e10vq

\n\n\n

\n\n\n\n\n

UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n

\n\n

Washington, DC 20549\n

\n\n

FORM 10-Q\n

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


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

\n\n\n\n

For the Quarterly Period Ended April 30, 2011

\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\n

For the Transition Period from to

\n\n

\nCommission File Number 1-14959\n

\n\n

BRADY CORPORATION\n

\n\n

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

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


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

\n\n

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

\n\n

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

\n\n\n

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by\nSection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for\nsuch shorter period that the registrant was required to file such reports), and (2) has been\nsubject to such filing requirements for the past 90 days. Yes þ\nNo o\n

\n\n\n

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

\n\n\n

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,\na non-accelerated filer or a smaller reporting company. See definition of “large accelerated\nfiler”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange 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


Large accelerated filer þ\n		Accelerated filer o\n		Non-accelerated filer o\n		Smaller reporting company o

\n\n\n

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

\n\n\n

APPLICABLE ONLY TO CORPORATE ISSUERS\n

\n\n\n

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

\n\n\n

As of\nMay 31, 2011, there were outstanding 49,278,752 shares of Class A Nonvoting Common Stock and\n3,538,628 shares of Class B Voting Common Stock. The Class B Common Stock, all of which is held by\naffiliates of the Registrant, is the only voting stock.\n

\n\n\n

\n\n\n\n\n

\n\n

\n\n\n\n

\n\n

PART I. FINANCIAL INFORMATION\n

\n\n

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


ITEM 1.		FINANCIAL STATEMENTS

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONDENSED CONSOLIDATED BALANCE SHEETS\n

\n\n\n

(DOLLARS IN THOUSANDS)\n\n

\n\n


	April 30, 2011			July 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	373,978			$	314,840
Accounts receivable — net		235,634				221,621
Inventories:
Finished products		59,727				52,906
Work-in-process		14,741				13,146
Raw materials and supplies		28,034				28,620

Total inventories		102,502				94,672
Prepaid expenses and other current assets		39,614				37,839

Total current assets		751,728				668,972
Other assets:
Goodwill		799,395				768,600
Other intangible assets		96,386				103,546
Deferred income taxes		52,744				39,103
Other		19,633				20,808
Property, plant and equipment:
Cost:
Land		6,416				6,265
Buildings and improvements		103,060				101,138
Machinery and equipment		302,017				289,727
Construction in progress		13,601				9,873

		425,094				407,003
Less accumulated depreciation		284,334				261,501

Property, plant and equipment — net		140,760				145,502

Total	$	1,860,646			$	1,746,531

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	90,621			$	96,702
Wages and amounts withheld from employees		67,316				67,285
Taxes, other than income taxes		9,061				7,537
Accrued income taxes		17,399				10,138
Other current liabilities		65,300				50,862
Current maturities on long-term obligations		61,264				61,264

Total current liabilities		310,961				293,788
Long-term obligations, less current maturities		351,789				382,940
Other liabilities		65,741				64,776

Total liabilities		728,491				741,504
Stockholders’ investment:
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487\nshares, respectively and outstanding 49,226,952 and 48,875,716\nshares, respectively		513				513
Class B voting common stock — Issued and outstanding 3,538,628 shares		35				35
Additional paid-in capital		308,908				304,205
Earnings retained in the business		769,081				718,512
Treasury stock — 1,724,535 and 2,175,771 shares, respectively, of\nClass A nonvoting common stock, at cost		(51,959	)			(66,314	)
Accumulated other comprehensive income		109,840				50,905
Other		(4,263	)			(2,829	)

Total stockholders’ investment		1,132,155				1,005,027

Total	$	1,860,646			$	1,746,531

\n\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

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3\n

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BRADY CORPORATION AND SUBSIDIARIES\n\n

\n\n

CONDENSED CONSOLIDATED STATEMENTS OF INCOME\n\n

\n\n

(Dollars in Thousands, Except Per Share Amounts)\n\n

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


	Three Months Ended April 30,							Nine Months Ended April 30,
	(Unaudited)							(Unaudited)
									Percentage										Percentage
	2011			2010			Change			2011		2010			Change
Net sales	$	337,896			$	321,887				4.9	%	$	996,493			$	936,202			6.4	%
Cost of products sold		170,258				161,690				5.3	%		505,333				471,644			7.1	%


Gross margin		167,638				160,197				4.6	%		491,160				464,558			5.7	%

Operating expenses:
Research and development		10,550				10,709				(1.5	%)		32,226				30,950			4.1	%
Selling, general and administrative		115,006				111,227				3.4	%		332,394				328,638			1.1	%
Restructuring charge — (See Note J)		1,211				2,347				(48.4	%)		6,986				9,597			(27.2	%)

Total operating expenses		126,767				124,283				2.0	%		371,606				369,185			0.7	%

Operating income		40,871				35,914				13.8	%		119,554				95,373			25.4	%

Other income (expense):
Investment and other income — net		1,428				121				1080.2	%		2,892				1,273			127.2	%
Interest expense		(5,103	)			(5,147	)			(0.9	%)		(16,640	)			(15,472	)		7.5	%


Income before income taxes		37,196				30,888				20.4	%		105,806				81,174			30.3	%

Income taxes		8,607				7,193				19.7	%		26,737				20,810			28.5	%


Net income	$	28,589			$	23,695				20.7	%	$	79,069			$	60,364			31.0	%


Per Class A Nonvoting Common Share:
Basic net income	$	0.54			$	0.45				20.0	%	$	1.50			$	1.15			30.4	%
Diluted net income	$	0.54			$	0.45				20.0	%	$	1.49			$	1.14			30.7	%
Dividends	$	0.18			$	0.175				2.9	%	$	0.54			$	0.525			2.9	%

Per Class B Voting Common Share:
Basic net income	$	0.54			$	0.45				20.0	%	$	1.48			$	1.13			31.0	%
Diluted net income	$	0.54			$	0.45				20.0	%	$	1.47			$	1.12			31.3	%
Dividends	$	0.18			$	0.175				2.9	%	$	0.523			$	0.508			3.0	%

Weighted average common shares\noutstanding (in thousands):
Basic		52,701				52,427							52,581				52,378
Diluted		53,337				52,873							53,067				52,971

\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

\n\n

4\n

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BRADY CORPORATION AND SUBSIDIARIES\n\n

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS\n\n

\n\n

(Dollars in Thousands)\n

\n\n


	Nine Months Ended
	April 30,
	(Unaudited)
	2011			2010
Operating activities:
Net income	$	79,069			$	60,364
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		37,522				40,276
Non-cash portion of restructuring charges		2,155				1,455
Non-cash portion of stock-based compensation expense		9,396				7,574
Gain on the divestiture of business		(4,394	)			—
Deferred income taxes		(9,018	)			(4,582	)
Changes in operating assets and liabilities (net of effects of business\nacquisitions/divestitures):
Accounts receivable		211				(17,192	)
Inventories		(1,491	)			3,887
Prepaid expenses and other assets		772				(5,273	)
Accounts payable and accrued liabilities		(8,355	)			31,493
Income taxes		4,579				152

Net cash provided by operating activities		110,446				118,154

Investing activities:
Acquisition of businesses, net of cash acquired		(7,970	)			(30,431	)
Divestiture of business, net of cash retained in business		12,979				—
Payments of contingent consideration		(979	)			—
Purchases of property, plant and equipment		(13,671	)			(20,927	)
Other		(379	)			1,197

Net cash used in investing activities		(10,020	)			(50,161	)

Financing activities:
Payment of dividends		(28,500	)			(27,560	)
Proceeds from issuance of common stock		7,154				3,494
Principal payments on debt		(42,514	)			(26,143	)
Income tax benefit from the exercise of stock options and deferred compensation\ndistribution		1,075				182

Net cash used in financing activities		(62,785	)			(50,027	)

Effect of exchange rate changes on cash		21,497				984

Net increase in cash and cash equivalents		59,138				18,950
Cash and cash equivalents, beginning of period		314,840				188,156

Cash and cash equivalents, end of period	$	373,978			$	207,106


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest	$	16,379			$	18,217
Income taxes, net of refunds		26,695				18,296
Acquisitions:
Fair value of assets acquired, net of cash and goodwill	$	4,624			$	15,366
Liabilities assumed		(1,446	)			(5,201	)
Goodwill		4,792				20,266

Net cash paid for acquisitions	$	7,970			$	30,431

\n\n\n\n

See Notes to Condensed Consolidated Financial Statements.\n

\n\n\n

\n\n\n\n

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5\n

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

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

\n\n

Nine Months Ended April 30, 2011

\n\n

(Unaudited)

\n\n

(In thousands, except share and per share amounts)

\n\n\n\n

NOTE A — Basis of Presentation\n

\n\n\n

The condensed consolidated financial statements included herein have been prepared by Brady\nCorporation and subsidiaries (the “Company” or “Brady”) without audit, pursuant to the rules and\nregulations of the Securities and Exchange Commission. In the opinion of the Company, the foregoing\nstatements contain all adjustments, consisting only of normal recurring adjustments necessary to\npresent fairly the financial position of the Company as of April 30, 2011 and July 3l, 2010, its\nresults of operations for the three and nine months ended April 30, 2011 and 2010, and its cash\nflows for the nine months ended April 30, 2011 and 2010. The condensed consolidated balance sheet\nas of July 31, 2010 has been derived from the audited consolidated financial statements of that\ndate. The preparation of financial statements in conformity with accounting principles generally\naccepted in the United States of America (“GAAP”) requires management to make estimates and\nassumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in\nmaking estimates, actual results in future periods may differ from the estimates.\n

\n\n

Certain information and footnote disclosures normally included in financial statements\nprepared in accordance with GAAP have been omitted pursuant to rules and regulations of the\nSecurities and Exchange Commission. Accordingly, the condensed consolidated financial statements do\nnot include all of the information and footnotes required by GAAP for complete financial statement\npresentation. It is suggested that these condensed consolidated financial statements be read in\nconjunction with the consolidated financial statements and the notes thereto included in the\nCompany’s latest annual report on Form 10-K for the year ended July 31, 2010.\n

\n\n

The Company has reclassified certain prior year financial statement amounts to conform to\ntheir current year presentation. The operating activities including “Other,” “Other liabilities,”\nand “Accounts payable and accrued liabilities”, which were previously disclosed as single line\nitems, have been combined and reported as “Accounts payable and accrued liabilities” on the\nCondensed Consolidated Statement of Cash Flows for the nine months ended April 30, 2011 and 2010.\nThese reclassifications had no effect on total assets, net income, or earnings per share.\n

\n\n\n

NOTE B — Goodwill and Intangible Assets\n

\n\n\n

Changes in the carrying amount of goodwill for the nine months ended April 30, 2011, are as\nfollows:\n


	Americas			Europe			Asia-Pacific		Total
Balance as of July 31, 2010	$	425,018			$	163,189		$	180,393	$	768,600
Current year acquisitions		—				—			4,792		4,792
Current year divestitures		(3,696	)			(8,380	)		—		(12,076	)
Translation adjustments		4,203				18,847			15,029		38,079

Balance as of April 30, 2011	$	425,525			$	173,656		$	200,214	$	799,395

\n\n\n

Goodwill increased $30,795 during the nine months ended April 30, 2011. Of the $30,795\nincrease, $38,079 was due to the positive effects of foreign currency translation and $4,792\nresulted from the acquisition of ID Warehouse during the second quarter of fiscal 2011. The\nincrease was offset by a $12,076 decrease in goodwill as a result of the divestiture of the\nCompany’s Teklynx business during the second quarter of fiscal 2011. See Note L, “Acquisitions and\nDivestitures” for further discussion.\n

\n\n

6\n

\n\n\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


	April 30, 2011		July 31, 2010
	Weighted												Weighted
	Average												Average
	Amortization		Gross									Amortization		Gross
	Period		Carrying			Accumulated		Net Book		Period			Carrying		Accumulated		Net Book
	(Years)		Amount			Amortization		Value		(Years)			Amount		Amortization		Value
Amortized other\nintangible assets:
Patents		5		$	9,687		$	(8,452	)	$	1,235			5		$	9,314	$	(7,855	)	$	1,459
Trademarks and other		7			9,434			(6,505	)		2,929			7			8,823		(5,685	)		3,138
Customer relationships		7			164,840			(115,293	)		49,547			7			152,720		(95,996	)		56,724
Non-compete agreements		4			13,523			(12,709	)		814			4			11,930		(11,059	)		871
Other		4			2,731			(2,723	)		8			4			3,309		(3,297	)		12
Unamortized other\nintangible assets:
Trademarks		N/A			41,853			—			41,853			N/A			41,342		—			41,342

Total				$	242,068		$	(145,682	)	$	96,386					$	227,438	$	(123,892	)	$	103,546

\n\n\n

The value of goodwill and other intangible assets in the Condensed Consolidated Balance Sheet\nat April 30, 2011 differs from the value assigned to them in the allocation of purchase price due\nto the effect of fluctuations in the exchange rates used to translate financial statements into the\nUnited States Dollar between the date of acquisition and April 30, 2011. The acquisition completed\nduring the nine months ended April 30, 2011 increased the customer relationships by $1,846 and\nincreased the amortizable trademarks by $487. See Note L, “Acquisitions and Divestitures” for\nfurther discussion.\n

\n\n

Amortization expense on intangible assets was $5,117 and $5,160 for the three-month periods\nended April 30, 2011 and 2010, respectively and $15,387 and $16,395 for the nine-month periods\nended April 30, 2011 and 2010, respectively. Annual amortization is projected to be $20,740,\n$16,794, $10,959, $5,941 and $5,531 for the years ending July 31, 2011, 2012, 2013, 2014 and 2015,\nrespectively.\n

\n\n\n

NOTE C — Comprehensive Income\n

\n\n\n

Total comprehensive income for the periods presented was a follows:\n


	Three Months Ended April 30,			Nine Months Ended April 30,
	2011			2010			2011		2010

Net Income	$	28,589			$	23,695		$	79,069		$	60,364
Unrealized (loss) gain on cash flow hedges		(315	)			110			(1,206	)		63
Amortization of gain on post-retirement medical, dental and vision plan		(31	)			(63	)		(126	)		(208	)
Foreign currency translation adjustments		30,512				(1,758	)		60,267			4,092

Total comprehensive income	$	58,755			$	21,984		$	138,004		$	64,311

\n\n\n

The increase in total comprehensive income for the quarter ended April 30, 2011 as\ncompared to April 30, 2010 was primarily due to the depreciation of the U.S. dollar against other\ncurrencies.\n

\n\n

7\n

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

NOTE D — Net Income Per Common Share\n

\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, the dividends on the Company’s\nperformance-based restricted shares are included in the basic and diluted earnings per share\ncalculations for the respective periods presented.\n

\n\n

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


	Three Months Ended April 30,			Nine Months Ended April 30,
	2011			2010			2011		2010
Numerator:
Net income (numerator for basic and diluted Class A\nnet income per share)	$	28,589			$	23,695		$	79,069		$	60,364
Less:
Restricted stock dividends		(56	)			(37	)		(168	)		(111	)

Numerator for basic and diluted Class A net income\nper share	$	28,533			$	23,658		$	78,901		$	60,253


Less:
Preferential dividends		—				—			(820	)		(816	)
Preferential dividends on dilutive stock options		—				—			(6	)		(11	)

Numerator for basic and diluted Class B net income\nper share	$	28,533			$	23,658		$	78,075		$	59,426


Denominator:
Denominator for basic net income per share for both\nClass A and Class B		52,701				52,427			52,581			52,378
Plus: Effect of dilutive stock options		636				446			486			593

Denominator for diluted net income per share for both\nClass A and Class B		53,337				52,873			53,067			52,971


Class A Nonvoting Common Stock net income per share:
Basic	$	0.54			$	0.45		$	1.50		$	1.15
Diluted	$	0.54			$	0.45		$	1.49		$	1.14

Class B Voting Common Stock net income per share:
Basic	$	0.54			$	0.45		$	1.48		$	1.13
Diluted	$	0.54			$	0.45		$	1.47		$	1.12

\n\n\n

Options to purchase approximately 2,500,000 and 3,100,000 shares of Class A Nonvoting Common\nStock for the three and nine months ended April 30, 2011, respectively, and 2,800,000 and\n2,700,000 shares of Class A Nonvoting Common Stock for the three and nine months ended April 30,\n2010, respectively, were not included in the computations of diluted net income per share because\nthe option exercise price was greater than the average market price of the common shares and,\ntherefore, the effect would be anti-dilutive.\n

\n\n\n

\n\n

8\n

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

NOTE E — Segment Information\n

\n\n\n

The Company evaluates short-term segment performance based on segment profit or loss and\ncustomer sales. Corporate long-term performance is evaluated based on shareholder value enhancement\n(“SVE”), which incorporates the cost of capital as a hurdle rate for capital expenditures, new\nproduct development, 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 performance.\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 by its own management team, maintains its own financial reports and is evaluated based\non regional segment profit. The Company has determined that these regions comprise its operating\nand reportable segments based on the information used by the Chief Executive Officer to allocate\nresources 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

\n\n

Following is a summary of segment information for the three and nine months ended April 30,\n2011 and 2010:\n


												Corporate
									Total		And
	Americas		Europe			Asia-Pacific		Regions	Eliminations		Totals
Three months ended April 30, 2011:
Revenues from external customers	$	149,217		$	105,894		$	82,785	$	337,896		$	—		$	337,896
Intersegment revenues		9,938			696			5,960		16,594			(16,594	)		—
Segment profit		38,292			28,938			9,976		77,206			(3,561	)		73,645

Three months ended April 30, 2010:
Revenues from external customers	$	144,413		$	98,152		$	79,322	$	321,887		$	—		$	321,887
Intersegment revenues		11,624			791			4,443		16,858			(16,858	)		—
Segment profit		33,858			27,472			12,775		74,105			(3,558	)		70,547

Nine months ended April 30, 2011:
Revenues from external customers	$	431,216		$	301,985		$	263,292	$	996,493		$	—		$	996,493
Intersegment revenues		30,729			2,209			18,306		51,244			(51,244	)		—
Segment profit		108,666			82,165			38,330		229,161			(12,087	)		217,074

Nine months ended April 30, 2010:
Revenues from external customers	$	402,255		$	289,101		$	244,846	$	936,202		$	—		$	936,202
Intersegment revenues		32,657			3,367			13,344		49,368			(49,368	)		—
Segment profit		90,205			78,281			38,589		207,075			(10,161	)		196,914

\n\n\n

Following is a reconciliation of segment profit to net income for the three months and nine months\nended April 30, 2011 and 2010.\n

\n\n


	Three months ended:			Nine months ended:
	April 30,			April 30,
	2011			2010			2011		2010
Total profit from reportable segments	$	77,206			$	74,105		$	229,161		$	207,075
Corporate and eliminations		(3,561	)			(3,558	)		(12,087	)		(10,161	)
Unallocated amounts:
Administrative costs		(31,563	)			(32,286	)		(90,534	)		(91,944	)
Restructuring charges		(1,211	)			(2,347	)		(6,986	)		(9,597	)
Investment and other income		1,428				121			2,892			1,273
Interest expense		(5,103	)			(5,147	)		(16,640	)		(15,472	)


Income before income taxes		37,196				30,888			105,806			81,174
Income taxes		(8,607	)			(7,193	)		(26,737	)		(20,810	)

Net income	$	28,589			$	23,695		$	79,069		$	60,364

\n\n

9\n

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

NOTE F —Stock-Based Compensation\n

\n\n\n

The Company has an incentive stock plan under which the Board of Directors may grant\nnonqualified stock options to purchase shares of Class A Nonvoting Common Stock or restricted\nshares of Class A Nonvoting Common Stock to employees. Additionally, the Company has a nonqualified\nstock option plan for non-employee directors under which stock options to purchase shares of Class\nA Nonvoting Common Stock are available for grant. The stock options have an exercise price equal to\nthe fair market value of the underlying stock at the date of grant and generally vest ratably over\na three-year period, with one-third becoming exercisable one year after the grant date and\none-third additional in each of the succeeding two years. Stock options issued under these plans,\nreferred to herein as “service-based” stock 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” stock options. Performance-based\nstock options expire 10 years from the date of grant. Restricted shares have an issuance price\nequal to the fair market value of the underlying stock at the date of grant. The Company granted\nrestricted shares in fiscal 2008 and fiscal 2011 that have an issuance price equal to the fair\nmarket value of the underlying stock at the date of grant. The restricted shares vest at the end of\na five-year period, with respect to the restricted shares issued in fiscal 2008, and ratably at the\nend of years 3, 4 and 5 with respect to the restricted shares issued in fiscal 2011, and upon\nmeeting certain financial performance conditions; these shares are referred to herein as\n“performance-based restricted shares.”\n

