Form 10-K

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION\n

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Washington, D.C. 20549\n

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Form 10-K\n

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

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For the fiscal year ended July 31, 2011

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

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For the transition period from to

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\nCommission file number 1-14959\n

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BRADY CORPORATION\n

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The aggregate market value of the non-voting common stock held by non-affiliates of the\nregistrant as of January 31, 2011, was approximately $1,488,000,246 based on closing sale price of\n$32.75 per share on that date as reported for the New York Stock Exchange). As of September 20,\n2011, there were 49,244,116 outstanding shares of Class A Nonvoting Common Stock (the “Class A\nCommon Stock”), and 3,538,628 shares of Class B Common Stock. The Class B Common Stock, all of\nwhich is held by affiliates of the registrant, is the only voting stock.\n

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INDEX\n

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	Page
PART I

Item 1. Business		3

General Development of Business		3

Financial Information About Industry Segments		3

Narrative Description of Business		3

Overview		3

Competitive Strengths		3

Key Strategies		4

Products		6

Marketing and Sales		7

Brands		8

Manufacturing Process and Raw Materials		8

Technology and Product Development		8

International Operations		9

Competition		9

Backlog		9

Environment		9

Employees		10

Acquisitions and Divestitures		10

Financial Information About Foreign and Domestic Operations and Export Sales		10

Information Available on the Internet		10

Item 1A. Risk Factors		10

Item 1B. Unresolved Staff Comments		14

Item 2. Properties		14

Item 3. Legal Proceedings		15

Item 4. (Removed and Reserved)		15

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of\nEquity Securities		16

Item 6. Selected Financial Data		18

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk		31

Item 8. Financial Statements and Supplementary Data		32

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		64

Item 9A. Controls and Procedures		64

Item 9B. Other Information		66

PART III

Item 10. Directors and Executive Officers of the Registrant		66

Item 11. Executive Compensation		71

Compensation Discussion and Analysis		71

Compensation Committee Interlocks and Insider Participation		78

Compensation Committee Report		78

Compensation Policies and Practices		78

Summary Compensation Table		79

Grants of Plan-Based Awards for 2011		80

Outstanding Equity Awards at 2011 Fiscal Year End		81

Option Exercises for Fiscal 2011		83

Non-Qualified Deferred Compensation for Fiscal 2011		84

Potential Payments Upon Termination or Change in Control		84

Compensation of Directors		88

Director Compensation Table — Fiscal 2011		89

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		89

Item 13. Certain Relationships, Related Transactions, and Director Independence		91

Item 14. Principal Accounting Fees and Services		92

PART IV

Item 15. Exhibits and Financial Statement Schedules		92

Signatures		96

Exhibit 10.37
Exhibit 10.38
Exhibit 10.39
Exhibit 10.40
Exhibit 10.41
Exhibit 21
Exhibit 23
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 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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2\n

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PART I\n

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

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Item 1.		*Business*

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(a) General Development of Business\n

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The Company, a Wisconsin corporation founded in 1914, currently operates globally in\nAustralia, Belgium, Brazil, Canada, the Cayman Islands, China, Denmark, France, Germany, Hong Kong,\nIndia, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, the Philippines,\nPoland, Singapore, Slovakia, South Korea, Spain, Sweden, Thailand, Turkey, the United Arab\nEmirates, the United Kingdom and the United States. The Company also sells through subsidiaries or\nsales offices in these countries, with additional sales through a dedicated team of international\nsales representatives in Hungary, New Zealand, Russia, Taiwan, and Vietnam. The Company further\nmarkets its products to parts of Eastern Europe, the Middle East, Africa, and South America. The\nCompany’s corporate headquarters are located at 6555 West Good Hope Road, Milwaukee, Wisconsin\n53223, and the telephone number is (414) 358-6600. The Company’s Internet address is\nhttp://www.bradycorp.com.\n

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(b) Financial Information About Industry Segments\n

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

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(c) Narrative Description of Business\n

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Overview\n

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

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

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

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The Company has a broad customer base. No individual customer is 5% or more of total net\nsales.\n

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Competitive Strengths\n

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

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Leader in Markets. Brady competes in markets where it believes it is often the leading\nsupplier with the manufacturing expertise, infrastructure, channels and sales resources necessary\nto provide the required product or comprehensive solution. For example, the Company believes it is\nthe leading supplier of wire identification products to the North American MRO (Maintenance, Repair\nand Operations) market and of precision die-cut components to the mobile telecommunications market.\nThe Company believes its leadership positions make it a preferred supplier to many of its customers\nand enables it to be successful in its markets.\n

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

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

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Broad Customer Base and Geographic Diversity. Brady believes its global infrastructure and\ndiverse market presence provide a solid platform for further expansion, and enable it to act as a\nprimary supplier to many of its global customers. Sales from international operations increased\nfrom 44.4% of net sales in fiscal 2000 to 64.6% of net sales in fiscal 2011. Brady has more than\none million end-customers that operate in multiple industries.\n

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Disciplined Acquisition and Integration Strategy. The Company has a dedicated team of\nexperienced professionals that employ a disciplined acquisition strategy and process to acquire\ncompanies. It applies strict financial standards to evaluate all acquisitions using an expected\nreturn model based on a modified return on invested capital calculation. It also conducts\ndisciplined integration reviews of acquired companies to track progress toward results expected at\nthe time of acquisition. Since 1996, the Company has acquired and integrated 57 companies to\nincrease market share in existing and new geographies, expand the product range it offers to both\nexisting and new customers, as well as add new technological capabilities.\n

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Channel Diversity and Strength. Brady utilizes a wide range of channels to reach customers\nacross a broad array of industries. It employs multi-channel direct marketing expertise to meet its\ncustomers’ need for convenience. The Company also has long-standing relationships with, and is a\npreferred supplier to, many of its largest distributors. In addition, the Company employs a global\nsales team to support both distributors and customers and to serve their productivity, tracking and\nsafety requirements. The Company believes its strong brands and reputation for quality, innovation\nand on-time delivery contribute to the popularity of its products with distributors, original\nequipment manufacturers (“OEMs”), resellers and other customers.\n

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

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Key Strategies\n

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

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• Revenue Expansion\n

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Capitalize on Growing Markets. The Company seeks to leverage its distribution network, global\nfootprint and strength in manufacturing and materials expertise to capitalize on growth in existing\nmarkets. Growth prospects are driven primarily by the general expansion of regional economies,\nchanges in legal and regulatory compliance requirements and the increased need of customers to\nidentify and protect their assets and employees, as well as technological advances in markets such\nas mobile telecommunications and other electronic devices.\n

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Increase Market Share. Many Brady markets are fragmented and populated with smaller regional\nor local competitors. The Company seeks to leverage its investment in new product development and\nits global sales, operations and distribution capabilities to\nincrease market share, as well as expand its distribution channels to capture new customers.\nThe Company employs a dedicated and experienced sales team that works closely with existing\ndistributors and customers to identify and capture new opportunities. In addition, Brady continues\nto leverage the strength of its brands, the quality of its products and its long-standing\nrelationships with key customers to build upon current market positions.\n

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

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Expand Geographically. Brady’s long-term strategy involves the pursuit of growth opportunities\nin a number of markets outside of the United States, including growth in emerging markets where the\nfuture growth rate prospects are believed to exceed those of the more established geographies. The\nCompany is committed to being in close proximity to its customers and to low-cost global supply\nchain capabilities including manufacturing. Brady currently operates in 30 countries and employs\napproximately 6,500 people. Of the approximately 6,500 global employees, Asia-Pacific accounts for\n43%, with the Americas and Europe employing 36%, and 21% of the workforce, respectively. Brady has\nmade strategic acquisitions and has invested heavily in its global infrastructure and flexible\nmanufacturing capacity in order to follow its customers into new geographies. Brady’s regional\nmanagement structure is a key component in effectively entering and competing in new geographies.\n

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Market/Customer Segmentation and Voice of the Customer. The Company employs a systematic\nprocess to facilitate its goals for growth into new and/or adjacent market spaces and focuses\nCompany resources on the best and most promising business development opportunities. Market and\ncustomer segmentation identifies fast growing, profitable market segments and the most attractive\ncustomers within these segments, while voice of the customer provides a more complete understanding\nof what these customers want and need in terms of products, services, and delivery options.\n

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New Product Development. Through product innovation and development activities, Brady seeks to\nintroduce new technologies and differentiated products that leverage its capabilities in specialty\nmaterials, printing systems, and die-cutting. The Company continues to invest in research and\ndevelopment activities, and employs approximately 215 R&D professionals worldwide with the largest\nR&D centers located in the United States, China, and Singapore. Amounts incurred for research and\ndevelopment activities were 3.2%, 3.4%, and 2.8% of sales in fiscal 2011, 2010, and 2009,\nrespectively.\n

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E-Business Expansion. The Company continues to develop and enhance its e-commerce\ncapabilities in a systematic process to facilitate sales growth over the Internet. This e-business\nstrategy is part of a more comprehensive multi-channel marketing strategy whereby the Company is\nfocusing on multiple channels to reach its customers to provide a better overall buying experience.\n

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

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• Improve Productivity\n

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Brady Business Performance System. The Company plans to continue its focus on improving\noperating efficiency and customer service, reducing costs, and improving productivity and return on\ninvested capital. To this end, Brady is continuing the expansion of its Brady Business Performance\nSystem (“BBPS”) in most of its operations globally. This approach to improving profitability\nfocuses on strategy deployment, implementing scalable business processes, operational efficiencies\nand lean manufacturing principles to drive cost savings, enhance customer service and improve\noverall business performance. BBPS started in operations, but its underlying principles have since\nbeen deployed beyond the manufacturing floor to functions such as human resources, information\ntechnology, finance, and sales and marketing.\n

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Global Strategic Sourcing. Through coordinated supply chain management, the Company looks to\nincrease productivity and efficiency in the process of procuring goods and services ranging from\nraw materials and products for resale, to travel and other services, as well as energy,\ncommunication and building lease costs. Brady’s strategic sourcing program focuses on improving\nvendor performance, reducing both direct and indirect spending, and implementing standard processes\nglobally.\n

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Sales and Marketing Productivity and Effectiveness. The Company continues to focus on\nimproving the effectiveness and efficiency of its sales and marketing professionals and processes\nto better serve our existing customers and prospective customers while better managing our sales\nand marketing costs through common processes for sales and marketing activities.\n

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General and Administrative Productivity and Effectiveness. The Company is focusing on the\nautomation, standardization, and simplification of its back-office activities including finance,\ninformation technology, human resources, and other functions. This includes the centralization of\ncertain functions in global and regional shared-service centers to better leverage talent and gain\neconomies of scale.\n

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Products\n

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

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

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Some of the Company’s stock products were originally designed, developed, distributed, and\nmanufactured as custom products for a specific application. However, such products have frequently\ncreated wide industry acceptance and have become stock items offered by the Company through direct\nmarketing and distributor sales channels. The Company’s most significant types of products are\ndescribed below.\n

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• Safety and Facility Identification\n

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

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

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

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

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

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

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

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• Wire and Cable Identification\n

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

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• High Performance Identification\n

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

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• Precision Die-Cut Parts\n

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

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• People Identification\n

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The Company offers identification systems and products including photo ID card systems that\ncombine digital imaging and other technologies to positively identify people; self-expiring name\ntags and software for visitor and employee identification. In addition, the Company provides asset\ncontrol software identification accessories including lanyards, badge holders, badge reels and\nattachments, providing security to companies, employees, and company assets.\n

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• Software and Printer Systems\n

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The Company also designs and produces software for inspection automation, industrial\nthermal-transfer printers and other electromechanical devices to serve the growing and specialized\nneeds of customers in a wide variety of markets. Industrial labeling systems, software, tapes,\nribbons and label stocks provide customers with the resources and flexibility to produce signs and\nlabels on demand at their site. The Company also offers poster printers, cutting systems,\nlaminators and supplies to education and training markets.\n

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Marketing and Sales\n

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

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

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Brands\n

\n\n\n

The Company goes to market under a variety of brand names. The Brady brand includes\nhigh-performance labels, wire identification products, printers, software, safety and facility\nidentification products, lock-out/tag-out products, people identification products, precision\ndie-cut parts and specialty materials. Other die-cut materials are marketed as Balkhausen products.\nSafety and facility identification products are also marketed under the Safety Signs Service brand,\nwith some lockout/tagout products offered under the Scafftag brands. In addition, identification\nproducts for the utility industry are marketed under the Electromark brand and spill-control\nproducts are marketed under the Sorbent Products Company and D.A.W.G. brands; poster printers and\ncutting systems for education and government markets are offered under the Varitronics brand; wire\nidentification products are marketed under the Modernotecnica brand and the Carroll brand; and\ncustom labels and nameplates under the Stickolor brand. Direct Marketing safety and facility\nidentification products are offered under the Seton, Emedco, Signals, Safetyshop, Clement and\nPersonnel Concepts names; direct supplies under the Accidental Health and Safety, Trafalgar, and\nSecurimed brands. Security and identification badges and systems are included in the Temtec,\nB.I.G., Identicard/Identicam, STOPware, J.A.M. Plastics, PromoVision, Brady People ID, and Quo-Luck\nbrands; hand-held regulatory documentation systems are available under the Tiscor name.\n

\n\n

Manufacturing Process and Raw Materials\n

\n\n\n

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

\n\n

The Company produces the majority of its pressure sensitive materials through vertically\nintegrated manufacturing processes. These integrated manufacturing processes permit greater\nflexibility to meet customer needs in product design and manufacture, and an improved ability to\nprovide specialized products designed to meet the needs of specific applications. Brady’s\nmanufacturing processes and inventory controls are designed to attain profitability in small orders\nby emphasizing flexibility and the optimal utilization of assets through quick turnaround and\ndelivery, balanced with optimization of lot sizes. Many of the Company’s manufacturing facilities\nhave received ISO 9001, 13485, or 14001 certification.\n

\n\n

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

\n\n

Technology and Product Development\n

\n\n\n

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

\n\n

8\n

\n\n

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

\n\n

The Company conducts much of its research and development activities at the Frederic S. Tobey\nResearch and Innovation Center (approximately 39,600 sq. ft.) in Milwaukee, Wisconsin and its\nresearch and development facilities in Singapore and Beijing, China. The Company spent\napproximately $43.0 million, $42.6 million, and $34.2 million during the fiscal years ended July\n31, 2011, 2010, and 2009, respectively, on its research and development activities. In fiscal 2011,\napproximately 215 employees were engaged in research and development activities for the Company.\nAdditional research projects were conducted in Company facilities in other locations in the United\nStates, Europe and Asia and under contract with universities, other institutions and consultants.\n

\n\n

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

\n\n

International Operations\n

\n\n\n

In fiscal 2011, 2010, and 2009, sales from international operations accounted for 64.6%,\n63.4%, and 61.8%, respectively, of the Company’s sales. Its global infrastructure includes\nsubsidiaries in Australia, Belgium, Brazil, Canada, the Cayman Islands, China, Denmark, France,\nGermany, Hong Kong, India, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, the\nPhilippines, Poland, Singapore, Slovakia, South Korea, Spain, Sweden, Thailand, Turkey, the United\nArab Emirates, the United Kingdom and the United States of America. The Company also sells through\nsubsidiaries or sales offices in these countries, with additional sales through a dedicated team of\ninternational sales representatives in Hungary, New Zealand, Russia, Taiwan, and Vietnam. The\nCompany further markets its products to parts of Eastern Europe, the Middle East, Africa and South\nAmerica.\n

\n\n

Competition\n

\n\n\n

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

\n\n

Backlog\n

\n\n\n

As of July 31, 2011, the amount of the Company’s backlog orders believed to be firm was $27.2\nmillion. This compares with $35.3 million and $27.5 million of backlog orders as of July 31, 2010\nand 2009, respectively. The decrease in the backlog from July 31, 2010 to July 31, 2011 was\nprimarily due to the larger amount of backlog related to a one-time brand protection order in the\nAmericas Brady business in the prior year. Average delivery time for the Company’s orders varies\nfrom same-day delivery to one month, depending on the type of product, customer request or demand,\nand whether the product is stock or custom-designed and manufactured. The Company’s backlog does\nnot provide much visibility for future business.\n

\n\n

Environment\n

\n\n\n

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

\n\n

9\n

\n\n

Employees\n

\n\n\n

As of September 20, 2011, the Company employed approximately 6,500 individuals. Brady has\nnever experienced a material work stoppage due to a labor dispute and considers its relations with\nemployees to be good. The mix of employees is changing as the Company employs more people in\ndeveloping countries where wage rates are lower and employee turnover tends to be higher than in\ndeveloped countries.\n

\n\n

Acquisitions and Divestitures\n

\n\n\n

Information about the Company’s acquisitions and divestitures is provided in Note 2 of the\nNotes to Consolidated Financial Statements contained in Item 8 — Financial Statements and\nSupplementary Data.\n

\n\n

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

\n\n\n

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

\n\n

(e) Information Available on the Internet\n

\n\n\n

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

\n\n

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


Item 1A.		*Risk Factors*

\n\n

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

\n\n

The Company’s financial condition, results of operations, cash flows, or liquidity may be\nadversely affected by a prolonged economic downturn or economic uncertainty.\n

\n\n

The Company’s business and operating results have been and will continue to be affected by\nglobal economic conditions. As global economic conditions deteriorate or economic uncertainty\ncontinues, our customers and potential customers may experience deterioration of their businesses,\nwhich may result in the delay or cancellation of plans to purchase our products. Our sensitivity to\neconomic cycles and any related fluctuations in the businesses of our customers or potential\ncustomers may have a material effect on our financial condition, results of operations, cash flows,\nor liquidity.\n

\n\n

Demand for the Company’s products may be susceptible to fluctuations in the major markets\nserved that may cause volatility in its results of operations, cash flows, and liquidity.\n

\n\n

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

\n\n

10\n

\n\n

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

\n\n

The Company’s debt and revolving loan agreements require it to maintain certain financial\ncovenants. The June 2004, February 2006, March 2007 and May 2010 debt agreements require the\nCompany to maintain a ratio of debt to the trailing twelve months earnings before interest, taxes,\ndepreciation and amortization (“EBITDA”), as defined in the debt agreements, of not more than a 3.5\nto 1.0 ratio (leverage ratio). The October 2006 revolving loan agreement, as amended and extended\nin May 2008, requires the Company to maintain a ratio of debt to trailing twelve months EBITDA, as\ndefined by the debt agreement, of not more than a 3.0 to 1.0 ratio. Additionally, the revolving\nloan agreement requires the trailing twelve months earnings before interest and taxes (“EBIT”) to\ninterest expense of not less than a 3.0 to 1.0 ratio (interest expense coverage). The October 2006\nrevolving loan agreement, as amended and extended in May 2008, also requires that the aggregate net\nbook value of the assets sold or otherwise disposed of by the Company and its subsidiaries, as\ndefined in the agreement, in any fiscal year of the Company shall not exceed 15% of consolidated\ntangible net worth.\n

\n\n

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

\n\n

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

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

\n\n

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

\n\n

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

\n\n

The Company is subject to income taxes in the U.S. and in many non-U.S. jurisdictions. As\nsuch the Company’s net earnings are subject to risk due to changing tax laws and tax rates around\nthe world. At any point in time, there are a number of tax proposals at various stages of\nlegislation throughout the globe. While it is impossible for us to predict whether some or all of\nthese proposals will be enacted, it is likely they will have an impact on our net earnings.\n

\n\n

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

\n\n

The Company reviews the probability of the realization of its deferred tax assets on a\nquarterly basis based on forecasts of taxable income in both the U.S. and foreign jurisdictions. As\npart of this review, the Company utilizes historical results, projected future operating results,\neligible carry-forward periods, tax planning opportunities, and other relevant considerations.\nAdverse changes in profitability and financial outlook in both the U.S. and foreign jurisdictions,\nor changes in its geographic footprint may require changes in the valuation allowances to reduce\nits deferred tax assets. Such changes could result in material non-cash expenses in the period in\nwhich the changes are made and could have a material impact on the Company’s net earnings.\n

\n\n

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

\n\n

Our historical growth has included, and our future growth strategy includes, acquisitions. The\nCompany may not be able to identify acquisition targets or successfully complete acquisitions in\nthe future due to the absence of quality companies, economic conditions, or price expectations from\nsellers. If the Company is unable to complete additional acquisitions, its growth may be limited.\n

\n\n

11\n

\n\n

Additionally, as the Company grows through acquisitions, it will continue to place significant\ndemands on its management, operational and financial resources. Recent and future acquisitions will\nrequire integration of operations, sales and marketing, information technology, finance and\nadministrative operations. The successful integration of acquisitions will require substantial\nattention from the Company’s management and the management of the acquired businesses, which could\ndecrease the time management, has to serve and attract customers. The Company cannot assure that it\nwill be able to successfully integrate these recent or any future acquisitions, that these\nacquisitions will operate profitably or that it will be able to achieve the financial or\noperational success expected from the acquisitions. The Company’s financial condition, cash flows\nand operational results could be adversely affected if it does not successfully integrate the newly\nacquired businesses or if its other businesses suffer on account of the increased focus on the\nnewly acquired businesses.\n

\n\n

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

\n\n

Development of proprietary products is key to the success of the Company’s core growth and\nreasonable gross profit margins now and in the future. Therefore, the Company must continue to\ndevelop new and innovative products and acquire and retain the necessary intellectual property\nrights in these products on an ongoing basis. If it fails to make innovations, launches products\nwith quality problems, or the market does not accept its new products, then the Company’s financial\ncondition, results of operations, cash flows, and liquidity could be adversely affected. The\nCompany continues to invest in the development and marketing of new products. These expenditures do\nnot always result in products that will be accepted by the market. Failure to develop successful\nnew products may also cause its customers to buy from a competitor or may cause the Company to\nlower its prices in order to compete. This could have an adverse impact on the Company’s\nprofitability.\n

\n\n

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

\n\n

The Company faces substantial competition throughout its entire business, but particularly in\nthe precision die-cut business. Competition may force the Company to cut its prices or incur\nadditional costs to remain competitive. The Company competes on the basis of production\ncapabilities, engineering and R&D capabilities, materials expertise, its global footprint, global\naccount management where needed, customer service and price. Present or future competitors may have\ngreater financial, technical or other resources, lower production costs or other pricing\nadvantages, any of which could put the Company at a disadvantage in the affected business by\nthreatening its market share or reducing its profit margins. Additionally, in some of its other\nbusinesses, the Company’s distributors/customers may seek lower cost sourcing opportunities, which\ncould cause a loss of business that may adversely impact the Company’s revenues.\n

\n\n

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

\n\n

More than 60 percent of the Company’s revenues are derived outside the United States. As such,\nfluctuations in foreign currency exchange rates can have an adverse impact on its sales and profits\nas amounts that are measured in foreign currency are translated back to U.S. dollars. Any increase\nin the value of the U.S. dollar in relation to the value of the local currency will adversely\naffect operating results from the Company’s foreign operations when translated into U.S. dollars.\nSimilarly, any decrease in the value of the U.S. dollar in relation to the value of the local\ncurrency will increase operating results in the Company’s foreign operations when translated into\nU.S. dollars. During fiscal 2011, the weakening U.S. dollar versus the majority of other currencies\nincreased the Company’s sales by $31.1 million.\n

\n\n

At July 31, 2011, approximately 69% of the Company’s cash and cash equivalents were held\noutside the United States. As a result, fluctuations in foreign currency can have an adverse impact\non the Company’s cash balances. Any increase in the value of the U.S. dollar in relation to the\nvalue of various foreign currencies will have a negative impact on cash balances when translated\ninto U.S. dollars. Weakening of the U.S. dollar against foreign currencies will have a positive\nimpact on cash balances when foreign currencies are translated into U.S. dollars. During fiscal\n2011, the weakening U.S. dollar versus the majority of other currencies increased the Company’s\ncash and cash equivalents by $22.0 million.\n

\n\n

12\n

\n\n

The Company’s goodwill or other intangible assets may become impaired, which may negatively\nimpact the Company’s profitability.\n

\n\n

The Company has a substantial amount of goodwill and other intangible assets on its balance\nsheet as a result of its acquisitions. As of July 31, 2011, the Company had $800.3 million of\ngoodwill on its balance sheet, representing the excess of the total purchase price for its\nacquisitions over the fair value of the net assets it acquired, and $90.0 million of other\nintangible assets, primarily representing the fair value of the customer relationships, patents and\ntrademarks it acquired in its acquisitions. At July 31, 2011, goodwill and other intangible assets\nrepresented approximately 48% of the Company’s total assets. The Company evaluates goodwill for\nimpairment on an annual basis or more frequently if impairment indicators are present based on the\nfair value of each operating segment. It assesses the impairment of other intangible assets on an\nannual basis or more frequently if impairment indicators are present based upon the expected future\ncash flows of the respective assets. These valuations include management’s estimates of sales,\nprofitability, cash flow generation, capital structure, cost of debt, interest rates, capital\nexpenditures, and other assumptions. Significant negative industry or economic trends, disruptions\nto the Company’s business, inability to effectively integrate acquired businesses, unexpected\nsignificant changes or planned changes in use of the assets or in entity structure, and\ndivestitures may adversely impact the assumptions used in the valuations. If the estimated fair\nvalue of the Company’s operating segments change in future periods, it may be required to record an\nimpairment charge related to goodwill or other intangible assets, which would have the effect of\ndecreasing its earnings in such period.\n

\n\n

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

\n\n

While the Company has a broad customer base and no individual customer represents 5% or more\nof total net sales, several of the Company’s large key customers in the precision die-cut business\ntogether comprise a significant portion of its revenues. Additionally, the Company does business\nwith several large distribution companies. The Company’s dependence on these large customers makes\nits relationships with these customers important to its business. The Company cannot guarantee that\nit will be able to maintain these relationships and retain this business in the future. Because\nthese large customers account for a significant portion of the Company’s revenues, they possess\nrelatively greater capacity to negotiate a reduction in the prices the Company charges for its\nproducts. If the Company is unable to provide products to its customers at the quality and prices\nacceptable to them or adapt to technological changes, some of its customers may in the future elect\nto shift some or all of this business to competitors or to substitute other manufacturer’s\nproducts. If one of the Company’s key customers consolidates, is acquired by another company or\nloses market share, the result of that event may have an adverse impact on the Company’s business.\nThe loss of or reduction of business from one or more of these large key customers could have a\nmaterial impact on the Company’s financial condition, results of operations, cash flows, and\nliquidity.\n

\n\n

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

\n\n

A significant portion of the Company’s sales are attributable to products manufactured outside\nof the United States. More than half of the Company’s approximately 6,500 employees and more than\nhalf of its manufacturing locations are outside of the United States. The Company’s international\noperations are generally subject to various risks including political, economic and societal\ninstability, the imposition of trade restrictions, local labor market conditions, the effects of\nincome taxes, and differences in business practices. The Company may incur increased costs and\nexperience delays or disruptions in product deliveries and payments in connection with\ninternational manufacturing and sales that could cause loss of revenue. Unfavorable changes in the\npolitical, regulatory and business climate in countries where the Company has operations could have\na material effect on its financial condition, results of operations, and cash flows\n

\n\n

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

\n\n

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

\n\n

13\n

\n\n

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

\n\n

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

\n\n

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

\n\n

The Company also has agreements relating to the sale of products to government entities or\nsupply products to companies who resell these products to government entities and are subject to\nvarious statutes and regulations that apply to companies doing business with the government. The\nlaws governing government contracts differ from the laws governing private contracts. The Company\nis also subject to investigation and audit for compliance with the requirements of government\ncontracts, including requirements related to procurement integrity, export control, employment\npractices, the accuracy of records and the recording of costs. A failure to comply with these\nrequirements might result in suspension of these contracts and suspension or debarment from\ngovernment contracting or subcontracting.\n

\n\n

The Company cannot provide assurance that its internal controls and compliance systems will\nalways protect the Company from acts committed by the Company’s employees, agents or business\npartners that would violate U.S. and/or non-U.S. laws, including the laws governing payments to\ngovernment officials, bribery, fraud, anti-kickback and false claims rules, competition, export and\nimport compliance, money laundering and data privacy. Any such improper actions could subject the\nCompany to civil or criminal investigations in the U.S. and in other jurisdictions, could lead to\nsubstantial civil or criminal, monetary and non-monetary penalties and related shareholder lawsuits\nand could damage the Company’s reputation.\n

\n\n

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

\n\n

The Company continues to implement several measures to address its cost structure. Successful\nimplementation of such initiatives is critical to the Company’s future competitiveness and its\nability to improve profitability. Further actions to reduce the Company’s cost structure and the\ncharges related to these actions may have a material effect on the Company’s results of operations\nand financial condition.\n

\n\n

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


Item 1B.		*Unresolved Staff Comments*

\n\n

None.\n

\n\n

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


Item 2.		*Properties*

\n\n

The Company currently operates 55 manufacturing or distribution facilities in the following\nregions:\n

\n\n

Americas: Thirteen are located in the United States; three in Brazil, two in Mexico; and one in\nCanada.\n

\n\n

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

\n\n

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

\n\n

The Company’s present operating facilities contain a total of approximately 3.1 million square\nfeet of space, of which approximately 2.1 million square feet is leased. The Company believes that\nits equipment and facilities are modern, well maintained and adequate for present needs.\n

\n\n

14\n

\n\n\n\n

\n\n

PART II\n

\n\n

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


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

\n\n

(a) Market Information\n

\n\n\n

Brady Corporation Class A Nonvoting Common Stock trades on the New York Stock Exchange under\nthe symbol BRC. The following table sets forth the range of high and low daily closing sales prices\nfor the Company’s class A stock as reported on the New York Stock Exchange for each of the quarters\nin the fiscal years ended July 31:\n


	2011		2010			2009
	High		Low			High		Low	High		Low
4th Quarter	$	38.49		$	29.60		$	34.75	$	24.37		$	29.41	$	21.33
3rd Quarter	$	37.71		$	33.37		$	35.28	$	27.19		$	23.08	$	14.61
2nd Quarter	$	33.78		$	30.83		$	31.22	$	26.77		$	31.07	$	16.38
1st Quarter	$	31.33		$	25.35		$	33.06	$	27.08		$	39.68	$	25.18

\n\n\n

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

\n\n

(b) Holders\n

\n\n\n

As of September 20, 2011, there were 808 Class A Common Stock shareholders of record and\napproximately 7,500 beneficial shareholders. There are three Class B Common Stock shareholders.\n

\n\n

(c) Issuer Purchases of Equity Securities\n

\n\n\n

During fiscal 2008 and fiscal 2009, the Company’s Board of Directors authorized share\nrepurchase plans for the Company’s Class A Nonvoting Common Stock. The share repurchase plans were\nimplemented by purchasing shares in the open market or privately negotiated transactions, with\nrepurchased shares available for use in connection with the Company’s stock-based plans and for\nother corporate purposes. The Company reacquired approximately 102,067, 1,345,000 and 1,349,000\nshares of its Class A Common Stock for $2.5 million, $40.3 million and $42.2 million in fiscal\n2010, 2009 and 2008, respectively, in connection with its stock repurchase plans. The Company did\nnot reacquire any shares in fiscal 2011. As of July 31, 2011, there remained 204,133 shares to\npurchase in connection with this share repurchase plan. On September 9, 2011, the Company’s Board\nof Directors authorized a share buyback program for up to an additional 2 million shares of the\nCompany’s Class A Common Stock.\n

\n\n

(d) Dividends\n

\n\n\n

The Company has historically paid quarterly dividends on outstanding common stock. Before any\ndividend may be paid on the Class B Common Stock, holders of the Class A Common Stock are entitled\nto receive an annual, noncumulative cash dividend of $0.01665 per share (subject to adjustment in\nthe event of future stock splits, stock dividends or similar events involving shares of Class A\nCommon Stock). Thereafter, any further dividend in that fiscal year must be paid on all shares of\nClass A Common Stock and Class B Common Stock on an equal basis. The Company’s revolving credit\nagreement restricts the amount of certain types of payments, including dividends that can be made\nannually to $50 million plus 75% of the consolidated net income excluding all extraordinary\nnon-cash items for the prior fiscal year. The Company believes that based on its historic dividend\npractice, this restriction will not impede it in following a similar dividend practice in the\nfuture.\n

\n\n

During the two most recent fiscal years and for the first quarter of fiscal 2012, the Company\ndeclared the following dividends per share on its Class A and Class B Common Stock for the years\nended July 31:\n


	2012		2011			2010
	1st Qtr		1st Qtr			2nd Qtr		3rd Qtr	4th Qtr		1st Qtr			2nd Qtr		3rd Qtr	4th Qtr
Class A	$	0.185		$	0.18		$	0.18	$	0.18		$	0.18		$	0.175	$	0.175	$	0.175	$	0.175
Class B		0.16835			0.16335			0.18		0.18			0.18			0.15835		0.175		0.175		0.175

\n\n

16\n

\n\n\n\n

\n\n

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


Item 6.		*Selected Financial Data*

\n\n

CONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL DATA
\nYears Ended July 31, 2007 through 2011\n

\n\n


	2011			2010			2009		2008		2007
Operating Data (1)
Net Sales	$	1,339,597			$	1,259,096		$	1,208,702		$	1,523,016		$	1,362,631
Gross Margin		656,196				623,297			577,583			744,195			657,044
Operating Expenses:
Research and development		43,001				42,621			34,181			40,607			35,954
Selling, general and administrative		441,815				435,906			397,180			495,904			449,103
Restructuring charge (2)		9,188				15,314			25,849			—			—

Total operating expenses		494,004				493,841			457,210			536,511			485,057

Operating Income		162,192				129,456			120,373			207,684			171,987
Other Income (Expense):
Investment and other income — net		3,990				1,168			1,800			4,888			2,875
Interest expense		(22,124	)			(21,222	)		(24,901	)		(26,385	)		(22,934	)

Net other expense		(18,134	)			(20,054	)		(23,101	)		(21,497	)		(20,059	)

Income before income taxes		144,058				109,402			97,272			186,187			151,928
Income Taxes		35,406				27,446			27,150			53,999			42,540

Net Income	$	108,652			$	81,956		$	70,122		$	132,188		$	109,388

Net Income Per Common Share — (Diluted):
Class A nonvoting	$	2.04			$	1.55		$	1.32		$	2.41		$	2.00
Class B voting	$	2.03			$	1.53		$	1.31		$	2.39		$	1.98
Cash Dividends on:
Class A common stock	$	0.72			$	0.70		$	0.68		$	0.60		$	0.56
Class B common stock	$	0.70			$	0.68		$	0.66		$	0.58		$	0.54
Balance Sheet at July 31:
Working capital	$	456,406			$	375,184		$	286,955		$	390,524		$	303,359
Total assets		1,861,505				1,746,231			1,583,267			1,850,513			1,698,857
Long-term obligations, less current maturities		331,914				382,940			346,457			457,143			478,575
Stockholders’ investment		1,156,192				1,005,027			951,092			1,021,808			891,012
Cash Flow Data:
Net cash provided by operating activities	$	167,350				165,238			126,645			225,554			136,018
Depreciation and amortization		48,827				53,022			54,851			60,587			53,856
Capital expenditures		(20,532	)			(26,296	)		(24,027	)		(26,407	)		(51,940	)

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


(1)		Financial data has been impacted by the acquisitive nature of the Company as one, three, two,\nand seven acquisitions were completed in fiscal years ended July 31, 2011, 2010, 2008, and\n2007, respectively. There were no acquisitions in fiscal 2009. See Note 2 in Item 8 for\nfurther information on the acquisitions that were completed.

(2)		In fiscal 2009, in response to the global economic downturn, the Company initiated several\nmeasures to address its cost structure, including the reduction in its workforce and decreased\ndiscretionary spending. The Company continued certain of these measures during fiscal 2011 and\n2010.

