Brady (BRC) 8-K Brady Corporation reports earnings for fiscal 2010 fourth quarter and year end

EXHIBIT 99.1

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

Brady Corporation reports earnings for fiscal 2010 fourth quarter and year end

MILWAUKEE (September 10, 2010)—Brady Corporation (NYSE:BRC) today reported results for its fiscal 2010 fourth quarter and its full fiscal year ended July 31, 2010.

Three Months Ended July 31, 2010

Sales in the fiscal 2010 fourth quarter increased 12.4 percent to $322.9 million compared to $287.2 million in the fourth quarter of fiscal 2009. Organic sales increased 10.7 percent with positive organic growth in all regions. Acquisitions added 2.7 percent to sales and foreign currency translation reduced sales by 1.0 percent in the fourth quarter ended July 31, 2010. Regionally, organic sales were up 14.7 percent in the Americas, 9.6 percent in Europe, and 5.2 percent in the Asia-Pacific region.

Net income for the quarter increased 12.4 percent to $21.6 million compared to $19.2 million in the same quarter last year. Excluding restructuring charges, net income in the quarter was up 15.9 percent to $26.2 million compared to $22.6 million in the fiscal 2009 fourth quarter.

Earnings per diluted Class A Common Share were $0.41 in the 2010 fourth quarter compared to $0.36 in the prior year quarter. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 14.0 percent to $0.49 in the fourth quarter compared to $0.43 in the prior year fourth quarter.

Year Ended July 31, 2010

Sales for the year ended July 31, 2010 were $1.259 billion compared to $1.209 billion in fiscal 2009, up 4.2 percent. Organic sales were up 0.2 percent, acquisitions added 1.3 percent to sales, and the impact of foreign currency translation added 2.7 percent.

Net income for the year ended July 31, 2010 increased 16.9 percent to $82.0 million compared to $70.1 million for the year ended July 31, 2009. Excluding after-tax restructuring charges, net income for the year ended July 31, 2010 was up 3.4 percent to $93.4 million compared to $90.3 million in fiscal 2009.

Earnings per diluted Class A Common Share were $1.55 for the year ended July 31, 2010 compared to $1.32 for the fiscal year ended July 31, 2009. Excluding after-tax restructuring charges, earnings per diluted Class A Common Share increased 2.9 percent to $1.76 for the year ended July 31, 2010 compared to $1.71 during the year ended July 31, 2009.

Commentary and Fiscal 2011 Guidance

“Brady had a strong fourth quarter and finished the year on a positive note. In particular, we were pleased to see double-digit organic growth in the fourth quarter and positive organic growth in all our regions for the second straight quarter, as well as significant improvement in our net income in the fourth quarter. These strong financial results were due to our continued focus on cost controls, as well as execution of our growth strategies including launching several new products. We also returned to acquisition activity this year after taking a pause last year due to the global economic crisis,” said Brady President and CEO Frank M. Jaehnert. “I’m also happy to report that yesterday our Board of Directors announced that we will increase our dividend to shareholders for the 25^th straight year.”

“We maintain a strong financial position with significant liquidity to fund future growth. We generated free cash flow of $138.9 million during the year ended July 31, 2010, which equates to 169 percent of net income, and we finished the year with cash and cash equivalents of $314.8 million, an increase of $126.6 million compared to July 31, 2009,” said Brady Chief Financial Officer, Thomas J. Felmer. “As we look to fiscal 2011, we believe that the overall global economy will continue to improve, albeit slowly. As a result, we anticipate mid-single-digit organic revenue growth in fiscal 2011, with more significant profitability improvement in the second half of the year as our continued investment in profitability improvement initiatives begin to yield benefits. For fiscal 2011 we expect earnings per diluted Class A Common Share of between $1.95 and $2.15. This guidance is based on current exchange rates, a full-year tax rate of 26 percent, capital expenditures of between $25 and $30 million, depreciation and amortization of $50 million, and diluted weighted average common shares outstanding consistent with that of July 31, 2010. Our guidance excludes additional expected pretax restructuring charges of approximately $12 to $15 million or $0.17 to $0.21 per diluted share.”

A Webcast regarding fiscal 2010 results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Daylight Time today.

