Exhibit 10.1
BRADY CORPORATION
2005 NONQUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose.
The 2005 Stock Option Plan for Non-Employee Directors (the “Plan) is intended to attract and
retain the services of experienced and knowledgeable non-employee directors of Brady Corporation
(the “Corporation”) for the benefit of the Corporation and its shareholders and to provide
additional incentive for such directors to continue to work for the best interest of the
Corporation and its shareholders.
2. Shares Subject to the Plan.
There are reserved for issuance upon the exercise of options granted under the Plan 300,000
Class A Non-Voting Common Shares $.01 par value, of the Corporation (the “Stock”). Such Stock may
be authorized and unissued Stock or previously outstanding Stock then held in the Corporation’s
treasury. If any option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the Stock subject to the unexercised portion thereof shall again be
available for the purposes of issuance upon the exercise of options granted under the Plan.
3. Administration.
The Plan shall be administered by the Board of Directors of the Corporation (the “Board”),
which may delegate any or all of its authority to a Committee of the Board. Subject to the express
provisions of the Plan, the Board shall have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, to determine the terms and provisions of the
option grants and agreements (which shall comply with and be subject to the terms and conditions of
the Plan) and to make all other determinations necessary or advisable for the administration of the
Plan. The Board’s determination of the matters referred to in this Paragraph 3 shall be conclusive.
4. Eligibility.
For purposes of the Plan, “Non-Employee Director” means a member of the Board who is not an
employee of the Corporation or a subsidiary of the Corporation. After the effective date of the
Plan, each Non-Employee Director who first becomes a Director on an annual meeting date after July
26, 2005 shall automatically be granted an option to purchase 10,000 shares of Stock on a date that
is 14 days after the annual meeting date, or if such person first becomes a Director on a date
other than the annual meeting date, the option shall automatically be granted on a date that is 14
days after first becoming a Director. On a date that is 14 days after each subsequent annual
meeting of the shareholders of the Corporation on or subsequent to the effective date of the Plan,
each Non-Employee Director who will continue to serve as an Non-Employee Director after such annual
meeting shall automatically be granted an option to purchase 6,000 shares of Stock.
Only non-statutory stock options shall be granted under the Plan.
5. Option Grants.
(a) The purchase price of the Stock under each option granted under the Plan shall be 100% of
the Fair Market Value of the Stock on the date such option is granted. For purposes of the Plan
“Fair Market Value” on any date shall mean, with respect to Stock, if the stock is then listed and
traded on a registered national securities exchange, or is quoted in the NASDAQ National Market
System, the average of the high and low sale prices recorded in composite transactions for such
date or, if such date is not a business day or if no sales of the Stock shall have been reported
with respect to such date, the next preceding business date with respect to which sales were
reported. In the absence of reported sales or if the stock is not so listed or quoted, but is
traded in the over-the-counter market, Fair Market Value shall be the average of the closing bid
and asked prices for such Stock on the relevant date.
(b) All options shall be exercisable in accordance with the following schedule:
|
|
|
|
|
|
|
Years After
|
|
|
|
Date of Grant
|
|
Percentage of Shares
|
|
Less than 1
|
|
|
0
|
%
|
|
1 but less than 2
|
|
|
33-1/3
|
%
|
|
2 but less than 3
|
|
|
66-2/3
|
%
|
|
3 or more
|
|
|
100
|
%
|
The term of each option shall be ten years from the date of grant, or such shorter period as
is prescribed in Paragraphs 5(c) and 5(d). Except as provided in Paragraphs 5(c) and 5(d), no
option may be exercised at any time unless the holder is then a director of the Corporation.
