10-K

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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                                   FORM 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                    FOR THE FISCAL YEAR ENDED JULY 31, 2003
                         COMMISSION FILE NUMBER 1-14959

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                               BRADY CORPORATION
               (Exact name of registrant as specified in charter)

                                            
                  WISCONSIN                                      39-0178960
           (State of Incorporation)                  (IRS Employer Identification No.)



                            6555 WEST GOOD HOPE ROAD
                              MILWAUKEE, WI 53223
             (Address of Principal Executive Offices and Zip Code)
                                 (414) 358-6600
                        (Registrant's Telephone Number)
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
    CLASS A NONVOTING COMMON STOCK, PAR VALUE $.01 PER SHARE, NEW YORK STOCK
                                    EXCHANGE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE

     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 [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).  Yes [X]     No [ ]

     The aggregate market value of the non-voting common stock held by
non-affiliates of the entity as of January 31, 2003 was approximately
$471,233,549, (based on closing sale price of $26.56 per share on that date as
reported for the New York Stock Exchange). As of September 15, 2003, there were
outstanding 21,636,682 shares of Class A Nonvoting Common Stock (the "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 affiliates of the registrant, is the only voting
stock.
                      DOCUMENTS INCORPORATED BY REFERENCE
BRADY CORPORATION 2003 ANNUAL REPORT TO SHAREHOLDERS, INCORPORATED INTO PART II
                                      & IV
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                                     INDEX



                                                                         PAGE
                                                                        ------
                                                                  
                                    PART I
Item 1.   Business....................................................     I-1
          General Development of Business.............................     I-1
          Financial Information About Industry Segments...............     I-1
          Narrative Description of Business:
            Overview..................................................     I-1
            Business Strategy.........................................     I-1
            Key Initiatives...........................................     I-2
            Products..................................................     I-3
            Marketing and Sales.......................................     I-5
            Manufacturing Process and Raw Materials...................     I-6
            Technology and Product Development........................     I-6
            International Operations..................................     I-7
            Competition...............................................     I-7
            Backlog...................................................     I-7
            Environment...............................................     I-7
            Employees.................................................     I-7
            Acquisitions..............................................     I-7
          Financial Information About Foreign and Domestic Operations
          and Export Sales............................................     I-7
          Information Available on the Internet.......................     I-8
Item 2.   Properties..................................................     I-8
Item 3.   Legal Proceedings...........................................     I-8
Item 4.   Submission of Matters to a Vote of Security Holders.........     I-8

                                   PART II
Item 5.   Market for the Registrant's Common Equity and Related
          Stockholder Matters.........................................    II-1
Item 6.   Selected Financial Data.....................................    II-1
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................    II-1
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   II-10
Item 8.   Financial Statements and Supplementary Data.................   II-11
Item 9.   Changes In and Disagreements With Accountants on Accounting
          and Financial Disclosure....................................   II-37
Item 9A.  Controls and Procedures.....................................   II-37


                                        1




                                                                         PAGE
                                                                        ------
                                                                  
                                   PART III
Item 10.  Directors and Executive Officers of the Registrant..........   III-1
Item 11.  Executive Compensation......................................   III-4
            Summary Compensation Table................................   III-4
            Stock Options.............................................   III-5
            Common Stock Price Performance Graph......................   III-7
            Compensation of Directors.................................   III-8
            Termination of Employment and Change in Control
            Arrangements..............................................   III-8
            Restricted Stock..........................................   III-9
            Compensation Committee Interlocks and Insider
            Participation.............................................   III-9
            Funded Retirement and 401(k) Plans........................   III-9
            Deferred Compensation Arrangements........................  III-10
            Compensation Committee Report on Executive Compensation...  III-10
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management and Related Stockholder Matters..................  III-13
Item 13.  Certain Relationships and Related Transactions..............  III-15

                                   PART IV
Item 14.  Exhibits, Financial Statement Schedule and Reports on Form
          8-K.........................................................    IV-1
Signatures............................................................    IV-5


                                        2


                                     PART I

     Brady Corporation and Subsidiaries are referred to herein as the "Company",
"Brady" or "we".

ITEM 1.  BUSINESS

(A) GENERAL DEVELOPMENT OF BUSINESS

     The Company, a Wisconsin corporation founded in 1914, currently operates 28
manufacturing facilities worldwide. Nine are located in the United States, three
each in Australia, Brazil and China, two each in France and Germany and one each
in Belgium, Canada, England, Italy, Malaysia and Singapore. The Company sells
through subsidiaries or sales offices in Australia, Belgium, Brazil, Canada,
China, England, France, Germany, Hong Kong, Hungary, Italy, Japan, Korea,
Malaysia, Mexico, the Philippines, Singapore, Sweden, Taiwan and the United
States. The Company's corporate headquarters are located at 6555 West Good Hope
Road, Milwaukee, Wisconsin 53223, and the telephone number is (414) 358-6600.
The Company's Internet address is http://www.bradycorp.com.

(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

     The information required by this Item is provided in Note 7 of the Notes to
Consolidated Financial Statements contained in Item 8 -- Financial Statements
and Supplementary Data.

(C) NARRATIVE DESCRIPTION OF BUSINESS

OVERVIEW

     Brady is an international manufacturer and marketer of identification
solutions and specialty materials which help customers increase safety,
security, productivity and performance. Its products include high-performance
labels and signs, printing systems and software, label-application and
data-collection systems, safety devices and precision die-cut materials. Founded
in 1914, the Company serves more than 300,000 customers in electronics,
telecommunications, manufacturing, electrical, construction, education and a
variety of other industries. Brady's reputation for innovation, commitment to
quality and service, and dedicated employees have made it a world leader in its
markets.

     Brady's major product categories include: identification solutions and
specialty tapes and graphics and workplace solutions. The Company's products are
sold in a variety of markets, including electrical, electronic,
telecommunication, governmental, public utility, computer, construction, general
manufacturing, laboratory, transportation equipment and education. The need for
the Company's products is driven by specification of customer engineering
departments, by regulatory compliance requirements imposed by agencies such as
the Occupational Safety & Health Administration (OSHA) and the Environmental
Protection Agency (EPA), or by the need to identify and track assets, or to
direct, warn, inform, train and protect people. The Company manufactures and
sells products domestically and internationally through multiple channels
including direct sales, distributor sales, mail-order catalogs, telemarketing
and electronic access through the Internet. The Company has a broad customer
base, which in fiscal 2003 consisted of more than 300,000 companies, with the
largest customer representing just over 5% of net sales. Sales from
international operations represented 52.3%, 48.5% and 44.0% of sales in fiscal
2003, 2002, and 2001, respectively.

BUSINESS STRATEGY

     Brady's mission is to be the world leader in identification and material
solutions that help companies improve productivity, performance, safety and
security. The Company's goal is to accomplish this objective by offering a broad
range of high-quality, innovative products to a widely diversified customer base
in a prompt and responsive manner. Underlying the Company's business strategy is
a Company-wide commitment to enhancing shareholder value. The Company's
long-term focus on activities that will create sustainable value for
shareholders drives decision making at all levels of the Company. The Company's
employees participate in an incentive plan that has a component focused upon
growth and profitability. This incentive plan serves to

                                       I-1


motivate employees, foster a team-oriented work environment and maximize the
utilization of assets. Key elements of the Company's business strategy include:

     Product innovation.  The Company continually seeks to improve existing
products and to develop innovative products to satisfy customers' requirements
and expectations. Brady's commitment to product innovation is reflected in
research and development efforts that include approximately 175 employees
primarily dedicated to research and development activities in the United States,
Canada, Belgium, France and Singapore.

     Breadth of product line.  The Company's products include over 50,000 stock
as well as custom items. The number of products offered allows Brady to serve as
a one-stop shopping network for customers. Additionally, management believes
that the Company provides a broader range of identification solutions than many
of its competitors.

     Focus on customers.  The Company seeks to provide "seamless" customer
service and to offer rapid response to customer orders and inquiries. To meet
this goal, the Company has streamlined its manufacturing processes to shorten
lead-times and has increased investment in telecommunications and management
information systems worldwide.

     Niche markets.  The Company strives to be a major player in niche markets
that allow the Company to leverage its capabilities in specialty materials,
die-cut parts and printing systems. By focusing on specific markets and
value-added product applications, the Company has established leading positions
in the electrical and safety markets with certain products such as wire markers,
pipe markers, safety signs and printing systems. It also is a leader in high
performance work-in-process labels, precision die-cut materials and
bar-code-label-generation software.

KEY INITIATIVES

     The Company's key initiatives include:

     Customer-driven growth.  The Company seeks to increase market penetration
in existing domestic and international markets through existing distribution
channels and strong sales and marketing efforts. To achieve this objective, the
Company is aligning more closely with distributors, combining its current sales
force and pursuing additional channels and expanding its geographic reach. Sales
from Brady's international operations have increased from $50,707,000 or 26.5%
of net sales in fiscal 1990 to $290,068,000 or 52.3% of net sales in fiscal
2003. The Company believes that international markets continue to represent a
significant growth opportunity. Accordingly, the Company is actively seeking to
increase penetration in established markets in Europe, Asia/Pacific and Canada
and to enter new emerging markets elsewhere in Eastern Europe, the Pacific Rim
and Latin America.

     Proprietary products.  The Company, through strong product innovation and
development activities, seeks to continually introduce new products and explore
additional applications for products in existing and new markets. Through its
market planning process, the Company seeks to fully understand the broad needs
of each of its major market segments and determine a strategy to meet those
needs in each segment.

     Acquisitions.  While the Company intends to continue pursuing internal
growth through the above strategies, it also intends, where practical, to fill
product lines or market sectors, open new geographic markets, acquire new
technology, and strengthen product offerings through the pursuit of strategic
acquisitions and joint ventures.

     Process improvement.  Process improvement will also support the Company as
it grows. Brady has been working over the last four years on its Earning
Customer Loyalty through Integrated Processes and Systems Everywhere (Eclipse)
initiative, a global project creating one Brady enterprise with common and
shared processes supported by a single integrated system (SAP). This will allow
Brady to better anticipate and serve the future needs of its customers while
making improvements in working capital measures and selling, general and
administrative (SG&A) expense. As of July 31, 2003, approximately 70% of Brady's
global operations were operating on this system, as measured by sales volume.

                                       I-2


     Leadership.  The Company highlights leadership as an important initiative
to its values and growth strategy. Its leadership principles include: customer
focus, high-performance expectations, boldness, decisiveness and accountability.

PRODUCTS

     The Company's products consist of over 50,000 stock as well as custom items
and complete identification systems that are used by the Company's customers to
create a safer work environment for employees, improve production and operating
efficiencies and increase the utilization of assets through tracking and
inventory process controls. Major product categories include: identification
solutions and specialty tapes products, including wire and cable markers,
high-performance labels, laboratory identification products, stand-alone
printing systems, bar-code and other software, automatic identification and data
collection systems and specialty tapes and precision die-cut solutions; and
graphics and workplace solutions products, including signs, pipe and valve
markers, storage markers, asset identification tags, lockout/tagout products,
traffic-control products, printing systems, software and graphics products.

     Many of the Company's stock products were originally designed, developed
and manufactured as custom products for a specific purchaser. However, such
products have frequently developed wide industry acceptance and become stock
items offered by the Company through mail-order and distributor sales. The
Company's most significant types of products are described below.

IDENTIFICATION SOLUTIONS AND SPECIALTY TAPES PRODUCTS

  WIRE AND CABLE MARKERS

     Brady manufactures a broad range of wire- and cable-marking products. These
products help mark and identify wires, cables and their termination points. Such
products may be used in virtually every industrial, power and communication
market to specify the origination and/or destination of wiring and to facilitate
repair or maintenance of equipment and data communication and electrical wiring
systems.

  HIGH PERFORMANCE LABELS

     Brady produces a complete line of label materials to meet customers' needs
for identification that performs under harsh or sensitive conditions. Brady
prints stock and custom labels and also sells unprinted materials to enable
customers to print their own labels on site, on demand, using thermal-transfer,
laser, dot matrix and inkjet printers. Brady labels are manufactured out of a
variety of films, predominantly coated by Brady, for applications in the
following markets: electronic, industrial, electrical, laboratory and security.

  SOFTWARE AND PRINTING SYSTEMS

     The Company designs and produces various computer software packages,
industrial thermal-transfer and dot matrix printers and other electromechanical
devices to serve the growing and specialized needs of customers in a wide
variety of markets. Industrial labeling systems, software, tapes, ribbons and
label stocks provide customers with the resources and flexibility to produce
signs and labels on demand at their site.

  AUTOMATIC IDENTIFICATION AND DATA-COLLECTION SYSTEMS

     Brady's automatic identification and data collection solutions include
bar-code-label-generating software and bar-code tags and labels to enable
accurate tracking of manufacturing, warehousing, receiving and shipping data.
The Company's software applications, fixed station terminals, high-speed
printers and associated customized consumable products allow its customers, in a
wide variety of markets, to have a higher degree of knowledge and control over
production, asset management and all phases of inventory control, including
receiving, warehousing, work-in-process, finished goods and shipping.

                                       I-3


  SPECIALTY TAPES

     Brady manufactures specialty tapes and related products that are used in a
variety of audio, video and computer applications. These specialty tape products
are characterized by high-performance adhesives, most of which are formulated by
the Company, to meet high-tolerance requirements of the industries in which they
are used. Its data-storage products include audio and videocassette splicing
tapes.

  PRECISION DIE-CUT SOLUTIONS

     The Company develops customized precision die-cut solutions that are used
to seal, insulate, protect, shield or provide other mechanical performance
properties in the assembly of electronic, telecommunications and other
equipment, including cellular phones, personal data assistants, computer hard
drives, computers and other devices. Solutions not only include the materials
and converting, but also automatic placement and other value-added services.

GRAPHICS AND WORKPLACE SOLUTIONS PRODUCTS

  SIGNS

     The Company manufactures safety and informational signs for use in a broad
range of industrial, commercial, governmental and institutional applications.
These signs are either self-adhesive or mechanically mounted, are designed for
both indoor and outdoor use and are manufactured to meet standards issued by the
National Safety Council, OSHA and a variety of industry associations in the
United States and abroad. The Company's sign products are categorized by type of
message to be conveyed, including admittance, directional and exit signs;
electrical hazard warnings; energy conservation messages; fire protection and
fire equipment signs; hazardous waste labels; hazardous and toxic material
warning signs; personal hazard warnings; housekeeping and operational warnings;
pictograms; radiation and laser signs; safety practices signs and regulatory
markings. The Company also offers architectural signage products including sign
systems, nameplates, Braille signs and desk plates.

  PIPE AND VALVE MARKERS

     The Company manufactures both self-adhesive and mechanically applied stock
and custom-designed pipe markers, and plastic and metal valve tags for the
identification of pipes and control valves in the mechanical contractor and
process industry markets. These products are designed to help identify and
provide information as to the contents, direction of flow and special hazardous
properties of materials contained in piping systems, and to facilitate repair or
maintenance of the systems.

  WAREHOUSE PRODUCTS

     The Company produces signs, self-adhesive and self-aligning die-cut numbers
and letters, labels, signs and tags used to mark warehouse locations and
identify inventory. Warehouse products are primarily used by industrial
companies in storage facilities such as warehouses, factories, stockrooms and
other facilities.

  ASSET IDENTIFICATION MARKERS

     Brady offers a wide range of asset-identification products that are an
important part of an effective asset management program in a wide variety of
markets. These include self-adhesive or mechanically mounted labels or tags made
of aluminum, brass, stainless steel, polycarbonate, vinyl, polyester, mylar and
paper. These products are also offered in tamper-evident varieties.

  LOCKOUT/TAGOUT PRODUCTS

     Brady offers a wide variety of lockout/tagout products. Under OSHA
regulations, all energy sources must be "locked out" while machines are being
serviced or maintained to prevent accidental engagement and injury. The
Company's products allow its customers to comply with these regulations and to
ensure worker safety for a wide variety of energy- and fluid-transmission
systems and operating machinery.

                                       I-4


  SECURITY CONTROL PRODUCTS

     The Company offers identification and security products including a variety
of self-expiring badges, security seals, parking permits and wristbands designed
for visitor control in financial, governmental, educational and commercial
facilities including meeting and convention sites. Some of these products make
use of migratory ink technology, which, upon activation, starts a timed process
resulting in an altered message, color or design to indicate expiration.

  TRAFFIC CONTROL PRODUCTS

     The Company offers a wide variety of traffic control devices including
traffic signs, directional and warning signs, parking tags and permits,
barriers, cones and other devices.

  GRAPHICS PRODUCTS

     Brady serves the identification and information needs of various
non-industrial markets with a variety of easy-to-use printing systems and
consumable supplies. It provides lettering and labeling systems, poster
printers, laminators and supplies to education and training markets.

  OTHER

     The Company also offers sign-making kits, barricading products, visual
warning systems, floor-marking products, safety badges, photo-identification
kits, and first aid cabinets/kits, among others.

OTHER PRODUCTS

     The Company also sells a variety of other products, none of which currently
individually accounts for a material portion of its sales, including: hospital
and clinical labels, packing and shipping goods, name plates, and quality and
production control products, among others.

MARKETING AND SALES

     The Company's products are sold in a wide variety of markets including
electrical, electronic, telecommunications, governmental, public utility,
commercial office, computer, construction, general manufacturing, laboratory,
transportation equipment and education. Brady has a diverse customer base that
consisted of over 300,000 customers in fiscal 2003. No material part of the
Company's business is dependent upon a single customer or group of customers,
and the loss of a particular customer would not have a material adverse effect
upon the Company's business. In fiscal 2003, Brady's largest customer accounted
for just over 5% of the Company's net sales.

     Brady seeks to offer the right product with rapid response times and
superior service so that it can provide solutions to the customer that are
better, faster and more economical than those available from the Company's
competitors. The Company markets and sells its products domestically and
internationally through multiple channels including direct sales, distributor
sales, mail-order-catalog marketing and electronic access through the Internet.
The Company currently has over 4,000 established relationships with a broad
range of electrical, safety, industrial and other domestic and international
distributors. The Company's sales force seeks to establish and foster ongoing
relationships with the end-users and distributors by providing technical support
and product-application advice.

     The Company direct markets certain products and those of other
manufacturers by catalog sales in both domestic and international markets. Such
products include industrial and facility identification products, safety and
regulatory-compliance products and original equipment manufacturer component
products, among others. Catalog operations are conducted through offices in the
U.S., Australia, Brazil, Canada, England, France, Germany and Italy, and include
foreign-language catalogs.

                                       I-5


MANUFACTURING PROCESS AND RAW MATERIALS

     The Company manufactures the majority of the products it sells, while
purchasing certain items from other manufacturers. Products manufactured by the
Company generally require a high degree of precision and the application of
adhesives with chemical and physical properties suited for specific uses. The
Company's manufacturing processes include compounding, coating, converting,
software development and printer design and assembly. The compounding process
involves the mixing of chemical batches for primers, top coatings and adhesives,
in solvent- or water-based materials. The coatings and adhesives are applied to
a wide variety of materials including polyester, polyimide, cloth, paper, metal
and metal foil. The converting process may include embossing, perforating,
laminating, die cutting, slitting, and printing or marking the materials as
required.

     The Company seeks to optimize the performance, quality and durability of
its products, while continually improving manufacturing processes, shortening
lead times and lowering manufacturing costs. The Company produces the majority
of the adhesive stocks and top-coated materials through an integrated
manufacturing process. These integrated manufacturing processes permit greater
flexibility in product design and manufacture, and an improved ability to
provide specialized products designed to meet the needs of specific
applications. Brady's "cellular" manufacturing processes and "just-in-time"
inventory control are designed to attain profitability in small orders by
emphasizing flexibility and the maximization of assets through quick turnaround
and delivery. A growing part of the Company's manufacturing is done through a
Web-to-Workbench(TM) process. In this process, orders received for items such as
signs and asset identification labels are sent directly from the customer's
order on the Internet to the manufacturing floor. Most of the Company's
manufacturing facilities have received ISO 9001 or 9002 certification.

     The materials used in the products manufactured by the Company consist
primarily of plastic sheets and films (primarily polyesters, vinyls and
polycarbonates), paper, metal and metal foil, cloth, fiberglass, inks, dyes,
adhesives, pigments, natural and synthetic rubber, organic chemicals, polymers
and solvents. The Company purchases its raw materials from many suppliers and is
not dependent upon any single supplier for any of its critical base materials.

TECHNOLOGY AND PRODUCT DEVELOPMENT

     The Company focuses its research and development efforts on material
development, systems design and software development. Material development
involves the application of surface chemistry concepts to coatings and adhesives
applied to a variety of base materials. Systems design integrates materials,
custom firmware and a variety of printing technologies to form a complete
solution for customer applications or the Company's own production requirements.

     The Company possesses patents covering various aspects of adhesive
chemistry, electronic circuitry, computer-generated wire markers, systems for
aligning letters and patterns, and visually changing paper. Although the Company
believes that its patents are a significant factor in maintaining market
position for certain products, technology in the areas covered by many of the
patents is evolving rapidly and may limit the value of such patents. The
Company's business is not dependent on any single patent or group of patents.

     The Company conducts much of its technology and development activities at
the Frederic S. Tobey Research and Innovation Center (approximately 39,600 sq.
ft.) in Milwaukee, Wisconsin. The Company spent approximately $18,900,000,
$17,300,000, and $20,300,000 in fiscal 2003, 2002, and 2001, respectively, on
its research and development activities. In fiscal 2003, approximately 175
employees were engaged in research and development activities for the Company.
Additional research projects were conducted under contract with universities,
other institutions and consultants.

     The Company's name and its registered trademarks are important to each of
its business segments. In addition, the Company owns other important trademarks
applicable to only certain of its products.

                                       I-6


INTERNATIONAL OPERATIONS

     In fiscal 2003, 2002, and 2001, sales from international operations
accounted for 52.3%, 48.5% and 44.0%, respectively, of the Company's sales. The
Company's global infrastructure includes subsidiaries in Australia, Belgium,
Brazil, Canada, China, England, France, Germany, Hungary, Italy, Japan,
Malaysia, Mexico, Singapore, and Sweden and sales offices in Hong Kong, Korea,
the Philippines, and Taiwan. Several of these locations manufacture or have the
capability to manufacture certain of the products they sell. The Company
acquired or opened new operations in Australia, China, England, Germany and
Malaysia in the last three years. The Company expects to continue to expand its
international operations as appropriate.

COMPETITION

     The markets for most of the Company's products are competitive. The Company
believes that it is one of the leading domestic producers of self-adhesive wire
markers, safety signs, pipe markers, precision die-cut materials and
bar-code-label-generating software. The Company competes for business
principally on the basis of product quality, performance, service, range of
products offered and to a lesser extent, on price. Product quality is determined
by factors such as suitability of component materials for various applications,
adhesive properties, graphics quality, durability, product consistency and
workmanship. Competition in many of the Company's product markets is highly
fragmented, ranging from smaller companies offering only one or a few types of
products, to some of the world's major adhesive and electrical product companies
offering some competing products as part of their product lines. A number of the
Company's competitors are larger than the Company and have greater resources.
Notwithstanding the resources of these competitors, management believes that the
Company provides a broader range of identification solutions than any of its
competitors.

BACKLOG

     As of July 31, 2003, the amount of the Company's backlog orders believed to
be firm was approximately $16,300,000. This compares with approximately
$22,300,000 and $22,100,000 of backlog orders as of July 31, 2002 and 2001,
respectively. Average delivery time for the Company's orders varies from one day
to one month, depending on the type of product, and whether the product is stock
or custom designed and manufactured.

ENVIRONMENT

     At present, the manufacturing processes for the Company's adhesive-based
products utilize certain evaporative solvents, which, unless controlled, would
be vented into the atmosphere. Emissions of these substances are regulated at
the federal, state and local levels. The Company has implemented a number of
procedures to reduce atmospheric emissions and/or to recover solvents.
Management believes the Company is substantially in compliance with all
environmental regulations.

EMPLOYEES

     As of July 31, 2003, the Company employed approximately 3,300 individuals.
The Company has never experienced a material work stoppage due to a labor
dispute, is not a party to any negotiated labor contracts, and considers its
relations with employees to be excellent.

ACQUISITIONS

     Information about the Company's acquisitions is provided in Note 2 of the
Notes to Consolidated Financial Statements contained in Item 8 -- Financial
Statements and Supplementary Data.

(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

     The information required by this Item is provided in Note 7 of the Notes to
Consolidated Financial Statements contained in Item 8 -- Financial Statements
and Supplementary Data.

                                       I-7


(E) INFORMATION AVAILABLE ON THE INTERNET

     The Company's Internet address is http://www.bradycorp.com. The Company
makes available, and has made available since June 2003, free of charge, on or
through its Internet website copies of its Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 reports filed by
the Company's insiders, and amendments to all such reports as soon as reasonably
practicable after such reports are electronically filed with or furnished to the
SEC.

ITEM 2.  PROPERTIES

     The Company currently operates 28 manufacturing facilities. Nine are
located in the United States, three each in Australia, Brazil and China, two
each in France and Germany and one each in Belgium, Canada, England, Italy,
Malaysia and Singapore. The Company's present operating facilities contain a
total of approximately 1,545,000 square feet of space, of which approximately
709,000 square feet is leased. The Company believes that its equipment and
facilities are modern, well maintained and adequate for present needs.

ITEM 3.  LEGAL PROCEEDINGS

     The Company is, and may in the future be, party to litigation arising in
the course of business. The Company is not currently a party to any material
pending legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On July 22, 2003, by written consent, the affirmative vote of 100% of the
1,769,314 shares of Class B Common Voting Stock approved the Brady Corporation
2003 Omnibus Incentive Stock Plan.

                                       I-8


                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

(a) Market Information

     Brady Corporation Class A Nonvoting Common Stock trades on the New York
Stock Exchange under the symbol BRC and on the Berlin Stock Exchange under the
number 900104. There is no trading market for the Company's Class B Voting
Common Stock.

     Stock price disclosure required by this Item is incorporated by reference
to Page 10 of the Brady Corporation 2003 Annual Report to Shareholders.

(b) Holders

     The number of holders of record of the Company's Class A and Class B Common
Stock as of September 5, 2003, was 332 and 3, respectively.

(c) Dividends

     The Company has followed a practice of paying quarterly dividends on
outstanding common stock. 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 $.0333 per share (subject to adjustment in the
event of future stock splits, stock dividends or similar events involving shares
of Class A Common Stock). Thereafter, any further dividend in that fiscal year
must be paid on all shares of Class A Common Stock and Class B Common Stock on
an equal basis. The Company's revolving credit agreement requires that it
maintain a specified level of consolidated net worth, which could restrict the
Company's ability to pay dividends. At July 31, 2003, the required consolidated
net worth was approximately $264,000,000 and the Company's actual consolidated
net worth was approximately $339,000,000.

     During its two most recent fiscal years and for the first quarter of the
current year, the Company declared the following dividends per share on its
Class A and Class B Common Stock for the years ended July 31:



                                                                                                        YEAR
                                                                                                       ENDING
                                       2002                                    2003                     2004
                       -------------------------------------   -------------------------------------   -------
                       1ST QTR   2ND QTR   3RD QTR   4TH QTR   1ST QTR   2ND QTR   3RD QTR   4TH QTR   1ST QTR
                       -------   -------   -------   -------   -------   -------   -------   -------   -------
                                                                            
Class A..............   $.19      $.19      $.19      $.19      $.20      $.20      $.20      $.20      $.21
Class B..............    .16       .19       .19       .19       .17       .20       .20       .20       .18


ITEM 6.  SELECTED FINANCIAL DATA

     The information required by this Item is incorporated by reference to Pages
8 and 9 of the Brady Corporation 2003 Annual Report to Shareholders.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

     In fiscal 2003, a difficult economic environment and shifting global
marketplace continued to challenge the Company. Nonetheless, the Company had
modest sales gains. However, reported net income dropped primarily due to
charges for restructuring the organization in response to a prolonged weak
economy and changes in the Company's global markets.

     With no sign of a material economic rebound, getting the Company's cost
structure back in line became a top priority. The Company continued with its
long-term strategic initiatives and began to take significant steps to transform
the way it operates in order to return to higher levels of sales, long-term
profitability and growth. With a renewed focus on its customers, the Company
took action to simplify and streamline its organization.

                                       II-1


Management believes this transformation is essential to ensure Brady's future
competitiveness and build shareholder value.

     Sales for fiscal 2003 were $554.9 million, up 7.3 percent from fiscal 2002
sales of $517.0 million. The impact of foreign-currency translations was a
positive 5.1 percent. Sales from core businesses were down 0.7 percent, while
acquisitions contributed 2.9 percent to annual sales. Sales in the Graphics and
Workplace Solutions Group increased 10.2 percent, while the Identification
Solutions and Specialty Tapes Group sales increased 3.6 percent. Regionally,
sales in the U.S. declined slightly, while Europe showed modest improvement in
local currencies. Asian and Latin American sales experienced more significant
growth despite economic weakness in those regions.

     As net income remained weak throughout the year, the Company initiated a
major restructuring of its global operations that includes the consolidation of
certain facilities in the U.S. and abroad, and a workforce reduction of
approximately 10 percent. This was not a downsizing in the traditional sense due
solely to a slowdown in work activities, but rather part of a comprehensive
re-design of the Company's operations intended to increase efficiency and
productivity in both the short and long term. After-tax net charges of $6.3
million were recorded in the fourth quarter, bringing the Company's reported net
income for fiscal 2003 to $21.4 million or $0.91 per diluted Class A Common
Share, compared with reported net income of $28.3 million or $1.20 per share in
fiscal 2002. As the Company's reorganization continues into fiscal 2004, Brady
expects to incur an additional $2 to $3 million in pre-tax restructuring
charges, and realize total after-tax savings of $7 to $9 million annually.

     Despite the challenges of fiscal 2003, Brady remains a strong and vital
company. The Company finished the year with more than $76 million in cash and
little debt on its balance sheet, and increased its dividend payments to
investors for the 18th straight year.

YEAR ENDED JULY 31, 2003, COMPARED TO YEAR ENDED JULY 31, 2002

     Sales for fiscal 2003 increased by $37,904,000 or 7.3% from fiscal 2002.
Sales of the Company's international operations increased 16.2% in U.S. dollars.
The acquisitions of Safety Signs Service in November 2001, Cleere Advantage in
February 2003 and Etimark GmbH in April 2003 increased international sales by
2.3% in fiscal 2003. International base business increased by 3.3% in local
currencies. These increases were aided by changes in the exchange rates used to
translate financial results into U.S. currency, which increased international
sales by 10.6%. Sales of the Company's U.S. operations decreased 1.0%, with a
base business decline of 4.4%, partially offset by the acquisitions of
Strandware, Inc. in November 2001, Temtec, Inc in April 2002 and TISCOR, Inc. in
January 2003. In total, acquisitions added 3.4% to sales.

     The cost of products sold as a percentage of sales decreased from 49.6% to
49.5% in fiscal 2003. The decrease was due to the net effect of higher initial
production costs of the Company's Globalmark and Visimate products and the
temporary disruption of customer service levels in our North American Direct
Marketing operations as the Company implemented a new business system during the
year. These factors were more than offset by higher relative growth within the
higher margin Graphics and Workplace Solutions Group and savings from
restructuring activities performed in fiscal 2002 and 2003.

     Research and development investment as a percentage of sales was 3.4%, up
from 3.3% in fiscal 2002.

     Selling, general and administrative expenses as a percentage of sales
increased to 39.6% in fiscal 2003 from 38.5%. The increase was due to higher
administrative expenses from recent acquisitions, higher expenses associated
with a system implementation in the Company's direct marketing operations in
North America, additional spending in European direct marketing businesses and
general cost increases, including pay and benefit cost increases, offset by cost
reductions from restructuring activities.

     Fiscal 2003 expenses included a net restructuring charge of $9,589,000,
which included a $10,215,000 charge relating primarily to consolidation of sales
and marketing resources in North America and Europe, consolidating operating
facilities in the United States and Europe, and a workforce reduction. The
$10,215,000 charge was offset by a $626,000 adjustment to the fiscal 2002 and
2001 restructuring accruals related to favorable settlement of leases upon
termination. Through attrition and position eliminations, the fiscal 2003
                                       II-2


and 2004 restructuring actions will result in a workforce reduction of
approximately 10 percent. The Company expects to incur pre-tax restructuring
charges in fiscal 2004 of $2 to $3 million. Total annual pre-tax savings from
these activities are expected to approximate $10 to $13 million.

     Fiscal 2002 expenses included a net restructuring charge of $2,720,000,
consisting of a $3,030,000 charge relating primarily to consolidation of
facilities in Asia/Pacific, United States and Europe and a workforce reduction
of approximately 3 percent, offset by a $310,000 adjustment to the fiscal 2001
severance accrual.

     Operating income decreased $9,354,000 to $32,149,000 in fiscal 2003. The
majority of the decrease was due to an increase in net charges associated with
restructuring activities from fiscal 2002 to fiscal 2003 of $6,869,000. The
remaining decrease was a result of higher selling, general and administrative
expenses as discussed above.

     Investment and other income decreased $1,287,000 from the prior year
primarily due to the net effect of foreign exchange rates, primarily on
intercompany transactions.

     Income before income taxes was $32,455,000, a decrease of 24.8% from fiscal
2002. The higher expenses associated with restructuring activities in fiscal
2003 versus fiscal 2002 accounted for 15.9% of the decrease.

     The Company's effective tax rate decreased from 34.5% for fiscal 2002 to
34.0% for fiscal 2003.

     Net income was $21,420,000 for fiscal 2003, compared to $28,253,000 for
fiscal 2002. Net income included after-tax net restructuring charges of
$6,329,000 in fiscal 2003 and a $1,782,000 charge in fiscal 2002.

YEAR ENDED JULY 31, 2002, COMPARED TO YEAR ENDED JULY 31, 2001

     Sales for fiscal 2002 decreased by $28,982,000 or 5.3% from fiscal 2001.
Sales of the Company's international operations increased 4.7% in U.S. dollars.
The acquisition of Balkhausen GmbH in March 2001, Eset in July 2001 and Safety
Signs Service in November 2001 increased international sales by 4.4% in fiscal
2002. International base business increased by 0.8% in local currencies. These
increases were partially offset by the negative effect of fluctuations in the
exchange rates used to translate financial results into U.S. currency, which
reduced international sales by 0.5%. Sales of the Company's U.S. operations
decreased 13.0%, with a base business decline of 14.3% partially offset by the
acquisitions of Strandware, Inc. in November 2001 and Temtec, Inc in April 2002,
which added 1.3% to sales.

