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\n\n

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q\n

\n\n\n\n

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

For the Quarterly Period Ended October 31, 2012

\n\n\n\n

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

For the Transition Period from\n to \n

Commission File Number 1-14959

BRADY CORPORATION

(Exact name of registrant as specified in its charter)

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

Wisconsin

39-0178960

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

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


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\ncheck mark whether the 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\nfile such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller\nreporting company. See the definitions 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 þ

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 December 3, 2012, there were 47,581,104 outstanding shares of Class A Nonvoting Common Stock and 3,538,628 shares of Class B Voting Common Stock. The Class B Voting Common\nStock, all of which 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		3
Item 1. Financial Statements (Unaudited)		3
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Income		4
Condensed Consolidated Statements of Other Comprehensive Income		5
Condensed Consolidated Statements of Cash Flows		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussions and Analysis of Financial Condition and Results of\nOperations		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		24
Item 4. Controls and Procedures		25
PART II. Other Information		26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 6. Exhibits		27
Signatures		27

\n\n\n

\n\n

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

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


	October 31, 2012			July 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	321,309			$	305,900
Accounts receivable — net		218,246				199,006
Inventories:
Finished products		67,992				64,740
Work-in-process		16,280				15,377
Raw materials and supplies		26,255				25,407

Total inventories		110,527				105,524
Prepaid expenses and other current assets		42,400				40,424

Total current assets		692,482				650,854
Other assets:
Goodwill		680,595				676,791
Other intangible assets		80,983				84,119
Deferred income taxes		46,627				45,356
Other		21,577				20,584
Property, plant and equipment:
Cost:
Land		8,892				8,651
Buildings and improvements		102,592				101,962
Machinery and equipment		296,561				292,130
Construction in progress		10,064				10,417

		418,109				413,160
Less accumulated depreciation		288,949				283,145

Property, plant and equipment — net		129,160				130,015

Total	$	1,651,424			$	1,607,719

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	105,348			$	86,646
Wages and amounts withheld from employees		40,529				54,629
Taxes, other than income taxes		8,211				9,307
Accrued income taxes		12,153				14,357
Other current liabilities		44,686				40,815
Current maturities on long-term debt		61,264				61,264

Total current liabilities		272,191				267,018
Long-term obligations, less current maturities		259,729				254,944
Other liabilities		78,538				76,404

Total liabilities		610,458				598,366
Stockholders’ investment:
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 47,563,704 and\n47,630,926 shares, respectively		513				513
Class B voting common stock — Issued and outstanding, 3,538,628 shares		35				35
Additional paid-in capital		314,896				313,008
Income retained in the business		749,773				732,290
Treasury stock — 3,387,783 and 3,245,561 shares, respectively of Class A nonvoting common stock, at\ncost		(93,535	)			(92,600	)
Accumulated other comprehensive income		72,178				59,411
Other		(2,894	)			(3,304	)

Total stockholders’ investment		1,040,966				1,009,353

Total	$	1,651,424			$	1,607,719

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)


	Three Months Ended October 31,
	(Unaudited)
	2012			2011
Net sales	$	337,646			$	349,508
Cost of products sold		173,026				181,677

Gross margin		164,620				167,831
Operating expenses:
Research and development		8,485				9,809
Selling, general and administrative		108,261				108,932
Loss (gain) on sales of businesses		3,438				—

Total operating expenses		120,184				118,741
Operating income		44,436				49,090
Other income and (expense):
Investment and other income (expense)		397				(202	)
Interest expense		(4,163	)			(5,047	)

Income before income taxes		40,670				43,841
Income taxes		13,482				11,109

Net income	$	27,188			$	32,732

Per Class A Nonvoting Common Share:
Basic net income	$	0.53			$	0.62
Diluted net income	$	0.53			$	0.62
Dividends	$	0.19			$	0.185
Per Class B Voting Common Share:
Basic net income	$	0.52			$	0.60
Diluted net income	$	0.51			$	0.60
Dividends	$	0.173			$	0.168
Weighted average common shares outstanding (in thousands):
Basic		51,039				52,657
Diluted		51,312				52,954

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)


	Three Months Ended October 31,
	(Unaudited)
	2012			2011
Net income	$	27,188			$	32,732
Other comprehensive income:
Foreign currency translation adjustments		18,493				(14,600	)
Net investment hedge translation adjustments		(5,301	)			3,228
Long-term intercompany loan translation adjustments		(1,594	)			(3,684	)
Cash flow hedges:
Net (loss) gain recognized in other comprehensive income		(557	)			1,010
Reclassification adjustment for (gains) losses included in net income		(467	)			777

		(1,024	)			1,787
Pension and other post-retirement benefits:
Gain recognized in other comprehensive income		—				1,105
Actuarial gain amortization		(11	)			—
Prior service credit amortization		(51	)			—

		(62	)			1,105
Other comprehensive income (loss), before tax		10,512				(12,164	)
Income tax benefit (expense) related to items of other comprehensive income (loss)		2,255				(4,956	)

Other comprehensive income (loss), net of tax		12,767				(17,120	)

Comprehensive income	$	39,955			$	15,612

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)


	October 31,
	(Unaudited)
	2012			2011
Operating activities:
Net income	$	27,188			$	32,732
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,675				11,241
Deferred income taxes		(109	)			4,399
Non-cash portion of stock-based compensation expense		4,399				3,591
Loss (gain) on sales of businesses		3,138				—
Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures):
Accounts receivable		(18,426	)			(7,798	)
Inventories		(8,141	)			(7,156	)
Prepaid expenses and other assets		(2,710	)			(7,384	)
Accounts payable and accrued liabilities		6,752				(21,814	)
Income taxes		(2,548	)			7,470

Net cash provided by operating activities		20,218				15,281
Investing activities:
Purchases of property, plant and equipment		(6,177	)			(5,817	)
Settlement of net investment hedges		—				(958	)
Divestiture of businesses, net of cash retained in the businesses		10,178				—
Other		(70	)			(233	)

Net cash provided by (used in) investing activities		3,931				(7,008	)
Financing activities:
Payment of dividends		(9,705	)			(9,690	)
Proceeds from issuance of common stock		1,684				683
Purchase of treasury stock		(5,121	)			(12,309	)
Income tax benefit from the exercise of stock options and deferred compensation distributions, and other		401				456

Net cash used in financing activities		(12,741	)			(20,860	)
Effect of exchange rate changes on cash		4,001				(5,790	)

Net increase (decrease) in cash and cash equivalents		15,409				(18,377	)
Cash and cash equivalents, beginning of period		305,900				389,971

Cash and cash equivalents, end of period	$	321,309			$	371,594

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest	$	4,953			$	6,082
Income taxes, net of refunds		12,199				5,825

See Notes to Condensed Consolidated Financial Statements.

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BRADY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended October 31, 2012

(Unaudited)

(In thousands, except share and per share amounts)

NOTE A — Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Brady Corporation\nand 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 adjustments,\nconsisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of October 31, 2012 and July 3l, 2012, and its results of operations, comprehensive income, and cash flows for the three\nmonths ended October 31, 2012 and 2011. The condensed consolidated balance sheet as of July 31, 2012, has been derived from the audited consolidated financial statements of that date. The preparation of financial statements in conformity\nwith accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making\nestimates, actual results in future periods may differ from the estimates.

