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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended April 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from                     to                     
Commission File Number 1-14959
BRADY CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-0178960
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
6555 West Good Hope Road
Milwaukee, Wisconsin 53233
(Address of principal executive offices and zip code)
(414) 358-6600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Nonvoting Common Stock, par value $0.01 per shareBRCNew York Stock Exchange
Indicate by check 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 file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,\" and \"emerging growth company\" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Emerging growth company
Non-accelerated filer Smaller reporting company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   No   
As of May 18, 2021, there were 48,524,455 outstanding shares of Class A Nonvoting Common Stock and 3,538,628 shares of Class B Voting Common Stock. The Class B Voting Common Stock, all of which is held by affiliates of the Registrant, is the only voting stock.


Table of Contents
FORM 10-Q
BRADY CORPORATION
INDEX
 
 Page
2

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)

April 30, 2021July 31, 2020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$321,801 $217,643 
Accounts receivable, net of allowances for credit losses of $7,551 and $7,157, respectively
163,381 146,181 
Inventories122,847 135,662 
Prepaid expenses and other current assets13,032 9,962 
Total current assets621,061 509,448 
Property, plant and equipment—net121,126 115,068 
Goodwill422,091 416,034 
Other intangible assets18,528 22,334 
Deferred income taxes8,334 8,845 
Operating lease assets37,622 41,899 
Other assets31,415 28,838 
Total$1,260,177 $1,142,466 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$72,234 $62,547 
Accrued compensation and benefits69,621 41,546 
Taxes, other than income taxes9,207 8,057 
Accrued income taxes2,711 8,652 
Current operating lease liabilities16,197 15,304 
Other current liabilities51,145 49,782 
Total current liabilities221,115 185,888 
Long-term operating lease liabilities25,841 31,982 
Other liabilities61,595 61,524 
Total liabilities308,551 279,394 
Stockholders’ equity:
Class A nonvoting common stock—Issued 51,261,487 shares, and outstanding 48,524,455 and 48,456,954 shares, respectively
513 513 
Class B voting common stock—Issued and outstanding, 3,538,628 shares
35 35 
Additional paid-in capital336,957 331,761 
Retained earnings771,797 704,456 
Treasury stock—2,737,032 and 2,804,533 shares, respectively, of Class A nonvoting common stock, at cost
(109,128)(107,216)
Accumulated other comprehensive loss(48,548)(66,477)
Total stockholders’ equity951,626 863,072 
Total$1,260,177 $1,142,466 

See Notes to Condensed Consolidated Financial Statements.
3

Table of Contents
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Amounts, Unaudited)

Three months ended April 30,Nine months ended April 30,
 2021202020212020
Net sales$295,503 $265,943 $838,568 $829,555 
Cost of goods sold146,656 136,416 424,771 419,496 
Gross margin148,847 129,527 413,797 410,059 
Operating expenses:
Research and development11,305 9,814 31,384 31,298 
Selling, general and administrative90,817 83,223 256,088 260,136 
Impairment charges 13,821  13,821 
Total operating expenses102,122 106,858 287,472 305,255 
Operating income 46,725 22,669 126,325 104,804 
Other income (expense):
Investment and other income1,181 112 3,372 3,252 
Interest expense(131)(628)(288)(1,976)
Income before income taxes and losses of unconsolidated affiliate47,775 22,153 129,409 106,080 
Income tax expense10,229 8,520 27,017 21,396 
Income before losses of unconsolidated affiliate37,546 13,633 102,392 84,684 
Equity in losses of unconsolidated affiliate(255) (760) 
Net income$37,291 $13,633 $101,632 $84,684 
Net income per Class A Nonvoting Common Share:
Basic$0.72 $0.26 $1.95 $1.60 
Diluted$0.71 $0.26 $1.94 $1.58 
Dividends$0.22 $0.22 $0.66 $0.65 
Net income per Class B Voting Common Share:
Basic$0.72 $0.26 $1.94 $1.58 
Diluted$0.71 $0.26 $1.93 $1.57 
Dividends$0.22 $0.22 $0.64 $0.64 
Weighted average common shares outstanding:
Basic52,050 52,607 52,030 53,023 
Diluted52,449 52,972 52,341 53,512 

See Notes to Condensed Consolidated Financial Statements.
4

Table of Contents
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Thousands, Unaudited)