\n\n

As of April 30, 2011, the Company has reserved 5,885,249 shares of Class A Nonvoting Common\nStock for outstanding stock options and restricted shares and 740,000 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 three months ended April 30, 2011 and 2010 was $2,527 ($1,541 net of taxes) and\n$2,418 ($1,475 net of taxes), respectively, and expense recognized during the nine months ended\nApril 30, 2011 and 2010 was $9,396 ($5,732 net of taxes) and $7,574 ($4,620 net of taxes),\nrespectively. As of April 30, 2011, total unrecognized compensation cost related to share-based\ncompensation awards was $18,384 pre-tax, net of estimated forfeitures, which the Company expects to\nrecognize over a weighted-average period of 2.2 years.\n

\n\n

The Company has estimated the fair value of its service-based and performance-based option\nawards granted during the nine months ended April 30, 2011 and 2010 using the Black-Scholes option\nvaluation model. The weighted-average assumptions used in the Black-Scholes valuation model are\nreflected in the following table:\n


	Nine Months Ended			Nine Months Ended
	April 30, 2011			April 30, 2010
					Performance-						Performance-
	Service-Based			Based Option			Service-Based		Based Option
Black-Scholes Option Valuation Assumptions	Option Awards			Awards			Option Awards		Awards
Expected term (in years)		5.91				6.57			5.95			6.57
Expected volatility		40.22	%			39.39	%		39.85	%		38.72	%
Expected dividend yield		1.94	%			1.96	%		3.02	%		3.02	%
Risk-free interest rate		1.65	%			2.35	%		2.65	%		3.03	%
Weighted-average market value of\nunderlying stock at grant date	$	29.10				28.43		$	28.73			28.73
Weighted-average exercise price	$	29.10				28.35		$	28.73			29.78
Weighted-average fair value of options\ngranted during the period	$	9.58				9.87		$	8.78			8.70

\n\n\n

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

\n\n

The Company granted 100,000 shares of performance-based restricted stock to Frank M. Jaehnert,\nthe Company’s President and Chief Executive Officer, in August of 2010, with a grant price and fair\nvalue of $28.35. The Company also granted 210,000 shares of performance-based restricted stock\nduring fiscal 2008, with a grant price and fair value of $32.83. As of April 30, 2011, 310,000\nperformance-based restricted shares were outstanding.\n

\n\n

The Company granted 465,000 performance-based stock options during the nine months ended April\n30, 2011, with a weighted average exercise price of $28.35 and a weighted average fair value of\n$9.87. The Company also granted 897,500 service-based stock options during the nine months ended\nApril 30, 2011, with a weighted average exercise price of $29.10 and a weighted average fair value\nof $9.58.\n

\n\n

10\n

\n\n\n\n\n

A summary of stock option activity under the Company’s share-based compensation plans for the\nnine months ended April 30, 2011 is presented below:\n


									Weighted
									Average
					Weighted			Remaining			Aggregate
					Average			Contractual			Intrinsic
Options	Shares			Exercise Price			Term			Value
Outstanding at July 31, 2010		5,108,736			$	28.69
New grants		1,362,500			$	28.84
Exercised		(366,488	)		$	19.43
Forfeited or expired		(292,499	)		$	31.65

Outstanding at April 30, 2011		5,812,249			$	29.16				6.62		$	48,729

Exercisable at April 30, 2011		3,359,215			$	29.70				5.00		$	26,350

\n\n\n

There were 3,359,215 and 3,104,089 options exercisable with a weighted average exercise price\nof $29.70 and $28.34 at April 30, 2011 and 2010, respectively. The cash received from the exercise\nof options during the quarters ended April 30, 2011 and 2010 was $2,244 and $1,822, respectively.\nThe cash received from the exercise of options during the nine months ended April 30, 2011 and 2010\nwas $7,154 and $3,494, respectively. The cash received from the tax benefit on stock options\nexercised during the quarter ended April 30, 2011 and 2010 was $695 and $462, respectively. The\ncash received from the tax benefit on options exercised during the nine months ended April 30, 2011\nand 2010 was $1,398 and $845, respectively.\n

\n\n

The total intrinsic value (defined as the amount by which the fair value of the underlying\nstock exceeds the exercise price of an option) of options exercised during the nine months ended\nApril 30, 2011 and 2010, based upon the average market price during the period, was $4,907 and\n$2,660, respectively. The total fair value of stock options vested during the nine months ended\nApril 30, 2011 and 2010 was $6,775 and $5,294, respectively.\n

\n\n\n

NOTE G — Stockholders’ Investment\n

\n\n\n

In fiscal 2009, the Company’s Board of Directors authorized share repurchase plans for the\nCompany’s Class A Nonvoting Common Stock. The share repurchase plans were implemented by purchasing\nshares in the open market or privately negotiated transactions, with repurchased shares available\nfor use in connection with the Company’s stock-based plans and for other corporate purposes. The\nCompany reacquired approximately 102,067 shares of its Class A Common Stock for $2.5 million in\nfiscal 2010 in connection with its stock repurchase plans. No shares were reacquired during the\nnine months ended April 30, 2011. As of April 30, 2011, there remained 204,133 shares to purchase\nin connection with this share repurchase plan.\n

\n\n\n

NOTE H — Employee Benefit Plans\n

\n\n\n

The Company provides postretirement medical, dental and vision benefits for eligible regular\nfull and part-time domestic employees (including spouses) outlined by the plan. Postretirement\nbenefits are provided only if the employee was hired prior to April 1, 2008, and retires on or\nafter attainment of age 55 with 15 years of credited service. Credited service begins accruing at\nthe later of age 40 or date of hire. All active employees first eligible to retire after July 31,\n1992, are covered by an unfunded, contributory postretirement healthcare plan where employer\ncontributions will not exceed a defined dollar benefit amount, regardless of the cost of the\nprogram. Employer contributions to the plan are based on the employee’s age and service at\nretirement.\n

\n\n

The Company funds benefit costs on a pay-as-you-go basis. There have been no changes to the\ncomponents of net periodic benefit cost or the amount that the Company expects to fund in fiscal\n2011 from those reported in Note 3 to the consolidated financial statements included in the\nCompany’s latest annual report on Form 10-K for the year ended July 31, 2010.\n

\n\n

11\n

\n\n\n

NOTE I — Fair Value Measurements\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 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\n\n\n \n \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\n\n \n \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\n\n \n \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

The following tables set forth by level within the fair value hierarchy, the Company’s\nfinancial assets and liabilities that were accounted for at fair value on a recurring basis at\nApril 30, 2011, and July 31, 2010, according to the valuation techniques the Company used to\ndetermine their fair values.\n\n


	Fair Value Measurements Using Inputs
	Considered as
	Quoted Prices
	in Active
	Markets		Significant
	for		Other			Significant
	Identical		Observable			Unobservable
	Assets		Inputs			Inputs		Fair	Balance Sheet
	(Level 1)		(Level 2)			(Level 3)		Value	Classification
April 30, 2011:
Trading Securities	$	11,236		$	—		$	—	$	11,236	Other assets
Foreign exchange contracts — cash flow hedges		—			65			—		65	Prepaid expenses and other current assets

Total Assets	$	11,236		$	65		$	—	$	11,301


Foreign exchange contracts — cash flow hedges	$	—		$	1,672			—	$	1,672	Other current liabilities
Foreign exchange contracts — net investment hedge		—			14,069			—		14,069	Other current liabilities
Foreign exchange contracts		—			—			—		—	Other current liabilities
Foreign currency denominated debt — net\ninvestment hedge		—			109,110			—		109,110	Long term obligations, less current maturities

Total Liabilities	$	—		$	124,851		$	—	$	124,851


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\ninvestment hedge		—			97,747			—		97,747	Long term obligations, less current maturities

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

\n\n

12\n

\n\n\n

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

\n\n

\n\n\n\n \n \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 the Company to obtain pricing information on\nan ongoing basis.

\n\n

\n\n\n\n \n \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 K, “Derivatives and Hedging Activities” for additional\ninformation.

\n\n

\n\n\n\n \n \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 K, “Derivatives and Hedging Activities” for additional information.

\n\n

There have been no transfers of assets or liabilities between the fair value hierarchy levels,\noutlined above, during the nine months ended April 30, 2011.\n

\n\n

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

\n\n

The estimated fair value of the Company’s long-term obligations including current maturities,\nbased on the quoted market prices for similar issues and on the current rates offered for debt of\nsimilar maturities, was $430,276 and $467,479 at April 30, 2011 and July 31, 2010, respectively, as\ncompared to the carrying value of $413,053 and $444,204 at April 30, 2011 and July 31, 2010,\nrespectively.\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 nine months ended April 30, 2011, the Company had no\nsignificant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent\nto their initial recognition other than for the acquisition of ID Warehouse and divestiture of the\nTeklynx business. See Note L, “Acquisitions and Divestitures” for further information.\n

\n\n\n

NOTE J — Restructuring\n

\n\n\n

In fiscal 2010, the Company continued the execution of its restructuring actions announced in\nfiscal 2009. As a result of these actions, the Company recorded restructuring charges of $15,314\nin fiscal 2010. The restructuring charges included $10,850 of employee separation costs, $2,260 of\nnon-cash fixed asset write-offs, $1,493 of other facility closure related costs, and $711 of\ncontract termination costs. The Company continued executing its restructuring actions during the\nnine months ended April 30, 2011.\n

\n\n

During the three and nine months ended April 30 2011, the Company recorded restructuring\ncharges of $1,211 and $6,986, respectively. The year-to-date charges of $6,986 consisted of $4,531\nof employee separation costs, $2,155 of fixed asset write-offs, and $300 of other facility closure\nrelated costs and contract termination costs. Of the $6,986 of restructuring charges recorded\nduring the nine months ended April 30, 2011, $4,401 was incurred in the Americas, $2,457 was\nincurred in Europe, and $128 was incurred in Asia-Pacific. The charges for employee separation\ncosts consisted of severance pay, outplacement services, medical and other related benefits. The\ncosts related to these restructuring activities have been recorded on the condensed consolidated\nstatements of income as restructuring charges. The Company expects the majority of the remaining\ncash payments to be made during the next twelve months.\n

\n\n

A reconciliation of the Company’s fiscal 2011 restructuring activity is as follows:\n


	Employee			Asset Write-
	Related			offs			Other		Total
Beginning balance, July 31, 2010	$	6,055			$	—		$	106		$	6,161

Restructuring charge		2,665				951			25			3,641
Non-cash write-offs		—				(951	)		—			(951	)
Cash payments		(3,413	)			—			(112	)		(3,525	)

Ending balance, October 31, 2010	$	5,307			$	—		$	19		$	5,326

Restructuring charge		1,213				763			158			2,134
Non-cash write-offs		—				(763	)		—			(763	)
Cash payments		(2,679	)			—			(169	)		(2,848	)

Ending balance, January 31, 2011	$	3,841			$	—		$	8		$	3,849

Restructuring charge		653				441			117			1,211
Non-cash write-offs		—				(441	)		—			(441	)
Cash payments		(1,823	)			—			(117	)		(1,940	)

Ending balance, April 30, 2011	$	2,671			$	—		$	8		$	2,679

\n\n\n

\n\n

13\n

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

NOTE K — Derivatives and Hedging Activities\n

\n\n\n

The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate\nrisk of specific foreign currency denominated transactions and net investments. These contracts\ntypically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future\ndate, with maturities of 12 months or less, which qualify as either cash flow hedges or net\ninvestment hedges under the accounting guidance for derivative instruments and hedging activities.\nThe primary objectives of the Company’s foreign currency exchange risk management are to minimize\nthe impact of currency movements due to products purchased in other than the respective\nsubsidiaries’ functional currency and to minimize the impact of currency movements on the Company’s\nnet investment denominated in a currency other than the U.S. dollar. To achieve this objective, the\nCompany hedges a portion of known exposures using forward foreign exchange currency contracts. As\nof April 30, 2011 and July 31, 2010, the notional amount of outstanding forward exchange contracts\nwas $120,475 and $45,328, respectively.\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 three-month or nine-month periods ended April 30, 2011 and 2010.\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, Japanese Yen, Swiss Franc, and the Korean Won.\nGenerally, these risk management transactions will involve the use of foreign currency derivatives\nto protect against exposure resulting from sales and identified inventory or other asset purchases.\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 Condensed Consolidated Balance Sheets. For these\ninstruments, the effective portion of the gain or loss on the derivative is reported as a component\nof other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods\nduring which the hedged transaction affects earnings. At April 30, 2011 and July 31, 2010,\nunrealized losses of $2,210 and $493 have been included in OCI, respectively. All balances are\nexpected to be reclassified from OCI to earnings during the next twelve months when the hedged\ntransactions impact earnings.\n

\n\n

At April 30, 2011 and July 31, 2010, the Company had $65 and $156 of forward exchange\ncontracts designated as cash flow hedges included in “Prepaid expenses and other current assets” on\nthe accompanying Condensed Consolidated Balance Sheets. At April 30, 2011 and July 31, 2010, the\nCompany had $1,672 and $829, respectively, of forward exchange contracts designated as cash flow\nhedges included in “Other current liabilities” on the accompanying Condensed Consolidated Balance\nSheets. At April 30, 2011 and July 31, 2010, the U.S. dollar equivalent of these outstanding\nforward foreign exchange contracts totaled $20,475 and $32,020, respectively, including contracts\nto sell Euros, Canadian Dollars, 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 aggregate\nprincipal amount of senior unsecured notes to accredited institutional investors. This\nEuro-denominated debt obligation was designated as a net investment hedge to hedge portions of the\nCompany’s net investment in Euro-denominated foreign operations. As net investment hedges, the\ncurrency effects of the debt obligations are reflected in the foreign currency translation\nadjustments component of accumulated other comprehensive income where they offset gains and losses\nrecorded on the Company’s net investment in Euro-denominated operations. The Company’s foreign\ndenominated debt obligations are valued under a market approach using publicized spot prices.\n

\n\n

During the three and nine month period ended April 30, 2011, the Company used forward foreign\nexchange currency contracts designated as net investment hedges to hedge portions of the Company’s\nnet investments in Euro-denominated foreign operations. For hedges that meet the effectiveness\nrequirements, the net gains or losses attributable to changes in spot exchange rates are recorded\nin the foreign exchange translation adjustment component of accumulated other comprehensive income\nwhere it offsets gains and losses recorded on the Company’s net investment in Euro-denominated\nforeign operations. Any ineffective portions are recognized in earnings. Recognition in earnings of\namounts previously recorded in cumulative translation is limited to circumstances such as complete\nor substantially complete liquidation of the net investment in the hedged foreign operation. At\nApril 30, 2011, the Company had $14,069 of forward foreign exchange currency contracts designated\nas net investment hedges included in “Other current liabilities” on the Condensed Consolidated\nBalance Sheet. At April 30, 2011, the U.S dollar equivalent of these outstanding forward foreign\nexchange contracts totaled $100,000. There were no forward foreign exchange contracts designated\nas net investment hedges outstanding as of July 31, 2010.\n

\n\n

14\n

\n\n\n\n\n

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

\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \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 Derivatives		Liability Derivatives
	April 30, 2011		July 31, 2010			April 30, 2011			July 31, 2010
	Balance Sheet						Balance Sheet					Balance Sheet				Balance Sheet
	Location		Fair Value			Location			Fair Value	Location			Fair Value	Location		Fair Value
Derivatives designated as hedging instruments

Cash flow hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	65			Prepaid expenses and other current assets		$	156	Other current liabilities		$	1,672	Other current liabilities	$	829


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		$	109,110	Long term obligations, less current maturities	$	97,747


Foreign exchange contracts	Prepaid expenses and other current assets	$	—			Prepaid expenses and other current assets		$	—	Other current liabilities		$	14,069	Other current liabilities	$	—


Total derivatives designated as hedging instruments				$	65					$	156				$	124,851	$	98,576


Derivatives not designated as hedging instruments

Foreign exchange contracts	Prepaid expenses and other current assets	$	—			Prepaid expenses and other current assets		$	24	Other current liabilities		$	—	Other current liabilities	$	64


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

\n\n\n

The pre-tax effects of derivative instruments designated as cash flow hedges and net investment\nhedges on the Condensed Consolidated Statements of Income consisted of the following:\n

\n\n

Location of

Gain or

Amount of Gain or (Loss)

Location of

Amount of Gain or (Loss)

(Loss)

Reclassified From

Gain or

Recognized in Income on

Recognized in OCI on

Reclassified

Accumulated OCI Into Income

(Loss)

Derivative (Ineffective

Derivative (Effective Portion)

From

(Effective Portion)

Recognized

Portion)

Nine

Accumulated

Nine

in Income

Nine

Derivatives in

months

OCI into

months

Cash Flow

ended

Income

ended

Derivative

ended

Hedging

April 30,

(Effective

April 30,

(Ineffective

April

April 30,

Relationships

2011

2010

Portion)

2011

2010

Portion)

30, 2011

2010

Cash Flow Hedges

Foreign exchange\ncontracts

(2,210

)

(120

)

Cost of Goods Sold

(887

)

—

Cost of Goods Sold

—

Total

(2,210

)

(120

)

(887

)

—

\n\n

15\n

\n\n\n

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


													Amount of Gain
													or (Loss)							Amount of Gain
	Amount of Gain or (Loss)							Reclassified From							or (Loss)
	Recognized in OCI on			Location of Gain			Accumulated OCI							Recognized in
	Derivative			or (Loss)			Into Income			Location of			Income on Derivative
Derivatives in	(Effective Portion)			Reclassified From			(Effective Portion)			Gain or (Loss)			(Ineffective Portion)
Net Investment	Nine months ended			Accumulated			Nine months ended			Recognized in			Nine months ended
Hedging	April 30,			OCI into Income			April 30,			Income on Derivative			April 30,
Relationships	2011			2010			(Effective Portion)			2011			2010			(Ineffective Portion)			2011			2010
Foreign currency denominated debt	$	(11,362	)		$	—			Investment and other income — net		$	—			$	—			Investment and other income — net		$	—	$	—
Foreign exchange contracts	$	(14,069	)		$	(1,326	)		Investment and other income — net		$	—			$	—			Investment and other income — net		$	—	$	—

Total	$	(25,431	)		$	(1,326	)						$	—			$	—					$	—	$	—

\n\n\n

The pre-tax effects of derivative instruments not designated as hedge instruments\non the Condensed Consolidated Statements of Income consisted of the following:\n


			Amount of Gain or (Loss)
			Recognized in Income on Derivative
	Location of Gain or	Nine months			Nine months
	(Loss) Recognized in	ended April 30,			ended April 30,
Derivatives Not Designated as Hedging Instruments	Income on Derivative	2011			2010
Foreign exchange contracts	Other income (expense)	$	(953	)		$	(402	)

Total			$	(953	)		$	(402	)

\n\n\n

NOTE L — Acquisitions and Divestitures\n

\n\n\n

On November 1, 2010, the Company acquired ID Warehouse, based in New South Wales, Australia\nfor $7,970. ID Warehouse offers security identification and visitor management products including\nidentification card printers, access control cards, wristbands, tamper-evident security seals and\nidentification accessories. The business is included in the Company’s Asia-Pacific segment. The\npurchase price allocation resulted in $4,792 assigned to goodwill, $1,846 assigned to customer\nrelationships, and $487 assigned to non-compete agreements. The amounts assigned to the customer\nrelationships and non-compete agreements are being amortized over 10 and 5 years, respectively.\nThe Company expects the acquisition to further strengthen its position in the people identification\nbusiness in Australia and the segment.\n

\n\n

The results of the operations of the acquired business have been included since the date of\nacquisition in the accompanying condensed consolidated financial statements. The Company is\ncontinuing to evaluate the initial purchase price allocations for the acquisition included above\nand will adjust the allocations as additional information relative to the fair value of assets and\nliabilities of the acquired business becomes known. Pro forma information related to the\nacquisition of ID Warehouse was not included because the impact on the Company’s consolidated\nresults of operations is considered to be immaterial.\n