\n\n\n

\n\n

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


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

\n\n

Overview\n

\n\n\n

In fiscal 2011, the Company posted sales of $1,339.6 million and net income of $108.7 million,\nan increase of 6.4% and 32.6%, respectively, from fiscal 2010. Of the 6.4% increase in sales,\norganic sales increased 2.9%, the effects of fluctuations in the exchange rates used to translate\nfinancial results into the United States dollar increased sales by 2.5%, and a fiscal 2011\nacquisition, net of divestiture, increased sales by 1.0%. Regionally, fiscal 2011 sales in the\nAmericas, Europe, and Asia-Pacific increased 4.8%, 6.5%, and 9.0% , respectively, as compared to\nfiscal 2010.\n

\n\n

18\n

\n\n

Net income for fiscal 2011 increased 32.6% to $108.7 million or $2.04 per diluted share of\nClass A Common Stock, compared to $82.0 million, or $1.55 per diluted share of Class A Common Stock\nin fiscal 2010. Fiscal 2011 net income before restructuring related expenses was $115.2 million, or\n$2.16 per diluted share of Class A Common Stock compared to 2010 net income before restructuring\nrelated expenses of $93.4 million, or $1.76 per diluted share of Class A Common Stock. The\nimprovement in earnings was driven by organic sales growth, the positive impacts of the Company’s\nongoing process improvement initiatives and restructuring activities as well as benefits from\nforeign currency translation.\n

\n\n

In fiscal 2011, the Company generated $167.4 million of cash from operations, an increase\nof $2.2 million from the prior fiscal year. The increase in fiscal 2011 net income was mainly\noffset by improvements in working capital in the prior year.\n

\n\n

Results of Operations\n

\n\n\n

Year Ended July 31, 2011, Compared to Year Ended July 31, 2010\n

\n\n\n

The comparability of the operating results for the fiscal years ended July 31, 2011 to July\n31, 2010, has been impacted by the following acquisitions and divestitures completed in fiscal\n2011.\n

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


Acquisition:	Segment	Date Completed
ID Warehouse\n	Asia Pacific\n	November 2010

Divestiture:	Segment	Date Completed
Teklynx\n	Americas Europe\n	December 2010

\n\n\n

Fiscal 2011 sales increased $80.5 million, or 6.4% from fiscal 2010. The 6.4% increase in\nsales consisted of 2.9% growth in organic sales, 2.5% growth due to the effects of the foreign\ncurrency translation, and 1.0% growth due to an acquisition net of divesture.\n

\n\n

Organic sales, defined as sales in the Company’s existing core businesses and regions\n(exclusive of acquisitions owned less than one year, divestitures, and foreign currency translation\neffects), were up 2.9% compared to fiscal 2010. Regionally, fiscal 2011 organic sales in\nthe Americas, Europe, and Asia-Pacific increased 3.2%, 4.7%, and 0.4%, respectively, as compared to\nfiscal 2010. The organic sales increase experienced in the Americas was due primarily to the strong\nBrady brand sales growth and new products positively received by end—users and distributors. The\nincrease in Europe’s organic sales was broad-based with growth in both the Brady business and\nDirect Marketing business. Geographically, sales were weak in the United Kingdom, offsetting\nstrength in other European markets. Organic sales in the Asia-Pacific segment remained relatively\nflat. The segment’s on-going customer base diversification in the mobile handset and other adjacent\nmarkets offset the reduced demand from one of our largest mobile handset customers.\n

\n\n

The acquisition net of the divestiture listed above increased sales by $12.7 million or 1.0%\nin fiscal 2011 as compared to fiscal 2010. The currency growth reflects fluctuations in the\nexchange rates used to translate financial results into the United States Dollar which increased\nsales by $31.1 million or 2.5% for the year.\n

\n\n

The gross margin as a percentage of sales declined to 49.0% in fiscal 2011 from 49.5% in\nfiscal 2010. The decline in gross margin as a percentage of sales was primarily due to the\nincreased costs of raw materials which the company was not able to fully offset through continued\ncost reduction activities or price increases. The Company continues to focus on gross margin\nimprovements through the Brady Business Performance System, lean, and strategic sourcing efforts.\n

\n\n

Research and development expenses increased to $43.0 million in fiscal 2011 from $42.6 million\nin fiscal 2010, and declined as a percentage of sales in fiscal 2011 to 3.2% compared to 3.4% in\nfiscal 2010. The increase in R&D spending was due to the Company’s continued commitment to\ninnovation and new product development. This investment declined as percentage of sales slightly in\nfiscal 2011 as a result of the elimination of the R&D expenses incurred by the Company’s previously\nowned Teklynx business.\n

\n\n

19\n

\n\n

Selling, general, and administrative (“SG&A”) expenses increased to $441.8 million in fiscal\n2011 as compared to $435.9 million in fiscal 2010. SG&A expenses increased during the fiscal year\nmainly due to the fluctuations in exchange rates. The Company divested of its Teklynx business\nresulting in a pre-tax gain of $4.4 million, which is included in SG&A. This pre-tax gain was\noffset\nby the associated transaction-related costs and income tax expense, resulting in a net income\nimpact of $0.8 million during fiscal 2011. SG&A also increased in fiscal 2011 as a result of the\nannual merit increases, and increased advertising campaign expenses. As a percentage of sales,\nSG&A declined to 33.0% in fiscal 2011 from 34.6% in fiscal 2010 as the Company continues to reduce\nadministrative costs through its cost reduction activities including simplifying, standardizing,\nand automating processes.\n

\n\n

Restructuring charges were $9.2 million and $15.3 million during fiscal 2011 and 2010,\nrespectively. During fiscal 2010 and 2011, the Company incurred restructuring related costs as a\nresult of facility consolidations and continued workforce reduction activities. The costs\nassociated with the workforce reduction primarily include employee separation costs, consisting of\nseverance pay, outplacement services, medical, and other related benefits for the Company’s work\nforce.\n

\n\n

Interest expense increased to $22.1 million from $21.2 million for fiscal 2011 compared to\nfiscal 2010. In fiscal 2011, the Company repaid approximately $61.3 million of debt. Interest\nexpense increased due to a full year of interest being recognized on the May 2010 private\nplacement, compared to a partial year of interest in 2010. The increase was partially offset by\nthe lower principal balance under the previously outstanding debt agreements.\n

\n\n

Other income and expense increased $2.8 million in fiscal 2011 to $4.0 million from $1.2\nmillion in the prior year. The increase was primarily due to the interest income earned on the\nCompany’s money market and depository accounts, in addition to the gains on securities held in\nexecutive deferred compensation plans.\n

\n\n

The Company’s effective tax rate was 24.6% in fiscal 2011, which was relatively consistent\nwith the effective tax rate of 25.1% in fiscal 2010. The Company anticipates that its fiscal 2012\neffective tax rate will be consistent with prior periods.\n

\n\n

Net income for the fiscal year ended July 31, 2011, increased 32.6% to $108.7 million,\ncompared to $82.0 million for the fiscal year ended July 31, 2010, as a result of the factors noted\nabove. Net income as a percentage of sales increased to 8.1% from 6.5% for the fiscal year ended\nJuly 31, 2011 compared to the prior year. Diluted net income per share increased 31.6% to $2.04\nper share for fiscal 2011 compared to $1.55 per share for the fiscal year ended July 31, 2010.\nFiscal 2011 and 2010 net income before restructuring related expenses was $115.2 million, or $2.16\nper diluted share of Class A Common Stock, and $93.4 million, or $1.76 per diluted share of Class A\nCommon Stock, respectively.\n

\n\n

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

\n\n\n

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

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


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

\n\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

20\n

\n\n

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

\n\n

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

\n\n

Restructuring charges were $15.3 and $25.8 million during fiscal 2010 and 2009, respectively.\nIn fiscal 2009, $1.6 million of income tax expense was also incurred related to the anticipated\nrepayment of certain tax holidays due to site consolidation actions. In response to the global\neconomic downturn, the Company implemented a plan to reduce its cost structure. During fiscal 2009\nand 2010, the Company incurred costs related to the reduction of its workforce and facility\nconsolidations. Restructuring costs related primarily to employee separation costs, consisting of\nseverance pay, outplacement services, medical, and other related benefits for the Company’s work\nforce.\n

\n\n

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

\n\n

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

\n\n

The Company’s effective tax rate was 25.1% for fiscal 2010 compared to 27.9% for fiscal 2009.\nThe decrease in the Company’s effective tax rate during fiscal 2010 was primarily due to the mix of\nprofits in low and high tax countries as well as positive impacts from foreign and U.S. income tax\naudits.\n

\n\n

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

\n\n

21\n

\n\n

Business Segment Operating Results\n

\n\n\n

The Company is organized and managed on a geographic basis by region. Each of these regions,\nAmericas, Europe and Asia Pacific, has a President that reports directly to the Company’s chief\noperating decision maker, its Chief Executive Officer. Each region has its own distinct operations,\nis managed locally by its own management team, maintains its own financial reports and is evaluated\nbased on regional segment profit. The Company has determined that these regions comprise its\noperating and reportable segments based on the information used by the Chief Executive Officer to\nallocate resources and assess performance. Segment results are as follows:\n


								Asia-			Total			Corporate and			Total
(Dollars in thousands)	Americas			Europe			Pacific		Regions			Eliminations			Company
SALES TO EXTERNAL\nCUSTOMERS
Years ended:
July 31, 2011	$	577,428			$	404,955		$	357,214			$	1,339,597				—		$	1,339,597
July 31, 2010		551,185				380,121			327,790				1,259,096				—			1,259,096
July 31, 2009		534,440				367,156			307,106				1,208,702				—			1,208,702
SALES GROWTH INFORMATION
Year ended July 31, 2011:
Organic		3.2	%			4.7	%		0.4	%			2.9	%			—			2.9	%
Currency		1.1	%			0.6	%		6.9	%			2.5	%			—			2.5	%
Acquisitions/Divestitures		0.5	%			1.2	%		1.7	%			1.0	%			—			1.0	%

Total		4.8	%			6.5	%		9.0	%			6.4	%			—			6.4	%
Year ended July 31, 2010:
Organic		0.1	%			(0.3	)%		0.8	%			0.2	%			—			0.2	%
Currency		1.6	%			1.4	%		5.9	%			2.7	%			—			2.7	%
Acquisitions/Divestitures		1.4	%			2.4	%		0.0	%			1.3	%			—			1.3	%

Total		3.1	%			3.5	%		6.7	%			4.2	%			—			4.2	%
SEGMENT PROFIT
Years ended:
July 31, 2011	$	145,516			$	112,047		$	50,105			$	307,668			$	(15,742	)	$	291,926
July 31, 2010		125,169				103,316			52,105				280,590				(14,131	)		266,459
July 31, 2009		114,404				99,875			42,575				256,854				(7,952	)		248,902

\n\n\n

NET INCOME RECONCILIATION\n

\n\n


	Years ended:
	July 31,			July 31,			July 31,
(Dollars in thousands)	2011			2010			2009
Total profit for reportable segments	$	307,668			$	280,590		$	256,854
Corporate and eliminations		(15,742	)			(14,131	)		(7,952	)
Unallocated amounts:
Administrative costs		(120,546	)			(121,689	)		(102,680	)
Restructuring costs		(9,188	)			(15,314	)		(25,849	)
Investment and other income — net		3,990				1,168			1,800
Interest expense		(22,124	)			(21,222	)		(24,901	)

Income before income taxes		144,058				109,402			97,272
Income taxes		(35,406	)			(27,446	)		(27,150	)

Net income	$	108,652			$	81,956		$	70,122

\n\n\n

The Company evaluates short-term segment performance based on segment profit or loss and\ncustomer sales. Corporate long-term performance is evaluated based on shareholder value enhancement\n(“SVE”), which incorporates the cost of capital as a hurdle rate for capital expenditures, new\nproduct development, and acquisitions. Segment profit or loss does not include certain\nadministrative costs, such as the cost of finance, information technology, human resources, and\nexecutive leadership which are managed as global functions. Restructuring charges, equity\ncompensation costs, interest, investment and other income and income taxes are also excluded when\nevaluating segment performance.\n

\n\n

22\n

\n\n

Americas\n

\n\n\n

Americas sales increased 4.8% from fiscal 2010 to fiscal 2011, and increased 3.1% from fiscal\n2009 to fiscal 2010. Organic sales grew 3.2% in 2011 and grew 0.1% in 2010. The net impact of the\nfiscal 2010 acquisition of Stickolor and the fiscal 2011 divestiture of the Teklynx business\nincreased sales of the segment by 0.5% and the fluctuations of the exchange rates used to translate\nfinancial results into U.S. dollars increased sales by 1.1% in fiscal 2011. The increase in\norganic sales in fiscal 2011 was driven by the broad-based improvements in the segment’s core\nmarkets in additional to the positive results from the segment’s sales and marketing productivity\ninitiatives. The segment continues to focus on the sale of new, differentiated products, growth in\nnew markets, while continuing to focus on growth in core products and markets.\n

\n\n

The annual organic sales growth of 0.1% in fiscal 2010 varied significantly during the year.\nIn the first quarter the Americas experienced a 15.2% decline in organic sales as the prior year\nquarter had not yet been impacted by the economic recession. In the second quarter the Americas\nexperienced a 4.3% decline in organic sales as the economic recession began in the prior year\nquarter. Subsequent to the first half of the year, Americas experienced sequential growth over the\nprior period each quarter due to modest improvements in the cable and wire ID, industrial\nidentification, and safety and facility identification markets. The Company’s sales volumes of\nsorbent products increased in the fourth quarter of fiscal 2010 as a result of the clean-up of the\nGulf of Mexico oil spill. The acquisition of Stickolor increased sales of the segment by 1.4% and\nthe fluctuations of the exchange rates used to translate financial results into U.S. dollars\nincreased sales by 1.6% in fiscal 2010.\n

\n\n

In the Americas region, segment profit increased 16.3% to $145.5 million in fiscal 2011 from\n$125.2 million in fiscal 2010. Segment profit as a percentage of sales increased to 25.2% in 2011\nfrom 22.7% in 2010. This increase was primarily due to the improved gross margin in the segment due\nto certain facility consolidation actions, operational and sourcing cost savings projects offset by\nhigher inflation, in addition to the actions taken in fiscal 2011 to streamline the segment’s\nselling expense structure. Comparing fiscal 2010 to 2009, segment profit increased 9.4% to $125.2\nmillion in fiscal 2010 from $114.4 million in fiscal 2009. Segment profit as a percentage of sales\nincreased to 22.7% in 2010 from 21.4% in 2009. This increase was primarily due to the segment’s\ncommitment to its productivity initiatives including lean manufacturing and strategic sourcing.\n

\n\n

Europe\n

\n\n\n

Europe sales increased 6.5% from fiscal 2010 to fiscal 2011, and increased 3.5% from fiscal\n2009 to fiscal 2010. Organic sales increased 4.7% in fiscal 2011 and declined 0.3% in fiscal 2010\nas compared to prior years. Segment sales increased 1.2% in fiscal 2011 as a result of the fiscal\n2010 acquisitions of Welco and Securimed, net of the fiscal 2011 divestiture of the Teklynx\nbusiness. The segment’s organic sales were positively impacted during fiscal 2011 as a result of\ngrowth in the Brady business and Direct Marketing business in Germany and Southern Europe due to a\ncombination of improving economies and positive results of sales initiatives, partially offset by\nthe continued depressed conditions in the United Kingdom. Sales were also positively affected by\nfluctuations in the exchange rates used to translate financial results into the United States\ndollar, which increased sales within the segment by 0.6% in fiscal 2011.\n

\n\n

The annual organic sales decline, in fiscal 2010, of 0.3% varied significantly during the\nyear. In the first quarter Europe experienced a 12.3% decline in organic sales as the prior year\nquarter had not yet been impacted by the economic recession. In the second quarter Europe\nexperienced a 1.6% decline in organic sales as the economic recession began in the prior year\nquarter. Subsequent to the first half of the year, Europe experienced sequential growth over the\nprior period each quarter. The segment’s organic sales volumes in direct marketing businesses and\nelectronic industries improved modestly. The increase was offset by the decline in sales to\ngovernmental and public utilities. The acquisitions of Welco and Securimed in fiscal 2010 increased\nsales by 2.4%. Sales were positively affected by fluctuations in the exchange rates used to\ntranslate financial results into the United States dollar, which increased sales within the segment\nby 1.4% in fiscal 2010.\n

\n\n

In the Europe region, segment profit increased 8.5% to $112.0 million in fiscal 2011 from\n$103.3 million in fiscal 2010. Segment profit as a percentage of sales increased to 27.7% in fiscal\n2011 from 27.2% in fiscal 2010 and 2009. The increase in the segment’s profit was mainly due to\nthe increased sales volumes in addition to the continued efforts to streamline selling expenses\nthrough the Company’s strategic initiatives. The segment maintained its segment profit as a\npercentage of sales in fiscal 2010 and was able to offset the increased expenses with cost savings\ninitiatives put in place in fiscal 2009 and 2010.\n

\n\n

23\n

\n\n

Asia-Pacific\n

\n\n\n

Asia-Pacific sales increased 9.0% from fiscal 2010 to fiscal 2011, and sales increased 6.7%\nfrom fiscal 2009 to fiscal 2010.\nOrganic sales increased 0.4% and 0.8% in fiscal 2011 and 2010, respectively as compared to prior\nyears. Foreign currency translation positively impacted the segment’s sales by 6.9% and 5.9% in\nfiscal 2011 and 2010, respectively, as compared to prior years. Overall, Asia-Pacific organic\nsales were relatively flat in fiscal 2011. Increased sales from the segment’s on-going customer\nbase diversification in the mobile handset and other adjacent markets offset the reduced demand\nfrom one of our largest mobile handset customers.\n

\n\n\n

The fiscal 2010 annual organic sales growth of 0.8% varied significantly during the year. In\nthe first quarter Asia experienced a 20.4% decline in organic sales as the prior year quarter had\nnot yet been impacted by the economic recession. In the second quarter Asia experienced a 25.7%\ngrowth in organic sales as the impact of the economic recession in the prior quarter was offset by\na heightened focus on high end mobile electronics and strong growth in the data storage market. In\nthe third and fourth quarters Asia experienced growth of 9.4% and 5.2%, respectively. The increase\nin organic sales in fiscal 2010 was primarily due to the success in higher-end solutions in both\nthe mobile electronics and computer and storage markets.\n

\n\n

In the Asia-Pacific region, segment profit declined 3.8% to $50.1 million in fiscal 2011 from\n$52.1 million in fiscal 2010. Segment profit as a percentage of sales declined to 14.0% in fiscal\n2011 from 15.9% in fiscal 2010. The decline in the profit in fiscal 2011 was the result of\nrelatively flat organic sales, continued price pressure, and inflation on raw materials and wages.\nThe segment continues to focus on driving operational improvements through lean as well as\nstrategic sourcing initiatives. Comparing fiscal 2010 to 2009, segment profit as a percentage of\nsales increased to 15.9% in 2010 from 13.9% in 2009. The increase in the segment’s profit was\nprimarily due to the commitment to lean manufacturing at all of the segment’s facilities.\n

\n\n

Liquidity and Capital Resources\n

\n\n\n

Cash and cash equivalents were $390.0 million at July 31, 2011, compared to $314.8 million at\nJuly 31, 2010. The increase in cash and cash equivalents of $75.2 million was the result of cash\nprovided by operations of $167.4 million, and the $22.0 million positive effects of foreign\ncurrency translation, offset by cash used for acquisitions, capital expenditures, dividends and\ndebt repayments during fiscal 2011.\n

\n\n

The Company’s working capital excluding cash as a percentage of sales remained flat at 5% in\nfiscal 2011 and 2010. Accounts receivable balances increased $6.9 million from July 31, 2010 to\nJuly 31, 2011. The increase in accounts receivable was due primarily to the impact of foreign\ncurrency translation as well as the increase in sales volumes. Inventories increased $9.5 million\nfrom July 31, 2010 to July 31, 2011 due to increased business activity and the impact of foreign\ncurrency translation, partially offset by focused inventory reduction initiatives. Current\nliabilities increased $8.1 million over the same period mainly due to the Company’s forward foreign\nexchange currency contracts designated as net investment hedges.\n

\n\n

Cash flow from operating activities totaled $167.4 million and $165.2 million in fiscal 2011\nand 2010, respectively. The increase was primarily due to the $26.7 million increase in net income\npartially offset by the change in working capital components outlined above. The increase was also\ndue to the payment of the Company’s fiscal 2010 annual incentive compensation during fiscal 2011,\nwhereas no incentive compensation was paid in fiscal 2010 due to the elimination of the annual\nincentive compensation in fiscal 2009.\n

\n\n

Cash used for investing activities totaled $22.6 million and $48.7 million in fiscal 2011 and\n2010, respectively. Cash used for acquisitions totaled $8.0 million during fiscal 2011 for the\nacquisition of ID Warehouse. The Company used $30.4 million for acquisitions of Welco, Stickolor,\nand Securimed during fiscal 2010; the net cash paid for Welco, Stickolor, and Securimed was $1.8\nmillion, $18.5 million, and $10.1 million, respectively. The Company did not complete any\nacquisitions in fiscal 2009. Cash received from the divestiture of the Teklynx business was $13.0\nmillion during fiscal 2011.\n

\n\n

The investing activities also include the settlement of net investment foreign exchange\ncontracts totaling a $5.5 million loss and a $6.2 million gain in fiscal 2011 and 2010,\nrespectively. The net settlement is accounted for as a component of other comprehensive income\n(“OCI”) on the Consolidated Balance Sheet. Payments of $0.9 million and $0.6 million were made\nduring fiscal 2011 to satisfy the holdback and earnout liabilities of the Asterisco and Securimed\nacquisitions, respectively. Payments of $0.7 million and $0.7 million were also made during fiscal\n2009 to satisfy the earnout and holdback liabilities of the Transposafe and Asterisco acquisitions,\nrespectively.\n

\n\n

24\n

\n\n

Capital expenditures were $20.5 million in fiscal 2011, $26.3 million in fiscal 2010, and\n$24.0 million in fiscal 2009. The decrease in the capital expenditures in fiscal 2011 was due to\nthe fiscal 2010 expenditures related to a new coater in the Americas segment and the increased\ntooling required for new products in fiscal 2010 which did not repeat in fiscal 2011.\n

\n\n

Cash used for financing activities totaled $91.6 million in fiscal 2011 and $160.3 million in\nfiscal 2009. Financing activities provided a total of $15.3 million in fiscal 2010. Cash used for\ndividends to shareholders was $38.0 million in fiscal 2011, $36.8 million in fiscal 2010, and $35.8\nmillion in fiscal 2009. Cash received from the exercise of stock options was $8.2 million in fiscal\n2011, $3.7 million in fiscal 2010, and $1.7 million in fiscal 2009. The Company made principal\npayments on its long-term obligations of $61.3 million in fiscal 2011, $44.9 million in fiscal\n2010, and $87.2 million in fiscal 2009. The Company purchased treasury stock of $2.5 million in\nfiscal 2010, and $40.3 million in fiscal 2009. During fiscal 2010, the Company received proceeds of\n$94.9 million from the May 2010 private placement as discussed below.\n

\n\n

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

\n\n

On 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 repaying 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. Under the debt agreement, the Company made scheduled principal payments\nof $21.4 million, $44.9 million, and $61.3 million during the years ended July 31, 2009, 2010, and\n2011, respectively. In June 2009, the Company also completed a cash tender offer to purchase\napproximately $65.8 million of its outstanding notes at par without penalty.\n

\n\n

On October 5, 2006, the Company entered into a $200 million multi-currency revolving loan\nagreement with a group of five banks that replaced the Company’s previous credit agreement. At the\nCompany’s option, and subject to certain standard conditions, the available amount under the credit\nfacility may be increased from $200 million up to $300 million. Under the credit agreement, the\nCompany has the option to select either a base interest rate (based upon the higher of the federal\nfunds rate plus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency interest\nrate (at the LIBOR rate plus a margin based on the Company’s consolidated leverage ratio). A\ncommitment fee is payable on the unused amount of the facility. The agreement restricts the amount\nof certain types of payments, including dividends, which can be made annually to $50 million plus\nan amount equal to 75% of consolidated net income for the prior fiscal year of the Company. The\nCompany believes that based on historic dividend practice, this restriction would not impede the\nCompany in following a similar dividend practice in the future. On March 18, 2008, the Company\nentered into an amendment to the revolving loan agreement which extended the maturity date from\nOctober 5, 2011 to March 18, 2013. All other terms of the revolving loan agreement remained the\nsame. As of July 31, 2011, there were no outstanding borrowings under the credit facility.\n

\n\n

25\n

\n\n

The Company’s debt and revolving loan agreements require it to maintain certain financial\ncovenants. The Company’s June 2004, February 2006, March 2007, and May 2010 private placement debt\nagreements require the Company to maintain a ratio of debt to the trailing twelve months EBITDA, as\ndefined in the debt agreements, of not more than a 3.5 to 1.0 ratio (leverage ratio). As of July\n31, 2011, the Company was in compliance with the financial covenant of the June 2004, February\n2006, March 2007, and May 2010 private placement debt agreements, with the ratio of debt to EBITDA,\nas defined by the agreements, equal to 1.7 to 1.0. Additionally, the Company’s October 2006\nrevolving loan agreement, as amended and extended in May 2008, requires the Company to maintain a\nratio of debt to trailing twelve months EBITDA, as defined by the debt agreement, of not more than\na 3.0 to 1.0 ratio. The revolving loan agreement requires the Company’s trailing twelve months\nearnings before interest and taxes (“EBIT”) to interest expense of not less than a 3.0 to 1.0 ratio\n(interest expense coverage). As of July 31, 2011, the Company was in compliance with the financial\ncovenants of the revolving loan agreement, with the ratio of debt to EBITDA, as defined by the\nagreement, equal to 1.8 to 1.0 and the interest expense coverage ratio equal to 7.8 to 1.0.\n

\n\n

Long-term obligations as a percentage of long-term obligations plus stockholders’ investment\nwere 22.3% at July 31, 2011 and 27.6% at July 31, 2010. Long-term obligations decreased by $51.0\nmillion from July 31, 2010 to July 31, 2011 due to debt repayments made during the year, offset by\nthe $10.3 million increase in the USD value of the Euro denominated debt due to foreign exchange\nfluctuations. The fiscal 2011 debt repayments consisted of the scheduled installment of $26.1\nmillion on the 2004 private placement, an installment of $18.8 million on the 2006 private\nplacement, and an installment of $16.4 million on the 2007 private placement.\n

\n\n

Stockholders’ investment increased $151.2 million during fiscal 2011 primarily due to net\nincome of $108.7 million offset by the dividends paid on Class A and Class B Common Stock of $35.6\nand $2.5 million, respectively. The increase in the accumulated other comprehensive income of $63.0\nmillion was primarily due to positive effects of foreign currency translation.\n

\n\n

The Company’s cash balances are generated and held in numerous locations throughout the world.\nAt July 31, 2011, approximately 69% of the Company’s cash and cash equivalents was held outside the\nUnited States. The Company’s growth has historically been funded by a combination of cash provided\nby operating 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 financial flexibility\nto respond to both internal growth opportunities and those available through acquisition.\n

\n\n

Subsequent Events Affecting Liquidity and Capital Resources\n

\n\n\n

On September 9, 2011, the Company announced an increase in the annual dividend to shareholders\nof the Company’s Class A Common Stock, from $0.72 to $0.74 per share. A quarterly dividend of\n$0.185 will be paid on October 31, 2011, to shareholders of record at the close of business on\nOctober 10, 2011. This dividend represents an increase of 2.8% and is the 26th consecutive annual\nincrease in dividends.\n

\n\n

On September 9, 2011, the Company’s Board of Directors authorized a share buyback program for\nup to an additional 2 million shares of the Company’s Class A Common Stock. The share repurchase\nplan may be implemented from time to time on the open market or in privately negotiated\ntransactions, with repurchased shares available for use in connection with the Company’s\nstock-based compensation plans and for other corporate purposes.\n

\n\n

26\n

\n\n

Off-Balance Sheet Arrangements\n

\n\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n

Related Party Transactions — The Company evaluated its affiliated party transactions for the\nperiod ended July 31, 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

Payments Due Under Contractual Obligations\n

\n\n\n

The Company’s future commitments at July 31, 2011, for long-term debt, operating lease\nobligations, purchase obligations, interest obligations and other obligations are as follows\n(dollars in thousands):\n


	Payments Due by Period
				Less than			1-3			3-5		More than		Uncertain
Contractual Obligations	Total		1 Year			Years			Years		5 Years		Timeframe
Long-Term Debt Obligations	$	393,178		$	61,264			$	122,528		$	85,028		$	124,358	$	—
Operating Lease Obligations		57,026			18,350				23,303			12,816			2,557		—
Purchase Obligations (1)		76,558			61,771				8,072			6,715			—		—
Interest Obligations		79,230			19,404				29,143			17,219			13,464		—
Tax Obligations		22,343			—				—			—			—		22,343
Other Obligations (2)		15,011			1,054				2,232			2,538			9,187		—

Total	$	643,346		$	161,843			$	185,278		$	124,316		$	149,566	$	22,343

\n\n\n\n

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


(1)		Purchase obligations include all open purchase orders as of July 31, 2011.

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

\n\n\n\n

Inflation and Changing Prices\n

\n\n\n

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

\n\n

27\n

\n\n

Critical Accounting Estimates\n

\n\n\n

Management’s discussion and analysis of the Company’s financial condition and results of\noperations are based upon the Company’s Consolidated Financial Statements, which have been prepared\nin accordance with accounting principles generally accepted in the United States. The preparation\nof these financial statements requires management to make estimates and judgments that affect the\nreported amounts of assets, liabilities, revenues and expenses, and related disclosure of\ncontingent assets and liabilities. The Company bases these estimates and judgments on historical\nexperience and on various other assumptions that are believed to be reasonable under the\ncircumstances. Actual results may differ from these estimates and judgments.\n

\n\n

The Company believes the following accounting estimates are most critical to an understanding\nof its financial statements. Estimates are considered to be critical if they meet both of the\nfollowing criteria: (1) the estimate requires assumptions about material matters that are uncertain\nat the time the accounting estimates are made, and (2) material changes in the estimates are\nreasonably likely from period to period. For a detailed discussion on the application of these and\nother accounting estimates, refer to Note 1 to the Company’s Consolidated Financial Statements.\n

\n\n

Income Taxes\n

\n\n

The Company’s effective tax rate is based on pre-tax income and the tax rates applicable to that\nincome in the various jurisdictions in which the Company operates. Significant judgment is required\nin determining the Company’s effective income tax rate and in evaluating its tax positions. The\nCompany establishes liabilities when it is more likely than not that the Company will not realize\nthe full tax benefit of the position. The Company adjusts these liabilities in light of changing\nfacts and circumstances.\n

\n\n\n

Tax regulations may require items of income and expense to be included in a tax return in\ndifferent periods than the items are reflected in the consolidated financial statements. As a\nresult, the effective income tax rate reflected in the consolidated financial statements may be\ndifferent than the tax rate reported in the income tax return. Some of these differences are\npermanent, such as expenses that are not deductible on the income tax return, and some are\ntemporary differences, such as depreciation expense. Temporary differences create deferred tax\nassets and liabilities. Deferred tax assets generally represent items that can be used as tax\ndeductions or credits in the tax return in future years for which the Company has already recorded\nthe tax benefit in the consolidated financial statements. The Company establishes valuation\nallowances against its deferred tax assets when it is more likely than not that the amount of\nexpected future taxable income will not support the use of the deduction or credit. The\ndetermination of the amount of valuation allowance to be provided on recorded deferred tax assets\ninvolves estimates regarding (1) the timing and amount of the reversal of taxable temporary\ndifferences, (2) expected future taxable income, and (3) the impact of tax planning strategies, and\ncan also be impacted by changes to tax laws. Deferred tax liabilities generally represent tax\nexpense recognized in the consolidated financial statements for which payment has been deferred or\nexpense for which the Company has already taken a deduction on an income tax return, but has not\nyet recognized as expense in the consolidated financial statements.\n

\n\n

The Company accounts for uncertain tax positions by recognizing the financial statement\neffects of a tax position only when, based upon the technical merits, it is “more-likely-than-not”\nthat the position will be sustained upon examination. Judgment is required in evaluating tax\npositions and determining income tax provisions. The Company generally re-evaluates the technical\nmerits of its tax positions and recognizes an uncertain tax benefit when (i) there is completion of\na tax audit; (ii) there is a change in applicable tax law including a tax case ruling or\nlegislative guidance; or (iii) there is an expiration of the statute of limitations.\n

\n\n

Goodwill and Other Indefinite-lived Intangible Assets\n

\n\n

The allocation of purchase price for business combinations requires management estimates and\njudgment as to expectations for future cash flows of the acquired business and the allocation of\nthose cash flows to identifiable intangible assets in determining the estimated fair value for\npurchase price allocation purposes. If the actual results differ from the estimates and judgments\nused in these estimates, the amounts recorded in the financial statements could result in a\npossible impairment of the intangible assets and goodwill or require acceleration of the\namortization expense of finite-lived intangible assets. In addition, accounting guidance requires\nthat goodwill and other indefinite-lived intangible assets be tested at least annually for\nimpairment. If circumstances or events prior to the date of the required annual assessment indicate\nthat, in management’s judgment, it is more likely than not that there has been diminution of fair\nvalue of a reporting unit below its carrying value, the Company performs an impairment analysis at\nthe time of such circumstance or event. Changes in management’s estimates or judgments could result\nin an impairment charge, and such a charge could have an adverse effect on the Company’s financial\ncondition and results of operations. To aid in establishing the value of goodwill and other\nintangible assets at the time of acquisition, Company policy requires that all acquisitions with a\npurchase price above $5 million require the use of external valuations.\n

\n\n

28\n

\n\n

The Company has identified seven reporting units within its three reportable segments. The\nCompany’s methodologies for valuing goodwill are applied consistently on a year-over-year basis;\nthe assumptions used in performing the 2011 impairment calculations were evaluated in light of\nmarket and business conditions. Brady continues to believe that the discounted cash flow model and\nmarket\nmultiples model provide a reasonable and meaningful fair value estimate based upon the\nreporting units’ projections of future operating results and cash flows and replicates how market\nparticipants would value the Company’s reporting units. The projections of future operating\nresults, which are based on both past performance and the projections and assumptions used in the\nCompany’s current and long range operating plans, are subject to change as a result of changing\neconomic and competitive conditions. Significant estimates used by management in the discounted\ncash flows methodology include estimates of future cash flows based on expected growth rates, price\nincreases, capital expenditures, working capital levels, income tax rates, the benefits of recent\nacquisitions and expected synergies, and a weighted-average cost of capital that reflects the\nspecific risk profile of the reporting unit being tested. Significant negative industry or\neconomic trends, disruptions to the Company’s business, loss of significant customers, inability to\neffectively integrate acquired businesses, unexpected significant changes or planned changes in use\nof the assets or in entity structure, and divestitures may adversely impact the assumptions used in\nthe valuations.\n

\n\n

In the event the fair value of a reporting unit is less than the carrying value, including\ngoodwill, the Company would then perform an additional assessment that would compare the implied\nfair value of goodwill with the carrying amount of goodwill. The determination of implied fair\nvalue of goodwill would require management to compare the fair value of the reporting unit to the\nestimated fair value of the assets and liabilities of the reporting unit; if necessary, the Company\nmay consult valuation specialists to assist with the assessment of the estimated fair value of\nassets and liabilities for the reporting unit. If the implied fair value of the goodwill is less\nthan the carrying value, an impairment would be recorded.\n

\n\n

In performing the Company’s annual goodwill impairment assessment the Company performed a\nsensitivity analysis on the material assumptions used in the discounted cash flow valuation models\nfor each of its reporting units. Based on the Company’s fiscal 2011 goodwill impairment testing and\nassuming a hypothetical 10% decrease in the estimated fair values of each of its reporting units,\nthe hypothetical fair value of each of the Company’s reporting units would have been greater than\nthe carrying value. See Note 1 of the Notes to Consolidated Financial Statements contained in Item\n8 — Financial Statements and Supplementary Data for further information about goodwill and\nintangible assets.\n

\n\n

The Company also evaluates the recoverability of its indefinite-lived intangible\nassets by utilizing a relief from royalty valuation methodology that estimates the fair value of\nthe future discounted cash flows of each indefinite-lived intangible asset. The future\nprojections, which are based on both past performance and the projections and assumptions used in\nthe Company’s current and long range operating plans, are subject to change as a result of changing\neconomic and competitive conditions. Significant estimates used by management in the relief from\nroyalty valuation methodology include estimates of future revenue streams based on expected growth\nand royalty rates, income tax rates, expected synergies, and a weighted-average cost of equity that\nreflects the specific risk profile of the indefinite-lived intangible asset tested. The Company’s\nmethodologies for valuing indefinite-lived intangible assets are applied consistently on a\nyear-over-year basis. The Company continues to believe that the relief from royalty valuation\nmethodology provides the most reasonable and meaningful fair value estimate based upon the\nindefinite-lived intangible assets’ projected future revenue streams and replicates how market\nparticipants would value the Company’s indefinite-lived intangible assets in an orderly\ntransaction.\n

\n\n

The Company completed its annual impairment testing of goodwill and other indefinite-lived\nintangibles assets in the fourth quarter of fiscal 2011. Although the Company consistently uses\nthe same methods in developing the assumptions and estimates underlying the fair value\ncalculations, such estimates are uncertain in nature and can vary from actual results.\n

\n\n

Reserves and Allowances\n

\n\n

The Company has recorded reserves or allowances for inventory obsolescence, uncollectible\naccounts receivable, and credit memos. These accounts require the use of estimates and judgment.\nThe Company bases its estimates on historical experience and on various other assumptions that are\nbelieved to be reasonable under the circumstances. The Company believes that such estimates are\nmade with consistent and appropriate methods. Actual results may differ from these estimates under\ndifferent assumptions or conditions.\n

\n\n

New Accounting Standards\n

\n\n

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

\n\n

29\n

\n\n

Forward-Looking Statements\n

\n\n\n

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

\n\n

30\n

\n\n

Risk Factors\n

\n\n\n

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

\n\n

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


Item 7A.		*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 objective of the Company’s foreign currency exchange risk management is to minimize the\nimpact of currency movements on non-functional currency transactions and minimize the foreign\ncurrency translation impact of the Company’s foreign operations. To achieve this objective, the\nCompany hedges a portion of known exposures using forward contracts. Main exposures are related to\ntransactions denominated in the British Pound, the Euro, Canadian Dollar, Australian Dollar,\nJapanese Yen and the Swiss Franc currency. As of July 31, 2011, the notional amount of outstanding\nforward contacts designated as cash flow hedges was $80.8 million. The Company also uses forward\nforeign exchange currency contracts of €38.7 million (approximately $50.0 million USD) and\neuro-denominated debt of €75.0 million designated as a hedge instrument to hedge portions of the\nCompany’s net investments in its European foreign operations.\n

\n\n

The Company could be exposed to interest rate risk through its corporate borrowing activities.\nThe objective of the Company’s interest rate risk management activities is to manage the levels of\nthe Company’s fixed and floating interest rate exposure to be consistent with the Company’s\npreferred mix. The interest rate risk management program allows the Company to enter into approved\ninterest rate derivatives if there is a desire to modify the Company’s exposure to interest rates.\nSuch activities require approval of the Board of Directors. As of July 31, 2011, the Company had no\ninterest rate derivatives.\n

\n\n

The Company is subject to the risk of changes in foreign currency exchange rates due to its\noperations in foreign countries. The Company has manufacturing facilities and sells and distributes\nits products throughout the world. As a result, the Company’s financial results could be\nsignificantly affected by factors such as changes in foreign currency exchange rates or weak\neconomic conditions in the foreign markets in which the Company manufactures, distributes and sells\nits products. Changes in foreign currency exchange rates for the Company’s foreign subsidiaries\nreporting in local currencies are generally reported as a component of stockholders’ investment.\nThe Company’s favorable and unfavorable currency translation adjustment recorded in fiscal 2011 and\n2010 as a separate component of stockholders’ investment was $63.0 million and ($1.2) million,\nrespectively. As of July 31, 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 $427.7 million and $240.4 million, respectively. The potential decrease in the net current\nassets as of July 31, 2011 from a hypothetical 10 percent adverse change in quoted foreign currency\nexchange rates would be approximately $42.8 million. This sensitivity analysis assumes a parallel\nshift in all major foreign currency exchange rates versus the U.S. dollar. Exchange rates rarely\nmove in the same direction relative to the U.S. dollar due to positive and negative correlations of\nthe various global currencies. This assumption may overstate the impact of changing exchange rates\non individual assets and liabilities denominated in a foreign currency.\n

\n\n

31\n

\n\n

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n

\n\n\n

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

\n\n\n\n

We have audited the accompanying consolidated balance sheets of Brady Corporation and subsidiaries\n(the “Company”) as of July 31, 2011 and 2010, and the related consolidated statements of income,\nstockholders’ investment, and cash flows for each of the three years in the period ended July 31,\n2011. Our audits also included the financial statement schedule listed in the Index at Item 15.\nThese financial statements and financial statement schedule are the responsibility of the Company’s\nmanagement. Our responsibility is to express an opinion on the financial statements and financial\nstatement schedule based on our audits.\n

\n\n\n

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

\n\n\n

In our opinion, such consolidated financial statements present fairly, in all material respects,\nthe financial position of Brady Corporation and subsidiaries at July 31, 2011 and 2010, and the\nresults of their operations and their cash flows for each of the three years in the period ended\nJuly 31, 2011, in conformity with accounting principles generally accepted in the United States of\nAmerica. Also, in our opinion, such financial statement schedule, when considered in relation to\nthe basic consolidated financial statements taken as a whole, present fairly, in all material\nrespects, the information set forth therein.\n

\n\n\n

We have also audited, in accordance with the standards of the Public Company Accounting Oversight\nBoard (United States), the Company’s internal control over financial reporting as of July 31, 2011,\nbased on the criteria established in Internal Control—Integrated Framework issued by the Committee\nof Sponsoring Organizations of the Treadway Commission and our report dated September 27, 2011,\nexpressed an unqualified opinion on the Company’s internal control over financial reporting.\n

