Brady (BRC) 8-K Brady reports F’09 third-quarter sales and earnings

Exhibit 99.1

For More Information:
Investor contact: Barbara Bolens 414-438-6940
Media contact: Carole Herbstreit 414-438-6882

For Immediate Release

Brady reports F’09 third-quarter sales and earnings

MILWAUKEE (May 20, 2009)—Brady Corporation (NYSE: BRC), a world leader in identification solutions, today announced third quarter sales and earnings for its fiscal quarter ended April 30, 2009.

          Sales for the quarter were $276.7 million compared to sales of $381.9 million in the fiscal 2008 third quarter, down 27.5 percent. Organic sales were down 19.9 percent compared to the prior year, and currency exchange had a negative impact of 7.7 percent on sales results in the quarter. Regionally, organic sales declined 22.2 percent in the Americas, 22.8 percent in Europe and 10.8 percent in Asia/Pacific.

          Net income for the quarter was $18.0 million compared to $34.4 million in the same quarter last year, down 47.7 percent. Earnings per diluted Class A Common Share were $0.34 compared to $0.63 in the prior year. 2009 results include after-tax restructuring charges of $1.6 million or $0.03 per share in the quarter.

          Sales for the nine months ended April 30, 2009 were $921.5 million compared to $1.126 billion in the same period last year, down 18.2 percent. Net income for the nine-month period was $50.9 million compared to $97.4 million in the prior year, down 47.7 percent. Nine-month earnings per share were $0.96 compared to $1.77 per share in the period last year. Results include after-tax restructuring charges of $16.8 million or $0.32 per share year-to-date.

          “Business in the quarter continued to be weak across all geographies and all product lines. Our business seems to be stabilizing for now, however global economic conditions remain uncertain and our visibility is limited,” said Brady President and Chief Executive Officer Frank M. Jaehnert. “We continue to take actions to reduce cost while investing in key initiatives that will drive growth when the economy improves.”

          “Brady continues to maneuver through this challenging economy by aggressively managing costs and improving on our already strong financial position. Cash flow from operations was $55 million in the quarter and we increased our cash position to $233 million. This cash, along with our untapped bank revolver, allows us to maintain flexibility for future opportunities,” said Brady Chief Financial Officer Thomas J. Felmer. “Based on current economic conditions and currency exchange rates, our guidance remains unchanged at net income of between $65 and $75 million, including after-tax restructuring charges of approximately $20 million; and earnings per diluted share guidance of between $1.23 and $1.42. Excluding restructuring charges, we expect net income of between $85 and $95 million and earnings per diluted share of between $1.61 and $1.80.”

          A Web cast of a conference call regarding the company’s fiscal 2009 third quarter results will be available at www.investor.bradycorp.com beginning at 7:00 a.m. Central Time today.

          Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect premises, products and people. Its products help customers increase safety, security, productivity and performance and 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 about 7,000 people at operations in the Americas, Europe and Asia/Pacific.

          More information is available on the Internet atwww.bradycorp.com.

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Brady believes that certain statements in this Form 10-Q 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 Form 10-Q, 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 Form 10-Q, 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 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 April 30,									Nine Months Ended April 30,
							Percentage									Percentage
	2009			2008			Change			2009			2008			Change
Net sales	$	276,733		$	381,909			-27.5	%	$	921,499		$	1,126,167			-18.2	%
Cost of products sold		142,560			192,333			-25.9	%		480,038			573,901			-16.4	%
Gross margin		134,173			189,576			-29.2	%		441,461			552,266			-20.1	%
Operating expenses:
Research and development		7,766			10,274			-24.4	%		25,325			29,323			-13.6	%
Selling, general and administrative		94,906			126,720			-25.1	%		302,776			369,579			-18.1	%
Restructuring charge		2,229			—			—			23,276			—			—
Total operating expenses		104,901			136,994			-23.4	%		351,377			398,902			-11.9	%
Operating income		29,272			52,582			-44.3	%		90,084			153,364			-41.3	%
Other income and (expense):
Investment and other income		989			920			7.5	%		1,143			3,307			-65.4	%
Interest expense		(6,307	)		(6,962	)		-9.4	%		(18,982	)		(20,429	)		-7.1	%
Income before income taxes		23,954			46,540			-48.5	%		72,245			136,242			-47.0	%
Income taxes		5,994			12,187			-50.8	%		21,325			38,829			-45.1	%
Net income	$	17,960		$	34,353			-47.7	%	$	50,920		$	97,413			-47.7	%
Per Class A Nonvoting Common Share:
Basic net income	$	0.34		$	0.64			-46.9	%	$	0.97		$	1.79			-45.8	%
Diluted net income	$	0.34		$	0.63			-46.0	%	$	0.96		$	1.77			-45.8	%
Dividends	$	0.17		$	0.15			13.3	%	$	0.51		$	0.45			13.3	%
Per Class B Voting Common Share:
Basic net income	$	0.34		$	0.64			-46.9	%	$	0.95		$	1.78			-46.6	%
Diluted net income	$	0.34		$	0.63			-46.0	%	$	0.95		$	1.76			-46.0	%
Dividends	$	0.17		$	0.15			13.3	%	$	0.49		$	0.43			14.0	%
Weighted average common shares outstanding (in Thousands):
Basic		52,286			54,021						52,642			54,294
Diluted		52,594			54,627						52,961			54,992

BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

	(Unaudited)
	April 30, 2009			July 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	232,901		$	258,355
Accounts receivable, less allowance for losses ($8,138 and $10,059, respectively)		183,287			262,461
Inventories:
Finished products		58,417			75,665
Work-in-process		15,569			21,187
Raw materials and supplies		32,201			37,767
Total inventories		106,187			134,619
Prepaid expenses and other current assets		42,167			43,650
Total current assets		564,542			699,085
Other assets:
Goodwill		726,944			789,107
Other intangible assets, net		116,275			144,791
Deferred income taxes		26,145			25,943
Other		16,555			21,381
Total other assets		885,919			981,222
Property, plant and equipment:
Cost:
Land		6,215			6,490
Buildings and improvements		93,584			98,646
Machinery and equipment		274,091			282,232
Construction in progress		7,301			6,040
		381,191			393,408
Less accumulated depreciation		232,035			223,202
Net property, plant and equipment		149,156			170,206
Total	$	1,599,617		$	1,850,513
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	79,129		$	118,209
Wages and amounts withheld from employees		40,722			82,354
Taxes, other than income taxes		6,190			10,234
Accrued income taxes		2,533			21,523
Other current liabilities		43,413			54,810
Current maturities on long-term debt		50,000			21,431
Total current liabilities		221,987			308,561
Long-term obligations, less current maturities		428,572			457,143
Other liabilities		57,359			63,001
Total liabilities		707,918			828,705
Stockholders’ investment:
Common stock:
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 48,747,494 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		298,172			292,769
Earnings retained in the business		663,069			639,059
Treasury stock — 2,303,993 and 1,046,191 shares, respectively of Class A nonvoting common stock, at cost		(70,841	)		(33,234	)
Accumulated other comprehensive income		5,480			128,161
Other		(4,729	)		(5,495	)
Total stockholders’ investment		891,699			1,021,808
Total	$	1,599,617		$	1,850,513

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

	(Unaudited)
	Nine Months Ended
	April 30,
	2009			2008
Operating activities:
Net income	$	50,920		$	97,413
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		40,672			45,682
Non-cash portion of restructuring charges		2,229			—
Non-cash portion of stock-based compensation expense		6,281			7,797
Other		1,495			(234	)
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable		52,276			4,014
Inventories		16,793			15,012
Prepaid expenses and other assets		(3,593	)		(6,193	)
Accounts payable and accrued liabilities		(73,381	)		(6,175	)
Income taxes		(17,571	)		(6,358	)
Other liabilities		908			1,157
Net cash provided by operating activities		77,029			152,115
Investing activities:
Acquisition of businesses, net of cash acquired		—			(28,871	)
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		(16,035	)		(19,029	)
Other		2,893			1,808
Net cash used in investing activities		(11,033	)		(32,690	)
Financing activities:
Payment of dividends		(26,910	)		(24,341	)
Proceeds from issuance of common stock		1,321			9,517
Principal payments on debt		(3	)		(14	)
Purchase of treasury stock		(40,267	)		(28,531	)
Income tax benefit from the exercise of stock options and deferred compensation distribution		860			4,620
Net cash used in financing activities		(64,999	)		(38,749	)
Effect of exchange rate changes on cash		(26,451	)		3,837
Net (decrease) increase in cash and cash equivalents		(25,454	)		84,513
Cash and cash equivalents, beginning of period		258,355			142,846
Cash and cash equivalents, end of period		232,901			227,359
Supplemental disclosures:
Cash paid during the period for:
Interest, net of capitalized interest	$	21,899		$	22,450
Income taxes, net of refunds		32,995			39,505
Acquisitions:
Fair value of assets acquired, net of cash	$	—		$	18,547
Liabilities assumed		—			(6,566	)
Goodwill		—			16,890
Net cash paid for acquisitions	$	—		$	28,871

