Form 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q\n

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

For the Quarterly Period Ended April 30, 2012

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

For the Transition Period\nfrom to \n

Commission File Number 1-14959

BRADY CORPORATION

(Exact name of registrant as specified in its charter)

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

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

(414) 358-6600

(Registrant’s telephone number, including area code)

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

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 pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was\nrequired to submit and post such files). Yes x No ¨

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

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange\nAct). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS

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

As of June 5, 2012, there were outstanding 49,041,259 shares of Class A Nonvoting Common Stock and 3,538,628 shares of Class B Voting Common Stock. The Class B Common Stock, all of\nwhich is held by affiliates of the Registrant, is the only voting stock.

\n\n

FORM 10-Q

BRADY CORPORATION

INDEX


	Page

PART I. Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets		3

Condensed Consolidated Statements of Income		4

Condensed Consolidated Statements of Cash Flows		5

Notes to Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of\nOperations		19

Item 3. Quantitative and Qualitative Disclosures About Market Risk		28

Item 4. Controls and Procedures		28

PART II. Other Information

Item 6. Exhibits		29

Certification

Certification

Section 1350 Certification

Section 1350 Certification

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\n\n

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)


	April 30, 2012			July 31, 2011
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	374,425			$	389,971
Accounts receivable — net		210,694				228,483
Inventories:
Finished products		65,322				62,152
Work-in-process		15,045				14,550
Raw materials and supplies		25,749				27,484

Total inventories		106,116				104,186
Prepaid expenses and other current assets		40,267				35,647

Total current assets		731,502				758,287
Other assets:
Goodwill		666,423				800,343
Other intangible assets		76,260				89,961
Deferred income taxes		48,578				53,755
Other		20,760				19,244
Property, plant and equipment:
Cost:
Land		6,119				6,406
Buildings and improvements		100,569				104,644
Machinery and equipment		303,666				305,557
Construction in progress		12,280				11,226

		422,634				427,833
Less accumulated depreciation		295,017				287,918

Property, plant and equipment — net		127,617				139,915

Total	$	1,671,140			$	1,861,505

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	75,303			$	98,847
Wages and amounts withheld from employees		48,954				69,798
Taxes, other than income taxes		10,169				7,612
Accrued income taxes		20,939				9,954
Other current liabilities		41,926				54,406
Current maturities on long-term debt		61,264				61,264

Total current liabilities		258,555				301,881
Long-term obligations, less current maturities		280,812				331,914
Other liabilities		68,191				71,518

Total liabilities		607,558				705,313
Stockholders’ investment:
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 49,031,625 and\n49,284,252 shares, respectively		513				513
Class B voting common stock — Issued and outstanding, 3,538,628 shares		35				35
Additional paid-in capital		311,369				307,527
Income retained in the business		730,295				789,100
Treasury stock — 1,919,862 and 1,667,235 shares, respectively of Class A nonvoting common stock, at\ncost		(55,354	)			(50,017	)
Accumulated other comprehensive income		80,432				113,898
Other		(3,708	)			(4,864	)

Total stockholders’ investment		1,063,582				1,156,192

Total	$	1,671,140			$	1,861,505

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands, Except Per Share Amounts)

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	Three Months Ended April 30,\n (Unaudited)			Nine Months Ended April 30,\n (Unaudited)
	2012			2011			Percentage Change	2012		2011			Percentage Change
Net sales	$	331,629			$	337,896		(1.9	)%	$	1,001,721			$	996,493		0.5	%
Cost of products sold		171,582				170,258		0.8	%		520,538				505,333		3.0	%

Gross margin		160,047				167,638		(4.5	)%		481,183				491,160		(2.0	)%
Operating expenses:
Research and development		8,940				10,550		(15.3	)%		28,721				32,226		(10.9	)%
Selling, general and administrative		106,714				115,006		(7.2	)%		320,489				332,394		(3.6	)%
Restructuring charges — (See Note J)		3,440				1,211		184.1	%		3,440				6,986		(50.8	)%
Impairment charge — (See Note B)		—				—		N/A			115,688				—		N/A

Total operating expenses		119,094				126,767		(6.1	)%		468,338				371,606		26.0	%
Operating income		40,953				40,871		0.2	%		12,845				119,554		(89.3	)%
Other income and (expense):
Investment and other income		1,110				1,428		(22.3	)%		1,720				2,892		(40.5	)%
Interest expense		(4,735	)			(5,103	)	(7.2	)%		(14,715	)			(16,640	)	(11.6	)%

Income (loss) before income taxes		37,328				37,196		0.4	%		(150	)			105,806		(100.1	)%
Income taxes		9,676				8,607		12.4	%		29,420				26,737		10.0	%

Net income (loss)	$	27,652			$	28,589		(3.3	)%	$	(29,570	)		$	79,069		(137.4	)%

Per Class A Nonvoting Common Share:
Basic net income (loss)	$	0.53			$	0.54		(1.9	)%	$	(0.57	)		$	1.50		(138.0	)%
Diluted net income (loss)	$	0.52			$	0.54		(3.7	)%	$	(0.57	)		$	1.49		(138.3	)%
Dividends	$	0.185			$	0.18		2.8	%	$	0.555			$	0.54		2.8	%
Per Class B Voting Common Share:
Basic net income (loss)	$	0.53			$	0.54		(1.9	)%	$	(0.58	)		$	1.48		(139.2	)%
Diluted net income (loss)	$	0.52			$	0.54		(3.7	)%	$	(0.58	)		$	1.47		(139.5	)%
Dividends	$	0.185			$	0.18		2.8	%	$	0.538			$	0.523		2.9	%
Weighted average common shares outstanding (in thousands):
Basic		52,513				52,701					52,539				52,581
Diluted		53,003				53,337					52,539				53,067

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)


	Nine Months\nEnded April 30, (Unaudited)
	2012			2011
Operating activities:
Net (loss) income	$	(29,570	)		$	79,069
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		32,921				37,522
Non-cash portion of restructuring charges		458				2,155
Non-cash portion of stock-based compensation expense		7,592				9,396
Impairment charge		115,688				—
Gain on divestiture of business		—				(4,394	)
Deferred income taxes		(3,192	)			(9,018	)
Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures):
Accounts receivable		11,050				211
Inventories		(5,595	)			(1,491	)
Prepaid expenses and other assets		(4,386	)			772
Accounts payable and accrued liabilities		(39,472	)			(8,355	)
Income taxes		15,101				4,579

Net cash provided by operating activities		100,595				110,446
Investing activities:
Purchases of property, plant and equipment		(14,498	)			(13,671	)
Payments of contingent consideration		(2,580	)			(979	)
Settlement of net investment hedges		(797	)			—
Acquisition of business, net of cash acquired		(3,039	)			(7,970	)
Divestiture of business, net of cash retained in business		—				12,979
Other		(1,536	)			(379	)

Net cash used in investing activities		(22,450	)			(10,020	)
Financing activities:
Payment of dividends		(29,235	)			(28,500	)
Proceeds from issuance of common stock		3,624				7,154
Purchase of treasury stock		(12,309	)			—
Principal payments on debt		(42,514	)			(42,514	)
Debt issuance costs		(961	)			—
Income tax benefit from the exercise of stock options and deferred compensation distributions, and other		754				1,075

Net cash used in financing activities		(80,641	)			(62,785	)
Effect of exchange rate changes on cash		(13,050	)			21,497

Net (decrease) increase in cash and cash equivalents		(15,546	)			59,138
Cash and cash equivalents, beginning of period		389,971				314,840

Cash and cash equivalents, end of period	$	374,425			$	373,978

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest	$	15,746			$	16,379
Income taxes, net of refunds		19,959				26,695
Acquisitions:
Fair value of assets acquired, net of cash and goodwill	$	2,395			$	4,624
Liabilities assumed		(583	)			(1,446	)
Goodwill		1,227				4,792

Net cash paid for acquisitions	$	3,039			$	7,970

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended April 30, 2012

(Unaudited)

(In thousands, except share and per share amounts)

NOTE A — Basis of Presentation

\n\n

The condensed consolidated financial statements included herein have been prepared by\nBrady Corporation and subsidiaries (the “Company” or “Brady”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the foregoing statements contain all\nadjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of April 30, 2012 and July 3l, 2011, its results of operations for the three and nine months ended\nApril 30, 2012 and 2011, and its cash flows for the nine months ended April 30, 2012 and 2011. The condensed consolidated balance sheet as of July 31, 2011 has been derived from the audited consolidated financial statements of that\ndate. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts\ntherein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with\nGAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete\nfinancial statement presentation. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest annual report on\nForm 10-K for the year ended July 31, 2011.

NOTE B — Goodwill and Intangible Assets

In order to better allocate resources to align with sales growth initiatives, the Company reorganized its management\nreporting structure within the EMEA and Asia-Pacific operating segments. As a result of the reorganization and in accordance with ASC 350, “Intangibles – Goodwill and Other,” the Company’s reporting units for purposes of goodwill\nimpairment testing were updated during the quarter ended April 30, 2012. In the EMEA operating segment, the Emerging Platforms reporting unit was consolidated into the Brady EMEA and Direct Marketing EMEA reporting units. In the Asia-Pacific\noperating segment, the North/South Asia reporting unit was divided into Brady North/South Asia and Die-Cut Asia. Further, Brady North/South Asia has been aggregated with Australia as part of the Brady Asia reporting unit. There were no changes to\nthe management structure within the Americas operating segment.

The Company performed the required initial (“Step\nOne”) impairment test over the new reporting units by preparing a discounted cash flow model taking into account current projections, estimates and assumptions. These estimates and assumptions primarily include, but are not limited to,\nprojections of revenue growth, operating earnings, discount rates, terminal growth rates, and required capital for the reporting unit. Due to the inherent uncertainty involved in making these estimates, actual results could differ materially from\nthe estimates. The estimated fair value of the reporting units was compared to the carrying amount including goodwill, and the results of the analysis indicated that there was no impairment as a result of the reorganization. Due to the\nreorganization, the Company has identified six reporting units within its three reporting segments for purposes of the annual goodwill impairment analysis: Brady Americas, Direct Marketing Americas, Brady EMEA, Direct Marketing EMEA, Brady Asia, and\nDie-Cut Asia.