Each option may be exercised in whole or in part from time to time as specified in the
agreements provided, however, that each holder may exercise an option in whole or in part by giving
written notice of the exercise to the Corporation, specifying the number of shares to be purchased
by payment in full of the purchase price therefor. The purchase price may be paid (a) in cash, (b)
by check, (c) with the approval of the Board, or if the applicable agreement so provides, by
delivering shares of Stock (“Delivered Stock”), (d) by surrendering to the Corporation shares of
Stock otherwise receivable upon exercise of the option (a “Net Exercise”), or (e) any combination
of the foregoing. For purposes of the foregoing, Delivered Stock shall be valued at its Fair
Market Value determined as of the business day immediately preceding the date of exercise of the
option and shares of Stock used in a Net Exercise shall be valued at their Fair Market Value
determined as of the date of exercise of the option. No holder shall be under any obligation to
exercise any option hereunder.
Upon exercise, the option price is to be paid in full in cash or, at the discretion of the
Board, in Stock owned by the optionee having a Fair Market Value on the date of exercise equal to
the aggregate option price or, at the discretion of the Board, in a combination of cash and Stock.
-2-
(c) All rights under any option shall terminate on the date such Participant ceases to be a
Director of the Corporation, except that (a) if the Directorship is terminated by the death of the
Director, any unexercised, unexpired Stock Options granted hereunder to the Director 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 Director’s personal representative or by the person to whom the options are
transferred under the Director’s last will and testament or the applicable laws of descent and
distribution; (b) if the Directorship is terminated as a result of the disability of the Director
(a disability means that the Director is disabled as a result of sickness or injury, such that he
or she is unable satisfactorily to perform the Director duties, as determined by the Board of
Directors, on the basis of medical evidence satisfactory to it), any unexercised, unexpired options
granted hereunder to the Director shall become 100% vested and fully exercisable, in whole or in
part, at any time within one year after the date of disability; (c) if the Directorship is
terminated and the Director has been a member of the Board of Directors for at least three years,
any unexercised, unexpired options granted hereunder to the Director shall continue to vest as
provided in Paragraph 5(b) and any option that is or becomes vested may be exercised within the
term of such option; and (d) if the Directorship is terminated for any reason other than (a), (b)
or (c) above, any unexercised, unexpired options granted hereunder and exercisable as of the date
of such termination shall be exercisable in whole or in part at any time within 90 days after such
date of termination.
(d) In the event of (a) a merger, consolidation, or reorganization with another corporation in
which the Corporation is not the surviving corporation or a merger, consolidation or reorganization
with another corporation in which the Corporation is the surviving corporation, but the Stock
ceases to be publicly traded, (b) the adoption of any plan for the dissolution of the Corporation,
or (c) the sale or exchange of all or substantially all the assets of the Corporation for cash or
for shares of stock or other securities of another corporation, all then-unexercised options shall
become fully exercisable immediately prior to any such event.
(e) Nothing in the Plan or in any option granted pursuant to the Plan shall confer on any
individual any right to continue as a director of the Corporation.
6. Transferability and Shareholder Rights of Holders of Options.
No options granted under the Plan shall be transferable otherwise than by will or by the laws
of descent and distribution, and an option may be exercised, during the lifetime of an optionee,
only by the optionee or optionee’s guardian or legal representative. An optionee shall have none of
the rights of a shareholder of the Corporation until the option has been exercised and the Stock
subject to the option has been registered in the name of the optionee on the transfer books of the
Corporation.
7. Adjustments upon Changes in Capitalization.
Notwithstanding any other provisions of the Plan, the number and class of shares subject to
the options and the option prices of options covered thereby shall be proportionately adjusted in
the event of changes in the outstanding Stock by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations or exchanges of shares, split-ups,
split-offs, spin-offs, liquidations or other similar changes in capitalization, or any distribution
to
-3-
common shareholders other than cash dividends and, in the event of any such change in the
outstanding Stock, the aggregate number and class of shares available under the Plan and the number
of shares as to which options may be granted shall be appropriately adjusted by the Board.