Certain information and footnote\ndisclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial\nstatements do not include all of the information and footnotes required by GAAP for complete financial statement presentation. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated\nfinancial statements and the notes thereto included in the Company’s latest annual report on Form 10-K for the year ended July 31, 2012.

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, “Presentation of Comprehensive Income,” which eliminates\nthe 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 stockholders’ equity be\npresented in either 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 for Amendments to the\nPresentation 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 that are reclassified\nfrom 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. The Company has provided the required statements of comprehensive\nincome for the three months ended October 31, 2012 and 2011.

NOTE B — Goodwill and Intangible Assets

Changes in the carrying amount of goodwill for the quarter ended October 31, 2012, are as follows:\n


	Americas			EMEA			Asia-Pacific		Total
Balance as of July 31, 2012	$	417,886			$	174,868		$	84,037	$	676,791

Current year divestitures		(2,882	)			—			—		(2,882	)
Translation adjustments		389				5,886			411		6,686

Balance as of October 31, 2012	$	415,393			$	180,754		$	84,448	$	680,595

Goodwill increased $3,804 during the three months ended October 31, 2012, due to the\npositive effects of foreign currency translation, partially offset by the divestitures of Precision Converting, LLC (“Brady Medical”) and the Varitronics businesses during the first quarter of fiscal 2013. Refer to Note K,\n“Acquisitions and Divestitures” for further discussion. The goodwill balance as of October 31, 2012, includes an accumulated impairment charge of $115,688 recognized during fiscal 2012 on the Company’s former North/South Asia\nreporting unit.

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


	October 31, 2012		July 31, 2012
	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		$	10,605		$	(9,217	)	$	1,388		5		$	10,418	$	(9,058	)	$	1,360
Trademarks and other		7			9,195			(7,403	)		1,792		7			8,945		(7,094	)		1,851
Customer relationships		7			164,375			(132,097	)		32,278		7			164,392		(128,805	)		35,587
Non-compete agreements and other		4			15,662			(15,224	)		438		4			15,988		(15,417	)		571
Unamortized other intangible assets:
Trademarks		N/A			45,087			—			45,087		N/A			44,750		—			44,750

Total				$	244,924		$	(163,941	)	$	80,983				$	244,493	$	(160,374	)	$	84,119

The value of goodwill and other intangible assets in the condensed consolidated balance\nsheets at October 31, 2012, differs from the value assigned to them in the original allocation of purchase price due to the effect of fluctuations in the exchange rates used to translate the financial statements into the United States Dollar\nbetween the date of acquisition and October 31, 2012.

Amortization expense on intangible assets was\n$4,147 and $4,080 for the three-month periods ended October 31, 2012 and 2011, respectively. The amortization over each of the next five fiscal years is projected to be $14,383, $7,060, $6,265, $5,359 and $2,918 for the fiscal years ending\nJuly 31, 2013, 2014, 2015, 2016 and 2017, respectively.

NOTE C — Net Income per Common Share

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


	Three Months Ended
	October 31,
	2012			2011
Numerator: (in thousands)
Net income	$	27,188			$	32,732
Less:
Restricted stock dividends		(59	)			(57	)

Numerator for basic and diluted Class A net income per share	$	27,129			$	32,675

Less:
Preferential dividends		(797	)			(818	)
Preferential dividends on dilutive stock options		(5	)			(5	)

Numerator for basic and diluted Class B net income per share	$	26,327			$	31,852

Denominator: (in thousands)
Denominator for basic net income per share for both Class A and Class B		51,039				52,657
Plus: Effect of dilutive stock options		273				297

Denominator for diluted net income per share for both Class A and Class B		51,312				52,954

Class A Nonvoting Common Stock net income per share:
Basic	$	0.53			$	0.62
Diluted	$	0.53			$	0.62
Class B Voting Common Stock net income per share:
Basic	$	0.52			$	0.60
Diluted	$	0.51			$	0.60

Options to purchase approximately 5,072,000 and 4,915,000 shares of Class A\nNonvoting Common Stock were not included in the computation of diluted net income per share for the quarters ended October 31, 2012 and 2011, respectively, because the option exercise price was greater than the average market price of the\ncommon shares and, therefore, the effect would be anti-dilutive.

\n\n\n

NOTE D — Segment Information

The Company evaluates short-term segment performance based on segment profit or loss and customer\nsales. Segment profit or loss does not include certain administrative costs, such as the cost of finance, information technology, human resources, and executive leadership, which are managed as global functions. Restructuring charges, impairment\ncharges, equity compensation costs, interest expense, investment and other income (expense) and income taxes are also excluded when evaluating performance. Intersegment sales and transfers are recorded at cost plus a standard percentage markup.\n

The Company is organized and managed on a geographic basis by region. Each of these regions, Americas, EMEA\nand 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 own\nfinancial 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 and\nassess performance.

Following is a summary of segment information for the three months ended October 31,\n2012 and 2011:


									Corporate
									and
	Americas		EMEA			Asia-Pacific		Total Region	Eliminations		Totals
Three months ended October 31, 2012:
Revenues from external customers	$	148,692		$	93,233		$	95,721	$	337,646		$	—		$	337,646
Intersegment revenues		10,082			924			6,407		17,413			(17,413	)		—
Segment profit		44,633			23,567			12,055		80,255			(1,973	)		78,282
Three months ended October 31, 2011:
Revenues from external customers	$	153,863		$	97,356		$	98,289	$	349,508		$	—		$	349,508
Intersegment revenues		10,225			762			7,442		18,429			(18,429	)		—
Segment profit		43,230			26,299			13,304		82,833			(3,263	)		79,570

Following is a reconciliation of segment profit to net income for the three months ended\nOctober 31, 2012 and 2011:


	Three months ended:
	October 31,
	2012			2011
Total profit from reportable segments	$	80,255			$	82,833
Corporate and eliminations		(1,973	)			(3,263	)
Unallocated amounts:
Administrative costs		(30,408	)			(30,480	)
Loss (gain) on sales of businesses (1)		(3,438	)			—
Investment and other income (expense)		397				(202	)
Interest expense		(4,163	)			(5,047	)

Income before income taxes		40,670				43,841
Income taxes		(13,482	)			(11,109	)

Net income	$	27,188			$	32,732

\n\n\n\n

(1)	Losses on sales of businesses relate to the Americas segment during the three months ended October 31, 2012.

\n\n\n

\n\n

Following is a summary of sales by business platform for the three months\nended October 31, 2012 and 2011:

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


	Three months ended
	October 31,
	2012		2011
ID Solutions	$	186,302		$	194,334
Direct Marketing		90,627			88,833
Die-Cut		60,717			66,341

Total		337,646			349,508

NOTE E – Stock-Based Compensation

The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock\noptions to purchase shares of Class A Nonvoting Common Stock or restricted shares of Class A Nonvoting Common Stock to employees and non-employee directors. The options have an exercise price equal to the fair market value of the\nunderlying 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. Options issued under the plan,\nreferred to herein as “service-based” options, generally expire 10 years from the date of grant. The Company also grants stock options to certain executives and key management employees that vest upon meeting certain financial performance\nconditions over the vesting schedule described above. These options are referred to herein as “performance-based” options. Performance-based stock options expire 10 years from the date of grant. Restricted shares issued under the plan have\nan 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 amended in fiscal 2011 to allow for vesting after either a five-year period or a seven-year period based\nupon both performance and service conditions. The restricted shares granted in fiscal 2011 vest ratably at the end of years 3, 4 and 5 upon meeting certain performance and service conditions. These shares are referred to herein as\n“performance-based restricted shares.” The Company also grants restricted stock units to certain executives and key management employees that vest upon meeting certain financial performance conditions over a specified vesting period,\nreferred to herein as “performance-based restricted stock units.” The performance-based restricted stock units granted in fiscal 2013 vest over a two-year period upon meeting both performance and service conditions.

