Brady
Annual Report 2015

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-KxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended July 31, 2015OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number 1-14959 BRADY CORPORATION(Exact name of registrant as specified in charter)Wisconsin 39-0178960(State or other jurisdiction ofincorporation or organization) (IRS EmployerIdentification No.)6555 West Good Hope Road,Milwaukee, WI 53223(Address of principal executive offices) (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 Name of each exchange on which registeredClass A Nonvoting Common Stock, ParValue $.01 per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ýIndicate 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 preceding12 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 ý No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted 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 and post suchfiles). Yes ý 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’sknowledge, 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 a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “largeaccelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filerx Accelerated filer¨Non-accelerated filer¨ (Do not check if a smaller reporting company) Smaller reporting company¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ýThe aggregate market value of the non-voting common stock held by non-affiliates of the registrant as of January 31, 2015, was approximately $1,174,025,350 based on theclosing sale price of $26.17 per share on that date as reported for the New York Stock Exchange. As of September 18, 2015, there were 47,711,833 outstanding shares of Class ANonvoting Common Stock (the “Class A Common Stock”), and 3,538,628 shares of Class B Common Stock. The Class B Common Stock, all of which is held by affiliates of theregistrant, is the only voting stock.Table of ContentsINDEXPART IPageItem.1 Business3General Development of Business3Financial Information About Industry Segments3Narrative Description of Business4Overview4Research and Development5Operations6Environment6Employees6Financial Information About Foreign and Domestic Operations and Export Sales6Information Available on the Internet6Item 1A. Risk Factors7Item 1B. Unresolved Staff Comments12Item 2. Properties12Item 3. Legal Proceedings12Item 4. Mine Safety Disclosures12PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities13Item 6. Selected Financial Data15Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations16Item 7A. Quantitative and Qualitative Disclosures About Market Risk32Item 8. Financial Statements and Supplementary Data33Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure71Item 9A. Controls and Procedures72Item 9B. Other Information74PART III Item 10. Directors and Executive Officers of the Registrant74Item 11. Executive Compensation79Compensation Discussion and Analysis79Management Development and Compensation Committee Interlocks and Insider Participation92Management Development and Compensation Committee Report92Compensation Policies and Practices92Summary Compensation Table93Grants of Plan-Based Awards for 201595Outstanding Equity Awards at 2015 Fiscal Year End96Option Exercises and Stock Vested for Fiscal 201598Non-Qualified Deferred Compensation for Fiscal 201598Potential Payments Upon Termination or Change in Control98Compensation of Directors102Director Compensation Table — Fiscal 2015103Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters104Item 13. Certain Relationships, Related Transactions, and Director Independence106Item 14. Principal Accounting Fees and Services107PART IV Item 15. Exhibits and Financial Statement Schedules108Signatures1132PART IItem 1. Business(a) General Development of BusinessBrady Corporation (“Brady,” “Company,” “we,” “us,” “our”) was incorporated under the laws of the state of Wisconsin in 1914. The Company’scorporate headquarters are located at 6555 West Good Hope Road, Milwaukee, Wisconsin 53223, and the telephone number is (414) 358-6600.Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises,products and people. The ability to provide customers with a broad range of proprietary, customized and diverse products for use in various applications,along with a commitment to quality and service, a global footprint, and multiple sales channels, have made Brady a leader in many of its markets.The Company’s primary objective is to build upon its market position and increase shareholder value by improving in the following key competencies:•Operational excellence — Continuous productivity improvement, business simplification and process transformation.•Customer service — Focus on the customer and understanding customer needs.•Innovation advantage — Technologically advanced, internally developed products drive growth and sustain gross profit margins.•Global leadership position in niche markets.•Digital capabilities.•Compliance expertise.Over the last two years, we made significant portfolio and management decisions designed to better position the Company for growth in the future. Thesechanges were a meaningful shift from the more volatile and less profitable consumer electronics Die-Cut business, which was partially divested in fiscal 2014and fully divested in the first quarter of fiscal 2015, to a focus on organic growth opportunities within our Identification Solutions (“ID Solutions" or "IDS”)and Workplace Safety ("WPS") segments. In our IDS business, our strategy for growth includes expanding the business in high opportunity markets andinvesting in research and development ("R&D") activities to develop and launch innovative, high-value products more efficiently. In our WPS business, ourstrategy to return to growth includes a focus on workplace safety critical industries, expansion of our product offerings, further developed pricingcapabilities, and increased investment in digital.The following were key initiatives supporting the strategy in fiscal 2015:•Focused on driving operational excellence and providing the Company's customers with innovative products and the highest level of customerservice.•Invested in R&D to identify emerging technology opportunities that align with the Company's target markets and improved our innovationdevelopment process.•Enhanced the Company's business primarily through focused sales and marketing efforts in selected vertical markets and an increased focus onstrategic accounts.•Expanded the direct-marketing model in the WPS business by increasing its offering of identification and workplace safety products with aheightened focus on proprietary and customized product offerings and an increased emphasis on digital.•Completed the consolidation of selected manufacturing facilities in the Americas and Europe.In fiscal 2014, the Company entered into an agreement with LTI Flexible Products, Inc. (d/b/a Boyd Corporation) for the sale of its Die-Cut business.The first phase of the divestiture closed on May 1, 2014 and included the Company’s European Die-Cut business and the portions of the Asia Die-Cutbusiness operated in Korea, Thailand and Malaysia, together with the transfer of certain of the Company’s employees in the United States supporting thoseoperations. The second phase of the divestiture included the Company's Die-Cut business located in China and closed in the first quarter of fiscal 2015.(b) Financial Information About Industry SegmentsThe information required by this Item is provided in Note 9 of the Notes to Consolidated Financial Statements contained in Item 8 - FinancialStatements and Supplementary Data.3Table of Contents(c) Narrative Description of BusinessOverviewThe Company is organized and managed on a global basis within two reportable segments: Identification Solutions and Workplace Safety.The IDS segment includes high-performance and innovative identification and healthcare products that are manufactured under multiple brands,including the Brady brand, and are primarily sold through distribution to a broad range of maintenance, repair, and operations ("MRO") and originalequipment manufacturing ("OEM") customers and through other channels, including direct sales, catalog marketing, and digital.The WPS segment includes workplace safety and compliance products, which are sold under multiple brand names through catalog and digital to abroad range of MRO customers. Approximately half of the WPS business is derived from internally manufactured product and half is from externally sourcedproducts.Below is a summary of sales by reportable segments for the fiscal years ended July 31: 2015 2014 2013IDS 68.8% 67.4% 63.8%WPS 31.2% 32.6% 36.2%Total 100% 100% 100%ID SolutionsWithin the ID Solutions segment, the primary product and service categories include:•Facility identification, which includes safety signs, pipe markers, labeling systems, spill control products, lockout/tagout devices, and software andservices for auditing, procedure writing and training.