FORM 10 - Q
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 April 30, 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
(State or other jurisdiction
of
incorporation or organization) 39-0178960
(I.R.S. Employer
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)
Indicated 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 June 1, 1995, there were outstanding 5,504,859 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>
FORM 10-Q
W. H. BRADY CO.
INDEX
PAGE
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets. . . . . . . .3
Unaudited Condensed Consolidated Statements
of Income. . . . . . . . . . . . . . . . . . . . . .4
Unaudited Condensed 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. . . . . . . . . . . . . . . . . . .8
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
<TABLE>
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
Apr. 30, July 31,
1995 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 93,696 $ 66,107
Accounts Receivable, Less Allowance for
Losses ($1,943 and $1,565, Respectively) 42,791 32,308
Inventories 21,700 23,737
Prepaid Expenses & Other Current Assets 11,427 9,611
Total Current Assets 169,614 131,763
Other Assets 6,462 6,403
Property Plant and Equipment:
Cost
Land 4,413 4,689
Buildings and Improvements 33,195 38,431
Machinery and Equipment 68,457 72,576
Construction in Progress 1,755 939
107,820 116,635
Less Accumulated Depreciation 49,848 52,292
Net Property, Plant & Equipment 57,972 64,343
Total $234,048 $202,509
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts Payable $ 13,102 $ 9,678
Wages & Amounts Withheld From Employees 12,704 10,479
Accrued Income Taxes 6,981 2,999
Other Current Liabilities 9,756 8,179
Current Maturities on Long-Term Debt 101 405
Total Current Liabilities 42,644 31,740
Long Term Debt, Less Current Maturities 1,880 1,855
Other Liabilities 24,650 23,785
Total Liabilities 69,174 57,380
Stockholders' Investment:
Preferred Stock 2,855 2,855
Class A Nonvoting Common Stock-Issued
and Outstanding 5,504,859 and 5,476,812
Shares, Respectively 55 54
Class B Voting Common Stock-Issued and
Outstanding 1,769,314 Shares 18 18
Additional Paid in Capital 7,681 6,768
Earnings Retained in the Business 148,472 132,271
Cumulative Translation Adjustments 5,793 3,163
Total Stockholders' Investment 164,874 145,129
$234,048 $202,509
See Notes to Condensed Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
W. H. BRADY CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands except per share amounts)
(UNAUDITED)
<CAPTION>
Three Months Ended Apr 30 Nine Months Ended Apr 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $ 83,321 $ 65,888 $231,217 $189,632
Operating Expenses:
Cost of Products Sold 37,156 30,143 106,215 88,386
Research & Development 2,543 2,465 7,790 7,836
Selling, General and
Administrative 29,899 24,494 85,966 71,591
Total Operating Expenses 69,598 57,102 199,971 167,813
Operating Income 13,723 8,786 31,246 21,819
Investment and Other
Income-Net 2,234 371 3,362 981
Interest Expense (101) (102) (293) (225)
Income Before Income Taxes 15,856 9,055 34,315 22,575
Income Taxes 6,312 3,490 13,738 8,971
Net Income $ 9,544 $ 5,565 $ 20,577 $ 13,604
Earnings Retained in
Business at Beginning
of Period 140,448 124,361 132,271 118,730
Less Dividends:
Preferred Stock (65) (65) (194) (194)
Common Stock (1,455) (1,229) (4,182) (3,508)
Earnings Retained in
Business at End of
Period $148,472 $128,632 $148,471 $128,632
Net Income Per Common Share
Net Income -
Class A Nonvoting $ 1.30 $ 0.76 $ 2.83 $ 1.88
Net Income -
Class B Voting $ 1.30 $ 0.76 $ 2.73 $ 1.78
See Notes to Condensed Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
W. H. BRADY CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
April 30
1995 1994
<S> <C> <C>
Net Income $20,569 $ 13,604
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation & Amortization 7,128 7,145
Loss (Gain) on Sale of Equipment (557) (84)
Loss (Gain) on Sale of Business (700) (0)
Provision for Losses on A/R 519 336
Changes in Operating Assets and Liabilities:
(Excluding the sale of businesses in 1995)
(Incr) Decr in A/R (12,788) (3,313)
(Incr) Decr in Inventory 1,920 1,341
(Incr) Decr in Prepaid Expense (1,569) (4,148)
Incr (Decr) in A/P & Other Liabilities 4,755 3,393
Incr (Decr) in Income Taxes 3,548 7,721
Net Cash Provided by Operating Activities 22,875 26,163
Investing Activities:
Purchases of Property, Plant and Equipment (5,704) (5,172)
Proceeds from Sale of Property, Plant
and Equipment - Net 4,035 244
Proceeds from Sale of Business - Net 8,375 0
Purchase of Other L/T Investment (750) 0
Net Cash Provided by (Used in)
Investing Activities 5,956 (4,928)
Financing Activities:
Principal Payments on Long Term Debt (383) (342)
Payment of Dividends (4,376) (3,702)
Proceeds from Issuance of Common Stock 914 773
Net Cash Used in Financing Activities (3,845) (3,271)
Effect of Exchange Rate Changes on Cash 2,653 202
Net Incr (Decr) in Cash and Cash Equivalents 27,589 18,166
Cash & Cash Equivalents at Beginning of Year 66,107 42,366
Cash and Cash Equivalents at End of Period $93,696 $ 60,532
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year For:
Interest 112 58
Income Taxes 9,752 6,214
See Notes to Condensed Consolidated Financial Statements.