As of October 31, 2012, the Company has reserved 7,013,266 shares of Class A Nonvoting Common Stock for\noutstanding stock options and restricted shares and 4,239,650 shares of Class A Nonvoting Common Stock remain for future issuance of stock options and restricted shares under the active plans. The Company uses treasury stock or will issue new\nClass A Nonvoting Common Stock to deliver shares under these plans.

The Company recognizes the\ncompensation cost of all share-based awards on a straight-line basis over the vesting period of the award. Total stock compensation expense recognized by the Company during the three months ended October 31, 2012 and 2011, was $4,399 ($2,683\nnet of taxes) and $3,591 ($2,190 net of taxes), respectively. As of October 31, 2012, total unrecognized compensation cost related to share-based compensation awards was $16,252 pre-tax, net of estimated forfeitures, which the Company expects\nto recognize over a weighted-average period of 2.0 years.

The Company has estimated the fair value of its\nservice-based and performance-based stock option awards granted during the three months ended October 31, 2012 and 2011, using the Black-Scholes option valuation model. The weighted-average assumptions used in the Black-Scholes valuation model\nare reflected in the following table:


	Three Months Ended			Three Months Ended
	October 31, 2012			October 31, 2011
				Performance-					Performance-
	Service-Based			Based Option			Service-Based		Based Option
Black-Scholes Option Valuation Assumptions	Option Awards			Awards			Option Awards		Awards
Expected term (in years)		5.94				—			5.89			6.57
Expected volatility		38.73	%			—			39.40	%		39.21	%
Expected dividend yield		2.20	%			—			2.07	%		1.99	%
Risk-free interest rate		0.89	%			—			1.16	%		2.05	%
Weighted-average market value of underlying stock at grant date	$	30.21			$	—		$	27.00		$	29.55
Weighted-average exercise price	$	30.21			$	—		$	27.00		$	29.55
Weighted-average fair value of options granted during the period	$	8.96			$	—		$	8.37		$	10.01

\n\n\n\n

\n\n

The Company uses historical data regarding stock option exercise behaviors\nto estimate the expected term of options granted 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\nis based on the Company’s historical dividend 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\noption. The market value is calculated as the average of the high and the low stock price on the date of the grant.

The Company granted 10,000 shares of performance-based restricted stock units in September 2012 with a grant price and fair value of $30.21. The Company granted 100,000 shares of performance-based\nrestricted stock in August of 2010, with a grant price and fair value of $28.35, and 210,000 shares in fiscal 2008, with a grant price and fair value of $32.83. As of October 31, 2012, 10,000 restricted stock units were outstanding and 310,000\nperformance-based restricted shares were outstanding.

The Company granted 760,350 service-based stock options\nduring the three months ended October 31, 2012, with a weighted average exercise price of $30.21 and a weighted average fair value of $8.96. There were no performance-based stock options granted during the three months ended October 31,\n2012.

A summary of stock option activity under the Company’s share-based compensation plans for the\nthree months ended October 31, 2012 is presented below:


Options	Shares			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at July 31, 2012		6,253,751			$	29.24
New grants		760,350			$	30.21
Exercised		(167,636	)		$	17.78
Forfeited or expired		(474,807	)		$	30.49

Outstanding at October 31, 2012		6,371,658			$	29.56		6.5	$	15,992

Exercisable at October 31, 2012		4,231,429			$	29.78		5.0	$	12,722

There were 4,231,429 and 3,975,963 options exercisable with a weighted average exercise\nprice of $29.78 and $29.83 at October 31, 2012 and 2011, respectively. The cash received from the exercise of options during the quarters ended October 31, 2012 and 2011, was $1,684 and $683, respectively. The tax benefit on stock options\nexercised during the quarters ended October 31, 2012 and 2011, was $635 and $469, respectively.

The\ntotal intrinsic value of options exercised during the three months ended October 31, 2012 and 2011, based upon the average market price at the time of exercise during the period, was $2,033 and $642, respectively. The total fair value of stock\noptions vested during the three months ended October 31, 2012 and 2011, was $6,330 and $6,935, respectively.

NOTE F — Stockholders’ Equity

On September 9, 2011, the Company’s Board of Directors authorized a share repurchase program\nfor up to two million 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\nconnection with the Company’s stock-based plans and for other corporate purposes. As of July 31, 2012, there remained 334,940 shares to purchase in connection with this share repurchase plan. During the three months ended October 31,\n2012, the Company purchased 188,167 shares of its Class A Nonvoting Common Stock under this plan for $5,121.

On September 6, 2012, the Company’s Board of Directors authorized an additional share repurchase program for up to two million additional shares of the Company’s Class A Nonvoting\nCommon Stock. As of October 31, 2012, there remained 2,146,773 shares to purchase in connection with the Company’s share repurchase plans.

NOTE G — Employee Benefit Plans

The Company provides postretirement medical benefits for eligible regular full and part-time domestic\nemployees (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 credited service. Credited service\nbegins 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 contributions will not exceed a\ndefined 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.

\n\n\n\n

\n\n

The Company funds benefit costs on a pay-as-you-go basis. There have been no\nchanges to the components of net periodic benefit cost or the amount that the Company expects to fund in fiscal 2013 from those reported in Note 3 to the consolidated financial statements included in the Company’s latest annual report on Form\n10-K for the year ended July 31, 2012.

NOTE H — Fair Value Measurements

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

Level 1 — Assets or\nliabilities 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\nunobservable pricing inputs and which result in the use of management estimates.

The following tables set\nforth by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis at October 31, 2012, and July 31, 2012, according to the valuation techniques the Company used\nto determine their fair values.


	Inputs Considered As
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Fair Values		Balance Sheet Classifications
October 31, 2012:
Trading securities	$	12,962		$	—		$	12,962	Other assets
Foreign exchange contracts		—			485			485	Prepaid expenses and other current assets

Total Assets	$	12,962		$	485		$	13,447

Foreign exchange contracts	$	—		$	311		$	311	Other current liabilities
Foreign currency denominated debt		—			105,292			105,292	Long term obligations, less current maturities

Total Liabilities	$	—		$	105,603		$	105,603

July 31, 2012:
Trading securities	$	12,676		$	—		$	12,676	Other assets
Foreign exchange contracts		—			1,234			1,234	Prepaid expenses and other current assets

Total Assets	$	12,676		$	1,234		$	13,910

Foreign exchange contracts	$	—		$	281		$	281	Other current liabilities
Foreign currency denominated debt		—			99,081			99,081	Long term obligations, less current maturities

Total Liabilities	$	—		$	99,362		$	99,362

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

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

Foreign exchange contracts: The Company’s foreign exchange contracts were classified as Level 2, as the fair\nvalue 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 exchange rates. See Note K, “Derivatives and Hedging Activities” for\nadditional information.

