EXHIBIT 99
Press Release of Brady Corporation, dated May 19, 2004.
For More Information:
Investor contact: Barbara Bolens 414-438-6940
Media contact: Carole Herbstreit 414-438-6882
BRADY REPORTS RECORD THIRD QUARTER WITH DOUBLE-DIGIT GROWTH IN SALES AND
EARNINGS
MILWAUKEE (May 19, 2004)--Brady Corporation (NYSE: BRC), a world leader in
identification solutions, today announced record earnings for its fiscal 2004
third quarter ended April 30, 2004.
Sales for the quarter were $180.9 million compared to $142.0 million,
in the third quarter last year, an increase of 27.4 percent. Sales growth in the
quarter was comprised of core business growth of 10.8 percent, growth from
acquisitions of 8.9 percent and a positive currency impact of 7.7 percent. In
the third quarter, regional core business grew 7.3 percent in the Americas, 8.4
percent in Europe, and 37.5 percent in Asia Pacific.
Net income for the quarter was $16.4 million compared to $8.6 million
in the same quarter last year. Earnings per diluted Class A Common Share were
$0.68, up 84.0 percent from $0.37 per share reported in the fiscal 2003 third
quarter.
Sales for the nine months ended April 30, 2004, rose 18.4 percent to
$485.7 million compared to $410.2 million in the same period last year. Net
income for the period was $34.8 million compared to $19.6 million, or $1.46 per
share compared to $0.83 per share in the period last year, an increase of 75.9
percent.
"We are encouraged to see growth in our core businesses returning to
healthy levels in all geographic regions," said Brady President and Chief
Executive Officer Frank M. Jaehnert. "Our efforts to control costs and boost
productivity, combined with a favorable currency impact, improvement in end-user
markets in the Americas and Europe, and continued strength in Asia Pacific, have
delivered a strong bottom line for the company. We are also pleased to announce
that we have attained regulatory approval for the purchase of EMED Co. and will
be completing this transaction in a few days."
"We are refining our guidance for our fiscal year ending July 31,
2004," said Brady Chief Financial Officer David Mathieson. "We expect sales of
between $645 to $655 million with net income of between $47 to $49 million or
$1.96 to $2.04 per diluted Class A Common Share. This includes approximately $3
million in tax benefit which we expect to recognize upon finalization of a
federal tax audit in the fourth quarter. This guidance does not include the
impact of acquiring EMED Co.
"Looking long-term over the next 5 years, we are targeting 10-percent
annual sales growth with half coming from acquisitions and half coming from our
core business. We are also looking to improve our net income rate each year to
reach 10 percent of sales over the same time period. Key to achieving these
targets are new proprietary
products, attractive acquisitions, continuous productivity improvement and a
reasonably stable economic environment."
A Web cast of a conference call regarding the company's fiscal 2004
third quarter results will be available at www.investor.bradycorp.com beginning
at 8:00 a.m. Central Time today.
Brady is an international manufacturer and marketer of identification
and materials solutions, with products including labels, signs, precision
die-cut materials, printing systems, software, and label-application and
data-collection systems for electronics, telecommunications, manufacturing,
electrical, and a variety of other markets. Founded in 1914, Brady is
headquartered in Milwaukee and employs about 3,500 people in operations in the
United States, Europe, Asia/Pacific, Latin America and Canada. More information
is available on the Internet at www.bradycorp.com.
###
This news release contains forward-looking information, as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking information in
this release involves risks and uncertainties, including, but not limited to,
domestic and international economic conditions and growth rates; fluctuations in
currency exchange rates for international currencies versus the U.S. dollar; the
successful implementation of a new enterprise-resource-planning system; the
ability of the company to acquire, integrate and achieve anticipated synergies
from new businesses; the ability of the company to adjust its cost structure to
changes in levels of sales and product mix in a timely manner; variations in the
economic or political conditions in the countries in which the company does
business; technology changes; and the continued availability of sources of
supply. Brady cautions that forward-looking statements are not guarantees, since
there are inherent difficulties in predicting future results, and that actual
results could differ materially from those expressed or implied in
forward-looking statements.