\n\n

On December 16, 2010, the Company sold its Teklynx business, a barcode software company. The\nTeklynx business had operations primarily in the Company’s Americas and Europe segments. The\nCompany received proceeds of $12,979, net of cash retained in the business. The transaction\nresulted in a pre-tax gain of $4,394, which was accounted for in “Selling, general, and\nadministrative expenses” (“SG&A”) on the Condensed Consolidated Statement of Income for the nine\nmonth periods ended April 30, 2011. The divestiture of the Teklynx business was part of the\nCompany’s continued long-term growth strategy to focus the Company’s energies and resources on\ngrowth of the Company’s core business.\n

\n\n

16\n

\n\n\n

NOTE M — Updated Accounting Policies\n

\n\n\n

In July 2010, the FASB issued Accounting Standards Update No. 2010-20, Disclosures about the\nCredit Quality of Financing Receivables and the Allowance for Credit Losses, requiring more robust\nand disaggregated disclosures about the credit quality of an entity’s financing receivables and its\nallowance for credit losses. The Company adopted the new guidance in the second quarter of fiscal\n2011. The new guidance provides for additional disclosure included herein.\n

\n\n

Accounts receivables are stated net of allowances for doubtful accounts of $5,523 and $7,137\nas of April 30, 2011 and July 31, 2010, respectively. No single customer comprised more than 10%\nof the Company’s consolidated net sales as of April 30, 2011 or July 31, 2010, or 10% of the\nCompany’s consolidated accounts receivable as of April 30, 2011 and July 31, 2010. Specific\ncustomer provisions are made when a review of significant outstanding amounts, utilizing\ninformation about customer creditworthiness and current economic trends, indicates that collection\nis doubtful. In addition, provisions are made at different rates, based upon the age of the\nreceivable and the Company’s historical collection experience.\n

\n\n

In addition, the Company provides for an allowance for estimated product returns and credit\nmemos which is recognized as a deduction from sales at the time of the sale. As of April 30, 2011\nand July 31, 2010, the Company had a reserve of $4,414 and $3,963, respectively.\n

\n\n\n

NOTE N — Subsequent Events\n

\n\n\n

On May 17, 2011, the Board of Directors declared a quarterly cash dividend to shareholders of\nthe Company’s Class A and Class B Common Stock of $0.18 per share payable on July 29, 2011 to\nshareholders of record at the close of business on July 8, 2011.\n

\n\n\n\n

\n\n

17\n

\n\n\n\n

\n\n

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


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

\n\n

Overview\n

\n\n\n

Brady, a Wisconsin corporation founded in 1914, is an international manufacturer and marketer\nof identification solutions and specialty materials that identify and protect premises, products,\nand people. Its products include facility identification products; safety and complementary\nproducts; wire and cable identification products; sorbent materials; people identification\nproducts; regulatory publishing products; high-performance identification products for product\nidentification and work-in-process identification; and bar-code labels and precision die-cut\ncomponents for mobile telecommunications devices, hard disk drives, medical devices and supplies,\nand automotive and other electronics. The Company serves customers in general manufacturing,\nmaintenance and safety, process industries, construction, electrical, telecommunications,\nelectronics, laboratory/healthcare, airline/transportation, brand protection, education,\ngovernmental, public utility, and a variety of other industries. The Company manufactures and sells\nproducts domestically and internationally through multiple channels including distributors,\nresellers, business-to-business direct marketing and a direct sales force. The Company believes\nthat its reputation for innovation, commitment to quality and service, and dedicated employees have\nmade it a world leader in the markets it serves. The Company operates in Australia, Belgium,\nBrazil, Canada, the Cayman Islands, China, Denmark, France, Germany, Hong Kong, India, Italy,\nJapan, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, the Philippines, Poland, Singapore,\nSouth Korea, Spain, Sweden, Thailand, Turkey, the United Arab Emirates, the United Kingdom and the\nUnited States. Brady sells through subsidiaries or sales offices in these countries, with\nadditional sales through a dedicated team of international sales representatives in New Zealand,\nRussia, Taiwan, Turkey, Vietnam, and the United Arab Emirates. The Company further markets its\nproducts to parts of Eastern Europe, the Middle East, Africa and Russia.\n

\n\n

Sales for the quarter ended April 30, 2011, increased 4.9% to $337.9 million, compared to\n$321.9 million in the same period of fiscal 2010. Of the increase in sales, organic sales increased\n1.0%, acquisitions net of divestitures added 0.4% and the effects of fluctuations in the exchange\nrates used to translate financial results into the United States dollar increased sales by 3.5%.\nNet income for the quarter ended April 30, 2011, was $28.6 million or $0.54 per diluted Class A\nNonvoting Common Share, up 20.7% and 20.0%, respectively, from $23.7 million or $0.45 per diluted\nClass A Nonvoting Common Share reported in the third quarter of last fiscal year. Net income\nbefore restructuring-related expenses for the quarter ended April 30, 2011 was $29.5 million, or\n$0.55 per diluted Class A Nonvoting Common Share, an increase of 16.1% from $25.4 million, or $0.48\nper diluted Class A Nonvoting Common Share for the quarter ended April 30, 2010.\n

\n\n

Sales for the nine months ended April 30, 2011, increased 6.4% to $996.5 million, compared to\n$936.2 million in the same period of fiscal 2010. Of the increase in sales, organic sales\nincreased 4.1%, acquisitions net of divestitures added 1.4% and the effects of fluctuations in the\nexchange rates used to translate financial results into the United States dollar increased sales\n0.9%. Net income for the nine months ended April 30, 2011, was $79.1 million or $1.49 per diluted\nClass A Nonvoting Common Share, up 31.0% and 30.7%, respectively, from $60.4 million or $1.14 per\ndiluted Class A Nonvoting Common Share reported in the same period of the prior fiscal year. Net\nincome before restructuring-related expenses for the nine months ended April 30, 2011 was $84.1\nmillion or $1.58 per diluted Class A Nonvoting Common Share, an increase of 25.0% from $67.3\nmillion or $1.27 per diluted Class A Nonvoting Common Share, for the nine months ended April 30,\n2010.\n

\n\n

Results of Operations\n

\n\n\n

The comparability of the operating results for the three and nine months ended April 30, 2011,\nto the prior year has been impacted by the following acquisitions and divestiture completed in\nfiscal 2011 and fiscal 2010.\n

\n\n

Fiscal 2011\n\n

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


	Segment		Date Completed
Acquisitions
ID Warehouse	Asia Pacific	November 2010

Divestiture
Teklynx	Americas Europe	December 2010

\n\n\n

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


	Segment		Date Completed
Acquisitions
Welconstruct Group Limited (“Welco”)	Europe	October 2009
Stickolor Industria e Comerciao de Auto Adesivos Ltda. (“Stickolor”)	Americas	December 2009
Securimed SAS (“Securimed”)	Europe	March 2010

\n\n

18\n

\n\n

Sales for the three months ended April 30, 2011, increased 4.9% compared to the same period in\nfiscal 2010. The increase was comprised of an increase in organic sales of 1.0%, an increase of\n0.4% due to the acquisitions net of divestitures listed in the above table, and an increase of 3.5%\ndue to the effect of currencies on sales. Organic sales grew during the third quarter of fiscal\n2011 in the Americas and Europe segments by 2.7% and 3.6%, respectively, partially offset by a\ndecline in organic sales of 5.1% in the Asia-Pacific segment. The organic sales increase\nexperienced in the Americas was due primarily to the strong Brady brand sales growth and new\nproducts positively received by end—users and distributors. The increase in Europe’s organic sales\nwas mainly a result of the Brady business in Germany and in Southern Europe. The decline in\norganic sales for the Asia-Pacific segment was due to the reduced demand from one of our largest\nmobile handset customers and Japan-related supply chain issues experienced by the Company’s\ncustomers.\n

\n\n

Sales for the nine months ended April 30, 2011, increased 6.4% compared to the same period in\nfiscal 2010. The increase was comprised of a 4.1% increase in organic sales and an increase of\n1.4% resulting from sales related to the acquisitions of ID Warehouse in fiscal 2011 and the\nacquisitions of Welco, Stickolor and Securimed in fiscal 2010, net of divestiture. The positive\nimpact of the fluctuations in exchange rates also increased sales in the quarter by 0.9%. The\nincrease in organic sales was comprised of increases of 5.3% in the Americas segment, 5.6% in the\nEurope segment, and 0.4% in the Asia-Pacific segment.\n

\n\n

Gross margin as a percentage of sales decreased to 49.6% from 49.8% for the quarter and to\n49.3% from 49.6% for the nine months ended April 30, 2011, compared to the same periods of the\nprevious year. This decrease in gross margin as a percentage of sales for the three and nine\nmonths ended April 30, 2011 was primarily due to the increased costs of raw materials which the\nCompany was not able to offset through continued cost reduction activities or price increases.\n

\n\n

Research and development (“R&D”) expenses decreased 1.5% to $10.6 million for the quarter and\nincreased 4.1% to $32.2 million for the nine months ended April 30, 2011, compared to $10.7 million\nand $31.0 million for the same periods in the prior year, respectively. The decrease for the\nquarter ended April 30, 2011 was due to the elimination of the R&D expenses incurred by the\nCompany’s previously owned Teklynx business in the second quarter of fiscal 2011. As a percentage\nof sales, R&D expenses represented a lower percentage of sales, declining to 3.1% in the third\nquarter of fiscal 2011 from 3.3% in the third quarter of fiscal 2010, and declining to 3.2% in the\nfirst nine months of fiscal 2011 compared to 3.3% in the first nine months of fiscal 2010. The\nCompany continues its commitment to innovation and new product development and expects R&D expense\nto continue to increase through fiscal 2011.\n

\n\n

Selling, general and administrative (“SG&A”) expenses increased 3.4% to $115.0 million for the\nthree months ended April 30, 2011, compared to $111.2 million for the same period in the prior\nyear, and increased 1.1% to $332.4 million for the nine months ended April 30, 2011, compared to\n$328.6 million for the same period in the prior year. SG&A increased during the quarter ended\nApril 30, 2011 mainly due to the fluctuations in exchange rates, in addition to the increase in\nannual merit increases and the increase in advertising campaign expenses. During the nine months\nended April 30, 2011, the Company divested of its Teklynx business resulting in a pre-tax gain of\n$4.4 million, which is included in SG&A. This gain was offset by an increase in the Company’s\ntransaction-related costs in addition to the merit increase during the nine months ended April 30,\n2011. As a percentage of sales, SG&A expenses declined to 34.0% from 34.6% for the quarter and to\n33.4% from 35.1% for the nine months ended April 30, 2011, compared to the same periods in the\nprior year.\n

\n\n

Restructuring expenses decreased to $1.2 million from $2.3 million for the three months ended\nApril 30, 2011, as compared to the same period in the prior year, and decreased to $7.0 million\nfrom $9.6 million for the nine months ended April 30, 2011 as compared to the same period in the\nprior year. In fiscal 2009, in response to the global recession, the Company took several measures\nto address its cost structure. The Company continued to incur costs related to the reduction of\nits workforce and facilities consolidations during the nine months ended April 30, 2011. The\nCompany expects to incur $8 to $10 million of restructuring charges in fiscal 2011.\n

\n\n

Other income and expense increased to $1.4 million from $0.1 million for the three months\nended April 30, 2011, as compared to the same period in the prior year, and increased to $2.9\nmillion from $1.3 million for the nine months ended April 30, 2011 as compared to the same period\nin the prior year. The increase was primarily due to the gains on securities held in executive\ndeferred compensation plans and interest income.\n

\n\n

Interest expense remained constant at $5.1 million for the quarter and increased to $16.6\nmillion from $15.5 million for the nine months ended April 30, 2011, compared to the same periods\nin the prior year. The increase was due to the incremental interest on the Company’s May 2010\nprivate placement entered into in the fourth quarter of fiscal 2010, partially offset by scheduled\ndebt payments made during the three and nine months ended April 30, 2011.\n

\n\n\n

\n\n

19\n

\n\n\n\n\n

The Company’s income tax rate was 23.1% for the three months ended April 30, 2011 and 25.3%\nfor the nine months ended April 30, 2011, compared to 23.3% and 25.6% for the three and nine months\nended April 30, 2010, respectively. During the quarter ended April 30, 2011, the Company\nrecognized tax benefits associated with certain international tax positions being settled and the\nlapses of statutes of limitation. The benefits were partially offset by an increase in the\nCompany’s effective tax rate due to the mix of profits in low and high tax countries. The Company\nexpects the full year effective tax rate for fiscal 2011 to be approximately 25%.\n

\n\n

Net income for the three months ended April 30, 2011, increased 20.7% to $28.6 million,\ncompared to $23.7 million for the same quarter of the previous year. Net income as a percentage of\nsales increased to 8.5% from 7.4% for the quarter ended April 30, 2011, compared to the same period\nin the prior year. Net income before restructuring-related expenses for the quarter ended April\n30, 2011 was $29.5 million, an increase of 16.1% from $25.4 million, for the same period in the\nprevious year. For the nine months ended April 30, 2011, net income increased 31.0% to $79.1\nmillion, compared to $60.4 million for the same period in the previous year. As a percentage of\nsales, net income increased to 7.9% from 6.4% for the nine months ended April 30, 2011, compared to\nthe same period in the previous year. Net income before restructuring-related expenses for the\nnine months ended April 30, 2011 was $84.1 million, an increase of 25.0% from $67.3 million, for\nthe nine months ended April 30, 2010. The improved earnings for the nine months ended April 30,\n2011, was primarily driven by the organic growth, which included organic growth in all three\nsegments along with the impacts of the Company’s on-going process improvement activities.\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.\n

\n\n

Following is a summary of segment information for the three and nine months ended April 30,\n2011 and 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 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n


																Corporate
								Asia-			Total			and
(Dollars in thousands)	Americas			Europe			Pacific		Regions			Eliminations			Total
SALES TO EXTERNAL CUSTOMERS
Three months ended:
April 30, 2011	$	149,217			$	105,894		$	82,785			$	337,896			$	—		$	337,896
April 30, 2010	$	144,413			$	98,152		$	79,322			$	321,887			$	—		$	321,887

Nine months ended:
April 30, 2011	$	431,216			$	301,985		$	263,292			$	996,493			$	—		$	996,493
April 30, 2010	$	402,255			$	289,101		$	244,846			$	936,202			$	—		$	936,202

SALES GROWTH INFORMATION
Three months ended April 30, 2011
Organic		2.7	%			3.6	%		(5.1	%)			1.0	%			—			1.0	%
Currency		1.3	%			4.0	%		7.0	%			3.5	%			—			3.5	%
Acquisitions/Divestitures		(0.7	%)			0.3	%		2.5	%			0.4	%			—			0.4	%

Total		3.3	%			7.9	%		4.4	%			4.9	%			—			4.9	%

Nine months ended April 30, 2011
Organic		5.3	%			5.6	%		0.4	%			4.1	%			—			4.1	%
Currency		0.9	%			(3.2	%)		5.6	%			0.9	%			—			0.9	%
Acquisitions/Divestitures		1.0	%			2.1	%		1.5	%			1.4	%			—			1.4	%

Total		7.2	%			4.5	%		7.5	%			6.4	%			—			6.4	%
SEGMENT PROFIT
Three months ended:
April 30, 2011	$	38,292			$	28,938		$	9,976			$	77,206			$	(3,561	)	$	73,645
April 30, 2010	$	33,858			$	27,472		$	12,775			$	74,105			$	(3,558	)	$	70,547
Percentage increase		13.1	%			5.3	%		(21.9	%)			4.2	%						4.4	%

Nine months ended:
April 30, 2011	$	108,666			$	82,165		$	38,330			$	229,161			$	(12,087	)	$	217,074
April 30, 2010	$	90,205			$	78,281		$	38,589			$	207,075			$	(10,161	)	$	196,914
Percentage increase		20.5	%			5.0	%		(0.7	%)			10.7	%						10.2	%

\n\n\n

\n\n

20\n

\n\n\n\n\n

NET INCOME RECONCILIATION (Dollars in thousands)\n

\n\n


	Three months ended:			Nine months ended:
	April 30,			April 30,			April 30,		April 30,
	2011			2010			2011		2010
Total profit from reportable segments	$	77,206			$	74,105		$	229,161		$	207,075
Corporate and eliminations		(3,561	)			(3,558	)		(12,087	)		(10,161	)
Unallocated amounts:
Administrative costs		(31,563	)			(32,286	)		(90,534	)		(91,944	)
Restructuring costs		(1,211	)			(2,347	)		(6,986	)		(9,597	)
Investment and other income		1,428				121			2,892			1,273
Interest expense		(5,103	)			(5,147	)		(16,640	)		(15,472	)

Income before income taxes		37,196				30,888			105,806			81,174
Income taxes		(8,607	)			(7,193	)		(26,737	)		(20,810	)

Net income	$	28,589			$	23,695		$	79,069		$	60,364

\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\nenhancement (“SVE”), which incorporates the cost of capital as a hurdle rate for capital\nexpenditures, new product development, and acquisitions. Segment profit or loss does not include\ncertain administrative costs, such as the cost of finance, information technology and human\nresources, which are managed as global functions. Restructuring charges, stock options, interest,\ninvestment and other income and income taxes are also excluded when evaluating performance.\n

\n\n

Americas:\n

\n\n\n

Americas sales increased 3.3% to $149.2 million for the quarter and 7.2% to $431.2 million for\nthe nine months ended April 30, 2011, compared to $144.4 million and $402.3 million for the same\nthree and nine-month periods in the prior year. Organic sales increased 2.7% and 5.3% during the\nquarter and year-to-date, respectively, as compared to the same periods in the previous year\nacross. Fluctuations in the exchange rates used to translate financial results into the United\nStates dollar resulted in a positive impact on sales of 1.3% and 0.9% in the quarter and in the\nnine-month period, respectively, as compared to the same periods in the previous year. Sales\nresulting from acquisitions net of divestiture declined 0.7% for the quarter and increased 1.0% for\nthe nine-month period as a result of the sales of Stickolor, acquired in the second quarter of\nfiscal 2010, offset by the reduction in sales due to the divestiture of the Teklynx business. The\nincreases in organic sales of 2.7% for the three-month period and 5.3% for the nine-month period\nwas driven by the broad-based improvement in the Company’s core markets, in addition to the\npositive results from new products.\n

\n\n

Segment profit for the region increased 13.1% to $38.3 million from $33.9 million for the\nquarter and 20.5% to $108.7 million from $90.2 million for the nine months ended April 30, 2011,\ncompared to the same periods in the prior year. Segment profit for the quarter was positively\nimpacted by increased sales volumes, while the segment continued to drive productivity improvements\nthrough consolidating facilities, and implementing other operational improvement initiatives to\nfurther reduce costs and improve productivity. As a percentage of sales, segment profit increased\nto 25.7% from 23.4% in the third quarter of fiscal 2011 and increased to 25.2% from 22.4% in the\nnine months ended April 30, 2011, compared to the same periods in the prior year. The increase in\nsegment profit as a percentage of sales was due to the cost reduction efforts and productivity\nimprovements described above.\n

\n\n

Europe:\n

\n\n\n

Europe sales increased 7.9% to $105.9 million for the quarter and 4.5% to $302.0 million for\nthe nine months ended April 30, 2011, compared to $98.2 million and $289.1 million for the same\nthree and nine-month periods in the prior year. Organic sales increased 3.6% and 5.6% for the\nquarter and year-to-date, respectively, compared to the same periods in the previous year. Sales\nwere also affected by fluctuations in the exchange rates used to translate financial results into\nthe United States dollar, which increased sales within the segment by 4.0% in the quarter and\nreduced sales by 3.2% during the nine-month period. Segment sales increased 0.3% during the quarter\nand 2.1% during the nine-month period as result of the fiscal 2010 acquisitions of Welco and\nSecurimed, net of the fiscal 2011 divestiture of the Teklynx business. The segment’s organic sales\nwere positively impacted during the three and nine months ended April 30, 2011 as a result of\ngrowth in the Brady business in Germany and Southern Europe due to a combination of improving\neconomies and positive results of sales initiatives, partially offset by the continued depressed\nconditions in the United Kingdom.\n