8. Amendment and Termination.
Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall
terminate on, and no awards of options shall be made after, the tenth anniversary of the effective
date of the Plan; provided, however, that such termination shall have no effect on options granted
prior thereto. The Plan may be terminated, modified or amended by the shareholders of the
Corporation. The Board may also terminate the Plan or modify or amend the Plan in such respects as
it shall deem advisable in order to conform to any change in any law or regulation applicable
thereto, or in other respects which shall not change (i) the total number of shares of Stock as to
which options may be granted, (ii) the class of persons eligible to receive options under the Plan,
(iii) the manner of determining the option prices, (iv) the period during which options may be
granted or exercised or (v) the provisions relating to the administration of the Plan by the Board.
9. Withholding.
Upon the issuance of Stock as a result of the exercise of an option, the Corporation shall
have the right to retain or sell without notice sufficient Stock to cover the amount of any tax
required by any government to be withheld or otherwise deducted and paid with respect to such Stock
being issued, remitting any balance to the optionee; provided, however, that the optionee shall
have the right to provide the Corporation with the funds to enable it to pay such tax.
10. Effectiveness of the Plan.
The Plan shall become effective on the day following the date the Plan is approved by the vote
of the holders of a majority of the outstanding shares of the Corporation’s Class B Voting Common
Stock. The Board may in its discretion authorize the granting of options which shall be expressly
subject to the conditions that (i) the Stock reserved for issue under the Plan shall have been duly
listed, upon official notice of issuance, upon each stock exchange in the United States upon which
the Stock is traded and (ii) a registration statement under the Securities Act of 1933 with respect
to such shares shall have become effective.
-4-
Exhibit 99.1
For more information
:
Investor contact: Barbara Bolens 414-438-6940
Media contact: Carole Herbstreit 414-438-6882
Brady Corporation reports sales and earnings for fiscal 2009 first quarter and announces global
workforce reduction
MILWAUKEE (November 20, 2008)—Brady Corporation (NYSE:BRC) reports sales and earnings for its
fiscal 2009 first quarter ended October 31, 2008.
Sales for the quarter declined 0.5 percent to $378.3 million compared to $380.1 million in the
first quarter of fiscal 2008. Organic sales declined 2.5 percent in the quarter, acquisitions
contributed 2.1 percent to sales growth and currency exchange had a negative 0.1 percent impact on
sales growth. By segment, sales were down 7.9 percent in the Americas and 0.6 percent in Europe;
sales increased 13.2 percent in Asia/Pacific.
Net income increased 2.0 percent in the fiscal 2009 first quarter to $37.1 million compared to
$36.4 million in the same quarter last year. Earnings per diluted Class A Common share were $0.69
in the first quarter of fiscal 2009, up 4.5 percent compared to $0.66 per diluted share in the
prior year’s quarter. Earnings per share results reflect the repurchase of approximately 1.15
million shares in the quarter.
“Our proactive measures to control costs helped to mitigate the effects of a deteriorating
economy, and combined with other factors including a lower effective tax rate, resulted in slight
net income growth in the first quarter. This was despite a decline in organic sales caused by a
marked slowdown in our markets in the later part of the quarter. We expect a continuation of the
challenging global economy and are taking additional steps to reduce our costs. These steps
include a global workforce reduction of approximately 10 percent to be implemented in the second
quarter, a company-wide salary freeze, the continued reduction of discretionary spending and
contingency plans for further reductions in the event of more severe business contraction,” said
Frank M. Jaehnert, Brady’s president and chief executive officer.
“We expect restructuring charges of approximately $30 million pretax during fiscal 2009.
Savings from our cost reduction actions should be approximately $30 million in fiscal 2009,” said
Brady Chief Financial Officer Thomas J. Felmer. “Based on current exchange rates and as a result
of these unprecedented economic conditions, we expect high single-digit declines in organic sales
for the remainder of the fiscal year. We are revising our net income guidance for fiscal 2009 and
now expect net income of between $75 and $85 million after restructuring charges of $20 million after tax
(previously $140 to $145 million), and earnings per diluted share including restructuring charges
of between $1.40 and $1.59 (previously $2.54 to $2.63).
