x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Wisconsin
|
|
39-0178960
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
6555 West Good Hope Road,
Milwaukee, WI
|
|
53223
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Class A Nonvoting Common Stock, Par
Value $.01 per share
|
|
New York Stock Exchange
|
Large accelerated filer
|
|
ý
|
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.
|
|
¨
|
PART I
|
Page
|
PART II
|
|
PART III
|
|
Outstanding Equity Awards at 201
8 Fiscal Year End
|
|
CEO Pay Ratio Disclosure
|
|
PART IV
|
|
•
|
Operational excellence — Continuous productivity improvement, automation, and process transformation.
|
•
|
Customer service — Focus on the customer and understanding customer needs.
|
•
|
Innovation advantage — Technologically-advanced, internally-developed proprietary products that drive revenue growth and sustain gross profit margins.
|
•
|
Global leadership position in niche markets.
|
•
|
Digital capabilities.
|
•
|
Compliance expertise.
|
•
|
Increased our investment in R&D by 14.2% and enhanced our innovation development process and the speed to deliver high-value, innovative products that align with our target markets.
|
•
|
Drove operational excellence and provided our customers with strong customer service.
|
•
|
Executed sustainable efficiency gains and increased the use of automation throughout our global operations as well as our selling, general, and administrative structures demonstrated through a reduction in selling, general and administrative ("SG&A") expenses as a percentage of net sales.
|
•
|
Expanded our digital presence demonstrated through increased WPS digital sales.
|
•
|
Grew through focused sales and marketing actions in selected vertical markets and strategic accounts.
|
•
|
Enhanced our global employee development process to attract and retain key talent.
|
|
|
2018
|
|
2017
|
|
2016
|
|||
IDS
|
|
72.1
|
%
|
|
71.9
|
%
|
|
71.0
|
%
|
WPS
|
|
27.9
|
%
|
|
28.1
|
%
|
|
29.0
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
Facility identification and protection, which includes safety signs, pipe markers, labeling systems, spill control products, lockout/tagout devices, and software and services for safety compliance auditing, procedure writing and training.
|
•
|
Product identification, which includes materials and printing systems for product identification, brand protection labeling, work in process labeling, and finished product identification.
|
•
|
Wire identification, which includes hand-held printers, wire markers, sleeves, and tags.
|
•
|
People identification, which includes name tags, badges, lanyards, and access control software.
|
•
|
Patient identification, which includes wristbands and labels used in hospitals for tracking and improving the safety of patients.
|
•
|
Custom wristbands used in the leisure and entertainment industry such as theme parks, concerts and festivals.
|
•
|
Safety and compliance signs, tags, and labels.
|
•
|
Informational signage.
|
•
|
Asset tracking labels.
|
•
|
First aid products.
|
•
|
Industrial warehouse and office equipment.
|
•
|
Labor law and other compliance posters.
|
•
|
Future economic conditions of major markets served.
|
•
|
Consolidation in the marketplace allowing competitors and customers to be more efficient and more price competitive.
|
•
|
Future competitors entering the marketplace.
|
•
|
Decreasing product life cycles.
|
•
|
Changes in customer preferences.
|
•
|
Ability to achieve operational excellence.
|
•
|
Delays or disruptions in product deliveries and payments in connection with international manufacturing and sales.
|
•
|
Regulations resulting from political and economic instability and disruptions.
|
•
|
Imposition of new, or change in existing, duties, tariffs and trade agreements.
|
•
|
Import, export and economic sanction laws.
|
•
|
Current and changing governmental policies, regulatory, and business environments.
|
•
|
Disadvantages from competing against companies from countries that are not subject to U.S. laws and regulations including the Foreign Corrupt Practices Act.
|
•
|
Local labor regulations.
|
•
|
Regulations relating to climate change, air emissions, wastewater discharges, handling and disposal of hazardous materials and wastes.
|
•
|
Regulations relating to product content, health, safety and the protection of the environment.
|
•
|
Specific country regulations where our products are manufactured or sold.
|
•
|
Regulations relating to compliance with data protection and privacy laws throughout our global business.
|
•
|
Laws and regulations that apply to companies doing business with the government, including audit requirements of government contracts related to procurement integrity, export control, employment practices, and the accuracy of records and recording of costs.
|
(a)
|
Market Information
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||||||
4th Quarter
|
|
$
|
40.65
|
|
|
$
|
36.10
|
|
|
$
|
39.80
|
|
|
$
|
33.05
|
|
|
$
|
32.68
|
|
|
$
|
26.29
|
|
3rd Quarter
|
|
$
|
39.00
|
|
|
$
|
35.90
|
|
|
$
|
39.75
|
|
|
$
|
35.10
|
|
|
$
|
27.82
|
|
|
$
|
21.13
|
|
2nd Quarter
|
|
$
|
39.75
|
|
|
$
|
36.60
|
|
|
$
|
39.45
|
|
|
$
|
32.55
|
|
|
$
|
26.39
|
|
|
$
|
20.84
|
|
1st Quarter
|
|
$
|
39.10
|
|
|
$
|
31.95
|
|
|
$
|
35.36
|
|
|
$
|
31.86
|
|
|
$
|
24.29
|
|
|
$
|
19.52
|
|
(b)
|
Holders
|
(c)
|
Issuer Purchases of Equity Securities
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price paid per share
|
|
Total Number of Shares Purchased As Part of Publicly Announced Plans
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Plans
|
|||||
May 1, 2018 - May 31, 2018
|
|
5,100
|
|
|
$
|
36.00
|
|
|
5,100
|
|
|
1,959,306
|
|
June 1, 2018 - June 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,959,306
|
|
|
July 1, 2018 - July 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,959,306
|
|
|
Total
|
|
5,100
|
|
|
$
|
36.00
|
|
|
5,100
|
|
|
1,959,306
|
|
(i)
|
Dividends
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
|
1st Qtr
|
|
1st Qtr
|
|
2nd Qtr
|
|
3rd Qtr
|
|
4th Qtr
|
|
1st Qtr
|
|
2nd Qtr
|
|
3rd Qtr
|
|
4th Qtr
|
||||||||||||||||||
Class A
|
|
$
|
0.2125
|
|
|
$
|
0.2075
|
|
|
$
|
0.2075
|
|
|
$
|
0.2075
|
|
|
$
|
0.2075
|
|
|
$
|
0.2050
|
|
|
$
|
0.2050
|
|
|
$
|
0.2050
|
|
|
$
|
0.2050
|
|
Class B
|
|
0.19585
|
|
|
0.19085
|
|
|
0.2075
|
|
|
0.2075
|
|
|
0.2075
|
|
|
0.18835
|
|
|
0.2050
|
|
|
0.2050
|
|
|
0.2050
|
|
(e)
|
Common Stock Price Performance Graph
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
Brady Corporation
|
|
$
|
100.00
|
|
|
$
|
80.73
|
|
|
$
|
74.99
|
|
|
$
|
106.04
|
|
|
$
|
112.15
|
|
|
$
|
132.08
|
|
S&P 500 Index
|
|
100.00
|
|
|
116.94
|
|
|
130.05
|
|
|
137.17
|
|
|
159.18
|
|
|
185.03
|
|
||||||
S&P SmallCap 600 Index
|
|
100.00
|
|
|
111.04
|
|
|
124.33
|
|
|
131.61
|
|
|
154.85
|
|
|
190.64
|
|
||||||
Russell 2000 Index
|
|
100.00
|
|
|
108.56
|
|
|
121.62
|
|
|
121.54
|
|
|
143.97
|
|
|
170.94
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
(In thousands, except per share amounts)
|
||||||||||||||||||
Operating data
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
1,173,851
|
|
|
$
|
1,113,316
|
|
|
$
|
1,120,625
|
|
|
$
|
1,171,731
|
|
|
$
|
1,225,034
|
|
Gross margin
|
|
588,291
|
|
|
558,292
|
|
|
558,773
|
|
|
558,432
|
|
|
609,564
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
|
45,253
|
|
|
39,624
|
|
|
35,799
|
|
|
36,734
|
|
|
35,048
|
|
|||||
Selling, general and administrative
(2)
|
|
390,342
|
|
|
387,653
|
|
|
405,096
|
|
|
422,704
|
|
|
452,164
|
|
|||||
Restructuring charges
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,821
|
|
|
15,012
|
|
|||||
Impairment charges
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,867
|
|
|
148,551
|
|
|||||
Total operating expenses
|
|
435,595
|
|
|
427,277
|
|
|
440,895
|
|
|
523,126
|
|
|
650,775
|
|
|||||
Operating income (loss)
|
|
152,696
|
|
|
131,015
|
|
|
117,878
|
|
|
35,306
|
|
|
(41,211
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment and other income (expense)
|
|
2,487
|
|
|
1,121
|
|
|
(709
|
)
|
|
845
|
|
|
2,402
|
|
|||||
Interest expense
|
|
(3,168
|
)
|
|
(5,504
|
)
|
|
(7,824
|
)
|
|
(11,156
|
)
|
|
(14,300
|
)
|
|||||
Net other expense
|
|
(681
|
)
|
|
(4,383
|
)
|
|
(8,533
|
)
|
|
(10,311
|
)
|
|
(11,898
|
)
|
|||||
Earnings (loss) from continuing operations before income taxes
|
|
152,015
|
|
|
126,632
|
|
|
109,345
|
|
|
24,995
|
|
|
(53,109
|
)
|
|||||
Income tax expense (benefit)
(5)
|
|
60,955
|
|
|
30,987
|
|
|
29,235
|
|
|
20,093
|
|
|
(4,963
|
)
|
|||||
Earnings (loss) from continuing operations
|
|
$
|
91,060
|
|
|
$
|
95,645
|
|
|
$
|
80,110
|
|
|
$
|
4,902
|
|
|
$
|
(48,146
|
)
|
(Loss) Earnings from discontinued operations, net of income taxes
(6)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,915
|
)
|
|
2,178
|
|
|||||
Net earnings (loss)
|
|
$
|
91,060
|
|
|
$
|
95,645
|
|
|
$
|
80,110
|
|
|
$
|
2,987
|
|
|
$
|
(45,968
|
)
|
Earnings (loss) from continuing operations per Common Share— (Diluted):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Class A nonvoting
|
|
$
|
1.73
|
|
|
$
|
1.84
|
|
|
$
|
1.58
|
|
|
$
|
0.10
|
|
|
$
|
(0.93
|
)
|
Class B voting
|
|
$
|
1.72
|
|
|
$
|
1.83
|
|
|
$
|
1.56
|
|
|
$
|
0.08
|
|
|
$
|
(0.95
|
)
|
(Loss) Earnings from discontinued operations per Common Share - (Diluted):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Class A nonvoting
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.04
|
|
Class B voting
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.05
|
|
Cash Dividends on:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Class A common stock
|
|
$
|
0.83
|
|
|
$
|
0.82
|
|
|
$
|
0.81
|
|
|
$
|
0.80
|
|
|
$
|
0.78
|
|
Class B common stock
|
|
$
|
0.81
|
|
|
$
|
0.80
|
|
|
$
|
0.79
|
|
|
$
|
0.78
|
|
|
$
|
0.76
|
|
Balance Sheet at July 31:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
1,056,931
|
|
|
$
|
1,050,223
|
|
|
$
|
1,043,964
|
|
|
$
|
1,062,897
|
|
|
$
|
1,253,665
|
|
Long-term obligations, less current maturities
|
|
52,618
|
|
|
104,536
|
|
|
211,982
|
|
|
200,774
|
|
|
159,296
|
|
|||||
Stockholders’ investment
|
|
752,112
|
|
|
700,140
|
|
|
603,598
|
|
|
587,688
|
|
|
733,076
|
|
|||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
143,042
|
|
|
$
|
144,032
|
|
|
$
|
138,976
|
|
|
$
|
93,348
|
|
|
$
|
93,420
|
|
Net cash (used in) provided by investing activities
|
|
(2,905
|
)
|
|
(15,253
|
)
|
|
(15,416
|
)
|
|
(14,365
|
)
|
|
10,207
|
|
|||||
Net cash used in financing activities
|
|
(90,680
|
)
|
|
(136,241
|
)
|
|
(99,576
|
)
|
|
(32,152
|
)
|
|
(115,387
|
)
|
|||||
Depreciation and amortization
|
|
25,442
|
|
|
27,303
|
|
|
32,432
|
|
|
39,458
|
|
|
44,598
|
|
|||||
Capital expenditures
|
|
(21,777
|
)
|
|
(15,167
|
)
|
|
(17,140
|
)
|
|
(26,673
|
)
|
|
(43,398
|
)
|
(1)
|
Operating data has been impacted by the reclassification of the Die-Cut businesses into discontinued operations in fiscal 2014 and 2015. The Company has elected to not separately disclose the cash flows related to discontinued operations.
|
(2)
|
During fiscal 2018, the Company recognized a gain of $4.7 million on the sale of its Runelandhs Försäljnings AB business.
|
(3)
|
During fiscal 2014, the Company approved a plan to consolidate facilities in the Americas, Europe, and Asia in order to enhance customer service, improve efficiency of operations, and reduce operating expenses. This plan resulted in restructuring charges during fiscal 2014 and fiscal 2015. Fiscal 2014 also included restructuring charges from a business simplification project executed in a prior year.
|
(4)
|
The Company recognized impairment charges of $46.9 million and $148.6 million during the fiscal years ended July 31, 2015 and 2014, respectively. The impairment charges primarily related to the following reporting units: WPS Americas and WPS APAC in fiscal 2015 and People ID in fiscal 2014.
|
(5)
|
Fiscal 2018 was significantly impacted by the Tax Reform Act which resulted in total incremental tax expense of $21.1 million, which consisted of $1.0 million related to the recording of a deferred tax liability for future withholdings and income taxes on the distribution of foreign earnings, an income tax charge of $3.3 million related to the deemed repatriation of the historical earnings of foreign subsidiaries, and the impact of the Tax Reform Act on the revaluation of deferred tax assets and liabilities as well as the impact on the Company's fiscal 2018 earnings from the reduced tax rate was an additional income tax expense of $16.8 million. Fiscal 2015 was significantly impacted by the impairment charges of $46.9 million, of which $39.8 million was non-deductible for income tax purposes. Fiscal 2014 was significantly impacted by the impairment charges of $148.6 million, of which $61.1 million was non-deductible for income tax purposes.
|
(6)
|
The Die-Cut business was sold in two phases. The first phase closed in the fourth quarter of fiscal 2014 and the second and final phase closed in the first quarter of fiscal 2015. The loss from discontinued operations in fiscal 2015 includes a $0.4 million net loss on the sale of the Die-Cut business, recorded during the three months ended October 31, 2014. The earnings from discontinued operations in fiscal 2014 include a $1.2 million net loss on the sale of the Die-Cut business recorded during the three months ended July 31, 2014.
|
(Dollars in thousands)
|
|
2018
|
|
% Sales
|
|
2017
|
|
% Sales
|
|
2016
|
|
% Sales
|
|||||||||
Net sales
|
|
$
|
1,173,851
|
|
|
|
|
|
$
|
1,113,316
|
|
|
|
|
|
$
|
1,120,625
|
|
|
|
|
Gross margin
|
|
588,291
|
|
|
50.1
|
%
|
|
558,292
|
|
|
50.1
|
%
|
|
558,773
|
|
|
49.9
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
|
45,253
|
|
|
3.9
|
%
|
|
39,624
|
|
|
3.6
|
%
|
|
35,799
|
|
|
3.2
|
%
|
|||
Selling, general and administrative
|
|
390,342
|
|
|
33.3
|
%
|
|
387,653
|
|
|
34.8
|
%
|
|
405,096
|
|
|
36.1
|
%
|
|||
Total operating expenses
|
|
435,595
|
|
|
37.1
|
%
|
|
427,277
|
|
|
38.4
|
%
|
|
440,895
|
|
|
39.3
|
%
|
|||
Operating income
|
|
$
|
152,696
|
|
|
13.0
|
%
|
|
$
|
131,015
|
|
|
11.8
|
%
|
|
$
|
117,878
|
|
|
10.5
|
%
|
(Dollars in thousands)
|
|
2018
|
|
% Sales
|
|
2017
|
|
% Sales
|
|
2016
|
|
% Sales
|
|||||||||
Operating income
|
|
$
|
152,696
|
|
|
13.0
|
%
|
|
$
|
131,015
|
|
|
11.8
|
%
|
|
$
|
117,878
|
|
|
10.5
|
%
|
Other income and (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment and other income (expense)
|
|
2,487
|
|
|
0.2
|
%
|
|
1,121
|
|
|
0.1
|
%
|
|
(709
|
)
|
|
(0.1
|
)%
|
|||
Interest expense
|
|
(3,168
|
)
|
|
(0.3
|
)%
|
|
(5,504
|
)
|
|
(0.5
|
)%
|
|
(7,824
|
)
|
|
(0.7
|
)%
|
|||
Earnings before income taxes
|
|
152,015
|
|
|
13.0
|
%
|
|
126,632
|
|
|
11.4
|
%
|
|
109,345
|
|
|
9.8
|
%
|
|||
Income tax expense
|
|
60,955
|
|
|
5.2
|
%
|
|
30,987
|
|
|
2.8
|
%
|
|
29,235
|
|
|
2.6
|
%
|
|||
Net earnings
|
|
$
|
91,060
|
|
|
7.8
|
%
|
|
$
|
95,645
|
|
|
8.6
|
%
|
|
$
|
80,110
|
|
|
7.1
|
%
|
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
NET SALES
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
$
|
846,087
|
|
|
$
|
800,392
|
|
|
$
|
795,511
|
|
Workplace Safety
|
|
327,764
|
|
|
312,924
|
|
|
325,114
|
|
|||
Total
|
|
$
|
1,173,851
|
|
|
$
|
1,113,316
|
|
|
$
|
1,120,625
|
|
SALES GROWTH INFORMATION
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
|
|
|
|
|
||||||
Organic
|
|
3.4
|
%
|
|
1.6
|
%
|
|
(0.7
|
)%
|
|||
Currency
|
|
2.3
|
%
|
|
(1.0
|
)%
|
|
(3.1
|
)%
|
|||
Total
|
|
5.7
|
%
|
|
0.6
|
%
|
|
(3.8
|
)%
|
|||
Workplace Safety
|
|
|
|
|
|
|
||||||
Organic
|
|
0.7
|
%
|
|
(2.0
|
)%
|
|
(0.7
|
)%
|
|||
Currency
|
|
4.6
|
%
|
|
(1.7
|
)%
|
|
(5.0
|
)%
|
|||
Divestitures
|
|
(0.6
|
)%
|
|
—
|
%
|
|
—
|
%
|
|||
Total
|
|
4.7
|
%
|
|
(3.7
|
)%
|
|
(5.7
|
)%
|
|||
Total Company
|
|
|
|
|
|
|
||||||
Organic
|
|
2.6
|
%
|
|
0.5
|
%
|
|
(0.7
|
)%
|
|||
Currency
|
|
3.0
|
%
|
|
(1.2
|
)%
|
|
(3.7
|
)%
|
|||
Divestitures
|
|
(0.2
|
)%
|
|
—
|
%
|
|
—
|
%
|
|||
Total
|
|
5.4
|
%
|
|
(0.7
|
)%
|
|
(4.4
|
)%
|
|||
SEGMENT PROFIT
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
$
|
143,411
|
|
|
$
|
130,572
|
|
|
$
|
112,276
|
|
Workplace Safety
|
|
31,712
|
|
|
25,554
|
|
|
30,792
|
|
|||
Total
|
|
$
|
175,123
|
|
|
$
|
156,126
|
|
|
$
|
143,068
|
|
SEGMENT PROFIT AS A PERCENT OF NET SALES
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
16.9
|
%
|
|
16.3
|
%
|
|
14.1
|
%
|
|||
Workplace Safety
|
|
9.7
|
%
|
|
8.2
|
%
|
|
9.5
|
%
|
|||
Total
|
|
14.9
|
%
|
|
14.0
|
%
|
|
12.8
|
%
|
NET EARNINGS RECONCILIATION
|
|
Years ended:
|
||||||||||
(Dollars in thousands)
|
|
July 31, 2018
|
|
July 31, 2017
|
|
July 31, 2016
|
||||||
Total segment profit
|
|
$
|
175,123
|
|
|
$
|
156,126
|
|
|
$
|
143,068
|
|
Unallocated costs:
|
|
|
|
|
|
|
||||||
Administrative costs
|
|
27,093
|
|
|
25,111
|
|
|
25,190
|
|
|||
Gain on sale of business
(1)
|
|
(4,666
|
)
|
|
—
|
|
|
—
|
|
|||
Investment and other (income) expense
|
|
(2,487
|
)
|
|
(1,121
|
)
|
|
709
|
|
|||
Interest expense
|
|
3,168
|
|
|
5,504
|
|
|
7,824
|
|
|||
Earnings before income taxes
|
|
$
|
152,015
|
|
|
$
|
126,632
|
|
|
$
|
109,345
|
|
(Dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash flow provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
143,042
|
|
|
$
|
144,032
|
|
|
$
|
138,976
|
|
Investing activities
|
(2,905
|
)
|
|
(15,253
|
)
|
|
(15,416
|
)
|
|||
Financing activities
|
(90,680
|
)
|
|
(136,241
|
)
|
|
(99,576
|
)
|
|||
Effect of exchange rate changes on cash
|
(1,974
|
)
|
|
178
|
|
|
2,752
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
47,483
|
|
|
$
|
(7,284
|
)
|
|
$
|
26,736
|
|
|
|
Payments Due by Period
|
||||||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More
than
5 Years
|
|
Uncertain
Timeframe
|
||||||||||||
Long-term Debt Obligations and Notes Payable
|
|
$
|
52,618
|
|
|
$
|
—
|
|
|
$
|
52,618
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating Lease Obligations
|
|
51,210
|
|
|
14,826
|
|
|
18,725
|
|
|
13,612
|
|
|
4,047
|
|
|
—
|
|
||||||
Purchase Obligations
(1)
|
|
48,633
|
|
|
48,607
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||||
Interest Obligations
|
|
4,466
|
|
|
2,233
|
|
|
2,233
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Tax Obligations
|
|
20,430
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,430
|
|
||||||
Other Obligations
(2)
|
|
2,813
|
|
|
377
|
|
|
698
|
|
|
598
|
|
|
1,140
|
|
|
—
|
|
||||||
Total
|
|
$
|
180,170
|
|
|
$
|
66,043
|
|
|
$
|
74,287
|
|
|
$
|
14,210
|
|
|
$
|
5,200
|
|
|
$
|
20,430
|
|
(1)
|
Purchase obligations include all open purchase orders as of
July 31, 2018
.
|
(2)
|
Other obligations represent expected payments under the Company’s U.S. postretirement medical plan and international pension plans as disclosed in Note 4 to the Consolidated Financial Statements, under Item 8 of this report.
|
•
|
Brady's ability to compete effectively or to successfully execute our strategy
|
•
|
Brady's ability to develop technologically advanced products that meet customer demands
|
•
|
Difficulties in protecting our sites, networks, and systems against security breaches
|
•
|
Decreased demand for the Company's products
|
•
|
Brady's ability to retain large customers
|
•
|
Extensive regulations by U.S. and non-U.S. governmental and self regulatory entities
|
•
|
Risks associated with the loss of key employees
|
•
|
Divestitures, contingent liabilities from divestitures and the failure to identify, integrate, and grow acquired companies
|
•
|
Litigation, including product liability claims
|
•
|
Brady's ability to execute facility consolidations and maintain acceptable operational service metrics
|
•
|
Foreign currency fluctuations
|
•
|
Changes in tax legislation and tax rates
|
•
|
Potential write-offs of Brady's substantial intangible assets
|
•
|
Differing interests of voting and non-voting shareholders
|
•
|
Brady's ability to meet certain financial covenants required by our debt agreements
|
•
|
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 this Form 10-K.