     The cost of products sold as a percentage of sales increased from 47.1% to
49.6%. The increase was due to higher unabsorbed manufacturing overhead costs,
changes in product mix and the impact of a full year of Balkhausen's operations
compared to four months in fiscal 2001; Balkhausen operations have lower margins
than the company average due to a high portion of pass through items in their
sales mix.

     Research and development investment as a percentage of sales was 3.3%, down
from 3.7% in fiscal 2001.

     Selling, general and administrative expenses as a percentage of sales
decreased to 38.5% in fiscal 2002, from 39.2% in fiscal 2001. Fiscal 2001
expenses included goodwill amortization of $6,119,000, which ceased on August 1,
2001. The remaining decrease of $8,819,000 was due primarily to fixed
administrative expenses spread over a lower sales base.

     Fiscal 2002 expenses included a net restructuring charge of $2,720,000
which consisted of a $3,030,000 charge relating primarily to consolidation of
facilities in Asia/Pacific, United States and Europe and a workforce reduction
of approximately 3 percent, offset by a $310,000 adjustment to the fiscal 2001
severance accrual. Fiscal 2001 expenses included a restructuring charge of
$9,560,000, primarily related to facilities consolidation and a workforce
reduction of approximately 5 percent.

     Operating income decreased $3,019,000 to $41,503,000 in fiscal 2002. Lower
expenses from restructuring and goodwill amortization when compared to fiscal
2001 were more than offset by reduced gross margin from lower sales volume,
resulting in the reduction in operating income.

                                       II-3


     Investment and other income increased $1,028,000 from the prior year
primarily due to the net effect of foreign exchange rates, primarily on
intercompany transactions, improving over the prior year by approximately
$2,000,000. Reductions in interest income of $800,000 partially offset the
foreign exchange improvement.

     Income before income taxes was $43,135,000, a decrease of 3.7% compared to
fiscal 2001's $44,790,000, due to the factors cited above.

     The Company's effective tax rate decreased from 38.5% for fiscal 2001 to
34.5% for fiscal 2002. The large decrease in the effective rate was due to the
effect of ceasing goodwill amortization on August 1, 2001.

     Net income was $28,253,000 for fiscal 2002, compared to $27,546,000 for
fiscal 2001. Net income included after-tax net restructuring charges of
$1,782,000 in fiscal 2002 and $5,879,000 in fiscal 2001 and goodwill
amortization in fiscal 2001 of $5,939,000 after-tax, which ceased on August 1,
2001.

BUSINESS SEGMENT OPERATING RESULTS

  IDENTIFICATION SOLUTIONS & SPECIALTY TAPES (ISST) GROUP

     ISST sales increased 3.6% in fiscal 2003 from fiscal 2002, following a
decrease of 12.9% in fiscal 2002 versus 2001. Base-business sales in fiscal 2003
were down 2.6% from fiscal 2002. The base business decline within the group was
most significant in North America, where a weak manufacturing economy impacted
our industrial base of customers. This was more than offset by the impact of
foreign currency translation, which added 4.1% to the group's sales and the
acquisitions of Strandware, Inc. in November 2001 and Etimark GmbH in April
2003, which added 2.1% to the group's sales.

     Segment profit as a percentage of sales remained constant at 13.5% in both
2003 and 2002. Comparing fiscal 2002 to 2001, segment profit as a percentage of
sales decreased from 19.7% to 13.5% as a result of sales decline and unabsorbed
cost increases.

  GRAPHICS & WORKPLACE SOLUTIONS GROUP

     Graphics & Workplace Solutions' sales increased 10.2% in fiscal 2003 from
fiscal 2002. Foreign currency translation increased the group's sales by 5.9%
from fiscal 2002 to 2003. The acquisitions of Safety Signs Service in November
2001, Temtec, Inc. in April 2002, TISCOR, Inc. in January 2003 and Cleere
Advantage in February 2003 added 3.4% to the group's sales. Base business
increased 0.9% in fiscal 2003. Graphics & Workplace Solutions' sales increased
1.4% in fiscal 2002 from fiscal 2001. The acquisitions of Safety Signs Service
in November 2001 and Temtec, Inc. in April 2002 added 1.2% to the group's sales.
Foreign currency did not have an impact on the group's sales in fiscal 2002
compared to fiscal 2001.

     Segment profit as a percentage of sales in the group declined to 22.7% in
fiscal 2003 from 24.8% in fiscal 2002 due to higher costs and depressed sales in
our North American direct marketing operations as a result of a temporary
disruption of customer service levels related to a business system
implementation mid-way through fiscal 2003. Segment profit as a percentage of
sales in the group declined to 24.8% in fiscal 2002 from 25.7% in fiscal 2001
due to a decline in gross margin. This decline was driven by lower sales volume
in North America and production costs for a new product introduction.

LIQUIDITY

     The Company's liquidity remains strong. Cash and cash equivalents were
$76,088,000 at July 31, 2003, compared to $75,969,000 at July 31, 2002 and
$62,811,000 at July 31, 2001. Working capital decreased $11,886,000 during
fiscal 2003 to $123,878,000 at July 31, 2003. Accounts receivable balances
increased $3,916,000 from July 31, 2002 to July 31, 2003. These increases were
due to foreign currency translation and accounts receivable balances added from
acquisitions completed during the fiscal year partially offset by a decrease
attributable to better management of receivables. Inventory remained essentially
flat from July 31, 2002 to July 31, 2003 as reduced unit volume offset increases
from foreign currency translation and acquisitions. Current liabilities
increased $17,017,000 due to the timing of income tax payments, increased
operating liabilities associated with acquisitions completed during fiscal 2003
and a larger accrual for restructuring charges at July 31, 2003 when compared to
July 31, 2002.
                                       II-4


     The Company has maintained significant cash balances due in large part to
its strong operating cash flow, which totaled $55,249,000 for fiscal 2003,
$54,251,000 for fiscal 2002 and $53,228,000 for fiscal 2001.

     Capital expenditures were $14,438,000 in fiscal 2003, $13,095,000 in fiscal
2002 and $20,770,000 in fiscal 2001. Fiscal 2003's capital expenditures included
further investment in software related to our Eclipse initiative, plant
additions/expansions in Asia and tooling for additional new products. Fiscal
2002's capital expenditures included tooling for two new products, continued
investment in software related to our Eclipse initiative, computers and building
improvements in Europe. Fiscal 2001's capital expenditures included a new
manufacturing location in Brazil, new software, computers and manufacturing
equipment in Europe.

     Financing activities required $16,833,000 in fiscal 2003, $13,385,000 in
fiscal 2002 and $22,676,000 in fiscal 2001. Cash used for dividends to
shareholders was $17,936,000 in fiscal 2003, $17,358,000 in fiscal 2002 and
$16,229,000 in fiscal 2001. The Company also redeemed all of the outstanding
preferred stock during fiscal 2003 for $3,026,000, including a required $171,000
premium paid for the redemption.

     On September 23, 1999, the Company entered into a $150,000,000
multicurrency revolving loan agreement with a group of six banks, which expires
on September 23, 2004. On January 31, 2000, the multicurrency revolving loan was
amended, increasing the amount available to $200,000,000. On October 31, 2001,
the multicurrency revolving loan was amended to modify a financial covenant to
restrict the amount of line of credit available to a multiple of domestic
earnings. On April 18, 2003, the multicurrency revolving loan was amended at the
Company's request, decreasing the amount available to $100,000,000. Under the
agreement, the Company has the option to have interest rates determined based
upon the prime rate at PNC Bank N.A. plus margin or a LIBOR rate plus margin. A
commitment fee is payable on the unused amount of credit. The agreement requires
the Company to maintain certain financial covenants. The Company is in
compliance with the covenants of the agreement. At July 31, 2003, approximately
$58,000,000 of the line of credit was available to the Company under the
formulas contained in the agreement. The agreement requires that the Company
maintain a specified level of consolidated net worth, which could restrict the
Company's ability to pay dividends. At July 31, 2003, the required consolidated
net worth was approximately $264,000,000 and the Company's actual consolidated
net worth was approximately $339,000,000. There were no borrowings under this
line of credit during the years ended July 31, 2003 and 2002.

     Long-term obligations as a percentage of long-term obligations plus
stockholders' investment were 0.2% at July 31, 2003 and 1.1% at July 31, 2002.
In November 2002, the Company successfully exited a capital lease of a domestic
facility. This capital lease represented approximately $3 million of the
long-term debt balance at July 31, 2002.

     The Company continues to seek opportunities to invest in new products, new
markets and strategic acquisitions that fit its growth strategy. Management
believes the Company's cash and cash equivalents, the cash flow it generates
from operating activities and the Company's available line of credit are
adequate to meet the Company's current investing and financing needs.

     The Company believes that its strong liquidity and continued strong cash
flows will enable it to execute its long-term strategic plan. This strategic
plan includes investments, which expand our current market share, open new
markets and geographies, develop new products and distribution channels and
continue to improve our processes. This strategic plan also includes executing
key acquisitions. Even in uncertain economic times, the Company's strong
liquidity allows it to continue with investments for the Company's future.
Should the Company remain in an unleveraged position during expansionary times,
the Company may experience a less rapid rate of growth compared to some of its
competitors.

OFF-BALANCE SHEET ARRANGEMENTS

     The Company does not have material off-balance sheet arrangements or
related party transactions. The Company is not aware of factors that are
reasonably likely to adversely affect liquidity trends, other than the risk
factors presented in other Company filings. However, the following additional
information is provided to assist financial statement users.

                                       II-5


     Operating Leases -- These leases generally are entered into only for
non-strategic investments (e.g., warehouses, office buildings, computer
equipment) for which the economic profile is favorable.

     Purchase Commitments -- The Company has purchase commitments for materials,
supplies, services, and property, plant and equipment as part of the ordinary
conduct of business. Such commitments are not in excess of current market
prices. Due to the proprietary nature of many of the Company's materials and
processes, certain supply contracts contain penalty provisions for early
termination. The Company does not believe a material amount of penalties will be
incurred under these contracts based upon historical experience and current
expectations.

     Other Contractual Obligations -- The Company does not have material
financial guarantees or other contractual commitments that are reasonably likely
to adversely affect liquidity.

     Related Party Transactions -- The Company does not have any related party
transactions that affect the results of operations, cash flow or financial
condition.

PAYMENTS DUE UNDER CONTRACTUAL OBLIGATIONS

     The Company's future commitments at July 31, 2003 for long-term debt and
operating lease obligations are as follows (dollars in thousands):



YEAR ENDING JULY 31,                            LONG-TERM DEBT   OPERATING LEASES    TOTAL
- --------------------                            --------------   ----------------   -------
                                                                           
2004..........................................      $  930           $10,358        $11,288
2005..........................................         161             7,681          7,842
2006..........................................         127             2,688          2,815
2007..........................................         109             2,503          2,612
2008..........................................          91             1,757          1,848
Thereafter....................................          80             2,671          2,751
                                                    ------           -------        -------
  Total.......................................      $1,498           $27,658        $29,156
                                                    ======           =======        =======


INFLATION

     Essentially all of the Company's revenue is derived from the sale of its
products in competitive markets. Because prices are influenced by market
conditions, it is not always possible to fully recover cost increases through
pricing. Changes in product mix from year to year and timing differences in
instituting price changes make it virtually impossible to accurately define the
impact of inflation on profit margins.

CRITICAL ACCOUNTING POLICIES

  REVENUE RECOGNITION

     The Company recognizes revenue when title and risk of loss have
transferred, there is evidence of an arrangement and collection of the sales
proceeds is reasonably assured, all of which generally occur upon shipment of
goods to customers. The vast majority of the Company's revenue relates to sale
of inventory to customers, and revenue is recognized when title and the risks
and rewards of ownership pass to the customer. Given the nature of the Company's
business and the applicable rules guiding revenue recognition, the Company's
revenue recognition practices do not contain estimates that materially affect
results of operations.

  RESTRUCTURING

     Restructuring charges relate to the restructuring activities in fiscal
2003, 2002 and 2001. The Company provides forward-looking information about the
restructuring activities, including estimated costs and savings. Such
disclosures represent management's best estimate, but do require significant
estimates that may change over time. However, the specific reserves recorded in
each year under the restructuring activities are not considered highly
uncertain, as discussed in more detail in Note 10 to the Consolidated Financial
Statements.

                                       II-6


  INCOME TAXES

     The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes,"
which requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in deferred
tax assets and liabilities. Changes in existing regulatory tax laws and rates
may affect the Company's ability to successfully manage regulatory matters
around the world, and future business results may affect the amount of deferred
tax liabilities or the valuation of deferred tax assets over time. The Company's
accounting for deferred tax consequences represents management's best estimate
of future events that can be appropriately reflected in the accounting
estimates. Although certain changes cannot be reasonably assumed in the
Company's current estimates, management does not believe such changes would
result in a material period-to-period impact on the results of operations or
financial condition.

  GOODWILL AND INTANGIBLE ASSETS

     The allocation of purchase price for business combinations requires
management estimates and judgment as to expectations for future cash flows of
the acquired business and allocation of those cash flows to identifiable
intangible assets in determining the estimated fair value for purchase price
allocation purposes. If the actual results differ from the estimates and
judgments used in these estimates, the amounts recorded in the financial
statements could result in a possible impairment of the intangible assets and
goodwill or require acceleration in the amortization expense of finite lived
intangible assets. In addition, SFAS No. 142, "Goodwill and Other Intangible
Assets," requires that goodwill and other indefinite lived intangible assets be
tested annually for impairment. Changes in management estimates or judgments
could result in an impairment charge, and such a charge could have an adverse
effect on the Company's financial condition and results of operations.

  RESERVES AND ALLOWANCES

     The Company has recorded reserves or allowances for inventory obsolescence,
credit memos, allowance for doubtful accounts, incurred but not reported medical
claims, compensated absences, incentive compensation and income tax
contingencies. These reserves require the use of estimates and judgment. The
Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances. The
Company believes that such estimates are made with consistent and appropriate
methods. Actual results may differ from these estimates under different
assumptions or conditions.

NEW ACCOUNTING STANDARDS

     In December 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure." This pronouncement provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this Statement amends the disclosure
requirements of SFAS No. 123, "Accounting for Stock-based Compensation," to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. This pronouncement did not have
an effect on the Company's financial results. The Company adopted the disclosure
provisions of SFAS No. 148 during fiscal 2003.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." This
pronouncement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some

                                       II-7


circumstances). Many of those instruments were previously classified as equity.
This Statement is effective for financial instruments entered into or modified
after May 31, 2003. This pronouncement does not impact the accounting of any of
the Company's financial instruments existing at July 31, 2003.

FORWARD-LOOKING STATEMENTS

     Except for historical information, the Company's reports to the Securities
and Exchange Commission on Form 10-K and Form 10-Q and periodic press releases,
as well as other public documents and statements, may contain "forward-looking
statements," as defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are often identified by words such as "intend,"
"anticipate," "assume," "believe," "estimate," "expect," "plan," "project,"
"will," and other expressions, which refer to future events and trends.

     The ability of the Company to attain management's goals and objectives is
materially dependent on numerous factors, including those set forth herein.

ECONOMIC CONDITIONS

     Operating results are significantly influenced by general economic
conditions and growth or contraction of the principal economies in which we
operate, including the United States, Canada, Europe, Latin America and the
Asia-Pacific region. This is especially true with respect to growth or
contraction of the industrial and technology sectors of those economies. All
economies in which we operate are cyclical and the rates of growth or
contraction can vary substantially. Because we have few long-term contracts, we
generally ship products within a short period of time from receiving orders and
thus maintain only a small backlog. The extent to which we can rapidly adjust
our cost structure and output to changing economic conditions may have a
significant effect on our future profitability.

CURRENCY FLUCTUATIONS

     Approximately half of our sales are in foreign currencies, which fluctuate
in relationship to one another and to the United States dollar. Fluctuations in
currencies can cause transaction, translation and other losses. These
fluctuations can have an adverse effect on our reported sales and earnings.

COST OF RAW MATERIALS

     As a manufacturer, our sales and profitability are also dependent upon
availability and cost of raw materials and the ability to control or pass on
costs of raw materials and labor. Inflationary and other increases in the costs
of raw materials and labor have occurred in the past and are expected to recur.
Our ability to reflect these costs in increased selling prices for our products,
increasing our productivity, and focusing on higher profit businesses, will
significantly influence our ability to maintain our margins. Past performance
may or may not be replicable in the future.

RELIANCE ON SUPPLIERS

     Our manufacturing operations depend on our suppliers' ability to deliver
quality components and products in time for us to meet critical manufacturing
and distribution schedules. If shortages or delays occur, our operating results
could suffer until other sources can be developed.

NEW PRODUCTS

     A significant portion of the revenues in each of our recent fiscal years
has been represented by sales of products we have introduced within three years
prior to the period. Our ability to develop and successfully market new products
and to develop, acquire and retain necessary intellectual property rights is
therefore essential to maintaining our growth, which ability cannot be assured.

                                       II-8


ACQUISITIONS, STRATEGIC ALLIANCES, JOINT VENTURES AND DIVESTITURES

     Part of our historic growth has come through acquisitions. We may also
engage in strategic alliances, joint ventures and divestitures. Our ability to
effectively evaluate potential acquisition, strategic alliance, joint venture or
divestiture transactions and to effectuate such transactions at a reasonable
price can affect our profitability. In addition, acquisitions, strategic
alliances and joint ventures may require us to integrate with a different
company culture, management team and business infrastructure. We may also have
to develop, manufacture and market products with our products in a way that
enhances the performance of the combined business or product line. Depending on
the size and complexity of an acquisition, our successful integration of the
entity depends on a variety of factors, including:

     - The hiring and retention of key employees,

     - Management of facilities and employees in separate geographic areas,

     - The integration or coordination of different research and development and
       product manufacturing facilities, and

     - Systems integration and implementation.

     All of these efforts require varying levels of management resources, which
may divert our attention from other business operations.

INTELLECTUAL PROPERTY

     We generally rely upon patent, copyright, trademark and trade secret laws
in the U.S. and in certain other countries, and agreements with our employees
and customers to establish and maintain our property rights in our technology
and products. However, any of our intellectual property rights could be
challenged, invalidated or circumvented. Third parties may claim that we are
infringing their intellectual property. Even if we do not believe that our
products are infringing third parties' intellectual property rights, the claims
can be time-consuming and costly to defend and divert management's attention and
resources away from our business. Claims of intellectual property infringement
might also require us to enter into costly royalty or license agreements. If we
cannot or do not license the infringed technology or substitute similar
technology from another source, our business could suffer.

ENVIRONMENTAL

     Some of our operations use substances regulated under various federal,
state and foreign laws governing the environment. It is our policy to apply
strict standards for environmental protection to sites inside and outside the
U.S., even when not subject to local government regulations. However, a failure
to comply with applicable standards or the accidental emission of or exposure to
hazardous materials could give rise to significant monetary liability. Also, the
imposition of new governmental standards or requirements could materially
increase our cost of operation.

EFFECT OF INTERNATIONAL POLITICAL CONSIDERATIONS

     Our international operations may be significantly influenced by political,
economic and regulatory conditions (including tariffs) in the countries in which
we conduct our operations.

OTHER

     Other factors include costs and other effects of computer viruses,
availability of electricity, natural gas and other sources of power, interest
rate increases; legal and administrative cases and proceedings, settlements,
judgments and investigations, claims, and changes in those items; adoption of
new, or revised accounting policies and practices and the application of such
policies and practices; the successful implementation of a new
enterprise-resource-planning system; business reorganizations or combinations;
loss of significant contracts or customers; the ability and willingness of
purchasers to substitute other products for the products that

                                       II-9


we distribute; and pricing, purchasing, financing and promotional decisions by
intermediaries in the distribution channel.

     The factors identified in this statement are believed to be important
factors (but not necessarily all of the important factors) that could cause
actual results to be materially different from those that may be expressed or
implied in any forward-looking statement made by, or on behalf of, the Company.
Other factors not discussed in this statement could also have material adverse
effects concerning forward-looking objectives or estimates. The Company assumes
no obligation to update the information included in this statement.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's business operations give rise to market risk exposure due to
changes in foreign exchange rates. To manage that risk effectively, the Company
enters into hedging transactions, according to established guidelines and
policies, that enable it to mitigate the adverse effects of this financial
market risk.

     The global nature of the Company's business requires active participation
in the foreign exchange markets. As a result of investments, production
facilities and other operations on a global scale, the Company has assets,
liabilities and cash flows in currencies other than the U.S. Dollar. The primary
objective of the Company's foreign-exchange risk management is to minimize the
impact of currency movements on intercompany transactions and foreign
raw-material imports. To achieve this objective, the Company hedges a portion of
known exposures using forward contracts. Main exposures are related to
transactions denominated in the British Pound, the Euro, Canadian Dollar,
Japanese Yen and Australian Dollar. The risk of these hedging instruments is not
material.

     The Company could be exposed to interest rate risk through its corporate
borrowing activities. The objective of the Company's interest rate risk
management activities is to manage the levels of the Company's fixed and
floating interest rate exposure to be consistent with the Company's preferred
mix. The interest rate risk management program consists of entering into
approved interest rate derivatives when there is a desire to modify the
Company's exposure to interest rates. As of July 31, 2003, the Company has not
entered into any interest rate derivatives.

                                      II-10


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                               BRADY CORPORATION

                         INDEX TO FINANCIAL STATEMENTS



                                                              PAGE
                                                              -----
                                                           
Independent Auditors' Report................................  II-12
Financial Statements:
  Consolidated Balance Sheets -- July 31, 2003 and 2002.....  II-13
  Consolidated Statements of Income -- Years Ended July 31,
     2003, 2002 and 2001....................................  II-14
  Consolidated Statements of Stockholders'
     Investment -- Years Ended July 31, 2003, 2002 and
     2001...................................................  II-15
  Consolidated Statements of Cash Flows -- Years Ended July
     31, 2003, 2002 and 2001................................  II-16
  Notes to Consolidated Financial Statements -- Years Ended
     July 31, 2003, 2002 and 2001...........................  II-17


                                      II-11


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
of Brady Corporation:
Milwaukee, Wisconsin

     We have audited the accompanying consolidated balance sheets of Brady
Corporation and subsidiaries (the "Company") as of July 31, 2003 and 2002, and
the related consolidated statements of income, stockholders' investment and cash
flows for each of the three years in the period ended July 31, 2003. Our audits
also included the financial statement schedule listed in Item 14. These
financial statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at July 31, 2003
and 2002, and the results of its operations and its cash flows for each of the
three years in the period ended July 31, 2003 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

     As discussed in Note 1 to the consolidated financial statements, the
Company ceased its amortization of goodwill as of August 1, 2001 in accordance
with Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets."

/s/ DELOITTE & TOUCHE LLP
September 8, 2003
Milwaukee, Wisconsin

                                      II-12


                       BRADY CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                             JULY 31, 2003 AND 2002



                                                                 2003         2002
                                                              ----------   ----------
                                                              (DOLLARS IN THOUSANDS)
                                                                     
                                       ASSETS
Current Assets:
  Cash and cash equivalents (Note 1)........................   $ 76,088     $ 75,969
  Accounts receivable, less allowance for losses ($3,166 and
     3,206, respectively)...................................     80,162       76,246
  Inventories (Note 1):
     Finished products......................................     18,780       19,130
     Work-in-process........................................      5,356        5,135
     Raw materials and supplies.............................     12,428       12,453
                                                               --------     --------
       Total inventories....................................     36,564       36,718
  Prepaid expenses and other current assets (Notes 1, 3 and
     4).....................................................     22,343       21,093
                                                               --------     --------
       Total current assets.................................    215,157      210,026
                                                               --------     --------
Other Assets:
  Goodwill (Note 1).........................................    130,667      108,053
  Other (Notes 1 and 4).....................................     24,455       21,555
Property, plant and equipment (Notes 1 and 5):
  Cost:
     Land...................................................      5,172        5,612
     Buildings and improvements.............................     51,471       50,122
     Machinery and equipment................................    139,007      127,955
     Construction in progress...............................      3,245        3,062
                                                               --------     --------
                                                                198,895      186,751
  Less accumulated depreciation.............................    119,655      105,860
                                                               --------     --------
       Net property, plant and equipment....................     79,240       80,891
                                                               --------     --------
Total.......................................................   $449,519     $420,525
                                                               ========     ========
                      LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
  Accounts payable..........................................   $ 28,470     $ 26,294
  Wages and amounts withheld from employees.................     30,619       26,251
  Taxes, other than income taxes............................      2,492        2,396
  Accrued income taxes......................................     11,449        6,312
  Other current liabilities (Note 3)........................     17,320       12,847
  Short-term borrowings and current maturities on long-term
     obligations (Note 5)...................................        929          162
                                                               --------     --------
       Total current liabilities............................     91,279       74,262
Long-Term Obligations, less current maturities (Note 5).....        568        3,751
Other Liabilities (Note 3)..................................     18,711       18,270
                                                               --------     --------
       Total liabilities....................................    110,558       96,283
                                                               --------     --------
Stockholders' Investment (Notes 1 and 6):
  Preferred Stock...........................................                   2,855
  Common Stock:
     Class A Nonvoting -- Issued 21,558,265 and 21,356,605
      shares, respectively (aggregate liquidation preference
      of $36,002 and $35,666 at July 31, 2003 and 2002,
      respectively).........................................        216          214
     Class B Voting -- Issued and outstanding 1,769,314
      shares................................................         18           18
  Additional paid-in capital................................     47,464       41,526
  Earnings retained in the business.........................    290,805      287,674
  Treasury stock -- 18,262 and 4,548 shares, respectively of
     Class A nonvoting common stock, at cost................       (509)        (132)
  Cumulative other comprehensive income (loss)..............      1,595       (7,665)
  Other.....................................................       (628)        (248)
                                                               --------     --------
       Total stockholders' investment.......................    338,961      324,242
                                                               --------     --------
Total.......................................................   $449,519     $420,525
                                                               ========     ========


                See notes to consolidated financial statements.
                                      II-13


                       BRADY CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001



                                                                2003       2002       2001
                                                              --------   --------   --------
                                                                  (DOLLARS IN THOUSANDS,
                                                                EXCEPT PER SHARE AMOUNTS)
                                                                           
Net Sales (Note 1)..........................................  $554,866   $516,962   $545,944
Operating Expenses:
  Cost of products sold.....................................   274,593    256,186    257,313
  Research and development..................................    18,873     17,271     20,329
  Selling, general and administrative.......................   219,662    199,282    214,220
  Restructuring charge -- net (Note 10).....................     9,589      2,720      9,560
                                                              --------   --------   --------
     Total operating expenses...............................   522,717    475,459    501,422
                                                              --------   --------   --------
Operating Income............................................    32,149     41,503     44,522
Other Income and (Expense):
  Investment and other income -- net........................       427      1,714        686
  Interest expense..........................................      (121)       (82)      (418)
                                                              --------   --------   --------
     Net other income.......................................       306      1,632        268
                                                              --------   --------   --------
Income Before Income Taxes..................................    32,455     43,135     44,790
Income Taxes (Notes 1 and 4)................................    11,035     14,882     17,244
                                                              --------   --------   --------
Net Income..................................................  $ 21,420   $ 28,253   $ 27,546
                                                              ========   ========   ========
Net Income Per Common Share (Notes 6 and 8):
  Class A Nonvoting:
     Basic..................................................  $   0.92   $   1.22   $   1.20
                                                              ========   ========   ========
     Diluted................................................  $   0.91   $   1.20   $   1.18
                                                              ========   ========   ========
  Class B Voting:
     Basic..................................................  $   0.89   $   1.19   $   1.17
                                                              ========   ========   ========
     Diluted................................................  $   0.88   $   1.17   $   1.15
                                                              ========   ========   ========


                See notes to consolidated financial statements.
                                      II-14


                       BRADY CORPORATION AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001



                                                                    EARNINGS                  OTHER
                                                       ADDITIONAL   RETAINED              COMPREHENSIVE                 TOTAL
                                  PREFERRED   COMMON    PAID-IN      IN THE    TREASURY      INCOME                 COMPREHENSIVE
                                    STOCK     STOCK     CAPITAL     BUSINESS    STOCK        (LOSS)        OTHER       INCOME
                                  ---------   ------   ----------   --------   --------   -------------   -------   -------------
                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                                            
Balances at July 31, 2000.......   $2,855      $227     $31,586     $265,462    $(132)      $ (7,137)     $(1,637)
  Net income....................                                      27,546                                           $27,546
  Net currency translation
    adjustment..................                                                              (4,879)                   (4,879)
                                                                                                                       -------
      Total comprehensive
        income..................                                                                                       $22,667
                                                                                                                       =======
  Issuance of 183,236 shares of
    Class A
    Common Stock under stock
      option plan...............                  2       3,578
  Other.........................                                                                              695
  Tax benefit from exercise of
    stock options...............                            642
  Cash dividends on Preferred
    Stock:
    1979 series -- $10 a
      share.....................                                        (220)
    6% and 1972 series -- $6 a
      share.....................                                         (39)
  Cash dividends on Common
    Stock:
    Class A -- $.72 a share.....                                     (14,755)
    Class B -- $.69 a share.....                                      (1,215)
                                   ------      ----     -------     --------    -----       --------      -------
Balances at July 31, 2001.......    2,855       229      35,806      276,779     (132)       (12,016)        (942)
  Net income....................                                      28,253                                           $28,253
  Net currency translation
    adjustment..................                                                               4,351                     4,351
                                                                                                                       -------
      Total comprehensive
        income..................                                                                                       $32,604
                                                                                                                       =======
  Issuance of 207,054 shares of
    Class A
    Common Stock under stock
      option plan...............                  3       4,885
  Other.........................                                                                              694
  Tax benefit from exercise of
    stock options...............                            835
  Cash dividends on Preferred
    Stock:
    1979 series -- $10 a
      share.....................                                        (220)
    6% and 1972 series -- $6 a
      share.....................                                         (39)
  Cash dividends on Common
    Stock:
    Class A -- $.76 a share.....                                     (15,807)
    Class B -- $.73 a share.....                                      (1,292)
                                   ------      ----     -------     --------    -----       --------      -------
Balances at July 31, 2002.......    2,855       232      41,526      287,674     (132)        (7,665)        (248)
  Net income....................                                      21,420                                           $21,420
  Net currency translation
    adjustment..................                                                               9,260                     9,260
                                                                                                                       -------
      Total comprehensive
        income..................                                                                                       $30,680
                                                                                                                       =======
  Issuance of 201,660 shares of
    Class A
    Common Stock under stock
      option plan...............                  2       4,660
  Other (Note 6)................                            669                                              (380)
  Tax benefit from exercise of
    stock options...............                            609
  Redemption of Preferred
    Stock.......................   (2,855)                              (171)
  Purchase of 13,714 shares of
    Class A
    Common Stock................                                                 (377)
  Cash dividends on Common
    Stock:
    Class A -- $.80 a share.....                                     (16,762)
    Class B -- $.77 a share.....                                      (1,356)
                                   ------      ----     -------     --------    -----       --------      -------
Balances at July 31, 2003.......   $   --      $234     $47,464     $290,805    $(509)      $  1,595      $  (628)
                                   ======      ====     =======     ========    =====       ========      =======


                See notes to consolidated financial statements.
                                      II-15


                       BRADY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001



                                                               2003      2002      2001
                                                              -------   -------   -------
                                                                (DOLLARS IN THOUSANDS)
                                                                         
Operating Activities:
  Net income................................................  $21,420   $28,253   $27,546
  Adjustments to reconcile net income to net cash provided
    by operating activities:
    Depreciation and amortization...........................   17,771    16,630    22,646
    Loss (gain) on sale of property, plant and equipment....       55     1,166      (185)
    Gain on sale of securities..............................                         (722)
    Provision for losses on accounts receivable.............    1,523     2,467     1,537
    Other...................................................      289       694       695
    Restructuring charge -- net.............................    6,926     2,239     9,226
    Changes in operating assets and liabilities (net of
     effects of business acquisitions):
      Accounts receivable...................................    4,334    (3,057)    8,299
      Inventory.............................................    4,140     4,895     2,252
      Prepaid expenses and other assets.....................   (1,179)   (1,538)   (1,749)
      Accounts payable and accrued liabilities..............   (4,007)      923   (13,109)
      Income taxes..........................................    5,244       453    (2,382)
      Deferred income taxes.................................   (1,915)      449    (1,981)
      Other liabilities.....................................      648       677     1,155
                                                              -------   -------   -------
         Net cash provided by operating activities..........   55,249    54,251    53,228
                                                              -------   -------   -------
Investing Activities:
  Acquisitions of businesses, net of cash acquired..........  (23,912)  (12,749)   (6,699)
  Purchases of property, plant and equipment................  (14,438)  (13,095)  (20,770)
  Termination of capital lease..............................     (791)
  Proceeds from sale of property, plant and equipment.......      257       776       525
  Proceeds from sale of securities..........................                          825
  Other.....................................................       68       534      (356)
                                                              -------   -------   -------
         Net cash used in investing activities..............  (38,816)  (24,534)  (26,475)
                                                              -------   -------   -------
Financing Activities:
  Payment of dividends......................................  (17,936)  (17,358)  (16,229)
  Proceeds from issuance of common stock....................    4,662     5,720     4,222
  Proceeds from borrowings..................................                          313
  Principal payments on debt................................     (327)   (1,747)   (9,257)
  Payment for redemption of preferred stock.................   (2,855)
  Purchase of treasury stock................................     (377)
  Other.....................................................                       (1,725)
                                                              -------   -------   -------
         Net cash used in financing activities..............  (16,833)  (13,385)  (22,676)
                                                              -------   -------   -------
Effect of exchange rate changes on cash.....................      519    (3,174)   (2,050)
                                                              -------   -------   -------
Net increase in cash and cash equivalents...................      119    13,158     2,027
Cash and cash equivalents, beginning of year................   75,969    62,811    60,784
                                                              -------   -------   -------
Cash and cash equivalents, end of year......................  $76,088   $75,969   $62,811
                                                              =======   =======   =======
Supplemental Disclosure of Cash Flow Information:
  Cash paid during the year for:
    Interest................................................  $    43   $   175   $   441
    Income taxes, net of refunds............................   12,789    15,176    21,613
  Acquisitions:
    Fair value of assets acquired, net of cash..............  $14,430   $ 5,667   $ 7,859
    Liabilities assumed.....................................   (8,146)   (1,789)   (4,736)
    Goodwill................................................   17,628     8,871     3,576
                                                              -------   -------   -------
    Net cash paid for acquisitions..........................  $23,912   $12,749   $ 6,699
                                                              =======   =======   =======
  Termination of capital lease:
    Disposition of capital assets...........................   (2,574)
    Settlement of capital lease liability...................    3,365
                                                              -------
    Net cash paid for termination of capital lease..........  $   791
                                                              =======


                See notes to consolidated financial statements.
                                      II-16


                       BRADY CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED JULY 31, 2003, 2002 AND 2001

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation -- The accompanying consolidated financial
statements include the accounts of Brady Corporation and its subsidiaries (the
"Company"), all of which are wholly-owned. All significant intercompany accounts
and transactions have been eliminated in consolidation.

     Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

     Fair Value of Financial Instruments -- The Company believes the carrying
amount of its financial instruments (cash and cash equivalents, accounts
receivable, accounts payable and long-term debt) is a reasonable estimate of the
fair value of these instruments due to their short-term nature or variable
interest rate.

     Cash Equivalents -- The Company considers all highly liquid investments
with maturities of three months or less when acquired to be cash equivalents.

     Inventories -- Inventories are stated at the lower of cost or market. Cost
has been determined using the last-in, first-out ("LIFO") method for certain
inventories (approximately 36% and 39% of total inventories at July 31, 2003 and
2002, respectively) and the first-in, first-out ("FIFO") method for other
inventories. The carrying value of domestic inventories stated at FIFO cost
exceeded the value of such inventories stated at LIFO cost by $7,494,000 and
$5,874,000 at July 31, 2003 and 2002, respectively.

     Depreciation -- The cost of buildings and improvements and machinery and
equipment is being depreciated over their estimated useful lives using the
straight-line method for financial reporting purposes. The estimated useful
lives range from 3 to 33 years.

     Intangible Assets -- The cost of intangible assets with determinable useful
lives is amortized to reflect the pattern of economic benefits consumed,
principally on a straight-line basis, over the estimated periods benefited.
Goodwill is evaluated annually for impairment. Beginning in fiscal 2002, such
determination of fair value is based on valuation models that incorporate
expected future cash flows and profitability projections. Prior to 2002,
goodwill was amortized over periods not exceeding 40 years.

     Changes in the carrying amount of goodwill for the years ended July 31,
2003 and 2002, are as follows:



                                                             GRAPHICS &
                                                              WORKPLACE
                                                  ISST        SOLUTIONS       TOTAL
                                               -----------   -----------   ------------
                                                                  
Balance as of August 1, 2001.................  $56,740,000   $39,301,000   $ 96,041,000
  Goodwill acquired during the period........    2,041,000     6,830,000      8,871,000
  Translation adjustments and other..........    1,103,000     2,038,000      3,141,000
                                               -----------   -----------   ------------
Balance as of July 31, 2002..................  $59,884,000   $48,169,000   $108,053,000
                                               ===========   ===========   ============
  Goodwill acquired during the period........    4,552,000    13,076,000     17,628,000
  Translation adjustments and other..........    2,122,000     2,864,000      4,986,000
                                               -----------   -----------   ------------
Balance as of July 31, 2003..................  $66,558,000   $64,109,000   $130,667,000
                                               ===========   ===========   ============


     Goodwill increased by $22,614,000 during the year ended July 31, 2003,
including an increase of $4,986,000 attributable to the effects of foreign
currency translation and other. The acquisitions of TISCOR

                                      II-17

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Inc., Cleere Advantage Ltd., Etimark GmbH and Aztech Systems resulted in
$8,191,000, $2,169,000, $4,132,000 and $580,000 of additional goodwill,
respectively. An additional payment of $2,000,000 related to the fiscal 2002
Temtec, Inc. acquisition was earned and paid during the period, resulting in
additional goodwill of $2,000,000. Lastly, a holdback payment and a purchase
accounting adjustment related to the fiscal 2002 acquisitions of Strandware,
Inc. and Temtec, Inc., respectively, resulted in additional goodwill of
$556,000.

     Goodwill increased by $12,012,000 during the year ended July 31, 2002,
including an increase of $3,141,000 attributable to the effects of foreign
currency translation and other. The acquisitions of Temtec, Inc., Strandware,
Inc. and Safety Signs Systems resulted in $5,397,000, $2,041,000 and $1,433,000
of additional goodwill, respectively.

     Other long-term assets include patents, trademarks, non-compete agreements
and other intangibles with finite lives being amortized in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets." The net book value of these assets was as follows:



                                                      JULY 31, 2003                            JULY 31, 2002
                           WEIGHTED      ---------------------------------------   --------------------------------------
                           AVERAGE          GROSS                                    GROSS
                         AMORTIZATION     CARRYING     ACCUMULATED     NET BOOK     CARRYING    ACCUMULATED     NET BOOK
                        PERIOD (YEARS)     AMOUNT      AMORTIZATION     VALUE        AMOUNT     AMORTIZATION     VALUE
                        --------------    --------     ------------    --------     --------    ------------    --------
                                                                                          
Patents, trademarks and
  other................       16         $ 6,920,000   $(4,129,000)   $2,791,000   $6,289,000   $(3,369,000)   $2,920,000
Customer
  relationships........        9           3,491,000      (205,000)    3,286,000           --            --            --
Purchased software.....        5           2,337,000      (475,000)    1,862,000      236,000      (230,000)        6,000
Non-compete
  agreements...........        5           2,658,000    (1,761,000)      897,000    2,423,000    (1,432,000)      991,000
                                         -----------   ------------   ----------   ----------   ------------   ----------
      Total............       11         $15,406,000   $(6,570,000)   $8,836,000   $8,948,000   $(5,031,000)   $3,917,000
                                         ===========   ============   ==========   ==========   ============   ==========


     The amounts related to customer relationships and software were acquired
with the TISCOR, Inc. and Cleere Advantage Ltd. acquisitions during the year
ended July 31, 2003. The purchase accounting related to the Etimark GmbH and
Aztech Systems acquisitions is subject to change based on completion of final
valuations of the assets purchased.

     Amortization expense related to intangible assets for 2003 and 2002 was
$1,539,000 and $385,000, respectively. The amortization over each of the next
five fiscal years will be $1,505,000, $1,385,000, $1,167,000, $1,062,000 and
$723,000 for 2004, 2005, 2006, 2007 and 2008, respectively.

     Impairment of Long-Lived Assets -- The Company evaluates whether events and
circumstances have occurred that indicate the remaining estimated useful life of
long-lived assets may warrant revision or that the remaining balance of an asset
may not be recoverable. The measurement of possible impairment is based on the
ability to recover the balance of assets from expected future operating cash
flows on an undiscounted basis.

     Impairment of Goodwill -- As of August 1, 2001, the Company adopted SFAS
No. 142 which addresses the financial accounting and reporting standards for the
acquisition of intangible assets outside of a business combination and for
goodwill and other intangible assets subsequent to their acquisition. This
accounting standard requires that goodwill be separately disclosed from other
intangible assets in the consolidated balance sheet, and no longer be amortized,
but tested for impairment on at least an annual basis.

     The Company performed the transitional assessment of goodwill on August 1,
2001 and the annual assessments on May 1, 2002 and 2003. The assessments
included comparing the carrying amount of net assets, including goodwill, of
each reporting unit to their respective fair value as of the date of the
assessment. Fair value was estimated based upon discounted cash flow analyses.
Because the estimated fair value of each of the Company's reporting units
exceeded their carrying amount, management believes that no impairment existed
as of the date of the latest assessment. No indications of impairment have been
identified between the date of the latest assessment and July 31, 2003.

                                      II-18

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In accordance with SFAS No. 142, the Company discontinued the amortization
of goodwill effective August 1, 2001. A reconciliation of previously reported
net income and net income per share to the amounts adjusted for the exclusion of
goodwill amortization net of the related income tax effect follows:



                                                FISCAL 2003   FISCAL 2002   FISCAL 2001
                                                -----------   -----------   -----------
                                                                   
Reported net income...........................  $21,420,000   $28,253,000   $27,546,000
  Add: Goodwill amortization, net of tax......           --            --     5,939,000
                                                -----------   -----------   -----------
Adjusted net income...........................  $21,420,000   $28,253,000   $33,485,000
                                                ===========   ===========   ===========
Net income per Class A Nonvoting
  Common Share -- Basic:
     Reported net income......................  $      0.92   $      1.22   $      1.20
       Add: Goodwill amortization, net of
          Tax.................................           --            --          0.26
                                                -----------   -----------   -----------
     Adjusted net income......................  $      0.92   $      1.22   $      1.46
                                                ===========   ===========   ===========
Net income per Class A Nonvoting
  Common Share -- Diluted:
     Reported net income......................  $      0.91   $      1.20   $      1.18
       Add: Goodwill amortization, net of
          Tax.................................           --            --          0.26
                                                -----------   -----------   -----------
     Adjusted net income......................  $      0.91   $      1.20   $      1.44
                                                ===========   ===========   ===========


     Catalog Costs -- Catalog costs are initially capitalized and amortized over
the estimated useful lives of the publications (generally eight months). At July
31, 2003 and 2002, $8,507,000 and $8,211,000 respectively, of prepaid catalog
costs were included in prepaid expenses and other current assets.

     Revenue Recognition -- The Company recognizes revenue when title and risk
of loss have transferred, there is evidence of an arrangement and collection of
the sales proceeds is reasonably assured, all of which generally occur upon
shipment of goods to customers. The vast majority of the Company's revenue
relates to sale of inventory to customers, and revenue is recognized when title
and the risks and rewards of ownership pass to the customer. Given the nature of
the Company's business and the applicable rules guiding revenue recognition, the
Company's revenue recognition practices do not contain estimates that materially
affect results of operations.

     Shipping and Handling Fees and Costs -- The Company accounts for Shipping
and Handling Fees and Costs in accordance with Emerging Issues Task Force
("EITF") Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs."
Under Issue No. 00-10 amounts billed to a customer in a sale transaction related
to shipping costs are reported as net sales and the related costs incurred for
shipping are reported as cost of goods sold.

     Stock Based Compensation -- The Company accounts for its stock based
compensation plans using the intrinsic value method in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees".

     Research and Development -- Amounts expended for research and development
are expensed as incurred.

     Foreign Currency Translation -- Foreign currency assets and liabilities are
translated into United States dollars at end of period rates of exchange, and
income and expense accounts are translated at the weighted average rates of
exchange for the period. Resulting translation adjustments are included in other
comprehensive income.

                                      II-19

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Income Taxes -- The Company accounts for income taxes in accordance with
SFAS No. 109, "Accounting for Income Taxes," which requires an asset and
liability approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities are computed annually for differences
between the financial statement and tax bases of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted tax
laws and rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized. Income tax
expense is the tax payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities.

     Risk Management Activities -- The Company is exposed to market risk, such
as changes in interest rates and currency exchange rates. The Company does not
hold or issue derivative financial instruments for trading purposes.

     Currency Rate Hedging -- The primary objectives of the foreign exchange
risk management activities are to understand and mitigate the impact of
potential foreign exchange fluctuations on the Company's financial results and
its economic well-being. While the Company's risk management objectives and
strategies will be driven from an economic perspective, the Company will
attempt, where possible and practical, to ensure that the hedging strategies it
engages in can be treated as "hedges" from an accounting perspective or
otherwise result in accounting treatment where the earnings effect of the
hedging instrument provides substantial offset (in the same period) to the
earnings effect of the hedged item. Generally, these risk management
transactions will involve the use of foreign currency derivatives to protect
against exposure resulting from intercompany sales and identified inventory or
other asset purchases.

     The Company primarily utilizes forward exchange contracts with maturities
of less than 12 months, which qualify as cash flow hedges. These are intended to
offset the effect of exchange rate fluctuations on forecasted sales, inventory
purchases and intercompany charges. The fair value of these instruments at July
31, 2003 and 2002 was not material.

     Hedge effectiveness is determined by how closely the changes in the fair
value of the hedging instrument offset the changes in the fair value or cash
flows of the hedged item. Hedge accounting is permitted only if the hedging
relationship is expected to be highly effective at the inception of the hedge
and on an on-going basis. Any ineffective portions are to be recognized in
earnings immediately.

     No cash flow hedges were discontinued during the year ended July 31, 2003.

     New Accounting Standards -- In June 2002, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This pronouncement is effective for exit or
disposal activities that are initiated after December 31, 2002, and requires
these costs to be recognized when the liability is incurred and not at project
initiation. The Company recorded a restructuring charge in fiscal 2003 in
accordance with the guidance of SFAS No. 146.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure." This pronouncement provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
Statement amends the disclosure requirements of SFAS No. 123, "Accounting for
Stock-Based Compensation," to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.
This pronouncement did not have an effect on the Company's financial results.
The Company adopted the disclosure requirements of SFAS No. 148 during fiscal
2003.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." This
pronouncement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It

                                      II-20

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. This Statement is effective for financial
instruments entered into or modified after May 31, 2003. This pronouncement does
not impact the accounting of any of the Company's financial instruments existing
at July 31, 2003.

     Reclassifications -- Certain reclassifications have been made to the prior
years' financial statements to conform to the current year presentation.

2.  ACQUISITIONS OF BUSINESSES

     Effective March 2001, the Company acquired the assets of Balkhausen GmbH,
located in Syke, Germany, a manufacturer of precision die-cut parts, specialty
materials and thermal-management products for cash of approximately $6,600,000
and assumed liabilities of approximately $4,300,000. Effective July 2001, the
Company acquired the assets of Eset, GmbH, located in Munich, Germany, a
developer of certain software printer drivers and label design software.

     In November 2001, the Company acquired Strandware, Inc., located in Eau
Claire, Wisconsin, a bar-code, label-design, and data-collection software
developer. Also in November 2001, the Company acquired Safety Signs Service,
located in Perth, Australia, a manufacturer and supplier of safety products. In
April 2002, the Company acquired Temtec, located in Suffern, New York, a
printing Company that develops and markets products for security applications.
The combined purchase price of these acquisitions was approximately $13,600,000.
Each of the acquisitions was for cash. The agreements include provisions for
contingent payments up to a maximum of $4,000,000 based on the earnings of the
acquired entities in calendar years 2002 and 2003, $2,000,000 of which was paid
during fiscal 2003. Approximately $8,900,000 was assigned to goodwill and
approximately $2,000,000 was assigned to patents, which will be amortized over a
weighted average life of nine years.

     In January 2003, the Company acquired TISCOR, Inc., located in Poway,
California, an innovator in mobile workforce automation solutions, and an
industry leader in designing hand-held-computer software for technicians
performing site and equipment inspections. The purchase price was approximately
$13,500,000 in cash. The agreement includes provisions for contingent payments
up to a maximum of $3,000,000 based on the earnings of the acquired entity in
calendar years 2003 and 2004. The results of its operations have been included
since the respective date of acquisition in the accompanying condensed
consolidated financial statements. The allocation of the purchase price resulted
in the allocation to intangible assets as follows: $8,191,000 to goodwill,
$2,900,000 to customer relationships and $2,100,000 to software.

     In February 2003, the Company acquired Cleere Advantage Ltd., a small
printing system distributor, located in the United Kingdom. In April 2003, the
Company acquired Etimark GmbH, located in Bad Nauheim, Germany, a leading
provider of complete barcode solutions including labels, printers, applicators
and software for the German Market. In July 2003, the Company acquired Aztech
Systems, an industrial labeling and signmaking system distributor, located in
Yorkshire, England. The combined purchase price for these acquisitions was
approximately $8,100,000 in cash. Preliminary allocations of the purchase price
for these acquisitions have been made based on the carrying values recorded by
the acquired entities. The purchase price allocations are preliminary and
pending the outcome of a valuation of some of the acquired entities, which are
in progress. Approximately $6,881,000 was assigned to goodwill in the
preliminary allocation of the purchase price.

     In September 2003, the Company acquired Brandon International,
headquartered in Baldwin Park, California, a manufacturer of die-cut products,
for approximately $11 million in cash and notes payable.

     These acquisitions have been accounted for using the purchase method of
accounting and, accordingly, the results of operations have been included since
the dates of acquisition in the accompanying consolidated

                                      II-21

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

financial statements. The pro forma results of operations of the above
acquisitions are not significant to the consolidated financial statements.

3.  EMPLOYEE BENEFIT PLANS

     The Company provides postretirement medical, dental and vision benefits for
all regular full and part-time domestic employees (including spouses) who retire
on or after attainment of age 55 with 15 years of credited service. Credited
service begins accruing at the later of age 40 or date of hire. All active
employees first eligible to retire after July 31, 1992, are covered by an
unfunded, contributory postretirement healthcare plan where employer
contributions will not exceed a Defined Dollar Benefit amount, regardless of the
cost of the program. Employer contributions to the plan are based on the
employee's age and service at retirement.

     The Company accounts for postretirement benefits other than pensions in
accordance with SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions." The Company funds benefit costs on a pay-as-you-go basis.

     The following table provides a reconciliation of the changes in the Plan's
accumulated benefit obligations at July 31, 2003, 2002 and 2001:



                                                                 2003         2002
                                                              ----------   ----------
                                                              (DOLLARS IN THOUSANDS)
                                                                     
Obligation at beginning of fiscal year......................   $11,144      $10,438
Service cost................................................       658          628
Interest cost...............................................       726          790
Actuarial (gain) loss.......................................      (639)        (240)
Benefit payments............................................      (476)        (472)
                                                               -------      -------
Obligation at end of fiscal year............................   $11,413      $11,144
                                                               =======      =======


     The following table shows the unfunded status of the Plan as of July 31,
2003 and 2002:



                                                                 2003         2002
                                                              ----------   ----------
                                                              (DOLLARS IN THOUSANDS)
                                                                     
Unfunded status at July 31..................................   $11,413      $11,144
Unrecognized net actuarial gain.............................     1,848        1,391
Unrecognized prior service cost.............................      (197)        (219)
                                                               -------      -------
Accumulated postretirement benefit obligation liability.....   $13,064      $12,316


     The following table provides the components of net periodic benefit cost
for the Plan for fiscal years 2003, 2002 and 2001:



                                                               YEAR ENDED JULY 31,
                                                             ------------------------
                                                              2003     2002     2001
                                                             ------   ------   ------
                                                              (DOLLARS IN THOUSANDS)
                                                                      
Net periodic postretirement benefit cost included the
  following components:
  Service cost -- benefits attributed to service during the
     period................................................  $  658   $  628   $  469
  Prior service cost.......................................      22       22       22
  Interest cost on accumulated postretirement benefit
     obligation............................................     726      790      726
  Amortization of unrecognized (gain)......................    (182)     (30)     (81)
                                                             ------   ------   ------
Periodic postretirement benefit cost.......................  $1,224   $1,410   $1,136
                                                             ======   ======   ======


                                      II-22

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation at July 31, 2003 was 12.0% trending down 0.5%
per year to 5.5% at July 31, 2017. The assumed health care cost trend rates used
in measuring the accumulated postretirement benefit obligation at July 31, 2002
was 9.5% trending down 0.5% per year to 5.5% at July 31, 2011.

     The weighted average discount rates used in determining the accumulated
postretirement benefit obligation was 6.0% and 7.5% in 2003 and 2002,
respectively.

     If the health care cost trend rate assumptions were increased by 1% or
decreased by 1%, the accumulated postretirement benefit obligation as of July
31, 2003 would be increased by $214,200 and decreased by $214,200, respectively.
The effect of a 1% increase or decrease in the health care cost trend rate
assumption on the sum of the service cost and interest cost would be increased
by $53,300 and decreased by $53,300, respectively. If the health care cost trend
rate assumptions were increased by 1% or decreased by 1%, the accumulated
postretirement benefit obligation as of July 31, 2002 would be increased by
$59,200 and decreased by $59,200, respectively. The effect of this change on the
sum of the service cost and interest cost would not be material.

     The Company has retirement and profit-sharing plans covering substantially
all full-time domestic employees and certain of its foreign subsidiaries.
Contributions to the plans are determined annually or quarterly, according to
the plan, based on earnings of the respective companies and employee
contributions. At July 31, 2003 and 2002, $3,497,000 and $2,503,000,
respectively, of accrued profit-sharing contributions were included in other
current liabilities.

     The Company also has deferred compensation plans for directors, officers
and key executives. At July 31, 2003 and 2002, $5,462,000 and $5,191,000,
respectively, of deferred compensation was included in current and other
long-term liabilities.

     During fiscal 1998, the Company adopted a new deferred compensation plan
that invests solely in shares of the Company's Class A Nonvoting Common Stock.
Participants in the old phantom stock plan were allowed to convert their
balances in the old plan to this new plan. The new plan was funded initially by
the issuance of 372,728 shares of Class A Nonvoting Common Stock to a Rabbi
Trust. All deferrals into the new plan result in purchases of Class A Nonvoting
Common Stock by the Rabbi Trust. No deferrals are allowed into the old plan.
Shares held by the Rabbi Trust are distributed to participants upon separation
from the Company as defined in the plan agreement.

     During fiscal 2002, the Company adopted a new deferred compensation plan
that allows future contributions to be invested in shares of the Company's Class
A Nonvoting Common Stock or in certain other investment vehicles. Prior deferred
compensation deferrals must remain in the Company's Class A Nonvoting Common
Stock. All deferrals into the new plan result in purchases of Class A Nonvoting
Common Stock or certain other investment vehicles by the Rabbi Trust. Balances
held by the Rabbi Trust are distributed to participants upon separation from the
Company as defined in the plan agreement.

     The amounts charged to income for the retirement, profit-sharing and
deferred compensation plans described above were $8,506,000 in 2003, $8,918,000
in 2002 and $7,515,000 in 2001.

     The Company has a voluntary employee benefit trust for the purpose of
funding employee medical benefits and certain other employee benefits. At July
31, 2003 and 2002, $2,428,000, and $4,142,000, respectively, of payments to the
trust to fund such benefits was included in prepaid expenses and other current
assets.

                                      II-23

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4.  INCOME TAXES

     Income taxes consist of the following:



                                                              YEAR ENDED JULY 31,
                                                          ---------------------------
                                                           2003      2002      2001
                                                          -------   -------   -------
                                                            (DOLLARS IN THOUSANDS)
                                                                     
Currently payable:
  Federal...............................................  $ 1,556   $   408   $ 4,977
  Foreign...............................................   10,329    13,421    13,242
  State.................................................    1,065       605     1,006
                                                          -------   -------   -------
                                                           12,950    14,434    19,225
                                                          -------   -------   -------
Deferred provision (credit):
  Federal...............................................   (2,004)    3,290    (1,101)
  Foreign...............................................      851    (3,319)     (569)
  State.................................................     (762)      477      (311)
                                                          -------   -------   -------
                                                           (1,915)      448    (1,981)
                                                          -------   -------   -------
Total...................................................  $11,035   $14,882   $17,244
                                                          =======   =======   =======


     Deferred income taxes result from temporary differences in the recognition
of revenues and expenses for financial statement and income tax purposes.

     Pre-tax income consists of the following:



                                                              YEAR ENDED JULY 31,
                                                          ---------------------------
                                                           2003      2002      2001
                                                          -------   -------   -------
                                                            (DOLLARS IN THOUSANDS)
                                                                     
United States...........................................  $ 3,371   $15,269   $17,957
Foreign.................................................   29,084    27,866    26,833
                                                          -------   -------   -------
  Total.................................................  $32,455   $43,135   $44,790
                                                          =======   =======   =======


                                      II-24

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The approximate tax effects of temporary differences are as follows:



                                                                   JULY 31, 2003
                                                          -------------------------------
                                                          ASSETS    LIABILITIES    TOTAL
                                                          -------   -----------   -------
                                                              (DOLLARS IN THOUSANDS)
                                                                         
Inventories.............................................  $ 2,906                 $ 2,906
Prepaid catalog costs...................................              $(1,592)     (1,592)
Employee benefits.......................................    4,011        (675)      3,336
Allowance for doubtful accounts.........................      236                     236
Other, net..............................................    2,579                   2,579
                                                          -------     -------     -------
  Current...............................................    9,732      (2,267)      7,465
                                                          -------     -------     -------
Depreciation and amortization...........................               (3,649)     (3,649)
Deferred compensation...................................    6,906                   6,906
Postretirement benefits.................................    5,871                   5,871
Currency translation adjustment.........................    1,304                   1,304
Tax loss carryforwards..................................    6,534                   6,534
Less valuation allowance................................   (6,274)                 (6,274)
Other, net..............................................    1,382                   1,382
                                                          -------     -------     -------
  Noncurrent............................................   15,723      (3,649)     12,074
                                                          -------     -------     -------
  Total.................................................  $25,455     $(5,916)    $19,539
                                                          =======     =======     =======




                                                                   JULY 31, 2002
                                                          -------------------------------
                                                          ASSETS    LIABILITIES    TOTAL
                                                          -------   -----------   -------
                                                              (DOLLARS IN THOUSANDS)
                                                                         
Inventories.............................................  $ 2,422                 $ 2,422
Prepaid catalog costs...................................              $(1,944)     (1,944)
Employee benefits.......................................    3,281        (649)      2,632
Allowance for doubtful accounts.........................      274                     274
Other, net..............................................    2,093                   2,093
                                                          -------     -------     -------
  Current...............................................    8,070      (2,593)      5,477
                                                          -------     -------     -------
Depreciation and amortization...........................               (4,700)     (4,700)
Deferred compensation...................................    7,726                   7,726
Postretirement benefits.................................    5,316                   5,316
Currency translation adjustment.........................    4,362                   4,362
Tax loss carryforwards..................................    6,447                   6,447
Less valuation allowance................................   (4,647)                 (4,647)
Other, net..............................................      583                     583
                                                          -------     -------     -------
  Noncurrent............................................   19,787      (4,700)     15,087
                                                          -------     -------     -------
  Total.................................................  $27,857     $(7,293)    $20,564
                                                          =======     =======     =======


     The change in the valuation allowance was $1,627,000, $930,000 and $663,000
in fiscal 2003, 2002 and 2001, respectively.

                                      II-25

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A reconciliation of the tax computed by applying the statutory U.S. Federal
income tax rate to income before income taxes to the total income tax provision
is as follows:



                                                              YEAR ENDED JULY 31,
                                                          ---------------------------
                                                           2003      2002      2001
                                                          -------   -------   -------
                                                            (DOLLARS IN THOUSANDS)
                                                                     
Tax at statutory rate...................................  $11,359   $15,097   $15,676
State income taxes, net of Federal tax benefit..........      197       583       751
International losses with no related tax benefits.......      992     1,447     1,071
International rate differential.........................   (1,221)   (1,099)    2,127
Rate variances arising from foreign subsidiary
  distributions.........................................       13      (564)   (2,860)
Other, net..............................................     (305)     (582)      479
                                                          -------   -------   -------
Total income tax provision..............................  $11,035   $14,882   $17,244
                                                          =======   =======   =======
Effective tax rate......................................     34.0%     34.5%     38.5%
                                                          =======   =======   =======


     The Company's policy is to remit earnings from foreign subsidiaries only to
the extent any resultant foreign income taxes are creditable in the United
States. Accordingly, the Company does not currently provide for the additional
United States and foreign income taxes which would become payable upon remission
of undistributed earnings of foreign subsidiaries.

     The cumulative undistributed earnings of such companies at July 31, 2003
amounted to approximately $62,841,000. If all such undistributed earnings were
remitted, an additional provision for foreign income taxes of $2,150,000 would
be required.

5.  LONG-TERM OBLIGATIONS

     On September 23, 1999, the Company entered into a $150,000,000
multicurrency revolving loan agreement with a group of six banks, which expires
on September 23, 2004. On January 31, 2000, the multicurrency revolving loan was
amended, increasing the amount available to $200,000,000. On October 31, 2001,
the multicurrency revolving loan was amended to modify a financial covenant to
restrict the amount of line of credit available to a multiple of domestic
earnings. On April 18, 2003, the multicurrency revolving loan was amended at the
Company's request, decreasing the amount available to $100,000,000. Under the
agreement, the Company has the option to have interest rates determined based
upon the prime rate at PNC Bank N.A. plus margin or a LIBOR rate plus margin. A
commitment fee is payable on the unused amount of credit. The agreement requires
the Company to maintain certain financial covenants. The Company is in
compliance with the covenants of the agreement. At July 31, 2003, approximately
$58,000,000 of the line of credit was available to the Company under the
formulas contained in the agreement. The agreement requires that the Company
maintain a specified level of consolidated net worth, which could restrict the
Company's ability to pay dividends. At July 31, 2003, the required consolidated
net worth was approximately $264,000,000 and the Company's actual consolidated
net worth was approximately $339,000,000. There were no borrowings under this
line of credit during the years ended July 31, 2003 and 2002.

                                      II-26

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Long-term obligations consist of the following:



                                                                 JULY 31,
                                                              ---------------
                                                               2003     2002
                                                              ------   ------
                                                                (DOLLARS IN
                                                                THOUSANDS)
                                                                 
Various bank loans..........................................  $1,497   $  903
Capital lease on building, term 7/1/00 - 6/30/15............      --    3,010
                                                              ------   ------
                                                               1,497    3,913
Less current maturities.....................................     929      162
                                                              ------   ------
                                                              $  568   $3,751
                                                              ======   ======


     The carrying value of the Company's long-term obligations approximates fair
value due to the variable nature of its interest rates.

     Maturities on long-term debt are as follows:



YEAR ENDING JULY 31
- -------------------                                            (DOLLARS IN THOUSANDS)
                                                            
2004........................................................            $930
2005........................................................             161
2006........................................................             127
2007........................................................             109
2008........................................................              91
Thereafter..................................................              80


6.  STOCKHOLDERS' INVESTMENT

     Information as to the Company's capital stock at July 31, 2003 and 2002 is
as follows:



                                              JULY 31, 2003                            JULY 31, 2002
                                  --------------------------------------   --------------------------------------
                                    SHARES        SHARES                     SHARES        SHARES
                                  AUTHORIZED      ISSUED       AMOUNT      AUTHORIZED      ISSUED       AMOUNT
                                  -----------   ----------   -----------   -----------   ----------   -----------
                                                             (DOLLARS IN                              (DOLLARS IN
                                                             THOUSANDS)                               THOUSANDS)
                                                                                    
Preferred Stock, $.01 par
  value.........................    5,000,000                                5,000,000
Cumulative Preferred Stock:
  6% Cumulative.................        5,000                                    5,000        3,984     $  399
  1972 Series...................       10,000                                   10,000        2,600        260
  1979 Series...................       30,000                                   30,000       21,963      2,196
                                                                                                        ------
                                                                                                        $2,855
                                                                                                        ======
Common Stock, $.01 par value:
  Class A Nonvoting.............  100,000,000   21,558,265      $216       100,000,000   21,356,605     $  214
  Class B Voting................   10,000,000    1,769,314        18        10,000,000    1,769,314         18
                                                                ----                                    ------
                                                                $234                                    $  232
                                                                ====                                    ======


     On August 1, 2002, all Cumulative Preferred Stock was redeemed at a 6%
premium for approximately $3,026,000. Each share of $100 par value Cumulative
Preferred Stock was entitled to receive cumulative cash dividends and could be
redeemed, under certain circumstances, by the Company at par value plus accrued

                                      II-27

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

dividends plus a premium of 6% of the par value. Such shares, which were held by
the initial holder thereof, were subject to redemption only if the holder
consented thereto.

     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 $.0333 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.

     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
$.0333 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 $1.67 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 $1.67 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, 2001, 2002 and 2003:



                                           UNEARNED                    SHARES HELD
                                          RESTRICTED     DEFERRED        IN RABBI
                                            STOCK      COMPENSATION   TRUST, AT COST    TOTAL
                                          ----------   ------------   --------------   -------
                                                         (DOLLARS IN THOUSANDS)
                                                                           
Balances July 31, 2000..................   $(1,637)      $12,772         $(12,772)     $(1,637)
                                           =======       =======         ========      =======
Sale of 13,608 shares of Class A Common
  Stock purchased by the Rabbi Trust
  related to deferred compensation
  plan..................................                    (407)             407
Purchase of 60,101 shares of Class A
  Common Stock purchased by the Rabbi
  Trust related to deferred compensation
  plan..................................                   1,906           (1,906)
Amortization of restricted stock........       695                                         695
                                           -------       -------         --------      -------
Balances July 31, 2001..................   $  (942)      $14,271         $(14,271)     $  (942)
                                           =======       =======         ========      =======
Sale of 15,545 shares of Class A Common
  Stock purchased by the Rabbi Trust
  related to deferred compensation
  plan..................................                    (609)             609
Purchase of 22,859 shares of Class A
  Common Stock purchased by the Rabbi
  Trust related to deferred compensation
  plan..................................                     670             (670)
Amortization of restricted stock........       694                                         694
                                           -------       -------         --------      -------
Balances July 31, 2002..................   $  (248)      $14,332         $(14,332)     $  (248)
                                           =======       =======         ========      =======


                                      II-28

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                                           UNEARNED                    SHARES HELD
                                          RESTRICTED     DEFERRED        IN RABBI
                                            STOCK      COMPENSATION   TRUST, AT COST    TOTAL
                                          ----------   ------------   --------------   -------
                                                         (DOLLARS IN THOUSANDS)
                                                                           
Sale of 14,213 shares of Class A Common
  Stock purchased by the Rabbi Trust
  related to deferred compensation
  plan..................................                    (430)             430
Purchase of 26,798 shares of Class A
  Common Stock purchased by the Rabbi
  Trust related to deferred compensation
  plan..................................                     823             (823)
Issuance of restricted stock............      (670)                                       (670)
Amortization of restricted stock........       290                                         290
                                           -------       -------         --------      -------
Balances July 31, 2003..................   $  (628)      $14,725         $(14,725)     $  (628)
                                           =======       =======         ========      =======


     The Company's Nonqualified Stock Option Plans allow the granting of stock
options to various officers, directors and other employees of the Company at
prices equal to fair market value at the date of grant. The Company has reserved
1,500,000, 2,125,000, 500,000 and 750,000 shares of Class A Nonvoting Common
Stock for issuance under the 1989, 1997, 2001 and 2003 Plans, respectively.
Generally, options will not be exercisable until one year after the date of
grant, and will be exercisable thereafter, to the extent of one-third per year
and have a maximum term of ten years.