\n\n\n

/s/ DELOITTE & TOUCHE LLP\n

\n\n\n

Milwaukee, WI
\nSeptember 27, 2011\n\n

\n\n

33\n

\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED BALANCE SHEETS

\n\n\n

July 31, 2011 and 2010

\n\n\n


	2011			2010
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	389,971			$	314,840
Accounts receivable — net		228,483				221,621
Inventories:
Finished products		62,152				52,906
Work-in-process		14,550				13,146
Raw materials and supplies		27,484				28,620

Total inventories		104,186				94,672
Prepaid expenses and other current assets		35,647				37,839

Total current assets		758,287				668,972

Other assets:
Goodwill		800,343				768,600
Other intangibles assets		89,961				103,546
Deferred income taxes		53,755				39,103
Other non-current assets		19,244				20,808
Property, plant and equipment:
Cost:
Land		6,406				6,265
Buildings and improvements		104,644				101,138
Machinery and equipment		305,557				289,727
Construction in progress		11,226				9,873

		427,833				407,003
Less accumulated depreciation		287,918				261,501

Property, plant and equipment — net		139,915				145,502

Total	$	1,861,505			$	1,746,531

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	98,847			$	96,702
Wages and amounts withheld from employees		69,798				67,285
Taxes, other than income taxes		7,612				7,537
Accrued income taxes		9,954				10,138
Other current liabilities		54,406				50,862
Current maturities on long-term obligations		61,264				61,264

Total current liabilities		301,881				293,788
Long-term obligations, less current maturities		331,914				382,940
Other liabilities		71,518				64,776

Total liabilities		705,313				741,504

Commitments and contingencies (See Note 9)
Stockholders’ investment:
Common stock:
Class A Nonvoting — Issued 51,261,487 and 51,261,487\nshares, respectively; (aggregate liquidation preference\nof $42,803 and $42,628 at July 31, 2011 and 2010,\nrespectively)		513				513
Class B Voting — Issued and outstanding 3,538,628 shares		35				35
Additional paid-in capital		307,527				304,205
Earnings retained in the business		789,100				718,512
Treasury stock —1,667,235 and 2,175,771 shares,\nrespectively of Class A nonvoting common stock, at cost		(50,017	)			(66,314	)
Accumulated other comprehensive income		113,898				50,905
Other		(4,864	)			(2,829	)

Total stockholders’ investment		1,156,192				1,005,027

Total	$	1,861,505			$	1,746,531

\n\n\n\n

See notes to consolidated financial statements.\n

\n\n\n

\n\n

34\n

\n\n\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF INCOME

\n\n\n

Years Ended July 31, 2011, 2010 and 2009

\n\n\n


	2011			2010			2009
	(In thousands, except per share amounts)
Net sales	$	1,339,597			$	1,259,096		$	1,208,702
Cost of products sold		683,401				635,799			631,119

Gross margin		656,196				623,297			577,583
Operating expenses:
Research and development		43,001				42,621			34,181
Selling, general and administrative		441,815				435,906			397,180
Restructuring charges		9,188				15,314			25,849

Total operating expenses		494,004				493,841			457,210

Operating income		162,192				129,456			120,373
Other income (expense):
Investment and other income — net		3,990				1,168			1,800
Interest expense		(22,124	)			(21,222	)		(24,901	)

Net other expense		(18,134	)			(20,054	)		(23,101	)

Income before income taxes		144,058				109,402			97,272
Income taxes		35,406				27,446			27,150

Net income	$	108,652			$	81,956		$	70,122

Net income per common share:
Class A Nonvoting:
Basic	$	2.06			$	1.56		$	1.33

Diluted	$	2.04			$	1.55		$	1.32

Dividends	$	0.72			$	0.70		$	0.68

Class B Voting:
Basic	$	2.04			$	1.55		$	1.32

Diluted	$	2.03			$	1.53		$	1.31

Dividends	$	0.70			$	0.68		$	0.66

Weighted average Class A and Class B common shares outstanding
Basic		52,639				52,402			52,559

Diluted		53,133				52,946			52,866

\n\n\n\n

See notes to consolidated financial statements.\n

\n\n\n

\n\n

35\n

\n\n\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT

\n\n\n

Years Ended July 31, 2011, 2010 and 2009

\n\n\n

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


								Earnings						Accumulated
				Additional			Retained						Other							Total
	Common		Paid-In			in the			Treasury		Comprehensive							Comprehensive
	Stock		Capital			Business			Stock		Income			Other			Income
	(In thousands, except per share amounts)
Balances at July 31, 2008	$	548		$	292,769			$	639,059		$	(33,234	)		$	128,161			$	(5,495	)

Net income		—			—				70,122			—				—				—		$	70,122
Net currency translation\nadjustment and other (Note 1)		—			—				—			—				(75,110	)			—			(75,110	)

Total comprehensive income																						$	(4,988	)

Issuance of 138,934 shares of\nClass A Common Stock under\nstock option plan		—			(1,995	)			—			3,678				—				—
Other (Note 6)		—			(1,744	)			—			—				—				1,003
Tax benefit from exercise of\nstock options and deferred\ncompensation distributions		—			1,336				—			—				—				—
Stock-based compensation expense (Note 1)		—			8,099				—			—				—				—
Purchase of 1,344,664 shares of\nClass A Common Stock		—			—				—			(40,267	)			—				—
Cash dividends on Common Stock
Class A — $0.68 per share		—			—				(33,492	)		—				—				—
Class B — $0.66 per share		—			—				(2,347	)		—				—				—

Balances at July 31, 2009	$	548		$	298,466			$	673,342		$	(69,823	)		$	53,051			$	(4,492	)

Net income		—			—				81,956			—				—				—		$	81,956
Net currency translation\nadjustment and other (Note 1)		—			—				—			—				(2,146	)			—			(2,146	)

Total comprehensive income																						$	79,810

Issuance of 215,447 shares of\nClass A Common Stock under\nstock option plan		—			(2,788	)			—			6,505				—				—
Other (Note 6)		—			(2,512	)			—			(459	)			—				1,663
Tax benefit from exercise of\nstock options and deferred\ncompensation distributions		—			1,318				—			—				—				—
Stock-based compensation expense\n(Note 1)		—			9,721				—			—				—				—
Purchase of 102,067 shares of\nClass A Common Stock		—			—				—			(2,537	)			—				—
Cash dividends on Common Stock
Class A — $0.70 per share		—			—				(34,368	)		—				—				—
Class B — $0.68 per share		—			—				(2,418	)		—				—				—

Balances at July 31, 2010	$	548		$	304,205			$	718,512		$	(66,314	)		$	50,905			$	(2,829	)

Net income		—			—				108,652			—				—				—		$	108,652
Net currency translation\nadjustment and other (Note 1)		—			—				—			—				62,993				—			62,993

Total comprehensive income																						$	171,645

Issuance of 524,144 shares of\nClass A Common Stock under stock\noption plan		—			(5,684	)			—			13,877				—				—
Other (Note 6)		—			(1,964	)			—			2,420				—				(2,035	)
Tax benefit from exercise of\nstock options and deferred\ncompensation distributions		—			1,140				—			—				—				—
Stock-based compensation expense\n(Note 1)		—			9,830				—			—				—				—
Cash dividends on Common Stock
Class A — $0.72 per share		—			—				(35,575	)		—				—				—
Class B — $0.70 per share		—			—				(2,489	)		—				—				—

Balances at July 31, 2011	$	548		$	307,527			$	789,100		$	(50,017	)		$	113,898			$	(4,864	)

\n\n\n\n

See notes to consolidated financial statements.\n

\n\n\n

\n\n

36\n

\n\n\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

CONSOLIDATED STATEMENTS OF CASH FLOWS

\n\n\n

Years Ended July 31, 2011, 2010 and 2009

\n\n\n


	2011			2010			2009
	(Dollars in thousands)
Operating activities:
Net income	$	108,652			$	81,956		$	70,122
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		48,827				53,022			54,851
Deferred income taxes		(8,161	)			(6,834	)		(8,640	)
Gain on the sale of business (pre-tax)		(4,394	)			—			—
Non-cash portion of stock-based compensation expense		9,830				9,721			7,731
Non-cash portion of restructuring		2,155				2,260			2,469
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable		7,680				(29,479	)		53,389
Inventories		(2,886	)			426			34,749
Prepaid expenses and other assets		5,624				(3,502	)		(2,423	)
Accounts payable and accrued liabilities		(3,365	)			52,410			(75,930	)
Income taxes		3,388				5,258			(9,673	)

Net cash provided by operating activities		167,350				165,238			126,645

Investing activities:
Acquisitions of businesses, net of cash acquired		(7,970	)			(30,431	)		—
Purchase price adjustment		—				—			3,514
Payments of contingent consideration		(1,528	)			—			(1,405	)
Divestiture of business, net of cash retained in business		12,980				—			—
Purchases of property, plant and equipment		(20,532	)			(26,296	)		(24,027	)
Settlements of net investment hedges		(5,542	)			6,248			—
Other		(39	)			1,798			2,874

Net cash used in investing activities		(22,631	)			(48,681	)		(19,044	)

Financing activities:
Payment of dividends		(38,064	)			(36,786	)		(35,839	)
Proceeds from issuance of common stock		8,193				3,717			1,683
Principal payments on debt		(61,264	)			(44,893	)		(87,224	)
Proceeds from issuance of debt		—				94,915			—
Purchase of treasury stock		—				(2,537	)		(40,267	)
Income tax benefit from the exercise of stock options and deferred compensation\ndistributions, and other		(439	)			859			1,336

Net cash (used in) provided by financing activities		(91,574	)			15,275			(160,311	)


Effect of exchange rate changes on cash		21,986				(5,148	)		(17,489	)


Net increase (decrease) in cash and cash equivalents		75,131				126,684			(70,199	)
Cash and cash equivalents, beginning of year		314,840				188,156			258,355

Cash and cash equivalents, end of year	$	389,971			$	314,840		$	188,156


Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of capitalized interest	$	21,298			$	21,626		$	26,047
Income taxes, net of refunds		35,851				30,870			48,766
Acquisitions:
Fair value of assets acquired, net of cash	$	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 consolidated financial statements.\n

\n\n\n

\n\n

37\n

\n\n\n

BRADY CORPORATION AND SUBSIDIARIES\n

\n\n

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

\n\n

Years Ended July 31, 2011, 2010 and 2009

\n\n

(In thousands except share and per share amounts)

\n\n\n\n

1. Summary of Significant Accounting Policies\n

\n\n\n\n

Nature of Operations — Brady Corporation is an international manufacturer and marketer of\nidentification solutions and specialty products which identify and protect premises, products and\npeople. Brady’s core capabilities in manufacturing, printing systems, precision engineering and\nmaterials expertise make it a leading supplier to the Maintenance, Repair and Operations (“MRO”)\nmarket and to the Original Equipment Manufacturing (“OEM”) market.\n

\n\n\n

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

\n\n\n\n

Basis of Presentation — The Company has reclassified certain prior year financial statement\namounts to conform to their current year presentation. The operating activities including “Other\nliabilities” and “Accounts payable and accrued liabilities,” which were previously disclosed as\nsingle line items, have been combined and reported as “Accounts payable and accrued liabilities” on\nthe Consolidated Statement of Cash Flows for the years ending July 2010 and 2009. The financing\nactivities including “Other” and “Income tax benefit from the exercise of stock options and\ndeferred compensation distribution,” which were previously disclosed as single line items, have\nbeen combined and reported as “Income tax benefit from the exercise of stock options and deferred\ncompensation distribution, and other” on the Consolidated Statement of Cash Flows for the years\nending July 2010 and 2009. This reclassification had no effect on cash provided by operating\nactivities, cash used in financing activities, total assets, net income, or earnings per share.\n

\n\n\n

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

\n\n\n

Subsequent Events — On September 9, 2011, the Company announced an increase in the annual\ndividend to shareholders of the Company’s Class A Common Stock, from $0.72 to $0.74 per share. A\nquarterly dividend of $0.185 will be paid on October 31, 2011, to shareholders of record at the\nclose of business on October 10, 2011. This dividend represents an increase of 2.8% and is the 26th\nconsecutive annual increase in dividends.\n

\n\n\n

Fair Value of Financial Instruments — The Company believes the carrying amount of its\nfinancial instruments (cash and cash equivalents, accounts receivable and accounts payable) is a\nreasonable estimate of the fair value of these instruments due to their short-term nature. The\nCompany adopted guidance related to fair value measurements on August 1, 2008 as it relates to\nfinancial assets and liabilities. The Company adopted the new accounting guidance on fair value\nmeasurements for its nonfinancial assets and liabilities on August 1, 2009. See Note 5 for more\ninformation regarding the fair value of long-term debt and Note 10 for fair value measurements.\n

\n\n\n

Cash Equivalents — The Company considers all highly liquid investments with original\nmaturities of three months or less when acquired to be cash equivalents, which are recorded at\ncost. The Company’s cash equivalents as of July 31, 2010, included variable rate demand note\nsecurities (“VRDN”) issued by various agencies that include a put feature to the original issuer or\nthe issuer’s agent. The Company’s VRDN investments are generally federal tax-exempt instruments of\nhigh credit quality, secured by direct-pay letters of credit from major financial institutions.\nThese investments have variable rates tied to short-term interest rates. Interest rates are reset\nweekly and these VRDN investments can be tendered for sale upon notice (generally no longer than\nseven days). Although the Company’s VRDN securities are issued and rated as long-term securities\n(with maturities through 2029), they are priced and traded as short-term investments.\n

\n\n

38\n

\n\n

The Company classified the variable rate demand note securities with put features, where the\nissuer holds the obligation, as cash equivalents. The investments are carried at cost or par value,\nwhich approximates the fair value. As of July 31, 2010, the recorded values of the VRDNs held by\nthe Company were $66.1 million and there were no realized or unrealized gains or losses related to\nthe Company’s securities. As of July 31, 2010, all VRDNs held by the Company were classified as\n“cash and cash equivalents” on the Consolidated Balance Sheets. The Company did not hold any VRDNs\nas of July 31, 2011.\n

\n\n\n

Accounts Receivables — Accounts receivables are stated net of allowances for doubtful\naccounts of $6,183 and $7,137 as of July 31, 2011 and 2010, respectively. No single customer\ncomprises more than 10% of the Company’s consolidated net sales in 2011, 2010, or 2009, or 10% of\nthe Company’s consolidated accounts receivable as of July 31, 2011 or 2010. Specific customer\nprovisions are made when a review of significant outstanding amounts, utilizing information about\ncustomer creditworthiness and current economic trends, indicates that collection is doubtful. In\naddition, provisions are made for the remainder of accounts receivable at different rates, based\nupon the age of the receivable and the Company’s historical collection experience.\n

\n\n\n

Inventories — Inventories are stated at the lower of cost or market. Cost has been determined\nusing the last-in, first-out (“LIFO”) method for certain domestic inventories (approximately 16% of\ntotal inventories at July 31, 2011 and approximately 20% of total inventories at July 31, 2010) and\nthe first-in, first-out (“FIFO”) or average cost methods for other inventories. Had all domestic\ninventories been accounted for on a FIFO basis instead of on a LIFO basis, the carrying value would\nhave increased by $9,168 and $9,178 on July 31, 2011 and 2010, respectively.\n

\n\n\n

Plant, Property, and Equipment — Plant, property, and equipment are recorded at cost. The\ncost of buildings and improvements and machinery and equipment is being depreciated over their\nestimated useful lives using primarily the straight-line method for financial reporting purposes.\nThe estimated useful lives range from 3 to 33 years as shown below.\n

\n\n

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


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

\n\n\n

Fully depreciated assets are retained in property and accumulated depreciation accounts until\ndisposal. Upon disposal, assets and related accumulated depreciation are removed from the accounts\nand the net amount, less proceeds from disposal, is charged or credited to operations. Leasehold\nimprovements are depreciated over the shorter of the lease term or the estimated useful life of the\nrespective asset. Depreciation expense was $28,997, $31,560, and $32,023 for the years ended July\n31, 2011, 2010 and 2009, respectively.\n

\n\n\n

Goodwill and Other Intangible Assets — The cost of intangible assets with determinable useful\nlives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis,\nover the estimated periods benefited. Intangible assets with indefinite useful lives and goodwill\nare not subjected to amortization. These assets are assessed for impairment annually or more\nfrequently as deemed necessary. Goodwill at July 31, 2011 and 2010 did not include any accumulated\nimpairment losses.\n

\n\n

Changes in the carrying amount of goodwill for the years ended July 31, 2011 and 2010 are as\nfollows:\n

\n\n


								Asia-
	Americas			Europe			Pacific		Total
Balance as of July 31, 2009	$	410,135			$	166,251		$	174,787	$	751,173

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

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

Current year acquisitions		—				—			4,792		4,792
Current year divestitures		(3,696	)			(8,380	)		—		(12,076	)
Translation adjustments and other		4,256				16,429			18,342		39,027

Balance as of July 31, 2011	$	425,578			$	171,238		$	203,527	$	800,343

\n\n\n

Goodwill increased $31,743 during fiscal 2011 due to the net effects of foreign currency\ntranslation and recent acquisition activity, offset by recent divestitures. Of the $31,743\nincrease, $39,027 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 2, “Acquisitions and\nDivestitures” for further discussion.\n

\n\n

39\n

\n\n

Goodwill increased $17,427 during fiscal 2010 due to the acquisition activity in the period\noffset by the net effects of foreign currency translation. Of the $17,427 increase in goodwill,\n$778 resulted from the acquisition of certain assets of Welco, a division of Welconstruct Group\nLimited (“Welco”) in the first quarter of fiscal 2010, $13,370 resulted from the acquisition of\nStickolor Industria e Comerciao de Auto Adesivos Ltda. (“Stickolor”) in the second quarter of\nfiscal 2010, and $6,118 resulted from the acquisition of Securimed SAS (“Securimed”) in the third\nquarter of fiscal 2010. The increase in goodwill was offset by the negative net effect of foreign\ncurrency translation of $2,839 during fiscal 2010.\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 other intangible assets. The net book value of these assets was as follows:\n

\n\n


	July 31, 2011		July 31, 2010
	Weighted												Weighted
	Average		Gross									Average		Gross
	Amortization		Carrying			Accumulated		Net Book		Amortization			Carrying		Accumulated		Net Book
	Period (Years)		Amount			Amortization		Value		Period (Years)			Amount		Amortization		Value
Amortized other intangible assets:
Patents		5		$	9,784		$	(8,556	)	$	1,228			5		$	9,314	$	(7,855	)	$	1,459
Trademarks and other		7			9,448			(6,599	)		2,849			7			8,823		(5,685	)		3,138
Customer relationships		7			165,566			(119,977	)		45,589			7			152,720		(95,996	)		56,724
Non-compete agreements and other		4			16,432			(15,760	)		672			4			15,239		(14,356	)		883
Unamortized other intangible assets:
Trademarks and tradenames		N/A			39,623			—			39,623			N/A			41,342		—			41,342

Total				$	240,853		$	(150,892	)	$	89,961					$	227,438	$	(123,892	)	$	103,546

\n\n\n

The value of other intangible assets in the Consolidated Balance Sheet at July 31, 2011,\ndiffers from the value assigned to them in the allocation of purchase price due to the effect of\nfluctuations in the exchange rates used to translate financial statements into the United States\ndollar between the date of acquisition and July 31, 2011.\n

\n\n

Amortization expense of intangible assets during fiscal 2011, 2010, and 2009 was $19,830,\n$21,462, and $22,828, respectively. The amortization over each of the next five fiscal years is\nprojected to be $16,883, $11,029, $5,946, $5,540, and $4,353 for the years ending July 31, 2012,\n2013, 2014, 2015 and 2016, respectively.\n

\n\n\n

Impairment of Long-Lived and Other Intangible Assets — The Company evaluates whether events\nand circumstances have occurred that indicate the remaining estimated useful life of long-lived and\nother finite-lived intangible assets may warrant revision or that the remaining balance of an asset\nmay not be recoverable. The measurement of possible impairment is based on fair value of the assets\ngenerally estimated by the ability to recover the balance of assets from expected future operating\ncash flows on an undiscounted basis. If impairment is determined to exist, any related impairment\nloss is calculated based on the fair value of the asset.\n

\n\n\n

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

\n\n

During the fourth quarter of fiscal 2011, the Company conducted a goodwill impairment\nassessment. The assessment included comparing the carrying amount of net assets, including\ngoodwill, of each reporting unit to its respective fair value as of May 1, 2011, the Company’s\nassessment date. Fair value was determined using the weighted average of a discounted cash flow and\nmarket participant analysis for each reporting unit. The Company’s methodologies for valuing\ngoodwill are applied consistently on a year-over-year basis. No indications of impairment have been\nidentified between the date of the interim assessments and July 31, 2011.\n

\n\n

During the fourth quarter of fiscal 2011, the Company conducted an indefinite-lived intangible\nasset impairment assessment. The assessment included comparing the carrying amount of the\nindefinite-lived intangible asset to the fair value of those assets as of May 1, 2011, the\nCompany’s assessment date. Fair value was determined using a discounted revenue stream analysis for\neach indefinite-lived intangible based on a relief from royalty valuation methodology. The\nCompany’s methodologies for valuing indefinite-lived intangible assets are applied consistently on\na year-over-year basis. No indications of impairment have been identified between the date of the\ninterim assessments and July 31, 2011.\n

\n\n

40\n

\n\n

Catalog Costs and Related Amortization — The Company accumulates all direct costs incurred,\nnet of vendor cooperative advertising payments, in the development, production, and circulation of\nits catalogs on its balance sheet until such time as the related catalog is mailed. The catalog\ncosts are subsequently amortized into selling, general, and administrative expense over the\nexpected sales realization cycle, which is one year or less. Consequently, any difference between\nthe estimated and actual revenue stream for a particular catalog and the related impact on\namortization expense is neutralized within a period of one year or less. The estimate of the\nexpected sales realization cycle for a particular catalog is based on the Company’s historical\nsales experience with identical or similar catalogs, and an assessment of prevailing economic\nconditions and various competitive factors. The Company tracks subsequent sales realization,\nreassesses the marketplace, and compares its findings to the previous estimate, and adjusts the\namortization of future catalogs, if necessary. At July 31, 2011 and 2010, $11,892 and $11,496,\nrespectively, of prepaid catalog costs were included in prepaid expenses and other current assets.\n

\n\n\n

Revenue Recognition — Revenue is recognized when it is both earned and realized or\nrealizable. The Company’s policy is to recognize revenue when title to the product, ownership, and\nrisk of loss have transferred to the customer, persuasive evidence of an arrangement exists, and\ncollection of the sales proceeds is reasonably assured, all of which generally occur upon shipment\nof goods to customers. The majority of the Company’s revenue relates to the sale of inventory to\ncustomers, and revenue is recognized when title and the risks and rewards of ownership pass to the\ncustomer. Given the nature of the Company’s business and the applicable rules guiding revenue\nrecognition, the Company’s revenue recognition practices do not contain estimates that materially\naffect the results of operations, with the exception of estimated returns and credit memos. The\nCompany provides for an allowance for estimated product returns and credit memos which is\nrecognized as a deduction from sales at the time of the sale. As of July 31, 2011 and 2010, the\nCompany had a reserve of $4,491 and $3,963, respectively.\n

\n\n\n

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

\n\n\n

Shipping and Handling Fees and Costs —Amounts billed to a customer in a sale transaction\nrelated to shipping and handling fees are reported as net sales and the related costs incurred for\nshipping and handling are reported as cost of goods sold.\n

\n\n\n

Advertising Costs — Advertising costs are expensed as incurred, except catalog and mailer\ncosts as outlined above. Advertising expense for the years ended July 31, 2011, 2010, and 2009 were\n$79,326, $72,000, and $77,395, respectively.\n

\n\n\n

Stock-Based Compensation — The Company has an incentive stock plan under which the Board of\nDirectors may grant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock\nor restricted shares of Class A Nonvoting Common Stock to employees. Additionally, the Company has\na nonqualified stock option plan for non-employee directors under which stock options to purchase\nshares of Class A Nonvoting Common Stock are available for grant. The stock options have an\nexercise price equal to the fair market value of the underlying stock at the date of grant and\ngenerally vest ratably over a three-year period, with one-third becoming exercisable one year after\nthe grant date and one-third additional in each of the succeeding two years. Stock options issued\nunder these plans, referred to herein as “service-based” stock options, generally expire 10 years\nfrom the date of grant. The Company also grants stock options to certain executives and key\nmanagement employees that vest upon meeting certain financial performance conditions over the\nvesting schedule described above; these options are referred to herein as “performance-based” stock\noptions. Performance-based stock options expire 10 years from the date of grant. Restricted shares\nhave an issuance price equal to the fair market value of the underlying stock at the date of grant.\nThe Company granted restricted shares in fiscal 2008 and fiscal 2011 that have an issuance price\nequal to the fair market value of the underlying stock at the date of grant. The restricted shares\ngranted in fiscal 2008 were amended in fiscal 2011 to allow for vesting after either a five-year\nperiod or a seven-year period based upon both performance and service conditions. The restricted\nshares granted in fiscal 2011 vest ratably at the end of years 3, 4 and 5 upon meeting certain\nperformance and service conditions. The restricted shares granted in fiscal 2008 and 2011 are\nreferred to herein as “performance-based restricted shares.”\n

\n\n

As of July 31, 2011, the Company has reserved 5,799,017 shares of Class A Nonvoting Common\nStock for outstanding stock options and restricted shares and 737,000 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

41\n

\n\n

The Company recognizes the compensation cost of all share-based awards on a straight-line\nbasis over the vesting period of the award. Total stock compensation expense recognized by the\nCompany during the years ended July 31, 2011, 2010, and 2009 was $9,830 ($5,996 net of taxes),\n$9,721 ($5,930 net of taxes), and $7,731 ($4,716 net of taxes), respectively. As of July 31, 2011,\ntotal unrecognized compensation cost related to share-based compensation awards was $18,551\npre-tax, net of estimated forfeitures, which the Company expects to recognize over a\nweighted-average period of 2.2 years.\n

\n\n

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

\n\n


	2011			2010			2009
	Performance-							Performance-						Performance-
	Based			Service-Based			Based			Service-Based		Based			Service-Based
Black-Scholes Option Valuation Assumptions	Options			Options			Options			Options		Options			Options
Expected term (in years)		6.57				5.91				6.57			5.94			N/A		5.96
Expected volatility		39.39	%			40.22	%			38.72	%		39.88	%		N/A		36.07	%
Expected dividend yield		1.96	%			1.94	%			3.02	%		3.01	%		N/A		2.03	%
Risk-free interest rate		2.35	%			1.65	%			3.03	%		2.63	%		N/A		1.75	%
Weighted-average market value of\nunderlying stock at grant date	$	28.43			$	29.13			$	28.73		$	28.68			N/A	$	21.26
Weighted-average exercise price	$	28.35			$	29.13			$	29.78		$	28.68			N/A	$	21.26
Weighted-average fair value of options\ngranted	$	9.87			$	9.59			$	8.70		$	8.77			N/A	$	6.30

\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 calculated as the average of the high and the low stock price on the date of grant.\n

\n\n

Effective July 20, 2011, the Compensation Committee of the Board of Directors of the Company\napproved an amendment to the fiscal 2008 performance-based restricted shares to provide for an\nadditional two-year vesting period. These awards originally vested five years from the grant date\nupon meeting certain financial performance and service conditions. This modification resulted in a\none-time cumulative reduction of $1.2 million to share-based compensation expense in order to align\nthe expense recognition with the amended vesting terms. The Company’s Chief Executive Officer,\nChief Financial Officer, and the other three named executive officers currently have the following\nperformance-based restricted shares affected by this amendment: Frank M. Jaehnert, 50,000 shares;\nThomas J. Felmer, 35,000 shares; Peter C. Sephton, 35,000 shares; Matthew O. Williamson, 35,000\nshares; and Robert L. Tatterson, 20,000 shares.\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 per share. The Company also granted 210,000 shares of performance-based restricted\nstock during fiscal 2008, with a grant price and fair value of $32.83. As of July 31, 2011,\n310,000 performance-based restricted shares were outstanding.\n

\n\n

The Company granted 465,000 performance-based stock options during fiscal 2011, with a\nweighted average exercise price of $28.35 and a weighted average fair value of $9.87. The Company\nalso granted 900,500 service-based stock options during fiscal 2011, with a weighted average\nexercise price of $29.13 and a weighted average fair value of $9.59.\n

\n\n\n

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

\n\n

42\n

\n\n

Other comprehensive income — Other comprehensive income consists of foreign currency\ntranslation adjustments, net unrealized gains and losses from cash flow hedges and net investment\nhedges, and the unamortized gain on the post-retirement medical, dental and vision plans net of\ntheir related tax effects.\n

\n\n

The following table illustrates the changes in the balances of each component of accumulated\nother comprehensive income for the periods presented.\n

\n\n


					Amortization
					of gain on
					post-
	Unrealized			retirement			Foreign		Accumulated
	(loss) gain on			medical,			currency		other
	cash flow			dental and			translation		comprehensive
	hedges			vision plan			adjustments		income
Beginning balance, July 31, 2008	$	(971	)		$	2,493		$	126,639		$	128,161
Current-period change		918				(551	)		(75,477	)		(75,110	)

Ending balance, July 31, 2009	$	(53	)		$	1,942		$	51,162		$	53,051

Current-period change		(268	)			(585	)		(1,293	)		(2,146	)

Ending balance, July 31, 2010	$	(321	)		$	1,357		$	49,869		$	50.905

Current-period change		(833	)			831			62,995			62,993

Ending balance, July 31, 2011	$	(1,154	)		$	2,188		$	112,864		$	113,898

\n\n\n

The increase in accumulated other comprehensive income for the year ended July\n31, 2011 as compared to the years ended July 31, 2010 and 2009 was primarily due to the\ndepreciation of the U.S. dollar against other currencies. The foreign currency translation\nadjustments line in the table above includes the impact of foreign currency translation in addition\nto the settlements of the net investment hedges, net of tax.\n

\n\n\n

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

\n\n\n

Income Taxes — The Company accounts for income taxes in accordance with the applicable\naccounting guidance, which requires an asset and liability approach to financial accounting and\nreporting for income taxes. Deferred income tax assets and liabilities are computed for differences\nbetween the financial statement and tax basis of assets and liabilities that will result in taxable\nor deductible amounts in the future based on enacted tax laws and rates applicable to the periods\nin which the differences are expected to affect taxable income. Valuation allowances are\nestablished when necessary to reduce deferred tax assets to the amount expected to be realized.\nIncome tax expense is the tax payable or refundable for the period plus or minus the change during\nthe period in deferred tax assets and liabilities. The Company recognizes the effect of income tax\npositions only if sustaining those positions is more likely than not. Changes in recognition or\nmeasurement are reflected in the period in which a change in judgment occurs.\n

\n\n\n

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

\n\n\n

Foreign Currency Hedging —The objective of the Company’s foreign currency exchange risk\nmanagement is to minimize the impact of currency movements on non-functional currency transactions\nand minimize the foreign currency translation impact on the Company’s foreign operations. While the\nCompany’s risk management objectives and strategies are driven from an economic perspective, the\nCompany attempts, where possible and practical, to ensure that the hedging strategies it engages in\nqualify for hedge accounting and result in accounting treatment where the earnings effect of the\nhedging instrument provides substantial offset (in the same period) to the earnings effect of the\nhedged item. Generally, these risk management transactions will involve the use of foreign currency\nderivatives to protect against exposure resulting from transactions in a currency differing from\nthe respective functional currency.\n

\n\n

The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate\nrisk of specific foreign currency denominated transactions. These contracts typically require the\nexchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities\nof less than 18 months. These instruments may or may not qualify as hedges under the accounting\nguidance for derivative instruments and hedging activities based upon the intended objective of the\ncontract. The fair value of these\ninstruments at July 31, 2011 and 2010 was a liability of $6,109 and $673, respectively. As of\nJuly 31, 2011, the notional amount of these outstanding forward exchange contracts was $80.8\nmillion. See Note 12 for more information regarding the Company’s derivative instruments and\nhedging activities.\n

\n\n

43\n

\n\n

The Company has designated a portion of its foreign exchange contracts as cash flow hedges and\nrecorded these contracts at fair value on the Consolidated Balance Sheets. For these instruments,\nthe effective portion of the gain or loss on the derivative is reported as a component of other\ncomprehensive income (“OCI”) and reclassified into earnings in the same period or periods during\nwhich the hedged transaction affects earnings. At July 31, 2011 and July 31, 2010, unrealized\nlosses of $1,535 and $493 have been included in OCI, respectively. All balances are expected to be\nreclassified from OCI to earnings during the next fifteen months when the hedged transactions\nimpact earnings.\n

\n\n

The Company has designated a portion of its foreign exchange contracts as net investment\nhedges of the Company’s net investments in European foreign operations and recorded these contracts\nat fair value on the Consolidated Balance Sheets. For net investment hedges that meet the\neffectiveness requirements, the net gains or losses attributable to changes in spot exchange rates\nare recorded in cumulative translation within other comprehensive income. Any ineffective portions\nare to be recognized in earnings. Recognition in earnings of amounts previously recorded in\ncumulative translation is limited to circumstances such as complete or substantially complete\nliquidation of the net investment in the hedged foreign operation. At July 31, 2011 and July 31,\n2010, unrealized losses of $4,589 and unrealized gains of $6,248 have been included in OCI,\nrespectively.\n

\n\n

The Company also utilizes Euro-denominated debt designated as hedge instruments to hedge\nportions of the Company’s net investments in European foreign operations. As of July 31, 2011, the\nCompany had €75.0 million foreign denominated debt outstanding designated as a net investment hedge\nof the Company’s net investment in its European foreign operations. See Note 12 for more\ninformation regarding the Company’s derivative instruments and hedging activities. For net\ninvestment hedges that meet the effectiveness requirements, the net gains or losses attributable to\nchanges in spot exchange rates are recorded in cumulative translation within other comprehensive\nincome. Any ineffective portions are to be 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\nJuly 31, 2011 and July 31, 2010, unrealized losses of $13,070 and $2,833 have been included in OCI,\nrespectively.\n

\n\n

The Company also enters into forward exchange contracts to create economic hedges to manage\nforeign exchange risk exposure. The fair value of these instruments at July 31, 2011 and 2010 was\n$1 and $40, respectively. The Company has not designated these derivative contracts as hedge\ntransactions, and accordingly, the mark-to-market impact of these derivatives is recorded each\nperiod in current earnings.\n

\n\n

Hedge effectiveness is determined by how closely the changes in the fair value of the hedging\ninstrument offset the changes in the fair value or cash flows of the hedged item. Hedge accounting\nis permitted only if the hedging relationship is expected to be highly effective at the inception\nof the hedge and on an on-going basis. Gains or losses on the derivative related to hedge\nineffectiveness are recognized in current earnings. The amount of hedge ineffectiveness was not\nsignificant for the fiscal years ended July 31, 2011, 2010, and 2009.\n

\n\n\n

New Accounting Standards — In June 2011, the Financial Accounting Standards Board (“FASB”)\namended its authoritative guidance related to the presentation of comprehensive income, requiring\nentities to present items of net income and other comprehensive income either in one continuous\nstatement or in two separate consecutive statements. This guidance becomes effective for the\nCompany’s fiscal 2013 first quarter. The Company has evaluated the impact of adopting this\nguidance but believes that it will result only in changes in the presentation of its financial\nstatements and will not have a material impact on the Company’s results of operations, financial\nposition or cash flows.\n

\n\n

In May 2011, the FASB amended its authoritative guidance related to fair value measurements to\nprovide a consistent definition and measurement of fair value, as well as similar disclosure\nrequirements between U.S. GAAP and International Financial Reporting Standards. This guidance\nclarifies the application of existing fair value measurement and expands the existing disclosure\nrequirements. This guidance becomes effective for the Company’s fiscal 2012 third quarter. This\nguidance is not expected to have a material impact on the Company’s results of operations,\nfinancial position or cash flows, but may require certain additional disclosures.\n

\n\n

In December 2010, the FASB amended its authoritative guidance related to Step 1 of the\ngoodwill impairment test for reporting units with zero or negative carrying amounts. For those\nreporting units, an entity is required to perform Step 2 of the goodwill\nimpairment test if it is more likely than not that goodwill impairment exists. In determining\nwhether it is more likely than not that a goodwill impairment exists, consideration should be made\nas to whether there are any adverse qualitative factors indicating that an impairment may exist.\nThis guidance becomes effective for the Company in fiscal 2012. The adoption of this standard is\nnot expected to have a material impact on the Company’s consolidated financial statements.\n

\n\n

44\n

\n\n\n

2. Acquisitions and Divestitures\n

\n\n\n

The Company completed one business acquisition during the fiscal year ended July 31, 2011 and\nthree business acquisitions during the fiscal year ended July 31, 2010. The Company did not\ncomplete any business acquisitions during the fiscal year ended July 31, 2009. All of these\ntransactions were accounted for using the purchase method of accounting; therefore, the results of\nthe acquired operations are included in the accompanying consolidated financial statements only\nsince their acquisition dates.\n

\n\n

The Company also divested of one business during the fiscal year ended July 31, 2011. The\nCompany did not complete any divestitures during the fiscal years ended July 31, 2010 or 2009.\n

\n\n

Fiscal 2011\n

\n\n\n

In November 2010, the Company acquired ID Warehouse, based in New South Wales, Australia for\n$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 following table summarizes the combined estimated fair values of the assets acquired and\nliabilities assumed at the date of the acquisition:\n

\n\n


Current assets net of cash	$	1,876
Property, plant & equipment		415
Goodwill		4,792
Customer relationships		1,846
Non-compete agreements		487

Total assets acquired net of cash		9,416
Liabilities assumed		1,446

Net assets acquired	$	7,970

\n\n\n

The results of the operations of the acquired business have been included since the date of\nacquisition in the accompanying consolidated financial statements. Pro forma information related to\nthe acquisition 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

In December 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 $12,980, 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 Consolidated Statement of Income for the year ended July\n31, 2011. The divestiture of the Teklynx business was part of the Company’s continued long-term\ngrowth strategy to focus the Company’s energies and resources on growth of the Company’s core\nbusiness.\n

\n\n

Fiscal 2010\n

\n\n\n

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

\n\n

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

\n\n

45\n

\n\n

In October 2009, the Company acquired certain assets of the Welco division of Welconstruct\nGroup Limited, based in the United Kingdom for $1,840. The Welco division conducts a direct\nmarketing business consisting of sales of storage, handling, office and workplace products, and\nequipment via catalog and the internet to industrial and commercial markets under the name and\ntitle “Welco.” The Welco business is included in the Company’s Europe segment.\n

\n\n

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

\n\n


Current assets net of cash	$	5,313
Property, plant & equipment		743
Goodwill		20,266
Customer relationships		7,970
Trademarks		1,340

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

Net assets acquired	$	30,431

\n\n\n

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

\n\n

The results of the operations of the acquired businesses have been included since the\nrespective dates of acquisition in the accompanying consolidated financial statements. Pro forma\ninformation related to the acquisitions during the twelve months ended July 31, 2010 is not\nincluded because the impact on the Company’s consolidated results of operations is considered to be\nimmaterial.\n

