BRC Brady Corp

• Fourth quarter organic revenue growth was 1.1 percent, with 0.9 percent organic growth in Workplace Safety and 1.2 percent organic growth in Identification Solutions.
• Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $0.41 during the fourth quarter ended July 31, 2014 compared to $0.55 in the same quarter of the prior year.
• GAAP earnings from continuing operations were impacted by the impairment charges of $148.6 million primarily due to the write down of intangible assets in the Company’s PeopleID reporting unit.
• On August 1, 2014, Brady completed the final phase of the divestiture of the die-cut business.
• Fiscal 2015 Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* guidance is initiated at a range from $1.50 to $1.70.
• Thomas J. Felmer has been appointed Senior Vice President and President of Brady’s Workplace Safety business. Aaron J. Pearce replaces Felmer as Senior Vice President and Chief Financial Officer.

Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for the fiscal 2014 fourth quarter ended July 31, 2014.

Quarter Ended July 31, 2014 Financial Results:

Sales from continuing operations for the quarter ended July 31, 2014 increased 2.0 percent to $316.7 million compared to the fourth quarter of fiscal 2013. Total organic sales increased 1.1 percent. By segment, organic sales were up 1.2 percent in Identification Solutions and 0.9 percent in Workplace Safety.

During the fourth quarter ended July 31, 2014, the Company recorded an impairment charge of $148.6 million primarily related to the write down of intangible assets in the Company’s PeopleID reporting unit. This reporting unit includes the December 2012 acquisition of Precision Dynamics Corporation (“PDC”), which primarily sells identification products into the healthcare industry. PDC’s organic sales declined low single digits for the fiscal year ended July 31, 2014 and are forecasted to grow at a slower pace than originally anticipated. This lack of historical sales growth and reduced forecasts for future sales growth are the main drivers for this impairment charge. In the fourth quarter of last year, the Company also incurred an impairment charge of $204.4 million related to the Company’s North American Workplace Safety reporting unit and its Asia reporting unit.

Net (loss) from continuing operations for the quarter ended July 31, 2014 was $(97.0) million compared to $(175.6) million in the same quarter last year. Non-GAAP net earnings from continuing operations* for the quarter ended July 31, 2014, were $21.0 million compared to $28.6 million in the same quarter last year.

Net (loss) from continuing operations per Class A Nonvoting Common Share was $(1.89) for the fourth quarter ended July 31, 2014 compared to $(3.40) in the same quarter last year. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $0.41 in the fourth quarter of fiscal 2014 and $0.55 per share in the fourth quarter of fiscal 2013.

Year Ended July 31, 2014 Financial Results:

Sales from continuing operations for the year ended July 31, 2014 were up 5.8 percent to $1.23 billion compared to $1.16 billion in fiscal 2013. Organic sales were up 0.2 percent. By segment, organic sales were up 2.9 percent in Identification Solutions and down 4.6 percent in Workplace Safety.

Net (loss) from continuing operations for the year ended July 31, 2014 was $(48.1) million compared to $(138.3) million for the year ended July 31, 2013. Non-GAAP net earnings from continuing operations* for the year ended July 31, 2014 were $79.5 million compared to $102.4 million for the year ended July 31, 2013.

Net (loss) from continuing operations per Class A Nonvoting Common Share was $(0.93) for the year ended July 31, 2014 compared to $(2.70) for the year ended July 31, 2013. Non-GAAP earnings from continuing operations per diluted Class A Nonvoting Common Share* were $1.53 for the year ended July 31, 2014 and $1.98 per share for the year ended July 31, 2013.

Commentary:

“We were encouraged by our revenue growth in the fourth quarter, which marks the second consecutive quarter of organic sales growth. This marks the first quarter of growth in our Workplace Safety business since fiscal 2012 as we continue to add new customers, increase revenues over the internet and realize returns from increased catalog advertising,” said Brady President and CEO J. Michael Nauman.

“Although we had organic sales growth, we were not pleased with our profitability performance as we continued to incur costs related to the consolidation of our facilities and have been experiencing challenges in terms of sales mix and pricing. Our overall facility consolidation efforts have been scaled back, and we will continue to execute the facility consolidation activities in a manner that will allow us to maintain the highest service levels and least disruptions to our customers while still achieving efficiency gains over the long run. We are focused on executing business fundamentals to drive organic sales growth while deemphasizing acquisitions at this time. We are increasing our investments in R&D to create sustainable processes for developing new innovative products that generate significant value for our customers. We will also focus on penetrating specific vertical markets in our Identification Solutions business in order to drive sales growth within our current industries including healthcare; food and beverage; chemical, oil and gas; and aerospace and mass transit, as well as expand our presence and product offering in selected markets in Asia. This accelerated investment in Identification Solutions will be evident in our fiscal 2015 financial results and is included in our guidance for next year,” said Nauman.