Three months ended April 30,Nine months ended April 30,
 2021202020212020
Net income$37,291 $13,633 $101,632 $84,684 
Other comprehensive income (loss):
Foreign currency translation adjustments2,891 (17,424)17,773 (18,383)
Cash flow hedges:
Net gain (loss) recognized in other comprehensive income (loss)118 (1,751)1,266 (1,192)
Reclassification adjustment for gains included in net income(292)(293)(21)(779)
(174)(2,044)1,245 (1,971)
Pension and other post-retirement benefits:
Net loss recognized in other comprehensive income (loss)  (32)(309)
Net actuarial gain amortization(105)(105)(306)(315)
(105)(105)(338)(624)
Other comprehensive income (loss), before tax2,612 (19,573)18,680 (20,978)
Income tax benefit (expense) related to items of other comprehensive income (loss)301 (179)(751)(10)
Other comprehensive income (loss), net of tax2,913 (19,752)17,929 (20,988)
Comprehensive income (loss)$40,204 $(6,119)$119,561 $63,696 

See Notes to Condensed Consolidated Financial Statements.
5

Table of Contents
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands, Unaudited)

Nine months ended April 30,
 20212020
Operating activities:
Net income$101,632 $84,684 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization17,240 17,731 
Stock-based compensation expense8,003 7,180 
Deferred income taxes(3,957)(309)
Impairment charges 13,821 
Equity in losses of unconsolidated affiliate760  
Other(1,186)1,698 
Changes in operating assets and liabilities:
Accounts receivable(13,247)9,019 
Inventories15,210 (7,439)
Prepaid expenses and other assets(2,584)(5,653)
Accounts payable and accrued liabilities39,244 (26,609)
Income taxes(6,207)1,790 
Net cash provided by operating activities154,908 95,913 
Investing activities:
Purchases of property, plant and equipment(21,411)(21,616)
Other2,567 (4,419)
Net cash used in investing activities(18,844)(26,035)
Financing activities:
Payment of dividends(34,290)(34,447)
Proceeds from exercise of stock options1,612 5,212 
Payments for employee taxes withheld from stock-based awards(2,772)(7,832)
Purchase of treasury stock(3,593)(64,113)
Other(231)133 
Net cash used in financing activities(39,274)(101,047)
Effect of exchange rate changes on cash7,368 (9,023)
Net increase (decrease) in cash and cash equivalents
104,158 (40,192)
Cash and cash equivalents, beginning of period217,643 279,072 
Cash and cash equivalents, end of period$321,801 $238,880 

See Notes to Condensed Consolidated Financial Statements.
6

Table of Contents
BRADY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended April 30, 2021
(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 and subsidiaries (the \"Company,\" \"Brady,\" \"we,\" or \"our\") 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, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of April 30, 2021 and July 31, 2020, its results of operations and comprehensive income for the three and nine months ended April 30, 2021 and 2020, and cash flows for the nine months ended April 30, 2021 and 2020. The condensed consolidated balance sheet as of July 31, 2020, has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statement presentation. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2020.

NOTE B — New Accounting Pronouncements
Adopted Standards
In June 2016, the FASB issued ASU 2016-13, \"Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,\" which changes the impairment model for most financial instruments. Prior guidance required the recognition of credit losses based on an incurred loss impairment methodology that reflected losses once the losses were probable. Under ASU 2016-13, the Company is required to use a current expected credit loss model (\"CECL\") that immediately recognizes an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The Company adopted ASU 2016-13 effective August 1, 2020, which did not have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, \"Goodwill and Other, Simplifying the Test for Goodwill Impairment.\" The new guidance removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment is now the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance remains largely unchanged. The Company adopted ASC 2017-04 effective August 1, 2020. This guidance only impacts the Company's consolidated financial statements if there is a future impairment of goodwill.
Standards not yet adopted
In December 2019, the FASB issued ASU 2019-12, \"Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740).\" The new guidance removes certain exceptions to the general principles in ASC 740 such as recognizing deferred taxes for equity investments, the incremental approach to performing intraperiod tax allocation and calculating income taxes in interim periods. The standard also simplifies accounting for income taxes under U.S. GAAP by clarifying and amending existing guidance, including the recognition of deferred taxes for goodwill, the allocation of taxes to members of a consolidated group and requiring that an entity reflect the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This guidance is effective for annual periods beginning after December 15, 2020, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, \"Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.\" Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected
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phase out of the London Inter-bank Offered Rate (\"LIBOR\") by the end of 2021. This guidance was effective upon issuance and allows application to contract changes as early as January 1, 2020. Some of the Company's contracts with respect to its borrowing agreements already contain comparable alternative reference rates that would automatically take effect upon the phasing out of LIBOR. The Company does not expect a material impact to the financial statements or disclosures.

