,192			520,480
		8/3/2009			7/20/2009			—			—			—				52,500			29.78		470,400
		9/25/2009			9/9/2009			—			—			—				35,000			28.73		312,200
		8/1/2005			2/17/2010													30,000					50,624
P.C. Sephton		8/1/2009			7/20/2009			—			234,379			585,947
		8/3/2009			7/20/2009			—			—			—				52,500			29.78		470,400
		9/25/2009			9/9/2009			—			—			—				35,000			28.73		312,200
		8/1/2005			2/17/2010													30,000					50,624
M.O. Williamson		8/1/2009			7/20/2009			—			240,271			600,677
		8/3/2009			7/20/2009			—			—			—				52,500			29.78		470,400
		9/25/2009			9/9/2009			—			—			—				35,000			28.73		312,200
		8/1/2005			2/17/2010													30,000					50,624

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


(1)		The awards were made under the Company’s annual cash incentive plan. The structure of the\nplan is described in Compensation Discussion and Analysis above. Award levels are set prior to\nthe beginning of the fiscal year and payouts can range from 0% to 250% of the target.

(2)		Effective February 17, 2010, the Compensation Committee of the Board of Directors of the\nCompany approved an amendment to the granting agreement under which the Company issued\nperformance-based stock options on August 1, 2005. Pursuant to the amendment, the exercise\nperiod for the performance-based stock options was extended to ten years from five years.\nAlso, the amendment provided that during the extension period, executives may exercise the\nperformance-based stock options following a termination only if the termination is as a result\nof the executive’s death or disability or qualifies as a retirement. The modification value is\nthe incremental fair value as of the modification date.

(3)		The performance-based stock options granted on August 3, 2009 become exercisable as follows:\nTwo-thirds of the shares vest in equal annual installments over a three-year period, with the\nvesting date being the date the Audit Committee accepts the results of the fiscal year audit\nconfirming the achievement of annual EPS growth levels. The remaining one-third of the shares\nvest at plan year three depending upon the Corporation’s EPS growth for fiscal 2012 over\nfiscal 2008 in comparison with other corporations in the S&P 600 Index. The time-based stock\noptions granted on September 25, 2009 become exercisable as follows: one-third of the shares\non September 25, 2010, one-third of the shares on September 25, 2011 and one-third of the\nshares on September 25, 2012. These options have a term of ten years and were calculated using\nthe grant date fair value.

(4)		The exercise price is the average of the high and low sale prices of the Company’s Class A\nCommon Stock as reported by the New York Stock Exchange on the date of the grant. The closing\nprices of the Company’s Class A Common Stock as reported by the New York Stock Exchange on the\ndates of the grants was $29.78 per share on August 3, 2009 and $28.73 on September 25, 2009.

\n\n\n\n

\n\n

73\n

\n\n

Outstanding Equity Awards at 2010 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 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \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		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
		60,000								33.8900			8/1/2015
		50,000								37.8300			11/30/2015
		50,000								38.1900			11/30/2016
		33,334			16,666	(2)				38.3100			12/4/2017
		16,667			33,333	(3)				20.9500			12/4/2018
					127,500	(5)				29.7800			8/3/2019
					70,000	(6)				28.7300			9/25/2019
																	50,000	(4)	1,390,500
T.J. Felmer		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
		30,000								33.8900			8/1/2015
		25,000								37.8300			11/30/2015
		25,000								38.1900			11/30/2016
		16,667			8,333	(2)				38.3100			12/4/2017
		8,334			16,666	(3)				20.9500			12/4/2018
					52,500	(5)				29.7800			8/3/2019
					35,000	(6)				28.7300			9/25/2019
																	35,000	(4)	973,350
A. J. Klotsche		5,400								14.1575			10/24/2010
		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
		30,000								33.8900			8/1/2015
		25,000								37.8300			11/30/2015
		25,000								38.1900			11/30/2016
		16,667			8,333	(2)				38.3100			12/4/2017
		8,334			16,666	(3)				20.9500			12/4/2018
					52,500	(5)				29.7800			8/3/2019
					35,000	(6)				28.7300			9/25/2019
																	35,000	(4)	973,350
P.C. Sephton		14,000								17.3250			11/20/2013
		30,000								22.6325			8/2/2014
		30,000								28.8425			11/18/2014
		30,000								33.8900			8/1/2015
		25,000								37.8300			11/30/2015
		25,000								38.1900			11/30/2016
		16,667			8,333	(2)				38.3100			12/4/2017
		8,334			16,666	(3)				20.9500			12/4/2018
					52,500	(5)				29.7800			8/3/2019
					35,000	(6)				28.7300			9/25/2019
																	35,000	(4)	973,350
M.O. Williamson		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
		30,000								33.8900			8/1/2015
		25,000								37.8300			11/30/2015
		25,000								38.1900			11/30/2016
		16,667			8,333	(2)				38.3100			12/4/2017
		8,334			16,666	(3)				20.9500			12/4/2018
					52,500	(5)				29.7800			8/3/2019
					35,000	(6)				28.7300			9/25/2019
																	35,000	(4)	973,350

