-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kwl6KE1SFoWYd8KMWNK6nwqn0M/p3UHEsV+FHidSqDWnPHa2CaMJRpP6SBjACKNM e/64hzCQCr63Myd4GaA5lg== 0000950124-96-005395.txt : 19970108 0000950124-96-005395.hdr.sgml : 19970108 ACCESSION NUMBER: 0000950124-96-005395 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19961212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRADY W H CO CENTRAL INDEX KEY: 0000746598 STANDARD INDUSTRIAL CLASSIFICATION: 3990 IRS NUMBER: 390178960 STATE OF INCORPORATION: WI FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12730 FILM NUMBER: 96679484 BUSINESS ADDRESS: STREET 1: 6555 W GOOD HOPE RD STREET 2: P O BOX 571 CITY: MILWAUKEE STATE: WI ZIP: 53201-0571 BUSINESS PHONE: 4143586600 10-Q 1 10-Q 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, 1996 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, 1996, there were outstanding 20,135,553 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. 2 FORM 10-Q W.H. BRADY CO. INDEX
Page ---- 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. Submission of Matters to a Vote of Security Holders 8 Item 6. Exhibits and Reports on Form 8-K 8 Signatures 8
3 W.H. BRADY CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
ASSETS October 31, 1996 July 31, 1996 ------ ---------------- ------------- (UNAUDITED) Current assets: Cash and cash equivalents $ 53,164 $ 49,281 Accounts receivable, less allowance for losses ($2,007 and $1,992, respectively 56,490 53,679 Inventories 45,329 40,697 Prepaid expenses and other current assets 10,780 12,454 ------------- ---------- Total current assets 165,763 156,111 Other assets: Intangibles - net 34,021 34,212 Other 5,924 5,863 ------------- ---------- 39,945 40,075 Property, plant and equipment: Cost: Land 5,230 4,735 Buildings and improvements 38,245 34,484 Machinery and equipment 79,230 78,680 Construction in progress 2,781 4,383 ------------- ---------- 125,486 122,282 Less accumulated depreciation 59,372 56,633 ------------- ---------- Net property, plant and equipment 66,114 65,649 ------------- ---------- Total $ 271,822 $ 261,835 ============= ========== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable $ 16,812 $ 13,922 Wages and amounts withheld from employees 13,815 14,144 Taxes, other than income taxes 2,311 1,790 Accrued income taxes 7,551 5,419 Other current liabilities 8,191 10,620 Current maturities on long-term debt 496 528 ------------- ---------- Total current liabilities 49,176 46,423 Long-term debt, less current maturities 3,522 1,809 Other liabilities 25,640 24,340 ------------- ---------- Total liabilities 78,338 72,572 Stockholders' investment: Preferred stock 2,855 2,855 Class A nonvoting common stock - Issued and outstanding 201 201 20,133,751 and 20,094,100 shares, respectively Class B voting common stock - issued and outstanding 1,769,314 shares 18 18 Additional paid-in capital 8,809 8,415 Earnings retained in the business 177,168 173,491 Cumulative translation adjustments 4,433 4,283 ------------- ---------- Total stockholders' investment 193,484 189,263 ------------- ---------- Total $ 271,822 $ 261,835 ============= ==========
See Notes to Condensed Consolidated Financial Statements 3 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) Three Months Ended October 31 1996 1995 ---------- --------- Net sales $ 97,221 $ 79,223 Operating expenses: Cost of products sold 44,805 36,088 Research and development 3,537 2,673 Selling, general and administrative 38,284 32,620 --------- --------- Total operating expenses 86,626 71,381 Operating income 10,595 7,842 Investment and other income - net 271 2,568 Interest expense (99) (51) --------- --------- Income before income taxes 10,767 10,359 Income taxes 4,237 4,024 --------- --------- Net income 6,530 6,335 Earnings retained in business at beginning of period 173,491 154,286 Less dividends: Preferred stock (65) (65) Common stock (2,788) (2,006) --------- --------- Earnings retained in the business at end of period $ 177,168 $ 158,550 ========= ========= Net income per common share: Net Income - Class A Nonvoting $ 0.30 $ 0.29 ========= ========= Net Income - Class B Voting $ 0.27 $ 0.26 ========= =========
See Notes to Condensed Consolidated Financial Statements. 4 5 W. H. BRADY CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
(UNAUDITED) Three Months Ended October 31 ----------------------------- 1996 1995 ----------- ------------ Operating Activities: Net Income $ 6,530 $ 6,335 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation & Amortization 3,505 2,156 (Gain) on Sale of Property, Plant & Equipment (3) (1,763) Provision for Losses on Accounts Receivable 121 177 Changes in Operating Assets & Liabilities: (Increase) Decrease in Accounts Receivable (2,632) (1,587) (Increase) Decrease in Inventory (4,435) (2,579) (Increase) Decrease in Prepaid Expense 1,564 (172) Increase (Decrease) in Accounts Payable and Other Liabilities 917 4,303 Increase (Decrease) in Income Taxes 2,017 2,613 ------------ -------------- Net Cash Provided by Operating Activities 7,584 9,483 Investing Activities: Purchases of Property, Plant and Equipment (1,909) (1,410) Proceeds from Sale of Property, Plant and Equipment - Net 90 83 Other Investments 297 0 Net Cash (Used in) Provided by Investing Activities ------------ -------------- (1,522) (1,327) Financing Activities: Payment of Dividends (2,853) (2,071) Proceeds from Issuance of Common Stock 383 10 Principal Payments on Long-Term Debt (670) (141) Proceeds from Issuance of Long-Term Debt 920 0 ------------ -------------- Net Cash (Used in) Financing Activities (2,220) (2,202) Effect of Exchange Rate Changes on Cash 41 (133) ------------ -------------- Net Increase in Cash and Cash Equivalents 3,883 5,821 Cash and Cash Equivalents at Beginning of Year 49,281 89,067 ------------ -------------- Cash and Cash Equivalents at End of Period $ 53,164 $ 94,888 ============ ============== Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year For: Interest $ 89 $ 377 Income Taxes 2,709 1,188 Receivable Relating to Sale of German Building 0 3,152 See Notes to Condensed Consolidated Financial Statements.
