Stockholder's Investments

12 Months Ended

Jul. 31, 2013

Equity [Abstract]

Stockholder's Investments

Stockholder's Investment

Information as to the Company’s capital stock at July 31, 2013 and 2012 is as follows:

	July 31, 2013				July 31, 2012
	Shares Authorized	Shares Issued	(thousands) Amount		Shares Authorized	Shares Issued	(thousands) Amount
Preferred Stock, $.01 par value	5,000,000				5,000,000
Cumulative Preferred Stock: 6% Cumulative	5,000				5,000
1972 Series	10,000				10,000
1979 Series	30,000				30,000
Common Stock, $.01 par value: Class A Nonvoting	100,000,000	51,261,487	$	513	100,000,000	51,261,487	$	513
Class B Voting	10,000,000	3,538,628	35		10,000,000	3,538,628	35
			$	548			$	548

Before any dividend may be paid on the Class B Common Stock, holders of the Class A Common Stock are entitled to receive an annual, noncumulative cash dividend of $.01665 per share. Thereafter, any further dividend in that fiscal year must be paid on each share of Class A Common Stock and Class B Common Stock on an equal basis.

Other than as required by law, holders of the Class A Common Stock are not entitled to any vote on corporate matters, unless, in each of the three preceding fiscal years, the $.01665 preferential dividend described above has not been paid in full. Holders of the Class A Common Stock are entitled to one vote per share for the entire fiscal year immediately following the third consecutive fiscal year in which the preferential dividend is not paid in full. Holders of Class B Common Stock are entitled to one vote per share for the election of directors and for all other purposes.

Upon liquidation, dissolution or winding up of the Company, and after distribution of any amounts due to holders of Cumulative Preferred Stock, holders of the Class A Common Stock are entitled to receive the sum of $0.835 per share before any payment or distribution to holders of the Class B Common Stock. Thereafter, holders of the Class B Common Stock are entitled to receive a payment or distribution of $0.835 per share. Thereafter, holders of the Class A Common Stock and Class B Common Stock share equally in all payments or distributions upon liquidation, dissolution or winding up of the Company.

The preferences in dividends and liquidation rights of the Class A Common Stock over the Class B Common Stock will terminate at any time that the voting rights of Class A Common Stock and Class B Common Stock become equal.

The following is a summary of other activity in stockholders’ investment for the years ended July 31, 2013, 2012, and 2011:

	Unearned Restricted Stock			Deferred Compensation			Shares Held in Rabbi Trust, at cost			Total
Balances at July 31, 2010	$	(3,373	)	$	12,848		$	(12,304	)	$	(2,829	)
Shares at July 31, 2010				614,988			614,988
Sale of shares at cost	—			(1,421		)	1,375			(46		)
Purchase of shares at cost	—			666			(666		)	—
Issuance of restricted stock	(2,835		)	—			—			(2,835		)
Amortization of restricted stock	846			—			—			846
Balances at July 31, 2011	$	(5,362	)	$	12,093		$	(11,595	)	$	(4,864	)
Shares at July 31, 2011				560,078			560,078
Sale of shares at cost	—			(1,407		)	1,368			(39		)
Purchase of shares at cost	—			924			(924		)	—
Amortization of restricted stock	1,599			—			—			1,599
Balances at July 31, 2012	$	(3,763	)	$	11,610		$	(11,151	)	$	(3,304	)
Shares at July 31, 2012				517,105			517,105
Sale of shares at cost	—			(1,461		)	1,419			(42		)
Purchase of shares at cost	—			891			(891		)	—
Forfeitures of restricted stock	838									838
Amortization of restricted stock	1,788			—			—			1,788
Balances at July 31, 2013	$	(1,137	)	$	11,040		$	(10,623	)	$	(720	)
Shares at July 31, 2013				469,797			469,797

Prior to 2002, all Brady Corporation deferred compensation was invested in the Company’s Class A Nonvoting Common Stock. In 2002, the Company adopted a new deferred compensation plan which allowed investing in other investment funds in addition to the Company’s Class A Nonvoting Common Stock. Under this plan, participants were allowed to transfer funds between the Company’s Class A Nonvoting Common Stock and the other investment funds. On May 1, 2006 the plan was amended with the provision that deferrals into the Company’s Class A Nonvoting Common Stock must remain in the Company’s Class A Nonvoting Common Stock and be distributed in shares of the Company’s Class A Nonvoting Common Stock. At July 31, 2013, the deferred compensation balance in stockholders’ investment represents the investment at the original cost of shares held in the Company’s Class A Nonvoting Common Stock for the deferred compensation plan prior to 2002 and the investment at the cost of shares held in the Company’s Class A Nonvoting Common Stock for the plan subsequent to 2002, adjusted for the plan amendment on May 1, 2006. The balance of shares held in the Rabbi Trust represents the investment in the Company’s Class A Nonvoting Common Stock at the original cost of all the Company’s Class A Nonvoting Common Stock held in deferred compensation plans.