\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 \n \n \n\n\n


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

(2)		All vest on December 4, 2010.

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

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

(5)		Two-thirds of the shares vest in equal annual installments over a three-year period, with the\nvesting date being the date the Audit Committee accepts the results of the fiscal year audit\nconfirming the achievement of annual EPS growth levels. The remaining one-third of the shares vest\nat plan year three depending upon the Corporation’s EPS growth for fiscal 2012 over fiscal 2008 in\ncomparison with other corporations in the S&P 600 Index.

(6)		One-third of the options vest on September 25, 2010, one-third of the options vest on September\n25, 2011 and one-third of the options vest on September 25, 2012.

\n\n

74\n

\n\n

Option Exercises for Fiscal 2010\n

\n\n\n

The following table summarizes option exercises completed during fiscal 2010 to the named\nexecutive officers.\n


	Option Awards
	Number of Shares
	Acquired on		Value Realized
Name	Exercise (#)		on Exercise ($)
F.M. Jaehnert	None		None
T.J. Felmer	None		None
A.J. Klotsche	None		None
P.C. Sephton	None		None
M.O. Williamson		8,000		111,031

\n\n

Non-Qualified Deferred Compensation for Fiscal 2010\n

\n\n\n

The following table summarizes the activity within the Executive Deferred Compensation Plan\nand the Brady Restoration Plan during fiscal 2010 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		140,892		42,323		(1,289	)		—	3,212,332
T.J. Felmer		29,823		7,647		47,847			—	802,899
A.J. Klotsche		3,709		4,617		5,382			—	340,475
P.C. Sephton		—		—		—			—	—
M.O. Williamson		4,173		8,345		9,551			—	597,692

\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

75\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

•

The amounts shown in the tables assume that each named executive officer terminated\nemployment on July 31, 2010. Accordingly, the tables reflect amounts earned as of July 31,\n2010, and include estimates of amounts that would be paid to the named executive officer\nupon the 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.

\n\n

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

•

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.

\n\n

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

•

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

\n\n\n

Frank M. Jaehnert\n

\n\n

The following table shows the amount payable assuming that the terms of the change of control\nagreement were triggered on July 31, 2010 and the named executive officer had to legally enforce\nthe terms of the agreement.\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Reimbursement ($)

Base Salary ($)(1)

Bonus ($) (2)

Gain $(3)

Gain $ (4)

($)

(5)

Total ($)

2,325,001

1,134,231

1,390,500

228,664

769,155

25,000

5,872,551

\n\n

\n\n\n\n \n \n \n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n\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, 2010.

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

(3)		Represents the closing market price of $27.81 on 50,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $27.81 and the exercise price\non 33,333 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\n

76\n

\n\n

Thomas J. Felmer\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Reimbursement ($)

Base Salary ($)(1)

Bonus ($) (2)

Gain $(3)

Gain $ (4)

($)

(5)

Total ($)

690,118

188,391

973,350

114,329

304,914

25,000

2,296,102

\n\n

\n\n\n\n\n\n \n \n \n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n\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, 2010.

