<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 31, 1995.
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from __________ to _________
Commission File Number 0-12730
W. H. BRADY CO.
(Exact name of registrant as specified in its charter)
Wisconsin 39-0178960
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6555 WEST GOOD HOPE ROAD, MILWAUKEE, WISCONSIN 53223
(Address of principal executive offices)
(Zip Code)
(414) 358-6600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of December 1, 1995, there were outstanding 20,073,251 (adjusted
for the stock dividend discussed in Note B) shares of Class A Common Stock and
1,769,314 shares of Class B Common Stock. The Class B Common Stock, all of
which is held by an affiliate of the Registrant, is the only voting stock.
<PAGE> 2
FORM 10-Q
W. H. BRADY CO.
INDEX
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<CAPTION>
Page
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<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance
Sheets 3
Unaudited Condensed Consolidated Statements
of Income and Earnings Retained in the Business 4
Unaudited Consolidated Statements
of Cash Flows 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. Other Information
Item 4. Results of Votes of Holders 8
Signatures 9
</TABLE>
<PAGE> 3
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
October 31 July 31
1995 1995
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ASSETS (Unaudited)
- - ------ -----------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 94,888 $ 89,067
Accounts Receivable, Less Allowance for
Losses ($1,882 and $1,881, Respectively) 46,442 42,104
Inventories 25,523 23,099
Prepaid Expenses & Other Current Assets 10,412 10,202
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Total Current Assets 177,265 164,472
Other Assets 6,953 6,960
Property Plant and Equipment:
Cost
Land 4,269 4,417
Buildings and Improvements 33,448 34,284
Machinery and Equipment 68,189 69,278
Construction in Progress 1,514 815
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107,420 108,794
Less Accumulated Depreciation 51,332 50,221
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Net Property, Plant & Equipment 56,088 58,573
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Total $240,306 $230,005
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- - ----------------------------------------
Current Liabilities:
Accounts Payable $ 13,787 $ 9,252
Wages & Amounts Withheld From Employees 11,417 14,447
Accrued Income Taxes 4,759 2,150
Other Current Liabilities 9,245 8,273
Current Maturities on Long Term Debt 336 412
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Total Current Liabilities 39,544 34,534
Long Term Debt, Less Current Maturities 1,823 1,903
Other Liabilities 24,347 22,745
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Total Liabilities 65,714 59,182
Stockholders' Investment:
Preferred Stock 2,855 2,855
Class A Nonvoting Common Stock-Issued
and Outstanding 20,061,425 and 5,507,341 Shares, Respectively 201 55
Class B Voting Common Stock-Issued and
Outstanding 1,769,314 Shares 18 18
Additional Paid in Capital 7,937 8,074
Earnings Retained in the Business 158,550 154,286
Cumulative Translation Adjustments 5,031 5,535
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Total Stockholders' Investment 174,592 170,823
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Total $240,306 $230,005
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND EARNINGS RETAINED IN THE BUSINESS
(Dollars in Thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended October 31
1995 1994
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<S> <C> <C>
NET SALES $ 79,223 $ 69,039
Operating Expenses
Cost of Products Sold 36,088 32,142
Research and Development 2,673 2,536
Selling, General and Administrative 32,620 26,552
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Total Operating Expenses 71,381 61,230
Operating Income 7,842 7,809
Investment and Other Income-Net 2,568 518
Interest Expense (51) (43)
---- ----
Income Before Income Taxes 10,359 8,284
Income Taxes 4,024 3,350
----- -----
NET INCOME $6,335 $4,934
Earnings Retained in the Business at Beginning of Period 154,286 132,271
Less Dividends:
Preferred Stock (65) (65)
Common Stock (2,006) (1,272)
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Earnings Retained in the Business at End of Period $158,550 $135,868
======== ========
Net Income Per Common Share
Net Income - Class A Nonvoting $0.29 $0.23
===== =====
Net Income - Class B Voting $0.26 $0.20
===== =====
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
W. H. BRADY CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31
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1995 1994
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<S> <C> <C>
Operating Activities:
Net Income $ 6,335 $ 4,934
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation & Amortization 2,156 2,435