|
|
Page
|
Financial Statements:
|
|
Consolidated Balance Sheets — July 31, 201
8 and 2017
|
|
Consolidated Statements of Earnings — Years Ended July 31, 201
8, 2017, and 2016
|
|
Consolidated Statements of Comprehensive Income
— Years Ended July 31, 201
8, 2017, and 2016
|
|
Consolidated Statements of Cash Flows — Years Ended July 31, 201
8, 2017, and 2016
|
|
Notes to Consolidated Financial Statements — Years Ended July 31, 201
8, 2017, and 2016
|
|
2018
|
|
2017
|
||||
|
(Dollars in thousands)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
181,427
|
|
|
$
|
133,944
|
|
Accounts receivable — net
|
161,282
|
|
|
149,638
|
|
||
Inventories:
|
|
|
|
||||
Finished products
|
73,133
|
|
|
69,760
|
|
||
Work-in-process
|
19,903
|
|
|
18,117
|
|
||
Raw materials and supplies
|
20,035
|
|
|
19,147
|
|
||
Total inventories
|
113,071
|
|
|
107,024
|
|
||
Prepaid expenses and other current assets
|
15,559
|
|
|
17,208
|
|
||
Total current assets
|
471,339
|
|
|
407,814
|
|
||
Other assets:
|
|
|
|
||||
Goodwill
|
419,815
|
|
|
437,697
|
|
||
Other intangible assets
|
42,588
|
|
|
53,076
|
|
||
Deferred income taxes
|
7,582
|
|
|
35,456
|
|
||
Other
|
17,662
|
|
|
18,077
|
|
||
Property, plant and equipment:
|
|
|
|
||||
Cost:
|
|
|
|
||||
Land
|
6,994
|
|
|
7,470
|
|
||
Buildings and improvements
|
96,245
|
|
|
98,228
|
|
||
Machinery and equipment
|
270,989
|
|
|
261,192
|
|
||
Construction in progress
|
4,495
|
|
|
4,109
|
|
||
|
378,723
|
|
|
370,999
|
|
||
Less accumulated depreciation
|
280,778
|
|
|
272,896
|
|
||
Property, plant and equipment — net
|
97,945
|
|
|
98,103
|
|
||
Total
|
$
|
1,056,931
|
|
|
$
|
1,050,223
|
|
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Notes payable
|
$
|
—
|
|
|
$
|
3,228
|
|
Accounts payable
|
66,538
|
|
|
66,817
|
|
||
Wages and amounts withheld from employees
|
67,619
|
|
|
58,192
|
|
||
Taxes, other than income taxes
|
8,318
|
|
|
7,970
|
|
||
Accrued income taxes
|
3,885
|
|
|
7,373
|
|
||
Other current liabilities
|
44,567
|
|
|
43,618
|
|
||
Total current liabilities
|
190,927
|
|
|
187,198
|
|
||
Long-term obligations
|
52,618
|
|
|
104,536
|
|
||
Other liabilities
|
61,274
|
|
|
58,349
|
|
||
Total liabilities
|
304,819
|
|
|
350,083
|
|
||
Stockholders’ investment:
|
|
|
|
||||
Class A nonvoting common stock — Issued 51,261,487 shares at July 31, 2018 and 2017, respectively (aggregate liquidation preference of $42,803 at July 31, 2018 and 2017)
|
513
|
|
|
513
|
|
||
Class B voting common stock — Issued and outstanding 3,538,628 shares
|
35
|
|
|
35
|
|
||
Additional paid-in capital
|
325,631
|
|
|
322,608
|
|
||
Earnings retained in the business
|
553,454
|
|
|
507,136
|
|
||
Treasury stock — 2,867,870 and 3,446,669 shares at July 31, 2018 and 2017, respectively, of Class A nonvoting common stock, at cost
|
(71,120
|
)
|
|
(85,470
|
)
|
||
Accumulated other comprehensive loss
|
(56,401
|
)
|
|
(44,682
|
)
|
||
Total stockholders’ investment
|
752,112
|
|
|
700,140
|
|
||
Total
|
$
|
1,056,931
|
|
|
$
|
1,050,223
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Net sales
|
$
|
1,173,851
|
|
|
$
|
1,113,316
|
|
|
$
|
1,120,625
|
|
Cost of products sold
|
585,560
|
|
|
555,024
|
|
|
561,852
|
|
|||
Gross margin
|
588,291
|
|
|
558,292
|
|
|
558,773
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
45,253
|
|
|
39,624
|
|
|
35,799
|
|
|||
Selling, general and administrative
|
390,342
|
|
|
387,653
|
|
|
405,096
|
|
|||
Total operating expenses
|
435,595
|
|
|
427,277
|
|
|
440,895
|
|
|||
Operating income
|
152,696
|
|
|
131,015
|
|
|
117,878
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Investment and other income (expense)
|
2,487
|
|
|
1,121
|
|
|
(709
|
)
|
|||
Interest expense
|
(3,168
|
)
|
|
(5,504
|
)
|
|
(7,824
|
)
|
|||
Earnings before income taxes
|
152,015
|
|
|
126,632
|
|
|
109,345
|
|
|||
Income tax expense
|
60,955
|
|
|
30,987
|
|
|
29,235
|
|
|||
Net earnings
|
$
|
91,060
|
|
|
$
|
95,645
|
|
|
$
|
80,110
|
|
Net earnings per Class A Nonvoting Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.76
|
|
|
$
|
1.87
|
|
|
$
|
1.59
|
|
Diluted
|
$
|
1.73
|
|
|
$
|
1.84
|
|
|
$
|
1.58
|
|
Dividends
|
$
|
0.83
|
|
|
$
|
0.82
|
|
|
$
|
0.81
|
|
Net earnings per Class B Voting Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.75
|
|
|
$
|
1.86
|
|
|
$
|
1.57
|
|
Diluted
|
$
|
1.72
|
|
|
$
|
1.83
|
|
|
$
|
1.56
|
|
Dividends
|
$
|
0.81
|
|
|
$
|
0.80
|
|
|
$
|
0.79
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
51,677
|
|
|
51,056
|
|
|
50,541
|
|
|||
Diluted
|
52,524
|
|
|
51,956
|
|
|
50,769
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Dollars in thousands)
|
||||||||||
Net earnings
|
$
|
91,060
|
|
|
$
|
95,645
|
|
|
$
|
80,110
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net (loss) gain recognized in other comprehensive (loss) income
|
(11,195
|
)
|
|
8,621
|
|
|
(1,405
|
)
|
|||
|
(11,195
|
)
|
|
8,621
|
|
|
(1,405
|
)
|
|||
|
|
|
|
|
|
||||||
Net investment hedge and long-term intercompany loan translation adjustments:
|
|
|
|
|
|
||||||
Net loss recognized in other comprehensive (loss) income
|
(2,480
|
)
|
|
(1,404
|
)
|
|
(2,280
|
)
|
|||
|
(2,480
|
)
|
|
(1,404
|
)
|
|
(2,280
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flow hedges:
|
|
|
|
|
|
||||||
Net gain (loss) recognized in other comprehensive (loss) income
|
966
|
|
|
(225
|
)
|
|
(1,254
|
)
|
|||
Reclassification adjustment for losses included in net earnings
|
551
|
|
|
486
|
|
|
196
|
|
|||
|
1,517
|
|
|
261
|
|
|
(1,058
|
)
|
|||
Pension and other post-retirement benefits:
|
|
|
|
|
|
||||||
Net gain (loss) recognized in other comprehensive (loss) income
|
446
|
|
|
647
|
|
|
(293
|
)
|
|||
Actuarial gain amortization
|
(576
|
)
|
|
(483
|
)
|
|
(612
|
)
|
|||
Prior service credit amortization
|
—
|
|
|
—
|
|
|
(1,035
|
)
|
|||
|
(130
|
)
|
|
164
|
|
|
(1,940
|
)
|
|||
|
|
|
|
|
|
||||||
Other comprehensive (loss) income, before tax
|
(12,288
|
)
|
|
7,642
|
|
|
(6,683
|
)
|
|||
Income tax benefit (expense) related to items of other comprehensive (loss) income
|
569
|
|
|
2,421
|
|
|
(3,028
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
(11,719
|
)
|
|
10,063
|
|
|
(9,711
|
)
|
|||
Comprehensive income
|
$
|
79,341
|
|
|
$
|
105,708
|
|
|
$
|
70,399
|
|
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Earnings
Retained
in the
Business
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive (Loss)
Income
|
|
Other
|
||||||||||||
|
|
(In thousands, except per share amounts)
|
||||||||||||||||||||||
Balances at July 31, 2015
|
|
$
|
548
|
|
|
$
|
314,403
|
|
|
$
|
414,069
|
|
|
$
|
(93,234
|
)
|
|
$
|
(45,034
|
)
|
|
$
|
(3,064
|
)
|
Net earnings
|
|
—
|
|
|
—
|
|
|
80,110
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,711
|
)
|
|
—
|
|
||||||
Issuance of 308,059 shares of Class A Common Stock under stock plan
|
|
—
|
|
|
(3,830
|
)
|
|
—
|
|
|
8,300
|
|
|
—
|
|
|
—
|
|
||||||
Other (Note 7)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(228
|
)
|
|
—
|
|
|
(799
|
)
|
||||||
Tax shortfall from exercise of stock options and deferred compensation distributions
|
|
—
|
|
|
(1,716
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation expense (Note 7)
|
|
—
|
|
|
8,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchase of 1,153,689 shares of Class A Common Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,552
|
)
|
|
—
|
|
|
—
|
|
||||||
Cash dividends on Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Class A — $0.81 per share
|
|
—
|
|
|
—
|
|
|
(38,001
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Class B — $0.79 per share
|
|
—
|
|
|
—
|
|
|
(2,807
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balances at July 31, 2016
|
|
$
|
548
|
|
|
$
|
317,001
|
|
|
$
|
453,371
|
|
|
$
|
(108,714
|
)
|
|
$
|
(54,745
|
)
|
|
$
|
(3,863
|
)
|
Net earnings
|
|
—
|
|
|
—
|
|
|
95,645
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,063
|
|
|
—
|
|
||||||
Issuance of 1,061,660 shares of Class A Common Stock under stock plan
|
|
—
|
|
|
(5,868
|
)
|
|
—
|
|
|
23,591
|
|
|
—
|
|
|
—
|
|
||||||
Other (Note 7)
|
|
—
|
|
|
1,943
|
|
|
—
|
|
|
(347
|
)
|
|
—
|
|
|
3,863
|
|
||||||
Tax shortfall from exercise of stock options and deferred compensation distributions
|
|
—
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation expense (Note 7)
|
|
—
|
|
|
9,495
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cash dividends on Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Class A — $0.82 per share
|
|
—
|
|
|
—
|
|
|
(39,037
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Class B — $0.80 per share
|
|
—
|
|
|
—
|
|
|
(2,843
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balances at July 31, 2017
|
|
$
|
548
|
|
|
$
|
322,608
|
|
|
$
|
507,136
|
|
|
$
|
(85,470
|
)
|
|
$
|
(44,682
|
)
|
|
$
|
—
|
|
Net earnings
|
|
—
|
|
|
—
|
|
|
91,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,719
|
)
|
|
—
|
|
||||||
Issuance of 842,305 shares of Class A Common Stock under stock plan
|
|
—
|
|
|
(7,171
|
)
|
|
—
|
|
|
16,234
|
|
|
—
|
|
|
—
|
|
||||||
Tax benefit and withholdings from deferred compensation distributions
|
|
—
|
|
|
214
|
|
|
—
|
|
|
(422
|
)
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation expense (Note 7)
|
|
—
|
|
|
9,980
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchase of 40,694 shares of Class A Common Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,462
|
)
|
|
—
|
|
|
—
|
|
||||||
Adoption of ASU 2018-02 (Note 1)
|
|
—
|
|
|
—
|
|
|
(1,869
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cash dividends on Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Class A — $0.83 per share
|
|
—
|
|
|
—
|
|
|
(39,998
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Class B — $0.81 per share
|
|
—
|
|
|
—
|
|
|
(2,875
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balances at July 31, 2018
|
|
$
|
548
|
|
|
$
|
325,631
|
|
|
$
|
553,454
|
|
|
$
|
(71,120
|
)
|
|
$
|
(56,401
|
)
|
|
$
|
—
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Dollars in thousands)
|
||||||||||
Operating activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
91,060
|
|
|
$
|
95,645
|
|
|
$
|
80,110
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
25,442
|
|
|
27,303
|
|
|
32,432
|
|
|||
Non-cash portion of stock-based compensation expense
|
9,980
|
|
|
9,495
|
|
|
8,154
|
|
|||
Gain on sale of business, net
|
(4,666
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
33,656
|
|
|
(8,618
|
)
|
|
2,085
|
|
|||
Changes in operating assets and liabilities (net of effects of business divestitures):
|
|
|
|
|
|
||||||
Accounts receivable
|
(16,612
|
)
|
|
766
|
|
|
8,159
|
|
|||
Inventories
|
(7,563
|
)
|
|
(5,687
|
)
|
|
4,833
|
|
|||
Prepaid expenses and other assets
|
1,747
|
|
|
1,812
|
|
|
475
|
|
|||
Accounts payable and accrued liabilities
|
13,091
|
|
|
22,255
|
|
|
3,928
|
|
|||
Income taxes
|
(3,093
|
)
|
|
1,061
|
|
|
(1,200
|
)
|
|||
Net cash provided by operating activities
|
143,042
|
|
|
144,032
|
|
|
138,976
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(21,777
|
)
|
|
(15,167
|
)
|
|
(17,140
|
)
|
|||
Sale of business, net of cash transferred with business
|
19,141
|
|
|
—
|
|
|
—
|
|
|||
Other
|
(269
|
)
|
|
(86
|
)
|
|
1,724
|
|
|||
Net cash used in investing activities
|
(2,905
|
)
|
|
(15,253
|
)
|
|
(15,416
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Payment of dividends
|
(42,873
|
)
|
|
(41,880
|
)
|
|
(40,808
|
)
|
|||
Proceeds from exercise of stock options
|
12,099
|
|
|
19,728
|
|
|
5,246
|
|
|||
Purchase of treasury stock
|
(1,462
|
)
|
|
—
|
|
|
(23,552
|
)
|
|||
Proceeds from borrowing on credit facilities
|
23,221
|
|
|
180,320
|
|
|
96,276
|
|
|||
Repayment of borrowing on credit facilities
|
(78,419
|
)
|
|
(244,268
|
)
|
|
(91,759
|
)
|
|||
Principal payments on debt
|
—
|
|
|
(49,302
|
)
|
|
(42,514
|
)
|
|||
Debt issuance costs
|
—
|
|
|
—
|
|
|
(803
|
)
|
|||
Income tax on equity-based compensation, and other
|
(3,246
|
)
|
|
(839
|
)
|
|
(1,662
|
)
|
|||
Net cash used in financing activities
|
(90,680
|
)
|
|
(136,241
|
)
|
|
(99,576
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(1,974
|
)
|
|
178
|
|
|
2,752
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
47,483
|
|
|
(7,284
|
)
|
|
26,736
|
|
|||
Cash and cash equivalents, beginning of period
|
133,944
|
|
|
141,228
|
|
|
114,492
|
|
|||
Cash and cash equivalents, end of period
|
$
|
181,427
|
|
|
$
|
133,944
|
|
|
$
|
141,228
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
2,976
|
|
|
$
|
5,766
|
|
|
$
|
8,528
|
|
Income taxes
|
33,267
|
|
|
31,885
|
|
|
28,497
|
|
Asset Category
|
|
Range of Useful Lives
|
Buildings & Improvements
|
|
10 to 33 Years
|
Computer Systems
|
|
5 Years
|
Machinery & Equipment
|
|
3 to 10 Years
|
|
IDS
|
|
WPS
|
|
Total
|
||||||
Balance as of July 31, 2016
|
$
|
384,529
|
|
|
$
|
45,342
|
|
|
$
|
429,871
|
|
Translation adjustments
|
4,845
|
|
|
2,981
|
|
|
7,826
|
|
|||
Realignment of businesses between segments
|
2,490
|
|
|
(2,490
|
)
|
|
—
|
|
|||
Balance as of July 31, 2017
|
$
|
391,864
|
|
|
$
|
45,833
|
|
|
$
|
437,697
|
|
Translation adjustments
|
(6,340
|
)
|
|
(1,487
|
)
|
|
(7,827
|
)
|
|||
Current year divestiture
|
—
|
|
|
(10,055
|
)
|
|
(10,055
|
)
|
|||
Balance as of July 31, 2018
|
$
|
385,524
|
|
|
$
|
34,291
|
|
|
$
|
419,815
|
|
|
July 31, 2018
|
|
July 31, 2017
|
||||||||||||||||||||||||
|
Weighted
Average
Amortization
Period
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Weighted
Average
Amortization
Period
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
Amortized other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Patents
|
5
|
|
$
|
1,448
|
|
|
$
|
(942
|
)
|
|
$
|
506
|
|
|
5
|
|
$
|
1,358
|
|
|
$
|
(471
|
)
|
|
$
|
887
|
|
Tradenames and other
|
9
|
|
4,497
|
|
|
(4,395
|
)
|
|
102
|
|
|
9
|
|
4,528
|
|
|
(4,229
|
)
|
|
299
|
|
||||||
Customer relationships
|
9
|
|
55,999
|
|
|
(33,535
|
)
|
|
22,464
|
|
|
8
|
|
60,759
|
|
|
(31,909
|
)
|
|
28,850
|
|
||||||
Unamortized other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tradenames
|
N/A
|
|
19,516
|
|
|
—
|
|
|
19,516
|
|
|
N/A
|
|
23,040
|
|
|
—
|
|
|
23,040
|
|
||||||
Total
|
|
|
$
|
81,460
|
|
|
$
|
(38,872
|
)
|
|
$
|
42,588
|
|
|
|
|
$
|
89,685
|
|
|
$
|
(36,609
|
)
|
|
$
|
53,076
|
|
|
Unrealized gain (loss) on cash flow hedges
|
|
Gain on postretirement plans
|
|
Foreign currency translation adjustments
|
|
Accumulated other comprehensive loss
|
||||||||
Ending balance, July 31, 2016
|
$
|
(857
|
)
|
|
$
|
2,236
|
|
|
$
|
(56,124
|
)
|
|
$
|
(54,745
|
)
|
Other comprehensive income before reclassification
|
670
|
|
|
867
|
|
|
8,713
|
|
|
10,250
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
296
|
|
|
(483
|
)
|
|
—
|
|
|
(187
|
)
|
||||
Ending balance, July 31, 2017
|
$
|
109
|
|
|
$
|
2,620
|
|
|
$
|
(47,411
|
)
|
|
$
|
(44,682
|
)
|
Other comprehensive income (loss) before reclassification
|
465
|
|
|
382
|
|
|
(14,242
|
)
|
|
(13,395
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
383
|
|
|
(576
|
)
|
|
—
|
|
|
(193
|
)
|
||||
Adoption of accounting standard ASU 2018-02
|
$
|
(94
|
)
|
|
$
|
876
|
|
|
$
|
1,087
|
|
|
1,869
|
|
|
Ending balance, July 31, 2018
|
$
|
863
|
|
|
$
|
3,302
|
|
|
$
|
(60,566
|
)
|
|
$
|
(56,401
|
)
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income tax benefit (expense) related to items of other comprehensive (loss) income:
|
|
|
|
|
|
|
||||||
Net investment hedge translation adjustments
|
|
$
|
(55
|
)
|
|
$
|
1,170
|
|
|
$
|
(1,804
|
)
|
Cash flow hedges
|
|
(669
|
)
|
|
705
|
|
|
192
|
|
|||
Pension and other post-retirement benefits
|
|
(64
|
)
|
|
(4
|
)
|
|
738
|
|
|||
Other income tax adjustments
|
|
(512
|
)
|
|
550
|
|
|
(2,154
|
)
|
|||
Adoption of accounting standard ASU 2018-02
|
|
1,869
|
|
|
—
|
|
|
—
|
|
|||
Income tax benefit (expense) related to items of other comprehensive (loss) income
|
|
$
|
569
|
|
|
$
|
2,421
|
|
|
$
|
(3,028
|
)
|
|
|
2018
|
|
2017
|
||||
Obligation at beginning of fiscal year
|
|
$
|
3,390
|
|
|
$
|
3,800
|
|
Interest cost
|
|
79
|
|
|
89
|
|
||
Benefit payments
|
|
(449
|
)
|
|
(499
|
)
|
||
Obligation at end of fiscal year
|
|
$
|
3,020
|
|
|
$
|
3,390
|
|
|
|
2018
|
|
2017
|
||||
Current liability
|
|
$
|
377
|
|
|
$
|
449
|
|
Non-current liability
|
|
2,643
|
|
|
2,941
|
|
||
|
|
$
|
3,020
|
|
|
$
|
3,390
|
|
|
|
Years Ended July 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net periodic postretirement benefit gain included the following components:
|
|
|
|
|
|
|
||||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Interest cost
|
|
79
|
|
|
89
|
|
|
114
|
|
|||
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
(1,035
|
)
|
|||
Amortization of net actuarial gain
|
|
(520
|
)
|
|
(544
|
)
|
|
(646
|
)
|
|||
Periodic postretirement benefit gain
|
|
$
|
(441
|
)
|
|
$
|
(455
|
)
|
|
$
|
(1,558
|
)
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Weighted average discount rate used in determining accumulated postretirement benefit obligation
|
|
2.50
|
%
|
|
2.50
|
%
|
|
2.50
|
%
|
Weighted average discount rate used in determining net periodic benefit cost
|
|
2.50
|
%
|
|
2.50
|
%
|
|
3.00
|
%
|
Assumed health care trend rate used to measure accumulated postretirement benefit obligation at July 31
|
|
7.00
|
%
|
|
7.25
|
%
|
|
7.50
|
%
|
Rate to which cost trend rate is assumed to decline (the ultimate trend rate)
|
|
5.50
|
%
|
|
5.50
|
%
|
|
5.50
|
%
|
Fiscal year the ultimate trend rate is reached
|
|
2024
|
|
|
2024
|
|
|
2018
|
|
|
|
One-Percentage
Point Increase
|
|
One-Percentage
Point Decrease
|
||||
Effect on future service and interest cost
|
|
$
|
4
|
|
|
$
|
(5
|
)
|
Effect on accumulated postretirement benefit obligation at July 31, 2018
|
|
17
|
|
|
(18
|
)
|
|
|
||
2019
|
$
|
377
|
|
2020
|
359
|
|
|
2021
|
339
|
|
|
2022
|
309
|
|
|
2023
|
289
|
|
|
2024 through 2028
|
1,140
|
|
|
|
Years Ended July 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current income tax expense:
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
2,830
|
|
|
$
|
15,279
|
|
|
$
|
5,048
|
|
Other Nations
|
|
26,593
|
|
|
23,826
|
|
|
19,929
|
|
|||
States (U.S.)
|
|
910
|
|
|
1,163
|
|
|
1,348
|
|
|||
|
|
$
|
30,333
|
|
|
$
|
40,268
|
|
|
$
|
26,325
|
|
Deferred income tax (benefit) expense:
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
30,267
|
|
|
$
|
(8,173
|
)
|
|
$
|
3,946
|
|
Other Nations
|
|
(1,462
|
)
|
|
(1,329
|
)
|
|
(1,387
|
)
|
|||
States (U.S.)
|
|
1,817
|
|
|
221
|
|
|
351
|
|
|||
|
|
$
|
30,622
|
|
|
$
|
(9,281
|
)
|
|
$
|
2,910
|
|
Total income tax expense
|
|
$
|
60,955
|
|
|
$
|
30,987
|
|
|
$
|
29,235
|
|
|
|
July 31, 2018
|
||||||||||
|
|
Assets
|
|
Liabilities
|
|
Total
|
||||||
Inventories
|
|
$
|
3,095
|
|
|
$
|
(53
|
)
|
|
$
|
3,042
|
|
Prepaid catalog costs
|
|
—
|
|
|
(978
|
)
|
|
(978
|
)
|
|||
Employee benefits
|
|
3,772
|
|
|
(91
|
)
|
|
3,681
|
|
|||
Accounts receivable
|
|
828
|
|
|
(1
|
)
|
|
827
|
|
|||
Fixed assets
|
|
2,959
|
|
|
(4,911
|
)
|
|
(1,952
|
)
|
|||
Intangible assets
|
|
1,073
|
|
|
(29,630
|
)
|
|
(28,557
|
)
|
|||
Deferred and equity-based compensation
|
|
10,656
|
|
|
—
|
|
|
10,656
|
|
|||
Postretirement benefits
|
|
3,280
|
|
|
—
|
|
|
3,280
|
|
|||
Tax credit and net operating loss carry-forwards
|
|
64,348
|
|
|
—
|
|
|
64,348
|
|
|||
Less valuation allowance
|
|
(56,866
|
)
|
|
—
|
|
|
(56,866
|
)
|
|||
Other, net
|
|
8,548
|
|
|
(8,962
|
)
|
|
(414
|
)
|
|||
Total
|
|
$
|
41,693
|
|
|
$
|
(44,626
|
)
|
|
$
|
(2,933
|
)
|
|
|
July 31, 2017
|
||||||||||
|
|
Assets
|
|
Liabilities
|
|
Total
|
||||||
Inventories
|
|
$
|
4,516
|
|
|
$
|
(1
|
)
|
|
$
|
4,515
|
|
Prepaid catalog costs
|
|
—
|
|
|
(1,107
|
)
|
|
(1,107
|
)
|
|||
Employee benefits
|
|
8,932
|
|
|
—
|
|
|
8,932
|
|
|||
Accounts receivable
|
|
1,141
|
|
|
(11
|
)
|
|
1,130
|
|
|||
Fixed assets
|
|
2,819
|
|
|
(3,884
|
)
|
|
(1,065
|
)
|
|||
Intangible assets
|
|
1,187
|
|
|
(37,681
|
)
|
|
(36,494
|
)
|
|||
Deferred and equity-based compensation
|
|
16,743
|
|
|
—
|
|
|
16,743
|
|
|||
Postretirement benefits
|
|
4,144
|
|
|
—
|
|
|
4,144
|
|
|||
Tax credit and net operating loss carry-forwards
|
|
70,128
|
|
|
—
|
|
|
70,128
|
|
|||
Less valuation allowance
|
|
(38,563
|
)
|
|
—
|
|
|
(38,563
|
)
|
|||
Other, net
|
|
12,630
|
|
|
(10,798
|
)
|
|
1,832
|
|
|||
Total
|
|
$
|
83,677
|
|
|
$
|
(53,482
|
)
|
|
$
|
30,195
|
|
•
|
Foreign net operating loss carry-forwards of
$108,540
, of which
$88,197
have no expiration date and the remainder of which expire within the next
five years
.
|
•
|
State net operating loss carry-forwards of
$35,231
, which expire from
2022 to 2038
.
|
•
|
Foreign tax credit carry-forwards of
$25,115
, which expire from
2021 to 2027
.
|
•
|
State R&D credit carry-forwards of
$11,448
, which expire from
2019 to 2033
.
|
|
|
Years Ended July 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Tax at statutory rate
|
|
26.9
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal tax benefit
|
|
1.6
|
%
|
|
1.0
|
%
|
|
0.8
|
%
|
International rate differential
|
|
(1.1
|
)%
|
|
(6.3
|
)%
|
|
0.4
|
%
|
Rate variances arising from foreign subsidiary distributions
(1)
|
|
0.8
|
%
|
|
(5.9
|
)%
|
|
0.5
|
%
|
Foreign tax credit carryforward valuation allowance
(2)
|
|
14.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Divestiture of business
(3)
|
|
(0.8
|
)%
|
|
—
|
%
|
|
—
|
%
|
Adjustments to tax accruals and reserves
(4)
|
|
2.2
|
%
|
|
3.6
|
%
|
|
(3.7
|
)%
|
Research and development tax credits and domestic manufacturer’s deduction
|
|
(2.0
|
)%
|
|
(1.8
|
)%
|
|
(3.6
|
)%
|
Deferred tax and other adjustments, net
|
|
(1.6
|
)%
|
|
(1.1
|
)%
|
|
(2.7
|
)%
|
Effective tax rate
|
|
40.1
|
%
|
|
24.5
|
%
|
|
26.7
|
%
|
(1)
|
The year ended July 31, 2017, includes the generation of foreign tax credit carryforwards from cash repatriations that occurred during the fiscal year.
|
(2)
|
The year ended July 31, 2018, includes the establishment of a valuation allowance against foreign tax credit carryforwards as a result of the Tax Reform Act.
|
(3)
|
The year ended July 31, 2018, includes the divestiture of the Company's Runelandhs business based in Sweden. Refer to Note 13 - Divestitures for additional information.
|
(4)
|
The years ended July 31, 2018 and 2017, include increases in current year uncertain tax positions, while the year ended July 31, 2016, includes reductions of uncertain tax positions resulting from the closure of audits and lapses in statutes of limitations.