Prior to the reorganization effective April 1, 2012, the Company had identified seven reporting units\nwithin its three reporting segments for purposes of the annual goodwill impairment analysis: Brady Americas, Direct Marketing Americas, Brady Europe, Direct Marketing Europe, Emerging Platforms Europe, North/South Asia, and Australia.\n The Company’s goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. The Company performs\nimpairment reviews for its reporting units using the discounted cash flow model and market multiples model, as these methods provide a reasonable and meaningful fair value estimate based on the reporting units’ projections of future operating\nresults and cash flows and replicates how market participants would value the Company’s reporting units. The projections of future operating results are based on both past performance and the projections and assumptions used in the\nCompany’s current and long-range operating plans. The Company’s estimates can be materially impacted by factors such as significant negative industry or economic trends, disruptions to the Company’s business, competitive forces, or\nchanges in significant customers.

In the quarter ended January 31, 2012, the former North/South Asia reporting unit experienced a sales decline\nand margin erosion due in large part to a major customer’s loss of market share within the mobile handset industry. The impact of this sales decline was partially offset by additional opportunities within the mobile handset and other computing\ndevices markets, but these sales were achieved at a lower gross margin percentage than was previously realized.

\n\n\n

\n\n

The Company’s plans to fill capacity and absorb overhead with these additional sales\nopportunities were partially successful; however, increased competition from local competitors drove down unit prices. While the Company continued to capture similar dollar value of sales, the gross margins were less than what was anticipated. The\nCompany placed increased focus on cost reduction and material procurement strategies to reduce cost of goods sold; however, these efforts were not enough to return the reporting unit to previous levels of profitability. Based upon the economic\nenvironment within the mobile handset market, management determined that the events were not temporary and gross margins in the mobile handset market were not likely to improve materially in the near term.

Due to the convergence of these events, in connection with a reforecast of expected fiscal 2012 financial results completed during the\nquarter ended January 31, 2012, the Company determined the foregoing circumstances to be indicators of potential impairment under the guidance of ASC 350, “Intangibles – Goodwill and Other.” The Company completed the required\ninitial (“Step One”) impairment test for the former North/South Asia reporting unit by preparing a discounted cash flow model taking into account updated projections, estimates and assumptions. These estimates and assumptions primarily\nincluded, but are not limited to, projections of revenue growth, operating earnings, discount rates, terminal growth rates, and required capital for the reporting unit. Due to the inherent uncertainty involved in these estimates, actual results\ncould differ materially from the estimates. The Company evaluated the significant assumptions used to determine the fair value of the reporting unit with the assistance of a third party valuation firm and concluded that they were reasonable.\n

The estimated fair value of the reporting unit was compared to the carrying amount including goodwill, and the results of the\nanalysis indicated that the former North/South Asia reporting unit was potentially impaired. Therefore, the Company proceeded to measure the amount of the potential impairment (“Step Two”) with the assistance of a third party valuation\nfirm. In Step Two of the goodwill impairment test, the Company determined the implied fair value of the goodwill and compared it to the carrying value of the goodwill. The Company allocated the fair value of the former North/South Asia reporting\nunit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination. The excess fair value of the reporting unit over the fair value of its identifiable assets and liabilities was the implied fair value of\ngoodwill. Upon completion of the assessment, the Company recognized a goodwill impairment charge of $115,688 during the quarter ended January 31, 2012.

The changes in the carrying amount of goodwill by reportable segment for the nine months ended April 30, 2012, are as follows:


	Americas			Europe			Asia-Pacific		Total
Balance as of July 31, 2011	$	425,578			$	171,238		$	203,527		$	800,343
Current year acquisitions		—				1,227			—			1,227
Translation adjustments		(5,409	)			(10,521	)		(3,529	)		(19,459	)
Impairment charge		—				—			(115,688	)		(115,688	)

Balance as of April 30, 2012	$	420,169			$	161,944		$	84,310		$	666,423

Goodwill decreased $133,920 during the nine months ended April 30, 2012. Of the $133,920 decrease, $115,688 was\ndue to the goodwill impairment charge recognized on the former North/South Asia reporting unit, and $19,459 was due to foreign currency translation. The decrease was partially offset by an increase of $1,227 from the acquisition of Grafo Wiremarkers\nAfrica (Proprietary) Limited (“Grafo”) during the third quarter of fiscal 2012. Refer to Note L, “Acquisitions and Divestitures” for further discussion.

Other intangible assets include patents, trademarks, customer relationships, non-compete agreements and other intangible assets with finite lives being amortized in accordance with accounting guidance for\ngoodwill and other intangible assets. The net book value of these assets was as follows:


	April 30, 2012		July 31, 2011
	Weighted									Weighted
	Average									Average
	Amortization		Gross							Amortization		Gross
	Period		Carrying			Accumulated		Net Book		Period		Carrying		Accumulated		Net Book
	(Years)		Amount			Amortization		Value		(Years)		Amount		Amortization		Value
Amortized other intangible assets:
Patents		5		$	10,215		$	(8,945	)	$	1,270		5		$	9,784	$	(8,556	)	$	1,228
Trademarks and other		7			9,298			(7,156	)		2,142		7			9,448		(6,559	)		2,849
Customer relationships		7			160,748			(127,764	)		32,984		7			165,566		(119,977	)		45,589
Non-compete agreements and other		4			15,945			(15,499	)		446		4			16,432		(15,760	)		672
Unamortized other intangible assets:
Trademarks		N/A			39,418			—			39,418		N/A			39,623		—			39,623

Total				$	235,624		$	(159,364	)	$	76,260				$	240,853	$	(150,892	)	$	89,961

\n\n

\n\n\n

\n\n

The value of goodwill and other intangible assets in the Condensed Consolidated Balance\nSheet at April 30, 2012, differs from the value assigned to them in the allocation of purchase price due to amortization, impairment charges, and the effect of fluctuations in the exchange rates used to translate financial statements into the\nUnited States Dollar between the date of acquisition and April 30, 2012. The acquisition completed during the nine months ended April 30, 2012, increased the customer relationships by $961. Refer to Note L, “Acquisitions and\nDivestitures” for further discussion.

Amortization expense on intangible assets was $3,944 and $5,117 for the\nthree-month periods ended April 30, 2012 and 2011, respectively, and $12,102 and $15,387 for the nine-month periods ended April 30, 2012 and 2011, respectively. Annual amortization expense is projected to be $16,205, $10,381, $5,466,\n$5,128 and $4,058 for the years ending July 31, 2012, 2013, 2014, 2015 and 2016, respectively. The amount of amortization expense recognized in the periods indicated will differ due to acquisitions, divestitures, impairment charges, and the\neffect of fluctuations in the exchange rates used to translate financial statements into the United States Dollar.

NOTE C — Comprehensive Income (Loss)

Total comprehensive income (loss) for the periods presented was as follows:


	Three Months\nEnded April 30,			Nine Months Ended April 30,
	2012			2011			2012		2011
Net income (loss)	$	27,652			$	28,589		$	(29,570	)	$	79,069
Unrealized (loss) gain on cash flow hedges		(499	)			(315	)		1,179			(1,206	)
Amortization of (gain) loss on post-retirement medical plans		(391	)			(31	)		124			(126	)
Foreign currency translation adjustments (1)		(3,936	)			30,512			(34,769	)		60,267

Total comprehensive income (loss)	$	22,826			$	58,755		$	(63,036	)	$	138,004

\n\n\n\n

(1)	The change in foreign currency translation adjustments for the three and nine months ended April 30, 2012, compared to the same periods in the prior year, was\nprimarily due to a decrease in the exchange rates used to translate the Euro into the United States dollar.

\n\n

NOTE D — Net Income (Loss) Per Common Share

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


	Three Months\nEnded April 30,			Nine Months\nEnded April 30,
	2012			2011			2012		2011
Numerator: (in thousands)
Net income (loss)	$	27,652			$	28,589		$	(29,570	)	$	79,069
Less:
Restricted stock dividends		(57	)			(56	)		(172	)		(168	)

Numerator for basic and diluted Class A net income (loss) per share	$	27,595			$	28,533		$	(29,742	)	$	78,901

Less:
Preferential dividends		—				—			(818	)		(820	)
Preferential dividends on dilutive stock options		—				—			(5	)		(6	)

Numerator for basic and diluted Class B net income (loss) per share	$	27,595			$	28,533		$	(30,565	)	$	78,075

Denominator: (in thousands)
Denominator for basic net income (loss) per share for both Class A and Class B		52,513				52,701			52,539			52,581
Plus: Effect of dilutive stock options		490				636			—			486

Denominator for diluted net income (loss) per share for both Class A and Class B		53,003				53,337			52,539			53,067

Class A Nonvoting Common Stock net income (loss) per share:
Basic	$	0.53			$	0.54		$	(0.57	)	$	1.50
Diluted	$	0.52			$	0.54		$	(0.57	)	$	1.49
Class B Voting Common Stock net income (loss) per share:
Basic	$	0.53			$	0.54		$	(0.58	)	$	1.48
Diluted	$	0.52			$	0.54		$	(0.58	)	$	1.47

\n\n

\n\n\n

\n\n

In accordance with ASC 260, “Earnings per Share,” dilutive options for the\nnine-month period ended April 30, 2012, were not included in the computation of diluted net loss per share since to do so would reduce the calculated loss per share. Options to purchase approximately 3,182,000 and 4,419,000 shares of\nClass A Nonvoting Common Stock for the three and nine months ended April 30, 2012, respectively, were not included in the computation of diluted net income (loss) per share because the impact of the inclusion of the options would have been\nanti-dilutive.

Options to purchase approximately 2,500,000 and 3,100,000 shares of Class A Nonvoting Common Stock for\nthe three and nine months ended April 30, 2011, respectively, were not included in the computation of diluted net income per share because the impact of the inclusion of the options would have been anti-dilutive.

NOTE E — Segment Information

The Company evaluates short-term segment performance based on segment profit or loss and customer sales. Segment profit\nor loss does not include certain administrative costs, such as the cost of finance, information technology and human resources, which are managed as global functions. Restructuring charges, impairment charges, stock options, interest, investment and\nother income and income taxes are also excluded when evaluating performance.

The Company is organized and managed on a\ngeographic basis by region. Each of these regions, Americas, EMEA and Asia-Pacific, has a President that reports directly to the Company’s chief operating decision maker, its Chief Executive Officer. Each region has its own distinct operations,\nis managed by its own management team, maintains its own financial reports and is evaluated based on regional segment profit. The Company has determined that these regions comprise its operating and reportable segments based on the information used\nby the Chief Executive Officer to allocate resources and assess performance.

