Brady Reports Strong Sales and Earnings Growth for Its Fiscal 2005 Second Quarter.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. -- 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 2005 second quarter ended January January: see month. 31, 2005. Sales for the quarter were up 28.3 percent to $196.2 million, compared to $152.9 million in the fiscal 2004 second quarter, with growth across all regions and major market segments. Net income for the quarter more than doubled to a record $20.6 million or $0.41 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 compared to $8.0 million or $0.17 per share in the second quarter of last year. Sales for the six months ended January 31, 2005, rose 30.1 percent to $396.6 million, compared to $304.9 million in the same period last year. Net income for the six months rose 122.6 percent to $40.9 million or $0.83 per diluted share compared to $18.4 million or $0.39 per share for the first half of fiscal 2004. "We are pleased to see strength in our end markets with all of our businesses and regions contributing to sales and profit," said Frank M. Jaehnert, Brady's president and chief executive officer. "In addition, our recent acquisitions continue to meet or exceed our expectations." "As a result of our improving profitability, we are increasing our guidance for fiscal 2005," 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. . "We anticipate sales of $790 to $810 million, with net income between $78 and $80 million and earnings per share of $1.55 to $1.60, up from previous guidance of sales of $780 to $800 million, net income of $66 to $69 million and earnings per share of $1.35 to $1.41." A webcast regarding fiscal 2005 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 and employs about 4,000 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 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). ,
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 $671
million in fiscal 2004. 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. Information by regional segment for the three and six months ended January 31, 2005 and 2004 is as follows:
(Dollars in thousands) Americas Europe Asia Corporate Total
SALES TO EXTERNAL CUSTOMERS
Three months ended:
January 31, 2005 $95,255 $70,886 $30,075 $196,216
January 31, 2004 74,196 60,360 18,392 152,948
Six months ended:
January 31, 2005 $200,704 $135,413 $60,518 $396,635
January 31, 2004 154,288 113,625 36,941 304,854
SALES GROWTH INFORMATION
Three months ended January 31, 2005:
Base 10.2% 8.5% 25.5% 11.4%
Currency 1.1% 8.9% 2.8% 4.4%
Acquisitions 17.0% 0.0% 35.2% 12.5%
Total 28.3% 17.4% 63.5% 28.3%
Six months ended January 31, 2005:
Base 9.0% 7.6% 26.9% 10.6%
Currency 0.8% 9.1% 3.3% 4.2%
Acquisitions 20.3% 2.5% 33.6% 15.3%
Total 30.1% 19.2% 63.8% 30.1%
SEGMENT PROFIT (LOSS)
Three months ended:
January 31, 2005 $20,431 $21,601 $8,709 $(585) $50,156
January 31, 2004 9,498 15,346 4,905 (1,200) 28,549
Percentage increase 115.1% 40.8% 77.6% 51.3% 75.7%
Six months ended:
January 31, 2005 $45,811 $39,733 $17,619 ($2,011)$101,153
January 31, 2004 24,614 28,795 10,329 (1,970) 61,768
Percentage increase 86.1% 38.0% 70.6% 2.1% 63.8%
PROFIT RECONCILIATION (Dollars in thousands)
Three months ended: Six months ended:
January 31, January 31, January 31, January 31,
2005 2004 2005 2004
Total profit for
reportable segments $50,741 $29,749 $103,163 $63,738
Corporate and
eliminations (585) (1,200) (2,010) (1,970)
Unallocated amounts:
Administrative
costs: (18,637) (15,365) (36,238) (30,537)
Interest - net (1,821) 134 (3,646) 225
Foreign exchange 276 (117) 246 (397)
Restructuring
charge, net - (66) - (1,819)
Other (584) (1,055) (2,188) (1,591)
Income before
income taxes 29,390 12,080 59,327 27,649
Income taxes 8,811 4,047 18,391 9,263
Net income $20,579 $8,033 $40,936 $18,386
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
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
------------------------------------
Three Months Ended January 31,
------------------------------------
Percentage
2005 2004 Change
----------- ----------- ----------
Net sales $ 196,216 $ 152,948 28.3%
Cost of products sold 91,260 75,138 21.5%
----------- -----------
Gross margin 104,956 77,810 34.9%
Operating expenses:
Research and development 6,099 5,606 8.8%
Selling, general and
administrative 67,923 60,495 12.3%
Restructuring charge - net - 66
----------- -----------
Total operating expenses 74,022 66,167 11.9%
Operating income 30,934 11,643 165.7%
Other income and (expense):
Investment and other
(expense) income 493 438 12.56%
Interest expense (2,037) (1) 203600.0%
----------- -----------
Income before income taxes 29,390 12,080 143.3%
Income taxes 8,811 4,047 117.7%
----------- -----------
Net income 20,579 8,033 156.2%
=========== ===========
Per Class A Nonvoting Common Share:
Basic net income $ 0.42 $ 0.17 147.1%
Diluted net income $ 0.41 $ 0.17 141.2%
Dividends $ 0.11 $ 0.11 4.8%
Per Class B Voting Common Share:
Basic net income $ 0.42 $ 0.17 147.1%
Diluted net income $ 0.41 $ 0.17 141.2%
Dividends $ 0.11 $ 0.11 4.8%
Weighted average common shares outstanding:
Basic 49,059,713 47,087,756
Diluted 49,981,887 47,782,208
(Unaudited)
------------------------------------
Six Months Ended January 31,
------------------------------------
Percentage
2005 2004 Change
----------- ----------- ----------
Net sales $ 396,635 $ 304,854 30.1%
Cost of products sold 186,154 148,281 25.5%
----------- ----------- ----------
Gross margin 210,481 156,573 34.4%
Operating expenses:
Research and development 11,803 10,470 12.7%
Selling, general and
administrative 135,951 116,883 16.3%
Restructuring charge - net - 1,819
----------- ----------- ----------
Total operating expenses 147,754 129,172 14.4%
Operating income 62,727 27,401 128.9%
Other income and (expense):
Investment and other
(expense) income 776 279 178.14%
Interest expense (4,176) (31) 13371.0%
----------- ----------- ----------
Income before income taxes 59,327 27,649 114.6%
Income taxes 18,391 9,263 98.5%
----------- ----------- ----------
Net income 40,936 18,386 122.6%
=========== =========== ==========
Per Class A Nonvoting Common Share:
Basic net income $ 0.84 $ 0.39 115.4%
Diluted net income $ 0.83 $ 0.39 115.6%
Dividends $ 0.22 $ 0.21 4.8%
Per Class B Voting Common Share:
Basic net income $ 0.82 $ 0.38 118.7%
Diluted net income $ 0.81 $ 0.37 118.9%
Dividends $ 0.20 $ 0.19 5.2%
Weighted average common shares outstanding:
Basic 48,772,946 46,986,066
Diluted 49,583,727 47,573,447
BRADY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(Unaudited)
------------------------
January 31, July 31,
2005 2004
----------- -----------
ASSETS
------
Current assets:
Cash and cash equivalents $ 72,599 $ 70,368
Accounts receivable, less allowance for
losses ($4,333 and $3,869, respectively) 111,804 105,322
Inventories:
Finished Products 36,138 29,616
Work-in-process 8,201 6,550
Raw materials and supplies 19,585 16,765
----------- -----------
Total inventories 63,924 52,931
Prepaid expenses and other current assets 25,222 23,302
----------- -----------
Total current assets 273,549 251,923
Other assets:
Goodwill 305,844 275,897
Other Intangible assets 59,039 45,879
Other 31,413 34,526
----------- -----------
396,296 356,302
Property, plant and equipment:
Cost:
Land 6,331 6,242
Buildings and improvements 61,902 58,850
Machinery and equipment 155,230 153,467
Construction in progress 6,121 1,468
----------- -----------
229,584 220,027
Less accumulated depreciation 137,989 133,922
----------- -----------
Net property, plant and equipment 91,595 86,105
----------- -----------
Total $ 761,440 $ 694,330
=========== ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
----------------------------------------
Current liabilities:
Accounts payable $ 35,160 $ 38,533
Wages and amounts withheld from employees 33,025 41,872
Taxes, other than income taxes 5,039 3,852
Accrued income taxes 19,959 12,399
Other current liabilities 24,314 23,529
Short-term borrowings and current
maturities on long-term debt 17 32
----------- -----------
Total current liabilities 117,514 120,217
Long-term obligations, less current
maturities 150,000 150,019
Other liabilities 34,569 20,779
----------- -----------
Total liabilities 302,083 291,015
Stockholders' investment:
Common stock:
Class A nonvoting common stock - Issued and
outstanding, 45,591,049 and 44,690,798
shares, respectively 456 224
Class B voting common stock - Issued and
outstanding 1,769,314 shares 18 18
Additional paid-in capital 90,914 72,865
Income retained in the business 352,687 322,224
Treasury Stock - 34,657 shares, at cost (1,074) (1,074)
Accumulated other comprehensive income 16,477 9,340
Other (121) (282)
----------- -----------
Total stockholders' investment 459,357 403,315
----------- -----------
Total $ 761,440 $ 694,330
=========== ===========
BRADY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands) (Unaudited)
Six Months Ended
January 31
2005 2004
----------- -----------
Operating activities:
Net income $ 40,936 $ 18,386
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 13,253 9,989
Income tax benefit from the exercise of
stock options 3,740 1,552
Loss on sale or disposal of property, plant
& equipment 470 104
Provision for losses on accounts receivable 618 764
Non-cash portion of stock-based
compensation expense 2,048 455
Net restructuring charge accrued liability - 1,742
Changes in operating assets and liabilities
(net of effects of business acquisitions):
Accounts receivable 888 (3,908)
Inventory (7,151) (3,806)
Prepaid expenses and other assets (1,715) 2,720
Accounts payable, accrued expenses and
other liabilities (17,491) (6,668)
Income taxes 7,240 1,009
Other liabilities 2,732 41
----------- -----------
Net cash provided by operating
activities 45,568 22,380
Investing activities:
Acquisition of businesses, net of cash
acquired (34,428) (30,652)
Purchases of property, plant and equipment (9,648) (6,621)
Proceeds from sale of property, plant and
equipment 262 255
Other (2,364) (933)
----------- -----------
Net cash used in investing activities (46,178) (37,951)
Financing activities:
Payment of dividends (10,473) (9,982)
Proceeds from issuance of common stock 12,655 7,919
Principal payments on debt (37) (1,534)
Purchase of treasury stock - (564)
----------- -----------
Net cash provided (used) in
financing activities 2,145 (4,161)
Effect of exchange rate changes on cash 696 1,855
Net increase (decrease) in cash and cash
equivalents 2,231 (17,877)
Cash and cash equivalents, beginning of
period 70,368 76,088
----------- -----------
Cash and cash equivalents, end of period $ 72,599 $ 58,211
=========== ===========
Supplemental disclosures:
Cash paid during the period for:
Interest $ 4,051 $ 64
Income taxes, net of refunds 6,122 6,502
Acquisitions:
Fair value of asset acquired, net of cash $ 25,938 $ 14,594
Liabilities assumed (15,013) (9,040)
Goodwill 23,503 25,098
----------- -----------
Net cash paid for acquisitions $ 34,428 $ 30,652
=========== ===========
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