SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended January 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 0-12730
W. H. BRADY CO.
(Exact name of registrant as specified in its charter)
Wisconsin
(State of other jurisdiction
of incorporation or
organization)
39-0178960
(I.R.S. Employer
Identification No.)
727 West Glendale Avenue, Milwaukee, Wisconsin 53201
(Address of principal executive offices)
(Zip Code)
(414) 332-8100
(Registrant's telephone number, including area code)
Indicated by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
As of March 1, 1994, there were outstanding 5,460,162 shares
of Class A Common Stock and 1,769,314 shares of Class B Common
Stock. The Class B Common Stock, all of which is held by an
affiliate of the Registrant, is the only voting stock.
FORM 10-Q
W. H. BRADY CO.
INDEX
PART I. Financial Information
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance
Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Consolidated Statements
of Earnings and Earnings Retained in Business. . . . . . . . . 4
Unaudited Consolidated Statements
of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . 7
PART II. Other Information. . . . . . . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
Jan 31 July 31
1994 1993
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 51,797 $ 42,366
Accounts Receivable, Less Allowance for
Losses ($1,398 and $1,247, Respectively) 31,193 30,522
Inventories 22,135 22,733
Prepaid Expenses & Other Current Assets 10,788 10,025
Total Current Assets 115,913 105,646
Other Assets 7,008 6,893
Property Plant and Equipment:
Cost
Land 4,668 4,664
Buildings and Improvements 37,814 37,473
Machinery and Equipment 68,273 68,802
Construction in Progress 3,081 3,807
113,836 114,746
Less Accumulated Depreciation 48,495 47,384
Net Property, Plant & Equipment 65,341 67,362
$188,262 $179,901
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts Payable $ 10,302 $ 8,577
Wages & Amounts Withheld From Employees 10,352 8,374
Income Taxes 2,759 2,392
Other Current Liabilities 6,471 7,882
Current Maturities on Long-Term Debt 381 478
Total Current Liabilities 30,265 27,703
Long Term Debt, Less Current Maturities 1,983 1,978
Other Liabilities 21,716 22,152
Stockholders' Investment:
Preferred Stock 2,855 2,855
Class A Nonvoting Common Stock-Issued
and Outstanding 5,460,162 and 5,437,162
Shares, Respectively 54 54
Class B Voting Common Stock-Issued and
Outstanding 1,769,314 Shares 18 18
Additional Paid in Capital 6,149 5,571
Earnings Retained in the Business 124,361 118,730
Cumulative Translation Adjustments 861 840
Total Stockholders' Investment 134,298 128,068
$188,262 $179,901
See Notes to Condensed Consolidated Financial Statements.
/TABLE
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND
EARNINGS RETAINED IN BUSINESS
(Dollars in Thousands except per share amounts)
(UNAUDITED)
Three Months Ended Jan 31 Six Months Ended Jan 31
1994 1993 1994 1993
Net Sales $ 64,109 $ 61,581 $ 123,744 $119,271
Operating Expenses:
Cost of Products Sold 29,992 29,689 58,243 57,786
Research & Development 2,664 3,435 5,371 6,307
Selling, General and
Administrative 25,357 23,599 47,097 45,126
Total Operating Expenses 58,013 56,723 110,711 109,219
Operating Income 6,096 4,858 13,033 10,052
Investment and
Other Income 301 962 610 1,273
Interest Expense (76) (16) (123) (230)
Income Before Income Taxes 6,321 5,804 13,520 11,095
Income Taxes 2,460 2,306 5,481 4,257
Net Income $ 3,861 $ 3,498 $ 8,039 $ 6,838
Earnings Retained in
Business at Beginning
of Period 121,793 108,649 118,730 106,274
Less Dividends:
Preferred Stock (65) (65) (130) (130)
Common Stock (1,228) (1,079) (2,278) (1,980)
Earnings Retained in
Business at End of
Period $124,361 $111,003 $124,361 $111,003
Net Income Per Common Share
Net Income -
Class A Nonvoting $ 0.53 $ 0.48 $ 1.12 $ 0.96
Net Income -
Class B Voting $ 0.53 $ 0.48 $ 1.02 $ 0.86
See Notes to Condensed Consolidated Financial Statements.
/TABLE
W. H. BRADY CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
January 31
1994 1993
Net Earnings $ 8,039 $ 6,838
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation & Amortization 4,860 4,940
Loss (Gain) on Sale of Equipment 123 (28)
Provision for Losses on A/R 245 310
Changes in Operating Assets and Liabilities:
(Incr) Decr in A/R (313) (3,876)
(Incr) Decr in Inventory 655 1,744
(Incr) Decr in Prepaid Expense (940) 489
Incr (Decr) in A/P & Other Liabilities 704 (4,488)
Incr (Decr) in Income Taxes 1,107 1,216
Net Cash Provided by Operating Activities 14,480 7,145
Investing Activities:
Purchases of Property, Plant and Equipment (3,097) (6,895)
Proceeds from Sale of Property, Plant
and Equipment 188 483
Proceeds from Sale of Businesses 0 7,421
Net Cash Used in Investing Activities (2,909) 1,009
Financing Activities:
Principal Payments on Long Term Debt (282) (339)
Payment of Dividends (2,408) (2,110)
Proceeds from Issuance of Common Stock 578 419
Net Cash Provided by Financing Activities (2,112) (2,030)
Effect of Exchange Rate Changes on Cash (28) (3,409)
Net Incr (Decr) in Cash and Cash Equivalents 9,431 2,715
Cash & Cash Equivalents at Beginning of Year 42,366 28,519
Cash and Cash Equivalents at End of Period $51,797 $31,234
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year For:
Interest $ 123 $ 118
Income Taxes 5,239 5,787
See Notes to Condensed Consolidated Financial Statements.