     Changes in the options are as follows:



                                                                                  WEIGHTED
                                                                                  AVERAGE
                                                                      OPTIONS     EXERCISE
                                                   OPTION PRICE     OUTSTANDING    PRICE
                                                  ---------------   -----------   --------
                                                                         
Balance, July 31, 2000..........................  $ 6.83 - $34.00    1,948,791     $24.01
                                                                    ===========
Options granted.................................   28.32 -  32.88      386,633      28.92
Options exercised...............................    6.83 -  31.38     (185,336)     19.66
Options cancelled...............................   19.19 -  34.00      (31,016)     26.76
                                                                    -----------
Balance, July 31, 2001..........................  $12.17 - $34.00    2,119,072     $25.24
                                                                    ===========
Options granted.................................   30.38 -  32.00      275,200      31.93
Options exercised...............................   12.17 -  34.00     (207,054)     23.61
Options cancelled...............................   19.19 -  32.00      (28,236)     28.02
                                                                    -----------
Balance, July 31, 2002..........................  $12.17 - $34.00    2,158,982     $26.21
                                                                    ===========
Options granted.................................   26.62 -  32.78      408,300      31.27
Options exercised...............................   12.17 -  32.88     (195,374)     23.86
Options cancelled...............................   28.32 -  34.00      (24,467)     29.52
                                                                    -----------
Balance, July 31, 2003..........................  $12.17 - $34.00    2,347,441     $27.24
                                                                    ===========
Available for grant after July 31, 2003.........                       123,836


     There were 1,505,092, 1,418,118, and 859,770 options exercisable with a
weighted average exercise price of $25.57, $24.39, and $23.82 at July 31, 2003,
2002 and 2001, respectively.

                                      II-29

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes information about stock options outstanding
at July 31, 2003:



                                         OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                              -----------------------------------------   ----------------------
                                SHARES      WEIGHTED AVERAGE   WEIGHTED     SHARES      WEIGHTED
                              OUTSTANDING      REMAINING       AVERAGE    EXERCISABLE   AVERAGE
          RANGE OF            AT JULY 31,     CONTRACTUAL      EXERCISE   AT JULY 31,   EXERCISE
      EXERCISE PRICES            2003        LIFE -- YEARS      PRICE        2003        PRICE
      ---------------         -----------   ----------------   --------   -----------   --------
                                                                         
$12.17 - $22.99.............     430,168          3.5           $19.07       355,168     $18.80
 23.00 -  29.99.............     857,214          5.3            25.61       675,743      25.13
 30.00 -  34.00.............   1,060,059          7.4            31.87       474,181      31.25
                              -----------                                 -----------
$12.17 - $34.00.............   2,347,441          5.9           $27.24     1,505,092     $25.57
                              ===========                                 ===========


     In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation,"
was issued. SFAS No. 123 establishes a fair value based method of accounting for
stock-based compensation; however, it allows entities to continue accounting for
employee stock-based compensation under the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." SFAS No. 123 as amended by SFAS No. 148, "Accounting for Stock-Based
Compensation," requires certain disclosures, including pro forma net income and
net income per share as if the fair value based accounting method had been used
for employee stock-based compensation cost. The Company has adopted SFAS No. 123
through disclosure with respect to employee stock-based compensation.

     If the Company had elected to recognize compensation cost for the Stock
Option Plans based on the fair value at the grant dates for awards under those
plans, consistent with the method prescribed by SFAS No. 123, net income and net
income per common share would have been changed to the pro forma amounts
indicated below:



                                                           2003      2002      2001
                                                          -------   -------   -------
                                                            (DOLLARS IN THOUSANDS)
                                                                     
Net income:
  As reported...........................................  $21,420   $28,253   $27,546
  Pro forma expense, net of tax effects.................   (2,038)   (2,038)   (2,153)
  Pro forma.............................................   19,382    26,215    25,393
Net income per Class A Common Share -- Diluted:
  As reported...........................................  $  0.91   $  1.20   $  1.18
  Pro forma expense, net of tax effects.................    (0.09)    (0.09)    (0.09)
  Pro forma.............................................     0.82      1.11      1.09


     The fair value of stock options used to compute pro forma net income and
net income per common share disclosure is the estimated present value at grant
date using the Black-Scholes option-pricing model with weighted average
assumptions and the resulting estimated fair value for fiscal years 2003, 2002
and 2001 as follows:



                                                       2003         2002         2001
                                                    ----------   ----------   ----------
                                                                     
Risk-free interest rate...........................         3.2%         5.4%         5.5%
Expected volatility...............................        38.5%        37.5%        36.5%
Dividend yield....................................         2.4%         2.3%         2.1%
Expected option life..............................   5.0 years    4.6 years    4.6 years
Weighted average estimated fair value at grant
  date............................................       $9.62       $10.37        $9.40


                                      II-30

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7.   SEGMENT INFORMATION

     Brady Corporation's reportable segments are business units that are each
managed separately because they manufacture and/or distribute distinct products
to differentiated markets. The Company has two reportable segments: the
Identification Solutions & Specialty Tapes Group and the Graphics and Workplace
Solutions Group.

     The Identification Solutions & Specialty Tapes Group consists of
High-Performance Identification (HPI), Power & Communications Identification
(PCI), Precision Die-Cut Solutions and Brady Software & Services. HPI develops,
manufactures and sells high performance identification products including labels
and printing systems used in recording and transmitting data throughout the
manufacturing process. PCI develops, manufactures and sells identification
solutions for customers that design, build, install and manage power and
communications distribution systems. Precision Die-Cut Solutions develops,
manufactures and sells precision die-cut products and services for electronic,
telecommunication, automotive and computer original equipment manufacturers
requiring value-added engineering die-cut solutions and global support. Brady
Software & Services is focused on Automatic Identification and Data Collection
software development for barcode, label design and data collection applications
and system integration services.

     The Graphics & Workplace Solutions Group consists primarily of Safety &
Facility Identification and Presentation Systems. Safety & Facility
Identification is the core business of the group and involves several brands:
Seton, Champion and Signals brands sell by direct marketing; Brady-Signmark(R)
brand sells through a field sales force and distributors. Each of the direct
marketing brands engages in direct selling to end users via direct-mail
catalogs, telemarketing and the Internet. Their products include more than
50,000 items including signs, property identification tags, training programs
for hazardous materials and regulatory compliance and related products, and
office accessories. Signmark(R) manufactures and sells signs, labels and devices
to meet government safety requirements; printers and accessories for
do-it-yourself industrial signage and labels; regulatory training programs and
products; and barricade tape, accident-prevention tags and other visual warning
systems. Presentation Systems focuses on the education market in North America
and Europe under the Varitronics brand and sells through distributors and
telemarketing. Varitronics produces and markets printing systems including
lettering and labeling systems, poster printers, and supplies and laminating
equipment.

     The Company evaluates performance and allocates resources based on profit
or loss from operations before income taxes, not including administrative costs,
interest, foreign exchange gain or loss and nonrecurring items. The accounting
policies of the reportable segments are the same as those described in the
summary of significant accounting policies.

     Intersegment sales and transfers are recorded at cost plus a standard
percentage markup. Intercompany profit is eliminated in consolidation. It is not
practicable to disclose enterprise-wide revenue from external customers on the
basis of product or service.

     In April 2003, the Company announced a new regional based management
structure. Throughout fiscal 2003, the Company continued to internally evaluate
its fiscal 2003 results under the historical group structure described above. As
a result, the Company will begin to report segment information by Americas,
Europe and Asia in fiscal 2004, when those segments are fully operational.

                                      II-31

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                                                IDENTIFICATION    GRAPHICS &    CORPORATE
                                                  SOLUTIONS &     WORKPLACE        AND
                                                SPECIALTY TAPES   SOLUTIONS    ELIMINATIONS    TOTALS
                                                ---------------   ----------   ------------   --------
                                                                (DOLLARS IN THOUSANDS)
                                                                                  
Year ended July 31, 2003:
  Revenues from external customers............     $229,565        $325,301                   $554,866
  Intersegment revenues.......................          929             935      $ (1,864)
  Depreciation and amortization expense.......        9,205           5,213         3,353       17,771
  Profit (loss)...............................       31,000          73,814        (2,812)     102,002
  Assets......................................      166,192         173,474       109,853      449,519
  Expenditures for property, plant and
     equipment................................        4,600           3,268         6,570       14,438
Year ended July 31, 2002:
  Revenues from external customers............     $221,678        $295,284                   $516,962
  Intersegment revenues.......................          468           1,419      $ (1,887)
  Depreciation and amortization expense.......        9,058           4,626         2,946       16,630
  Profit (loss)...............................       29,819          73,143        (2,140)     100,822
  Assets......................................      154,527         149,907       116,091      420,525
  Expenditures for property, plant and
     equipment................................        4,188           5,983         2,924       13,095
Year ended July 31, 2001:
  Revenues from external customers............     $254,611        $291,333                   $545,944
  Intersegment revenues.......................        2,194           1,847      $ (4,041)
  Depreciation and amortization expense.......       13,425           6,299         2,922       22,646
  Profit (loss)...............................       50,270          74,873        (1,917)     123,226
  Assets......................................      161,638         123,148       108,806      393,592
  Expenditures for property, plant and
     equipment................................        7,597           5,508         7,665       20,770




                                                             YEAR ENDED JULY 31
                                                       ------------------------------
                                                         2003       2002       2001
                                                       --------   --------   --------
                                                           (DOLLARS IN THOUSANDS)
                                                                    
Profit reconciliation:
  Total profit or loss for reportable segments.......  $104,814   $102,962   $125,143
  Corporate and eliminations.........................    (2,812)    (2,140)    (1,917)
  Unallocated amounts:
     Administrative costs............................   (56,167)   (53,832)   (58,071)
     Goodwill........................................                          (6,119)
     Interest-net....................................       717        665      1,128
     Foreign exchange................................      (411)       963     (1,115)
     Restructuring charge, net.......................    (9,589)    (2,720)    (9,560)
     Other...........................................    (4,097)    (2,763)    (4,699)
                                                       --------   --------   --------
       Income before income taxes....................  $ 32,455   $ 43,135   $ 44,790
                                                       ========   ========   ========


                                      II-32

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                                          REVENUES*                   LONG-LIVED ASSETS**
                                     YEAR ENDED JULY 31,              YEAR ENDED JULY 31,
                                ------------------------------   ------------------------------
                                  2003       2002       2001       2003       2002       2001
                                --------   --------   --------   --------   --------   --------
                                                    (DOLLARS IN THOUSANDS)
                                                                     
Geographic information:
  United States...............  $303,849   $302,543   $341,379   $134,506   $129,986   $127,632
  Europe......................   200,348    165,020    156,115     58,317     45,551     40,648
  Other foreign...............    92,452     85,498     84,112     17,084     13,407     13,198
  Eliminations................   (41,783)   (36,099)   (35,662)
                                --------   --------   --------   --------   --------   --------
     Consolidated total.......  $554,866   $516,962   $545,944   $209,907   $188,944   $181,478
                                ========   ========   ========   ========   ========   ========


- ---------------

 * Revenues are attributed based on country of origin.

** Long-lived assets consist of property, plant, and equipment and goodwill.

8.  NET INCOME PER COMMON SHARE

     Net income per Common Share is computed by dividing net income (after
deducting the applicable Preferred Stock dividends and preferential Class A
Common Stock dividends) by the weighted average Common Shares outstanding of
23,177,741 for 2003, 23,023,687 for 2002 and 22,824,398 for 2001. The
preferential dividend on the Class A Common Stock of $.0333 per share has been
added to the net income per Class A Common Share for all years presented.

                                      II-33

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Reconciliations of the numerator and denominator of the basic and diluted
per share computations for the Company's Class A and Class B common stock are
summarized as follows:



                                                      FISCAL 2003    FISCAL 2002    FISCAL 2001
                                                      ------------   ------------   ------------
                                                       (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                           
Numerator:
  Net income........................................    $21,420        $28,253        $27,546
  Less: Preferred stock dividends and premium on
     redemption of preferred stock..................       (171)          (259)          (259)
                                                        -------        -------        -------
  Numerator for basic and diluted Class A net income
     per share......................................     21,249         27,994         27,287
  Less:
     Preferential dividends.........................       (711)          (705)          (699)
     Preferential dividends on dilutive stock
       Options......................................         (7)           (10)            (8)
                                                        -------        -------        -------
  Numerator for basic and diluted Class B net income
     per share......................................    $20,531        $27,279        $26,580
                                                        =======        =======        =======
Denominator:
  Denominator for basic net income per share for
     both Class A and B.............................     23,178         23,024         22,824
  Plus: Effect of dilutive stock options............        199            316            283
                                                        -------        -------        -------
  Denominator for diluted net income per share for
     both Class A and B.............................     23,377         23,340         23,107
                                                        =======        =======        =======
Class A common stock net income per share
  calculation:
  Basic.............................................    $  0.92        $  1.22        $  1.20
  Diluted...........................................    $  0.91        $  1.20        $  1.18
Class B common stock net income per share
  calculation:
  Basic.............................................    $  0.89        $  1.19        $  1.17
  Diluted...........................................    $  0.88        $  1.17        $  1.15


     Options to purchase 778,684, 0, and 95,050 shares of Class A common stock
were not included in the computations of diluted net income per share for the
fiscal years 2003, 2002 and 2001, respectively, because the option exercise
prices were greater than the average market price of the common shares and,
therefore, the effect would be antidilutive.

                                      II-34

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9.   COMMITMENTS

     The Company has entered into various noncancellable operating lease
agreements. Rental expense charged to operations was $10,800,000 for 2003,
$8,955,000 for 2002 and $8,822,000 for 2001. Future minimum lease payments
required under such leases in effect at July 31, 2003, are as follows (by fiscal
year):

                                                            
2004........................................................   $10,358,000
2005........................................................     7,681,000
2006........................................................     2,688,000
2007........................................................     2,503,000
2008........................................................     1,757,000
Thereafter..................................................     2,671,000
                                                               -----------
                                                               $27,658,000
                                                               ===========



10. RESTRUCTURING CHARGES

     The Company recorded a restructuring charge of $10,215,000 in fiscal 2003
related primarily to combining sales and marketing resources and consolidation
of facilities throughout North American and Europe resulting in a workforce
reduction of approximately 200 employees. The majority of the workforce
reduction was completed in May 2003. The $10,215,000 charge includes a provision
for severance of approximately $8,220,000 and write-off or impairment of assets
and other of $1,995,000. Total cash expenditures in connection with these
actions will approximate $9,000,000, of which, approximately $2,300,000 was paid
prior to July 31, 2003. The cost savings resulting from this began in fiscal
2003 and will continue into fiscal 2004. The $10,215,000 charge in fiscal 2003
was partially offset by a credit of $626,000 related to adjustments in lease
termination costs associated with the Company's fiscal 2002 and 2001
restructuring activities. The net restructuring charge in fiscal 2003 was
$9,589,000 ($6,329,000 after tax, $0.27 per diluted class A common share). The
total restructuring charge the Company expects to incur under this restructuring
program is $12,000,000 to $13,000,000, with the remainder to be incurred during
fiscal 2004.

     The Company recorded a restructuring charge of $3,030,000 in fiscal 2002
related primarily to consolidation of facilities in Asia/Pacific, United States
and Europe and workforce reduction of approximately three percent. The
$3,030,000 charge includes a provision for severance of approximately
$1,720,000, a provision for lease cancellation costs associated with the
facilities consolidation of $940,000 and write-off or impairment of assets and
other of $370,000. The workforce reduction of approximately 100 people was
essentially completed in July 2002. Total cash expenditures in connection with
these actions will approximate $2,400,000, of which, approximately $800,000 was
paid prior to July 31, 2002. The cost savings resulting from this plan are
expected to be recognized beginning in fiscal 2003. The $3,030,000 charge in
fiscal 2002 was partially offset by a credit of $310,000 related to adjustments
in severance costs associated with the Company's fiscal 2001 restructuring
activities. The net restructuring charge in fiscal 2002 was $2,720,000
($1,782,000 after tax, $0.07 per diluted class A common share).

     A reconciliation of activity with respect to the Company's 2002
restructuring is as follows:

                                                            
Ending balance, July 31, 2002...............................   $ 2,239,000
  Cash payments associated with severance and other.........    (1,461,000)
  Non-cash asset write-offs.................................      (195,000)
  Adjustment to lease accrual...............................      (453,000)
                                                               -----------
Ending balance, July 31, 2003...............................   $   130,000
                                                               ===========



                                      II-35

                       BRADY CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In July 2001, the Company recorded a restructuring charge of $9,560,000
($5,879,000 after tax, $0.26 per share) related primarily to facilities
consolidation in the United States and Europe and workforce reductions in its
operations around the world. The $9,560,000 charge includes a provision for
severance of approximately $5,700,000, write-off or impairment of assets
(primarily buildings) of approximately $2,750,000 and $1,110,000 of other costs
associated with the restructuring efforts. Other costs primarily include lease
cancellation costs associated with the facilities consolidation. The workforce
reduction of approximately 175 people was essentially completed in August 2001.
Total cash expenditures in connection with these actions approximated
$6,300,000.

     A reconciliation of activity with respect to the Company's 2001
restructuring is as follows:

                                                            
Ending balance, July 31, 2001...............................   $ 6,937,000
  Cash payments associated with severance and other.........    (4,389,000)
  Non-cash asset write-offs.................................      (490,000)
  Adjustment to severance accrual...........................      (310,000)
                                                               -----------
Ending balance, July 31, 2002...............................   $ 1,748,000
                                                               ===========
  Cash payments associated with severance and other.........    (1,535,000)
  Non-cash asset write-offs.................................       (40,000)
  Adjustment to lease accrual...............................      (173,000)
                                                               -----------
Ending balance, July 31, 2003...............................   $        --
                                                               ===========



11. UNAUDITED QUARTERLY FINANCIAL INFORMATION



                                                        QUARTERS
                                  ----------------------------------------------------
                                   FIRST      SECOND     THIRD      FOURTH     TOTAL
                                  --------   --------   --------   --------   --------
                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                               
2003
Net Sales.......................  $138,662   $129,565   $141,955   $144,684   $554,866
Gross Margin....................    70,217     63,656     73,129     73,271    280,273
Operating Income................    12,374      4,549     12,074      3,152*    32,149
Net Income......................     8,199      2,817      8,597      1,807*    21,420
Net Income Per Class A Common
  Share:
  Basic.........................      0.35       0.12       0.37       0.08       0.92
  Diluted.......................      0.35       0.12       0.37       0.08       0.91
2002
Net Sales.......................  $130,001   $120,589   $130,533   $135,839   $516,962
Gross Margin....................    66,878     59,637     67,017     67,244    260,776
Operating Income................    11,668      9,386     12,716      7,733*    41,503
Net Income......................     7,995      6,138      8,475      5,645*    28,253
Net Income Per Class A Common
  Share:
  Basic.........................      0.35       0.26       0.36       0.24       1.22
  Diluted.......................      0.34       0.26       0.36       0.24       1.20


- ---------------

* The fourth quarters of fiscal 2003 and 2002 include net restructuring charges
  of $9,589,000 ($6,329,000 after-tax, $0.27 per share) and $2,720,000
  ($1,782,000 after-tax, $0.07 per share), respectively.

                                      II-36


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

ITEM 9A. CONTROLS AND PROCEDURES

     The Company maintains disclosure controls and procedures designed to ensure
that the information the Company must disclose in its filings with the
Securities and Exchange Commission is recorded, processed, summarized and
reported on a timely basis. The Company's Chief Executive Officer and Chief
Financial Officer have reviewed and evaluated the Company's disclosure controls
and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the
period covered by this report (the "Evaluation Date"). Based on such evaluation,
such officers have concluded that, as of the Evaluation Date, the Company's
disclosure controls and procedures are effective in bringing to their attention
on a timely basis material information relating to the Company required to be
included in the Company's periodic filings under the Exchange Act.

     There have not been any changes in the Company's internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
that occurred during the Company's most recently completed fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                      II-37


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



NAME                             AGE                               TITLE
- ----                             ---                               -----
                                  
Frank M. Jaehnert............    46     President, CEO and Director
Tracey F. Carpentier.........    40     V.P. -- Direct Marketing Americas
David R. Hawke...............    49     Executive Vice President
Allan J. Klotsche............    38     V.P. -- Brady Asia-Pacific, Global Die Cut and Strategic
                                        Account Manager
Michael O. Oliver............    50     Sr. V.P., Human Resources
Donald E. Rearic.............    63     Sr. V.P. -- Corporate Finance, Treasurer & Assistant
                                        Secretary
David W. Schroeder...........    48     Sr. V.P., CFO
Peter C. Sephton.............    44     V.P. -- Brady Europe
Matt O. Williamson...........    47     V.P. -- Brady Americas
Conrad G. Goodkind...........    59     Secretary
Katherine M. Hudson..........    56     Chairman, Director
Peter J. Lettenberger........    66     Director
Robert C. Buchanan...........    63     Director
Roger D. Peirce..............    66     Director
Richard A. Bemis.............    62     Director
Dr. Frank W. Harris..........    61     Director
Gary E. Nei..................    59     Director
Mary K. Bush.................    55     Director
Frank R. Jarc................    61     Director


     Frank M. Jaehnert -- Mr. Jaehnert joined the Company in 1995 as Finance
Director of the Identification Solutions & Specialty Tapes Group. He served as
Chief Financial Officer from November 1996 to January 2002. He served as Senior
Vice President of the Company and President, Identification Solutions and
Specialty Tapes Group from January 2002 to March 2003. In February 2003, he was
elected to his current position, effective April 1, 2003. Before joining the
Company, he held various financial and management positions for Robert Bosch
GmbH from 1983 to 1995.

     Tracey F. Carpentier -- Mrs. Carpentier joined the Company in 1985. She
served in a variety of sales, marketing and management roles until 1997, when
she was appointed V.P. and General Manager of Brady Canada. From 1999 to 2003,
Mrs. Carpentier served as V.P. and General Manager of Brady's Seton division in
Branford, Connecticut. She was appointed to her current position in April 2003.

     David R. Hawke -- Mr. Hawke joined the Company in 1979. He served as
General Manager of the Industrial Products Division from 1985 to 1991. From 1991
to February 1995, he served as Managing Director -- European Operations. From
February 1995 to August 2001, he served as Vice President, Graphics Group. He
served as Vice President, Graphics and Workplace Solutions from August 2001 to
January 2002. He served as Senior Vice President of the Company and President,
Graphics and Workplace Solutions Group from January 2002 to April 2003. In April
2003, he was appointed to his present position.

     Allan J. Klotsche -- Mr. Klotsche joined the Company in 1988. He served in
a variety of sales, marketing, technical, and management roles until 1998, when
he was appointed V.P. and General Manager of the Precision Tapes Group. He was
appointed to his current position in April 2003.

     Michael O. Oliver -- Mr. Oliver joined the Company in February 1997 as Vice
President -- Human Resources. He was appointed to his present position in
January 2002. Before joining the Company, he held various human resource
positions for Unilever from 1990 to 1997.

                                      III-1


     Donald E. Rearic -- Mr. Rearic joined the Company in 1990. He served in a
variety of treasury and finance roles until 2002, when he was appointed to his
current position. Before joining Brady, he served as V.P., Treasurer and
Assistant Secretary at CSC Industries, Inc., Warren Ohio, the holding company
for Copperweld Steel Company.

     David W. Schroeder -- Mr. Schroeder joined the Company in June 1991 as
General Manager of the Industrial Products Division. He served as Vice
President, Identification Solutions & Specialty Tapes Group from March 1995 to
January 2002. He was appointed to his present position in January 2002. Before
joining the Company, he served as President and Chief Executive Officer of
Uniroyal Adhesives & Sealants Co., Inc. from 1988 to May 1991.

     Peter C. Sephton -- Mr. Sephton joined the Company in 1997 as Managing
Director -- Seton-UK. From 2001 to 2003 he served as managing director for
Brady's Identification Solutions Business in Europe. In April 2003, he was
appointed to his current position. Before joining Brady, he served in a variety
of managerial roles with Tate and Lyle Plc, Sutcliffe Speakman Plc and Morgan
Crucible Plc.

     Matt O. Williamson -- Mr. Williamson joined the Company in 1979. From 1979
to 1998 he served in a variety of sales and marketing leadership roles. From
1998 to 2001, he served as V.P. and General Manager -- Identification Solutions
Division. From 2001 to 2003 he served as V.P. and General Manager of High
Performance Identification Business. In April 2003, he was appointed to his
current position.

     Conrad G. Goodkind -- Mr. Goodkind was elected Secretary of the Company in
November 1999. He is a partner of Quarles & Brady LLP, general counsel to the
Company, which he joined in 1979.

     Katherine M. Hudson -- Mrs. Hudson joined the Company in January 1994, as
President, Chief Executive Officer and Director. Before joining Brady
Corporation, she was a Vice President at Eastman Kodak Company and General
Manager of its Professional, Printing and Publishing Imaging Division. Her 24
years at Eastman Kodak Company included positions in finance, communication and
public affairs, information systems and the management of instant photography,
printing and publishing and professional photography. She is a director of CNH
Global N.V. and Charming Shoppes, Inc., and serves on the Alverno College Board
of Trustees, the Medical College of Wisconsin Board of Trustees and the Board of
Wisconsin United for Health Foundation.

     Peter J. Lettenberger -- Mr. Lettenberger has served as a Director of the
Company since January 1977. Mr. Lettenberger is a member of the Company's
Finance and Corporate Governance Committees. He is a partner of Quarles & Brady
LLP, general counsel to the Company, which he joined in 1964. He is also a
director of Electronic Tele-Communications, Inc., Waukesha, Wisconsin.

     Robert C. Buchanan -- Mr. Buchanan has been a Director of the Company since
November 1987. Mr. Buchanan is a member of the Company's Finance Committee and
chairs its Corporate Governance Committee. Mr. Buchanan is President and
Chairman of the Board of Fox Valley Corporation in Appleton, Wisconsin, having
assumed that position November 1980. He is also a trustee of The Northwestern
Mutual Life Insurance Company, Milwaukee.

     Roger D. Peirce -- Mr. Peirce has served as a Director of the Company since
September 1988. Mr. Peirce has been a member of the Compensation Committee of
the Company since September 1988, and its chairman from November 1996 to June
2003, and is a member of its Corporate Governance and Finance Committees. Mr.
Peirce is a private investor and consultant and is a director of Journal
Communications, Inc. He was the secretary/treasurer of The Jor-Mac Company,
Inc., a metal fabricator in Grafton, Wisconsin, from 1997 through 2002. He was
President and CEO of Valuation Research Corporation from April 1995 to May 1996.
From September 1988 to December 1993, he was President of Super Steel Products
Corp. in Milwaukee, Wisconsin. Prior to that he was a managing partner for
Arthur Andersen LLP, independent certified public accountants.

     Richard A. Bemis -- Mr. Bemis has been a Director of the Company since
January 1990 and a member of its Compensation Committee since March 1990, and is
a member of its Technology Committee. Mr. Bemis is President and CEO of Bemis
Manufacturing Company, a manufacturer of molded plastic products in

                                      III-2


Sheboygan Falls, Wisconsin. He is also a director of the Wisconsin Public
Service Corporation, Green Bay, Wisconsin.

     Frank W. Harris -- Dr. Harris has been a Director of the Company since
November 1991, a member of its Audit Committee since May 1999, and is chair of
its Technology Committee. Dr. Harris is Professor and Director of the Maurice
Morton Institute of Polymer Science at the University of Akron, and has been on
its faculty since 1983.

     Gary E. Nei -- Mr. Nei has been a Director of the Company since November
1992. Mr. Nei is a member of the Company's Governance Committee and Chair of its
Finance and Compensation Committees. Mr. Nei is Chairman of NEI-Turner Media, a
publishing company in Walworth, Wisconsin, and Chairman of the Beverage Testing
Institute, a publishing company in Chicago, Illinois. He also serves as a
consultant to Welsh Carson Anderson and Stowe, a private investment company in
New York, New York. He is also a Director of Bone Care International, Inc. a
pharmaceutical company in Madison, Wisconsin.

     Mary K. Bush -- Ms. Bush was elected to the Board of Directors in May 2000.
Ms. Bush is president of Bush International Inc., Washington, D.C., an
international financial advisory firm. She serves on the Audit Committee. Ms.
Bush is also a director of Mortgage Guarantee Insurance Corp., R.J. Reynolds
Tobacco Holdings, Inc., Millennium Chemicals, Inc. and the Board of Trustees of
the Pioneer Funds. Former Boards include Texaco, Inc. and Nations Bank Trust
Company.

     Frank R. Jarc -- Mr. Jarc was elected to the Board of Directors in May
2000. Mr. Jarc is a consultant specializing in corporate development and
international acquisitions. From April 1999 to March 2000 he was Senior Vice
President of Corporate Development at Office Depot, an operator of office supply
superstores. Between June 1996 and March 1999, he was Executive Vice President
and Chief Financial Officer of Viking Office Products, a direct mail marketer of
office products. Prior to that, he was Executive Vice President and Chief
Financial Officer of R.R. Donnelley and Sons, a global printing company. He is
chair of Brady's Audit Committee and serves on the Compensation Committee.

     All directors serve until their respective successors are elected at the
next annual meeting of shareholders. Officers serve at the discretion of the
Board of Directors. None of the Company's directors or executive officers has
any family relationship with any other director or executive officer.

                        AUDIT COMMITTEE FINANCIAL EXPERT

     The Company's board of directors has determined that at least one audit
committee financial expert is serving on its audit committee. Mr. Jarc, chair of
the audit committee is a financial expert and is independent as that term is
used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.

            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     During fiscal year 2003 with respect to the Company's Class A Common Stock:

     1. On February 24, 2003, the Company granted options to purchase 100,000
        shares of Class A Common Stock to Frank M. Jaehnert, an officer of the
        Company. This transaction was reported on an amended Form 4 filed May
        21, 2003.

     2. On July 31, 2003, Mr. Jaehnert acquired 6 shares of Class A Common Stock
        through the Company's dividend reinvestment program. This transaction
        was reported on a Form 5 filed September 18, 2003.

                                 CODE OF ETHICS

     The Company has adopted a code of ethics that applies to its chief
executive officer, chief financial officer, chief accounting officer and other
key financial personnel. The code of ethics can be viewed at the Company's
website, www.bradycorp.com. The Company intends to satisfy the disclosure
requirements under

                                      III-3


Item 10 of Form 8-K regarding an amendment to, or a waiver from, a provision of
its code of ethics by putting such information on its Internet website.

ITEM 11.  EXECUTIVE COMPENSATION

     The following table summarizes the compensation paid or accrued by the
Company during the three fiscal years ended July 31, 2003, to those persons who,
as of the end of fiscal 2003, were the Named Executive Officers.

                           SUMMARY COMPENSATION TABLE



                                                                                       LONG-TERM COMPENSATION
                                                           ANNUAL COMPENSATION                 AWARDS
                                                        --------------------------   --------------------------
                                                                            OTHER    RESTRICTED
                                                                            ANNUAL     STOCK                      ALL OTHER
                                               FISCAL   SALARY     BONUS     COMP      AWARDS      OPTIONS/SAR      COMP
NAME AND PRINCIPAL POSITION                     YEAR      ($)     ($)(1)    ($)(2)     ($)(5)     (# OF SHARES)    ($)(3)
- ---------------------------                    ------   -------   -------   ------   ----------   -------------   ---------
                                                                                             
F.M. Jaehnert................................   2003    345,769        --      --          --        115,000        32,371
President &                                     2002    265,384    45,000      --          --         13,000        17,312
Chief Executive Officer                         2001    236,154        --      --          --         10,000        16,893
(effective April 1, 2003)

K. M. Hudson.................................   2003    550,000        --      --          --         36,300        85,473(4)
Chairman of the Board                           2002    536,626   100,000      --          --         35,000        58,919(4)
(effective April 1, 2003)                       2001    497,231        --      --          --         35,000        95,063(4)

D. W. Schroeder..............................   2003    337,308    74,200      --          --         15,000        35,105
Sr. V.P., Chief Financial Officer &             2002    321,038    45,000      --          --         13,000        19,705
President Brady Technologies                    2001    289,385        --      --          --         13,000        21,849

D.R. Hawke...................................   2003    315,673    83,170      --     334,700         15,000        28,744
Executive Vice President                        2002    292,669    45,000      --          --         13,000        18,900
                                                2001    258,384        --      --          --         13,000        18,449

M.O. Oliver..................................   2003    220,481    51,130      --     334,700          7,000        20,188
Sr. Vice President,                             2002    207,227    25,000      --          --          5,000        15,484
Human Resources                                 2001    178,107        --      --          --         45,000        12,522

D.E. Rearic..................................   2003    168,654    35,442      --          --          5,500        74,873(6)
Sr. Vice President -- Corporate                 2002    157,435    21,362      --          --          4,500        67,429(6)
Finance, Treasurer                              2001    143,542    12,919      --          --          3,500        60,866(6)
and Assistant Secretary


- ---------------

(1) Reflects bonus earned during the listed fiscal year, which was paid during
    the next fiscal year.

(2) Unless otherwise noted, any prerequisites or other personal benefits
    received from the Company by any of the named executives were less than the
    reporting thresholds established by the Securities and Exchange Commission
    (the lesser of $50,000 or 10% of the individual's cash compensation).

(3) All other compensation for fiscal 2003 for Mrs. Hudson, and Messrs.
    Schroeder, Hawke, Jaehnert, Oliver and Rearic, respectively, includes: (i)
    matching contributions to the Company's Matched 401(k) Plan, Funded
    Retirement Plan and Restoration Plan for each named executive officer of
    $55,000, $30,363, $24,485, $29,329, $19,400 and $18,126 respectively and
    (ii) the cost of group term life insurance for each named executive officer
    of $2,124, $4,742, $4,259, $3,042, $788 and $567, respectively.

