EX-99 2 c92287exv99.txt PRESS RELEASE EXHIBIT 99 For More Information: Investor contact: Barbara Bolens 414-438-6940 Media contact: Carole Herbstreit 414-438-6882 BRADY REPORTS STRONG SALES AND EARNINGS GROWTH FOR ITS FISCAL 2005 SECOND QUARTER MILWAUKEE (February 16, 2005)--Brady Corporation (NYSE: BRC), a world leader in identification solutions, today announced increased sales and net income results for its fiscal 2005 second quarter ended January 31, 2005. Sales for the quarter were up 28.3 percent to $196.2 million, compared to $152.9 million in the fiscal 2004 second quarter, with growth across all regions and major market segments. Net income for the quarter more than doubled to a record $20.6 million or $0.41 per diluted Class A Common share compared to $8.0 million or $0.17 per share in the second quarter of last year. Sales for the six months ended January 31, 2005, rose 30.1 percent to $396.6 million, compared to $304.9 million in the same period last year. Net income for the six months rose 122.6 percent to $40.9 million or $0.83 per diluted share compared to $18.4 million or $0.39 per share for the first half of fiscal 2004. "We are pleased to see strength in our end markets with all of our businesses and regions contributing to sales and profit," said Frank M. Jaehnert, Brady's president and chief executive officer. "In addition, our recent acquisitions continue to meet or exceed our expectations." "As a result of our improving profitability, we are increasing our guidance for fiscal 2005," said Brady chief financial officer, David Mathieson. "We anticipate sales of $790 to $810 million, with net income between $78 and $80 million and earnings per share of $1.55 to $1.60, up from previous guidance of sales of $780 to $800 million, net income of $66 to $69 million and earnings per share of $1.35 to $1.41." A webcast regarding fiscal 2005 second quarter results will be available at www.investor.bradycorp.com beginning at 9:30 a.m. Central Standard Time today. Brady is an international manufacturer and marketer of identification and materials solutions, with products including labels, signs, precision die-cut materials, printing systems, software, and label-application and data-collection systems for electronics, telecommunications, manufacturing, electrical, and a variety of other markets. Founded in 1914, Brady is headquartered in Milwaukee and employs about 4,000 people in operations in the United States, Europe, Asia/Pacific, Latin America and Canada. The company had sales of $671 million in fiscal 2004. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available on the Internet at www.bradycorp.com. Information by regional segment for the three and six months ended January 31, 2005 and 2004 follows:
(Dollars in thousands) Americas Europe Asia Corporate Total SALES TO EXTERNAL CUSTOMERS Three months ended: January 31, 2005 $ 95,255 $ 70,886 $ 30,075 $ 196,216 January 31, 2004 74,196 60,360 18,392 152,948 Six months ended: January 31, 2005 $ 200,704 $ 135,413 $ 60,518 $ 396,635 January 31, 2004 154,288 113,625 36,941 304,854 SALES GROWTH INFORMATION Three months ended January 31, 2005: Base 10.2% 8.5% 25.5% 11.4% Currency 1.1% 8.9% 2.8% 4.4% Acquisitions 17.0% 0.0% 35.2% 12.5% Total 28.3% 17.4% 63.5% 28.3% Six months ended January 31, 2005: Base 9.0% 7.6% 26.9% 10.6% Currency 0.8% 9.1% 3.3% 4.2% Acquisitions 20.3% 2.5% 33.6% 15.3% Total 30.1% 19.2% 63.8% 30.1% SEGMENT PROFIT (LOSS) Three months ended: January 31, 2005 $ 20,431 $ 21,601 $ 8,709 $ (585) $ 50,156 January 31, 2004 9,498 15,346 4,905 (1,200) 28,549 Percentage increase 115.1% 40.8% 77.6% 51.3% 75.7% Six months ended: January 31, 2005 $ 45,811 $ 39,733 $ 17,619 $ (2,011) $ 101,153 January 31, 2004 24,614 28,795 10,329 (1,970) 61,768 Percentage increase 86.1% 38.0% 70.6% 2.1% 63.8%