Excluding restructuring charges, we expect
net income of $95 to $105 million and earnings per diluted share of between $1.78 and $1.97.”
“Brady is a financially strong company, with a solid balance sheet and good cash flow, and we
are committed to taking all steps necessary to protect the long-term health of the company in these
challenging times. To ensure our competitiveness when the current economic crisis subsides, we
will continue to invest in growth strategies including new product development, acquisitions,
e-business and the Brady Business Performance System, which focuses on ‘lean’ thinking and
continuous improvement,” added Jaehnert.
A web cast regarding fiscal 2009 first quarter results will be available at
www.investor.bradycorp.com.
Brady Corporation is an international manufacturer and marketer of complete solutions that
identify and protect premises, products and people. Its products include high-performance labels
and signs, safety devices, printing systems and software, and precision die-cut materials. Founded
in 1914, the company has more than 500,000 customers in electronics, telecommunications,
manufacturing, electrical, construction, education, medical and a variety of other industries.
Brady is headquartered in Milwaukee and employs nearly 8,000 people at operations in the Americas,
Europe and Asia/Pacific. Brady’s fiscal 2008 sales were approximately $1.523 billion. More
information is available on the Internet at www.bradycorp.com.
Brady believes that certain statements in this news release are “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995. All statements related to
future, not past, events included in this news release, including, without limitation, statements
regarding Brady’s future financial position, business strategy, targets, projected sales, costs,
earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management
for future operations are forward-looking statements. When used in this news release, words such as
“may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or
“plan” or similar terminology are generally intended to identify forward-looking statements. These
forward-looking statements by their nature address matters that are, to different degrees,
uncertain and are subject to risks, assumptions and other factors, some of which are beyond Brady’s
control, that could cause actual results to differ materially from those expressed or implied by
such forward-looking statements. For Brady, uncertainties arise from future financial performance
of major markets Brady serves, which include, without limitation, telecommunications,
manufacturing, electrical, construction, laboratory, education, governmental, public utility,
computer, transportation; difficulties in making and integrating acquisitions; risks associated
with newly acquired businesses; Brady’s ability to retain significant contracts and customers;
future competition; Brady’s ability to develop and successfully market new products; changes in the
supply of, or price for, parts and components; increased price pressure from suppliers and
customers; interruptions to sources of supply; environmental, health and safety compliance costs
and liabilities; Brady’s ability to realize cost savings from operating initiatives; Brady’s
ability to attract and retain key talent; difficulties associated with exports; risks associated
with international operations; fluctuations in currency rates versus the US dollar; technology
changes; potential write-offs of Brady’s substantial intangible assets; risks associated with
obtaining governmental approvals and maintaining regulatory compliance for new and existing
products; business interruptions due to implementing business systems; and numerous other matters
of national, regional and global scale, including those of a political, economic, business,
competitive and regulatory nature contained from time to time in Brady’s U.S. Securities and
Exchange Commission filings, including, but not limited to, those factors listed in the “Risk
Factors” section located in Item 1A of Part I of Brady’s Form 10-K for the year ended July 31,
2008. These uncertainties may cause
Brady’s actual future results to be materially different than those expressed in its
forward-looking statements. Brady does not undertake to update its forward-looking statements.
