EXHIBIT 99
For More Information:
Investor contact: Barbara Bolens 414-438-6940
Media contact: Carole Herbstreit 414-438-6882
For Immediate Release
Brady reports sales and net income for its fiscal 2006 second quarter
MILWAUKEE (February 17, 2006)--Brady Corporation (NYSE: BRC), a world leader in
identification solutions, today announced a record second quarter ended January
31, 2006.
Sales for the quarter were up 17.7 percent to $231.0 million, compared
to $196.2 million in the second quarter of fiscal 2005. Base business growth was
up 9.5 percent, acquisitions contributed 11.1 percent to sales, and currency
exchange was a negative 2.9 percent. Net income for the quarter increased 3.3
percent to $21.3 million or $0.43 per diluted Class A Common share, compared to
$20.6 million or $0.41 per share in the fiscal 2005 second quarter.
Sales for the six months ended January 31, 2006, rose 16.9 percent to
$463.6 million, compared to $396.6 million in the same period last year. Net
income for the first six months of fiscal 2006 rose 25.7 percent to $51.5
million or $1.03 per diluted Class A Common share compared to $40.9 million or
$0.83 per share for the first half of fiscal 2005.
"Strong organic sales growth and successful integration of acquisitions
contributed to our good performance in this quarter against the backdrop of an
exceptionally strong quarter in the prior year," said Frank M. Jaehnert, Brady's
president and chief executive officer.
"As a result of our continued strong performance in the first half of
the fiscal year, successful acquisitions, the completion of the recent private
placement of $200 million in ten-year notes at 5.3 percent to institutional
investors, and expectations of a stable economic environment, we are increasing
our guidance for fiscal 2006," said Brady Chief Financial Officer David
Mathieson. "We anticipate sales of $980 to $990 million, with net income between
$100 and $103 million and diluted earnings per share of $2.00 to $2.06, up from
previous guidance of sales of $910 to $920 million, net income of $98 to $100
million and earnings per share of $1.96 to $2.00."
A webcast regarding fiscal 2006 second quarter results will be
available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Standard
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 300,000 customers in electronics, telecommunications, manufacturing,
electrical, construction, education, medical and a variety of other industries.
Brady is headquartered in Milwaukee and employs about 5,500 people in operations
in the United States, Europe, Asia/Pacific, Latin America and Canada. Brady's
fiscal 2005 sales were approximately $816 million. More information is available
on the Internet at www.bradycorp.com.
This news release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 - that is, statements
related to future, not past events. In this context forward-looking statements
often address our expected future business and financial performance, and often
contain certain words such as "expect, anticipate, intend, plan, believe, seek,
will, or may." Forward-looking statements by their nature address matters that
are, to different degrees uncertain. For us, uncertainties arise from future
financial performance of major markets we serve which include, without
limitation, telecommunications, manufacturing, electrical, construction,
laboratory, education, governmental, public utility, computer, transportation;
future integration of and performance of acquired businesses; fluctuations in
currency rates versus the US dollar; technology changes; interruptions to
sources of supply; 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 and
those identified in reports we file with the SEC. These uncertainties may cause
our actual future results to be materially different than those expressed in our
forward-looking statements. We do not undertake to update our forward-looking
statements.
