falsedesktopBRC2021-01-31000074659821000023{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large accelerated filer\t☑\tAccelerated filer\t☐\tEmerging growth company\t☐\nNon-accelerated filer\t☐\tSmaller reporting company\t☐\t\t\n", "q10k_tbl_1": "\tPage\nPART I. Financial Information\t3\nItem 1. Financial Statements (Unaudited)\t3\nCondensed Consolidated Balance Sheets\t3\nCondensed Consolidated Statements of Income\t4\nCondensed Consolidated Statements of Comprehensive Income\t5\nCondensed Consolidated Statements of Cash Flows\t6\nNotes to Condensed Consolidated Financial Statements\t7\nItem 2. Management's Discussion and Analysis of Results of Operations and Financial Condition\t16\nItem 3. Quantitative and Qualitative Disclosures About Market Risk\t23\nItem 4. Controls and Procedures\t23\nPART II. Other Information\t24\nItem 1A. Risk Factors\t24\nItem 6. Exhibits\t25\nSignatures\t26\n", "q10k_tbl_2": "\tJanuary 31 2021\tJuly 31 2020\n\t(Unaudited)\t\nASSETS\t\t\nCurrent assets:\t\t\nCash and cash equivalents\t277588\t217643\nAccounts receivable net of allowances for credit losses of $7450 and $7157 respectively\t154052\t146181\nInventories\t122922\t135662\nPrepaid expenses and other current assets\t12774\t9962\nTotal current assets\t567336\t509448\nProperty plant and equipment-net\t122088\t115068\nGoodwill\t420726\t416034\nOther intangible assets\t19809\t22334\nDeferred income taxes\t8261\t8845\nOperating lease assets\t38849\t41899\nOther assets\t30813\t28838\nTotal\t1207882\t1142466\nLIABILITIES AND STOCKHOLDERS' EQUITY\t\t\nCurrent liabilities:\t\t\nAccounts payable\t67483\t62547\nAccrued compensation and benefits\t52098\t41546\nTaxes other than income taxes\t8518\t8057\nAccrued income taxes\t9393\t8652\nCurrent operating lease liabilities\t16534\t15304\nOther current liabilities\t47518\t49782\nTotal current liabilities\t201544\t185888\nLong-term operating lease liabilities\t27134\t31982\nOther liabilities\t59869\t61524\nTotal liabilities\t288547\t279394\nStockholders' equity:\t\t\nClass A nonvoting common stock-Issued 51261487 shares and outstanding 48486758 and 48456954 shares respectively\t513\t513\nClass B voting common stock-Issued and outstanding 3538628 shares\t35\t35\nAdditional paid-in capital\t334077\t331761\nRetained earnings\t745960\t704456\nTreasury stock-2774729 and 2804533 shares respectively of Class A nonvoting common stock at cost\t(109789)\t(107216)\nAccumulated other comprehensive loss\t(51461)\t(66477)\nTotal stockholders' equity\t919335\t863072\nTotal\t1207882\t1142466\n", "q10k_tbl_3": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nNet sales\t265838\t276665\t543065\t563612\nCost of goods sold\t136316\t137538\t278115\t283080\nGross margin\t129522\t139127\t264950\t280532\nOperating expenses:\t\t\t\t\nResearch and development\t9876\t10517\t20079\t21484\nSelling general and administrative\t82234\t87366\t165271\t176913\nTotal operating expenses\t92110\t97883\t185350\t198397\nOperating income\t37412\t41244\t79600\t82135\nOther income (expense):\t\t\t\t\nInvestment and other income\t2036\t1760\t2191\t3140\nInterest expense\t(51)\t(647)\t(157)\t(1348)\nIncome before income taxes and losses of unconsolidated affiliate\t39397\t42357\t81634\t83927\nIncome tax expense\t8206\t8804\t16788\t12876\nIncome before losses of unconsolidated affiliate\t31191\t33553\t64846\t71051\nEquity in losses of unconsolidated affiliate\t(331)\t0\t(505)\t0\nNet income\t30860\t33553\t64341\t71051\nNet income per Class A Nonvoting Common Share:\t\t\t\t\nBasic\t0.59\t0.63\t1.24\t1.33\nDiluted\t0.59\t0.62\t1.23\t1.32\nDividends\t0.22\t0.22\t0.44\t0.44\nNet income per Class B Voting Common Share:\t\t\t\t\nBasic\t0.59\t0.63\t1.22\t1.32\nDiluted\t0.59\t0.62\t1.21\t1.31\nDividends\t0.22\t0.22\t0.42\t0.42\nWeighted average common shares outstanding:\t\t\t\t\nBasic\t52018\t53320\t52020\t53232\nDiluted\t52282\t53827\t52288\t53781\n", "q10k_tbl_4": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nNet income\t30860\t33553\t64341\t71051\nOther comprehensive income (loss):\t\t\t\t\nForeign currency translation