Foreign currency denominated debt: The Company’s foreign currency\ndenominated 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 curves and\nforeign currency exchange rates. See Note J, “Derivatives and Hedging Activities” for additional information.

\n\n\n\n

\n\n

There have been no transfers of assets or liabilities between the fair value\nhierarchy levels, outlined above, during the three months ended October 31, 2012 and 2011. In addition, the Company had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial\nrecognition during the three months ended October 31, 2012 and 2011.

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

The estimated fair value of the Company’s short-term and long-term debt obligations, based on the quoted market prices for similar issues and on the current rates offered for debt of similar\nmaturities, was $343,894 and $338,668 at October 31, 2012 and July 31, 2012, respectively, as compared to the carrying value of $320,993 and $316,208 at October 31, 2012 and July 31, 2012, respectively.

During fiscal 2012, goodwill with a carrying amount of $163,702 in the former North/South Asia reporting unit was written\ndown to its estimated implied fair value of $48,014, resulting in a non-cash impairment charge of $115,688. In order to arrive at the implied fair value of goodwill, the Company assigned the fair value to all of the assets and liabilities of the\nreporting unit as if the reporting unit had been acquired in a business combination. Intangible assets consisted of customer lists, and were valued using the income approach based upon customers in existence at the valuation date. After assigning\nfair value to the assets and liabilities of the reporting unit, the result was the implied fair value of goodwill of $48,014, which represented a Level 3 asset measured at fair value on a nonrecurring basis subsequent to its original recognition.\n

NOTE I — Restructuring

During fiscal 2012, the Company took various measures to address its cost structure in response to\nweaker sales forecasts across the Company. As a result of these actions, the Company recorded restructuring charges of $12,110, which consisted of $10,944 of employee separation costs, $458 of fixed asset write-offs, $521 of other facility closure\nrelated costs, and $187 of contract termination costs. Of the $12,110 of restructuring charges recorded during fiscal 2012, $3,531 was incurred in the Americas, $6,898 was incurred in EMEA, and $1,681 was incurred in Asia-Pacific. The costs related\nto these restructuring activities were recorded on the consolidated statements of income as restructuring charges during fiscal 2012. The Company expects the majority of the remaining cash payments to be made during fiscal 2013.

A reconciliation of the Company’s fiscal 2012 restructuring liability is as follows:


	Employee Related			Other			Total
Beginning balance, July 31, 2012	$	8,809			$	265		$	9,074

Cash payments		(3,516	)			(64	)		(3,580	)

Ending balance, October 31, 2012	$	5,293			$	201		$	5,494

NOTE J — Derivatives and Hedging Activities

The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate risk of\nspecific foreign currency denominated transactions. 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 less than 18 months, which qualify as cash flow\nhedges or net investment hedges under the accounting guidance for derivative instruments and hedging activities. The primary objective of the Company’s foreign currency exchange risk management is to minimize the impact of currency movements\ndue to transactions 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 U.S. Dollar. To achieve this\nobjective, the Company hedges a portion of known exposures using forward foreign exchange currency contracts. As of October 31, 2012 and July 31, 2012, the notional amount of outstanding forward exchange contracts was $50,859 and $61,169,\nrespectively.

The Company hedges a portion of known exposure using forward exchange contracts. Main exposures\nare related to transactions denominated in the British Pound, the Euro, Canadian Dollar, Australian Dollar, Malaysian Ringgit and Singapore Dollar. Generally, these risk management transactions will involve the use of foreign currency derivatives to\nminimize the impact of currency movements on non-functional currency transactions.

Hedge effectiveness is\ndetermined by how closely the changes in fair value of the hedging 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\nthe inception of the hedge and on an on-going basis. Gains or losses on the derivative related to hedge ineffectiveness are recognized in current earnings.

\n\n

Cash Flow Hedges

The Company has designated a portion of its foreign exchange contracts as cash flow hedges and recorded these contracts at\nfair value on the condensed consolidated balance sheets. For these instruments, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in\nthe same period or periods during which the hedged transaction affects earnings. At October 31, 2012, unrealized losses of $557 have been included in OCI. As of October 31, 2011, unrealized gains of $1,010 have been included in OCI. These\nbalances are expected to be reclassified from OCI to earnings during the next twelve months when the hedged transactions impact earnings. For the three months ended October 31, 2012 and 2011, the Company reclassified gains of $467 and losses of\n$777 from OCI into earnings, respectively. At October 31, 2012 and July 31, 2012, the U.S. dollar equivalent of these outstanding forward foreign exchange contracts totaled $33,348 and $39,458, respectively, including contracts to sell\nEuros, Canadian Dollars, Australian Dollars, British Pounds and U.S. Dollars.

Net Investment Hedges

The Company has also designated intercompany and third party foreign currency denominated debt instruments as net\ninvestment hedges. At October 31, 2012 and July 31, 2012, the Company designated €4,581 of intercompany loans as net investment hedges to hedge portions of its net investment in European foreign operations. On May 13, 2010, the\nCompany completed the private placement of €75.0 million aggregate principal amount of senior unsecured notes to accredited institutional investors. This Euro-denominated debt obligation was designated as a net investment hedge to\nselectively hedge portions of its net investment in European foreign operations. The Company’s foreign denominated debt obligations are valued under a market approach using publicized spot prices.

Additionally, the Company utilizes forward foreign exchange currency contracts designated as hedge instruments to hedge\nportions of the Company’s net investments in foreign operations. The net gains or losses attributable to changes in spot exchange rates are recorded in other comprehensive income. Recognition in earnings of amounts previously recorded in\ncumulative translation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation. At October 31, 2012 and July 31, 2012, the U.S dollar equivalent of these\noutstanding forward foreign exchange contracts totaled $8,550 and $10,650, respectively. For the three months ended October 31, 2012 and 2011, the Company recognized an OCI loss of $5,301 and an OCI gain of $3,228, respectively, on its net\ninvestment hedges.

Non-Designated Hedges

For the three months ended October 31, 2012, the Company recognized a gain of $186 in “Investment and other income” on the condensed consolidated statements of income related to\nnon-designated hedges. The Company did not recognize a gain or loss on the condensed consolidated statements of income related to non-designated hedges during the three months ended October 31, 2011.