Intersegment sales and transfers are recorded at\ncost plus a standard percentage markup. Intercompany profit is eliminated in consolidation. It is impracticable to disclose enterprise-wide revenue from external customers on the basis of product or service because the Company is organized and\nmanaged on a geographic basis by region, each of which has its own distinct operations and is managed locally by its own management team.

Following is a summary of segment information for the three and nine months ended April 30, 2012 and 2011:


	Americas		EMEA			Asia-Pacific		Total Region		Corporate and Eliminations		Totals
Three months ended April 30, 2012:
Revenues from external customers	$	150,629		$	97,938		$	83,062		$	331,629		$	—		$	331,629
Intersegment revenues		9,995			747			7,672			18,414			(18,414	)		—
Segment profit		38,887			25,571			6,598			71,056			(388	)		70,668
Three months ended April 30, 2011:
Revenues from external customers	$	149,217		$	105,894		$	82,785		$	337,896		$	—		$	337,896
Intersegment revenues		9,938			696			5,960			16,594			(16,594	)		—
Segment profit		38,292			28,938			9,976			77,206			(3,561	)		73,645

Nine months ended April 30, 2012:
Revenues from external customers	$	442,896		$	290,887		$	267,938		$	1,001,721		$	—		$	1,001,721
Intersegment revenues		30,211			2,779			22,435			55,425			(55,425	)		—
Segment profit		117,914			78,432			27,635	(1)		223,981			(6,009	)		217,972
Nine months ended April 30, 2011:
Revenues from external customers	$	431,216		$	301,985		$	263,292		$	996,493		$	—		$	996,493
Intersegment revenues		30,729			2,209			18,306			51,244			(51,244	)		—
Segment profit		108,666			82,165			38,330			229,161			(12,087	)		217,074

\n\n\n\n

(1)

The Company recognized a goodwill impairment charge of $115,688 during the quarter ended January 31, 2012, related to the former North/South Asia reporting unit\nwithin the Asia-Pacific reporting segment, which is excluded from segment profit as presented in the table above. Refer to Note B, “Goodwill and Intangible Assets” for further discussion.

\n\n

\n\n\n

\n\n

Following is a reconciliation of segment profit to net income (loss) for the three months\nand nine months ended April 30, 2012 and 2011:


	Three months\nended April 30,			Nine months\nended April 30,
	2012			2011			2012		2011
Total profit from reportable segments	$	71,056			$	77,206		$	223,981		$	229,161
Corporate and eliminations		(388	)			(3,561	)		(6,009	)		(12,087	)
Unallocated amounts:
Administrative costs		(26,275	)			(31,563	)		(85,999	)		(90,534	)
Restructuring charges		(3,440	)			(1,211	)		(3,440	)		(6,986	)
Impairment charge		—				—			(115,688	)		—
Investment and other income		1,110				1,428			1,720			2,892
Interest expense		(4,735	)			(5,103	)		(14,715	)		(16,640	)

Income (loss) before income taxes		37,328				37,196			(150	)		105,806
Income taxes		(9,676	)			(8,607	)		(29,420	)		(26,737	)

Net income (loss)	$	27,652			$	28,589		$	(29,570	)	$	79,069

\n\n

NOTE F – Stock-Based Compensation

\n\n

The Company has an incentive stock plan under which the Board of Directors may\ngrant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock or grant restricted shares of Class A Nonvoting Common Stock to employees and non-employee directors. The stock options have an exercise price equal to\nthe fair market value of the underlying stock at the date of grant and generally vest ratably over a three-year period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding two years.\nStock options issued under these plans, referred to herein as “service-based” stock options, generally expire 10 years from the date of grant. The Company also grants stock options to certain executives and key management employees\nthat vest upon meeting certain financial performance conditions over the vesting schedule described above; these options are referred to herein as “performance-based” stock options. Performance-based stock options expire 10 years from\nthe date of grant. The Company granted restricted shares in fiscal 2008 and fiscal 2011 that have an issuance price equal to the fair market value of the underlying stock at the date of grant. The restricted shares granted in fiscal 2008 were\namended in fiscal 2011 to allow for vesting after a seven-year period upon meeting both performance and service conditions. The restricted shares granted in fiscal 2011 vest ratably at the end of years three, four and five upon meeting certain\nperformance and service conditions. The restricted shares granted in fiscal 2008 and 2011 are referred to herein as “performance-based restricted shares.”

As of April 30, 2012, the Company has reserved 6,776,947 shares of Class A Nonvoting Common Stock for\noutstanding stock

options and restricted shares and 4,950,950 shares of Class A Nonvoting Common Stock for future issuance of stock\noptions and restricted shares under the various plans. The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver shares under these plans.

The Company recognizes the compensation cost of all share-based awards on a straight-line basis over the vesting period of the award.\nCompensation expense for performance-based stock options is recorded over the remaining vesting period when the Company determines that it is probable that the performance criteria will be met. Total stock compensation expense recognized by the\nCompany during the three months ended April 30, 2012 and 2011 was $2,102 ($1,282 net of taxes) and $2,527 ($1,541 net of taxes), respectively, and expense recognized during the nine months ended April 30, 2012 and 2011 was $7,592 ($4,631\nnet of taxes), and $9,396 ($5,732 net of taxes), respectively. As of April 30, 2012, total unrecognized compensation cost related to share-based compensation awards was $16,022 pre-tax, net of estimated forfeitures, which the Company expects to\nrecognize over a weighted-average period of 2.0 years.

\n\n\n\n

\n\n

The Company has estimated the fair value of its service-based and performance-based option\nawards granted during the nine months ended April 30, 2012 and 2011 using the Black-Scholes option valuation model. The weighted-average assumptions used in the Black-Scholes valuation model are reflected in the following table:


	Nine Months Ended April 30,\n2012			Nine Months Ended April 30,\n2011
Black-Scholes Option Valuation Assumptions	Service-Based Option Awards\n			Performance- Based\nOption Awards			Service-Based Option Awards\n		Performance- Based\nOption Awards
Expected term (in years)		5.89				6.57			5.91			6.57
Expected volatility		39.41	%			39.21	%		40.22	%		39.39	%
Expected dividend yield		2.07	%			1.99	%		1.94	%		1.96	%
Risk-free interest rate		1.16	%			2.05	%		1.65	%		2.35	%
Weighted-average market value of underlying stock at grant date	$	27.05			$	29.55		$	29.10		$	28.43
Weighted-average exercise price		27.05				29.55			29.10			28.35
Weighted-average fair value of options granted during the period		8.42				10.01			9.58			9.87

The Company uses historical data regarding stock option exercise behaviors to estimate the expected term of options\ngranted based on the period of time that options granted are expected to be outstanding. Expected volatilities are based on the historical volatility of the Company’s stock. The expected dividend yield is based on the Company’s historical\ndividend payments and historical yield. The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the grant date for the length of time corresponding to the expected term of the option. The market value is calculated as the\naverage of the high and the low stock price on the date of the grant.

The Company granted 100,000 shares of performance-based\nrestricted stock to Frank M. Jaehnert, the Company’s President and Chief Executive Officer, in August of 2010, with a grant price and fair value of $28.35. The Company also granted 210,000 shares of performance-based restricted stock during\nfiscal 2008, with a grant price and fair value of $32.83. As of April 30, 2012, 310,000 performance-based restricted shares were outstanding.

The Company granted 415,000 performance-based stock options during the nine months ended April 30, 2012, with a weighted average exercise price of $29.55 and a weighted average fair value of $10.01.\nThe Company also granted 797,450 service-based stock options during the nine months ended April 30, 2012, with a weighted average exercise price of $27.05 and a weighted average fair value of $8.42.

A summary of stock option activity under the Company’s share-based compensation plans for the nine months ended April 30, 2012\nis presented below:


Options	Shares			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at July 31, 2011		5,726,017			$	29.24
New grants		1,212,450			$	27.91
Exercised		(254,357	)		$	20.15
Forfeited or expired		(217,163	)		$	32.92

Outstanding at April 30, 2012		6,466,947			$	29.22		6.5	$	22,069

Exercisable at April 30, 2012		3,848,048			$	29.67		5.0	$	14,972

There were 3,848,048 and 3,359,215 options exercisable with a weighted average exercise price of $29.67 and $29.70 at\nApril 30, 2012 and 2011, respectively. The cash received from the exercise of options during the quarters ended April 30, 2012 and 2011 was $1,441 and $2,244, respectively. The cash received from the exercise of options during the nine\nmonths ended April 30, 2012 and 2011 was $3,624 and $7,154, respectively. The cash received from the tax benefit on stock options exercised during the quarter ended April 30, 2012 and 2011 was $166 and $695, respectively. The cash received\nfrom the tax benefit on options exercised during the nine months ended April 30, 2012 and 2011 was $761 and $1,398, respectively.

\n\n\n\n

\n\n

The total intrinsic value of options exercised during the nine months ended April 30,\n2012 and 2011, based upon the average market price at the time of exercise during the period, was $2,987 and $4,907, respectively. The total fair value of stock options vested during the nine months ended April 30, 2012 and 2011, was $8,035 and\n$6,775, respectively.

NOTE G — Stockholders’ Investment

In fiscal 2009, the Company’s Board of Directors authorized a share repurchase plan for the Company’s\nClass A Nonvoting Common Stock. The plan was implemented by purchasing shares in the open market or in privately negotiated transactions, with repurchased shares available for use in connection with the Company’s stock-based plans and for\nother corporate purposes. The Company did not repurchase any shares during fiscal 2011. As of July 31, 2011, there remained 204,133 shares to purchase in connection with this share repurchase plan.

On September 9, 2011, the Company’s Board of Directors authorized an additional share repurchase program for up to two million\nadditional shares of the Company’s Class A Nonvoting Common Stock. The plan may be implemented by purchasing shares in the open market or in privately negotiated transactions, with repurchased shares available for use in connection with\nthe Company’s stock-based compensation plans and for other corporate purposes. During the three months ended October 31, 2011, the Company purchased 457,360 shares of its Class A Nonvoting Common Stock under the plans for $12,309. No\nshares were repurchased by the Company in the quarters ended January 31, 2012 and April 30, 2012, and there remained 1,746,773 shares to purchase in connection with the 2011 share repurchase plan.

