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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
 
FORM 8-K
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 10, 2013 
 
 
 
BRADY CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Commission File Number 1-14959
 
 
 
Wisconsin
 
39-0971239
(State of
Incorporation)
 
(IRS Employer
Identification No.)
6555 West Good Hope Road
Milwaukee, Wisconsin 53223
(Address of Principal Executive Offices and Zip Code)
(414) 358-6600
(Registrant’s Telephone Number)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On September 12, 2013, Brady Corporation (the \"Company\") issued a press release announcing its fiscal 2013 fourth quarter financial results. A copy of the press release announcing the fourth quarter financial results is being furnished to the Securities and Exchange Commission as Exhibit 99.1 attached hereto and is incorporated herein by reference.

Item 2.05
COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

On September 11, 2013, the Company's Board of Directors approved a restructuring plan to consolidate facilities in North America, Europe and Asia. The Company is implementing the restructuring action to improve efficiency of operations, reduce operating expenses and enhance customer service. In connection with the restructuring action, the Company expects to incur pre-tax charges of approximately $30 million, substantially all of which are expected to be incurred during fiscal 2014. The charges include employee severance costs of approximately $13 million, facility shut-down costs and lease termination costs of approximately $12 million, and non-cash asset write-offs of approximately $5 million. Cash expenditures for these restructuring activities are expected to be approximately $25 million and are being funded with cash generated from operations. The Company expects the restructuring actions to be substantially complete by the end of fiscal 2014.

Item 2.06
MATERIAL IMPAIRMENTS

On September 10, 2013, the Company concluded that under generally accepted accounting principles a material charge of approximately $204 million for impairment of goodwill and other long-lived assets within its Workplace Safety Americas and Identification Solutions APAC reporting units will be recorded in the Company's fourth fiscal quarter ended July 31, 2013. This non-cash impairment charge does not impact the Company's future cash flow, liquidity, or compliance with its debt covenants in various agreements.

WPS Americas

Since the global economic recession in fiscal 2009, organic growth within the WPS Americas reporting unit has been difficult to achieve, especially within mature markets such as the U.S. and Canada where business-to-business transactions over the internet are more advanced than many of the European and Australian markets. With the acceleration of the internet in the business-to-business market, competition and pricing pressure have intensified. As a result, organic sales declined by approximately 7% and segment profit declined by nearly 20% during fiscal 2013 compared to fiscal 2012.

The Company is modifying its strategy within the WPS platform, which includes investments in the following: enhanced digital capabilities, expanded product offerings, enhanced industry-specific expertise, and adjusting its pricing strategies. Although management believes the strategy modifications will improve organic sales and profitability of the WPS segment in future years, there is risk associated with any strategy. As such, the Company's annual goodwill impairment test performed as of May 1, 2013, resulted in an impairment of approximately $173 million in goodwill and approximately $10 million in indefinite-lived tradenames during the three months ended July 31, 2013.

IDS APAC

The IDS APAC reporting unit had goodwill of approximately $18 million at the annual impairment assessment date. Although sales grew within this reporting unit from 2012 to 2013, profit declined, and neither were as high as anticipated. Projections for the business were not sufficient to support the balance of goodwill remaining within the reporting unit, and the Company concluded that the annual goodwill impairment test resulted in an impairment of approximately $18 million in goodwill and approximately $3 million in fixed assets during the three months ended July 31, 2013.




Item 8.01
OTHER EVENTS

Director Compensation    

On September 11, 2013, the Company's Board of Directors approved an annual stock-based compensation award of 4,250 time-based stock options and 1,450 shares of unrestricted stock for each non-management Director effective September 20, 2013.

Increase in Annual Dividend

On September 11, 2013, the Company announced that its Board of Directors had increased the annual cash dividend on its Class A Common Stock from $0.76 to $0.78 per share. A quarterly dividend in the amount of $0.195 per share will be paid on October 31, 2013, to shareholders of record as of the close of business on October 10, 2013. A copy of the press release regarding the dividend is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01
FINANCIAL STATEMENTS AND EXHIBITS
 
(d)    Exhibits

The following are filed as Exhibits to this Report.

Exhibit No.
Description of Exhibit
99.1
Press Release of Brady Corporation, dated September 12, 2013, relating to fourth quarter fiscal 2013 financial results.

99.2
Press Release of Brady Corporation, dated September 11, 2013, relating to increase in quarterly dividend.
99.3
Informational slides provided by Brady Corporation, dated September 12, 2013, relating to fourth quarter fiscal 2013 financial results.


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
BRADY CORPORATION
 
 
 
Date: September 12, 2013
 
 
 
 
 
 
 
/s/ Thomas J. Felmer
 
 
Thomas J. Felmer
 
 
Senior Vice President &
Chief Financial Officer






EXHIBIT INDEX

EXHIBIT NUMBER
DESCRIPTION
99.1
Press Release of Brady Corporation, dated September 12, 2013, relating to fourth quarter fiscal 2013 financial results.

99.2
Press Release of Brady Corporation, dated September 11, 2013, relating to increase in quarterly dividend.
99.3
Informational slides provided by Brady Corporation, dated September 12, 2013, relating to fourth quarter fiscal 2013 financial results.





\t\n\n
\n\n\t\n\t\t\n\t\t\n\t\tExhibit 99.1\n\t\n\t\n


EXHIBIT 99.1

For More Information:
Investor contact: Aaron Pearce 414-438-6895
Media contact: Carole Herbstreit 414-438-6882

For Immediate Release

Brady Corporation Reports Fiscal 2013 Fourth Quarter Results and Certain Non-Cash Charges

MILWAUKEE (September 12, 2013)--Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for the fiscal 2013 fourth quarter ended July 31, 2013.
Effective May 1, 2013, the Company changed its reporting structure from geographically-based to an organization structured around three global business platforms: Identification Solutions, Workplace Safety and Die-Cut. The Identification Solutions business focuses on identification solutions for a broad range of applications including wire identification, product identification, safety and facility identification, people identification and healthcare identification. The Workplace Safety business focuses on workplace safety and compliance products, and is expanding its multi-channel direct-marketing model with an increased focus on e-business. The Die-Cut business continues to provide precision solutions primarily to the global electronics industry. In May 2013, the Company announced plans to sell its Die-Cut business. Accordingly, the Company has recast its prior-period financial statements to report the financial results of the Die-Cut business on a line item as discontinued operations in the accompanying consolidated statements of income.

Quarter Ended July 31, 2013 Financial Results:
Sales from continuing operations for the fiscal 2013 fourth quarter ended July 31, 2013 were up 14.9 percent to $309.1 million compared to $269.1 million in the fourth quarter of fiscal 2012. Organic sales were down 2.3 percent, the acquisition of Precision Dynamics Corporation (“PDC”) added 16.9 percent to sales, and the impact of foreign currency translation increased sales by 0.3 percent. By segment, organic sales were up 2.1 percent in Identification Solutions and down 8.6 percent in Workplace Safety.
During the quarter ended July 31, 2013, the Company recorded non-cash impairment charges of $204.4 million related to the write-down of certain long-lived assets in Asia, the write-down of goodwill of the Company's North American Workplace Safety business, and the write down of certain other intangible assets. During the quarter, the Company also recorded restructuring charges of $15.6 million and non-cash tax charges of $4.0 million related to the funding of the PDC acquisition and the recording of certain tax valuation allowances.
Net earnings (loss) from continuing operations for the fiscal 2013 fourth quarter ended July 31, 2013, were a loss of $(176.2) million compared to earnings of $20.9 million in the same quarter last year. Non-GAAP net earnings from continuing operations* for the fiscal fourth quarter ended July 31, 2013, was $27.9 million compared to $29.3 million in the same quarter last year.
Earnings (loss) from continuing operations per diluted Class A Nonvoting Common Share was $(3.41) for the fourth quarter of fiscal 2013 compared to $0.40 in the same quarter last year. Non-GAAP earnings from




continuing operations per diluted Class A Nonvoting Common Share* were $0.53 in the fourth quarter of fiscal 2013 and $0.56 per share in the same quarter of fiscal 2012.
  