###
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended October 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Percentage Change
|
|
|
Net sales
|
|
$
|
378,317
|
|
|
$
|
380,134
|
|
|
|
-0.5
|
%
|
|
Cost of products sold
|
|
|
197,171
|
|
|
|
192,467
|
|
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
181,146
|
|
|
|
187,667
|
|
|
|
-3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
9,056
|
|
|
|
8,978
|
|
|
|
0.9
|
%
|
|
Selling, general and administrative
|
|
|
115,896
|
|
|
|
120,351
|
|
|
|
-3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
124,952
|
|
|
|
129,329
|
|
|
|
-3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
56,194
|
|
|
|
58,338
|
|
|
|
-3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income
|
|
|
1,852
|
|
|
|
118
|
|
|
|
1469.5
|
%
|
|
Interest expense
|
|
|
(6,361
|
)
|
|
|
(6,720
|
)
|
|
|
-5.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
51,685
|
|
|
|
51,736
|
|
|
|
-0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
14,575
|
|
|
|
15,366
|
|
|
|
-5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
37,110
|
|
|
$
|
36,370
|
|
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Class A Nonvoting Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
|
|
$
|
0.70
|
|
|
$
|
0.67
|
|
|
|
4.5
|
%
|
|
Diluted net income
|
|
$
|
0.69
|
|
|
$
|
0.66
|
|
|
|
4.5
|
%
|
|
Dividends
|
|
$
|
0.17
|
|
|
$
|
0.15
|
|
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Class B Voting Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
|
|
$
|
0.68
|
|
|
$
|
0.65
|
|
|
|
4.6
|
%
|
|
Diluted net income
|
|
$
|
0.67
|
|
|
$
|
0.64
|
|
|
|
4.7
|
%
|
|
Dividends
|
|
$
|
0.15
|
|
|
$
|
0.13
|
|
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,291
|
|
|
|
54,350
|
|
|
|
|
|
|
Diluted
|
|
|
53,938
|
|
|
|
55,121
|
|
|
|
|
|
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
October 31, 2008
|
|
|
July 31, 2008
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
178,792
|
|
|
$
|
258,355
|
|
|
Accounts receivable, less allowance for losses ($9,066 and
$10,059, respectively)
|
|
|
243,219
|
|
|
|
262,461
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
|
Finished products
|
|
|
68,267
|
|
|
|
75,665
|
|
|
Work-in-process
|
|
|
21,586
|
|
|
|
21,187
|
|
|
Raw materials and supplies
|
|
|
40,852
|
|
|
|
37,767
|
|
|
|
|
|
|
|
|
|
|
Total inventories
|
|
|
130,705
|
|
|
|
134,619
|
|
|
Prepaid expenses and other current assets
|
|
|
46,669
|
|
|
|
43,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
599,385
|
|
|
|
699,085
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
724,072
|
|
|
|
789,107
|
|
|
Other intangible assets, net
|
|
|
124,593
|
|
|
|
144,791
|
|
|
Deferred income taxes
|
|
|
25,576
|
|
|
|
25,943
|
|
|
Other
|
|
|
17,820
|
|
|
|
21,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
892,061
|
|
|
|
981,222
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
6,169
|
|
|
|
6,490
|
|
|
Buildings and improvements
|
|
|
92,509
|
|
|
|
98,646
|
|
|
Machinery and equipment
|
|
|
265,097
|
|
|
|
282,232
|
|
|
Construction in progress
|
|
|
9,453
|
|
|
|
6,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
373,228
|
|
|
|
393,408
|
|
|
Less accumulated depreciation
|
|
|
216,891
|
|
|
|
223,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
|
156,337
|
|
|
|
170,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,647,783
|
|
|
$
|
1,850,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
109,083
|
|
|
$
|
118,209
|
|
|
Wages and amounts withheld from employees
|
|
|
52,396
|
|
|
|
82,354
|
|
|
Taxes, other than income taxes
|
|
|
8,033
|
|
|
|
10,234
|
|
|
Accrued income taxes
|
|
|
13,764
|
|
|
|
21,523
|
|
|
Other current liabilities
|
|
|
49,365
|
|
|
|
54,810
|
|
|
Short-term borrowings and current maturities on long-term debt
|
|
|
21,430
|
|
|
|
21,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
254,071
|
|
|
|
308,561
