FORM 10 - Q
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 April 30, 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 June 1, 1994, there were outstanding 5,466,812 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
PAGE
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets. . . . . . . .3
Unaudited Condensed Consolidated Statements
of Earnings and Earnings Retained in Business. . . .4
Unaudited Condensed 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. . . . . . . . . . . . . . . . . . .8
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . .8
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
Apr. 30, July 31,
1994 1993
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 60,532 $ 42,366
Accounts Receivable, Less Allowance for
Losses ($1,507 and $1,247, Respectively) 33,076 30,522
Inventories 21,622 22,733
Prepaid Expenses & Other Current Assets 10,083 10,025
Total Current Assets 125,313 105,646
Other Assets 10,931 6,893
Property Plant and Equipment:
Cost
Land 4,670 4,664
Buildings and Improvements 38,040 37,473
Machinery and Equipment 70,539 68,802
Construction in Progress 2,319 3,807
115,568 114,746
Less Accumulated Depreciation 50,266 47,384
Total Property, Plant & Equipment 65,302 67,362
$201,546 $179,901
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts Payable $ 8,588 $ 8,577
Wages & Amounts Withheld From Employees 11,505 8,374
Income Taxes 7,797 2,392
Other Current Liabilities 7,901 7,882
Current Maturities on Long-Term Debt 372 478
Total Current Liabilities 36,163 27,703
Long Term Debt, Less Current Maturities 2,163 1,978
Other Liabilities 24,013 22,152
Total Liabilities 62,339 51,833
Stockholders' Investment:
Preferred Stock 2,855 2,855
Class A Nonvoting Common Stock-Issued
and Outstanding 5,466,812 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 6,344 5,571
Earnings Retained in the Business 128,632 118,730
Cumulative Translation Adjustments 1,304 840
Total Stockholders' Investment 139,207 128,068
$201,546 $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 Apr 30 Nine Months Ended Apr 30
1994 1993 1994 1993
Net Sales $ 65,888 $ 62,736 $189,632 $182,007
Operating Expenses:
Cost of Products Sold 30,143 30,726 88,386 88,512
Research & Development 2,465 3,163 7,836 9,470
Selling, General and
Administrative 24,494 22,343 71,591 67,469
Total Operating Expenses 57,102 56,232 167,813 165,451
Operating Income 8,786 6,504 21,819 16,556
Investment and Other
Income-Net 371 111 981 1,384
Interest Expense (102) (117) (225) (347)
Income Before Income Taxes 9,055 6,498 22,575 17,593
Income Taxes 3,490 2,381 8,971 6,638
Net Income $ 5,565 $ 4,117 $ 13,604 $ 10,955
Earnings Retained in
Business at Beginning
of Period 124,361 111,003 118,730 106,274
Less Dividends:
Preferred Stock (65) (65) (194) (194)
Common Stock (1,229) (1,080) (3,508) (3,060)
Earnings Retained in
Business at End of
Period $128,632 $113,975 $128,632 $113,975
Net Income Per Common Share
Net Income -
Class A Nonvoting $ 0.76 $ 0.56 $ 1.88 $ 1.52
Net Income -
Class B Voting $ 0.76 $ 0.56 $ 1.78 $ 1.42
See Notes to Condensed Consolidated Financial Statements.