/TABLE
W. H. BRADY CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended January 3l, l994
NOTE A - Basis of Presentation
The condensed consolidated financial statements included
herein have been prepared by the Company without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. In the opinion of the Company, the foregoing
statements contain all adjustments, consisting only of normal
recurring accruals, necessary to present fairly the financial
position of the Company as of January 3l, 1994 and July 3l, 1993,
and its results of operations and its cash flows for the three
months and six months ended January 31, 1994 and l993. The
consolidated balance sheet at July 31, l993 has been taken from
the audited financial statements of that date and condensed.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the
Company's latest annual report.
It is not practical to segregate the amounts of raw material,
work in process or finished goods at the respective interim
balance sheet dates.
NOTE B - Net Earnings Per Common Share
Net earnings per common share were computed by dividing net
earnings (after deducting the applicable preferred stock and
preferential Class A common stock dividends) by the weighted
average number of Class A and Class B common shares outstanding
of 7,216,147 for the three months and six months ended January
31, 1994 and 7,186,302 for the same periods in 1993. The
preferential dividend on the Class A common stock of $.10 per
share declared on September 24, 1993 has been added to the net
earnings per Class A common share for the six months ended
January 31, 1994. The net earnings per Class A common share for
the six months ended January 31, 1993 includes $.10 per share
relating to preferential dividends declared in that period.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
For the three months ended January 31, 1994 revenues of
$64,109,000 were 4.1% higher than the same quarter of the
previous year. For the six months ended January 31, 1994
revenues of $123,744,000 were 3.7% higher than the same period
last year. Sales of the Company's international operations
increased 22.4% for the quarter and 18.0% for the six months as a
result of real growth offset by changes in the exchange rates
used to translate financial results into U.S. currency. Sales of
the Company's U.S. operations decreased 4.3% for the quarter and
2.9% for the six month period because of the divestiture of three
businesses last year. Comparing only continuing operations,
sales of the Company's U.S. operations increased 4.6% for the
quarter and 8.2% for the six month period.
The cost of products sold as a percentage of sales was 46.8%
for the quarter and 47.1% for the six months ended January 31,
1994. For the same periods last year these percentages were
48.2% and 48.5%, respectively. These decreases from period to
period were caused by changes in product mix and the Company's
continuous improvement efforts. Selling, general and
administrative expenses as a percentage of sales were 39.6% for
the quarter compared to 38.3% for the same quarter of the
previous year. For the six months ended January 31, 1994, this
percentage was 38.1% compared to 37.8% for the same period last
year. Research and development expenses decreased 22.5% for the
quarter and 14.8% for the six months ended January 31, 1994 over
the same periods last year because of lower product development
project expenditures.
Income before income taxes increased 8.9% for the quarter and
21.9% for the six months ended January 31, 1994. Net income
increased 10.4% to $3,861,000 compared to $3,498,000 for the same
quarter of the previous year. For the six months ended January
31, 1994 net income increased 17.6% to $8,039,000 from $6,838,000
for the same period last year. Last year's three month and six
month net income included an after-tax gain of $400,000 from the
sale of certain assets of two of the Company's domestic
operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
The Company's financial condition remains sound. The
current ratio as of January 31, 1994 was 3.8 to 1. Cash and cash
equivalents and temporary investments were $51,797,000 at January
31, 1994 compared to $42,366,000 at July 31, 1993. Working
capital increased $7,705,000 during the six months and equaled
$85,648,000 as of January 31, 1994. The Company believes this
amount is adequate to meet its operating needs.
PART II
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
A report on Form 8-K dated December 7, 1993 was filed
relating to the appointment of Katherine M. Hudson as
the Company's President and Chief Executive Officer
effective January 1, 1994, succeeding Paul G. Gengler
who retired at the end of 1993. Ms. Hudson will also
serve as a W.H. Brady Co. Director effective January 1,
1994, having been appointed to fill a vacancy created
by Mr. Gengler's resignation.
No financial statements were filed as part of this
report.
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
W.H. BRADY CO.
Date: March 9, l994 /S/ K. M. Hudson
K. M. Hudson
President
Date: March 9, 1994 /S/ D. P. DeLuca
D. P. DeLuca
Vice President-Finance and
Assistant Secretary
(Principal Accounting Officer)