Year Ended July 31, 2013 Financial Results:
Sales from continuing operations for the year ended July 31, 2013, were up 7.8 percent to $1.15 billion compared to $1.07 billion for the year ended July 31, 2012. Organic sales were down 2.6 percent; acquisitions increased sales by 11.3 percent; and the impact of foreign currency translation decreased sales by 0.9 percent. By segment, Identification Solutions' organic sales increased 0.3 percent and Workplace Safety's organic sales decreased 7.0 percent.
Earnings (loss) from continuing operations for the year ended July 31, 2013, was a loss of $(140.8) million compared to earnings of $102.5 million for the year ended July 31, 2012. Non-GAAP net earnings from continuing operations* was $99.9 million for the year ended July 31, 2013 compared to $112.2 million for the year ended July 31, 2012.
Earnings (loss) from continuing operations per diluted Class A Nonvoting Common Share were $(2.75) for the year ended July 31, 2013 compared to $1.94 for the year ended July 31, 2012. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* was $1.93 for the year-ended July 31, 2013, compared to $2.12 for the year-ended July 31, 2012.

Commentary and Guidance:
“Fiscal 2013 was a year of unprecedented change and transformation for Brady. In addition to reorganizing our businesses around global business platforms, we also engaged in a business simplification process that resulted in a structure that brings us closer to our customers and more effectively supports our growth,” said Brady's President and Chief Executive Officer, Frank M. Jaehnert. “In fiscal 2013, we also made significant changes in our portfolio of companies. We sold several smaller non-core businesses and announced that we are seeking a buyer for our Die-Cut business. At the same time, we completed the acquisition of PDC, which was the largest acquisition in Brady's nearly 100-year history. PDC is a leader in healthcare identification and gives Brady a strong entrance into the healthcare identification space.
“We are committed to returning to organic sales growth in fiscal 2014. Our Identification Solutions business will continue to focus on industries such as healthcare, food and beverage, chemical, oil and gas, and aerospace and mass transit, as well as expanding into faster-growing geographies such as Central Europe, the Middle East, Africa and selected markets in Asia. We are accelerating investment in our Workplace Safety business to improve organic sales and profit by building a scalable multi-channel model that all of our global Workplace Safety businesses will use. This accelerated investment will be evident in our fiscal 2014 financial results and is included in our guidance for next year.”
Brady's Chief Financial Officer, Thomas J. Felmer said, “Brady remains financially very strong. Cash provided by operating activities was $143.5 million during the year ended July 31, 2013, which is in line with the prior year and our debt balance is lower today than it was prior to the purchase of PDC.




“As we look ahead to fiscal 2014, we anticipate organic sales to range from a slight contraction to low single-digit growth, with organic sales strongest in our Identification Solutions business. We expect organic sales to be down in the first half of the year and return to positive organic sales in the second half of fiscal 2014 as our initiatives to improve our Workplace Safety business begin to produce results. For fiscal 2014, we expect earnings from continuing operations per diluted Class A Nonvoting Common Share of between $1.80 and $2.00, exclusive of restructuring charges. Included in this guidance are approximately $0.08 of benefits from the acquisition of PDC, $0.40 of benefits from business simplification activities, an incremental $(0.20) of investments into our Workplace Safety business, and $(0.25) of incremental expenses due to more normalized incentive compensation. This guidance is based on current exchange rates, a full-year income tax rate in the mid-to-upper 20 percent range, capital expenditures of approximately $40 million, and depreciation and amortization of approximately $50 million. We also anticipate approximately $30 million of restructuring charges in fiscal 2014, which will result in approximately $10 million of annualized operational savings beginning in fiscal 2015.”

A webcast regarding Brady's fiscal 2013 fourth quarter financial results will be available at www.bradycorp.com beginning at 9:30 a.m. Central Time today.
Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Brady's products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2013, employed approximately 7,400 people in its worldwide businesses. Brady's fiscal 2013 sales were approximately $1.15 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com.

* See accompanying notes for non-GAAP measures.
















###
Brady believes that certain statements in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements related to future, not past, events included in this news release, 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 plans and objectives of management for future operations are forward-looking statements. When used in this news release, words such as “may,” “will,” “expect,” “intend,” “estimate,” “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 matters 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 forward-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 include, without limitation, telecommunications, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, transportation; difficulties in making and integrating acquisitions; risks associated with newly acquired 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 US 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 maintain 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; Brady'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; and 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, including, but not limited to, those factors listed in the “Risk Factors” section located in Item 1A of Part I of Brady's Form 10-K for the year ended July 31, 2012. These uncertainties may cause 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.





BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
 
Three months ended July 31,
 
Twelve Months Ended July 31,
 
2013
 
2012
 
2013
 
2012
Net sales
$
309,097

 
$
269,089

 
$
1,152,109

 
$
1,068,688

Cost of products sold
152,086

 
121,636

 
546,029

 
479,118

Gross margin
157,011

 
147,453

 
606,080

 
589,570

Operating expenses:
 
 
 
 
 
 
 
Research and development
9,390

 
8,996

 
33,552

 
34,528

Selling, general and administrative
106,938

 
100,283

 
427,661

 
392,526

Restructuring charges
15,573

 
4,107

 
26,046

 
6,084

Impairment charges
204,448

 
—

 
204,448

 
—

Total operating expenses
336,349

 
113,386

 
691,707

 
433,138

 
 
 
 
 
 
 
 
Operating (loss) income
(179,338
)
 
34,067

 
(85,627
)
 
156,432

 
 
 
 
 
 
 
 
Other income and (expense):
 
 
 
 
 
 
 
Investment and other income
1,095

 
362

 
3,522

 
2,082

Interest expense
(3,886
)
 
(4,375
)
 
(16,641
)
 
(19,090
)
 
 
 
 
 
 
 
 
(Loss) earnings from continuing operations before income taxes
(182,129
)
 
30,054

 
(98,746
)
 
139,424

 
 
 
 
 
 
 
 
Income tax (benefit) expense
(5,895
)
 
9,185

 
42,070

 
36,953

 
 
 
 
 
 
 
 
(Loss) earnings from continuing operations
$
(176,234
)
 
$
20,869

 
$
(140,816
)
 
$
102,471

 
 
 
 
 
 
 
 
(Loss) from discontinued operations, net of income taxes
(1,037
)
 
(9,210
)
 
(13,719
)
 
(120,382
)
 
 
 
 
 
 
 
 
Net (loss) earnings
$
(177,271
)
 
$
11,659

 
$
(154,535
)
 
$
(17,911
)
 
 
 
 
 
 
 
 
(Loss) earnings from continuing operations per Class A Nonvoting Common Share:
 
 
 
 
 
 
 
Basic
$
(3.41
)
 
$
0.40

 
$
(2.75
)
 
$
1.95

Diluted
$
(3.41
)
 
$
0.40

 
$
(2.75
)
 
$
1.94

 
 
 
 
 
 
 
 
(Loss) earnings from continuing operations per Class B Voting Common Share:
 
 
 
 
 
 
 
Basic
$
(3.41
)
 
$
0.40

 
$
(2.76
)
 
$
1.93

Diluted
$
(3.41
)
 
$
0.40

 
$
(2.76
)
 
$
1.92

 
 
 
 
 
 
 
 
(Loss) from discontinued operations per Class A Nonvoting Common Share:
 
 
 
 
 
 
 
Basic
$
(0.02
)
 
$
(0.18
)
 
$
(0.27
)
 
$
(2.3
)
Diluted
$
(0.02
)
 
$
(0.18
)
 
$
(0.27
)
 
$
(2.29
)
 
 
 
 
 
 
 
 
(Loss) from discontinued operations per Class B Voting Common Share:
 
 
 
 
 
 
 
Basic
$
(0.02
)
 
$
(0.18
)
 
$
(0.27
)
 
$
(2.29
)
Diluted
$
(0.02
)
 
$
(0.18
)
 
$
(0.27
)
 
$
(2.28
)
 
 
 
 
 
 
 
 
(Loss) earnings per Class A Nonvoting Common Share:
 
 
 
 
 
 
 
Basic
$
(3.43
)
 
$
0.22

 
$
(3.02
)
 
$
(0.35
)
Diluted
$
(3.43
)
 
$
0.22

 
$
(3.02
)
 
$
(0.35
)
Dividends
$
0.19

 
$
0.185

 
$
0.76

 
$
0.74

 
 