\n\n

Segment profit for the region increased 5.3% to $28.9 million from $27.5 million for the\nquarter and 5.0% to $82.2 million from $78.3 million for the nine months ended April 30, 2011,\ncompared to the same periods in the prior year. The increase in segment profit for the quarter was\nattributable to the increased sales volumes in addition to productivity initiatives. As a\npercentage of sales, segment profit declined to 27.3% from 28.0% in the third quarter of fiscal\n2011 and increased slightly to 27.2% from 27.1% in the nine months ended April 30, 2011, compared\nto the same periods in the prior year. The increase in segment profit as a percentage of sales in\nthe nine months ended April 30, 2011 was partially due to the increased sales volumes and the\ncontinued efforts to streamline selling expenses through strategic initiatives.\n

\n\n\n

\n\n

21\n

\n\n\n\n\n

Asia-Pacific:\n

\n\n\n

Asia-Pacific sales increased 4.4% to $82.8 million for the quarter and 7.5% to $263.3 million\nfor the nine months ended April 30, 2011, compared to $79.3 million and $244.8 million for the same\nthree and nine-month periods in the prior year. Organic sales declined 5.1% in the quarter and\nincreased 0.4% for the nine-month periods, compared to the same periods in the previous year. Sales\nwere positively impacted by fluctuations in the exchange rates used to translate financial results\ninto the United States dollar, which increased sales within the region by 7.0% in the quarter and\n5.6% for the nine-month period. Segment sales increased 2.5% during the quarter and 1.5% during\nthe nine-month period as result of the fiscal 2011 acquisition of ID Warehouse. The significant\ndecline in organic sales for the quarter was primarily due to the reduced demand from one of our\nlargest mobile handset customers and the supply chain disruptions at several of the segment’s\nelectronic customers resulting from the earthquake in Japan. The modest increase in organic sales\nfor the nine months ended April 30, 2011 was driven by increased sales in the consumer electronic\nmarket in addition to the expanded focus on MRO applications throughout the segment, partially\noffset by the decline of mobile handset sales. The segment continues to focus on the development\nof new value-added solutions, while continuing growth in adjacent markets.\n

\n\n

Segment profit for the region declined 21.9% to 10.0 million from $12.8 million for the\nquarter and declined 0.7% to $38.3 million from $38.6 million for the nine months ended April 30,\n2011, compared to the same periods in the prior year. The decline in segment profit during the\nthree and nine months ended April 30, 2011 was primarily due to the decline in organic sales as\ndiscussed above in addition to the inflationary pressures on raw materials resulting in cost\nincreases. The segment continues to focus on driving operational excellence through its strategic\nsourcing initiatives. As a percentage of sales, segment profit declined to 12.1% from 16.1% in\nthe third quarter of fiscal 2011 and to 14.5% from 15.8% in the nine months ended April 30, 2011,\ncompared to the same periods in the prior year.\n

\n\n

Financial Condition\n

\n\n\n

Cash and cash equivalents were $374.0 million at April 30, 2011, compared to $314.8 million at\nJuly 31, 2010. The increase in cash of $59.2 million was the result of cash provided by operations\nof $110.4 million and the $21.5 million effect of exchange rates, partially offset by cash used for\nacquisitions, capital expenditures, dividends, and debt payments during the nine months ended April\n30, 2011.\n

\n\n

The Company’s working capital, excluding cash and cash equivalents, increased to $66.8 million\nat April 30, 2011 from $60.3 million at July 31, 2010. Accounts receivable and inventories\nincreased $14.0 million and $7.8 million for the nine months ended April 30, 2011, respectively,\ndue the impact of foreign currency translation on the Company’s foreign balances. The net increase\nin current liabilities was $17.2 million from July 31, 2010 to April 30, 2011. The increase in the\ncurrent liabilities was primarily due to the Company’s forward foreign exchange currency contracts\ndesignated as net investment hedges.\n

\n\n

Cash flow from operating activities totaled $110.4 million for the nine months ended April 30,\n2011, compared to $118.2 million for the same period last year. The decrease was primarily due to\nthe payment of the Company’s fiscal 2010 annual incentive compensation during the nine months ended\nApril 30, 2011, whereas no incentive compensation was paid in same period in the prior year due to\nthe elimination of the annual incentive compensation in fiscal 2009.\n

\n\n

Cash used for acquisitions totaled $8.0 million for the nine months ended April 30, 2011 due\nto the acquisition of ID Warehouse. The Company used $30.4 million for acquisitions of Welco,\nStickolor, and Securimed during the nine months ended April 30, 2010; the net cash paid for Welco,\nStickolor, and Securimed was $1.8 million, $18.5 million, and $10.1 million, respectively. Cash\nreceived from divestiture was $13.0 million during the nine months ended April 30, 2011 as a result\nof the sale of the Teklynx business.\n

\n\n

Capital expenditures were $13.7 million for the nine months ended April 30, 2011, compared to\n$20.9 million in the same period last year. The decrease was mainly due to the expenditures\nrelated to the new coater in the Americas segment and the increased tooling required for new\nproducts in fiscal 2010. Capital expenditures were $26.3 million during the twelve months ended\nJuly 31, 2010. The Company expects the capital expenditures to be between $18.0 million and $20.0\nmillion for the twelve months ending July 31, 2011. Net cash used in financing activities was\n$62.8 million for the nine months ended April 30, 2011, due primarily to the payment of dividends\nof $28.5 million and the principal debt payments of $42.5 million, partially offset by the proceeds\nfrom the issuance of the common stock related to stock option exercises.\n

\n\n

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

\n\n

22\n

\n\n\n\n\n

On May 13, 2010, the Company completed a private placement of €75.0 million aggregate\nprincipal amount of senior unsecured notes to accredited institutional investors. The €75.0 million\nof senior notes consists of €30.0 million aggregate principal amount of 3.71% Series 2010-A Senior\nNotes, due May 13, 2017 and €45.0 million aggregate principal amount of 4.24% Series 2010-A Senior\nNotes, due May 13, 2020, with interest payable on the notes semiannually. This private placement\nwas exempt from the registration requirements of the Securities Act of 1933. The notes were not\nregistered for resale and may not be resold absent such registration or an applicable exemption\nfrom the registration requirements of the Securities Act of 1933 and applicable state securities\nlaws. The notes have certain prepayment penalties for prepaying them prior to maturity. The notes\nhave been fully and unconditionally guaranteed on an unsecured basis by the Company’s domestic\nsubsidiaries. These unsecured notes were issued pursuant to a note purchase agreement, dated May\n13, 2010.\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.\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 conditions, the available amount under the credit facility\nmay be increased from $200 million up to $300 million. Under the credit agreement, the Company has\nthe option to select either a base interest rate (based upon the higher of the federal funds rate\nplus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency interest rate (at the\nLIBOR rate plus a margin based on the Company’s consolidated leverage ratio). A commitment fee is\npayable on the unused amount of the facility. The agreement restricts the amount of certain types\nof payments, including dividends, which can be made annually to $50 million plus an amount equal to\n75% of consolidated net income for the prior fiscal year of the Company. The Company believes that\nbased on historic dividend practice, this restriction would not impede the Company in following a\nsimilar dividend practice in the future. On March 18, 2008, the Company entered into an amendment\nto the revolving loan agreement which extended the maturity date from October 5, 2011 to March 18,\n2013. All other terms of the revolving loan agreement remained the same. As of April 30, 2011,\nthere 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 April\n30, 2011, the Company was in compliance with the financial covenant of the June 2004, February\n2006, and March 2007 private placement debt agreements, with the ratio of debt to EBITDA, as\ndefined by the agreements, equal to 1.9 to 1.0. As of April 30, 2011, the Company was in\ncompliance with the financial covenant of the May 2010 private placement debt agreement, with the\nratio of debt to EBITDA, as defined by the agreement, equal to 1.8 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 April 30, 2011 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 1.9 to 1.0 and the interest expense coverage ratio equal to 7.4 to 1.0.\n

\n\n

Long-term obligations, less current obligations, as a percentage of long-term obligations,\nless current obligations, plus stockholders’ investment were 23.7% at April 30, 2011 and 27.6% at\nJuly 31, 2010. Long-term obligations increased by $11.3 million from July 31, 2010 to April 30,\n2011 due to the negative impact of foreign currency translation on the Company’s Euro-denominated\ndebt. The increase was offset by the $42.5 million debt payments made during the nine months ended\nApril 30, 2011.\n

\n\n

Stockholders’ investment increased $127.1 million during the nine months ended April 30, 2011\nas a result of the Company’s net income of $79.1 million as well as the increase in the accumulated\nother comprehensive income of $60.3 million due to the impact of foreign currency translation. The\nincrease was offset by the dividends paid on Class A and Class B Common Stock of $26.6 million and\n$1.9 million, respectively.\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, are sufficient to fund its anticipated requirements for working\ncapital, capital expenditures, restructuring activities, acquisitions, common stock repurchases,\nscheduled debt repayments, and dividend payments. The Company believes that its current credit\narrangements are sound and that the strength of its balance sheet will allow the Company the\nfinancial flexibility to respond to both internal growth opportunities and those available through\nacquisition.\n

\n\n\n

\n\n

23\n

\n\n\n\n\n

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

\n\n

Operating Leases — These leases generally are entered into for investments in facilities 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.\n

\n\n

Related-Party Transactions — The Company evaluated its affiliated party transactions for the\nperiod ended April 30, 2011. 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

Subsequent Events Affecting Financial Condition\n

\n\n\n

\n\n

24\n

\n\n\n\n\n

Forward-Looking Statements\n

\n\n\n

Brady believes that certain statements in this Form 10-Q are “forward-looking statements”\nwithin the meaning of the Private Securities Litigation Reform Act of 1995. All statements related\nto future, not past, events included in this Form 10-Q, including, without limitation, statements\nregarding Brady’s future financial position, business strategy, targets, projected sales, costs,\nearnings, capital expenditures, debt levels and cash flows, and plans and objectives of management\nfor future operations are forward-looking statements. When used in this Form 10-Q, words such as\n“may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or\n“plan” or similar terminology are generally intended to identify forward-looking statements. These\nforward-looking statements by their nature address matters that are, to different degrees,\nuncertain and are subject to risks, assumptions and other factors, some of which are beyond 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 the Company’s most recently filed Form 10-K for the year ended July 31, 2010. These\nuncertainties may cause Brady’s actual future results to be materially different than those\nexpressed in its forward-looking statements. Brady does not undertake to update its forward-looking\nstatements.\n

\n\n\n

\n\n

25\n

\n\n\n\n

\n\n

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


ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

\n\n

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

\n\n

The global nature of the Company’s business requires active participation in the foreign\nexchange markets. As a result of investments, production facilities and other operations on a\nglobal scale, the Company has assets, liabilities and cash flows in currencies other than the U.S.\nDollar. The primary objective of the Company’s foreign currency exchange risk management is to\nminimize the impact of currency movements on intercompany transactions and foreign raw-material\nimports. To achieve this objective, the Company hedges a portion of known exposures using forward\ncontracts. Main exposures are related to transactions denominated in the British Pound, the Euro,\nCanadian Dollar, Australian Dollar, Singapore Dollar, Swedish Krona, Japanese Yen, and the Korean\nWon. As of April 30, 2011, the amount of outstanding foreign exchange contracts was $120,475\nmillion. In fiscal 2010 and continuing in fiscal 2011, the Company also hedged portions of its net\ninvestments in its European foreign operations using forward foreign exchange currency contracts\nand Euro-denominated debt of €75.0 million designated as a hedge instrument.\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, with the approval of the Board of Directors, if there is a desire to\nmodify the Company’s exposure to interest rates. As of April 30, 2011, the Company had no interest\nrate 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 European currencies, primarily the Euro, changes between the U.S.\nDollar and the Australian Dollar, changes between the U.S. Dollar and the Canadian Dollar, and\nchanges between the U.S. Dollar and the Chinese Yuan. Changes in foreign currency exchange rates\nfor the Company’s foreign subsidiaries reporting in local currencies are generally reported as a\ncomponent of shareholders’ equity. The Company’s currency translation adjustments recorded for the\nthree and nine months ended April 30, 2011 were $30.5 million favorable and $60.3 million\nfavorable, respectively. The Company’s currency translation adjustments recorded for the three and\nnine months ended April 30, 2010 were $1.8 million unfavorable and $4.0 million favorable,\nrespectively. As of April 30, 2011 and 2010, the Company’s foreign subsidiaries had net current\nassets (defined as current assets less current liabilities) subject to foreign currency translation\nrisk of $411.2 million and $221.7 million, respectively. The potential increase in the net current\nassets as of April 30, 2011 from a hypothetical 10 percent adverse change in quoted foreign\ncurrency exchange rates would be $41.1 million. This sensitivity analysis assumes a parallel shift\nin foreign currency exchange rates. Exchange rates rarely move in the same direction relative to\nthe U.S. Dollar. This assumption may overstate the impact of changing exchange rates on individual\nassets and liabilities denominated in a foreign currency.\n

\n\n

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


ITEM 4.		CONTROLS AND PROCEDURES

\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 Senior Executive Vice President and Chief Financial\nOfficer, of 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 Senior Executive Vice President and Chief Financial\nOfficer concluded that the Company’s disclosure controls and procedures are effective as of the end\nof the period covered by this report.\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\n

\n\n

26\n

\n\n\n\n

\n\n

PART II. OTHER INFORMATION\n

\n\n

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


ITEM 6.		Exhibits

\n\n

(a) Exhibits\n


	10.1			Brady Corporation Executive Deferred Compensation Plan, as amended

	10.2			Brady Corporation Directors’ Deferred Compensation Plan, as amended

	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

	101			Interactive Data File

\n\n\n

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

\n\n

SIGNATURES

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


	BRADY CORPORATION \n
Date: June 7, 2011	/s/ Frank M. Jaehnert\n
	Frank M. Jaehnert
	President & Chief Executive Officer

Date: June 7, 2011	/s/ Thomas J. Felmer\n
	Thomas J. Felmer
	Senior Vice President & Chief Financial Officer \n(Principal Financial Officer)

\n\n

27\n

\n\n

EXHIBIT 10.1\n

\n\n\n

BRADY CORPORATION\n

\n\n\n

EXECUTIVE DEFERRED COMPENSATION PLAN\n

\n\n\n

AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 17, 2011\n

\n\n\n

ARTICLE I\n

\n\n\n

INTRODUCTION\n

\n\n\n

For periods prior to calendar year 2005, Brady Corporation has maintained the Brady\nCorporation Executive Deferred Compensation Plan by means of a series of individual deferred\ncompensation agreements with covered executives. Amounts deferred prior to January 1, 2005 (which\nwere all fully vested under Plan terms), including past and future earnings credited thereon, shall\nremain subject to the terms of those individual agreements as previously in effect (the “Frozen\nAgreements”) but no further amounts shall be deferred under the Frozen Agreements. All deferrals\nto the Plan for periods on or after January 1, 2005 shall be governed by the terms and provisions\nof this document. Except as provided in Sections 4.2(b)(x) and 6.1(a)(iii)(C) below, nothing in\nthis document shall apply to amounts deferred prior to 2005 and past and future earnings credited\nthereon. This document is intended to comply with the provisions of Section 409A of the Internal\nRevenue Code and shall be interpreted accordingly. If any provision or term of this document would\nbe prohibited by or inconsistent with the requirements of Section 409A of the Code, then such\nprovision or term shall be deemed to be reformed to comply with Section 409A of the Code. This\nPlan is further amended and restated, effective as of February 17, 2011, to revise and clarify\ncertain Plan terms regarding the investment of amounts in the Brady Stock Fund.\n

\n\n

ARTICLE II\n

\n\n\n

DEFINITIONS\n

\n\n\n\n

The following definitions shall be applicable throughout the Plan:\n

\n\n

2.1 “Account” means the account credited from time to time with bookkeeping amounts\nequal to the portions of a Participant’s compensation deferred pursuant to Section 3.2 and\nearnings credited on such amounts in accordance with Article IV.\n

\n\n

2.2 “Administrator” means the Compensation Committee of the Board of Directors of\nBrady Corporation.\n

\n\n

2.3 “Beneficiary” means the person, persons, or entity designated by the Participant\nto receive any benefits payable under the Plan on or after the Participant’s death. Each\nParticipant shall be permitted to name, change or revoke the Participant’s designation of a\nBeneficiary in writing on a form and in the manner prescribed by the Corporation; provided,\nhowever, that the designation on file with the Corporation at the time of the Participant’s death\nshall be controlling. Should a Participant fail to make a valid Beneficiary designation or leave\nno named Beneficiary surviving, any benefits due shall be\npaid to such Participant’s spouse, if living; or if not living, then any benefits due shall\nbe paid to such Participant’s estate. A Participant may designate a primary beneficiary and a\ncontingent beneficiary; provided, however, that the Corporation may reject any such instrument\ntendered for filing if it contains successive beneficiaries or contingencies unacceptable to it.\nIf all Beneficiaries who survive the Participant shall die before receiving the full amounts\npayable hereunder, then the payments shall be paid to the estate of the Beneficiary last to die.\n

\n\n

2.4 “Code” means the Internal Revenue Code of 1986, including any subsequent\namendments.\n

\n\n

2.5 “Corporation” means Brady Corporation, and each of its affiliates which has\nadopted the Plan or may adopt the Plan. Currently, the additional sponsoring affiliates are\nTricor Direct, Inc. and Brady Worldwide, Inc. The term “Corporation” as used throughout this Plan\nshall include references to those affiliates of Brady Corporation which have also adopted the\nPlan; provided, however, that for purposes of the power to amend or terminate the Plan or take any\nother action under or with respect to the Plan, except for the payment of benefits, the term\n“Corporation” shall refer only to Brady Corporation.\n

\n\n

2.6 “Effective Date” means February 17, 2011. This document describes how this Plan\nhas been administered for periods after 2004 and prior to February 17, 2011 and how it shall be\nadministered for periods on and after February 17, 2011.\n

\n\n

2.7 “ERISA” means the Employee Retirement Income Security Act of 1974, including any\nsubsequent amendments.\n

\n\n\n

2.8 “Fiscal Year” means the period beginning August 1 and ending July 31.\n

\n\n

2.9 “Participant” means a key management or highly compensated employee designated as\neligible to participate in the Plan for a Plan Year under Section 3.1 (such persons shall be known\nas “Active Participants” for such Plan Year) and any person who previously participated in the\nPlan and is entitled to benefits.\n

\n\n

2.10 “Performance Based Bonus” means bonus compensation, the amount of which or\nentitlement to, is based on services performed over a period of at least 12 consecutive months\nwhich is contingent on the satisfaction of pre-established organizational or individual\nperformance criteria, which performance criteria are not substantially certain to be met at the\ntime a deferral election is permitted. Performance Based Bonus compensation may include payments\nbased upon subjective performance criteria, but (i) any subjective performance criteria must\nrelate to the performance of the Participant service provider, a group of service providers that\nincludes the Participant service provider, or a business unit for which the Participant provides\nservices (which may include the entire organization) and (ii) the determination that any\nsubjective performance criteria have been met must not be made by the Participant or a family\nmember of the Participant (as defined in Code Section 267(c)(4) applied as if the family of an\nindividual includes the spouse of any family member). Organizational or individual performance\ncriteria are considered pre-established if established in writing by not later than 90 days after\nthe commencement of the period of service to which the criteria relate, provided that the outcome\nis substantially uncertain at the time the criteria are established. A Performance Based Bonus\nmay include payments based on performance criteria that are not approved by the Administrator or\nby the stockholders of the Corporation. A Performance Based Bonus shall not include any amount or\nportion of any amount that will be paid either regardless of performance, or based upon a level of\nperformance that is substantially certain to be met at the time the criteria are established.\nWhether a bonus is\nperformance based shall be determined in accordance with the requirements of IRS Reg. Section\n1.409A-1 (e) which are summarized in part in this Section 2.10.\n

\n\n

-2-\n

\n\n

2.11 “Plan” means the Brady Corporation Executive Deferred Compensation Plan, as set\nforth herein, as applicable to amounts deferred after calendar year 2004, and as it may be amended\nfrom time to time.\n

\n\n\n

2.12 “Plan Year” means the calendar year.\n

\n\n

2.13 “Separation from Service” shall have the meaning set forth in IRS Regulation\nSection 1.409A-1 the requirements of which are summarized in part as follows:\n