NOTE H — Employee Benefit Plans

\n\n

The Company provides postretirement medical benefits for eligible\nregular full and part-time domestic employees (including spouses) outlined by the plan. Postretirement benefits are provided only if the employee was hired prior to April 1, 2008, and retires on or after attainment of age 55 with 15 years of\ncredited service. Credited service begins accruing at the later of age 40 or date of hire. All active employees first eligible to retire after July 31, 1992, are covered by an unfunded, contributory postretirement healthcare plan where employer\ncontributions will not exceed a defined dollar benefit amount, regardless of the cost of the program. Employer contributions to the plan are based on the employee’s age and service at retirement.

The Company funds benefit costs on a pay-as-you-go basis. There have been no changes to the components of net periodic benefit cost or\nthe amount that the Company expects to fund in fiscal 2012 from those reported in Note 3 to the consolidated financial statements included in the Company’s latest annual report on Form 10-K for the year ended July 31, 2011.

\n\n

NOTE I — Fair Value Measurements

\n\n

In accordance with fair value accounting guidance, the Company’s\nassets and liabilities measured at fair market value are classified in one of the following categories:

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

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

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

\n\n\n\n

\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 April 30, 2012, and July 31, 2011, according to the valuation techniques the Company used to determine their fair values:


	Fair Value Measurements Using Inputs Considered As
	Quoted Prices in\nActive Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Fair Values	Balance Sheet Classifications
April 30, 2012:
Trading Securities	$	12,759		$	—		$	—	$	12,759	Other assets

Foreign exchange contracts — cash flow hedges		—			181			—		181	Prepaid expenses and other current assets

Foreign exchange contracts — non-designated		—			23			—		23	Prepaid expenses and other current assets

Foreign exchange contracts — net investment hedges		—			—			—		—	Prepaid expenses and other current assets

Total Assets	$	12,759		$	204		$	—	$	12,963

Foreign exchange contracts — cash flow hedges	$	—		$	144		$	—	$	144	Other current liabilities
Foreign exchange contracts — net investment hedges		—			23			—		23	Other current liabilities
Foreign exchange contracts — non-designated		—			—			—		—	Other current liabilities
Foreign currency denominated debt — net investment hedge		—			99,398			—		99,398	Long term obligations, less current maturities

Total Liabilities	$	—		$	99,565		$	—	$	99,565

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 — non-designated		—			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 — non-designated		—			2			—		2	Other current liabilities
Foreign currency denominated debt — net investment hedge		—			107,985			—		107,985	Long term obligations less current maturities

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

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

Trading Securities: The Company’s deferred compensation investments consist of investments in mutual funds. These investments\nwere classified as Level 1 as the shares of these investments trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

Foreign currency exchange contracts: The Company’s foreign currency exchange contracts were classified as Level 2, as the\nfair value was based on the present value of the future cash flows using external models that use observable inputs, such as interest rates, yield curves and foreign currency exchange rates. See Note K, “Derivatives and Hedging Activities”\nfor additional information.

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

There were no transfers of assets or liabilities between the fair value hierarchy levels, outlined above, during the nine months ended April 30, 2012.

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

\n\n

\n\n\n\n

\n\n

The estimated fair value of the Company’s long-term obligations including current\nmaturities, based on the quoted market prices for similar issues and on the current rates offered for debt of similar maturities, was $363,616 and $416,694 at April 30, 2012 and July 31, 2011, respectively, as compared to the carrying\nvalue of $342,076 and $393,178 at April 30, 2012 and July 31, 2011, respectively.

During the nine months ended\nApril 30, 2012, goodwill with a carrying amount of $163,702 in the former North/South Asia reporting unit was written down to its estimated implied fair value of $48,014, resulting in a non-cash impairment charge of $115,688. The implied fair\nvalue of goodwill of $48,014 represents a Level 3 asset measured at fair value on a nonrecurring basis subsequent to its original recognition. Refer to Note B, “Goodwill and Intangible Assets” for further information regarding the\nvaluation inputs.

During the nine months ended April 30, 2011, the Company had no significant measurements of assets or\nliabilities at fair value on a nonrecurring basis subsequent to their initial recognition other than for the acquisition of ID Warehouse, and the divestiture of the Teklynx business. Refer to Note L, “Acquisitions and Divestitures” for\nfurther information.

NOTE J — Restructuring

During the three months ended April 30, 2012, the Company took various measures to address its cost structure in\nresponse to weaker sales forecasts across the Company, as well as the decline in operating results in the Asia die-cut business. As a result of these actions, the Company recorded restructuring charges of $3,440, which consisted of $2,469 of\nemployee separation costs, $458 of fixed asset write-offs, and $513 of other facility closure related costs. Of the $3,440 of restructuring charges recorded during the three months ended April 30, 2012, $1,709 was incurred in the Americas,\n$1,601 was incurred in EMEA, and $130 was incurred in Asia-Pacific. The charges for employee separation costs consisted of severance pay, outplacement services, medical and other related benefits. The costs related to these restructuring activities\nhave been recorded on the condensed consolidated statements of income as restructuring charges. The Company expects the majority of the remaining cash payments to be made during the next twelve months.

In fiscal 2009, in response to the global economic downturn, the Company took several measures to address its cost structure. In addition\nto a company-wide salary freeze and decreased discretionary spending, the Company reduced its workforce by 25%. The Company reduced its workforce through voluntary and involuntary separation programs, voluntary retirement programs, and facility\nconsolidations. The Company continued the execution of its restructuring actions during fiscal 2011. These actions included a reduction in its contract labor and decreased discretionary spending. As a result of these actions, the Company recorded\nrestructuring charges of $1,211 and $6,986 during the three and nine months ended April 30, 2011, respectively. The restructuring charges of $6,986 during the nine months ended April 30, 2011 consisted of $4,531 of employee separation\ncosts, $2,155 of fixed asset write-offs, and $300 of other facility closure related costs and contract termination costs. Of the $6,986 of restructuring charges recorded during the nine months ended April 30, 2011, $4,401 was incurred in the\nAmericas, $2,457 was incurred in Europe, and $128 was incurred in Asia-Pacific.

A reconciliation of the Company’s\nrestructuring activity during the nine months ended April 30, 2012 is as follows:


	Employee Related			Asset Write-offs			Other		Total
Beginning balance, July 31, 2011	$	2,207			$	—		$	49		$	2,256

Restructuring charge		2,469				458			513			3,440
Non-cash write-offs		—				(458	)		—			(458	)
Cash payments		(2,464	)			—			(490	)		(2,954	)

Ending balance, April 30, 2012	$	2,212			$	—		$	72		$	2,284

\n\n

NOTE K — Derivatives and Hedging Activities

\n\n

The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate risk\nof specific foreign currency denominated transactions and net investments. These contracts typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities of 18 months or less, which\nqualify as either cash flow hedges or net investment hedges under the accounting guidance for derivative instruments and hedging activities. The primary objectives of the Company’s foreign currency exchange risk management are to minimize the\nimpact of currency movements due to products purchased in other than the respective subsidiaries’ functional currency and to minimize the impact of currency movements on the Company’s net investment denominated in a currency other than the\nU.S. dollar. To achieve this objective, the Company hedges a portion of known exposures using forward foreign exchange currency contracts. As of April 30, 2012 and July 31, 2011, the notional amount of outstanding forward exchange\ncontracts was $50,999 and $80,807, respectively.

\n\n\n\n

\n\n

Hedge effectiveness is determined by how closely the changes in the fair value of the\nhedging instrument offset the changes in the fair value or cash flows of the hedged item. Hedge accounting is permitted only if the hedging relationship is expected to be highly effective at the inception of the hedge and on an on-going basis. Gains\nor losses on the derivative related to hedge ineffectiveness are recognized in current earnings. The amount of hedge ineffectiveness was not significant for the three-month or nine-month periods ended April 30, 2012 and 2011.

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

The\nCompany has designated a portion of its foreign exchange contracts as cash flow hedges and recorded these contracts at fair value on the Condensed Consolidated Balance Sheets. For these instruments, the effective portion of the gain or loss on the\nderivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. At April 30, 2012 and July 31, 2011,\nunrealized gains of $177 and unrealized losses of $1,535 have been included in OCI, respectively. All balances are expected to be reclassified from OCI to earnings during the next twelve months when the hedged transactions impact earnings.\n

At April 30, 2012 and July 31, 2011, the Company had $181 and $16 of forward exchange contracts designated as cash\nflow hedges included in “Prepaid expenses and other current assets” on the accompanying condensed consolidated balance sheets. At April 30, 2012 and July 31, 2011, the Company had $144 and $830, respectively, of forward exchange\ncontracts designated as cash flow hedges included in “Other current liabilities” on the accompanying Condensed Consolidated Balance Sheets. At April 30, 2012 and July 31, 2011, the U.S. dollar equivalent of these outstanding\nforward foreign exchange contracts totaled $24,326 and $30,519, respectively, including contracts to sell Euros, Canadian Dollars, Australian Dollars, British Pounds, U.S. Dollars, and Swiss Franc.

The Company has also designated intercompany and third party foreign currency denominated debt instruments as net investments hedges.\nDuring the nine months ended April 30, 2012, the Company designated €4,581 of intercompany loans as net investment hedges to hedge portions of its net investment in European foreign operations. No intercompany loans were designated as net\ninvestment hedges as of July 31, 2011. On May 13, 2010, the Company completed the private placement of €75.0 million aggregate principal 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 Company’s net investment in Euro-denominated foreign operations. As net investment hedges, the currency effects of the debt obligations are\nreflected in the foreign currency translation adjustments component of accumulated other comprehensive income where they offset gains and losses recorded 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.

Additionally, the Company\nutilizes forward foreign exchange currency contracts designated as hedge instruments to hedge portions of the Company’s net investments in foreign operations. For hedges that meet the effectiveness requirements, the net gains or losses\nattributable to changes in spot exchange rates are recorded in the foreign exchange translation adjustment component of accumulated other comprehensive income where it offsets gains and losses recorded on the Company’s net investment in\nEuro-denominated foreign operations. Any ineffective portions are recognized in earnings. Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete\nliquidation of the net investment in the foreign operation. At April 30, 2012, and July 31, 2011, the Company had $23 and $5,295, respectively, of forward foreign exchange currency contracts designated as net investment hedges included in\n“Other current liabilities” on the accompanying Condensed Consolidated Balance Sheets. At April 30, 2012 and July 31, 2011, the U.S dollar equivalent of these outstanding forward foreign exchange contracts totaled $12,999 and\n$50,000, respectively, including contracts to sell Euros, Singapore Dollars, and Malaysian Ringgit.

