BRC Brady Corp

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 at www.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, 2009 2008

PercentageChange

2009 2008

PercentageChange

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 48,747,494 and 51,261,487 shares, respectively and outstanding 50,170,581 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 six months ended April 30, 2009 and 2008 is as follows: (in thousands) � Americas � Europe � Asia-Pacific � Subtotals �

Corporate andEliminations

� � 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 increase (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 increase (decrease) � -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, 2009 � April 30, 2008 April 30, 2009 � April 30, 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.