\n\n\n

(a) In General. The Participant shall have a Separation from Service with the\nCorporation if the Participant dies, retires, or otherwise has a termination of employment\nwith the Corporation. However, for purposes of this Section 2.13, the employment\nrelationship is treated as continuing intact while the individual is on military leave, sick\nleave, or other bona fide leave of absence if the period of such leave does not exceed six\nmonths, or if longer, so long as the individual retains a right to reemployment with the\nCorporation under an applicable statute or by contract. For purposes of this paragraph (a)\nof this Section 2.13, a leave of absence constitutes a bona fide leave of absence only if\nthere is a reasonable expectation that the Participant will return to perform services for\nthe Corporation. If the period of leave exceeds six months and the individual does not\nretain a right to reemployment under an applicable statute or by contract, the employment\nrelationship is deemed to terminate on the first date immediately following such six-month\nperiod. Notwithstanding the foregoing, where a leave of absence is due to any medically\ndeterminable physical or mental impairment that can be expected to result in death or can be\nexpected to last for a continuous period of not less than six months, where such impairment\ncauses the Participant to be unable to perform the duties of his or her position of\nemployment or any substantially similar position of employment, a 29-month period of absence\nmay be substituted for such six-month period.\n

\n\n\n

(b) Termination of Employment. Whether a termination of employment has\noccurred is determined based on whether the facts and circumstances indicate that the\nCorporation and Participant reasonably anticipated that no further services would be\nperformed after a certain date or that the level of bona fide services the Participant would\nperform after such date (whether as an employee or as an independent contractor) would\npermanently decrease to no more than 20 percent of the average level of bona fide services\nperformed (whether as an employee or an independent contractor) over the immediately\npreceding 36-month period (or, the full period of services to the Corporation if the\nParticipant has been providing services to the Corporation less than 36 months). Facts and\ncircumstances to be considered in making this determination include, but are not limited\nto, whether the Participant continues to be treated as an employee for other purposes (such\nas continuation of salary and participation in employee benefit programs), whether similarly\nsituated service providers have been treated consistently, and whether the Participant is\npermitted, and realistically available, to perform services for other service recipients in\nthe same line of business. The Participant is presumed to have Separated from Service where\nthe level of bona fide services performed decreases to a level equal to 20 percent or less\nof the average level of services performed by the employee during the immediately preceding\n36-month period. The Participant will be presumed not to have Separated from Service where\nthe level of bona fide services performed continues at a level that is 50 percent or more of\nthe average level of service performed by the Participant during the\n

\n\n

-3-\n

\n\n\n

immediately preceding\n36-month period. No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20 percent and less than 50\npercent of the average level of bona fide services performed during the immediately\npreceding 36-month period. The presumption is rebuttable by demonstrating that the\nCorporation and the Participant reasonably anticipated that as of a certain date the level\nof bona fide services would be reduced permanently to a level less than or equal to 20\npercent of the average level of bona fide services provided during the immediately preceding\n36-month period or the full period of services to the Corporation if the Participant has\nbeen providing services to the Corporation less than 36 months (or that the level of bona\nfide services would not be so reduced). For example, the Participant may demonstrate that\nthe Corporation and the Participant reasonably anticipated that the Participant would cease\nproviding services, but that, after the original cessation of services, business\ncircumstances such as termination of the Participant’s replacement caused the Participant to\nreturn to employment. Although the Participant’s return to employment may cause the\nParticipant to be presumed to have continued in employment because the Participant is\nproviding services at a rate equal to the rate at which the Participant was providing\nservices before the termination of employment, the facts and circumstances in this case\nwould demonstrate that at the time the Participant originally ceased to provide services,\nthe Corporation reasonably anticipated that the Participant would not provide services in\nthe future. For purposes of this paragraph (b), for periods during which the Participant is\non a paid bona fide leave of absence (as defined in paragraph (a) of this Section 2.13) and\nhas not otherwise terminated employment pursuant to paragraph (a) of this Section 2.13, the\nParticipant is treated as providing bona fide services at a level equal to the level of\nservices that the Participant would have been required to perform to receive the\ncompensation paid with respect to such leave of absence. Periods during which the\nParticipant is on an unpaid bona fide leave of absence (as defined in paragraph (a) of this\nSection 2.13) and has not otherwise terminated employment pursuant to paragraph (a) of this\nSection 2.13, are disregarded for purposes of this paragraph (b) of this Section 2.13\n(including for purposes of determining the applicable 36-month (or shorter) period).\n

\n\n\n

(c) Asset Purchase Transactions. Where as part of a sale or other disposition\nof assets by the Corporation as seller to an unrelated service recipient (buyer), a\nParticipant of the Corporation would otherwise experience a Separation from Service with the\nCorporation, the Corporation and the buyer may retain the discretion to specify, and may\nspecify, whether a Participant providing services to the Corporation immediately before the\nasset purchase transaction and providing services to the buyer after and in connection with\nthe asset purchase transaction has experienced a Separation from Service, provided that the\nasset purchase transaction results from bona fide, arm’s length negotiations, all service\nproviders providing services to the Corporation immediately before the asset purchase\ntransaction and providing services to the buyer after and in connection with the asset\npurchase transaction are treated consistently (regardless of position at the Corporation)\nfor purposes of applying the provisions of any nonqualified deferred compensation plan, and\nsuch treatment is specified in writing no later than the closing date of the asset purchase\ntransaction. For purposes of this paragraph (c), references to a sale or other disposition\nof assets, or an asset purchase transaction, refer only to a transfer of substantial assets,\nsuch as a plant or division or substantially all the assets of a trade or business.\n

\n\n\n

(d) Dual Status. If a Participant provides services both as an employee of the\nCorporation and as an independent contractor of the Corporation, the Participant must\nseparate from service both as an employee and as an independent contractor to be treated as\nhaving Separated from Service. If a Participant ceases providing services as an independent\ncontractor and begins providing services as an employee, or ceases providing services as an\nemployee and begins providing services as an independent contractor, the Participant will\nnot be considered to\nhave a Separation from Service until the Participant has ceased providing services in\nboth capacities. Notwithstanding the foregoing, if a Participant provides services both as\nan employee of the Corporation and a member of the board of directors of the Corporation,\nthe services provided as a director are not taken into account in determining whether the\nParticipant has a Separation from Service as an employee for purposes of this Plan unless\nthis Plan is aggregated with any plan in which the Participant participates as a director\nunder IRS Regulation Section 1.409A-1(c)(2)(ii).\n

\n\n

-4-\n

\n\n

2.14 “Specified Employee” shall have the meaning set forth in IRS Regulation Section\n1.409A-1 the requirements of which are summarized in part as follows:\n

\n\n\n

(a) In General. “Specified Employee” means a Participant who as of the date of\nhis Separation from Service is a “key employee” as defined in Code Section 416(i)\n(disregarding Section 416(i)(5)), i.e., an employee who at any time during the 12 month\nperiod ending on an identification date is an officer of the Corporation or one of its\naffiliates having an annual compensation as defined in IRS Regulation Section 1.409A-1(i)(2)\ngreater than $130,000, a 5% owner of the Corporation or one of its affiliates or a 1% owner\nof the Corporation or one of its affiliates having compensation of more than $150,000. The\n$130,000 amount described in the preceding sentence shall be adjusted for cost of living\nincreases in such amounts and at such times as specified by the Internal Revenue Service.\nFurther, no more than 50 employees (or, if lesser, the greater of 3 or 10% of the employees)\nshall be treated as officers. The foregoing definition shall be interpreted at all times in\na manner consistent with such regulations as may be adopted from time to time by the\nInternal Revenue Service for purposes of applying the key employee definition of Section\n416(i) to the requirements of Code Section 409A. If a person is a key employee as of an\nidentification date, the person is treated as a Specified Employee for the 12-month period\nbeginning on the first day of the fourth month following the identification date. The\n“identification date” is December 31.\n

\n\n\n

(b) In the event of a public offering, merger, acquisition, spin-off, reorganization or\nother corporate transaction, “Specified Employees” shall be determined as provided in IRS\nReg. Section 1.409A-(1)(i)(6).\n

\n\n

2.15 “Unforeseeable Emergency” means a severe financial hardship to a Participant\nresulting from an illness or accident of the Participant or the Participant’s spouse or dependent\n(as defined in Section 152(a) of the Code), loss of the Participant’s property due to casualty\n(including the need to rebuild a home following damage to a home not otherwise covered by\ninsurance, for example, as a result of a natural disaster), or other similar extraordinary and\nunforeseeable circumstances arising as a result of events beyond the control of the Participant.\nFor example, the imminent foreclosure of or eviction from the Participant’s primary residence may\nconstitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses,\nincluding non-refundable deductibles, as well as for the costs of prescription drug medication,\nmay constitute an Unforeseeable Emergency. Finally, the need to pay for funeral expenses of a\nspouse or a dependent (as defined in Code section 152(a)) may also constitute an Unforeseeable\nEmergency. Except as otherwise provided above, the purchase of a home and the payment of college\ntuition are not Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable\nEmergency is to be determined based on the relevant facts and circumstances of each case.\n

\n\n

-5-\n

\n\n

ARTICLE III\n

\n\n\n

PARTICIPATION AND DEFERRALS\n

\n\n\n

3.1 Determination of Participants. Within a reasonable period of time prior to the\nbeginning of a Plan Year or at any time during a Plan Year, the Administrator will designate\nemployees who will be eligible to become Active Participants in the Plan for that Plan Year (or\nthe remainder of such Plan Year). An employee designated as an Active Participant for a Plan Year\nshall remain an Active Participant until the employee’s Separation from Service or the\nAdministrator or the Board of Directors of the Corporation takes action to terminate such\nemployee’s participation effective on the first day of any Plan Year subsequent to the date of\nsuch action by the Administrator or the Board.\n

\n\n\n

3.2 Deferral Elections.\n

\n\n\n

(a) Salary Payments. An Active Participant may elect to defer a specified\npercentage of his salary for services performed during a Plan Year by completing and filing\nsuch forms as required by the Corporation prior to the first day of the Plan Year. A\nParticipant’s deferrals shall be taken at a uniform percentage rate from each of his salary\npayments during the year. Compensation deferred shall be retained by the Corporation,\ncredited to the Participant’s Account pursuant to Section 4.1 and paid in accordance with\nthe terms and conditions of the Plan. An employee who is not already eligible to\nparticipate in any other deferred compensation plan of the account balance type who becomes\nan Active Participant for the first time during a Plan Year (for example, an employee\ndesignated to be a Participant by the Administrator upon hire or promotion) may within 30\ndays after the effective date of participation make an election to defer a specified\npercentage of salary to be paid to him for services to be performed subsequent to the\ndeferral election.\n

\n\n\n

(b) Bonus Payments. An Active Participant may elect to defer a portion of any\nand all bonus payments made to him during a Plan Year by completing and filing such forms as\nrequired by the Corporation. To the extent a bonus payment represents a payment of a\nPerformance Based Bonus, to be effective the deferral election with respect to such bonus\nmust be filed with the Corporation at least seven months prior to the end of the period in\nwhich the bonus payment is earned. If a bonus payment is not a Performance Based Bonus but\nis calculated on a Fiscal Year basis, then to be effective the deferral election must be\nfiled prior to the beginning of the Fiscal Year during which the Participant first renders\nany services giving rise to the payment of the bonus. If a bonus is not a Performance Based\nBonus and is not calculated on a Fiscal Year basis, to be effective, the deferral election\nmust be filed prior to the beginning of the first Plan Year in which are performed any\nservices for which such bonus is payable. An employee who is not already eligible to\nparticipate in any other deferred compensation plan sponsored by the Corporation of the\naccount balance type who becomes an Active Participant for the first time during a Plan Year\n(for example, an employee designated to be a Participant by the Administrator upon hire or\npromotion) may within 30 days after the effective date of participation make an election to\ndefer a specified percentage of any bonus payment for which the service period has already\nbegun and, in such event, the election shall apply to the portion of bonus compensation\nequal to the total bonus compensation to be paid to the Participant with respect to that\nservice period multiplied by a fraction of which the numerator is the number of days\nremaining in the performance period and the denominator is the total number of days in the\nperformance period.\n

\n\n

-6-\n

\n\n\n

3.3 Continued Effect of Elections.\n

\n\n\n

(a) Salary Payments. An Active Participant’s deferral election with respect to\na Plan Year under Section 3.2(a) shall be irrevocable after the last date upon which it may\nbe filed pursuant to Section 3.2(a) and shall continue in effect each subsequent Plan Year\nuntil prospectively revoked or amended in writing. For a revocation or amendment to be\neffective with respect to salary payments during a Plan Year, it must be filed by the last\ndate for which an effective deferral election is permitted to be filed with respect to those\nsalary payments under Section 3.2(a).\n

\n\n\n

(b) Bonus Payments. An Active Participant’s deferral election under Section\n3.2(b) with respect to a bonus shall be irrevocable after the last date upon which it may be\nfiled pursuant to Section 3.2(b) and shall continue in effect with respect to bonuses earned\nin subsequent performance periods until prospectively revoked or amended in writing. For a\nrevocation or amendment to be effective for any bonus payment, it must be filed by the last\ndate for which an effective deferral election is permitted to be filed with respect to that\nbonus payment under Section 3.2(b).\n

\n\n

3.4 Prior Deferral Elections. Any deferral election made prior to calendar year 2005\nunder a Frozen Agreement shall be treated as a deferral election described in Section 3.2(a)\nand/or Section 3.2(b), as the case may be, and shall continue in effect until modified as\ndescribed in Section 3.3 above unless modified earlier pursuant to Section 8.14(a) below.\n

\n\n

3.5 Unforeseeable Emergency. In the event that a Participant makes application for a\nhardship distribution under Section 6.3 and the Administrator determines that an Unforeseeable\nEmergency exists, all deferral elections otherwise in effect under this Article III and any other\nnonqualified deferred compensation plan of the account balance type sponsored by the Corporation\nshall immediately terminate upon such determination. To resume deferrals thereafter, a\nParticipant must make an election satisfying the provisions of Section 3.2(a) and/or (b), as the\ncase may be, as those provisions apply to someone who is already an Active Participant in the\nPlan.\n

\n\n

3.6 401(k) Hardship. Any deferral elections in effect under this Article III shall\nbe cancelled as required due to a hardship distribution described in IRS Regulation Section\n1.401(k)-1(d)(3) or any successor thereto. To resume deferrals after the required suspension\nperiod, a Participant must make an election satisfying the provisions of Section 3.2(a) and/or\n(b), as the case may be, as those provisions apply to someone who is already an Active Participant\nin the Plan.\n

\n\n

ARTICLE IV\n

\n\n\n

ACCOUNTS\n

\n\n\n

4.1 Credits to Account. Bookkeeping amounts equal to the amounts deferred by a\nParticipant pursuant to Section 3.2 shall be credited to such Participant’s Deferral Account as\nsoon as practicable after the deferred compensation would otherwise have been paid to such\nParticipant in the absence of deferral.\n

\n\n

-7-\n

\n\n\n

4.2 Valuation of Account.\n

\n\n\n

(a) The Participant’s Account shall be credited or charged with deemed earnings or\nlosses as if it were invested in accordance with paragraph (b) below.\n

\n\n\n

(b) (i) The investment funds available hereunder for the deemed investment of the\nAccount shall be the Brady Stock Fund and such other funds as the Administrator shall from\ntime to time determine. However, in no event shall the Corporation be required to make any\nsuch investment in the Brady Stock Fund or any other investment fund and, to the extent such\ninvestments are made, such investments shall remain an asset of the Corporation subject to\nthe claims of its general creditors.\n

\n\n\n

(ii) On the date credited to the Participant’s Account, deferrals shall be\ndeemed to be invested in one or more of the investment funds designated by the\nParticipant for such deemed investment; provided that any deferrals designated for\ninvestment in the Brady Stock Fund shall initially be credited to the General\nInvestment Sub-account and transferred to the Brady Stock Sub-account on a quarterly\nbasis. Once made, the Participant’s investment designation shall continue in effect\nfor all future deferrals until changed by the Participant. Any such change may be\nprospectively elected by the Participant at the times established by the\nAdministrator, which shall be no less frequently than quarterly, and shall be\neffective only for deferrals, credited from and after its effective date. Until\nsuch time as the Administrator takes action to the contrary, such changes may be\nelected at the same times as changes may be elected with respect to the Brady\nMatched 401(k) Plan.\n

\n\n\n

(iii) A Participant’s balance in the Brady Stock Fund shall be determined as\nthough the Participant’s deferrals allocated to that Fund are invested in shares of\nClass A non-voting common stock of Brady Corporation by purchase at the fair market\nvalue price of such stock on the date the deferrals are credited to the\nParticipant’s Brady stock account.\n

\n\n\n

(iv) The portion of a Participant’s Account invested in the Brady Stock Fund\nshall be called the Brady Stock Sub-account. The remaining portion of the\nParticipant’s Account shall be referred to as the General Investment Sub-account.\n

\n\n\n

(v) The value of the Brady Stock Sub-account on any particular date will be\nbased upon the value of the shares of Class A non-voting common stock of Brady\nCorporation which the sub-account is deemed to hold on that date. The shares of\nsuch stock deemed to be held in such sub-account shall be credited with dividends at\nthe time they are credited with respect to actual shares of Class A non-voting\ncommon stock of Brady Corporation and such dividends shall be deemed to be used to\npurchase additional shares of Class A non-voting common stock of Brady Corporation\non the day following the crediting of such dividends at the then fair market value\nprice of such stock. The sub-account shall also be credited from time to time with\nadditional shares of Class A non-voting common stock of Brady Corporation equal in\nnumber to the number of shares granted in any stock dividend or split to which the\nholder of a like number of shares of Class A non-voting common stock would be\nentitled. All other distributions with respect to shares of Class A non-voting\ncommon stock of Brady Corporation shall be similarly applied. In the event of a\ndistribution of preferred stock, such preferred stock shall be valued at its par\nvalue (or its voluntary liquidating price, if it does not have a par value).\n

\n\n

-8-\n

\n\n\n

(vi) The valuation of the funds held in the General Investment Sub-account\nshall be accomplished in the same manner as though the deemed investment in such\nfunds had actually been made and are valued at their fair market value price on\nvaluation dates hereunder.\n

\n\n\n

(vii) A Participant’s Account shall be valued as of December 31 each year and\nat such other times established by the Administrator, which shall be no less\nfrequently than quarterly. Until such time as the Administrator takes action to the\ncontrary, such valuation shall be at the same time as valuations made of Brady\nmatched 401(k) plan assets.\n

\n\n\n

(viii) All elections and designations under this section shall be made in\naccordance with procedures prescribed by the Administrator. The Administrator may\nprescribe uniform percentages for such elections and designations.\n

\n\n\n

(ix) A Participant may prospectively elect to reallocate his Account balance\namong the investment funds at the times established by the Administrator, which\nshall be no less frequently than quarterly. Until such time as the Administrator\ntakes action to the contrary, such changes may be elected at the same times as\nchanges may be elected with respect to the Brady Matched 401(k) Plan.\nNotwithstanding any other provision of this Plan to the contrary, a Participant may\nnot make (i) any election or transaction in the Brady Stock Fund at a time when the\nParticipant is in possession of any material non-public information or at a time not\npermitted under the Corporation’s policy on insider trading or (ii) an opposite way\nelection with respect to the Brady Stock Fund within six months of a prior election\nregarding the Brady Stock Fund.\n

\n\n\n

(x) Notwithstanding subparagraph (ix) above, from and after May 1, 2006, a\nParticipant may not shift any amounts from his Brady Stock Sub-account to his\nGeneral Investment Sub-account or vice-versa. Notwithstanding Article I and Section\n2.11 of this Plan to the contrary, the rule of this subparagraph (x) shall apply to\nall amounts held for a Participant under a Frozen Agreement as well, meaning that\nfrom and after May 1, 2006, a Participant shall not be entitled to transfer any\namount to or from the portion of his account held in the Brady Stock Fund under the\nFrozen Agreement. The preceding sentence shall not apply to a Participant who has\nhad a Separation from Service prior to May 1, 2006.\n

\n\n\n

(c) The Corporation shall provide annual reports to each Participant showing (a) the\nvalue of the Account as of the most recent December 31^st, (b) the amount of\ndeferral made by the Participant for the Plan Year ending on such date and (c) the amount of\nany investment gain or loss and the costs of administration credited or debited to the\nParticipant’s Account.\n