\n\n

\n\n\n\n

\n\n

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


	Asset Derivatives		Liability Derivatives
	April 30, 2012		July 31, 2011		April 30, 2012			July 31, 2011
Derivatives \n designated as hedging instruments	Balance \n Sheet \n Location	Fair Value		Balance \n Sheet \n Location		Fair Value			Balance \n Sheet \n Location	Fair Value		Balance \n Sheet \n Location	Fair Value
Cash flow hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	181		Prepaid expenses and other current assets		$	16		Other current liabilities	$	144		Other current liabilities	$	830

Net investment hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	—		Prepaid expenses and other current assets		$	—		Other current liabilities	$	23		Other current liabilities	$	5,295

Foreign currency denominated debt	Prepaid expenses and other current assets	$	—		Prepaid expenses and other current assets		$	—		Long term obligations, less current maturities	$	99,398		Long term obligations, less\ncurrent maturities		107,985

Total derivatives designated as hedging instruments		$	181				$	16			$	99,565			$	114,110

Derivatives not designated as hedging instruments
Foreign exchange contracts	Prepaid expenses and other current assets	$	23		Prepaid expenses and other current assets		$	3		Other current liabilities	$	—		Other current liabilities	$	2

Total derivatives not designated as hedging instruments		$	23				$	3			$	—			$	2

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


Derivatives in \n Cash Flow Hedging Relationships	Amount of Gain or\n(Loss) Recognized\nin OCI on Derivative (Effective Portion)		Location of Gain or \n (Loss) Reclassified From Accumulated OCI into Income\n(Effective Portion)		Amount of Gain or \n(Loss) Reclassified From Accumulated \nOCI Into Income (Effective Portion)		Location of \n Gain or (Loss) Recognized in Income on \n Derivative \n (Ineffective Portion)	Amount of Gain or\n(Loss) Recognized in Income\non Derivative (Ineffective Portion)
	Nine months ended\nApril 30,				Nine months ended April 30,			Nine months ended\nApril 30,
	2012		2011				2012		2011				2012		2011
Foreign exchange contracts	$	177		$	(2,210	)	Cost of goods sold	$	(650	)	$	(887	)	Cost of goods sold		$	—	$	—

Total	$	177		$	(2,210	)		$	(650	)	$	(887	)			$	—	$	—

\n\n

\n\n\n\n

\n\n

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


Derivatives in Net Invesment Hedging \n Relationships	Amount of Gain or\n(Loss) Recognized\nin OCI on Derivative (Effective Portion)			Location of Gain or \n (Loss) Reclassified From Accumulated OCI into Income \n (Effective Portion)		Amount of Gain or\n(Loss) Reclassified From Accumulated \nOCI into Income (Effective Portion)		Location of \n Gain or (Loss) Recognized in Income on \n Derivative \n (Ineffective Portion)	Amount of Gain or (Loss) Recognized in Income\non Derivative (Ineffective Portion)
	Nine months ended\nApril 30,					Nine months ended\nApril 30,			Nine months ended\nApril 30,
	2012			2011				2012		2011			2012		2011
Foreign currency intercompany debt	$	113			$	—		Investment and other income — net	$	—	$	—		Investment and other income — net		$	—	$	—
Foreign currency denominated debt		8,588				(11,362	)	Investment and other income — net		—		—		Investment and other income — net			—		—
Foreign exchange contracts		(1,166	)			(14,069	)	Investment and other income — net		—		—		Investment and other income — net			—		—

Total	$	7,535			$	(25,431	)		$	—	$	—				$	—	$	—

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

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


		Amount of Gain or (Loss) Recognized in Income on Derivative
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Nine months ended April \n30, 2012		Nine months ended April \n30, 2011
Foreign exchange contracts	Other income (expense)	$	227		$	(953	)

Total		$	227		$	(953	)

\n\n

NOTE L — Acquisitions and Divestitures

In March 2012, the Company acquired Grafo Wiremarkers Africa (Proprietary) Limited\n(“Grafo”), based in Johannesburg, South Africa for $3,039. Grafo offers a comprehensive range of wire identification products and is the sole distributor in Africa of locally developed\nDartag^® ABS cablemarkers, and stainless steel ties and tags. Grafo has annual sales of approximately $3,000 and\nis included in the Company’s EMEA segment. The purchase price allocation resulted in $1,227 assigned to goodwill, and $961 assigned to customer relationships. The amount assigned to the customer relationships is being amortized over seven\nyears. The Company expects the acquisition to provide a base in South Africa where it can further expand its business with the established distributors and customers throughout South Africa and the Southern African Development Community (SADC)\ncountries.

The results of the operations of the acquired business have been included since the respective date of acquisition\nin the accompanying condensed consolidated financial statements. The Company is continuing to evaluate the initial purchase price allocations for the acquisitions completed within the past 12 months and will adjust the allocations as additional\ninformation relative to the fair value of assets and liabilities of the acquired businesses becomes known. Pro-forma information related to the acquisition during the nine months ended April 30, 2012, is not included because the impact on the\nCompany’s consolidated results of operations is considered immaterial.

In November 2010, the Company acquired ID\nWarehouse, based in New South Wales, Australia for $7,970. ID Warehouse offers security identification and visitor management products including identification card printers, access control cards, wristbands, tamper-evident security seals and\nidentification accessories. The business is included in the Company’s Asia-Pacific segment.

In December 2010, the\nCompany sold its Teklynx business, a barcode software company. The Teklynx business had operations primarily in the Company’s Americas and EMEA segments. The Company received proceeds of $12,979, net of cash retained in the business. The\ntransaction resulted in a pre-tax gain of $4,394, which was accounted for in “Selling, general, and administrative expenses” (“SG&A”) on the Condensed Consolidated Statement of Income for the nine month period ended\nApril 30, 2011. The divestiture of Teklynx was part of the Company’s continued long-term growth strategy to focus the Company’s energies and resources on growth of the Company’s core business.

\n\n\n\n

\n\n\n

NOTE M — Subsequent Events

In May 2012, the Company acquired Runelandhs Försäljnings AB (“Runelandhs”), based in Kalmar,\nSweden for approximately $24,000. Runelandhs is a direct marketer of industrial and office equipment with annual sales of approximately $19,000. Its products include lifting, transporting, and warehouse equipment; workbenches and material handling\nsupplies; products for environmental protection; and entrance, reception, and office furnishings.

In May 2012, the Company\nacquired Pervaco AS (“Pervaco”), based in Kjeller, Norway for approximately $12,000. Pervaco is a direct marketer of facility identification products with annual sales of approximately $6,000.

On May 15, 2012, the Board of Directors declared a quarterly cash dividend to shareholders of the Company’s Class A and\nClass B Common Stock of $0.185 per share payable on July 31, 2012, to shareholders of record at the close of business on July 10, 2012.

NOTE N — New Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update\n(“ASU”) No. 2011-08, “Intangibles – Goodwill and Other (Topic 350), Testing Goodwill for Impairment,” which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting\nunit’s fair value is less than its carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely\nthan not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. This update is effective for annual and interim\ngoodwill impairment tests performed in fiscal years beginning after December 15, 2011, with early adoption permitted. The Company does not expect adoption of this ASU to have a material impact on the Company’s results of operations,\nfinancial position or cash flow.

In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income,”\nwhich eliminates the option to present components of other comprehensive income (“OCI”) as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all non-owner changes in\nstockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently, in December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date\nfor Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income,” which indefinitely defers the requirements in ASU 2011-05 to present on the face of the financial statements adjustments for items\nthat are reclassified from OCI to net income in the statement where the components of net income and the components of OCI are presented. The ASU does not change the items that must be reported in OCI. This update is effective for fiscal years, and\ninterim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company is in the process of determining its method of presentation; however, it does not anticipate the adoption of these updates to have\na material impact on its financial statements.

In May 2011, the FASB issued ASU 2011-04 “Fair Value Measurement:\nAmendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single,\nconverged fair value framework. While the ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, it expands existing disclosure requirements for fair value measurements and makes other amendments. Key additional\ndisclosures include quantitative disclosures about unobservable inputs in Level 3 measures, qualitative information about sensitivity of Level 3 measures and valuation processes, and classification within the fair value hierarchy for instruments\nwhere fair value is only disclosed in the footnotes but the carrying amount is on some other basis. This update is effective for interim and annual periods beginning after December 15, 2011. The Company does not expect adoption of this ASU to\nhave a material impact on the Company’s results of operations, financial position or cash flow.

\n\n

\n\n\n\n

\n\n

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

Overview

Brady, a Wisconsin corporation, founded in 1914, is an international manufacturer of identification solutions and specialty materials that identify and protect premises, products and people. The Company\nis organized and managed on a geographic basis by region: Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific. Across these regions, the Company conducts three primary businesses: Brady, Direct Marketing and Die-Cut.

Brady Business

Within the Brady business, the primary product categories include:

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

•

Workplace safety and compliance, which includes facility identification, spill control, lockout/tagout, and software services\n

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

•

Product identification, which includes materials and printing systems for product identification, brand protection labeling, tamper-evident labeling,\nwork in process labeling, finished product identification, and bar coding that performs under harsh or demanding conditions

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

•

Wire identification, which includes handheld printers, wire markers, sleeves, and tags

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

•

People identification, which includes access control software and products, self-expiring name tags, badges, and lanyards.\n

Products within the Brady business are sold under the Brady brand through multiple channels, which include\ndistributors, resellers, and a dedicated direct sales force. The Brady business serves customers in many markets, which include industrial manufacturing, electronic manufacturing, chemical, oil, gas, food and beverage, aerospace defense, mass\ntransit, electrical contractors, and telecommunications.

The Brady business provides differentiated, proprietary products,\nmost of which have been internally developed and manufactured. These internally developed products include materials, printing systems, and software.

Direct Marketing Business

Within the Direct Marketing business, the\nprimary product categories include:

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

•

Workplace safety and compliance, which include informational signs, tags, security and traffic related products, first aid supplies, material handling,\nasset identification, and regulatory products.