\n\n\n

3. Employee Benefit Plans\n

\n\n\n

The Company provides postretirement medical, dental and vision benefits (the “Plan”) for\neligible regular full and part-time domestic employees (including spouses) outlined by the plan.\nPostretirement benefits are provided only if the employee was hired prior to April 1, 2008, and\nretires on or after attainment of age 55 with 15 years of credited service. Credited service begins\naccruing at the later of age 40 or date of hire. All active employees first eligible to retire\nafter July 31, 1992, are covered by an unfunded, contributory postretirement healthcare plan where\nemployer contributions will not exceed a defined dollar benefit amount, regardless of the cost of\nthe program. Employer contributions to the plan are based on the employee’s age and service at\nretirement.\n

\n\n

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

\n\n

The Plan is unfunded and recorded as a liability in the accompanying consolidated balance\nsheets as of July 31, 2011 and 2010. The following table provides a reconciliation of the changes\nin the Plan’s accumulated benefit obligations during the years ended July 31:\n

\n\n


	2011			2010
Obligation at beginning of year	$	15,277			$	14,311
Service cost		666				662
Interest cost		694				795
Actuarial (gain)/loss		(955	)			967
Benefit payments		(671	)			(834	)
Plan amendments		—				(169	)
Settlements		—				(455	)

Obligation at end of fiscal year	$	15,011			$	15,277

\n\n\n

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

\n\n

46\n

\n\n

As of July 31, 2011 and 2010, amounts recognized as liabilities in the accompanying\nconsolidated balance sheets consist of:\n

\n\n


	2011		2010
Current liability	$	1,054		$	1,060
Noncurrent liability		13,957			14,217

	$	15,011		$	15,277

\n\n\n

As of July 31, 2011 and 2010, pre-tax amounts recognized in accumulated other comprehensive\nincome in the accompanying consolidated balance sheets consist of:\n

\n\n


	2011		2010
Net actuarial gain	$	3,131		$	2,252
Prior service credit		503			585

	$	3,634		$	2,837

\n\n\n

Net periodic benefit cost for the Plan for fiscal years 2011, 2010, and 2009 includes the\nfollowing components:\n

\n\n


	Years Ended July 31,
	2011			2010			2009
Net periodic postretirement benefit cost included the following components:
Service cost — benefits attributed to service during the period	$	666			$	662		$	672
Prior service credit		(82	)			(64	)		(70	)
Interest cost on accumulated postretirement benefit obligation		694				795			842
Amortization of unrecognized gain		(76	)			(206	)		(308	)
Curtailment loss		—				—			393

Periodic postretirement benefit cost	$	1,202			$	1,187		$	1,529

\n\n\n

The estimated actuarial gain and prior service credit that will be amortized from accumulated\nother comprehensive income into net periodic postretirement benefit cost over the next fiscal year\nare $178 and $82, respectively. The termination of the voluntary retiree medical savings account\nplan resulted in a reduction in the liability for the one-time settlement of $455 and the one-time\nplan amendment of $169 as of July 31, 2010. The reduction in workforce resulted in a one-time\ncurtailment gain of $679 and the accelerated recognition of the previously unrecognized prior\nservice cost of $106, offset by a one-time separation benefit charge of $1,178, resulting in a net\ncurtailment loss of $393 as of July 31, 2009.\n

\n\n

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

\n\n


	2011			2010		2009
Weighted average discount rate used in determining accumulated\npostretirement benefit obligation liability		4.5	%		4.5	%	5.5	%
Weighted average discount rate used in determining net periodic benefit cost		4.5	%		5.5	%	6.8	%
Assumed health care trend rate used to measure APBO at July 31		8.0	%		8.0	%	8.0	%
Rate to which cost trend rate is assumed to decline (the ultimate trend rate)		5.5	%		5.5	%	5.5	%
Fiscal year the ultimate trend rate is reached		2017			2016		2015

\n\n\n

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

\n\n

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


	One-Percentage		One-Percentage
	Point Increase		Point Decrease
Effect on future service and interest cost	$	13		$	(12	)
Effect on accumulated postretirement benefit obligation at July 31, 2011		185			(170	)

\n\n\n

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

\n\n

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


2012	$	1,054
2013		1,084
2014		1,148
2015		1,234
2016		1,304
2017 through 2021		7,791

\n\n

47\n

\n\n\n

The Company has retirement and profit-sharing plans covering substantially all full-time\ndomestic employees and certain of its foreign subsidiaries. Contributions to the plans are\ndetermined annually or quarterly, according to the respective plans, based on earnings of the\nrespective companies and employee contributions. At July 31, 2011 and 2010, $7,293 and $7,540,\nrespectively, of accrued retirement and profit-sharing contributions were included in other current\nliabilities and other long-term liabilities on the accompanying consolidated balance sheets.\n

\n\n

The Company also has deferred compensation plans for directors, officers and key executives\nwhich are discussed below. At July 31, 2011 and 2010, $12,299 and $10,398, respectively, of\ndeferred compensation was included in current and other long-term liabilities in the accompanying\nconsolidated balance sheets.\n

\n\n

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

\n\n

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

\n\n

The amounts charged to expense for the retirement and profit sharing described above were\n$14,911, $12,547, and $11,765 during the years ended July 31, 2011, 2010, and 2009, respectively.\n

\n\n\n

4. Income Taxes\n

\n\n\n

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

\n\n


	Years Ended July 31,
	2011		2010			2009
United States	$	29,913		$	4,423		$	(383	)
Other Nations		114,145			104,979			97,655

Total	$	144,058		$	109,402		$	97,272

\n\n\n

Income taxes consist of the following:\n

\n\n


	Years Ended July 31,
	2011			2010			2009
Current income tax expense:
United States	$	5,784			$	474		$	3,486
Other Nations		37,384				32,800			31,223
States (U.S.)		399				1,006			1,081

		43,567				34,280			35,790

Deferred income tax (benefit) expense:
United States		(5,161	)			(4,604	)		(7,633	)
Other Nations		(3,746	)			(1,942	)		(1,693	)
States (U.S.)		746				(288	)		686

		(8,161	)			(6,834	)		(8,640	)

Total	$	35,406			$	27,446		$	27,150

\n\n

48\n

\n\n\n

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

\n\n

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

\n\n


	July 31, 2011
	Assets			Liabilities			Total
Inventories	$	5,328			$	(37	)	$	5,291
Prepaid catalog costs		18				(3,038	)		(3,020	)
Employee benefits		892				—			892
Accounts receivable		1,979				(75	)		1,904
Other, net		8,429				(2,363	)		6,066

Current		16,646				(5,513	)		11,133

Fixed Assets		2,189				(7,672	)		(5,483	)
Intangible Assets		1,964				(33,798	)		(31,834	)
Capitalized R&D expenditures		2,807				—			2,807
Deferred compensation		23,654				—			23,654
Postretirement benefits		6,764				—			6,764
Tax credit carry-forwards and net operating losses		62,638				—			62,638
Less valuation allowance		(27,476	)			—			(27,476	)
Other, net		2,453				—			2,453

Noncurrent		74,993				(41,470	)		33,523

Total	$	91,639			$	(46,983	)	$	44,656

\n\n


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

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

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

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

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

\n\n\n

Tax loss carry-forwards at July 31, 2011 are comprised of:\n

\n\n\n

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

•

Foreign net operating loss carry-forwards of $84,182, of which $73,388 have no expiration\ndate and the remainder of which expire within the next 5 years.

\n\n

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

•

State net operating loss carry-forwards of $71,880, which expire from 2014 to 2030.

\n\n

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

•

Foreign tax credit carry-forwards of $28,304, which expire from 2018 to 2021.

\n\n

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

•

State research and development credit carry-forwards of $346, which expire from 2017 to\n2029.

\n\n

The valuation allowance decreased by $34 during the fiscal year ended July 31, 2011 and\nincreased by $1,840 during the fiscal year ended July 31, 2010. If realized or reversed in future\nperiods, substantially all of the valuation allowance would impact the income tax rate.\n

\n\n

49\n

\n\n

Rate Reconciliation\n

\n\n

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

\n\n


	Years Ended July 31,
	2011			2010		2009
Tax at statutory rate		35.0	%		35.0	%	35.0	%
State income taxes, net of federal tax benefit		0.0	%		0.6	%	1.6	%
International rate differential		(6.3	)%		(9.8	)%	(8.6	)%
Non-creditable withholding taxes		0.8	%		1.8	%	—
Rate variances arising from foreign subsidiary distributions		(6.5	)%		(2.6	)%	(3.4	)%
Adjustments to tax accruals and reserves		3.8	%		(0.5	)%	5.8	%
Research and development tax credits		(1.1	)%		(0.3	)%	(1.5	)%
Other, net		(1.1	)%		0.9	%	(1.0	)%

Effective tax rate		24.6	%		25.1	%	27.9	%

\n\n\n

The Company is eligible for tax holidays on the earnings of certain subsidiaries in Asia,\nincluding China, India, Thailand, and the Philippines. The benefits realized as a result of these\ntax holidays reduced the consolidated effective tax rate by approximately 1.5%, 2.3%, and 3.3%\nduring the years ended July 31, 2011, 2010, and 2009, respectively. These tax holidays are in the\nprocess of expiring and are anticipated to be fully exhausted by March 31, 2014.\n

\n\n

Uncertain Tax Positions\n

\n\n

On August 1, 2007, the Company adopted guidance regarding uncertain tax positions. The\nguidance requires application of a “more likely than not” threshold to the recognition and\nderecognition of tax positions.\n

\n\n

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

\n\n


Balance at July 31, 2008	$	16,017
Additions based on tax positions related to the current year		2,526
Additions for tax positions of prior years(1)		4,056
Reductions for tax positions of prior years		(934	)
Lapse of\nstatute of limitations		(944	)
Settlements with tax authorities		60
Cumulative Translation Adjustments and\nother		(1,319	)

Balance at July 31, 2009	$	19,462

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

Balance at July 31, 2010	$	17,668

Additions based on tax positions related to the current year		5,147
Additions for tax positions of prior years		2,387
Reductions for tax positions of prior years		(291	)
Lapse of statute of limitations		(2,803	)
Settlements with tax authorities		(728	)
Cumulative Translation Adjustments and other		963

Balance at July 31, 2011	$	22,343

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


(1)		Includes acquisitions.

\n\n\n\n

With the exception of Cumulative Translation Adjustments, the entire amount of unrecognized\ntax benefits, if recognized, would affect the Company’s effective income tax rate.\n

\n\n

The Company recognizes interest and penalties related to unrecognized tax benefits within the\nprovision for income taxes on the consolidated statements of income.\n

\n\n

50\n

\n\n

Interest expense is recognized on the amount of potentially underpaid taxes associated with\nthe Company’s tax positions, beginning in the first period in which interest starts accruing under\nthe respective tax law and continuing until the tax positions are settled. During the years ended\nJuly 31, 2011, 2010, and 2009, the Company recognized a $990 reduction in interest expense, and a\n$33 and $427 increase in interest expense, respectively, and $500, $780 and $414 of penalties,\nrespectively, related to the reserve for uncertain tax positions, net of amounts reversing due to\nreductions for tax positions of prior years, statute of limitations, and settlements. At July 31,\n2011 and 2010, the Company had $1,507 and $2,473, respectively, accrued for interest on\nunrecognized tax benefits. Penalties are accrued if the tax position does not meet the minimum\nstatutory threshold to avoid the payment of a penalty. At July 31, 2011 and 2010, the Company had\n$2,229 and $1,592, respectively, accrued for penalties on unrecognized tax benefits.\n

\n\n

The Company estimates that it is reasonably possible that the unrecognized tax benefits may be\nreduced by $2,351 within twelve months as a result of the resolution of worldwide tax matters, tax\naudit settlements, and/or statute expirations.\n

\n\n

During the year ended July 31, 2011, the Company recognized tax benefits associated with\ncertain international and domestic tax positions being resolved and the lapse of statutes of\nlimitations.\n

\n\n

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

\n\n

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


Jurisdiction		Open Tax Years
United States — Federal\n		F’09 — F’11
France\n		F’08 — F’11
Germany\n		F’03 — F’11
United Kingdom\n		F’09 — F’11

\n\n\n

Unremitted Earnings\n

\n\n

The Company does not provide for U.S. deferred taxes on cumulative earnings of non-U.S.\naffiliates and associated companies that have been reinvested indefinitely. These earnings relate\nto ongoing operations and at July 31, 2011, were approximately $455,812. These earnings have been\nreinvested in non-U.S. business operations and the Company does not intend to repatriate these\nearnings to fund U.S. operations. It is not practicable to determine the income tax liability that\nwould be payable if such earnings were not indefinitely reinvested.\n

\n\n

51\n

\n\n\n

5. Long-Term Obligations\n

\n\n\n

\n\n

On October 5, 2006, the Company entered into a $200 million multi-currency revolving loan\nagreement with a group of five banks that replaced the Company’s previous credit agreement. At the\nCompany’s option, and subject to certain standard conditions, the available amount under the credit\nfacility may be increased from $200 million up to $300 million. Under the credit agreement, the\nCompany has the option to select either a base interest rate (based upon the higher of the federal\nfunds rate plus one-half of 1% or the prime rate of Bank of America) or a Eurocurrency interest\nrate (at the LIBOR rate plus a margin based on the Company’s consolidated leverage ratio). A\ncommitment fee is payable on the unused amount of the facility. The agreement restricts the amount\nof certain types of payments, including dividends, which can be made annually up to $50 million\nplus an amount equal to 75% of consolidated net income for the prior fiscal year of the Company.\nThe Company believes that based on historic dividend practice, this restriction would not impede\nthe Company in following a similar dividend practice in the future. On March 18, 2008, the Company\nentered into an amendment to the revolving loan agreement which extended the maturity date from\nOctober 5, 2011 to March 18, 2013. All other terms of the revolving loan agreement remained the\nsame. As of July 31, 2011, there were no outstanding borrowings under the credit facility.\n

\n\n

52\n

\n\n

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

\n\n


	2011			2010
Euro-denominated notes payable in 2017 at a fixed rate of 3.71%	$	43,194			$	45,615
Euro-denominated notes payable in 2020 at a fixed rate of 4.24%		64,791				52,132
USD-denominated notes payable through 2014 at a fixed rate of 5.14%		56,250				75,000
USD-denominated notes payable through 2016 at a fixed rate of 5.30%		130,714				156,857
USD-denominated notes payable through 2017 at a fixed rate of 5.33%		98,229				114,600

	$	393,178			$	444,204

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

	$	331,914			$	382,940

\n\n\n

The estimated fair value of the Company’s long-term obligations, based on the quoted market\nprices for similar issues and on the current rates offered for debt of similar maturities, was\n$416,694 and $467,479 at July 31, 2011 and July 31, 2010, respectively, as compared to the carrying\nvalue of $393,178 and $444,204 at July 31, 2011 and July 31, 2010, respectively.\n

\n\n

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

\n\n


Years Ending July 31,
2012	$	61,264
2013		61,264
2014		61,264
2015		42,514
2016		42,514
Thereafter		124,358

Total	$	393,178

\n\n\n

The Company had outstanding letters of credit of $1,466, and $1,564 at July 31, 2011 and 2010,\nrespectively.\n

\n\n\n

6. Stockholders’ Investment\n

\n\n\n

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

Information as to the Company’s capital stock at July 31, 2011 and 2010 is as follows:

\n\n


	July 31, 2011		July 31, 2010
	Shares		Shares		(thousands)		Shares	Shares		(thousands)
	Authorized		Issued		Amount		Authorized	Issued		Amount
Preferred Stock, $.01 par value		5,000,000							5,000,000
Cumulative Preferred Stock: 6%\nCumulative		5,000							5,000
1972 Series		10,000							10,000
1979 Series		30,000							30,000
Common Stock, $.01 par value:
Class A Nonvoting		100,000,000		51,261,487		$	513		100,000,000		51,261,487	$	513
Class B Voting		10,000,000		3,538,628			35		10,000,000		3,538,628		35

						$	548					$	548

\n\n\n

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

\n\n

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

\n\n

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

\n\n

53\n

\n\n

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

\n\n

During fiscal 2008 and fiscal 2009, the Company’s Board of Directors authorized share\nrepurchase plans for the Company’s Class A Nonvoting Common Stock. The share repurchase plans were\nimplemented by purchasing shares in the open market or privately negotiated transaction, with\nrepurchased shares available for use in connection with the Company’s stock-based plans and for\nother corporate purposes. The Company reacquired approximately 102,067, 1,345,000 and 1,349,000\nshares of its Class A Common Stock for $2.5 million, $40.3 million and $42.2 million in fiscal\n2010, 2009 and 2008, respectively, in connection with its stock repurchase plans. The Company did\nnot reacquire any shares in fiscal 2011. As of July 31, 2011, there remained 204,133 shares to\npurchase in connection with this share repurchase plan.\n

\n\n

The following is a summary of other activity in stockholders’ investment for the years ended\nJuly 31, 2011, 2010, and 2009:\n

\n\n


	Unearned							Shares Held
	Restricted			Deferred			in Rabbi
	Stock			Compensation			Trust, at cost			Total
Balances at July 31, 2008	$	(6,182	)		$	13,643			$	(12,956	)	$	(5,495	)

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

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

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

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

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

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

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

Sale of shares at cost		—				(1,421	)			1,375			(46	)
Purchase of shares at cost		—				666				(666	)		—
Issuance of restricted stock		(2,835	)			—				—			(2,835	)
Amortization of restricted stock		846				—				—			846

Balances at July 31, 2011	$	(5,362	)		$	12,093			$	(11,595	)	$	(4,864	)

Shares at July 31, 2011						560,078				560,078

\n\n\n

Prior to 2002, all Brady Corporation deferred compensation was invested in the Company’s Class\nA Nonvoting Common Stock. In 2002, the Company adopted a new deferred compensation plan which\nallowed investing in other investment funds in addition to the Company’s Class A Nonvoting Common\nStock. Under this plan, participants were allowed to transfer funds between the Company’s Class A\nNonvoting Common Stock and the other investment funds. On May 1, 2006 the plan was amended with the\nprovision that deferrals into the Company’s Class A Nonvoting Common Stock must remain in the\nCompany’s Class A Nonvoting Common Stock and be distributed in shares of the Company’s Class A\nNonvoting Common Stock. At July 31, 2011, the deferred compensation balance in stockholders’\ninvestment represents the investment at the original cost of shares held in the Company’s Class A\nNonvoting Common Stock for the deferred compensation plan prior to 2002 and the investment at the\ncost of shares held in the Company’s Class A Nonvoting Common Stock for the plan subsequent to\n2002, adjusted for the plan amendment on May 1, 2006. The balance of shares held in the Rabbi Trust\nrepresents the investment in the Company’s Class A Nonvoting Common Stock at the original cost of\nall the Company’s Class A Nonvoting Common Stock held in deferred compensation plans.\n

\n\n

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

\n\n

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

\n\n

54\n

\n\n

As of July 31, 2011, the Company has reserved 5,799,017 shares of Class A Nonvoting Common\nStock for outstanding stock options and restricted shares and 737,000 shares of Class A Nonvoting\nCommon Stock remain for future issuance of stock options and restricted shares under the various\nplans. The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver\nshares under these plans.\n

\n\n

Changes in the options are as follows:\n

\n\n


								Weighted
								Average
				Options			Exercise
	Option Price		Outstanding			Price
Balance, July 31, 2008	$	9.59 – $40.37			3,985,205			$	29.43

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

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

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

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

Options granted		28.35 – 37.95			1,365,500				28.86
Options exercised		14.16 – 29.78			(417,888	)			19.62
Options cancelled		16.39 – 38.31			(330,331	)			31.37

Balance, July 31, 2011	$	13.31 – $40.37			5,726,017			$	29.24

\n\n\n

The total fair value of options vested during the fiscal years ended July 31, 2011, 2010, and\n2009 was $6,822, $5,548, and $6,559, respectively. The total intrinsic value of options exercised\nduring the fiscal years ended July 31, 2011, 2010, and 2009 was $5,701, $3,004, and $2,156,\nrespectively.\n

\n\n

There were 3,316,815, 3,100,955, and 2,831,311 options exercisable with a weighted average\nexercise price of $29.83, $28.85, and $27.46 at July 31, 2011, 2010, and 2009, respectively. The\ncash received from the exercise of options during the fiscal years ended July 31, 2011, 2010, and\n2009 was $8,193, $3,717, and $1,683, respectively. The tax benefit on options exercised during the\nfiscal years ended July 31, 2011, 2010, and 2009 was $682, $866, and $779, respectively.\n

\n\n

The following table summarizes information about stock options outstanding at July 31, 2011:\n

\n\n


											Options Outstanding and
	Options Outstanding		Exercisable
				Weighted Average			Weighted			Shares		Weighted
	Number of Shares		Remaining			Average			Exercisable		Average
Range of	Outstanding at		Contractual Life			Exercise			at July 31,		Exercise
Exercise Prices	July 31, 2011		(in years)			Price			2011		Price
Up to $14.99		200,000			1.6			$	13.31			200,000	$	13.31
$15.00 to $29.99		3,900,515			7.2				26.68			1,516,313		24.07
$30.00 and up		1,625,502			5.0				37.33			1,600,502		37.34

Total		5,726,017			6.4				29.24			3,316,815		29.83

\n\n\n

As of July 31, 2011, the aggregate intrinsic value (defined as the amount by which the fair\nvalue of the underlying stock exceeds the exercise price of an option) of options outstanding and\nthe options exercisable was $14,864 and $11,727, respectively.\n

\n\n

Effective July 20, 2011, the Compensation Committee of the Board of Directors of the Company\napproved an amendment to the fiscal 2008 performance-based restricted shares to provide for an\nadditional two year vesting period. These awards originally vested five years from the grant date\nupon meeting certain financial performance and service conditions. This modification resulted in a\none-time,$1.2 million reduction in share-based compensation expense to align the expense\nrecognition with the amended vesting terms. The Company’s Chief Executive Officer, Chief Financial\nOfficer, and the other three named executive officers currently have the\nfollowing performance-based restricted shares affected by this amendment: Frank M. Jaehnert,\n50,000 shares; Thomas J. Felmer, 35,000 shares; Peter C. Sephton, 35,000 shares; Matthew O.\nWilliamson, 35,000 shares; and Robert L. Tatterson, 20,000 shares.\n

\n\n

55\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 July 31, 2011, 310,000\nperformance-based restricted shares were outstanding.\n

\n\n

\n\n\n

7. Segment Information\n

\n\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

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


												Corporate
												and
	Americas		Europe			Asia-Pacific		Total Region	Eliminations		Total Company
Year ended July 31, 2011:
Revenues from external customers	$	577,428		$	404,955		$	357,214	$	1,339,597		$	—		$	1,339,597
Intersegment revenues		41,638			3,054			24,500		69,192			(69,192	)		—
Depreciation and amortization expense		15,682			8,147			15,515		39,344			9,483			48,827
Segment profit		145,516			112,047			50,105		307,668			(15,742	)		291,926
Assets		735,003			333,977			389,465		1,458,445			403,060			1,861,505
Expenditures for property, plant and\nequipment		8,212			2,626			8,620		19,458			1,074			20,532

Year ended July 31, 2010:
Revenues from external customers	$	551,185		$	380,121		$	327,790	$	1,259,096		$	—		$	1,259,096
Intersegment revenues		43,136			4,456			18,188		65,780			(65,780	)		—
Depreciation and amortization expense		21,142			8,088			15,749		44,979			8,043			53,022
Segment profit		125,169			103,316			52,105		280,590			(14,131	)		266,459
Assets		754,753			313,204			362,653		1,430,610			315,921			1,746,531
Expenditures for property, plant and\nequipment		8,502			1,535			9,946		19,983			6,313			26,296

Year ended July 31, 2009:
Revenues from external customers	$	534,440		$	367,156		$	307,106	$	1,208,702		$	—		$	1,208,702
Intersegment revenues		45,853			4,310			18,534		68,697			(68,697	)		—
Depreciation and amortization expense		22,022			8,467			15,957		46,446			8,405			54,851
Segment profit		114,404			99,875			42,575		256,854			(7,952	)		248,902
Assets		703,559			298,717			341,605		1,343,881			239,386			1,583,267
Expenditures for property, plant and\nequipment		8,422			3,326			5,848		17,596			6,431			24,027

\n\n

56\n

\n\n


	Years Ended July 31,
	2011			2010			2009
Net income reconciliation:
Total profit for reportable segments	$	307,668			$	280,590		$	256,854
Corporate and eliminations		(15,742	)			(14,131	)		(7,952	)
Unallocated amounts:
Administrative costs		(120,546	)			(121,689	)		(102,680	)
Restructuring costs		(9,188	)			(15,314	)		(25,849	)
Investment and other income — net		3,990				1,168			1,800
Interest expense		(22,124	)			(21,222	)		(24,901	)

Income before income taxes		144,058				109,402			97,272
Income taxes		(35,406	)			(27,446	)		(27,150	)

Net income	$	108,652			$	81,956		$	70,122

\n\n\n


	Revenues*			Long-Lived Assets**
	Years Ended July 31,			As of Years Ended July 31,
	2011			2010			2009		2011		2010		2009
Geographic information:
United States	$	535,412			$	521,318		$	510,703		$	488,571		$	507,481	$	519,932
China		164,640				156,842			199,893			118,945			118,953		123,078
Other		708,737				646,716			566,589			422,703			391,214		375,905
Eliminations		(69,192	)			(65,780	)		(68,483	)		—			—		—

Consolidated total	$	1,339,597			$	1,259,096		$	1,208,702		$	1,030,219		$	1,017,648	$	1,018,915

\n\n\n\n

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


*		Revenues are attributed based on country of origin.

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

\n\n

57\n

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

8. Net Income Per Common Share\n

\n\n\n

Net income per Common Share is computed by dividing net income (after deducting restricted\nstock dividends and the applicable preferential Class A Common Stock dividends) by the weighted\naverage Common Shares outstanding of 52,639,355 for 2011, 52,402,387 for 2010, and 52,558,657 for\n2009. The preferential dividend on the Class A Common Stock of $.01665 per share has been added to\nthe net income per Class A Common Share for all years presented.\n

\n\n

In June 2008, the Financial Accounting Standards Board (“FASB”) issued accounting guidance\naddressing whether instruments granted in share-based payment transactions are participating\nsecurities prior to vesting, and therefore need to be included in the earnings allocation in\ncomputing earnings per share. This guidance requires that all outstanding unvested share-based\npayment awards that contain rights to non-forfeitable dividends be considered participating\nsecurities in undistributed earnings with common shareholders. The Company adopted the guidance\nduring the first quarter of fiscal 2010. As a result, 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

\n\n


	Years ended July 31,
	2011			2010			2009
Numerator
Net income (numerator for basic and diluted Class A net income per share)	$	108,652			$	81,956		$	70,122
Less:
Restricted stock dividends		(223	)			(147	)		(144	)

Numerator for basic and diluted Class A net income per share	$	108,429			$	81,809		$	69,978

Less:
Preferential dividends		(820	)			(816	)		(823	)
Preferential dividends on dilutive stock options		(6	)			(11	)		(11	)

Numerator for basic and diluted Class B net income per share	$	107,603			$	80,982		$	69,144

Denominator:
Denominator for basic net income per share for both Class A and B		52,639				52,402			52,559
Plus: effect of dilutive stock options		494				544			307

Denominator for diluted net income per share for both Class A and B		53,133				52,946			52,866

Class A common stock net income per share calculation:
Basic	$	2.06			$	1.56		$	1.33
Diluted	$	2.04			$	1.55		$	1.32
Class B common stock net income per share calculation:
Basic	$	2.04			$	1.55		$	1.32
Diluted	$	2.03			$	1.53		$	1.31

\n\n\n

Options to purchase 3,049,611, 2,832,337, and 2,764,308 shares of Class A common stock were\nexcluded from the computations of diluted net income per share for years ended July 31, 2011, 2010,\nand 2009, respectively, because the option exercise prices were greater than the average market\nprice of the common shares and, therefore, the effect would be anti-dilutive.\n

\n\n\n

9. Commitments and Contingencies\n

\n\n\n

The Company has entered into various non-cancellable operating lease agreements. Rental\nexpense charged to operations on a straight-line basis was $22,213, $23,712, and $25,971 for the\nyears ended July 31, 2011, 2010, and 2009, respectively. Future minimum lease payments required\nunder such leases in effect at July 31, 2011 are as follows, for the years ending July 31:\n

\n\n

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


2012	$	18,350
2013		12,636
2014		10,667
2015		7,338
2016		5,478
Thereafter		2,557

	$	57,026

\n\n\n

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

\n\n

58\n

\n\n\n

10. 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 active\nmarkets 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 which\npricing 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 July\n31, 2011, and July 31, 2010, according to the valuation techniques the Company used to determine\ntheir fair values.\n

\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
July 31, 2011:
Trading Securities	$	10,897		$	—		$	—	$	10,897	Other assets
Foreign exchange contracts — cash flow hedges		—			16			—		16	Prepaid expenses and other current assets
Foreign exchange contracts		—			3			—		3	Prepaid expenses and other current assets

Total Assets	$	10,897		$	19		$	—	$	10,916

Foreign exchange contracts — cash flow hedges	$	—		$	830		$	—	$	830	Other current liabilities
Foreign exchange contracts — net investment hedges		—			5,295			—		5,295	Other current liabilities
Foreign exchange contracts		—			2			—		2	Other current liabilities
Foreign currency denominated debt — net\ninvestment hedge		—			107,985			—		107,985	Long term obligations, less current maturities

Total Liabilities	$	—		$	114,112		$	—	$	114,112


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

59\n

\n\n\n

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

\n\n\n

\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 12, “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 12, “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 fiscal years ended July 31, 2011 and 2010.\n

\n\n

The Company’s financial instruments, other than those presented in the disclosures above,\ninclude cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and\nshort-term and long-term debt. See Note 5, “Long-Term Obligations” for fair value of long-term\ndebt. The fair values of cash and cash equivalents, accounts receivable, accounts payable, and\naccrued liabilities approximated carrying values because of the short-term nature of these\ninstruments.\n

\n\n

Disclosures for nonfinancial assets and liabilities that are measured at fair value, but are\nrecognized and disclosed at fair value on a nonrecurring basis, were required prospectively\nbeginning August 1, 2009. During fiscal 2011, the Company had no significant measurements of assets\nor liabilities at fair value on a nonrecurring basis subsequent to their initial recognition other\nthan for the acquisition of ID Warehouse and divestiture of the Teklynx business. See Note 2,\n“Acquisitions and Divestitures” for further information. The Company also tested goodwill and\nintangible assets for impairment during the fourth quarter of fiscal 2011. See Note 1, “Summary of\nSignificant Accounting Policies” for further information.\n

\n\n\n

11. Restructuring\n

\n\n\n

In fiscal 2009, in response to the global economic downturn, the Company took several measures\nto address its cost structure. In addition to a company-wide salary freeze and decreased\ndiscretionary spending, the Company reduced its workforce by 25%. The Company reduced its\nworkforce through voluntary and involuntary separation programs, voluntary retirement programs, and\nfacility consolidations. As a result of these actions, the Company recorded restructuring charges\nof $25,849 in fiscal 2009. The restructuring charges included $21,279 of employee separation costs,\n$2,101 of non-cash fixed asset write-offs, $1,194 of other facility\nclosure related costs, and $1,275\nof contract termination costs. Of the $25,849 of\nrestructuring charges recorded during the year ended July 31, 2009, $13,928 was incurred in the\nAmericas, $7,730 was incurred in Europe, and $4,191 was incurred in Asia-Pacific.\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. Of the $15,314 of restructuring charges recorded during the fiscal\nyear ended July 31, 2010, $7,158 was incurred in the Americas, $5,350 was incurred in Europe, and\n$2,806 was incurred in Asia-Pacific.\n

\n\n

In fiscal 2011, the Company continued executing its restructuring actions initiated in\nthe prior periods and recorded restructuring charges of $9,188. The fiscal 2011 restructuring\ncharges consisted of $6,341 of employee separation costs, $2,155 of non-cash fixed asset\nwrite-offs, $449 of other facility closure related costs, and $243 of contract termination costs.\nOf the $9,188 of restructuring charges recorded during the fiscal year ended July 31, 2011, $5,445\nwas incurred in the Americas, $3,340 was incurred in Europe, and $403 was incurred in Asia-Pacific.\nThe costs related to these restructuring activities have been recorded on the consolidated\nstatements of income as restructuring charges. The Company expects the majority of the remaining\ncash payments to be made within the next twelve months.\n

\n\n

60\n

\n\n

A reconciliation of the Company’s restructuring activity for fiscal 2009, 2010 and 2011 is as\nfollows:\n

\n\n


	Employee			Asset
	Related			Write-offs			Other		Total
Beginning balance, July 31, 2008	$	—			$	—		$	—		$	—
Restructuring charge		21,279				2,101			2,469			25,849
Non-cash write-offs		(368	)			(2,101	)					(2,469	)
Other separation benefits		(1,178	)									(1,178	)
Cash payments		(15,288	)			—			(1,592	)		(16,880	)

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

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

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

Restructuring charge		6,341				2,155			692			9,188
Non-cash write-offs		—				(2,155	)		—			(2,155	)
Cash payments		(10,189	)			—			(749	)		(10,938	)

Ending balance, July 31, 2011	$	2,207			$	—		$	49		$	2,256

\n\n\n\n

12. 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 18 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 transactions in other than the respective subsidiaries’\nfunctional currency and to minimize the impact of currency movements on the Company’s net\ninvestment 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 July 31, 2011 and July 31, 2010, the notional amount of outstanding forward exchange contracts\nwas $80,807 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 twelve-month periods ended July 31, 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, Japanese Yen, Swiss Franc. Generally, these risk management transactions will\ninvolve the use of foreign currency derivatives to protect against exposure resulting from sales\nand 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 Consolidated Balance Sheets. For these instruments,\nthe effective portion of the gain or loss on the derivative is reported as a component of other\ncomprehensive income (“OCI”) and reclassified into earnings in the same period or periods during\nwhich the hedged transaction affects earnings. At July 31, 2011 and 2010, unrealized losses of\n$1,535 and $493 have been included in OCI, respectively. All balances are expected to be\nreclassified from OCI to earnings during the next fifteen months when the hedged transactions\nimpact earnings.\n

\n\n

At July 31, 2011 and July 31, 2010, the Company had $16 and $156 of forward exchange contracts\ndesignated as cash flow hedges included in “Prepaid expenses and other current assets” on the\naccompanying Consolidated Balance Sheets. At July 31, 2011 and July 31, 2010, the Company had $830\nand $829, respectively, of forward exchange contracts designated as cash flow hedges included in\n“Other current liabilities” on the accompanying Consolidated Balance Sheets. At July 31, 2011 and\nJuly 31, 2010, the U.S. dollar equivalent of these outstanding forward foreign exchange contracts\ntotaled $30,519 and $32,020, respectively, including contracts to sell Euros, Canadian Dollars,\nAustralian Dollars, British Pounds, U.S. Dollars, and Swiss Franc.\n

\n\n

61\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 twelve month period ended July 31, 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\nJuly 31, 2011, the Company had $5,295 of forward foreign exchange currency contracts designated as\nnet investment hedges included in “Other current liabilities” on the Consolidated Balance Sheet.\nAt July 31, 2011, the U.S dollar equivalent of these outstanding forward foreign exchange contracts\ntotaled $50,000. There were no forward foreign exchange contracts designated as net investment\nhedges outstanding as of July 31, 2010.\n

\n\n

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

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

\n\n


	Asset Derivatives		Liability Derivatives
	July 31, 2011		July 31, 2010		July 31, 2011			July 31, 2010
Derivatives designated as	Balance Sheet				Balance Sheet					Balance Sheet				Balance Sheet
hedging instruments	Location	Fair Value		Location		Fair Value			Location	Fair Value		Location	Fair Value
Cash flow hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	16		Prepaid expenses and other current assets		$	156		Other current liabilities	$	830		Other current liabilities	$	829

Net investment hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	—		Prepaid expenses and other current assets		$	—		Other current liabilities	$	5,295		Other current liabilities	$	—

Foreign currency denominated debt	Prepaid expenses and other current assets	$	—		Prepaid expenses and other current assets		$	—		Long term obligations, less current maturities	$	107,985		Long term obligations, less current maturities	$	97,747

Total derivatives designated as hedging instruments		$	16				$	156			$	114,110			$	98,576

Derivatives not designated as hedging instruments
Foreign exchange contracts	Prepaid expenses and other current assets	$	3		Prepaid expenses and other current assets		$	24		Other current liabilities	$	2		Other current liabilities	$	64

Total derivatives not designated as hedging instruments		$	3				$	24			$	2			$	64

\n\n\n

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

\n\n


									Amount of Gain
									or (Loss)			Location of		Amount of Gain
	Amount of Gain or (Loss)					Reclassified From		Gain or (Loss)	or (Loss)
	Recognized in OCI on			Location of Gain or		Accumulated OCI		Recognized in	Recognized in
	Derivative			(Loss) Reclassified		Into Income		Income on	Income on Derivative
Derivatives in	(Effective Portion)			From Accumulated		(Effective Portion)		Derivative	(Ineffective Portion)
Cash Flow Hedging	As of July 31,			OCI into Income		Year Ended July 31,		(Ineffective	Year Ended July 31,
Relationships	2011			2010			(Effective Portion)	2011		2010			Portion)		2011		2010
Foreign exchange contracts	$	(1,535	)		$	(493	)	Cost of goods sold	$	(1,781	)		$	(80	)	Cost of goods sold		$	—	$	—

Total	$	(1,535	)		$	(493	)		$	(1,781	)		$	(80	)			$	—	$	—

\n\n

62\n

\n\n\n

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

\n\n


									Amount of Gain
									or (Loss)		Location of		Amount of Gain
	Amount of Gain or (Loss)					Reclassified From		Gain or (Loss)	or (Loss)
	Recognized in OCI on			Location of Gain or		Accumulated OCI		Recognized in	Recognized in
Derivatives in	Derivative			(Loss) Reclassified		Into Income		Income on	Income on Derivative
Net Investment	(Effective Portion)			From Accumulated		(Effective Portion)		Derivative	(Ineffective Portion)
Hedging	As of July 31,			OCI into Income		Year Ended July 31,		(Ineffective	Year Ended July 31,
Relationships	2011			2010			(Effective Portion)	2011		2010		Portion)		2011		2010
Foreign exchange contracts	$	(4,589	)		$	6,248		Investment and other income — net	$	—		$	—		Investment and other income — net		$	—	$	—

Foreign currency denominated debt	$	(13,070	)		$	(2,833	)	Investment and other income — net	$	—		$	—		Investment and other income — net		$	—	$	—

Total	$	(17,659	)		$	3,415			$	—		$	—				$	—	$	—

\n\n\n

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

\n\n\n


	Location of Gain or	Amount of Gain or
	(Loss) Recognized	(Loss) Recognized in
	in Income on	Income on Derivative
Derivatives Not Designated as Hedging Instruments	Derivative	2011			2010
Foreign exchange contracts	Other income (expense)	$	(945	)		$	(40	)

Total		$	(945	)		$	(40	)

\n\n\n\n

13. Unaudited Quarterly Financial Information\n

\n\n\n\n


	Quarters
	First		Second			Third		Fourth	Total
2011
Net Sales	$	329,588		$	329,009		$	337,896	$	343,104	$	1,339,597
Gross Margin		164,512			159,010			167,638		165,036		656,196
Operating Income*		41,603			37,080			40,871		42,638		162,192
Net Income		26,281			24,199			28,589		29,583		108,652
Net Income Per Class A Common Share:
Basic	$	0.50		$	0.46		$	0.54	$	0.56	$	2.06
Diluted **		0.50			0.46			0.54		0.56		2.04
2010
Net Sales	$	318,486		$	295,829		$	321,887	$	322,894	$	1,259,096
Gross Margin		157,443			146,918			160,197		158,739		623,297
Operating Income*		35,557			23,902			35,914		34,083		129,456
Net Income		21,668			15,001			23,695		21,592		81,956
Net Income Per Class A Common Share:
Basic	$	0.41		$	0.29		$	0.45	$	0.41	$	1.56
Diluted **		0.41			0.29			0.45		0.41		1.55

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


*		Fiscal 2011 had before tax restructuring charges by quarter of $3,641, $2,134, $1,211, and\n$2,202 for a total of $9,188. Fiscal 2010 had before tax restructuring charges by quarter of\n$3,601, $3,649, $2,347, and $5,717 for a total of $15,314.