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

(3)		Represents the closing market price of $27.81 on 35,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $27.81 and the exercise price\non 16,666 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

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Reimbursement ($)

Base Salary ($) (1)

Bonus ($) (2)

Gain $ (3)

Gain $ (4)

($)

(5)

Total ($)

600,300

121,550

973,350

114,329

319,469

25,000

2,153,998

\n\n

\n\n\n\n\n\n \n \n \n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n\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, 2010.

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

(3)		Represents the closing market price of $27.81 on 35,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $27.81 and the exercise price\non 16,666 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

77\n

\n\n\n

Peter C. Sephton\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Reimbursement ($)

Base Salary ($)(1)

Bonus ($) (2)

Gain $(3)

Gain $ (4)

($)

(5)

Total ($)

677,904

392,859

973,350

114,329

317,382

25,000

2,500,824

\n\n

\n\n\n\n\n\n \n \n \n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n\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, 2010. As Mr. Sephton works and\nlives in the United Kingdom, his base salary is paid to him in British Pounds. The amount\nshown in U.S. dollars was converted from British Pounds at the July 2010 month-end exchange\nrate: $1 = £0.6358.

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

(3)		Represents the closing market price of $27.81 on 35,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $27.81 and the exercise price\non 16,666 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

Matthew O. Williamson\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Reimbursement ($)

Base Salary ($) (1)

Bonus ($) (2)

Gain $ (3)

Gain $ (4)

($)

(5)

Total ($)

693,384

278,899

973,350

114,329

333,123

25,000

2,418,085

\n\n

\n\n\n\n\n\n \n \n \n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n\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, 2010.

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

(3)		Represents the closing market price of $27.81 on 35,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $27.81 and the exercise price\non 16,666 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

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, 2010.\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, 2010		Gain $ (1)		July 31, 2010		Gain $ (2)
F.M. Jaehnert		50,000		1,390,500			33,333	228,664
T.J. Felmer		35,000		973,350			16,666	114,329
A.J. Klotsche		35,000		973,350			16,666	114,329
P.C. Sephton		35,000		973,350			16,666	114,329
M.O. Williamson		35,000		973,350			16,666	114,329

\n\n

\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 $27.81 on unvested shares that would vest due to the\nchange in control.

(2)		Represents the difference between the closing market price of $27.81 and the exercise price\non unvested stock options in-the-money that would vest due to death or disability.

\n\n

78\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. On September 10, 2009, the Corporation’s Board of Directors\nauthorized an increase in compensation paid to its non-management Directors. Pursuant to the Board\naction, the annual cash retainer paid to non-management Directors was increased from $35,000 to\n$45,000 effective at the annual Board of Directors meeting held on November 19, 2009 and the annual\ngrant of stock options was increased from 6,000 shares to 8,400 shares effective with the annual\ngrant on September 25, 2009. The remaining components of director compensation remained unchanged\nand include $6,000 for each committee chair ($10,000 for the Audit Committee Chair) and $1,500 plus\nexpenses for each meeting of the Board or any committee thereof, which they attend and are a member\nor $1,000 for single issue telephonic committee meetings of the Board. Directors also receive\n$1,000 for each meeting they attend of any committee for which they are not a member and $500 for\neach telephonic committee meeting they attend of any committee for which they are not a member. In\nfiscal 2010, the Board of Directors also initiated a policy pursuant to which non-management\nDirectors are eligible to receive compensation of up to $1,000 per day for special assignments\nrequired by management or the Board of Directors, so long as the compensation does not impair\nindependence.\n