•Product identification, which includes materials and printing systems for product identification, brand protection labeling, work in processlabeling, and finished product identification.•Wire identification, which includes hand-held printers, wire markers, sleeves, and tags.•People identification, which includes self-expiring name tags, badges, lanyards, and access control software.•Patient identification, which includes wristbands and labels used in hospitals for tracking and improving the safety of patients.•Custom wristbands used in the leisure and entertainment industry such as theme parks, concerts and festivals.Approximately 65% of ID Solutions products are sold under the Brady brand. In the United States, identification products for the utility industry aremarketed under the Electromark brand; spill-control products are marketed under the SPC brand; and security and identification badges and systems aremarketed under the B.I.G., Identicard/Identicam, PromoVision, and Brady People ID brands. Wire identification products are marketed under theModernotecnica brand in Italy and lockout/tagout products are offered under the Scafftag brand in the U.K. Custom labels and nameplates are availableunder the Stickolor brand in Brazil; and identification and patient safety products in the healthcare industry and custom wristbands for the leisure andentertainment industry are available under the PDC Innovative brand in the U.S. and Europe.The ID Solutions segment offers high quality products with rapid response and superior service to provide solutions to customers. The business marketsand sells products through multiple channels including distributors, direct sales, catalog marketing, and e-commerce. The ID Solutions sales force partnerswith end-users and distributors by providing technical application and product expertise.ID Solutions serves customers in many industries, which include industrial manufacturing, electronic manufacturing, healthcare, chemical, oil, gas,automotive, aerospace, defense, mass transit, electrical contractors, leisure and entertainment and telecommunications, among others.The ID Solutions segment manufactures differentiated, proprietary products, most of which have been internally developed. These internally developedproducts include materials, printing systems, and software. IDS competes for business principally on the basis of production capabilities, engineering,research and development capabilities, materials expertise, customer service, product quality and price, and safety expertise. Competition is highlyfragmented, ranging from smaller companies offering minimal product variety, to some of the world's largest major adhesive and electrical product companiesoffering competing products as part of their overall product lines.4Table of ContentsWorkplace SafetyWithin the Workplace Safety segment, the primary product categories include:•Safety and compliance signs, tags, and labels.•Informational and architectural signage.•Asset tracking labels.•First aid products.•Industrial warehouse and office equipment.•Labor law compliance posters.Products within the Workplace Safety segment are sold under a variety of brands including: safety and facility identification products offered under theSeton, Emedco, Signals, Safety Signs Service and Pervaco brands; first aid supplies under the Accidental Health and Safety, Trafalgar, and Securimed brands;warehouse supplies and industrial furniture under the Runelandhs and Welco brands; wire identification products marketed under the Carroll brand; andlabor law compliance posters under the Personnel Concepts brand.Workplace Safety primarily sells to other businesses and serves many industries, including manufacturers, process industries, government, education,construction, and utilities. The business markets and sells products through multiple channels, including catalog, telemarketing and digital.The Workplace Safety platform manufactures a broad range of stock and custom identification products, and also sells a broad range of related resaleproducts. Historically, both the Company and many of our competitors focused their businesses on catalog marketing, often with varying product niches.However, the competitive landscape is changing with the continued evolution of digital channels. Many of our competitors extensively utilize e-commerceto promote the sale of their products. A consequence of this shift is price transparency, as prices on non-proprietary products can be easily compared.Therefore, to compete effectively, we continue to focus on developing dynamic pricing capabilities and enhancing customer experience as these are criticalto convert customers from traditional catalog channels to digital.Discontinued OperationsDiscontinued operations include the Asia Die-Cut and European Die-Cut businesses ("Die-Cut"), which were announced as held for sale in the third andfourth quarters of fiscal 2013, respectively. In fiscal 2014, the Company entered into an agreement with LTI Flexible Products, Inc. (d/b/a Boyd Corporation)for the sale of Die-Cut. The first phase of the divestiture closed in the fourth quarter of fiscal 2014 and the second phase of the divestiture closed in the firstquarter of fiscal 2015. The assets and liabilities of the businesses included in the second phase were classified as held for sale on the consolidated balancesheet as of July 31, 2014. The operating results of the Die-Cut businesses were reflected as discontinued operations in the consolidated statements of earningsfor the years ended July 31, 2015, 2014 and 2013. In addition, the Brady Medical and Varitronics businesses were previously divested in fiscal 2013 andwere reported within discontinued operations. These divested businesses were part of the IDS business platform.The Die-Cut business consisted of the manufacture and sale of precision converted products such as gaskets, meshes, heat-dissipation materials,antennaes, dampers, filters, and similar products sold primarily to the electronics industry with a concentration in the mobile-handset and hard-disk driveindustries.Research and DevelopmentThe Company focuses its research and development ("R&D") efforts on pressure sensitive materials, printing systems and software, and it mainlysupports the IDS segment. Material development involves the application of surface chemistry concepts for top coatings and adhesives applied to a variety ofbase materials. Systems design integrates materials, embedded software and a variety of printing technologies to form a complete solution for customerapplications. In addition, the research and development team supports production and marketing efforts by providing application and technical expertise.The Company owns patents and tradenames relating to certain products in the United States and internationally. Although the Company believes thatpatents are a significant driver in maintaining its position for certain products, technology in the areas covered by many of the patents continues to evolveand may limit the value of such patents. The Company's business is not dependent on any single patent or group of patents. Patents applicable to specificproducts extend for up to 20 years according to the date of patent application filing or patent grant, depending upon the legal term of patents in the variouscountries where patent protection is obtained. The Company's tradenames are valid ten years from the date of registration, and are typically renewed on anongoing