|
Balance at July 31, 2015
|
$
|
21,133
|
|
Additions based on tax positions related to the current year
|
3,093
|
|
|
Additions for tax positions of prior years
|
1,290
|
|
|
Reductions for tax positions of prior years
|
(9,369
|
)
|
|
Lapse of statute of limitations
|
(344
|
)
|
|
Settlements with tax authorities
|
(456
|
)
|
|
Cumulative Translation Adjustments and other
|
(53
|
)
|
|
Balance as of July 31, 2016
|
$
|
15,294
|
|
Additions based on tax positions related to the current year
|
2,500
|
|
|
Additions for tax positions of prior years
|
1,124
|
|
|
Reductions for tax positions of prior years
|
(62
|
)
|
|
Lapse of statute of limitations
|
(663
|
)
|
|
Settlements with tax authorities
|
(118
|
)
|
|
Cumulative Translation Adjustments and other
|
287
|
|
|
Balance as of July 31, 2017
|
$
|
18,362
|
|
Additions based on tax positions related to the current year
|
2,467
|
|
|
Additions for tax positions of prior years
|
1,586
|
|
|
Reductions for tax positions of prior years
|
(23
|
)
|
|
Lapse of statute of limitations
|
(489
|
)
|
|
Settlements with tax authorities
|
(1,277
|
)
|
|
Cumulative Translation Adjustments and other
|
(196
|
)
|
|
Balance as of July 31, 2018
|
$
|
20,430
|
|
Jurisdiction
|
|
Open Tax Years
|
United States — Federal
|
|
F’15 — F’18
|
France
|
|
F’15 — F’18
|
|
|
2018
|
|
2017
|
||||
Euro-denominated notes payable in 2020 at a fixed rate of 4.24%
|
|
$
|
52,618
|
|
|
$
|
53,202
|
|
USD-denominated borrowing on revolving loan agreement at a weighted average rate of 0.00% and 1.94% as of July 31, 2018 and 2017, respectively
|
|
—
|
|
|
16,998
|
|
||
EUR-denominated borrowing on revolving loan agreement at a weighted average rate of 0.00% and 0.75% as of July 31, 2018 and 2017, respectively
|
|
—
|
|
|
34,336
|
|
||
CNY-denominated borrowing on China revolving loan agreement at a weighted average rate of 0.00% and 3.92% as of July 31, 2018 and 2017, respectively
|
|
—
|
|
|
2,228
|
|
||
USD-denominated borrowing on China revolving loan agreement at a weighted average rate of 0.00% and 2.63% as of July 31, 2018 and 2017, respectively
|
|
—
|
|
|
1,000
|
|
||
|
|
$
|
52,618
|
|
|
$
|
107,764
|
|
Less notes payable
|
|
—
|
|
|
(3,228
|
)
|
||
Total long-term debt
|
|
$
|
52,618
|
|
|
$
|
104,536
|
|
|
|
July 31, 2018
|
|
July 31, 2017
|
||||||||||||||||
|
|
Shares
Authorized
|
|
Shares
Issued
|
|
(thousands)
Amount
|
|
Shares
Authorized
|
|
Shares
Issued
|
|
(thousands)
Amount
|
||||||||
Preferred Stock, $.01 par value
|
|
5,000,000
|
|
|
|
|
|
|
5,000,000
|
|
|
|
|
|
||||||
Cumulative Preferred Stock:
6% Cumulative
|
|
5,000
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
||||||
1972 Series
|
|
10,000
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
||||||
1979 Series
|
|
30,000
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
||||||
Common Stock, $.01 par value: Class A Nonvoting
|
|
100,000,000
|
|
|
51,261,487
|
|
|
$
|
513
|
|
|
100,000,000
|
|
|
51,261,487
|
|
|
$
|
513
|
|
Class B Voting
|
|
10,000,000
|
|
|
3,538,628
|
|
|
35
|
|
|
10,000,000
|
|
|
3,538,628
|
|
|
35
|
|
||
|
|
|
|
|
|
$
|
548
|
|
|
|
|
|
|
$
|
548
|
|
|
|
Deferred Compensation
|
|
Shares Held in Rabbi Trust, at cost
|
|
Total
|
||||||
Balances at July 31, 2015
|
|
$
|
5,684
|
|
|
$
|
(8,748
|
)
|
|
$
|
(3,064
|
)
|
Shares at July 31, 2015
|
|
252,261
|
|
|
362,025
|
|
|
|
||||
Sale of shares at cost
|
|
$
|
(1,238
|
)
|
|
$
|
1,278
|
|
|
$
|
40
|
|
Purchase of shares at cost
|
|
178
|
|
|
(1,017
|
)
|
|
(839
|
)
|
|||
Balances at July 31, 2016
|
|
$
|
4,624
|
|
|
$
|
(8,487
|
)
|
|
$
|
(3,863
|
)
|
Shares at July 31, 2016
|
|
201,418
|
|
|
347,081
|
|
|
|
||||
Sale of shares at cost
|
|
$
|
(1,247
|
)
|
|
$
|
1,288
|
|
|
$
|
41
|
|
Purchase of shares at cost
|
|
315
|
|
|
(925
|
)
|
|
(610
|
)
|
|||
Effect of plan amendment
|
|
4,432
|
|
|
—
|
|
|
4,432
|
|
|||
Balances at July 31, 2017
|
|
$
|
8,124
|
|
|
$
|
(8,124
|
)
|
|
$
|
—
|
|
Shares at July 31, 2017
|
|
314,082
|
|
|
314,082
|
|
|
|
||||
Sale of shares at cost
|
|
$
|
(977
|
)
|
|
$
|
977
|
|
|
$
|
—
|
|
Purchase of shares at cost
|
|
1,075
|
|
|
(1,075
|
)
|
|
—
|
|
|||
Balances at July 31, 2018
|
|
$
|
8,222
|
|
|
$
|
(8,222
|
)
|
|
$
|
—
|
|
Shares at July 31, 2018
|
|
299,916
|
|
|
299,916
|
|
|
|
Black-Scholes Option Valuation Assumptions
|
|
2018
|
|
2017
|
|
2016
|
||||||
Expected term (in years)
|
|
6.07
|
|
|
6.11
|
|
|
6.11
|
|
|||
Expected volatility
|
|
28.19
|
%
|
|
29.55
|
%
|
|
29.95
|
%
|
|||
Expected dividend yield
|
|
2.72
|
%
|
|
2.70
|
%
|
|
2.59
|
%
|
|||
Risk-free interest rate
|
|
1.96
|
%
|
|
1.26
|
%
|
|
1.64
|
%
|
|||
Weighted-average market value of underlying stock at grant date
|
|
$
|
36.85
|
|
|
$
|
35.14
|
|
|
$
|
20.02
|
|
Weighted-average exercise price
|
|
$
|
36.85
|
|
|
$
|
35.14
|
|
|
$
|
20.02
|
|
Weighted-average fair value of options granted during the period
|
|
$
|
7.96
|
|
|
$
|
7.56
|
|
|
$
|
4.58
|
|
|
|
Option Price
|
|
Options Outstanding
|
|
Weighted Average Exercise Price
|
|||||||
Balance as of July 31, 2017
|
|
$
|
19.96
|
|
—
|
$38.83
|
|
2,879,801
|
|
|
$
|
27.40
|
|
Options granted
|
|
36.85
|
|
—
|
36.85
|
|
364,046
|
|
|
36.85
|
|
||
Options exercised
|
|
19.96
|
|
—
|
38.31
|
|
(622,916
|
)
|
|
28.84
|
|
||
Options cancelled
|
|
19.96
|
|
—
|
38.31
|
|
(116,298
|
)
|
|
31.42
|
|
||
Balance as of July 31, 2018
|
|
$
|
19.96
|
|
—
|
$38.83
|
|
2,504,633
|
|
|
$
|
28.23
|
|
|
|
Options Outstanding
|
|
Options Outstanding and Exercisable
|
||||||||||||||
Range of Exercise Prices
|
|
Number of Shares
Outstanding at
July 31, 2018
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Weighted
Average
Exercise
Price
|
|
Shares
Exercisable
at July 31,
2018
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Weighted
Average
Exercise
Price
|
||||||
$19.96 - $26.99
|
|
846,353
|
|
|
6.7
|
|
$
|
20.84
|
|
|
611,735
|
|
|
6.5
|
|
$
|
21.16
|
|
$27.00 - $32.99
|
|
978,233
|
|
|
3.3
|
|
29.24
|
|
|
977,506
|
|
|
3.3
|
|
29.24
|
|
||
$33.00 - $38.83
|
|
680,047
|
|
|
8.4
|
|
35.97
|
|
|
132,988
|
|
|
7.2
|
|
35.13
|
|
||
Total
|
|
2,504,633
|
|
|
5.8
|
|
$
|
28.23
|
|
|
1,722,229
|
|
|
4.7
|
|
$
|
26.82
|
|
Time-Based RSUs and Restricted Shares
|
|
Shares
|
|
Weighted Average Grant Date
Fair Value
|
|||
Balance as of July 31, 2017
|
|
517,108
|
|
|
$
|
25.61
|
|
New grants
|
|
94,457
|
|
|
36.80
|
|
|
Vested
|
|
(219,389
|
)
|
|
24.76
|
|
|
Forfeited
|
|
(49,320
|
)
|
|
26.94
|
|
|
Balance as of July 31, 2018
|
|
342,856
|
|
|
$
|
29.05
|
|
Performance-Based RSUs
|
|
Shares
|
|
Weighted Average Grant Date
Fair Value |
|||
Balance as of July 31, 2017
|
|
58,206
|
|
|
$
|
32.03
|
|
New grants
|
|
56,290
|
|
|
33.12
|
|
|
Vested
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
(6,399
|
)
|
|
32.57
|
|
|
Balance as of July 31, 2018
|
|
108,097
|
|
|
$
|
32.57
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Sales to External Customers:
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
$
|
846,087
|
|
|
$
|
800,392
|
|
|
$
|
795,511
|
|
WPS
|
|
327,764
|
|
|
312,924
|
|
|
325,114
|
|
|||
Total Company
|
|
$
|
1,173,851
|
|
|
$
|
1,113,316
|
|
|
$
|
1,120,625
|
|
Depreciation & Amortization:
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
$
|
22,075
|
|
|
$
|
23,092
|
|
|
$
|
27,285
|
|
WPS
|
|
3,367
|
|
|
4,211
|
|
|
5,147
|
|
|||
Total Company
|
|
$
|
25,442
|
|
|
$
|
27,303
|
|
|
$
|
32,432
|
|
Segment Profit:
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
$
|
143,411
|
|
|
$
|
130,572
|
|
|
$
|
112,276
|
|
WPS
|
|
31,712
|
|
|
25,554
|
|
|
30,792
|
|
|||
Total Company
|
|
$
|
175,123
|
|
|
$
|
156,126
|
|
|
$
|
143,068
|
|
Assets:
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
$
|
737,174
|
|
|
$
|
761,448
|
|
|
$
|
748,408
|
|
WPS
|
|
138,329
|
|
|
154,827
|
|
|
154,321
|
|
|||
Corporate
|
|
181,428
|
|
|
133,948
|
|
|
141,235
|
|
|||
Total Company
|
|
$
|
1,056,931
|
|
|
$
|
1,050,223
|
|
|
$
|
1,043,964
|
|
Expenditures for property, plant & equipment:
|
|
|
|
|
|
|
||||||
ID Solutions
|
|
$
|
17,283
|
|
|
$
|
12,347
|
|
|
$
|
11,640
|
|
WPS
|
|
4,494
|
|
|
2,820
|
|
|
5,500
|
|
|||
Total Company
|
|
$
|
21,777
|
|
|
$
|
15,167
|
|
|
$
|
17,140
|
|
|
Years ended July 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator (in thousands):
|
|
|
|
|
|
||||||
Earnings (Numerator for basic and diluted earnings per Class A Nonvoting Common Share)
|
$
|
91,060
|
|
|
$
|
95,645
|
|
|
$
|
80,110
|
|
Less:
|
|
|
|
|
|
||||||
Preferential dividends
|
(799
|
)
|
|
(788
|
)
|
|
(783
|
)
|
|||
Preferential dividends on dilutive stock options
|
(14
|
)
|
|
(14
|
)
|
|
(1
|
)
|
|||
Numerator for basic and diluted earnings per Class B Voting Common Share
|
$
|
90,247
|
|
|
$
|
94,843
|
|
|
$
|
79,326
|
|
Denominator (in thousands):
|
|
|
|
|
|
||||||
Denominator for basic earnings per share for both Class A and Class B
|
51,677
|
|
|
51,056
|
|
|
50,541
|
|
|||
Plus: Effect of dilutive equity awards
|
847
|
|
|
900
|
|
|
228
|
|
|||
Denominator for diluted earnings per share for both Class A and Class B
|
52,524
|
|
|
51,956
|
|
|
50,769
|
|
|||
Net earnings per Class A Nonvoting Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.76
|
|
|
$
|
1.87
|
|
|
$
|
1.59
|
|
Diluted
|
$
|
1.73
|
|
|
$
|
1.84
|
|
|
$
|
1.58
|
|
Net earnings per Class B Voting Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.75
|
|
|
$
|
1.86
|
|
|
$
|
1.57
|
|
Diluted
|
$
|
1.72
|
|
|
$
|
1.83
|
|
|
$
|
1.56
|
|
|
Inputs
Considered As
|
|
|
|
|
||||||||
|
Quoted Prices in Active Markets for Identical
Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Fair Values
|
|
Balance Sheet Classifications
|
||||||
July 31, 2017
|
|
|
|
|
|
|
|
||||||
Trading securities
|
$
|
13,994
|
|
|
$
|
—
|
|
|
$
|
13,994
|
|
|
Other assets
|
Foreign exchange contracts
|
—
|
|
|
1,354
|
|
|
1,354
|
|
|
Prepaid expenses and other current assets
|
|||
Total Assets
|
$
|
13,994
|
|
|
$
|
1,354
|
|
|
$
|
15,348
|
|
|
|
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
1,577
|
|
|
$
|
1,577
|
|
|
Other current liabilities
|
Total Liabilities
|
$
|
—
|
|
|
$
|
1,577
|
|
|
$
|
1,577
|
|
|
|
July 31, 2018
|
|
|
|
|
|
|
|
||||||
Trading securities
|
$
|
14,383
|
|
|
$
|
—
|
|
|
$
|
14,383
|
|
|
Other assets
|
Foreign exchange contracts
|
—
|
|
|
1,077
|
|
|
1,077
|
|
|
Prepaid expenses and other current assets
|
|||
Total Assets
|
$
|
14,383
|
|
|
$
|
1,077
|
|
|
$
|
15,460
|
|
|
|
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
Other current liabilities
|
Total Liabilities
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||||||
|
July 31, 2018
|
|
July 31, 2017
|
|
July 31, 2018
|
|
July 31, 2017
|
||||||||||||||||
|
Balance
Sheet
Location
|
|
Fair
Value
|
|
Balance
Sheet
Location
|
|
Fair
Value
|
|
Balance
Sheet
Location
|
|
Fair
Value
|
|
Balance
Sheet
Location
|
|
Fair
Value
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
1,076
|
|
|
Prepaid expenses and other current assets
|
|
$
|
1,067
|
|
|
Other current liabilities
|
|
$
|
—
|
|
|
Other current liabilities
|
|
$
|
1,569
|
|
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency denominated debt
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
Long term obligations, less current maturities
|
|
$
|
52,668
|
|
|
Long term obligations, less current maturities
|
|
$
|
53,280
|
|
Total derivatives designated as hedging instruments
|
|
|
$
|
1,076
|
|
|
|
|
$
|
1,067
|
|
|
|
|
$
|
52,668
|
|
|
|
|
$
|
54,849
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
1
|
|
|
Prepaid expenses and other current assets
|
|
$
|
287
|
|
|
Other current liabilities
|
|
$
|
3
|
|
|
Other current liabilities
|
|
$
|
7
|
|
Total derivatives not designated as hedging instruments
|
|
|
$
|
1
|
|
|
|
|
$
|
287
|
|
|
|
|
$
|
3
|
|
|
|
|
$
|
7
|
|
|
|
Quarters
|
||||||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
280,176
|
|
|
$
|
268,001
|
|
|
$
|
275,927
|
|
|
$
|
289,212
|
|
|
$
|
1,113,316
|
|
Gross margin
|
|
140,358
|
|
|
134,158
|
|
|
139,909
|
|
|
143,867
|
|
|
558,292
|
|
|||||
Operating income
|
|
33,208
|
|
|
29,962
|
|
|
31,550
|
|
|
36,295
|
|
|
131,015
|
|
|||||
Net earnings
|
|
22,553
|
|
|
25,297
|
|
|
22,553
|
|
|
25,242
|
|
|
95,645
|
|
|||||
Net earnings per Class A Nonvoting Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic *
|
|
$
|
0.45
|
|
|
$
|
0.50
|
|
|
$
|
0.44
|
|
|
$
|
0.49
|
|
|
$
|
1.87
|
|
Diluted
|
|
$
|
0.44
|
|
|
$
|
0.49
|
|
|
$
|
0.43
|
|
|
$
|
0.48
|
|
|
$
|
1.84
|
|
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
290,151
|
|
|
$
|
287,780
|
|
|
$
|
298,421
|
|
|
$
|
297,499
|
|
|
$
|
1,173,851
|
|
Gross margin
|
|
146,065
|
|
|
143,692
|
|
|
151,082
|
|
|
147,452
|
|
|
588,291
|
|
|||||
Operating income
|
|
35,411
|
|
|
34,796
|
|
|
37,709
|
|
|
44,780
|
|
|
152,696
|
|
|||||
Net earnings
|
|
25,836
|
|
|
4,273
|
|
|
26,000
|
|
|
34,951
|
|
|
91,060
|
|
|||||
Net earnings per Class A Nonvoting Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic *
|
|
$
|
0.50
|
|
|
$
|
0.08
|
|
|
$
|
0.50
|
|
|
$
|
0.67
|
|
|
$
|
1.76
|
|
Diluted *
|
|
$
|
0.49
|
|
|
$
|
0.08
|
|
|
$
|
0.49
|
|
|
$
|
0.66
|
|
|
$
|
1.73
|
|
Name
|
|
Age
|
|
Title
|
J. Michael Nauman
|
|
56
|
|
President, CEO and Director
|
Aaron J. Pearce
|
|
47
|
|
Chief Financial Officer and Treasurer
|
Louis T. Bolognini
|
|
62
|
|
Senior V.P., General Counsel and Secretary
|
Bentley N. Curran
|
|
56
|
|
V.P. - Digital Business and Chief Information Officer
|
Thomas J. Felmer
|
|
56
|
|
Senior V.P., President - Workplace Safety
|
Helena R. Nelligan
|
|
52
|
|
Senior V.P. - Human Resources
|
Russell R. Shaller
|
|
55
|
|
Senior V.P., President - Identification Solutions
|
Ann E. Thornton
|
|
36
|
|
Chief Accounting Officer and Corporate Controller
|
Patrick W. Allender
|
|
71
|
|
Director
|
Gary S. Balkema
|
|
63
|
|
Director
|
Elizabeth P. Bruno
|
|
51
|
|
Director
|
Nancy L. Gioia
|
|
58
|
|
Director
|
Conrad G. Goodkind
|
|
74
|
|
Director
|
Frank W. Harris
|
|
76
|
|
Director
|
Bradley C. Richardson
|
|
60
|
|
Director
|
•
|
J. Michael Nauman, President, Chief Executive Officer and Director;
|
•
|
Aaron J. Pearce, Chief Financial Officer and Treasurer;
|
•
|
Louis T. Bolognini, Senior Vice President, General Counsel and Secretary;
|
•
|
Thomas J. Felmer, Senior Vice President and President - Workplace Safety; and
|
•
|
Russell R. Shaller, Senior Vice President and President - Identification Solutions.
|
•
|
Our fiscal
2018
earnings before income taxes were
$152.0 million
, an increase of
$25.4 million
over fiscal
2017
. Excluding the gain on the sale of Runelandhs, our fiscal 2018 earnings before income taxes were
$147.3 million
, an increase of
$20.7 million
over fiscal
2017
;
|
•
|
Brady continues to demonstrate cash generation capabilities that meet ongoing business needs as we generated
$143.0 million
of cash flow from operating activities during the year ended
July 31, 2018
;
|
•
|
Our sales for the full year ended
July 31, 2018
were
$1,173.9 million
, up
$60.5 million
from fiscal
2017
. Organic sales increased
2.6%
and foreign currency translation increased sales by
3.0%
while the divestiture of the Runelandhs business decreased sales by
0.2%
; and
|
•
|
Brady continues to focus on enhancing our innovation development process and the speed to deliver high-value, innovative products that align with our target markets in support of future growth as we invested
$45.3 million
in R&D expenses during the year ended
July 31, 2018
, an increase of
$5.6 million
over fiscal
2017
.
|
Emphasis on Variable Compensation
|
|
A significant portion of the named executive officers' possible compensation is tied to Company performance, which is intended to drive shareholder value.
|
|
|
|
Ownership Requirements
|
|
Mr. Nauman is required to own shares in the Company at a value equal to five times his base salary. Messrs. Pearce, Felmer and Shaller are required to own shares in the Company at a value equal to three times their base salaries. Mr. Bolognini is required to own shares in the Company at a value equal to two times his base salary. Our NEOs are expected to obtain the required ownership levels within five years and may not sell shares, other than to cover tax withholding requirements associated with the vesting or exercise of the equity award, until such time as they meet the requirements.
|
|
|
|
Clawback Provisions
|
|
Following a review and analysis of relevant governance and incentive compensation practices and policies across our compensation peer group and other public companies, the Committee instituted a recoupment policy, effective August 2013, under which incentive compensation payments and/or awards may be recouped by the Company if such payments and/or awards were based on erroneous results. If the Committee determines that an executive officer or other key executive of the Company who participates in any of the Company's incentive plans has engaged in intentional misconduct that results in a material inaccuracy in the Company's financial statements or fraudulent or other willful and deliberate conduct that is detrimental to the Company or there is a material, negative revision of a performance measure for which incentive compensation was paid or awarded, the Committee may take a variety of actions including, among others, seeking repayment of incentive compensation (cash and/or equity) that is greater than what would have been awarded if the payments/awards had been based on accurate results and the forfeiture of incentive compensation. As this policy suggests, the Committee believes that any incentive compensation should be based only on accurate and reliable financial and operational information, and, thus, any inappropriately paid incentive compensation should be returned to the Company for the benefit of shareholders. The Committee believes that this policy enhances the Company's compensation risk mitigation efforts. While the policy affords the Committee discretion regarding the application and enforcement of the policy, the Company and the Committee will conform the policy to any requirements that may be promulgated by the national stock exchanges in the future, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
|
|
|
|
Performance Thresholds and Caps
|
|
Our cash incentive awards are determined based on financial results for organic revenue, earnings before income taxes, division organic revenue, division operating income, and achievement of fiscal year objectives, which aggregate to a maximum payout of 185% of target. Executive officers then receive a performance rating that results in a multiplier ranging from 0% to 150%, resulting in a maximum cash incentive award payout of 278% of target opportunities.
We grant equity compensation to executive officers that promotes long-term financial and operating performance by delivering incremental value to the extent our stock price increases over time. In fiscal 2017, we incorporated an annual grant of performance-based RSUs to executive officers with the number of shares issued at vesting determined by the achievement of certain financial performance goals achieved over a three-year period.
|
|
|
|
Securities Trading Policy
|
|
Our Insider Trading Policy prohibits executive officers from trading during certain periods at the end of each quarter until after we disclose our financial and operating results. We may impose additional restricted trading periods at any time if we believe trading by executives would not be appropriate because of developments that are, or could be, material and which have not been publicly disclosed. The Insider Trading Policy also prohibits the pledging of Company stock as collateral for loans, holding Company securities in a margin account by officers, directors or employees, and the hedging of Company securities.
|
|
|
|
Annual Risk Reviews
|
|
The Company conducts an annual compensation-related risk review and presents findings and suggested risk mitigation actions to both the Audit and Management Development and Compensation Committees.
|
No Excessive Change of Control Payments
|
|
Mr. Nauman's maximum cash benefit is equal to two times salary and two times target bonus plus a prorated target bonus in the year in which the termination occurs. For all other NEOs, the maximum cash benefit is equal to two times salary and two times the average bonus payment received in the three years immediately prior to the date the change of control occurs. In the event of a change of control, unexercised stock options become fully exercisable or, if canceled, each named executive officer shall be given cash or stock equal to the in-the-money value of the canceled stock options. In the event of a change of control, performance-based (at target) and time-based RSUs become unrestricted and fully vested.
|
|
|
|
No Employment Agreements
|
|
The Company does not maintain any employment agreements with its executives. Both Mr. Nauman's offer letter and Mr. Shaller's offer letter provide that each is deemed an at-will employee, but will receive a severance benefit in the event his employment is terminated by the Company without cause or for good reason as described in the respective offer letter.
|
|
|
|
No Reloads, Repricing, or Options Issued at a Discount
|
|
Stock options issued are not repriced, replaced, or regranted through cancellation or by lowering the option price of a previously granted option.
|
•
|
Allow the Company to compete for, retain and motivate talented executives;
|
•
|
Deliver compensation plans that are both internally equitable when comparing similar roles and levels within the Company and externally competitive when comparing to the external marketplace and the Company’s designated peer group;
|
•
|
Maintain an appropriate balance between base salary and short- and long-term incentive opportunities;
|
•
|
Provide integrated compensation programs aligned to the Company’s annual and long-term financial goals and realized performance;
|
•
|
Recognize and reward individual initiative and achievement with the amount of compensation each executive receives reflective of the executive’s level of proficiency within his or her role and their level of sustained performance; and
|
•
|
Institute a “pay for performance” philosophy where level of rewards are aligned to Company performance.
|
Compensation Component
|
|
Purpose of Compensation Component
|
|
Compensation Component in Relation to Performance
|
Base salary
|
|
A fixed level of income security used to attract and retain employees by compensating them for the primary functions and responsibilities of the position.
|
|
The base salary increase an employee receives depends upon the employee's individual performance, the employee's displayed skills and competencies and market competitiveness.
|
|
|
|
||
Annual cash incentive award
|
|
To attract, retain, motivate and reward employees for achieving or exceeding annual performance goals at total Company and division levels.
|
|
Financial performance as well as the achievement of fiscal year objectives and the individual performance of each executive determines the actual amount of the executive's annual cash incentive award.
|
|
|
|
||
Annual equity incentive award: Time-based stock options, time-based RSUs and performance-based RSUs
|
|
To attract, retain, motivate and reward top talent for the successful creation of long-term shareholder value.
|
|
An assessment of executive leadership, experience and expected future contribution, combined with market competitive grant information, are used to determine the amount of equity granted to each executive.