\n\n

On November 19, 2009, the Board of Directors of the Corporation, upon the recommendation of\nits Corporate Governance Committee, created the position of Lead Independent Director. The current\nchair of the Corporate Governance Committee, Mr. Conrad Goodkind, is serving as the Lead\nIndependent Director, which position will be paid an annual retainer of $10,000.\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 Nonqualified Stock Option Plan for Non-employee\nDirectors (the “2010 Directors Plan”). Under the terms of the 2010 Directors Plan, pursuant to\nwhich 200,000 shares of the Company’s Class A Common Stock have been authorized for issuance, each\nnon-employee Director is granted an option to purchase 10,000 shares of the Company’s common stock\ntwo weeks after first becoming a director and 8,400 shares of the Company’s common stock on an\nannual basis thereafter. The grant price is the fair market value of the stock on the grant date\nand is calculated by taking the average of the high and low stock price on that date. The options\nvest one-third each year for the first three years and have a ten year life. The 2010 Directors\nPlan became effective upon shareholder approval.\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. Distributions of the Company Class A Nonvoting\nCommon Stock are made in-kind; distributions of other assets are in cash.\n

\n\n

Effective January 1, 2008, the Director Deferred Compensation Plan was amended and restated to\ncomply with the provisions of Section 409A of the Internal Revenue Code.\n

\n\n

79\n

\n\n

\n\n\n

Director Compensation Table — Fiscal 2010\n


	Fees Earned
	or Paid in		Option
Name	Cash ($)		Awards ($) (1)		Total ($)
Elizabeth Pungello		73,000		75,415		148,415
Robert C. Buchanan		91,000		75,415		166,415
Frank W. Harris (2)		79,000		75,415		154,415
Chan W. Galbato		77,500		75,415		152,915
Patrick W. Allender		88,500		75,415		163,915
Conrad G. Goodkind		99,000		75,415		174,415
Bradley C. Richardson		85,000		75,415		160,415
Gary S. Balkema (5)		13,750		N/A		13,750
Frank R. Jarc (3)		28,750		N/A		28,750
Gary E. Nei (3)		14,250		N/A		14,250
Richard A. Bemis (4)		17,250		N/A		17,250

\n\n\n\n\n\n\n \n \n \n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n\n\n\n \n \n \n\n\n\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 grant date fair value computed in accordance with accounting guidance for\nequity grants made in the applicable year for time-based stock options. The assumptions used\nto determine the value of the awards, including the use of the Black-Scholes method of\nvaluation by the Company, are discussed in Note 1 of the Notes to Consolidated Financial\nStatements of the Company contained in Item 8 of this Form 10-K for the fiscal year ended July\n31, 2010. The grant date fair value of options granted in fiscal 2010 was $75,415 for Ms.\nPungello, Mr. Buchanan, Mr. Harris, Mr. Galbato, Mr. Allender, Mr. Goodkind, and for Mr.\nRichardson. The actual value, if any, which an option holder will realize upon the exercise\nof an option will depend on the excess of the market value of the Company’s common stock over\nthe exercise price on the date the option is exercised, which cannot be forecasted with any\naccuracy.

		Outstanding option awards at July 31, 2010 for each individual serving as a director on that date\ninclude the following: Ms. Pungello, 44,400 shares; Mr. Buchanan, 32,400 shares; Mr. Harris,\n50,400 shares; Mr. Galbato, 30,400 shares; Mr. Allender, 30,400 shares; Mr. Richardson, 24,400\nshares; Mr. Goodkind, 30,400 shares.

(2)		Includes $10,000 paid for special assignments.

(3)		Mr. Jarc’s and Mr. Nei’s Board services ended on November 19, 2009.

(4)		Mr. Bemis’s Board services ended on December 18, 2009.

(5)		Mr. Balkema joined the Board on July 19, 2010.

\n\n

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder\nMatters\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, 2010. 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


(1)		The trustee is Elizabeth P. Pungello, who has sole voting and dispositive power and who is\nthe remainder beneficiary. Elizabeth Pungello is the great-granddaughter of William H. Brady\nand currently serves on the Company’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 and dispositive\npowers with respect to these shares. William H. Brady III is the grandson of William H. Brady.