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term obligations, less current maturities
|
|
|
457,143
|
|
|
|
457,143
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
56,298
|
|
|
|
63,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
767,512
|
|
|
|
828,705
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ investment:
|
|
|
|
|
|
|
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
Class A Nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively
and outstanding 48,926,466 and 50,005,296 shares, respectively
|
|
|
513
|
|
|
|
513
|
|
|
Class B Voting common stock — Issued and outstanding, 3,538,628 shares
|
|
|
35
|
|
|
|
35
|
|
|
Additional paid-in capital
|
|
|
294,181
|
|
|
|
292,769
|
|
|
Earnings retained in the business
|
|
|
667,108
|
|
|
|
639,059
|
|
|
Treasury stock — 2,125,021 and 1,046,191 shares, respectively
of Class A nonvoting common stock, at cost
|
|
|
(67,539
|
)
|
|
|
(33,234
|
)
|
|
Accumulated other comprehensive income
|
|
|
(8,839
|
)
|
|
|
128,161
|
|
|
Other
|
|
|
(5,188
|
)
|
|
|
(5,495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ investment
|
|
|
880,271
|
|
|
|
1,021,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,647,783
|
|
|
$
|
1,850,513
|
|
|
|
|
|
|
|
|
|
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended
|
|
|
|
|
October 31
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
37,110
|
|
|
$
|
36,370
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
13,712
|
|
|
|
14,168
|
|
|
Non-cash portion of stock-based compensation expense
|
|
|
2,092
|
|
|
|
3,257
|
|
|
Other
|
|
|
(198
|
)
|
|
|
46
|
|
|
Changes in operating assets and liabilities (net of effects of business acquisitions):
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(12,571
|
)
|
|
|
(10,880
|
)
|
|
Inventories
|
|
|
(10,360
|
)
|
|
|
1,337
|
|
|
Prepaid expenses and other assets
|
|
|
(8,147
|
)
|
|
|
(4,417
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
(21,679
|
)
|
|
|
(13,278
|
)
|
|
Income taxes
|
|
|
(3,513
|
)
|
|
|
6,086
|
|
|
Other liabilities
|
|
|
(1,167
|
)
|
|
|
1,201
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(4,721
|
)
|
|
|
33,890
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
Payments of contingent consideration
|
|
|
—
|
|
|
|
(1,200
|
)
|
|
Purchases of short-term investments
|
|
|
—
|
|
|
|
(5,150
|
)
|
|
Sales of short-term investments
|
|
|
—
|
|
|
|
7,860
|
|
|
Purchases of property, plant and equipment
|
|
|
(6,429
|
)
|
|
|
(7,395
|
)
|
|
Other
|
|
|
1,300
|
|
|
|
(1,375
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(5,129
|
)
|
|
|
(7,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
Payment of dividends
|
|
|
(9,061
|
)
|
|
|
(8,100
|
)
|
|
Proceeds from issuance of common stock
|
|
|
1,162
|
|
|
|
4,134
|
|
|
Principal payments on debt
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
Purchase of treasury stock
|
|
|
(36,508
|
)
|
|
|
—
|
|
|
Income tax benefit from the exercise of stock options and deferred
compensation distributions
|
|
|
667
|
|
|
|
2,712
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) financing activities
|
|
|
(43,741
|
)
|
|
|
(1,259
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
(25,972
|
)
|
|
|
2,382
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(79,563
|
)
|
|
|
27,753
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
258,355
|
|
|
|
142,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
178,792
|
|
|
|
170,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
Interest, net of capitalized interest
|
|
$
|
9,298
|
|
|
$
|
9,298
|
|
|
Income taxes, net of refunds
|
|
|
15,605
|
|
|
|
1,782
|
|
Information by regional segment for the three months ended October 31, 2008 and 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
(in thousands)
|
|
Americas
|
|
Europe
|
|
Asia-Pacific
|
|
Subtotals
|
|
Eliminations
|
|
Total
|
|
SALES TO EXTERNAL CUSTOMERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2008
|