Stock options are inherently performance-based in that the value is dependent upon the increase in the stock price.
Time-based RSUs are intended to facilitate retention and to align executives with the creation of long-term shareholder value.
Performance-based RSUs are intended to align executives with long-term financial goals and the creation of long-term shareholder value.
|
Actuant Corporation
|
Graco Inc.
|
Myers Industries Inc.
|
Apogee Enterprises, Inc.
|
HB Fuller Company
|
Nordson Corporation
|
Barnes Group Inc.
|
Hexcel Corporation
|
Powell Industries, Inc.
|
EnPro Industries, Inc.
|
IDEX Corporation
|
Watts Water Technologies, Inc.
|
Entegris, Inc.
|
II-VI Incorporated
|
Zebra Technologies Corporation
|
ESCO Technologies Inc.
|
Modine Manufacturing Company
|
|
Federal Signal Corp.
|
Mine Safety Appliances Company
|
|
Named Executive Officer
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Percentage Increase
|
|||||
J. Michael Nauman
|
|
$
|
775,000
|
|
|
$
|
735,000
|
|
|
5.4
|
%
|
Aaron J. Pearce
|
|
374,000
|
|
|
340,000
|
|
|
10.0
|
%
|
||
Louis T. Bolognini
|
|
341,734
|
|
|
338,350
|
|
|
1.0
|
%
|
||
Thomas J. Felmer
|
|
390,807
|
|
|
386,937
|
|
|
1.0
|
%
|
||
Russell R. Shaller
|
|
360,887
|
|
|
347,006
|
|
|
4.0
|
%
|
Performance Metric
|
|
Definition
|
|
Weighting
|
|
NEO
|
Total Company organic revenue
|
|
Total Company organic revenue is measured as total company sales, at budgeted exchange rates, excluding all acquired and divested sales. Total Company organic revenue is reported quarterly and annually in the Company's forms 10-Q and 10-K filed with the SEC.
|
|
30%
|
|
Messrs. Nauman, Pearce and Bolognini
|
Earnings before income taxes
|
|
Earnings before income taxes is defined as total Company revenues at budgeted exchange rates minus total Company expenses for the cost of doing business before deducting income tax expense. Earnings before income taxes excludes certain non-routine expenses such as income or loss from acquisitions or divestitures completed in fiscal 2018.
|
|
50%
|
|
Messrs. Nauman, Pearce and Bolognini
|
Division organic revenue
|
|
Division organic revenue is measured as division customer sales, at budgeted exchange rates, excluding all acquired and divested sales.
|
|
30%
|
|
Messrs. Felmer and Shaller
|
Division operating income
|
|
Division operating income is measured as division sales less cost of goods sold, selling expenses, research and development expenses, and administrative expenses, at budgeted exchange rates. Division operating income excludes certain non-routine expenses such as income or loss from acquisitions or divestitures completed in fiscal 2018.
|
|
50%
|
|
Messrs. Felmer and Shaller
|
Fiscal year objectives
|
|
In fiscal 2018, the Company had seven fiscal year objectives that were established at the beginning of the fiscal year and viewed as critical to the execution of the Company's strategy. The amount funded depends on the number of fiscal year objectives achieved in fiscal 2018.
|
|
20%
|
|
All NEOs
|
|
|
|
|
|
|
|
|
Fiscal 2018 Actual Results
|
||||||||||
Performance Measure
(weighting)
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
Achievement ($)
|
|
Achievement (%)
|
||||||
Organic Revenue (30%)(millions)
|
|
$1,108.9
|
|
$1,128.0
|
|
$1,142.2 or more
|
|
|
|
|
$1,139.1
|
|
188
|
%
|
||||
Earnings before income taxes (50%)(millions)
|
|
$126.7
|
|
$136.3
|
|
$139.4 or more
|
|
|
|
|
$142.5
|
|
200
|
%
|
||||
Fiscal Year Objectives (20%)
|
|
0
|
%
|
|
100
|
%
|
|
125
|
%
|
|
|
|
|
|
120
|
%
|
||
Individual Performance Multiplier
|
|
0
|
%
|
|
100
|
%
|
|
150
|
%
|
|
|
|
|
|
Varies
|
|
||
Fiscal 2018 Bonus Award:
|
|
Threshold
|
|
Target
|
|
Maximum (% of Base Salary)
|
|
Actual Payout
(% of Target)
|
|
Actual Payout
(% of Base Salary)
|
|
Actual Payout
($)
|
||||||
J.M. Nauman
|
|
0
|
%
|
|
100
|
%
|
|
278
|
%
|
|
226
|
%
|
|
226
|
%
|
|
$1,712,933
|
|
A.J. Pearce
|
|
0
|
%
|
|
60
|
%
|
|
167
|
%
|
|
226
|
%
|
|
135
|
%
|
|
$488,329
|
|
L.T. Bolognini
|
|
0
|
%
|
|
60
|
%
|
|
167
|
%
|
|
180
|
%
|
|
108
|
%
|
|
$368,484
|
•
|
Strategy - Objective focused on further aligning the Company’s personnel around the Company’s corporate and divisional strategies to drive implementation and ensure accountability of the key elements of the respective strategies. The implementation of the respective strategies is focused on delivering long-term sustainable improvements in organic sales, operating income, and cash generation.
|
•
|
Organic sales growth - Objective focused on accelerating the Company’s organic sales growth. The Company’s organic sales growth rate accelerated from
0.5%
in fiscal
2017
to
2.6%
in fiscal
2018
.
|
•
|
Earnings before income taxes - Objective focused on improving earnings before income taxes while making the investments necessary to sustainably increase the Company’s organic sales growth in future years. Excluding the
$4.7 million
gain on the sale of Runelandhs, earnings before income taxes improved from
$126.6 million
in fiscal
2017
to
$147.3 million
in fiscal
2018
and from
11.4%
of net sales in fiscal
2017
to
12.6%
of net sales in fiscal
2018
, while investments in research and development increased by
14.2%
.
|
•
|
Cash flow - Objective focused on driving strong cash flow in relation to net earnings. The Company’s cash flow from operating activities was
$143.0 million
in fiscal
2018
, which equates to
157.1%
of net earnings.
|
•
|
Selling, general and administrative expenses - Objective focused on reducing selling, general and administrative expenses throughout the Company, with a specific focus on general and administrative expenses. Excluding the impact of foreign currency exchange and the gain on sale of a business, selling, general and administrative expenses were reduced by 1.1% from fiscal
2017
to fiscal
2018
through ongoing efficiency gains and sustainable process improvement initiatives.
|
•
|
Earnings before income taxes - Objective focused on improving earnings before income taxes while making the investments necessary to sustainably increase the Company’s organic sales growth in future years. Excluding the
$4.7 million
gain on the sale of Runelandhs, earnings before income taxes improved from
$126.6 million
in fiscal
2017
to
$147.3 million
in fiscal
2018
and from
11.4%
of net sales in fiscal
2017
to
12.6%
of net sales in fiscal
2018
, while investments in research and development increased by
14.2%
.
|
•
|
Sale of subsidiary - Objective focused on the successful completion of the sale of the Company's Runelandhs business in Sweden. On May 31, 2018, the Company completed the sale of its Runelandhs business.
|
•
|
Compliance - Objective focused on ensuring continued compliance with domestic and international laws and regulations, as well as maintaining internal compliance programs.
|
|
|
|
|
|
|
|
|
Fiscal 2018 Actual Results
|
||||||||||
Performance Measure
(weighting)
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
Achievement ($)
|
|
Achievement (%)
|
||||||
WPS Division Organic Revenue (30%)(millions)
|
|
$306.7
|
|
$309.7
|
|
$312.0 or more
|
|
|
|
$311.7
|
|
176
|
%
|
|||||
WPS Division Operating Income (50%)(millions)
|
|
$36.1
|
|
$37.0
|
|
$37.5 or more
|
|
|
|
|
$39.9
|
|
200
|
%
|
||||
Fiscal Year Objectives (20%)
|
|
0
|
%
|
|
100
|
%
|
|
125
|
%
|
|
|
|
|
|
120
|
%
|
||
Individual Performance Multiplier
|
|
0
|
%
|
|
100
|
%
|
|
150
|
%
|
|
|
|
|
|
125
|
%
|
||
Fiscal 2018 Bonus Award:
|
|
Threshold
|
|
Target
|
|
Maximum (% of Base Salary)
|
|
Actual Payout
(% of Target)
|
|
Actual Payout
(% of Base Salary)
|
|
Actual Payout
($)
|
||||||
T.J. Felmer
|
|
0
|
%
|
|
80
|
%
|
|
222
|
%
|
|
221
|
%
|
|
177
|
%
|
|
$688,315
|
•
|
WPS strategic alignment - Objective focused on aligning the team around the key WPS objectives that are meant to improve the long-term financial results of the WPS division. The key WPS activities related to improving our customers’ buying experience included, among other activities, increasing our customer interactions by providing extensive safety and compliance expertise, improving our ability to quickly customize products, and improving our portfolio of customized and proprietary products.
|
•
|
WPS organic sales growth - Objective focused on returning the WPS business to organic sales growth in fiscal
2018
. Organic sales grew
0.7%
in fiscal
2018
compared to a
2.0%
decline in fiscal
2017
.
|
•
|
WPS operating income - Objective focused on improving operating income while making the investments to necessary sustainably increase WPS’s organic sales growth in future years. Operating income in the WPS segment increased from
$25.6 million
in fiscal
2017
to
$31.7 million
in fiscal
2018
and from
8.2%
of sales in fiscal
2017
to
9.7%
of sales in fiscal
2018
, while making the necessary investments to complete the strategic realignment of this business to deliver sustainable profit improvements.
|
|
|
|
|
|
|
|
|
Fiscal 2018 Actual Results
|
||||||||||
Performance Measure (weighting)
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
Achievement ($)
|
|
Achievement (%)
|
||||||
IDS Division Organic Revenue (30%)(millions)
|
|
$572.5
|
|
$588.5
|
|
$600.5 or more
|
|
|
|
$606.9
|
|
200
|
%
|
|||||
IDS Division Operating Income (50%)(millions)
|
|
$120.5
|
|
$127.6
|
|
$131.5 or more
|
|
|
|
|
$134.1
|
|
200
|
%
|
||||
Fiscal Year Objectives (20%)
|
|
0
|
%
|
|
100
|
%
|
|
125
|
%
|
|
|
|
|
|
120
|
%
|
||
Individual Performance Multiplier
|
|
0
|
%
|
|
100
|
%
|
|
150
|
%
|
|
|
|
|
|
150
|
%
|
||
Fiscal 2018 Bonus Award:
|
|
Threshold
|
|
Target
|
|
Maximum (% of Base Salary)
|
|
Actual Payout
(% of Target)
|
|
Actual Payout
(% of Base Salary)
|
|
Actual Payout
($)
|
||||||
R.R. Shaller
|
|
0
|
%
|
|
55
|
%
|
|
153
|
%
|
|
276
|
%
|
|
152
|
%
|
|
$539,722
|
•
|
Innovation development process - Objective focused on designing and implementing processes to grow the Company’s pipeline of new products and deliver to market in a timely manner. Several new products were launched during fiscal
2018
, including several printers. The new product pipeline was streamlined and improved which has reduced the time frame from new product idea to product launch.
|
•
|
IDS organic sales growth - Objective focused on accelerating organic sales growth in the IDS segment. Organic sales within the IDS segment increased by
1.6%
in fiscal
2017
and organic growth accelerated to
3.4%
in fiscal
2018
.
|
•
|
Operational excellence - Objective focused on improving our manufacturing facilities to deliver gross margin improvements while improving customer service levels. Improvements in the manufacturing and fulfillment process resulted in an improved gross profit margin and a
9.8%
increase in segment profit in the IDS segment when compared to fiscal
2017
.
|
Named Officers
|
|
Total Grant Date Fair Value
|
|
Time-Based Stock Options Grant Date
Fair Value
|
|
Performance-based RSUs (at target)
Grant Date
Fair Value
|
|
Time-Based
RSUs
Grant Date
Fair Value
|
||||||||
J.M. Nauman
|
|
$
|
2,500,068
|
|
|
$
|
833,340
|
|
|
$
|
833,365
|
|
|
$
|
833,363
|
|
A.J. Pearce
|
|
880,045
|
|
|
293,338
|
|
|
293,344
|
|
|
293,363
|
|
||||
L.T. Bolognini
|
|
325,010
|
|
|
108,335
|
|
|
108,336
|
|
|
108,339
|
|
||||
T.J. Felmer
|
|
550,059
|
|
|
183,341
|
|
|
183,352
|
|
|
183,366
|
|
||||
R.R. Shaller
|
|
550,059
|
|
|
183,341
|
|
|
183,352
|
|
|
183,366
|
|
•
|
Financial planning and tax preparation;
|
•
|
Car allowance;
|
•
|
Physical examination;
|
•
|
Long-term care insurance; and
|
•
|
Personal liability insurance.
|
J.M. Nauman
|
|
5 times base salary
|
A.J. Pearce
|
|
3 times base salary
|
L.T. Bolognini
|
|
2 times base salary
|
T.J. Felmer
|
|
3 times base salary
|
R.R. Shaller
|
|
3 times base salary
|
Name and Principal Position
|
|
Fiscal
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Time-based and Performance-based RSUs
($)(1)
|
|
Option
Awards
($)(2)
|
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
|
All Other
Compensation
($)(4)
|
|
Total
($)
|
||||||||||||||
J.M. Nauman, President, CEO & Director
|
|
2018
|
|
$
|
759,616
|
|
|
$
|
—
|
|
|
$
|
1,666,728
|
|
|
$
|
833,340
|
|
|
$
|
1,712,933
|
|
|
$
|
202,808
|
|
|
$
|
5,175,425
|
|
|
2017
|
|
721,538
|
|
|
—
|
|
|
1,666,702
|
|
|
833,338
|
|
|
1,259,987
|
|
|
143,598
|
|
|
4,625,163
|
|
||||||||
|
2016
|
|
693,750
|
|
|
—
|
|
|
733,350
|
|
|
1,466,668
|
|
|
528,984
|
|
|
89,017
|
|
|
3,511,769
|
|
||||||||
A.J. Pearce, CFO & Treasurer
|
|
2018
|
|
$
|
360,923
|
|
|
$
|
—
|
|
|
$
|
586,707
|
|
|
$
|
293,338
|
|
|
$
|
488,329
|
|
|
$
|
97,767
|
|
|
$
|
1,827,064
|
|
|
2017
|
|
332,308
|
|
|
—
|
|
|
586,712
|
|
|
293,337
|
|
|
417,811
|
|
|
74,651
|
|
|
1,704,819
|
|
||||||||
|
2016
|
|
315,000
|
|
|
—
|
|
|
250,019
|
|
|
250,001
|
|
|
144,113
|
|
|
49,920
|
|
|
1,009,053
|
|
||||||||
L.T. Bolognini, Senior VP, General Counsel and Secretary
|
|
2018
|
|
$
|
340,432
|
|
|
$
|
—
|
|
|
$
|
216,675
|
|
|
$
|
108,335
|
|
|
$
|
368,484
|
|
|
$
|
90,113
|
|
|
$
|
1,124,039
|
|
|
2017
|
|
337,062
|
|
|
—
|
|
|
216,694
|
|
|
108,334
|
|
|
282,525
|
|
|
77,981
|
|
|
1,022,596
|
|
||||||||
|
2016
|
|
333,725
|
|
|
—
|
|
|
162,514
|
|
|
162,502
|
|
|
122,143
|
|
|
52,220
|
|
|
833,104
|
|
||||||||
T.J. Felmer, Senior VP, President-Workplace Safety
|
|
2018
|
|
$
|
389,319
|
|
|
$
|
—
|
|
|
$
|
366,718
|
|
|
$
|
183,341
|
|
|
$
|
688,315
|
|
|
$
|
69,355
|
|
|
$
|
1,697,048
|
|
|
2017
|
|
386,937
|
|
|
—
|
|
|
366,701
|
|
|
183,338
|
|
|
—
|
|
|
78,155
|
|
|
1,015,131
|
|
||||||||
|
2016
|
|
386,937
|
|
|
—
|
|
|
275,009
|
|
|
275,004
|
|
|
111,438
|
|
|
62,934
|
|
|
1,111,322
|
|
||||||||
R.R. Shaller, Senior VP & President - Identification Solutions
|
|
2018
|
|
$
|
355,548
|
|
|
$
|
—
|
|
|
$
|
366,718
|
|
|
$
|
183,341
|
|
|
$
|
539,722
|
|
|
$
|
113,141
|
|
|
$
|
1,558,470
|
|
|
2017
|
|
344,312
|
|
|
—
|
|
|
366,701
|
|
|
183,338
|
|
|
425,140
|
|
|
125,664
|
|
|
1,445,155
|
|
||||||||
|
2016
|
|
340,000
|
|
|
—
|
|
|
225,009
|
|
|
225,003
|
|
|
171,806
|
|
|
188,467
|
|
|
1,150,285
|
|
(1)
|
Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year for time-based RSUs and performance-based RSUs. The grant date fair value is calculated based on the number of shares of Class A Common Stock underlying the time-based RSUs and performance-based RSUs (at target), times the average of the high and low stock price of Class A Common Stock on the date of grant. The actual value of a restricted stock award or RSU will depend on the market value of the Class A Common Stock on the date the stock is sold. The table reflects the grant date fair value at target level of performance-based RSUs (100%). The grant date fair value of these awards in fiscal 2018 assuming that the highest level of performance conditions will be achieved is as follows: Mr. Nauman, $1,666,731; Mr. Pearce, $586,688; Mr. Bolognini, $216,671; Mr. Felmer, $366,705; and Mr. Shaller, $366,705.
|
(2)
|
Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year for time-based stock options. The assumptions used to determine the value of the awards, including the use of the Black-Scholes method of valuation by the Company, are discussed in Note 1 of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K, for the fiscal year ended
July 31, 2018
. The actual value, if any, which an option holder will realize upon the exercise of an option will depend on the excess of the market value of the Class A Common Stock over the exercise price on the date the option is exercised.
|
(3)
|
Represents incentive plan compensation earned during the listed fiscal years, which was paid during the next fiscal year.
|
(4)
|
The amounts in this column include: matching contributions to the Company’s Matched 401(k) Plan, Funded Retirement Plan and Restoration Plan, the costs of group term life insurance for each named executive officer, use of a Company car or car allowance, and associated expenses, the cost of long-term care insurance, the cost of personal liability insurance, the cost of disability insurance and other perquisites. The perquisites may include relocation assistance and annual allowances for financial and tax planning. Refer to the table below.
|
Name
|
|
Fiscal
Year
|
|
Retirement
Plan
Contributions
($)
|
|
Company
Car
($)
|
|
Group
Term
Life
Insurance
($)
|
|
Long-term
Care
Insurance
($)
|
|
Long-Term Disability Insurance
($)
|
|
Relocation ($)
|
|
Other
($)
|
|
Total
($)
|
||||||||||||||||
J.M. Nauman
|
|
2018
|
|
$
|
159,522
|
|
|
$
|
18,000
|
|
|
$
|
1,728
|
|
|
$
|
4,860
|
|
|
$
|
5,212
|
|
|
$
|
—
|
|
|
$
|
13,486
|
|
|
$
|
202,808
|
|
|
2017
|
|
99,097
|
|
|
18,000
|
|
|
1,629
|
|
|
4,860
|
|
|
5,606
|
|
|
—
|
|
|
14,406
|
|
|
143,598
|
|
|||||||||
|
2016
|
|
54,808
|
|
|
18,000
|
|
|
1,087
|
|
|
4,860
|
|
|
4,311
|
|
|
—
|
|
|
5,951
|
|
|
89,017
|
|
|||||||||
A.J. Pearce
|
|
2018
|
|
$
|
61,988
|
|
|
$
|
18,000
|
|
|
$
|
810
|
|
|
$
|
2,893
|
|
|
$
|
3,618
|
|
|
$
|
—
|
|
|
$
|
10,458
|
|
|
$
|
97,767
|
|
|
2017
|
|
36,517
|
|
|
18,000
|
|
|
783
|
|
|
2,893
|
|
|
3,775
|
|
|
—
|
|
|
12,683
|
|
|
74,651
|
|
|||||||||
|
2016
|
|
24,606
|
|
|
13,468
|
|
|
505
|
|
|
2,893
|
|
|
2,800
|
|
|
—
|
|
|
5,648
|
|
|
49,920
|
|
|||||||||
L.T. Bolognini
|
|
2018
|
|
$
|
49,748
|
|
|
$
|
18,000
|
|
|
$
|
747
|
|
|
$
|
3,946
|
|
|
$
|
5,343
|
|
|
$
|
—
|
|
|
$
|
12,329
|
|
|
$
|
90,113
|
|
|
2017
|
|
36,646
|
|
|
18,000
|
|
|
779
|
|
|
3,946
|
|
|
5,557
|
|
|
—
|
|
|
13,053
|
|
|
77,981
|
|
|||||||||
|
2016
|
|
26,557
|
|
|
11,799
|
|
|
528
|
|
|
3,946
|
|
|
4,097
|
|
|
—
|
|
|
5,293
|
|
|
52,220
|
|
|||||||||
T.J. Felmer
|
|
2018
|
|
$
|
31,044
|
|
|
$
|
18,000
|
|
|
$
|
847
|
|
|
$
|
3,737
|
|
|
$
|
3,387
|
|
|
$
|
—
|
|
|
$
|
12,340
|
|
|
$
|
69,355
|
|
|
2017
|
|
39,870
|
|
|
18,000
|
|
|
900
|
|
|
3,737
|
|
|
3,648
|
|
|
—
|
|
|
12,000
|
|
|
78,155
|
|
|||||||||
|
2016
|
|
30,955
|
|
|
18,000
|
|
|
610
|
|
|
3,737
|
|
|
3,221
|
|
|
—
|
|
|
6,411
|
|
|
62,934
|
|
|||||||||
R.R. Shaller
|
|
2018
|
|
$
|
62,092
|
|
|
$
|
18,000
|
|
|
$
|
813
|
|
|
$
|
3,427
|
|
|
$
|
5,363
|
|
|
$
|
7,257
|
|
|
$
|
16,189
|
|
|
$
|
113,141
|
|
|
2017
|
|
41,106
|
|
|
18,000
|
|
|
792
|
|
|
3,427
|
|
|
5,527
|
|
|
44,812
|
|
|
12,000
|
|
|
125,664
|
|
|||||||||
|
2016
|
|
29,600
|
|
|
18,000
|
|
|
537
|
|
|
3,427
|
|
|
4,103
|
|
|
127,244
|
|
|
5,556
|
|
|
188,467
|
|
|
|
Grant
Date
|
|
Compensation
Committee
Approval
Date
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards (2)
|
|
All Other
Stock Awards: Number of Shares of Stock or Units (#) (3) |
|
All Other
Option Awards: Number of Securities Underlying Options (#) |
|
Exercise
or Base
Price of
Stock
or
Option
Awards
($) (4)
|
|
Grant
Date Fair
Value
of
Stock and
Option
Awards
($)
|
|||||||||||||||||||||||
Name
|
|
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
Threshold (#)
|
|
Target (#)
|
|
Maximum (#)
|
|
|
|
|
|||||||||||||||||||||
J.M. Nauman
|
|
|
|
|
|
$
|
—
|
|
|
$
|
759,616
|
|
|
$
|
2,107,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
8/1/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
10,065
|
|
|
25,162
|
|
|
50,324
|
|
|
|
|
|
|
$
|
33.12
|
|
|
$
|
833,365
|
|
||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,615
|
|
|
|
|
36.85
|
|
|
833,363
|
|
||||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,792
|
|
|
36.85
|
|
|
833,340
|
|
||||||||||||
A.J. Pearce
|
|
|
|
|
|
—
|
|
|
216,554
|
|
|
600,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
8/1/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
3,543
|
|
|
8,857
|
|
|
17,714
|
|
|
|
|
|
|
33.12
|
|
|
293,344
|
|
||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,961
|
|
|
|
|
36.85
|
|
|
293,363
|
|
||||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,071
|
|
|
36.85
|
|
|
293,338
|
|
||||||||||||
L.T. Bolognini
|
|
|
|
|
|
—
|
|
|
204,259
|
|
|
566,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
8/1/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
1,308
|
|
|
3,271
|
|
|
6,542
|
|
|
|
|
|
|
33.12
|
|
|
108,336
|
|
||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,940
|
|
|
|
|
36.85
|
|
|
108,339
|
|
||||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,583
|
|
|
36.85
|
|
|
108,335
|
|
||||||||||||
T.J. Felmer
|
|
|
|
|
|
—
|
|
|
311,455
|
|
|
864,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
8/1/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
2,214
|
|
|
5,536
|
|
|
11,072
|
|
|
|
|
|
|
33.12
|
|
|
183,352
|
|
||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,976
|
|
|
|
|
36.85
|
|
|
183,366
|
|
||||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,295
|
|
|
36.85
|
|
|
183,341
|
|
||||||||||||
R.R. Shaller
|
|
|
|
|
|
—
|
|
|
195,551
|
|
|
542,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
8/1/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
2,214
|
|
|
5,536
|
|
|
11,072
|
|
|
|
|
|
|
33.12
|
|
|
183,352
|
|
||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,976
|
|
|
|
|
36.85
|
|
|
183,366
|
|
||||||||||||
|
|
9/22/2017
|
|
7/10/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,295
|
|
|
36.85
|
|
|
183,341
|
|
(1)
|
At its May 2017 meeting, the Management Development and Compensation Committee approved the values of the annual cash incentive award under the Company's annual cash incentive plan. The structure of the plan is described in the Compensation Discussion and Analysis above and was set prior to the beginning of the fiscal year.
|
(2)
|
This award represents performance-based restricted stock units awarded on August 1, 2017, as part of the annual fiscal 2018 equity grant. These performance-based RSUs have a three-year performance period with the number of shares issued at vesting determined by the Company’s achievement of organic revenue and operating income growth goals over the three-year performance period. Payout opportunities will range from 0% to 200% of the target award. Target payout is set at 100% of award value, with threshold and maximum payouts set at 40% and 200% of target award value, respectively. The target number of performance stock units is used to determine the grant date fair value for this award.
|
(3)
|
The time-based RSU awards vest equally over three years.
|
(4)
|
The exercise price and base price is the average of the high and low prices of the Company’s Class A Common Stock as reported by the New York Stock Exchange on the date of the grant.