Information by regional segment for the three and nine months ended April 30,
2004 and 2003 is as follows:
<Table>
<Caption>
(Dollars in thousands) Americas Europe Asia Corporate Total
---------------------- -------- ------ ---- --------- -----
SALES TO EXTERNAL CUSTOMERS
Three months ended:
April 30, 2004 $89,251 $69,683 $21,920 $180,854
April 30, 2003 76,536 50,838 14,581 141,955
Nine months ended:
April 30, 2004 $243,539 $183,308 $58,861 $485,708
April 30, 2003 224,899 143,801 41,482 410,182
SALES GROWTH INFORMATION
Three months ended April 30, 2004:
Base 7.3% 8.4% 37.5% 10.8%
Currency 1.4% 15.6% 12.8% 7.7%
Acquisitions 7.9% 13.1% 0.0% 8.9%
Total 16.6% 37.1% 50.3% 27.4%
Nine months ended April 30, 2004:
Base (1.0)% 0.5% 30.2% 2.6%
Currency 1.6% 14.8% 11.7% 7.3%
Acquisitions 7.7% 12.2% 0.0% 8.5%
Total 8.3% 27.5% 41.9% 18.4%
SEGMENT PROFIT (LOSS)
Three months ended:
April 30, 2004 $17,991 $19,461 $6,520 $(1,067) $42,905
April 30, 2003 12,670 11,729 3,298 (847) 26,850
Percentage increase 42.0% 65.9% 97.7% 26.0% 59.8%
Nine months ended:
April 30, 2004 $42,605 $48,256 $16,849 $(3,037) $104,673
April 30, 2003 32,530 33,023 10,078 (2,503) 73,128
Percentage increase 31.0% 46.1% 67.2% 21.3% 43.1%
</Table>
<Table>
<Caption>
PROFIT RECONCILIATION (Dollars in thousands)
Three months ended: Nine months ended:
-------------------------------- --------------------------------
April 30, 2004 April 30, 2003 April 30, 2004 April 30, 2003
-------------- -------------- -------------- --------------
Total profit for reportable segments $43,972 $27,697 $107,710 $75,631
Corporate and eliminations (1,067) (847) (3,037) (2,503)
Unallocated amounts:
Administrative costs: (17,415) (14,055) (47,952) (41,682)
Interest - net 138 148 363 528
Foreign exchange (429) 806 (826) 194
Restructuring charge, net (455) - (2,274) -
Other (1,318) (720) (2,909) (2,448)
Income before income taxes $23,426 $13,029 $51,075 $29,720
</Table>
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND INCOME RETAINED IN THE BUSINESS
(Dollars in Thousands, Except Per Share Amounts)
<Table>
<Caption>
(Unaudited)
-----------------------------------------------------------------------------
Three Months Ended April 30, Nine Months Ended April 30,
------------------------------------- --------------------------------------
Percentage Percentage
2004 2003 Change 2004 2003 Change
--------- --------- ---------- --------- --------- ----------
Net sales $ 180,854 $ 141,955 27.4% $ 485,708 $ 410,182 18.4%
Cost of products sold 85,980 68,826 24.9% 233,841 203,180 15.1%
--------- --------- --------- ---------
Gross margin 94,874 73,129 29.7% 251,867 207,002 21.7%
Operating expenses:
Research and development 6,210 5,165 20.2% 16,680 13,808 20.8%
Selling, general and administrative 64,490 55,890 15.4% 181,373 164,197 10.5%
Restructuring charge - net 455 -- 2,274 --
--------- --------- --------- ---------
Total operating expenses 71,155 61,055 16.5% 200,327 178,005 12.5%
Operating income 23,719 12,074 96.4% 51,540 28,997 77.7%
Other income and (expense):
Investment and other (expense) income (288) 977 -129.48% (429) 788 -154.44%
Interest expense (5) (22) -77.3% (36) (65) -44.6%
--------- --------- --------- ---------
Income before income taxes 23,426 13,029 79.8% 51,075 29,720 71.9%
Income taxes 7,027 4,432 58.6% 16,290 10,107 61.2%
--------- --------- --------- ---------
Net income 16,399 8,597 90.8% 34,785 19,613 77.4%
Income retained in business at beginning of period 299,563 289,508 3.5% 290,805 287,674 1.1%
Less:
Redemption premium on preferred stock -- -- -- (171)
Common stock dividends (4,873) (4,543) 7.3% (14,501) (13,554) 7.0%
Income retained in business at end of period $ 311,089 $ 293,562 6.0% $ 311,089 $ 293,562 6.0%
========= ========= ========= =========
Net income per Class A Nonvoting Common Share
Basic $ 0.69 $ 0.37 86.5% $ 1.48 $ 0.84 76.2%
========= ========= ========= =========
Diluted $ 0.68 $ 0.37 83.8% $ 1.46 $ 0.83 75.9%
========= ========= ========= =========
Net income per Class B Voting Common Share
Basic $ 0.69 $ 0.37 86.5% $ 1.45 $ 0.81 79.0%
========= ========= ========= =========
Diluted $ 0.68 $ 0.37 83.8% $ 1.43 $ 0.80 78.8%
========= ========= ========= =========
</Table>
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