\n\n\n\n

\n\n

Fair values of derivative instruments in the condensed consolidated balance\nsheets were as follows:


	Asset Derivatives		Liability\nDerivatives
	October 31, 2012		July 31, 2012		October 31, 2012			July 31, 2012
	Balance \n Sheet Location	Fair Value		Balance \n Sheet Location		Fair Value			Balance \n Sheet Location	Fair Value		Balance \n Sheet Location	Fair Value
Derivatives designated as hedging instruments
Cash flow hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	470		Prepaid expenses and other current assets		$	1,156		Other current liabilities	$	191		Other current liabilities	$	210

Net investment hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	—		Prepaid expenses and other current assets		$	—		Other current liabilities	$	16		Other current liabilities	$	71

Foreign currency denominated debt	Prepaid expenses and other current assets	$	—		Prepaid expenses and other current assets		$	—		Long term obligations, less current maturities	$	105,292		Long term obligations, less current maturities	$	99,081

Total derivatives designated as hedging instruments		$	470				$	1,156			$	105,499			$	99,362

Derivatives not designated as hedging instruments
Foreign exchange contracts	Prepaid expenses and other current assets	$	15		Prepaid expenses and other current assets		$	78		Other current liabilities	$	104		Other current liabilities	$	—

Total derivatives not designated as hedging instruments		$	15				$	78			$	104			$	—

NOTE K — Acquisitions and Divestitures

In August 2012, the Company sold all of its assets of Precision Converting, LLC, doing business as\nBrady Medical, in Mesquite, Texas. Brady Medical specialized in manufacturing and converting die-cut products for the medical and diagnostic industry. Brady Medical had operations in the Company’s Americas segment. The Company received proceeds\nof $3,378 for this business, of which $3,018 was in cash and $360 was in non-cash consideration. The non-cash consideration consisted of an escrow account to be released upon the terms of the agreement, which is classified within “Other Long\nTerm Assets” on the Condensed Consolidated Balance Sheets. The transaction resulted in a pre-tax loss of $3,675, which was accounted for during the period ended October 31, 2012.

In October 2012, the Company sold certain assets of its Varitronics business, an education technology solutions business.\nVaritronics had operations in the Company’s Americas segment. The Company received proceeds of $8,410 for this business, of which $7,160 was in cash and $1,250 was in the form of a promissory note. The promissory note is classified within\n“Other Long Term Assets” on the Condensed Consolidated Balance Sheets. The transaction resulted in a pre-tax gain of $237, which was accounted for during the period ended October 31, 2012.

The Brady Medical and Varitronics divestitures are part of the Company’s continued long-term strategy to focus\nresources on businesses with a clear path to sustainable organic growth and profitability.

NOTE L — Subsequent Events

On November 14, 2012, the Board of Directors declared a quarterly cash dividend to shareholders of\nthe Company’s Class A and Class B Common Stock of $0.19 per share payable on January 31, 2013 to shareholders of record at the close of business on January 10, 2013.

\n\n

\n\n\n\n

\n\n

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

Overview

Brady Corporation was incorporated under the laws of the state of Wisconsin in 1914. Brady Corporation is an international manufacturer of identification solutions and specialty materials that identify\nand protect premises, products and people. The ability to provide customers with a broad range of proprietary, customized, and diverse products for use in various applications, along with a commitment to quality and service, a global footprint and\nmultiple sales channels, have made Brady a world leader in many of its markets.

The Company operates in\nAustralia, Belgium, Brazil, Canada, the Cayman Islands, China, Denmark, France, Germany, Hong Kong, India, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, the Philippines, Poland, Singapore, Slovakia, South Africa, South Korea,\nSpain, Sweden, Thailand, Turkey, the United Arab Emirates, the United Kingdom and the United States. Brady sells through subsidiaries or sales offices in these countries, with additional sales through a dedicated team of international sales\nrepresentatives in New Zealand, Russia, Taiwan, Vietnam, Central Europe, the Middle East, Africa and South America.

The Company is organized and managed on a geographic basis within three regions: Americas, EMEA (Europe, the Middle East and Africa), and Asia-Pacific, which are the reportable segments. Across these\nregions, the Company operates three primary business platforms: Identification Solutions (“ID Solutions”), Direct Marketing and Die-Cut. Refer to Item 1 of the Company’s fiscal 2012 Form 10-K for additional information regarding\nthe business platforms.

Results of Operations

During the quarter ended October 31, 2012, the business and operating results were affected by continued global economic weakness. As such, in order to create growth we are focused on the following\ninitiatives:

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

•

Expanding our business in emerging geographies, or geographies where we are under-penetrated

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

•

Expanding globally in certain focus markets, such as Aerospace and Mass Transit, Chemical, Oil & Gas, and Food & Beverage\n

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

•

New product development

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

•

Commitment to increased market share, and

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

•

Expansion of our on-line capabilities to deliver the best buying experience for our customers, partially mitigating the decline in the traditional\ncatalog model within the Direct Marketing business platform

We are also evaluating our\nportfolio of businesses to ensure that resources are allocated to those with sustainable organic growth and profitability. As such, two businesses were divested during the quarter ended October 31, 2012, as summarized within the table below.\nDivestitures involve risks, including difficulties in the separation of operations, services, products, and personnel, the diversion of management’s attention from other business concerns, and the disruption of our business.

The comparability of the operating results for the three months ended October 31, 2012, to the prior year has been\nimpacted by the following acquisitions and divestitures completed in fiscal 2013 and fiscal 2012:

Fiscal 2013

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


Divestitures	Segment		Date Completed
Precision Converting, LLC (“Brady Medical”)		Americas		August 2012
Varitronics		Americas		October 2012

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


Acquisitions	Segment		Date Completed
Grafo Wiremarkers Africa (“Grafo”)		EMEA		March 2012
Runelandhs Försäljnings AB (“Runelandhs”)		EMEA		May 2012
Pervaco AS (“Pervaco”)		EMEA		May 2012

Divestiture
Etimark		EMEA		July 2012

\n\n\n\n

\n\n

Sales for the quarter ended October 31, 2012, decreased 3.4% to $337.6\nmillion, compared to $349.5 million in the same period of the last fiscal year. Of the 3.4% decrease in sales, organic sales decreased by 1.9%, and fluctuations in the exchange rates used to translate financial results into the United States Dollar\nreduced sales by 2.1%. Acquisitions, net of divestitures increased sales by 0.6% during the three months ended October 31, 2012. The decrease in organic sales for the quarter ended October 31, 2012, was comprised of 0.7%, 3.2% and 2.5%\ndecreases in sales in the Americas, EMEA and Asia-Pacific segments, respectively. Net income for the quarter ended October 31, 2012, was $27.2 million or $0.53 per diluted Class A Nonvoting Common Share, a decrease of 16.9% from $32.7\nmillion or $0.62 per diluted Class A Nonvoting Common Share reported in the first quarter of last fiscal year.

Gross margin as a percentage of sales was 48.8% for the quarter ended October 31, 2012, compared to 48.0% in the same period of the previous year. The increase in gross margin was due to operational\nimprovements, as well as the divestiture of businesses with lower gross margins.

Research and development\n(“R&D”) expenses decreased 13.5% to $8.5 million during the three months ended October 31, 2012, compared to $9.8 million for the same period in the prior year. As a percentage of sales, R&D expenses decreased from 2.8% to\n2.5% during the three months ended October 31, 2012, compared to the three months ended October 31, 2011. The decline in R&D expenses was due to the downsizing of certain Asian R&D centers primarily supporting the Die-Cut business\nplatform, which took place during the second half of fiscal 2012.

Selling, general, and administrative\nexpenses (“SG&A”) decreased 0.6% to $108.3 million for the three months ended October 31, 2012, compared to $108.9 million for the same period in the prior year. SG&A expense as percentage of sales increased to 32.1% in the\nfirst quarter of fiscal 2013 compared to 31.2% in the same quarter last year. The increase in SG&A as a percentage of sales was due to the Company’s continued focus on reinvestment in growth initiatives, as well as the decline in sales\nduring the current period.

Interest expense decreased to $4.2 million for the quarter ended October 31,\n2012, from $5.0 million for the same period in the prior year. The decrease was due to the Company’s declining principal balance under its outstanding debt agreements.