adjustments\t19074\t(1009)\t14882\t(959)\nCash flow hedges:\t\t\t\t\nNet gain recognized in other comprehensive income (loss)\t451\t363\t1148\t559\nReclassification adjustment for losses (gains) included in net income\t60\t(105)\t271\t(486)\n\t511\t258\t1419\t73\nPension and other post-retirement benefits:\t\t\t\t\nNet loss recognized in other comprehensive income (loss)\t(32)\t(309)\t(32)\t(309)\nNet actuarial gain amortization\t(95)\t(105)\t(201)\t(210)\n\t(127)\t(414)\t(233)\t(519)\nOther comprehensive income (loss) before tax\t19458\t(1165)\t16068\t(1405)\nIncome tax (expense) benefit related to items of other comprehensive income (loss)\t(1251)\t(42)\t(1052)\t169\nOther comprehensive income (loss) net of tax\t18207\t(1207)\t15016\t(1236)\nComprehensive income\t49067\t32346\t79357\t69815\n", "q10k_tbl_5": "\tSix months ended January 31\t\n\t2021\t2020\nOperating activities:\t\t\nNet income\t64341\t71051\nAdjustments to reconcile net income to net cash provided by operating activities:\t\t\nDepreciation and amortization\t11421\t11672\nStock-based compensation expense\t5471\t5384\nDeferred income taxes\t(3866)\t1272\nEquity in losses of unconsolidated affiliate\t505\t0\nOther\t121\t1664\nChanges in operating assets and liabilities:\t\t\nAccounts receivable\t(4157)\t6209\nInventories\t15018\t(1311)\nPrepaid expenses and other assets\t(2436)\t(2621)\nAccounts payable and accrued liabilities\t11990\t(39777)\nIncome taxes\t481\t(436)\nNet cash provided by operating activities\t98889\t53107\nInvesting activities:\t\t\nPurchases of property plant and equipment\t(14511)\t(13100)\nOther\t(1881)\t(3406)\nNet cash used in investing activities\t(16392)\t(16506)\nFinancing activities:\t\t\nPayment of dividends\t(22837)\t(23136)\nProceeds from exercise of stock options\t471\t4686\nPayments for employee taxes withheld from stock-based awards\t(2638)\t(7733)\nPurchase of treasury stock\t(3593)\t0\nOther\t(231)\t134\nNet cash used in financing activities\t(28828)\t(26049)\nEffect of exchange rate changes on cash\t6276\t179\nNet increase in cash and cash equivalents\t59945\t10731\nCash and cash equivalents beginning of period\t217643\t279072\nCash and cash equivalents end of period\t277588\t289803\n", "q10k_tbl_6": "\tJanuary 31 2021\tJuly 31 2020\nFinished products\t79100\t85547\nWork-in-process\t19262\t24044\nRaw materials and supplies\t24560\t26071\nTotal inventories\t122922\t135662\n", "q10k_tbl_7": "\tJanuary 31 2021\t\t\t\tJuly 31 2020\t\t\t\n\tWeighted Average Amortization Period (Years)\tGross Carrying Amount\tAccumulated Amortization\tNet Book Value\tWeighted Average Amortization Period (Years)\tGross Carrying Amount\tAccumulated Amortization\tNet Book Value\nDefinite-lived other intangible assets:\t\t\t\t\t\t\t\t\nCustomer relationships and tradenames\t9\t45498\t(35431)\t10067\t9\t45385\t(32670)\t12715\nIndefinite-lived other intangible assets:\t\t\t\t\t\t\t\t\nTradenames\tN/A\t9742\t0\t9742\tN/A\t9619\t0\t9619\nTotal\t\t55240\t(35431)\t19809\t\t55004\t(32670)\t22334\n", "q10k_tbl_8": "\tSix months ended January 31\t\n\t2021\t2020\nOperating cash outflows from operating leases\t8762\t8216\nOperating lease assets obtained in exchange for new operating lease liabilities\t3297\t10637\n", "q10k_tbl_9": "\tCommon Stock\tAdditional Paid-In Capital\tRetained Earnings\tTreasury Stock\tAccumulated Other Comprehensive Loss\tTotal Stockholders' Equity\nBalances at October 31 2020\t548\t332121\t726546\t(109146)\t(69668)\t880401\nNet income\t0\t0\t30860\t0\t0\t30860\nOther comprehensive income net of tax\t0\t0\t0\t0\t18207\t18207\nIssuance of shares of Class A Common Stock under stock plan\t0\t59\t0\t230\t0\t289\nStock-based compensation expense\t0\t1897\t0\t0\t0\t1897\nRepurchase of shares of Class A Common Stock\t0\t0\t0\t(873)\t0\t(873)\nCash dividends on Common Stock:\t\t\t\t\t\t\nClass A - $0.2200 per share\t0\t0\t(10667)\t0\t0\t(10667)\nClass B - $0.2200 per share\t0\t0\t(779)\t0\t0\t(779)\nBalances at January 31 2021\t548\t334077\t745960\t(109789)\t(51461)\t919335\n", "q10k_tbl_10": "\tCommon Stock\tAdditional Paid-In Capital\tRetained Earnings\tTreasury