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||||||||||||||||
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration Date
|
|
Number of
Units of Stock That Have Not Vested
(#)
|
|
Market
Value of Units of Stock That
Have Not Vested
($)
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested
(#)
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units Or Other Rights That Have Not Vested
($)
|
||||||||||
J.M. Nauman
|
|
60,943
|
|
|
—
|
|
|
$
|
22.66
|
|
|
9/25/2024
|
|
|
|
|
|
|
|
|
||||||
|
|
140,653
|
|
|
100,466
|
|
(1)
|
19.96
|
|
|
9/25/2025
|
|
|
|
|
|
|
|
|
|||||||
|
|
28,577
|
|
|
71,440
|
|
(2)
|
35.14
|
|
|
9/23/2026
|
|
|
|
|
|
|
|
|
|||||||
|
|
—
|
|
|
96,792
|
|
(3)
|
36.85
|
|
|
9/22/2027
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
35,778
|
|
(4)
|
$
|
1,368,509
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
12,247
|
|
(5)
|
468,448
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
15,810
|
|
(6)
|
604,733
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
22,615
|
|
(7)
|
865,024
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,018
|
|
(8)
|
$
|
995,189
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,162
|
|
(9)
|
962,447
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
A.J. Pearce
|
|
9,000
|
|
|
—
|
|
|
$
|
30.21
|
|
|
9/21/2022
|
|
|
|
|
|
|
|
|
||||||
|
|
4,523
|
|
|
—
|
|
|
31.07
|
|
|
9/20/2023
|
|
|
|
|
|
|
|
|
|||||||
|
|
34,825
|
|
|
—
|
|
|
22.66
|
|
|
9/25/2024
|
|
|
|
|
|
|
|
|
|||||||
|
|
34,250
|
|
|
17,125
|
|
(1)
|
19.96
|
|
|
9/25/2025
|
|
|
|
|
|
|
|
|
|||||||
|
|
12,574
|
|
|
25,147
|
|
(2)
|
35.14
|
|
|
9/23/2026
|
|
|
|
|
|
|
|
|
|||||||
|
|
—
|
|
|
34,071
|
|
(3)
|
36.85
|
|
|
9/22/2027
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
4,868
|
|
(10)
|
$
|
186,201
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
4,175
|
|
(5)
|
159,694
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
5,565
|
|
(6)
|
212,861
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
7,961
|
|
(7)
|
304,508
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,159
|
|
(8)
|
$
|
350,332
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,857
|
|
(9)
|
338,780
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
L.T. Bolognini
|
|
25,000
|
|
|
—
|
|
|
$
|
34.64
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
||||||
|
|
14,848
|
|
|
—
|
|
|
31.07
|
|
|
9/20/2023
|
|
|
|
|
|
|
|
|
|||||||
|
|
6,892
|
|
|
—
|
|
|
22.66
|
|
|
9/25/2024
|
|
|
|
|
|
|
|
|
|||||||
|
|
—
|
|
|
11,131
|
|
(1)
|
19.96
|
|
|
9/25/2025
|
|
|
|
|
|
|
|
|
|||||||
|
|
4,644
|
|
|
9,287
|
|
(2)
|
35.14
|
|
|
9/23/2026
|
|
|
|
|
|
|
|
|
|||||||
|
|
—
|
|
|
12,583
|
|
(3)
|
36.85
|
|
|
9/22/2027
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
2,714
|
|
(5)
|
$
|
103,811
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
2,055
|
|
(6)
|
78,604
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
2,940
|
|
(7)
|
112,455
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,383
|
|
(8)
|
$
|
129,400
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,271
|
|
(9)
|
125,116
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Felmer
|
|
11,667
|
|
|
—
|
|
|
$
|
29.78
|
|
|
8/3/2019
|
|
|
|
|
|
|
|
|
||||||
|
|
35,000
|
|
|
—
|
|
|
28.73
|
|
|
9/25/2019
|
|
|
|
|
|
|
|
|
|||||||
|
|
11,667
|
|
|
—
|
|
|
28.35
|
|
|
8/2/2020
|
|
|
|
|
|
|
|
|
|||||||
|
|
40,000
|
|
|
—
|
|
|
29.10
|
|
|
9/24/2020
|
|
|
|
|
|
|
|
|
|||||||
|
|
35,000
|
|
|
—
|
|
|
27.00
|
|
|
9/30/2021
|
|
|
|
|
|
|
|
|
|||||||
|
|
45,500
|
|
|
—
|
|
|
30.21
|
|
|
9/21/2022
|
|
|
|
|
|
|
|
|
|||||||
|
|
33,862
|
|
|
—
|
|
|
31.07
|
|
|
9/20/2023
|
|
|
|
|
|
|
|
|
|||||||
|
|
47,159
|
|
|
—
|
|
|
22.66
|
|
|
9/25/2024
|
|
|
|
|
|
|
|
|
|||||||
|
|
37,676
|
|
|
18,837
|
|
(1)
|
19.96
|
|
|
9/25/2025
|
|
|
|
|
|
|
|
|
|||||||
|
|
7,859
|
|
|
15,717
|
|
(2)
|
35.14
|
|
|
9/23/2026
|
|
|
|
|
|
|
|
|
|||||||
|
|
—
|
|
|
21,295
|
|
(3)
|
36.85
|
|
|
9/22/2027
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
6,666
|
|
(11)
|
$
|
254,975
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
4,592
|
|
(5)
|
175,644
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
3,478
|
|
(6)
|
133,034
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
4,976
|
|
(7)
|
190,332
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,724
|
|
(8)
|
$
|
190,037
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,536
|
|
(9)
|
211,752
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
R.R. Shaller
|
|
30,826
|
|
|
15,412
|
|
(1)
|
$
|
19.96
|
|
|
9/25/2025
|
|
|
|
|
|
|
|
|
||||||
|
|
7,859
|
|
|
15,717
|
|
(2)
|
35.14
|
|
|
9/23/2026
|
|
|
|
|
|
|
|
|
|||||||
|
|
—
|
|
|
21,295
|
|
(3)
|
36.85
|
|
|
9/22/2027
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
8,396
|
|
(12)
|
$
|
321,147
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
3,757
|
|
(5)
|
143,705
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
3,478
|
|
(6)
|
133,034
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
4,976
|
|
(7)
|
190,332
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,724
|
|
(8)
|
$
|
218,943
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,536
|
|
(9)
|
211,752
|
|
(1)
|
The remaining options vest on September 25, 2018.
|
(2)
|
One-half of the options vest on September 23, 2018, and the remaining options vest on September 23, 2019.
|
(3)
|
One-third of the options vest on September 22, 2018, one-third of the options vest on September 22, 2019, and one-third of the options vest on September 22, 2020.
|
(4)
|
Mr. Nauman was awarded 53,668 shares of time-based restricted stock units effective August 4, 2014, the date of his appointment as Chief Executive Officer and Director of the Company. One-half of the units vested on August 4, 2018, and the remaining units vest on August 4, 2019.
|
(5)
|
This award represents time-based restricted stock units awarded on September 25, 2015, as part of the annual fiscal 2016 equity grant. The remaining units vest on September 25, 2018.
|
(6)
|
This award represents time-based restricted stock units awarded on September 23, 2016, as part of the annual fiscal 2017 equity grant. One-half of the units vest on September 23, 2018, and the remaining units vest on September 23, 2019.
|
(7)
|
This award represents time-based restricted stock units awarded on September 22, 2017, as part of the annual fiscal 2018 equity grant. One-third of the units vest on September 22, 2018, one-third of the units vest on September 22, 2019, and one-third of the units vest on September 22, 2020.
|
(8)
|
This award represents performance-based RSUs awarded on August 1, 2016, as part of the annual fiscal 2017 equity grant. These performance-based RSUs have a three-year performance period with the number of shares issued at vesting determined by the Company's achievement of organic revenue and operating income growth goals over the three-year performance period. Payout opportunities will range from 0% to 200% of the target award. The amounts listed above are based on the target value of each award (100%).
|
(9)
|
This award represents performance-based RSUs awarded on August 1, 2017, as part of the annual fiscal 2018 equity grant. These performance-based RSUs have a three-year performance period with the number of shares issued at vesting determined by the Company's achievement of organic revenue and operating income growth goals over the three-year performance period. Payout opportunities will range from 0% to 200% of the target award. The amounts listed above are based on the target value of each award (100%).
|
(10)
|
Mr. Pearce was awarded 12,171 shares of time-based restricted stock units on July 15, 2015, for retention purposes. Forty percent of the units vest on July 15, 2019.
|
(11)
|
Effective November 28, 2014, Mr. Felmer was awarded 10,000 shares of time-based restricted stock units for retention purposes. One-half of the units vest on November 28, 2018, and one-half of the units vest on November 28, 2019.
|
(12)
|
Mr. Shaller was awarded 20,992 shares of time-based restricted stock units on June 22, 2015, the date he joined the Company as an officer. One-half of the units vest on the fourth and fifth anniversaries of the award date, respectively.
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||||
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized
on Exercise ($)
|
|
Number of Shares
Acquired on Vesting (#)
|
|
Value Realized
on Vesting ($)
|
||||||
J.M. Nauman
|
|
93,542
|
|
|
$
|
1,613,768
|
|
|
51,334
|
|
|
$
|
1,822,399
|
|
A.J. Pearce
|
|
—
|
|
|
—
|
|
|
14,153
|
|
|
530,280
|
|
||
L.T. Bolognini
|
|
11,131
|
|
|
225,570
|
|
|
5,846
|
|
|
215,184
|
|
||
T.J. Felmer
|
|
21,667
|
|
|
131,970
|
|
|
16,133
|
|
|
603,949
|
|
||
R.R. Shaller
|
|
—
|
|
|
—
|
|
|
9,697
|
|
|
370,583
|
|
Name
|
|
Executive
Contribution in Fiscal 2018
($)
|
|
Company
Contributions in
Fiscal 2018
($)
|
|
Aggregate
Earnings in
Fiscal 2018
($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
July 31, 2018
($)
|
||||||||||
J.M. Nauman
|
|
$
|
69,784
|
|
|
$
|
137,722
|
|
|
$
|
5,320
|
|
|
$
|
—
|
|
|
$
|
389,054
|
|
A.J. Pearce
|
|
88,219
|
|
|
39,130
|
|
|
102,470
|
|
|
—
|
|
|
968,112
|
|
|||||
L.T. Bolognini
|
|
14,040
|
|
|
28,080
|
|
|
2,131
|
|
|
—
|
|
|
100,811
|
|
|||||
T.J. Felmer
|
|
4,683
|
|
|
9,367
|
|
|
610,761
|
|
|
—
|
|
|
4,227,887
|
|
|||||
R.R. Shaller
|
|
20,107
|
|
|
40,214
|
|
|
626
|
|
|
—
|
|
|
96,764
|
|
•
|
The amounts detailed in the tables assume that each named executive officer terminated employment on
July 31, 2018
. Accordingly, the tables reflect amounts earned as of
July 31, 2018
, and include estimates of amounts that would be paid to the named executive officer upon the termination or occurrence of a change in control. The actual amounts that would be paid to a named executive officer can only be determined at the time of termination.
|
•
|
The tables below include amounts the Company is obligated to pay the named executive officer as a result of the severance agreement and executed change in control agreement. The tables do not include benefits that are paid generally to all salaried employees or a broad group of salaried employees. Therefore, the named executive officers would receive benefits in addition to those set forth in the tables.
|
•
|
A named executive officer is entitled to receive base salary earned during his term of employment regardless of the manner in which the named executive officer’s employment is terminated. As such, this amount is not shown in the tables.
|
Base Salary ($) (1)
|
|
Bonus ($) (2)
|
|
Restricted Stock
Unit Acceleration
Gain ($) (3)
|
|
Stock Option
Acceleration
Gain ($) (4)
|
|
Legal Fee
Reimbursement
($) (5)
|
|
Total ($)
|
||||||||||||
$
|
1,550,000
|
|
|
$
|
1,550,000
|
|
|
$
|
5,264,348
|
|
|
$
|
2,195,210
|
|
|
$
|
25,000
|
|
|
$
|
10,584,558
|
|
(1)
|
Represents two times the base salary in effect at
July 31, 2018
.
|
(2)
|
Represents two times the target bonus amount in effect at
July 31, 2018
.
|
(3)
|
Represents the closing market price of $38.25 on 137,630 unvested time-based and performance-based RSUs that would vest due to the change in control.
|
(4)
|
Represents the difference between the closing market price of $38.25 and the exercise price on 268,698 unvested, in-the-money stock options that would vest due to change in control.
|
(5)
|
Represents the maximum reimbursement of legal fees allowed.
|
Base Salary ($) (1)
|
|
Bonus ($) (2)
|
|
Restricted Stock
Unit Acceleration Gain ($) (3) |
|
Total ($)
|
||||||||
$
|
1,550,000
|
|
|
$
|
1,550,000
|
|
|
$
|
1,368,508.5
|
|
|
$
|
4,468,509
|
|
(1)
|
Represents two times the base salary in effect at
July 31, 2018
.
|
(2)
|
Represents two times the target bonus amount in effect at
July 31, 2018
.
|
(3)
|
Represents the closing market price of $38.25 on 35
,778
unvested time-based RSUs that would vest due to termination without cause.
|
Base Salary ($) (1)
|
|
Bonus ($) (2)
|
|
Restricted Stock
Unit Acceleration
Gain ($) (3)
|
|
Stock Option
Acceleration
Gain ($) (4)
|
|
Legal Fee
Reimbursement
($) (5)
|
|
Total ($)
|
||||||||||||
$
|
748,000
|
|
|
$
|
374,616
|
|
|
$
|
1,552,376
|
|
|
$
|
439,123
|
|
|
$
|
25,000
|
|
|
$
|
3,139,115
|
|
(1)
|
Represents two times the base salary in effect at
July 31, 2018
.
|
(2)
|
Represents two times the average bonus payment received in the last three fiscal years ended
July 31, 2018
,
2017
and
2016
.
|
(3)
|
Represents the closing market price of $38.25 on 40,585 unvested time-based and performance-based RSUs that would vest due to the change in control.
|
(4)
|
Represents the difference between the closing market price of $38.25 and the exercise price on 76,343 unvested, in-the-money stock options that would vest due to change in control.
|
(5)
|
Represents the maximum reimbursement of legal fees allowed.
|
Base Salary ($) (1)
|
|
Bonus ($) (2)
|
|
Restricted Stock
Unit Acceleration
Gain ($) (3)
|
|
Stock Option
Acceleration
Gain ($) (4)
|
|
Legal Fee
Reimbursement
($) (5)
|
|
Total ($)
|
||||||||||||
$
|
683,468
|
|
|
$
|
269,779
|
|
|
$
|
549,385
|
|
|
$
|
250,085
|
|
|
$
|
25,000
|
|
|
$
|
1,777,717
|
|
(1)
|
Represents two times the base salary in effect at
July 31, 2018
.
|
(2)
|
Represents two times the average bonus payment received in the last three fiscal years ended
July 31, 2018
,
2017
and
2016
.
|
(3)
|
Represents the closing market price of $38.25 on 14,363 unvested time-based and performance-based RSUs that would vest due to the change in control.
|
(4)
|
Represents the difference between the closing market price of $38.25 and the exercise price on 33,001 unvested, in-the-money stock options that would vest due to change in control.
|
(5)
|
Represents the maximum reimbursement of legal fees allowed.
|
Base Salary ($) (1)
|
|
Bonus ($) (2)
|
|
Restricted Stock
Unit Acceleration
Gain ($) (3)
|
|
Stock Option
Acceleration
Gain ($) (4)
|
|
Excise Tax
Reimbursement
($)
|
|
Legal Fee
Reimbursement
($) (5)
|
|
Total ($)
|
||||||||||||||
$
|
781,614
|
|
|
$
|
74,292
|
|
|
$
|
1,184,679
|
|
|
$
|
423,222
|
|
|
$
|
—
|
|
|
$
|
25,000
|
|
|
$
|
2,488,807
|
|
(1)
|
Represents two times the base salary in effect at
July 31, 2018
.
|
(2)
|
Represents two times the average bonus payment received in the last three fiscal years ended
July 31, 2018
,
2017
and
2016
.
|
(3)
|
Represents the closing market price of $38.25 on 30,972 unvested time-based and performance-based RSUs that would vest due to the change in control.
|
(4)
|
Represents the difference between the closing market price of $38.25 and the exercise price on 55,849 unvested, in-the-money stock options that would vest due to change in control.
|
(5)
|
Represents the maximum reimbursement of legal fees allowed.
|
Base Salary ($) (1)
|
|
Bonus ($) (2)
|
|
Restricted Stock
Unit Acceleration
Gain ($) (3)
|
|
Stock Option
Acceleration
Gain ($) (4)
|
|
Legal Fee
Reimbursement
($) (5)
|
|
Total ($)
|
||||||||||||
$
|
721,774
|
|
|
$
|
596,946
|
|
|
$
|
1,218,913
|
|
|
$
|
360,578
|
|
|
$
|
25,000
|
|
|
$
|
2,923,211
|
|
(1)
|
Represents two times the base salary in effect at
July 31, 2018
.
|
(2)
|
Represents two times the average bonus payment received in the last three fiscal years ended
July 31, 2018
,
2017
and
2016
.
|
(3)
|
Represents the closing market price of $38.25 on 31,867 unvested time-based and performance-based RSUs that would vest due to the change in control.
|
(4)
|
Represents the difference between the closing market price of $38.25 and the exercise price on 54,424 unvested, in-the-money stock options that would vest due to change in control.
|
(5)
|
Represents the maximum reimbursement of legal fees allowed.
|
Base Salary ($) (1)
|
|
Bonus ($) (2)
|
|
Total ($)
|
||||||
$
|
360,887
|
|
|
$
|
195,551
|
|
|
$
|
556,438
|
|
(1)
|
Represents one times the base salary in effect at
July 31, 2018
.
|
(2)
|
Represents one times the target bonus amount in effect at
July 31, 2018
.
|
Name
|
|
Unvested Restricted
Stock Units as of
July 31, 2018
|
|
Restricted Stock Unit Acceleration
Gain $ (1)
|
|
Unvested, In-the-Money Stock Options
as of
July 31, 2018
|
|
Stock Option
Acceleration
Gain $ (2)
|
||||||
J. Michael Nauman
|
|
137,630
|
|
|
$
|
5,264,348
|
|
|
268,698
|
|
|
$
|
2,195,210
|
|
A.J. Pearce
|
|
40,585
|
|
|
1,552,376
|
|
|
76,343
|
|
|
439,123
|
|
||
L.T. Bolognini
|
|
14,363
|
|
|
549,385
|
|
|
33,001
|
|
|
250,085
|
|
||
T.J. Felmer
|
|
30,972
|
|
|
1,184,679
|
|
|
55,849
|
|
|
423,222
|
|
||
R.R. Shaller
|
|
31,867
|
|
|
1,218,913
|
|
|
52,424
|
|
|
360,578
|
|
(1)
|
Represents the closing market price of $38.25 on unvested awards that would vest due to death or disability.
|
(2)
|
Represents the difference between the closing market price of $38.25 and the exercise price on unvested, in-the-money stock options that would vest due to death or disability.
|
Name
|
|
Unvested Restricted
Stock Units as of
July 31, 2018
|
|
Restricted Stock Unit Acceleration
Gain $ (1)
|
|||
J. Michael Nauman
|
|
35,778
|
|
|
$
|
1,368,509
|
|
A.J. Pearce
|
|
—
|
|
|
—
|
|
|
L.T. Bolognini
|
|
—
|
|
|
—
|
|
|
T.J. Felmer
|
|
—
|
|
|
—
|
|
|
R.R. Shaller
|
|
—
|
|
|
—
|
|
(1)
|
Represents the closing market price of $38.25 on unvested awards that would vest due to termination without cause.
|
•
|
A measurement date of May 31, 2018, which is within three months of the Company's fiscal year end, to identify the median employee. On this date, the Company's employee population consisted of 6,212 individuals (1,778 in the U.S. and 4,434 internationally)
|
•
|
The Company selected annual total compensation (base salary/wages and overtime pay, commissions, bonuses paid and allowance/fixed payments) as of May 31, 2018 as the compensation measure.
|
•
|
The Company annualized the compensation of employees to cover the full fiscal year.
|
Name
|
|
Fees Earned
or Paid in
Cash ($)
|
|
Option Awards ($) (1)
|
|
Stock
Awards ($) (2)
|
|
Total ($)
|
||||||||
Patrick W. Allender
|
|
$
|
105,000
|
|
|
$
|
—
|
|
|
$
|
95,036
|
|
|
$
|
200,036
|
|
Gary S. Balkema
|
|
101,500
|
|
|
—
|
|
|
95,036
|
|
|
196,536
|
|
||||
Elizabeth P. Bruno
|
|
83,000
|
|
|
—
|
|
|
95,036
|
|
|
178,036
|
|
||||
Nancy L. Gioia
|
|
92,000
|
|
|
—
|
|
|
95,036
|
|
|
187,036
|
|
||||
Conrad G. Goodkind
|
|
155,000
|
|
|
—
|
|
|
95,036
|
|
|
250,036
|
|
||||
Frank W. Harris
|
|
84,500
|
|
|
—
|
|
|
95,036
|
|
|
179,536
|
|
||||
Bradley C. Richardson
|
|
111,500
|
|
|
—
|
|
|
95,036
|
|
|
206,536
|
|
||||
Harold L. Sirkin
(3)
|
|
20,500
|
|
|
—
|
|
|
95,036
|
|
|
115,536
|
|
(1)
|
No stock options were awarded to non-management Directors in fiscal
2018
. Outstanding option awards at July 31,
2018
, for each individual who served as Director in fiscal
2018
include the following: Mr. Allender, 39,800; Mr. Balkema, 35,400; Ms. Bruno, 33,800; Ms. Gioia, 8,500; Mr. Goodkind, 39,800; Mr. Harris, 33,800; and Mr. Richardson, 12,750 shares. The actual value, if any, which an option holder will realize upon the exercise of an option will depend on the excess of the market value of the Company's common stock over the exercise price on the date the option is exercised.
|
(2)
|
Represents the fair value of shares of Brady Corporation Class A Non-Voting Common Stock granted in fiscal
2018
as compensation for their services. The shares of unrestricted stock and RSUs granted to the non-management directors were valued at the average of the high and low market price of $36.85 on September 22, 2017.
|
(3)
|
Mr. Sirkin resigned as a director on November 6, 2017.
|
Title of Class
|
|
Name and Address of Beneficial Owner
|
|
Amount of Beneficial
Ownership
|
|
Percent of
Ownership(2)
|
|||
Class B Common Stock
|
|
EBL GST Non-Exempt Stock B Trust(1) c/o Elizabeth P. Bruno 2002 S. Hawick Ct. Chapel Hill, NC 27516
|
|
1,769,304
|
|
|
50
|
%
|
|
|
|
William H. Brady III Living Trust dated November 1, 2013 (3)
|
|
1,769,304
|
|
|
50
|
%
|
|
|
|
c/o William H. Brady III
249 Rosemont Ave.
Pasadena, CA 91103
|
|
|
|
|
(1)
|
The trustee is Elizabeth P. Bruno, who has sole voting and dispositive power and who is the remainder beneficiary. Elizabeth Bruno is the great-granddaughter of William H. Brady and currently serves on the Company’s Board of Directors.
|
(2)
|
An additional 20 shares are owned by a third trust with different trustees.
|
(3)
|
William H. Brady III is grantor of this revocable trust and shares voting and dispositive powers with respect to these shares with his co-trustee. William H. Brady III is the grandson of William H. Brady.
|
Title of Class
|
|
Name of Beneficial Owner & Nature of Beneficial Ownership
|
|
Amount of
Beneficial
Ownership(3)(4)(5)
|
|
Percent of
Ownership
|
||
Class A Common Stock
|
|
Elizabeth P. Bruno (1)
|
|
1,242,867
|
|
|
2.6
|
%
|
|
|
J. Michael Nauman
|
|
494,743
|
|
|
1.0
|
%
|
|
|
Thomas J. Felmer
|
|
398,132
|
|
|
0.8
|
%
|
|
|
Aaron J. Pearce
|
|
177,318
|
|
|
0.4
|
%
|
|
|
Conrad G. Goodkind
|
|
164,092
|
|
|
0.3
|
%
|
|
|
Patrick W. Allender (2)
|
|
117,699
|
|
|
0.2
|
%
|
|
|
Louis T. Bolognini
|
|
94,961
|
|
|
0.2
|
%
|
|
|
Russell R. Shaller
|
|
90,852
|
|
|
0.2
|
%
|
|
|
Bradley C. Richardson
|
|
63,718
|
|
|
0.1
|
%
|
|
|
Frank W. Harris
|
|
60,490
|
|
|
0.1
|
%
|
|
|
Gary S. Balkema
|
|
53,709
|
|
|
0.1
|
%
|
|
|
Nancy L. Gioia
|
|
21,537
|
|
|
*
|
|
|
|
All Officers and Directors as a Group (15 persons)
|
|
3,204,758
|
|
|
6.6
|
%
|
|
|
|
|
|
|
|
||
Class B Common Stock
|
|
Elizabeth P. Bruno (1)
|
|
1,769,304
|
|
|
50.0
|
%
|
*
|
Indicates less than one-tenth of one percent.
|
(1)
|
Ms. Bruno’s holdings of Class A Common Stock include 806,296 shares owned by a trust for which she is a trustee and has sole dispositive and voting authority
and 34,530 shares owned by trusts in which she is a co-trustee. Ms. Bruno’s holdings of Class B Common Stock include 1,769,304 shares owned by a trust over which she has sole dispositive and voting authority.
|
(2)
|
Mr. Allender's holdings of Class A Common Stock include 20,000 shares owned by the Patrick and Deborah Allender Irrevocable Trust.