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 1,000,000 customers in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee and employs approximately 6,600 people at operations in the Americas, Europe and Asia/Pacific. More information is available on the Internet at www.bradycorp.com.

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Brady believes that certain statements in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements related to future, not past, events included in this news release, including, without limitation, statements regarding Brady’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations are forward-looking statements. When used in this news release, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from the length or severity of the current worldwide economic downturn or timing or strength of a subsequent recovery; future financial performance of major markets Brady serves, which include, without limitation, telecommunications, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, transportation; difficulties in making and integrating acquisitions; risks associated with newly acquired businesses; Brady’s ability to 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; Brady’s ability to maintain its debt covenants; unforeseen tax consequences; 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 Annual Report on Form 10-K for the period ended July 31, 2009, as updated by subsequently filed reports. These uncertainties may cause Brady’s actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements.

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands)

	(Unaudited)
	Three Months Ended July 31,									Twelve Months Ended July 31,
							Percentage									Percentage
	2010			2009			Change			2010			2009			Change
Net sales	$	322,894		$	287,203			12.4	%	$	1,259,096		$	1,208,702			4.2	%
Cost of products sold		164,155			151,081			8.7	%		635,799			631,119			0.7	%
Gross margin		158,739			136,122			16.6	%		623,297			577,583			7.9	%
Operating expenses:
Research and development		11,671			8,856			31.8	%		42,621			34,181			24.7	%
Selling, general and administrative		107,268			94,404			13.6	%		435,906			397,180			9.8	%
Restructuring charges		5,717			2,573			122.2	%		15,314			25,849			-40.8	%
Total operating expenses		124,656			105,833			17.8	%		493,841			457,210			8.0	%
Operating income		34,083			30,289			12.5	%		129,456			120,373			7.5	%
Other income and (expense):
Investment and other income		(105	)		657			-116.0	%		1,168			1,800			-35.1	%
Interest expense		(5,750	)		(5,919	)		-2.9	%		(21,222	)		(24,901	)		-14.8	%
Income before income taxes		28,228			25,027			12.8	%		109,402			97,272			12.5	%
Income taxes		6,636			5,825			13.9	%		27,446			27,150			1.1	%
Net income	$	21,592		$	19,202			12.4	%	$	81,956		$	70,122			16.9	%
Per Class A Nonvoting Common Share:
Basic net income	$	0.41		$	0.37			10.8	%	$	1.56		$	1.33			17.3	%
Diluted net income	$	0.41		$	0.36			13.9	%	$	1.55		$	1.32			17.4	%
Dividends	$	0.175		$	0.17			2.9	%	$	0.70		$	0.68			2.9	%
Per Class B Voting Common Share:
Basic net income	$	0.41		$	0.37			10.8	%	$	1.55		$	1.32			17.4	%
Diluted net income	$	0.41		$	0.36			13.9	%	$	1.53		$	1.31			16.8	%
Dividends	$	0.175		$	0.17			2.9	%	$	0.68		$	0.66			3.5	%
Weighted average common shares outstanding (in Thousands):
Basic		52,476			52,308						52,402			52,559
Diluted		52,872			52,583						52,946			52,866