 
 
 
 
 
 
(Loss) earnings per Class B Voting Common Share:
 
 
 
 
 
 
 
Basic
$
(3.43
)
 
$
0.22

 
$
(3.03
)
 
$
(0.36
)
Diluted
$
(3.43
)
 
$
0.22

 
$
(3.03
)
 
$
(0.36
)
Dividends
$
0.19

 
$
0.185

 
$
0.74

 
$
0.72

 
 
 
 
 
 
 
 
Weighted average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
51,689

 
52,196

 
51,330

 
52,453

Diluted
51,689

 
52,448

 
51,330

 
52,821






BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
July 31, 2013
 
July 31, 2012
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
91,058

 
$
305,900

Accounts receivable—net
169,261

 
199,006

Inventories:
 
 
 
Finished products
64,544

 
64,740

Work-in-process
14,776

 
15,377

Raw materials and supplies
15,387

 
25,407

Total inventories
94,707

 
105,524

Assets held for sale
119,864

 
—

Prepaid expenses and other current assets
37,600

 
40,424

Total current assets
512,490

 
650,854

Other assets:
 
 
 
Goodwill
617,236

 
676,791

Other intangible assets
156,851

 
84,119

Deferred income taxes
8,623

 
45,356

Other
21,325

 
20,584

Property, plant and equipment:
 
 
 
Cost:
 
 
 
Land
7,861

 
8,651

Buildings and improvements
91,471

 
101,962

Machinery and equipment
266,787

 
292,130

Construction in progress
11,842

 
10,417

 
377,961

 
413,160

Less accumulated depreciation
255,803

 
283,145

Property, plant and equipment—net
122,158

 
130,015

Total
$
1,438,683

 
$
1,607,719

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
 
 
 
Current liabilities:
 
 
 
Notes payable
$
50,613

 
$
—

Accounts payable
82,519

 
86,646

Wages and amounts withheld from employees
42,413

 
54,629

Liabilities held for sale
34,583

 
—

Taxes, other than income taxes
8,243

 
9,307

Accrued income taxes
7,056

 
14,357

Other current liabilities
36,806

 
40,815

Current maturities on long-term debt
61,264

 
61,264

Total current liabilities
323,497

 
267,018

Long-term obligations, less current maturities
201,150

 
254,944

Other liabilities
83,239

 
76,404

Total liabilities
607,886

 
598,366

Stockholders’ investment:
 
 
 
Common stock:
 
 
 
Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 48,408,544 and 47,630,926 shares, respectively
513

 
513

Class B voting common stock—Issued and outstanding, 3,538,628 shares
35

 
35

Additional paid-in capital
306,191

 
313,008

Earnings retained in the business
538,512

 
732,290

Treasury stock—2,626,276 and 3,245,561 shares, respectively of Class A nonvoting common stock, at cost
(69,797
)
 
(92,600
)
Accumulated other comprehensive income
56,063

 
59,411

Other
(720
)
 
(3,304
)
Total stockholders’ investment
830,797

 
1,009,353

Total
$
1,438,683

 
$
1,607,719






BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

 
July 31, 2013
 
July 31, 2012
Operating activities:
 
 
 
Net loss
$
(154,535
)
 
$
(17,911
)
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
48,725

 
43,987

Non-cash portion of restructuring charges
3,699

 
458

Non-cash portion of stock-based compensation expense
1,736

 
9,735

Impairment charge
204,448

 
115,688

Loss on write-down of assets held for sale
15,658

 
—

Loss (gain) on sales of businesses
3,138

 
204

Deferred income taxes
21,630

 
(9,679
)
Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures):
 
 
 
Accounts receivable
1,535

 
18,089

Inventories
2,440

 
(7,674
)
Prepaid expenses and other assets
5,036

 
(2,744
)
Accounts payable and accrued liabilities
(2,285
)
 
(29,370
)
Income taxes
(7,722
)
 
23,922

Net cash provided by operating activities
143,503

 
144,705

 
 
 
 
Investing activities:
 
 
 
Purchases of property, plant and equipment
(35,687
)
 
(24,147
)
Payments of contingent consideration
—

 
(2,580
)
Settlement of net investment hedges
—

 
(797
)
Acquisition of business, net of cash acquired
(301,157
)
 
(37,649
)
Sales of businesses, net of cash retained
10,178

 
856

Other
900

 
(287
)
Net cash used in investing activities
(325,766
)
 
(64,604
)
 
 
 
 
Financing activities:
 
 
 
Payment of dividends
(39,243
)
 
(38,899
)
Proceeds from issuance of common stock
20,324

 
3,864

Purchase of treasury stock
(5,121
)
 
(49,933
)
Proceeds from borrowings on notes payable
220,000

 
—

Repayment of borrowings on notes payable
(181,000
)
 
—

Proceeds from borrowings on line of credit
11,613

 
—

Principal payments on debt
(61,264
)
 
(62,687
)
Debt issuance costs
—

 
(961
)
Income tax benefit from the exercise of stock options and deferred compensation distribution, and other
1,631

 
792

Net cash used in financing activities
(33,060
)
 
(147,824
)
 
 
 
 
Effect of exchange rate changes on cash
481

 
(16,348
)
 
 
 
 
Net decrease in cash and cash equivalents
(214,842
)
 
(84,071
)
Cash and cash equivalents, beginning of period
305,900

 
389,971

 
 
 
 
Cash and cash equivalents, end of period
$
91,058

 
$
305,900

 
 
 
 
Supplemental disclosures:
 
 
 
Cash paid during the period for:
 
 
 
Interest, net of capitalized interest
$
17,162

 
$
19,194

Income taxes, net of refunds
34,030

 
35,292

Acquisitions:
 
 
 
Fair value of assets acquired, net of cash
$
168,724

 
$
23,792

Liabilities assumed
(37,747
)
 
(8,987
)
Goodwill
170,180

 
22,844

Net cash paid for acquisitions
$
301,157

 
$
37,649






 
EBITDA from Continuing Operations
 
 
 
 
 
 
 
 
 
Brady is presenting EBITDA from Continuing Operations because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA from Continuing Operations represents earnings from continuing operations before interest expense, income taxes, depreciation, amortization and impairment charges. EBITDA from Continuing Operations is not a calculation based on generally accepted accounting principles (\"GAAP\"). The amounts included in the EBITDA from Continuing Operations calculation, however, are derived from amounts included in the Consolidated Statements of Earnings data. EBITDA from Continuing Operations should not be considered as an alternative to net earnings or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA from Continuing Operations measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Total
 
EBITDA from Continuing Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from continuing operations
 
$
25,785

 
$
(11,365
)
 
$
20,998

 
$
(176,234
)
 
$
(140,816
)
 
 
 
Interest expense
 
4,163

 
4,406

 
4,186

 
3,886

 
16,641

 
 
 
Income taxes
 
13,077

 
28,823

 
6,065

 
(5,895
)
 
42,070

 
 
 
Depreciation and amortization
 
7,684

 
8,490

 
11,065

 
12,688

 
39,927

 
 
 
Intangible asset write-down in restructuring charges
 
—

 
—

 
3,207

 
—

 
3,207

 
 
 
Impairment charges
 
—

 
—

 
—

 
204,448

 
204,448

 
 
EBITDA from Continuing Operations (non-GAAP measure)
 
$
50,709

 
$
30,354

 
$
45,521

 
$
38,893

 
$
165,477

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Total
 
EBITDA from Continuing Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from continuing operations
 
$
27,856

 
$
26,436

 
$
27,310

 
$
20,869

 
$
102,471

 
 
 
Interest expense
 
5,047

 
4,933

 
4,735

 
4,375

 
19,090

 
 
 
Income taxes
 
9,640

 
6,838

 
11,290

 
9,185

 
36,953

 
 
 
Depreciation and amortization
 
7,825

 
7,548

 
8,051

 
7,657

 
31,081

 
 
EBITDA from Continuing Operations (non-GAAP measure)
 
$
50,368

 
$
45,755

 
$
51,386

 
$
42,086

 
$
189,595

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
EBITDA from Discontinued Operations
 
 
 
 
 
 
 
 
 
 
 