5 6 W.H. BRADY CO. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three months ended October 31, 1996 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, 1996 and July 3l, 1996, and its results of operations and its cash flows for the three months ended October 31, 1996 and l995. The consolidated balance sheet at July 31, l996, 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 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 was 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 for the first quarter of fiscal 1996 to reflect the common stock dividend. 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 of 21,878,864 for the three months ended October 31, 1996 and 21,830,474 (adjusted for the stock dividend discussed in Note B) for the same period in 1995. The preferential dividend on the Class A common stock of $0.0333 per share declared on September 17, 1996 has been added to the net earnings per Class A common share for the three months ended October 31, 1996. The net earnings per Class A common share for the three months ended October 31, 1995 includes $0.0333 per share (adjusted for the stock dividend discussed in Note B) relating to preferential dividends declared in that period. 6 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations For the three months ended October 31, 1996, revenues of $97,221,000 were 22.7% higher than the same quarter of the previous year. Sales of the Company's international operations increased 15.0%. This increase was a result of the acquisition of Techpress II Limited (8.7%) and real growth through continued market penetration in Europe and the Far East (8.1%) offsetting the negative effect of fluctuations in the exchange rates used to translate results into U.S. currency (1.8%). Sales of the Company's U.S. operations increased 28.5%, with 22.2% of the increase as a result of the acquisitions of Varitronic Systems Inc. and The Hirol Company. The cost of products sold increased from 45.6% to 46.1% of sales. This increase reflects continued changes in product mix toward systems which have a higher level of costs and increased amortization expense and higher cost levels in the Company's recently acquired operations. Selling, general and administrative expenses as a percentage of sales decreased from 41.2% to 39.4%. This decrease is a result of spreading fixed costs over a larger sales base and less spending on investments in sales and marketing activities than in last year's first quarter. Research and development expenses increased 32.3% compared to the prior year because of the acquisitions. Operating income was $10,595,000 in the current year, compared to $7,842,000 in the prior year because of the factors cited above. Investment and other income last year included $1,750,000 ($950,000 after tax, or $0.04 per share) representing the gain on sale of a building in Germany. In addition, the fiscal 1997 first quarter investment income was $442,000 lower than last year, primarily because of lower cash balances as a result of acquisitions in the last year. Income before income taxes increased 3.9% over the same period last year. Excluding the $950,000 after tax gain from the sale of a building in Germany in last year's first quarter, income before income taxes increased 14.4% from the same period last year. Net income increased 3.1% to $6,530,000, compared to $6,335,000 for the same quarter of the previous year. Excluding the after tax gain of $950,000 from the sale of a building in Germany in the first quarter of fiscal 1996, net income in the fiscal 1997 first quarter increased 21.3%. Financial Condition The Company's liquidity remains strong. The current ratio as of October 31, 1996, was 3.4 to 1. Cash and cash equivalents were $53,164,000 at October 31, 1996, compared to $49,281,000 at July 31, 1996. Working capital increased $6,899,000 during the quarter and equaled $116,587,000 as of October 31, 1996. The Company has maintained significant cash balances due in large part to its strong operating cash flow, which totaled $7,584,000 for the three months ended October 31, 1996, compared to $9,483,000 in the first quarter last year. The decrease in operating cash flow resulted primarily from the gain on the sale of a German building in the first quarter last year. Capital expenditures were $1,909,000 in the three months ended October 31, 1996, compared to $1,410,000 in last year's first quarter. Financing activities were essentially flat with last year, with $920,000 in borrowing by the Company's new Korean joint venture offsetting a $782,000 increase in dividends. 7 8 Long-term debt as a percentage of long-term debt plus stockholders' investment was 1.8% at October 31, 1996, compared to 0.9% at July 31, 1996, as a result of borrowing by the Company's new Korean joint venture. The Company believes that its cash and cash equivalents and the cash flow it generates from operating activities are adequate to meet the Company's current investing and financing needs. PART II ITEM 4. Submission of Matters to a Vote of Security Holders. On November 15, 1996, at the Company's Annual Meeting, the Class B Common Stock shareholders unanimously reelected the following directors: Richard A. Bemis, Robert C. Buchanan, Frank W. Harris, Katherine M. Hudson, Peter J. Lettenberger and Gary R. Nei. Only the holders of the Company's Class B Common Stock were eligible to vote in the election for Directors. 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, 1996. 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 10, 1996 /s/ K. M. Hudson -------------------- ---------------------------------------- K. M. Hudson President Date: December 10, 1996 /s/ F. M. Jaehnert -------------------- ---------------------------------------- F. M. Jaehnert Vice President & Chief Financial Officer (Principal Accounting Officer) 8 EX-27 2 FDS
5 1,000 3-MOS JUL-31-1997 AUG-01-1996 OCT-31-1996 53,164 0 58,497 2,007 45,329 165,763 125,486 59,372 271,822 49,176 3,522 2,855 0 219 190,410 271,822 97,221 97,221 44,805 44,805 41,821 0 99 10,767 4,237 6,530 0 0 0 6,530 0.30 0.30
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