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

	(Unaudited)
	July 31, 2010			July 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	314,840		$	188,156
Accounts receivable — net		221,621			191,189
Inventories:
Finished products		52,906			53,244
Work-in-process		13,146			13,159
Raw materials and supplies		28,620			27,405
Total inventories		94,672			93,808
Prepaid expenses and other current assets		37,839			36,274
Total current assets		668,972			509,427
Other assets:
Goodwill		768,600			751,173
Other intangible assets, net		103,546			115,754
Deferred income taxes		39,103			36,374
Other		20,808			18,551
Total other assets		932,057			921,852
Property, plant and equipment:
Cost:
Land		6,265			6,335
Buildings and improvements		101,138			96,968
Machinery and equipment		289,727			283,301
Construction in progress		9,873			7,869
		407,003			394,473
Less accumulated depreciation		261,501			242,485
Net property, plant and equipment		145,502			151,988
Total assets	$	1,746,531		$	1,583,267
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	96,702		$	83,793
Wages and amounts withheld from employees		67,285			36,313
Taxes, other than income taxes		7,537			6,262
Accrued income taxes		10,138			5,964
Other current liabilities		50,862			45,247
Current maturities on long-term debt		61,264			44,893
Total current liabilities		293,788			222,472
Long-term obligations, less current maturities		382,940			346,457
Other liabilities		64,776			63,246
Total liabilities		741,504			632,175
Stockholders’ investment:
Common stock:
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 48,875,716 and 48,780,560 shares, respectively		513			513
Class B voting common stock — Issued and outstanding, 3,538,628 shares		35			35
Additional paid-in capital		304,205			298,466
Income retained in the business		718,512			673,342
Treasury stock — 2,175,771 and 2,270,927 shares, respectively of Class A nonvoting common stock, at cost		(66,314	)		(69,823	)
Accumulated other comprehensive income		50,905			53,051
Other		(2,829	)		(4,492	)
Total stockholders’ investment		1,005,027			951,092
Total liabilities and stockholders’ investment	$	1,746,531		$	1,583,267

BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

	(Unaudited)
	Twelve Months Ended July 31,
	2010			2009			2008
Operating activities:
Net income	$	81,956		$	70,122		$	132,188
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		53,022			54,851			60,587
Deferred income taxes		(6,834	)		(8,640	)		(1,501	)
Loss (gain) on disposal of property, plant & equipment		20			383			1,672
Non-cash portion of stock-based compensation expense		9,721			7,731			10,228
Non-cash portion of restructuring charges		2,260			2,469			—
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable		(29,479	)		53,389			(3,704	)
Inventories		426			34,749			16,224
Prepaid expenses and other assets		(3,502	)		(2,423	)		(629	)
Accounts payable and accrued liabilities		51,268			(78,684	)		18,641
Income taxes		5,258			(9,673	)		(8,492	)
Other liabilities		1,122			2,371			340
Net cash provided by operating activities		165,238			126,645			225,554
Investing activities:
Acquisition of businesses, net of cash acquired		(30,431	)		—			(29,346	)
Purchase price adjustment		—			3,514			—
Payments of contingent consideration		—			(1,405	)		(5,798	)
Purchases of short-term investments		—			—			(10,350	)
Sales of short-term investments		—			—			29,550
Purchases of property, plant and equipment		(26,296	)		(24,027	)		(26,407	)
Proceeds from net investment hedge		6,248			—			—
Other		1,798			2,874			3,143
Net cash used in investing activities		(48,681	)		(19,044	)		(39,208	)
Financing activities:
Payment of dividends		(36,786	)		(35,839	)		(32,464	)
Proceeds from issuance of common stock		3,717			1,683			14,500
Principal payments on debt		(44,893	)		(87,224	)		(39,443	)
Proceeds from issuance of debt		94,915			—			18,000
Purchase of treasury stock		(2,537	)		(40,267	)		(42,175	)
Income tax benefit from the exercise of stock options & deferred comp		1,318			1,336			4,638
Other		(459	)		—			—
Net provided by (used in) financing activities		15,275			(160,311	)		(76,944	)
Effect of exchange rate changes on cash		(5,148	)		(17,489	)		6,107
Net increase (decrease) in cash and cash equivalents		126,684			(70,199	)		115,509
Cash and cash equivalents, beginning of year		188,156			258,355			142,846
Cash and cash equivalents, end of year	$	314,840		$	188,156		$	258,355
Supplemental disclosures:
Cash paid during the period for:
Interest, net of capitalized interest	$	21,626		$	21,899		$	26,308
Income taxes, net of refunds		30,870			32,995			51,834
Acquisitions:
Fair value of assets acquired, net of cash	$	15,366		$	—		$	21,508
Liabilities assumed		(5,201	)		—			(9,038	)
Goodwill		20,266			—			16,876
Net cash paid for acquisitions	$	30,431		$	—		$	29,346

Information by regional segment for the three and twelve months ended July 31, 2010 and 2009 is as follows:

													Corporate and
(in thousands)	Americas			Europe			Asia-Pacific			Total Region			Eliminations			Total Company
SALES TO EXTERNAL CUSTOMERS
Three months ended:
July 31, 2010	$	148,929		$	91,020		$	82,945		$	322,894			—		$	322,894
July 31, 2009		124,867			86,567			75,769			287,203			—			287,203
July 31, 2008		169,303			131,765			95,781			396,849			—			396,849
Twelve months ended:
July 31, 2010	$	551,185		$	380,121		$	327,790		$	1,259,096			—		$	1,259,096
July 31, 2009		534,440			367,156			307,106			1,208,702			—			1,208,702
July 31, 2008		667,106			496,715			359,195			1,523,016			—			1,523,016
SALES GROWTH INFORMATION
Three months ended July 31, 2010:
Base		14.7	%		9.6	%		5.2	%		10.7	%		—			10.7	%
Currency		1.4	%		-9.0	%		4.2	%		-1.0	%		—			-1.0	%
Acquisitions		3.2	%		4.5	%		0.0	%		2.7	%		—			2.7	%
Total		19.3	%		5.1	%		9.4	%		12.4	%		—			12.4	%
Twelve months ended July 31, 2010:
Base		0.1	%		-0.3	%		0.8	%		0.2	%		—			0.2	%
Currency		1.6	%		1.4	%		5.9	%		2.7	%		—			2.7	%
Acquisitions		1.4	%		2.4	%		0.0	%		1.3	%		—			1.3	%
Total		3.1	%		3.5	%		6.7	%		4.2	%		—			4.2	%
SEGMENT PROFIT (LOSS)
Three months ended:
July 31, 2010	$	34,964		$	25,035		$	13,516		$	73,515		$	(3,970	)		69,545
July 31, 2009		28,300			22,018			9,072			59,390			(1,320	)		58,070
Percentage increase (decrease)		23.5	%		13.7	%		49.0	%		23.8	%		200.8	%		19.8	%
Twelve months ended:
July 31, 2010	$	125,169		$	103,316		$	52,105		$	280,590		$	(14,131	)	$	266,459
July 31, 2009		114,404			99,875			42,575			256,854			(7,952	)		248,902
Percentage increase (decrease)		9.4	%		3.4	%		22.4	%		9.2	%		77.7	%		7.1	%

NET INCOME RECONCILIATION(in thousands)

	Three months ended:						Twelve months ended:
	July 31, 2010			July 31, 2009			July 31, 2010			July 31, 2009
Total profit for reportable segments	$	73,515		$	59,390		$	280,590		$	256,854
Corporate and eliminations		(3,970	)	$	(1,320	)	$	(14,131	)	$	(7,952	)
Unallocated amounts:
Administrative costs		(29,745	)		(25,208	)		(121,689	)		(102,680	)
Restructuring costs		(5,717	)		(2,573	)		(15,314	)		(25,849	)
Investment and other income		(105	)		657			1,168			1,800
Interest expense		(5,750	)		(5,919	)		(21,222	)		(24,901	)
Income before income taxes		28,228			25,027		$	109,402			97,272
Income taxes (2009 Q4 Restructuring — $1.6 million)		(6,636	)		(5,825	)		(27,446	)		(27,150	)
Net income	$	21,592		$	19,202		$	81,956		$	70,122

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(in thousands)

	Fiscal 2010
	Q1		Q2		Q3		Q4		Total
EBITDA (1)
Net income	$	21,668	$	15,001	$	23,695	$	21,592	$	81,956
Interest expense		5,162		5,163		5,147		5,750		21,222
Income taxes		8,775		4,842		7,193		6,636		27,446
Depreciation and amortization		13,817		13,549		12,910		12,746		53,022
EBITDA (non-GAAP measure)	$	49,422	$	38,555	$	48,945	$	46,724	$	183,646

	Fiscal 2009
	Q1		Q2			Q3		Q4		Total
EBITDA (1)
Net income	$	37,110	$	(4,150	)	$	17,960	$	19,202	$	70,122
Interest expense		6,361		6,314			6,307		5,919		24,901
Income taxes		14,575		756			5,994		5,825		27,150
Depreciation and amortization		13,712		13,481			13,479		14,179		54,851
EBITDA (non-GAAP measure)	$	71,758	$	16,401		$	43,740	$	45,125	$	177,024

(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.