Brady is presenting EBITDA from Discontinued Operations because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA from Discontinued Operations represents earnings (loss) from discontinued operations before interest expense, income taxes, depreciation, amortization, and impairment charges. EBITDA from Discontinued Operations is not a calculation based on generally accepted accounting principles (\"GAAP\"). The amounts included in the EBITDA from Discontinued Operations calculation, however, are derived from amounts included in the Consolidated Statements of Earnings data. EBITDA from Discontinued Operations should not be considered as an alternative to net earnings or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA from Discontinued Operations measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Total
 
EBITDA from Discontinued Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from discontinued operations
 
$
1,403

 
$
2,680

 
$
(16,765
)
 
$
(1,037
)
 
$
(13,719
)
 
 
 
Interest expense
 
—

 
—

 
—

 
—

 
—

 
 
 
Income taxes
 
404

 
1,802

 
1,530

 
1,478

 
5,214

 
 
 
Depreciation and amortization
 
2,991

 
2,881

 
2,926

 
—

 
8,798

 
 
 
Loss on write-down of assets held for sale
 
—

 
—

 
15,658

 
—

 
15,658

 
 
 
Impairment charges
 
—

 
—

 
—

 
—

 
—

 
 
EBITDA from Discontinued Operations (non-GAAP measure)
 
$
4,798

 
$
7,363

 
$
3,349

 
$
441

 
$
15,951

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Total
 
EBITDA from Discontinued Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from discontinued operations
 
$
4,876

 
$
(116,390
)
 
342

 
(9,210
)
 
$
(120,382
)
 
 
 
Interest expense
 
—

 
—

 
—

 
—

 
—

 
 
 
Income taxes
 
1,469

 
1,798

 
(1,615
)
 
2,056

 
3,708

 
 
 
Depreciation and amortization
 
3,417

 
3,387

 
2,693

 
3,409

 
12,906

 
 
 
Impairment charges
 
—

 
115,688

 
—

 
—

 
115,688

 
 
EBITDA from Discontinued Operations (non-GAAP measure)
 
$
9,762

 
$
4,483

 
$
1,420

 
$
(3,745
)
 
$
11,920

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
EBITDA:
 
 
 
 
 
 
 
 
 
 
 
Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA represents net earnings before interest expense, income taxes, depreciation, amortization and impairment charges. EBITDA is not a calculation based on generally accepted accounting principles (\"GAAP\"). The amounts included in the EBITDA calculation, however, are derived from amounts included in the Consolidated Statements of Earnings data. EBITDA should not be considered as an alternative to net earnings or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Total
 
EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss)
 
$
27,188

 
$
(8,685
)
 
$
4,233

 
$
(177,271
)
 
$
(154,535
)
 
 
 
Interest expense
 
4,163

 
4,406

 
4,186

 
3,886

 
16,641

 
 
 
Income taxes
 
13,481

 
30,625

 
7,595

 
(4,417
)
 
47,284

 
 
 
Depreciation and amortization
 
10,675

 
11,371

 
13,991

 
12,688

 
48,725

 
 
 
Intangible asset write-down in restructuring charges
 
—

 
—

 
3,207

 
—

 
3,207

 
 
 
Loss on write-down of assets held for sale
 
—

 
—

 
15,658

 
—

 
15,658

 
 
 
Impairment charges
 
—

 
—

 
—

 
204,448

 
204,448

 
 
EBITDA (non-GAAP measure)
 
$
55,507

 
$
37,717

 
$
48,870

 
$
39,334

 
$
181,428

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Total
 
EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss)
 
$
32,732

 
$
(89,954
)
 
$
27,652

 
$
11,659

 
$
(17,911
)
 
 
 
Interest expense
 
5,047

 
4,933

 
4,735

 
4,375

 
19,090

 
 
 
Income taxes
 
11,109

 
8,636

 
9,675

 
11,241

 
40,661

 
 
 
Depreciation and amortization
 
11,242

 
10,935

 
10,744

 
11,066

 
43,987

 
 
 
Impairment charge
 
—

 
115,688

 
—

 
—

 
115,688

 
 
EBITDA (non-GAAP measure)
 
$
60,130

 
$
50,238

 
$
52,806

 
$
38,341

 
$
201,515

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
(Loss) Earnings from Continuing Operations Before Income Taxes Excluding Certain Items:
 
 
 
Brady is presenting the Non-GAAP measure \"(Loss) Earnings from Continuing Operations Before Income Taxes Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Statements of Earnings data. We do not view these items to be part of our sustainable results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of (Loss) Earnings from Continuing Operations Before Income Taxes to (Loss) Earnings from Continuing Operations Before Income Taxes Excluding Certain Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended July 31,
 
Year Ended July 31,
 
 
 
 
 
 
 
2013
 
2012
 
2013
 
2012
 
(Loss) Earnings from Continuing Operations Before Income Taxes (GAAP measure)
 
$
(182,129
)
 
$
30,054

 
$
(98,746
)
 
$
139,424

 
 
Cost of goods sold:
 
 
 
 
 
 
 
 
 
 
 
Purchase accounting expense related to inventory
 
—

 
—

 
1,530

 
—

 
 
Selling, general and administrative:
 
 
 
 
 
 
 
 
 
 
 
PDC acquisition-related expenses
 
 
 
—

 
—

 
3,600

 
—

 
 
 
Reversal of restricted stock grant expense
 
 
 
(4,232
)
 
—

 
(4,232
)
 
—

 
 
Restructuring charges
 
15,573

 
4,107

 
26,046

 
6,084

 
 
Impairment charges
 
 
 
204,448

 
—

 
204,448

 
—

 
 
Non-cash income tax charges related to PDC funding and certain valuation allowances
 
 
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) Earnings from Continuing Operations Before Income Taxes Excluding Certain Items (non-GAAP measure)
 
$
33,660

 
$
34,161

 
$
132,646

 
$
145,508

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Taxes on Continuing Operations Excluding Certain Items:
 
Brady is presenting the Non-GAAP measure \"Income Taxes on Continuing Operations Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Statements of Earnings data. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Income Taxes on Continuing Operations to Income Taxes on Continuing Operations Excluding Certain Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended July 31,
 
Year Ended July 31,
 
 
 
 
 
 
 
2013
 
2012
 
2013
 
2012
 
Income Taxes on Continuing Operations (GAAP measure)
 
$
(5,895
)
 
$
9,185

 
$
42,070

 
$
36,953

 
 
Cost of goods sold:
 
 
 
 
 
 
 
 
 
 
 
Purchase accounting expense related to inventory
 
—

 
—

 
581

 
—

 
 
Selling, general and administrative:
 
 
 
 
 
 
 
 
 
 
 
PDC acquisition-related expenses
 
 
 
—

 
—

 
641

 
—

 
 
 
Reversal of restricted stock grant expense
 
 
 
(1,608
)
 
—

 
(1,608
)
 
—

 
 
Restructuring charges
 
4,337

 
1,314

 
7,157

 
2,014

 
 
Impairment charges
 
 
 
12,892

 
—

 
12,892

 
—

 
 
Non-cash income tax charges related to PDC funding and certain valuation allowances
 
 
 
(3,976
)
 
(5,616
)
 
(28,976
)
 
(5,616
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Taxes on Continuing Operations Excluding Certain Items (non-GAAP measure)
 
$
5,750

 
$
4,883

 
$
32,757

 
$
33,351

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
Net (Loss) Earnings from Continuing Operations Excluding Certain Items:
 
 
 
Brady is presenting the Non-GAAP measure \"Net (Loss) Earnings from Continuing Operations Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Statements of Earnings data. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net (Loss) Earnings from Continuing Operations to Net (Loss) Earnings from Continuing Operations Excluding Certain Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended July 31,
 
Year Ended July 31,
 
 
 
 
 
 
 
2013
 
2012
 
2013
 
2012
 
Net (Loss) Earnings from Continuing Operations (GAAP measure)
 
$
(176,234
)
 
$
20,869

 
$
(140,816
)
 
$
102,471

 
 
Cost of goods sold:
 
 
 
 
 
 
 
 
 
 
 
Purchase accounting expense related to inventory
 
—

 
—

 
949

 
—

 
 
Selling, general and administrative:
 
 
 
 
 
 
 
 
 
 
 
PDC acquisition-related expenses
 
 
 
—

 
—

 
2,959

 
—

 
 