NOTE C — Additional Balance Sheet Information
Inventories
Inventories as of April 30, 2021, and July 31, 2020, consisted of the following:
 April 30, 2021July 31, 2020
Finished products$78,484 $85,547 
Work-in-process20,886 24,044 
Raw materials and supplies23,477 26,071 
Total inventories$122,847 $135,662 
Property, plant and equipment
Property, plant and equipment is presented net of accumulated depreciation in the amount of $274,961 and $276,248 as of April 30, 2021, and July 31, 2020, respectively.

NOTE D — Other Intangible Assets
Other intangible assets as of April 30, 2021 and July 31, 2020, consisted of the following: 
 April 30, 2021July 31, 2020
Weighted Average Amortization Period (Years)Gross Carrying AmountAccumulated AmortizationNet Book ValueWeighted Average Amortization Period (Years)Gross Carrying AmountAccumulated AmortizationNet Book Value
Definite-lived other intangible assets:
Customer relationships and tradenames9$45,497 $(36,783)$8,714 9$45,385 $(32,670)$12,715 
Indefinite-lived other intangible assets:
TradenamesN/A9,814 — 9,814 N/A9,619 — 9,619 
Total$55,311 $(36,783)$18,528 $55,004 $(32,670)$22,334 
The change in the gross carrying amount of other intangible assets as of April 30, 2021 compared to July 31, 2020 was due to the effect of currency fluctuations during the nine-month period.
Amortization expense of intangible assets was $1,352 and $1,290 for the three months ended April 30, 2021 and 2020, respectively, and $4,056 and $3,872 for the nine months ended April 30, 2021 and 2020, respectively. Amortization expense over each of the next three fiscal years is projected to be $5,408, $5,121, and $2,241 for the fiscal years ending July 31, 2021, 2022, and 2023. No amortization expense for intangible assets is projected after July 31, 2023.

NOTE E — Leases
The Company leases certain manufacturing facilities, warehouses and office space, computer equipment, and vehicles accounted for as operating leases. Lease terms typically range from one year to ten years. As of April 30, 2021, the Company did not have any finance leases.
Operating lease expense was $4,714 and $4,219 for the three months ended April 30, 2021 and 2020, respectively, and $12,956 and $13,897 for the nine months ended April 30, 2021 and 2020, respectively. Operating lease expense was recognized in either \"Cost of goods sold\" or \"Selling, general and administrative\" expenses in the condensed consolidated statements of income, based on the nature of the lease. Short-term lease expense, variable lease expenses, and sublease income was immaterial to the condensed consolidated statements of income for the three and nine months ended April 30, 2021 and 2020.
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Supplemental cash flow information related to the Company's operating leases for the nine months ended April 30, 2021 and 2020, was as follows:
Nine months ended April 30,
20212020
Operating cash outflows from operating leases$13,965 $12,469 
Operating lease assets obtained in exchange for new operating lease liabilities5,832 10,637 

NOTE F – Stockholders' Equity
The following table illustrates the changes in the balances of each component of stockholders' equity for the three months ended April 30, 2021:
Common StockAdditional
 Paid-In Capital
Retained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balances at January 31, 2021$548 $334,077 $745,960 $(109,789)$(51,461)$919,335 
Net income— — 37,291 — — 37,291 
Other comprehensive income, net of tax— — — — 2,913 2,913 
Issuance of shares of Class A Common Stock under stock plan— 348 — 661 — 1,009 
Stock-based compensation expense— 2,532 — — — 2,532 
Cash dividends on Common Stock:
Class A — $0.2200 per share— — (10,675)— — (10,675)
Class B — $0.2200 per share— — (779)— — (779)
Balances at April 30, 2021$548 $336,957 $771,797 $(109,128)$(48,548)$951,626 
The following table illustrates the changes in the balances of each component of stockholders' equity for the nine months ended April 30, 2021:
Common StockAdditional
 Paid-In Capital
Retained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balances at July 31, 2020$548 $331,761 $704,456 $(107,216)$(66,477)$863,072 
Net income— — 101,632 — — 101,632 
Other comprehensive income, net of tax— — — — 17,929 17,929 
Issuance of shares of Class A Common Stock under stock plan— (2,839)— 1,681 — (1,158)
Tax benefit and withholdings from deferred compensation distributions— 32 — — — 32 
Stock-based compensation expense— 8,003 — — — 8,003 
Repurchase of shares of Class A Common Stock— — — (3,593)— (3,593)
Cash dividends on Common Stock:
Class A — $0.6600 per share— — (32,013)— — (32,013)
Class B — $0.6434 per share— — (2,278)— — (2,278)
Balances at April 30, 2021$548 $336,957 $771,797 $(109,128)$(48,548)$951,626 