The Company’s income tax rate was 33.1% for the quarter ended October 31, 2012, and 25.3% for the same period\nin the prior year. The increase in the Company’s income tax rate during the first quarter of fiscal 2013 was primarily due to the non-renewal of certain U.S. tax laws, the mix of profits earned in higher tax countries, and the divestitures of\ntwo U.S. businesses.

Net income for the three months ended October 31, 2012, decreased 16.9% to $27.2\nmillion, compared to $32.7 million for the same quarter of the previous year. Net income as a percentage of sales decreased to 8.1% for the quarter ended October 31, 2012, from 9.4% for the same period in the prior year. The losses on the sales\nof Brady Medical and Varitronics were $3.2 million, or $0.06 per diluted Class A Common Share.

Business Segment Operating Results\n

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 months ended\nOctober 31, 2012 and 2011:


(Dollars in thousands)	Americas			EMEA			Asia- Pacific		Total Regions		Corporate and Eliminations			Total
SALES TO EXTERNAL CUSTOMERS
Three months ended:
October 31, 2012	$	148,692			$	93,233		$	95,721		$	337,646			$	—		$	337,646
October 31, 2011	$	153,863			$	97,356		$	98,289		$	349,508			$	—		$	349,508
SALES GROWTH INFORMATION
Three months ended October 31, 2012
Organic		(0.7	)%			(3.2	)%		(2.5	)%		(1.9	)%			—			(1.9	)%
Currency		(1.1	)%			(5.7	)%		(0.1	)%		(2.1	)%			—			(2.1	)%
Acquisitions/Divestitures		(1.6	)%			4.7	%		0.0	%		0.6	%			—			0.6	%

Total		(3.4	)%			(4.2	)%		(2.6	)%		(3.4	)%			—			(3.4	)%
SEGMENT PROFIT
Three months ended:
October 31, 2012	$	44,633			$	23,567		$	12,055		$	80,255			$	(1,973	)	$	78,282
October 31, 2011	$	43,230			$	26,299		$	13,304		$	82,833			$	(3,263	)	$	79,570
Percentage increase (decrease)		3.2	%			(10.4	)%		(9.4	)%		(3.1	)%						(1.6	)%

NET INCOME RECONCILIATION


	Three months ended:
	October 31,
(Dollars in thousands)	2012			2011
Total profit from reportable segments	$	80,255			$	82,833
Corporate and eliminations		(1,973	)			(3,263	)
Unallocated amounts:
Administrative costs		(30,408	)			(30,480	)
Loss (gain) on sales of businesses (1)		(3,438	)			—
Investment and other income (expense)		397				(202	)
Interest expense		(4,163	)			(5,047	)

Income before income taxes		40,670				43,841
Income taxes		(13,482	)			(11,109	)

Net income	$	27,188			$	32,732

\n\n\n\n

(1)	Losses on sales of businesses relate to the Americas segment during the three months ended October 31, 2012.

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, human resources, and executive leadership, which are managed as global functions. Restructuring charges, impairment charges, equity\ncompensation costs, interest expense, investment and other income and income taxes are also excluded when evaluating performance.

Americas:

Sales in the Americas decreased 3.4% to $148.7 million for the quarter ended October 31, 2012, compared to $153.9\nmillion for the same period in the prior year. Organic sales declined by 0.7%, the divestitures of Brady Medical and Varitronics decreased sales by 1.6%, and fluctuations in the exchange rates used to translate financial results into the U.S. dollar\ndecreased sales by 1.1%.

The decrease in organic sales of 0.7% during the quarter was primarily due to a\ndecline in the Direct Marketing business platform. Although Direct Marketing sales transacted over the internet increased, it was not sufficient to offset revenue declines in the traditional catalog business. This decrease in the Direct Marketing\nplatform’s organic sales was partially offset by organic sales growth within the ID Solutions platform in the U.S. and Canada through new product developments and an increased focus on the Company’s core distributor-based business.\n

Segment profit increased 3.2% to $44.6 million for the quarter ended October 31, 2012, compared to $43.2\nmillion for the same period in the prior year. As a percentage of sales, segment profit increased to 30.0% for the quarter from 28.1% for the same period in the prior year.

\n\n\n\n

\n\n

The increase in segment profit was driven by the ID Solutions platform, as\nthe Direct Marketing platform’s profit declined as a result of a decline in sales for the quarter. The ID Solutions platform realized an improved gross margin from the divestiture of businesses as well as operational improvements taken to\nimprove the Company’s selling expense structure. These efforts have effectively offset the investment in core growth strategies within the region.

EMEA:

Sales in EMEA decreased 4.2% to $93.2 million for\nthe quarter ended October 31, 2012, compared to $97.4 million for the same period in the prior year. Organic sales declined by 3.2%, acquisitions net of divestitures increased sales by 4.7%, and fluctuations in the exchange rates used to\ntranslate financial results into the U.S. dollar decreased sales by 5.7%.

The decrease in organic sales of\n3.2% during the quarter was primarily due to the difficult economic circumstances in the European economy. Specifically, the ID Solutions platform experienced a sales decline within most European countries during the quarter ended October 31,\n2012, compared to the same period in the prior year. The Direct Marketing platform experienced an organic sales decline in most European countries as well, partially offset by modest growth within France. The fiscal 2012 acquisitions of Grafo,\nPervaco and Runelandhs, net of the divestiture of the Etimark business in the fourth quarter of fiscal 2012, increased sales by 4.7% for the quarter ended October 31, 2012, compared to the same period in the prior year.

Segment profit decreased 10.4% to $23.6 million for the quarter ended October 31, 2012, compared to $26.3 million\nfor the same period in the prior year. As a percentage of sales, segment profit decreased to 25.3% for the quarter ended October 31, 2012, from 27.0% for the same period in the prior year. The segment profit decrease was a result of the decline\nin sales within both the ID Solutions and Direct Marketing platforms during the quarter.

Asia-Pacific:

Asia-Pacific sales decreased 2.6% to $95.7 million for the quarter ended October 31, 2012, compared to $98.3 million\nfor the same period in the prior year. Organic sales decreased 2.5% in the quarter ended October 31, 2012, compared to the same period last year, and fluctuations in the exchange rates used to translate financial results into the U.S. dollar\ndecreased sales within the segment by 0.1% in the quarter.

The decrease in organic sales during the quarter\nwas primarily due to a decline in the hard disk drive market within the Asia Die-Cut business platform as a result of a recent softening in the PC market. In addition, the continued weakness in the Australian economy reduced organic sales for the\nquarter ended October 31, 2012, compared to the same period in the prior year. The decline in organic growth within the region was partially offset by an increase in organic sales due to securing several new programs within the mobile handset\nbusiness.

Segment profit decreased 9.4% to $12.1 million for the quarter ended October 31, 2012,\ncompared to $13.3 million for the same period in the prior year. As a percentage of sales, segment profit decreased to 12.6% for the quarter ended October 31, 2012, from 13.5% for the same period in the prior year.

The decrease in segment profit for the quarter was due to the decline in sales in the hard disk drive market within the\nAsia Die-Cut business platform, as well as the decline in the Australian business during the quarter ended October 31, 2012, compared to the same period in the prior year.

Financial Condition

Cash and cash equivalents were $321.3\nmillion at October 31, 2012, an increase of $15.4 million compared to $305.9 million at July 31, 2012. During the quarter ended October 31, 2011, cash and cash equivalents declined $18.4 million.