\n\n\n

(d) Notwithstanding any other provision of this Agreement that may be interpreted to\nthe contrary, the deemed investments are to be used for measurement purposes only and\nshall not be considered or construed in any manner as an actual investment\nof the Participant’s Account balance in any such fund. In the event that Brady Corporation\nor the trustee of any grantor trust which Brady Corporation may choose to establish to\nfinance some or all of its obligations hereunder, in its own discretion, decides to invest\nfunds in any or all of the funds, the Participant shall have no rights in or to such\ninvestments themselves. Without limiting the foregoing, the Participant’s Account balance\nshall at all times be a bookkeeping entry only and shall not\nrepresent any investment made on the Participant’s behalf by the Corporation or any\ntrust; the Participant shall at all times remain an unsecured creditor of the Corporation.\n

\n\n

-9-\n

\n\n

ARTICLE V\n

\n\n\n

VESTING\n

\n\n\n

5.1 Full Vesting. A Participant shall be fully vested and nonforfeitable at all\ntimes in his or her Account hereunder.\n

\n\n

ARTICLE VI\n

\n\n\n

MANNER AND TIMING OF DISTRIBUTION\n

\n\n\n\n

6.1 Payment of Benefits.\n

\n\n\n

(a) After a Participant’s Separation from Service the Participant’s Account shall be\npaid to the Participant (or in the event of the Participant’s death, to the Participant’s\nBeneficiary). Payment shall be made in one of the following forms as specified in the\nParticipant’s payment election pursuant to Section 6.2:\n

\n\n\n

(i) Single Sum. A single sum distribution of the value of the balance\nof the Account on the first day of October following the Participant’s Separation\nfrom Service; or\n

\n\n\n

(ii) Installments. The value of the balance of the Account shall be\npaid in annual installments on the first day of October each year with the first of\nsuch installments to be paid on the first day of October following the Participant’s\nSeparation from Service. Annual installments shall be paid in one of the\nalternative methods specified below over the number of years selected by the\nParticipant in the payment election made pursuant to Section 6.2, but not to exceed\n10. The earnings (or losses) provided for in Section 4.2 shall continue to accrue\non the balance remaining in the Account during the period of installment payments.\nThe alternative methods available are as follows:\n

\n\n\n

(A) Fractional Method. The annual installment shall be\ncalculated by multiplying the most recent July 31 value of the Account by a\nfraction, the numerator of which is one, and the denominator of which is the\nremaining number of annual payments due the Participant. By way of example,\nif the Participant elects a 10 year annual installment method, the first\npayment shall be one-tenth (1/10) of the Account balance. The following\nyear, the payment shall be one-ninth (1/9) of the Account balance.\n

\n\n\n

(B) Percentage or Fixed Dollar Method. The annual installment\nshall be calculated by multiplying the most recent July 31 value of the\nAccount, in the case of the percentage method, by the percentage selected by\nthe Participant and paying out the resulting amount or, in the case of the\nfixed dollar\nmethod, by paying out the fixed dollar amount selected by the\nParticipant for the number of years selected by the Participant. However,\nin the event the dollar amount selected is more than the value of the\nAccount in any given year, the entire value of the Account will be\ndistributed. Further, regardless of the method selected by the Executive,\nthe final installment payment will include 100% of the then remaining July\n31 Account value.\n

\n\n

-10-\n

\n\n\n

(iii) In Cash or In Stock. Prior to May 1, 2006 all payments shall be\nmade in cash. From and after May 1, 2006, payments shall be made in cash and/or\nClass A non-voting common stock of Brady Corporation pursuant to the following:\n

\n\n\n

(A) If distribution is made in a single sum, the value of the portion\nof the Participant’s Account which consists of the General Investment\nSub-account shall be paid in cash while the value of the portion of the\nAccount which consists of the Brady Stock Sub-account shall be paid by\ndistributing the number of shares of Class A non-voting stock of Brady\nCorporation which represent the number of deemed shares held in the Brady\nStock Sub-Account, except, however, that any fractional shares shall be\nvalued and distributed in cash.\n

\n\n\n

(B) If distribution is made in installments, a portion of each\ninstallment shall be distributed in cash and a portion in Class A non-voting\n shares of common stock of Brady Corporation. The portion to be distributed\nin cash shall be that portion of the total installment payment which is the\nsame percentage as derived by dividing the value of the Balance in the\nGeneral Investment Sub-account by the value of the total Account balance and\nthe portion to be distributed in stock shall be the same percentage as\ndetermined by dividing the value of the balance of the Brady Stock\nSub-account by the value of the total Account balance. The number of shares\nof Class A non-voting shares of common stock of Brady Corporation to be\ndistributed shall be the number having the same value as the portion of the\ninstallment to be paid in such stock, except, however, that any fractional\n shares shall be distributed in cash.\n

\n\n\n

(C) Notwithstanding Article I and Section 2.11 of this Plan to the\ncontrary, the rule of this sub-paragraph (iv) shall apply to amounts held\nfor a Participant under a Frozen Agreement from and after May 1, 2006. The\npreceding sentence shall not apply to a Participant who has had a Separation\nfrom Service prior to May 1, 2006.\n

\n\n\n

(b) In the case of a Participant who is a Specified Employee, payment pursuant to\nparagraph (a) above shall commence no earlier than the first day of the seventh month\nfollowing the Participant’s Separation from Service. This delay in distribution rule does\nnot apply if the payment is being made as a result of the Participant’s death or disability.\nFor this purpose, “disability” means that the Participant:\n

\n\n\n

(i) is unable to engage in any substantial gainful activity by reason of any\nmedically determinable physical or mental impairment which can be expected to result\nin death or can be expected to last for a continuous period of not less than 12\nmonths, or\n

\n\n\n

(ii) is, by reason of any medically determinable physical or mental impairment\nwhich can be expected to result in death or can be expected to last for a\ncontinued period of not less than 12 months, receiving income replacement\nbenefits for a period of not less than three months under an accident and health\nplan covering the employees of the Corporation or one of its affiliates in which the\nParticipant is covered.\n

\n\n

-11-\n

\n\n

6.2 Payment Election. An individual who first becomes an Active Participant at the\nbeginning of a Plan Year who is provided with prior written notice of the effective date of\nparticipation shall complete a payment election form specifying the form of payment applicable to\nsuch Participant’s Account under the Plan. Absent an actual election by such Participant by the\neffective date of participation, the Participant shall be deemed to have elected payment in the\nfive (5) annual installment payment form. An individual who first becomes an Active Participant\nother than on the first day of a Plan Year shall complete a payment election form specifying the\nform of payment applicable to such Participant’s Account no later than 30 days after the effective\ndate of participation. In the event such a Participant does not make an actual election within\nsuch 30 day period, the Participant shall be deemed to have elected the five (5) annual\ninstallment payment form; provided, however, that if such Participant is already a participant in\nany other nonqualified plan or plans sponsored by the Corporation of the account balance type, the\nmost recent payment election with respect to any one of those plans shall be the payment election\nform deemed elected under this Plan regardless of whether the individual elects a different\npayment election form during that initial 30 day period. A Participant may change the form of\npayment by completing and filing a new payment election form with the Corporation, and the payment\nelection form on file with the Corporation as of the date of the Participant’s Separation from\nService shall be controlling. Notwithstanding the foregoing, a payment election form changing the\nParticipant’s form of payment shall not be effective if the Participant has a Separation from\nService within twelve months after the date on which the election change is filed with the\nCorporation. Any change in payment method must have the effect of delaying the commencement of\npayments to a date which is at least five (5) years following the initially scheduled commencement\ndate of payment previously in effect. For purposes of compliance with Section 409A of the\nInternal Revenue Code, a series of five year installment payments, ten year installment payments\nand twenty year installment payments are each designated as a single payment rather than a right\nto a series of separate payments; therefore, a Participant who has elected (or is deemed to have\nelected) any option under Section 6.1 may substitute any of the other options for the option\noriginally elected as long as the foregoing one-year and five year rules are satisfied. A switch\nfrom the percentage method to the fixed dollar method or vice versa and a switch from either of\nthose methods to the fractional method or vice versa is considered a substitution of a new option\nfor the original option for purposes of this rule even if the number of yearly installments is not\nchanged. The five year delay rule does not apply if the revised payment method applies only upon\nthe Participant’s death or disability. For this purpose, disability has the same meaning as in\nSection 6.1(b). In the event that the Participant’s new payment election would not be effective\nunder the foregoing rules, the payment election from previously in effect shall be controlling.\n

\n\n

6.3 Financial Hardship. A partial or total distribution of the Participant’s Account\nshall be made prior to Separation from Service upon the Participant’s request and a demonstration\nby the Participant of severe financial hardship as a result of an Unforeseeable Emergency. Such\ndistribution shall be made in a single sum as soon as administratively practicable following the\nAdministrator’s determination that the foregoing requirements have been met. In any case, a\ndistribution due to Unforeseeable Emergency may not be made to the extent that such emergency is\nor may be relieved through reimbursement or compensation from insurance or otherwise, by\nliquidation of the Participant’s assets, to the extent the liquidation of such assets would not\ncause severe financial hardship, or by cessation of deferrals under Section 3.2 and any other\nnonqualified deferred compensation plan of the account balance type sponsored by the Corporation.\nDistributions because of an Unforeseeable Emergency must be limited to the amount reasonably\nnecessary to satisfy the emergency need (which may include amounts necessary to pay any Federal,\nstate, or local income taxes or penalties reasonably\nanticipated to result from the distribution). Determinations of amounts reasonably necessary\nto satisfy the emergency need must take into account any additional compensation that is available\nbecause of cancellation of a deferral election under Section 3.2 and any other nonqualified\ndeferred compensation plan of the account balance type sponsored by the Corporation upon a payment\ndue to an Unforeseeable Emergency. The payment may be made from any arrangement in which the\nParticipant participates that provides for payment upon an Unforeseeable Emergency, provided that\nthe arrangement under which the payment was made must be designated at the time of payment.\n

\n\n

-12-\n

\n\n\n

6.4 Delayed Distribution.\n

\n\n\n

(a) A payment otherwise required to be made pursuant to the provisions of this Article\nVI shall be delayed if the Corporation reasonably anticipates that the Corporation’s\ndeduction with respect to such payment would be limited or eliminated by application of Code\nSection 162(m); provided, however that such payment shall be made on the earliest date on\nwhich the Corporation anticipates that the deduction of the payment of the amount will not\nbe limited or eliminated by application of Code Section 162(m). In any event, such payment\nshall be made no later than the last day of the calendar year in which the Participant has a\nSeparation from Service or, in the case of a Specified Employee, the last day of the\ncalendar year in which occurs the six (6) month anniversary of such Separation from Service.\n

\n\n\n

(b) A payment otherwise required under this Article VI shall be delayed if the\nCorporation reasonably determines that the making of the payment will jeopardize the ability\nof the Corporation to continue as a going concern; provided, however, that payments shall be\nmade on the earliest date on which the Corporation reasonably determines that the making of\nthe payment will not jeopardize the ability of the Corporation to continue as a going\nconcern.\n

\n\n\n

(c) A payment otherwise required under this Article VI shall be delayed if the\nCorporation reasonably anticipates that the making of the payment will violate federal\nsecurities laws or other applicable law; provided, however, that payments shall nevertheless\nbe made on the earliest date on which the Corporation reasonably anticipates that the making\nof the payment will not cause such violation. (The making of a payment that would cause\ninclusion in gross income or the applicability of any penalty provision or other provision\nof the Code is not treated as a violation of applicable law.)\n

\n\n\n

(d) A payment otherwise required under this Article VI shall be delayed upon such other\nevents and conditions as the Internal Revenue Service may prescribe in generally applicable\nguidance published in the Internal Revenue Bulletin.\n

\n\n

6.5 Inclusion in Income Under Section 409A. Notwithstanding any other provision of\nthis Article VI, in the event this Plan fails to satisfy the requirements of Code Section 409A and\nregulations thereunder with respect to any Participant, there shall be distributed to such\nParticipant as promptly as possible after the Administrator becomes aware of such fact of\nnoncompliance such portion of the Participant’s Account balance hereunder as is included in income\nas a result of the failure to comply, but no more. Any such distribution shall be taken on a pro\nrata basis from the Participant’s General Investment Sub-account and Brady Stock Sub-account in\nthe manner described in Section 6.1(a)(iv)(B).\n

\n\n

6.6 Domestic Relations Order. Notwithstanding any other provision of this Article\nVI, payments shall be made from an account of a Participant in this Plan to such individual or\nindividuals (other than the Participant) and at such times as are necessary to comply with a\ndomestic relations order (as defined in Code Section 414(p)(1)(B)). Any such distribution shall\nbe taken on a pro rata basis from\nthe Participant’s General Investment Sub-account and Brady Stock Sub-account in the manner\ndescribed in Section 6.1(a)(iv)(B).\n

\n\n

-13-\n

\n\n

6.7 De Minimis Amounts. Notwithstanding any other provision this Article VI, a\nParticipant’s Account balance under this Plan and all other nonqualified deferred compensation\nplans of the account balance type shall automatically be distributed to the Participant on or\nbefore the later of December 31 of the calendar year in which occurs the Participant’s Separation\nfrom Service or the 15^th day of the third month following the Participant’s Separation\nfrom Service if the total amount in such Account balance at the time of distribution, when\naggregated with all other amounts payable to the Participant under all arrangements benefiting the\nParticipant described in Section 1.409A-1(c) or any successor thereto, do not exceed the amount\ndescribed in Code Section 402(g)(1)(B). The foregoing lump sum payment shall be made\nautomatically and any other distribution elections otherwise applicable with respect to the\nindividual in the absence of this provision shall not apply.\n

\n\n

ARTICLE VII\n

\n\n\n

ADMINISTRATION\n

\n\n\n

7.1 Compensation Committee as Administrator. The Plan shall be administered by the\nAdministrator, which shall be the Compensation Committee of the Corporation’s Board of Directors.\nThe Administrator shall have all authority that may be appropriate for administering the Plan,\nincluding the authority to adopt rules and regulations for the conduct of its affairs and for\nimplementing, amending and carrying out the Plan, interpreting the provisions of the Plan and\ndetermining a Participant’s entitlement to benefits hereunder. The Administrator shall be\nentitled to rely upon the Corporation’s records as to information pertinent to calculations or\ndeterminations made pursuant to the Plan.\n

\n\n

The Administrator may also delegate any of its clerical or other administrative duties to one\nor more officers or employees of the Corporation, who may assist the Administrator in the\nperformance of any of its functions hereunder. In the event of such delegation, a reference to the\nAdministrator shall be deemed to refer to such officer(s) or employee(s).\n

\n\n

7.2 Authority of Administrator. The Administrator shall have full and complete\ndiscretionary authority to determine eligibility for benefits under the Plan, to construe the\nterms of the Plan and to decide any matter presented through the claims procedure. Any final\ndetermination by the Administrator shall be binding on all parties and afforded the maximum\ndeference allowed by law. If challenged in court, such determination shall not be subject to\nde novo review and shall not be overturned unless proven to be arbitrary and capricious\nbased upon the evidence considered by the Administrator at the time of such determination.\n

\n\n

7.3 Administrator Actions. The Administrator may authorize one or more of its\nmembers to execute on its behalf instructions or directions to any interested party, and any such\ninterested party may rely upon the information contained therein. The members may also act at a\nmeeting or by unanimous written consent. A majority of the members shall constitute a quorum for\nthe transaction of business and shall have full power to act hereunder. All decisions shall be\nmade by vote of the majority present at any meeting at which a quorum is present, except for\nactions in writing without a meeting, which must be unanimous.\n

\n\n

7.4 Minor or Incompetent Payees. If a person to whom a benefit is payable is a minor\nor is otherwise incompetent by reason of a physical or mental disability, the Corporation may\ncause the\npayments due to such person to be made to another person for the first person’s benefit\nwithout any responsibility to see to the application of such payment. Such payments shall operate\nas a complete discharge of the obligations to such person under the Plan.\n

\n\n

-14-\n

\n\n

7.5 No Liability. Except as otherwise provided by law, neither the Administrator,\nnor any member thereof, nor any director, officer or employee of the Corporation involved in the\nadministration of the Plan shall be liable for any error of judgment, action or failure to act\nhereunder or for any good faith exercise of discretion, excepting only liability for gross\nnegligence or willful misconduct. The Corporation shall hold harmless and defend any individual\nin the employment of the Corporation and any director of the Corporation against any claim, action\nor liability asserted against him in connection with any action or failure to act regarding the\nPlan, except as and to the extent that any such liability may be based upon the individual’s own\ngross negligence or willful misconduct. This indemnification shall not duplicate but may\nsupplement any coverage available under any applicable insurance.\n

\n\n\n

7.6 Claims Procedure.\n

\n\n\n

(a) If the Participant or the Participant’s Beneficiary (hereinafter referred to as a\n“Claimant”) is denied all or a portion of an expected benefit under the Plan for any reason,\nhe or she may file a claim with the Administrator or its designee. The Administrator or its\ndesignee shall notify the Claimant within 60 days of allowance or denial of the claim,\nunless the Claimant receives written notice prior to the end of the sixty (60) day period\nstating that special circumstances require an extension of the time for decision and\nspecifying the expected date of decision. The notice of the such decision shall be in\nwriting, sent by mail to the Claimant’s last known address, and if a denial of the claim,\nmust contain the following information:\n

\n\n\n

(i) the specific reasons for the denial;\n

\n\n\n

(ii) specific reference to pertinent provisions of the Plan on which the denial\nis based;\n

\n\n\n

(iii) if applicable, a description of any additional information or material\nnecessary to perfect the claim, an explanation of why such information or material\nis necessary, and an explanation of the claims review procedure; and\n

\n\n\n

(iv) a description of the Plan’s claims review procedure, including a statement\nof the Claimant’s right to bring a civil action under Section 502 of ERISA if the\nClaimant’s claim is denied upon review.\n

\n\n\n

(b) A Claimant is entitled to request a review of any denial of his claim. The request\nfor review must be submitted in writing to the Administrator within 60 days after receipt of\nthe notice of the denial. The timely filing of such a request is necessary to preserve any\nlegal recourse which may be available to the Claimant and, absent the submission of request\nfor review within the 60-day period, the claim will be deemed to be conclusively denied.\nUpon submission of a written request for review, the Claimant or his representative shall be\nentitled to review all pertinent documents, and to submit issues and comments in writing for\nconsideration by the Administrator. The Administrator shall fully and fairly review the\nmatter and shall consider all information submitted in the review request, without regard to\nwhether or not such information was submitted or considered in the initial claim\ndetermination. The Administrator shall promptly respond to the Claimant, in writing, of its\ndecision within 60 days after receipt of the review request. However, due to special\ncircumstances, if no response has been provided within the first\n60 days, and notice of the need for additional time has been furnished within such\nperiod, the review and response may be made within the following 60 days. The\nAdministrator’s decision shall include specific reasons for the decision, including\nreferences to the particular Plan provisions upon which the decision is based, notification\nthat the Claimant can receive or review copies of all documents, records and information\nrelevant to the claim, and information as to the Claimant’s right to file suit under Section\n502(a) of ERISA.\n

\n\n

-15-\n

\n\n\n

(c) If a determination of disability for purposes of Section 6.1(b) or 6.2 becomes\nnecessary and if such determination is considered to be with respect to a claim for benefits\nbased on disability for purposes of 29 CFR Section 2560.503-1, then the Administrator shall\nadopt and administer a special procedure for considering such disability claims meeting the\nrequirements of 29 CFR Section 2560.503-1 for disability benefit claims.\n

\n\n

ARTICLE VIII\n

\n\n\n

MISCELLANEOUS\n

\n\n\n

8.1 Amendment or Termination. The Corporation (through its Board of Directors or\nauthorized officers or employees and/or the Compensation Committee) reserves the right to alter or\namend the Plan, or any part thereof, in such manner as it may determine, at any time and for any\nreason. Further, the Board of Directors of the Corporation reserves the right to terminate the\nPlan, at any time and for any reason. Notwithstanding the foregoing, in no event shall any\namendment or termination deprive any Participant or Beneficiary of any amounts credited to him\nunder this Plan as of the date of such amendment or termination; provided, however, that the\nCorporation may prospectively change the manner in which earnings are credited or discontinue the\ncrediting of earnings and, further, the Corporation may make any amendment it deems necessary or\ndesirable for purposes of compliance with the requirements of Code Section 409A and regulations\nthereunder.\n