**		The sum of the quarters does not equal the year-to-date total due to rounding.

\n\n\n\n\n

\n\n

63\n

\n\n

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


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

\n\n

None.\n

\n\n

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


Item 9A.		*Controls and Procedures*

\n\n

Disclosure Controls and Procedures:\n

\n\n\n

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

\n\n

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

\n\n\n

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

\n\n

With the participation of the Chief Executive Officer and the Chief Financial Officer,\nmanagement conducted an evaluation of the effectiveness of our internal control over financial\nreporting as of July 31, 2011, based on the framework and criteria established in Internal Control\n— Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway\nCommission. Based on the assessment, management concluded that, as of July 31, 2011, the Company’s\ninternal control over financial reporting is effective based on those criteria. The Company’s\ninternal control over financial reporting, as of July 31, 2011, has been audited by Deloitte &\nTouche LLP, an independent registered public accounting firm, as stated in their report, which is\nincluded herein.\n

\n\n

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

\n\n

Changes in Internal Control Over Financial Reporting:\n

\n\n\n

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

\n\n

64\n

\n\n

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n

\n\n\n

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

\n\n\n\n

We have audited the internal control over financial reporting of Brady Corporation and subsidiaries\n(the “Company”) as of July 31, 2011, based on criteria established in Internal Control —\nIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway\nCommission. The Company’s management is responsible for maintaining effective internal control over\nfinancial reporting and for its assessment of the effectiveness of internal control over financial\nreporting, included in the accompanying management report (Management’s Report on Internal Control\nover Financial Reporting). Our responsibility is to express an opinion on the Company’s internal\ncontrol over financial reporting based on our audit.\n

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n\n

In our opinion, the Company maintained, in all material respects, effective internal control over\nfinancial reporting as of July 31, 2011, based on the criteria established in Internal Control —\nIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway\nCommission.\n

\n\n\n

We have also audited, in accordance with the standards of the Public Company Accounting Oversight\nBoard (United States), the consolidated financial statements and financial statement schedule as of\nand for the year ended July 31, 2011, of the Company and our report dated September 27, 2011,\nexpressed an unqualified opinion on those financial statements and financial statement schedule.\n

\n\n\n

/s/ DELOITTE & TOUCHE LLP\n

\n\n\n

Milwaukee, WI
\nSeptember 27, 2011\n\n

\n\n

65\n

\n\n

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


Item 9B.		*Other Information*

\n\n

By unanimous written consent effective September 26, 2011, the holders of the\nCompany’s Class B Common Stock, by unanimous written consent covering 100% of the 3,538,628\noutstanding shares, approved the Brady Corporation 2012 Omnibus Incentive Stock Plan (the “2012\nOmnibus Plan”). Under the terms of the 2012 Omnibus Plan, pursuant to which 5,500,000 shares of the\nCompany’s Class A Common Stock have been authorized for issuance, the Company may grant\nunrestricted stock, nonqualified stock options, incentive stock options, shares of restricted stock\nand restricted stock units to eligible employees and Directors of the Company and its affiliates.\nThe 2012 Omnibus Plan, which became effective upon shareholder approval, provides that after\nDecember 31, 2011, no further awards or grants shall be made under the Company’s 2010 Omnibus\nIncentive Stock Plan or the Company’s 2010 Stock Option Plan for\nNon-Employee Directors. The foregoing description of the 2012 Omnibus Plan does not purport to be\ncomplete and is qualified in its entirety by reference to the full text of the 2012 Omnibus Plan,\nwhich is filed as Exhibit 10.38 to this Form 10-K and is incorporated herein by reference.\nForms of granting agreements under the 2012 Omnibus Plan are filed as Exhibits 10.39, 10.40. and\n10.41 to this Form 10-K.\n

\n\n

PART III\n

\n\n

\n\n\n\n

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


Item 10.		*Directors and Executive Officers of the Registrant*


Name	Age		Title
Frank M. Jaehnert\n		53		President, CEO and Director
Thomas J. Felmer\n		49		Senior V.P., CFO
Stephen Millar\n		50		President — Brady Asia-Pacific and V.P., Brady Corporation
Peter C. Sephton\n		52		President — Brady Europe and V.P., Brady Corporation
Matthew O. Williamson\n		55		President — Brady Americas and V.P., Brady Corporation
Allan J. Klotsche\n		46		Senior V.P. — Human Resources
Robert L. Tatterson\n		46		V.P. and Chief Technology Officer
Bentley N. Curran\n		49		V.P. and Chief Information Officer
Kathleen M. Johnson\n		57		V.P. and Chief Accounting Officer
Aaron J. Pearce\n		40		V.P. and Treasurer
Conrad G. Goodkind\n		67		Director
Elizabeth Pungello\n		44		Director
Frank W. Harris\n		69		Director
Chan W. Galbato\n		48		Director
Patrick W. Allender\n		64		Director
Bradley C. Richardson\n		53		Director
Gary S. Balkema\n		56		Director

\n\n\n

Frank M. Jaehnert — Mr. Jaehnert has served on the Company’s Board of Directors and as the\nCompany’s President and CEO since 2003. Mr. Jaehnert joined the Company in 1995 and served in\nleadership positions in a variety of different functions and businesses, including that of CFO from\n1996 to 2002, before his promotion to President and CEO in 2003. Previously, he served in a variety\nof financial roles at Robert Bosch, GmbH, including treasurer of a subsidiary. His broad operating\nand functional experience and in-depth knowledge of Brady’s businesses are particularly valuable\ngiven the diverse nature of Brady’s portfolio. These experiences, combined with Mr. Jaehnert’s\ntalent for leadership and his long-term strategic perspective, have helped drive the Company’s\ngrowth and performance during his tenure as Director and CEO.\n

\n\n

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

\n\n

Stephen Millar — Mr. Millar joined the Company in 1999 as Managing Director of Brady\nAustralia, a position he held until 2008 when he joined Brady Americas’ leadership team as\nVice-President and General Manager responsible for its portfolio of people identification, medical\nand education businesses. In 2010, he returned to Asia in the role of MRO Director for the region.\nHe was appointed to his current position, President-Brady Asia Pacific in March 2011. Prior to\njoining Brady, Mr. Millar served in a variety of leadership positions in Australia and New Zealand\nwith GNB Technologies, a global manufacturer of automotive and industrial\nbatteries. He holds a Bachelor of Commerce and Administration degree from Victoria University\nof Wellinton, New Zealand and is a member of the institute of Chartered Accountants of New Zealand.\n

\n\n

66\n

\n\n

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

\n\n

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

\n\n

Allan J. Klotsche — Mr. Klotsche joined the Company in 1989. He served in a variety of sales,\nmarketing, technical, and management roles until 1998, when he was appointed V.P. and General\nManager of the Precision Tapes Group. He served as President — Brady Asia Pacific from 2003 until\nhis current appointment as Senior Vice President leading Brady’s global human resource function in\nOctober 2010. Mr. Klotsche also serves as President of the Brady Corporation Foundation. He holds\nan MBA from the University of Wisconsin-Milwaukee.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

Aaron J. Pearce— Mr. Pearce joined the Company in 2004 as Director of Internal Audit. From\n2006 to 2008, he served as Finance Director for Brady’s Asia Pacific Region. From 2008 to 2009, he\nserved as the Global Tax Director. In January 2010, he assumed the role of Treasurer and Director\nof Investor Relations. Prior to Brady, Mr. Pearce was with Deloitte & Touche LLP and started his\ncareer in banking. He holds a bachelors degree in business administration from the University of\nWisconsin-Milwaukee and is a certified public accountant.\n

\n\n

Conrad G. Goodkind — Mr. Goodkind was elected to the Board of Directors in 2007. He currently\nserves as Brady’s Lead Independent Director. He also serves as the Chair of the Corporate\nGovernance Committee and as a member of the Finance Committee. He previously served as Secretary of\nthe Company from 1999 to 2007. Mr. Goodkind was a partner in the law firm of Quarles & Brady, LLP,\nwhere his practice concentrated in corporate and securities law from 1979 to 2009. Prior to 1979,\nhe served as Wisconsin’s Deputy Commissioner of Securities. Mr. Goodkind previously served as a\ndirector of Cade Industries, Inc. and Able Distributing, Inc. His extensive experience in advising\ncompanies on a broad range of transactional matters, including mergers and acquisitions and\nsecurities offerings, and historical knowledge of the Company provides the Board with expertise and\ninsight into governance, business and compliance issues that the Company encounters.\n

\n\n

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

\n\n

67\n

\n\n

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

\n\n

Chan W. Galbato — Mr. Galbato was elected to the Board of Directors in 2006. He serves as\nchairman of the Compensation Committee and is a member of the Audit and Technology Committees. He\nhas extensive executive leadership experience including his current role as a senior operating\nexecutive with Cerberus Operations and Advisory Company, LLC. Mr. Galbato was President and CEO of\nthe Controls division of Invensys plc. Prior to that, Mr. Galbato held positions as President of\nServices at The Home Depot, President and CEO of Armstrong Floor Products, CEO of Choice Parts LLC,\nand CEO of Coregis Insurance Company, a GE Capital company. Mr. Galbato is Chairman of the Board of\nBlue Bird Corporation and North American Bus Industries, Inc., Guilford Mills, Inc., and NewPage\nCorporation and is a member of the Board of Tower International, Inc. His public company leadership\nexperience gives him insight into business strategy, leadership and executive compensation and his\npublic company and private equity experience give him insight into technology trends, acquisition\nstrategy and financing, each of which represents an area of key strategic opportunity for the\nCompany.\n

\n\n

Patrick W. Allender — Mr. Allender was elected to the Board of Directors in 2007. He serves\nas the Chair of the Finance Committee and as a member of the Audit and Compensation Committees. He\nserved as Executive Vice President and CFO of Danaher Corporation from 1998 to 2005 and Executive\nVice President from 2005 to 2007. Additionally, he served as a public accountant at Arthur Andersen\nLLC from 1968 to 1985. He has served as a director of Colfax Corporation since 2008 and Diebold,\nInc. since May 2011. Mr. Allender’s strong background in finance and accounting, as well as his\npast experience as the CFO of a public company, provides the Board with financial expertise and\ninsight.\n

\n\n

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

\n\n

Gary S. Balkema — Mr. Balkema was elected to the Board of Directors in 2010. From 2000 to\n2011, he served as the President of Bayer Healthcare LLC and Worldwide Consumer Care Division,\nwhich has four billion dollars in sales and over 5,400 employees. He was also responsible for\noverseeing Bayer LLC USA’s compliance program. He has over 20 years of general management\nexperience. Mr. Balkema brings strong experience in consumer marketing skills and mergers and\nacquisitions and integrations. His broad operating and functional experience are valuable to the\nCompany given the diverse nature of the Company’s portfolio.\n

\n\n

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

\n\n

Board Leadership Structure — The Board does not have a formal policy regarding the separation\nof the roles of Chief Executive Officer and Chairman of the Board as the Board believes it is in\nthe best interests of the Company to make that determination based on the position and direction of\nthe Company and the membership of the Board. The Board currently has not appointed a Chairman of\nthe Board. In fiscal 2010, the Board formalized the position of Lead Independent Director, which is\nelected on an annual basis from among the independent Directors of the Board based upon the\nrecommendation of the Corporate Governance Committee. The duties of the Lead Independent Director\ninclude, among others, chairing executive sessions of the non-management Directors, meeting\nperiodically with the Chief Executive Officer on current significant issues facing the Company,\nfacilitating effective communication among the Chief Executive Officer and all members of the\nBoard, and overseeing the Board’s shareholder communication policies and procedures. Mr. Goodkind,\nChair of the Corporate Governance Committee, currently serves as the Lead Independent Director.\n

\n\n

68\n

\n\n

The Board believes that its current leadership structure has enhanced the Board’s oversight\nof, and independence from, Company management; the ability of the Board to carry out its roles and\nresponsibilities on behalf of our shareholders; and our overall corporate governance.\n

\n\n\n

Risk Oversight — The Board oversees the Company’s risk management processes directly and\nthrough its committees. In general, the Board oversees the management of risks inherent in the\noperation of the Company’s businesses, the implementation of its strategic plan, its acquisition\nand capital allocation program and its organizational structure. Each of the Board’s committees\nalso oversees the management of Company risks that fall within the committee’s areas of\nresponsibility. The Company’s management is responsible for reporting significant risks to\nexecutives at the quarterly disclosure committee meeting. The significance of the risk is assessed\nby executive management and escalation to the respective board committee and Board of Directors is\ndetermined. The Company reviews its risk assessment with the Audit Committee annually.\n

\n\n

Audit Committee Financial Expert — The Company’s Board of Directors has determined that at\nleast one Audit Committee financial expert is serving on its Audit Committee. Messrs. Richardson,\nChair of the Audit Committee, and Allender and Galbato, members of the Audit Committee, are\nfinancial experts and are independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A\nunder the Exchange Act.\n

\n\n

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

\n\n

Meetings of Non-management Directors — The non-management directors of the Board regularly\nmeet alone without any members of management present. Mr. Goodkind, Lead Independent Director and\nChair of Corporate Governance Committee, is the presiding Director at these sessions. In fiscal\n2011, there were 6 executive sessions. Interested parties can raise concerns to be addressed at\nthese meetings by calling the confidential Brady hotline at 1-800-368-3613.\n

\n\n

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

\n\n

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

\n\n

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

\n\n

Director Qualifications — Brady’s Corporate Governance Committee reviews the individual\nskills and characteristics of the Directors, as well as the composition of the Board as a whole.\nThis assessment includes a consideration of independence, diversity, age, skills, expertise, and\nindustry backgrounds in the context of the needs of the Board and the Company. Although the Company\nhas no policy regarding diversity, the Corporate Governance Committee seeks a broad range of\nperspectives and considers both the personal characteristics and experience of Directors and\nprospective nominees to the Board so that, as a group, the Board will possess the appropriate\ntalent, skills, and expertise to oversee the Company’s businesses.\n

\n\n

69\n

\n\n\n

\n\n\n\n

\n\n

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


Item 11.		*Executive Compensation*

\n\n

Compensation Discussion and Analysis\n

\n\n\n

The Compensation Discussion and Analysis explains the compensation philosophy, policies and\npractices of the Company with respect to its executives and management. The following information\nand analyses focuses primarily on the compensation provided to the Company’s principal executive\nofficer, principal financial officer and its other three most highly compensated executives, who\nare collectively referred to in this section as the “named executive officers.” Brady’s named\nexecutive officers are Frank M. Jaehnert, President, Chief Executive Officer and Director; Thomas\nJ. Felmer, Senior Vice President and Chief Financial Officer; Peter C. Sephton, President — Brady\nEurope and Vice President, Brady Corporation; Robert L. Tatterson, Vice President — R&D and Chief\nTechnology Officer; and Matthew O. Williamson, President — Brady Americas and Vice President,\nBrady Corporation.\n

\n\n

Executive Compensation Overview and Philosophy\n

\n\n\n

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

\n\n

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

Provide a competitive total compensation package to attract and retain exceptional\nleadership talent.

\n\n

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

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

\n\n

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

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

\n\n

The Compensation Committee of the Board of Directors is responsible for monitoring and\napproving the compensation of the Company’s named executive officers. In compliance with this\nresponsibility, the Committee annually reviews the individual performance of these executives and\napproves any changes in their base salary, the payment of an annual cash incentive and grant of\nequity awards. The Committee periodically utilizes the services of an independent executive\ncompensation consulting firm to assist with the review and evaluation of compensation levels and\npolicies. Their expertise may also be utilized in modifying any existing or proposing any new\ncompensation arrangements. During fiscal 2011, the Compensation Committee engaged the services of\nan independent compensation consultant; however, the total fees for the consultant’s services did\nnot exceed $120,000. The Committee considers this professional advice and other available\ncompetitive information and data in making executive compensation decisions. The Committee is\nflexible in the application of this information and does not rely on rigid guidelines or formulas\nwhen determining or modifying executive compensation.\n

\n\n

In order to successfully achieve our Company objectives, a combination of short-term and\nlong-term incentives has been developed. The Compensation Committee believes a proper balance\nbetween these elements is necessary and should include a combination of cash and equity, with fixed\nand performance-based components. Our short-term incentive is in the form of cash, while the\nlong-term incentive is equity based and includes performance-based and time-based stock options,\nalong with performance-based restricted shares. These programs are designed to provide a balance\nbetween annual Company performance and the generation of long-term shareholder value. We also\nbelieve these programs further enhance the performance of the Company by providing effective tools\nto attract, retain, and motivate a group of highly skilled executives. This results in strong\nfinancial and operational performance, which supports the preservation and enhancement of\nshareholder value over time, without incurring undue risk to our shareholders.\n

\n\n

Annually, the Chief Executive Officer recommends a proposal to the Compensation Committee for\ncompensation for each named executive officer other than himself, with respect to whom the\nCompensation Committee formulates and determines compensation. The Compensation Committee reviews\nthe proposal for each officer and ultimately approves a compensation arrangement for them. The\nresulting approved compensation levels, including the President and Chief Executive Officer’s\ncompensation, are then reported by the Compensation Committee to the full Board of Directors.\n

\n\n

71\n

\n\n

Elements of Executive Compensation for Fiscal 2011\n

\n\n\n

As noted above, it is the Compensation Committee’s philosophy that an executive compensation\nprogram should be used to promote both the short and long-term financial objectives of the Company,\nencourage the executives to act in the long-term best interest of the Company and attract and\nretain people who are qualified, motivated and committed to excellence. The Compensation Committee\nbelieves this can be accomplished through compensation programs that provide a balanced mix of\nperformance-based cash and equity compensation. The annual bonus and equity compensation plans\nprovide incentives commensurate with performance.\n

\n\n

The Compensation Committee is responsible for reviewing the overall level of compensation, as\nwell as the various elements of compensation for each of the named executive officers. In addition\nto the specific process discussed below for base salaries, annual cash incentives and long-term\nequity compensation, the Compensation Committee reviews individual comprehensive total compensation\nsummaries that include the annual cash and equity grants, along with all other benefits over a\ntrailing four-year period.\n

\n\n

Base Salary\n

\n\n\n

Individual performance and competitiveness in the market are key components in determining\nbase salary and any changes in base salary. On an annual basis, the Compensation Committee obtains\ncompensation surveys from nationally recognized compensation consultants to assist in understanding\ncompensation levels in the marketplace. A regression analysis is then performed based on the\nappropriate organization level (company, group, division) and sales volume of the appropriate Brady\nbusiness. The base salary is designed to compensate executives for their level of responsibility\nand sustained individual performance. One consideration is the comparison of the individual base\nsalaries to the median for like positions and responsibilities based on these nationally recognized\ncompensation surveys. Further, the Compensation Committee has flexibility to increase base salaries\nabove the median to retain or attract key employees whose performance merits higher base salaries,\nor to set base salary below the median where individuals are new to the job and performance is\nbeing evaluated. The Compensation Committee annually reviews base salaries to ensure, on the basis\nof responsibility and performance, that executive compensation is meeting the Compensation\nCommittee’s principles. The determination of base salary also affects the annual bonus payout since\nan individual’s annual bonus target is expressed as a percentage of base salary.\n

\n\n

In addition to the nationally recognized compensation surveys, the Compensation Committee has\nhistorically used peer group data for similar positions nationally to test the reasonableness and\ncompetitiveness of several components of compensation, including base salaries, annual incentives,\nand long term incentives by position. The Compensation Committee also uses judgment to determine\nthe appropriate level of base salary, which we believe reflects individual performance and\nresponsibilities, and calibrates with the most recently available market compensation data. A total\ncompensation benchmarking analysis of our industry and selected peer companies, which resulted in a\nmodified listing of peer group companies, was conducted by an outside consultant and assisted the\nCompensation Committee in the review of fiscal 2011 compensation levels for the named executive\nofficers. The criteria utilized by the Committee to determine the group of peer companies included\nrevenue size, industry, financial performance relative to the S&P 600 and the availability of\ninformation.\n

\n\n

The peer group utilized in setting fiscal 2011 compensation levels included 30 companies that\nare in a similar industry with annual revenues up to approximately $5 billion: A.O. Smith\nCorporation, Actuant Corporation, Ameron International Corporation, AMETEK, Inc., Bio-Rad\nLaboratories, Inc., Cubic Corporation, Curtiss-Wright Corporation, Dentsply International Inc.,\nDonaldson Company, Inc., Garmin Ltd., Graco Inc., Greif, Inc., Herman Miller Inc., Hexcel\nCorporation, HNI Corporation, IDEX Corporation, Lincoln Electric Holdings Inc., Matthews\nInternational Corporation, MetroPCS Communications Inc., Mine Safety Appliances Company, MSC\nIndustrial Direct Company, Inc., Plexus Corporation, Rayonier Inc., Regal Beloit Corporation,\nSnap-On Inc., Temple Inland Inc., Thomas & Betts Corporation, Toro Corporation, Tupperware Brands\nCorporation and Warnaco Group Inc. This list may vary in the future due to changes in our business\nor the business of the companies utilized as peers.\n

\n\n

As a result of the benchmarking study conducted during the summer of 2010, it was determined\nby the Compensation Committee that fiscal 2011 base salary merit increases for the named executive\nofficers would range from 3.2% to 7.2%.\n

\n\n

Annual Cash Incentive Bonus\n

\n\n\n

All named executive officers participate in an annual cash incentive plan, which is primarily\nbased on fiscal year financial results. The largest component of the plan is corporate earnings per\nshare growth. Other components include consolidated organic sales growth, segment organic sales\ngrowth, segment profit, and working capital improvement. Each component is based on the\nindividual’s role at either the corporate or segment level.\n

\n\n

72\n

\n\n\n

As part of the annual review of compensation, the Compensation Committee takes into account\ntotal annual cash compensation in the marketplace. Salary, combined with annual target bonus\nlevels that have been established as a percentage of salary, are intended to approximate the median\nof the market total annual cash compensation, as defined in nationally recognized compensation\nsurveys. Annual bonus payouts will vary above or below the targeted amount based on the actual\nperformance of the Company during the fiscal year. Payouts for the Company’s named executives can\nrange from 0% to 250% of the target based on the performance of the Company and the segment for\nwhich they are responsible. The management team recommends performance targets for the annual\nincentive plans which are aligned with the performance of our peer group. After review of these\nrecommendations, the Compensation Committee sets the final targets ensuring they are aligned\nexternally and support a balance between annual Company performance and the generation of long-term\nshareholder value. The plan is designed so that current fiscal year results must exceed prior year\nresults before any payout is made. In the event that current year results do not exceed prior\nyear, as was the case in fiscal year 2009, named executive officers will not be eligible for a cash\nincentive bonus. An employee must also hold a position within the Company on the last day of the\nfiscal year to be eligible to receive a bonus payment.\n

\n\n

The Compensation Committee annually reviews the components of these plans, the required\nperformance levels at each target payout level, the calculation of the individual bonus awards, and\nalso monitors projected bonus payouts throughout the year once the targets are set. Sales and net\nincome must exceed the prior year in order for these components of the bonus plan to pay out.\n

\n\n

The individual incentive target amounts are set at a percentage of base salary and the target\namounts are larger for individuals with greater levels of responsibility. The target bonus\npercentage for Mr. Jaehnert is 100% of his base salary, and for Messrs. Felmer, Sephton, Tatterson\nand Williamson are 70% of their base salaries. The following table provides the components of the\ntarget bonus percentages for fiscal 2011.\n


	Consolidated			Earnings			Working		Segment Organic		Segment
	Net Organic			Per Share			Capital		Sales		Profit		Target
Name	Sales Growth			Growth			Improvement		Growth (1)		(1)		Payout
Frank M. Jaehnert		10.0	%			80.0	%		10.0	%	NA		NA			100.0	%
Thomas J. Felmer		10.0	%			80.0	%		10.0	%	NA		NA			70.0	%
Peter C. Sephton	NA				40.0	%		10.0	%		10.0	%		40.0	%		70.0	%
Robert L. Tatterson		10.0	%			80.0	%		10.0	%	NA		NA			70.0	%
Matthew O. Williamson	NA				40.0	%		10.0	%		10.0	%		40.0	%		70.0	%

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


(1)		Segment sales and profit for Messrs. Sephton and Williamson are based on organic sales\ngrowth and profit for their respective segment excluding the impact of currency.

\n\n\n\n

For the fiscal year ended July 31, 2011, the Company paid the following annual cash incentive\nbonuses:\n


Name	Bonus ($)		Salary %
Frank M. Jaehnert		1,632,548		205.8	%
Thomas J. Felmer		523,349		144.1	%
Peter C. Sephton		341,190		95.6	%
Robert L. Tatterson		462,338		144.1	%
Matthew O. Williamson		462,461		128.4	%

\n\n\n

The 2011 allocation of the annual cash incentive bonuses by component is as follows:\n

\n\n


	Consolidated			Earnings Per			Working		Segment					Actual
Name	Organic Sales			Share (1)			Capital		Organic Sales		Segment Profit		Payout
Frank M. Jaehnert		58.0	%			250.0	%		0.0	%	NA		NA			205.8	%
Thomas J. Felmer		58.0	%			250.0	%		0.0	%	NA		NA			205.8	%
Peter C. Sephton	NA				250.0	%		0.0	%		94.0	%		68.0	%		136.6	%
Robert L. Tatterson		58.0	%			250.0	%		0.0	%	NA		NA			205.8	%
Matthew O. Williamson	NA				250.0	%		100.0	%		62.8	%		168.0	%		183.5	%

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


(1)		Earnings per share as utilized in the individual bonus plans is calculated using a fixed\namount of 53 million shares. Weighted average diluted shares\noutstanding were 53.1 million\nfor fiscal year 2011.

\n\n

73\n

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

Targets and actual performance for the above mentioned bonus plans are as follows:\n


Plan Component	Target			Actual Performance
Total Company Organic Sales Growth		5	%		2.9	%
Segment Organic Sales Growth		5	%		3.1% - 4.7	%
Total Company Earnings per Share Growth		10	%		32.6	%
Segment Profit Growth		10	%		8.4% - 16.8	%
Total Company Working Capital Improvement		5	%		0.0	%
Segment Working Capital Improvement		5	%		0.0% - 4.0	%

\n\n\n

Effective September 1, 2011, the holders of the Company’s Class B Common Stock approved an\namendment to the Brady Corporation Incentive Compensation Plan For Elected Corporate Officers (the\n“Current Plan”) increasing the annual limitation on bonus awards granted to any participant under\nthe Current Plan from $1.5 million to $2.0 million. In addition, the holders of the Company’s Class\nB Common Stock approved the Brady Corporation Incentive Compensation Plan for Senior Executives\n(the “New Plan”), which is intended to replace the Current Plan beginning with fiscal 2012 awards.\n

\n\n

For fiscal 2012, the Company will place a greater emphasis on organic sales growth. As a\nresult, the corporate and regional bonus plans were modified to increase the weight of the organic\nsales component, remove working capital improvement as a component of the plan and replace earnings\nper share growth with net income growth.\n

\n\n

Equity Incentives: Long-term Incentive Compensation\n

\n\n\n

The Company utilizes a combination of performance-based stock options, time-based stock\noptions and performance-based restricted shares to attract, retain, and motivate key employees who\ndirectly impact the long-term performance of the Company. A combination of performance-based stock\noptions, time-based stock options and performance-based restricted shares is utilized to provide a\nbalance between annual Company performance and the generation of long-term shareholder value.\nEquity-based plans are influenced by Brady’s stock price, which directly affects the amount of\ncompensation the executive receives upon exercising the options. The size and type of equity awards\nis determined by the Compensation Committee with periodic input from its outside consultant. A\nstudy by the Committee’s external compensation consultant was recently conducted and assisted the\nCompensation Committee in the review of fiscal 2011 long-term incentive awards for the named\nexecutive officers.\n

\n\n

By unanimous written consent effective September 24, 2010, the holders of the Company’s Class\nB Common Stock approved an amendment to the Brady Corporation 2010 Omnibus Incentive Stock Plan\n(the “2010 Omnibus Plan”). Under the terms of the amended 2010 Omnibus Plan, the maximum number of\nequity awards that could be granted to a participant in a calendar year was increased from 200,000\nto 400,000 shares.\n

\n\n

By unanimous written consent effective September 26, 2011, the holders of the Company’s Class\nB Common Stock approved the Brady Corporation 2012 Omnibus Incentive Stock Plan (the “2012 Omnibus\nPlan”). Under the terms of the 2012 Omnibus Plan, pursuant to which 5,500,000 shares of the\nCompany’s Class A Common Stock have been authorized for issuance, the Company may grant\nunrestricted stock, nonqualified stock options, incentive stock options, shares of restricted stock\nand restricted stock units to eligible employees and Directors of the Company and its affiliates.\nThe 2012 Omnibus Plan, which became effective upon shareholder approval, provides that no further\ngrants will be made under the Company’s 2010 Omnibus Incentive Stock Plan after December 31, 2011.\n

\n\n

Performance-based Stock Options:\n

\n\n\n

The Compensation Committee believes that performance-based stock options serve as an important\nmotivator and a required component of the Company’s overall compensation program.\nPerformance-based stock options were granted in fiscal 2011 with two vesting criteria. The\nperformance criterion for two-thirds of the performance-based options is based upon annual earnings\nper share growth targets, while the performance criterion for the remaining one-third of the\nperformance-based options is based upon a relative measure of the Company’s three year earnings per\nshare growth compared to the S&P 600 Index. These options have a ten year life and were granted on\nthe first working day of the Company’s fiscal year.\n

\n\n

In July 2011, the Compensation Committee determined that the performance-based stock options\nto be granted during fiscal 2012 would include vesting criteria based upon year over year diluted\nEPS growth, including an opportunity to vest over a two or three year period if the compound annual\ngrowth rate exceeds the annual target.\n

\n\n

74\n

\n\n

Time-based Stock Options:\n

\n\n\n

Time-based stock option grants in fiscal 2011 were reviewed and approved by the Compensation\nCommittee on September 8, 2010, with an effective grant date of September 24, 2010. The grant price\nwas the fair market value of the stock on the grant date, which was calculated as the average of\nthe high and low stock price on that date. The time-based stock options generally vest one-third\neach year for the first three years and have a ten-year life.\n

\n\n

Performance-based Restricted Stock:\n

\n\n\n

Periodically, the Company issues restricted stock grants to key executives as an element of\ntheir overall compensation. In January 2008, the Compensation Committee approved the issuance of\nperformance-based restricted stock awards to six of Brady’s senior executives. A total of 210,000\nrestricted shares were issued and included both a performance vesting requirement (earnings per\nshare) and a service vesting requirement (five years). In addition to the original vesting\ncriteria, the restricted stock awards were amended effective July 20, 2011 to include an additional\nvesting opportunity based upon earnings per share growth for the fiscal years ending July 31, 2013\nor July 31, 2014, and a service vesting requirement through July 31, 2014.\n

\n\n

Based upon input from an external compensation consultant and the Committee’s desire to\nprovide an incentive for retention and improved Company performance, effective August 2, 2010, a\ngrant of 100,000 shares of performance-based restricted stock was issued to Mr. Jaehnert. This\ngrant of performance-based restricted stock included both a performance vesting requirement based\nupon earnings per share growth and a service vesting requirement prorated at July 31, 2013, July\n31, 2014 and July 31, 2015.\n

\n\n

Employment and Post-Employment Benefits\n

\n\n\n

General Benefits:\n

\n\n\n

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

\n\n

Retirement Benefits:\n

\n\n\n

Brady employees (including named executive officers) in the United States and certain\nexpatriate employees working for its international subsidiaries are eligible to participate in the\nBrady Corporation Matched 401(k) Plan (the “Employee 401(k) Plan”). In addition, named executive\nofficers in the United States and employees at many of our United States locations are also\neligible to participate in the Brady Corporation’s Funded Retirement Plan (“Funded Retirement\nPlan”). The Company agrees to contribute certain amounts to both Plans. Under the Funded Retirement\nPlan, the Company contributes 4% of the eligible earnings of each employee covered by the Funded\nRetirement Plan. In addition, participants may elect to have their annual pay reduced by up to 5%\nand have the amount of this reduction contributed to their 401(k) Plan and matched by an additional\n4% contribution by the Company. Participants may also elect to have up to another 45% of their\neligible earnings contributed to the Employee 401(k) Plan (without an additional matching\ncontribution by the Company). The assets of the Employee 401(k) Plan and Funded Retirement Plan\ncredited to each participant are invested by the trustee of the Plans as directed by each plan\nparticipant in a variety of investment funds as permitted by the Employee 401(k) Plan and the\nFunded Retirement Plan.\n

\n\n

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

\n\n

Benefits are generally payable upon the death, disability, or retirement of the participant,\nor upon termination of employment before retirement, although benefits may be withdrawn from the\nemployee 401(k) Plan and paid to the participant if required for certain emergencies. Under certain\nspecified circumstances, the employee 401(k) Plan allows loans to be drawn on a participant’s\naccount. The participant is immediately fully vested with respect to employee contributions; all\nother contributions become fully vested over a two-year period of continuous service for the\nemployee 401(k) Plan and after six years of continuous service for the Funded Retirement Plan.\n

\n\n

75\n

\n\n

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

\n\n

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

\n\n

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

\n\n

76\n

\n\n

Perquisites:\n

\n\n\n

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

\n\n

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

•

Annual allowance for financial and tax planning

\n\n

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

•

Enhanced long-term disability insurance

\n\n

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

•

Company car

\n\n

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

•

Long-term care insurance

\n\n

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

•

Personal liability insurance

\n\n

Stock Ownership Guidelines\n

\n\n\n

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

\n\n

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

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


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

\n\n\n

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

\n\n

Mr. Jaehnert met his respective ownership levels in 2011. Named executive officers other than\nthe Company’s CEO have until fiscal year 2013 to achieve their respective ownership levels. If an\nexecutive does not meet the above ownership level or certain interim levels, the Compensation\nCommittee may direct that the executive’s after-tax payout on any incentive plans will be in Class\nA Nonvoting Common Stock to bring the executive up to the required level. The Compensation\nCommittee reviews the actual stock ownership levels of each of the named executive officers on an\nannual basis to ensure the guidelines are met.\n

\n\n

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

\n\n

Employment and Change of Control Agreements\n

\n\n\n

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

\n\n

In May 2003, the Board approved a Change of Control Agreement for Mr. Jaehnert, which was\nsubsequently amended and restated in December 2008 to comply with Internal Revenue Code Section\n409A. The agreement applicable to Mr. Jaehnert provides a payment of an amount equal to three times\nhis annual base salary and three times the average bonus payment received in the three years\nimmediately prior to the date the change of control occurs in the event of termination or\nresignation upon a change of control. The agreement will also reimburse a maximum of $25,000 of\nlegal fees incurred by Mr. Jaehnert in order to enforce the change of control agreement, in which\nhe prevails. Payments under the agreement will be spread over three years.\n

\n\n

77\n

\n\n

Compliance with Tax Regulations Regarding Executive Compensation\n

\n\n\n

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

\n\n

Compensation Committee Interlocks and Insider Participation\n

\n\n\n

During fiscal 2011, the Board’s Compensation Committee was composed of board members Allender,\nBuchanan, Galbato and Pungello. None of these persons has at any time been an employee of the\nCompany or any of its subsidiaries. Mr. Buchanan’s Board services ended on November, 18, 2010.\nThere are no relationships among the Company’s executive officers, members of the Compensation\nCommittee or entities whose executives serve on the Board that require disclosure under applicable\nSEC regulations.\n

\n\n

Compensation Committee Report\n

\n\n\n

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

\n\n

Chan W. Galbato, Chairman
\nPatrick W. Allender
\nElizabeth P. Pungello\n\n

\n\n

Compensation Policies and Practices\n

\n\n\n

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

\n\n

78\n

\n\n

Summary Compensation Table\n

\n\n\n

The following table sets forth compensation awarded to, earned by, or paid to the named\nexecutive officers, who served as executive officers during the fiscal year ended July 31, 2011 for\nservices rendered to the Company and its subsidiaries during the fiscal years ended July 31, 2011,\nJuly 31, 2010 and July 31, 2009.\n


														Non-Equity
						Restricted			Option			Incentive Plan			All Other
	Fiscal		Salary		Stock Awards		Awards			Compensation			Compensation			Total
Name And Principal Position	Year		($)		($)(1)		($)(2)			($)(3)			($)(4)			($)
F.M. Jaehnert		2011		793,269			2,803,500				2,470,157				1,632,548		223,329	7,922,803
President &		2010		768,269			—				1,868,047				1,193,891		127,590	3,957,797
Chief Executive Officer		2009		750,000			—				389,421				—		179,761	1,319,182

T.J. Felmer		2011		363,285			(22,050	)			914,386				523,349		93,163	1,872,133
Senior Vice President &		2010		339,659			—				833,224				369,481		65,242	1,607,606
Chief Financial Officer		2009		318,269			—				194,710				—		65,322	578,301

P.C. Sephton (4)		2011		356,818			(22,050	)			790,878				341,190		92,158	1,558,994
President — Brady Europe		2010		334,827			—				833,224				188,441		118,801	1,475,293
		2009		325,710			—				194,710				—		86,787	607,207

R.L. Tatterson		2011		320,935			(12,600	)			667,370				462,338		75,398	1,513,441
Vice President — R&D &		2010		307,235			—				659,100				334,210		45,579	1,346,124
Chief Technology Officer		2009		300,000			—				161,000				—		66,321	527,321

M.O. Williamson		2011		360,071			(22,050	)			790,878				462,461		73,093	1,664,453
President — Brady Americas		2010		343,244			—				833,224				234,505		53,695	1,464,668
		2009		326,843			—				194,710				—		65,265	586,818

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


(1)		Represents the grant date fair value computed in accordance with accounting guidance for\nequity grants made or modified in the applicable year for restricted stock awards. The grant\ndate fair value is calculated based on the number of shares of Common Stock underlying the\nrestricted stock awards, times the average of the high and low trade prices of Brady Common\nStock on the date of grant. The actual value of a restricted stock award will depend on the\nmarket value of the Company’s Common Stock on the date the stock is sold. The restricted stock\naward granted on January 8, 2008 was amended effective July 20, 2011 so that the shares will\nvest upon meeting a performance vesting requirement based upon earnings per share growth at\neither July 31, 2013 or July 31, 2014, provided that the senior executives meet the service\nvesting requirement of an additional two years. The reduction in the incremental fair value of\nthe restricted share grant as of the modification date is included in the table above.