\n\n

80\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, 2010. 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(5)		Ownership
Class A Common Stock	Elizabeth P. Pungello(1)		1,342,436		2.6	%
	Frank M. Jaehnert(2)		851,425		1.6
	Allan J. Klotsche		229,198		0.4
	Thomas J. Felmer		238,275		0.5
	Matthew O. Williamson		223,909		0.4
	Peter C. Sephton		243,735		0.5
	Robert C. Buchanan(3)		95,177		0.2
	Frank W. Harris		75,145		0.1
	Conrad G. Goodkind		77,300		0.1
	Patrick W. Allender		26,931		0.1
	Chan W. Galbato		20,064		*
	Bradley C. Richardson		13,392		*
	Gary S. Balkema		—		*
	All Officers and Directors as a Group (17 persons)(4)		3,670,476		7.0
Class B Common Stock	Elizabeth P. Pungello(1)		1,769,304		50.0	%

\n\n

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


*		Indicates less than one-tenth of one percent.

(1)		Ms. Pungello’s holdings of Class A Common Stock include 430,706 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\ninclude 1,769,304 shares owned by a trust over which she has sole dispositive and voting\nauthority.

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

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

(4)		The amount shown for all officers and directors individually and as a group (17 persons)\nincludes options to acquire a total of 1,950,414 shares of Class A Common Stock, which are\ncurrently exercisable or will be exercisable within 60 days of July 31, 2010, including the\nfollowing: Ms. Pungello, 32,800 shares; Mr. Jaehnert, 734,669 shares; Mr. Klotsche, 219,135\nshares; Mr. Felmer, 214,335 shares; Mr. Williamson, 209,835 shares; Mr. Sephton, 202,335\nshares; Mr. Buchanan, 20,800 shares; Mr. Harris, 38,800 shares; Mr. Tatterson, 60,001 shares;\nMs. Johnson, 57,834 shares; Mr. Curran, 71,668; Mr. Goodkind, 18,800 shares: Mr. Galbato,\n18,800 shares; Mr. Allender, 18,800 shares; Mr. Richardson, 11,467 shares. It does not include\nother options for Class A Common Stock which have been granted at later dates and are not\nexercisable within 60 days of July 31, 2010.

(5)		The amount shown for all officers and directors individually and as a group (17 persons)\nincludes Class A Common Stock owned in deferred compensation plans totaling 207,675 shares of\nClass A Common Stock, including the following: Ms. Pungello, 2,103 shares; Mr. Jaehnert,\n85,916 shares; Mr. Klotsche, 7,531 shares; Mr. Felmer, 10,326 shares; Mr. Williamson, 14,074\nshares; Mr. Sephton, 0 shares; Mr. Buchanan, 58,143 shares; Mr. Goodkind, 9,538 shares; Mr.\nAllender, 8,131, Ms. Johnson, 5,672; Mr. Pearce, 2,950; Mr. Richardson, 1,925; Mr. Galbato,\n1,264; Mr. Curran, 102.

\n\n

81\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

5,108,736

28.69

2,210,000

Equity compensation plans not approved by security holders

None

Total

5,108,736

28.69

2,210,000

\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 3,000,000 and 200,000 shares of Class A Nonvoting Common\nStock for issuance under the Brady Corporation 2010 Omnibus Incentive Stock Plan and the Brady Corporation\n2010 Nonqualified Stock Option Plan for Non-employee Directors, respectively. Generally, options\nwill not be exercisable until one year after the date of grant, and will be exercisable thereafter,\nto the extent of one-third per year and have a maximum term of ten years. In August 2004, 2005,\n2006, 2007, and 2009 certain executives and key management employees were issued stock options that\nvest upon meeting certain financial performance conditions in addition to the vesting schedule\ndescribed above. Performance-based options expire 10 years from the date of grant. All grants under\nthe Option Plans are at market price on the date of the grant. The Company granted 210,000\nperformance-based restricted shares during fiscal 2008, with a grant price and fair value of\n$32.83. The Company did not grant any performance-based restricted shares during fiscal 2010 or\n2009. As of July 31, 2010, all of the performance-based restricted shares granted in fiscal 2008\nremain outstanding.\n