Stock\tAccumulated Other Comprehensive Loss\tTotal Stockholders' Equity\nBalances at July 31 2020\t548\t331761\t704456\t(107216)\t(66477)\t863072\nNet income\t0\t0\t64341\t0\t0\t64341\nOther comprehensive income net of tax\t0\t0\t0\t0\t15016\t15016\nIssuance of shares of Class A Common Stock under stock plan\t0\t(3187)\t0\t1020\t0\t(2167)\nTax benefit and withholdings from deferred compensation distributions\t0\t32\t0\t0\t0\t32\nStock-based compensation expense\t0\t5471\t0\t0\t0\t5471\nRepurchase of shares of Class A Common Stock\t0\t0\t0\t(3593)\t0\t(3593)\nCash dividends on Common Stock:\t\t\t\t\t\t\nClass A - $0.4400 per share\t0\t0\t(21338)\t0\t0\t(21338)\nClass B - $0.4234 per share\t0\t0\t(1499)\t0\t0\t(1499)\nBalances at January 31 2021\t548\t334077\t745960\t(109789)\t(51461)\t919335\n", "q10k_tbl_11": "\tCommon Stock\tAdditional Paid-In Capital\tRetained Earnings\tTreasury Stock\tAccumulated Other Comprehensive Loss\tTotal Stockholders' Equity\nBalances at October 31 2019\t548\t327241\t663808\t(43779)\t(71283)\t876535\nNet income\t0\t0\t33553\t0\t0\t33553\nOther comprehensive loss net of tax\t0\t0\t0\t0\t(1207)\t(1207)\nIssuance of shares of Class A Common Stock under stock plan\t0\t187\t0\t624\t0\t811\nTax benefit and withholdings from deferred compensation distributions\t0\t69\t0\t0\t0\t69\nStock-based compensation expense\t0\t1766\t0\t0\t0\t1766\nCash dividends on Common Stock:\t\t\t\t\t\t\nClass A - $0.2175 per share\t0\t0\t(10833)\t0\t0\t(10833)\nClass B - $0.2175 per share\t0\t0\t(770)\t0\t0\t(770)\nBalances at January 31 2020\t548\t329263\t685758\t(43155)\t(72490)\t899924\n", "q10k_tbl_12": "\tCommon Stock\tAdditional Paid-In Capital\tRetained Earnings\tTreasury Stock\tAccumulated Other Comprehensive Loss\tTotal Stockholders' Equity\nBalances at July 31 2019\t548\t329969\t637843\t(46332)\t(71254)\t850774\nNet income\t0\t0\t71051\t0\t0\t71051\nOther comprehensive loss net of tax\t0\t0\t0\t0\t(1236)\t(1236)\nIssuance of shares of Class A Common Stock under stock plan\t0\t(6223)\t0\t3177\t0\t(3046)\nTax benefit and withholdings from deferred compensation distributions\t0\t133\t0\t0\t0\t133\nStock-based compensation expense\t0\t5384\t0\t0\t0\t5384\nCash dividends on Common Stock:\t\t\t\t\t\t\nClass A - $0.4350 per share\t0\t0\t(21655)\t0\t0\t(21655)\nClass B - $0.4184 per share\t0\t0\t(1481)\t0\t0\t(1481)\nBalances at January 31 2020\t548\t329263\t685758\t(43155)\t(72490)\t899924\n", "q10k_tbl_13": "\tUnrealized (loss) gain on cash flow hedges\tUnamortized gain on post-retirement plans\tForeign currency translation adjustments\tAccumulated other comprehensive loss\nBeginning balance July 31 2020\t(200)\t2181\t(68458)\t(66477)\nOther comprehensive income (loss) before reclassification\t1215\t(23)\t13585\t14777\nAmounts reclassified from accumulated other comprehensive loss\t203\t36\t0\t239\nEnding balance January 31 2021\t1218\t2194\t(54873)\t(51461)\n", "q10k_tbl_14": "\tUnrealized gain on cash flow hedges\tUnamortized gain on post-retirement plans\tForeign currency translation adjustments\tAccumulated other comprehensive loss\nBeginning balance July 31 2019\t707\t2800\t(74761)\t(71254)\nOther comprehensive income (loss) before reclassification\t468\t(216)\t(913)\t(661)\nAmounts reclassified from accumulated other comprehensive loss\t(365)\t(210)\t0\t(575)\nEnding balance January 31 2020\t810\t2374\t(75674)\t(72490)\n", "q10k_tbl_15": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nIncome tax (expense) benefit related to items of other comprehensive income (loss):\t\t\t\t\nCash flow hedges\t47\t(5)\t(1)\t30\nPension and other post-retirement benefits\t6\t93\t246\t93\nOther income tax adjustments and currency translation\t(1304)\t(130)\t(1297)\t46\nIncome tax (expense) benefit related to items of other comprehensive income (loss)\t(1251)\t(42)\t(1052)\t169\n", "q10k_tbl_16": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nNet sales:\t\t\t\t\nID Solutions\t\t\t\t\nAmericas\t124970\t137909\t258237\t287271\nEurope\t44040\t45319\t86622\t88701\nAsia\t25217\t22134\t47560\t44377\nTotal\t194227\t205362\t392419\t420349\nWorkplace