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The following table illustrates the changes in the balances of each component of stockholders' equity for the three months ended April 30, 2020:
Common StockAdditional
 Paid-In Capital
Retained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balances at January 31, 2020$548 $329,263 $685,758 $(43,155)$(72,490)$899,924 
Net income— — 13,633 — — 13,633 
Other comprehensive loss, net of tax— — — — (19,752)(19,752)
Issuance of shares of Class A Common Stock under stock plan— (91)— 517 — 426 
Stock-based compensation expense— 1,796 — — — 1,796 
Repurchase of shares of Class A Common Stock— — — (64,113)— (64,113)
Cash dividends on Common Stock:
Class A — $0.2175 per share— — (10,542)— — (10,542)
Class B — $0.2175 per share— — (770)— — (770)
Balances at April 30, 2020$548 $330,968 $688,079 $(106,751)$(92,242)$820,602 
The following table illustrates the changes in the balances of each component of stockholders' equity for the nine months ended April 30, 2020:
Common StockAdditional
 Paid-In Capital
Retained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balances at July 31, 2019$548 $329,969 $637,843 $(46,332)$(71,254)$850,774 
Net income— — 84,684 — — 84,684 
Other comprehensive loss, net of tax— — — — (20,988)(20,988)
Issuance of shares of Class A Common Stock under stock plan— (6,314)— 3,694 — (2,620)
Tax benefit and withholdings from deferred compensation distributions— 133 — — — 133 
Stock-based compensation expense— 7,180 — — — 7,180 
Repurchase of shares of Class A Common Stock— — — (64,113)— (64,113)
Cash dividends on Common Stock:
Class A — $0.6525 per share— — (32,197)— — (32,197)
Class B — $0.6359 per share— — (2,251)— — (2,251)
Balances at April 30, 2020$548 $330,968 $688,079 $(106,751)$(92,242)$820,602 

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NOTE G — Accumulated Other Comprehensive Loss
Other comprehensive loss consists of foreign currency translation adjustments which includes the settlements of net investment hedges, unrealized gains and losses from cash flow hedges, and the unamortized gain on post-retirement plans, net of their related tax effects.
The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the nine months ended April 30, 2021:
Unrealized (loss) gain on cash flow hedgesUnamortized gain on post-retirement plansForeign currency translation adjustmentsAccumulated other comprehensive loss
Beginning balance, July 31, 2020$(200)$2,181 $(68,458)$(66,477)
Other comprehensive income (loss) before reclassification1,189 (23)16,848 18,014 
Amounts reclassified from accumulated other comprehensive loss(16)(69) (85)
Ending balance, April 30, 2021$973 $2,089 $(51,610)$(48,548)
The decrease in accumulated other comprehensive loss as of April 30, 2021 compared to July 31, 2020, was primarily due to the depreciation of the U.S. dollar against certain other currencies during the nine-month period.
The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the nine months ended April 30, 2020:
Unrealized gain (loss) on cash flow hedgesUnamortized gain on post-retirement plansForeign currency translation adjustmentsAccumulated other comprehensive loss
Beginning balance, July 31, 2019$707 $2,800 $(74,761)$(71,254)
Other comprehensive loss before reclassification(1,363)(216)(18,510)(20,089)
Amounts reclassified from accumulated other comprehensive loss(584)(315) (899)
Ending balance, April 30, 2020$(1,240)$2,269 $(93,271)$(92,242)
The increase in accumulated other comprehensive loss as of April 30, 2020, compared to July 31, 2019, was primarily due to the appreciation of the U.S. dollar against certain other currencies during the nine-month period.
Of the amounts reclassified from accumulated other comprehensive loss during the nine months ended April 30, 2021 and 2020, unrealized gains on cash flow hedges were reclassified to \"Cost of goods sold\" and net unamortized gains on post-retirement plans were reclassified into \"Investment and other income\" on the condensed consolidated statements of income.
The following table illustrates the income tax benefit (expense) on the components of other comprehensive income (loss) for the three and nine months ended April 30, 2021 and 2020:
Three months ended April 30,Nine months ended April 30,
2021202020212020
Income tax benefit (expense) related to items of other comprehensive income (loss):
Cash flow hedges$(71)$(6)$(72)$24 
Pension and other post-retirement benefits  246 93 
Other income tax adjustments and currency translation372 (173)(925)(127)
Income tax benefit (expense) related to items of other comprehensive income (loss)$301 $(179)$(751)$(10)