###
Information by regional segment for the three and six months ended January 31,
2006 and 2005 is as follows:
Corporate
and
(in Thousands) Americas Europe Asia Subtotals Eliminations Total
-------- ------ ---- --------- ------------ -----
SALES TO EXTERNAL CUSTOMERS
Three months ended:
January 31, 2006 $ 109,951 $ 76,284 $ 44,739 $ 230,974 - $ 230,974
January 31, 2005 95,255 70,886 30,075 196,216 - 196,216
Six months ended:
January 31, 2006 $ 226,010 $150,046 $ 87,553 $ 463,609 - $ 463,609
January 31, 2005 200,704 135,413 60,518 396,635 - 396,635
SALES GROWTH INFORMATION
Three months ended January 31, 2006:
Base 5.2% 2.5% 39.4% 9.5% - 9.5%
Currency 1.3% -9.4% -0.7% -2.9% - -2.9%
Acquisitions 8.9% 14.5% 10.1% 11.1% - 11.1%
Total 15.4% 7.6% 48.8% 17.7% - 17.7%
Six months ended January 31, 2006:
Base 4.4% 1.5% 35.8% 8.2% - 8.2%
Currency 1.6% -5.5% 1.4% -0.9% - -0.9%
Acquisitions 6.6% 14.8% 7.5% 9.6% - 9.6%
Total 12.6% 10.8% 44.7% 16.9% - 16.9%
SEGMENT PROFIT (LOSS)
Three months ended:
January 31, 2006 $ 24,969 $ 19,989 $ 11,717 $ 56,675 $ (2,631) $ 54,044
January 31, 2005 20,431 21,601 8,709 50,741 $ (585) 50,156
Percentage increase (decrease) 22.2% -7.5% 34.5% 11.7% 349.7% 7.8%
Six months ended:
January 31, 2006 $ 57,163 $ 40,767 $ 24,727 $ 122,657 $ (5,017) $ 117,640
January 31, 2005 45,811 39,733 17,619 103,163 $ (2,010) 101,153
Percentage increase 24.8% 2.6% 40.3% 18.9% 149.6% 16.3%
NET INCOME RECONCILIATION (in thousands)
Three months ended: Six months ended:
January 31, January 31, January 31, January 31,
2006 2005 2006 2005
---- ---- ---- ----
Total profit for reportable segments $ 56,675 $ 50,741 $ 122,657 $ 103,163
Corporate and eliminations (2,631) (585) $ (5,017) (2,010)
Unallocated amounts:
Administrative costs (22,279) (18,637) (40,938) (36,238)
Interest - net (2,239) (1,821) (3,910) (3,646)
Foreign exchange (75) 276 61 246
Other (522) (584) (1,392) (2,188)
---------------------------------------------------------------
Income before income taxes 28,929 29,390 71,461 59,327
Income taxes (7,675) (8,811) (20,009) (18,391)
---------------------------------------------------------------
Net income $ 21,254 $ 20,579 $ 51,452 $ 40,936
===============================================================
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Unaudited)
--------------------------------------------------------------------------------
Three Months Ended January 31, Six Months Ended January 31,
---------------------------------------- --------------------------------------
Percentage Percentage
2006 2005 Change 2006 2005 Change
--------- --------- ---------- --------- --------- ----------
Net sales $ 230,974 $ 196,216 17.7% $ 463,609 $ 396,635 16.9%
Cost of products sold 113,869 91,260 24.8% 222,513 186,154 19.5%
--------- --------- --------- ---------
Gross margin 117,105 104,956 11.6% 241,096 210,481 14.5%
Operating expenses:
Research and development 6,829 6,099 12.0% 13,363 11,803 13.2%
Selling, general and administrative 79,000 67,923 16.3% 152,328 135,951 12.0%
--------- --------- --------- ---------
Total operating expenses 85,829 74,022 16.0% 165,691 147,754 12.1%
Operating income 31,276 30,934 1.1% 75,405 62,727 20.2%
Other income and (expense):
Investment and other income 88 493 -82.2% 480 776 -38.1%
Interest expense (2,435) (2,037) 19.5% (4,424) (4,176) 5.9%
--------- --------- --------- ---------
Income before income taxes 28,929 29,390 -1.6% 71,461 59,327 20.5%
Income taxes 7,675 8,811 -12.9% 20,009 18,391 8.8%
--------- --------- --------- ---------
Net income $ 21,254 $ 20,579 3.3% $ 51,452 $ 40,936 25.7%
========= ========= ========= =========
Per Class A Nonvoting Common Share:
Basic net income $ 0.43 $ 0.42 2.4% $ 1.05 $ 0.84 25.0%
Diluted net income $ 0.43 $ 0.41 4.9% $ 1.03 $ 0.83 24.1%
Dividends $ 0.13 $ 0.11 18.2% $ 0.26 $ 0.22 18.2%
Per Class B Voting Common Share:
Basic net income $ 0.43 $ 0.42 2.4% $ 1.03 $ 0.82 25.6%
Diluted net income $ 0.43 $ 0.41 4.9% $ 1.02 $ 0.81 25.9%
Dividends $ 0.13 $ 0.11 18.2% $ 0.24 $ 0.20 20.0%
Weighted average common shares outstanding
(in Thousands):
Basic 48,994 49,060 49,098 48,773
Diluted 49,813 49,989 49,891 49,584
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited)
---------------------------------
JANUARY 31, 2006 JULY 31, 2005
---------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 50,742 $ 72,970
Short term investments - 7,100
Accounts receivable, less allowance for losses ($3,820 and 145,794 123,453