Safety\t\t\t\t\nAmericas\t20200\t23636\t44231\t47939\nEurope\t40165\t37002\t81431\t73027\nAustralia\t11246\t10665\t24984\t22297\nTotal\t71611\t71303\t150646\t143263\nTotal Company\t\t\t\t\nAmericas\t145170\t161545\t302468\t335210\nEurope\t84205\t82321\t168053\t161728\nAsia-Pacific\t36463\t32799\t72544\t66674\nTotal\t265838\t276665\t543065\t563612\n", "q10k_tbl_17": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nSegment profit:\t\t\t\t\nID Solutions\t39000\t40655\t79279\t83098\nWorkplace Safety\t3463\t5455\t11451\t10612\nTotal Company\t42463\t46110\t90730\t93710\n", "q10k_tbl_18": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nTotal profit from reportable segments\t42463\t46110\t90730\t93710\nUnallocated amounts:\t\t\t\t\nAdministrative costs\t(5051)\t(4866)\t(11130)\t(11575)\nInvestment and other income\t2036\t1760\t2191\t3140\nInterest expense\t(51)\t(647)\t(157)\t(1348)\nIncome before income taxes and losses of unconsolidated affiliate\t39397\t42357\t81634\t83927\n", "q10k_tbl_19": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nNumerator (in thousands):\t\t\t\t\nNet Income (Numerator for basic and diluted income per Class A Nonvoting Common Share)\t30860\t33553\t64341\t71051\nLess:\t\t\t\t\nPreferential dividends\t0\t0\t(808)\t(828)\nPreferential dividends on dilutive stock options\t0\t0\t(4)\t(10)\nNumerator for basic and diluted income per Class B Voting Common Share\t30860\t33553\t63529\t70213\nDenominator: (in thousands)\t\t\t\t\nDenominator for basic income per share for both Class A and Class B\t52018\t53320\t52020\t53232\nPlus: Effect of dilutive equity awards\t264\t507\t268\t549\nDenominator for diluted income per share for both Class A and Class B\t52282\t53827\t52288\t53781\nNet income per Class A Nonvoting Common Share:\t\t\t\t\nBasic\t0.59\t0.63\t1.24\t1.33\nDiluted\t0.59\t0.62\t1.23\t1.32\nNet income per Class B Voting Common Share:\t\t\t\t\nBasic\t0.59\t0.63\t1.22\t1.32\nDiluted\t0.59\t0.62\t1.21\t1.31\n", "q10k_tbl_20": "\tJanuary 31 2021\tJuly 31 2020\tFair Value Hierarchy\nAssets:\t\t\t\nTrading securities\t19204\t18606\tLevel 1\nForeign exchange contracts\t1246\t594\tLevel 2\nLiabilities:\t\t\t\nForeign exchange contracts\t499\t777\tLevel 2\n", "q10k_tbl_21": "\tJanuary 31 2021\tJuly 31 2020\nDesignated as cash flow hedges\t12300\t24600\nNon-designated hedges\t3427\t3107\nTotal foreign exchange contracts\t15727\t27707\n", "q10k_tbl_22": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nGains recognized in OCI\t451\t363\t1148\t559\n(Losses) gains reclassified from OCI into cost of goods sold\t(60)\t105\t(271)\t486\n", "q10k_tbl_23": "\tJanuary 31 2021\t\tJuly 31 2020\t\n\tPrepaid expenses and other current assets\tOther current liabilities\tPrepaid expenses and other current assets\tOther current liabilities\nDerivatives designated as hedging instruments:\t\t\t\t\nForeign exchange contracts (cash flow hedges)\t1241\t499\t588\t761\nDerivatives not designated as hedging instruments:\t\t\t\t\nForeign exchange contracts (non-designated hedges)\t5\t0\t6\t16\nTotal derivative instruments\t1246\t499\t594\t777\n", "q10k_tbl_24": "\tThree months ended January 31\t\t\t\tSix months ended January 31\t\t\t\n(Dollars in thousands)\t2021\t% Sales\t2020\t% Sales\t2021\t% Sales\t2020\t% Sales\nNet sales\t265838\t\t276665\t\t543065\t\t563612\t\nGross margin\t129522\t48.7%\t139127\t50.3%\t264950\t48.8%\t280532\t49.8%\nOperating expenses:\t\t\t\t\t\t\t\t\nResearch and development\t9876\t3.7%\t10517\t3.8%\t20079\t3.7%\t21484\t3.8%\nSelling general and administrative\t82234\t30.9%\t87366\t31.6%\t165271\t30.4%\t176913\t31.4%\nTotal operating expenses\t92110\t34.6%\t97883\t35.4%\t185350\t34.1%\t198397\t35.2%\nOperating income\t37412\t14.1%\t41244\t14.9%\t79600\t14.7%\t82135\t14.6%\n", "q10k_tbl_25": "\tThree months ended January 31\t\t\t\tSix months ended January 31\t\t\t\n(Dollars in thousands)\t2021\t% Sales\t2020\t% Sales\t2021\t% Sales\t2020\t% Sales\nOperating income\t37412\t14.1%\t41244\t14.9%\t79600\t14.7%\t82135\t14.6%\nOther income (expense):\t\t\t\t\t\t\t\t\nInvestment