APRIL 30, 2004 JULY 31, 2003
-------------- -------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 79,831 $ 76,088
Accounts receivable, less allowance for losses ($3,651 and
$3,166, respectively) 101,800 80,162
Inventories 45,189 36,564
Prepaid expenses and other current assets 22,125 22,343
--------- ---------
TOTAL CURRENT ASSETS 248,945 215,157
OTHER ASSETS:
Goodwill 159,122 130,667
Other 25,904 24,455
--------- ---------
185,026 155,122
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land 5,244 5,172
Buildings and improvements 54,658 51,471
Machinery and equipment 149,233 139,007
Construction in progress 1,858 3,245
--------- ---------
210,993 198,895
Less accumulated depreciation 131,119 119,655
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 79,874 79,240
--------- ---------
TOTAL $ 513,845 $ 449,519
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 33,240 $ 28,470
Wages and amounts withheld from employees 33,580 30,619
Taxes, other than income taxes 4,563 2,492
Accrued income taxes 20,000 11,449
Other current liabilities 22,675 17,320
Short-term borrowings and current maturities on long-term debt 32 929
--------- ---------
TOTAL CURRENT LIABILITIES 114,090 91,279
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 28 568
OTHER LIABILITIES 20,657 18,711
--------- ---------
TOTAL LIABILITIES 134,775 110,558
STOCKHOLDERS' INVESTMENT:
Common stock:
Class A nonvoting common stock - Issued and outstanding, 21,990,249 220 216
and 21,558,265 shares, respectively
Class B voting common stock - Issued and outstanding 1,769,314 shares 18 18
Additional paid-in capital 60,870 47,464
Income retained in the business 311,089 290,805
Treasury Stock - 34,657 and 18,262 shares, at cost (1,074) (509)
Cumulative other comprehensive income 8,315 1,595
Other (368) (628)
--------- ---------
TOTAL STOCKHOLDERS' INVESTMENT 379,070 338,961
--------- ---------
TOTAL $ 513,845 $ 449,519
========= =========
</Table>
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<Table>
<Caption>
(Unaudited)
Nine Months Ended
April 30
2004 2003
Operating activities:
Net income $ 34,785 $ 19,613
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and Amortization 14,654 13,112
Loss on sale or disposal of property, plant & equipment 111 71
Provision for losses on accounts receivable 1,116 833
Non-cash portion of stock-based compensation expense 791 185
Net restructuring charge accrued liability 2,178 --
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable (14,216) (1,159)
Inventory (4,677) 2,713
Prepaid expenses and other assets (144) (1,468)
Accounts payable, accrued expenses and other liabilities 3,298 1,943
Income taxes 9,586 4,628
-------- --------
Net cash provided by operating activities 47,482 40,471
Investing activities:
Acquisition of businesses, net of cash acquired (30,728) (20,906)
Termination of capital lease -- (791)
Purchases of property, plant and equipment (10,616) (11,593)
Proceeds from sale of property, plant and equipment 281 56
Other (1,358) (198)
-------- --------
Net cash used in investing activities (42,421) (33,432)
Financing activities:
Payment of dividends (14,854) (13,725)
Proceeds from issuance of common stock 10,745 2,040
Principal payments on debt (1,563) (210)
Redemption of preferred stock -- (2,855)
Purchase of treasury stock (564) (377)
-------- --------
Net cash used in financing activities (6,236) (15,127)
-------- --------
Effect of exchange rate changes on cash 4,918 750
Net increase (decrease) in cash and cash equivalents 3,743 (7,338)
-------- --------
Cash and cash equivalents, beginning of period 76,088 75,969
Cash and cash equivalents, end of period $ 79,831 $ 68,631
======== ========
Supplemental disclosures:
Cash paid during the period for:
Interest $ 73 $ 38
Income taxes, net of refunds 7,552 8,045
Acquisitions:
Fair value of asset acquired, net of cash $ 14,784 $ 14,460
Liabilities assumed (8,916) (9,264)
Goodwill 24,860 15,710
-------- --------
Net cash paid for acquisitions $ 30,728 $ 20,906
======== ========
Termination of capital lease:
Disposition of capital assets $ -- $ (2,574)
Settlement of capital lease liability -- 3,365
-------- --------
Net cash paid for termination of capital lease $ -- $ 791
======== ========
</Table>