(Gain) on Sale of Property, Plant & Equipment (1,763) (8)
Provision for Losses on A/R 177 226
Changes in Operating Assets and Liabilities:
(Incr) Decr in A/R (1,587) (3,479)
(Incr) Decr in Inventory (2,579) (200)
(Incr) Decr in Prepaid Expense & Other Assets (172) (773)
Incr (Decr) in A/P & Other Liabilities 4,303 (1,482)
Incr (Decr) in Income Taxes 2,613 1,222
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Net Cash Provided by Operating Activities 9,483 2,875
Investing Activities:
Purchases of Property, Plant and Equipment (1,410) (974)
Proceeds from Sale of Property, Plant and Equipment 83 55
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Net Cash Provided by (Used in) Investing Activities (1,327) (919)
Financing Activities:
Payment of Dividends (2,071) (1,337)
Proceeds from Issuance of Common Stock 10 214
Principal Payments on Long Term Debt (141) (37)
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Net Cash Used in Financing Activities (2,202) (1,160)
Effect of Exchange Rate Changes on Cash (133) 1,111
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Net Increase in Cash and Cash Equivalents 5,821 1,907
Cash & Cash Equivalents at Beginning of Year 89,067 66,107
------ ------
Cash and Cash Equivalents at End of Period $94,888 $ 68,014
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year For:
Interest $ 377 $ 26
Income Taxes 1,188 1,404
Receivable Relating to Sale of German Facility 3,152
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
W. H. BRADY CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three months ended October 3l, l995
NOTE A - Basis of Presentation
The condensed consolidated financial statements included herein have
been prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of the
Company, the foregoing statements contain all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the financial position
of the Company as of October 3l, 1995 and July 3l, 1995, and its results of
operations and its cash flows for the three months ended October 31, 1995 and
l994. The consolidated balance sheet at July 31, l995 has been taken from the
audited financial statements of that date and condensed.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual
report.
It is not practical to segregate the amounts of raw material, work in
process or finished goods at the respective interim balance sheet dates.
NOTE B - Capital Stock and Share Data
On November 17, 1995, at a Special Meeting of Shareholders, the
Company's shareholders approved a proposal to amend the Company's Restated
Articles of Incorporation to increase the number of authorized shares of Class
A Common Stock from 10,000,000 shares to 100,000,000 shares. Also on November
17, 1995, the shareholders approved, and the Board of Directors declared, a
common stock dividend of two shares of Class A Common Stock on each outstanding
share of Class A Common Stock and Class B Common Stock. The common stock
dividend will be paid on December 15, 1995, to shareholders of record at the
close of business on December 1, 1995. Accordingly, amounts per share and
number of shares included in the condensed consolidated financial statements
have been adjusted retroactively to reflect the common stock dividend. In
connection with the common stock dividend, $146,000 was transferred from
additional paid in capital to Class A Nonvoting Common Stock, reflecting the
par value of the new shares issued.
NOTE C - Net Earnings Per Common Share
Net earnings per common share were computed by dividing net earnings
(after deducting the applicable preferred stock and preferential Class A common
stock dividends) by the weighted average number of Class A and Class B common
shares outstanding (adjusted for the stock dividend discussed in Note B) of
21,830,474 for the three months ended October 31, 1995 and 21,743,334 for the
same period in 1994. The preferential dividend on the Class A common stock of
$0.0333 per share (adjusted for the stock dividend discussed in Note B)
declared on September 19, 1995 has been added to the net earnings per Class A
common share for the three months ended October 31, 1995. The net earnings per
Class A common share for the three months ended October 31, 1994 includes
$0.0333 per share (adjusted for the stock dividend discussed in Note B)
relating to preferential dividends declared in that period.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
For the three months ended October 31, 1995, net sales of $79,223,000
were 14.8% higher than the same quarter of the previous year, primarily as a
result of increased international sales. Sales of the Company's international
operations increased 32.2% , 27.2% as a result of growth through
continued market penetration in Europe and the Far East and new Seton
subsidiaries in Australia and Italy. Changes in the exchange rates used to
translate financial results into U.S. currency resulted in an additional 5.0%
increase in international sales.