basis.5Table of ContentsThe Company spent $36.7 million, $35.0 million, and $33.6 million during the fiscal years ended July 31, 2015, 2014, and 2013, respectively, on itsR&D activities related to continuing operations. The increase in R&D spending over the years was primarily due to our innovation development initiative torealign the R&D processes in order to accelerate new product innovation and increased investments in emerging technologies such as RFID and sensingtechnologies. As of July 31, 2015, 220 employees were engaged in research and development activities for the Company.OperationsThe materials used in the products manufactured consist primarily of a variety of plastic and synthetic films, paper, metal and metal foil, cloth,fiberglass, inks, dyes, adhesives, pigments, natural and synthetic rubber, organic chemicals, polymers, and solvents for consumable identification products inaddition to electronic components, molded parts and sub-assemblies for printing systems. The Company operates a coating facility that manufactures bulkrolls of label stock for internal and external customers. In addition, the Company purchases finished products for resale.The Company purchases raw materials, components and finished products from many suppliers. Overall, the Company is not dependent upon anysingle supplier for its most critical base materials or components; however, the Company has chosen in certain situations to sole source, or limit the sources ofmaterials, components, or finished items for design or cost reasons. As a result, disruptions in supply could have an impact on results for a period of time, butwe believe any disruptions would simply require qualification of new suppliers and the disruption would be modest. In certain instances, the qualificationprocess could be more costly or take a longer period of time and in rare circumstances, such as a global shortage of critical materials or components, thefinancial impact could be significant. The Company currently operates 42 manufacturing or distribution facilities globally.The Company carries working capital mainly related to accounts receivable and inventory. Inventory consists of raw materials, work in process andfinished goods. Generally, custom products are made to order while an on-hand quantity of stock product is maintained to provide customers with timelydelivery. Normal and customary payment terms range from net 30 to 90 days from date of invoice and varies by geographies.The Company has a broad customer base, and no individual customer is 5% or more of total net sales.Average delivery time for customer orders varies from same-day delivery to one month, depending on the type of product, customer request, andwhether the product is stock or custom-designed and manufactured. The Company's backlog is not material, does not provide significant visibility for futurebusiness and is not pertinent to an understanding of the business.EnvironmentCompliance with federal, state and local environmental protection laws during fiscal 2015 did not have a material impact on the Company’s business,financial condition or results of operations.EmployeesAs of July 31, 2015, the Company employed approximately 6,560 individuals. Brady has never experienced a material work stoppage due to a labordispute and considers its relations with employees to be good.(d) Financial Information About Foreign and Domestic Operations and Export SalesThe information required by this Item is provided in Note 9 of the Notes to Consolidated Financial Statements contained in Item 8 — FinancialStatements and Supplementary Data.(e) Information Available on the InternetThe Company’s Corporate Internet address is http://www.bradycorp.com. The Company makes available, free of charge, on or through its Internetwebsite copies of its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to all such reports assoon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. The Company is not including the informationcontained on or available through its website as part of, or incorporating such information by reference into, this Annual Report on Form 10-K.6Table of ContentsItem 1A. Risk FactorsInvestors should carefully consider the risks set forth below and all other information contained in this report and other documents we file with theSEC. The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties facing us. Ourbusiness is also subject to general risk and uncertainties that affect many other companies, such as market conditions, geopolitical events, changes in lawsor accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expectedeconomic or business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impairour business, including our results of operations, liquidity and financial conditions.Business RisksFailure to successfully implement our Workplace Safety strategy, or if successfully implemented, failure to realize the benefits expected from thestrategy, may adversely affect our business, sales, results of operations, cash flow and liquidity.In fiscal 2015, the Workplace Safety segment represented 31.2% of our total sales. Organic sales in the WPS segment declined 0.4% in fiscal 2015,4.6% in fiscal 2014, and 7.0% in fiscal 2013, all compared to the same periods in the prior year. During fiscal 2015, we recorded impairment charges of $46.9million primarily related to the goodwill and other intangible assets in the WPS Americas and WPS Asia-Pacific ("WPS APAC") reporting units. The WPSsegment has experienced a deterioration in sales and profits due to a reduction in direct catalog mailings, increased digital competition, and pricingadjustments. While traditional direct marketing channels such as catalogs are important means of selling WPS products, an increasing number of customersare purchasing products on the Internet. The Company's strategy to grow this business includes: a focus on workplace safety critical industries, expansion ofour product offerings, further developed pricing capabilities, and increased investment in digital. There is a risk that the Company may not continue tosuccessfully implement this strategy, or if successfully implemented, not realize its expected benefits, due to the continued levels of increased competitionand pricing pressure brought about by the Internet. Although the rate of sales decline has slowed over the past three years, there is also a risk that theCompany may not be able to permanently reverse the downward trends in this business and return the segment to historic levels of sales and profits. If theserisks materialize, their effects could adversely impact our business, sales, results of operations, cash flow and liquidity.Failure to develop technologically advanced products that meet customer demands (including price expectations) and expand into adjacent productcategories and markets could adversely impact our business, sales, results of operations, cash flow and liquidity.Development of technologically advanced new products is targeted as a driver of our organic growth and profitability. Technology is changing rapidlyand our competitors are innovating quickly. If we do not keep pace with developing technologically advanced products, we risk product commoditization,deterioration of the value of our brand, and reduced ability to effectively compete. We must continue to develop innovative products, as well as acquire andretain the necessary intellectual property rights in these products. If we fail to make innovations, or we launch products with quality problems, or if customersdo not accept our products, then our business, sales, results of operations, cash flow, and liquidity could be adversely affected.In addition, our strategy is to expand into higher-growth adjacent product categories and markets with technologically advanced new products. Newproduct development and marketing efforts, including entry in markets where we have limited or no prior experience, such as healthcare and leisure andentertainment, have inherent risks. There can be no assurance that we will successfully execute these strategies. If we are unable to gain market share orsuccessfully expand into adjacent markets with innovative new products, our business, sales, results