\n\n

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

\n\n\n

The Company annually solicits information from its Directors in order to ensure there are no\nconflicts of interest. The information gathered annually is reviewed by the Company and if any\ntransactions are not in accordance with the rules of the New York Stock Exchange or are potentially\nin violation of the Company’s Corporate Governance Principles, the transactions are referred to the\nCorporate Governance Committee for approval, ratification, or other action. Further, potential\naffiliated party transactions are discussed at the Company’s quarterly disclosure committee\nmeetings. In addition pursuant to its charter, the Company’s Audit Committee periodically reviews\nreports and disclosures of insider and affiliated party transactions with the Company, if any.\nFurthermore, the Company’s directors are expected to be mindful of their fiduciary obligations to\nthe Company and to report any potential conflicts to the Corporate Governance Committee for review.\nBased on the Company’s consideration of all relevant facts and circumstances, the Corporate\nGovernance Committee will decide whether or not to approve such transactions and will approve only\nthose transactions that are in the best interest of the Company. Additionally, the Company has\nprocesses in place to educate executives and employees about affiliated transactions. The Company\nmaintains an anonymous hotline by which employees may report potential conflicts of interest such\nas affiliated party transactions. Based on these evaluations the Company has determined that it\ndoes not have material related party transactions that affect the results of operations, cash flow\nor financial condition. The Company has also determined that no transactions occurred in fiscal\n2010, or are currently proposed, that would require disclosure under Item 404 (a) of Regulation\nS-K.\n

\n\n

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

\n\n

82\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, 2010 and 2009. 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, 2010 and 2009.\n


	2010		2009
	(Dollars in thousands)
Audit, audit-related and tax compliance
Audit fees(1)	$	1,425		$	1,379
Tax fees — compliance		549			842

Subtotal audit, audit-related and tax compliance fees		1,974			2,221
Non-audit related
Tax fees — planning and advice		723			892
Other fees (2)		281			340

Subtotal non-audit related fees		1,004			1,232

Total fees	$	2,978		$	3,453

\n\n

\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 annual\nfinancial statements, attestation of management’s assessment of internal control, reviews of\nthe quarterly financial statements and statutory reporting compliance.

(2)		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


	2010		2009
Ratio of Tax Planning and Advice Fees and All Other\nFees to Audit Fees, Audit-Related Fees and Tax\nCompliance Fees		.5 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 2009 and 2010 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

83\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 Thomas J. Felmer,\nAllan J. Klotsche, Peter C. Sephton, Robert L. Tatterson, and Matthew O. Williamson (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, and Employee\nPerformance Stock Option Agreement under 2006 Omnibus Incentive Stock Plan (10)

	*10.7		Brady Corporation 2004 Omnibus Incentive Stock Plan, as amended (10)

	*10.8		Form of Brady Corporation 2004 Nonqualified Stock Option Agreement under the 2004 Omnibus Incentive Stock\nPlan, 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 Non-employee Directors, as\namended (8)

	*10.12		Brady Corporation 1997 Omnibus Incentive Stock Plan, as amended (10)

	*10.13		Brady Corporation 1997 Nonqualified Stock Option Plan for Non-Employee Directors, as amended (10)

	10.14		Revolving Credit Facility Credit Agreement (14)

	*10.15		Brady Corporation 2006 Omnibus Incentive Stock Plan, as amended (10)

	*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 options issued on\nAugust 2, 2004 to Frank M. Jaehnert, Thomas J. Felmer, Peter C. Sephton, Matthew O. Williamson, and Allan J.\nKlotsche (12)

	*10.19		Form of Performance-based Restricted Stock Agreement under Brady Corporation 2006 Omnibus Incentive Stock\nPlan (7)

	*10.20		Change of Control Agreement, amended as of December 23, 2008, entered into with Frank M. Jaehnert (12)

	*10.21		Restated Brady Corporation Restoration Plan (5)

	*10.22		Brady Corporation 2001 Omnibus Incentive Stock Plan, as amended (10)

	*10.23		Brady Corporation 2003 Omnibus Incentive Stock Plan, as amended (10)