    All other compensation for fiscal 2002 for Mrs. Hudson, and Messrs.
    Schroeder, Hawke, Jaehnert, Oliver and Rearic, respectively, includes: (i)
    matching contributions to the Company's Matched 401(k) Plan, Funded
    Retirement Plan and Restoration Plan for each named executive officer of
    $25,013, $19,095, $18,331, $16,872, $14,889 and $12,569, respectively and
    (ii) the cost of group term life insurance for each named executive officer
    of $2,931, $610, $569, $440, $595 and $1,860, respectively.

                                      III-4


    All other compensation for fiscal 2001 for Mrs. Hudson, and Messrs.
    Schroeder, Hawke, Jaehnert, Oliver and Rearic, respectively, includes: (i)
    matching contributions to the Company's Matched 401(k) Plan, Funded
    Retirement Plan and Restoration Plan for each named executive officer of
    $44,165, $21,063, $17,731, $16,449, $12,060 and $9,239, respectively and
    (ii) the cost of group term life insurance for each named executive officer
    of $1,572, $786, $718, $444, $462 and $1,627, respectively.

(4) Fiscal 2003 includes $28,349 accrued, but not paid, for the current year's
    portion of a Supplemental Executive Retirement Plan (SERP). Fiscal 2002
    includes $30,975 accrued, but not paid, for that year's portion of the SERP.
    Fiscal 2001 includes $49,326 accrued, but not paid, for that year's portion
    of the SERP.

(5) In August 1997, the Company granted restricted stock awards to certain key
    executives. Mrs. Hudson was awarded 50,000 shares of authorized, but
    unissued Class A Common Stock and Messrs. Schroeder and Hawke were awarded
    25,000 shares each of authorized, but unissued Class A Common Stock. As of
    July 31, 2003, Mrs. Hudson continued to hold 35,000 of such shares, Messrs.
    Schroeder and Hawke continued to hold 6,250 of such shares at July 31, 2003.
    Using the closing price of $34.41 per share for the Company's Class A Common
    Stock on July 31, 2003, Mrs. Hudson's holdings were valued at $1,204,350 and
    the holdings of Messrs. Schroeder and Hawke were valued at $215,063 each.
    The restricted stock awards granted to Mrs. Hudson vested on August 1, 2002.
    The restricted stock awards granted to Messrs. Schroeder and Hawke vested
    75% on August 1, 2002, with the remaining 25% vesting on August 1, 2003. The
    executives have the right to receive any cash dividends payable on these
    shares.

    In June 2003, the Company granted restricted stock awards to certain key
    executives. Messrs. Hawke and Oliver were awarded 10,000 shares each of
    authorized, but unissued Class A Common Stock, which shares such executive
    officers continued to hold as of July 31, 2003. The value of the grants
    stated in the table is based on the closing price on the date of grant.
    Using the closing price of $34.41 per share for the Company's Class A Common
    Stock on July 31, 2003, the holdings of Messrs. Hawke and Oliver were valued
    at $344,100 each. The restricted stock awards granted to Messrs. Hawke and
    Oliver vest 100% on August 1, 2005. The executives have the right to receive
    any cash dividends payable on these shares.

(6) Fiscal 2003 includes $56,180 accrued, but not paid, for the current year's
    portion of a Supplemental Executive Retirement Plan (SERP). Fiscal 2002
    includes $53,000 accrued, but not paid, for that year's portion of the SERP.
    Fiscal 2001 includes $50,000 accrued, but not paid, for that year's portion
    of the SERP.

STOCK OPTIONS

     The following tables summarize option grants and exercises during fiscal
2003 to or by the executive officers named in the Summary Compensation Table
above, and the value of unexercised options held by such persons at July 31,
2003. Stock Appreciation Rights are not available under any of the Company's
plans.

                          OPTION GRANTS IN FISCAL 2003

                               INDIVIDUAL GRANTS



                                     # OF SECURITIES    % OF TOTAL
                                       UNDERLYING        OPTIONS
                                         OPTIONS        GRANTED TO      EXERCISE
                                         GRANTED       EMPLOYEES IN      PRICE
NAME                                     (#)(1)        FISCAL 2003    ($/SHARE)(2)    EXPIRATION DATE
- ----                                 ---------------   ------------   ------------   -----------------
                                                                         
F.M. Jaehnert......................      100,000           25.2%        26.6200      February 24, 2013
                                          15,000            3.8%        32.7750      November 14, 2012
K.M. Hudson........................       36,300            9.2%        32.7750      November 14, 2012
D.W. Schroeder.....................       15,000            3.8%        32.7750      November 14, 2012
D.R. Hawke.........................       15,000            3.8%        32.7750      November 14, 2012
M.O. Oliver........................        7,000            1.8%        32.7750      November 14, 2012
D.E. Rearic........................        5,500            1.4%        32.7750      November 14, 2012


                                      III-5




                                                               POTENTIAL REALIZABLE VALUE
                                                                   AT ASSUMED RATES OF
                                                               STOCK PRICE APPRECIATION(3)
                                                          -------------------------------------
NAME                                                      0%($)     5%($)(6)       10%($)(6)
- ----                                                      -----   ------------   --------------
                                                                        
F.M. Jaehnert..........................................     0        1,986,675        5,014,725
K.M. Hudson............................................     0          749,414        1,891,775
D.W. Schroeder.........................................     0          309,675          781,725
D.R. Hawke.............................................     0          309,675          781,725
M.O. Oliver............................................     0          144,515          364,805
D. E. Rearic...........................................     0          113,548          286,633
All Stockholders' Gains (increase in market value of Brady
  Corporation Common Stock at assumed rates of stock price
  appreciation)(4)(6)..........................................   $441,925,507   $1,115,570,250
All Optionees' Gains (as a percent of all shareholders'
  gains)(5)(6).................................................          1.76%            1.76%


- ---------------

(1) The options granted November 14, 2002, become exercisable as follows:
    33 1/3% of the shares on November 14, 2003; 33 1/3% of the shares on
    November 14, 2004; and 33 1/3% of the shares on November 14, 2005. These
    options have a term of ten years.

    The options granted to Mr. Jaehnert on February 24, 2003, become exercisable
    February 24, 2008, and have a term of ten years.

(2) The exercise price is the average of the highest and lowest sale prices of
    the Company's Class A Common Stock as reported by the New York Stock
    Exchange on the date of the grant.

(3) Represents total potential appreciation of approximately 0%, 63% and 159%
    for assumed annual rates of appreciation of 0%, 5% and 10%, respectively,
    compounded annually for the ten-year option terms.

(4) Calculated from the $32.7750 exercise price applicable to the options
    granted on November 14, 2002 and the $26.6200 exercise price applicable to
    the options granted on February 24, 2003 based on the 21,405,934 shares of
    Class A Common Stock outstanding on February 24, 2003.

(5) Represents potential realizable value for all options granted in fiscal 2003
    compared to the increase in market value of Brady Corporation Class A Common
    Stock at assumed rates of stock price appreciation.

(6) The Company disavows the ability of any valuation model to predict or
    estimate the Company's future stock price or to place a reasonably accurate
    present value on these options because any model depends on assumptions
    about the stock's future price movement that the Company is unable to
    predict.

                   AGGREGATED OPTION EXERCISES IN FISCAL 2003
                   AND VALUE OF OPTIONS AT END OF FISCAL 2003



                                                                  NUMBER OF SECURITIES UNDERLYING
                                     SHARES                    UNEXERCISED OPTIONS AT JULY 31, 2003
                                   ACQUIRED ON      VALUE      -------------------------------------
NAME                               EXERCISE(#)   REALIZED($)    EXERCISABLE(#)     UNEXERCISABLE(#)
- ----                               -----------   -----------   ----------------   ------------------
                                                                      
K.M. Hudson......................         0              0          496,001             121,299
D.W. Schroeder...................    33,250        427,780          146,000              28,000
D.R. Hawke.......................     6,000        101,781          168,000              28,000
F.M. Jaehnert....................         0              0           44,100             202,000
M.O. Oliver......................         0              0           17,500              52,000
D.E. Rearic......................         0              0           20,833               9,667


                                      III-6




                                                          VALUE OF UNEXERCISED IN-THE-MONEY
                                                             OPTIONS AT JULY 31, 2003(1)
                                                          ---------------------------------
NAME                                                      EXERCISABLE($)   UNEXERCISABLE($)
- ----                                                      --------------   ----------------
                                                                     
K.M. Hudson.............................................    5,739,598           219,688
D.W. Schroeder..........................................    1,379,424            71,821
D.R. Hawke..............................................    1,606,318            71,821
F.M. Jaehnert...........................................      338,868         1,899,691
M.O. Oliver.............................................      126,050           204,787
D.E. Rearic.............................................      169,932            23,333


- ---------------

(1) Represents the closing price for the Company's Class A Common Stock on July
    31, 2003, of $34.4100 less the exercise price for all outstanding
    exercisable and unexercisable options for which the exercise price is less
    than such closing price.

COMMON STOCK PRICE PERFORMANCE GRAPH

     The graph below shows a comparison of the cumulative return over the last
five fiscal years had $100 been invested at the close of business on July 31,
1998, in each of Brady Corporation Class A Common Stock, the Standard & Poor's
(S&P) 500 Index, the Russell 2000 Index and the New York Stock Exchange (NYSE)
Composite Index.

                COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
  BRADY CORPORATION VERSUS PUBLISHED INDICES (S&P 500, RUSSELL 2000 AND NYSE)
                          FISCAL YEAR ENDING JULY 31,

                                  (LINE GRAPH)



- -----------------------------------------------------------------------------------------------------------
                                           1998       1999       2000       2001       2002       2003
- -----------------------------------------------------------------------------------------------------------
                                                                                  
 Brady                                     $100       $175       $156       $180       $147       $189
- -----------------------------------------------------------------------------------------------------------
 S&P 500                                   $100       $120       $131       $112       $ 86       $ 95
- -----------------------------------------------------------------------------------------------------------
 S&P Small Cap 600                         $100       $105       $118       $132       $116       $137
- -----------------------------------------------------------------------------------------------------------
 Russell 2000                              $100       $107       $122       $120       $ 99       $121
- -----------------------------------------------------------------------------------------------------------


                                      III-7


COMPENSATION OF DIRECTORS

     Each director who is also an employee of the Company receives no additional
compensation for service on the Board or on any committee of the Board. Prior to
August 1, 2003, directors who were not also employees of the Company received an
annual retainer of $20,000 plus $1,500 for each committee they chaired and
$1,250 plus expenses for each meeting of the Board or any committee thereof,
which they attended and were a member. Directors also received $750 for each
meeting they attended of any committee for which they were not a member.

     Effective August 1, 2003, directors who are not also employees of the
Company receive an annual retainer of $25,000 plus $1,500 for each committee
they chair ($5,500 for the audit committee chair) and $1,250 plus expenses for
each on-site meeting of the Board or any committee thereof, which they attend
and are a member or $750 for single issue telephonic committee meetings.
Directors also receive $750 for each meeting they attend of any committee for
which they are not a member.

TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

     In May 2003, the Board approved a new Change in Control Agreement for Mr.
Jaehnert. The agreement calls for payment of an amount equal to three times the
annual salary and bonus for Mr. Jaehnert in the event of termination or
resignation upon a change of control. The agreements also call for reimbursement
of any excise taxes imposed and up to $25,000 of attorney fees to enforce the
executive's rights under the agreement. Payments under the agreements will be
spread over three years.

     In January 2001, the Board approved new Change in Control Agreements for
certain of its executive officers including Messrs. Schroeder, Hawke and Oliver.
The agreements call for payment of an amount equal to two times the annual
salary and bonus for Messrs. Schroeder, Hawke, and Oliver in the event of
termination or resignation upon a change of control. The agreements also call
for reimbursement of any excise taxes imposed and up to $25,000 of attorney fees
to enforce the executive's rights under the agreement. Payments under the
agreements will be spread over two years for Messrs. Schroeder, Hawke and
Oliver.

     In fiscal 1994 the Company created a Supplemental Executive Retirement Plan
(SERP) for Mrs. Hudson. The stated amount of the Plan at January 1, 1999, was
$500,000. The Company credited a deferred compensation account with the net
present value of the stated amount in January 1994. The account is credited
annually with the current year's increase in the net present value calculation.
After January 1, 1999, interest accrues quarterly on the balance in the account
at the prime rate in effect at the end of each calendar quarter.

     The Company is required to pay Mrs. Hudson the balance in the account over
a ten-year period beginning January 2009. The first payment will be one-tenth of
the balance in the account; the second one-ninth; and so on.

     In the event of a change in control of the Company, Mrs. Hudson's SERP may
accelerate and become payable in 30 days.

     The Company's Board of Directors has approved a compensation package for
Mrs. Hudson, who served as the Company's President and CEO until March 31, 2003.
Mrs. Hudson will remain an employee of the Company for a period up to January
19, 2005, at her annual base salary in effect for fiscal 2003; and will be
eligible for coverage under the Company's regular medical insurance plan or a
payment in lieu thereof toward similar coverage. Until January 19, 2004, she
will also receive other executive benefits at the 2003 level and be eligible to
participate in the Company's bonus plan. While employed, Mrs. Hudson will
perform such duties as requested of her by the President. All compensation and
benefits will terminate if Mrs. Hudson accepts outside employment, other than
with an academic entity.

     Mr. Schroeder currently serves as the Company's Chief Financial Officer,
but is seeking an executive position outside of the Company. The Compensation
Committee of the Board has agreed to continue Mr. Schroeder's salary and
benefits while he remains employed by the Company to a date not later than May
31, 2004; and to pay an amount equal to his base salary for a period of six
months following termination

                                      III-8


of employment with the Company. While employed, Mr. Schroeder will be eligible
for participation in the Company's bonus plan. He is also eligible for Company
paid executive placement consulting services.

RESTRICTED STOCK

     In August 1997, the Company granted restricted stock awards to certain key
executives. Mrs. Hudson was awarded 50,000 shares of authorized, but unissued
Class A Common Stock and Messrs. Schroeder and Hawke were awarded 25,000 shares
each of authorized, but unissued Class A Common Stock. As of July 31, 2003, Mrs.
Hudson continued to hold 35,000 of such shares, Messrs. Schroeder and Hawke
continued to hold 6,250 of such shares at July 31, 2003. The restricted stock
awards granted to Mrs. Hudson vested on August 1, 2002. The restricted stock
awards granted to Messrs. Schroeder and Hawke vested 75% on August 1, 2002, with
the remaining 25% vesting on August 1, 2003. The executives have the right to
receive any cash dividends payable on these shares.

     In June 2003, the Company granted restricted stock awards to certain key
executives. Messrs. Hawke and Oliver were awarded 10,000 shares each of
authorized, but unissued Class A Common Stock, which shares such executive
officers continued to hold as of July 31, 2003. Using the closing price of
$34.41 per share for the Company's Class A Common Stock on July 31, 2003, the
holdings of Messrs. Hawke and Oliver were valued at $344,100 each. The
restricted stock awards granted to Messrs. Hawke and Oliver vest 100% on August
1, 2005. The executives have the right to receive any cash dividends payable on
these shares.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     During fiscal 2003, the Board's Compensation Committee was composed of
Messrs. Bemis, Jarc, Nei and Peirce. Mr. Lettenberger serves as a nonvoting
advisor to the Committee. None of these persons has at any time been an employee
of the Company or any of its subsidiaries. There are no relationships among the
Company's executive officers, members of the Compensation Committee or entities
whose executives serve on the Board that require disclosure under applicable SEC
regulations.

FUNDED RETIREMENT AND 401(K) PLANS

     Substantially all Brady employees in the United States and certain
expatriate employees working for its international subsidiaries are eligible to
participate in the Company's Funded Retirement Plan ("Brady Corporation Funded
Retirement Plan") and Employee 401K Plan (the "Brady Corporation Matched 401(k)
Plan"). Under these plans the Company agrees to contribute certain amounts to
both Plans. Under the Funded Retirement Plan, the Company contributes 4% of the
eligible earnings of each person covered by the Funded Retirement Plan. In
addition, participants may elect to have their annual pay reduced by up to 4%
and have the amount of this reduction contributed to the Brady Corporation
Matched 401(k) Plan and matched by an additional, equal contribution by the
Company. Participants may also elect to have up to another 8% of their eligible
earnings contributed to the Brady Corporation Matched 401(k) Plan (without an
additional matching contribution by the Company). The assets of the Brady
Corporation Matched 401(k) Plan and Brady Corporation Funded Retirement Plan
credited to each participant are invested by the trustee of the Plans as
directed in several investment funds as permitted by the Brady Corporation
Matched 401(k) Plan and Brady Corporation Funded Retirement Plan. The annual
contributions and forfeitures allocated to any participant under all defined
contribution plans may not exceed the lesser of $30,000 or 25% of the
participant's base compensation and bonuses.

     Benefits are generally payable upon the death, disability, or retirement of
the participant or upon termination of employment before retirement, although
benefits may also be withdrawn from the Brady Corporation Matched 401(k) Plan
and paid to the participant if required for certain emergencies. Under certain
specified circumstances, the Brady Corporation Matched 401(k) Plan allows loans
to be drawn on a participant's account. The participant is immediately fully
vested with respect to the contributions attributable to reductions in pay; all
other contributions become fully vested over a three-year period of continuous
service for the Brady Corporation Matched 401(k) Plan and after five years of
continuous service for the Brady Corporation Funded Retirement Plan.

                                      III-9


DEFERRED COMPENSATION ARRANGEMENTS

     During fiscal 1998, the Company adopted new deferred compensation plans
whereby directors, executive officers, corporate staff officers and certain key
management employees of the Company are permitted to defer portions of their
fees, salary and bonus into a plan account, the value of which is measured by
the Company's Class A Common Stock. Participants in the old deferred
compensation plan were allowed to convert their balances in the old plan to this
new plan. The conversion to the new plan was funded by the issuance of 372,728
shares of Class A Common Stock to a Rabbi Trust (the "Trust") in November 1997.
All deferrals into the new plan result in purchases of existing Class A Common
Stock by the Trust. No deferrals are allowed into the old plan.

     Upon the retirement, disability, or death of a participant, the Company is
required under the new plan to pay, each year for a period of ten years, a
portion of the shares held in the participant's name by the Trust. The first
payment must be one-tenth of the number of shares held; the second one-ninth;
and so on, with the number of shares held in the Trust reduced by each payment.

     If the participant's employment ends for reasons other than retirement,
disability or death, the shares held by the Trust in the participant's name will
be distributed over a period of ten years. At the request of the participant and
for special situations at the sole discretion of the Compensation Committee, the
Company may make distributions in larger installments or in a lump sum or other
basis.

     In the old deferred compensation plan, directors, executive officers,
corporate staff officers and certain key management employees of the Company
were permitted to defer portions of their fees, salary and bonus into a plan,
the value of which was measured in "phantom stock" of the Company. "Phantom
Stock" is not actual stock or rights to acquire stock in the Company, but it
gives participants the right to share in increases in book value (as defined) of
the common stock. At the end of each fiscal year, the deferred compensation
balance (with interest) is credited to the purchase of phantom common stock at
the then book value of the common stock of the Company, and is thereafter
adjusted to reflect stock dividends and other dividends or distributions on the
Company's Class A Common Stock. No new deferrals are allowed into this old
deferred compensation plan. Upon the retirement, disability, or death of
participant, the Company is required to pay, each year for a period of ten
years, a portion of the book value of the phantom stock determined by the book
value of the corresponding number of common shares as of the end of each fiscal
year. The first payment must be one-tenth of the book value; the second
one-ninth; and so on, with the number of phantom shares reduced by the
equivalent in book value of each payment. At the request of the participant, the
Company may make payments in larger installments or in a lump sum on a
discounted or other basis.

     All current directors and executives converted their balances to the new
deferred compensation plan. Certain retired participants elected not to transfer
their balances into the new plan. They were allowed to remain in the old
deferred compensation plan until the end of fiscal 2002. At that point the old
plan terminated and participant's balances earn simple interest at a rate equal
to the yield on a 30-year U.S. Treasury Bond as of July 31 of each year.

     During fiscal 2002, the Company adopted new deferred compensation plans
whereby executive officers, corporate staff officers and certain key management
employees of the Company are permitted to defer portions of their fees, salary
and bonus into a plan account, the value of which is measured by the fair value
of the underlying investments. The assets of the Plan are held in a Rabbi Trust
and are invested by the trustee of the Plan as directed by the participant in
several investment funds as permitted by the Plan.

     Upon the retirement, disability, or death of participant, the Company is
required under the plan to pay, each year for a period of ten years, a portion
of the balance held in the participant's name by the Trust. The first payment
must be one-tenth of the balance held; the second one-ninth; and so on, with the
balance held in the Trust reduced by each payment.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Company's Compensation Committee (the "Committee") is composed entirely
of outside directors and is responsible for considering and approving
compensation arrangements for senior management of the
                                      III-10


Company, including the Company's executive officers and the chief executive
officer. It is the philosophy of the Committee to establish a total executive
compensation program, which is competitive with a broad range of companies that
it considers to be of comparable size and complexity.

     The primary components of the Company's executive compensation program are
(i) base salary, (ii) annual cash incentive plan and (iii) long term incentive
compensation in the form of stock options and/or restricted stock. These are
designed to align shareholder and management interests, to balance the
achievement of annual performance targets with actions that focus on the
long-term success of the Company, and to attract, motivate and retain key
executives who are important to the continued success of the Company. The base
salary compensation and the annual cash incentive compensation plan are reviewed
and approved by the Compensation Committee.

     The Committee believes that:

     - The Company's pay levels are appropriately targeted to attract and retain
       key executives;

     - The Company's incentive plan provides strong incentives for management to
       increase shareholder value; and

     - The Company's total executive compensation program is a cost-effective
       strategy to increase shareholder value.

  BASE SALARY

     Consistent with the Committee's philosophy, base salaries are generally
maintained at or modestly above competitive base salary levels. Competitive
salary level is defined as the median base salary for similar responsibilities
in a group of companies selected by the Committee that the Committee considers
to be of comparable size and complexity. In setting base salaries for fiscal
2003, the Committee reviewed compensation survey data and was satisfied that the
base salary levels set would achieve the Company's objectives. Specific
increases reflect the Committee's subjective evaluation of individual
performance.

  ANNUAL BONUS PLAN

     The annual cash incentive compensation plan (the "Bonus Plan") provides for
the annual payment of cash bonuses. When viewed together with the Company's base
salary, the purpose of the Bonus Plan is to provide a balance between fixed
compensation and variable, results-oriented compensation. The Bonus Plan is 80%
objective. It stresses maximization of Company profitability, revenue growth and
return on invested capital.

  STOCK OPTIONS

     In July 2003, the Company's Class B Voting Common shareholders approved the
Brady Corporation 2003 Omnibus Incentive Stock Plan under which 750,000 shares
of Class A Common Stock are available for grant. In October 2001, the Company
approved the Brady Corporation 2001 Omnibus Incentive Stock Plan under which
500,000 shares of Class A Common Stock were available for grant. In May 1997,
the Company approved the Brady Corporation 1997 Omnibus Incentive Stock Plan and
the Brady Corporation 1997 Nonqualified Stock Option Plan for Non-Employee
Directors (the "Option Plans") under which 2,000,000 shares and 125,000 shares,
respectively, of Class A Common Stock are available for grant. In 1989 the Board
approved the Brady Corporation 1989 Non-Qualified Stock Option Plan (the "Option
Plan") under which 1,500,000 shares of Class A Common Stock were available for
grant. The Option Plans assist directors, executive officers, corporate staff
officers and key management employees in becoming shareholders with an important
stake in the Company's future, aligning their personal financial interest with
that of all shareholders. Stock options are typically granted annually and have
a term of ten years. Generally, the options become one-third exercisable one
year after the date of the grant and one-third additional in each of the
succeeding two years so that at the end of three years after the date of the
grant they are fully exercisable. In August 2003, certain executives and key
management employees were issued stock options that vest upon meeting certain
financial performance conditions in addition to the vesting schedule described
above and have a term of five years. All grants under the Option Plans are at
market price on the date of the grant.
                                      III-11


  COMPLIANCE WITH TAX REGULATIONS REGARDING EXECUTIVE COMPENSATION

     Section 162(m) of the Internal Revenue Code, added by the Omnibus Budget
Reconciliation Act of 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's chief
executive officer and the other named executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. The Company's executive compensation program, as
currently constructed, is not likely to generate nondeductible compensation in
excess of these limits. The Compensation Committee will continue to review these
tax regulations as they apply to the Company's executive compensation program.
It is the Compensation Committee's intent to preserve the deductibility of
executive compensation to the extent reasonably practicable and to the extent
consistent with its other compensation objectives.

  COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

     Mrs. Hudson received $550,000 in base salary in fiscal 2003, an increase of
2.5% from the prior year's base salary. Based on the terms of the Company's
objective Bonus Plan, discussed above, Mrs. Hudson earned a bonus attributable
to fiscal 2003 of $160,220. Mrs. Hudson voluntarily elected to waive her right
to this bonus, deferring the entire amount to be paid together with any bonus
earned in fiscal 2004, dependent upon certain financial performance in fiscal
2004. Consequently, she was not paid a bonus attributable to fiscal 2003, a
decrease of $100,000 from the bonus paid in fiscal 2002. Mrs. Hudson's
compensation reflects:

          (i) continued strong operating cash flow and the Company's relative
     performance to its peers with respect to stock price performance, sales and
     profits;

          (ii) the successful acquisitions of Tiscor, Inc., Cleere Advantage,
     Etimark GmbH and Aztech Systems;

          (iii) continued efforts to focus the Company's resources on
     sustainable value-enhancing long-term growth; and

          (iv) continued involvement in management team development and
     succession planning.

     During fiscal 2003, Mrs. Hudson was awarded options to purchase 36,300
shares of Class A Common Stock.

     Mr. Jaehnert was elected President and Chief Executive Officer effective
April 1, 2003. Mr. Jaehnert's base salary was $345,769 in fiscal 2003. Based on
the terms of the Company's objective Bonus Plan, discussed above, Mr. Jaehnert
earned a bonus attributable to fiscal 2003 of $96,800. Mr. Jaehnert voluntarily
elected to waive his right to the bonus, deferring the entire amount to be paid
together with any bonus earned in fiscal 2004, dependent upon certain financial
performance in fiscal 2004. Consequently, Mr. Jaehnert was not paid a bonus
attributable to fiscal 2003, a decrease of $45,000 from the bonus paid in fiscal
2002. During fiscal 2003, Mr. Jaehnert was awarded options to purchase 115,000
shares of Class A Common Stock. Included in those options are 100,000 options
that vest all at once five years from the date of grant, February 24, 2003.

     The Committee believes these awards are consistent with the objectives of
the various plans and with the overall compensation policy of the Board of
Directors.

                         ******************************

     The Compensation Committee believes the executive compensation programs and
practices described above are competitive. They are designed to provide
increased compensation with improved financial performance and to provide
additional opportunity for capital accumulation.

        Gary E. Nei, Chairman
        Richard A. Bemis
        Frank R. Jarc
        Roger D. Peirce

                                      III-12


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The following table sets forth the current beneficial ownership of
shareholders who are known by the Company to own five percent (5%) of any class
of the Company's voting shares on September 15, 2003.



                                                                       AMOUNT OF
                                                                       BENEFICIAL    PERCENT OF
   TITLE OF CLASS          NAME AND ADDRESS OF BENEFICIAL OWNER        OWNERSHIP    OWNERSHIP(2)
- --------------------       ------------------------------------        ----------   ------------
                                                                           
Class B Common        William H. Brady, Jr. Trust
  Stock.............  f/b/o Elizabeth B. Lurie(1)...................    884,652         50%
                      c/o Quarles & Brady
                      Attn: Peter J. Lettenberger
                      411 East Wisconsin Avenue
                      Milwaukee, WI 53202
                      William H. Brady III
                      Revocable Trust 2001(1).......................    884,652         50%
                      c/o Quarles & Brady
                      Attn: Peter J. Lettenberger
                      411 East Wisconsin Avenue
                      Milwaukee, WI 53202


- ---------------

(1) The trustees of both trusts are Richard A. Bemis, Robert C. Buchanan, Peter
    J. Lettenberger, Roger D. Peirce and Gary E. Nei, each of whom shares voting
    and dispositive power.

(2) An additional 10 shares are owned by a third trust with the same trustees.

(B) SECURITY OWNERSHIP OF MANAGEMENT

     The following table sets forth the current beneficial ownership of each
class of equity securities of the Company by each Director or Nominee and by all
Directors and Officers of the Company as a group as of September 15, 2003.
Unless otherwise noted, the address for each of the listed persons is c/o Brady
Corporation, 6555 West Good Hope Road, Milwaukee, Wisconsin 53223. Except as
otherwise indicated, all shares are owned directly.



                                                                                   AMOUNT OF
                                                                                   BENEFICIAL    PERCENT OF
   TITLE OF CLASS     NAME OF BENEFICIAL OWNER & NATURE OF BENEFICIAL OWNERSHIP   OWNERSHIP(9)   OWNERSHIP
- --------------------  ---------------------------------------------------------   ------------   ----------
                                                                                        
Class A Common Stock  Richard A. Bemis(1)(2)..............................         2,357,256        10.4%
                      Peter J. Lettenberger(1)(3).........................         2,352,344        10.3
                      Roger D. Peirce(1)(4)...............................         2,351,256        10.3
                      Robert C. Buchanan(1)(5)............................         2,350,356        10.3
                      Gary E. Nei(1)(6)...................................         2,350,256        10.3
                      Katherine M. Hudson(7)..............................           575,664         2.5
                      David R. Hawke......................................           213,518         0.9
                      David W. Schroeder..................................           188,220         0.8
                      Frank M. Jaehnert(8)................................           135,911         0.6
                      Michael O. Oliver...................................            41,167         0.2
                      Donald E. Rearic....................................            25,819         0.1
                      Conrad G. Goodkind..................................            18,734         0.1
                      Frank W. Harris.....................................            11,533         0.1
                      Frank R. Jarc.......................................             6,000           *
                      Mary K. Bush........................................             6,000           *
                      All Officers and Directors as a Group
                      (15 persons)(9).....................................         3,627,010        15.9


                                      III-13




                                                                                   AMOUNT OF
                                                                                   BENEFICIAL    PERCENT OF
   TITLE OF CLASS     NAME OF BENEFICIAL OWNER & NATURE OF BENEFICIAL OWNERSHIP   OWNERSHIP(9)   OWNERSHIP
- --------------------  ---------------------------------------------------------   ------------   ----------
                                                                                        
Class B Common Stock  Peter J. Lettenberger(1)............................         1,769,314         100
                      Richard A. Bemis(1).................................         1,769,314         100
                      Gary E. Nei(1)......................................         1,769,314         100
                      Roger D. Peirce(1)..................................         1,769,314         100
                      Robert C. Buchanan(1)...............................         1,769,314         100
                      All Officers and Directors as a Group...............         1,769,314         100


- ---------------

  *  Indicates less than one-tenth of one percent.

 (1) The amount shown includes shares held directly by the William H. Brady, Jr.
     Trust f/b/o Elizabeth B. Lurie (the "William H. Brady, Jr. Trust"), the
     William H. Brady III Revocable Trust 2001 (the "Revocable Trust") and the
     William H. Brady, Jr. Family Trust (the "Family Trust") (collectively, the
     "Trusts"). The William H. Brady, Jr. Trust owns 1,079,128 shares of Class A
     Common Stock and 884,652 shares of Class B Common Stock. The Revocable
     Trust owns 1,260,128 shares of Class A Common Stock and 884,652 shares of
     Class B Common Stock. The Family Trust owns 10 shares of Class B Common
     Stock. The Trustees of the Trusts are Richard A. Bemis, Robert C. Buchanan,
     Peter J. Lettenberger, Gary E. Nei and Roger D. Peirce, each of whom shares
     voting and dispositive power.

 (2) In addition to shares beneficially owned as a trustee of the Trusts, Mr.
     Bemis owns 9,000 shares of Class A Common Stock directly and holds vested
     options to acquire an additional 9,000 shares of Class A Common Stock.

 (3) In addition to shares beneficially owned as a trustee of the Trusts, Mr.
     Lettenberger owns directly 4,088 shares of Class A Common Stock and holds
     vested options to acquire an additional 9,000 shares of Class A Common
     Stock.

 (4) In addition to shares beneficially owned as a trustee of the Trusts, Mr.
     Peirce owns 1,500 shares of Class A Common Stock directly, 1,500 shares
     through his Keogh plan and holds vested options to acquire an additional
     9,000 shares of Class A Common Stock.

 (5) In addition to shares beneficially owned as a trustee of the Trusts, Mr.
     Buchanan owns 600 shares of Class A Common Stock directly, 1,500 additional
     shares through his Keogh plan and holds vested options to acquire an
     additional 9,000 shares of Class A Common Stock.

 (6) In addition to shares beneficially owned as a trustee of the Trusts, Mr.
     Nei owns 2,000 shares of Class A Common Stock directly (with respect to
     which he shares voting and investment power with his spouse) and holds
     vested options to acquire an additional 9,000 shares of Class A Common
     Stock.

 (7) Mrs. Hudson owns 44,231 shares of Class A Common Stock directly and holds
     vested options to acquire an additional 531,433 shares of Class A Common
     Stock.

 (8) Of the shares listed, 2,732 shares are owned directly by Mr. Jaehnert's
     spouse.

 (9) The amount shown for all officers and directors as a group (15 persons)
     includes options to acquire a total of 1,127,034 shares of Class A Common
     Stock, which are currently exercisable or will be exercisable within 60
     days of September 15, 2003. It does not include other options for Class A
     Common Stock, which have been granted at later dates.

(10) In addition to the shares shown in this table, the officers and directors
     as a group owned the equivalent of 355,264 shares of the Company's Class A
     Common Stock in its deferred compensation plans, including 98,500 for Mrs.
     Hudson, 10,154 for Mr. Jaehnert, 36,984 for Mr. Hawke, 29,580 for Mr.
     Schroeder, 5,531 for Mr. Oliver, and 5,674 for Mr. Rearic.

(C) CHANGES IN CONTROL

     No arrangements are known to the Company, which may, at a subsequent date,
result in a change in control of the Company.