PROFIT RECONCILIATION (Dollars in thousands) Three months ended: Six months ended: January 31, January 31, January 31, January 31, 2005 2004 2005 2004 Total profit for reportable segments $ 50,741 $ 29,749 $ 103,163 $ 63,738 Corporate and eliminations (585) (1,200) (2,010) (1,970) Unallocated amounts: Administrative costs: (18,637) (15,365) (36,238) (30,537) Interest - net (1,821) 134 (3,646) 225 Foreign exchange 276 (117) 246 (397) Restructuring charge, net -- (66) -- (1,819) Other (584) (1,055) (2,188) (1,591) Income before income taxes 29,390 12,080 59,327 27,649 Income taxes 8,811 4,047 18,391 9,263 Net income $ 20,579 $ 8,033 $ 40,936 $ 18,386
This news release contains forward-looking information, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking information in this release involves risks and uncertainties, including, but not limited to, domestic and international economic conditions and growth rates; fluctuations in currency exchange rates for international currencies versus the U.S. dollar; the successful implementation of a new enterprise-resource-planning system; the ability of the company to acquire, integrate and achieve anticipated synergies from new businesses; the ability of the company to adjust its cost structure to changes in levels of sales and product mix in a timely manner; variations in the economic or political conditions in the countries in which the company does business; technology changes; and the continued availability of sources of supply. Brady cautions that forward-looking statements are not guarantees, since there are inherent difficulties in predicting future results, and that actual results could differ materially from those expressed or implied in forward-looking statements. ### BRADY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands, Except Per Share Amounts)
(Unaudited) -------------------------------------------------------------------------------------- Three Months Ended January 31, Six Months Ended January 31, ----------------------------------------- ----------------------------------------- Percentage Percentage 2005 2004 Change 2005 2004 Change --------- --------- ---------- --------- --------- ---------- Net sales $ 196,216 $ 152,948 28.3% $ 396,635 $ 304,854 30.1% Cost of products sold 91,260 75,138 21.5% 186,154 148,281 25.5% --------- --------- --------- --------- Gross margin 104,956 77,810 34.9% 210,481 156,573 34.4% Operating expenses: Research and development 6,099 5,606 8.8% 11,803 10,470 12.7% Selling, general and administrative 67,923 60,495 12.3% 135,951 116,883 16.3% Restructuring charge - net -- 66 -- 1,819 --------- --------- --------- --------- Total operating expenses 74,022 66,167 11.9% 147,754 129,172 14.4% Operating income 30,934 11,643 165.7% 62,727 27,401 128.9% Other income and (expense): Investment and other (expense) income 493 438 12.56% 776 279 178.14% Interest expense (2,037) (1) 203600.0% (4,176) (31) 13371.0% --------- --------- --------- --------- Income before income taxes 29,390 12,080 143.3% 59,327 27,649 114.6% Income taxes 8,811 4,047 117.7% 18,391 9,263 98.5% --------- --------- --------- --------- Net income 20,579 8,033 156.2% 40,936 18,386 122.6% ========= ========= ========= ========= Per Class A Nonvoting Common Share: Basic net income $ 0.42 $ 0.17 147.1% $ 0.84 $ 0.39 115.4% Diluted net income $ 0.41 $ 0.17 141.2% $ 0.83 $ 0.39 115.6% Dividends $ 0.11 $ 0.11 4.8% $ 0.22 $ 0.21 4.8% Per Class B Voting Common Share: Basic net income $ 0.42 $ 0.17 147.1% $ 0.82 $ 0.38 118.7% Diluted net income $ 0.41 $ 0.17 141.2% $ 0.81 $ 0.37 118.9% Dividends $ 0.11 $ 0.11 4.8% $ 0.20 $ 0.19 5.2% Weighted average common shares outstanding: Basic 49,059,713 47,087,756 48,772,946 46,986,066 Diluted 49,981,887 47,782,208 49,583,727 47,573,447
BRADY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