	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 Kathleen Johnson (12)

\n\n

85\n


Exhibit
Number		Description
	*10.28		Brady Corporation 2010 Omnibus Incentive Stock Plan (17)

	*10.29		Brady Corporation 2010 Nonqualified Stock Option Plan for Non-employee Directors (17)

	*10.30		Form of Non-Qualified Employee Stock Option Agreement and Employee Performance Stock Option Agreement under\n2010 Omnibus Incentive Stock Plan (17)

	*10.31		Form of Director Stock Option Agreement under 2010 Nonqualified Stock Option Plan for Non-employee Directors\n(17)

	*10.32		Form of Amendment, dated February 17, 2010, to granting agreement for performance-based stock options issued\non August 1, 2005 to Frank M. Jaehnert, Thomas J. Felmer, Peter C. Sephton, Matthew O. Williamson and Allan\nJ. Klotche (18)

	10.33		Brady Note Purchase Agreement dated May 13, 2010 (19)

	*10.34		Performance-based Restricted Stock Agreement with Frank M. Jaehnert, dated August 2, 2010 (20)

	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

\n\n


*		Management contract or compensatory plan or arrangement

(1)		Incorporated by reference to Registrant’s Registration Statement No. 333-04155 on Form S-3

(2)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 15, 2006

(3)		Incorporated by reference to Registrant’s 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\nended July 31, 1992

(5)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal\nquarter ended January 31, 2008

(6)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed March 19, 2008

(7)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed January 9, 2008

(8)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed December 4, 2006

(9)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 17, 2006

(10)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 2008

(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\nquarter ended January 31, 2009

(13)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 2005

(14)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 2006

(15)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 20, 2006

(16)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 17, 2007

(17)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 2009

(18)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 23, 2010

(19)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed May 14, 2010

(20)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed August 4, 2010

\n\n

86\n

\n\n

Exhibit 21\n

\n\n\n

SCHEDULE OF SUBSIDIARIES OF BRADY CORPORATION
\nJULY 31, 2010\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	%
AIO Acquisition Inc.	Delaware		100	%
Doing Business As:
All-In-One Products
Personnel Concepts
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
Stopware
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
Electromark
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	%
Visisign Pty. Ltd.	Australia		100	%
Transposafe Systems Belgium NV/SA	Belgium		100	%
W.H. Brady, N.V.	Belgium		100	%
Stickolor Industria e Comércio de Auto Adesivos Ltda.	Brazil		100	%

\n\n


		Percentage
		of Voting
	State (Country)	Securities
Name of Company	Of Incorporation	Owned

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
Identicam Systems
Seton
Teklynx International
Varitronics Canada
Brady Cayman Finance Company	Cayman Islands		100	%
Brady Investment Management (Shanghai) Co., Ltd.	China		100	%
Brady Technology (Wuxi) Co. Ltd.	China		100	%
Brady (Beijing) Co. Ltd.	China		100	%
Brady (Shenzhen) Co., Ltd.	China		100	%
Brady (Dongguan) Co., Ltd.	China		100	%
Suzhou Dicel EMC Co., Ltd.	China		100	%
Brady Technology (Langfang) Co., Ltd.	China		100	%
Tradex Converting (Suzhou) Co., Ltd.	China		100	%
CIPI Xiamen, Ltd.	China		100	%
PanYu Meixin Metal Company Ltd.	China		100	%
Brady A/S	Denmark		100	%
Braton Europe S.A.R.L	France		100	%
Braton Groupe S.A.R.L	France		100	%
Doing Business As:
Brady
Teklynx
Brady Groupe S.A.S	France		100	%
Doing Business As:
Seton
Signals
BIG
Securimed S.A.S.	France		100	%
Brady GmbH	Germany		100	%
Doing Business As:
Seton
Balkhausen
Etimark
Teklynx
Transposafe Systems Deutschland GmbH	Germany		100	%
Quo-Luck Company Limited	Hong Kong		100	%
Bakee Metal Manufactory Company Limited	Hong Kong		100	%
Brady Corporation Hong Kong Limited	Hong Kong		100	%
Brady Company India Private Limited	India		100	%
Brady Italia, S.r.l.	Italy		100	%
Nippon Brady K.K.	Japan		100	%
Brady Luxembourg S.à r.l.	Luxembourg		100	%
Brady Finance Luxembourg S.à r.l.	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 Systems B.V.	Netherlands		100	%
Transposafe Systems Holland B.V.	Netherlands		100	%
Brady AS	Norway		100	%
Brady Philippines Direct Marketing Inc.	Philippines		100	%
Transposafe Systems Polska Sp. Z.o.o.	Poland		100	%