and other income\t2036\t0.8%\t1760\t0.6%\t2191\t0.4%\t3140\t0.6%\nInterest expense\t(51)\t-%\t(647)\t(0.2)%\t(157)\t-%\t(1348)\t(0.2)%\nIncome before income tax and losses of unconsolidated affiliate\t39397\t14.8%\t42357\t15.3%\t81634\t15.0%\t83927\t14.9%\nIncome tax expense\t8206\t3.1%\t8804\t3.2%\t16788\t3.1%\t12876\t2.3%\nIncome before losses of unconsolidated affiliate\t31191\t11.7%\t33553\t12.1%\t64846\t11.9%\t71051\t12.6%\nEquity in losses of unconsolidated affiliate\t(331)\t(0.1)%\t0\t-%\t(505)\t(0.1)%\t0\t-%\nNet income\t30860\t11.6%\t33553\t12.1%\t64341\t11.8%\t71051\t12.6%\n", "q10k_tbl_26": "\tThree months ended January 31\t\tSix months ended January 31\t\n\t2021\t2020\t2021\t2020\nSALES GROWTH INFORMATION\t\t\t\t\nID Solutions\t\t\t\t\nOrganic\t(6.9)%\t(1.3)%\t(7.6)%\t(0.7)%\nCurrency\t1.5%\t(0.5)%\t1.0%\t(0.9)%\nTotal\t(5.4)%\t(1.8)%\t(6.6)%\t(1.6)%\nWorkplace Safety\t\t\t\t\nOrganic\t(4.8)%\t(1.0)%\t0.4%\t(0.9)%\nCurrency\t5.2%\t(1.6)%\t4.8%\t(2.5)%\nTotal\t0.4%\t(2.6)%\t5.2%\t(3.4)%\nTotal Company\t\t\t\t\nOrganic\t(6.3)%\t(1.2)%\t(5.6)%\t(0.8)%\nCurrency\t2.4%\t(0.8)%\t2.0%\t(1.3)%\nTotal\t(3.9)%\t(2.0)%\t(3.6)%\t(2.1)%\nSEGMENT PROFIT AS A PERCENT OF NET SALES\t\t\t\t\nID Solutions\t20.1%\t19.8%\t20.2%\t19.8%\nWorkplace Safety\t4.8%\t7.7%\t7.6%\t7.4%\nTotal\t16.0%\t16.7%\t16.7%\t16.6%\n", "q10k_tbl_27": "\tSix months ended January 31\t\n(Dollars in thousands)\t2021\t2020\nNet cash flow provided by (used in):\t\t\nOperating activities\t98889\t53107\nInvesting activities\t(16392)\t(16506)\nFinancing activities\t(28828)\t(26049)\nEffect of exchange rate changes on cash\t6276\t179\nNet increase in cash and cash equivalents\t59945\t10731\n", "q10k_tbl_28": "Exhibit No.\tExhibit Description\n31.1\tRule 13a-14(a)/15d-14(a) Certification of J. Michael Nauman\n31.2\tRule 13a-14(a)/15d-14(a) Certification of Aaron J. Pearce\n32.1\tSection 1350 Certification of J. Michael Nauman\n32.2\tSection 1350 Certification of Aaron J. Pearce\n101.INS\tXBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.)\n101.SCH\tXBRL Taxonomy Schema Document\n101.CAL\tXBRL Taxonomy Extension Calculation Linkbase Document\n101.DEF\tXBRL Taxonomy Extension Definition Linkbase Document\n101.LAB\tXBRL Taxonomy Extension Label Linkbase Document\n101.PRE\tXBRL Taxonomy Presentation Label Linkbase Document\n104\tCover Page Inline XBRL data (contained in Exhibit 101)\n"}{"bs": "q10k_tbl_2", "is": "q10k_tbl_3", "cf": "q10k_tbl_5"}None
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended January 31, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 1-14959
BRADY CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin
39-0178960
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
6555 West Good Hope Road
Milwaukee,
Wisconsin
53223
(Address of principal executive offices and zip code)
(414) 358-6600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Nonvoting Common Stock, par value $0.01 per share
BRC
New York Stock Exchange
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☑No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☑No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Emerging growth company
☐
Non-accelerated filer
☐
Smaller reporting company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No☑
As of February 16, 2021, there were 48,486,758 outstanding shares of Class A Nonvoting Common Stock and 3,538,628 shares of Class B Voting Common Stock. The Class B Voting Common Stock, all of which is held by affiliates of the Registrant, is the only voting stock.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended January 31, 2021
(Unaudited)
(In thousands, except share and per share amounts)
NOTE A — Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by Brady Corporation and subsidiaries (the "Company," "Brady," "we," or "our") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of January 31, 2021 and July 31, 2020, its results of operations and comprehensive income for the three and six months ended January 31, 2021 and 2020, and cash flows for the six months ended January 31, 2021 and 2020. The condensed consolidated balance sheet as of July 31, 2020, has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statement presentation. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2020.