Products within the Direct Marketing business are sold under\na variety of brands through multiple channels, which include catalog, on-line, phone, and telemarketing. The Direct Marketing business serves customers in many markets, which include process industries, manufacturers, government, education,\nconstruction, and utilities.

The Direct Marketing business consists primarily of stock and customer identification products,\nand also sells a broad range of related resale products.

Die-Cut Business

Within the Die-Cut business, the primary products include highly customized precision die-cut products used to seal, dissipate heat,\ninsulate, protect, shield, or provide other mechanical performance properties.

Products within the Die-Cut business are sold\nthrough a technical direct sales force, and are supported by global strategic account management. The Die-Cut business serves customers in many markets, which include mobile handset, hard disk drive, consumer electronics, other computing devices, as\nwell as products for automotive, and medical.

The Die-Cut business consists of highly engineered customized products,\nmanufactured to specific customer requirements.

The Company believes that its reputation for innovation, commitment to\nquality and service, and dedicated employees have made it a world leader in the markets it serves. The Company operates in Australia, Belgium, Brazil, Canada, the Cayman Islands, China, Denmark, France, Germany, Hong Kong, India, Italy, Japan,\nLuxembourg, Malaysia, Mexico, the Netherlands, Norway, the Philippines, Poland, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, Thailand, Turkey, the United Arab Emirates, the United Kingdom and the United States. Brady sells through\nsubsidiaries or sales offices in these countries, with additional sales through a dedicated team of international sales representatives in New Zealand, Russia, Taiwan, Vietnam, Central Europe, the Middle East, Africa and South America.

\n\n\n\n

\n\n

Sales for the quarter ended April 30, 2012, decreased 1.9% to $331.6 million,\ncompared to $337.9 million in the same period of fiscal 2011. Organic sales decreased 0.5%, acquisitions increased sales 0.2%, and the effects of fluctuations in the exchange rates used to translate financial results into the United States\ndollar reduced sales 1.6%. Net income for the quarter ended April 30, 2012, was $27.7 million or $0.52 per diluted Class A Nonvoting Common Share, down from net income of $28.6 million, or $0.54 per diluted Class A Nonvoting Common\nShare reported in the third quarter of last fiscal year.

Sales for the nine months ended April 30, 2012, increased 0.5%\nto $1,001.7 million, compared to $996.5 million in the same period of fiscal 2011. Organic sales increased 0.4%, divestitures net of acquisitions reduced sales 0.2%, and the effects of fluctuations in the exchange rates used to translate financial\nresults into the United States dollar increased sales 0.3%. The net loss for the nine months ended April 30, 2012, was $29.6 million or $0.57 per diluted Class A Nonvoting Common Share, down from net income of $79.1 million, or $1.49 per\ndiluted Class A Nonvoting Common Share reported in the same period of the prior fiscal year. The net loss was a result of a $115.7 million non-cash goodwill impairment charge recorded during the quarter ended January 31, 2012, related to\nthe former North/South Asia reporting unit within the Company’s Asia-Pacific reporting segment. Refer to Note B, “Goodwill and Intangible Assets” in the Notes to the Condensed Consolidated Financial Statements for further discussion\nregarding the goodwill impairment charge.

Results of Operations

The comparability of the operating results for the three and nine months ended April 30, 2012, to the prior year has been impacted by\nthe following acquisitions and divestiture completed in fiscal 2012 and fiscal 2011.

Fiscal 2012

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\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
Grafo	EMEA	March 2012

Fiscal 2011

Acquisition	Segment	Date Completed
ID Warehouse	Asia Pacific	November 2010

Divestiture
Teklynx	Americas EMEA	December 2010

Gross margin as a percentage of sales decreased to 48.3% from 49.6% for the quarter and to 48.0% from\n49.3% for the nine months ended April 30, 2012, compared to the same periods of the previous year. The primary driver of the gross margin decline continued to be the Asia-Pacific region, where competition within the die-cut market has been\nsignificant.

Research and development (“R&D”) expenses decreased 15.3% to $8.9 million for the quarter and\ndecreased 10.9% to $28.7 million for the nine months ended April 30, 2012, compared to $10.6 million and $32.2 million for the same periods in the prior year, respectively. As a percentage of sales, R&D expenses decreased to 2.7% in\nthe third quarter of fiscal 2012 from 3.1% in the third quarter of fiscal 2011, and declined to 2.9% in the first nine months of fiscal 2012 compared to 3.2% in the first nine months of fiscal 2011. The decline in R&D expenses was primarily due\nto a decrease in variable incentive compensation for fiscal year 2012 compared to fiscal year 2011, as well as reduced overall R&D spend due to an increased mix of materials projects, which have less development costs than printer and software\nprojects.

Selling, general and administrative (“SG&A”) expenses decreased 7.2% to $106.7 million for the three\nmonths ended April 30, 2012, compared to $115.0 million for the same period in the prior year, and decreased 3.6% to $320.5 million for the nine months ended April 30, 2012, compared to $332.4 million for the same period in the prior\nyear. As a percentage of sales, SG&A expenses decreased to 32.2% from 34.0% for the third quarter, primarily due to a pretax reduction of $6.0 million in variable incentive compensation compared to the same period in the prior year. The decrease\nin SG&A expenses as a percentage of sales to 32.0% from 33.4% for the nine months ended April 30, 2012, compared to the same periods in the prior year, was due to the reduction in variable incentive compensation and the continued focus on\nreducing SG&A expense through ongoing productivity initiatives. This reduction was partially offset by investments required for growth initiatives.

\n\n\n\n

\n\n

During the three months ended April 30, 2012, the Company took various measures to\naddress its cost structure in response to weaker sales forecasts across the Company, as well as the decline in operating results in the Asia die-cut business. As a result of these actions, the Company recorded restructuring expenses of $3.4 million\nduring the three months ended April 30, 2012, compared to $1.2 million in the same period in the prior year. During the nine months ended April 30, 2012, restructuring expenses decreased to $3.4 million from $7.0 million, compared to the\nsame period in the prior year. The decrease in restructuring expenses for the nine months ended April 30, 2012, was a result of minimal restructuring charges recorded during the first six months of fiscal 2012 compared to the same period of\nfiscal 2011. Restructuring expenses are expected to continue for the next several quarters.

Investment and other income\ndecreased to $1.1 million from $1.4 million for the three months ended April 30, 2012, compared to the same period in the prior year, and decreased to $1.7 million from $2.9 million for the nine months ended April 30, 2012, compared to the\nsame period in the prior year. The decrease was primarily due to losses on foreign currency exchange.

Interest expense\ndecreased to $4.7 million from $5.1 million for the three months ended April 30, 2012, compared to the same period in the prior year, and decreased to $14.7 million from $16.6 million for the nine months ended April 30, 2012, compared\nto the same period in the prior year. The decrease was due to the Company’s lower principal balance under its outstanding debt agreements.

The Company’s effective tax rate increased to 25.9% from 23.1% for the quarter and decreased to (196.1%) from 25.3% for the nine months ended April 30, 2012, compared to the same periods in\nthe prior year. The effective tax rate for the nine months ended April 30, 2012, was significantly impacted by the non-deductible former North/South Asia goodwill impairment charge of $115.7 million recognized during the three months ended\nJanuary 31, 2012. Refer to Note B, “Goodwill and Intangible Assets” in the Notes to the Condensed Consolidated Financial Statements for further discussion. Excluding the goodwill impairment charge, the effective tax rate was 25.5% for\nthe nine months ended April 30, 2012.

Net income for the three months ended April 30, 2012, decreased 3.3% to\n$27.7 million, compared to $28.6 million for the same quarter of the previous year. Net income as a percentage of sales decreased to 8.3% from 8.5% for the quarter ended April 30, 2012, compared to the same period in the prior year. Net\nincome before restructuring-related expenses for the quarter ended April 30, 2012 was $30.3 million, an increase of 2.7% from $29.5 million for the same period in the prior year. The Company’s net loss was $29.6 million for the nine months\nended April 30, 2012, compared to net income of $79.1 million for the nine months ended April 30, 2011. The Company’s net loss before restructuring-related expenses for the nine months ended April 30, 2012, was $26.9 million, a\ndecrease from net income before restructuring-related expenses of $84.1 million in the same period of the prior year. The net loss was a result of the goodwill impairment charge of $115.7 million recorded during the three months ended\nJanuary 31, 2012. Refer to Note B, “Goodwill and Intangible Assets” in the Notes to the Condensed Consolidated Financial Statements for further discussion. Net income before the impairment charge and restructuring charges was $88.8\nmillion for the nine months ended April 30, 2012, compared to $84.1 million for the same period in the prior year.

Business Segment\nOperating Results

The Company is organized and managed on a geographic basis by region. Each of these regions, Americas,\nEMEA and Asia-Pacific, has a President that reports directly to the Company’s chief operating decision maker, its Chief Executive Officer. Each region has its own distinct operations, is managed locally by its own management team, maintains its\nown financial reports and is evaluated based on regional segment profit. The Company has determined that these regions comprise its operating and reportable segments based on the information used by the Chief Executive Officer to allocate resources\nand assess performance.