 
Reversal of restricted stock grant expense
 
 
 
(2,624
)
 
—

 
(2,624
)
 
—

 
 
Restructuring charges
 
11,236

 
2,793

 
18,889

 
4,070

 
 
Impairment charges
 
 
 
191,556

 
—

 
191,556

 
—

 
 
Non-cash income tax charges related to PDC funding and certain valuation allowances
 
 
 
3,976

 
5,616

 
28,976

 
5,616

 
 
 
 
 
 
 
 
 
 
 
 
 
Net Earnings from Continuing Operations Excluding Certain Items (non-GAAP measure)
 
$
27,910

 
$
29,278

 
$
99,889

 
$
112,157

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Earnings from Continuing Operations Per Diluted Class A Diluted Nonvoting Common Share Excluding Certain Items:
 
Brady is presenting the Non-GAAP measure \"Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items.\" This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Statements of Earnings data. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net (Loss) Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share to Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended July 31,
 
Year Ended July 31,
 
 
 
 
 
 
 
2013
 
2012
 
2013
 
2012
 
Net (Loss) Earnings from Continuing Operations Per Class A Diluted Nonvoting Share (GAAP measure)
 
$
(3.41
)
 
$
0.40

 
$
(2.75
)
 
$
1.94

 
 
Cost of goods sold:
 
 
 
 
 
 
 
 
 
 
 
Purchase accounting expense related to inventory
 
—

 
—

 
0.02

 
—

 
 
Selling, general and administrative:
 
—

 
—

 
—

 
—

 
 
 
PDC acquisition-related expenses
 
 
 
—

 
—

 
0.06

 
—

 
 
 
Reversal of restricted stock grant expense
 
 
 
(0.05
)
 
—

 
(0.05
)
 
—

 
 
Restructuring charges
 
0.22

 
0.05

 
0.37

 
0.08

 
 
Impairment charges
 
 
 
3.71

 
—

 
3.71

 
—

 
 
Non-cash income tax charges related to PDC funding and certain valuation allowances
 
 
 
0.08

 
0.11

 
0.56

 
0.11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share Excluding Certain Items (non-GAAP measure)
 
$
0.53

 
$
0.56

 
$
1.93

 
$
2.12






BRADY CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION

(Dollars in Thousands)
Fiscal 2012
Fiscal 2013
Q1
Q2
Q3
Q4
YTD
Q1
Q2
Q3
Q4
YTD
SALES TO EXTERNAL CUSTOMERS
Identification Solutions
$
163,968

$
149,012

$
160,481

$
160,312

$
633,774

$
161,244

$
166,707

$
195,905

$
209,576

$
733,433

Workplace Safety
109,428

106,040

110,669

108,777

434,914

109,622

104,468

105,066

99,521

418,676

Total Company
273,396

255,052

271,150

269,089

1,068,688

270,866

271,175

300,971

309,097

1,152,109

 
SALES INFORMATION
Identification Solutions
Organic
5.5
%
(0.8
)%
2.1
 %
3.8
 %
2.7
 %
0.4
 %
1.3
 %
(2.3
)%
2.1
 %
0.3
 %
Currency
1.7
%
(0.8
)%
(1.8
)%
(5
)%
(1.6
)%
(2.5
)%
(0.5
)%
(1
)%
0.2
 %
(0.9
)%
Acquisitions
—%

—%

0.3
 %
0.4
 %
0.2
 %
0.4
 %
11.1
 %
25.4
 %
28.4
 %
16.3
 %
Total
7.2
%
(1.6
)%
0.6
 %
(0.8
)%
1.3
 %
(1.7
)%
11.9
 %
22.1
 %
30.7
 %
15.7
 %
 
Workplace Safety
Organic
4.4
%
(1.1
)%
(1.6
)%
(1.8
)%
(0.2
)%
(3.3
)%
(7
)%
(9
)%
(8.6
)%
(7
)%
Currency
3.7
%
(0.3
)%
(1.6
)%
(6.1
)%
(1.2
)%
(2.3
)%
0.4
 %
(1.1
)%
0.1
 %
(0.7
)%
Acquisitions
1.9
%
—%

—%

4.5
 %
1.6
 %
5.8
 %
5.1
 %
5
 %
—%

4
 %
Total
10
%
(1.4
)%
(3.2
)%
(3.4
)%
0.2
 %
0.2
 %
(1.5
)%
(5.1
)%
(8.5
)%
(3.7
)%
 
Total Company
Organic
5.1
%
(0.9
)%
0.6
 %
1.5
 %
1.5
 %
(1.1
)%
(2.2
)%
(5
)%
(2.3
)%
(2.6
)%
Currency
2.4
%
(0.6
)%
(1.8
)%
(5.5
)%
(1.4
)%
(2.4
)%
(0.1
)%
(1.1
)%
0.3
 %
(0.9
)%
Acquisitions
0.8
%
—%

0.2
 %
2.1
 %
0.8
 %
2.6
 %
8.6
 %
17.1
 %
16.9
 %
11.3
 %
Total
8.3
%
(1.5
)%
(1
)%
(1.9
)%
0.9
 %
(0.9
)%
6.3
 %
11
 %
14.9
 %
7.8
 %
 
SEGMENT PROFIT
Identification Solutions
$
41,839

$
36,844

$
40,711

$
40,034

$
159,427

$
43,973

$
33,813

$
45,967

$
47,565

$
171,319

Workplace Safety
30,321

28,545

29,141

29,179

117,187

27,829

23,600

23,453

20,360

95,241

Total Company
72,160

65,389

69,852

69,213

276,614

71,802

57,413

69,420

67,925

266,560

 
SEGMENT PROFIT AS PERCENT OF SALES
Identification Solutions
25.5
%
24.7
 %
25.4
 %
25
 %
25.2
 %
27.3
 %
20.3
 %
23.5
 %
22.7
 %
23.4
 %
Workplace Safety
27.7
%
26.9
 %
26.3
 %
26.8
 %
26.9
 %
25.4
 %
22.6
 %
22.3
 %
20.5
 %
22.7
 %
Total Company
26.4
%
25.6
 %
25.8
 %
25.7
 %
25.9
 %
26.5
 %
21.2
 %
23.1
 %
22
 %
23.1
 %
 
NET EARNINGS RECONCILIATION
Total segment profit
$
72,160

$
65,389

$
69,852

$
69,213

$
276,614

$
71,802

$
57,413

$
69,420

$
67,925

$
266,560

Unallocated Amounts:
Administrative costs
29,415

27,996

25,648

31,039

114,098

29,173

34,513

30,765

27,242

121,693

Restructuring charges
—

—

1,977

4,107

6,084

—

1,933

8,540

15,573

26,046

Impairment charges
—

—

—

—

—

—

—

—

204,448

204,448

Investment and other expense (income)
203

(813
)
(1,109
)
(362
)
(2,082
)
(396
)
(898
)
(1,132
)
(1,095
)
(3,522
)
Interest expense
5,047

4,933

4,735

4,375

19,090

4,163

4,406

4,186

3,886

16,641

Earnings (loss) from continuing operations before income taxes
$
37,495

$
33,273

$
38,601

$
30,054

$
139,424

$
38,862

$
17,459

$
27,061

$
(182,129
)
$
(98,746
)



\t\n\n
\n\n\t\n\t\t\n\t\t\n\t\tExhibit 99.2\n\t\n\t\n


EXHIBIT 99.2

For More Information Contact:
Aaron Pearce (414) 438-6895

Brady Corporation increases dividend to shareholders for the 28th straight year

MILWAUKEE (September 11, 2013)---Brady Corporation's (NYSE: BRC) Board of Directors has announced an increase in its annual dividend to shareholders of the company's Class A Common stock from $0.76 per share to $0.78 per share. A quarterly dividend of $0.195 per share will be paid on October 31, 2013 to shareholders of record at the close of business on October 10, 2013. This dividend represents the 28th consecutive annual increase in dividends.
    Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Brady's products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software, and precision die-cut materials. Founded in 1914, the company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2013 employed approximately 7,400 people in its worldwide businesses. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com.