|
(3)
|
The amount shown for all officers and directors individually and as a group (15 persons) includes options to acquire a total of 1,394,233 shares of Class A Common Stock, which are currently exercisable or will be exercisable within 60 days of July 31, 2018, including the following: Ms. Bruno, 33,800 shares; Mr. Nauman, 398,623 shares; Mr. Felmer, 339,185 shares; Mr. Pearce, 136,228 shares; Mr. Goodkind, 39,800 shares; Mr. Allender, 39,800 shares; Mr. Bolognini, 71,354 shares; Mr. Shaller, 69,055 shares; Mr. Richardson, 12,750 shares; Mr. Harris, 33,800 shares; Mr. Balkema, 35,400 shares; and Ms. Gioia, 8,500 shares. It does not include other options for Class A Common Stock which have been granted at later dates and are not exercisable within 60 days of July 31, 2018.
|
(4)
|
The amount shown for all officers and directors individually and as a group (15 persons) includes unvested restricted stock units to acquire 82,874 shares of Class A Common stock, which will vest within 60 days of July 31, 2018, including the following: Mr. Nauman, 45,580 units; Mr. Felmer, 7,990 units; Mr. Pearce, 9,612 units; Mr. Bolognini, 4,722 units; and Mr. Shaller, 7,155 units. No unvested restricted stock units were held by directors which will vest within 60 days of July 31, 2018. It does not include unvested restricted stock awards or restricted stock units to acquire Class A Common Stock which have been granted at later dates and will not vest within 60 days of July 31, 2018.
|
(5)
|
The amount shown for all officers and directors individually and as a group (15 persons) includes Class A Common Stock owned in deferred compensation plans totalling 207,424 shares of Class A Common Stock, including the following: Ms. Bruno, 2,588 shares; Mr. Nauman 0 shares; Mr. Felmer, 12,702 shares; Mr. Pearce, 3,628 shares; Mr. Goodkind, 67,596 shares; Mr. Allender, 57,506 shares; Mr. Bolognini, 0 shares; Mr. Shaller 0 shares; Mr. Richardson, 45,798 shares; Mr. Harris, 0 shares; Mr. Balkema, 14,859 shares; and Ms. Gioia, 2,622 shares.
|
|
|
As of July 31, 2018
|
||||||||
Plan Category
|
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
|
||||
Equity compensation plans approved
by security holders
|
|
2,955,586
|
|
|
$
|
28.23
|
|
|
4,049,563
|
|
Equity compensation plans not
approved by security holders
|
|
None
|
|
|
None
|
|
|
None
|
|
|
Total
|
|
2,955,586
|
|
|
$
|
28.23
|
|
|
4,049,563
|
|
|
|
2018
|
|
2017
|
||||
|
|
(Dollars in thousands)
|
||||||
Audit, audit-related and tax compliance
|
|
|
|
|
||||
Audit fees
(1)
|
|
$
|
1,235
|
|
|
$
|
1,200
|
|
Tax fees — compliance
|
|
609
|
|
|
492
|
|
||
Subtotal audit, audit-related and tax compliance fees
|
|
1,844
|
|
|
1,692
|
|
||
Non-audit related
|
|
|
|
|
||||
Tax fees — planning and advice
|
|
320
|
|
|
189
|
|
||
Subtotal non-audit related fees
|
|
320
|
|
|
189
|
|
||
Total fees
|
|
$
|
2,164
|
|
|
$
|
1,881
|
|
(1)
|
Audit fees consist of professional services rendered for the audit of the Company’s annual financial statements, attestation of management’s assessment of internal control, reviews of the quarterly financial statements and statutory reporting compliance.
|
|
|
2018
|
|
2017
|
Ratio of Tax Planning and Advice Fees to Audit Fees, Audit-Related Fees and Tax Compliance Fees
|
|
0.2 to 1
|
|
0.1 to 1
|
Exhibit
Number
|
Description
|
|
2.1
|
|
|
2.2
|
|
|
3.1
|
|
Restated Articles of Incorporation of Brady Corporation (1)
|
3.2
|
|
|
*10.1
|
|
|
*10.2
|
|
Brady Corporation BradyGold Plan, as amended (2)
|
*10.3
|
|
Executive Additional Compensation Plan, as amended (2)
|
*10.4
|
|
|
*10.5
|
|
|
*10.6
|
|
|
*10.7
|
|
|
*10.8
|
|
|
10.9
|
|
Brady Corporation Automatic Dividend Reinvestment Plan (4)
|
*10.10
|
|
|
*10.11
|
|
|
*10.12
|
|
|
*10.13
|
|
|
*10.14
|
|
|
*10.15
|
|
|
*10.16
|
|
|
*10.17
|
|
|
*10.18
|
|
|
*10.19
|
|
|
*10.20
|
|
|
*10.21
|
|
|
*10.22
|
|
|
*10.23
|
|
*10.24
|
|
|
*10.25
|
|
|
10.26
|
|
|
*10.27
|
|
|
*10.28
|
|
|
*10.29
|
|
|
*10.30
|
|
|
*10.31
|
|
|
*10.32
|
|
|
*10.33
|
|
|
*10.34
|
|
|
*10.35
|
|
|
*10.36
|
|
|
*10.37
|
|
|
*10.38
|
|
|
*10.39
|
|
|
*10.40
|
|
|
*10.41
|
|
|
*10.42
|
|
|
*10.43
|
|
|
10.44
|
|
|
*10.45
|
|
|
*10.46
|
|
|
*10.47
|
|
|
*10.48
|
|
|
*10.49
|
|
|
*10.50
|
|
|
*10.51
|
|
|
*10.52
|
|
*10.53
|
|
|
*10.54
|
|
|
*10.55
|
|
|
*10.56
|
|
|
*10.57
|
|
|
*10.58
|
|
|
*10.59
|
|
|
21
|
|
|
23
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101
|
|
Interactive Data File
|
*
|
Management contract or compensatory plan or arrangement
|
(1)
|
Incorporated by reference to Registrant’s Registration Statement No. 333-04155 on Form S-3
|
(2)
|
Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1989
|
(3)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 25, 2008
|
(4)
|
Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1992
|
(5)
|
Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2008
|
(6)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 25, 2014
|
(7)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed January 9, 2008
|
(8)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed December 4, 2006
|
(9)
|
Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2014
|
(10)
|
Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2008
|
(11)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed October 2, 2014
|
(12)
|
Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2009
|
(13)
|
Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2014
|
(14)
|
Reserved
|
(15)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 2, 2011
|
(16)
|
Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2011
|
(17)
|
Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2009
|
(18)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 23, 2010
|
(19)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed May 14, 2010
|
(20)
|
Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2014
|
(21)
|
Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2015
|
(22)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 27, 2010
|
(23)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed July 18, 2014
|
(24)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 25, 2015
|
(25)
|
Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2017
|
(26)
|
Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2011
|
(27)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed May 27, 2016
|
(28)
|
Incorporated by reference to Registrant’s Current Report on Form 8-K filed June 5, 2015
|
(29)
|
Incorporated by reference to Registrant's Current Report on Form 8-K filed December 31, 2012
|
(30)
|
Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2013
|
(31)
|
Incorporated by reference to Registrant's Annual Report on Form 10-K for the fiscal year ended July 31, 2012
|
(32)
|
Incorporated by reference to Registrants Annual Report on Form 10-K for the fiscal year ended July 31, 2013
|
(33)
|
Incorporated by reference to Registrant's Current Report on Form 8-K filed July 14, 2016
|
(34)
|
Incorporated by reference to Registrant's Current Report on Form 8-K filed July 16, 2015
|
(35)
|
Incorporated by reference to Registrant's Current Report on Form 8-K filed August 4, 2014
|
(36)
|
Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2013
|
|
|
Year ended July 31,
|
||||||||||
Description
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Valuation accounts deducted in balance sheet from assets to which they apply — Accounts receivable — allowance for doubtful accounts:
|
|
|
|
|
|
|
||||||
Balances at beginning of period
|
|
$
|
4,629
|
|
|
$
|
5,144
|
|
|
$
|
3,585
|
|
Additions — Charged to expense
|
|
752
|
|
|
732
|
|
|
1,904
|
|
|||
Deductions — Bad debts written off, net of recoveries
|
|
(910
|
)
|
|
(1,247
|
)
|
|
(345
|
)
|
|||
Balances at end of period
|
|
$
|
4,471
|
|
|
$
|
4,629
|
|
|
$
|
5,144
|
|
Inventory — Reserve for slow-moving inventory:
|
|
|
|
|
|
|
||||||
Balances at beginning of period
|
|
$
|
14,322
|
|
|
$
|
15,083
|
|
|
$
|
13,269
|
|
Additions — Charged to expense
|
|
2,797
|
|
|
4,608
|
|
|
4,950
|
|
|||
Deductions — Inventory write-offs
|
|
(4,537
|
)
|
|
(5,369
|
)
|
|
(3,136
|
)
|
|||
Balances at end of period
|
|
$
|
12,582
|
|
|
$
|
14,322
|
|
|
$
|
15,083
|
|
Valuation allowances against deferred tax assets:
|
|
|
|
|
|
|
|
|||||
Balances at beginning of period
|
|
$
|
38,563
|
|
|
$
|
37,992
|
|
|
$
|
39,922
|
|
Additions during year
|
|
24,184
|
|
|
2,004
|
|
|
2,614
|
|
|||
Deductions — Valuation allowances reversed/utilized
|
|
(5,881
|
)
|
|
(1,433
|
)
|
|
(4,544
|
)
|
|||
Balances at end of period
|
|
$
|
56,866
|
|
|
$
|
38,563
|
|
|
$
|
37,992
|
|
B
RADY
C
ORPORATION
|
||
By:
|
|
/s/ AARON J. PEARCE
|
|
|
Aaron J. Pearce
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal Financial Officer)
|
Signature
|
|
Title
|
/s/ J. MICHAEL NAUMAN
|
|
President and Chief Executive Officer; Director
|
J. Michael Nauman
|
|
(
Principal Executive Officer
)
|
/s/ ANN E. THORNTON
|
|
Chief Accounting Officer and Corporate Controller
|
Ann E. Thornton
|
|
(Principal Accounting Officer)
|
/s/ PATRICK W. ALLENDER
|
|
|
Patrick W. Allender
|
|
Director
|
/s/ GARY S. BALKEMA
|
|
|
Gary S. Balkema
|
|
Director
|
/s/ NANCY L. GIOIA
|
|
|
Nancy L. Gioia
|
|
Director
|
/s/ CONRAD G. GOODKIND
|
|
|
Conrad G. Goodkind
|
|
Director
|
/s/ FRANK W. HARRIS
|
|
|
Frank W. Harris
|
|
Director
|
/s/ ELIZABETH P. BRUNO
|
|
|
Elizabeth P. Bruno
|
|
Director
|
/s/ BRADLEY C. RICHARDSON
|
|
|
Bradley C. Richardson
|
|
Director
|
*
|
Each of the above signatures is affixed as of September 13, 2018.
|
(a)
|
For example, if a Participant elected to change from receiving a portion of their Account in installments (commencing on the October 1 following termination of employment) to receiving that portion in a lump sum (on the October 1 following five (5) years after termination), but then terminated ten months after making that new election, that new election would not be effective. The Participant would receive that portion of their Account in the installment method previously in effect.
|
(a)
|
For example, if a Participant was to receive a particular portion of their Account in installments commencing on the October 1 following termination, they could not receive a lump sum of that portion of their Account until at least five (5) years after the installments were to commence (that is, the October 1 following five (5) years after termination).
|
(i)
|
A Claimant must exhaust all administrative remedies under the Plan before seeking judicial review;
|
(ii)
|
A Claimant must bring a legal action (including, but not limited to, a civil action under Section 502(a) of ERISA with respect to any ERISA Plan) within a reasonable period following a final decision of an adverse benefit determination (or, in the absence of such a final decision, within a reasonable period following the date the final decision should have been issued under the Plan); and
|
(iii)
|
Claimant may not present in any legal action evidence not timely presented to the Plan Administrator as part of the Plan’s administrative review process.
|
(1)
|
For example, if a Participant elected to change from receiving a portion of their Account in installments (commencing on the October 1 following termination of employment) to receiving that portion in a lump sum (on the October 1 following five (5) years after termination), but then terminated ten months after making that new election, that new election would not be effective. The Participant would receive that portion of their Account in the installment method previously in effect.
|
(1)
|
For example, if a Participant was to receive a particular portion of their Account in installments commencing on the October 1 following termination, they could not receive a lump sum of that portion of their Account until at least five (5) years after the installments were to commence (that is, the October 1 following five (5) years after termination).
|
Number of Performance-based Restricted Stock Units Granted at Target (the “Units”):
|
|
Grant Date:
|
|
Scheduled Vesting Date:
|
The date described in Section 2(a) of the Agreement
|
Performance Period:
|
|
Performance Goals:
|
See Exhibit A
|
1.
|
Award of Performance Restricted Stock Units
|
2.
|
Vesting and Forfeiture of Units
|
(a)
|
Scheduled Vesting.
The number of Units that have been earned during the Performance Period shall be eligible to vest on the Scheduled Vesting Date, so long as the Employee’s employment has been continuous since the Grant Date. The actual number of earned Units that will vest on the Scheduled Vesting Date will be determined by the Committee as provided in Exhibit A. For these purposes, the “Scheduled Vesting Date” means the date the Committee certifies (i) the degree to which the applicable performance goals for the Performance Period have been satisfied, and (ii) the number of Units that have been earned during the Performance Period as provided in Exhibit A, which certification shall occur no later than October 15 of the fiscal year immediately following the fiscal year during which the Performance Period ended.
|
(b)
|
Retirement.
If employment is terminated as a result of the Employee’s retirement (after age 60 with five years of employment with the Corporation or a Subsidiary) and after the Employee has been employed for at least one year after the Grant Date, the Employee will receive a pro rata portion of the Units that would otherwise have been determined to vest on the Scheduled Vesting Date in accordance with Exhibit A if the Employee had remained continuously employed until the Scheduled Vesting Date. The pro rata portion shall be determined as follows: (a) if Employee is employed for at least one year, but less than two years after the Grant Date, the Employee shall earn 2/3 of the number of Units that would otherwise have been determined to vest and (b) if Employee is employed for at least two years after the Grant Date, the Employee shall earn 100% of the Units that would otherwise have been determined to vest.
|
(c)
|
Death.
If employment is terminated by the death of the Employee prior to the last day of the Performance Period, the Units granted hereunder to the Employee shall be 100% vested at target. If employment is terminated by death on or after the last day of the Performance Period, the number of Units determined to have been earned as of the end of the Performance Period in accordance with Exhibit A shall vest. Vested Units shall be payable to the Employee’s personal representative or to the person to whom the Units are transferred under the Employee’s last will and testament or the applicable laws of descent and distribution within 60 days of the Employee's death
|
(d)
|
Disability.
If employment is terminated as a result of the Disability of the Employee prior to the last day of the Performance Period, the Units granted hereunder to the Employee shall be 100% vested at target and payable within 60 days of the Employee's Disability. If employment is terminated by Disability on or after the last day of the Performance Period, the number of Units determined to have been earned as of the end of the Performance Period in accordance with Exhibit A shall vest.
|
(e)
|
Change in Control.
If a Change in Control occurs while the Employee continues to be employed, then the Units shall vest as of the Date of the Change in Control to the extent provided below:
|
(i)
|
If the Change in Control occurs on or after the last day of the Performance Period, the number of Units determined to have been earned as of the end of the Performance Period in accordance with Exhibit A shall vest.
|
(ii)
|
In the event of a Change in Control prior to the end of the Performance Period, the Units shall become 100% vested at target and the conditions described under Section 2 and Exhibit A shall cease to apply.
|
(iii)
|
For purposes of this Award, the term "Change in Control" shall have the meaning set forth in Exhibit B. No event described in Section 13.05 of the Plan shall cause the Units to become vested unless such event is a Change in Control.
|
(f)
|
Forfeiture of Unvested Units.
If employment is terminated prior to the Scheduled Vesting Date under circumstances other than as set forth in Sections 2(a) through (e), all unvested Units shall immediately be forfeited.
|
3.
|
Settlement of Units
|
4.
|
Withholding Taxes
|
5.
|
No Dividends
|
6.
|
No Shareholder Rights
|
7.
|
Transfer Restrictions
|
8.
|
Confidentiality, Non-Solicitation and Non-Compete
|
(a)
|
During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provide Employee with Confidential Information relating to the Company, its business and clients, the disclosure or misuse of which would cause severe and irreparable harm to the Company. During Employee’s employment with Company, and for a two (2)-year period thereafter, Employee agrees not to use or disclose Company’s Confidential Information except as necessary in executing Employee’s duties for Company. Employee shall keep Confidential Information constituting a trade secret under applicable law confidential for so long as such information constitutes a trade secret (
i.e.
, protection as to trade secrets shall not necessarily expire at the end of the two (2)-year period). Upon the termination of Employee's employment with the Company for any reason, Employee shall immediately return to the Company all documents and materials that contain or constitute Confidential Information, in any form whatsoever, including but not limited to, all copies, abstracts, electronic versions, and summaries thereof. As to any electronically stored copies of Confidential Information, Employee shall contact their supervisor or Company’s General Counsel to discuss the proper method for returning such items. Employee hereby consents and agrees that Company may access any of Employee’s personal computers and other electronic storage devices (including personal phones) and any electronic storage accounts (such as dropbox) so as to allow Company to ascertain the presence of Company’s Confidential Information and how such information has been used by Employee and to remove any such items from such devices and accounts. Employee further agrees that, without the written consent of the Chief Executive Officer of the Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval of the Board of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use, disclosure, copying or duplication of any Confidential Information of the Company, other than in connection with the authorized activities conducted in the course of Employee's employment with the Company. Employee agrees to take all reasonable steps and precautions to prevent any unauthorized disclosure, use, copying or duplication of Confidential Information. For purposes of this Agreement,
|
(i)
|
information relating to the Company’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payments terms, customer lists and other similar information;
|
(ii)
|
inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company;
|
(iii)
|
the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;
|
(iv)
|
the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and
|
(v)
|
other confidential and proprietary information or documents relating to the Company’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents which the Company reasonably regards as being confidential.
|
(vi)
|
Confidential Information does not include information which: (i) is already available to the public without wrongful act or breach by Employee; (ii) becomes available to the public through no fault of Employee; or (iii) is required to be disclosed pursuant to a court order or order of government authority, provided that Employee promptly notifies Company of such request so Company may seek a protective order.
|
(b)
|
Post-Employment Customer Non-Solicitation Agreement
. For one (1) year following Employee’s separation from Company, Employee will not
contact-or support others in contacting-customers of Company with whom Employee had business contact during the last two (2) years of Employee’s employment with Company, for the purpose of selling or providing products or services competitive with those offered by Company (“
Competitive Products”). “Competitive Products” shall mean products and services competitive with those products and services for which Employee was responsible during the last two (2) years of Employee’s employment with Company.
|
(c)
|
Post-Employment Non-Solicitation Agreement Based Upon Customer Knowledge
. For one (1) year following Employee’s separation from Company, Employee will not
contact-or support others in contacting-customers of Company about whom Employee possesses Confidential Information or for whom Employee supervised others in serving during the
|
(d)
|
Post-Employment Non-Compete Agreement
. For one (1) year following Employee’s separation from Company, Employee will not, directly or indirectly, within the United States, provide services similar to any of those Employee provided to Company during the last two (2) years of Employee’s employment with Company to a competitor of Company or a person or entity preparing to compete with Company. If Employee’s services to Company at all times during their last two (2) years of employment were limited to particular subsidiaries or affiliates (Tricor Direct, Inc., Precision Dynamics Corporation, etc.) or divisions (WPS, IDS, PeopleID, etc.), then the term “competitor” as used in this paragraph will be limited to competitors of all such subsidiaries, affiliates, and divisions.
|
(e)
|
Post-Employment Restriction on Working With Competitive Products
. For one (1) year following Employee’s separation from Company, Employee will not, work in the development, design, modification, improvement, or creation of products or services competitive with any products or services with which Employee was involved in the development, design, modification, improvement or creation for Company during the last two (2) years of Employee’s employment.
|
(f)
|
Post-Employment Restriction on Advising Investors
. For one (1) year following Employee’s separation from Company, Employee will not, directly or indirectly, advise a private equity firm or other investor regarding buying, investing in, or divesting from Company or any of its competitors.
|
(g)
|
Post-Employment Restriction on Soliciting Employees
. For one (1) year following Employee’s separation from Company, Employee will not solicit or encourage Key Employees of Company to provide services to a competitor of Company or to otherwise terminate their relationship with Company. “Key Employees” are employees or contractors whom Employee supervised, who supervised Employee, or with whom Employee had significant business contact during Employee’s last year of employment with Company and who work for or serve Company as an engineer, manager, executive, sales employee, professional, or director.
|
(h)
|
Duty of Loyalty and Related Obligations
. Employee acknowledges and agrees that Employee owes Company a duty of loyalty while employed by Company. During Employee’s employment with Company, Employee agrees not to take action that will harm Company, such as, encouraging employees, vendors, suppliers, contractors, or customers to terminate their relationships with Company, usurping a business opportunity from Company, engaging in conduct that would injure Company’s reputation, providing services or assistance to a competitive enterprise, or otherwise competing with Company.
|
(i)
|
Non-Disparagement and Social Media
. Employee agrees not to disparage Company or any of its officers, directors, or employees on social media, on any public platform, or to persons external to Company when such comments have the potential to harm Company (
i.e.
, making disparaging comments about Company to distributors, customers, suppliers, etc.).
|
(j)
|
Other Business Relationships.
Employee agrees, for a one (1)-year period following Employee’s separation from Company, not to encourage or advise any vendors, suppliers, or others possessing a business relationship with Company to terminate that relationship or to otherwise modify that relationship to Company’s detriment.
|
(k)
|
Employee acknowledges and agrees that compliance with this Section 8 is necessary to protect the Company, and that a breach of any of this Section 8 will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law. In the event of a breach of this Section 8, or any part thereof, the Company, and its successors and assigns, shall be entitled to injunctive relief and to such other and further relief as is proper under the circumstances. The Company shall institute and prosecute proceedings in any Court of competent jurisdiction either in law or in equity to obtain damages for any such breach of this Section 8, or to enjoin Employee from performing services in breach of Section 8(b) during the term of employment and for a period of 12 months following the termination of employment. Employee hereby agrees to submit to the jurisdiction of any Court of competent jurisdiction in any disputes that arise under this Agreement.
|
(l)
|
Employee further agrees that, in the event of a breach of this Section 8, the Corporation may elect to recover all or any part of the value of any amounts previously paid or payable or any Shares (or the value of any Shares) delivered or deliverable to Employee pursuant to any Company bonus program, this Agreement, and any other Company plan or arrangement.
|
(m)
|
Employee agrees that the terms of this Section 8 shall survive the termination of Employee's employment with the Company.
|
(n)
|
EMPLOYEE HAS READ THIS SECTION 8 AND AGREES THAT THE CONSIDERATION PROVIDED BY THE CORPORATION IS FAIR AND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL AND PROPRIETARY INFORMATION, THE POST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIR AND REASONABLE.
|
9.
|
Clawback
|
10.
|
Binding Effect
|
11.
|
Provisions of Plan Controlling
|
12.
|
Wisconsin Contract
|
13.
|
Severability
|
14.
|
No Contract
|
15.
|
Notice of Immunity
|
|
|
PAGE
|
|
|
|
|
|
ARTICLE I
|
INTRODUCTION
|
1
|
|
|
|
|
|
1.1
|
Establishment and Effective Date
|
1
|
|
1.2
|
Purpose
|
1
|
|
1.3
|
Section 409A
|
1
|
|
|
|
|
|
ARTICLE II
|
DEFINITIONS
|
2
|
|
|
|
|
|
2.1
|
Account
|
2
|
|
2.2
|
Additional Employer Contribution
|
2
|
|
2.3
|
Additional Matching Contribution
|
2
|
|
2.4
|
Affiliate
|
2
|
|
2.5
|
Beneficiary
|
2
|
|
2.6
|
Board
|
2
|
|
2.7
|
Code
|
2
|
|
2.8
|
Committee
|
2
|
|
2.9
|
Compensation
|
2
|
|
2.10
|
Elective Deferral
|
3
|
|
2.11
|
Elective Deferral Account
|
3
|
|
2.12
|
Eligible Employee
|
3
|
|
2.13
|
Employee
|
3
|
|
2.14
|
Employer
|
3
|
|
2.15
|
Employer Contribution
|
3
|
|
2.16
|
Employer Contribution Account
|
3
|
|
2.17
|
Excess Compensation
|
3
|
|
2.18
|
Matching Contribution
|
3
|
|
2.19
|
Matching Contribution Account
|
3
|
|
2.20
|
Participant
|
3
|
|
2.21
|
Plan
|
3
|
|
2.22
|
Plan Year
|
3
|
|
2.23
|
Qualified 401(k) Plan
|
3
|
|
2.24
|
Separation from Service
|
4
|
|
2.25
|
Specified Employee
|
6
|
|
2.26
|
Unforeseeable Emergency
|
7
|
|
|
|
|
|
ARTICLE III
|
PARTICIPATION
|
8
|
|
|
|
|
|
3.1
|
Eligibility to Participate
|
8
|
|
3.2
|
Continuation of Eligibility
|
8
|
|
|
|
|
|
ARTICLE IV
|
DEFERRALS
|
9
|
|
|
|
|
|
4.1
|
Elective Deferrals
|
9
|
|
4.2
|
Additional Rules Governing Deferral Elections
|
9
|
|
4.3
|
Matching Contribution
|
10
|
|
4.4
|
Employer Contribution
|
10
|
|
4.5
|
Additional Matching Contribution
|
10
|
|
4.6
|
Additional Employer Contribution
|
11
|
|
|
|
|
|
ARTICLE V
|
ACCOUNTS AND CREDITS
|
12
|
|
|
|
|
|
5.1
|
Credits to Accounts
|
12
|
|
5.2
|
No Funding
|
12
|
|
5.3
|
Deemed Investment of Accounts
|
12
|
|
5.4
|
Reports to Participants
|
13
|
|
|
|
|
|
ARTICLE VI
|
VESTING
|
14
|
|
|
|
|
|
ARTICLE VII
|
MANNER AND TIMING OF DISTRIBUTION
|
15
|
|
|
|
|
|
7.1
|
Payment of Benefits
|
15
|
|
7.2
|
Payment Election
|
16
|
|
7.3
|
Financial Hardship
|
17
|
|
7.4
|
Delayed Distribution
|
18
|
|
7.5
|
Inclusion in Income Under Section 409A
|
19
|
|
7.6
|
Domestic Relations Order
|
19
|
|
7.7
|
De Minimis Amounts
|
19
|
|
7.8
|
Overpayments
|
19
|
|
|
|
|
|
ARTICLE VIII
|
PLAN OPERATION AND ADMINISTRATION
|
20
|
|
|
|
|
|
8.1
|
Administrator
|
20
|
|
8.2
|
Committee
|
20
|
|
8.3
|
Authority to Act
|
20
|
|
8.4
|
Information from Participants
|
20
|
|
8.5
|
Committee Discretion
|
20
|
|
8.6
|
Committee Members’ Conflict of Interest
|
21
|
|
8.7
|
Governing Law
|
21
|
|
8.8
|
Expenses
|
21
|
|
8.9
|
Minor or Incompetent Payees
|
21
|
|
8.10
|
Withholding
|
21
|
|
8.11
|
Indemnification
|
21
|
|
|
|
|
|
ARTICLE IX
|
CLAIMS PROCEDURE
|
22
|
|
|
|
|
|
9.1
|
Claims
|
22
|
|
9.2
|
Review
|
22
|
|
9.3
|
Additional claims requirements
|
23
|
|
|
|
|
|
ARTICLE X
|
AMENDMENT AND TERMINATION
|
24
|
|
|
|
|
|
ARTICLE XI
|
MISCELLANEOUS PROVISIONS
|
25
|
|
|
|
|
|
11.1
|
Headings
|
25
|
|
11.2
|
No Contract of Employment
|
25
|
|
11.3
|
Rights of Participants and Beneficiaries
|
25
|
|
11.4
|
Nonalienation of Benefits
|
25
|
|
11.5
|
Tax Treatment
|
25
|
|
11.6
|
Other Plans and Agreements
|
25
|
|
11.7
|
Number and Gender
|
26
|
|
11.8
|
Plan Provisions Controlling
|
26
|
|
11.9
|
Severability
|
26
|
|
11.10
|
Evidence Conclusive
|
26
|
|
11.11
|
Status of Plan Under ERISA
|
26
|
|
11.12
|
Name and Address Changes
|
27
|
|
11.13
|
Assignability by Corporation
|
27
|
|
11.14
|
Special Rule for 2005-2007
|
27
|
|
1.1
|
Establishment and Effective Date
|
1.2
|
Purpose
|
1.3
|
Section 409A
|
2.1
|
Account
shall mean the account maintained to record a Participant’s interest in the Plan and shall be composed of the following subaccounts: Elective Deferral Account, Matching Contribution Account and Employer Contribution Account.
