Brady Reports Record Third Quarter With Double-Digit Growth in Sales and Earnings.Business Editors MILWAUKEE--(BUSINESS WIRE)--May 19, 2004 Brady Corporation Brady Corporation is a US based multi-national company specialising in the manufacture of labels and label printers for use in offices and industry. Company History Brady was founded in 1914 in Eau Claire, Wisconsin, as W.H. Brady Co. (NYSE NYSE See: New York Stock Exchange :BRC BRC Black Rock City (Burning Man) BRC British Retail Consortium BRC Business Resource Center (Small Business Administration) BRC Bisexual Resource Center BRC Black Radical Congress ), 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 A·mer·i·cas , the See America. , 8.4 percent in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , 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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 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 geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. regions," said Brady Bra·dy , James Buchanan Known as "Diamond Jim." 1856-1917. American financier and philanthropist who gained his nickname because of his attraction to diamonds and his extravagant lifestyle. Noun 1. President and Chief Executive Officer Frank M. Jaehnert. "Our efforts to control costs and boost productivity, combined with a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency impact, improvement in end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. 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 at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval for the purchase of EMED EMED Eastern Mediterranean (shipping routes) EMED Eastern Mediterranean Resources Public Limited EMED Entrepreneurial Management and Executive Development Co. and will be completing this transaction in a few days." "We are refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar our guidance for our fiscal year ending July July: see month. 31, 2004," said Brady Chief Financial Officer David Mathieson David Mathieson (born January 18, 1978 in Dumfries, Scotland) is a goalkeeper currently playing for Scottish First Division side Gretna. He has previously played for St Johnstone and Queen of the South. . "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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3 million in tax benefit which we expect to recognize upon finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. 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 five 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 webcast 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 Communicating information, including data, text, pictures, voice and video over long distance. See communications. , manufacturing, electrical, and a variety of other markets. Founded in 1914, Brady is headquartered in Milwaukee Milwaukee (mĭlwŏk`ē), city (1990 pop. 628,088), seat of Milwaukee co., SE Wis., at the point where the Milwaukee, Menominee, and Kinnickinnic rivers enter Lake Michigan; inc. 1846. and employs about 3,500 people in operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Europe, Asia/Pacific, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . More information is available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.bradycorp.com. This news release contains forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information, as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. ; 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. are not guarantees, since there are inherent difficulties in predicting future results, and that actual results could differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in forward-looking statements.
Information by regional segment for the three and nine months ended
April 30, 2004 and 2003 is as follows:
(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%
PROFIT RECONCILIATION (Dollars in thousands)
Three months ended: Nine months ended:
April 30, April 30, April 30, April 30,
2004 2003 2004 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
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
INCOME RETAINED IN THE BUSINESS
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
------------------------------------------------------
Three Months Ended Nine Months Ended
April 30, April 30,
-------------------------- --------------------------
Percent- Percent-
age age
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%
======== ======== ======== ========
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
April 30, July 31,
2004 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 and
21,558,265 shares, respectively 220 216
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
=========== ===========
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands) (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 investments (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
========= =========
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