of operations, cash flow, and liquidity could beadversely affected.Failure to execute facility consolidations and maintain acceptable operational service metrics may adversely impact our business, sales, results ofoperations, cash flow and liquidity.During fiscal years 2014 and 2015, we incurred unplanned operating costs related to consolidation of certain facilities and experienced deteriorationof key service metrics. We remain challenged by operating inefficiencies stemming from these actions, but we are focused on improvements and returning toprior service metrics. We continually assess our global footprint and expect to implement additional measures to reduce our cost structure, simplify ourbusiness, and standardize our processes, and these actions could result in unplanned operating costs and business disruptions in the future. If these risksmaterialize, or if we fail to successfully address these inefficiencies, their effects could adversely impact our business, sales, results of operations, cash flowand liquidity.7Table of ContentsOur failure or the failure of third-party service providers to protect our sites, networks and systems against security breaches, or otherwise to protectour confidential information, may substantially harm our business, sales, results of operations, cash flow and liquidity.Our business systems collect, maintain, transmit and store data about our customers, vendors and others, including credit card information andpersonally identifiable information, as well as other confidential and proprietary information. We also employ third-party service providers that store, processand transmit proprietary, personal and confidential information on our behalf. We rely on encryption and authentication technology licensed from thirdparties in an effort to securely transmit confidential and sensitive information, including credit card numbers. Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to hack our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishingattacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmittedby our sites, networks and systems or that we or our third-party service providers otherwise maintain. We and our service providers may not have the resourcesor technical sophistication to anticipate or prevent all types of attacks, and techniques used to obtain unauthorized access to or sabotage systems changefrequently and may not be known until launched against us or our third-party service providers. In addition, security breaches can also occur as a result ofnon-technical issues, including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships. Althoughwe maintain privacy, data breach and network security liability insurance, we cannot be certain that our coverage will be adequate or cover liabilitiesactually incurred, or that insurance will continue to be available to us on economically reasonable terms, or at all. Any compromise or breach of our securitymeasures, or those of our third-party service providers, could adversely impact our ability to conduct business, violate applicable privacy, data security andother laws, and cause significant legal and financial exposure, adverse publicity, and a loss of confidence in our security measures, which could have anadverse and material effect on our business, sales, results of operations, cash flow and liquidity.Failure to compete effectively or remain competitive may have a negative impact on our business, sales, results of operations, cash flow and liquidity.We actively compete with companies that produce and market the same or similar products, and in some instances, with companies that sell differentproducts that are designed for the same end user. Additionally, we continue to face competition through the Internet in our entire business. Competition mayforce us to reduce prices or incur additional costs to remain competitive. We compete on the basis of price, customer support, product innovation, productoffering, product quality, expertise, production capabilities, and for multinational customers, our global footprint. Present or future competitors may developand introduce new and enhanced products, offer products based on alternative technologies and processes, accept lower profit, have greater financial,technical or other resources, or lower production costs or have other pricing advantages. Any of these could put us at a disadvantage by threatening our shareof sales or reducing our profit margins, which could adversely impact our results of operations, cash flow and liquidity. Additionally, throughout our globalbusiness, distributors and customers may seek lower cost sourcing opportunities, which could result in a loss of business that may adversely impact ourbusiness, sales, results of operations, cash flow and liquidity.Deterioration of or instability in the global economy and financial markets may adversely affect our business, sales, results of operations, cash flowand liquidity.Our business and operating results could be affected by global economic conditions. In fiscal 2015, our business was negatively impacted by the weakeconomy in Australia and Brazil. When global economic conditions deteriorate or economic uncertainty continues, customers and potential customers mayexperience deterioration of their businesses, which may result in the delay or cancellation of plans to purchase our products. Our sensitivity to economiccycles and any related fluctuations in the businesses of our customers or potential customers could have a material adverse impact on our business, sales,results of operations, cash flow and liquidity.The global nature of our business exposes us to foreign currency fluctuations that could adversely affect our business, sales, results of operations,cash flow, and liquidity.Nearly 45% of our sales are derived outside the United States. Sales and purchases in currencies other than the U.S. dollar expose us to fluctuations inforeign currencies relative to the U.S. dollar, and may adversely affect our financial statements. Increased strength of the U.S. dollar will increase the effectiveprice of our products sold in currencies other than U.S. dollars into other countries. Decreased strength of the U.S. dollar could adversely affect the cost ofmaterials, products, and services purchased overseas. Our sales and expenses are translated into U.S. dollars for reporting purposes, and the strengthening orweakening of the U.S. dollar could result in unfavorable translation effects, which occurred in fiscal 2015. In addition, certain of our subsidiaries may invoicecustomers in a currency other than its functional currency, which could result in unfavorable translation effects on our business, sales, results of operations,cash flow and liquidity.8Table of ContentsDemand for our products may be adversely affected by numerous factors, some of which we cannot predict or control. This could adversely affect ourbusiness, sales, results of operations, cash flow and liquidity.Numerous factors may affect the demand for our products, including:•Future financial performance of major markets served.•Consolidation in the marketplace, allowing competitors and customers to be more efficient and more price competitive.•Future competitors entering the marketplace.•Decreasing product life cycles.