|
2.2
|
Additional Employer Contribution
shall mean the amount credited to a Participant pursuant to Section 4.6.
|
2.3
|
Additional Matching Contribution
shall mean the amount credited to a Participant pursuant to Section 4.5.
|
2.4
|
Affiliate
shall mean each incorporated or unincorporated trade or business in which Brady Corporation directly or indirectly owns, as applicable, eighty percent (80%) of the voting stock or eighty percent (80%) of the capital or profits interest.
|
2.5
|
Beneficiary
means the person, persons, or entity designated by the Participant to receive any benefits payable under the Plan on or after the Participant’s death. Each Participant shall be permitted to name, change or revoke the Participant’s designation of a Beneficiary in writing on a form and in the manner prescribed by the Employer; provided, however, that the designation on file with the Employer at the time of the Participant’s death shall be controlling. Should a Participant fail to make a valid Beneficiary designation or leave no named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, if living; or if not living, then any benefits due shall be paid to such Participant’s estate. A Participant may designate a primary beneficiary and a contingent beneficiary; provided, however, that the Employer may reject any such instrument tendered for filing if it contains successive beneficiaries or contingencies unacceptable to it. If all Beneficiaries who survive the Participant shall die before receiving the full amounts payable hereunder, then the payments shall be paid to the estate of the Beneficiary last to die.
|
2.6
|
Board
shall mean the Board of Directors of Brady Corporation.
|
2.7
|
Code
shall mean the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder.
|
2.8
|
Committee
shall mean the Compensation Committee of the Board.
|
2.9
|
Compensation
shall mean the total compensation payable to a Participant by the Employer for any period (prior to elective deferrals under this Plan or any other plan or deferral agreement) required to be reported as wages on the Employee’s Form W-2 for income tax purposes, but reduced by all of the following items (even if includable in gross income):
|
2.10
|
Elective Deferral
shall mean the portion of a Participant’s Compensation that is reduced and credited to their Elective Deferral Account pursuant to their election under Section 4.1.
|
2.11
|
Elective Deferral Account
shall mean the account maintained to record a Participant’s interest in the Plan attributable to their Elective Deferrals.
|
2.12
|
Eligible Employee
shall mean an Employee eligible under Section 3.1 and 3.2(a).
|
2.13
|
Employee
shall mean an employee of the Employer.
|
2.14
|
Employer
shall mean Brady Corporation and any Affiliate that adopts the Plan with the approval of the Board.
|
2.15
|
Employer Contribution
shall mean the amount credited to a Participant pursuant to Section 4.4.
|
2.16
|
Employer Contribution Account
shall mean the account maintained to record a Participant’s interest in the Plan attributable to Employer Contributions and Additional Employer Contributions on their behalf.
|
2.17
|
Excess Compensation
shall mean the portion of Compensation earned by a Participant during a Plan Year after the date the Compensation they have earned during the Plan Year equals the limit in Code Section 401(a)(17) for such Plan Year.
|
2.18
|
Matching Contribution
shall mean the amount credited to a Participant pursuant to Section 4.3.
|
2.19
|
Matching Contribution Account
shall mean the account maintained to record a Participant’s interest in the Plan attributable to Matching Contributions and Additional Matching Contributions on their behalf.
|
2.20
|
Participant
shall mean (i) an Eligible Employee under Section 3.1 and 3.2(a) or (ii) a former Eligible Employee who has an Account under the Plan.
|
2.21
|
Plan
shall mean the Brady Corporation Restoration Plan, as set forth in this document, as the same may be amended or restated from time to time.
|
2.22
|
Plan Year
shall mean the calendar year.
|
2.23
|
Qualified 401(k) Plan
shall mean the Brady Matched 401(k) Plan (or any successor plan thereto qualified under Code §§ 401(a) and 401(k)).
|
2.24
|
Separation from Service
shall have the meaning set forth in IRS Regulation Section 1.409A-1 the requirements of which are summarized in part as follows:
|
(a)
|
In General.
The Participant shall have a Separation from Service with the Employer if the Participant dies, retires, or otherwise has a termination of employment with the Employer. However, for purposes of this Section 2.24, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Employer under an applicable statute or by contract. For purposes of this paragraph (a) of this Section 2.24, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer. If the period of leave exceeds six months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of their position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period.
|
(b)
|
Termination of Employment
. Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Employer and Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or, the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Participant continues to be treated as an employee for other purposes (such as continuation of salary and participation in employee benefit programs), whether similarly situated service providers have been treated consistently, and whether the Participant is permitted, and realistically available, to perform services for other service recipients in the same line of business. The Participant is presumed to have Separated from Service where the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the employee during the immediately preceding 36-month period. The Participant will be presumed not to have Separated from Service where the level of bona fide services performed
|
(c)
|
Asset Purchase Transactions
. Where as part of a sale or other disposition of assets by the Employer as seller to an unrelated service recipient (buyer), a Participant of the Employer would otherwise experience a Separation from Service with the Employer, the Employer and the buyer may retain the discretion to specify, and may specify, whether a Participant providing services to the Employer immediately before the asset purchase transaction and providing services to the buyer after and in connection with the asset purchase transaction has experienced a Separation from Service, provided that the asset purchase transaction results from bona fide, arm’s length negotiations, all service providers providing services to the Employer immediately before the asset purchase transaction and providing services to the buyer after and in connection with the asset purchase transaction are treated consistently
|
(d)
|
Dual Status
. If a Participant provides services both as an employee of the Employer and as an independent contractor of the Employer, the Participant must separate from service both as an employee and as an independent contractor to be treated as having Separated from Service. If a Participant ceases providing services as an independent contractor and begins providing services as an employee, or ceases providing services as an employee and begins providing services as an independent contractor, the Participant will not be considered to have a Separation from Service until the Participant has ceased providing services in both capacities. Notwithstanding the foregoing, if a Participant provides services both as an employee of the Employer and a member of the board of directors of the Employer, the services provided as a director are not taken into account in determining whether the Participant has a Separation from Service as an employee for purposes of this Plan unless this Plan is aggregated with any plan in which the Participant participates as a director under IRS Regulation Section 1.409A-1(c)(2)(ii).
|
2.25
|
Specified Employee
shall have the meaning set forth in IRS Regulation Section 1.409A‑1 the requirements of which are summarized in part as follows:
|
(a)
|
In General
. “Specified Employee” means a Participant who as of the date of their separation from service is a “key employee” as defined in Code Section 416(i) (disregarding Section 416(i)(5)), i.e., an employee who at any time during the 12 month period ending on an identification date is an officer of the Employer or one of its affiliates having an annual compensation as defined in IRS Regulation Section 1.409A-1(i)(2) greater than $130,000, a 5% owner of the Employer or one of its affiliates or a 1% owner of the Employer or one of its affiliates having compensation of more than $150,000. The $130,000 amount described in the preceding sentence shall be adjusted for cost of living increases in such amounts and at such times as specified by the Internal Revenue Service. Further, no more than 50 employees (or, if lesser, the greater of 3 or 10% of the employees) shall be treated as officers. The foregoing definition shall be interpreted at all times in a manner consistent with such regulations as may be adopted from time to time by the Internal Revenue Service for purposes of applying the key employee definition of Section 416(i) to the requirements of Code Section 409A. If a person is a key employee as of an identification date, the person is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the identification date. The “identification date” is December 31.
|
(b)
|
In the event of a public offering, merger, acquisition, spin-off, reorganization or other corporate transaction, "Specified Employees" shall be determined as provided in IRS Reg. Section 1.409A-(1)(i)(6).
|
2.26
|
Unforeseeable Emergency
means a severe financial hardship to a Participant resulting from an illness or accident of the Participant or the Participant’s spouse or dependent (as defined in Section 152(a) of the Code), loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, may constitute an Unforeseeable Emergency. Finally, the need to pay for funeral expenses of a spouse or a dependent (as defined in Code section 152(a)) may also constitute an Unforeseeable Emergency. Except as otherwise provided above, the purchase of a home and the payment of college tuition are not Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable Emergency is to be determined based on the relevant facts and circumstances of each case.
|
3.1
|
Eligibility to Participate
|
3.2
|
Continuation of Eligibility
|
(a)
|
An Employee shall continue to be eligible to elect deferrals and receive Employer contributions in accordance with the provisions of Article IV only for so long as they continue in employment with the Employer.
|
(b)
|
An individual who has a Separation from Service shall cease to be eligible and shall again be eligible to elect deferrals and receive Employer contributions in accordance with the provisions of Article IV only in accordance with Section 3.1.
|
4.1
|
Elective Deferrals
|
(a)
|
An Eligible Employee may elect an Elective Deferral of up to fifty percent (50%) of their Excess Compensation for services performed during a Plan Year by completing and filing such forms as may be required by the Employer.
|
(b)
|
An Eligible Employee’s Elective Deferral election under paragraph (a) of this Section shall apply to and reduce their Excess Compensation, i.e., the portion of their Compensation earned during a Plan Year after the date the Compensation they have earned during the Plan Year equals the limit in Code Section 401(a)(17) for such Plan Year.
|
4.2
|
Additional Rules Governing Deferral Elections
|
(a)
|
An Eligible Employee’s election under Section 4.1 shall (i) if made within the thirty (30) day period following the date they are first eligible to participate in any account balance-type deferred compensation plan of the Employer, be effective for that portion of their Excess Compensation to be paid for services performed subsequent to the election, and (ii) if not made within said thirty (30) day period, be effective for Excess Compensation paid for services performed during the Plan Year following the date the election is received by the Employer, or its designee.
|
(b)
|
An Eligible Employee’s election for a Plan Year under this Article IV shall be irrevocable after the last day upon which such election is permitted to be made for such Plan Year and shall continue in effect for subsequent Plan Years until changed or revoked pursuant to paragraph (c) below.
|
(c)
|
An Eligible Employee may change or revoke their election which would otherwise be effective for a Plan Year by completing and filing such forms as may be required by the Employer by the last day of the preceding Plan Year.
|
(d)
|
In the event that during enrollment in the Plan a Participant does not make a payment election, a lump sum payment election will be automatically applied for the Plan Year in which the contributions are made.
|
(e)
|
Notwithstanding paragraphs (a), (b) (c) and (d), in the event that a Participant makes application for a hardship distribution under Section 7.3 and the Administrator determines that an Unforeseeable Emergency exists, their deferral election otherwise in effect under this Article IV and any other nonqualified deferred compensation plan of the account balance type shall immediately terminate upon such determination. To resume deferrals thereafter, a Participant must make an election satisfying the provisions of paragraph (c).
|
(f)
|
Notwithstanding paragraphs (a), (b) (c) and (d), if an Eligible Employee receives a withdrawal of their elective contributions under the Qualified 401(k) Plan or any other 401(k) plan (i.e., a qualified cash or deferred arrangement) of the Employer (or any affiliate treated under the Code as a single employer with the Employer for purposes of the 401(k) plan) due to financial hardship pursuant to IRS Regulation Section 1.40(k)-1(d)(3) or its successor, their deferral election under this Section 4.1 shall be revoked automatically (effective on the date such hardship withdrawal is paid). In addition, such Eligible Employee shall not be eligible to have another deferral election in effect until the first day of the Plan Year which begins after a six month suspension period that begins on the first day of the calendar month following the date the hardship withdrawal is paid. Such Eligible Employee may then resume deferrals by making an election, pursuant to the rules of paragraph (c) above, effective for any Plan Year which begins after the end of such suspension period.
|
4.3
|
Matching Contribution
|
4.4
|
Employer Contribution
|
4.5
|
Additional Matching Contribution
|
4.6
|
Additional Employer Contribution
|
5.1
|
Credits to Accounts
|
(a)
|
An amount equal to the amount by which a Participant’s Compensation has been reduced pursuant to their deferral election under Section 4.1 shall be credited to their Elective Deferral Account.
|
(b)
|
Matching Contributions and Additional Matching Contributions on a Participant’s behalf shall be credited to their Matching Contribution Account.
|
(c)
|
Employer Contributions and Additional Employer Contributions on a Participant’s behalf shall be credited to their Employer Contribution Account.
|
(d)
|
Said credits shall be made at times established by the Committee but no later than 60 days after the last day of the Plan Year to which they relate.
|
(e)
|
Each Account shall also be credited or charged with deemed earnings and losses as if it were invested in accordance with Section 5.3.
|
5.2
|
No Funding
|
(a)
|
The right of any individual to receive payment under the provisions of this Plan shall be an unsecured claim against the general assets of the Employer, and no provisions contained in this Plan, nor any action taken pursuant to this Plan, shall be construed to give any individual at any time a security interest in any asset of the Employer, of any affiliated company, or of the stockholders of the Employer. The liabilities of the Employer to any individual pursuant to this Plan shall be those of a debtor pursuant to such contractual obligations as are created by this Plan and, to the extent any person acquires a right to receive payment from the Employer under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Employer.
|
(b)
|
The Employer may establish a grantor trust (but shall not be required to do so) to which shall be contributed (subject to the claims of the general creditors of the Employer) the amounts credited to the Accounts. If a grantor trust is so established, except as specifically provided otherwise by the terms of the trust agreement for the trust, payment by the trust of the amounts due to a Participant or their Beneficiary under the Plan shall be considered a payment by the Employer for purposes of the Plan.
|
5.3
|
Deemed Investment of Accounts
|
(a)
|
The Committee shall select one or more investment funds for the deemed investment of Accounts. However, in no event shall the Employer be required to make any such
|
(b)
|
On the date credited to the respective Account, a Participant’s Elective Deferrals, Matching Contributions, Additional Matching Contributions, Employer Contributions and Additional Employer Contributions shall be deemed to be invested in one or more of the investment funds designated by the Participant for such deemed investment. Once made, the Participant’s investment designation shall continue in effect for future Elective Deferrals, Matching Contributions, Additional Matching Contributions, Employer Contributions and Additional Employer Contributions until changed by the Participant. A Participant may change the deemed allocation of their existing Participant Account at times established by the Administrator.
|
(c)
|
A Participant may elect to reallocate the balance of their Accounts deemed to be invested in the investment funds under this Section at the times established by the Committee.
|
(d)
|
All elections and designations under this Section shall be made in accordance with procedures prescribed by the Committee. The Committee may prescribe uniform percentages for such elections and designations.
|
(e)
|
Any distribution of a Participant’s Account which is not a distribution of the entire account shall be taken pro rata from each of the investment funds in which the account is deemed to be invested.
|
5.4
|
Reports to Participants
|
7.1
|
Payment of Benefits
|
(a)
|
After a Participant’s Separation from Service the Participant’s Account shall be paid to the Participant (or in the event of the Participant’s death, to the Participant’s Beneficiary). Payment shall be made in one of the following forms as specified in the Participant’s payment election pursuant to Section 7.2:
|
(i)
|
Single Sum
. A single sum distribution of the value of the balance of the Account on the first day of the second month following the Participant’s Separation from Service; or
|
(ii)
|
Installments
. This subparagraph (ii) shall only be applicable after April 30, 2006. The value of the balance of the Account shall be paid in annual installments with the first of such installment to be paid on the first day of the second month following the Participant’s Separation from Service and with subsequent annual installments to be paid on an anniversary of the payment of the first installment. Annual installments shall be paid in one of the alternative methods specified below over the number of years selected by the Participant in the payment election made pursuant to Section 7.2, but not to exceed 10. The earnings (or losses) provided for in Section 5.1(e) shall continue to accrue on the balance remaining in the Account during the period of installment payments. The annual installment shall be calculated by multiplying the most recent value of the Account by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due the Participant. By way of example, if the Participant elects a 10 year annual installment method, the first payment shall be one-tenth (1/10) of the Account balance. The following year, the payment shall be one-ninth (1/9) of the Account balance; or
|
(iii)
|
Other Methods and Prior Elections.
Any other method authorized by the Plan Administrator as reflected on the Participant's payment election and elected by the Participant. Payment methods previously allowable under the Plan, such as the percentage or fixed dollar method of payment, and previously elected by a Participant will remain in effect unless the Participant elects an alternative payment schedule pursuant to Section 7.2(c).
|
(b)
|
In the case of a Participant who is a Specified Employee, payment pursuant to paragraph (a) above shall commence no earlier than the first day of the seventh month following the Participant’s Separation from Service. This delay in distribution rule does not apply if the payment is being made as a result of the Participant’s death.
|
7.2
|
Payment Election
|
(a)
|
For each Plan Year, an individual who is or becomes a Participant at the beginning of such Plan Year shall, prior to their date of participation for such Plan Year, complete a payment election form specifying the form of payment applicable to the portion of such Participant’s Account under the Plan attributable to participation for such Plan Year. In the event that a Participant does not make a timely payment election, a lump sum payment election will apply for the Plan Year in which the contributions are made.
|
(b)
|
An individual who first becomes a Participant other than on the first day of a Plan Year shall, no later than 30 days after the effective date of participation, complete a payment election form specifying the form of payment applicable to the portion of such Participant’s Account attributable to participation for such Plan Year. A “payment election form” shall mean the form established from time to time by the Administrator which a Participant completes, signs and returns to the Administrator to make an election under the Plan. To the extent authorized by the Administrator, such form may be provided electronically and, in such case, need not be signed by the Participant. In the event that a Participant does not make a timely payment election, a lump sum payment election will apply for the Plan Year in which the contributions are made.
|
(c)
|
A Participant may change the form of payment (for example, from installments to lump sum) or time of commencement of distribution (for example, from termination to ten years after termination) with respect to contributions related to any specific Plan Year by completing and filing a new payment election form with the Corporation. Such election will apply to the amount contributed for such Plan Year and the earnings on such amount.
|
(i)
|
The payment election form on file with the Corporation with respect to a particular portion of their Account as of the date of the Participant’s Separation from Service shall be controlling with respect to such portion of their Account. Notwithstanding the foregoing, an election to change the form of payment with respect to a particular portion of a Participant's Account shall not be effective if they have a Separation from Service within twelve (12) months after the date on which they file the election change with the Corporation.
|
(A)
|
For example, if a Participant elected to change from receiving a portion of their Account in installments (commencing on the October 1 following termination of employment) to receiving that portion in a lump sum (on the October 1 following five (5) years after termination), but then terminated ten months after making that new election, that new election would not be effective. The Participant would receive that portion of their Account in the installment method previously in effect.
|
(ii)
|
Any change in payment method with respect to a particular portion of a Participant's Account must result in delaying the commencement of payments with respect to such portion of their Account to a date which is at least five (5) years following the previously scheduled commencement date.
|
(A)
|
For example, if a Participant was to receive a particular portion of their Account in installments commencing on the October 1 following termination, they could not receive a lump sum of that portion of their Account until at least five (5) years after the installments were to commence (that is, the October 1 following five (5) years after termination).
|
(iii)
|
For purposes of compliance with Code Section 409A, a series of installment payments is designated as a single payment on the date the first installment payment is due to be made rather than a right to a series of separate payments; therefore, a Participant who has elected (or is deemed to have elected) any option under Section 7.1(a)(i), (ii) or (iii) with respect to a particular portion of their Account may substitute any of the other options for the option originally selected with respect to such portion of their Account as long as the foregoing one-year and five year rules are satisfied.
|
(iv)
|
For purposes of the right to change the form of payment or time of commencement of distribution under Section 7.2(c) above, all amounts credited to a Participant's Account (and earnings and losses on such amounts) with respect to Plan Years commencing prior to January 1, 2019 shall be treated as made in a single Plan Year, such that a change in the Plan Year commencing prior to January 1, 2019 will apply to all Plan Years of such Participant commencing prior to January 1, 2019.
|
(d)
|
The five year delay rule does not apply with respect to a particular portion of their Account if the revised payment method applies only upon the Participant’s death. In the event that the Participant’s new payment election would not be effective under the foregoing rules, the payment election previously in effect shall be controlling.
|
7.3
|
Financial Hardship
|
7.4
|
Delayed Distribution
|
(a)
|
A payment otherwise required to be made pursuant to the provisions of this Article VII shall be delayed if the Employer reasonably anticipates that the Employer’s deduction with respect to such payment would be limited or eliminated by application of Code Section 162(m); provided, however that such payment shall be made on the earliest date on which the Employer anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m). In any event, such payment shall be made no later than the last day of the calendar year in which the Participant has a Separation from Service or, in the case of a Specified Employee, the last day of the calendar year in which occurs the six (6) month anniversary of such Separation from Service.
|
(b)
|
A payment otherwise required under this Article VII shall be delayed if the Employer reasonably determines that the making of the payment will jeopardize the ability of the Employer to continue as a going concern; provided, however, that payments shall be made on the earliest date on which the Employer reasonably determines that the making of the payment will not jeopardize the ability of the Employer to continue as a going concern.
|
(c)
|
A payment otherwise required under this Article VII shall be delayed if the Employer reasonably anticipates that the making of the payment will violate federal securities laws or other applicable law; provided, however, that payments shall nevertheless be made on the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause such violation. (The making of a payment that would cause inclusion in gross income or the applicability of any penalty provision or other provision of the Code is not treated as a violation of applicable law.)
|
(d)
|
A payment otherwise required under this Article VII shall be delayed upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
|
7.5
|
Inclusion in Income Under Section 409A
|
7.6
|
Domestic Relations Order
|
7.7
|
De Minimis Amounts
|
7.8
|
Overpayments
|
(a)
|
Any overpayments must be returned to the Plan by the recipient.
|
(b)
|
The Plan and its agents are authorized to (A) recoup overpayments plus any earnings or interest, and (B) if necessary and permissible consistent with Section 409A, offset any overpayments that are not returned against other Plan benefits to which the recipient is or becomes entitled.
|
8.1
|
Administrator
|
8.2
|
Committee
|
(a)
|
to make and enforce such rules and regulations as it may deem necessary or desirable for the efficient administration of the Plan;
|
(b)
|
to interpret the Plan, including the right to remedy possible ambiguities, inconsistencies or omissions;
|
(c)
|
to decide all questions related to participation in, and payment of amounts under, the Plan, including all factual questions related thereto; and
|
(d)
|
to maintain all necessary records for the administration of the Plan.
|
8.3
|
Authority to Act
|
8.4
|
Information from Participants
|
8.5
|
Committee Discretion
|
8.6
|
Committee Members’ Conflict of Interest
|
8.7
|
Governing Law
|
8.8
|
Expenses
|
8.9
|
Minor or Incompetent Payees
|
8.10
|
Withholding
|
8.11
|
Indemnification
|
9.1
|
Claims
|
(a)
|
the specific reasons for the denial;
|
(b)
|
specific reference to pertinent provisions of the Plan on which the denial is based;
|
(c)
|
if applicable, a description of any additional information or material necessary to perfect the claim, an explanation of why such information or material is necessary, and an explanation of the claims review procedure; and
|
(d)
|
a description of the Plan’s claims review procedure, including a statement of the Claimant’s right to bring a civil action under Section 502 of ERISA if the Claimant’s claim is denied upon review.
|
9.2
|
Review
|
9.3
|
Additional claims requirements
|
(a)
|
A Claimant must exhaust all administrative remedies under the Plan before seeking judicial review;
|
(b)
|
A Claimant must bring a legal action (including, but not limited to, a civil action under Section 502(a) of ERISA with respect to any ERISA Plan) within a reasonable period following a final decision of an adverse benefit determination (or, in the absence of such a final decision, within a reasonable period following the date the final decision should have been issued under the Plan); and
|
(c)
|
Claimant may not present in any legal action evidence not timely presented to the Plan Administrator as part of the Plan’s administrative review process.
|
11.1
|
Headings
|
11.2
|
No Contract of Employment
|
11.3
|
Rights of Participants and Beneficiaries
|
11.4
|
Nonalienation of Benefits
|
11.5
|
Tax Treatment
|
11.6
|
Other Plans and Agreements
|
(a)
|
Participation in the Plan shall not affect a Participant’s rights to participate in and receive benefits under any other plans of the Employer, nor shall it affect their rights under any other agreement entered into with the Employer, unless explicitly provided otherwise by such agreement.
|
(b)
|
Any amount credited under or paid pursuant to the Plan shall not be treated as wages, salary or any other type of compensation or otherwise taken into account in the determination of the Participant’s benefits under any other plans of the Employer, unless explicitly provided otherwise by such plan.