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NOTE H — Revenue Recognition
The Company recognizes revenue when control of the product or service transfers to the customer at an amount that represents the consideration expected to be received in exchange for those products and services. The Company’s revenues are primarily from the sale of identification solutions and workplace safety products that are shipped and billed to customers. All revenue is from contracts with customers and is included in “Net sales” on the condensed consolidated statements of income. See Note I, “Segment Information,” for the Company’s disaggregated revenue disclosure.
The Company offers extended warranty coverage that is included in the sales price of certain products, which it accounts for as service warranties. The Company accounts for the deferred revenue associated with extended service warranties as a contract liability. The balance of contract liabilities associated with service warranty performance obligations was $2,567 and $2,559 as of April 30, 2021 and July 31, 2020, respectively. The current portion and non-current portion of contract liabilities are included in “Other current liabilities” and “Other liabilities,\" respectively, on the condensed consolidated balance sheets. The Company recognized revenue of $291 and $317 during the three months ended April 30, 2021 and 2020, respectively, and $882 and $948 during the nine months ended April 30, 2021 and 2020, respectively, that was included in the contract liability balance at the beginning of the respective period from the amortization of extended service warranties. Of the contract liability balance outstanding at April 30, 2021, the Company expects to recognize 11% by the end of fiscal 2021, an additional 38% by the end of fiscal 2022, and the remaining balance thereafter. 

NOTE I — Segment Information
The Company is organized and managed on a global basis within three operating segments, Identification Solutions (\"IDS\"), Workplace Safety (\"WPS\"), and People Identification (\"PDC\"), which aggregate into two reportable segments that are organized around businesses with consistent products and services: IDS and WPS. The IDS and PDC operating segments aggregate into the IDS reporting segment, while the WPS reporting segment is comprised solely of the Workplace Safety operating segment.
The following is a summary of net sales by segment and geographic region for the three and nine months ended April 30, 2021 and 2020:
Three months ended April 30,Nine months ended April 30,
2021202020212020
Net sales:
ID Solutions
Americas$143,348 $131,169 $401,585 $418,440 
Europe50,416 41,183 137,038 129,884 
Asia24,301 20,817 71,861 65,194 
Total$218,065 $193,169 $610,484 $613,518 
Workplace Safety
Americas$21,425 $21,456 $65,656 $69,395 
Europe42,491 37,567 123,922 110,594 
Australia13,522 13,751 38,506 36,048 
Total$77,438 $72,774 $228,084 $216,037 
Total Company
Americas$164,773 $152,625 $467,241 $487,835 
Europe92,907 78,750 260,960 240,478 
Asia-Pacific37,823 34,568 110,367 101,242 
Total$295,503 $265,943 $838,568 $829,555 
The following is a summary of segment profit for the three and nine months ended April 30, 2021 and 2020:
Three months ended April 30,Nine months ended April 30,
 2021202020212020
Segment profit:
ID Solutions$47,539 $36,401 $126,818 $119,499 
Workplace Safety5,656 4,379 17,107 14,991 
Total Company$53,195 $40,780 $143,925 $134,490 
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The following is a reconciliation of segment profit to income before income taxes and losses of unconsolidated affiliate for the three and nine months ended April 30, 2021 and 2020:
Three months ended April 30,Nine months ended April 30,
 2021202020212020
Total profit from reportable segments$53,195 $40,780 $143,925 $134,490 
Unallocated amounts:
Administrative costs(6,470)(4,290)(17,600)(15,865)
Impairment charges (13,821) (13,821)
Investment and other income1,181 112 3,372 3,252 
Interest expense(131)(628)(288)(1,976)
Income before income taxes and losses of unconsolidated affiliate$47,775 $22,153 $129,409 $106,080 