•Changes in customer preferences.If any of these factors occur, the demand for our products could suffer, and this could adversely impact our business, sales, results of operations, cashflows and liquidity.A large customer loss could significantly affect our business, sales, results of operations, cash flow, and liquidity.While we have a broad customer base and no individual customer represents 5% or more of total sales, we conduct business with several largecustomers and distribution companies. Our dependence on these customers makes relationships with them important. We cannot guarantee that theserelationships will be retained in the future. Because these large customers account for a significant portion of sales, they may possess a greater capacity tonegotiate reduced prices. If we are unable to provide products to our customers at the quality and prices acceptable to them, some of our customers may shifttheir business to competitors or may substitute another manufacturer's products. If one of the large customers consolidates, is acquired, or loses market share,the result of that event may have an adverse impact on our business. The loss of or reduction of business from one or more of these large customers could havea material adverse impact on our business, sales, results of operations, cash flows, and liquidity.We depend on key employees and the loss of these individuals could have an adverse effect on our operations.Our success depends to a large extent upon the continued services of our key executives, managers and other skilled employees. We cannot ensure thatwe will be able to retain our key executives, managers and employees. The departure of key personnel without adequate replacement could disrupt ourbusiness operations. Additionally, we need qualified managers and skilled employees with technical and industry experience to operate our businesssuccessfully. If we are unable to attract and retain qualified individuals or our costs to do so increase significantly, our operations could be materiallyadversely affected.We are a global company headquartered in the United States. We are subject to extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities at various levels of the governing bodies. Failure to comply with laws and regulations could adversely affect our business, sales, resultsof operations, cash flow and liquidity.Our operations are subject to the risks of doing business domestically and globally, including the following:•Delays or disruptions in product deliveries and payments in connection with international manufacturing and sales.•Political and economic instability and disruptions.•Imposition of duties and tariffs.•Import, export and economic sanction laws.•Current and changing governmental policies, regulatory, and business environments.•Disadvantages from competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign CorruptPractices Act.•Local labor market conditions.•Regulations relating to climate change, air emissions, wastewater discharges, handling and disposal of hazardous materials and wastes.•Regulations relating to health, safety and the protection of the environment.•Specific country regulations where our products are manufactured or sold.•Laws and regulations that apply to companies doing business with the government, including audit requirements of government contractsrelated to procurement integrity, export control, employment practices, and the accuracy of records and recording of costs.Further, these laws and regulations are constantly evolving and it is impossible to accurately predict the effect they may have upon our sales, results ofoperations, cash flows and liquidity.9Table of ContentsWe cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents orbusiness partners that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, anti-kickbackand false claims rules, competition, export and import compliance, money laundering and data privacy. Any such improper actions could subject us to civilor criminal investigations in the U.S. and in other jurisdictions, could lead to substantial civil or criminal, monetary and non-monetary penalties and relatedshareholder lawsuits, could damage our reputation, and could adversely impact our business, results of operations, cash flow and liquidity.Product liability claims could adversely impact our financial condition, results of operations, cash flows, and reputation.Our business exposes us to potential product liability risk, as well as warranty and recall claims that are inherent in the design, manufacture, sale anduse of our products. We sell products in industries such as aerospace, defense, healthcare, chemical, and energy where the impact of product liability risk ishigh. To date, we have not incurred material costs related to these types of claims. However, in the event our products actually or allegedly fail to perform asexpected and we are subject to such claims above the amount of insurance coverage, outside the scope of our coverage, or for which we do not have coverage,our financial condition, results of operations and cash flows, as well as our reputation, could be materially and adversely affected.Divestitures could negatively impact our business and contingent liabilities from divested businesses could adversely affect our results of operations,cash flow and liquidity.We continually assess the strategic fit of our existing businesses and may divest businesses that we determine do not align with our strategic plan, orthat are not achieving the desired return on investment. For example, over the last three fiscal years, we have divested our Brady Medical and Varitronicsbusinesses, and our Asia Die-Cut and European Die-Cut businesses. Divestitures pose risks and challenges that could negatively impact our business. Forexample, when we decide to sell a business or assets, we may be unable to do so on satisfactory terms and within our anticipated time-frame, and even afterreaching a definitive agreement to sell a business, the sale is typically subject to satisfaction of pre-closing conditions which may not be satisfied. Inaddition, the impact of the divestiture on our revenue and net earnings may be larger than projected, which could distract management, and disputes mayarise with buyers. Also, we have retained responsibility for and have agreed to indemnify buyers against some contingent liabilities related to a number ofbusinesses that we have recently sold. The resolution of these contingencies has not had a material adverse impact on our results of operations, cash flow andliquidity, but we cannot be certain that this favorable pattern will continue.Inability to identify, complete, and integrate acquisitions and grow acquired companies, may adversely impact our sales, results of operations, cashflow and liquidity.Our historical growth has included acquisitions, and our future growth strategy may include acquisition opportunities. For example, in fiscal 2013 theCompany acquired Precision Dynamics Corporation ("PDC"), a manufacturer of identification products primarily for the healthcare sector, for $301.2 million.We have not met the sales growth synergies identified at the time of the PDC acquisition, which, in addition to other factors, resulted in the Companyrecording impairment charges of $148.6 million during fiscal 2014, primarily related to the goodwill and other intangible assets in the PeopleID reportingunit, which consists primarily of the PDC business. Failure to achieve these synergies for PDC or other acquired companies may adversely impact our sales,results of operations, cash flow and liquidity. We may not focus on acquisitions as part of our growth strategy, or if we do, we may not be able to identifyacquisition targets or successfully complete acquisitions in the future due to the absence of quality companies in our target markets, economic conditions, orprice expectations from sellers. If we do not complete additional acquisitions, our growth may be limited.Acquisitions place significant demands on management, operational, and financial resources. Recent and future acquisitions will require integration ofoperations, sales and marketing, information technology, and administrative operations, which could decrease the time available to focus on our other growthstrategies. We cannot assure that we will be able to successfully integrate acquisitions, that these acquisitions will operate profitably, or that we will be ableto achieve the desired sales growth or operational success. Our sales, results of operations, cash flow, and liquidity could be adversely affected if we do notsuccessfully integrate the newly acquired businesses, or if our other businesses suffer due to the increased focus on the acquired businesses.10Table of ContentsFinancial/Ownership RisksFailure to execute our strategies could result in impairment of goodwill or other intangible assets, which may negatively impact earnings andprofitability.We have goodwill of $433.2 million and other intangible assets of $68.9 million as of July 31, 2015, which represents 47.2% of our total assets. Overthe past three years, the Company has recorded impairment charges