The cost of products sold decreased from 46.6% to 45.6% of net sales
principally as a result of changes in product mix. Selling, general and
administrative expenses as a percentage of net sales increased from 38.5% to
41.2%. Adding sales and marketing personnel and expanding catalog sales efforts
contributed to this increase. In addition, the Company invested in advanced
telecommunications and information technology to enhance customer service.
Research and development expenses increased 5.4% compared to the prior year.
Operating income was $7,842,000 in the current year, compared to
$7,809,000 in the prior year, due principally to the increased selling, general
and administrative expenditures mentioned above in the current period.
Investment and other income this year included $1,750,000 ($950,000
after tax) representing gain on the sale of a building in Germany. Income
before income taxes increased 25.1% to $10,359,000 compared to $8,284,000 for
the same period last year.
Net income increased 28.4% to $6,335,000 for the quarter, compared to
$4,934,000 for the prior year because of the factors cited above.
Financial Condition
The Company's liquidity remained strong. The current ratio as of
October 31, 1995 was 4.5 to 1. Cash and cash equivalents were $94,888,000 at
October 31, 1995, compared to $89,067,000 at July 31, 1995. Working capital
increased $7,783,000 during the quarter and equaled $137,721,000 as of October
31, 1995. The Company believes this amount is adequate to meet its current and
anticipated operating needs.
7
<PAGE> 8
PART II
ITEM 4. Submission of Matters to a Vote of Security Holders.
On November 17, 1995, the Company held a Special Meeting of
Shareholders in order to consider and act upon the following matters:
1. A proposal to amend Article III of the Restated Articles of
Incorporation of the Company to increase the number of
shares which the Company has authority to issue from
25,045,000 to 115,045,000, consisting of an increase in the
number of authorized shares of Class A Common Stock from
10,000,000 to 100,000,000. At the meeting, there were
4,178,311 shares of Class A Common Stock voted in favor of
this proposal, 429,180 shares voted against, 800 shares
abstained, and there were zero broker non-votes. All
1,769,314 shares of Class B Common Stock were voted in favor
of this proposal.
2. A proposed dividend of two shares of Class A Common Stock
on each outstanding share of Class A Common Stock and
Class B Common Stock. 4,071,945 shares of the Class A Common
Stock were voted in favor of this proposal, 59,108 shares
were voted against, 403 shares abstained, and there were
476,835 broker non-votes. All 1,769,314 shares of Class B
Common Stock were voted in favor of this proposal.
Also at this meeting, all nominees for the Board of
Directors, consisting of William H. Brady III, Richard A.
Bemis, Robert C. Buchanan, Donald E. DeLuca, Frank W. Harris,
Katherine M. Hudson, Peter J. Lettenberger, Elizabeth B.
Lurie, Gary R. Nei, and Roger D. Peirce were re-elected.
Only the holders of the Company's Class B Common Stock were
eligible to vote in the election for Directors. All
1,769,314 shares of Class B Common Stock were voted in favor
of election of each of the Director-nominees.
8
<PAGE> 9
PART III
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
The Company was not required to file and did not file a
report on Form 8-K during the quarter ended October 31,
1995.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIGNATURES
W.H. BRADY CO.
Date: December 14, 1995 /s/ K. M. Hudson
---------------------- ----------------------
K. M. Hudson
President
Date: December 14, 1995 /s/ D. P. DeLuca
---------------------- ----------------------
D. P. DeLuca
Senior Vice President and
Assistant Secretary
(Principal Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 94,888
<SECURITIES> 0
<RECEIVABLES> 48,324
<ALLOWANCES> 1,882
<INVENTORY> 25,523
<CURRENT-ASSETS> 177,265
<PP&E> 107,420
<DEPRECIATION> 51,332
<TOTAL-ASSETS> 240,306
<CURRENT-LIABILITIES> 39,544
<BONDS> 1,823
<COMMON> 219
2,855
0
<OTHER-SE> 171,518
<TOTAL-LIABILITY-AND-EQUITY> 240,306
<SALES> 79,223
<TOTAL-REVENUES> 79,223
<CGS> 36,088
<TOTAL-COSTS> 36,088
<OTHER-EXPENSES> 35,293
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51
<INCOME-PRETAX> 10,359
<INCOME-TAX> 4,024
<INCOME-CONTINUING> 6,335
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,335
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>