“Although our fourth quarter profitability and cash flow did not meet our expectations, we continue to have a strong balance sheet which strengthened during the quarter as we repaid an additional $32.7 million of debt,” said Brady’s Chief Financial Officer Aaron J. Pearce.

Fiscal 2015 Guidance:

The Company anticipates low single-digit organic sales growth in fiscal 2015, with organic sales growth in both the Identification Solutions and Workplace Safety businesses. Brady also expects earnings from continuing operations per diluted Class A Nonvoting Common Share of between $1.50 and $1.70, exclusive of restructuring charges and other non-routine charges. This guidance is based on current exchange rates, a full-year income tax rate in the mid-to-upper 20 percent range. We also anticipate approximately $15 million of restructuring charges in fiscal 2015 and capital expenditures of approximately $30 million in fiscal 2015 before returning to a more normalized level in fiscal 2016.

Executive Appointments:

Brady’s Board of Directors has appointed Thomas J. Felmer to serve as the Company’s Senior Vice President and President – Workplace Safety. Mr. Felmer most recently served as Senior Vice President and CFO. He joined Brady in 1989 and has held various Group President and general management positions across several Brady businesses in both the U.S. and Europe.

With Mr. Felmer’s appointment as President – Workplace Safety, the Board has appointed Aaron J. Pearce to serve as Senior Vice President and Chief Financial Officer of the Company. Mr. Pearce joined Brady in 2004 as Director of Internal Audit, and has held various financial leadership positions including Finance Director for the Company’s Asia Pacific Region; Global Tax Director; Vice President, Treasurer and Director of Investor Relations; and Vice President - Finance, with responsibility for finance support to the Company’s Workplace Safety and ID Solutions businesses, as well as financial planning and analysis.

“Tom Felmer is a talented executive who has been with Brady for more than 25 years and I am pleased that he has accepted the role of President of Workplace Safety and that he will continue his excellent work leading the turnaround of this business unit,” said Brady President and CEO J. Michael Nauman. “Aaron Pearce brings a broad range of financial experience and intimate knowledge of Brady’s business to the role of CFO and I look forward to working with him in this capacity.”

A webcast regarding Brady’s fiscal 2014 fourth quarter financial results will be available at www.bradycorp.com beginning at 9:30 a.m. Central Time today.

Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, education, medical and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of August 1, 2014, employed approximately 6,400 people in its worldwide businesses. Brady’s fiscal 2014 sales were approximately $1.23 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com.

* See accompanying notes for Non-GAAP measures.

In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company'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.

The use of 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: Implementation of the Workplace Safety strategy; 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, hard disk drive, manufacturing, electrical, construction, laboratory, education, governmental, public utility, computer, healthcare and transportation; future competition; changes in the supply of, or price for, parts and components; increased price pressure from suppliers and customers; Brady's ability to retain significant contracts and customers; fluctuations in currency rates versus the U.S. dollar; risks associated with international operations; difficulties associated with exports; risks associated with obtaining governmental approvals and maintaining regulatory compliance; Brady's ability to develop and successfully market new products; risks associated with identifying, completing, and integrating acquisitions; risks associated with divestitures and businesses held for sale; risks associated with restructuring plans; environmental, health and safety compliance costs and liabilities; risk associated with loss of key talent; risk associated with product liability claims; technology changes and potential security violations to the Company's information technology systems; Brady's ability to maintain compliance with its debt covenants; increase in our level of debt; potential write-offs of Brady's substantial intangible assets; unforeseen tax consequences; risk, associated with our ownership structure; 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 within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2013.

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 except as required by law.

            BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited; Dollars in thousands, except per share data)   Three months ended July 31, Twelve Months Ended July 31, 2014 2013 2014 2013 Net sales $ 316,733 $ 310,592 $ 1,225,034 $ 1,157,792 Cost of products sold   162,672     152,722     615,470     548,444   Gross margin 154,061 157,870 609,564 609,348 Operating expenses: Research and development 9,373 9,390 35,048 33,552 Selling, general and administrative 111,340 106,983 452,164 427,858 Restructuring charges 810 15,573 15,012 26,046 Impairment charges   148,551     204,448     148,551     204,448   Total operating expenses 270,074 336,394 650,775 691,904   Operating loss: (116,013 ) (178,524 ) (41,211 ) (82,556 )   Other income and (expense): Investment and other income 515 1,097 2,402 3,523 Interest expense   (3,523 )   (3,887 )   (14,300 )   (16,641 )   Loss from continuing operations before income taxes (119,021 ) (181,314 ) (53,109 ) (95,674 )   Income tax (benefit) expense   (22,040 )   (5,757 )   (4,963 )   42,583     Loss from continuing operations $ (96,981 ) $ (175,557 ) $ (48,146 ) $ (138,257 )   (Loss) earnings from discontinued operations, net of income taxes   (13,428 )   (1,714 )   2,178     (16,278 )   Net loss $ (110,409 ) $ (177,271 ) $ (45,968 ) $ (154,535 )   Loss from continuing operations per Class A Nonvoting Common Share: Basic $ (1.89 ) $ (3.40 ) $ (0.93 ) $ (2.70 ) Diluted $ (1.89 ) $ (3.40 ) $ (0.93 ) $ (2.70 )   Loss from continuing operations per Class B Nonvoting Common Share: Basic $ (1.89 ) $ (3.40 ) $ (0.95 ) $ (2.71 ) Diluted $ (1.89 ) $ (3.40 ) $ (0.95 ) $ (2.71 )   (Loss) earnings from discontinued operations per Class A Nonvoting Common Share: Basic $ (0.26 ) $ (0.03 ) $ 0.04 $ (0.32 ) Diluted $ (0.26 ) $ (0.03 ) $ 0.04 $ (0.32 )   (Loss) earnings from discontinued operations per Class B Voting Common Share: Basic $ (0.26 ) $ (0.03 ) $ 0.05 $ (0.32 ) Diluted $ (0.26 ) $ (0.03 ) $ 0.05 $ (0.32 )   Loss per Class A Nonvoting Common Share: Basic $ (2.15 ) $ (3.43 ) $ (0.89 ) $ (3.02 ) Diluted $ (2.15 ) $ (3.43 ) $ (0.89 ) $ (3.02 ) Dividends $ 0.195 $ 0.19 $ 0.78 $ 0.76   Loss per Class B Voting Common Share: Basic $ (2.15 ) $ (3.43 ) $ (0.90 ) $ (3.03 ) Diluted $ (2.15 ) $ (3.43 ) $ (0.90 ) $ (3.03 ) Dividends $ 0.195 $ 0.19 $ 0.76 $ 0.74   Weighted average common shares outstanding (in thousands): Basic 51,250 51,689 51,866 51,330 Diluted 51,250 51,689 51,866 51,330         BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited; Dollars in thousands) July 31, 2014 July 31, 2013

ASSETS

Current assets: Cash and cash equivalents $ 81,834 $ 91,058 Accounts receivable—net 177,648 169,261 Inventories: Finished products 73,096 64,544 Work-in-process 17,689 14,776 Raw materials and supplies   22,490     15,387   Total inventories 113,275 94,707 Assets held for sale 49,542 119,864 Prepaid expenses and other current assets   41,543     37,600   Total current assets 463,842 512,490 Other assets: Goodwill 515,004 617,236 Other intangible assets 91,014 156,851 Deferred income taxes 27,320 8,623 Other 22,314 21,325 Property, plant and equipment: Cost: Land 7,875 7,861 Buildings and improvements 101,866 91,471 Machinery and equipment 288,409 266,787 Construction in progress   12,500     11,842   410,650 377,961 Less accumulated depreciation   276,479     255,803   Property, plant and equipment—net   134,171     122,158   Total $ 1,253,665   $ 1,438,683  

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

Current liabilities: Notes payable $ 61,422 50,613 Accounts payable 88,099 82,519 Wages and amounts withheld from employees 38,064 42,413 Liabilities held for sale 10,640 34,583 Taxes, other than income taxes 7,994 8,243 Accrued income taxes 7,893 7,056 Other current liabilities 35,319 36,806 Current maturities on long-term debt   42,514     61,264  