NOTE B — New Accounting Pronouncements
Adopted Standards
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which changes the impairment model for most financial instruments. Prior guidance required the recognition of credit losses based on an incurred loss impairment methodology that reflected losses once the losses were probable. Under ASU 2016-13, the Company is required to use a current expected credit loss model ("CECL") that immediately recognizes an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The Company adopted ASU 2016-13 effective August 1, 2020, which did not have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, "Goodwill and Other, Simplifying the Test for Goodwill Impairment." The new guidance removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment is now the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance remains largely unchanged. The Company adopted ASC 2017-04 effective August 1, 2020. This guidance only impacts the Company's consolidated financial statements if there is a future impairment of goodwill.
Standards not yet adopted
In December 2019, the FASB issued ASU 2019-12, "Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)." The new guidance removes certain exceptions to the general principles in ASC 740 such as recognizing deferred taxes for equity investments, the incremental approach to performing intraperiod tax allocation and calculating income taxes in interim periods. The standard also simplifies accounting for income taxes under U.S. GAAP by clarifying and amending existing guidance, including the recognition of deferred taxes for goodwill, the allocation of taxes to members of a consolidated group and requiring that an entity reflect the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This guidance is effective for annual periods beginning after December 15, 2020, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected
phase out of the London Inter-bank Offered Rate ("LIBOR") by the end of 2021. This guidance was effective upon issuance and allows application to contract changes as early as January 1, 2020. Some of the Company's contracts with respect to its borrowing agreements already contain comparable alternative reference rates that would automatically take effect upon the phasing out of LIBOR. The Company is in the process of reviewing its bank facilities and commercial contracts that utilize LIBOR as the reference rate and is currently evaluating the potential impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.
NOTE C — Additional Balance Sheet Information
Inventories
Inventories as of January 31, 2021, and July 31, 2020, consisted of the following:
January 31, 2021
July 31, 2020
Finished products
$
79,100
$
85,547
Work-in-process
19,262
24,044
Raw materials and supplies
24,560
26,071
Total inventories
$
122,922
$
135,662
Property, plant and equipment
Property, plant and equipment is presented net of accumulated depreciation in the amount of $272,945 and $276,248 as of January 31, 2021, and July 31, 2020, respectively.
NOTE D — Other Intangible Assets
Other intangible assets as of January 31, 2021 and July 31, 2020, consisted of the following:
January 31, 2021
July 31, 2020
Weighted Average Amortization Period (Years)
Gross Carrying Amount
Accumulated Amortization
Net Book Value
Weighted Average Amortization Period (Years)
Gross Carrying Amount
Accumulated Amortization
Net Book Value
Definite-lived other intangible assets:
Customer relationships and tradenames
9
$
45,498
$
(35,431)
$
10,067
9
$
45,385
$
(32,670)
$
12,715
Indefinite-lived other intangible assets:
Tradenames
N/A
9,742
—
9,742
N/A
9,619
—
9,619
Total
$
55,240
$
(35,431)
$
19,809
$
55,004
$
(32,670)
$
22,334
The change in the gross carrying amount of other intangible assets as of January 31, 2021 compared to July 31, 2020 was mainly due to the effect of currency fluctuations during the six-month period.