of approximately $400 million related to the goodwill and other intangible assets ofmultiple reporting units. We evaluate goodwill for impairment on an annual basis, or more frequently if impairment indicators are present, based upon the fairvalue of each reporting unit. We assess the impairment of other intangible assets on an annual basis, or more frequently if impairment indicators are present,based upon the expected future cash flows of the respective assets. These valuations include management's estimates of sales, profitability, cash flowgeneration, capital structure, cost of debt, interest rates, capital expenditures, and other assumptions. Significant negative industry or economic trends,disruptions to our business, inability to achieve sales projections or cost savings, inability to effectively integrate acquired businesses, unexpectedsignificant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in thevaluations. If the estimated fair value of our reporting units changes in future periods, we may be required to record an impairment charge related to goodwillor other intangible assets, which would reduce earnings in such period.Changes in tax legislation or tax rates could adversely affect results of operations and financial statements. Additionally, audits by taxingauthorities could result in tax payments for prior periods.We are subject to income taxes in the U.S. and in many non-U.S. jurisdictions. As such, our earnings are subject to risk due to changing tax laws and taxrates around the world. At any point in time, there are a number of tax proposals at various stages of legislation throughout the globe. While it is impossiblefor us to predict whether some or all of these proposals will be enacted, it likely would have an impact on our earnings.Our tax filings are subject to audit by U.S. federal, state and local tax authorities and by non-U.S. tax authorities. If these audits result in payments orassessments that differ from our reserves, our future net earnings may be adversely impacted.We review the probability of the realization of our deferred tax assets on a quarterly basis based on forecasts of taxable income in both the U.S. andforeign jurisdictions. As part of this review, we utilize historical results, projected future operating results, eligible carry-forward periods, tax planningopportunities, and other relevant considerations. Adverse changes in profitability and financial outlook in both the U.S. and/or foreign jurisdictions, orchanges in our geographic footprint may require changes in the valuation allowances in order to reduce our deferred tax assets. Such changes could result in amaterial impact on earnings.Our annual cash needs could require us to repatriate cash to the U.S. from foreign jurisdictions, which may result in tax charges. We had no such taxcharges in fiscal 2015. However, in fiscal 2014, we repatriated cash to the U.S. in connection with the sale of the Die Cut businesses, which resulted in a taxcharge of $4.0 million in continuing operations and in fiscal 2013, we repatriated cash to the U.S. in connection with the acquisition of PDC, which resultedin a tax charge of $26.6 million.Substantially all of our voting stock is controlled by members of the Brady family, while our public investors hold non-voting stock. The interests ofthe voting and non-voting shareholders could differ, potentially resulting in decisions that unfavorably affect the value of the non-voting shares.Substantially all of our voting stock is controlled by Elizabeth P. Bruno, one of the Directors, and William H. Brady III, both of whom are descendantsof the Company's founder. All of our publicly traded shares are non-voting. Therefore, Ms. Bruno and Mr. Brady have control in most matters requiringapproval or acquiescence by shareholders, including the composition of our Board of Directors and many corporate actions. Such concentration of ownershipmay discourage a potential acquirer from making a purchase offer that our public shareholders may find favorable, which in turn could adversely affect themarket price of our common stock or prevent our shareholders from realizing a premium over our stock price. Furthermore, this concentration of voting shareownership may adversely affect the trading price for our non-voting common stock because investors may perceive disadvantages in owning stock incompanies whose voting stock is controlled by a limited number of shareholders.11Table of ContentsFailure to meet certain financial covenants required by our debt agreements may adversely affect our assets, results of operations, cash flows, andliquidity.As of July 31, 2015, we had $253.7 million in outstanding indebtedness. In addition, based on the availability under our credit facilities as of July 31,2015, we had the ability to incur an additional $194.7 million under our revolving credit agreement. Our current revolving credit agreement and long-termdebt obligations also impose certain restrictions on us. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations("MD&A") within Item 7 for more information regarding our credit agreement and long-term debt obligations. If we breach any of these restrictions orcovenants and do not obtain a waiver from the lenders, then subject to applicable cure periods, the outstanding indebtedness (and any other indebtednesswith cross-default provisions) could be declared immediately due and payable, which could adversely affect our assets, results of operations, cash flows andliquidity.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesThe Company currently operates 42 manufacturing or distribution facilities across the globe and are split by reporting segment as follows: IDS: Thirty facilities are used for our IDS business. Six of which are located within the United States; four each are located in Belgium and China; three eachin Mexico and the United Kingdom; two each in Brazil and India; and one each in Canada, Hong Kong, Italy, Japan, Malaysia, and Singapore. WPS: Twelve facilities are used for our WPS business. Three of which are located in France; two each are located in Australia and Germany; and one each inthe Netherlands, Poland, Sweden, the United Kingdom, and the United States. The Company’s present operating facilities contain a total of approximately 2.2 million square feet of space, of which approximately 1.6 million squarefeet is leased. The Company believes that its equipment and facilities are modern, well maintained, and adequate for present needs.Item 3. Legal ProceedingsThe Company is, and may in the future be, party to litigation arising in the normal course of business. The Company is not currently a party to anymaterial pending legal proceedings in which management believes the ultimate resolution would have a material effect on the Company’s consolidatedfinancial statements.Item 4. Mine Safety DisclosuresNot applicable.12Table of ContentsPART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities(a)Market InformationBrady Corporation Class A Nonvoting Common Stock trades on the New York Stock Exchange under the symbol BRC. The following table sets forththe range of high and low daily closing sales prices for the Company’s Class A stock as reported on the New York Stock Exchange for each of the quarters inthe fiscal years ended July 31: 2015 2014 2013 High Low High Low High Low4th Quarter $26.76 $23.15 $30.75 $24.26 $35.58 $29.763rd Quarter $28.91 $26.03 $27.89 $25.15 $36.33 $31.512nd Quarter $27.56 $23.50 $31.61 $27.36 $35.00 $30.181st Quarter $27.07 $21.19 $35.54 $29.19 $31.22 $26.34There is no trading market for the Company’s Class B Voting Common Stock.(b)HoldersAs of September 9, 2015, there were 1,057 Class A Common Stock shareholders of record and approximately 9,228 beneficial shareholders. There arethree Class B Common Stock shareholders.