Information by regional segment for the three and nine months ended April 30, 2009 and 2008 is as follows:

													Corporate and
(in thousands)	Americas			Europe			Asia-Pacific			Subtotals			Eliminations			Total
SALES TO EXTERNAL CUSTOMERS
Three months ended:
April 30, 2009	$	125,688		$	85,172		$	65,873		$	276,733			—		$	276,733
April 30, 2008	$	166,407		$	133,422		$	82,080		$	381,909			—		$	381,909
Nine months ended:
April 30, 2009	$	409,573		$	280,589		$	231,337		$	921,499			—		$	921,499
April 30, 2008	$	497,803		$	364,951		$	263,413		$	1,126,167			—		$	1,126,167
SALES GROWTH INFORMATION
Three months ended April 30, 2009:
Base		-22.2	%		-22.8	%		-10.8	%		-19.9	%		—			-19.9	%
Currency		-2.4	%		-13.4	%		-8.9	%		-7.7	%		—			-7.7	%
Acquisitions		0.1	%		0.0	%		0.0	%		0.1	%		—			0.1	%
Total		-24.5	%		-36.2	%		-19.7	%		-27.5	%		—			-27.5	%
Nine months ended April 30, 2009:
Base		-16.4	%		-15.6	%		-8.7	%		-14.3	%		—			-14.3	%
Currency		-1.7	%		-9.4	%		-3.5	%		-4.7	%		—			-4.7	%
Acquisitions		0.4	%		1.9	%		0.0	%		0.8	%		—			0.8	%
Total		-17.7	%		-23.1	%		-12.2	%		-18.2	%		—			-18.2	%
SEGMENT PROFIT
Three months ended:
April 30, 2009	$	28,540		$	23,773		$	6,979		$	59,292		$	(1,717	)	$	57,575
April 30, 2008	$	40,169		$	36,245		$	11,055		$	87,469		$	(1,816	)	$	85,653
Percentage (decrease)		-29.0	%		-34.4	%		-36.9	%		-32.2	%		-5.5	%		-32.8	%
Nine months ended:
April 30, 2009	$	86,104		$	77,857		$	33,502		$	197,463		$	(6,631	)	$	190,832
April 30, 2008	$	116,312		$	97,212		$	43,105		$	256,629		$	(6,400	)	$	250,229
Percentage (decrease) increase		-26.0	%		-19.9	%		-22.3	%		-23.1	%		3.6	%		-23.7	%

NET INCOME RECONCILIATION(in thousands)

	Three months ended:						Nine months ended:
	April 30,			April 30,			April 30,			April 30,
	2009			2008			2009			2008
Total profit for reportable segments	$	59,292		$	87,469		$	197,463		$	256,629
Corporate and eliminations		(1,717	)		(1,816	)	$	(6,631	)		(6,400	)
Unallocated amounts:
Administrative costs		(26,074	)		(33,071	)		(77,472	)		(96,865	)
Restructuring costs		(2,229	)		—			(23,276	)		—
Investment and other income		989			920			1,143			3,307
Interest expense		(6,307	)		(6,962	)		(18,982	)		(20,429	)
Income before income taxes		23,954			46,540			72,245			136,242
Income taxes		(5,994	)		(12,187	)		(21,325	)		(38,829	)
Net income	$	17,960		$	34,353		$	50,920		$	97,413

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands)

	Fiscal 2008
	Q1		Q2		Q3		Q4		Total
EBITDA (1)
Net income	$	36,370	$	26,690	$	34,353			$	97,413
Interest expense		6,720		6,747		6,962				20,429
Income taxes		15,366		11,276		12,187				38,829
Depreciation and amortization		14,168		15,501		16,013				45,682
EBITDA (non-GAAP measure)	$	72,624	$	60,214	$	69,515	$	—	$	202,353

	Fiscal 2009
	Q1		Q2			Q3		Q4		Total
EBITDA (1)
Net income (loss)	$	37,110	$	(4,150	)	$	17,960			$	50,920
Interest expense		6,361		6,314			6,307				18,982
Income taxes		14,575		756			5,994				21,325
Depreciation and amortization		13,712		13,481			13,479				40,672
EBITDA (non-GAAP measure)	$	71,758	$	16,401		$	43,740	$	—	$	131,899

(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.