###



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F’13 Q4 Financial Results September 12, 2013 1 WE IDENTIFY AND PROTECT PREMISES, PRODUCTS, AND PEOPLE. BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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FORWARD-LOOKING STATEMENTS BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS 2 In this presentation, statements that are not reported financial results or other historic information are “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 expenditures, debt levels and cash flows, and plans and objectives of management for future operations. The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “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 matters 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 forward-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; increased usage of e-commerce allowing for ease of price transparency; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, hard disk drive, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, and transportation; future competition; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; Brady’s ability to retain significant contracts and customers; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; risks associated with obtaining governmental approvals and maintaining regulatory compliance; Brady’s ability to develop and successfully market new products; difficulties in making and integrating acquisitions; risks associated with newly acquired businesses; risks associated with divestitures, risks associated with restructuring plans; environmental, health and safety compliance costs and liabilities; technology changes and potential security violations to the Company’s information technology systems; Brady’s ability to maintain compliance with its debt covenants; increase in our level of debt; potential write-offs of Brady’s substantial intangible assets; unforeseen tax consequences; and 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, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2012. These uncertainties may cause 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 except as required by law. 2
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SUMMARY COMMENTS F’13 – A Year of Unprecedented Change: • Reorganized around global business platforms. • Sold 3 businesses and announced plans to sell Die-Cut. • Purchased PDC in Q2 of F’13. • Executed business simplification. F’14 – Priorities: • Return WPS business to organic sales growth. • Drive organic sales growth initiatives in IDS. • Complete the sale of Die-Cut. • Continue to review cost structure. 3 3 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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DILUTED EPS FROM CONTINUING OPERATIONS 4 * Diluted EPS, excluding restructuring charges and non-routine items are non-GAAP measures. See slides #19 and #20. 4 * Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share Excluding Certain Items is a non-GAAP measure. See slide #21. 3-Months Ended July 31, Year Ended July 31, 2013 2012 2013 2012 Net Earnings (Loss) from Continuing Operations Per Class A Diluted Nonvoting Share (GAAP-measure) $ (3.41) $ 0.40 $ (2.75) $ 1.94 Restructuring charges 0.22 0.05 0.37 0.08 PDC Acquisition-related charges - - 0.08 - Impairment charges (non-cash) 3.71 - 3.71 - Income Tax charges (non-cash) 0.08 0.11 0.56 0.11 Reversal of Restricted Stock Expense (non-cash) (0.05) - (0.05) - Net Earnings (Loss) from Continuing Operations Per Class A Diluted Nonvoting Share Excluding Certain Items (non-GAAP measure)* $ 0.53 $ 0.56 $ 1.93 $ 2.12 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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Q4 F’13 - FINANCIAL SUMMARY  Sales up 14.9% to $309.1M vs. $269.1M in Q4 of F’12. • Organic sales down 2.3%, acquisitions increased sales by 16.9%, and foreign currency increased sales by 0.3%.  Gross Profit Margin of 50.8% in Q4 of F’13 compared with 54.8% in Q4 of F’12.  SG&A expense of $106.9M (34.6% of sales) in Q4 of F’13 vs. $100.3M (37.3% of sales) in Q4 of F’12.  Net earnings (loss) from continuing operations of $(176.2M) in Q4 of F’13 vs. $20.9M in Q4 of F’12. • Net Earnings from Continuing Operations, Excluding Certain Items* was $27.9M in Q4 of F’13 vs. $29.3M in Q4 of F’12.  Net earnings (loss) from continuing operations per Class A Diluted Nonvoting Share of $(3.41) in Q4 of F’13 vs. $0.40 in Q4 of F’12. • Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share, Excluding Certain Items* was $0.53 in Q4 of F’13 vs. $0.56 in Q4 of F’12. 5 * Net Earnings from Continuing Operations, Excluding Certain Items and Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share Excluding Certain Items, are non-GAAP measures. See slides #20 and #21. 5 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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F’14 GUIDANCE – CONTINUING OPERATIONS 6 F’14 Diluted EPS from Continuing Operations $1.80 to $2.00 (excluding restructuring charges and certain other items). Material Items Impacting F’14 EPS from Continuing Operations Guidance: 6 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS Guidance Assumptions – Continuing Operations:  Organic sales ranging from a slight contraction to low single-digit growth.  Full-year income tax rate in the mid-to-upper 20% range.  Full-year capital expenditures of approx. $40M ($10 million related to facility consolidation activities).  Full-year depreciation and amortization expense of approximately $50M.  Full-year restructuring charges of approximately $30M ($5 million will be non-cash). Minimal savings from restructuring activities in F’14 and approx. $10M of pre-tax operational savings in F’15.  Free cash flow of approximately 110 - 120% of net income. Incremental Benefit from PDC Acquisition $ 0.08 Business Simplification Savings (net of certain reinvestments) 0.40 Workplace Safety Strategic Investments (0.20) Incremental Incentive Compensation (0.25)
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SALES OVERVIEW $273 $255 $271 $269 $271 $271 $301 $309 $150 $200 $250 $300 $350 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 Organic Sales 5.1% (0.9%) 0.6% 1.5% (1.1%) (2.2%) (5.0%) (2.3%) 7  Q4 F’13 Sales up 14.9%: • (2.3%) organic sales decline. • 16.9% growth from acquisitions. • 0.3% growth due to currency translation.  ID Solutions – Organic growth of 2.1%.  Workplace Safety – Organic sales down 8.6% in Q4.  Die-Cut – Business is all in discontinued operations and excluded from reported sales amounts. Q4 F’13 SALES: Q4 F’13 SALES COMMENTARY: SALES (Millions of USD) 7 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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GROSS PROFIT MARGIN AND SG&A 8 $99 $95 $98 $100 $99 $110 $112 $107 36.3% 37.3% 36.2% 37.3% 36.6% 40.5% 37.2% 34.6% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% $50 $100 $150 $200 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 GROSS PROFIT & GPM% (Millions of USD) SG&A & SG&A as % of SALES (Millions of USD)  GPM of 50.8% compared to 54.8% in Q4 of F’12.  Excluding PDC, the Q4 F’13 GPM would have been 52.3%.  Negative mix and pricing pressure in Workplace Safety partially offset by operational improvements. GROSS PROFIT MARGIN:  SG&A up from $100.3M in Q4 of F’12 to $106.9M in Q4 of F’13.  PDC added approximately $13M of SG&A expense in the fourth quarter ended July 31, 2013.  In the fourth quarter of F’14, SG&A included a $4.2M benefit due to the reversal of restricted share expense. SG&A EXPENSE: 8 $150 $141 $150 $147 $150 $141 $159 $157 55.0% 55.4% 55.5% 54.8% 55.2% 52.0% 52.7% 50.8% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% $100 $150 $200 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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NET EARNINGS & EPS FROM CONTINUING OPERATIONS – Non-GAAP*  Q4 F’13 net earnings from continuing operations, excluding certain items* of $27.9M compared to $29.3M in Q4 of F’12.  