Amortization expense of intangible assets was $1,353 and $1,291 for the three months ended January 31, 2021 and 2020, respectively, and $2,704 and $2,582 for the six months ended January 31, 2021 and 2020, respectively. Amortization expense over each of the next three fiscal years is projected to be $5,407, $5,123, and $2,241 for the fiscal years ending July 31, 2021, 2022, and 2023. No amortization expense for intangible assets is projected after July 31, 2023.
NOTE E — Leases
The Company leases certain manufacturing facilities, warehouses and office space, computer equipment, and vehicles accounted for as operating leases. Lease terms typically range from one year to ten years. As of January 31, 2021, the Company did not have any finance leases.
Operating lease expense was $4,169 and $4,274 for the three months ended January 31, 2021 and 2020, respectively, and $8,242 and $9,678 for the six months ended January 31, 2021 and 2020, respectively. Operating lease expense was recognized in either "Cost of goods sold" or "Selling, general and administrative" expenses in the condensed consolidated statements of income, based on the nature of the lease. Short-term lease expense, variable lease expenses, and sublease income was immaterial to the condensed consolidated statements of income for the three and six months ended January 31, 2021 and 2020.
The following table illustrates the changes in the balances of each component of stockholders' equity for the three months ended January 31, 2020:
Common Stock
Additional Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
Balances at October 31, 2019
$
548
$
327,241
$
663,808
$
(43,779)
$
(71,283)
$
876,535
Net income
—
—
33,553
—
—
33,553
Other comprehensive loss, net of tax
—
—
—
—
(1,207)
(1,207)
Issuance of shares of Class A Common Stock under stock plan
—
187
—
624
—
811
Tax benefit and withholdings from deferred compensation distributions
—
69
—
—
—
69
Stock-based compensation expense
—
1,766
—
—
—
1,766
Cash dividends on Common Stock:
Class A — $0.2175 per share
—
—
(10,833)
—
—
(10,833)
Class B — $0.2175 per share
—
—
(770)
—
—
(770)
Balances at January 31, 2020
$
548
$
329,263
$
685,758
$
(43,155)
$
(72,490)
$
899,924
The following table illustrates the changes in the balances of each component of stockholders' equity for the six months ended January 31, 2020:
Common Stock
Additional Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
Balances at July 31, 2019
$
548
$
329,969
$
637,843
$
(46,332)
$
(71,254)
$
850,774
Net income
—
—
71,051
—
—
71,051
Other comprehensive loss, net of tax
—
—
—
—
(1,236)
(1,236)
Issuance of shares of Class A Common Stock under stock plan
—
(6,223)
—
3,177
—
(3,046)
Tax benefit and withholdings from deferred compensation distributions
—
133
—
—
—
133
Stock-based compensation expense
—
5,384
—
—
—
5,384
Cash dividends on Common Stock:
Class A — $0.4350 per share
—
—
(21,655)
—
—
(21,655)
Class B — $0.4184 per share
—
—
(1,481)
—
—
(1,481)
Balances at January 31, 2020
$
548
$
329,263
$
685,758
$
(43,155)
$
(72,490)
$
899,924
NOTE G — Accumulated Other Comprehensive Loss
Other comprehensive loss consists of foreign currency translation adjustments which includes the settlements of net investment hedges, unrealized gains and losses from cash flow hedges, and the unamortized gain on post-retirement plans, net of their related tax effects.
The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the six months ended January 31, 2021:
Unrealized (loss) gain on cash flow hedges
Unamortized gain on post-retirement plans
Foreign currency translation adjustments
Accumulated other comprehensive loss
Beginning balance, July 31, 2020
$
(200)
$
2,181
$
(68,458)
$
(66,477)
Other comprehensive income (loss) before reclassification
1,215
(23)
13,585
14,777
Amounts reclassified from accumulated other comprehensive loss
The decrease in accumulated other comprehensive loss as of January 31, 2021 compared to July 31, 2020, was primarily due to the depreciation of the U.S. dollar against certain other currencies during the six-month period.
The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the six months ended January 31, 2020:
Unrealized gain on cash flow hedges
Unamortized gain on post-retirement plans
Foreign currency translation adjustments
Accumulated other comprehensive loss
Beginning balance, July 31, 2019
$
707
$
2,800
$
(74,761)
$
(71,254)
Other comprehensive income (loss) before reclassification
468
(216)
(913)
(661)
Amounts reclassified from accumulated other comprehensive loss
(365)
(210)
—
(575)
Ending balance, January 31, 2020
$
810
$
2,374
$
(75,674)
$
(72,490)
The increase in accumulated other comprehensive loss as of January 31, 2020, compared to July 31, 2019, was primarily due to the appreciation of the U.S. dollar against certain other currencies during the six-month period.