	Three months ended: October 31,
(Dollars in thousands)	2012			2011
Net cash flow provided by (used in):
Operating activities	$	20,218			$	15,281
Investing activities		3,931				(7,008	)
Financing activities		(12,741	)			(20,860	)
Effect of exchange rate changes on cash		4,001				(5,790	)

Net increase (decrease) in cash and cash equivalents	$	15,409			$	(18,377	)

\n\n\n\n

\n\n

Net cash provided by operating activities was $20.2 million during the three\nmonths ended October 31, 2012, compared to $15.3 million during the same period in the prior year. Cash flows from operating activities are generated primarily from operating income and managing the components of working capital. The increase\nin cash flows from operating activities of $4.9 million from the first quarter of fiscal 2012 to the first quarter of fiscal 2013 was primarily due to favorable cash flows from accounts payable and accrued liabilities, partially offset by\nunfavorable cash flows from accounts receivable.

Net cash provided by investing activities was $3.9 million\nduring the three months ended October 31, 2012, compared to net cash used by investing activities of $7.0 million during the same period in the prior year. The increase in cash provided by investing activities of $10.9 million was primarily due\nto the sales of the Brady Medical and Varitronics businesses which provided $10.2 million in cash flows.

Net\ncash used in financing activities was $12.7 million during the three months ended October 31, 2012, compared to net cash used by financing activities of $20.9 million during the same period in the prior year. The decrease in cash used in\nfinancing activities of $8.1 million was primarily due to a decline in the repurchase of common shares of $7.2 million.

During fiscal 2004 through fiscal 2007, the Company completed three private placement note issuances totaling $500 million in ten-year fixed rate notes with varying maturity dates to institutional\ninvestors at interest rates varying from 5.14% to 5.33%. The notes must be repaid equally over seven years, with initial payment due dates ranging from 2008 to 2011, with interest payable on the notes due semiannually on various dates throughout the\nyear, which began in December 2004. The private placements were 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\nexemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The notes have certain prepayment penalties for repaying them prior to the maturity date.

On May 13, 2010, the Company completed a private placement of €75.0 million aggregate principal amount of\nsenior unsecured notes to accredited institutional investors. The €75.0 million of senior notes consists of €30.0 million aggregate principal amount of 3.71% Series 2010-A Senior Notes, due May 13, 2017 and\n€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 was exempt from the registration requirements of the\nSecurities Act of 1933. The notes were not registered for resale and may not be resold absent such registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The\nnotes 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 subsidiaries. These unsecured notes were issued pursuant to a\nnote purchase agreement, dated May 13, 2010.

On February 1, 2012, the Company and certain of its\nsubsidiaries 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 that had been entered into on October 5, 2006, and\namended 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 upon the higher of the federal funds rate plus one-half\nof 1% or the prime rate of Bank of America plus a margin based upon the Company’s consolidated leverage ratio) or a Eurocurrency interest rate (at the LIBOR rate plus a margin based on the Company’s consolidated leverage ratio). At the\nCompany’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 occurred under the credit facility.

The Company’s debt and revolving loan agreements require it to maintain certain financial covenants. The\nCompany’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 months EBITDA, as defined in the debt agreements, of not\nmore 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 defined by the debt agreement, of not more than a 3.25 to\n1.0 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 (interest expense coverage). As of October 31, 2012, the\nCompany was in compliance with the financial covenants of the debt and revolving loan agreements, with the ratio of debt to EBITDA, as defined by the agreement, equal to 1.5 to 1.0 and the interest expense coverage ratio equal to 12.0 to 1.0.\n

Long-term obligations as a percentage of long-term obligations plus stockholders’ investment were 20.0%\nat October 31, 2012 and 20.2% at July 31, 2012. Long-term obligations increased by $4.8 million from July 31, 2012 to October 31, 2012 due to the negative impact of foreign currency translation on the Company’s\nEuro-denominated debt.

Stockholders’ investment increased $31.6 million during the three months\nended October 31, 2012, due to the positive effects of foreign currency translation of $13.4 million and current quarter net income of $27.2 million, partially offset by the quarterly dividend payment of $9.7 million.

\n\n\n\n

\n\n

The Company’s cash balances are generated and held in numerous\nlocations throughout the world. At October 31, 2012 and July 31, 2012, approximately 73% and 78% of the Company’s cash and cash equivalents were held outside the United States, respectively. The Company’s growth has historically\nbeen 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 borrowing capacity, are sufficient to fund its anticipated requirements\nfor working capital, capital expenditures, restructuring activities, acquisitions, common stock repurchases, scheduled debt repayments, and dividend payments. However, the Company’s cash needs could require the repatriation of cash to the\nUnited States from foreign jurisdictions, which could result in material expenses in the period in which the transactions occur. The Company believes that its current credit arrangements are sound and that the strength of its balance sheet will\nallow financial flexibility to respond to both internal growth opportunities and those available through acquisition.

Subsequent Events\nAffecting Financial Condition

On November 14, 2012, the Board of Directors declared a quarterly cash\ndividend to shareholders of the Company’s Class A and Class B Common Stock of $0.19 per share payable on January 31, 2013, to shareholders of record at the close of business on January 10, 2013.

\n\n\n\n

\n\n

Off-Balance Sheet Arrangements — The Company does not have material\noff-balance sheet arrangements 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\nfollowing additional information is provided to assist those reviewing the Company’s financial statements.

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

Purchase Commitments —\nThe 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, such commitments are not in excess of current market prices and are not\nmaterial 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 provisions for early termination. The Company does not believe a\nmaterial 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 reasonably likely to adversely affect liquidity.

Related-Party Transactions — Based on an evaluation for the period ended October 31, 2012, the Company does not have\nmaterial related party transactions that affect the results of operations, cash flow or financial condition.

Forward-Looking Statements\n

In this quarterly report on Form 10-Q, statements that are not reported financial results or other historic\ninformation may be “forward-looking statements.” These forward-looking statements relate to, among other things, the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital\nexpenditures, debt levels and cash flows, and plans and objectives of management for future operations.

The\nuse of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are\ngenerally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond\nBrady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from:

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

•

The length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery;

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

•

Increased usage of e-commerce allowing for ease of price transparency;

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

•

Future financial performance of major markets Brady serves, which include, without limitation, telecommunications, hard disk drive, manufacturing,\nelectrical, construction, laboratory, education, governmental, public utility, computer, and transportation;

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

•

Future competition;

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

•

Changes in the supply of, or price for, parts and components;

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

•

Increased price pressure from suppliers and customers;

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

•

Brady’s ability to retain significant contracts and customers;

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

•

Fluctuations in currency rates versus the U.S. dollar;

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

•

Risks associated with international operations;

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

•

Difficulties associated with exports;

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

•

Risks associated with obtaining governmental approvals and maintaining regulatory compliance;

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

•

Brady’s ability to develop and successfully market new products;

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

•

Risks associated with identifying, completing, and integrating acquisitions;

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

•

Risks associated with restructuring plans;

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

•

Environmental, health and safety compliance costs and liabilities;

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

•

Technology changes and potential security violations to the Company’s information technology systems;

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

•

Brady’s ability to maintain compliance with its debt covenants;

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

•

Increase in our level of debt;

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

•

Potential write-offs of Brady’s substantial intangible assets;

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

•

Unforeseen tax consequences; and

\n\n\n\n

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

•

Numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory\nnature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of the Form 10-K.\n

These uncertainties may cause Brady’s actual future results to be materially different\nthan those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.