|
$
|
160,916
|
|
|
$
|
108,215
|
|
|
$
|
109,186
|
|
|
$
|
378,317
|
|
|
|
—
|
|
|
$
|
378,317
|
|
|
October 31, 2007
|
|
|
174,775
|
|
|
|
108,914
|
|
|
|
96,445
|
|
|
|
380,134
|
|
|
|
—
|
|
|
|
380,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES GROWTH INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended October 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
-8.2
|
%
|
|
|
-5.3
|
%
|
|
|
11.0
|
%
|
|
|
-2.5
|
%
|
|
|
—
|
|
|
|
-2.5
|
%
|
|
Currency
|
|
|
-0.3
|
%
|
|
|
-1.6
|
%
|
|
|
2.2
|
%
|
|
|
-0.1
|
%
|
|
|
—
|
|
|
|
-0.1
|
%
|
|
Acquisitions
|
|
|
0.6
|
%
|
|
|
6.3
|
%
|
|
|
0.0
|
%
|
|
|
2.1
|
%
|
|
|
—
|
|
|
|
2.1
|
%
|
|
Total
|
|
|
-7.9
|
%
|
|
|
-0.6
|
%
|
|
|
13.2
|
%
|
|
|
-0.5
|
%
|
|
|
—
|
|
|
|
-0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2008
|
|
$
|
35,524
|
|
|
$
|
31,138
|
|
|
$
|
22,401
|
|
|
$
|
89,063
|
|
|
|
($2,307
|
)
|
|
$
|
86,756
|
|
|
October 31, 2007
|
|
|
44,107
|
|
|
$
|
29,900
|
|
|
$
|
19,390
|
|
|
|
93,397
|
|
|
|
($2,237
|
)
|
|
|
91,160
|
|
|
Percentage increase (decrease)
|
|
|
-19.5
|
%
|
|
|
4.1
|
%
|
|
|
15.5
|
%
|
|
|
-4.6
|
%
|
|
|
3.1
|
%
|
|
|
-4.8
|
%
|
NET INCOME RECONCILIATION
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended:
|
|
|
|
|
October 31,
|
|
|
October 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Total profit for reportable segments
|
|
$
|
89,063
|
|
|
$
|
93,397
|
|
|
Corporate and eliminations
|
|
|
(2,307
|
)
|
|
|
(2,237
|
)
|
|
Unallocated amounts:
|
|
|
|
|
|
|
|
|
|
Administrative costs
|
|
|
(30,562
|
)
|
|
|
(32,822
|
)
|
|
Investment and other income
|
|
|
1,852
|
|
|
|
118
|
|
|
Interest expense
|
|
|
(6,361
|
)
|
|
|
(6,720
|
)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
51,685
|
|
|
|
51,736
|
|
|
Income taxes
|
|
|
(14,575
|
)
|
|
|
(15,366
|
)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
37,110
|
|
|
$
|
36,370
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2008
|
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Total
|
|
|
EBITDA (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
36,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36,370
|
|
|
Interest expense
|
|
|
6,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,720
|
|
|
Income taxes
|
|
|
15,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,366
|
|
|
Depreciation and amortization
|
|
|
14,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (non-GAAP measure)
|
|
$
|
72,624
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
72,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Total
|
|
|
EBITDA (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
37,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,110
|
|
|
Interest expense
|
|
|
6,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,361
|
|
|
Income taxes
|
|
|
14,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,575
|
|
|
Depreciation and amortization
|
|
|
13,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (non-GAAP measure)
|
|
$
|
71,758
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
71,758
|
|
|
|
|
|
|
(1)
|
|
Brady is presenting EBITDA because it is used by many of our investors and lenders, and is
presented as a convenience to them. EBITDA represents net income before interest expense, income
taxes and depreciation and amortization. EBITDA is not a calculation based on generally accepted
accounting principles (GAAP). The amounts included in the EBITDA calculation, however, are derived
from amounts included in the Condensed Consolidated Statements of Income data. EBITDA should not
be considered as an alternative to net income or operating income as an indicator of the company’s
operating performance, or as an alternative to operating cash flows as a measure of liquidity. The
EBITDA measure presented may not always be comparable to similarly titled measures reported by
other companies due to differences in the components of the calculation.
|