The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock or restricted shares of Class A Nonvoting Common Stock to employees and non-employee directors. The options have an exercise price equal to the fair market value of the underlying stock at the date of grant and generally vest ratably over a three-year period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding two years. Options issued under the plan, referred to herein as “service-based” options, generally expire 10 years from the date of grant. The Company also grants stock options to certain executives and key management employees that vest upon meeting certain financial performance conditions over the vesting schedule described above. These options are referred to herein as “performance-based” options. Performance-based stock options expire 10 years from the date of grant. Restricted shares issued under the plan have an issuance price equal to the fair market value of the underlying stock at the date of grant. The restricted shares granted in fiscal 2008 were amended in fiscal 2011 to allow for vesting after either a five-year period or a seven-year period based upon both performance and service conditions. The restricted shares granted in fiscal 2011 vest ratably at the end of years 3, 4 and 5 upon meeting certain performance and service conditions. These shares are referred to herein as “performance-based restricted shares.” Restricted shares granted in fiscal 2013 vest at the end of a three-year period based upon service conditions. These shares are referred to herein as “cliff-vested restricted shares.”

The Company also grants restricted stock units to certain executives and key management employees that vest upon meeting certain financial performance conditions over a specified vesting period, referred to herein as “performance-based restricted stock units.” The performance-based restricted stock units granted in fiscal 2013 vest over a two-year period upon meeting both performance and service conditions.

As of July 31, 2013, the Company has reserved 5,150,975 shares of Class A Nonvoting Common Stock for outstanding stock options and restricted shares and 4,359,943 shares of Class A Nonvoting Common Stock remain for future issuance of stock options and restricted shares under the active plans. The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver shares under these plans.

Changes in the options are as follows:

	Option Price	Options Outstanding		Weighted Average Exercise Price
Balance, July 31, 2010	$13.31–$40.37	5,108,736		$	28.69
Options granted	28.35 – 37.95	1,365,500		28.86
Options exercised	14.16 – 29.78	(417,888	)	19.62
Options cancelled	16.39 – 38.31	(330,331	)	31.37
Balance, July 31, 2011	$13.31–$40.37	5,726,017		$	29.24
Options granted	27.00 – 33.54	1,212,450		27.91
Options exercised	13.31 – 29.78	(266,991	)	20.21
Options cancelled	16.00 – 38.31	(417,725	)	31.16
Balance, July 31, 2012	$13.31–$40.37	6,253,751		$	29.24
Options granted	30.21 – 36.25	828,450		30.58
Options exercised	13.31 – 31.54	(1,080,089	)	22.79
Options cancelled	16.39 – 38.31	(895,527	)	30.02
Balance, July 31, 2013	$17.23 – $40.37	5,106,585		$	30.68

The total fair value of options vested during the fiscal years ended July 31, 2013, 2012, and 2011 was $11,086, $8,016, and $6,822, respectively. The total intrinsic value of options exercised during the fiscal years ended July 31, 2013, 2012, and 2011 was $10,728, $3,096, and $5,701, respectively.

There were 3,311,043, 3,503,963, and 3,316,815 options exercisable with a weighted average exercise price of $31.46, $29.69, and $29.83 at July 31, 2013, 2012, and 2011, respectively. The cash received from the exercise of options during the fiscal years ended July 31, 2013, 2012, and 2011 was $20,324, $3,864, and $8,193, respectively. The tax benefit on options exercised during the fiscal years ended July 31, 2013, 2012, and 2011 was $1,964, $777, and $682, respectively.

The following table summarizes information about stock options outstanding at July 31, 2013:

	Options Outstanding				Options Outstanding  and Exercisable
Range of Exercise Prices	Number of Shares Outstanding at July 31, 2013	Weighted  Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Shares Exercisable at July 31, 2013	Weighted Average Exercise Price
$17.00 - $27.99	939,749	6.4	$	24.67	561,740	$	23.11
$28.00 - $37.99	3,361,336	6.0	30.54		1,943,803	31.05
$38.00 and up	805,500	3.2	38.26		805,500	38.26
Total	5,106,585	5.7	30.68		3,311,043	31.46

As of July 31, 2013, the aggregate intrinsic value (defined as the amount by which the fair value of the underlying stock exceeds the exercise price of an option) of options outstanding and the options exercisable was $18,900 and $11,577, respectively.

The Company granted 5,000 cliff-vested restricted shares in December 2012, with a grant price and fair value of $32.99. The Company granted 10,000 shares of performance-based restricted stock units in September 2012, with a grant price and fair value of $30.21. The Company granted 100,000 shares of performance-based restricted stock in August of 2010, with a grant price and fair value of $28.35, and 210,000 shares in fiscal 2008, with a grant price and fair value of $32.83. In fiscal 2013, 33,333 shares of performance-based restricted stock vested and 55,000 shares were forfeited. As a result, as of July 31, 2013, 221,667 performance-based restricted shares were outstanding, 5,000 cliff-vested restricted shares were outstanding, and 10,000 performance-based restricted stock units were outstanding.