Brady Reports Strong Growth in Sales and Earnings for Its Fiscal 2004 Second Quarter.Business Editors MILWAUKEE--(BUSINESS WIRE)--Feb. 18, 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 increased sales and net income results for its fiscal 2004 second quarter ended January January: see month. 31, 2004. Sales for the quarter were up 18.0 percent to $152.9 million, compared to $129.6 million in the fiscal 2003 second quarter, primarily due to acquisitions and currency exchange. Net income for the quarter was $8.0 million or $0.34 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, up 183 percent from $2.8 million or $0.12 per share reported in the second quarter of last year. Sales for the six months ended January 31, 2004, rose 13.7 percent to $304.9 million, compared to $268.2 million in the same period last year. Net income for the six months rose 66.9 percent to $18.4 million or $0.77 per share compared to $11.0 million or $0.47 per share for the first half of fiscal 2003. "The significant efforts we've we've Contraction of we have. we've have made to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. our organization and invest in strategic acquisitions and key 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. markets such as Asia, are now paying off with a higher quality of earnings, despite only moderate improvement in the manufacturing sector in the U.S. and 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). ," said Frank M. Jaehnert, Brady's
president and chief executive officer. "After last year's weak
second quarter, we are now seeing some improvement in key markets in the
U.S. and Europe, while Asian markets, particularly telecom and
electronics, continue to be strong. This, along with a positive foreign
currency exchange, is helping to boost our results. Sales from recent
acquisitions also contributed more than 10 percent to our sales growth
in the quarter, and despite the investment costs Those program costs required beyond the development phase to introduce into operational use a new capability; to procure initial, additional, or replacement equipment for operational forces; or to provide for major modifications of an existing capability. associated with
integrating these acquisitions, our net income continues to
improve."
"We expect the improvement in our key markets and further growth through acquisitions, as well as the effects of a weaker dollar, to continue in the second half of fiscal 2004, and are increasing our guidance range to $615 to $645 million in sales with net income of $37 to $41 million in fiscal 2004," 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. 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. . "Looking long term, we are continuing with our growth strategies of developing proprietary products; making acquisitions that expand our product range, technical expertise or market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" ; and further improving our processes to best serve our customers." A webcast regarding fiscal 2004 second quarter results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Standard 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 3,400 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 . The company had sales of $555 million in fiscal 2003. Brady stock trades on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol BRC. 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, which includes an interactive version of the 2003 Annual Report to Shareholders. Information by regional segment for the three and six months ended January 31, 2004 and 2003 follows:
(Unaudited, dollars in Americas Europe Asia Corporate Total
thousands)
======================================================================
SALES TO EXTERNAL CUSTOMERS
======================================================================
Three months ended:
======================================================================
January 31, 2004 $74,196 $60,360 $18,392 $152,948
======================================================================
January 31, 2003 68,432 47,880 13,253 129,565
======================================================================
======================================================================
Six months ended:
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January 31, 2004 $154,288 $113,625 $36,941 $304,854
======================================================================
January 31, 2003 148,363 92,963 26,901 268,227
======================================================================
======================================================================
SALES GROWTH INFORMATION
======================================================================
Three months ended January 31, 2004:
======================================================================
Base (4.2)% (3.3)% 26.6% (0.7)%
======================================================================
Currency 2.1 % 16.0 % 12.2% 8.2 %