                                      III-14


(D) EQUITY COMPENSATION PLAN INFORMATION



                                                                                         NUMBER OF SECURITIES
                                                                                        REMAINING AVAILABLE FOR
                                          NUMBER OF SECURITIES                           FUTURE ISSUANCE UNDER
                                           TO BE ISSUED UPON       WEIGHTED-AVERAGE       EQUITY COMPENSATION
                                              EXERCISE OF         EXERCISE PRICE OF        PLANS (EXCLUDING
                                          OUTSTANDING OPTIONS,   OUTSTANDING OPTIONS,   SECURITIES REFLECTED IN
                                          WARRANTS AND RIGHTS    WARRANTS AND RIGHTS          COLUMN (A))
PLAN CATEGORY                                     (A)                    (B)                      (C)
- -------------                             --------------------   --------------------   -----------------------
                                                                               
Equity compensation plans approved by
  security holders......................       2,347,441                $27.24                  123,836
Equity compensation plans not approved
  by security holders...................            None                  None                     None
                                               ---------                ------                  -------
Total...................................       2,347,441                $27.24                  123,836
                                               =========                ======                  =======


     The Company's Nonqualified Stock Option Plans allow the granting of stock
options to various officers, directors and other employees of the Company at
prices equal to fair market value at the date of grant. The Company has reserved
1,500,000, 2,125,000, 500,000 and 750,000 shares of Class A Nonvoting Common
Stock for issuance under the 1989, 1997, 2001 and 2003 Plans, respectively.
Options granted prior to 1992 become exercisable once the employees have been
continuously employed for six months after the grant date. Generally, options
granted in 1992 and thereafter will not be exercisable until one year after the
date of grant, and will be exercisable thereafter, to the extent of one-third
per year and have a maximum term of ten years. In August 2003, certain
executives and key management employees were issued stock options that vest upon
meeting certain financial performance conditions in addition to the vesting
schedule described above. All grants under the Option Plans are at market price
on the date of the grant.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Mr. Peter J. Lettenberger serves as a Director of the Company; he is also a
partner of Quarles & Brady LLP, general counsel to the Company. Mr. Conrad G.
Goodkind serves as Secretary to the Company; he is also a partner of Quarles &
Brady, general counsel to the Company.

                                      III-15


                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

     (a) The following documents are filed as part of this report:

        1) The selected financial data and stock price disclosure presented on
           Pages 8 through 10 of the Company's 2003 Annual Report to
           Shareholders are incorporated herein by reference.

        2) Consolidated Financial Statement Schedule --

          Schedule II  Valuation and Qualifying Accounts

          Independent Auditors' Report on Financial Statement Schedule

          All other schedules are omitted as they are not required, or the
          required information is shown in the consolidated financial statements
          or notes thereto.

        3) Exhibits -- See Exhibit Index at page IV-2 of this Form 10-K.

     (b) Reports on Form 8-K.

          A report on Form 8-K was filed on June 9, 2003, relating to the
     Company's sales and earnings expectations for the Company's fiscal 2004
     year ending July 31, 2004. The Company also announced the closing of
     certain facilities in the United States in connection with the Company's
     previously announced restructuring activities.

          A report on Form 8-K was furnished on May 16, 2003, relating to the
     Company's fiscal 2003 third quarter financial results.

                                       IV-1


                                 EXHIBIT INDEX



EXHIBIT
NUMBER                            DESCRIPTION
- -------                           -----------
       
  3.1     Restated Articles of Incorporation of Brady Corporation(1)
  3.2     By-laws of Brady Corporation, as amended(2)
*10.2     Brady Corporation BradyGold Plan, as amended(2)
*10.3     Executive Additional Compensation Plan, as amended(2)
*10.4     Form of Executive's Deferred Compensation Agreement, as
          amended(11)
*10.5     Forms of Director's Deferred Compensation Agreement, as
          amended(11)
*10.6     Brady Corporation 1989 Non-Qualified Stock Option Plan(4)
 10.9     Brady Corporation Automatic Dividend Reinvestment Plan(4)
*10.10    Supplemental Executive Retirement Plan between Brady
          Corporation and Katherine M. Hudson(5)
*10.11    Supplemental Executive Retirement Plan between Brady
          Corporation and Donald E. Rearic
*10.12    Brady Corporation 1997 Omnibus Incentive Stock Plan(7)
*10.13    Brady Corporation 1997 Nonqualified Stock Option Plan for
          Non-Employee Directors(7)
*10.14    Change of Control Agreement dated January 5, 2001, between
          Brady Corporation and Katherine M. Hudson(10)
*10.15    Change of Control Agreement dated January 5, 2001, between
          Brady Corporation and David W. Schroeder(10)
*10.17    Change of Control Agreement dated January 5, 2001, between
          Brady Corporation and David R. Hawke(10)
*10.18    Change of Control Agreement dated May 13, 1997, between
          Brady Corporation and Donald E. Rearic
*10.20    Restricted Stock Agreement dated August 1, 1997, between
          Brady Corporation and Katherine M. Hudson(8)
*10.22    Restricted Stock Agreement dated August 1, 1997, between
          Brady Corporation and David W. Schroeder(8)
*10.23    Restricted Stock Agreement dated August 1, 1997, between
          Brady Corporation and David R. Hawke(8)
*10.24    Amendment to Change of Control Agreement dated May 20, 2003,
          between Brady Corporation and Frank M. Jaehnert(14)
*10.25    Brady Corporation Restoration Plan dated January 1, 2000(9)
*10.26    Brady Corporation 2001 Omnibus Incentive Stock Plan(11)
 10.27    Revolving Credit Facility Credit Agreement(12)
*10.28    Change of Control Agreement dated January 5, 2001, between
          Brady Corporation and Michael O. Oliver(13)
*10.29    Brady Corporation 2003 Omnibus Incentive Stock Plan
*10.30    Restricted Stock Agreement dated June 18, 2003, between
          Brady Corporation and David R. Hawke
*10.31    Restricted Stock Agreement dated June 18, 2003, between
          Brady Corporation and Michael O. Oliver
*10.32    Summary of Compensation Arrangement with Katherine M. Hudson
*10.33    Summary of Compensation Arrangement with David W. Schroeder
 13       Annual Report to Shareholders for year ended July 31, 2003
 18.1     Letter regarding change in accounting method(3)
 21       Subsidiaries of Brady Corporation


                                       IV-2




EXHIBIT
NUMBER                            DESCRIPTION
- -------                           -----------
       
 23       Consent of Deloitte & Touche LLP, Independent Auditor
 31.1     Rule 13a-14(a)/15d-14(a) Certification of Frank M. Jaehnert
 31.2     Rule 13a-14(a)/15d-14(a) Certification of David W. Schroeder
 32.1     Section 1350 Certification of Frank M. Jaehnert
 32.2     Section 1350 Certification of David W. Schroeder


- ---------------

  *  Management contract or compensatory plan or arrangement

 (1) Incorporated by reference to Registrant's Registration Statement No.
     333-04155 on Form S-3

 (2) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     the fiscal year ended July 31, 1989

 (3) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the fiscal quarter ended January 31, 1989

 (4) Incorporated by reference to Registrant's Annual Report on form 10-K for
     the fiscal year ended July 31, 1992

 (5) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     the fiscal year ended July 31, 1994

 (6) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     the fiscal year ended July 31, 1995

 (7) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the fiscal quarter ended April 30, 1997

 (8) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     the fiscal year ended July 31, 1997

 (9) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     the fiscal year ended July 31, 2000

(10) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     the fiscal year ended July 31, 2001

(11) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the fiscal quarter ended January 31, 2002

(12) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the fiscal quarter ended April 30, 2002

(13) Incorporated by reference to Registrant's Annual Report on Form 10-K for
     the fiscal year ended July 31, 2002

(14) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
     the fiscal quarter ended April 30, 2003

                                       IV-3


                       BRADY CORPORATION AND SUBSIDIARIES

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS



                                                                YEAR ENDED JULY 31,
                                                              ------------------------
DESCRIPTION                                                    2003     2002     2001
- -----------                                                   ------   ------   ------
                                                               (DOLLARS IN THOUSANDS)
                                                                       
Valuation accounts deducted in balance sheet from assets to
  which they apply --
  Accounts receivable -- allowance for losses:
  Balances at beginning of period...........................  $3,206   $2,297   $2,919
  Additions -- Charged to expense...........................   1,523    2,467    1,537
                Due to acquired businesses..................     167
  Deductions -- Bad debts written off, net of recoveries....  (1,730)  (1,558)  (2,159)
                                                              ------   ------   ------
  Balances at end of period.................................  $3,166   $3,206   $2,297
                                                              ======   ======   ======
  Inventory -- reserve for slow-moving inventory:
  Balances at beginning of period...........................  $4,957   $4,273   $4,714
  Additions -- Charged to expense...........................   1,593      684
                Due to acquired businesses..................     165
  Deductions -- Inventory written off.......................      --       --     (441)
                                                              ------   ------   ------
  Balances at end of period.................................  $6,715   $4,957   $4,273
                                                              ======   ======   ======


                                       IV-4


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized this twenty-third day
of October 2003.

                                          BRADY CORPORATION

                                          By       /s/ D. W. SCHROEDER
                                            ------------------------------------
                                                      D. W. Schroeder
                                            Senior Vice President & Chief
                                             Financial Officer
                                               (Principal Accounting Officer)
                                               (Principal Financial Officer)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

                                                                    

          /s/ F. J. JAEHNERT                  President and Director         October 23, 2003
- --------------------------------------     (Principal Executive Officer)
            F. J. Jaehnert


           /s/ K. M. HUDSON                          Director                October 23, 2003
- --------------------------------------
             K. M. Hudson


        /s/ P. J. LETTENBERGER                       Director                October 23, 2003
- --------------------------------------
          P. J. Lettenberger


           /s/ R. A. BEMIS                           Director                October 23, 2003
- --------------------------------------
             R. A. Bemis


           /s/ F. W. HARRIS                          Director                October 23, 2003
- --------------------------------------
             F. W. Harris


          /s/ R. C. BUCHANAN                         Director                October 23, 2003
- --------------------------------------
            R. C. Buchanan


           /s/ R. D. PEIRCE                          Director                October 23, 2003
- --------------------------------------
             R. D. Peirce


            /s/ G. E. NEI                            Director                October 23, 2003
- --------------------------------------
              G. E. Nei


            /s/ M. K. BUSH                           Director                October 23, 2003
- --------------------------------------
              M. K. Bush


            /s/ F. R. JARC                           Director                October 23, 2003
- --------------------------------------
              F. R. Jarc



                                       IV-5

EX-10.11

                                                                   EXHIBIT 10.11

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

      This Supplemental Executive Retirement Plan (the "SERP") is entered into
this 16th day of November, 2001, between BRADY Corporation (the "Company") and
DONALD E. REARIC ("Executive"):

      1. Objectives. This SERP is intended to provide for a payment after
retirement to the Executive, who is currently a Group Vice President of W. H.
Brady Co., in recognition of his past and future years of service with the
Company and the limitations imposed on his and the Company's contributions to
the Company's Profit Sharing Plan.

      2. Bookkeeping Account. The Company shall cause a bookkeeping reserve
account (the "Account") to be established for the Executive solely as a device
for determining the amounts which may become payable to the Executive
thereunder. Such Account shall not constitute or be treated as a trust fund of
any kind, it being expressly provided that the amounts credited to the Account
shall at all times be and remain the sole property of the Company. The Executive
shall have no proprietary rights of any nature with respect thereto, unless and
until such time as a payment thereof is made to the Executive (or beneficiary)
as provided herein. Amounts shall be credited to the Executive's Account as
follows:

      (a) Provided only that the Executive is in the employment of the Company
as of July 31, 2001, $50,000 shall be credited to the Account. If the Executive
is in the employment of the Company as of July 31, 2002, an additional $50,000
shall be credited to the Account and an additional $50,000 shall be credited to
the Account as of July 31, 2003, 2004 and 2005 if the Executive is in the
employment of the Company as of those dates.


      (b) Interest shall accrue on the balance in the Executive's Account at the
prime rate (base rate on corporate loans) in effect July 31 of each year as
reported by the principal bank or financial institution with which the Company
is doing business, and shall be credited to the Account annually as of July 31
of each year, until all distributions to which the Executive, the Executive's
estate or beneficiary is entitled, shall have been made. However, the interest
rate used shall never be less than six percent (6%) or more than ten percent
(10%). If a lump sum amount distribution is made as of a date other than July
31, interest shall be credited to the Account as of such payment date based on
the interest rate for the prior July 31.

      3. Vesting. The Executive shall at all times have a 100% vested interest
in the Account balance established for the Executive under this SERP.

      4. Benefit Payment.

            (a) Payment shall be made over a 10 year period commencing on August
1 of the year following the Executive's termination of employment with the
Company (the "First Payment Date"), with the first payment being one-tenth of
the amount credited to the Executive's Account, and thereafter an amount shall
be paid to the Executive as of the first day of each August thereafter in an
amount equal, as nearly as possible, to the amount paid on the First Payment
Date plus any interest credited to the Account in the period intervening since
the last payment, until a total of ten payments have been made. Such 10
payments, regardless of the total amount thereof, shall constitute full payment
of all amounts due the Executive under this SERP.

            (b) The Executive shall have the right to designate a beneficiary or
beneficiaries to receive a distribution with respect to any potion of such
Executive's Account remaining unpaid at the Executive's death. Such designation
shall be effected by filing written notification with the Company in the form
prescribed by it and may be changed from time to time by similar action. If the
Executive fails to make such a designation, any such distribution shall be paid
to the Executive's estate or its successors. The amount remaining in the Account
shall be paid to the beneficiary or the Executive's estate for the balance of
the applicable ten year period in the same manner and amount as it would have
been paid to the Executive.

            (c) The Company may, in its uncontrolled discretion, and in lieu of
the annual payments provided for in this paragraph and upon such terms and
conditions as the Board of Directors of the Company may determine, pay the
Executive or his beneficiary the amount credited to the Account (1) in larger
installments, including a lump sum, or (2) in some other manner; provided,
however, that the payments cannot be made in smaller amounts or over a period
longer than provided in paragraph 4(a), without the Executive's consent.

      5. Claim Procedure. The Company shall provide adequate notice in writing
to the Executive or the Executive's beneficiary (a "Claimant") if any claim for
benefits under this SERP has been denied setting forth specific reasons for such
denial and advising the Claimant of the procedures to be followed to obtain a
full and fair review by the Company or some other fiduciary named by it of the
decision denying the claim. The Company or such other named fiduciary, acting as
administrator for this SERP, shall have full and complete discretionary
authority to construe and interpret this SERP, to adopt and modify claim
procedure rules, and to decide any matter presented through the claim review
procedure. Any final decision on review by such Administrator in good faith and
in the exercise of its discretionary authority shall be final and binding on all
parties and not subject to reversal if challenged in litigation unless proven to
be arbitrary and capricious based on the evidence considered by the
administrator at the time of such final decision.

      6. Miscellaneous.

      (a) Neither the Company nor the Executive nor any beneficiary shall have
the power to transfer, assign, encumber, commute or anticipate any amounts
payable hereunder.

      (b) The Company shall have the right to withhold from any amounts payable
hereunder, or any amounts otherwise payable, any taxes or other amounts required
by any governmental authority to be withheld.

      (c) Every person receiving or claiming payments under this SERP shall be
conclusively presumed to be mentally competent until the date on which the
Company receives a written notice, in a form and manner acceptable to it, that
such person is incompetent and that a guardian, conservator, or other person
legally vested with the care of such person's estate has been appointed. In the
event a guardian or conservator of the estate of any person receiving or
claiming payments under this SERP shall be appointed by a court of competent
jurisdiction, payments may be made to such guardian or conservator provided that
proper proof of appointment and continuing qualification is furnished in a form
and manner acceptable to the Company. Any such payment so made shall be a
complete discharge of any liability therefor.

      (d) Participation in this SERP or the payment of any benefits thereunder,
shall not be construed as giving to the Executive any right to be retained in
the service of the Company or its subsidiaries, limiting in any way the right of
the Company or its subsidiaries to terminate the Executive's employment at any
time, evidencing any agreement or understanding, express or implied, that the
Company or its subsidiaries will employ the Executive in any particular position
or at any particular rate of compensation and/or guaranteeing the Executive any
right to receive a salary increase in any year, such increase being granted only
at the sole discretion of the Board.

      (e) None of the payments made hereunder shall be taken into account under
any other pension, profit sharing or welfare benefit plan or program of the
Company.

      (f) The schedule attached is an example of the anticipated Contributions,
Interest and Payments to be made provided that the Executive's employment
terminates on December 31, 2005.

                                          W. H. BRADY CO.


                                          By /s/ Frank Jaehnert
                                             -----------------------------

                                          /s/ Donald E. Rearic
                                             -----------------------------
                                              Donald E. Rearic

                                W. H. BRADY CO.
                              DONALD E. REARIC -SERP


Fiscal
Year         Contribution        8% Interest            Payment          Balance
- ----         ------------        -----------            -------          -------
                                                            
7/31/01         $  50,000                                               $ 50,000
7/31/02            50,000          $   4,000                             104,000
7/31/03            50,000              8,320                             162,320
7/31/04            50,000             12,986                             225,306
7/31/05            50,000             18,024                             293,330
8/01/06                               23,466             31,680          285,116
8/01/07                               22,809             54,489          253,436
8/01/08                               20,275             51,955          221,756
8/01/09                               17,740             49,420          190,076
8/01/10                               15,206             46,886          158,396
8/01/11                               12,672             44,352          126,716
8/01/12                               10,137             41,817           95,036
8/01/13                                7,603             39,283           63,356
8/01/14                                5,068             36,748           31,676
8/01/15                                2,534             34,210              -0-

                $ 250,000           $180,840           $430,840

EX-10.18

                                                                   EXHIBIT 10.18

                                 W.H. BRADY CO.

                           CHANGE OF CONTROL AGREEMENT

            AGREEMENT, made as of the 13th day of May, 1997, between W.H.
Brady Co., a Wisconsin corporation, ("Company") and Donald E. Rearic.

            WHEREAS, the Executive is now serving as an executive of the
Company in a position of importance and responsibility; and

            WHEREAS, the Executive possesses intimate knowledge of the business
and affairs of the Company and its policies, markets and financial and human
resources, and the Executive has acquired certain confidential information and
data with respect to the Company; and

            WHEREAS, the Company wishes to continue to receive the benefit of
the Executive's knowledge and experience and, as an inducement for continued
service, is willing to offer the Executive certain payments due to severance as
a result of change of control as set forth herein;

            NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the Executive and Company agree as follows:

      SECTION 1.  DEFINITIONS.

            (a) Change of Control. For purposes of this Agreement, a "Change of
Control" shall occur if and when any person or group of persons (as defined in
Section 13(d)(3) of the Securities and Exchange Act of 1934) other than the
members of the family of William H. Brady, Jr. and their descendants, or trusts
for their benefit, and the W. H. Brady Foundation, Inc., collectively, directly
or indirectly controls in excess of 50% of the voting common stock of the
Company.

            (b) Termination Due to Change of Control. A "Termination Due to
Change of Control" shall occur if within the 12 month period beginning with the
date a Change of Control occurs (i) the Executive's employment with the Company
is involuntarily terminated (other than by reason of death, disability or Cause)
or (ii) the Executive's employment with the Company is voluntarily terminated by
the Executive subsequent to (A) any reduction in the total of the Executive's
annual base salary (exclusive of fringe benefits) and the Executive's target
bonus in comparison with the Executive's annual base salary and target bonus
immediately prior to the date the Change of Control occurs, (B) a significant
diminution in the responsibilities or authority of the Executive in comparison
with the Executive's responsibility and authority immediately prior to the date
the Change of Control occurs or (C) the imposition of a requirement by the
Company that the Executive relocate to a principal work location more than 50
miles from the Executive's principal work location immediately prior to the date
the Change of Control occurs.

            (c) "Cause" means (i) the Executive's willful and continued failure
to substantially perform the Executive's duties with the Company (other than any
such failure resulting from physical or mental incapacity) after written demand
for performance is given to the Executive by the Company which specifically
identifies the manner in which the Company believes the Executive has not
substantially performed and a


                                       1

reasonable time to cure has transpired, (ii) the Executive's conviction of (or
plea of nolo contendere for the commission of) a felony, or (iii) the
Executive's commission of an act of dishonesty or of any willful act of
misconduct which results in or could reasonably be expected to result in
significant injury (monetarily or otherwise) to the Company, as determined in
good faith by the Board of Directors of the Company.

            (d) "Beneficiary" means any one or more primary or secondary
beneficiaries designated in writing by the Executive on a form provided by the
Company to receive any benefits which may become payable under this Agreement on
or after the Executive's death. The Executive shall have the right to name,
change or revoke the Executive's designation of a Beneficiary on a form provided
by the Company. The designation on file with the Company at the time of the
Executive's death shall be controlling. Should the Executive fail to make a
valid Beneficiary designation or leave no named Beneficiary surviving, any
benefits due shall be paid to the Executive's spouse, if living; or if not
living, then to the Executive's estate.

            (e) "Code" means the Internal Revenue Code of 1986, as amended.

      SECTION 2. PAYMENTS UPON TERMINATION DUE TO CHANGE OF CONTROL.

            (a) Following Termination Due to Change of Control, the Executive
shall be paid an amount equal to one times his annual base salary (exclusive of
incentive compensation and fringe benefits) paid the Executive by the Company in
effect immediately prior to the date the Change of Control occurs, and two times
the average bonus payment received in the three years immediately prior to the
date the Change of Control occurs. Such amount shall be paid in 12 monthly
installments beginning on the 15th day of the month following the month in which
the Executive's employment with the Company terminates.

            (b) If the scheduled payments under paragraph (a) above would result
in disallowance of any portion of the Company's deduction therefore under
Section 162(m) of the Code, the payments called for under paragraph (a) shall be
limited to the amount which is deductible, with the balance to be paid as soon
as deductible by the Company. However, in such event, the Company shall pay the
Executive on a quarterly basis an amount of interest based on the prime rate
recomputed each quarter on the unpaid scheduled payments.

      SECTION 3. EXCISE TAX, ATTORNEY FEES.

            (a) If the payments under Section 2 in combination with any other
payments which the Executive has the right to receive from the Company (the
"Total Payments") would result in the Executive incurring an excise tax as a
result of Section 280(G) of the Code, the Company will reimburse the Executive
for such Excise Tax.

            (b) If the Executive is required to file a lawsuit to enforce the
Executive's rights under this Agreement, or the Executive's Nonqualified
Retention Stock Option Agreement dated August 1, 2000, and the Executive
prevails in such lawsuit, the Company will reimburse the Executive for his
attorney fees incurred up to a maximum of $25,000.00.


                                       2

      SECTION 4. DEATH AFTER THE EXECUTIVE HAS BEGUN RECEIVING PAYMENTS.

Should the Executive die after Termination Due to Change of Control, but before
receiving all payments due the Executive hereunder, any remaining payments due
shall be made to the Executive's Beneficiary.

      SECTION 5. CONFIDENTIAL INFORMATION AGREEMENT.

The Executive has obligations under the separate Confidential Information
Agreement between the Executive and the Company which continue beyond the
Executive's termination of employment. The payments to be made hereunder are
conditioned upon the Executive's compliance with the terms of the Confidential
Information Agreement. The payments made hereunder shall be reduced by any
payments the Company makes to the Executive under Section 3 of the Confidential
Information Agreement. In the event the Executive violates the provisions of the
Confidential Information Agreement, no further payments shall be due hereunder
and the Executive shall be obligated to repay all previous payments received
hereunder in the same manner as provided in Section 4 of the Confidential
Information Agreement.

      SECTION 6. MISCELLANEOUS.

            (a) Non-Assignability. This Agreement is personal to the Executive
and, without the prior written consent of the Company, shall not be assignable
by the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns and shall also be enforceable by the Executive's
legal representatives.

            (b) Successors. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.

            (c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws, to the extent not preempted by
federal law. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

            (d) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

                  If to the Executive:    Donald E. Rearic
                                          2535 Talbot Lane Circle
                                          Brookfield, WI 53045

                  If to the Company:      W.H. Brady Co.
                                          6555 West Good Hope Road
                                          Milwaukee, WI  53223
                                          Attention: Corporate Secretary


                                       3

or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.

            (e) Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.

            (f) No Guarantee of Employment. Nothing contained in this Agreement
shall give the Executive the right to be retained in the employment of the
Company or affect the right of the Company to dismiss the Executive.

            (g) Amendment; Entire Agreement. This Agreement may not be amended
or modified except by a written agreement executed by the parties hereto or
their respective successors and legal representatives. This Agreement contains
the entire agreement between the parties on the subjects covered and replaces
all prior writings, proposals, specifications or other oral or written materials
relating thereto.

            (h) Impact on Other Plans. No amounts paid to the Executive under
this Agreement will be taken into account as "wages", "salary", "base pay" or
any other type of compensation when determining the amount of any payment or
allocation, or for any other purpose, under any other qualified or nonqualified
plan or agreement of the Company, except as otherwise may be specifically
provided by such plan or agreement.

            (i) Other Agreements. This Agreement supersedes any other severance
arrangement between the Company and the Executive. This Agreement does not
confer any payments or benefits other than the payments described in Sections 2
& 3 hereof.

            (j) Withholding. To the extent required by law, the Company shall
withhold any taxes required to be withheld with respect to this Agreement by the
federal, state or local government from payments made hereunder or from other
amounts paid to the Executive by the Company.

            (k) Facility of Payment. If the Executive or, if applicable, the
Executive's Beneficiary, is under legal disability, the Company may direct that
payments be made to a relative of such person for the benefit of such person,
without the intervention of any legal guardian or conservator, or to any legal
guardian or conservator of such person. Any such distribution shall constitute a
full discharge with respect to the Company and the Company shall not be required
to see to the application of any distribution so made.


                                       4

      SECTION 7. CLAIMS PROCEDURE.

            (a) Claim Review. If the Executive or the Executive's Beneficiary (a
"Claimant") believes that he or she has been denied all or a portion of a
benefit under this Agreement, he or she may file a written claim for benefits
with the Company. The Company shall review the claim and notify the Claimant of
the Company's decision within 60 days of receipt of such claim, unless the
Claimant receives written notice prior to the end of the 60 day period stating
that special circumstances require an extension of the time for decision. The
Company's decision shall be in writing, sent by mail to the Claimant's last
known address, and if a denial of the claim, must contain the specific reasons
for the denial, reference to pertinent provisions of this Agreement on which the
denial is based, a designation of any additional material necessary to perfect
the claim, and an explanation of the claim review procedure.

            (b) Appeal Procedure to the Board. A Claimant is entitled to request
a review of any denial by the full Board by written request to the Chair of the
Board within 60 days of receipt of the denial. Absent a request for review
within the 60-day period, the claim will be deemed to be conclusively denied.
The Board shall afford the Claimant the opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a review
decision in writing, all within 60 days after receipt of a request for review
(provided that, in special circumstances the Board may extend the time for
decision by not more than 60 days upon written notice to the Claimant.) The
Board's review decision shall contain specific reasons for the decision and
reference to the pertinent provisions of this Agreement.

            IN WITNESS WHEREOF, the Executive has signed this Agreement and,
pursuant to the authorization of the Board, the Company has caused this
Agreement to be signed, all as of the date first set forth above.

      /s/ Donald E. Rearic
      ------------------------------------
      Executive - Donald E. Rearic

      W.H. Brady Co.


      By: /s/ Katherine M Hudson
          --------------------------------

      Attest /s/ Peter J. Lettenberger
             -----------------------------


                                       5

EX-10.29

                                                                   EXHIBIT 10.29

                                BRADY CORPORATION
                        2003 OMNIBUS INCENTIVE STOCK PLAN

I. INTRODUCTION

      1.01 Purpose. This plan shall be known as the Brady Corporation 2003
Omnibus Incentive Stock Plan. The purpose of the Plan is to provide an incentive
for employees of Brady Corporation and its Affiliates to improve corporate
performance on a long-term basis, and to attract and retain employees by
enabling employees to participate in the future successes of the Corporation,
and by associating the long term interests of employees with those of the
Corporation and its shareholders. It is intended that the Plan and its operation
comply with the provisions of Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule). The Plan is intended to permit the grant of
Nonqualified Stock Options, Incentive Stock Options, shares of Restricted Stock
and Restricted Stock Units. The proceeds received by the Corporation from the
sale of Corporation Stock pursuant to the Plan shall be used for general
corporate purposes.

      1.02 Effective Date. The effective date of the Plan shall be July 22,
2003, subject to approval of the Plan by holders of a majority of the
outstanding voting common stock of the Corporation provided that such approval
is given within 12 months of the effective date. Any Award granted prior to such
shareholder approval shall be expressly conditioned upon shareholder approval of
the Plan.

      1.03 Effect on 2001 Plan. If the Plan is approved, no further awards or
grants will be made under the Brady Corporation 2001 Omnibus Incentive Stock
Plan (the "2001 Plan"). Awards under the 2001 Plan will remain in effect until
they have been exercised or have expired.

II. PLAN DEFINITIONS

      For Plan purposes, except where the context clearly indicates otherwise,
the following terms shall have the meanings set forth below:

            (a)   "Affiliates" means any "subsidiary corporation" or "parent
                  corporation" as such terms are defined in Section 424 of the
                  Code.

            (b)   "Agreement" means a written agreement (including any amendment
                  or supplement thereto) between the Corporation and a
                  Participant specifying the terms and conditions of an Award.

            (c)   "Award" shall mean the grant of any form of Stock Option,
                  Restricted Stock or Restricted Stock Units.

            (d)   "Board" shall mean the Board of Directors of the Corporation.


                                      -1-

            (e)   "Code" shall mean the Internal Revenue Code of 1986, as
                  amended from time to time.

            (f)   "Committee" shall mean the Committee described in Section
                  4.01.

            (g)   "Corporation" shall mean Brady Corporation, a Wisconsin
                  corporation.

            (h)   "Corporation Stock" shall mean the Corporation's Class A
                  Non-Voting Common Stock, $.01 par value, and such other stock
                  and securities as may be substituted therefor pursuant to
                  Section 3.02.

            (i)   "Eligible Employee" shall mean any regular salaried employee
                  of the Corporation or an Affiliate, including an employee who
                  is a member of the Board, who satisfies the requirements of
                  Section 5.01.

            (j)   "Exercise Period" shall mean the period of time provided
                  pursuant to Section 6.05 within which a Stock Option may be
                  exercised.

            (k)   "Fair Market Value" on any date shall mean, with respect to
                  Corporation Stock, if the stock is then listed and traded on a
                  registered national securities exchange, or is quoted in the
                  NASDAQ National Market System, the average of the high and low
                  sale prices recorded in composite transactions for such date
                  or, if such date is not a business day or if no sales of
                  Corporation Stock shall have been reported with respect to
                  such date, the next preceding business date with respect to
                  which sales were reported. In the absence of reported sales or
                  if the stock is not so listed or quoted, but is traded in the
                  over-the-counter market, Fair Market Value shall be the
                  average of the closing bid and asked prices for such shares on
                  the relevant date.

            (l)   "Participant" means an Eligible Employee who has been granted
                  an Award under this Plan.

            (m)   "Performance Goals" means the performance goals established by
                  the Committee prior to the grant of any Award of Stock
                  Options, Restricted Stock or Restricted Stock Units intended
                  to qualify as "performance-based compensation" under Section
                  162(m) of the Code. Performance Goals may be established at
                  the Company or business unit level and may be based upon the
                  attainment of goals relating to one or more of the following
                  business criteria measured on an absolute basis or in terms of
                  growth or reduction: revenue, expenses, net income (pre-tax or
                  after-tax and with adjustments as stipulated), earnings per
                  share, return on equity, return on assets, return on tangible
                  book value, operating income, earnings before depreciation,
                  interest, taxes and amortization (EBDITA), loss ratio, expense
                  ratio, increase in stock price, total shareholder return,
                  economic value added and operating cash flow. The Committee
                  may establish other subjective or objective performance goals,
                  including individual goals, which it deems appropriate.


                                      -2-

            (n)   "Person" means any individual or entity, and the heirs,
                  personal representatives, executors, administrators, legal
                  representatives, successors and assigns of such Person as the
                  context may require.

            (o)   "Plan" shall mean the Brady Corporation 2003 Omnibus Incentive
                  Stock Plan, as set forth herein, as it may be amended from
                  time to time.

            (p)   "Restricted Stock" means shares of Corporation Stock granted
                  to a Participant under Article VII.

            (q)   "Restricted Stock Unit" means an Award granted to a
                  Participant under Article VIII.

            (r)   "Stock Option" means an option to purchase a stated number of
                  shares of Corporation Stock at the price set forth in an
                  Agreement. A Stock Option may be either a Nonqualified Stock
                  Option or an Incentive Stock Option.

III.  SHARES SUBJECT TO AWARD

      3.01 Available Shares. Subject to adjustments under Section 3.02, the
total number of shares of Corporation Stock authorized for issuance shall not
exceed seven hundred fifty thousand (750,000) shares, provided that no
individual Eligible Employee may be granted an Award or Awards under the Plan
covering more than one hundred thousand (100,000) shares of Corporation Stock in
any calendar year (determined without regard to grants under any other plan or
program). The shares authorized for issuance under the Plan may consist, in
whole or in part, of authorized but unissued Corporation Stock, or of treasury
stock of the Corporation. Shares subject to and not issued under an Award that
expires, terminates, is canceled or forfeited for any reason under the Plan
shall again become available for the granting of Awards.

      3.02 Changes in Corporation Stock. In the event of any change in the
Corporation Stock resulting from a reorganization, recapitalization, stock
split, stock dividend, merger, consolidation, rights offering or like
transaction, the Committee shall, in its discretion, proportionately and
appropriately adjust: (a) the aggregate number and kind of shares authorized for
issuance under the Plan and (b) in the case of previously granted Stock Options,
the option price and the number and kind of shares subject to the Stock Options,
without any change in the aggregate purchase prices to be paid for the Stock
Options.

IV. ADMINISTRATION

      4.01 Administration by the Committee. The Plan shall be administered by
the Committee. The Committee shall be a committee designated by the Board to
administer the Plan and shall initially be the Compensation Committee of the
Board. The Committee shall be constituted to permit the Plan to comply with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule) and Section 162(m) of the Code. A majority of the members of the
Committee shall constitute a quorum. The approval of such a quorum, expressed by
a majority vote at a meeting held either in person or by conference telephone
call, or the unanimous consent of all members in writing without a meeting,
shall constitute the action of the Committee and shall be valid and effective
for all purposes of the Plan.