Both Q4 of F’12 and Q4 of F’13 benefited from low income tax rates of 14% and 17%, respectively.  Q4 F’13 diluted EPS from continuing operations, excluding certain items* of $0.53 compared to $0.56 in Q4 of F’12. $28 $26 $29 $29 $26 $19 $27 $28 10% 10% 11% 11% 9% 7% 9% 9% 0% 3% 6% 9% 12% 15% $0 $15 $30 $45 $60 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 $0.53 $0.50 $0.55 $0.56 $0.50 $0.38 $0.54 $0.53 $0.20 $0.40 $0.60 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 9 NET EARNINGS FROM CONTINUING OPERATION,S EXCLUDING CERTAIN ITEMS* (Millions of USD) Q4 F’13 – Non-GAAP Earnings* Q4 F’13 – Non-GAAP EPS* 9 * Net Earnings from Continuing Operations Excluding Certain Items and Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share Excluding Certain Items, are non-GAAP measures. See slides #20, #21, and #22. NET EARNINGS FROM CONTINUING OPERATIONS PER CLASS A DILUTED NONVOTING SHARE, EXCLUDING CERTAIN ITEMS* BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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3 Mos. Ended July 31, 2013 Year-Ended July 31, 2013 Cash Balance - Beginning of Period 77.0$ 305.9$ Cash Flow from Operating Activities 53.9 143.5 Capital Expenditures (9.6) (35.7) Proceeds from Sales of Businesses - 10.2 Acquisition of Businesses - (301.2) Repurchase of Stock - (5.1) Proceeds from Issuance of Stock 10.0 20.3 Dividends (9.9) (39.2) Debt (Repayments) Borrowings (26.6) (10.7) Effect of Exchange Rate on Cash (5.8) 0.5 Other 2.1 2.6 Cash Balance - July 31, 2013 91.1$ 91.1$ CASH GENERATION 10  Cash flow from operating activities of $53.9M in Q4 and $143.5M in F’13  Used $301.2M for the acquisition of PDC and decreased debt by $10.7M in F’13. SIGNIFICANT CASH MOVEMENTS: 10 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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DEBT & EBITDA 2.3 2.2 2.0 1.8 1.8 1.8 1.6 1.6 1.6 2.0 1.7 1.7 1.0x 1.5x 2.0x 2.5x Q 1 F'1 1 Q 3 F'1 1 Q 1 F'1 2 Q 3 F'1 2 Q 1 F'1 3 Q 3 F'1 3 GROSS DEBT / TTM EBITDA*  July 31, 2013 Cash = $91M and Debt = $313M  Gross Debt/EBITDA = 1.7x  Net Debt/EBITDA = 1.2x STRONG BALANCE SHEET: 11 GROSS DEBT (Millions of USD) $391 $384 $342 $316 $321 $438 $338 $313 $250 $300 $350 $400 $450 $500 Q 1 F '1 2 Q 2 F '1 2 Q 3 F '1 2 Q 4 F '1 2 Q 1 F '1 3 Q 2 F '1 3 Q 3 F '1 3 Q 4 F '1 3 11 * EBITDA has been updated to include the pre-acquisition trailing twelve months of Precision Dynamics Corporation. EBITDA is a non-GAAP measure. See slide #19 for the reconciliation of net income (loss) to EBITDA. BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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IDENTIFICATION SOLUTIONS 12 12 Fiscal 2012 Quarters Fiscal 2013 Quarters FULL YEARS Q1F’12 Q2 F’12 Q3 F’12 Q4 F’12 Q1 F’13 Q2 F’13 Q3 F’13 Q4 F’13 F’12 F’13 Sales $ 164.0 $ 149.0 $ 160.5 $ 160.3 $ 161.2 $ 166.7 $ 195.9 $ 209.6 $ 633.8 $ 733.4 Organic Sales % 5.5% (0.8%) 2.1% 3.8% 0.4% 1.3% (2.3%) 2.1% 2.7% 0.3% Segment Profit $ 41.8 $ 36.8 $ 40.7 $ 40.0 $ 44.0 $ 33.8 $ 46.0 $ 47.6 $ 159.4 $ 171.3 Segment Profit % 25.5% 24.7% 25.4% 25.0% 27.3% 20.3% 23.5% 22.7% 25.2% 23.4% BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS  Revenues up 30.7%:  Organic=+2.1%, Fx=+0.2%, Acq.=+28.4%  U.S. business has shown organic growth for last 8 quarters.  Expanding in Central Europe, Middle East, Africa and Asia. Economic headwinds persist in Western Europe.  Segment profit up 18.8%.  Excluding PDC, segment profit would have been $38.5M (23.5% of sales) in Q4 and $153.6M (24.3% of sales) for the full year ended July 31, 2013. Q4 F’13 SUMMARY:  Modest economic growth in the U.S. while macro-economic headwinds remain in Europe and Brazil.  Low single-digit organic sales growth in F’14. F’14 OUTLOOK: Q4 F’13 vs. Q4 F’12 PERFORMANCE (Millions of USD) Q4F’12 Q4 F’13 Change Sales $ 160.3 $ 209.6 + 30.7% Segment Profit 40.0 47.6 + 18.8% Segment Profit % 25.0% 22.7% - 2.3 pts HISTORICAL FINANCIAL PERFORMANCE (Millions of USD)
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WORKPLACE SAFETY 13 HISTORICAL FINANCIAL PERFORMANCE (Millions of USD) 13 Fiscal 2012 Quarters Fiscal 2013 Quarters FULL YEARS Q1F’12 Q2 F’12 Q3 F’12 Q4 F’12 Q1 F’13 Q2 F’13 Q3 F’13 Q4 F’13 F’12 F’13 Sales $ 109.4 $ 106.0 $ 110.7 $ 108.8 $ 109.6 $ 104.5 $ 105.1 $ 99.5 $ 434.9 $ 418.7 Organic Sales % 4.4% (1.1%) (1.6%) (1.8%) (3.3%) (7.0%) (9.0%) (8.6%) (0.2%) (7.0%) Segment Profit $ 30.3 $ 28.5 $ 29.1 $ 29.2 $ 27.8 $ 23.6 $ 23.5 $ 20.4 $ 117.2 $ 95.2 Segment Profit % 27.7% 26.9% 26.3% 26.8% 25.4% 22.6% 22.3% 20.5% 26.9% 22.7% BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS  Revenues down (8.5%):  Organic=(8.6%), Fx=+0.1%  All major geographies experienced declines in Q4 revenues and profitability.  Australia impacted by weak economy and slow- down in the mining industry.  The Americas and EMEA business impacted by the rapid shift of buying patterns to the internet, resulting in increased competition and price pressure.  Segment profit down 30.2%. Q4 F’13 SUMMARY:  Organic sales to be flat to slightly negative, with reduced organic sales in the 1st half of F’14.  Segment profit degradation as we make investments to expand our product offering, and improve our pricing and digital capabilities ($14M incremental investment in F’14). F’14 OUTLOOK: Q4 F’13 vs. Q4 F’12 PERFORMANCE (Millions of USD) Q4F’12 Q4 F’13 Change Sales $ 108.8 $ 99.5 - 8.5% Segment Profit 29.2 20.4 - 30.2% Segment Profit % 26.8% 20.5% - 6.3 pts
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WPS STRATEGIES TO RETURN TO SALES GROWTH WPS is a profitable business with hundreds of thousands of customers. WPS strategies to return to sales growth: 1. Build best-in-class online / digital 2. Enhanced product offerings 3. Enhanced industry-specific expertise for workplace safety critical industries 4. Adjusting our pricing strategies and capabilities 5. Increasing catalog advertising where appropriate. 14 14 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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INVESTOR RELATIONS Brady Contact: Aaron Pearce Investor Relations 414-438-6895 Aaron_Pearce@Bradycorp.com See our web site at www.investor.bradycorp.com 15 15 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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SALES & SEGMENT PROFIT % 16 ID SOLUTIONS (Millions of USD) $164 $149 $160 $160 $161 $167 $196 $210 25.5% 24.7% 25.4% 25.0% 27.3% 20.3% 23.5% 22.7% 0% 10% 20% 30% $0 $50 $100 $150 $200 $250 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 16 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS WORKPLACE SAFETY (Millions of USD) $109 $106 $111 $109 $110 $104 $105 $100 27.7% 26.9% 26.3% 26.8% 25.4% 22.6% 22.3% 20.5% 0% 10% 20% 30% $0 $50 $100 $150 $200 $250 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13 DIE-CUT (Millions of USD) (Included in Discontinued Operations) $76 $66 $61 $54 $67 $53 $49 $46 9.9% 3.8% 1.7% -2.6% 9.9% 4.7% 4.3% 7.9% -10% -5% 0% 5% 10% $0 $25 $50 $75 $100 $125 $150 Q1 F'12 Q2 F'12 Q3 F'12 Q4 F'12 Q1 F'13 Q2 F'13 Q3 F'13 Q4 F'13