Total current liabilities

291,945 323,497 Long-term obligations, less current maturities 159,296 201,150 Other liabilities   69,348     83,239   Total liabilities 520,589 607,886 Stockholders’ investment: Common stock: Class A nonvoting common stock—Issued 51,261,487 and 51,261,487 shares, respectively and outstanding 47,704,196 and 48,408,544 shares, respectively 513 513 Class B voting common stock—Issued and outstanding, 3,538,628 shares 35 35 Additional paid-in capital 311,811 306,191 Earnings retained in the business 452,057 538,512

Treasury stock—3,477,291 and 2,626,276 shares, respectively of Class A nonvoting common stock, at cost

(93,337 ) (69,797 ) Accumulated other comprehensive income 64,156 56,063 Other   (2,159 )   (720 ) Total stockholders’ investment   733,076     830,797   Total $ 1,253,665   $ 1,438,683           BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; Dollars in Thousands) July 31, 2014 July 31, 2013 Operating activities: Net loss $ (45,968 ) $ (154,535 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 44,598 48,725 Non-cash portion of restructuring charges 566 3,699 Non-cash portion of stock-based compensation expense 5,214 1,736 Impairment charges 148,551 204,448 Loss on write-down of assets held for sale — 15,658 Loss on sales of businesses 1,238 3,138 Deferred income taxes (27,516 ) 21,630 Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures): Accounts receivable (3,600 ) 1,535 Inventories (12,608 ) 2,440 Prepaid expenses and other assets (278 ) 5,036 Accounts payable and accrued liabilities (20,508 ) (2,285 ) Income taxes   3,731     (7,722 ) Net cash provided by operating activities 93,420 143,503   Investing activities: Purchases of property, plant and equipment (43,398 ) (35,687 ) Acquisition of business, net of cash acquired — (301,157 ) Sales of businesses, net of cash retained 54,242 10,178 Other   (637 )   900   Net cash provided by (used in) investing activities 10,207 (325,766 )   Financing activities: Payment of dividends (40,487 ) (39,243 ) Proceeds from issuance of common stock 12,113 20,324 Purchase of treasury stock (30,581 ) (5,121 ) Proceeds from borrowings on notes payable 63,000 220,000 Repayment of borrowings on notes payable (60,000 ) (181,000 ) Proceeds from borrowings on line of credit 10,334 11,613 Repayment of borrowings on line of credit (2,398 ) Principal payments on debt (61,264 ) (61,264 ) Income tax benefit from the exercise of stock options and deferred compensation distribution, and other   (6,104 )   1,631   Net cash used in financing activities (115,387 ) (33,060 )   Effect of exchange rate changes on cash 2,536 481   Net decrease in cash and cash equivalents (9,224 ) (214,842 ) Cash and cash equivalents, beginning of period   91,058     305,900     Cash and cash equivalents, end of period $ 81,834   $ 91,058     Supplemental disclosures: Cash paid during the period for: Interest, net of capitalized interest $ 14,594 $ 17,162 Income taxes, net of refunds 33,043 34,030 Acquisitions: Fair value of assets acquired, net of cash $ — $ 168,724 Liabilities assumed — (37,747 ) Goodwill   —     170,180   Net cash paid for acquisitions $ —   $ 301,157       BRADY CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited; Dollars in Thousands)                       Fiscal 2014 Fiscal 2013 Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD SALES TO EXTERNAL CUSTOMERS ID Solutions $ 209,546 $ 194,732 $ 206,448 $ 214,397 $ 825,123 $ 162,393 $ 168,234 $ 197,417 $ 211,071 $ 739,115 Workplace Safety   97,984     96,462     103,129     102,336     399,911     109,622     104,468     105,066     99,521     418,677   Total $ 307,530   $ 291,194   $ 309,577   $ 316,733   $ 1,225,034   $ 272,015   $ 272,702   $ 302,483   $ 310,592   $ 1,157,792     SALES INFORMATION ID Solutions Organic 3.3 % 2.5 % 4.8 % 1.2 % 2.9 % 0.9 % 1.8 % (1.9 )% 2.3 % 0.8 % Currency (0.3 )% (0.5 )% (0.2 )% 0.4 % (0.2 )% (2.4 )% (0.5 )% (1.0 )% 0.2 % (1.0 )% Acquisitions   26.0 %   13.8 %   — %   — %   8.9 %   0.4 %   11.1 %   25.3 %   28.2 %   16.3 % Total   29.0 %   15.8 %   4.6 %   1.6 %   11.6 %   (1.1 )%   12.4 %   22.4 %   30.7 %   16.1 % Workplace Safety Organic (10.0 )% (6.8 )% (1.9 )% 0.9 % (4.6 )% (3.3 )% (7.0 )% (9.0 )% (8.6 )% (7.0 )% Currency (0.6 )% (0.9 )% 0.1 % 1.9 % 0.1 % (2.3 )% 0.4 % (1.1 )% 0.1 % (0.7 )% Acquisitions   — %   — %   — %   — %   — %   5.8 %   5.1 %   5.0 %   — %   4.0 % Total   (10.6 )%   (7.7 )%   (1.8 )%   2.8 %   (4.5 )%   0.2 %   (1.5 )%   (5.1 )%   (8.5 )%   (3.7 )% Total Company Organic (2.1 )% (1.1 )% 2.5 % 1.1 % 0.2 % (0.8 )% (1.8 )% (4.8 )% (2.1 )% (2.4 )% Currency (0.4 )% (0.6 )% (0.2 )% 0.9 % (0.1 )% (2.4 )% (0.1 )% (1.0 )% 0.1 % (0.8 )% Acquisitions   15.6 %   8.5 %   — %   — %   5.7 %   2.6 %   8.6 %   17.0 %   16.9 %   11.3 % Total   13.1 %   6.8 %   2.3 %   2.0 %   5.8 %   (0.6 )%   6.7 %   11.2 %   14.9 %   8.1 %   SEGMENT PROFIT ID Solutions $ 50,967 $ 37,526 $ 44,302 $ 43,334 $ 176,129 $ 44,580 $ 34,643 $ 46,787 $ 48,379 $ 174,389 Workplace Safety   18,374       14,668     14,771       18,425     66,238     27,829       23,600     23,453       20,360     95,242   Total $ 69,341     $ 52,194   $ 59,073     $ 61,759   $ 242,367   $ 72,409     $ 58,243   $ 70,240     $ 68,739   $ 269,631   SEGMENT PROFIT AS A PERCENT OF SALES ID Solutions 24.3 % 19.3 % 21.5 % 20.2 % 21.3 % 27.5 % 20.6 % 23.7 % 22.9 % 23.6 % Workplace Safety   18.8 %   15.2 %   14.3 %   18.0 %   16.6 %   25.4 %   22.6 %   22.3 %   20.5 %   22.7 % Total   22.5 %   17.9 %   19.1 %   19.5 %   19.8 %   26.6 %   21.4 %   23.2 %   22.1 %   23.3 %     Fiscal 2014 Fiscal 2013 Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD Total segment profit $ 69,341 $ 52,194 $ 59,073 $ 61,759 $ 242,367 $ 72,409 $ 58,243 $ 70,240 $ 68,739 $ 269,631 Unallocated amounts: Administrative costs (32,813 ) (29,524 ) (29,267 ) (28,411 ) (120,015 ) (29,174 ) (34,513 ) (30,765 ) (27,242 ) (121,693 ) Restructuring charges (6,839 ) (4,324 ) (3,039 ) (810 ) (15,012 ) - (1,933 ) (8,540 ) (15,573 ) (26,046 ) Impairment charges - - - (148,551 ) (148,551 ) - - (204,448 ) (204,448 ) Investment and other income 761 255 872 514 2,402 396 898 1,133 1,097 3,523 Interest expense   (3,721 )   (3,676 )   (3,381 )   (3,522 )   (14,300 )   (4,163 )   (4,406 )   (4,186 )   (3,887 )   (16,641 ) Earnings (loss) from continuing operations before income taxes $ 26,729   $ 14,925   $ 24,258   $ (119,021 ) $ (53,109 ) $ 39,468   $ 18,289   $ 27,882   $ (181,314 ) $ (95,674 )           GAAP to NON-GAAP MEASURES (Unaudited; Dollars in Thousands, Except Per Share Amounts)     In accordance with the U.S. Securities and Exchange Commission’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings release and the reconciliation to the most closely related GAAP measure.   Earnings from Continuing Operations Before Income Taxes Excluding Certain Items: Brady is presenting the Non-GAAP measure "Earnings from Continuing Operations Before Income Taxes Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Statements of Earnings data. We do not view these items to be part of our sustainable results. We believe this profit measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Loss from Continuing Operations Before Income Taxes to Earnings from Continuing Operations Before Income Taxes Excluding Certain Items:     Three Months Ended July 31, Year Ended July 31, 2014 2013 2014 2013 Loss from Continuing Operations Before Income Taxes (GAAP measure) $ (119,021 ) $ (181,314 ) $ (53,109 ) $ (95,674 ) Cost of goods sold: Purchase accounting expense related to inventory — — — 1,530 Selling, general and administrative: Reversal of restricted stock grant expense — (4,232 ) — (4,232 ) PDC acquisition-related expenses — — — 3,600 Non-cash income tax charges — — — — Restructuring charges 810 15,573 15,012 26,046 Impairment charges   148,551     204,448     148,551     204,448     Earnings from Continuing Operations Before Income Taxes Excluding Certain Items (non-GAAP measure) $ 30,340   $ 34,475   $ 110,454   $ 135,718       Income Taxes on Continuing Operations Excluding Certain Items: Brady is presenting the Non-GAAP measure "Income Taxes on Continuing Operations Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Statements of Earnings data. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Income Taxes on Continuing Operations to Income Taxes on Continuing Operations Excluding Certain Items:     Three Months Ended July 31, Year Ended July 31, 2014 2013 2014 2013 Income Taxes on Continuing Operations (GAAP measure) $ (22,040 ) $ (5,757 ) $ (4,963 ) $ 42,583 Cost of goods sold: Purchase accounting expense related to inventory — — — 581 Selling, general and administrative: Reversal of restricted stock grant expense — (1,608 ) — (1,608 ) PDC acquisition-related expenses — — — 641 Non-cash income tax charges — (3,976 ) — (28,976 ) Restructuring charges 230 4,337 4,751 7,157 Impairment charges   31,157     12,892     31,157     12,892     Income Taxes on Continuing Operations Excluding Certain Items (non-GAAP measure) $ 9,347   $ 5,888   $ 30,945   $ 33,270       Net Earnings from Continuing Operations Excluding Certain Items: Brady is presenting the Non-GAAP measure "Net Earnings from Continuing Operations Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Statements of Earnings data. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net Loss from Continuing Operations to Net Earnings from Continuing Operations Excluding Certain Items:     Three Months Ended July 31, Year Ended July 31, 2014 2013 2014 2013 Net Loss from Continuing Operations (GAAP measure) $ (96,981 ) $ (175,557 ) $ (48,146 ) $ (138,257 ) Cost of goods sold: Purchase accounting expense related to inventory — — — 949 Selling, general and administrative: Reversal of restricted stock grant expense — (2,624 ) — (2,624 ) PDC acquisition-related expenses — — — 2,959 Non-cash income tax charges — 3,976 — 28,976 Restructuring charges 580 11,236 10,261 18,889 Impairment charges   117,394     191,556     117,394     191,556     Net Earnings from Continuing Operations Excluding Certain Items (non-GAAP measure) $ 20,993   $ 28,587   $ 79,509   $ 102,448       Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items: Brady is presenting the Non-GAAP measure "Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items." This is not a calculation based upon GAAP. The amounts included in this Non-GAAP measure are derived from amounts included in the Consolidated Financial Statements and supporting footnote disclosures. We do not view these items to be part of our sustainable results. We believe this measure provides an important perspective of underlying business trends and results and provides a more comparable measure from year to year. The table below provides a reconciliation of Net Loss from Continuing Operations Per Diluted Class A Nonvoting Common Share to Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Common Share Excluding Certain Items:     Three Months Ended July 31, Year Ended July 31, 2014 2013 2014 2013 Net Loss from Continuing Operations Per Diluted Class A Nonvoting Share (GAAP measure) $ (1.89 ) $ (3.40 ) $ (0.93 ) $ (2.70 ) Cost of goods sold: Purchase accounting expense related to inventory — — — 0.02 Selling, general and administrative: Reversal of restricted stock grant expense — (0.05 ) — (0.05 ) PDC acquisition-related expenses — — — 0.06 Non-cash income tax charges — 0.08 — 0.56 Restructuring charges 0.01 0.22 0.20 0.37 Impairment charges   2.29     3.71     2.29     3.71     Net Earnings from Continuing Operations Per Diluted Class A Nonvoting Share Excluding Certain Items (non-GAAP measure) $ 0.41   $ 0.55   $ 1.53   $ 1.98  

Brady CorporationInvestor contact: Aaron Pearce 414-438-6895Media contact: Carole Herbstreit 414-438-6882