\n\n

If the Plan is amended to freeze benefit accruals, no additional deferrals or contributions\nshall be credited to any Participant Account hereunder. Following such a freeze of benefit\naccruals, Participants’ Accounts shall be paid at such time and in such form as provided under\nArticle VI of the Plan. If the Corporation terminates the Plan and if the termination is of the\ntype described in regulations issued by the Internal Revenue Service pursuant to Code Section 409A,\nthen the Corporation shall distribute the then existing Account balances of Participants and\nbeneficiaries in a lump sum within the time period specified in such regulations and, following\nsuch distribution, there shall be no further obligation to any Participant or beneficiary under\nthis Plan. However, if the termination is not of the type described in such regulations, then\nfollowing Plan termination Participants’ Accounts shall be paid at such time and in such form as\nprovided under Article VI of the plan.\n

\n\n

8.2 Applicable Law. This Plan shall be governed by the laws of the State of\nWisconsin, except to the extent preempted by the provisions of ERISA or other applicable federal\nlaw.\n

\n\n

8.3 Relationship to Other Programs. Participation in the Plan shall not affect a\nParticipant’s rights to participate in and receive benefits under any other plans of the\nCorporation, nor shall it affect the Participant’s rights under any other agreement entered into\nwith the Corporation, unless expressly provided otherwise by such plan or agreement. Any amount\ncredited under or paid pursuant to this Plan shall not be treated as wages, salary or any other\ntype of compensation or otherwise taken into account\nin the determination of the Participant’s benefits under any other plans of the Corporation,\nunless expressly provided otherwise by such plan.\n

\n\n

-16-\n

\n\n

8.4 Non-Assignability by Participant. No Participant or Beneficiary shall have any\nright to commute, sell, assign, pledge, convey, or otherwise transfer any rights or claims to\nreceive benefits hereunder, nor shall such rights or claims be subject to garnishment, attachment,\nexecution or levy of any kind except to the extent otherwise required by law.\n

\n\n

8.5 Status of Plan Under ERISA. The Plan is intended to be an unfunded plan\nmaintained by the Corporation primarily for the purpose of providing deferred compensation for a\nselect group of management or highly compensated employees, as described in Section 201(2),\nSection 301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of ERISA.\n

\n\n

8.6 Withholding. The Corporation shall comply with all applicable tax and\ngovernmental withholding requirements. To the extent required by law, the Corporation shall\nwithhold any taxes required to be withheld by the federal or any state or local government from\npayments made hereunder or from any other amounts paid to a Participant by the Corporation. If\nFICA taxes must be withheld in connection with amounts credited hereunder before payments are\notherwise due hereunder and if there are no other wages from which to withhold them, the\nCorporation shall pay such FICA taxes generated by such payment (and taxes under Code Section 3401\ntriggered thereby and additional taxes under Section 3401 attributable to pyramiding of Section\n3401 wages and taxes) but no more and the Participant’s Account hereunder shall be reduced by an\namount equal to the payments made by the Corporation. Any such distribution shall be taken on a\npro rata basis from the Participant’s General Investment Sub-account and Brady Stock Sub-account\nin the manner described in Section 6.1(a)(iv)(B).\n

\n\n

8.7 No Right to Continued Employment. Neither participation in this Plan, nor the\npayment of any benefit hereunder, shall be construed as giving to a Participant any right to be\nretained in the service of the Corporation, or limiting in any way the right of the Corporation to\nterminate the Participant’s service at any time. Nor does participation in this Plan guarantee\nthe Participant the right to be continued in service in any particular position or at any\nparticular rate of compensation.\n

\n\n

8.8 Assignability by Corporation. The Corporation shall have the right to assign all\nof its right, title and obligation in and under this Plan upon a merger or consolidation in which\nthe Corporation is not the surviving entity or to the purchaser of substantially its entire\nbusiness or assets or the business or assets pertaining to a major product line, provided such\nassignee or purchaser assumes and agrees to perform after the effective date of such assignment\nall of the terms, conditions and provisions imposed by this Plan upon the Corporation. Upon such\nassignment, all of the rights, as well as all obligations, of the Corporation under this Plan\nshall thereupon cease and terminate.\n

\n\n

8.9 Unsecured Claim; Grantor Trust. The right of a Participant to receive payment\nhereunder shall be an unsecured claim against the general assets of the Corporation, and no\nprovisions contained herein, nor any action taken hereunder shall be construed to give any\nindividual at any time a security interest in any asset of the Corporation, of any affiliated\ncorporation, or of the stockholders of the Corporation. The liabilities of the Corporation to a\nParticipant hereunder shall be those of a debtor pursuant to such contractual obligations as are\ncreated hereunder and to the extent any person acquires a right to receive payment from the\nCorporation hereunder, such right shall be no greater than the right of any unsecured general\ncreditor of the Corporation.\n

\n\n

The Corporation may establish a grantor trust (but shall not be required to do so) to which\nthe Corporation may in its discretion contribute (subject to the claims of the general creditors of\nthe\nCorporation) the amounts credited to the Account. If a grantor trust is so established,\npayment by the trust of the amounts due the Participant or his Beneficiary hereunder shall be\nconsidered a payment by the Corporation for purposes of this Plan.\n

\n\n

-17-\n

\n\n

8.10 Notices or Filings. Any notice or filing required or permitted to be given to\nthe Administrator hereunder shall be sufficient if in writing and hand-delivered, or sent by\nregistered or certified mail, to the address below:\n

\n\n\n

Corporate Treasurer
\nBrady Corporation
\nP.O. Box 571
\nMilwaukee, WI 53201-0571\n

\n\n

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail,\nas of the date shown on the postmark on the receipt for registration or certification.\n

\n\n

Any notice or filing required or permitted to be given to a Participant hereunder shall be\nsufficient if in writing and hand-delivered, or sent by mail, to the last known address of the\nParticipant.\n

\n\n

8.11 Special rules for 2005-2007. Notwithstanding the usual rules required regarding\nthe deferral elections and distribution elections:\n

\n\n\n

(a) A Participant may on or before March 15, 2005 make a new deferral election to apply\nto amounts which would otherwise be paid in calendar year 2005; provided that such amounts\nhave not been paid or become payable at the time of the election. Such election shall\nremain in effect for future years until modified pursuant to Section 3.3(a) and/or (b), as\nthe case may be.\n

\n\n\n

(b) On or before December 31, 2007, a Participant may make an election as to\ndistribution of his Account from among the choices described at Section 6.1 hereof without\ncomplying with the rules described in Section 6.2 hereof as long as the effect of the\nelection is not to accelerate payments into 2006 or to defer payments which would otherwise\nhave been made in 2006, and as long as the effect of the election is not to accelerate the\npayments into 2007 or to defer payments which would otherwise have been made in 2007. Such\nelection shall become effective after the last day upon which it is permitted to be made.\nHowever, in order to subsequently change such special election after December 31, 2007, the\nrequirements of Section 6.2 hereof must be satisfied. (This election will not apply to\ndistribution of the Participant’s accounts holding amounts earned and vested prior to\nJanuary 1, 2005, if any, (and earnings credited thereon) since such accounts are not\ngoverned by this document but are governed by the Frozen Plan.)\n

\n\n

IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer to execute this\nPlan document on its behalf as of the 17th day of February, 2011.\n

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


	BRADY CORPORATION

\n	By:		/s/ Frank M. Jaehnert
\n		\n
\n	Attest:	/s/ Thomas J. Felmer
\n			\n

\n\n\n\n

\n\n

-18-\n

\n\n

EXHIBIT 10.2\n

\n\n\n

BRADY CORPORATION\n

\n\n\n

DIRECTORS’ DEFERRED COMPENSATION PLAN\n

\n\n\n

AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 17, 2011\n

\n\n\n

ARTICLE I\n

\n\n\n

INTRODUCTION\n

\n\n\n

1.1 For periods prior to calendar year 2005, Brady Corporation has maintained the Brady\nCorporation Directors’ Deferred Compensation Plan by means of a series of individual deferred\ncompensation agreements with covered directors. This amended and restated document shall apply to\nthose prior agreements with respect to both investment and distribution of amounts deferred before\n2005 and after 2004 and with respect to rules for making deferrals after 2004. This document is\nintended to comply with the provisions of Section 409A of the Internal Revenue Code and shall be\ninterpreted accordingly. If any provision or term of this document would be prohibited by or\ninconsistent with the requirements of Section 409A of the Code, then such provision or term shall\nbe deemed to be reformed to comply with Section 409A of the Code. This Plan is amended and\nrestated, effective as of February 17, 2011.\n

\n\n

ARTICLE II\n

\n\n\n

DEFINITIONS\n

\n\n\n\n

The following definitions shall be applicable throughout the Plan:\n

\n\n

2.1 “Account” means the account credited from time to time with bookkeeping amounts\nequal to the portions of a Participant’s compensation deferred pursuant to Section 3.1 and earnings\ncredited on such amounts in accordance with Article IV.\n

\n\n\n

2.2 “Administrator” means the Board of Directors of Brady Corporation.\n

\n\n

2.3 “Beneficiary” means the person, persons, or entity designated by the Participant\nto receive any benefits payable under the Plan on or after the Participant’s death. Each\nParticipant shall be permitted to name, change or revoke the Participant’s designation of a\nBeneficiary in writing on a form and in the manner prescribed by the Corporation; provided,\nhowever, that the designation on file with the Corporation at the time of the Participant’s death\nshall be controlling. Should a Participant fail to make a valid Beneficiary designation or leave\nno named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, if\nliving; or if not living, then any benefits due shall be paid to such Participant’s estate. A\nParticipant may designate a primary beneficiary and a contingent beneficiary; provided, however,\nthat the Corporation may reject any such instrument tendered for filing if it contains successive\nbeneficiaries or contingencies unacceptable to it. If all Beneficiaries who survive Participant\nshall die before receiving the full amounts payable hereunder, then the payments shall be paid to\nthe estate of the Beneficiary last to die.\n

\n\n

2.4 “Code” means the Internal Revenue Code of 1986, including any subsequent\namendments.\n

\n\n\n

2.5 “Corporation” means Brady Corporation.\n

\n\n

2.6 “Distribution Date” means the October 1 following the Payment Event. For\ndistribution elections prior to the Effective Date, the Distribution Date was the quarterly date\nspecified by the Participant upon which distribution would be made or commenced following the\nParticipant’s Separation from Service or the In-Service Payment Event Date, as the case may be.\nAll distribution elections in effect on the Effective Date shall remain in effect unless the\nParticipant consents to a Distribution Date that is the October 1 following the Participant’s\nPayment Event; provided that no change in Distribution Date may change the calendar year of the\ndistribution. If the distribution is payable other than in a single installment, subsequent\ninstallments shall be paid on anniversaries of the Distribution Date.\n

\n\n

2.7 “Effective Date” means February 17, 2011. This document describes how this Plan\nhas been administered for periods after 2004 and prior to February 17, 2011 and how it shall be\nadministered for periods on and after February 17, 2011.\n

\n\n

2.8 “In-Service Payment Event Date” means the date, if any, specified by the\nParticipant as the reference date following which distribution of his Account shall begin. An\nIn-Service Payment Event Date may be no earlier than January 1, 2007. For distribution elections\nfollowing the Effective Date, a Participant may not elect an In-Service Payment Event Date.\n

\n\n

2.9 “Participant” means a director of Brady Corporation currently eligible to make\ndeferrals (an “Active Participant”) and any former director who previously participated in the Plan\nand is entitled to benefits.\n

\n\n

2.10 “Payment Event” means the date of a Participant’s Separation From Service. For\ndistribution elections prior to February 17, 2011, a Participant could elect a Payment event that\nwas the earlier of the date of a Participant’s Separation From Service or the date the Participant\nspecified as his In-Service Payment Event Date.\n

\n\n

2.11 “Plan” means the Brady Corporation Directors’ Deferred Compensation Plan, as set\nforth herein and as it may be amended from time to time.\n

\n\n\n

2.12 “Plan Year” means the calendar year.\n

\n\n

2.13 “Separation from Service” means expiration or termination of the arrangement with\nthe Corporation pursuant to which the Participant performed services as a director of the\nCorporation if such expiration or termination constitutes a good faith and complete termination of\nthe relationship and all other independent contractor relationships the Participant has with the\nCorporation. A good faith and complete termination of a relationship shall not be deemed to have\noccurred if the Corporation anticipates a renewal of a contractual relationship or anticipates that\nthe Participant shall become an employee of the Corporation. For this purpose, the Corporation is\nconsidered to anticipate the renewal of a contractual relationship with the Participant if it\nintends to contract again for the services provided under the expired arrangement, and neither the\nCorporation nor the Participant has eliminated the Participant as a possible provider of services\nunder any such new arrangement. Further, the Corporation is considered to intend to contract again\nfor the services provided under an expired arrangement if the Corporation’s doing so is conditioned\nonly upon incurring a need for the services, the availability of funds or both. The foregoing\nrequirements are deemed satisfied if no amount will be paid to the Participant before a date at\nleast 12 months after the day on which the arrangement expires pursuant to which the Participant\nperformed services for the Corporation (or, in the case of more than one arrangement, all such\narrangements expire)\nand no amount payable to the Participant on that date will be paid to the Participant if,\nafter the expiration of the arrangement (or arrangements) and before that date, the Participant\nperforms services for the Corporation as a director or other independent contractor or an\nemployee). If a Participant provides services both as an employee of the Corporation and as a\nmember of the board of directors of the Corporation, the services provided as an employee are not\ntaken into account in determining whether the Participant has a Separation from Service as a\ndirector for purposes of this Plan because this Plan is not aggregated with any plan in which the\nParticipant participates as an employee pursuant to IRS Regulation Section 1.409A-1(c)(2)(ii).\n

\n\n

-2-\n

\n\n

2.14 “Unforeseeable Emergency” means a severe financial hardship to a Participant\nresulting from an illness or accident of the Participant or the Participant’s spouse or dependent\n(as defined in Section 152(a) of the Code), loss of the Participant’s property due to casualty\n(including the need to rebuild a home following damage to a home not otherwise covered by\ninsurance, for example, as a result of a natural disaster), or other similar extraordinary and\nunforeseeable circumstances arising as a result of events beyond the control of the Participant.\nFor example, the imminent foreclosure of or eviction from the Participant’s primary residence may\nconstitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses,\nincluding non-refundable deductibles, as well as for the costs of prescription drug medication, may\nconstitute an Unforeseeable Emergency. Finally, the need to pay for funeral expenses of a spouse\nor a dependent (as defined in Code section 152(a)) may also constitute an Unforeseeable Emergency.\nExcept as otherwise provided above, the purchase of a home and the payment of college tuition are\nnot Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable Emergency is\nto be determined based on the relevant facts and circumstances of each case.\n

\n\n

ARTICLE III\n

\n\n\n

DEFERRALS\n

\n\n\n

3.1 Deferral Elections. An Active Participant may elect to defer a specified\npercentage of his fees for services performed as a director of the Corporation during a Plan Year\nby completing and filing such forms as required by the Corporation prior to the first day of the\nPlan Year. A Participant’s deferrals shall be taken at a uniform percentage rate from each of the\npayments made to him by the Corporation during the Plan Year. Compensation deferred shall be\nretained by the Corporation, credited to the Participant’s Account pursuant to Section 4.1 and paid\nin accordance with the terms and conditions of the Plan. A director who is not already eligible to\nparticipate in any other deferred compensation plan of the account balance type sponsored by the\nCorporation who becomes an Active Participant for the first time during a Plan Year (i.e., first\nbecomes a director) may within 30 days after the effective date of participation make an election\nto defer a specified percentage of compensation to be paid to him for services to be performed\nsubsequent to the deferral election.\n

\n\n

3.2 Continued Effect of Elections. An Active Participant’s deferral election with\nrespect to a Plan Year under Section 3.1 shall be irrevocable after the last date upon which it may\nbe filed pursuant to Section 3.1 and shall continue in effect each subsequent Plan Year until\nprospectively revoked or amended in writing. For a revocation or amendment to be effective with\nrespect to payments during a Plan Year, it must be filed by the last date for which an effective\ndeferral election is permitted to be filed with respect to those payments under Section 3.1.\n

\n\n

3.3 Prior Deferral Elections. Any deferral election made prior to calendar year 2005\nunder an individual agreement shall be treated as a deferral election described in Section 3.1 and\nshall continue in effect until modified as described in Section 3.2 above unless modified earlier\npursuant to Section 8.12(a) below.\n

\n\n

-3-\n

\n\n

3.4 Unforeseeable Emergency. In the event that a Participant makes application for a\nhardship distribution under Section 6.3 and the Administrator determines that an Unforeseeable\nEmergency exists, all deferral elections otherwise in effect under this Article III and any other\nnonqualified deferred compensation plan of the account balance type sponsored by the Corporation\nshall immediately terminate upon such determination. To resume deferrals thereafter, a Participant\nmust make an election satisfying the provisions of Section 3.1, as the case may be, as those\nprovisions apply to someone who is already an Active Participant in the Plan.\n

\n\n

ARTICLE IV\n

\n\n\n

ACCOUNTS\n

\n\n\n

4.1 Credits to Account. Bookkeeping amounts equal to the amounts deferred by a\nParticipant pursuant to Section 3.1 shall be credited to such Participant’s Deferral Account as\nsoon as practicable after the deferred compensation would otherwise have been paid to such\nParticipant in the absence of deferral.\n

\n\n\n

4.2 Valuation of Account.\n

\n\n\n

(a) The Participant’s Account shall be credited or charged with deemed earnings or\nlosses as if it were invested in accordance with paragraph (b) below.\n

\n\n\n

(iii) The portion of a Participant’s Account invested in the Brady Stock Fund\nshall be called the Brady Stock Sub-account. The remaining portion of the\nParticipant’s Account shall be referred to as the General Investment Sub-account.\n

\n\n\n

(iv) A Participant’s balance in the Brady Stock Fund shall be determined as\nthough the Participant’s deferrals allocated to that Fund are invested in shares of\nClass A non-voting common stock of Brady Corporation by purchase at the fair market\nvalue price of such stock on the date the deferrals are credited to the\nParticipant’s Brady Stock Fund Sub-account.\n

\n\n

-4-\n

\n\n\n

(x) Notwithstanding subparagraph (ix) above, from and after May 1, 2006, a\nParticipant may not shift any amounts from his Brady Stock Sub-account to his\nGeneral Investment Sub-account or vice-versa. The preceding sentence shall not\napply to a Participant who has had a Separation from Service prior to May 1, 2006.\nA Participant shall, on or after February 16, 2006 and prior to May 1, 2006, be\nentitled to reallocate up to 50% of the balance of the portion of his Account\nattributable to pre-2004 deferrals from investments in the Brady Stock Fund to the\nother investment funds available hereunder; and, thereafter, the portion of such\naccount attributable to pre-2004 deferrals held in the Brady Stock Fund must remain\nin the Brady Stock Fund but the director may continue to make new investment choices\nfrom among available investment funds with\nrespect to remaining portions of that account. The preceding sentence shall\nnot apply to a Participant who has a Separation from Service before reallocation\nunder such sentence has taken place.\n

\n\n

-5-\n

\n\n\n

(d) Notwithstanding any other provision of this Agreement that may be interpreted to\nthe contrary, the deemed investments are to be used for measurement purposes only and\nshall not be considered or construed in any manner as an actual investment\nof the Participant’s Account balance in any such fund. In the event that Brady Corporation\nor the trustee of any grantor trust which Brady Corporation may choose to establish to\nfinance some or all of its obligations hereunder, in its own discretion, decides to invest\nfunds in any or all of the funds, the Participant shall have no rights in or to such\ninvestments themselves. Without limiting the foregoing, the Participant’s Account balance\nshall at all times be a bookkeeping entry only and shall not represent any investment made\non the Participant’s behalf by the Corporation or any trust; the Participant shall at all\ntimes remain an unsecured creditor of the Corporation.\n

\n\n

ARTICLE V\n

\n\n\n

VESTING\n

\n\n\n

5.1 Full Vesting. A Participant shall be fully vested and nonforfeitable at all times\nin his or her Account hereunder.\n

\n\n

ARTICLE VI\n

\n\n\n

MANNER AND TIMING OF DISTRIBUTION\n

\n\n\n

6.1 Payment of Benefits. After a Participant’s Payment Event the Participant’s\nAccount shall be paid to the Participant (or in the event of the Participant’s death, to the\nParticipant’s Beneficiary). Payment shall be made in a Single Sum or Installments as specified in\nthe Participant’s payment election pursuant to Section 6.2:\n