                                      -3-

      4.02 Committee Powers. Subject to Section 10.06, the Committee is
empowered to adopt, amend and rescind such rules, regulations and procedures and
take such other action as it shall deem necessary or proper for the
administration of the Plan and, in its discretion, may modify, extend or renew
any Award theretofore granted. The Committee shall also have authority to
interpret the Plan, and the decision of the Committee on any questions
concerning the interpretation of the Plan shall be final and conclusive. The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. The Committee
shall not incur any liability for any action taken in good faith with respect to
the Plan or any Award.

      Subject to the provisions of the Plan, the Committee shall have full and
final authority to:

            (a)   designate the Eligible Employees to whom Awards shall be
                  granted;

            (b)   grant Awards in such form and amount as the Committee shall
                  determine;

            (c)   impose such limitations, restrictions and conditions upon any
                  such Award as the Committee shall deem appropriate, including
                  conditions (in addition to those contained in this Plan) (i)
                  on the exercisability of all or any portion of a Stock Option,
                  (ii) on the transferability or forfeitability of Restricted
                  Stock or (iii) requiring an Eligible Employee to retain all or
                  a portion of the Corporation Stock for a period of time
                  following the exercise of a Stock Option, the vesting of
                  Restricted Stock or the payment of Restricted Stock Units;

            (d)   prescribe the form of Agreement with respect to each Award;

            (e)   waive in whole or in part any limitations, restrictions or
                  conditions imposed upon any such Award as the Committee shall
                  deem appropriate (including accelerating the time at which any
                  Stock Option may be exercised or the time at which Restricted
                  Stock may become transferable or nonforfeitable);

            (f)   make adjustments in the terms and conditions of a Performance
                  Goal in recognition of unusual or nonrecurring events
                  affecting the Company or the financial statements of the
                  Company or of changes in applicable laws, regulations, or
                  accounting principles, whenever the Committee determines that
                  such adjustments are appropriate in order to prevent dilution
                  or enlargement of the benefits or potential benefits intended
                  to be made available under the Plan, provided that no such
                  adjustment shall be authorized to the extent that such
                  adjustment would be inconsistent with the Plan's or any
                  Performance Award meeting the requirements of Section 162(m)
                  of the Code; and

            (g)   determine the extent to which leaves of absence for
                  governmental or military service, illness, temporary
                  disability and the like shall not be deemed interruptions of
                  continuous employment.

V. PARTICIPATION


                                      -4-

      5.01 Eligibility. Any employee of the Corporation and its Affiliates
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, has contributed or can be expected to contribute
to the profits, growth and success of the Corporation shall be eligible for
Awards under the Plan. A member of the Committee or any person who is expected
to become a member within one year of any Award shall not be an Eligible
Employee if his or her status as an Eligible Employee would prevent the
Committee from being "disinterested" under Rule 16b-3 under the Securities
Exchange Act of 1934. From among all such Eligible Employees, the Committee
shall determine from time to time those Eligible Employees to whom Awards shall
be granted. No Eligible Employee shall have any right whatsoever to receive an
Award unless so determined by the Committee.

      5.02 No Employment Rights. The Plan shall not be construed as conferring
any rights upon any person for a continuation of employment, nor shall it
interfere with the rights of the Corporation or any Affiliates to terminate the
employment of any person or to take any other action affecting such person.

VI. STOCK OPTIONS

      6.01 Stock Options; General. Stock Options granted under the Plan shall be
in the form of Nonqualified Stock Options ("NSOs"), Incentive Stock Options
("ISOs") or a combination thereof. Each Stock Option granted under the Plan
shall be evidenced by an Agreement which shall contain the terms and conditions
required by this Article VI, and such other terms and conditions, not
inconsistent herewith, as the Committee may deem appropriate in each case. A
Stock Option granted under the Plan shall not be treated as an Incentive Stock
Option unless the Stock Option Agreement specifically designates the option as
an Incentive Stock Option.

      6.02 Stock Option Holder's Rights as a Shareholder. The holder of a Stock
Option shall not have any rights as a shareholder with respect to the shares
covered by a Stock Option until such shares have been delivered to him or her.

      6.03 Option Price. The price at which each share of Corporation Stock
covered by a Stock Option may be purchased shall be not less than 100% of the
Fair Market Value of such stock on the date on which the option is granted. The
option price shall be subject to adjustment as provided in Section 3.02 hereof.

      6.04 Date Stock Option Granted. For purposes of the Plan, a Stock Option
shall be considered as having been granted on the date on which the Committee
authorized the grant of the Stock Option except where the Committee has
designated a later date, in which event the later date shall constitute the date
of grant of the Stock Option; provided, however, that notice of the grant of the
Stock Option shall be given to the Participant within a reasonable time.

      6.05 Exercise Period. The Committee shall have the power to set the time
or times within which each Option shall be exercisable, and to accelerate the
time or times of exercise; provided, however, that

            (a)   no Stock Option granted under this Plan to any Person subject
                  to the reporting requirements of Section 16(b) of the
                  Securities and Exchange


                                      -5-

                  Act of 1934 may be exercised until at least six months from
                  the later of (i) the date of grant or (ii) shareholder
                  approval of the Plan, and

            (b)   no Stock Option shall be exercisable after the expiration of
                  ten (10) years from the date the Stock Option is granted. Each
                  Agreement with respect to a Stock Option shall state the
                  period or periods of time within which the Stock Option may be
                  exercised by the Participant, in whole or in part.

Subject to the foregoing, unless the Agreement with respect to a Stock Option
expressly provides otherwise, a Stock Option shall be exercisable in accordance
with the following schedule:



Years After
Date of Grant                 Percentage of Shares
- -------------                 --------------------
                           
Less than 1                               0%

1 but less than 2                    33-1/3%

2 but less than 3                    66-2/3%

3 or more                               100%


      6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be
exercised in whole or in part from time to time as specified in the Agreements
provided, however, that each Participant may exercise a Stock Option in whole or
in part by giving written notice of the exercise to the Corporation, specifying
the number of shares to be purchased by payment in full of the purchase price
therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the
approval of the Committee, or if the applicable Agreement so provides, by
delivering shares of Corporation Stock ("Delivered Stock), or (d) with a
combination of cash, check and Delivered Stock. For purposes of the foregoing,
Delivered Stock shall be valued at its Fair Market Value determined as of the
business day immediately preceding the date of exercise of the Stock Option. No
Participant shall be under any obligation to exercise any Stock Option
hereunder.

      6.07 Dissolution or Liquidation. Anything contained herein to the contrary
notwithstanding, on the effective date of any dissolution or liquidation of the
Corporation, any unexercised Stock Options shall be deemed cancelled, and the
holder of any such unexercised Stock Options shall be entitled to receive
payment under Section 10.04.

      6.08 Special Rules for Incentive Stock Options. For so long as Section 422
( or any successor provision) of the Code so provides:

            (a)   The aggregate Fair Market Value of Corporation Stock
                  (determined as of the date the stock option is granted) with
                  respect to which ISOs are exercisable for the first time
                  during a calendar year may not exceed $100,000. To the extent
                  that the value of the stock subject to options exceeds that
                  amount, the excess shall be considered to be NSOs, with the
                  determination to be made in the order the options are granted.


                                      -6-

            (b)   Employees who own, directly or indirectly, within the meaning
                  of Code Section 425(d), more than 10% of the voting power of
                  all classes of stock of the Corporation or any parent or
                  subsidiary corporation shall not be eligible to receive an ISO
                  hereunder unless the purchase price per share under such
                  option is at least 110% of the Fair Market Value of the stock
                  subject to the option and such option by its terms is not
                  exercisable after the expiration of five (5) years from the
                  date such option is granted

            (c)   To obtain favorable ISO tax treatment, the option must be
                  exercised while the Participant is an employee, or within
                  three months after the Participant's termination as an
                  employee; provided that, in the case of termination on account
                  of disability (as defined in Section 22(e)(3) of the Code),
                  the exercise period may be extended to one year; and further
                  provided that the employment requirement is waived in the case
                  of the participant's death.

VII. RESTRICTED STOCK

      7.01 Administration. Shares of Restricted Stock may be issued either alone
or in addition to other Awards granted under the Plan. The Committee shall
determine the Eligible Employees to whom and the time or times at which grants
of Restricted Stock will be made, the number of shares to be granted, the time
or times within which such Awards may be subject to forfeiture or otherwise
restricted and any other terms and conditions of the Awards. The restrictions
may be based upon specified Performance Goals, the Participant's continued
employment with the Corporation or its Affiliates or such other factors or
criteria as the Committee shall determine. Subject to Sections 7.02 and 7.03
hereof the provisions of Restricted Stock Awards need not be the same with
respect to each recipient.

      7.02 Certificates. Each individual receiving a Restricted Stock Award
shall be issued a certificate in respect of such shares of Restricted Stock
which certificate shall be held in custody by the Corporation until the
restrictions thereon shall have lapsed. In addition, each individual receiving a
Restricted Stock Award shall, as a condition of any such Restricted Stock Award,
have delivered to the Corporation a stock power, endorsed in blank, with respect
to the Corporation Stock covered by such Award. Each certificate in respect of
shares of Restricted Stock shall be registered in the name of the Participant to
whom such Restricted Stock has been granted and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:

      "The transferability of this certificate and the shares of stock
      represented hereby are subject to the terms and conditions (including
      forfeiture) of the Brady Corporation 2003 Omnibus Incentive Stock Plan and
      a Restricted Stock Agreement. Copies of such Plan and Agreement are on
      file at the offices of the Brady Corporation."

In addition each certificate in respect of shares of Restricted Stock may bear
such legends and statements as the Committee may deem advisable to assure
compliance with the federal and state laws and regulations.


                                      -7-

      7.03 Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:

            (a)   Until the applicable restrictions lapse, the Participant shall
                  not be permitted to sell, assign, transfer, exchange, pledge,
                  hypothecate or otherwise dispose of or encumber shares of
                  Restricted Stock.

            (b)   Unless and until a forfeiture of the Restricted Stock, the
                  Participant shall have, with respect to the shares of
                  Restricted Stock, all of the rights of a shareholder of the
                  Corporation, including the right to vote the shares (if
                  applicable) and the right to receive any cash dividends.
                  Unless otherwise determined by the Committee, cash dividends
                  shall be automatically paid in cash and dividends payable in
                  Corporation Stock shall be paid in the form of additional
                  Restricted Stock.

            (c)   Except to the extent otherwise provided in the applicable
                  Restricted Stock Agreement and (d) below, all shares still
                  subject to restriction shall be forfeited by the Participant
                  upon termination of a Participant's employment for any reason.

            (d)   In the event of hardship or other special circumstances of a
                  Participant whose employment is involuntarily terminated
                  (other than for cause), the Committee may waive in whole or in
                  part any or all remaining restrictions with respect to such
                  Participant's shares of Restricted Stock.

            (e)   If and when the applicable restrictions lapse, unlegended
                  certificates for such shares shall be delivered to the
                  Participant.

            (f)   Each Award shall be confirmed by, and be subject to the terms
                  of, a Restricted Stock Agreement.

VIII. RESTRICTED STOCK UNITS

      8.01 Administration. Restricted Stock Units may be issued either alone or
in addition to other Awards granted under the Plan. The Committee shall
determine the Eligible Employees to whom and the time or times at which grants
of Restricted Stock Units will be made, the number of units to be granted, the
time or times within which such Awards may be subject to forfeiture or otherwise
restricted and any other terms and conditions of the Awards. The restrictions
may be based upon specified Performance Goals, the Participant's continued
employment with the Corporation or its Affiliates or such other factors or
criteria as the Committee shall determine. The provisions of Restricted Stock
Awards need not be the same with respect to each recipient.

      8.02 Form and Timing of Payment of Restricted Stock Units. Timing of
payment of earned Restricted Stock Units shall be determined by the Committee at
its sole discretion. The Committee, in its sole discretion, may pay earned
Restricted Stock Units in the form of cash or in shares of Corporation Stock (or
in a combination thereof), which have an aggregate Fair Market Value equal to
the value of the earned Restricted Stock Units.


                                      -8-

IX. WITHHOLDING TAXES

      9.01 General Rule. Pursuant to applicable federal and state laws, the
Corporation is or may be required to collect withholding taxes upon the exercise
of a Stock Option or the lapse of stock restrictions. The Corporation may
require, as a condition to the exercise of a Stock Option or the issuance of a
stock certificate, that the Participant concurrently pay to the Corporation
(either in cash or, at the request of Participant, but subject to such rules and
regulations as the Committee may adopt from time to time, in shares of Delivered
Stock) the entire amount or a portion of any taxes which the Corporation is
required to withhold by reason of such exercise or lapse of restrictions, in
such amount as the Committee or the Corporation in its discretion may determine.
If and to the extent that withholding of any federal, state or local tax is
required in connection with the exercise of an Option or the lapse of stock
restrictions, the Participant may, subject to such rules and regulations as the
Corporation may adopt from time to time, elect to have the Corporation hold back
from the shares to be issued upon the exercise of the Stock Option or the lapse
of stock restrictions, the number of shares of Corporation Stock having a Fair
Market Value equal to such withholding obligation.

      9.02 Special Rule for Insiders. Any such request or election (to satisfy a
withholding obligation using shares) by an individual who is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 (an "Insider")
shall be made in accordance with the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.

X. GENERAL

      10.01 Nontransferability. No Award granted under the Plan shall be
transferable or assignable (or made subject to any pledge, lien, obligation or
liability of a Participant) except by last will and testament or the laws of
descent and distribution. Upon a transfer or assignment pursuant to a
Participant's last will and testament or the laws of descent and distribution,
any Stock Option must be transferred in accordance therewith. During the
Participant's lifetime, Stock Options shall be exercisable only by the
Participant or by the Participant's guardian or legal representative.
Notwithstanding the foregoing, NSOs may be transferred by a Participant to the
Participant's spouse, children or grandchildren or to a trust for the benefit of
such spouse, children or grandchildren; provided that the terms of any such
transfer prohibit the resale of shares acquired upon exercise of the option at a
time during which the transferor would not be permitted to sell such shares
under the Corporation's policy on trading by insiders.

      10.02 General Restriction. Each Award shall be subject to the requirement
that if at any time the Board or the Committee shall determine, in its
discretion, that the listing, registration, or qualification of securities upon
any securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Stock Option or the
issue or purchase of securities thereunder, such Stock Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board or the Committee. The Committee shall have the right
to


                                      -9-

rely on an opinion of its counsel as to whether any such listing, registration,
qualification, consent or approval shall have been effected or obtained.

      10.03 Effect of Termination of Employment, Disability or Death. Except as
otherwise provided by the Committee upon any Award, all rights under any Stock
Option granted to a Participant shall terminate and any Restricted Stock or
Restricted Stock Unit granted to a Participant shall be forfeited on the date
such Participant ceases to be employed by the Corporation or its subsidiaries,
except that

            (a)   if the Participant's employment is terminated by the death of
                  the Participant, any unexercised, unexpired Stock Options
                  granted hereunder to the Participant shall be 100% vested and
                  fully exercisable, in whole or in part, at any time within one
                  year after the date of death, by the Participant's personal
                  representative or by the person to whom the Stock Options are
                  transferred under the Participant's last will and testament or
                  the applicable laws of descent and distribution;

            (b)   if the Participant dies within 90 days after termination of
                  employment by the Corporation or its Affiliates, other than
                  for cause, any unexercised, unexpired Stock Options granted
                  hereunder to the Participant and exercisable as of the date of
                  such termination of employment shall be exercisable, in whole
                  or in part, at any time within one year after the date of
                  death, by the Participant's personal representative or by the
                  person to whom the Stock Options are transferred under the
                  Participant's last will and testament or the applicable laws
                  of descent and distribution;

            (c)   if the Participant's employment is terminated as a result of
                  the disability of the Participant (a disability means that the
                  Participant is disabled as a result of sickness or injury,
                  such that he or she is unable to satisfactorily perform the
                  material duties of his or her job, as determined by the Board
                  of Directors, on the basis of medical evidence satisfactory to
                  it), any unexercised, unexpired Stock Options granted
                  hereunder to the Participant shall become 100% vested and
                  fully exercisable, in whole or in part, at any time within one
                  year after the date of disability;

            (d)   if the Participant's employment is terminated as a result of
                  the Participant's retirement (after age 55 with ten years of
                  employment with the Corporation or an Affiliate or after age
                  65), any unexercised, unexpired Stock Options granted
                  hereunder to the Participant and exercisable as of the date of
                  such retirement may be exercised by the Participant at any
                  time within one year after the date of retirement; and

            (e)   if the Participant's employment is terminated by the Company
                  or an Affiliate for any reason other than the Participant's
                  death, disability or retirement of the Participant or for
                  cause, any unexercised, unexpired Stock Options granted
                  hereunder and exercisable as of the date of such termination
                  of employment shall be exercisable in whole or in part at any
                  time within 90 days after such date of termination.


                                      -10-

If a Participant's employment is terminated for cause (as determined by the
Committee in its sole discretion), all of the Participant's unexercised Stock
Options shall expire and all of the Participant's Restricted Stock and
Restricted Stock Units shall be forfeited. Notwithstanding the foregoing, no
Stock Option shall be exercisable after the date of expiration of its term.

      10.04 Merger, Consolidation or Reorganization. In the event of (a) the
merger or consolidation of the Corporation with or into another corporation or
corporations in which the Corporation is not the surviving corporation, (b) the
adoption of any plan for the dissolution of the Corporation, or (c) the sale or
exchange of all or substantially all the assets of the Corporation for cash or
for shares of stock or other securities of another corporation, all
then-unexercised Stock Options shall become fully exercisable, and all
restrictions imposed on any then-Restricted Stock shall terminate (such that any
Restricted Stock shall become fully transferable) immediately prior to any such
merger or consolidation in which the Corporation is not the surviving
corporation. Notwithstanding the foregoing, in the case of then-unexercised
Stock Options held by persons subject to the reporting requirements of Section
16(a) of the 1934 Act, the Committee may elect to cancel any then-unexercised
Stock Option. If any Stock Option is canceled, the Corporation, or the
corporation assuming the obligations of the Corporation hereunder, shall pay the
Participant an amount of cash or stock, as determined by the Committee, equal to
the Fair Market Value per share of the Corporation Stock immediately preceding
such cancellation over the option price, multiplied by the number of shares
subject to such cancelled Stock Option.

      10.05 Expiration and Termination of the Plan. This Plan shall remain in
effect until all of the Awards made under the Plan have been exercised, the
restrictions thereon have lapsed or the Awards have expired, terminated, or been
canceled or forfeited. Notwithstanding the foregoing, no Awards shall be granted
under the Plan, after that date which is ten years after the Plan is approved by
the Board; or such earlier date as the Board determines in its sole discretion.

      10.06 Amendments. The Board may from time to time amend, modify, suspend
or terminate the Plan; provided, however, that no such action shall (a) impair
without the Participant's consent any Award theretofore granted under the Plan
or deprive any Participant of any shares of Corporation Stock which he may have
acquired through or as a result of the Plan or (b) be made without shareholder
approval where such approval would be required as a condition of compliance with
Rule 16b-3.

      10.07 Wisconsin Law. Except as otherwise required by applicable federal
laws, the Plan shall be governed by, and construed in accordance with, the laws
of the State of Wisconsin.

      10.08 Unfunded Plan. The Plan, insofar as it provides for Awards, shall be
unfunded and the Corporation shall not be required to segregate any assets that
may at any time be represented by Awards under this Plan. Any liability of the
Corporation to any Person with respect to any Award under this Plan shall be
based solely upon any contractual obligations that may be created pursuant to
this Plan. No such obligation of the Corporation shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Corporation.

      10.09 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other


                                      -11-

provision of law shall be construed to refer to any amendment to or successor of
such provision of law.

      10.10 Gender and Number. Except when otherwise required by the context,
words in the masculine gender shall include the feminine, the singular shall
include the plural, and the plural the singular.


                                      -12-

EX-10.30

                                                                   EXHIBIT 10.30

                                BRADY CORPORATION

                           RESTRICTED STOCK AGREEMENT

                                 (JUNE 18, 2003)

         Brady Corporation (the "Corporation"), a Wisconsin corporation, hereby
grants to David R. Hawke (the "Employee") a Restricted Stock Award (the "Award")
with respect to 10,000 shares (the "Shares") of the authorized, but unissued,
Class A Common Stock, $.01 par value, of the Corporation (the "Common Stock"),
all in accordance with and subject to the following terms and conditions:

         1. Restrictions. The restrictions on the Shares shall lapse, and the
Shares shall vest, on June 18, 2005 (the "Vesting Date"), provided that the
Employee remains an employee of the Corporation (or a subsidiary or affiliate)
during the entire period (the "Restriction Period).

         2. Termination of Employment, etc., During Restriction Period. A. In
the event of the termination of the Employee's employment with the Corporation
(and any subsidiary or affiliate) prior to the end of the Restriction Period due
to death or disability, the Shares shall become unrestricted and fully vested.

            For purposes of this Agreement, "Disability" means that the Employee
is disabled as a result of sickness or injury, such that he is unable to
satisfactorily perform the material duties of his job, as determined by the
Board of Directors, on the basis of medical evidence satisfactory to it.

            B. In the event of the termination of the Employee's employment with
the Corporation (and any subsidiary or affiliate) prior to the end of the
Restriction Period due to a change in control, the shares shall become
unrestricted and fully vested.

            For purposes of this Agreement, a "Change of Control" shall occur if
any person or group of persons (as defined in Section 13(d)(3) of the Securities
and Exchange Act of 1934) other than the members of the family of William H.
Brady, Jr. and their descendants, or trusts for their benefit, collectively,
directly or indirectly controls in excess of 50% of the voting common stock of
the Corporation.

            For purposes of this Agreement, a termination due to Change of
Control shall occur if within the 12 month period beginning with the date a
Change of Control occurs (i) the Employee's employment with the Corporation is
involuntarily terminated (other than by reason of death, disability or cause) or
(ii) the Employee's employment with the Corporation is voluntarily terminated by
the Employee subsequent to (A) a 10% or more diminution in the total of the
Employee's annual base salary (exclusive of fringe benefits) and the Employee's
target bonus in comparison with the Employee's total of annual base salary and
target bonus immediately prior to the date the Change of Control occurs, (B) a
significant diminution in the responsibilities or authority of the Employee in
comparison with the Employee's responsibility and authority immediately prior to
the date the Change of Control occurs or (C) the imposition of a requirement by
the Corporation that the Employee relocate to a principal work location



more than 50 miles from the Employee's principal work location immediately prior
to the date the Change of Control occurs.

            For purposes of this Agreement, Cause means (i) the Employee's
willful and continued failure to substantially perform the Employee's duties
with the Corporation (other than any such failure resulting from physical or
mental incapacity) after written demand for performance is given to the Employee
by the Corporation which specifically identifies the manner in which the
Corporation believes the Employee has not substantially performed and a
reasonable time to cure has transpired, (ii) the Employee's conviction of or
plea of nolo contendere for the commission of a felony, or (iii) the Employee's
commission of an act of dishonesty or of any willful act of misconduct which
results in or could reasonably be expected to result in significant injury
(monetarily or otherwise) to the Corporation, as determined in good faith by the
Board of Directors of the Corporation.

            C. In the event of (a) the merger or consolidation of the
Corporation with or into another corporation or corporations in which the
Corporation is not the surviving corporation, (b) the adoption of any plan for
the dissolution of the Corporation, or (c) the sale or exchange of all or
substantially all the assets of the Corporation for cash or for shares of stock
or other securities of another corporation, all restrictions imposed on any
then-Restricted Stock shall terminate (such that any Restricted Stock shall
become fully transferable) immediately prior to any such event in which the
Corporation is not the surviving corporation.

            D. If the lapsing of the restrictions, other than under paragraph
2.C., would result in disallowance of any portion of the Corporation's deduction
therefore under Section 162(m) of the Internal Revenue Code, the restrictions
shall lapse only as to those shares for which the amount is deductible, with the
balance to lapse as soon as deductible by the Corporation. However, in such
event, the Corporation shall pay the Employee on a quarterly basis an amount of
interest based on the prime rate recomputed each quarter and the value as of
each quarter of the shares as to which such restriction has not lapsed.

            E. If the lapsing of the restrictions would result in any excise tax
to the Employee as a result of Section 280(G) of the Code, the Corporation shall
pay the Employee an amount equal to such excise tax.

         3. Dividend Rights. The Employee shall have the right to receive any
cash dividends otherwise payable with respect to the Shares, as paid, and the
Employee shall have all other rights as holder of such Shares, provided,
however, the Corporation shall retain custody of all stock certificates
representing shares as to which such restriction has not lapsed.

         4. Transfer Restrictions. This Award and the Shares (until they become
unrestricted pursuant to the terms hereof) are non-transferable and may not be
assigned, pledged or hypothecated and shall not be subject to execution,
attachment or similar process. Upon any attempt to effect any such disposition,
or upon the levy of any such process, the Award shall immediately become null
and void and the Shares shall be forfeited.

         5. Withholding Taxes. The Corporation may require payment of or
withhold any tax which it believes is payable as a result of the Shares becoming
unrestricted and fully vested, and the Corporation may defer making delivery
with respect to Shares until arrangements satisfactory to the Corporation have
been made with regard to any such withholding obligations. In lieu of part or
all of any such payment, the Employee, in satisfaction of all withholding taxes
(including, without limitation, Federal income, FICA (Social Security and
Medicare) and any state and local income taxes) payable as a result of such
vesting, may elect, subject to such rules and regulations as the Corporation may
adopt from time to time, to have


                                      -2-



the Corporation withhold that number of Shares (valued at Fair Market Value on
the date of vesting and rounded upward) required to settle such withholding
taxes.

         6. Death of Employee. If any of the Shares shall vest upon the death of
the Employee, they shall be registered in the name of the estate of the Employee
unless the Corporation shall have theretofore received in writing a beneficiary
designation, in which event they shall be registered in the name of the
designated beneficiary.

         7. Adjustment of Shares. The terms and provisions of this Award
(including, without limitation, the terms and provisions relating to the number
and class of shares subject to this Award) shall be subject to appropriate
adjustment in the event of any recapitalization, merger, consolidation,
disposition of property or stock, separation, reorganization, stock dividend,
issuance of rights, combination or split-up or exchange of shares, or the like.

         IN WITNESS WHEREOF, this Restricted Stock Agreement has been duly
executed as of June 18, 2003.

                                 BRADY CORPORATION

                                 By:     /s/ Frank Jaehnert
                                         -------------------------
                                         Frank Jaehnert, President


                                 Attest: /s/ Conrad G. Goodkind
                                         -------------------------
                                         Conrad G. Goodkind, Secretary


                                      -3-

EX-10.31

                                                                   EXHIBIT 10.31

                                BRADY CORPORATION

                           RESTRICTED STOCK AGREEMENT

                                 (JUNE 18, 2003)



      Brady Corporation (the "Corporation"), a Wisconsin corporation, hereby
grants to Michael O. Oliver (the "Employee") a Restricted Stock Award (the
"Award") with respect to 10,000 shares (the "Shares") of the authorized, but
unissued, Class A Common Stock, $.01 par value, of the Corporation (the "Common
Stock"), all in accordance with and subject to the following terms and
conditions:

      1. Restrictions. The restrictions on the Shares shall lapse, and the
Shares shall vest, on June 18, 2005 (the "Vesting Date"), provided that the
Employee remains an employee of the Corporation (or a subsidiary or affiliate)
during the entire period (the "Restriction Period).

      2. Termination of Employment, etc., During Restriction Period. A. In the
event of the termination of the Employee's employment with the Corporation (and
any subsidiary or affiliate) prior to the end of the Restriction Period due to
death or disability, the Shares shall become unrestricted and fully vested.

            For purposes of this Agreement, "Disability" means that the Employee
is disabled as a result of sickness or injury, such that he is unable to
satisfactorily perform the material duties of his job, as determined by the
Board of Directors, on the basis of medical evidence satisfactory to it.

            B. In the event of the termination of the Employee's employment with
the Corporation (and any subsidiary or affiliate) prior to the end of the
Restriction Period due to a change in control, the shares shall become
unrestricted and fully vested.

            For purposes of this Agreement, a "Change of Control" shall occur if
any person or group of persons (as defined in Section 13(d)(3) of the Securities
and Exchange Act of 1934) other than the members of the family of William H.
Brady, Jr. and their descendants, or trusts for their benefit, collectively,
directly or indirectly controls in excess of 50% of the voting common stock of
the Corporation.

            For purposes of this Agreement, a termination due to Change of
Control shall occur if within the 12 month period beginning with the date a
Change of Control occurs (i) the Employee's employment with the Corporation is
involuntarily terminated (other than by reason of death, disability or cause) or
(ii) the Employee's employment with the Corporation is voluntarily terminated by
the Employee subsequent to (A) a 10% or more diminution in the total of the
Employee's annual base salary (exclusive of fringe benefits) and the Employee's
target bonus in comparison with the Employee's total of annual base salary and
target bonus immediately prior to the date the Change of Control occurs, (B) a
significant diminution in the responsibilities or authority of the Employee in
comparison with the Employee's responsibility and authority immediately prior to
the date the Change of Control occurs or (C) the imposition of a requirement by
the Corporation that the Employee relocate to a principal work location

more than 50 miles from the Employee's principal work location immediately prior
to the date the Change of Control occurs.

            For purposes of this Agreement, Cause means (i) the Employee's
willful and continued failure to substantially perform the Employee's duties
with the Corporation (other than any such failure resulting from physical or
mental incapacity) after written demand for performance is given to the Employee
by the Corporation which specifically identifies the manner in which the
Corporation believes the Employee has not substantially performed and a
reasonable time to cure has transpired, (ii) the Employee's conviction of or
plea of nolo contendere for the commission of a felony, or (iii) the Employee's
commission of an act of dishonesty or of any willful act of misconduct which
results in or could reasonably be expected to result in significant injury
(monetarily or otherwise) to the Corporation, as determined in good faith by the
Board of Directors of the Corporation.

            C. In the event of (a) the merger or consolidation of the
Corporation with or into another corporation or corporations in which the
Corporation is not the surviving corporation, (b) the adoption of any plan for
the dissolution of the Corporation, or (c) the sale or exchange of all or
substantially all the assets of the Corporation for cash or for shares of stock
or other securities of another corporation, all restrictions imposed on any
then-Restricted Stock shall terminate (such that any Restricted Stock shall
become fully transferable) immediately prior to any such event in which the
Corporation is not the surviving corporation.

            D. If the lapsing of the restrictions, other than under paragraph
2.C., would result in disallowance of any portion of the Corporation's deduction
therefore under Section 162(m) of the Internal Revenue Code, the restrictions
shall lapse only as to those shares for which the amount is deductible, with the
balance to lapse as soon as deductible by the Corporation. However, in such
event, the Corporation shall pay the Employee on a quarterly basis an amount of
interest based on the prime rate recomputed each quarter and the value as of
each quarter of the shares as to which such restriction has not lapsed.

            E. If the lapsing of the restrictions would result in any excise tax
to the Employee as a result of Section 280(G) of the Code, the Corporation shall
pay the Employee an amount equal to such excise tax.

      3. Dividend Rights. The Employee shall have the right to receive any cash
dividends otherwise payable with respect to the Shares, as paid, and the
Employee shall have all other rights as holder of such Shares, provided,
however, the Corporation shall retain custody of all stock certificates
representing shares as to which such restriction has not lapsed.

      4. Transfer Restrictions. This Award and the Shares (until they become
unrestricted pursuant to the terms hereof) are non-transferable and may not be
assigned, pledged or hypothecated and shall not be subject to execution,
attachment or similar process. Upon any attempt to effect any such disposition,
or upon the levy of any such process, the Award shall immediately become null
and void and the Shares shall be forfeited.

      5. Withholding Taxes. The Corporation may require payment of or withhold
any tax which it believes is payable as a result of the Shares becoming
unrestricted and fully vested, and the Corporation may defer making delivery
with respect to Shares until arrangements satisfactory to the Corporation have
been made with regard to any such withholding obligations. In lieu of part or
all of any such payment, the Employee, in satisfaction of all withholding taxes
(including, without limitation, Federal income, FICA (Social Security and
Medicare) and any state and local income taxes) payable as a result of such
vesting, may elect, subject to such rules and regulations as the Corporation may
adopt from time to time, to have


                                      -2-

the Corporation withhold that number of Shares (valued at Fair Market Value on
the date of vesting and rounded upward) required to settle such withholding
taxes.

      6. Death of Employee. If any of the Shares shall vest upon the death of
the Employee, they shall be registered in the name of the estate of the Employee
unless the Corporation shall have theretofore received in writing a beneficiary
designation, in which event they shall be registered in the name of the
designated beneficiary.

      7. Adjustment of Shares. The terms and provisions of this Award
(including, without limitation, the terms and provisions relating to the number
and class of shares subject to this Award) shall be subject to appropriate
adjustment in the event of any recapitalization, merger, consolidation,
disposition of property or stock, separation, reorganization, stock dividend,
issuance of rights, combination or split-up or exchange of shares, or the like.

      IN WITNESS WHEREOF, this Restricted Stock Agreement has been duly executed
as of June 18, 2003.

                                   BRADY CORPORATION



                                   By:     /s/ Frank Jaehnert
                                           -------------------------------
                                           Frank Jaehnert, President



                                   Attest: /s/ Conrad G. Goodkind
                                           -------------------------------
                                           Conrad G. Goodkind, Secretary

                                       -3-

EX-10.32

                                                                   EXHIBIT 10.32

SUMMARY OF COMPENSATION ARRANGEMENT WITH KATHERINE M. HUDSON

      The Company's Board of Directors has approved a compensation package for
Mrs. Hudson, who served as the Company's President and CEO until March 31, 2003.
Mrs. Hudson will remain an employee of the Company for a period up to January
19, 2005, at her annual base salary in effect for fiscal 2003; and will be
eligible for coverage under the Company's regular medical insurance plan or a
payment in lieu thereof toward similar coverage. Until January 19, 2004, she
will also receive other executive benefits at the 2003 level and be eligible to
participate in the Company's bonus plan. While employed, Mrs. Hudson will
perform such duties as requested of her by the President. All compensation and
benefits will terminate if Mrs. Hudson accepts outside employment, other than
with an academic entity.