\n\n\n\n

\n\n

Following is a summary of segment information for the three and nine months ended April 30, 2012 and\n2011:


(Dollars in thousands)	Americas			EMEA			Asia- Pacific		Total Regions		Corporate and Eliminations			Total
SALES TO EXTERNAL CUSTOMERS
Three months ended:
April 30, 2012	$	150,629			$	97,938		$	83,062		$	331,629			$	—		$	331,629
April 30, 2011	$	149,217			$	105,894		$	82,785		$	337,896			$	—		$	337,896
Nine months ended:
April 30, 2012	$	442,896			$	290,887		$	267,938		$	1,001,721			$	—		$	1,001,721
April 30, 2011	$	431,216			$	301,985		$	263,292		$	996,493			$	—		$	996,493
SALES INFORMATION
Three months ended April 30, 2012
Organic		1.9	%			(3.3	)%		(1.2	)%		(0.5	)%			—			(0.5	)%
Currency		(0.9	)%			(4.7	)%		1.5	%		(1.6	)%			—			(1.6	)%
Acquisitions/Divestitures		0.0	%			0.5	%		0.0	%		0.2	%			—			0.2	%

Total		1.0	%			(7.5	)%		0.3	%		(1.9	)%			—			(1.9	)%
Nine months ended April 30, 2012
Organic		3.5	%			(2.0	)%		(1.9	)%		0.4	%			—			0.4	%
Currency		(0.5	)%			(1.1	)%		3.0	%		0.3	%			—			0.3	%
Acquisitions/Divestitures		(0.3	)%			(0.6	)%		0.7	%		(0.2	)%			—			(0.2	)%

Total		2.7	%			(3.7	)%		1.8	%		0.5	%			—			0.5	%
SEGMENT PROFIT
Three months ended:
April 30, 2012	$	38,887			$	25,571		$	6,598		$	71,056			$	(388	)	$	70,668
April 30, 2011	$	38,292			$	28,938		$	9,976		$	77,206			$	(3,561	)	$	73,645
Percentage increase (decrease)		1.6	%			(11.6	)%		(33.9	)%		(8.0	)%						(4.0	)%
Nine months ended:
April 30, 2012	$	117,914			$	78,432		$	27,635	(1)	$	223,981			$	(6,009	)	$	217,972
April 30, 2011	$	108,666			$	82,165		$	38,330		$	229,161			$	(12,087	)	$	217,074
Percentage increase (decrease)		8.5	%			(4.5	)%		(27.9	)%		(2.3	)%						0.4	%

\n\n\n\n

(1)

The Company recognized a goodwill impairment charge of $115.7 million during the quarter ended January 31, 2012, related to the former North/South Asia reporting\nunit within the Asia-Pacific reporting segment, which is excluded from segment profit as presented in the table above. Refer to Note B, “Goodwill and Intangible Assets” in the Notes to the Condensed Consolidated Financial Statements for\nfurther discussion.

NET INCOME RECONCILIATION


	Three months\nended: April 30,			Nine months\nended: April 30,
(Dollars in thousands)	2012			2011			2012		2011
Total profit from reportable segments	$	71,056			$	77,206		$	223,981		$	229,161
Corporate and eliminations		(388	)			(3,561	)		(6,009	)		(12,087	)
Unallocated amounts:
Administrative costs		(26,275	)			(31,563	)		(85,999	)		(90,534	)
Restructuring charges		(3,440	)			(1,211	)		(3,440	)		(6,986	)
Impairment charge		—				—			(115,688	)		—
Investment and other income		1,110				1,428			1,720			2,892
Interest expense		(4,735	)			(5,103	)		(14,715	)		(16,640	)

Income (loss) before income taxes		37,328				37,196			(150	)		105,806
Income taxes		(9,676	)			(8,607	)		(29,420	)		(26,737	)

Net income (loss)	$	27,652			$	28,589		$	(29,570	)	$	79,069

The Company evaluates short-tem segment performance based on segment profit or loss and customer sales.\nSegment profit or loss does not include certain administrative costs, such as the cost of finance, information technology and human resources, which are managed as global functions. Restructuring charges, impairment charges, stock options, interest,\ninvestment and other income and income taxes are also excluded when evaluating performance.

\n\n\n\n

\n\n

Americas:

Americas sales increased 1.0% to $150.6 million for the quarter and increased 2.7% to $442.9 million for the nine months ended April 30, 2012, compared to $149.2 million and $431.2 million,\nrespectively, for the same periods in the prior year. Organic sales increased 1.9% and 3.5% during the quarter and nine-month periods, respectively, compared to the same periods in the prior year. Fluctuations in the exchange rates used to translate\nfinancial results into the United States dollar resulted in a negative impact on sales of 0.9% in the quarter, and 0.5% in the nine-month period. The decrease in sales resulting from the fiscal year 2011 divestiture of Teklynx was 0.3% in the\nnine-month period, and did not have an impact on the quarter ended April 30, 2012.

The increase in organic sales of 1.9%\nfor the quarter and 3.5% for the nine-month period were driven primarily by the Brady business in the United States through new proprietary product launches and increased customer demand within the electrical and data communication markets. The\nstrong Brady business sales growth was partially offset by a sales decline within the direct marketing business within the regulatory publishing products market.

Segment profit increased 1.6% to $38.9 million from $38.3 million for the quarter, and increased 8.5% to $117.9 million from $108.7 million for the nine months ended April 30, 2012, compared to the\nsame periods in the prior year. As a percentage of sales, segment profit increased to 25.8% from 25.7% for the quarter, and increased to 26.6% from 25.2% for the nine months ended April 30, 2012, compared to the same periods in the prior year.\n

The profit improvement for the quarter and nine-month periods ended April 30, 2012, was driven by an improved gross\nmargin due to selected price increases that went into effect at the beginning of fiscal year 2012, along with increased productivity within the selling expense structure. The actions taken to reduce selling expenses were focused on improving the\nproductivity and processes of inside sales, field sales, and inquiry management.

EMEA:

EMEA sales decreased 7.5% to $97.9 million for the quarter and 3.7% to $290.9 million for the nine months ended April 30, 2012,\ncompared to $105.9 million and $302.0 million, respectively, for the same periods in the prior year. Organic sales decreased 3.3% and 2.0% for the quarter and nine-month periods, respectively, compared to the same periods in the prior year.\nFluctuations in the exchange rates used to translate financial results into the United States dollar resulted in a negative impact on sales of 4.7% in the quarter, and 1.1% in the nine-month period. The acquisition of Grafo increased segment sales\nby 0.5% during the quarter ended April 30, 2012, compared to the same period in the prior year. The acquisition of Grafo net of the fiscal 2011 divestiture of Teklynx decreased segment sales by 0.6% during the nine months ended April 30,\n2012, compared to the same period in the prior year.

The decrease in organic sales of 3.3% in the quarter ended\nApril 30, 2012, was primarily due to the current economic uncertainty in Europe, compared to the relative stability in the European economy in the same period of the prior year. Specifically, businesses in the U.K., Spain and Italy experienced\nsales declines driven by the difficult economic circumstances. The organic sales decline was shared between the direct marketing and Brady businesses throughout the segment. Sales increased by 0.5% due to the acquisition of Grafo, a supplier of\nwire-marking products that enabled geographic expansion into South Africa.

Segment profit decreased 11.6% to $25.6 million\nfrom $28.9 million for the quarter, and decreased 4.5% to $78.4 million from $82.2 million for the nine months ended April 30, 2012, compared to the same periods in the prior year. As a percentage of sales, segment profit decreased to 27.0%\nfrom 27.3% for the quarter and decreased to 27.0% from 27.2% for the nine months ended April 30, 2012, compared to the same periods in the prior year.

The decrease in segment profit for the quarter and nine-month period ended April 30, 2012 was primarily due to the organic sales decline. The macroeconomic slowdown in Europe is difficult and\ntrending downwards. During the quarter ended April 30, 2012, approximately one-half of the Company’s restructuring charges related to the European die-cut business. The Company has reallocated resources within countries in order to focus\non growing markets within the Middle East and Central Europe.

Asia-Pacific:

Asia-Pacific sales increased 0.3% to $83.1 million from $82.8 million for the quarter, and increased 1.8% to $267.9 million from $263.3\nmillion for the nine months ended April 30, 2012, compared to the same periods in the prior year. Organic sales decreased 1.2% and 1.9% during the quarter and nine-month periods, respectively, compared to the same periods in the prior year.\nFluctuations in the exchange rates used to translate financial results into the United States dollar resulted in a positive impact on sales of 1.5% in the quarter, and 3.0% in the nine-month period. Segment sales increased 0.7% during the nine\nmonths ended April 30, 2012, due to the fiscal 2011 acquisition of ID Warehouse, which had no incremental effect on sales for the quarter ended April 30, 2012.

\n\n\n\n

\n\n

The decrease in organic sales for the quarter and the year ended April 30, 2012, was\nprimarily due to weak sales within the die-cut business, as sales to one of the Company’s largest customers have declined significantly as a result of the customer’s loss of market share. During the quarter ended April 30, 2012, the\nsales decline was partially offset by the timing of the Chinese New Year, which increased sales by approximately $5.0 million during the second quarter of fiscal 2012 compared to the same period in the prior year.

Segment profit decreased 33.9% to $6.6 million from $10.0 million for the quarter, and decreased 27.9% to $27.6 million from $38.3\nmillion for the nine months ended April 30, 2012, compared to the same periods in the prior year. As a percentage of sales, segment profit decreased to 7.9% from 12.1% in the quarter, and decreased to 10.3% from 14.6% for the nine-month period,\ncompared to the same periods in the prior year.

The decrease in segment profit for the quarter and nine-month period ended\nApril 30, 2012, was primarily due to increased competition and declines in sales to the Company’s largest die-cut customer as a result of their market share decline. The reduction in segment profit associated with the die-cut business was\npartially offset by margin improvement and mix impact from the growing and more profitable Australian businesses.

In addition\nto the factors described above, the nine months ended April 30, 2012 were negatively impacted by the residual effects of the Thailand flood through delayed product launches and lower absorption of fixed costs within the segment. Losses caused\nby the flooding are expected to be partially covered by property and business interruption insurance. The timing of the insurance recoveries could fall into subsequent periods beyond fiscal year 2012.

Financial Condition

Cash and cash equivalents were $374.4 million at April 30, 2012 and $390.0 million at July 31, 2011, a decline of $15.5\nmillion as summarized below:


	Nine months ended: April \n30,
(Dollars in thousands)	2012			2011
Net cash flow provided by (used in):
Operating activities	$	100,595			$	110,446
Investing activities		(22,450	)			(10,020	)
Financing activities		(80,641	)			(62,785	)
Effect of exchange rate changes on cash		(13,050	)			21,497

Net (decrease) increase in cash and cash equivalents	$	(15,546	)		$	59,138

Net cash provided by operating activities was $100.6 million for the nine months ended April 30,\n2012, a decrease of $9.8 million from cash provided by operating activities of $110.4 million for the nine months ended April 30, 2011. Cash flows from operating activities are generated primarily from operating income and managing the\ncomponents of working capital. The decrease in cash flows from operating activities during the nine months ended April 30, 2012, compared to the same period of the prior year was primarily due to a decrease in accounts payable and an increase\nin inventory levels.

Net cash used in investing activities was $22.5 million for the nine months ended April 30, 2012,\nan increase of $12.5 million from cash used in investing activities of $10.0 million for the nine months ended April 30, 2011. The increase in cash used in investing activities for the nine months ended April 30, 2012, was primarily a\nresult of the comparison to the prior year divestiture of Teklynx, which generated $13.0 million in cash from the sale transaction. Capital expenditures were $14.5 million for the nine months ended April 30, 2012, compared to $13.7 million\nin the same period last year and $20.5 million during the twelve months ended July 31, 2011. The Company expects capital expenditures of approximately $20.0 million for the year ending July 31, 2012.