		Effective August 2, 2010, a grant of 100,000 shares of performance-based restricted stock was\nissued to Mr. Jaehnert, which included both a performance vesting requirement based upon\nearnings per share growth and a service vesting requirement prorated at July 31, 2013, July 31,\n2014 and July 31, 2015.

(2)		Represents the grant date fair value computed in accordance with accounting guidance for\nequity grants made or modified in the applicable year for performance-based and time-based\nstock options. The assumptions used to determine the value of the awards, including the use of\nthe Black-Scholes method of valuation by the Company, are discussed in Note 1 of the Notes to\nConsolidated Financial Statements of the Company contained in Item 8 of this Form 10-K, for\nthe fiscal year ended July 31, 2011. The actual value, if any, which an option holder will\nrealize upon the exercise of an option will depend on the excess of the market value of the\nCompany’s Common Stock over the exercise price on the date the option is exercised, which\ncannot be forecasted with any accuracy.

(3)		Reflects incentive plan compensation earned during the listed fiscal years, which was paid\nduring the next fiscal year. Consistent with the Company’s incentive compensation plan, there\nwere no bonuses paid to executives for fiscal year 2009 because Company performance did not\nexceed fiscal year 2008 levels.

\n\n

79\n

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


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

\n\n\n


				Retirement			Group Term					Long-term			Personal			Temporary/
				Plan			Life		Company		Care			Liability			Total
	Fiscal		Contributions			Insurance		Car		Insurance			Insurance			Disability			Other	Total
Name	Year		($)			($)		($)		($)			($)			($)			($)	($)
F.M. Jaehnert		2011			158,281			2,740			24,057				5,141				2,654		23,760	6,696	223,329
		2010			61,923			3,042			28,070				5,141				2,654		23,760	3,000	127,590
		2009			116,284			3,042			27,698				4,863				2,654		23,760	1,460	179,761

T.J. Felmer		2011			57,931			828			25,311				3,737				—		—	5,356	93,163
		2010			27,157			713			29,995				3,737				—		—	3,640	65,242
		2009			32,528			890			26,401				4,863				—		—	640	65,322

P.C. Sephton(4)		2011			57,091			3,267			31,800				—				—		—	—	92,158
		2010			85,162			2,695			30,944				—				—		—	—	118,801
		2009			52,114			1,749			32,924				—				—		—	—	86,787

R.L. Tatterson		2011			50,793			732			16,074				3,506				—		—	4,293	75,398
		2010			25,966			653			13,560				2,630				—		—	2,770	45,579
		2009			42,132			670			14,974				5,755				—		—	2,790	66,321

M. O. Williamson		2011			47,059			820			14,436				5,501				—		—	5,277	73,093
		2010			27,648			724			16,422				5,501				—		—	3,400	53,695
		2009			40,038			919			18,309				4,863				—		—	1,136	65,265

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


(4)		The amounts in this table for Mr. Sephton, who works and lives in the United Kingdom, were\npaid to him in British Pounds. The amounts shown in U.S. dollars in the table above were\nconverted from British Pounds at the average exchange rate for fiscal 2011: $1 = £0.6250,\n2010: $1 = £0.6358, fiscal 2009: $1 = £0.6294.

\n\n\n

\n\n

Grants of Plan-Based Awards for 2011\n

\n\n\n

The following table summarizes grants of plan-based awards made during fiscal 2011 to the\nnamed executive officers.\n


																	All Other			All Other			Exercise
																	Stock			Option			or Base	Grant
																	Awards:			Awards:			Price of	Date Fair
																	Number of			Number of			Stock	Value
				Compen-					Shares of		Securities		or			of
				sation			Estimated Future Payouts Under		Stock		Under-		Option			Stock and
				Committee			Non-Equity Incentive Plan Awards (1)		or		lying		Awards			Option
	Grant		Approval			Threshold					Maximum		Units			Options			Options			Awards
Name	Date		Date			($)		Target ($)		($)		(#)			(#)			(2)(3) & (4) (#)			($)
F.M. Jaehnert		8/1/2010			7/19/2010			—			793,269			1,983,173
		8/2/2010			7/19/2010			—			—			—				100,000						28.35	2,835,000
		8/2/2010			7/19/2010			—			—			—								150,000		28.35	1,473,548
		9/24/2010			9/8/2010			—			—			—								100,000		29.10	996,609
		1/8/2008			7/20/2011			—			—			—				50,000						32.20	(31,500	)
T.J. Felmer		8/1/2010			7/19/2010			—			254,300			635,749
		8/2/2010			7/19/2010			—			—			—								52,500		28.35	515,742
		9/24/2010			9/8/2010			—			—			—								40,000		29.10	398,644
		1/8/2008			7/20/2011			—			—			—				35,000						32.20	(22,050	)
P.C. Sephton		8/1/2010			7/19/2010			—			249,773			624,432
		8/2/2010			7/19/2010			—			—			—								45,000		28.35	442,064
		9/24/2010			9/8/2010			—			—			—								35,000		29.10	348,813
		1/8/2008			7/20/2011			—			—			—				35,000						32.20	(22,050	)
R.L. Tatterson		8/1/2010			7/19/2010			—			224,654			561,636
		8/2/2010			7/19/2010			—			—			—								37,500		28.35	368,387
		9/24/2010			9/8/2010			—			—			—								30,000		29.10	298,983
		1/8/2008			7/20/2011			—			—			—				20,000						32.20	(12,600	)
M.O. Williamson		8/1/2010			7/19/2010			—			252,050			630,124
		8/2/2010			7/19/2010			—			—			—								45,000		28.35	442,064
		9/24/2010			9/8/2010			—			—			—								35,000		29.10	348,813
		1/8/2008			7/20/2011			—			—			—				35,000						32.20	(22,050	)

\n\n\n

\n\n

80\n

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


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

(2)		Effective August 2, 2010, a grant of 100,000 shares of performance-based restricted stock was\nissued to Mr. Jaehnert, which included both a performance vesting requirement based upon\nearnings per share growth and a service vesting requirement prorated at July 31, 2013, July\n31, 2014 and July 31, 2015.

(3)		The performance-based stock options granted on August 2, 2010 become exercisable as follows:\nTwo-thirds of the shares vest in equal annual installments over a three-year period, with the\nvesting date being the date the Audit Committee accepts the results of the fiscal year audit\nconfirming the achievement of annual EPS growth levels. The remaining one-third of the shares\nvest at plan year three depending upon the Corporation’s EPS growth for fiscal 2013 over\nfiscal 2010 in comparison with other corporations in the S&P 600 Index. The time-based stock\noptions granted on September 24, 2010 become exercisable as follows: one-third of the shares\non September 24, 2011, one-third of the shares on September 24, 2012 and one-third of the\nshares on September 24, 2013. These options have a term of ten years and were calculated using\nthe grant date fair value.

(4)		Effective July 20, 2011, the Compensation Committee of the Board of Directors of the Company\napproved an amendment to the granting agreement under which the Company issued\nperformance-based restricted stock on January 8, 2008. In addition to the original vesting\ncriteria, the shares may also vest upon meeting certain financial performance criteria for the\nfiscal years ending July 31, 2013 or July 31, 2014, provided that the senior executives meet\nthe service vesting requirement of an additional two years. The average of the high and low\ntrade prices of the Company’s Class A Common Stock as reported by the New York Stock Exchange\non the a date of the performance-based restricted stock was $32.20, and the incremental\nreduction in the fair value of the grant as of the modification date is reported within the\ntable above.

(5)		The exercise price is the average of the high and low sale prices of the Company’s Class A\nCommon Stock as reported by the New York Stock Exchange on the date of the grant. The average\nof the high and low sale prices of the Company’s Class A Common Stock as reported by the New\nYork Stock Exchange on the grant dates was $28.35 per share on August 2, 2010 and $29.10 on\nSeptember 24, 2010.

\n\n\n

\n\n

Outstanding Equity Awards at 2011 Fiscal Year End\n

\n\n

Option Awards (1)

Stock Awards

Equity

Equity Incentive

Incentive Plan

Plan Awards;

Equity Incentive

Number of

Awards:

Number of

Plan Awards:

Securities

Number of

Unearned

Market or Payout

Underlying

Securities

Shares, Units or

Value of Unearned

Unexercised

Underlying

Option

Other Rights

Shares, Units or

Options

Unexercised

Exercise

That Have Not

Other Rights That

Exercisable

Unexercisable

Unearned

Price

Option

Vested

Have Not Vested

Name

(#)

Options (#)

($)

Expiration Date

(#)

($)

F.M. Jaehnert

200,000

13.3100

2/24/2013

72,000

17.3250

11/20/2013

60,000

22.6325

8/2/2014

60,000

28.8425

11/18/2014

60,000

33.8900

8/1/2015

50,000

37.8300

11/30/2015

50,000

38.1900

11/30/2016

50,000

38.3100

12/4/2017

33,334

16,666

(2)

20.9500

12/4/2018

28,334

99,166

(3)

29.7800

8/3/2019

23,334

46,666

(5)

28.7300

9/25/2019

150,000

(6)

28.3500

8/2/2020

100,000

(7)

29.1000

9/24/2020

50,000

(4)

1,480,000

100,000

(8)

2,960,000

\n\n

81\n

\n\n

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				Option Awards (1)							Stock Awards
							Equity								Equity Incentive
							Incentive Plan								Plan Awards;			Equity Incentive
	Number of		Number of			Awards:							Number of			Plan Awards:
	Securities		Securities			Number of							Unearned			Market or Payout
	Underlying		Underlying			Securities							Shares, Units or			Value of Unearned
	Unexercised		Unexercised			Underlying		Option				Other Rights			Shares, Units or
	Options		Options			Unexercised		Exercise				That Have Not			Other Rights That
	Exercisable		Unexercisable			Unearned		Price	Option		Vested			Have Not Vested
Name	(#)		(#)			Options (#)		($)	Expiration Date		(#)			($)

T.J. Felmer		8,000								16.0000			10/16/2011
		10,000								16.3875			11/14/2012
		10,000								17.3250			11/20/2013
		20,000								22.6325			8/2/2014
		30,000								28.8425			11/18/2014
		30,000								33.8900			8/1/2015
		25,000								37.8300			11/30/2015
		25,000								38.1900			11/30/2016
		25,000								38.3100			12/4/2017
		16,667			8,333	(2)				20.9500			12/4/2018
		11,667			40,833	(3)				29.7800			8/3/2019
		11,667			23,333	(5)				28.7300			9/25/2019
					52,500	(6)				28.3500			8/2/2020
					40,000	(7)				29.1000			9/24/2020
																	35,000	(4)	1,036,000

P.C. Sephton		14,000								17.3250			11/20/2013
		30,000								22.6325			8/2/2014
		30,000								28.8425			11/18/2014
		30,000								33.8900			8/1/2015
		25,000								37.8300			11/30/2015
		25,000								38.1900			11/30/2016
		25,000								38.3100			12/4/2017
		16,667			8,333	(2)				20.9500			12/4/2018
		11,667			40,833	(3)				29.7800			8/3/2019
		11,667			23,333	(5)				28.7300			9/25/2019
					45,000	(6)				28.3500			8/2/2020
					35,000	(7)				29.1000			9/24/2020
																	35,000	(4)	1,036,000

R. L. Tatterson		25,000								38.1900			11/30/2016
		25,000								38.3100			12/4/2017
		16,667			8,333	(2)				20.9500			12/4/2018
		10,000			35,000	(3)				29.7800			8/3/2019
		10,000			20,000	(5)				28.7300			9/25/2019
					37,500	(6)				28.3500			8/2/2020
					30,000	(7)				29.1000			9/24/2020
																	20,000	(4)	592,000

M.O. Williamson		7,500								16.3875			11/14/2012
		14,000								17.3250			11/20/2013
		30,000								22.6325			8/2/2014
		30,000								28.8425			11/18/2014
		30,000								33.8900			8/1/2015
		25,000								37.8300			11/30/2015
		25,000								38.1900			11/30/2016
		25,000								38.3100			12/4/2017
		16,667			8.333	(2)				20.9500			12/4/2018
		11,667			40,833	(3)				29.7800			8/3/2019
		11,667			23,333	(5)				28.7300			9/25/2019
					45,000	(6)				28.3500			8/2/2020
					35,000	(7)				29.1000			9/24/2020
																	35,000	(4)	1,036,000

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


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

(2)		All shares vest on December 4, 2011.

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

(4)		Effective July 20, 2011, the Compensation Committee of the Board of Directors of the Company\napproved an amendment to the granting agreement under which the Company issued\nperformance-based restricted stock on January 8, 2008. Pursuant to the amendment, the shares\nwill vest upon meeting a financial performance vesting requirement at either July 31, 2013 or\nJuly 31, 2014, provided that the senior executives meet the service vesting requirement of an\nadditional two years.

(5)		One-half of the options vest on September 25, 2011 and one-half of the options vest on\nSeptember 25, 2012.

\n\n

82\n

\n\n

Non-Qualified Deferred Compensation for Fiscal 2011\n

\n\n\n

The following table summarizes the activity within the Executive Deferred Compensation Plan\nand the Brady Restoration Plan during fiscal 2011 for the named executive officers.\n


	Executive		Registrant		Aggregate	Aggregate	Aggregate
	Contributions in		Contributions in		Earnings in	Withdrawals/	Balance at
	Last Fiscal Year		Last Fiscal Year		Last Fiscal Year	Distributions	Last Fiscal Year
Name	($)		($)		($)	($)	End ($)
F.M. Jaehnert		69,648		138,681		424,023		—	3,844,683
T.J. Felmer		322,045		37,870		169,524		—	1,332,339
P.C. Sephton		—		—		—		—	—
R.L. Tatterson		51,057		32,115		41,071		—	383,877
M.O. Williamson		13,561		27,121		75,046		—	713,419

\n\n\n

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

\n\n

Potential Payments Upon Termination or Change in Control\n

\n\n\n

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

\n\n

Following termination due to a change in control, executives shall be paid a multiplier of\ntheir annual base salary in effect immediately prior to the date the change of control occurs, plus\na multiplier of their average bonus payment received over a three-year period prior to the date the\nchange of control occurs. The Company will also reimburse the executive for any excise tax incurred\nby the executive as a result of Section 280(G) of the Internal Revenue Code. The Company will also\nreimburse a maximum of $25,000 of legal fees incurred by the executive in order to enforce the\nchange of control agreement, in which the executive prevails.\n

\n\n

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

\n\n

Assumptions and General Principles.\n

\n\n

The following assumptions and general principles apply with respect to the tables that follow\nin this section.\n

\n\n

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

•

The amounts shown in the tables assume that each named executive officer terminated\nemployment on July 31, 2011. Accordingly, the tables reflect amounts earned as of July 31,\n2011, and include estimates of amounts that would be paid to the named executive officer\nupon the occurrence of a change in control. The actual amounts that would be paid to a named\nexecutive officer can only be determined at the time of termination.

\n\n

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

•

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

\n\n

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

•

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

\n\n

84\n

\n\n

Frank M. Jaehnert\n

\n\n

The following table shows the amount payable assuming that the terms of the change of control\nagreement were triggered on July 31, 2011 and the named executive officer had to legally enforce\nthe terms of the agreement.\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Base Salary ($)(1)

Bonus ($) (2)

Gain $(3)

Gain $ (4)

($)

($) (5)

Total ($)

2,400,000

1,897,445

4,440,000

422,260

1,663,980

25,000

10,848,685

\n\n\n\n

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


(1)		Represents three times the base salary in effect at July 31, 2011.

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

(3)		Represents the closing market price of $29.60 on 150,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $29.60 and the exercise price\non 313,332 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n

Thomas J. Felmer\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Base Salary ($)(1)

Bonus ($) (2)

Gain $(3)

Gain $ (4)

($)

($) (5)

Total ($)

740,000

311,739

1,036,000

178,006

358,880

25,000

2,649,625

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2011.

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

(3)		Represents the closing market price of $29.60 on 35,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $29.60 and the exercise price\non 124,166 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n

85\n

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

Peter C. Sephton\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Base Salary ($)(1)

Bonus ($) (2)

Gain $(3)

Gain $ (4)

($)

($) (5)

Total ($)

721,636

300,562

1,036,000

166,131

322,231

25,000

2,571,560

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2011. As Mr. Sephton works and\nlives in the United Kingdom, his base salary is paid to him in British Pounds. The amount\nshown in U.S. dollars was converted from British Pounds at the July 2011 month-end exchange\nrate: $1 = £0.6358.

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

(3)		Represents the closing market price of $29.60 on 35,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $29.60 and the exercise price\non 111,666 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n

Robert L. Tatterson\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Base Salary ($) (1)

Bonus ($) (2)

Gain $ (3)

Gain $ (4)

($)

($) (5)

Total ($)

650,000

373,905

592,000

151,356

315,928

25,000

2,108,189

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2011.

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

(3)		Represents the closing market price of $29.60 on 20,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $29.60 and the exercise price\non 95,833 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n

86\n

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

Matthew O. Williamson\n

\n\n

Restricted Stock

Stock Option

Excise Tax

Legal Fee

Award Acceleration

Acceleration

Reimbursement

Base Salary ($) (1)

Bonus ($) (2)

Gain $ (3)

Gain $ (4)

($)

($) (5)

Total ($)

730,000

278,610

1,036,000

166,131

347,133

25,000

2,582,874

\n\n\n\n

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


(1)		Represents two times the base salary in effect at July 31, 2011.

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

(3)		Represents the closing market price of $29.60 on 35,000 unvested awards that would vest due\nto the change in control.

(4)		Represents the difference between the closing market price of $29.60 and the exercise price\non 111,666 unvested stock options in-the-money that would vest due to the change in control.

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

\n\n\n\n

Potential Payments Upon Termination Due to Death or Disability\n

\n\n\n

In the event of termination due to death or disability, all unexercised, unexpired stock\noptions would immediately vest and all restricted stock awards would immediately become\nunrestricted and fully vested. The following table shows the amount payable to the named executive\nofficers should this event occur on July 31, 2011.\n


	Unvested Shares					Unvested Stock
	of Restricted					Options
	Stock		Restricted Stock		In-the		Stock Option
	as of		Award Acceleration		Money as of		Acceleration
Name	July 31, 2011		Gain $ (1)		July 31, 2011		Gain $ (2)
F.M. Jaehnert		150,000		4,440,000			313,332	422,260
T.J. Felmer		35,000		1,036,000			124,166	178,006
P.C. Sephton		35,000		1,036,000			111,666	166,131
R.L. Tatterson		20,000		592,000			95,833	151,356
M.O. Williamson		35,000		1,036,000			111,666	166,131

\n\n\n\n

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


(1)		Represents the closing market price of $29.60 on unvested shares that would vest due to the\nchange in control.

(2)		Represents the difference between the closing market price of $29.60 and the exercise price\non unvested stock options in-the-money that would vest due to death or disability.

\n\n

87\n

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

\n\n

Compensation of Directors\n

\n\n\n

To ensure competitive compensation for the Directors, surveys prepared by various consulting\nfirms and the National Association of Corporate Directors are reviewed by the Corporate Governance\nCommittee and the Compensation Committee in making recommendations to the Board of Directors\nregarding Director compensation. Directors who are employees of the Company receive no additional\ncompensation for service on the Board or on any committee of the Board. The annual cash retainer\npaid to non-management Directors is $45,000. The remaining components of Director compensation\ninclude $6,000 for each committee chair ($10,000 for the Audit Committee Chair) and $1,500 plus\nexpenses for each meeting of the Board or any committee thereof, which they attend and are a member\nor $1,000 for single issue telephonic committee meetings of the Board. Directors also receive\n$1,000 for each meeting they attend of any committee for which they are not a member and $500 for\neach telephonic committee meeting they attend of any committee for which they are not a member. In\naddition, non-management Directors are eligible to receive compensation of up to $1,000 per day for\nspecial assignments required by management or the Board of Directors, so long as the compensation\ndoes not impair independence and is approved as required by the Board.\n

\n\n

On September 9, 2011, the Corporation’s Board of Directors authorized an increase in\ncompensation paid to its non-management Directors. Effective with the annual Board of Directors\nmeeting to be held on November 17, 2011, the annual committee chair fees will increase from $6,000\nto $10,000 for each of the Chairs of the Compensation, Corporate Governance, Finance, and\nTechnology Committees and from $10,000 to $15,000 for the Chair of the Audit Committee.\n

\n\n

On November 18, 2010, the Board of Directors of the Corporation, upon the recommendation of\nits Corporate Governance Committee, increased the annual Lead Independent Director fee from $10,000\nto $15,000. The current chair of the Corporate Governance Committee, Mr. Conrad Goodkind, is\nserving as the Lead Independent Director.\n

\n\n

By unanimous written consent effective September 26, 2011, the holders of the Company’s Class\nB Common Stock approved the Brady Corporation 2012 Omnibus Incentive Stock Plan (the “2012 Omnibus\nPlan”). Under the terms of the 2012 Omnibus Plan, pursuant to which 5,500,000 shares of the\nCompany’s Class A Common Stock have been authorized for issuance, the Board has full and final\nauthority to designate the non-management Directors to whom awards will be granted, the date on\nwhich awards will be granted and the number of shares of stock covered by each grant. On September\n9, 2011, the Board approved an annual stock-based compensation award of approximately $75,000, half\nin time-based stock options and half in unrestricted shares of Class A Common Stock, for each\nnon-management Director effective September 30, 2011.\n

\n\n

Directors are also eligible to defer portions of their fees into the Brady Corporation\nDirector Deferred Compensation Plan (“Director Deferred Compensation Plan”), the value of which is\nmeasured by the fair value of the underlying investments. On September 9, 2011, the Board approved\nan amendment to the Director Deferred Compensation Plan to incorporate rules for the deferral of\ncompensation payable in the form of Brady Corporation common stock. The assets of the Director\nDeferred Compensation Plan are held in a Rabbi Trust and are invested by the trustee as directed by\nthe participant in several investment funds as permitted by the Director Deferred Compensation\nPlan. The investment funds available in the Director Deferred Compensation Plan include Brady\nCorporation Class A Nonvoting Common Stock and various mutual funds that are provided in the\nEmployee 401(k) Plan.\n

\n\n

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

\n\n

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

\n\n

88\n

\n\n

\n\n\n

Director\nCompensation Table — Fiscal 2011\n


	Fees Earned
	or Paid in		Option
Name	Cash ($)		Awards ($) (1)		Total ($)
Elizabeth P. Pungello		71,000		83,600		154,600
Robert C. Buchanan (2)		27,250		83,600		110,850
Frank W. Harris		75,500		83,600		159,100
Chan W. Galbato		93,500		83,600		177,100
Patrick W. Allender (3)		92,500		83,600		176,100
Conrad G. Goodkind		100,000		83,600		183,600
Bradley C. Richardson		87,000		83,600		170,600
Gary S. Balkema		77,000		181,739		258,739

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


(1)		Represents the grant date fair value computed in accordance with accounting guidance for\nequity grants made in the applicable year for time-based stock options. The assumptions used\nto determine the value of the awards, including the use of the Black-Scholes method of\nvaluation by the Company, are discussed in Note 1 of the Notes to Consolidated Financial\nStatements of the Company contained in Item 8 of this Form 10-K for the fiscal year ended July\n31, 2011. The grant date fair value of options granted in fiscal 2011 was $83,600 for Ms.\nPungello, Mr. Buchanan, Mr. Harris, Mr. Galbato, Mr. Allender, Mr. Goodkind, and for Mr.\nRichardson.

		The grant date fair value of options granted in fiscal 2011 was $181,739 for Mr. Balkema, who in\naddition to the grant received by the other non-management Directors, also received a grant of\n10,000 options two weeks after the date he joined the Board. The actual value, if any, which an\noption holder will realize upon the exercise of an option will depend on the excess of the market\nvalue of the Company’s common stock over the exercise price on the date the option is exercised,\nwhich cannot be forecasted with any accuracy.

		Outstanding option awards at July 31, 2011 for each individual serving as a director on that date\ninclude the following: Ms. Pungello, 52,800 shares; Mr. Harris, 52,800 shares; Mr. Galbato,\n38,800 shares; Mr. Allender, 38,800 shares; Mr. Goodkind, 38,800 shares; Mr. Richardson, 32,800\nshares; and Mr. Balkema, 18,400.

(2)		Mr. Buchanan’s Board services ended on November 18, 2010.

(3)		Includes $5,000 paid for special assignments.

\n\n\n

\n\n

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


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

\n\n

(a) Security Ownership of Certain Beneficial Owners\n

\n\n\n

The following table sets forth the current beneficial ownership of shareholders who are known\nby the Company to own more than five percent (5%) of any class of the Company’s voting shares on\nAugust 15, 2011. As of that date, nearly all of the voting stock of the Company was held by two\ntrusts controlled by direct descendants of the Company’s founder, William H. Brady, as follows:\n


		Amount of
		Beneficial		Percent of
Title of Class	Name and Address of Beneficial Owner	Ownership		Ownership(2)
Class B Common Stock	Brady Corporation Class B Common Stock Trust(1)		1,769,304		50	%
	c/o Elizabeth P. Pungello
	2002 S. Hawick Ct.
	Chapel Hill, NC 27516
	William H. Brady III Revocable Trust of 2003(3)		1,769,304		50	%
	c/o William H. Brady III
	249 Rosemont Ave.
	Pasadena, CA 91103

\n\n\n\n\n

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


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

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

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

\n\n

89\n

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

(b)\nSecurity Ownership of Management

\n\n\n

The following table sets forth the current beneficial ownership of each class of equity\nsecurities of the Company by each Director or Nominee and by all Directors and Officers of the\nCompany as a group as of July 31, 2011. Unless otherwise noted, the address for each of the listed\npersons is c/o Brady Corporation, 6555 West Good Hope Road, Milwaukee, Wisconsin 53223. Except as\notherwise indicated, all shares are owned directly.\n


		Amount of
		Beneficial		Percent of
Title of Class	Name of Beneficial Owner & Nature of Beneficial Ownership	Ownership(4)		Ownership
Class A Common Stock	Elizabeth P. Pungello(1)		1,352,095		2.6	%
	Frank M. Jaehnert(2)		925,161		1.8
	Peter C. Sephton		305,402		0.6
	Thomas J. Felmer		298,808		0.6
	Matthew O. Williamson		285,973		0.5
	Robert L. Tatterson		129,833		0.2

	Conrad G. Goodkind		91,510		0.2
	Frank W. Harris		72,245		0.1
	Patrick W. Allender		39,736		0.1
	Chan W. Galbato		32,694		0.1
	Bradley C. Richardson		25,083		*
	Gary S. Balkema		11,468		*
	All Officers and Directors as a Group (17 persons)(3)		4,105,264		7.8

Class B Common Stock	Elizabeth P. Pungello(1)		1,769,304		50.0	%

\n\n\n\n\n

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


*		Indicates less than one-tenth of one percent.

(1)		Ms. Pungello’s holdings of Class A Common Stock include 1,352,095 shares owned by a trust for\nwhich she is a trustee and has sole dispositive and voting authority. Ms. Pungello’s holdings\nof Class B Common Stock include 1,769,304 shares owned by a trust over which she has sole\ndispositive and voting authority.

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

(3)		The amount shown for all officers and directors individually and as a group (17 persons)\nincludes options to acquire a total of 2,443,174 shares of Class A Common Stock, which are\ncurrently exercisable or will be exercisable within 60 days of July 31, 2011, including the\nfollowing: Ms. Pungello, 42,400 shares; Mr. Jaehnert, 805,336 shares; Mr. Sephton, 264,002\nshares; Mr. Felmer, 271,336 shares; Mr. Williamson, 271,502 shares; Mr. Tatterson, 125,001\nshares; Mr. Goodkind, 28,400 shares; Mr. Harris, 42,400 shares; Mr. Allender, 28,400 shares;\nMr. Galbato, 28,400 shares; Mr. Richardson, 22,400 shares;\nMr. Balkema, 9,468 shares; Mr.\nKlotsche, 275,402 shares; Mr. Curran, 101,890 shares; Ms. Johnson, 58,001 shares; Mr. Millar,\n39,501 shares; and Mr. Pearce, 29,335 shares. It does not include other options for Class A\nCommon Stock which have been granted at later dates and are not exercisable within 60 days of\nJuly 31, 2011.

(4)		The amount shown for all officers and directors individually and as a group (17 persons)\nincludes Class A Common Stock owned in deferred compensation plans totaling 163,759 shares of\nClass A Common Stock, including the following: Ms. Pungello, 2,163 shares; Mr. Jaehnert,\n88,343 shares; Mr. Sephton, 0 shares; Mr. Felmer, 10,618 shares; Mr. Williamson, 14,471\nshares; Mr. Tatterson, 0 shares; Mr. Goodkind, 13,059 shares; Mr. Harris, 0 shares; Mr.\nAllender, 11,336 shares; Mr. Galbato, 4,293 shares; Mr. Richardson, 2,683 shares; Mr. Balkema,\n0 shares; Mr. Klotsche, 7,823 shares; Mr. Curran, 104 shares; Ms. Johnson, 5,832 shares; Mr.\nMillar, 0 shares; and Mr. Pearce, 3,034 shares.

\n\n

(c)\nChanges in Control

\n\n\n\n

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

\n\n

90\n

\n\n

(d) Equity Compensation Plan Information\n

\n\n

As of July 31, 2011

Number of securities

remaining available for

Number of securities

future issuance under

to be issued upon

Weighted-average

equity compensation

exercise of

exercise price of

plans (excluding

outstanding options,

securities reflected in

warrants and rights

column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders

5,799,017

29.24

737,000

Equity compensation plans not approved by security holders

None

Total

5,799,017

29.24

737,000

\n\n\n

The Company’s equity compensation plans allow the granting of stock options to various\nofficers, directors and other employees of the Company at prices equal to fair market value at the\ndate of grant. The Company has reserved 3,000,000 and 200,000 shares of Class A Nonvoting Common\nStock for issuance under the Brady Corporation 2010 Omnibus Incentive Stock Plan and the Brady\nCorporation 2010 Nonqualified Stock Option Plan for Non-employee Directors, respectively.\nGenerally, options will not be exercisable until one year after the date of grant, and will be\nexercisable thereafter, to the extent of one-third per year and have a maximum term of ten years.\n

\n\n

In August 2004, 2005, 2006, 2007, 2009, and 2011 certain executives and key management\nemployees were issued stock options that vest upon meeting certain financial performance conditions\nin addition to the vesting schedule described above. Performance-based options expire 10 years from\nthe date of grant. All grants under the equity plans are at market price on the date of the grant.\nThe Company granted 210,000 performance-based restricted shares during fiscal 2008, with a grant\nprice and fair value of $32.83. Effective July 20, 2011, the Compensation Committee of the Board of\nDirectors of the Company approved an amendment to the fiscal 2008 performance-based restricted\nshares to provide for an additional two year vesting period. See “Exhibit 10.35”, incorporated by\nreference, for the full text of the amendment. The Company did not grant any performance-based\nrestricted shares during fiscal 2010 or 2009. The Company granted 100,000 shares of\nperformance-based restricted stock to Frank M. Jaehnert, the Company’s President and Chief\nExecutive Officer, in August of 2010, with a grant price and fair value of $28.35. As of July 31,\n2011, 310,000 performance-based restricted shares were outstanding.\n

\n\n

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


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

\n\n

The Company annually solicits information from its Directors in order to ensure there are no\nconflicts of interest. The information gathered annually is reviewed by the Company and if any\ntransactions are not in accordance with the rules of the New York Stock Exchange or are potentially\nin violation of the Company’s Corporate Governance Principles, the transactions are referred to the\nCorporate Governance Committee for approval, ratification, or other action. Further, potential\naffiliated party transactions are discussed at the Company’s quarterly disclosure committee\nmeetings. In addition pursuant to its charter, the Company’s Audit Committee periodically reviews\nreports and disclosures of insider and affiliated party transactions with the Company, if any.\nFurthermore, the Company’s directors are expected to be mindful of their fiduciary obligations to\nthe Company and to report any potential conflicts to the Corporate Governance Committee for review.\nBased on the Company’s consideration of all relevant facts and circumstances, the Corporate\nGovernance Committee will decide whether or not to approve such transactions and will approve only\nthose transactions that are in the best interest of the Company. Additionally, the Company has\nprocesses in place to educate executives and employees about affiliated transactions. The Company\nmaintains an anonymous hotline by which employees may report potential conflicts of interest such\nas affiliated party transactions. Based on these evaluations the Company has determined that it\ndoes not have material related party transactions that affect the results of operations, cash flow\nor financial condition. The Company has also determined that no transactions occurred in fiscal\n2011, or are currently proposed, that would require disclosure under Item 404 (a) of Regulation\nS-K.\n

\n\n

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

\n\n

91\n

\n\n

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


Item 14.		*Principal Accounting Fees and Services*

\n\n

The following table presents the aggregate fees incurred for professional services by Deloitte\n& Touche LLP and Deloitte Tax LLP during the years ended July 31, 2011 and 2010. Other than as set\nforth below, no professional services were rendered or fees billed by Deloitte & Touche LLP or\nDeloitte Tax LLP during the years ended July 31, 2011 and 2010.\n


	2011		2010
	(Dollars in thousands)
Audit, audit-related and tax compliance
Audit fees(1)	$	1,374		$	1,425
Tax fees — compliance		949			549

Subtotal audit, audit-related and tax compliance fees		2,323			1,974
Non-audit related
Tax fees — planning and advice		479			723
Other fees (2)		275			281

Subtotal non-audit related fees		754			1,004

Total fees	$	3,077		$	2,978

\n\n\n\n

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


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

(2)		All other fees relate to expatriate activities.