\n\n

EXHIBIT 31.1\n

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n

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

\n\n\n

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

\n\n\n

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

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


	/s/ FRANK M. JAEHNERT\n
	(Frank M. Jaehnert)
	President and Chief Executive Officer

\n\n\n

Date: September 21, 2010\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

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

\n\n

\n\n\n

\n\n

\n\n\n

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

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


	/s/ THOMAS J. FELMER\n
	(Thomas J. Felmer)
	Senior Vice President and Chief Financial Officer

\n\n\n

Date: September 21, 2010\n

\n\n


	Page
Report of Independent Registered Public Accounting Firm		30

Financial Statements:

Consolidated Balance Sheets — July 31, 2010 and 2009		31

Consolidated Statements of Income — Years Ended July 31, 2010, 2009, and 2008		32

Consolidated Statements of Stockholders’ Investment — Years Ended July 31, 2010, 2009, and 2008		33

Consolidated Statements of Cash Flows — Years Ended July 31, 2010, 2009, and 2008		34

Notes to Consolidated Financial Statements — Years Ended July 31, 2010, 2009, and 2008		35


	Year ended July 31,
Description	2010			2009			2008
	(Dollars in thousands)
Valuation accounts deducted in balance sheet from assets to which they apply — \nAccounts receivable — allowance for doubtful accounts:
Balances at beginning of period	$	7,931			$	10,059		$	9,109
Additions — Charged to expense		2,005				1,278			2,480
Due to acquired businesses		80				—			34
Deductions — Bad debts written off, net of recoveries		(2,879	)			(3,406	)		(1,564	)

Balances at end of period	$	7,137			$	7,931		$	10,059

Inventory — reserve for slow-moving inventory:
Balances at beginning of period	$	22,288			$	22,148		$	18,073
Additions — Charged to expense		1,646				5,138			5,415
Due to acquired businesses		129				—			253
Deductions — Inventory write-offs		(8,119	)			(4,998	)		(1,593	)

Balances at end of period	$	15,944			$	22,288		$	22,148


	Brady Corporation \n
	By:	/s/ Thomas j. felmer\n
		Thomas J. Felmer
		Senior Vice President & Chief Financial Officer \n(Principal Financial Officer)


Signature		Title

/s/ FRANK M. JAEHNERT\n		President and Chief Executive Officer; Director
\nFrank M. Jaehnert\n		(Principal Executive Officer)

/s/ KATHLEEN M. JOHNSON\n		Vice President and Chief Accounting Officer
\nKathleen M. Johnson\n		(Principal Accounting Officer)

/s/ BRADLEY C. RICHARDSON\n \n		Director
Bradley C. Richardson

/s/ PATRICK W. ALLENDER\n \n		Director
Patrick W. Allender

/s/ ROBERT C. BUCHANAN\n \n		Director
Robert C. Buchanan

/s/ CHAN W. GALBATO\n \n		Director
Chan W. Galbato

/s/ FRANK W. HARRIS\n \n		Director
Frank W. Harris

/s/ CONRAD G. GOODKIND\n \n		Director
Conrad G. Goodkind

/s/ ELIZABETH P. PUNGELLO\n \n		Director
Elizabeth P. Pungello

/s/ GARY S. BALKEMA\n \n		Director
Gary S. Balkema


*		Each of the above signatures is affixed as of September 21, 2010.