(Unaudited) --------------------------------- January 31, 2005 July 31, 2004 ---------------- ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 72,599 $ 70,368 Accounts receivable, less allowance for losses ($4,333 and 111,804 105,322 $3,869, respectively) Inventories: Finished Products 36,138 29,616 Work-in-process 8,201 6,550 Raw materials and supplies 19,585 16,765 ------------ ------------ Total inventories 63,924 52,931 Prepaid expenses and other current assets 25,222 23,302 ------------ ------------ TOTAL CURRENT ASSETS 273,549 251,923 OTHER ASSETS: Goodwill 305,844 275,897 Other Intangible assets 59,039 45,879 Other 31,413 34,526 ------------ ------------ 396,296 356,302 PROPERTY, PLANT AND EQUIPMENT: Cost: Land 6,331 6,242 Buildings and improvements 61,902 58,850 Machinery and equipment 155,230 153,467 Construction in progress 6,121 1,468 ------------ ------------ 229,584 220,027 Less accumulated depreciation 137,989 133,922 ------------ ------------ NET PROPERTY, PLANT AND EQUIPMENT 91,595 86,105 ------------ ------------ TOTAL $ 761,440 $ 694,330 ============ ============ LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts payable $ 35,160 $ 38,533 Wages and amounts withheld from employees 33,025 41,872 Taxes, other than income taxes 5,039 3,852 Accrued income taxes 19,959 12,399 Other current liabilities 24,314 23,529 Short-term borrowings and current maturities on long-term debt 17 32 ------------ ------------ TOTAL CURRENT LIABILITIES 117,514 120,217 LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 150,000 150,019 OTHER LIABILITIES 34,569 20,779 ------------ ------------ TOTAL LIABILITIES 302,083 291,015 STOCKHOLDERS' INVESTMENT: Common stock: Class A nonvoting common stock - Issued and outstanding, 45,591,049 456 224 and 44,690,798 shares, respectively Class B voting common stock - Issued and outstanding 1,769,314 shares 18 18 Additional paid-in capital 90,914 72,865 Income retained in the business 352,687 322,224 Treasury Stock - 34,657 shares, at cost (1,074) (1,074) Accumulated other comprehensive income 16,477 9,340 Other (121) (282) ------------ ------------ TOTAL STOCKHOLDERS' INVESTMENT 459,357 403,315 ------------ ------------ TOTAL $ 761,440 $ 694,330 ============ ============
BRADY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
(Unaudited) Six Months Ended January 31 2005 2004 ------------ ------------ Operating activities: Net income $ 40,936 $ 18,386 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,253 9,989 Income tax benefit from the exercise of stock options 3,740 1,552 Loss on sale or disposal of property, plant & equipment 470 104 Provision for losses on accounts receivable 618 764 Non-cash portion of stock-based compensation expense 2,048 455 Net restructuring charge accrued liability -- 1,742 Changes in operating assets and liabilities (net of effects of business acquisitions): Accounts receivable 888 (3,908) Inventory (7,151) (3,806) Prepaid expenses and other assets (1,715) 2,720 Accounts payable, accrued expenses and other liabilities (17,491) (6,668) Income taxes 7,240 1,009 Other liabilities 2,732 41 ------------ ------------ Net cash provided by operating activities 45,568 22,380 Investing activities: Acquisition of businesses, net of cash acquired (34,428) (30,652) Purchases of property, plant and equipment (9,648) (6,621) Proceeds from sale of property, plant and equipment 262 255 Other (2,364) (933) ------------ ------------ Net cash used in investing activities (46,178) (37,951) Financing activities: Payment of dividends (10,473) (9,982) Proceeds from issuance of common stock 12,655 7,919 Principal payments on debt (37) (1,534) Purchase of treasury stock -- (564) ------------ ------------ Net cash provided (used) in financing activities 2,145 (4,161) Effect of exchange rate changes on cash 696 1,855 Net increase (decrease) in cash and cash equivalents 2,231 (17,877) Cash and cash equivalents, beginning of period 70,368 76,088 ------------ ------------ Cash and cash equivalents, end of period $ 72,599 $ 58,211 ============ ============ Supplemental disclosures: Cash paid during the period for: Interest $ 4,051 $ 64 Income taxes, net of refunds 6,122 6,502 Acquisitions: Fair value of asset acquired, net of cash $ 25,938 $ 14,594 Liabilities assumed (15,013) (9,040) Goodwill 23,503 25,098 ------------ ------------ Net cash paid for acquisitions $ 34,428 $ 30,652 ============ ============