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2013 2012 Change Sales 309.1$ 269.1$ 40.0$ Gross Margin 157.0 147.5 9.5 % of Sales 50.8% 54.8% (4.0) pts Research and Development (9.4) (9.0) (0.4) Selling, General and Admin. (106.9) (100.3) (6.6) % of Sales (34.6%) (37.3%) (2.7) pts Impairment Charges (204.4) - (204.4) Restructuring Expense (15.6) (4.1) (11.5) - - - Operating Income (179.3) 34.1 (213.4) Interest and Other (2.8) (4.0) 1.2 Income Taxes 5.9 (9.2) 15.1 - - - Net Earnings from Continuing Operations (176.2)$ 20.9$ (197.1)$ - - - % of Sales (57.0%) 7.8% (64.8) pts Earnings from Continuing Operations per Class A Nonvoting Common Share (3.41)$ 0.40$ (3.81)$ - - - Net Earnigns from Continuing Operations, Excluding Certain Items (Non-GAAP measure)* 27.9$ 29.3$ (1.4)$ - - - % of Sales 9.0% 10.9% (1.9) pts Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share, Excluding Certain Items (Non-GAAP measure)* 0.53$ 0.56$ (0.03)$ - - - Three Months Ended July 31, - TOTAL COMPANY INCOME STATEMENTS 17 COMPARABLE INCOME STATEMENT (Millions of USD) 17 * Net Earnings from Continuing Operations, Excluding Certain Items and Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Share Excluding Certain Items, are non-GAAP measures. See slides #20 and #21. BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS
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DEBT STRUCTURE 18 18 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS (Thousands of USD) Int. Rate Fixed vs. Variable July 31, 2013 Balance July 31, 2012 Balance Revolver Borrowings (due Feb. 2017): USD-denominated (L+1.125) 1.28% Variable 39,000$ -$ EUR-denominated (L+1.125) - Variable - - GBP-denominated (L+1.125) - Variable - - China Borrowings: USD-denominated note payable 1.13% Variable 11,613 - Private Placements: USD-denominated 2004 Series 5.14% Fixed 18,750 37,500 USD-denominated 2006 Series 5.30% Fixed 78,429 104,571 USD-denominated 2007 Series 5.33% Fixed 65,486 81,857 EUR-denominated 2010 Series (7-yr.) 3.71% Fixed 39,900 36,912 EUR-denominated 2010 Series (10-yr.) 4.24% Fixed 59,850 55,368 TOTAL DEBT 313,028$ 316,208$
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19 EBITDA - Total Company (‘000s of USD) 19 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS EBITDA RECONCILIATION Q1 Q2 Q3 Q4 Total 27,188$ (8,684)$ 4,232$ (177,271)$ (154,535)$ Interest expense 4,163 4,406 4,186 3,886 16,641 Income taxes 13,481 30,625 7,595 (4,417) 47,284 Depreciation and amortization 10,675 11,371 13,991 12,688 48,725 Intangible asset write-down in restructuring charges — — 3,207 — 3,207 Loss on write-down of assets held for sale — — 15,658 — 15,658 Impairment charges — — — 204,448 204,448 55,507$ 37,718$ 48,869$ 39,334$ 181,428$ Q1 Q2 Q3 Q4 Total 32,732$ (89,954)$ 27,652$ 11,659$ (17,911)$ Interest expense 5,047 4,933 4,735 4,375 19,090 Income taxes 11,109 8,636 9,675 11,241 40,661 Depreciation and amortization 11,242 10,935 10,744 11,066 43,987 Impairment charge — 115,688 — — 115,688 60,130$ 50,238$ 52,806$ 38,341$ 201,515$ Brady is presenting EBITDA because it is used by many of our investors and lenders, and is presented as a convenience to them. EBITDA represents net earnings before interest expense, income taxes, depreciation, amortization and impairment charges. EBITDA is not a calculation based on generally accepted accounting principles ("GAAP"). The amounts included in the EBITDA calculation, however, are derived from amounts included in the Condensed Consolidated Statements of Income data. EBITDA should not be considered as an alternative to net income or operating income as an indicator of the Company's operating performance, or as an alternative to net cash provided by operating activities as a measure of liquidity. The EBITDA measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation. Fiscal 2013 EBITDA: Net earnings (loss) EBITDA (non-GAAP measure) Fiscal 2012 EBITDA: Net earnings (loss) EBITDA (non-GAAP measure)
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NET EARNINGS FROM CONTINUING OPERATIONS, EXCLUDING CERTAIN ITEMS 20 Reconciliation of Net Earnings from Continuing Operations Excluding Certain Items (‘000s of USD): 20 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS 2013 2012 2013 2012 (176,234)$ 20,869$ (140,816)$ 102,471$ — — 949 — PDC acquisition-related expenses — — 2,959 — Reversal of restricted stock grant expense (2,624) — (2,624) — 11,236 2,793 18,889 4,070 Impairment charges 191,556 — 191,556 — 3,976 5,616 28,976 5,616 27,910$ 29,278$ 99,889$ 112,157$ Selling, general and administrative: Restructuring charges Non-cash income tax charges Net Earnings from Continuing Operations Excluding Certain Items (non-GAAP measure) Purchase accounting expense related to inventory Brady is presenting the Non-GAAP measure "Net (Loss) Earnings from Continuing Operations Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Condensed Consolidated Statements of Income data. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net (Loss) Earnings from Continuing Operations to Net (Loss) Earnings from Continuing Operations Excluding Certain Items: Three Months Ended July 31, Year Ended July 31, Cost of goods sold: Net (Loss) Earnings from Continuing Operations (GAAP measure)
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NET EARNINGS FROM CONTINUING OPERATIONS PER DILUTED CLASS A NONVOTING SHARE, EXCLUDING ITEMS 21 Reconciliation of Net Earnings from Continuing Operations per Diluted Class A Nonvoting Share Excluding Certain Items: 21 BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS 2013 2012 2013 2012 Nonvoting Share (GAAP measure) (3.41)$ 0.40$ (2.75)$ 1.94$ — — 0.02 — — — — — PDC acquisition-related expenses — — 0.06 — Reversal of restricted stock grant expense (0.05) — (0.05) — 0.22 0.05 0.37 0.08 Impairment charges 3.71 — 3.71 — 0.08 0.11 0.56 0.11 Share Excluding Certain Items (non-GAAP measure) 0.53$ 0.56$ 1.93$ 2.12$ Net Earnings from Continuing Operations Per Class A Diluted Nonvoting Selling, general and administrative: Restructuring charges on-cash income tax charges Cost of goods sold: Purchase accounting expense related to inventory Net (Loss) Earnings from Continuing Operations Per Class A Diluted Brady is presenting the Non-GAAP measure "Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Condensed Consolidated Statements of Income data. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net (Loss) Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share to Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items: Three Months Ended July 31, Year Ended July 31,
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QUARTERLY FINANCIAL STATEMENTS 22 22 Reconciliation of Net Earnings from Continuing Operations per Diluted Class A Nonvoting Share Excluding Certain Items (in millions of USD, except per share amounts): BRADY – FISCAL 2013 Q4 FINANCIAL RESULTS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 273.4$ 255.1$ 271.2$ 269.1$ 270.9$ 271.2$ 301.0$ 309.1$ Gross margin 150.5 141.2 150.4 147.5 149.5 141.0 158.5 157.0 % of Sa les 55.0% 55.4% 55.5% 54.8% 55.2% 52.0% 52.7% 50.8% Research and development (8.5) (8.8) (8.2) (9.0) (7.9) (8.2) (8.1) (9.4) Selling, general and administrative (99.2) (95.0) (98.0) (100.3) (99.0) (109.9) (111.8) (106.9) % of Sa les (36.3%) (37.3%) (36.2%) (37.3%) (36.6%) (40.5%) (37.2%) (34.6%) Restructuring charges - - (2.0) (4.1) - (1.9) (8.5) (15.6) Operating income 42.7 37.4 42.2 34.1 42.6 21.0 30.1 (179.3) Earnings (loss) from continuing operations 27.9$ 26.4$ 27.3$ 20.9$ 25.8$ (11.4)$ 21.0$ (176.2)$ Earnings (loss) from continuing operations per Class A Nonvoting Common Share (GAAP measure) 0.53$ 0.50$ 0.52$ 0.40$ 0.50$ (0.22)$ 0.40$ (3.41)$ Restructuring charges - - 0.03 0.05 - 0.03 0.13 0.22 PDC acquisition-related expenses - - - - - 0.08 - - Non-cash income tax charges - - - 0.11 - 0.49 - 0.08 Impairment charges - - - - - - - 3.71 Reversal of restricted stock grant expense - - - - - - - (0.05) Earnings (loss) from continuing operations per Class A Nonvoting Common Share (Non-GAAP measure) 0.53$ 0.50$ 0.55$ 0.56$ 0.50$ 0.38$ 0.54$ 0.53$ F'12 F'13
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