$3,726, respectively)
Inventories:
Finished Products 42,706 38,827
Work-in-process 12,103 9,681
Raw materials and supplies 32,185 22,227
--------- ---------
Total inventories 86,994 70,735
Prepaid expenses and other current assets 32,381 28,114
--------- ---------
TOTAL CURRENT ASSETS 315,911 302,372
Other assets:
Goodwill 403,794 332,369
Other Intangible assets 87,554 71,647
Deferred Income Taxes 38,187 39,043
Other 7,903 6,305
--------- ---------
TOTAL OTHER ASSETS 537,438 449,364
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land 6,520 6,388
Buildings and improvements 71,625 65,007
Machinery and equipment 167,981 157,093
Construction in progress 8,811 6,510
--------- ---------
254,937 234,998
Less accumulated depreciation 144,483 136,587
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 110,454 98,411
--------- ---------
TOTAL $ 963,803 $ 850,147
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 54,886 $ 52,696
Wages and amounts withheld from employees 38,026 49,620
Taxes, other than income taxes 5,761 4,815
Accrued income taxes 14,546 24,028
Other current liabilities 26,712 29,649
Short-term borrowings and current maturities on long-term debt 155 4
--------- ---------
TOTAL CURRENT LIABILITIES 140,086 160,812
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 250,217 150,026
OTHER LIABILITIES 48,700 42,035
--------- ---------
TOTAL LIABILITIES 439,003 352,873
STOCKHOLDERS' INVESTMENT:
Common stock:
Class A nonvoting common stock - Issued 45,881,743 and 45,877,543 shares, 459 458
respectively and outstanding 45,421,577 and 45,792,199 shares, respectively
Class B voting common stock - Issued and outstanding, 3,538,628 shares 35 35
Additional paid-in capital 100,160 99,029
Income retained in the business 421,622 382,880
Treasury Stock - 460,166 and 85,344 shares, respectively of Class A
nonvoting common stock, at cost (16,554) (1,575)
Accumulated other comprehensive income 20,865 17,497
Other (1,787) (1,050)
--------- ---------
TOTAL STOCKHOLDERS' INVESTMENT 524,800 497,274
--------- ---------
Total $ 963,803 $ 850,147
========= =========
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Thousands)
(Unaudited)
Six Months Ended
Jan-31
2006 2005
--------- ---------
Operating activities:
Net income $ 51,452 $ 40,936
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 14,554 13,253
Income tax benefit from the exercise of stock options - 3,740
Deferred Income taxes 712 1,492
Loss on sale or disposal of property, plant & equipment 45 470
Provision for losses on accounts receivable 623 618
Non-cash portion of stock-based compensation expense 2,827 2,048
Changes in operating assets and liabilities (net of effects of business acquisitions):
Accounts receivable (11,250) 888
Inventories (11,537) (7,151)
Prepaid expenses and other assets (2,959) (1,715)
Accounts payable and accrued liabilities (17,512) (19,323)
Income taxes (10,127) 5,748
Other liabilities 3,970 2,732
--------- ---------
Net cash provided by operating activities 20,798 43,736
Investing activities:
Acquisition of businesses, net of cash acquired (100,256) (34,428)
Purchases of short-term investments (3,800) (20,500)
Sales of short-term investments 10,900 22,300
Purchases of property, plant and equipment (17,341) (9,648)
Proceeds from sale of property, plant and equipment 66 262
Other (1,711) (2,364)
--------- ---------
Net cash used in investing activities (112,142) (44,378)
Financing activities:
Payment of dividends (12,710) (10,473)
Proceeds from issuance of common stock 6,467 12,655
Principal payments on debt (829) (37)
Net proceeds from issuance of debt 100,000 -
Purchase of treasury stock (27,233) -
Income tax benefit from the exercise of stock options 3,354 -
--------- ---------
Net cash provided by financing activities 69,049 2,145
Effect of exchange rate changes on cash 67 696
Net (decrease) increase in cash and cash equivalents (22,228) 2,199
Cash and cash equivalents, beginning of period 72,970 68,788
--------- ---------
Cash and cash equivalents, end of period $ 50,742 $ 70,987
========= =========
Supplemental disclosures:
Cash paid during the period for:
Interest, net of capitalized interest $ 3,907 $ 4,051
Income taxes, net of refunds 24,510 6,122
Acquisitions:
Fair value of asset acquired, net of cash $ 39,422 $ 25,938
Liabilities assumed (9,326) (15,013)
Goodwill 70,160 23,503
--------- ---------
Net cash paid for acquisitions $ 100,256 $ 34,428
========= =========