\n\n\n

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


	2011		2010
Ratio of Tax Planning and Advice Fees and All\nOther Fees to Audit Fees, Audit-Related Fees and Tax\nCompliance Fees		.3 to 1		.5 to 1

\n\n\n

Pre-Approval Policy — The services performed by the Independent Registered Public Accounting\nFirm (“Independent Auditors”) in fiscal 2010 and 2011 were pre-approved in accordance with the\npre-approval policy and procedures adopted by the Audit Committee at its November 19, 2003 meeting.\nThe policy requires the Audit Committee to pre-approve the audit and non-audit services performed\nby the Independent Auditors in order to assure that the provision of such services does not impair\nthe auditor’s independence. Unless a type of service to be performed by the Independent Auditors\nhas received general pre-approval, it will require specific pre-approval by the Audit Committee.\nAny proposed services exceeding pre-approved cost levels will require specific pre-approval by the\nAudit Committee.\n

\n\n

PART IV\n

\n\n

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


Item 15.		*Exhibits and Financial Statement Schedules*

\n\n\n

Item 15 (a) — The following documents are filed as part of this report:\n

\n\n\n

1) & 2) Consolidated Financial Statement Schedule —\n

\n\n\n

Schedule II Valuation and Qualifying Accounts\n

\n\n\n

All other schedules are omitted as they are not required, or the required information is\nshown in the consolidated financial statements or notes thereto.\n

\n\n\n

3) Exhibits — See Exhibit Index at page 93 of this Form 10-K.\n

\n\n

92\n

\n\n

EXHIBIT INDEX\n

\n\n


Exhibit
Number		Description
	3.1		Restated Articles of Incorporation of Brady Corporation (1)
	3.2		By-laws of Brady Corporation, as amended (23)
	*10.1		Form of Change of Control Agreement, amended as of December 23, 2008, entered into with Thomas J.\nFelmer, Allan J. Klotsche, Peter C. Sephton, Robert L. Tatterson, and Matthew O. Williamson (12)
	*10.2		Brady Corporation BradyGold Plan, as amended (2)
	*10.3		Executive Additional Compensation Plan, as amended (2)
	*10.4		Executive Deferred Compensation Plan, as amended (16)
	*10.5		Directors’ Deferred Compensation Plan, as amended (25)
	*10.6		Forms of Non-Qualified Employee Stock Option Agreement, Director Stock Option Agreement, and Employee\nPerformance Stock Option Agreement under 2006 Omnibus Incentive Stock Plan (10)
	*10.7		Brady Corporation 2004 Omnibus Incentive Stock Plan, as amended (10)
	*10.8		Form of Brady Corporation 2004 Nonqualified Stock Option Agreement under the 2004 Omnibus Incentive\nStock Plan, as amended (13)
	10.9		Brady Corporation Automatic Dividend Reinvestment Plan (4)
	*10.10		Brady Corporation 2005 Nonqualified Plan for Non-employee Directors, as amended (3)
	*10.11		Forms of Nonqualified Stock Option Agreements under 2005 Non-qualified Plan for Non-employee Directors,\nas amended (8)
	*10.12		Brady Corporation 1997 Omnibus Incentive Stock Plan, as amended (10)
	*10.13		Brady Corporation 1997 Nonqualified Stock Option Plan for Non-Employee Directors, as amended (10)
	10.14		Revolving Credit Facility Credit Agreement (14)
	*10.15		Brady Corporation 2006 Omnibus Incentive Stock Plan, as amended (10)
	*10.16		Brady Corporation Incentive Compensation Plan for Elected Corporate Officers, as amended (15)
	10.17		First Amendment to Revolving Credit Facility Credit Agreement (6)
	*10.18		Form of Amendment, dated March 4, 2009, to granting agreement for performance-based stock options issued\non August 2, 2004 to Frank M. Jaehnert, Thomas J. Felmer, Peter C. Sephton, Matthew O. Williamson, and\nAllan J. Klotsche (12)
	*10.19		Form of Performance-based Restricted Stock Agreement under Brady Corporation 2006 Omnibus Incentive\nStock Plan (7)
	*10.20		Change of Control Agreement, amended as of December 23, 2008, entered into with Frank M. Jaehnert (12)
	*10.21		Restated Brady Corporation Restoration Plan (5)
	*10.22		Brady Corporation 2001 Omnibus Incentive Stock Plan, as amended (10)
	*10.23		Brady Corporation 2003 Omnibus Incentive Stock Plan, as amended (10)
	10.24		Brady Note Purchase Agreement dated June 28, 2004 (11)
	10.25		First Supplement to Note Purchase Agreement, dated February 14, 2006 (9)
	10.26		Second Supplement to Note Purchase Agreement, dated March 23, 2007 (24)
	*10.27		Form of Change of Control Agreement, amended as of December 23, 2008, entered into with Kathleen Johnson\n(12)
	*10.28		Brady Corporation 2010 Omnibus Incentive Stock Plan, as amended (22)
	*10.29		Brady Corporation 2010 Nonqualified Stock Option Plan for Non-employee Directors (17)
	*10.30		Form of Non-Qualified Employee Stock Option Agreement and Employee Performance Stock Option Agreement\nunder 2010 Omnibus Incentive Stock Plan (17)
	*10.31		Form of Director Stock Option Agreement under 2010 Nonqualified Stock Option Plan for Non-employee\nDirectors (17)
	*10.32		Form of Amendment, dated February 17, 2010, to granting agreement for performance-based stock options\nissued on August 1, 2005 to Frank M. Jaehnert, Thomas J. Felmer, Peter C. Sephton, Matthew O. Williamson\nand Allan J. Klotche (18)
	10.33		Brady Note Purchase Agreement dated May 13, 2010 (19)
	*10.34		Performance-based Restricted Stock Agreement with Frank M. Jaehnert, dated August 2, 2010 (20)
	*10.35		Form of Amendment to January 8, 2008 Brady Corporation Performance-Based Restricted Stock Agreement,\ndated July 20, 2011 (21)
	*10.36		Brady Corporation Incentive Compensation Plan for Senior Executives (15)
	*10.37		Form of Fiscal 2012 Performance Stock Option under the 2010 Omnibus Incentive Stock Plan
	*10.38		Brady Corporation 2012 Omnibus Incentive Stock Plan
	*10.39		Form of Non-Qualified Employee Stock Option Agreement under 2012 Omnibus Incentive Stock Plan
	*10.40		Form of Non-Qualified Employee Performance Stock Option Agreement under 2012 Omnibus Incentive Stock Plan
	*10.41		Form of Director Stock Option Agreement under 2012 Omnibus Incentive Stock Plan
	21		Subsidiaries of Brady Corporation

\n\n

93\n

\n\n

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


Exhibit
Number		Description
	23		Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
	31.1		Rule 13a-14(a)/15d-14(a) Certification of Frank M. Jaehnert
	31.2		Rule 13a-14(a)/15d-14(a) Certification of Thomas J. Felmer
	32.1		Section 1350 Certification of Frank M. Jaehnert
	32.2		Section 1350 Certification of Thomas J. Felmer
	101		Interactive Data File


*		Management contract or compensatory plan or arrangement

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

(2)		Incorporated by reference to Registrant’s Annual Report on Form 10-K filed for the fiscal\nyear ended July 31, 1989

(3)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 25, 2008

(4)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year\nended July 31, 1992

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

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

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

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

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

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

(11)		Incorporated by reference to Registrant’s 8-K/A filed August 3, 2004

(12)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal\nquarter ended January 31, 2009

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

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

(15)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 2, 2011

(16)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal\nquarter ended April 30, 2011

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

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

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

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

(21)		Incorporated by reference to Registrant’s Current Report on Form 8-K/A filed July 28, 2011

(22)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 27,\n2010

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

(24)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed March 26, 2007

(25)		Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 15,\n2011

\n\n

94\n

\n\n

EXHIBIT 10.37\n

\n\n\n

BRADY CORPORATION
\nPERFORMANCE STOCK OPTION\n

\n\n\n

Upon management’s recommendation, the Compensation Committee (the “Committee”) of the Brady\nCorporation Board of Directors has awarded to (“Employee”) a non-qualified performance\nstock option (the “Option”) effective\n X, 20XX, pursuant to the terms of the Brady\nCorporation 2010 Omnibus Incentive Stock Plan (the “Plan”).\n

\n\n

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

Number of Shares Optioned; Option Price

\n\n\n

The Corporation grants to the Employee the right and option to purchase, on the terms and\nconditions hereof, all or any part of an aggregate of XXXX (X,XXX) shares of the presently\nauthorized Class A Common Stock of the Corporation (the “Option Shares”), $.01 par value,\nwhether unissued or issued and reacquired by the Corporation, at the price of $XX.XX per\nshare (the “Option Price”). Vesting of the Option Shares shall be based upon the Company’s\nannual year-over-year growth in earnings per share (“EPS”) for fiscal 2012, 2013 and 2014.\nFor this purpose EPS shall be determined using the Corporation’s diluted earnings per share\nfor its Class A common stock.\n

\n\n

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

Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

\n\n\n

Except as provided in this paragraph and in paragraph 3, this Option may not be exercised\n(a) unless Employee is, at the date of the exercise, in the employ of the Corporation or a\nSubsidiary, and (b) the performance conditions provided below have been met; provided,\nhowever, that in no event shall this Option be exercisable for any shares after the\nexpiration date provided in paragraph 7.\n

\n\n\n

Vesting of the Option Shares shall be determined as follows, with the vesting date in each\nsituation being the date the Audit Committee accepts the results of the fiscal year audit.\n

\n\n\n

Year 1 (2012 Option Shares)\n

\n\n\n

Quantity: 1/3 of Option Shares (the “2012 Option Shares”)\n

\n\n\n

Performance Criteria: The 2012 Option Shares will vest if the EPS for fiscal 2012 exceed\nthe EPS for fiscal 2011 by 15% or more. If the 2012 Option Shares do not become vested\nbecause the EPS for 2012 does not exceed the EPS for 2011 by at least 15%, the 2012 Option\nShares will become vested if the Compound Annual Growth Rate (“CAGR”) of the Corporation’s\nEPS since fiscal year 2011, for fiscal 2013 or fiscal 2014 is 15% or more.\n

\n\n

\n\n\n

Year 2 (2013 Option Shares)\n

\n\n\n

Quantity: 1/3 of Option Shares (the “2013 Option Shares”)\n

\n\n\n

Performance Criteria: The 2013 Option Shares will vest if the EPS for fiscal 2013 exceed\nthe EPS for fiscal 2012 by 15% or more. If the 2013 Option Shares do not become vested\nbecause the EPS for 2013 do not exceed the EPS for 2012 by at least 15%, the 2013 Option\nShares will become vested if the CAGR for 2013 or 2014 as compared to the base year of 2011\nis 15% or more.\n

\n\n\n

Year 3 (2014 Option Shares)\n

\n\n\n

Quantity: 1/3 of Option Shares (the “2014 Option Shares”)\n

\n\n\n

Performance Criteria: The 2014 Option Shares will vest if the EPS for fiscal 2014 exceed\nthe EPS for fiscal 2013 by 15% or more. If the 2014 Option Shares do not become vested\nbecause the EPS for 2014 do not exceed the EPS for 2013 by at least 15%, the 2014 Option\nShares will become vested if the CAGR for 2014 as compared to the base year of 2011 is 15%\nor more.\n

\n\n\n

For example in the event of the following distributions the Option Shares would vest:\n


	YOY EPS Growth			CAGR		1st Vesting Opportunity		2nd Vesting Opportunity

Year 1:		10	%				No		Yes (after year three)

Year 2:		16	%		13	%	Yes			N/A

Year 3:		30	%		18	%	Yes			N/A

\n\n


	YOY EPS Growth			CAGR		1st Vesting Opportunity		2nd Vesting Opportunity

Year 1:		30	%				Yes			N/A

Year 2:		15	%		22	%	Yes			N/A

Year 3:		3	%		15	%	No		Yes

\n\n\n\n

If Employee shall cease to be employed by the Corporation or a Subsidiary for any reason\nother than as provided in paragraph 3, Employee may, at any time within 90 days of such\ntermination, but in no event later than the date of expiration of this Option, exercise this\nOption to the extent Employee was entitled to do so on the date of such termination.\nHowever, if Employee was dismissed for cause, of which the Compensation Committee of the\nBoard of Directors of the Corporation shall be the sole judge, this Option shall forthwith\nexpire. This Agreement does not confer upon Employee any right of continuation of\nemployment by the Corporation or a Subsidiary, nor does it impair any right the Corporation\nor any Subsidiary may have to terminate the Employee’s employment at any time.\n

\n\n

-2-\n

\n\n

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

Termination of Employment

\n\n

Notwithstanding the provisions of paragraph 2 hereof, other than in the event of a termination\nfor cause, if the Employee:\n

\n\n

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

	(a)		is terminated by the death of the Employee, any unexercised, unexpired Stock\nOptions granted hereunder to the Employee shall be 100% vested and fully exercisable,\nin whole or in part, at any time within one year after the date of death, by the\nEmployee’s personal representative or by the person to whom the Stock Options are\ntransferred under the Employee’s last will and testament or the applicable laws of\ndescent and distribution;

	(b)		dies within 90 days after termination of employment by the Corporation or its\nAffiliates, other than for cause, any unexercised, unexpired Stock Options granted\nhereunder to the Employee and exercisable as of the date of such termination of\nemployment shall be exercisable, in whole or in part, at any time within one year after\nthe date of death, by the Employee’s personal representative or by the person to whom\nthe Stock Options are transferred under the Employee’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		is terminated as a result of the disability of the Employee (a disability means\nthat the Employee is disabled as a result of sickness or injury, such that he or she is\nunable to satisfactorily perform the material duties of Employee’s job, as determined\nby the Board of Directors, on the basis of medical evidence satisfactory to it), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall become\n100% vested and fully exercisable, in whole or in part, at any time within one year\nafter the date of disability;

	(d)		is terminated as a result of the Employee’s retirement (after age 55 with ten\nyears of employment with the Corporation or a Subsidiary or after age 65), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall continue\nto vest as provided in paragraph 2 hereof and any option that is or becomes vested may\nbe exercised in whole or in part prior to the expiration date of such option.

\n\n

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

Deferral of Exercise

\n\n\n

Although the Corporation intends to exert its best efforts so that the shares purchasable\nupon the exercise of this Option will be registered under, or exempt from, the registration\nrequirements of, the Securities Act of 1933 (the “Act”) and any applicable state securities\nlaw at the time or times this Option (or any portion of this Option) first becomes\nexercisable, if the exercise of this Option would otherwise result in a violation by the\nCorporation of any provision of the Act or of any state securities law, the Corporation may\nrequire that such exercise be deferred until the Corporation has taken appropriate action to\navoid any such violation.\n

\n\n

-3-\n

\n\n

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

Method of Exercising Option

\n\n\n

This Option shall be exercised by delivering to the Corporation, at the office of its\nTreasurer, a written notice of the number of shares with respect to which this Option is at\nthe time being exercised and by paying the Corporation in full the Option Price of the\n shares being acquired at the time.\n

\n\n

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

Method of Payment

\n\n\n

Payment shall be made either (i) in cash; (ii) by delivering shares of the Corporation’s\nClass A Common Stock which have been beneficially owned by the Employee, the spouse of the\nEmployee, or both of them, for a period of at least six months prior to the time of exercise\n(“Delivered Stock”); (iii) by surrendering to the Corporation shares of Class A Common Stock\notherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any combination\nof the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair\nMarket Value of the stock at the date of exercise, determined in accordance with paragraph\n9.\n

\n\n

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

Expiration Date

\n\n\n

This Option shall expire ten years after the date on which this Option was granted.\n

\n\n

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

Withholding Taxes

\n\n\n

The Corporation may require, as a condition to the exercise of this Option, that the\nEmployee concurrently pay to the Corporation any taxes which the Corporation is required to\nwithhold by reason of such exercise. In lieu of part or all of any such payment, the\nEmployee may elect, subject to such rules and regulations as the Committee may adopt from\ntime to time, to have the Corporation withhold from the shares to be issued upon exercise\nthat number of shares having a Fair Market Value, determined in accordance with paragraph 9,\nequal to the amount which the Corporation is required to withhold.\n

\n\n

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

Method of Valuation of Stock

\n\n\n

The “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall\nmean, if the stock is then listed and traded on a registered national securities exchange,\nor is quoted in the NASDAQ National Market System, the average of the high and low sales\nprice recorded in composite transactions for such date (rounding up to the nearest cent) or,\nif such date is not a business day or if no sales of shares shall have been reported with\nrespect to such date, the next preceding business date with respect to which sales were\nreported. In the absence of reported sales or if the stock is not so listed or quoted, but\nis traded in the over-the-counter market, Fair Market Value shall be the average of the\nclosing bid and asked prices for such shares on the relevant date (rounding up to the\nnearest cent.\n

\n\n

-4-\n

\n\n

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

10.

No Rights in Shares Until Certificates Issued

\n\n\n

Neither the Employee nor his heirs nor his personal representative shall have any of the\nrights or privileges of a stockholder of the Corporation in respect of any of the shares\nissuable upon the exercise of the Option herein granted, unless and until certificates\nrepresenting such shares shall have been issued or shares in book entry form shall have been\nrecorded in the records of the Corporation’s transfer agent.\n

\n\n

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

11.

Option Not Transferable

\n\n\n

No portion of the Option granted hereunder shall be transferable or assignable (or made\nsubject to any pledge, lien, obligation or liability of an Employee) except (a) by last will\nand testament or the laws of descent and distribution (and upon a transfer or assignment\npursuant to an Employee’s last will and testament or the laws of descent and distribution,\nany Option must be transferred in accordance therewith); (b) during the Employee’s lifetime,\nnonqualified stock Options may be transferred by an Employee to the Employee’s spouse,\nchildren or grandchildren or to a trust for the benefit of such spouse, children or\ngrandchildren, provided that the terms of any such transfer prohibit the resale of shares\nacquired upon exercise of the option at a time during which the transferor would not be\npermitted to sell such shares under the Corporation’s policy on trading by insiders and are\nsubject to the provisions of paragraph 9.\n

\n\n

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

12.

Prohibition Against Pledge, Attachment, Etc.

\n\n\n

Except as otherwise herein provided, the Option herein granted and the rights and privileges\npertaining thereto shall not be transferred, assigned, pledged or hypothecated in any way\n(whether by operation of law or otherwise) and shall not be subject to execution, attachment\nor similar process.\n

\n\n

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

13.

Changes in Stock

\n\n\n

In the event there are any changes in the Class A Common Stock of the Corporation through\nmerger, consolidation, reorganization, recapitalization, stock dividend, stock split,\ncombination or exchange of shares, rights offering or any other change affecting the Class A\nCommon Stock of the Corporation, appropriate changes will be made by the Compensation\nCommittee in the aggregate number of shares and the purchase price and kind of shares\nsubject to this Option, to prevent substantial dilution or enlargement of the rights granted\nto or available for Employee.\n

\n\n

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

14.

Dissolution or Merger

\n\n\n

\n\n

-5-\n

\n\n\n

Employee\nhas retired or died, Employee’s right to surrender all or any unexercised portion of this Option under this paragraph shall be available only to the\nextent at the time of any such surrender, Employee would have been entitled to exercise this\nOption under paragraphs 2 or 3 hereof, as the case may be. The amount of cash to be paid to\nEmployee for the portion of this Option so surrendered, shall be equal to the number of\n shares of Class A Common Stock subject to the surrendered Option multiplied by the\ndifference between the Option Price per share, as described in paragraph 1 hereof, and the\nFair Market Value per share, determined in accordance with paragraph 9 hereof, as of the\ntime of surrender.\n

\n\n

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

15.

Notices

\n\n\n

Any notice to be given to the Corporation under the terms of this Agreement shall be\naddressed to the Corporation in care of its Chief Financial Officer, and any notice to be\ngiven to the Employee may be addressed at the address as it appears on the Corporation’s\nrecords, or at such other address as either party may hereafter designate in writing to the\nother. Except as provided in paragraph 5 hereof, any such notice shall be deemed to have\nbeen duly given, if and when enclosed in a properly sealed envelope addressed as aforesaid,\nand deposited, postage prepaid, in the United States mail.\n

\n\n

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

16.

Provisions of Plan and Corporate Records Controlling

\n\n\n

This Option is subject in all respects to the provisions of the Plan. In the event of any\nconflict between any provisions of this Option and the provisions of the Plan, the\nprovisions of the Plan shall control, except to the extent that the Plan permits the\nCommittee to modify the terms of an Option grant and has done so herein. Terms defined in\nthe Plan where used herein shall have the meanings as so defined. Employee acknowledges\nreceipt of a copy of the Plan. The Corporation’s records shall be the official record of\nthe Option grant described herein and , in the event of any conflict between this\ndescription and the Corporation’s records, the Corporation’s records shall control.\n

\n\n

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

17.

Wisconsin Contract

\n\n\n

This Option has been granted in Wisconsin and shall be construed under the laws of that\nstate.\n

\n\n\n

\n\n

-6-\n

\n\n

EXHIBIT 10.38\n

\n\n\n

BRADY CORPORATION
\n2012 OMNIBUS INCENTIVE STOCK PLAN\n

\n\n\n

I. INTRODUCTION\n

\n\n\n

1.01 Purpose. This plan shall be known as the Brady Corporation 2012 Omnibus\nIncentive Stock Plan. The purpose of the Plan is to provide an incentive for directors and\nemployees of Brady Corporation and its Affiliates to improve corporate performance on a long-term\nbasis, and to attract and retain directors and employees by enabling them to participate in the\nfuture successes of the Corporation, and by associating the long term interests of directors and\nemployees with those of the Corporation and its shareholders. It is intended that the Plan and its\noperation comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or\nany successor rule). The Plan is intended to permit the grant of Nonqualified Stock Options,\nIncentive Stock Options, shares of Restricted Stock, Restricted Stock Units and shares of\nUnrestricted Stock. The proceeds received by the Corporation from the sale of Corporation Stock\npursuant to the Plan shall be used for general corporate purposes.\n

\n\n

1.02 Effective Date. The effective date of the Plan shall be September 1, 2011,\nsubject to approval of the Plan by holders of a majority of the outstanding voting common stock of\nthe Corporation. Any Award granted prior to such shareholder approval shall be expressly\nconditioned upon shareholder approval of the Plan.\n

\n\n

1.03 Effect on Prior Plan. After December 31, 2011, no further awards or grants will\nbe made under the Brady Corporation 2010 Omnibus Incentive Stock Plan or the 2010 Stock Option Plan\nfor Non-Employee Directors.\n

\n\n

II. PLAN DEFINITIONS\n

\n\n\n

For Plan purposes, except where the context clearly indicates otherwise, the following terms\nshall have the meanings set forth below:\n

\n\n

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

	(a)		“Administrator” means the administrator as described in\nSection 4.01.

	(b)		“Affiliates” means any “subsidiary corporation” or\n“parent corporation” as such terms are defined in Section 424 of the Code.

	(c)		“Agreement” means a written agreement (including any\namendment or supplement thereto) between the Corporation and a Participant\nspecifying the terms and conditions of an Award.

	(d)		“Award” shall mean the grant of any form of Stock\nOption, Restricted Stock, Restricted Stock Units or Unrestricted Stock.

	(e)		“Board” shall mean the Board of Directors of the\nCorporation.

\n\n

	(f)		“Code” shall mean the Internal Revenue Code of 1986, as\namended from time to time.

	(g)		“Committee” shall mean the committee described in\nSection 4.01.

	(h)		“Corporation” shall mean Brady Corporation, a Wisconsin\ncorporation.

	(i)		“Corporation Stock” shall mean the Corporation’s Class\nA Non-Voting Common Stock, $.01 par value, and such other stock and securities\nas may be substituted therefor pursuant to Section 3.02.

	(j)		“Eligible Individual” shall mean any director or\nregular salaried employee of the Corporation or an Affiliate, who satisfies the\nrequirements of Section 5.01.

	(k)		“Exercise Period” shall mean the period of time\nprovided pursuant to Section 6.05 within which a Stock Option may be exercised.

	(l)		“Fair Market Value” on any date shall mean, with\nrespect to Corporation Stock, if the stock is then listed and traded on a\nregistered national securities exchange, or is quoted in the NASDAQ National\nMarket System, the average of the high and low sale prices recorded in\ncomposite transactions for such date (rounding up to the nearest cent) or, if\nsuch date is not a business day or if no sales of Corporation Stock shall have\nbeen reported with respect to such date, the next preceding business date with\nrespect to which sales were reported. In the absence of reported sales or if\nthe stock is not so listed or quoted, but is traded in the over-the-counter\nmarket, Fair Market Value shall be the average of the closing bid and asked\nprices for such shares on the relevant date.

	(m)		“Participant” means an Eligible Individual who has been\ngranted an Award under this Plan.

	(n)		“Performance Goals” means the performance goals\nestablished by the Administrator prior to the grant of any Award of Stock\nOptions, Restricted Stock or Restricted Stock Units intended to qualify as\n“performance-based compensation” under Section 162(m) of the Code. Performance\nGoals may be established at the Company or business unit level and may be based\nupon the attainment of goals relating to one or more of the following business\ncriteria measured on an absolute basis or in terms of growth or reduction:\nrevenue, expenses, net income (pre-tax or after-tax), earnings per share,\nreturn on equity, return on assets, return on tangible book value, operating\nincome, earnings before interest, taxes, depreciation and amortization\n(EBITDA), loss ratio, expense ratio, increase in stock price, total shareholder\nreturn, economic value added and operating cash flow. The Administrator may\nestablish other subjective or objective performance goals, including individual\ngoals, which it deems appropriate. In measuring the degree of

\n\n

-2-\n

\n\n

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

			attainment of a\nPerformance Goal, Unusual and Unforeseen Charges may be included or excluded as determined by the\nAdministrator in its discretion or as otherwise provided in an Award\nAgreement. “Unusual and Unforeseen Charges” may include but are not limited\nto any one of the following events creating positive or negative adjustments\nto the attainment of a performance metric so long as the inclusion or\nexclusion would not jeopardize the status of the compensation as\n“performance-based compensation” under Section 162(m) of the Code: (i)\nrestructurings, discontinued operations, impairment of goodwill or\nlong-lived assets, follow on stock offerings, extraordinary items, and other\nunusual or non-recurring charges, (ii) an event either not directly related\nto the operations of the Corporation or not within the reasonable control of\nthe Corporation’s management, (iii) the cumulative effects of tax or\naccounting changes in accordance with generally accepted accounting\nprinciples, (iv) changes in tax regulations or laws, or (v) the effect of a\nmerger or acquisition.

	(o)		“Person” means any individual or entity, and the heirs,\npersonal representatives, executors, administrators, legal representatives,\nsuccessors and assigns of such Person as the context may require.

	(p)		“Plan” shall mean the Brady Corporation 2012 Omnibus\nIncentive Stock Plan, as set forth herein, as it may be amended from time to\ntime.

	(q)		“Restricted Stock” means shares of Corporation Stock\ngranted to a Participant under Article VII.

	(r)		“Restricted Stock Unit” means an Award granted to a\nParticipant under Article VIII.

	(s)		“Stock Option” means an option to purchase a stated\nnumber of shares of Corporation Stock at the price set forth in an Agreement.\nA Stock Option may be either a Nonqualified Stock Option or an Incentive Stock\nOption.

	(t)		“Unrestricted Stock” means shares of Corporation Stock\ngranted to a Participant under Article IX.

\n\n

III. SHARES SUBJECT TO AWARD\n

\n\n\n

3.01 Available Shares. Subject to adjustments under Section 3.02, the total number of\nshares of Corporation Stock authorized for issuance shall not exceed five million five hundred\nthousand (5,500,000) shares, all of which may be issued in the form of ISOs. No individual may be\ngranted an Award or Awards under the Plan covering more than five hundred thousand (500,000) shares\nof Corporation Stock in any calendar year (determined without regard to grants under any other plan\nor program). The shares authorized for issuance under the Plan may consist, in whole or in part,\nof authorized but unissued Corporation Stock, or of treasury stock of the Corporation. Shares\nsubject to and not issued under an Award that expires, terminates, is canceled or forfeited for any\nreason under the Plan shall again become available for the granting of Awards.\n

\n\n

-3-\n

\n\n

3.02 Changes in Corporation Stock. In the event of any change in the Corporation\nStock resulting from a reorganization, recapitalization, stock split, stock dividend, merger,\nconsolidation, rights offering or like transaction, the Administrator shall proportionately and\nappropriately adjust: (a) the aggregate number and kind of shares authorized for issuance under\nthe Plan; and (b) in the case of previously-granted Stock Options, the option price and the number\nand kind of shares subject to the Stock Options, without any change in the aggregate purchase price\nto be paid for the Stock Options.\n

\n\n

IV. ADMINISTRATION\n

\n\n\n

4.01 Administration. For purposes of the power to grant Awards to directors, the\nAdministrator shall consist of the entire Board, which may delegate any or all of its authority to\na committee of the Board. For purposes of the power to grant Awards to employees, the\nAdministrator shall be a committee designated by the Board to administer the Plan and shall\ninitially be the Compensation Committee of the Board. The Committee shall be constituted to permit\nthe Plan to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or\nany successor rule) and Section 162(m) of the Code. A majority of the members of the Committee\nshall constitute a quorum. The approval of such a quorum, expressed by a majority vote at a\nmeeting held either in person or by conference telephone call, or the unanimous consent of all\nmembers in writing without a meeting, shall constitute the action of the Committee and shall be\nvalid and effective for all purposes of the Plan.\n

\n\n

4.02 Administrator Powers. Subject to Section 11.06, the Administrator is empowered\nto adopt, amend and rescind such rules, regulations and procedures and take such other action as it\nshall deem necessary or proper for the administration of the Plan and, in its discretion, may\nmodify, extend or renew any Award theretofore granted. The Administrator shall also have authority\nto interpret the Plan, and the decision of the Administrator on any questions concerning the\ninterpretation of the Plan shall be final and conclusive. The express grant in the Plan of any\nspecific power to the Administrator shall not be construed as limiting any power or authority of\nthe Administrator. The Administrator shall not incur any liability for any action taken in good\nfaith with respect to the Plan or any Award.\n

\n\n

Subject to the provisions of the Plan, the Administrator shall have full and final authority\nto:\n

\n\n

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

	(a)		designate the Eligible Individuals to whom Awards shall be\ngranted;

	(b)		grant Awards in such form and amount as the Administrator shall\ndetermine;

	(c)		impose such limitations, restrictions and conditions upon any\nsuch Award as the Administrator shall deem appropriate, including conditions\n(in addition to those contained in this Plan) (i) on the exercisability of all\nor any portion of a Stock Option, (ii) on the transferability or forfeitability\nof Restricted Stock or (iii) requiring an Eligible Individual to retain all or\na portion of the Corporation Stock for a period of time following the exercise of a Stock Option, the vesting of Restricted Stock or the payment\nof Restricted Stock Units;

\n\n

-4-\n

\n\n

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

	(d)		prescribe the form of Agreement with respect to each Award;

	(e)		waive in whole or in part any limitations, restrictions or\nconditions imposed upon any such Award as the Administrator shall deem\nappropriate (including accelerating the time at which any Stock Option may be\nexercised or the time at which Restricted Stock may become transferable or\nnonforfeitable);

	(f)		make adjustments in the terms and conditions of a Performance\nGoal in recognition of unusual or nonrecurring events affecting the Company or\nthe financial statements of the Company or of changes in applicable laws,\nregulations, or accounting principles, whenever the Administrator determines\nthat such adjustments are appropriate in order to prevent dilution or\nenlargement of the benefits or potential benefits intended to be made available\nunder the Plan, provided that no such adjustment shall be authorized to the\nextent that such adjustment would be inconsistent with the Plan’s or any\nPerformance Award meeting the requirements of Section 162(m) of the Code; and

	(g)		determine the extent to which leaves of absence for\ngovernmental or military service, illness, temporary disability and the like\nshall not be deemed interruptions of continuous service.

\n\n

V. PARTICIPATION\n

\n\n\n

5.01 Eligibility. Any director or employee of the Corporation and its Affiliates who,\nin the sole opinion of the Administrator, has contributed or can be expected to contribute to the\nprofits, growth and success of the Corporation shall be eligible for Awards under the Plan. From\namong all such Eligible Individuals, the Administrator shall determine from time to time those\nEligible Individuals to whom Awards shall be granted. No Eligible Individual shall have any right\nwhatsoever to receive an Award unless so determined by the Administrator.\n

\n\n

5.02 No Employment or Service Rights. The Plan shall not be construed as conferring\nany rights upon any person for a continuation of employment or service, nor shall it interfere with\nthe rights of the Corporation or any Affiliates to terminate the employment or service of any\nperson or to take any other action affecting such person.\n

\n\n

VI. STOCK OPTIONS\n

\n\n\n

6.01 Stock Options; General. Stock Options granted under the Plan shall be in the\nform of Nonqualified Stock Options (“NSOs”), Incentive Stock Options (“ISOs”) or a combination\nthereof; provided that incentive stock options may only be granted to individuals who are employed\nby the Corporation or an Affiliate. Each Stock Option granted under the Plan shall be evidenced by\nan Agreement which shall contain the terms and conditions required by this Article VI, and such\nother terms and conditions, not inconsistent herewith, as the\nAdministrator may deem appropriate in each case. A Stock Option granted under the Plan shall\nnot be treated as an Incentive Stock Option unless the Stock Option Agreement specifically\ndesignates the option as an Incentive Stock Option.\n

\n\n

-5-\n

\n\n\n\n

6.02 Stock Option Holder’s Rights as a Shareholder. The holder of a Stock Option\nshall not have any rights as a shareholder with respect to the shares covered by a Stock Option\nuntil such shares have been delivered to him or her.\n

\n\n

6.03 Option Price. The price at which each share of Corporation Stock covered by a\nStock Option may be purchased shall be not less than 100% of the Fair Market Value of such stock on\nthe date on which the option is granted. The option price shall be subject to adjustment as\nprovided in Section 3.02 hereof.\n

\n\n

6.04 Date Stock Option Granted. For purposes of the Plan, a Stock Option shall be\nconsidered as having been granted on the date on which the Administrator authorized the grant of\nthe Stock Option except where the Administrator has designated a later date, in which event the\nlater date shall constitute the date of grant of the Stock Option; provided, however, that notice\nof the grant of the Stock Option shall be given to the Participant within a reasonable time.\n

\n\n

6.05 Exercise Period. The Administrator shall have the power to set the time or times\nwithin which each Option shall be exercisable, and to accelerate the time or times of exercise;\nprovided, however, that no Stock Option shall be exercisable after the expiration of ten (10) years\nfrom the date the Stock Option is granted. Each Agreement with respect to a Stock Option shall\nstate the period or periods of time within which the Stock Option may be exercised by the\nParticipant, in whole or in part.\n

\n\n

Subject to the foregoing, unless the Agreement with respect to a Stock Option expressly provides\notherwise, a Stock Option shall be exercisable in accordance with the following schedule:\n


Years After
Date of Grant	Percentage of Shares

Less than 1		0	%

1 but less than 2		33-1/3	%

2 but less than 3		66-2/3	%

3 or more		100	%

\n\n\n

6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be exercised\nin whole or in part from time to time as specified in the Agreements provided, however, that each\nParticipant may exercise a Stock Option in whole or in part by giving written notice of the\nexercise to the Corporation, specifying the number of shares to be purchased by payment in full of\nthe purchase price therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the\napproval of the Administrator, or if the applicable Agreement so provides, by delivering shares of\nCorporation Stock (“Delivered Stock”), (d) by surrendering to the Corporation shares\nof Corporation Stock otherwise receivable upon exercise of the Stock Option (a “Net\nExercise”), or (e) any combination of the foregoing. For purposes of the foregoing, Delivered\nStock shall be valued at its Fair Market Value determined as of the business day immediately\npreceding the date of exercise of the Stock Option and shares of Corporation Stock used in a Net\nExercise shall be valued at their Fair Market Value determined as of the date of exercise of the\nStock Option. No Participant shall be under any obligation to exercise any Stock Option hereunder.\n

\n\n

-6-\n

\n\n

6.07 Dissolution or Liquidation. Anything contained herein to the contrary\nnotwithstanding, on the effective date of any dissolution or liquidation of the Corporation, any\nunexercised Stock Options shall be deemed cancelled, and the holder of any such unexercised Stock\nOptions shall be entitled to receive payment under Section 12.04.\n

\n\n

6.08 Special Rules for Incentive Stock Options. For so long as Section 422 ( or any\nsuccessor provision) of the Code so provides:\n

\n\n

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

	(a)		The aggregate Fair Market Value of Corporation Stock\n(determined as of the date the stock option is granted) with respect to which\nISOs are exercisable for the first time during a calendar year may not exceed\n$100,000. To the extent that the value of the stock subject to options exceeds\nthat amount, the excess shall be considered to be NSOs, with the determination\nto be made in the order the options are granted.

	(b)		Employees who own, directly or indirectly, within the meaning\nof Code Section 425(d), more than 10% of the voting power of all classes of\nstock of the Corporation or any parent or subsidiary corporation shall not be\neligible to receive an ISO hereunder unless the purchase price per share under\nsuch option is at least 110% of the Fair Market Value of the stock subject to\nthe option and such option by its terms is not exercisable after the expiration\nof five (5) years from the date such option is granted

	(c)		To obtain favorable ISO tax treatment, the option must be\nexercised while the Participant is an employee, or within three months after\nthe Participant’s termination as an employee; provided that, in the case of\ntermination on account of disability (as defined in Section 22(e)(3) of the\nCode), the exercise period may be extended to one year; and further provided\nthat the employment requirement is waived in the case of the participant’s\ndeath.

\n\n

VII. RESTRICTED STOCK\n

\n\n\n

7.01 Administration. Shares of Restricted Stock may be issued either alone or in\naddition to other Awards granted under the Plan. The Administrator shall determine the Eligible\nIndividuals to whom and the time or times at which grants of Restricted Stock will be made, the\nnumber of shares to be granted, the time or times within which such Awards may be subject to\nforfeiture or otherwise restricted and any other terms and conditions of the Awards. The\nrestrictions may be based upon specified Performance Goals, the Participant’s continued service\nwith the Corporation or its Affiliates or such other factors or criteria as the Administrator shall\ndetermine. Subject to Sections 7.02 and 7.03 hereof the provisions of Restricted Stock Awards\nneed not be the same with respect to each recipient.\n

\n\n

-7-\n

\n\n\n\n\n

7.02 Terms and Conditions. Shares of Restricted Stock shall be subject to the\nfollowing terms and conditions:\n

\n\n

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

	(a)		Any Restricted Stock Award granted hereunder may be evidenced\nin such manner as the Administrator may deem appropriate, including, without\nlimitation, book-entry registration or issuance of a stock certificate or\ncertificates.

	(b)		Until the applicable restrictions lapse, the Participant shall\nnot be permitted to sell, assign, transfer, exchange, pledge, hypothecate or\notherwise dispose of or encumber shares of Restricted Stock.

	(c)		Unless and until a forfeiture of the Restricted Stock, the\nParticipant shall have, with respect to the shares of Restricted Stock, all of\nthe rights of a shareholder of the Corporation, including the right to vote the\n shares (if applicable) and the right to receive any cash dividends. Unless\notherwise determined by the Administrator, cash dividends shall be\nautomatically paid in cash and dividends payable in Corporation Stock shall be\npaid in the form of additional Restricted Stock.

	(d)		Except to the extent otherwise provided in the applicable\nRestricted Stock Agreement and (e) below, all shares still subject to\nrestriction shall be forfeited by the Participant upon termination of a\nParticipant’s service for any reason.

	(e)		In the event of hardship or other special circumstances of a\nParticipant whose service is involuntarily terminated (other than for cause),\nthe Administrator may waive in whole or in part any or all remaining\nrestrictions with respect to such Participant’s shares of Restricted Stock.

	(f)		If and when the applicable restrictions lapse, unlegended\ncertificates for such shares shall be delivered to the Participant.

	(g)		Each Award shall be confirmed by, and be subject to the terms\nof, a Restricted Stock Agreement.