\n\n\n

(i) Single Sum. A single sum distribution of the value of the balance\nof the Account on the Distribution Date following the Participant’s Payment Event.\nIf the Participant receives a single sum distribution before Separation from Service\nwith the result that additional amounts are subsequently deposited in the\nParticipant’s Account, a distribution shall be made on each succeeding Distribution\nDate of the entire value of the then balance of the Account.\n

\n\n

-6-\n

\n\n\n

(ii) Installments. The value of the balance of the Account shall be\npaid in annual installments on the Distribution Date each year with the first of\nsuch installments to be paid on the Distribution Date following the Participant’s\nPayment Event. Annual installments shall be paid in one of the alternative methods\nspecified below over the number of years selected by the Participant in the payment\nelection made pursuant to Section 6.2, but not to exceed 10. The earnings (or\nlosses) provided for in Section 4.2\nshall continue to accrue on the balance remaining in the Account during the\nperiod of installment payments. The alternative methods available are as follows:\n

\n\n\n

(B) Percentage or Fixed Dollar Method. The annual installment\nshall be calculated by multiplying the most recent July 31 value of the\nAccount, in the case of the percentage method, by the percentage selected by\nthe Participant and paying out the resulting amount or, in the case of the\nfixed dollar method, by paying out the fixed dollar amount selected by the\nParticipant for the number of years selected by the Participant. However,\nin the event the dollar amount selected is more than the value of the\nAccount in any given year, the entire value of the Account will be\ndistributed. Further, regardless of the method selected by the Participant,\nthe final installment payment will include 100% of the then remaining\nAccount value.\n

\n\n\n

(iii) In Cash or In Stock. Prior to May 1, 2006 all payments shall be\nmade in cash, except that amounts held in the Brady Stock Sub-account attributable\nto pre-2004 deferrals shall be distributed by means of Class A non-voting common\nstock of Brady Corporation. From and after May 1, 2006, payments shall be made in\ncash and/or Class A non-voting common stock of Brady Corporation pursuant to the\nfollowing:\n

\n\n\n

\n\n

-7-\n

\n\n

6.2 Payment Election. An individual who first becomes a Participant at the beginning\nof a Plan Year shall, prior to his date of participation, complete a payment election form\nspecifying the form of payment applicable to such Participant’s Account under the Plan. An\nindividual who first becomes a Participant other than on the first day of a Plan Year shall, no\nlater than 30 days after the effective date of participation, complete a payment election form\nspecifying the form of payment applicable to such Participant’s Account; provided, however, that if\nsuch Participant is already a participant in any other nonqualified plan or plans sponsored by the\nCorporation of the account balance type, the most recent payment election with respect to any one\nof those plans shall be the form of payment election deemed elected under this Plan regardless of\nwhether the individual elects a different form of payment during that initial 30 day period. A\n“payment election form” shall mean the form established from time to time by the Administrator\nwhich a Participant completes, signs and returns to the Administrator to make an election under the\nPlan. To the extent authorized by the Administrator, such form may be provided electronically and,\nin such case, need not be signed by the Participant. A Participant may change the form of payment\nby completing and filing a new payment election form with the Corporation, and the payment election\nform on file with the Corporation as of the date of the Participant’s Payment Event shall be\ncontrolling. Notwithstanding the foregoing, a payment election form changing the Participant’s\nform of payment shall not be effective if the Participant has a Payment Event within twelve months\nafter the date on which the election change is filed with the Corporation. Any change in payment\nmethod must have the effect of delaying the commencement of payments to a date which is at least\nfive (5) years after the initially scheduled commencement date of payment previously in effect.\nAny change in the Distribution Date must have the effect of delaying the commencement of payments\nto a date which is at least five (5) years after the initially scheduled Distribution Date. For\npurposes of compliance with Code Section 409A, a series of installment payments is designated as a\nsingle payment rather than a right to a series of separate payments; therefore, a Participant who\nhas elected (or is deemed to have elected) any option under Section 6.1(a)(i) or (ii) may\nsubstitute any of the other options for the option originally selected as long as the foregoing\none-year and five year rules are satisfied. A switch from the percentage method to the fixed\ndollar method or vice versa and a switch from either of those methods to the fractional method or\nvice versa is considered a substitution of a new option for the original option for purposes of\nthis rule even if the number of yearly installments is not changed. The five year delay rule does\nnot apply if the revised payment method applies only upon the Participant’s death or disability.\nFor this purpose, “disability” means that the Participant is unable to engage in any substantial\ngainful activity by reason of any medically determinable physical or mental impairment which can be\nexpected to result in death or can be expected to last for a continuous period of not less than 12\nmonths.\n

\n\n

6.3 Financial Hardship. A partial or total distribution of the Participant’s Account\nshall be made prior to a Payment Event upon the Participant’s request and a demonstration by the\nParticipant of severe financial hardship as a result of an Unforeseeable Emergency. Such\ndistribution shall be made in a single sum as soon as administratively practicable following the\nAdministrator’s determination that the foregoing requirements have been met. In any case, a\ndistribution due to Unforeseeable Emergency may not be made to the extent that such emergency is or\nmay be relieved through reimbursement or compensation from insurance or otherwise, by liquidation\nof the Participant’s assets, to the extent the liquidation of such assets would not cause severe\nfinancial hardship, or by cessation of deferrals under Section 3.1 and any other nonqualified\ndeferred compensation plan of the account balance type sponsored by the Corporation. Distributions\nbecause of an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy\nthe emergency need (which may include amounts necessary to pay any Federal, state, or local income\ntaxes or penalties reasonably anticipated to result from the distribution). Determinations of\namounts reasonably necessary to satisfy the emergency need must take into account any additional\ncompensation that is available because of cancellation of a deferral election under Section 3.1 and\nany other nonqualified deferred compensation plan of the account balance type sponsored by the\nCorporation upon a payment due to an Unforeseeable Emergency. The payment may be made from any\narrangement in which the Participant participates that provides for payment upon an Unforeseeable\nEmergency, provided that the arrangement under which the payment was made must be designated\nat the time of payment.\n

\n\n

-8-\n

\n\n\n

6.4 Delayed Distribution.\n

\n\n\n

(a) A payment otherwise required under this Article VI shall be delayed if the\nCorporation reasonably anticipates that the making of the payment will violate a term of a\nloan agreement to which the Corporation is a party, or other similar contract to which the\nCorporation is a party, and such violation will cause material harm to the Corporation;\nprovided, however, that payments shall be made on the earliest date on which the Corporation\nreasonably anticipates that the making of the payment will not cause such violation, or such\nviolation will not cause material harm to the Corporation, and provided that the facts and\ncircumstances indicate that the Corporation entered into the loan agreement (including such\ncovenant) or other similar contract for legitimate reasons, and not to avoid the\nrestrictions on deferral elections and subsequent deferral elections under Code Section\n409A.\n

\n\n\n

(c) A payment otherwise required under this Article VI shall be delayed upon such other\nevents and conditions as the Internal Revenue Service may prescribe in generally applicable\nguidance published in the Internal Revenue Bulletin.\n

\n\n

6.6 Domestic Relations Order. Notwithstanding any other provision of this Article VI,\npayments shall be made from an account of a Participant in this Plan to such individual or\nindividuals (other than the Participant) and at such times as are necessary to comply with a\ndomestic relations order (as defined in Code Section 414(p)(1)(B)). Any such distribution shall be\ntaken on a pro rata basis from the Participant’s General Investment Sub-account and Brady Stock\nSub-account in the manner described in Section 6.1(a)(iv)(B).\n

\n\n

6.7 De Minimis Amounts. Notwithstanding any other provision of this Article VI, a\nParticipant’s entire Account balance under this Plan and all other nonqualified deferred\ncompensation plans of the account balance type shall automatically be distributed to the\nParticipant on or before the later of December 31 of the calendar year in which occurs the\nParticipant’s Separation from Service or the 15^th day of the third month following the\nParticipant’s Separation from Service if the total amount in such Account balance at the time of\ndistribution, when aggregated with all other amounts payable to the Participant under all\narrangements benefiting the Participant described in Section 1.409A-1(c) or any successor thereto,\ndo not exceed the amount described in Code Section 402(g)(1)(B). The foregoing lump sum payment\nshall be made automatically and any other distribution elections otherwise applicable with respect\nto the individual in the absence of this provision shall not apply.\n

\n\n

-9-\n

\n\n

ARTICLE VII\n

\n\n\n

ADMINISTRATION\n

\n\n\n

7.1 Administrator. The Plan shall be administered by the Administrator, which shall\nbe the Corporation’s Board of Directors. The Administrator shall have all authority that may be\nappropriate for administering the Plan, including the authority to adopt rules and regulations for\nthe conduct of its affairs and for implementing, amending and carrying out the Plan, interpreting\nthe provisions of the Plan and determining a Participant’s entitlement to benefits hereunder. The\nAdministrator shall be entitled to rely upon the Corporation’s records as to information pertinent\nto calculations or determinations made pursuant to the Plan.\n

\n\n

7.2 Authority of Administrator. The Administrator shall have full and complete\ndiscretionary authority to determine eligibility for benefits under the Plan, to construe the terms\nof the Plan and to decide any matter presented through the claims procedure. Any final\ndetermination by the Administrator shall be binding on all parties and afforded the maximum\ndeference allowed by law. If challenged in court, such determination shall not be subject to\nde novo review and shall not be overturned unless proven to be arbitrary and capricious\nbased upon the evidence considered by the Administrator at the time of such determination.\n

\n\n

7.3 Administrator Actions. The Administrator may authorize one or more of its members\nto execute on its behalf instructions or directions to any interested party, and any such\ninterested party may rely upon the information contained therein. The members may also act at a\nmeeting or by unanimous written consent. A majority of the members shall constitute a quorum for\nthe transaction of business and shall have full power to act hereunder. All decisions shall be\nmade by vote of the majority present at any meeting at which a quorum is present, except for\nactions in writing without a meeting, which must be unanimous.\n

\n\n

7.4 Minor or Incompetent Payees. If a person to whom a benefit is payable is a minor\nor is otherwise incompetent by reason of a physical or mental disability, the Corporation may cause\nthe payments due to such person to be made to another person for the first person’s benefit without\nany responsibility to see to the application of such payment. Such payments shall operate as a\ncomplete discharge of the obligations to such person under the Plan.\n

\n\n

7.5 No Liability. Except as otherwise provided by law, neither the Administrator, nor\nany member thereof, nor any director, officer or employee of the Corporation involved in the\nadministration of the Plan shall be liable for any error of judgment, action or failure to act\nhereunder or for any good faith exercise of discretion, excepting only liability for gross\nnegligence or willful misconduct. The Corporation shall hold harmless and defend any individual in\nthe employment of the Corporation and any director of the Corporation against any claim, action or\nliability asserted against him in connection with any action or failure to act regarding the Plan,\nexcept as and to the extent that any such liability may be based upon the individual’s own gross\nnegligence or willful misconduct. This indemnification shall not duplicate but may supplement any\ncoverage available under any applicable insurance.\n

\n\n

-10-\n

\n\n\n

7.6 Claims Procedure.\n

\n\n\n

(i) the specific reasons for the denial;\n

\n\n\n

(ii) specific reference to pertinent provisions of the Plan on which the denial\nis based;\n

\n\n\n

(b) A Claimant is entitled to request a review of any denial of his claim. The request\nfor review must be submitted in writing to the Administrator within 60 days after receipt of\nthe notice of the denial. The timely filing of such a request is necessary to preserve any\nlegal recourse which may be available to the Claimant and, absent the submission of request\nfor review within the 60-day period, the claim will be deemed to be conclusively denied.\nUpon submission of a written request for review, the Claimant or his representative shall be\nentitled to review all pertinent documents, and to submit issues and comments in writing for\nconsideration by the Administrator. The Administrator shall fully and fairly review the\nmatter and shall consider all information submitted in the review request, without regard to\nwhether or not such information was submitted or considered in the initial claim\ndetermination. The Administrator shall promptly respond to the Claimant, in writing, of its\ndecision within 60 days after receipt of the review request. However, due to special\ncircumstances, if no response has been provided within the first 60 days, and notice of the\nneed for additional time has been furnished within such period, the review and response may\nbe made within the following 60 days. The Administrator’s decision shall include specific\nreasons for the decision, including references to the particular Plan provisions upon which\nthe decision is based, notification that the Claimant can receive or review copies of all\ndocuments, records and information relevant to the claim, and information as to the\nClaimant’s right to file suit under Section 502(a) of ERISA.\n

\n\n\n

\n\n

-11-\n

\n\n

7.7 Conflict of Interest. No person who is covered under the Plan may vote or decide\nupon any matter relating solely to himself or vote in any case in which his individual right to any\nbenefit under\nthe Plan is particularly involved. Decisions shall be made by remaining members of the\nCorporation’s Board of Directors.\n

\n\n

ARTICLE VIII\n

\n\n\n

MISCELLANEOUS\n

\n\n\n

8.1 Amendment or Termination. The Corporation (through its Board of Directors or\nauthorized officers or employees) reserves the right to alter or amend the Plan, or any part\nthereof, in such manner as it may determine, at any time and for any reason. Further, the Board of\nDirectors of the Corporation reserves the right to terminate the Plan, at any time and for any\nreason. Notwithstanding the foregoing, in no event shall any amendment or termination deprive any\nParticipant or Beneficiary of any amounts credited to him under this Plan as of the date of such\namendment or termination; provided, however, that the Corporation may prospectively change the\nmanner in which earnings are credited or discontinue the crediting of earnings and, further, the\nCorporation may make any amendment it deems necessary or desirable for purposes of compliance with\nthe requirements of Code Section 409A and regulations thereunder.\n

\n\n

If the Plan is amended to freeze benefit accruals, no additional contributions shall be\ncredited to any Participant Account hereunder. Following such a freeze of benefit accruals,\nParticipants’ Accounts shall be paid at such time and in such form as provided under Article VI of\nthe Plan. If the Corporation terminates the Plan and if the termination is of the type described\nin regulations issued by the Internal Revenue Service pursuant to Code Section 409A, then the\nCorporation shall distribute the then existing Account balances of Participants and beneficiaries\nin a lump sum within the time period specified in such regulations and, following such\ndistribution, there shall be no further obligation to any Participant or beneficiary under this\nPlan. However, if the termination is not of the type described in such regulations, then following\nPlan termination Participants’ Accounts shall be paid at such time and in such form as provided\nunder Article VI of the plan.\n

\n\n

8.2 Applicable Law. This Plan shall be governed by the laws of the State of\nWisconsin, except to the extent preempted by the provisions of ERISA or other applicable federal\nlaw.\n

\n\n

8.3 Relationship to Other Programs. Participation in the Plan shall not affect a\nParticipant’s rights to participate in and receive benefits under any other plans of the\nCorporation, nor shall it affect the Participant’s rights under any other agreement entered into\nwith the Corporation, unless expressly provided otherwise by such plan or agreement. Any amount\ncredited under or paid pursuant to this Plan shall not be treated as any type of compensation or\notherwise taken into account in the determination of the Participant’s benefits under any other\nplans of the Corporation, unless expressly provided otherwise by such plan.\n

\n\n

8.5 No Right to Continued Service. Neither participation in this Plan, nor the\npayment of any benefit hereunder, shall be construed as giving to a Participant any right to be\nretained in the service of the Corporation, or limiting in any way the right of the Corporation to\nterminate the Participant’s service at any time.\n

\n\n

-12-\n

\n\n

8.6 Assignability by Corporation. The Corporation shall have the right to assign all\nof its right, title and obligation in and under this Plan upon a merger or consolidation in which\nthe Corporation is not the surviving entity or to the purchaser of substantially its entire\nbusiness or assets or the business or assets pertaining to a major product line, provided such\nassignee or purchaser assumes and agrees to perform after the effective date of such assignment all\nof the terms, conditions and provisions imposed by this Plan upon the Corporation. Upon such\nassignment, all of the rights, as well as all obligations, of the Corporation under this Plan shall\nthereupon cease and terminate.\n

\n\n

8.7 Unsecured Claim; Grantor Trust. The right of a Participant to receive payment\nhereunder shall be an unsecured claim against the general assets of the Corporation, and no\nprovisions contained herein, nor any action taken hereunder shall be construed to give any\nindividual at any time a security interest in any asset of the Corporation, of any affiliated\ncorporation, or of the stockholders of the Corporation. The liabilities of the Corporation to a\nParticipant hereunder shall be those of a debtor pursuant to such contractual obligations as are\ncreated hereunder and to the extent any person acquires a right to receive payment from the\nCorporation hereunder, such right shall be no greater than the right of any unsecured general\ncreditor of the Corporation. The Corporation may establish a grantor trust (but shall not be\nrequired to do so) to which the Corporation may in its discretion contribute (subject to the claims\nof the general creditors of the Corporation) the amounts credited to the Account. If a grantor\ntrust is so established, payment by the trust of the amounts due the Participant or his Beneficiary\nhereunder shall be considered a payment by the Corporation for purposes of this Plan.\n

\n\n

8.8 Notices or Filings. Any notice or filing required or permitted to be given to the\nAdministrator hereunder shall be sufficient if in writing and hand-delivered, or sent by registered\nor certified mail, to the address below:\n

\n\n\n

Corporate Treasurer
\nBrady Corporation
\nP.O. Box 571
\nMilwaukee, WI 53201-0571\n

\n\n

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail,\nas of the date shown on the postmark on the receipt for registration or certification.\n

\n\n

8.9 Special rules for 2005-2007. Notwithstanding the usual rules required regarding\nthe deferral elections and distribution elections:\n

\n\n\n

(a) A Participant may on or before March 15, 2005 make a new deferral election to apply\nto amounts which would otherwise be paid in calendar year 2005; provided that such amounts\nhave not been paid or became payable at the time of the election. Such election shall\nremain in effect for future years until modified pursuant to Section 3.2.\n

\n\n\n

(b) On or before December 31, 2007, a Participant may elect an In-Service Payment Event\nDate and/or make an election as to distribution of his Account from among the choices\ndescribed at Section 6.1 hereof without complying with the rules described in Section 6.2\nhereof as long as the effect of the election is not to accelerate payments into 2006 or to\ndefer payments which would otherwise have been made in 2006 and not to accelerate payments\ninto 2007 or to defer payments which would otherwise have been made in 2007. Such election\nshall become effective after the last day upon which it is permitted to be made or, if\nearlier, the first day of the calendar year in which payments under the election are\nscheduled to commence. In order to change any such election after December 31, 2007, the\nrequirements of Section 6.2 hereof must\nbe satisfied. Any individual who has on or before December 31, 2006 elected an\nIn-Service Payment Event Date of January 1, 2007 and a Distribution Date of April 1, may on\nor before December 31, 2007 elect to change the Distribution Date to be applicable in\ncalendar year 2008 and subsequent years from April 1 to January 1.\n

\n\n

-13-\n

\n\n\n\n

EXHIBIT 31.1\n

\n\n\n

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

\n\n\n

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

\n\n\n\n

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

\n\n

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

\n\n

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

\n\n

(4) The registrant’s other certifying officer and I are responsible for establishing and\nmaintaining disclosure controls and procedures (as defined in Exchange Act 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

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

\n\n

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

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

\n\n\n

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

\n\n

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

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

\n\n

Date: June 7, 2011\n

\n\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\n\n\n\n

EXHIBIT 31.2\n

\n\n\n

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

\n\n\n

I, Thomas J. Felmer, certify that:\n

\n\n\n\n

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

\n\n

\n\n\n

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

\n\n

Date: June 7, 2011\n

\n\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\n\n\n\n

EXHIBIT 32.1\n

\n\n\n

SECTION 1350 CERTIFICATION\n

\n\n\n\n

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

\n\n

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 30,\n2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act\nof 1934; and\n

\n\n

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

\n\n

Date: June 7, 2011\n

\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

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

\n\n

\n\n\n\n\n

EXHIBIT 32.2\n

\n\n\n

SECTION 1350 CERTIFICATION\n

\n\n\n

\n\n

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

\n\n

Date: June 7, 2011\n

\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

\n\n


	Page

PART I. Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets		3

Condensed Consolidated Statements of Income		4

Condensed Consolidated Statements of Cash Flows		5

Notes to Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 3. Quantitative and Qualitative Disclosures About Market Risk		26

Item 4. Controls and Procedures		26

PART II. Other Information

Item 6. Exhibits		27

EX-10.1
EX-10.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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