EX-10.33

                                                                   EXHIBIT 10.33

SUMMARY OF COMPENSATION ARRANGEMENT WITH DAVID W. SCHROEDER

      Mr. Schroeder serves as the Company's Chief Financial Officer, but is
seeking an executive position outside of the Company. The Compensation Committee
of the Board has agreed to continue Mr. Schroeder's salary and benefits while he
remains employed by the Company to a date not later than May 31, 2004 ; and to
pay an amount equal to his base salary for a period of six months following
termination of employment with the Company. While employed, Mr. Schroeder will
be eligible for participation in the Company's bonus plan. He is also eligible
for Company paid executive placement consulting services.

EX-13

EXHIBIT 13

A Year of Transformation Brady Corporation 2003 Annual Report

BRADY CORPORATION is an international manufacturer and marketer of identification solutions and specialty materials that help customers increase safety, security, productivity and performance. Its products include high-performance labels and signs, printing systems and software, label-application and data-collection systems, safety devices and precision die-cut materials. Founded in 1914, the company is the provider of choice to more than 300,000 customers in electronics, telecommunications, manufacturing, electrical, construction, education and a variety of other industries. Brady's reputation for innovation, commitment to quality and service, and dedicated employees have made it a world leader in its markets. FINANCIAL HIGHLIGHTS [Dollars in thousands except per share amounts] % YEARS ENDED JULY 31 2003 2002 CHANGE RESULTS OF OPERATIONS Net sales $554,866 $516,962 7.3 Earnings before income taxes $32,455 $43,135 -24.8 Net income $21,420 $28,253 -24.2 Return on invested capital 9.6% 13.2% Net income per diluted Common Share Class A Nonvoting $0.91 $1.20 -24.2 Class B Voting $0.88 $1.17 -24.8 Pre-tax profit margin 5.9% 8.3% After-tax profit margin 3.9% 5.5% Restructuring charge After tax $6,329 $1,782 Per Diluted Share $0.27 $0.07 OTHER INFORMATION Working capital $123,878 $135,764 -8.8 Stockholders' investment $338,961 $324,242 4.5 Research and development $18,873 $17,271 9.3 Capital expenditures $14,438 $13,095 10.3 Depreciation and amortization $17,771 $16,630 6.9 Dividend yield 2.3% 2.8% -17.9 Trailing 12 months P/E ratio 37.8 22.9 65.1 Current ratio 2.4 2.8 -14.3 Weighted average shares outstanding (diluted) 23,376,928 23,339,708 .2

TO OUR SHAREHOLDERS: A Year of Transformation In fiscal 2003, Brady Corporation faced a difficult economic environment and a shifting global marketplace. Despite these challenges, we had modest sales gains. However, our reported net income dropped due primarily to charges we took for restructuring our organization in response to a prolonged 2003 Annual Report weak economy and changes in our global markets. With no sign of a material economic rebound in the manufacturing sector, getting our cost structure back in line became a top priority. Staying the course with our long-term strategic initiatives, we also accelerated our efforts to transform the way we do business in order to return to higher levels of profitability and growth. With a renewed focus on our customers, we took action to simplify and streamline our operations. We believe this transformation is essential to ensure our future competitiveness and build shareholder value. FINANCIAL RESULTS Our sales for the year were $554.9 million, up 7.3 percent from fiscal 2002 sales of $517.0 million. The impact of foreign-currency translations was a positive 5.1 percent. Sales from core businesses were down 0.7 percent, while acquisitions contributed 2.9 percent to annual sales. Sales in the Graphics & Workplace Solutions Group increased 10.2 percent, while the Identification Solutions & Specialty Tapes Group sales increased 3.6 percent. Regionally, sales in the U.S. declined slightly, while Europe showed modest improvement in local currencies. Asian and Latin American sales experienced more significant growth despite economic weakness in those regions.

As our net income remained weak throughout the year, we initiated a major restructuring of our global operations that includes the consolidation of certain facilities in the U.S. and abroad, and a workforce reduction of approximately 10 percent. This was not a downsizing in the traditional sense due solely to a slowdown in work activities, but rather part of a comprehensive redesign of our operations intended to increase efficiency and productivity in both the short and long term. After-tax net charges of $6.3 million were recorded in the fourth quarter, bringing our reported net income for fiscal 2003 to $21.4 million or $0.91 per diluted Class ACommon Share, compared with reported net income of $28.3 million or $1.20 per share in fiscal 2002. As our reorganization continues into fiscal 2004, we expect to incur an additional $2 to $3 million pre-tax in restructuring charges, and realize total after-tax savings of $7 to $9 million annually. Despite the challenges of fiscal 2003, Brady remains a strong and vital company. We finished the year with more than $76 million in cash and little debt on our balance sheet, and increased our dividend payments to shareholders for the 18th straight year. STRATEGIC ACCOMPLISHMENTS In fiscal 2003, we continued to make progress on our long-term strategic initiatives of developing new products and new markets, expanding our operations geographically, making strategic acquisitions and improving our processes. NEW PRODUCTS We believe the health care market, in particular the need for fast, accurate and durable identification for laboratory samples, holds significant opportunity for Brady. In fiscal 2003, we responded to this need by launching a number of proprietary products for laboratory applications. Building upon the same platform as Brady's ID Pal(TM) Labeling Tool, we also introduced the Lab Pal(TM) Label Printer, featuring built-in date/time stamping to provide important timing documentation right on the label, serialization options, preprogrammed settings for vial and slide labels, and laboratory-specific symbols. And for labs desiring a benchtop printer for their identification needs, our new THE LAB PAL(TM) PRINTER IS JUST ONE OF THE NEW PRODUCTS BRADY LAUNCHED IN 2003. 2003 MILESTONES SEPTEMBER 2002 - NOVEMBER 2002 - DECEMBER 2002 - BRADY DECEMBER 2002 - BRADY LAUNCHES ASIAN BRADY INCREASES COMPLETES SAP INSTALLATION BRADY BEGINS WEB SITES FOR DIVIDENDS TO FOR ITS NORTH AMERICAN MANUFACTURING IN CUSTOMERS IN SHAREHOLDERS FOR THE DIRECT MARKETING BUSINESS MALAYSIA AND EXPANDS SINGAPORE, MALAYSIA, 18TH CONSECUTIVE YEAR UNITS OPERATIONS IN CHINA INDONESIA AND THE PHILIPPINES

Bradyprinter(TM) Model 1344 printer with a compact design, high print resolution and bar-coding capability fits the bill. In addition, Brady offered two new software solutions for laboratory identification: LabelMark(TM) labeling software and CODESOFT(TM)6 labeling design software. Expanding the offering of last year's new products, we added a new line of colored label materials for the ID Pal(TM) Labeling Tool, and launched the GlobalMark(TM) Industrial Label Maker in Asia with new applications and templates in Korean, Japanese and Chinese. Other new products introduced in fiscal 2003 include Varitronics' ProFinish(TM) XL Cold Laminating System for the education market, which provides heavy duty protection to school posters, banners and other visuals up to 42" wide. GEOGRAPHIC EXPANSION The exodus of electronic manufacturing to Asia continued to drive our investment strategy in the region. In December 2002, we further positioned ourselves to quickly and effectively respond to multinational and local customers in Asia by opening a new manufacturing operation in Penang, Malaysia. there includes high-performance labels used to identify printed circuit Brady's product Production offerings are meeting the needs of a growing Asian market. boards, wires, cables, patch panels and outlets in telecommunication closets. In March 2003, we opened a second manufacturing facility in China by expanding our Beijing operation to include production of die-cut components for use in cellular phones, pagers and other telecommunication devices. The Beijing location will also serve as Brady's prototype center for the region. Athird manufacturing facility in China, located in Shenzhen, will be operational soon. These expansions are part of an ongoing initiative to further grow our business in the robust telecommunications and electronics markets in Asia. ACQUISITIONS This year we made four acquisitions to strengthen our product offering and enhance our position in the marketplace. In January 2003, we acquired TISCOR, Inc., located in San Diego, California. TISCOR is an industry leader in designing handheld-computer software that automates the documentation process JANUARY 2003 - FEBRUARY 2003 - FRANK FEBRUARY 2003 - MARCH 2003 - APRIL 2003 - BRADY ACQUIRES JAEHNERT ELECTED PRESIDENT BRADY ACQUIRES BRADY'S MANAUS, BRADY ANNOUNCES TISCOR, INC., A AND CEO, AND KATHERINE BRITISH DISTRIBUTOR BRAZIL FACILITY REORGANIZATION OF ITS SANDIEGO-BASED HUDSON ELECTED CHAIRMAN CLEERE ADVANTAGE LTD. EARNS ISO GLOBAL BUSINESSES TO SOFTWARE OF THE BOARD, EFFECTIVE 9001:2000 A REGION-BASED DEVELOPER APRIL 1, 2003 CERTIFICATION STRUCTURE

for site and equipment inspections, and helps customers comply with strict occupational and physical safety regulations. TISCOR products closely align with our core businesses in safety, facility maintenance, security and asset management. In April 2003, we acquired Etimark GmbH, located in Bad Nauheim, Germany. Etimark offers complete bar-code solutions including high-performance labels, printers, applicators and software. As one of the largest label manufacturers in Germany, the company further enhances Brady's position as a leading provider of identification solutions in Europe. TISCOR'S SOFTWARE HELPS CUSTOMERS TRACK STRICT OCCUPATIONAL AND SAFETY REGULATIONS ON HANDHELD COMPUTER DEVICES. In February 2003, we also acquired Cleere Advantage Ltd., the largest independent dealer of Brady's Signmark(R) products in the United Kingdom. This was followed in July 2003 by the acquisition of Aztech Systems, another dealer of Brady products in the U.K. Both acquisitions signal a renewed commitment to a stronger direct sales relationship with our end-user customer base in the U.K. Process Improvement The investments we made in our process improvement initiatives over the past three years set the stage for important changes to our organizational structure. With common processes and systems now established in 70 percent of our business, we have the underlying global platform needed to facilitate the combining of our Identification Solutions & Specialty Tapes Group with our Graphics & Workplace Solutions Group. The new organizational structure shifts from a group structure based on product lines, to a regional structure focusing on the Americas, Europe and Asia. This new structure optimizes our efforts to create value for our customers by bringing them a more complete offering of Brady products and simplifying their purchasing experiences. As we work to increase value for our shareholders and maximize our profitability, the new structure also affords us the opportunity to eliminate redundancies in our operations, particularly in the sales and marketing organization, and establish a more streamlined global footprint by consolidating certain manufacturing operations. We will begin reporting financial results by regional operations in fiscal 2004. APRIL 2003 - APRIL 2003 - BRADY MAY 2003 - BRADY JULY 2003 - BRADY BRADY AGAIN ACQUIRES GERMAN BAR-CODE ANNOUNCES RESTRUCTURING ACQUIRES BRITISH NAMED TO MANUFACTURER ETIMARK INCLUDING A 10-PERCENT DISTRIBUTOR AZTECH BUSINESS ETHICS WORKFORCE REDUCTION AND SYSTEMS MAGAZINE'S "100 FACILITY CONSOLIDATIONS BEST CORPORATE CITIZENS" LIST

LEADERSHIP TRANSITION As part of a planned succession process, the Board of Directors implemented a change in leadership effective April 1, 2003. Frank M. Jaehnert was elected president and chief executive officer, succeeding Katherine M. Hudson, who assumed the role of chairman of the board after nine years of leadership hallmarked by impressive global expansion, an aggressive acquisition strategy and the building of a solid platform for Brady's future growth. Frank joined Brady in 1995 and most recently served as president of its Identification Solutions & Specialty Tapes Group after five years as the company's chief financial officer. The Board also appointed the following executives officers of the company: Matt Williamson and Tracey Carpentier, who will share responsibility for Brady Americas, with Matt focusing on the Brady brands and Tracey concentrating on our direct marketing operations; Peter Sephton, responsible for Brady Europe; and Allan Klotsche, responsible for Brady Asia/Pacific and our global die-cut operations. They join David Hawke, responsible for global processes and strategic initiatives; Michael Oliver, responsible for human resources; and Chief Financial Officer David Schroeder as Frank's leadership team. BRADY'S NEW REGIONAL STRUCTURE IS MORE EFFICIENT WHILE SIMPLIFYING CUSTOMERS' PURCHASING EXPERIENCES. MOVING FORWARD As we look ahead, we will be working to leverage our new organizational structure to further reduce our complexity and costs, to rebalance our resources for increased efficiency and productivity, and to transform our business for higher levels of sales and profits. There are many factors working in our favor. We are in a strong financial position. We have invested well in building a solid infrastructure which can support our future growth. We are geographically positioned to respond to and capitalize on changes in the global business landscape. We have excellent brands, like Brady, Seton, Teklynx, Varitronics and others that enjoy a solid reputation in the marketplace. And we have great people focused on meeting the needs of our customers with superior service and exciting products. There is much opportunity ahead, and we are excited by the prospects before us. Thank you for your continued support, Katherine M. Hudson Frank M. Jaehnert Chairman of the Board President and Chief Executive Officer

2003 FINANCIALREVIEW (Dollars in Thousands, Except Per Share Amounts) Years Ended July 31, 1993 through 2003 2003 2002 2001 2000 1999 1998 OPERATING DATA NET SALES . . . . . . . . . . . . . . . . . . . . $554,866 $516,962 $545,944 $550,664 $479,025 $463,235 .. . Operating expenses: Cost of products sold . . . . . . . . . . . . . 274,593 256,186 257,313 245,587 216,060 212,980 Research and development . . . . . . . . . 18,873 17,271 20,329 20,555 17,116 20,287 Selling, general and administrative . . . 219,662 199,282 214,220 215,231 182,688 178,648 Restructuring charge - net . . . . . . . . . 9,589 2,720 9,560 -- (611) 5,390 Total operating expenses . . . . . . . . . 522,717 475,459 501,422 481,373 415,253 417,305 OPERATING INCOME . . . . . . . . . . . . . . . . 32,149 41,503 44,522 69,291 63,772 45,930 OTHER INCOME AND (EXPENSE): Investment and other income - net . . . 427 1,714 686 7,418 1,455 638 Interest expense . . . . . . . . . . . . . . . . (121) (82) (418) (578) (445) (403) Net other income . . . . . . . . . . . . . . 306 1,632 268 6,840 1,010 235 Income before income taxes and cumulative effect of changes in accounting principles . . . . . . . . . . . . . 32,455 43,135 44,790 76,131 64,782 46,165 INCOME TAXES . . . . . . . . . . . . . . . . . . . 11,035 14,882 17,244 28,930 25,198 18,129 NET INCOME . . . . . . . . . . . . . . . . . . . . $21,420 $ 28,253 $ 27,546 $ 47,201 $ 39,584 $ 28,036 .. NET INCOME PER COMMON SHARE (DILUTED): Class ANonvoting . . . . . . . . . . . . . . . $0.91 $ 1.20 $ 1.18 $ 2.05 $ 1.73 $ 1.23 Class B Voting . . . . . . . . . . . . . . . . . . $0.88 $ 1.17 $ 1.15 $ 2.02 $ 1.70 $ 1.20 CASH DIVIDENDS ON: Class A Common Stock . . . . . . . . . . . . $0.80 $ .76 $ .72 $ .68 $ .64 $ .60 Class BCommon Stock . . . . . . . . . . . . $0.77 $ .73 $ .69 $ .65 $ .61 $ .57 BALANCE SHEET (at year end) Working capital . . . . . . . . . . . . . . . . . 123,878 $135,764 $123,830 $116,084 $129,884 $125,386 Total assets . . . . . . . . . . . . . . . . . . . 449,519 420,525 393,592 398,134 351,120 311,824 Long-term obligations, less current maturities . . . . . . . . . . . . . 568 3,751 4,144 4,157 1,402 3,716 Stockholders' investment . . . . . . . . . . 338,961 324,242 302,579 291,224 260,564 233,373

1997 1996 1995 1994 1993 $433,649 $365,929 $319,946 $260,386 $247,286 201,664 172,813 149,218 122,661 118,617 16,300 11,309 10,426 10,318 12,132 165,317 140,642 119,717 97,932 92,449 - -- -- -- -- (1,236) 383,281 324,764 279,361 230,911 221,962 50,368 41,165 40,585 29,475 25,324 1,159 4,570 4,609 837 559 (256) (302) (555) (410) (54) 903 4,268 4,054 427 505 51,271 45,433 44,639 29,902 25,829 19,564 17,406 16,728 11,362 8,973 $ 31,707 $ 28,027 $ 27,911 $ 18,540 $ 16,856 $ 1.43 $ 1.26 $ 1.26 $ .84 $ .77 $ 1.40 $ 1.23 $ 1.23 $ .81 $ .74 $ .52 $ .40 $ .27 $ .23 $ .20 $ .49 $ .37 $ .23 $ .19 $ .17 $130,724 $109,688 $129,938 $100,023 $ 77,943 291,662 261,835 230,005 202,509 179,901 3,890 1,809 1,903 1,855 1,978 206,547 189,263 170,823 145,129 128,068

SHAREHOLDER SERVICES COMMON SHARES Brady Corporation Class ACommon Stock trades on the New under the symbol BRC. As of September ACommon Stock shareholders shareholders. There are shareholders. Brady Corporation also listed on the Berlin Stock Exchange. QUARTERLY STOCK DATA 2003 2002 2001 High Low High Low High Low 4th Quarter $35.00 $30.67 $36.69$26.70 $35.94 $28.67 3rd Quarter $33.88 $25.85 $40.47$32.04 $38.83 $30.48 2nd Quarter $35.58 $25.05 $37.47$29.03 $38.35 $27.08 1st Quarter $35.35 $27.50 $36.41$27.47 $32.67 $26.92 DIVIDENDS Brady has paid dividends on its Common Stock every quarter since going public in June 1984, and the Company has increased the dividend every year for each of the past 18 years. At its September 2003 meeting, the Board of Directors increased the quarterly dividend on Class ACommon Stock to $0.21 per share per quarter, or $0.84 per year. Dividends are normally paid on the last day of October, January, April and July. DIVIDEND REINVESTMENT Shareholders of record may have their dividends automatically reinvested in Brady stock through a Dividend Reinvestment Program. For more information on this program, see the description on the Internet at www.investor.bradycorp.com or call Brady's investor line at 414-438-6918. STOCK TRANSFER AGENT Wells Fargo Bank Minnesota, N.A. York Stock Exchange Shareowner Services 5, 2003, there were 332 Class P.O. Box 64584 of record and about 4,000 beneficial St. Paul, MN, 55164-0854 three Class B Common Stock www.wellsfargo.com/com/shareowner_services stock is BRADY INFORMATION Brady's Internet site at www.investor.bradycorp.com contains corporate governance information, investor presentations, 10-K and 10-Q filings, annual reports, news releases, frequently asked investor questions, stock prices, a Brady investment calculator, product information and a variety of other information about Brady. INFORMATION REQUESTS AND INVESTOR NEWS LINE Aphone system at 414-438-6918 enables you to listen to financial news highlights, request printed 10-K and other financial information, request dividend reinvestment information or be transferred to an investor relations representative. Or you may send your information requests to Investor Relations, Brady Corporation, P.O. Box 571, Milwaukee, WI 53201-0571, or e-mail investor@bradycorp.com. ANALYST AND INVESTOR CONTACT Barbara Bolens, Director of Investor Relations, 414-438-6940. ANNUAL MEETING The Brady Corporation Annual Meeting will be at 9 a.m., Thursday, November 20, 2003, at Brady Corporation, 6555 W. Good Hope Road, Milwaukee, Wisconsin. Highlights will be posted on the Internet at www.investor.bradycorp.com.

BRADY AROUND THE WORLD Brady Corporation W.H.B. do Brasil Ltda. Brady Gmbh - Etimark P.O. Box 571 Brady Manaus An de Birkenkaute 6 Milwaukee, WI 53201 Avenida Solimoes, N. 2100 61231 Bad Nauheim, Germany Distrito Industrial da Suframa Brady Worldwide, Inc 69075-200 Manaus Brady Gmbh UNITED 6555 W. Good Hope Rd. Amazonas, Brazil Olchinger Str. 56 STATES Milwaukee, WI 53223 D-82194 Grobenzell, Germany 2221 W. Camden Rd. W.H.B. Identification Solutions, Inc. Milwaukee, WI 53209 Seton-Canada Brady Corporation S.E.A. Pte. Ltd. CANADA56 Leek Crescent Unit 03/04, 18th Floor 5300 N. 118th Court, Bldg. F Richmond Hill CRE Centre Milwaukee, WI 53225 Ontario, Canada 889 Cheung Sha Wan Road HONKowloon, Hong Kong KONG 100 S. Massachusetts Street Seattle, WA98134 Brady (Beijing) Co. Ltd. Unit 8401/8402 Plant #8 Brady Kft. Brady Coated Products CHINA 3 Yong Chang Bei Road BDA Vaci ut 35, H-1134 P.O. Box 298 Beijing 100176, PRC Budapest, Hungary 2230 W. Florist Ave. HUNGARY Milwaukee, WI 53201-0298 Brady (Shanghai) International Trading Co. Ltd. Brady Italia. Srl Brady Varitronics 5F-B, No. 158 Aona Road ITAVia Luigi Lazzaroni 7 6835 Winnetka Circle Wai Gao Qiao Free Trade Zone 21047 Saronno (VA), Italy Brooklyn Park, MN 55428 Shanghai 200131, PRC Seton Identification Products Brady (Shanghai) International Nippon Brady K.K. 20 Thompson Rd. Trading Co. Ltd. TVP Building 3rd Floor Branford, CT 06405 Room B, 27th Fl, JAP3-9-13 Moriya-cho, Kanagawa-Ku New Shanghai International Tower Yokohama, Kanagawa 221-0022, Japan Brady Precision Die-Cut Products No. 360 Pudong Nan Rd South 6500 NW 12th Avenue, Suite 119 Shanghai 200120, PRC Fort Lauderdale, FL33309 Brady Corporation S.E.A. Pte Ltd. - Brady (Wuxi) Co. Ltd. Korean Branch Temtec No. 229 KOR272-2 Yatap-dong, Bundang-gu Seongnam 100 Route 50 Xingchuang Ba Lu Gyeonggi-do Lighthouse, 4th floor, 42 peong Suffern, NY 10901 Wuxi-Singapore Industrial Park Seoul, Republic of Korea (South) Wuxi, Jinagsu, PRC 214028 TISCOR 12250 Parkway Centre Dr. Brady (Wuxi) Co., Ltd., Shenzhen Brady Technology Sdn Bhd Branch Poway, CA 92064 Unit A-B, 5th Fl, Hi-Tech Bldg 47, Hilir Sungai Keluang 2 7 Industrial Road Shekou Payan Lepas Industrial Park Shenzhen 518067, PRC MALPhase 4, 11900 Byan Lepas Brady Australia Pty. Ltd. Penang, Malaysia Seton Australia Pty. Ltd. 112 Christina Road Braton Group s.a.r.l. Villawood NSW 2163 Brady France W.H. Brady S. de R.L. de C. V. AUSTRALIA Australia FRANCE1 Rue de Terre Neuve - Bat. E Iago Iseo, N. 91 BP 362 - ZAC Les Ulis MEXCol. Anahuac Brady Australia Pty. Ltd. 91959 Courtaboeuf Cedex, France 11320 Mexico D.F., Mexico Visi Sign 10 Reid Street Tricor Groupe S.A. - Seton Bayswater, Victoria 3153 45 Avenue de L'Europe Brady Corporation S.E.A. Pte. Ltd. Australia BP 132 9 Narra Drive, Palmera Heights III 594 Roncq Cedex, France Valley Golf, Cainta Rizal Brady Australia Pty. Ltd. Philippines 1900 Safety Sign Service Brady LettraSoft S.A. PHILIPPINES 663 Dundas Road 13 Rue des Emeraudes Forrest Field, West Australia F-69006 Lyon, France Brady Corporation S.E.A. Pte. Ltd. 6058 Australia Brady Corporation Asia Pte. Ltd. Signals S.A. 55 Ayer Rajah Crescent #03-25 Rond Point de la Republique SINAyerRRajah Industrial Estate W.H. Brady, n.v.. Z.I. de la Rochelle Singapore 139949 Industrie Park C/3 17187 Perigny Cedex, France Lindestraat 20 BELGIUM B-9240 Zele, Belgium Brady Software Group Europe Brady AB Z.I. Est Karins Vag 5 2, rue Vincent Van Gogh SWE194 54 Upplands Vasby W.H.B. do Brasil Ltda. 32000 Auch, France Sweden Brady Sao Paulo BRAZIL Rua Rosangela Donata De Oliveira 30 06236-110 Osasco Brady GmbH Brady Corporation S.E.A. Pte. Ltd. Sao Paulo, Brazil Otto-Hahn-Str. 5-7 6F-2, 412, Chung Hsiao E. Rd. 63222 Langen, Germany TAISEC 5 W.H.B. do Brasil Ltda. GERMANY Taipei 110, Taiwan Seton Brasil Brady GmbH - Balkhausen Centro Empresarial Alphaville Rudolf-Diesel-Strasse 17 Av. Jurua, 105 - Modulo 4 28857 Syke, Germany Brady Corporation Ltd. 06455-010 Barueri Wildmere Industrial Estate Sao Paulo, Brazil UNITEDBanbury, Oxfordshire KIN0X16 7JU, United Kingdom

Brady Corporation P.O. Box 571 Milwaukee, WI 53201-0571 VISIT US AT WWW.BRADYCORP.COM In keeping with Brady Corporation's policy of (C) Brady Corporation. All Rights Reserved. environmental stewardship, this brochure is recyclable. 10-LP-03-27

EX-21

                                                                               .
                                                                               .
                                                                               .
                                                                      Exhibit 21

                  SCHEDULE OF SUBSIDIARIES OF BRADY CORPORATION


                                                                                                                 Percentage
                                                                                                                 of Voting
                                                                        State (Country)                          Securities
Name of Company                                                         of Incorporation                         Owned
- ---------------------------------------------------------------------------------------------------------------------------

                                                                                                        
Brady Corporation                                                       Wisconsin                                Parent

Tricor Direct Inc.-                                                     Delaware                                 100%
     Doing Business As:
           Seton
           Seton Name Plate Company
           D&G Sign and Label Co.
           Seton Identification Products
           The Hirol Company
Worldmark of Wisconsin Inc.                                             Delaware                                 100%
Brady Investment Co.                                                    Nevada                                   100%
Brady International Sales, Inc.                                         U.S. Virgin Islands                      100%
Brady International Co.                                                 Wisconsin                                100%
Brady Worldwide, Inc.                                                   Wisconsin                                100%
      Also Doing Business As:
           Varitronic Systems
           Teklynx International
           Barcodes West
           Temtec
TISCOR, Inc.                                                            California                               100%
Brady Australia Pty. Ltd.                                               Australia                                100%
     Also Doing Business As:
           Visi Sign Pty.
Seton Australia Pty. Ltd.                                               Australia                                100%
W.H. Brady, N.V.                                                        Belgium                                  100%
W.H.B. do Brasil Ltda.                                                  Brazil                                   100%
W.H.B. Identification Solutions, Inc.-                                  Canada                                   100%
    Doing Business As:
           Brady
           GrafTek
           Revere-Seton
           Seton
1167232 Ontario, Inc.                                                   Canada                                   100%
BRC Financial                                                           Canada                                   100%





                                                                                                                 Percentage
                                                                                                                 of Voting
                                                                        State (Country)                          Securities
Name of Company                                                         of Incorporation                         Owned
- -----------------------------------------------------------------------------------------------------------------------------

                                                                                                         
Brady Shanghai International Trading Co., Ltd.                          China                                    100%
Brady (Wuxi) Co. Ltd.                                                   China                                    100%
Brady (Beijing) Co. Ltd.                                                China                                    100%
B.I. U.K. Limited                                                       England                                  100%
B.I. Financial Limited                                                  England                                  100%
Seton Limited                                                           England                                  100%
W.H. Brady Co. Ltd.                                                     England                                  100%
Brady Corporation Limited                                               England                                  100%
Brady LettraSoft S.A.                                                   France                                   100%
Braton Europe Eurl                                                      France                                   100%
Braton Groupe S.A.R.L. -                                                France                                   100%
    Doing Business As:
           Brady
           Techniques Avancees
           Holman
           Periprint
Tricor Group, S.A. -                                                    France                                   100%
    Doing Business As:
           Seton
           Signals
Brady Holding GmbH                                                      Germany                                  100%
Brady GmbH                                                              Germany                                  100%
    Doing Business As:
           Seton
           Balkhausen
           Brady ISST
           Soft
Brady KFT                                                               Hungary                                  100%
Brady Italia, SRL                                                       Italy                                    100%
Nippon Brady K.K.                                                       Japan                                    100%
Brady Technology SDN, BHD.                                              Malaysia                                 100%
W. H. Brady S. de R.L. de C.V.                                          Mexico                                   100%
Brady Corporation S.E.A. Pte. Ltd.                                      Singapore                                100%
Brady Corporation Asia Pte. Ltd.                                        Singapore                                100%
Brady Lettrasoft S.L.                                                   Spain                                    100%
Brady AB                                                                Sweden                                   100%
Seton Scandinavia AB                                                    Sweden                                   100%

EX-23

                                                                      EXHIBIT 23


INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements Nos.
333-99615, 333-38857, 333-38859, 333-44505 and 333-92417 of Brady Corporation on
Form S-8 of our report dated September 8, 2003 (which report expresses an
unqualified opinion and includes an explanatory paragraph as to the adoption of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets"), appearing in this Annual Report on Form 10-K of Brady
Corporation for the year ended July 31, 2003.

/s/ Deloitte & Touche LLP
Milwaukee, Wisconsin
October 23, 2003

EX-31.1

                                                                    EXHIBIT 31.1

                     RULE 13a-14(a)/15d-14(a) CERTIFICATION

     I, Frank M. Jaehnert, certify that:

          (1) I have reviewed this annual report on Form 10-K of Brady
     Corporation;

          (2) Based on my knowledge, this report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this report;

          (3) Based on my knowledge, the financial statements, and other
     financial information included in this report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     report;

          (4) The registrant's other certifying officer and I are responsible
     for establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
     and have:

             a) Designed such disclosure controls and procedures, or caused such
        disclosure controls and procedures to be designed under our supervision,
        to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this
        report is being prepared;

             b) Evaluated the effectiveness of the registrant's disclosure
        controls and procedures and presented in this report our conclusions
        about the effectiveness of the disclosure controls and procedures, as of
        the end of the period covered by this report based on such evaluation;
        and

             c) Disclosed in this report any change in the registrant's internal
        control over financial reporting that occurred during the registrant's
        most recent fiscal quarter (the registrant's fourth fiscal quarter in
        the case of an annual report) that has materially affected, or is
        reasonably likely to materially affect, the registrant's internal
        control over financial reporting; and

          (5) The registrant's other certifying officer and I have disclosed,
     based on our most recent evaluation of internal control over financial
     reporting, to the registrant's auditors and the audit committee of the
     registrant's board of directors (or persons performing the equivalent
     functions):

             a) All significant deficiencies and material weaknesses in the
        design or operation of internal control over financial reporting which
        are reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

             b) Any fraud, whether or not material, that involves management or
        other employees who have a significant role in the registrant's internal
        control over financial reporting.

Date: October 23, 2002

/s/ FRANK M. JAEHNERT
- ---------------------------------------------------------
(Frank M. Jaehnert)
President and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                     RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, David W. Schroeder, certify that:

     (1) I have reviewed this annual report on Form 10-K of Brady Corporation;

     (2) Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

     (3) Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

     (4) The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          a) Designed such disclosure controls and procedures, or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

          b) Evaluated the effectiveness of the registrant's disclosure controls
     and procedures and presented in this report our conclusions about the
     effectiveness of the disclosure controls and procedures, as of the end of
     the period covered by this report based on such evaluation; and

          c) Disclosed in this report any change in the registrant's internal
     control over financial reporting that occurred during the registrant's most
     recent fiscal quarter (the registrant's fourth fiscal quarter in the case
     of an annual report) that has materially affected, or is reasonably likely
     to materially affect, the registrant's internal control over financial
     reporting; and

     (5) The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

          a) All significant deficiencies and material weaknesses in the design
     or operation of internal control over financial reporting which are
     reasonably likely to adversely affect the registrant's ability to record,
     process, summarize and report financial information; and

          b) Any fraud, whether or not material, that involves management or
     other employees who have a significant role in the registrant's internal
     control over financial reporting.

Date: October 23, 2003

/s/ DAVID W. SCHROEDER
- ---------------------------------------------------------
(David W. Schroeder)
Senior Vice President and Chief Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                           SECTION 1350 CERTIFICATION

     Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, the undersigned officer of Brady Corporation
(the "Company") certifies to his knowledge that:

          (1) The Annual Report on Form 10-K of the Company for the year ended
     July 31, 2003 fully complies with the requirements of Section 13(a) or
     15(d) of the Securities Exchange Act of 1934; and

          (2) The information contained in that Form 10-K fairly presents, in
     all material respects, the financial conditions and results of operations
     of the Company.

Date: October 23, 2003

/s/ FRANK M. JAEHNERT
- ---------------------------------------------------------
(Frank M. Jaehnert)
President and Chief Executive Officer

     A signed original of this written statement required by Section 906, or
other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.

EX-32.2

                                                                    EXHIBIT 32.2

                           SECTION 1350 CERTIFICATION

     Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, the undersigned officer of Brady Corporation
(the "Company") certifies to his knowledge that:

          (1) The Annual Report on Form 10-K of the Company for the year ended
     July 31, 2003 fully complies with the requirements of Section 13(a) or
     15(d) of the Securities Exchange Act of 1934; and

          (2) The information contained in that Form 10-K fairly presents, in
     all material respects, the financial conditions and results of operations
     of the Company.

Date: October 23, 2003

/s/ DAVID W. SCHROEDER
- ---------------------------------------------------------
(David W. Schroeder)
Senior Vice President and Chief Financial Officer

     A signed original of this written statement required by Section 906, or
other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.