\n\n

VIII. RESTRICTED STOCK UNITS\n

\n\n\n

8.01 Administration. Restricted Stock Units may be issued either alone or in addition\nto other Awards granted under the Plan. The Administrator shall determine the Eligible Individuals\nto whom and the time or times at which grants of Restricted Stock Units will be made, the number of\nunits to be granted, the time or times within which such Awards may be subject to forfeiture or\notherwise restricted and any other terms and conditions of the Awards. The restrictions may be\nbased upon specified Performance Goals, the Participant’s continued service with the Corporation or\nits Affiliates or such other factors or criteria as the Administrator\nshall determine. The provisions of Restricted Stock Awards need not be the same with respect\nto each recipient.\n

\n\n

-8-\n

\n\n\n\n\n

8.02 Form and Timing of Payment of Restricted Stock Units. Timing of payment of\nearned Restricted Stock Units shall be determined by the Administrator at its sole discretion. The\nAdministrator, in its sole discretion, may pay earned Restricted Stock Units in the form of cash or\nin shares of Corporation Stock (or in a combination thereof), which have an aggregate Fair Market\nValue equal to the value of the earned Restricted Stock Units.\n

\n\n

IX. UNRESTRICTED STOCK\n

\n\n\n

9.01 Administration. Shares of Unrestricted Stock may be issued either alone or in\naddition to other Awards granted under the Plan. The Administrator shall determine the Eligible\nIndividuals to whom and the time or times at which grants of Unrestricted Stock will be made, the\nnumber of shares to be granted, and any other terms and conditions of the Awards. It is\nanticipated that shares of Unrestricted Stock will only be granted to directors.\n

\n\n

X. WITHHOLDING TAXES\n

\n\n\n

10.01 General Rule. Pursuant to applicable federal and state laws, the Corporation is\nor may be required to collect withholding taxes upon the exercise of a Stock Option or the lapse of\nstock restrictions. The Corporation may require, as a condition to the exercise of a Stock Option\nor the issuance of a stock certificate, that the Participant concurrently pay to the Corporation\n(either in cash or, at the request of Participant, but subject to such rules and regulations as the\nAdministrator may adopt from time to time, in shares of Delivered Stock) the entire amount or a\nportion of any taxes which the Corporation is required to withhold by reason of such exercise or\nlapse of restrictions, in such amount as the Administrator or the Corporation in its discretion may\ndetermine. If and to the extent that withholding of any federal, state or local tax is required in\nconnection with the exercise of an Option or the lapse of stock restrictions, the Participant may,\nsubject to such rules and regulations as the Corporation may adopt from time to time, elect to have\nthe Corporation hold back from the shares to be issued upon the exercise of the Stock Option or the\nlapse of stock restrictions, the number of shares of Corporation Stock having a Fair Market Value\nequal to such withholding obligation.\n

\n\n

10.02 Special Rule for Insiders. Any such request or election (to satisfy a\nwithholding obligation using shares) by an individual who is subject to the provisions of Section\n16 of the Securities Exchange Act of 1934 (an “Insider”) shall be made in accordance with the rules\nand regulations of the Securities and Exchange Commission promulgated thereunder.\n

\n\n

XI. GENERAL\n

\n\n\n

11.01 Nontransferability. No Award granted under the Plan shall be transferable or\nassignable (or made subject to any pledge, lien, obligation or liability of a Participant) except\nby last will and testament or the laws of descent and distribution. Upon a transfer or assignment\npursuant to a Participant’s last will and testament or the laws of descent and distribution, any\nStock Option must be transferred in accordance therewith. During the Participant’s lifetime, Stock\nOptions shall be exercisable only by the Participant or by the Participant’s guardian or legal\nrepresentative. Notwithstanding the foregoing, NSOs may be transferred by a Participant\nto the Participant’s spouse, children or grandchildren or to a trust for the benefit of such\nspouse, children or grandchildren; provided that the terms of any such transfer prohibit the resale\nof shares acquired upon exercise of the option at a time during which the transferor would not be\npermitted to sell such shares under the Corporation’s policy on trading by insiders.\n

\n\n

-9-\n

\n\n\n\n\n

11.02 General Restriction. Each Award shall be subject to the requirement that if at\nany time the Board or the Committee shall determine, in its discretion, that the listing,\nregistration, or qualification of securities upon any securities exchange or under any state or\nfederal law, or the consent or approval of any government regulatory body, is necessary or\ndesirable as a condition of, or in connection with, the granting of such Stock Option or the issue\nor purchase of securities thereunder, such Stock Option may not be exercised in whole or in part\nunless such listing, registration, qualification, consent or approval shall have been effected or\nobtained free of any conditions not acceptable to the Board or the Committee. The Administrator\nshall have the right to rely on an opinion of its counsel as to whether any such listing,\nregistration, qualification, consent or approval shall have been effected or obtained.\n

\n\n

11.03 Effect of Termination of Service, Disability or Death. Except as otherwise\nprovided by the Administrator upon any Award, all rights under any Stock Option granted to a\nParticipant shall terminate and any Restricted Stock or Restricted Stock Unit granted to a\nParticipant shall be forfeited on the date such Participant’s service with the Corporation or its\nsubsidiaries terminates, except that\n

\n\n

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

	(a)		if the Participant’s service is terminated by the death of the\nParticipant, any unexercised, unexpired Stock Options granted hereunder to the\nParticipant shall be 100% vested and fully exercisable, in whole or in part, at\nany time within one year after the date of death, by the Participant’s personal\nrepresentative or by the person to whom the Stock Options are transferred under\nthe Participant’s last will and testament or the applicable laws of descent and\ndistribution;

	(b)		if the Participant dies within 90 days after termination of\nservice by the Corporation or its Affiliates, other than for cause, any\nunexercised, unexpired Stock Options granted hereunder to the Participant and\nexercisable as of the date of such termination of service shall be exercisable,\nin whole or in part, at any time within one year after the date of death, by\nthe Participant’s personal representative or by the person to whom the Stock\nOptions are transferred under the Participant’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		if the Participant’s service is terminated as a result of the\ndisability of the Participant (a disability means that the Participant is\ndisabled as a result of sickness or injury, such that he or she is unable to\nsatisfactorily perform the material duties of his or her job, as determined by\nthe Board of Directors, on the basis of medical evidence satisfactory to it),\nany unexercised, unexpired Stock Options granted hereunder to the Participant\nshall become 100% vested and fully exercisable, in whole or in part, at any\ntime within one year after the date of disability;

\n\n

-10-\n

\n\n

\n\n\n

\n\n

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

	(d)		Notwithstanding (a), (b), or (c) if a director’s service\nterminates for any reason after serving on the Board for at least three years\nor an employee’s service is terminated as a result of the Participant’s\nretirement (after age 55 with ten years of service with the Corporation or an\nAffiliate or after age 65), any unexercised, unexpired Stock Options granted\nhereunder to the Participant shall continue to vest as provided in Section 6.05\nhereof and any Stock Option that is or becomes vested may be exercised in whole\nor in part prior to the expiration date of such Stock Option; and

	(e)		if the Participant’s service is terminated by the Company or an\nAffiliate for any reason other than the Participant’s death, disability or\nretirement of the Participant or for cause, any unexercised, unexpired Stock\nOptions granted hereunder and exercisable as of the date of such termination of\nservice shall be exercisable in whole or in part at any time within 90 days\nafter such date of termination.

\n\n

If a Participant’s service is terminated for cause (as determined by the Administrator in its sole\ndiscretion), all of the Participant’s unexercised Stock Options shall expire and all of the\nParticipant’s Restricted Stock and Restricted Stock Units shall be forfeited. Notwithstanding the\nforegoing, no Stock Option shall be exercisable after the date of expiration of its term.\n

\n\n

11.04 Merger, Consolidation or Reorganization. In the event of (a) the merger or\nconsolidation of the Corporation with or into another corporation or corporations in which the\nCorporation is not the surviving corporation, (b) the adoption of any plan for the dissolution of\nthe Corporation, or (c) the sale or exchange of all or substantially all the assets of the\nCorporation for cash or for shares of stock or other securities of another corporation, all\nthen-unexercised Stock Options shall become fully exercisable, and all restrictions imposed on any\nthen-Restricted Stock and Restricted Stock Units shall terminate (such that any Restricted Stock\nshall become fully transferable) immediately prior to any such merger or consolidation in which the\nCorporation is not the surviving corporation. The Administrator may elect to cancel any\nthen-unexercised Stock Options. If any Stock Option is canceled, the Corporation, or the\ncorporation assuming the obligations of the Corporation hereunder, shall pay the Participant an\namount of cash or stock, as determined by the Administrator, equal to the Fair Market Value per\nshare of the Corporation Stock immediately preceding such cancellation over the option price,\nmultiplied by the number of shares subject to such cancelled Stock Option.\n

\n\n

11.05 Expiration and Termination of the Plan. This Plan shall remain in effect until\nall of the Awards made under the Plan have been exercised, the restrictions thereon have lapsed or\nthe Awards have expired, terminated, or been canceled or forfeited. Notwithstanding the foregoing,\nno Awards shall be granted under the Plan, after that date which is ten years after the Plan is\napproved by the Board; or such earlier date as the Board determines in its sole discretion.\n

\n\n

11.06 Amendments. The Board may from time to time amend, modify, suspend or terminate\nthe Plan; provided, however, that no such action shall (a) impair without the Participant’s consent\nany Award theretofore granted under the Plan or deprive any Participant of any shares of\nCorporation Stock which he may have acquired through or as a result of the Plan or\n(b) be made without shareholder approval where such approval would be required as a condition\nof compliance with Rule 16b-3.\n

\n\n

-11-\n

\n\n

11.07 Wisconsin Law. Except as otherwise required by applicable federal laws, the\nPlan shall be governed by, and construed in accordance with, the laws of the State of Wisconsin.\n

\n\n

11.08 Unfunded Plan. The Plan, insofar as it provides for Awards, shall be unfunded\nand the Corporation shall not be required to segregate any assets that may at any time be\nrepresented by Awards under this Plan. Any liability of the Corporation to any Person with respect\nto any Award under this Plan shall be based solely upon any contractual obligations that may be\ncreated pursuant to this Plan. No such obligation of the Corporation shall be deemed to be secured\nby any pledge of, or other encumbrance on, any property of the Corporation.\n

\n\n

11.09 Rules of Construction. Headings are given to the articles and sections of this\nPlan solely as a convenience to facilitate reference. The reference to any statute, regulation, or\nother provision of law shall be construed to refer to any amendment to or successor of such\nprovision of law.\n

\n\n

11.10 Gender and Number. Except when otherwise required by the context, words in the\nmasculine gender shall include the feminine, the singular shall include the plural, and the plural\nthe singular.\n

\n\n

11.11 Deferral. The Administrator may, in its discretion and as provided in the\napplicable Award Agreement, permit a Participant to defer the recognition of income with respect to\nan Award pursuant to the terms of any deferred compensation plan maintained by the Corporation.\n

\n\n

11.12 Section 409A Compliance. To the extent applicable, it is intended that the\nPlan and all Awards hereunder comply with the requirements of Section 409A of the Code, and the\nPlan and all Agreements shall be interpreted and applied by the Administrator in a manner\nconsistent with this intent in order to avoid the imposition of any additional tax under Section\n409A of the Code. In the event that any provision of the Plan or an Agreement is determined by the\nAdministrator to not comply with the applicable requirements of Section 409A of the Code, the\nAdministrator shall have the authority to take such actions and to make such changes to the Plan or\nan Agreement as the Administrator deems necessary to comply with such requirements, provided that\nno such action shall adversely affect any outstanding Award without the consent of the affected\nParticipant.\n

\n\n\n

\n\n

-12-\n

\n\n

EXHIBIT 10.39\n

\n\n\n

BRADY CORPORATION
\nNONQUALIFIED STOCK OPTION\n

\n\n\n

Upon management’s recommendation, the Compensation Committee (the “Committee”) of the Brady\nCorporation Board of Directors has awarded to XXXXXX (“Employee”) a non-qualified stock option (the\n“Option”) effective XXXXXXX, pursuant to the terms of the Brady Corporation 2012 Omnibus Incentive\nStock Plan (the “Plan”). The Corporation’s records shall be the official record of the Option\ngrant described herein and, in the event of any conflict between this description and the\nCorporation’s records, the Corporation’s records shall control.\n

\n\n

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

Number of Shares Optioned; Option Price

\n\n\n

The Corporation grants to the Employee the right and option to purchase, on the terms and\nconditions hereof, all or any part of an aggregate of XXXXXX shares of the presently\nauthorized Class A Common Stock of the Corporation, $.01 par value, whether unissued or\nissued and reacquired by the Corporation, at the price of $XXXX per share (the “Option\nPrice”).\n

\n\n

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

Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

\n\n\n

Except as provided in this paragraph and in paragraph 3, this Option may not be exercised\n(a) unless Employee is at the date of the exercise in the employ of the Corporation or a\nSubsidiary, and (b) until Employee shall have been continuously so employed for a period of\nat least one year from the date hereof. Thereafter, this Option shall be exercisable for\nany amount of shares up to the maximum percentage of shares covered by this Option (rounded\nup to the nearest whole share), as follows (but in no event shall this Option be exercisable\nfor any shares after the expiration date provided in paragraph 7):\n


	Maximum
	Percentage
	of Shares For
Number of Completed Years After	Which Option is
Date of Grant of this Option	Exercisable

Less than 1	Zero
At least 1 but less than 2		33-1/3	%
At least 2 but less than 3		66-2/3	%
At least 3		100	%

\n\n\n\n

If Employee shall cease to be employed by the Corporation or a Subsidiary for any reason\nother than as provided in paragraph 3 after Employee shall have been continuously so\nemployed for one year after the grant of this Option, Employee may, at any time within 90\ndays of such termination, but in no event later than the date of\nexpiration of this Option, exercise this Option to the extent Employee was entitled to do so\non the date of such termination. However, if Employee was dismissed for cause, of which the\nCommittee shall be the sole judge, this Option shall forthwith expire. This Agreement does\nnot confer upon Employee any right of continuation of employment by the Corporation or a\nSubsidiary, nor does it impair any right the Corporation or any Subsidiary may have to\nterminate the Employee’s employment at any time.\n

\n\n

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

Termination of Employment

\n\n\n

Notwithstanding the provisions of paragraph 2 hereof, if the Employee:\n

\n\n

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

	(a)		is terminated by the death of the Employee, any unexercised, unexpired Stock\nOptions granted hereunder to the Employee shall be 100% vested and fully exercisable,\nin whole or in part, at any time within one year after the date of death, by the\nEmployee’s personal representative or by the person to whom the Stock Options are\ntransferred under the Employee’s last will and testament or the applicable laws of\ndescent and distribution;

	(b)		dies within 90 days after termination of employment by the Corporation or its\nAffiliates, other than for cause, any unexercised, unexpired Stock Options granted\nhereunder to the Employee and exercisable as of the date of such termination of\nemployment shall be exercisable, in whole or in part, at any time within one year after\nthe date of death, by the Employee’s personal representative or by the person to whom\nthe Stock Options are transferred under the Employee’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		is terminated as a result of the disability of the Employee (a disability means\nthat the Employee is disabled as a result of sickness or injury, such that he or she is\nunable to satisfactorily perform the material duties of Employee’s job, as determined\nby the Board of Directors, on the basis of medical evidence satisfactory to it), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall become\n100% vested and fully exercisable, in whole or in part, at any time within one year\nafter the date of disability; or

	(d)		is terminated as a result of the Employee’s retirement (after age 55 with ten\nyears of employment with the Corporation or an Affiliate or after age 65), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall continue\nto vest as provided in paragraph 2 hereof and any option that is or becomes vested may\nbe exercised in whole or in part prior to the expiration date of such option.

\n\n

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

Deferral of Exercise

\n\n\n

\n\n

-2-\n

\n\n

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

Method of Exercising Option

\n\n\n

\n\n

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

Method of Payment

\n\n\n

\n\n

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

Expiration Date

\n\n\n

This Option shall expire ten years after the date on which this Option was granted.\n

\n\n

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

Withholding Taxes

\n\n\n

\n\n

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

Method of Valuation of Stock

\n\n\n

The “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall\nmean, if the stock is then listed and traded on a registered national securities exchange,\nor is quoted in the NASDAQ National Market System, the average of the high and low sales\nprice recorded in composite transactions for such date or, if such date is not a business\nday or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of\nreported sales or if the stock is not so listed or quoted, but is traded in the\nover-the-counter market, Fair Market Value shall be the average of the closing bid and asked\nprices for such shares on the relevant date.\n

\n\n

-3-\n

\n\n

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

10.

No Rights in Shares Until Certificates Issued

\n\n\n

\n\n

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

11.

Option Not Transferable

\n\n\n

\n\n

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

12.

Prohibition Against Pledge, Attachment, Etc.

\n\n\n

\n\n

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

13.

Changes in Stock

\n\n\n

In the event there are any changes in the Class A Common Stock of the Corporation through\nmerger, consolidation, reorganization, recapitalization, stock dividend, stock split,\ncombination or exchange of shares, rights offering or any other change affecting the Class A\nCommon Stock of the Corporation, appropriate changes will be made by the Committee in the\naggregate number of shares and the purchase price and kind of shares subject to this Option,\nto prevent substantial dilution or enlargement of the rights granted to or available for\nEmployee.\n

\n\n

-4-\n

\n\n

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

14.

Dissolution or Merger

\n\n\n

Anything contained herein to the contrary notwithstanding, upon the dissolution or\nliquidation of the Corporation, or upon any merger in which the Corporation is not the\nsurviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Employee shall have the right within 60 days prior to the effective date of\nsuch dissolution, liquidation or merger, to surrender all or any unexercised portion of this\nOption to the Corporation for cash, subject to the discretion of the Committee as to the\nexact timing of said surrender. Notwithstanding the foregoing, however, in the event\nEmployee has retired or died, Employee’s right to surrender all or any unexercised portion\nof this Option under this paragraph shall be available only to the extent that at the time\nof any such surrender, Employee would have been entitled to exercise this Option under\nparagraphs 2 or 3 hereof, as the case may be. The amount of cash to be paid to Employee for\nthe portion of this Option so surrendered, shall be equal to the number of shares of Class A\nCommon Stock subject to the surrendered Option multiplied by the difference between the\nOption Price per share, as described in paragraph 1 hereof, and the Fair Market Value per\nshare, determined in accordance with paragraph 9 hereof, as of the time of surrender.\n

\n\n

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

15.

Notices

\n\n\n

\n\n

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

16.

Provisions of Plan Controlling

\n\n\n

\n\n

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

17.

Wisconsin Contract

\n\n\n

This Option has been granted in Wisconsin and shall be construed under the laws of that\nstate.\n

\n\n\n

\n\n

-5-\n

\n\n

EXHIBIT 10.40\n

\n\n\n

BRADY CORPORATION
\nPERFORMANCE STOCK OPTION\n

\n\n\n

Upon management’s recommendation, the Compensation Committee (the “Committee”) of the Brady\nCorporation Board of Directors has awarded to (“Employee”) a non-qualified performance\nstock option (the “Option”) effective X, 20XX, pursuant to the terms of the Brady\nCorporation 2012 Omnibus Incentive Stock Plan (the “Plan”).\n

\n\n

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

Number of Shares Optioned; Option Price

\n\n\n

\n\n

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

Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option

\n\n\n

Vesting of the Option Shares shall be determined as follows, with the vesting date in each\nsituation being the date the Audit Committee accepts the results of the fiscal year audit.\n

\n\n\n

Year 1 (2012 Option Shares)\n

\n\n\n

Quantity: 1/3 of Option Shares (the “2012 Option Shares”)\n

\n\n\n

\n\n

\n\n\n

Year 2 (2013 Option Shares)\n

\n\n\n

Quantity: 1/3 of Option Shares (the “2013 Option Shares”)\n

\n\n\n

Year 3 (2014 Option Shares)\n

\n\n\n

Quantity: 1/3 of Option Shares (the “2014 Option Shares”)\n

\n\n\n

For example in the event of the following distributions the Option Shares would vest:\n


	YOY EPS Growth			CAGR		1st Vesting Opportunity		2nd Vesting Opportunity

Year 1:		10	%				No		Yes (after year three)

Year 2:		16	%		13	%	Yes			N/A

Year 3:		30	%		18	%	Yes			N/A

\n\n


	YOY EPS Growth			CAGR		1st Vesting Opportunity		2nd Vesting Opportunity

Year 1:		30	%				Yes			N/A

Year 2:		15	%		22	%	Yes			N/A

Year 3:		3	%		15	%	No		Yes

\n\n\n\n

\n\n

-2-\n

\n\n

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

Termination of Employment

\n\n

Notwithstanding the provisions of paragraph 2 hereof, other than in the event of a termination\nfor cause, if the Employee:\n

\n\n

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

	(a)		is terminated by the death of the Employee, any unexercised, unexpired Stock\nOptions granted hereunder to the Employee shall be 100% vested and fully exercisable,\nin whole or in part, at any time within one year after the date of death, by the\nEmployee’s personal representative or by the person to whom the Stock Options are\ntransferred under the Employee’s last will and testament or the applicable laws of\ndescent and distribution;

	(b)		dies within 90 days after termination of employment by the Corporation or its\nAffiliates, other than for cause, any unexercised, unexpired Stock Options granted\nhereunder to the Employee and exercisable as of the date of such termination of\nemployment shall be exercisable, in whole or in part, at any time within one year after\nthe date of death, by the Employee’s personal representative or by the person to whom\nthe Stock Options are transferred under the Employee’s last will and testament or the\napplicable laws of descent and distribution;

	(c)		is terminated as a result of the disability of the Employee (a disability means\nthat the Employee is disabled as a result of sickness or injury, such that he or she is\nunable to satisfactorily perform the material duties of Employee’s job, as determined\nby the Board of Directors, on the basis of medical evidence satisfactory to it), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall become\n100% vested and fully exercisable, in whole or in part, at any time within one year\nafter the date of disability;

	(d)		is terminated as a result of the Employee’s retirement (after age 55 with ten\nyears of employment with the Corporation or a Subsidiary or after age 65), any\nunexercised, unexpired Stock Options granted hereunder to the Employee shall continue\nto vest as provided in paragraph 2 hereof and any option that is or becomes vested may\nbe exercised in whole or in part prior to the expiration date of such option.

\n\n

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

Deferral of Exercise

\n\n\n

\n\n

-3-\n

\n\n

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

Method of Exercising Option

\n\n\n

\n\n

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

Method of Payment

\n\n\n

\n\n

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

Expiration Date

\n\n\n

This Option shall expire ten years after the date on which this Option was granted.\n

\n\n

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

Withholding Taxes

\n\n\n

\n\n

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

Method of Valuation of Stock

\n\n\n

\n\n

-4-\n

\n\n

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

10.

No Rights in Shares Until Certificates Issued

\n\n\n

\n\n

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

11.

Option Not Transferable

\n\n\n

\n\n

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

12.

Prohibition Against Pledge, Attachment, Etc.

\n\n\n

\n\n

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

13.

Changes in Stock

\n\n\n

\n\n

-5-\n

\n\n

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

14.

Dissolution or Merger

\n\n\n

Anything contained herein to the contrary notwithstanding upon the dissolution or\nliquidation of the Corporation, or upon any merger in which the Corporation is not the\nsurviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Employee shall have the right within sixty (60) days prior to the effective date\nof such dissolution, liquidation or merger, to surrender all or any unexercised portion of\nthis Option to the Corporation for cash, subject to the discretion of the Compensation\nCommittee as to the exact timing of said surrender. Notwithstanding the foregoing, however,\nin the event Employee has retired or died, Employee’s right to surrender all or\nany unexercised portion of this Option under this paragraph shall be available only to the\nextent at the time of any such surrender, Employee would have been entitled to exercise this\nOption under paragraphs 2 or 3 hereof, as the case may be. The amount of cash to be paid to\nEmployee for the portion of this Option so surrendered, shall be equal to the number of\n shares of Class A Common Stock subject to the surrendered Option multiplied by the\ndifference between the Option Price per share, as described in paragraph 1 hereof, and the\nFair Market Value per share, determined in accordance with paragraph 9 hereof, as of the\ntime of surrender.\n

\n\n

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

15.

Notices

\n\n\n

\n\n

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

16.

Provisions of Plan and Corporate Records Controlling

\n\n\n

\n\n

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

17.

Wisconsin Contract

\n\n\n

This Option has been granted in Wisconsin and shall be construed under the laws of that\nstate.\n

\n\n

-6-\n

\n\n

EXHIBIT 10.41\n

\n\n\n

BRADY CORPORATION
\nDIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT\n

\n\n\n

Option granted on X, 20XX, by Brady Corporation, a Wisconsin corporation\n(hereinafter called the “Company”), to (hereinafter called the “Director”) pursuant\nto the terms of the Brady Corporation 2012 Omnibus Incentive Stock Plan. The Corporation’s records\nshall be the official record of the Option grant described herein and, in the event of any conflict\nbetween this description and Corporation’s records, the Corporation’s records shall control.\n

\n\n

1. Number of Shares Optioned; Option Price. The Company grants to the Director the\nright and option to purchase, on the terms and conditions hereof, all or any part of an aggregate\nof XXXX (XXX) shares of the presently authorized Class A Common Stock of the Company, $.01 par\nvalue, whether unissued or issued and reacquired by the Company, at the price of\n ($XX.XX) per share (the “Option Price”).\n

\n\n

2. Conditions of Exercise of Options During Director’s Lifetime; Vesting of Option.\nExcept as provided hereinafter in this paragraph and in paragraph 3, this Option may not be\nexercised (a) unless Director is at the date of the exercise a Director of the Company and (b)\nuntil Director shall have been continuously a Director for a period of at least one year from the\ndate hereof. Thereafter, this Option shall be exercisable for any amount of shares up to the\nmaximum percentage of shares covered by this Option (rounded up to the nearest whole share) as\nfollows (but in no event shall this Option be exercisable for any shares after the expiration date\nprovided in paragraph 7):\n

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


	Maximum Percentage
Number of Completed Years	of Shares for Which
After Date of Grant of this Option	Option is Exercisable

Less than 1	Zero
At least 1 but less than 2		33-1/3	%
At least 2 but less than 3		66-2/3	%
At least 3		100	%

\n\n\n

If Director shall cease to be a Director of the Company for any reason (except death or\ndisability, or if the Director has been a member of the Board of Directors for at least three\nyears) after Director shall have been continuously a Director for one year after the grant of this\nOption, Director may, at any time within three months of such termination, but in no event later\nthan the date of expiration of this Option, exercise this Option to the extent Director was\nentitled to do so on the date of such termination. This Agreement does not confer upon Director\nany right to continue as a Director of the Company.\n

\n\n

3. Termination of Directorship, Etc. A. Notwithstanding the provisions of paragraph 2\nhereof, in the event of the termination of the Directorship with the Company prior to three years\nfrom date of grant, due to death or disability, this Option shall become 100% vested and fully\nexercisable.\n

\n\n

For purposes of this Agreement, “Disability” means that the Director is disabled as a result\nof sickness or injury, such that he is unable satisfactorily to perform the Director’s duties as\ndetermined by the Board of Directors, on the basis of medical evidence satisfactory to it.\n

\n\n

B. (i) If the Directorship is terminated by the death of the Director, any unexercised,\nunexpired Stock Options granted hereunder to the Director shall be exercisable, in whole or in\npart, at any time within one year after the date of death, by the Director’s personal\nrepresentative or by the person to whom the Stock Options are transferred under the Director’s last\nwill and testament or the applicable laws of descent and distribution. (ii) If the Directorship is\nterminated as a result of the disability of the Director, any unexercised, unexpired Stock Options\ngranted hereunder to the Director shall be exercisable, in whole or in part, at any time within one\nyear after the date of disability. (iii) If the Directorship is terminated after the Director has\nbeen a member of the Board for at least three years, any unexercised, unexpired Stock Options\ngranted hereunder to the Director shall continue to vest as provided in paragraph 2 and any option\nthat is or becomes vested may be exercised within the term of such option.\n

\n\n

C. In the event of (a) the merger or consolidation of the Company with or into another\ncorporation or corporations in which the Company is not the surviving corporation, (b) the adoption\nof any plan for the dissolution of the Company, or (c) the sale or exchange of all or substantially\nall the assets of the Company for cash or for shares of stock or other securities of another\ncorporation, this Option shall become fully vested and exercisable immediately prior to any such\nevent in which the Company is not the surviving corporation.\n

\n\n

4. Deferral of Exercise. Although the Company intends to exert its best efforts so\nthat the shares purchasable upon the exercise of this Option will be registered under, or exempt\nfrom the registration requirements of, the Federal Securities Act of 1933 (the “Act”) and any\napplicable state securities law at the time or times this Option (or any portion of this Option)\nfirst becomes exercisable, if the exercise of this Option would otherwise result in the violation\nby the Company of any provision of the Act or of any state securities law, the Company may require\nthat such exercise be deferred until the Company has taken appropriate action to avoid any such\nviolation.\n

\n\n

5. Method of Exercising Option. This Option shall be exercised by delivering to the\nCompany, at the office of its Treasurer, a written notice of the number of shares with respect to\nwhich this Option is at the time being exercised and by paying the Company in full the Option Price\nof the shares being acquired at the time.\n

\n\n

6. Method of Payment. Payment shall be made either (i) in cash; (ii) by delivering\nshares of the Company’s Class A Common Stock which have been beneficially owned by the Director,\nthe spouse of the Director, or both of them, for a period of at least six months prior to the time\nof exercise (“Delivered Stock”); (iii) by surrendering to the Company shares of Class A Common\nStock otherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv) any\ncombination of the foregoing. Payment in the form of Delivered Stock shall be in the amount\nof the Fair Market Value of the stock at the date of exercise, determined in accordance with\nparagraph 9.\n

\n\n

-2-\n

\n\n

7. Expiration Date. This Option shall expire ten years after the date on which this\nOption was granted.\n

\n\n

8. Withholding Taxes. The Company may require payment of or withhold any tax which it\nbelieves is payable as a result of the exercise of this Option, and the Company may defer making\ndelivery with respect to the shares until arrangements satisfactory to the Company have been made\nwith regard to any such withholding obligations. In lieu of part or all of any such payment, the\nDirector, in satisfaction of all withholding taxes (including, without limitation, Federal income,\nFICA (Social Security and Medicare) and any state and local income taxes) payable as a result of\nsuch exercise, may elect, subject to such rules and regulations as the Company may adopt from time\nto time, to have the Company withhold that number of shares (valued at Fair Market Value on the\ndate of exercise and rounded upward) required to settle such withholding taxes.\n

\n\n

9. Method of Valuation of Stock. The “Fair Market Value” of the Class A Common Stock\nof the Company on any date shall mean, if the stock is then listed and traded on a registered\nnational securities exchange, or is quoted in the NASDAQ National Market System, the average of the\nhigh and low sale prices recorded in composite transactions for such date or, if such date is not a\nbusiness day or if no sales of shares shall have been reported with respect to such date, the next\npreceding business date with respect to which sales were reported. In the absence of reported\nsales or if the stock is not so listed or quoted, but is traded in the over-the-counter market,\nFair Market Value shall be the average of the closing bid and asked prices for such shares on the\nrelevant date.\n

\n\n

10. No Rights in Shares Until Certificates Issued. Neither the Director nor his heirs\nnor his personal representative shall have any of the rights or privileges of a stockholder of the\nCompany in respect of any of the shares issuable upon the exercise of the Option herein granted,\nunless and until certificates representing such shares shall have been issued.\n

\n\n

11. Option Not Transferable During Director’s Lifetime. This Option shall not be\ntransferable by the Director other than by his will or by the laws of descent and distribution and\nshall be exercisable during his lifetime only by him.\n

\n\n

12. Prohibition Against Pledge, Attachment, Etc. Except as otherwise herein provided,\nthe Option herein granted and the rights and privileges pertaining thereto shall not be\ntransferred, assigned, pledged or hypothecated in any way (whether by operation of law or\notherwise) and shall not be subject to execution, attachment or similar process.\n

\n\n

13. Changes in Stock. In the event there are any changes in the Class A Common Stock\nof the Company through merger, consolidation, reorganization, recapitalization, stock dividend,\nstock split, combination or exchange of shares, rights offering or any other change affecting the\nClass A Common Stock of the Company, appropriate changes shall be made by the Board of Directors of\nthe Company, in the aggregate number of shares and the purchase price\nand kind of shares subject to this Option, to prevent substantial dilution or enlargement of\nthe rights granted to or available for Director.\n

\n\n

-3-\n

\n\n

14. Dissolution or Merger. Anything contained herein to the contrary notwithstanding,\nupon the dissolution or liquidation of the Company, or upon any merger in which the Company is not\nthe surviving corporation, at any time prior to the expiration date of the termination of this\nOption, the Director shall have the right immediately prior to the effective date of such\ndissolution, liquidation or merger, to surrender all or any unexercised portion of this Option to\nthe Company for cash, subject to the discretion of the Board of Directors as to the exact timing of\nsaid surrender. Notwithstanding the foregoing, however, in the event Director has retired or died,\nDirector’s right to surrender all or any unexercised portion of this Option under this paragraph\nshall be available only to the extent that at the time of any such surrender, Director would have\nbeen entitled to exercise this Option under paragraphs 2 or 3 hereof, as the case may be. The\namount of cash to be paid to Director for the portion of this Option so surrendered, shall be equal\nto the number of shares of Class A Common Stock subject to the surrendered Option multiplied by the\ndifference between the Option Price per share, as described in paragraph 1 hereof, and the Fair\nMarket Value per share, determined in accordance with paragraph 9 hereof, as of the time of\nsurrender.\n

\n\n

15. Notices. Any notice to be given to the Company under the terms of this Agreement\nshall be addressed to the Company in care of its Vice President and Chief Financial Officer, and\nany notice to be given to the Director may be addressed at the address as it appears on the\nCompany’s records, or at such other address as either party may hereafter designate in writing to\nthe other. Any such notice shall be deemed to have been duly given if and when enclosed in a\nproperly sealed envelope addressed as aforesaid, and deposited, postage prepaid, in the United\nStates mail.\n

\n\n

16. Provisions of Plan Controlling. This Option is subject in all respects to the\nprovisions of the Plan. In the event of any conflict between any provisions of this Option and the\nprovisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan\npermits the Committee to modify the terms of an Option grant and has done so herein. Terms defined\nin the Plan where used herein shall have the meanings as so defined. Director acknowledges receipt\nof a copy of the Plan.\n

\n\n

17. Wisconsin Contract. This Option has been granted in Wisconsin and shall be\nconstrued under the laws of that state.\n

\n\n\n

\n\n

-4-\n

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

Exhibit 21\n

\n\n\n

SCHEDULE OF SUBSIDIARIES OF BRADY CORPORATION
\nJuly 31, 2011\n

\n\n


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

Brady Corporation	Wisconsin	Parent
Tricor Direct, Inc.	Delaware		100	%
Doing Business As:
Seton
Seton Name Plate Company
D&G Sign and Label
Seton Identification Products
Emedco
Champion America
DAWG, Inc.
Worldmark of Wisconsin Inc.	Delaware		100	%
Brady Investment Co.	Nevada		100	%
AIO Acquisition Inc.	Delaware		100	%
Doing Business As:
All-In-One Products
Personnel Concepts
Personnel Concepts Limited
Personnel Concepts Ltd.
PC Limited
USA Printing & Mailing
Dual Core LLC	Wisconsin		100	%
Doing Business As:
Identicard Systems Worldwide
Brady People ID
JAM Plastics
PromoVision Palomino
Temtec
Stopware
BIG Badges
Brady Mexico Holding LLC	Delaware		100	%
Brady Precision Converting, LLC	Wisconsin		100	%
Doing Business As Brady Medical
Clement Communications, Inc.	Pennsylvania		100	%
Visual Wear LLC	Massachusetts		100	%
Doing Business As 1888LANYARD.com
Brady International Co.	Wisconsin		100	%
Brady Worldwide, Inc.	Wisconsin		100	%
Also Doing Business As:
Brandon International
Varitronic Systems
Sorbent Products Company
TISCOR\n
\nElectromark
Brady Australia Holdings Pty. Ltd.	Australia		100	%
Brady Australia Pty. Ltd.	Australia		100	%
Seton Australia Pty. Ltd.	Australia		100	%
Accidental Health & Safety Pty. Ltd.	Australia		100	%
Trafalgar First Aid Pty. Ltd.	Australia		100	%
Carroll Australasia Pty. Ltd.	Australia		100	%

\n\n


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

Scafftag Australia Pty. Ltd.	Australia		100	%
Visisign Pty. Ltd.	Australia		100	%
ID Warehouse Pty. Ltd.	Australia		100	%
Mix Group Australasia Pty. Ltd.	Australia		100	%
Transposafe Systems Belgium NV/SA	Belgium		100	%
W.H. Brady, N.V.	Belgium		100	%
Stickolor Industria e Comércio de Auto Adesivos Ltda.	Brazil		100	%
W.H.B. do Brasil Ltda.	Brazil		100	%
BRC Financial	Canada		100	%
W.H.B. Identification Solutions Inc.	Canada		100	%
Doing Business As:
Brady
Identicam Systems
Seton
Varitronics Canada
Brady Cayman Finance Company	Cayman Islands		100	%
Brady Investment Management (Shanghai) Co., Ltd.	China		100	%
Brady Technology (Wuxi) Co. Ltd.	China		100	%
Brady (Beijing) Co. Ltd.	China		100	%
Brady (Shenzhen) Co., Ltd.	China		100	%
Brady Technology (Dongguan) Co., Ltd.	China		100	%
Suzhou Dicel EMC Co., Ltd.	China		100	%
Brady Technology (Langfang) Co., Ltd.	China		100	%
Tradex Converting (Suzhou) Co., Ltd.	China		100	%
Brady (Xiamen) Co., Ltd.	China		100	%
Brady A/S	Denmark		100	%
Braton Europe S.A.R.L	France		100	%
Brady Groupe S.A.S	France		100	%
Doing Business As:
Seton
Signals
BIG
Securimed S.A.S.	France		100	%
Brady GmbH	Germany		100	%
Doing Business As:
Seton
Balkhausen
Etimark
Brady Holdings GmbH & Co. KG	Germany		100	%
Brady Holdings Verwaltungs GmbH	Germany		100	%
Transposafe Systems Deutschland GmbH	Germany		100	%
Quo-Luck Company Limited	Hong Kong		100	%
Bakee Metal Manufactory Company Limited	Hong Kong		100	%
Brady Corporation Hong Kong Limited	Hong Kong		100	%
Brady Company India Private Limited	India		100	%
Brady Italia, S.r.l.	Italy		100	%
Nippon Brady K.K.	Japan		100	%
Brady Luxembourg S.à r.l.	Luxembourg		100	%
Brady Finance Luxembourg S.à r.l.	Luxembourg		100	%
Brady Technology SDN. BHD.	Malaysia		100	%
W. H. Brady S. de R.L. de C.V.	Mexico		100	%
Brady Servicios, S. de R.L. de C.V.	Mexico		100	%
Brady B.V.	Netherlands		100	%
Brady Finance B.V.	Netherlands		100	%
Holland Mounting Systems B.V.	Netherlands		100	%
Transposafe Systems Holland B.V.	Netherlands		100	%
Brady AS	Norway		100	%
Brady Philippines Direct Marketing Inc.	Philippines		100	%
Transposafe Systems Polska Sp. Z.o.o.	Poland		100	%

\n\n

EXHIBIT 31.1\n

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n

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

\n\n

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

\n\n

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

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n\n

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

\n\n

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

\n\n\n

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

\n\n\n

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

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



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

\n\n

Date: September 27, 2011\n

\n\n

\n\n\n\n\n

EXHIBIT 31.2\n

\n\n\n

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

\n\n\n

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

\n\n\n\n\n

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

\n\n

\n\n\n

\n\n

\n\n\n

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

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



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

\n\n

Date: September 27, 2011\n

\n\n


	7/31/2006		7/31/2007		7/31/2008	7/31/2009	7/31/2010		7/31/2011
Brady Corporation		100.00		105.28		112.28		92.53		89.61	104.98
S&P 500 Index		100.00		116.13		103.25		82.64		94.08	112.56
S&P SmallCap 600 Index		100.00		114.10		104.66		84.49		100.69	125.58
Russell 2000 Index		100.00		112.13		104.61		82.91		98.20	121.68


*		$100 invested on 7/31/06 in stock or index — including reinvestment of dividends. Fiscal\nyear ended July 31.


Item 8.		*Financial Statements and Supplementary Data*


	Page
Report of Independent Registered Public Accounting Firm		33

Financial Statements:

Consolidated Balance Sheets — July 31, 2011 and 2010		34

Consolidated Statements of Income — Years Ended July 31, 2011, 2010, and 2009		35

Consolidated Statements of Stockholders’ Investment — Years Ended July 31, 2011, 2010, and 2009		36

Consolidated Statements of Cash Flows — Years Ended July 31, 2011, 2010, and 2009		37

Notes to Consolidated Financial Statements — Years Ended July 31, 2011, 2010, and 2009		38


(6)		Two-thirds of the shares vest in equal installments over a three-year period, with the\nvesting date being the date the Audit Committee accepts the results of the fiscal year audit\nconfirming the achievement of annual EPS growth levels. The remaining one-third of the shares\nvest at plan year three depending upon the Corporation’s EPS growth for fiscal 2013 over\nfiscal 2010 in comparison with other corporations in the S&P 600 Index.

(7)		One-third of the options vest on September 24, 2011, one-third of the options vest on\nSeptember 24, 2012, and one-third of the options vest on September 24, 2013.

(8)		Effective August 2, 2010, a grant of 100,000 shares of performance-based restricted stock was\nissued to Mr. Jaehnert, which included both a performance vesting requirement based upon\nearnings per share growth and a service vesting requirement prorated at July 31, 2013, July\n31, 2014 and July 31, 2015.


	Option Awards
	Number of Shares
	Acquired on		Value Realized
Name	Exercise (#)		on Exercise ($)
F.M. Jaehnert		76,000		1,518,095
T.J. Felmer		8,000		128,760
P.C. Sephton	None		None
R.L. Tatterson	None		None
M.O. Williamson	None		None


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


Signature		Title

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

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

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

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

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

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

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

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

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


*		Each of the above signatures is affixed as of September 27, 2011.


Item 3.		*Legal Proceedings*


Item 4.		(Removed and Reserved)