|
11.7
|
Number and Gender
|
11.8
|
Plan Provisions Controlling
|
11.9
|
Severability
|
11.10
|
Evidence Conclusive
|
11.11
|
Status of Plan Under ERISA
|
11.12
|
Name and Address Changes
|
11.13
|
Assignability by Corporation
|
11.14
|
Special Rule for 2005-2007
|
1.
|
Number of Shares Optioned; Grant Price
|
2.
|
Conditions of Exercise of Options During Employee’s Lifetime; Vesting of Option
|
Number of Completed Years
After Grant Date
|
Maximum Percentage of Shares For Which
Option is Exercisable
|
Less than 1
|
Zero
|
At least 1 but less than 2
|
33-1/3%
|
At least 2 but less than 3
|
66-2/3%
|
At least 3
|
100%
|
3.
|
Termination of Employment
|
a)
|
is terminated by the death of the Employee, any unexercised, unexpired Stock Options granted hereunder to the Employee shall be 100% vested and fully exercisable, in whole or in part, at any time within one year after the date of death, by the Employee’s personal representative or by the person to whom the Stock Options are transferred under the Employee’s last will and testament or the applicable laws of descent and distribution;
|
b)
|
is terminated as a result of the Disability of the Employee, any unexercised, unexpired Stock Options granted hereunder to the Employee shall become 100% vested and fully exercisable, in whole or in part, at any time within one year after the date of Disability; or
|
c)
|
is terminated as a result of the Employee’s retirement (after age 60 with five years of employment with the Corporation or an Affiliate), any unexercised, unexpired Stock Options granted hereunder to the Employee shall continue to vest as provided in Section 2 hereof and any Stock Options that are or become vested may be exercised, in whole or in part, at any time prior to the expiration date of such option.
|
4.
|
Deferral of Exercise
|
5.
|
Method of Exercising Option
|
6.
|
Method of Payment
|
7.
|
Expiration Date
|
8.
|
Withholding Taxes
|
9.
|
Method of Valuation of Stock
|
10.
|
Confidentiality, Non-Solicitation and Non-Compete
|
(i)
|
information relating to the Company’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payments terms, customer lists and other similar information;
|
(ii)
|
inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company;
|
(iii)
|
the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;
|
(iv)
|
the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and
|
(v)
|
other confidential and proprietary information or documents relating to the Company’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents which the Company reasonably regards as being confidential.
|
(vi)
|
Confidential Information does not include information which: (i) is already available to the public without wrongful act or breach by Employee; (ii) becomes available to the public through no fault of Employee; or (iii) is required to be disclosed pursuant to a court order or order of government authority, provided that Employee promptly notifies Company of such request so Company may seek a protective order
|
a)
|
Post-Employment Customer Non-Solicitation Agreement
. For one (1) year following Employee’s separation from Company, Employee will not
contact-or support others in contacting-customers of Company with whom Employee had business contact during the last two (2) years of Employee’s employment with Company, for the purpose of selling or providing products or services competitive with those offered by Company (“
Competitive Products”). “Competitive Products” shall mean products and services competitive with those products and services for which Employee was responsible during the last two (2) years of Employee’s employment with Company.
|
b)
|
Post-Employment Non-Solicitation Agreement Based Upon Customer Knowledge
. For one (1) year following Employee’s separation from Company, Employee will not
contact-or support others in contacting-customers of Company about whom Employee possesses Confidential Information or for whom Employee supervised others in serving during the last two (2) years of Employee’s employment with Company, for the purpose of selling or providing
products or services competitive with those offered by Company (“Competitive Products”). “Competitive Products” shall mean products and services competitive with those products and services for which Employee was responsible during the last two (2) years of Employee’s employment with Company.
|
c)
|
Post-Employment Non-Compete Agreement
. For one (1) year following Employee’s separation from Company, Employee will not, directly or indirectly, within the United States, provide services similar to any of those Employee provided to Company during the last two (2) years of Employee’s employment with Company to a competitor of Company or a person or entity preparing to compete with Company. If Employee’s services to Company at all times during their last two (2) years of employment were limited to particular subsidiaries or affiliates (Tricor Direct, Inc., Precision Dynamics Corporation, etc.) or divisions (WPS, IDS, PeopleID, etc.), then the term “competitor” as used in this paragraph will be limited to competitors of all such subsidiaries, affiliates, and divisions.
|
d)
|
Post-Employment Restriction on Working With Competitive Products
. For one (1) year following Employee’s separation from Company, Employee will not, work in the development, design, modification, improvement, or creation of products or services competitive with any products or services with which Employee was involved in the development, design, modification, improvement or creation for Company during the last two (2) years of Employee’s employment.
|
e)
|
Post-Employment Restriction on Advising Investors
. For one (1) year following Employee’s separation from Company, Employee will not, directly or indirectly, advise a private equity firm or other investor regarding buying, investing in, or divesting from Company or any of its competitors.
|
f)
|
Post-Employment Restriction on Soliciting Employees
. For one (1) year following Employee’s separation from Company, Employee will not solicit or encourage Key Employees of Company to provide services to a competitor of Company or to otherwise terminate their relationship with Company. “Key Employees” are employees or contractors whom Employee supervised, who supervised Employee, or with whom Employee had significant business contact during Employee’s last year of employment with Company and who work for or serve Company as an engineer, manager, executive, sales employee, professional, or director.
|
g)
|
Duty of Loyalty and Related Obligations
. Employee acknowledges and agrees that Employee owes Company a duty of loyalty while employed by Company. During Employee’s employment with Company, Employee agrees not to take action that will harm Company, such as, encouraging employees, vendors, suppliers, contractors, or customers to terminate their relationships with Company, usurping a business opportunity from Company, engaging in conduct that would injure Company’s reputation, providing services or assistance to a competitive enterprise, or otherwise competing with Company.
|
h)
|
Non-Disparagement and Social Media
. Employee agrees not to disparage Company or any of its officers, directors, or employees on social media, on any public platform, or to persons external to Company when such comments have the potential to harm Company (
i.e.
, making disparaging comments about Company to distributors, customers, suppliers, etc.).
|
i)
|
Other Business Relationships.
Employee agrees, for a one (1)-year period following Employee’s separation from Company, not to encourage or advise any vendors, suppliers, or others possessing a business relationship with Company to terminate that relationship or to otherwise modify that relationship to Company’s detriment.
|
j)
|
Employee acknowledges and agrees that compliance with this Section 10 is necessary to protect the Company, and that a breach of any of this Section 10 will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law. In the event of a breach of this Section 10, or any part thereof, the Company, and its successors and assigns, shall be entitled to injunctive relief and to such other and further relief as is proper under the circumstances. The Company shall institute and prosecute proceedings in any Court of competent jurisdiction either in law or in equity to obtain damages for any such breach of this Section 10, or to enjoin Employee from performing services in breach of Section 10(b) during the term of employment and for a period of 12 months following the termination of employment. Employee hereby agrees to submit to the jurisdiction of any Court of competent jurisdiction in any disputes that arise under this Agreement.
|
k)
|
Employee further agrees that, in the event of a breach of this Section 10, the Corporation may elect to recover all or any part of the value of any amounts previously paid or payable or any Shares (or the value of any Shares) delivered or deliverable to Employee pursuant to any Company bonus program, this Agreement, and any other Company plan or arrangement.
|
l)
|
Employee agrees that the terms of this Section 10 shall survive the termination of Employee's employment with the Company.
|
m)
|
EMPLOYEE HAS READ THIS SECTION 10 AND AGREES THAT THE CONSIDERATION PROVIDED BY THE CORPORATION IS FAIR AND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL AND PROPRIETARY INFORMATION, THE POST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIR AND REASONABLE.
|
11.
|
Clawback
|
12.
|
No Rights in Shares Until Certificates Issued
|
13.
|
Option Not Transferable
|
14.
|
Prohibition Against Pledge, Attachment, Etc.
|
15.
|
Change in Control
|
16.
|
Notices
|
17.
|
Provisions of Plan Controlling
|
18.
|
Wisconsin Contract
|
19.
|
Severability
|
20.
|
At-Will Employment.
|
21.
|
Notice of Immunity.
|
(i)
|
any underwriter temporarily holding securities pursuant to an offering of such securities, or
|
(ii)
|
any acquisition by any entity pursuant to a transaction which complies with clauses (i), (ii) and
|
1.
|
Number of Units
|
2.
|
Service Vesting Requirement
|
(a)
|
Vesting
. The Award shall be subject to the following service vesting requirement. If the Employee continues in employment through the vesting dates listed below, the Restricted Stock Units shall be vested as listed in the following table:
|
Number of Completed Years
After Grant Date
|
Maximum Percentage of Shares For Which
Option is Exercisable
|
Less than 1
|
Zero
|
At least 1 but less than 2
|
33-1/3%
|
At least 2 but less than 3
|
66-2/3%
|
At least 3
|
100%
|
(b)
|
Forfeiture of Restricted Stock Units
. Except as provided in Section 3, if the Employee terminates employment prior to the satisfaction of the vesting requirements set forth in Section 2(a) above, any unvested Restricted Stock Units shall immediately be forfeited. The period of time during which the Restricted Stock Units covered by this Award are forfeitable is referred to as the “Restricted Period.”
|
3.
|
Accelerated Vesting.
|
(a)
|
in the event of the termination of the Employee’s employment with the Corporation (and any Affiliate) prior to the end of the Restricted Period due to (i)death or Disability, the Restricted Stock Units shall become fully vested, and (ii) retirement (after age 60 with five years of employment with the Corporation or an Affiliate), the Restricted Stock Units shall continue to vest as provided in Section 2 hereof
|
(b)
|
In the event of a Change in Control (as defined in Exhibit A), all restrictions imposed on any then-outstanding Restricted Stock Units shall terminate such that any Restricted Stock Units shall become fully vested immediately prior to the Change in Control (as defined in Exhibit A). No event described in Section 13.05 of the Plan shall cause the Restricted Stock Units to become unrestricted and fully vested unless such event is a Change in Control (as defined in Exhibit A).
|
4.
|
No Dividends
|
5.
|
Settlement of Restricted Stock Units.
|
6.
|
Transfer Restrictions
|
7.
|
Withholding Taxes
|
8.
|
Death of Employee
|
9.
|
Confidentiality, Non-Solicitation and Non-Compete
|
(a)
|
During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provide Employee with Confidential Information relating to the Company, its business and clients, the disclosure or misuse of which would cause severe and irreparable harm to the Company. During Employee’s employment with Company, and for a two (2)-year period thereafter, Employee agrees not to use or disclose Company’s Confidential Information except as necessary in executing Employee’s duties for Company. Employee shall keep Confidential Information constituting a trade secret under applicable law confidential for so long as such information constitutes a trade secret (
i.e.
, protection as to trade secrets shall not necessarily expire at the end of the two (2)-year period). Employee agrees that all Confidential Information is and shall remain the sole and absolute property of the Company. Upon the termination of Employee's employment with the Company for any reason, Employee shall immediately return to the Company all documents and materials that contain or constitute Confidential Information, in any form whatsoever, including but not limited to, all copies, abstracts, electronic versions, and summaries thereof. As to any electronically stored copies of Confidential Information, Employee shall contact their supervisor or Company’s General Counsel to discuss the proper method for returning such items. Employee hereby consents and agrees that Company may access any of Employee’s personal computers and other electronic storage devices (including personal phones) and any electronic storage accounts (such as dropbox) so as to allow Company to ascertain the presence of Company’s Confidential Information and how such information has been used by Employee and to remove any such items from such devices and accounts. Employee further agrees that, without the written consent of the Chief Executive Officer of the Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval of the Board of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use, disclosure, copying or duplication of any Confidential Information of the Company, other than in connection with the authorized activities conducted in the course of Employee's employment with the Company. Employee agrees to take all reasonable steps and precautions to prevent any unauthorized disclosure, use, copying or duplication of Confidential Information. For purposes of this Agreement, Confidential Information means any and all financial, technical, commercial or other information concerning the business and affairs of the Company that is confidential and proprietary to the Company, including without limitation,
|
(i)
|
information relating to the Company’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payments terms, customer
|
(ii)
|
inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company;
|
(iii)
|
the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;
|
(iv)
|
the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and
|
(v)
|
other confidential and proprietary information or documents relating to the Company’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents which the Company reasonably regards as being confidential.
|
(vi)
|
Confidential Information does not include information which: (i) is already available to the public without wrongful act or breach by Employee; (ii) becomes available to the public through no fault of Employee; or (iii) is required to be disclosed pursuant to a court order or order of government authority, provided that Employee promptly notifies Company of such request so Company may seek a protective order
|
(b)
|
Post-Employment Customer Non-Solicitation Agreement
. For one (1) year following Employee’s separation from Company, Employee will not
contact-or support others in contacting-customers of Company with whom Employee had business contact during the last two (2) years of Employee’s employment with Company, for the purpose of selling or providing products or services competitive with those offered by Company (“
Competitive Products”). “Competitive Products” shall mean products and services competitive with those products and services for which Employee was responsible during the last two (2) years of Employee’s employment with Company.
|
(c)
|
Post-Employment Non-Solicitation Agreement Based Upon Customer Knowledge
. For one (1) year following Employee’s separation from Company, Employee will not
contact-or support others in contacting-customers of Company about whom Employee possesses Confidential Information or for whom Employee supervised others in serving during the last two (2) years of Employee’s employment with Company, for the purpose of selling or providing
products or services competitive with those offered by Company (“Competitive Products”). “Competitive Products” shall mean products and services competitive with those products and services for which Employee was responsible during the last two (2) years of Employee’s employment with Company.
|
(d)
|
Post-Employment Non-Compete Agreement
. For one (1) year following Employee’s separation from Company, Employee will not, directly or indirectly, within the United States, provide services similar to any of those Employee provided to Company during the last two (2) years of Employee’s employment with Company to a competitor of Company or a person or entity preparing to compete with Company. If Employee’s services to Company at all times during their last two (2) years of employment were limited to particular subsidiaries or affiliates (Tricor Direct, Inc., Precision Dynamics Corporation, etc.) or divisions (WPS, IDS, PeopleID, etc.), then the term “competitor” as used in this paragraph will be limited to competitors of all such subsidiaries, affiliates, and divisions.
|
(e)
|
Post-Employment Restriction on Working With Competitive Products
. For one (1) year following Employee’s separation from Company, Employee will not, work in the development, design, modification, improvement, or creation of products or services competitive with any products or services with which Employee was involved in the development, design, modification, improvement or creation for Company during the last two (2) years of Employee’s employment.
|
(f)
|
Post-Employment Restriction on Advising Investors
. For one (1) year following Employee’s separation from Company, Employee will not, directly or indirectly, advise a private equity firm or other investor regarding buying, investing in, or divesting from Company or any of its competitors.
|
(g)
|
Post-Employment Restriction on Soliciting Employees
. For one (1) year following Employee’s separation from Company, Employee will not solicit or encourage Key Employees of Company to provide services to a competitor of Company or to otherwise terminate their relationship with Company. “Key Employees” are employees or contractors whom Employee supervised, who supervised Employee, or with whom Employee had significant business contact during Employee’s last year of employment with Company and who work for or serve Company as an engineer, manager, executive, sales employee, professional, or director.
|
(h)
|
Duty of Loyalty and Related Obligations
. Employee acknowledges and agrees that Employee owes Company a duty of loyalty while employed by Company. During Employee’s employment with Company, Employee agrees not to take action that will harm Company, such as, encouraging employees, vendors, suppliers, contractors, or customers to terminate their relationships with Company, usurping a business opportunity from Company, engaging in conduct that would injure Company’s reputation, providing services or assistance to a competitive enterprise, or otherwise competing with Company.
|
(i)
|
Non-Disparagement and Social Media
. Employee agrees not to disparage Company or any of its officers, directors, or employees on social media, on any public platform, or to persons external to Company when such comments have the potential to harm Company (
i.e.
, making disparaging comments about Company to distributors, customers, suppliers, etc.).
|
(j)
|
Other Business Relationships.
Employee agrees, for a one (1)-year period following Employee’s separation from Company, not to encourage or advise any vendors, suppliers, or others possessing a business relationship with Company to terminate that relationship or to otherwise modify that relationship to Company’s detriment.
|
(k)
|
Employee acknowledges and agrees that compliance with this Section 9 is necessary to protect the Company, and that a breach of any of this Section 9 will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law. In the event of a breach of this Section 9, or any part thereof, the Company, and its successors and assigns, shall be entitled to injunctive relief and to such other and further relief as is proper under the circumstances. The Company shall institute and prosecute proceedings in any Court of competent jurisdiction either in law or in equity to obtain damages for any such breach of this Section 9, or to enjoin Employee from performing services in breach of Section 9(b) during the term of employment and for a period of 12 months following the termination of employment. Employee hereby agrees to submit to the jurisdiction of any Court of competent jurisdiction in any disputes that arise under this Agreement.
|
(l)
|
Employee further agrees that, in the event of a breach of this Section 9, the Corporation may elect to recover all or part of the value of any amounts previously paid or payable or any Shares (or the value of any Shares) delivered or deliverable to Employee pursuant to any Company bonus program, this Agreement, and any other Company plan or arrangement.
|
(m)
|
Employee agrees that the terms of this Section 9 shall survive the termination of Employee's employment with the Company.
|
(n)
|
EMPLOYEE HAS READ THIS SECTION 9 AND AGREES THAT THE CONSIDERATION PROVIDED BY THE CORPORATION IS FAIR AND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL AND PROPRIETARY INFORMATION, THE POST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIR AND REASONABLE.
|
10.
|
Clawback
|
11.
|
Provisions of Plan Controlling
|
12.
|
Wisconsin Contract
|
13.
|
Severability
|
14.
|
At-Will Employment
|
15.
|
Notice of Immunity
|
(i)
|
any underwriter temporarily holding securities pursuant to an offering of such securities, or
|
(ii)
|
any acquisition by any entity pursuant to a transaction which complies with clauses (i), (ii) and
|
|
|
State (Country)
|
|
Percentage of Voting
|
Name of Company
|
|
Of Incorporation
|
|
Securities Owned
|
Brady Corporation
|
|
Wisconsin
|
|
Parent
|
Tricor Direct, Inc.
|
|
Delaware
|
|
100%
|
Doing Business As:
|
|
|
|
|
Seton
|
|
|
|
|
Seton Name Plate Company
|
|
|
|
|
D&G Sign and Label
|
|
|
|
|
Seton Identification Products
|
|
|
|
|
Emedco
|
|
|
|
|
Champion America
|
|
|
|
|
DAWG, Inc.
|
|
|
|
|
Worldmark of Wisconsin Inc.
|
|
Delaware
|
|
100%
|
AIO Acquisition Inc.
|
|
Delaware
|
|
100%
|
Doing Business As:
|
|
|
|
|
All-In-One Products
|
|
|
|
|
Personnel Concepts
|
|
|
|
|
Personnel Concepts Limited
|
|
|
|
|
Personnel Concepts Ltd.
|
|
|
|
|
PC Limited
|
|
|
|
|
USA Printing & Mailing
|
|
|
|
|
Dual Core LLC
|
|
Wisconsin
|
|
100%
|
Doing Business As:
|
|
|
|
|
Identicard Systems Worldwide
|
|
|
|
|
Brady People ID
|
|
|
|
|
JAM Plastics
|
|
|
|
|
Promo Vision Palomino
|
|
|
|
|
Temtec
|
|
|
|
|
BIG Badges
|
|
|
|
|
Brady Holdings Mexico LLC
|
|
Delaware
|
|
100%
|
Clement Communications, Incorporated
|
|
Pennsylvania
|
|
100%
|
Brady International Co.
|
|
Wisconsin
|
|
100%
|
Brady Worldwide, Inc.
|
|
Wisconsin
|
|
100%
|
Doing Business As:
|
|
|
|
|
Brandon International
|
|
|
|
|
Sorbent Products Company
|
|
|
|
|
TISCOR
|
|
|
|
|
Electromark
|
|
|
|
|
Precision Dynamics Corporation
|
|
California
|
|
100%
|
Doing Business As:
|
|
|
|
|
Pharmex
|
|
|
|
|
TimeMed Labeling Systems
|
|
|
|
|
PDMX LLC
|
|
California
|
|
100%
|
Idem Indemnity, Inc.
|
|
Vermont
|
|
100%
|
Brady Australia Holdings Pty. Ltd.
|
|
Australia
|
|
100%
|
Brady Australia Pty. Ltd.
|
|
Australia
|
|
100%
|
Doing Business As:
|
|
|
|
|
Scafflag Australia
|
|
|
|
|
Seton Australia
|
|
|
|
|
Trafalgar First Aid
|
|
|
|
|
Visisign
|
|
|
|
|
Accidental Health & Safety Pty. Ltd.
|
|
Australia
|
|
100%
|
Carroll Australasia Pty. Ltd.
|
|
Australia
|
|
100%
|
ID Warehouse Pty. Ltd.
|
|
Australia
|
|
100%
|
PDC Belgium Holdings Sprl
|
|
Belgium
|
|
100%
|
PDC Europe Sprl
|
|
Belgium
|
|
100%
|
Transposafe Systems Belgium NV/SA
|
|
Belgium
|
|
100%
|
W.H. Brady N.V.
|
|
Belgium
|
|
100%
|
W.H.B. do Brasil Ltda.
|
|
Brazil
|
|
100%
|
BRC Financial
|
|
Canada
|
|
100%
|
W.H.B. Identification Solutions Inc.
|
|
Canada
|
|
100%
|
Doing Business As:
|
|
|
|
|
Brady
|
|
|
|
|
IDenticard
|
|
|
|
|
IDenticard Systems
|
|
|
|
|
Seton
|
|
|
|
|
Brady (Beijing) Co. Ltd.
|
|
China
|
|
100%
|
Brady (Xiamen) Co., Ltd.
|
|
China
|
|
100%
|
Brady Investment Management (Shanghai) Co., Ltd.
|
|
China
|
|
100%
|
Brady Printing (Shenzhen) Co., Ltd.
|
|
China
|
|
100%
|
Brady Technology (Dongguan) Co., Ltd.
|
|
China
|
|
100%
|
Brady Technology (Wuxi) Co. Ltd.
|
|
China
|
|
100%
|
Brady A/S
|
|
Denmark
|
|
100%
|
Braton Europe S.A.R.L.
|
|
France
|
|
100%
|
Brady Groupe S.A.S.
|
|
France
|
|
100%
|
Doing Business As:
|
|
|
|
|
Seton
|
|
|
|
|
Signals
|
|
|
|
|
BIG
|
|
|
|
|
Securimed S.A.S.
|
|
France
|
|
100%
|
Brady GmbH
|
|
Germany
|
|
100%
|
Doing Business As:
|
|
|
|
|
Seton
|
|
|
|
|
Transposafe Systems Deutschland GmbH
|
|
Germany
|
|
100%
|
Bakee Metal Manufactory Company Limited
|
|
Hong Kong
|
|
100%
|
Brady Corporation Hong Kong Limited
|
|
Hong Kong
|
|
100%
|
Brady Company India Private Limited
|
|
India
|
|
100%
|
Brady Italia, S.r.l.
|
|
Italy
|
|
100%
|
Nippon Brady K.K.
|
|
Japan
|
|
100%
|
Brady Finance Luxembourg S.à.r.l.
|
|
Luxembourg
|
|
100%
|
Brady Luxembourg S.à.r.l.
|
|
Luxembourg
|
|
100%
|
Brady S.à.r.l.
|
|
Luxembourg
|
|
100%
|
Brady Technology SDN. BHD.
|
|
Malaysia
|
|
100%
|
Brady Mexico, S. de R.L. de C.V.
|
|
Mexico
|
|
100%
|
W.H. Brady S. de R.L. de C.V.
|
|
Mexico
|
|
100%
|
Brady B.V.
|
|
Netherlands
|
|
100%
|
Brady Finance B.V.
|
|
Netherlands
|
|
100%
|
Transposafe Systems Holland B.V.
|
|
Netherlands
|
|
100%
|
Brady AS
|
|
Norway
|
|
100%
|
Pervaco AS
|
|
Norway
|
|
100%
|
Brady Philippines Direct Marketing Inc.
|
|
Philippines
|
|
100%
|
Transposafe Systems Polska Sp. Z.o.o.
|
|
Poland
|
|
100%
|
Brady ID Solutions SRL
|
|
Romania
|
|
100%
|
Brady LLC
|
|
Russia
|
|
100%
|
Brady Asia Holding Pte. Ltd.
|
|
Singapore
|
|
100%
|
Brady Asia Pacific Pte. Ltd.
|
|
Singapore
|
|
100%
|
Brady Corporation Asia Pte. Ltd.
|
|
Singapore
|
|
100%
|
Brady s.r.o.
|
|
Slovakia
|
|
100%
|
Grafo Wiremarkers Pty. Ltd.
|
|
South Africa
|
|
100%
|
Wiremarkers Africa Pty. Ltd.
|
|
South Africa
|
|
100%
|
Brady IDS Korea LLC
|
|
South Korea
|
|
100%
|
Brady Identificación S.L.U.
|
|
Spain
|
|
100%
|
Brady AB
|
|
Sweden
|
|
100%
|
Brady Sweden Holding AB
|
|
Sweden
|
|
100%
|
Brady (Thailand) Co., Ltd.
|
|
Thailand
|
|
100%
|
Brady Etiket ve Isaretleme Ticaret Ltd. Sirketi
|
|
Turkey
|
|
100%
|
Brady Middle East FZE
|
|
United Arab Emirates
|
|
100%
|
B.I. (UK) Limited
|
|
United Kingdom
|
|
100%
|
Brady Corporation Limited
|
|
United Kingdom
|
|
100%
|
Brady European Holdings Limited
|
|
United Kingdom
|
|
100%
|
Date: September 13, 2018
|
|
|
|
/s/ J. MICHAEL NAUMAN
|
|
J. Michael Nauman
|
|
President and Chief Executive Officer
|
|
Date: September 13, 2018
|
|
|
|
/s/ AARON J. PEARCE
|
|
Aaron J. Pearce
|
|
Chief Financial Officer and Treasurer
|
|
Date: September 13, 2018
|
|
|
|
/s/ J. MICHAEL NAUMAN
|
|
J. Michael Nauman
|
|
President and Chief Executive Officer
|
|
Date: September 13, 2018
|
|
|
|
/s/ AARON J. PEARCE
|
|
Aaron J. Pearce
|
|
Chief Financial Officer and Treasurer
|
|