/TABLE
<PAGE>
W. H. BRADY CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended April 30, 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 April 30, 1995 and July 31, 1994, and its results of
operations and its cash flows for the three months and nine months ended April
30, 1995 and l994. The consolidated balance sheet at July 31, l994 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. These condensed financial
statements should 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 - 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 of 7,263,663 for the three months and nine months ended
April 30, 1995 and 7,221,301 for the same periods in 1994. The preferential
dividend on the Class A common stock of $.10 per share declared on September
23, 1994 has been added to the net earnings per Class A common share for the
nine months ended April 30, 1995. The net earnings per Class A common share
for the nine months ended April 30, 1994 includes $.10 per share relating to
preferential dividends declared in that period.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
For the three months ended April 30, 1995 revenues of $83,321,000 were
26.5% higher than the same quarter of the previous year. For the nine months
ended April 30, 1995 revenues of $231,217,000 were 21.9% higher than the same
period last year. Sales of the Company's international operations increased
41.5% for the quarter and 33.4% for the nine months as a result of both real
growth through continued market penetration in Europe and the Far East and
changes in the exchange rates used to translate financial results into U.S.
currency. Sales of the Company's U.S. operations increased 17.3% for the
quarter and 15.3% for the nine month period.
The cost of products sold as a percentage of sales was 44.6% for the
quarter and 45.9% for the nine months ended April 30, 1995. For the same
periods last year these percentages were 45.8% and 46.6%. These decreases from
period to period were caused by changes in product mix and the Company's
continuous improvement efforts. Selling, general and administrative expenses
as a percentage of sales were 35.9% for the quarter compared to 37.2% for the
same quarter of the previous year. For the nine months ended April 30, 1995,
this percentage was 37.2% compared to 37.8% for the same period last year.
Research and development expenses increased 3.2% for the quarter and decreased
0.6% for the nine months ended April 30, 1995 over the same periods last year.
Investment and other income for the quarter and the nine months ended April
30, 1995 includes approximately $1,500,000 ($900,000 net of taxes) from the
sale of two businesses and two buildings.
Income before income taxes increased 75.1% for the quarter and 52.0% for
the nine months ended April 30, 1995. Net income increased 71.5% to $9,544,000
compared to $5,655,000 for the same quarter of the previous year. For the nine
months ended April 30, 1995 net income increased 51.3% to $20,577,000 from
$13,604,000 for the same period last year.
Financial Condition
The Company's liquidity remains strong. The current ratio as of April 30,
1995 was 4.0 to 1. Cash and cash equivalents were $93,696,000 at April 30,
1995 compared to $66,107,000 at July 31, 1994. Working capital increased
$26,947,000 during the nine months and equaled $126,970,000 as of April 30,
1995. The Company believes this amount is adequate to meet its current and
anticipated operating needs. <PAGE>
PART II
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 April 30, 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: June 2, 1995 /S/ K. M. Hudson
K. M. Hudson
President
Date: June 2, 1995 /S/ D. P. DeLuca
D. P. DeLuca
Senior Vice President
and Assistant Secretary
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> APR-30-1995
<PERIOD-TYPE> 9-MOS
<CASH> 93,696
<SECURITIES> 0
<RECEIVABLES> 44,734
<ALLOWANCES> 1,943
<INVENTORY> 21,700
<CURRENT-ASSETS> 169,614
<PP&E> 107,820
<DEPRECIATION> 49,848
<TOTAL-ASSETS> 234,048
<CURRENT-LIABILITIES> 42,644
<BONDS> 1,880
2,855
0
<COMMON> 73
<OTHER-SE> 161,946
<TOTAL-LIABILITY-AND-EQUITY> 234,048
<SALES> 231,217
<TOTAL-REVENUES> 231,217
<CGS> 106,215
<TOTAL-COSTS> 106,215
<OTHER-EXPENSES> 93,756
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 293
<INCOME-PRETAX> 34,315
<INCOME-TAX> 13,738
<INCOME-CONTINUING> 20,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,577
<EPS-PRIMARY> 2.83
<EPS-DILUTED> 2.83
</TABLE>