NOTE J — Net Income per Common Share
The following table summarizes the computation of basic and diluted net income per share for the Company’s Class A and Class B common stock:
Three months ended April 30,Nine months ended April 30,
 2021202020212020
Numerator (in thousands):
Net Income (Numerator for basic and diluted income per Class A Nonvoting Common Share)$37,291 $13,633 $101,632 $84,684 
Less:
Preferential dividends  (808)(828)
Preferential dividends on dilutive stock options  (4)(10)
Numerator for basic and diluted income per Class B Voting Common Share$37,291 $13,633 $100,820 $83,846 
Denominator: (in thousands)
Denominator for basic income per share for both Class A and Class B52,050 52,607 52,030 53,023 
Plus: Effect of dilutive equity awards399 365 311 489 
Denominator for diluted income per share for both Class A and Class B52,449 52,972 52,341 53,512 
Net income per Class A Nonvoting Common Share:
Basic$0.72 $0.26 $1.95 $1.60 
Diluted$0.71 $0.26 $1.94 $1.58 
Net income per Class B Voting Common Share:
Basic$0.72 $0.26 $1.94 $1.58 
Diluted$0.71 $0.26 $1.93 $1.57 
Potentially dilutive securities attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share where the combined exercise price and average unamortized fair value were greater than the average market price of Brady's Class A Nonvoting Common Stock because the effect would have been anti-dilutive. The amount of anti-dilutive shares was 239,707 and 488,932 for the three months ended April 30, 2021 and 2020, respectively, and 603,356 and 353,752 for the nine months ended April 30, 2021 and 2020, respectively.

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NOTE K — Fair Value Measurements
In accordance with fair value accounting guidance, the Company determines fair value based on the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The inputs used to measure fair value are classified into the following hierarchy:
Level 1 — Unadjusted quoted prices in active markets for identical instruments that are accessible as of the reporting date.
Level 2 — Other significant pricing inputs that are either directly or indirectly observable.
Level 3 — Significant unobservable pricing inputs, which result in the use of management's own assumptions.
The following table summarizes the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis at April 30, 2021 and July 31, 2020:
 April 30, 2021July 31, 2020Fair Value Hierarchy
Assets:
Trading securities$20,169 $18,606 Level 1
Foreign exchange contracts724 594 Level 2
Liabilities:
Foreign exchange contracts252 777 Level 2
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Trading securities: The Company’s deferred compensation investments consist of investments in mutual funds, which are included in \"Other assets\" on the condensed consolidated balance sheets. 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 value was based on the present value of the future cash flows using external models that use observable inputs, such as interest rates, yield curves and foreign exchange rates. See Note L, “Derivatives and Hedging Activities,” for additional information.
The fair values of cash and cash equivalents, accounts receivable, accounts payable, and other liabilities approximated carrying values due to their short-term nature.

NOTE L — Derivatives and Hedging Activities
The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate risk of specific 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 hedges 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 program is to minimize the impact of currency movements due 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 objective, the Company hedges a portion of known exposures using forward foreign exchange currency contracts.
Main foreign currency exposures are related to transactions denominated in the British Pound, Euro, Canadian dollar, Australian dollar, Mexican Peso, Chinese Yuan, Malaysian Ringgit and Singapore dollar. Generally, these risk management transactions will involve the use of foreign currency derivatives to minimize the impact of currency movements on non-functional currency transactions.
The U.S. dollar equivalent notional amounts of outstanding forward exchange contracts were as follows:
  April 30, 2021July 31, 2020
Designated as cash flow hedges$6,150 $24,600 
Non-designated hedges3,495 3,107 
Total foreign exchange contracts$9,645 $27,707 
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Cash Flow Hedges
The Company has designated a portion of its forward foreign exchange contracts as cash flow hedges and recorded these contracts at fair value on the condensed consolidated balance sheets. For these instruments, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (\"OCI\") and reclassified into income in the same period or periods during which the hedged transaction affects income. As of April 30, 2021 and July 31, 2020, unrealized gains of $860 and losses of $385 have been included in OCI, respectively.
The following table summarizes the amount of pre-tax gains and losses related to foreign exchange contracts designated as cash flow hedging instruments:
 Three months ended April 30,Nine months ended April 30,
  2021202020212020
Gains (losses) recognized in OCI$118 $(1,751)