Net cash used in financing activities was $80.6 million for the nine months ended April 30, 2012, an increase of $17.8 million from\ncash used in financing activities of $62.8 million during the nine months ended April 30, 2011. The change was primarily due to $12.3 million used to repurchase common shares during the nine months ended April 30, 2012 compared to the same\nperiod of the prior year.

On October 26, 2011, 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 time to time in one or more offerings, an indeterminate amount of Class A Nonvoting Common Stock and debt securities as it deems prudent\nor necessary to raise capital at a later date. The shelf registration statement became effective upon filing with the SEC. The Company plans to use the proceeds 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\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 institutional investors at interest rates varying from 5.14% to 5.33%. The notes must be repaid equally over seven years, with initial payment due dates\nranging from 2008 to 2011, with interest payable on the notes due semiannually on various dates throughout the year, which began in December 2004. The private placements were exempt from the registration requirements of the Securities Act of 1933.\nThe notes were not registered for resale and may not be resold absent such registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The notes have certain\nprepayment penalties for repaying them prior to the maturity date.

On May 13, 2010, the Company completed a private\nplacement of €75.0 million aggregate principal amount of senior unsecured notes to accredited institutional investors. The €75.0 million of senior notes consists of €30.0 million aggregate principal amount of 3.71%\nSeries 2010-A Senior Notes, due May 13, 2017 and €45.0 million aggregate principal amount of 4.24% Series 2010-A Senior Notes, 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 registered for resale and may not be resold absent such registration or an applicable exemption from the registration requirements of the Securities Act\nof 1933 and applicable state securities laws. The notes have certain prepayment penalties for prepaying them prior to maturity. The notes have 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 13, 2010.

On\nFebruary 1, 2012, the Company and certain of its subsidiaries entered into an unsecured $300 million multi-currency revolving loan agreement with a group of six banks that replaced and terminated the Company’s previous credit agreement\nthat had been entered into on October 5, 2006, and amended on March 18, 2008. Under the new credit agreement, which has a final maturity date of February 1, 2017, the Company has the option to select either a base interest rate (based\nupon the higher of the federal funds rate plus one-half of 1% or the prime rate of Bank of America plus a margin based on the Company’s consolidated leverage ratio) or a Eurocurrency interest rate (at the LIBOR rate plus a margin based on the\nCompany’s consolidated leverage ratio). At the Company’s option, and subject to certain conditions, the available amount under the new credit facility may be increased from $300 million up to $450 million. No borrowings have\noccurred under the new credit facility dated February 1, 2012.

The Company’s debt and revolving loan agreements\nrequire it to maintain certain financial covenants. The Company’s June 2004, February 2006, March 2007, and May 2010 private placement debt agreements require the Company to maintain a ratio of debt to the trailing twelve\nmonths EBITDA, as defined in the debt agreements, of not more than a 3.5 to 1.0 ratio (leverage ratio). The revolving loan agreement dated February 1, 2012, 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 3.25 to 1.0 ratio. The agreement requires the Company’s trailing twelve months earnings 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 April 30, 2012, the Company was in compliance with the financial covenants of the revolving loan agreement, with the ratio of debt to EBITDA, as defined by the agreement, equal to 1.5 to 1.0 and the interest\nexpense coverage ratio equal to 11.3 to 1.0.

Long-term obligations, less current obligations, as a percentage of long-term\nobligations, less current obligations, plus stockholders’ investment were 20.9% at April 30, 2012 and 22.3% at July 31, 2011. Long-term obligations decreased by $51.1 million from July 31, 2011 to April 30, 2012, which was\nprimarily due to the $42.5 million debt principal payments made during the nine months ended April 30, 2012. The remaining decrease of $8.6 million from July 31, 2011 to April 30, 2012, was due to the positive impact of foreign\ncurrency translation on the Company’s Euro-denominated debt.

Stockholders’ investment decreased $92.6 million\nduring the nine months ended April 30, 2012, as a result of the Company’s net loss of $29.6 million, as well as the decrease in accumulated other comprehensive income of $33.5 million due to the impact of foreign currency translation, and\nthe payment of dividends on Class A and Class B Common Stock of $27.3 million and $1.9 million, respectively.

The\nCompany’s cash balances are generated and held in numerous locations throughout the world. At April 30, 2012 and July 31, 2011, approximately 68% and 69% of the Company’s cash and cash equivalents were held outside the United\nStates, respectively. The Company’s growth has historically been funded by a combination of cash provided by operating activities and debt financing. The Company believes that its cash flow from operating activities, in addition to its\nborrowing capacity, are sufficient to fund its anticipated requirements for working capital, capital expenditures, restructuring activities, acquisitions, common stock repurchases, scheduled debt repayments, and dividend payments. The Company\nbelieves that its current credit arrangements are sound and that the strength of its balance sheet will allow financial flexibility to respond to both internal growth opportunities and those available through acquisition.

\n\n\n\n

\n\n

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

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

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

Other Contractual Obligations — The Company does not have material financial guarantees or other contractual commitments that are\nreasonably likely to adversely affect liquidity.

Related-Party Transactions — The Company evaluated its affiliated party\ntransactions for the period ended April 30, 2012. Based on the evaluation the Company does not have material related party transactions that affect the results of operations, cash flow or financial condition.

Subsequent Events Affecting Financial Condition

In May 2012, the Company acquired Runelandhs Försäljnings AB (“Runelandhs”), based in Kalmar, Sweden for $23.9 million. Runelandhs is a direct marketer of industrial and office\nequipment with annual sales of approximately $19.0 million. Its products include lifting, transporting, and warehouse equipment; workbenches and material handling supplies; products for environmental protection; and entrance, reception, and office\nfurnishings.

In May 2012, the Company acquired Pervaco AS (“Pervaco”), based in Kjeller, Norway for $12.2 million.\nPervaco is a direct marketer of facility identification products with annual sales of approximately $6.0 million.

On\nMay 15, 2012, the Board of Directors declared a quarterly cash dividend to shareholders of the Company’s Class A and Class B Common Stock of $0.185 per share payable on July 31, 2012 to shareholders of record at the close of\nbusiness on July 10, 2012.

\n\n\n\n

\n\n

Forward-Looking Statements

Brady believes that certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements related to\nfuture events included in this Form 10-Q, including, without limitation, statements regarding Brady’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and\nplans and objectives of management for future operations are forward-looking statements. When used in this Form 10-Q, words such as “may,” “will,” “expect,” “intend,” “estimate,”\n“anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address\nmatters that are, to different degrees, uncertain and are subject to risks, assumptions and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such\nforward-looking statements. For Brady, uncertainties arise from the length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery; future financial performance of major markets Brady serves, which\ninclude, without limitation, telecommunications, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, transportation; difficulties in making and integrating acquisitions; risks associated with newly\nacquired businesses; Brady’s ability to develop and successfully market new products; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; fluctuations in currency rates versus the\nUS dollar; unforeseen tax consequences; potential write-offs of Brady’s substantial intangible assets; Brady’s ability to retain significant contracts and customers; risks associated with international operations; Brady’s ability to\nmaintain compliance with its debt covenants; technology changes; business interruptions due to implementing business systems; environmental, health and safety compliance costs and liabilities; future competition; interruptions to sources of supply;\nBrady’s ability to realize cost savings from operating initiatives; difficulties associated with exports; risks associated with restructuring plans; risks associated with obtaining governmental approvals and maintaining regulatory compliance;\nand numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings,\nincluding, but not limited to, those factors listed in the “Risk Factors” section located in Item 1A of Part I of the Company’s most recently filed Form 10-K for the year ended July 31, 2011. These uncertainties may\ncause Brady’s actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements.

\n\n\n\n

\n\n

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to the Company’s annual report on Form 10-K for the year ended July 31, 2011. There has been no material change in this\ninformation since July 31, 2011.

ITEM 4. CONTROLS AND PROCEDURES

Brady Corporation maintains a set of disclosure controls and procedures that are designed to ensure that information required to be\ndisclosed by the Company in the reports filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s\nrules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports the Company files under the Exchange Act is\naccumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required\ndisclosure. The Company carried out an evaluation, under the supervision and with the participation of its management, including its President and Chief Executive Officer and its Senior Executive Vice President and Chief Financial Officer, of the\neffectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, the Company’s President and Chief Executive Officer and Senior\nExecutive Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.

There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and\n15d-15(f)) that occurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

\n\n\n\n

\n\n

PART II. OTHER INFORMATION

ITEM 6. Exhibits

(a) Exhibits

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


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

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

32.1		Section 1350 Certification of Frank M. Jaehnert

32.2		Section 1350 Certification of Thomas J. Felmer

101		Interactive Data File

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

SIGNATURES

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


		BRADY CORPORATION

Date: June 5, 2012		/s/ Frank M. Jaehnert

		Frank M. Jaehnert
		President & Chief Executive Officer

Date: June 5, 2012		/s/ Thomas J. Felmer

		Thomas J. Felmer
		Senior Vice President & Chief Financial Officer (Principal Financial Officer)

\n\n\n\n

\nEX-31.1\n\n \n\n

EXHIBIT 31.1

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

I, Frank M. Jaehnert, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: June 5, 2012

/s/ FRANK M. JAEHNERT\n

Frank M. Jaehnert

President and\nChief Executive Officer

\n\n

\nEX-31.2\n\n \n\n

EXHIBIT 31.2

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

I, Thomas J. Felmer, certify that:

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

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

Date: June 5, 2012

/s/ THOMAS J. FELMER\n

Thomas J. Felmer

Senior Vice\nPresident and Chief

Financial Officer

\n\n

\nEX-32.1\n\n \n\n

EXHIBIT 32.1

SECTION 1350 CERTIFICATION

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

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act\nof 1934; and

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

Date: June 5, 2012

/s/ FRANK M. JAEHNERT

Frank M. Jaehnert

President and Chief Executive Officer

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

\n\n

\nEX-32.2\n\n \n\n

EXHIBIT 32.2

SECTION 1350 CERTIFICATION

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

Date: June 5, 2012

/s/ THOMAS J. FELMER

Thomas J. Felmer

Senior Vice President and Chief

Financial Officer

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

\n\n","error":null}

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company