\n\n\n\n

\n\n

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The global nature of the Company’s business requires active participation in the foreign exchange markets. As a\nresult of investments, production facilities and other operations on a global scale, the Company has assets, liabilities and cash flows in currencies other than the U.S. Dollar. The objective of the Company’s foreign currency exchange risk\nmanagement is to minimize the impact of currency movements on non-functional currency transactions and minimize the foreign currency translation impact on the Company’s operations. To achieve this objective, the Company hedges a portion of\nknown exposures using forward contracts. Main exposures are related to transactions denominated in the British Pound, the Euro, Canadian Dollar, Australian Dollar, Malaysian Ringgit, and Singapore Dollar. As of October 31, 2012, the notional\namount of outstanding forward contracts designated as cash flow hedges was $33.3 million. The Company also uses euro-denominated debt of €75.0 million designated as a hedge instrument to hedge portions of the Company’s net investments\nin its European foreign operations.

The Company also faces exchange rate risk from transactions with\ncustomers in countries outside the United States and from intercompany transactions between affiliates. Although the Company has a U.S. dollar functional currency for reporting purposes, it has manufacturing sites throughout the world and the\nmajority of its sales are generated in foreign currencies. Costs incurred and sales recorded by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period. As a\nresult, the Company is exposed to movements in the exchange rates of various currencies against the U.S. dollar. In particular, the Company has more sales in European currencies than it has expenses in those currencies. Therefore, when European\ncurrencies strengthen or weaken against the U.S. dollar, operating profits are increased or decreased, respectively.

Currency exchange rates decreased sales by 2.1% for the quarter ended October 31, 2012, as compared to an increase in sales of 2.7% due to currency exchange rate fluctuations in the same period of\nthe prior year. During the current quarter, the U.S. dollar appreciated on average against other major currencies throughout the period.

The Company could be exposed to interest rate risk through its corporate borrowing activities. The objective of the Company’s interest rate risk management activities is to manage the levels of the\nCompany’s fixed and floating interest rate exposure to be consistent with the Company’s preferred mix. The interest rate risk management program allows the Company to enter into approved interest rate derivatives if there is a desire to\nmodify the Company’s exposure to interest rates. As of October 31, 2012, the Company had no interest rate derivatives.

The Company is subject to the risk of changes in foreign currency exchange rates due to its operations in foreign countries. The Company has manufacturing facilities and sells and distributes its products\nthroughout the world. As a result, the Company’s financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company\nmanufactures, distributes and sells its products. The Company’s operating results are principally exposed to changes in exchange rates between the U.S. dollar and the Australian dollar, the Canadian dollar, the Singapore dollar, the Euro, the\nBritish Pound, the Brazilian Real, the Korean Won, and the Chinese Yuan. Changes in foreign currency exchange rates for the Company’s foreign subsidiaries reporting in local currencies are generally reported as a component of stockholders’\ninvestment. The Company’s currency translation adjustments recorded for the three months ended October 31, 2012 and 2011 were $13.4 million favorable, and $19.1 million unfavorable, respectively. As of October 31, 2012 and 2011, the\nCompany’s foreign subsidiaries had net current assets (defined as current assets less current liabilities) subject to foreign currency translation risk of $407.3 million and $407.4 million, respectively. The potential decrease in the net\ncurrent assets as of October 31, 2012, from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates would be $40.7 million. This sensitivity analysis assumes a parallel shift in all major foreign currency exchange\nrates versus the U.S. dollar. Exchange rates rarely move in the same direction relative to the U.S. dollar due to positive and negative correlations of the various global currencies. This assumption may overstate the impact of changing exchange\nrates on individual assets and liabilities denominated in a foreign currency.

\n\n\n\n

\n\n

ITEM 4. CONTROLS AND PROCEDURES

Brady Corporation maintains a set of disclosure controls and procedures that are designed to ensure that information\nrequired to be disclosed 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\nthe SEC’s rules 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\nAct is accumulated 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\nrequired disclosure. 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,\nof the effectiveness 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\n13a-15(f) and 15d-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\n

PART II. OTHER INFORMATION

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 9, 2011, the Company’s Board of Directors authorized a share repurchase program for up to two\nmillion 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 the\nCompany’s stock-based plans and for other corporate purposes. As of July 31, 2012, there remained 334,940 shares to purchase in connection with this share repurchase plan. During the three months ended October 31, 2012, the Company\npurchased 188,167 shares of its Class A Nonvoting Common Stock under this plan for $5,121.

On\nSeptember 6, 2012, the Company’s Board of Directors authorized an additional share repurchase program for up to two million additional shares of the Company’s Class A Nonvoting Common Stock. As of October 31, 2012, there\nremained 2,146,773 shares to purchase in connection with the Company’s share repurchase plans.

\n\n\n\n

\n\n

The following table provides information with respect to the purchase of\nClass A Nonvoting Common Stock during the three months ended October 31, 2012:


						Total Number of	Maximum Number
			Average			Shares Purchased	of Shares that May
	Total Number of		Price Paid			as Part of Publicly	Yet Be Purchased
Period	Shares Purchased		per Share			Announced Plans	Under the Plans
August 1, 2012 – August 31, 2012		188,167		$	27.22		188,167	146,773
September 1, 2012 – September 30, 2012		—		$	—		—	2,146,773
October 1, 2012 – October 31, 2012		—		$	—		—	2,146,773

Total		188,167		$	27.22		188,167	2,146,773

ITEM 6. Exhibits

\n\n\n\n

(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\nduly caused this report to be signed 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\n\n\n\n\n\n\n\n\n\n\n\n\n\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: December 5, 2012						/s/ FRANK M. JAEHNERT
						Frank. M. Jaehnert
						President & Chief Executive Officer

Date: December 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\nmaterial fact necessary 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\npresent in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure\ncontrols 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 Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed\nunder 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 during the period in which this report is being\nprepared;

b) Designed such internal control over financial reporting, or caused such internal control over\nfinancial 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 accordance with generally accepted\naccounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and\nprocedures 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\nduring the registrant’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\nover financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based\non our most recent 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\nreporting which are reasonably 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.

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

Date: December 5, 2012

/s/ FRANK M. JAEHNERT

Frank M. Jaehnert

President and Chief 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;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a\nmaterial act necessary 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;

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.

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

Date: December 5, 2012

/s/ THOMAS J. FELMER

Thomas J. Felmer

Senior Vice President 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.\nSection 1350, as adopted 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 October 31, 2012 fully complies\nwith the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

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

Date: December 5, 2012

/s/ FRANK M. JAEHNERT

Frank M. Jaehnert

President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other\ndocument 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 provided to the Company and will be retained by the\nCompany 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 and shall not be deemed filed by the Company for\npurposes of Section 18 of the Securities Exchange Act of 1934, as amended.

\n\n

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

EXHIBIT 32.2

SECTION 1350 CERTIFICATION

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

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

Date: December 5, 2012

/s/ THOMAS J. FELMER

Thomas J. Felmer

Senior Vice President and Chief Financial Officer

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company