======================================================================
Acquisitions 10.5 % 13.4 % 0.0% 10.5 %
======================================================================
Total 8.4 % 26.1 % 38.8% 18.0 %
======================================================================
======================================================================
Six months ended January 31, 2004:
======================================================================
Base (5.4)% (3.8)% 26.3% (1.6)%
======================================================================
Currency 1.8 % 14.4 % 11.0% 7.1 %
======================================================================
Acquisitions 7.6 % 11.6 % 0.0% 8.2 %
======================================================================
Total 4.0 % 22.2 % 37.3% 13.7 %
======================================================================
======================================================================
SEGMENT PROFIT (LOSS)
======================================================================
Three months ended:
======================================================================
January 31, 2004 $9,498 $15,346 $4,905 $(1,200) $28,549
======================================================================
January 31, 2003 5,879 10,876 3,093 (1,127) 18,721
======================================================================
Percentage increase
(decrease) 61.6% 41.1% 58.6% 6.5% 52.5%
======================================================================
======================================================================
Six months ended:
======================================================================
January 31, 2004 $24,614 $28,795 $10,329 $(1,970) $61,768
======================================================================
January 31, 2003 19,860 21,294 6,780 (1,656) 46,278
======================================================================
Percentage increase
(decrease) 23.9% 35.2% 52.3% 19.0% 33.5%
======================================================================
PROFIT RECONCILIATION (Dollars in thousands)
======================================================================
Three months ended: Six months ended:
======================================================================
January 31, January January January 31,
2004 31, 2003 31, 2004 2003
======================================================================
Total profit for reportable
segments $29,749 $19,848 $63,738 $47,934
======================================================================
Corporate and eliminations (1,200) (1,127) (1,970) (1,656)
======================================================================
Unallocated amounts:
======================================================================
Administrative costs: (15,365) (13,292) (30,537) (27,627)
======================================================================
Interest - net 134 253 225 380
======================================================================
Foreign exchange (117) (536) (397) (612)
======================================================================
Restructuring charge, net (66) - (1,819) -
======================================================================
Other (1,055) (880) (1,591) (1,728)
======================================================================
Income before income taxes 12,080 4,266 27,649 16,691
======================================================================
Income taxes 4,047 1,449 9,263 5,675
======================================================================
Net income $8,033 $2,817 $18,386 $11,016
======================================================================
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.
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 January 31, Six Months Ended January 31,
------------------------------ ----------------------------
Percent- Percent-
age age
2004 2003 Change 2004 2003 Change
---- ---- -------- ---- ---- --------
Net sales $152,948 $129,565 18.0% $304,854 $268,227 13.7%
Operating expenses:
Cost of products
sold 74,718 65,909 13.4% 147,861 134,354 10.1%
Research and
development 5,606 4,572 22.6% 10,470 8,643 21.1%
Selling, general
and admini-
strative 60,495 54,535 10.9% 116,883 108,307 7.9%
Restructuring
charge - net 66 - 1,819 -
-------- -------- -------- --------
Total operating
expenses 140,885 125,016 12.7% 277,033 251,304 10.2%
Operating
income 12,063 4,549 165.2% 27,821 16,923 64.4%
Other income and (expense):
Investment and other
income
(expense) 18 (275) -106.55% (141) (189) -25.40%
Interest expense (1) (8) -87.5% (31) (43) -27.9%
-------- -------- -------- --------
Income before
income taxes 12,080 4,266 183.2% 27,649 16,691 65.7%
Income taxes 4,047 1,449 179.3% 9,263 5,675 63.2%
-------- -------- -------- --------
Net income 8,033 2,817 185.2% 18,386 11,016 66.9%
Income retained in
business at
beginning of
period 296,388 291,231 1.8% 290,805 287,674 1.1%
Less:
Redemption premium
on preferred
stock - - - (171)
Common stock
dividends (4,858) (4,540) 7.0% (9,628) (9,011) 6.8%
Income retained in
business at end
of period $299,563 $289,508 3.5% $299,563 $289,508 3.5%
======== ======== ======== ========
Net income per Class A Nonvoting Common
Share
Basic $ 0.34 $ 0.12 183.3% $ 0.78 $ 0.47 66.0%
======== ======== ======== ========
Diluted $ 0.34 $ 0.12 183.3% $ 0.77 $ 0.47 63.8%
======== ======== ======== ========
Net income per Class B Voting Common Share
Basic $ 0.34 $ 0.12 183.3% $ 0.75 $ 0.44 70.5%
======== ======== ======== ========
Diluted $ 0.34 $ 0.12 183.3% $ 0.74 $ 0.44 68.2%
======== ======== ======== ========
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
January 31, 2004 July 31, 2003
---------------- -------------
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents $ 58,211 $ 76,088
Accounts receivable, less allowance for
losses ($3,764 and 94,428 80,162
$3,166, respectively)
Inventories 45,302 36,564
Prepaid expenses and other current
assets 20,434 22,343
------------- ----------
Total current assets 218,375 215,157
Other assets:
Goodwill 162,504 130,667
Other 23,978 24,455
------------- ----------
186,482 155,122
Property, plant and equipment:
Cost:
Land 5,252 5,172
Buildings and improvements 53,767 51,471
Machinery and equipment 146,441 139,007
Construction in progress 5,880 3,245
------------- ----------
211,340 198,895
Less accumulated depreciation 130,207 119,655
------------- ----------
Net property, plant and equipment 81,133 79,240
------------- ----------
Total $ 485,990 $ 449,519
============= ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
------------------------------------------
Current liabilities:
Accounts payable $ 31,075 $ 28,470
Wages and amounts withheld from
employees 30,003 30,619
Taxes, other than income taxes 3,633 2,492
Accrued income taxes 13,206 11,449
Other current liabilities 21,988 17,320
Short-term borrowings and current
maturities on long-term debt 21 929
------------- ----------
Total current liabilities 99,926 91,279
Long-term obligations, less current
maturities 48 568
Other liabilities 19,917 18,711
------------- ----------
Total liabilities 119,891 110,558
Stockholders' investment:
Common stock:
Class A nonvoting common stock - Issued
and outstanding, 21,873,849 219 216
and 21,558,265 shares,
respectively
Class B voting common stock - Issued
and outstanding 1,769,314 shares 18 18
Additional paid-in capital 57,213 47,464
Income retained in the business 299,563 290,805
Treasury Stock - 34,657 and 18,262
shares, at cost (1,074) (509)
Cumulative other comprehensive income 10,615 1,595
Other (455) (628)
------------- ----------
Total stockholders' investment 366,099 338,961
------------- ----------
Total $ 485,990 $ 449,519
============= ==========
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS) (Unaudited)
Six Months Ended January 31,
2004 2003
------------ --------
Operating activities:
Net income $ 18,386 $ 11,016
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 9,989 8,102
Loss on sale or disposal of property,
plant & equipment 104 41
Provision for losses on accounts
receivable 764 671
Amortization of restricted stock 173 123
Net restructuring charge accrued
liability 1,742 -
Changes in operating assets and liabilities
(net of effects of business acquisitions):
Accounts receivable (3,908) 1,320
Inventory (3,806) 730
Prepaid expenses and other assets 2,720 787
Accounts payable and accrued
liabilities (6,627) (4,145)
Income taxes 2,561 2,008
------------ --------
Net cash provided by operating
activities 22,098 20,653
Investing activities:
Acquisitions of businesses, net of cash
acquired (30,652) (12,817)
Termination of capital lease (791)
Purchases of property, plant and
equipment (6,621) (7,621)
Proceeds from sale of property, plant and
equipment 255 16
Other (933) (295)
------------ --------
Net cash used in investing
activities (37,951) (21,508)
Financing activities:
Payment of dividends (9,982) (9,182)
Proceeds from issuance of Common Stock 7,919 1,620
Principal payments on debt (1,534) (162)
Payment for redemption of preferred stock - (2,855)
Purchase of treasury stock (564) (377)
Proceeds from short-term borrowings-net 75
------------ --------
Net cash used in financing
activities (4,161) (10,881)
Effect of exchange rate changes on cash 2,137 1,393
------------ --------
Net decrease in cash and cash equivalents (17,877) (10,343)
Cash and cash equivalents, beginning of
period 76,088 75,969
------------ --------
Cash and cash equivalents, end of period $ 58,211 $ 65,626
============ ========
Supplemental disclosures:
Cash paid during the period for:
Interest $ 64 $ 38
Income taxes, net of refunds 6,502 3,942
Acquisitions:
Fair value of asset acquired, net of cash $ 14,594 $ 5,277
Liabilities Assumed (9,040) (2,009)
Goodwill 25,098 9,549
------------ --------
Net cash paid for acquisitions $ 30,652 $ 12,817
============ ========
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