Of the amounts reclassified from accumulated other comprehensive loss during the six months ended January 31, 2021 and 2020, unrealized (losses) gains on cash flow hedges were reclassified to "Cost of goods sold" and net unamortized gains on post-retirement plans were reclassified into "Investment and other income" on the condensed consolidated statements of income.
The following table illustrates the income tax (expense) benefit on the components of other comprehensive income (loss) for the three and six months ended January 31, 2021 and 2020:
Three months ended January 31,
Six months ended January 31,
2021
2020
2021
2020
Income tax (expense) benefit related to items of other comprehensive income (loss):
Cash flow hedges
$
47
$
(5)
$
(1)
$
30
Pension and other post-retirement benefits
6
93
246
93
Other income tax adjustments and currency translation
(1,304)
(130)
(1,297)
46
Income tax (expense) benefit related to items of other comprehensive income (loss)
$
(1,251)
$
(42)
$
(1,052)
$
169
NOTE H — Revenue Recognition
The Company recognizes revenue when control of the product or service transfers to the customer at an amount that represents the consideration expected to be received in exchange for those products and services. The Company’s revenues are primarily from the sale of identification solutions and workplace safety products that are shipped and billed to customers. All revenue is from contracts with customers and is included in “Net sales” on the condensed consolidated statements of income. See Note I, “Segment Information,” for the Company’s disaggregated revenue disclosure.
The Company offers extended warranty coverage that is included in the sales price of certain products, which it accounts for as service warranties. The Company accounts for the deferred revenue associated with extended service warranties as a contract liability. The balance of contract liabilities associated with service warranty performance obligations was $2,531 and $2,559 as of January 31, 2021 and July 31, 2020, respectively. The current portion and non-current portion of contract liabilities are included in “Other current liabilities” and “Other liabilities," respectively, on the condensed consolidated balance sheets. The Company recognized revenue of $294 and $316 during the three months ended January 31, 2021 and 2020, respectively, and $591 and $631 during the six months ended January 31, 2021 and 2020, respectively, that was included in the contract liability balance at the beginning of the respective period from the amortization of extended service warranties. Of the contract liability balance outstanding at January 31, 2021, the Company expects to recognize 22% by the end of fiscal 2021, an additional 35% by the end of fiscal 2022, and the remaining balance thereafter.
The Company is organized and managed on a global basis within three operating segments, Identification Solutions ("IDS"), Workplace Safety ("WPS"), and People Identification ("PDC"), which aggregate into two reportable segments that are organized around businesses with consistent products and services: IDS and WPS. The IDS and PDC operating segments aggregate into the IDS reporting segment, while the WPS reporting segment is comprised solely of the Workplace Safety operating segment.
The following is a summary of net sales by segment and geographic region for the three and six months ended January 31, 2021 and 2020:
Three months ended January 31,
Six months ended January 31,
2021
2020
2021
2020
Net sales:
ID Solutions
Americas
$
124,970
$
137,909
$
258,237
$
287,271
Europe
44,040
45,319
86,622
88,701
Asia
25,217
22,134
47,560
44,377
Total
$
194,227
$
205,362
$
392,419
$
420,349
Workplace Safety
Americas
$
20,200
$
23,636
$
44,231
$
47,939
Europe
40,165
37,002
81,431
73,027
Australia
11,246
10,665
24,984
22,297
Total
$
71,611
$
71,303
$
150,646
$
143,263
Total Company
Americas
$
145,170
$
161,545
$
302,468
$
335,210
Europe
84,205
82,321
168,053
161,728
Asia-Pacific
36,463
32,799
72,544
66,674
Total
$
265,838
$
276,665
$
543,065
$
563,612
The following is a summary of segment profit for the three and six months ended January 31, 2021 and 2020:
Three months ended January 31,
Six months ended January 31,
2021
2020
2021
2020
Segment profit:
ID Solutions
$
39,000
$
40,655
$
79,279
$
83,098
Workplace Safety
3,463
5,455
11,451
10,612
Total Company
$
42,463
$
46,110
$
90,730
$
93,710
The following is a reconciliation of segment profit to income before income taxes and losses of unconsolidated affiliate for the three and six months ended January 31, 2021 and 2020:
Three months ended January 31,
Six months ended January 31,
2021
2020
2021
2020
Total profit from reportable segments
$
42,463
$
46,110
$
90,730
$
93,710
Unallocated amounts:
Administrative costs
(5,051)
(4,866)
(11,130)
(11,575)
Investment and other income
2,036
1,760
2,191
3,140
Interest expense
(51)
(647)
(157)
(1,348)
Income before income taxes and losses of unconsolidated affiliate