/TABLE
W. H. BRADY CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
April 30
1994 1993
Net Income $ 13,604 $ 10,955
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation & Amortization 7,145 7,444
Loss (Gain) on Sale of Equipment 84 (81)
Provision for Losses on A/R 336 396
Changes in Operating Assets and Liabilities:
(Incr) Decr in A/R (3,313) (7,710)
(Incr) Decr in Inventory 1,341 1,023
(Incr) Decr in Prepaid Expense (4,148) 1,841
Incr (Decr) in A/P & Other Liabilities 3,393 (1,868)
Incr (Decr) in Income Taxes 7,721 (1,169)
Net Cash Provided by Operating Activities 26,163 10,831
Investing Activities:
Purchases of Property, Plant and Equipment (5,172) (9,061)
Proceeds from Sale of Property, Plant
and Equipment 244 580
Proceeds from Sale of Businesses 0 7,421
Net Cash Used in Investing Activities (4,928) (1,060)
Financing Activities:
Principal Payments on Long Term Debt (342) (430)
Payment of Dividends (3,702) (3,255)
Proceeds from Issuance of Common Stock 773 591
Net Cash Used in Financing Activities (3,271) (3,094)
Effect of Exchange Rate Changes on Cash 202 (2,250)
Net Incr (Decr) in Cash and Cash Equivalents 18,166 4,427
Cash & Cash Equivalents at Beginning of Year 42,366 28,519
Cash and Cash Equivalents at End of Period $ 60,532 $ 32,946
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year For:
Interest 58 219
Income Taxes 6,214 7,192
See Notes to Condensed Consolidated Financial Statements.
/TABLE
W. H. BRADY CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended April 30, 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 April 30, 1994 and July 31, 1993,
and its results of operations and its cash flows for the three months and
nine months ended April 30, 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. These condensed
financial statements should 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 7,221,301 for the three months and nine
months ended April 30, 1994 and 7,191,037 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 nine months ended April 30, 1994. The net earnings
per Class A common share for the nine months ended April 30, 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 April 30, 1994 revenues of $65,888,000 were
5.0% higher than the same quarter of the previous year. For the nine
months ended April 30, 1994 revenues of $189,632,000 were 4.2% higher than
the same period last year. Sales of the Company's international operations
increased 21.7% for the quarter and 19.3% for the nine 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 3.1% for the quarter and 2.9% for the nine month
period because of the divestiture of three businesses last year. Comparing
only continuing operations, sales of the Company's U.S. operations
increased 4.2% for the quarter and 6.8% for the nine month period.
The cost of products sold as a percentage of sales was 45.8% for the
quarter and 46.6% for the nine months ended April 30, 1994. For the same
periods last year these percentages were 49.0% and 48.6%. These decreases
from period to period were caused by changes in product mix, the
divestiture of three businesses last year and the Company's continuous
improvement efforts. Selling, general and administrative expenses as a
percentage of sales were 37.2% for the quarter compared to 35.6% for the
same quarter of the previous year. For the nine months ended April 30,
1994, this percentage was 37.8% compared to 37.1% for the same period last
year. Research and development expenses decreased 22.1% for the quarter
and 17.3% for the nine months ended April 30, 1994 over the same periods
last year because of lower product development project expenditures.
Income before income taxes increased 39.4% for the quarter and 28.3%
for the nine months ended April 30, 1994. Net income increased 35.2% to
$5,565,000 compared to $4,117,000 for the same quarter of the previous
year. For the nine months ended April 30, 1994 net income increased 24.2%
to $13,604,000 from $10,955,000 for the same period last year. Last year's
nine 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.
Financial Condition
The Company's liquidity remains strong. The current ratio as of April
30, 1994 was 3.5 to 1. Cash and cash equivalents were $60,532,000 at April
30, 1994 compared to $42,366,000 at July 31, 1993. Working capital
increased $11,207,000 during the nine months and equaled $89,150,000 as of
April 30, 1994. The Company believes this amount is adequate to meet its
current and anticipated operating needs.
PART II
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
The Company was not required to file and did not file a report on
Form 8-K during the quarter ended April 30, 1994.
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: June 2, 1994 /S/ K. M. Hudson
K. M. Hudson
President
Date: June 2, 1994 /S/ D. P. DeLuca
D. P. DeLuca
Vice President-Finance
and Assistant Secretary
(Principal Accounting Officer)
PART II
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
The Company was not required to file and did not file a report on
Form 8-K during the quarter ended April 30, 1994.
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:
K. M. Hudson
President
Date:
D. P. DeLuca
Vice President-Finance and
Assistant Secretary
(Principal Accounting Officer)