(c)Issuer Purchases of Equity SecuritiesThe Company has a share repurchase program of the Company’s Class A Nonvoting Common Stock. The plan may be implemented by purchasingshares in the open market or in privately negotiated transactions, with repurchased shares available for use in connection with the Company’s stock-basedplans and for other corporate purposes. The Company did not repurchase any shares in fiscal 2015. As of July 31, 2015, there remained 966,242 shares topurchase in connection with this share repurchase program.On September 10, 2015, the Company's Board of Directors authorized an increase in the Company’s share repurchase program, authorizing therepurchase of up to a total of two million shares of the Company’s Class A Common Stock, inclusive of the shares in the existing share repurchase program.(d)DividendsThe Company has historically paid quarterly dividends on outstanding common stock. Before any dividend may be paid on the Class B CommonStock, holders of the Class A Common Stock are entitled to receive an annual, noncumulative cash dividend of $0.01665 per share (subject to adjustment inthe event of future stock splits, stock dividends or similar events involving shares of Class A Common Stock). Thereafter, any further dividend in that fiscalyear must be paid on all shares of Class A Common Stock and Class B Common Stock on an equal basis. The Company believes that based on its historicdividend practice, this requirement will not impede it in following a similar dividend practice in the future.During the two most recent fiscal years and for the first quarter of fiscal 2016, the Company declared the following dividends per share on its Class Aand Class B Common Stock for the years ended July 31: 2016 2015 2014 1st Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th QtrClass A $0.2025 $0.20 $0.20 $0.20 $0.20 $0.195 $0.195 $0.195 $0.195Class B 0.18585 0.18335 0.20 0.20 0.20 0.17835 0.195 0.195 0.19513Table of Contents(e)Common Stock Price Performance GraphThe 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 31,2010, in each of Brady Corporation Class A Common Stock, the Standard & Poor’s (S&P) 500 Index, the Standard and Poor’s SmallCap 600 Index, and theRussell 2000 Index.Comparison of 5 Year Cumulative Total Return*Among Brady Corporation, the S&P 500 Index,the S&P SmallCap 600 Index, and the Russell 2000 Index*$100 invested on July 31, 2010 in stock or index—including reinvestment of dividends. Fiscal years ended July 31: 2010 2011 2012 2013 2014 2015Brady Corporation $100.00 $108.81 $100.01 $128.45 $103.70 $96.33S&P 500 Index 100.00 119.65 130.58 163.22 190.87 212.26S&P SmallCap 600 Index 100.00 124.72 129.70 174.80 194.10 217.33Russell 2000 Index 100.00 123.92 124.16 167.32 181.64 203.49Copyright (C) 2015, Standard & Poor’s, Inc. and Russell Investments. All rights reserved.14Table of ContentsItem 6. Selected Financial DataCONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL DATAYears Ended July 31, 2011 through 2015 2015 2014 2013 2012 2011 (In thousands, except per share amounts)Operating data (1) Net sales $1,171,731 $1,225,034 $1,157,792 $1,071,504 $1,059,355Gross margin 558,432 609,564 609,348 590,969 587,950Operating expenses: Research and development 36,734 35,048 33,552 34,528 38,268Selling, general and administrative 422,704 452,164 427,858 392,694 397,472Restructuring charges (2) 16,821 15,012 26,046 6,084 6,451Impairment charges (3) 46,867 148,551 204,448 — —Total operating expenses 523,126 650,775 691,904 433,306 442,191Operating income (loss) 35,306 (41,211) (82,556) 157,663 145,759Other income (expense): Investment and other income—net 845 2,402 3,523 2,082 3,989Interest expense (11,156) (14,300) (16,641) (19,090) (22,124)Net other expense (10,311) (11,898) (13,118) (17,008) (18,135)Earnings (loss) from continuing operations before incometaxes 24,995 (53,109) (95,674) 140,655 127,624Income taxes (4) 20,093 (4,963) 42,583 37,162 21,667Earnings (loss) from continuing operations $4,902 $(48,146) $(138,257) $103,493 $105,957(Loss) earnings from discontinued operations, net ofincome taxes (5) (1,915) 2,178 (16,278) (121,404) 2,695Net earnings (loss) $2,987 $(45,968) $(154,535) $(17,911) $108,652Earnings (loss) from continuing operations per CommonShare— (Diluted): Class A nonvoting $0.10 $(0.93) $(2.70) $1.95 $1.99Class B voting $0.08 $(0.95) $(2.71) $1.94 $1.97(Loss) earnings from discontinued operations perCommon Share - (Diluted): Class A nonvoting $(0.04) $0.04 $(0.32) $(2.29) $0.05Class B voting $(0.04) $0.05 $(0.32) $(2.30) $0.05Cash Dividends on: Class A common stock $0.80 $0.78 $0.76 $0.74 $0.72Class B common stock $0.78 $0.76 $0.74 $0.72 $0.70Balance Sheet at July 31: Total assets 1,062,897 1,253,665 1,438,683 1,607,719 1,861,505Long-term obligations, less current maturities 200,774 159,296 201,150 254,944 331,914Stockholders’ investment 587,688 733,076 830,797 1,009,353 1,156,192Cash Flow Data: Net cash provided by operating activities $93,348 $93,420 $143,503 $144,705 $167,350Net cash (used in) provided by investing activities (14,365) 10,207 (325,766) (64,604) (22,631)Net cash used in financing activities (32,152) (115,387) (33,060) (147,824) (91,574)Depreciation and amortization 39,458 44,598 48,725 43,987 48,827Capital expenditures (26,673) (43,398) (35,687) (24,147) (20,532)15Table of Contents(1)Operating data has been impacted by the reclassification of the Die-Cut businesses into discontinued operations. The Company has elected to notseparately disclose the cash flows related to discontinued operations. Refer to Note 15 within Item 8 for further information on discontinuedoperations. The operating data is also impacted by the acquisitive nature of the Company as one, three, and one acquisitions were completed in fiscalyears ended July 31, 2013, 2012, and 2011, respectively. There were no acquisitions in fiscal 2015 and fiscal 2014. Refer to Note 2 within Item 8 forfurther information on the acquisition that was completed in fiscal 2013.(2)In fiscal 2009, in response to the global economic downturn, the Company initiated several measures to address its cost structure, including areduction in its workforce and decreased discretionary spending. The Company continued certain of these measures during fiscal 2010, 2011, and2012. During fiscal 2013, the Company executed a business simplification project which included various measures to address its cost structure andresulted in restructuring charges during fiscal 2013 and into fiscal 2014. In addition, in fiscal 2014, the Company approved a plan to consolidatefacilities in the Americas, Europe, and Asia in order to enhance customer service, improve efficiency of our operations, and reduce operating expenses.This plan resulted in restructuring charges during fiscal 2014 and fiscal 2015.(3)The Company recognized impairment charges of $46.9 million, $148.6 million, and $204.4 million during the three months ended July 31, 2015,2014, and 2013, respectively. The impairment charges primarily related to the following reporting units: WPS Americas and WPS APAC in fiscal2015; PeopleID in fiscal 2014; and WPS Americas and IDS APAC in fiscal 2013. Refer to Note 3 within Item 8 for further information regarding theimpairment charges.(4)Fiscal 2015 was significantly impacted by the impairment charges of $46.9 million, of which $39.8 million was non-deductible for income taxpurposes. Fiscal 2014 was significantly impacted by the impairment charges of $148.6 million, of which $61.1 million was non-deductible for incometax purposes, and a tax charge of $4.0 million in continuing operations associated with the repatriation of the cash proceeds from the sale of the Die-Cut business. Fiscal 2013 was significantly impacted by the impairment charges of $204.4 million, of which $168.9 million was non-deductible forincome tax purposes, as well as a tax charge of $26.6 million associated with the funding of the PDC acquisition.(5)The loss from discontinued operations in fiscal 2015 includes a $0.4 million net loss on the sale of the Die-Cut business, recorded during the threemonths ended October 31, 2014. The earnings from discontinued operations in fiscal 2014 include a $1.2 million net loss on the sale of the Die-Cutbusiness recorded during the three months ended July 31, 2014. The Die-Cut business was sold in two phases. The first phase closed in the fourthquarter of fiscal 2014 and the second and final phase closed in the first quarter of fiscal 2015. The loss from discontinued operations in fiscal 2013was primarily attributable to a $15.7 million write-down of the Die-Cut business to its estimated fair value less costs to sell. The loss fromdiscontinued operations in fiscal 2012 was primarily attributable to the $115.7 million goodwill impairment charge recorded during the three monthsending January 31, 2012, which was related to the Die-Cut disposal group. Refer to Note 15 within Item 8 for further information regardingdiscontinued operations.Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverviewAs discussed in Item 1, “Business,” we are a global manufacturer and supplier of identification solutions and workplace safety products that identifyand protect premises, products and people. The IDS segment is primarily involved in the design, manufacture, and distribution of high-performance andinnovative identification and healthcare products. The WPS segment provides workplace safety and compliance products, of which half is derived frominternally manufactured product and half is from externally sourced products. Nearly 45% of our total sales are derived outside of the United States. Foreignsales within the IDS and WPS segments are approximately 40% and 70%, respectively.The ability to provide customers with a vast array of proprietary, customized and diverse products for use in various applications across multiplecustomers and geographies, along with a commitment to quality and service, have made Brady a leader in many of its markets. The long-term sales growthand profitability of our segments will depend not only on improved demand in end markets and the overall economic environment, but also on our ability tocontinuously improve operational excellence, focus on the customer, develop and market innovative new products, and to advance in our digitalcapabilities. Our priorities during fiscal 2015 included a continued focus on operational excellence, growth initiatives (new product development,investments in R&D and digital, and expansion in high-opportunity markets), and completing our facility consolidation activities to enhance customerservice and improve efficiency of our operations.16Table of ContentsResults of OperationsA comparison of results of operating income (loss) from continuing operations for the fiscal years ended July 31, 2015, 2014, and 2013 is as follows:(Dollars in thousands) 2015 % Sales 2014 % Sales 2013 % SalesNet Sales $1,171,731 $1,225,034 $1,157,792 Gross Margin 558,432 47.7% 609,564 49.8 % 609,348 52.6 %Operating Expenses: Research and Development 36,734 3.1% 35,048 2.9 % 33,552 2.9 % Selling, General & Administrative 422,704 36.1% 452,164 36.9 % 427,858 37.0 % Restructuring charges 16,821 1.4% 15,012 1.2 % 26,046 2.2 % Impairment charges 46,867 4.0% 148,551 12.1 % 204,448 17.7 %Total operating expenses 523,126 44.6% 650,775 53.1 % 691,904 59.8 %Operating income (loss) $35,306 3.0% $(41,211) (3.4)% $(82,556) (7.1)%In fiscal 2015, sales decreased 4.4% to $1,171.7 million, compared to $1,225.0 million in fiscal 2014, which consisted of organic sales growth of 1.0%and a negative currency impact of 5.4% due to the strengthening of the U.S. dollar against other major currencies during the year. Organic sales grew 1.7% inthe IDS segment, while organic sales within the WPS segment declined by 0.4%.During fiscal 2014, net sales increased 5.8% from fiscal 2013, which consisted of organic growth of 0.2%, a negative currency impact of 0.1% andgrowth from acquisitions of 5.7%. The acquisition growth was from the acquisition of PDC within the IDS segment in fiscal 2013. Organic sales within theIDS segment were up 2.9%, while organic sales within the WPS segment declined by 4.6%.Gross margin decreased 8.4% to $558.4 million in fiscal 2015 as compared to $609.6 million in fiscal 2014. As a percentage of sales, gross margindeclined to 47.7% in fiscal 2015 from 49.8% in fiscal 2014. The decline in gross margin was due to increased costs related to facility consolidation activitiesin the Americas due to duplicate labor and facilities expenses as well as operating inefficiencies following the facility moves, such as additional freight costsand excess inventory and scrap charges. To a lesser extent, geographic product mix also contributed to the decline in gross margin as Asia was our region ofgreatest sales growth in fiscal 2015 and generally has the lowest segment profit margins.Gross margin was $609.6 million in fiscal 2014, which was consistent with the gross margin in the the prior year. As a percentage of sales, gross margindeclined to 49.8% in fiscal 2014 from 52.6% in fiscal 2013. The decline was primarily due to the sales decline and price reductions in the WPS business. Research and development expenses increased to $36.7 million in fiscal 2015 from $35.0 million in fiscal 2014 and $33.6 million in fiscal 2013. Theincrease in R&D spending over the years was a result of our innovation development initiative to realign the R&D processes in order to accelerate newproduct innovation, increased investments in emerging technologies such as RFID and sensing technologies, and increased investments in other newproducts.Selling, general and administrative (“SG&A”) expenses include selling costs directly attributed to the IDS and WPS segments, as well as administrativeexpenses including finance, information technology, human resources and legal. SG&A expenses decreased 6.5% to $422.7 million in fiscal 2015 comparedto $452.2 million in fiscal 2014. The decline was primarily due to the strengthening of the U.S. dollar, and to a lesser extent, reduced amortization expense of$5.8 million, an amendment to our U.S.-based post-retirement medical benefit plan that resulted in a $4.3 million curtailment gain, and our focused efforts toreduce expenses. This decline was partially offset by continued investments in sales personnel within the IDS segment and increased spending in the WPSsegment for both on-line and traditional print advertising.SG&A expense increased to $452.2 million in fiscal 2014 compared to $427.9 million in fiscal 2013. The increase was primarily due to incrementalSG&A associated with the PDC business of approximately $22 million. In addition, the Company expanded its sales force in multiple geographies within theIDS segment in fiscal 2014 and increased spending in both on-line advertising as well as traditional print advertising within the WPS segment.17Table of ContentsIn fiscal 2014, the Company announced a restructuring plan to consolidate facilities in the Americas, Europe and Asia. The Company implemented thisrestructuring plan to enhance customer service, improve efficiency of our operations and reduce operating expenses. Restructuring activities related tofacility consolidation activities extended into fiscal 2015 and were complete at the end of the fiscal year. However, the Company experienced operationalinefficiencies, increased costs, and customer service disruptions in fiscal 2015 as a result of these facility consolidations and we expect this to continue, to alesser extent, into fiscal 2016. We remain focused on improvements and returning to prior service metrics and we expect to realize operational efficienciesfrom these actions over the longer-term.In connection with this plan, the Company incurred restructuring charges of $16.8 million in fiscal 2015. These charges consisted of $5.4 million ofemployee separation costs, $5.2 million of facility closure related costs, $2.0 million of contract termination costs, and $4.2 million of non-cash asset write-offs. The charges for employee separation costs consisted of severance pay, outplacement services, medical and other benefits. Non-cash asset write-offsconsist mainly of fixed assets written off in conjunction with facility consolidations. Of the $16.8 million recognized in fiscal 2015, $12.1 million wasincurred within the IDS segment and $4.7 million was incurred within the WPS segment.In fiscal 2013, the Company announced a restructuring action to reduce its global workforce by approximately 5-7% in order to address its coststructure, which was expected to result in annual cost savings of $25 to $30 million. The Company realized annualized savings of approximately $25million; however, investments in initiatives to drive sales growth and an extension of the timeframe of the restructuring actions into fiscal 2014 had animpact on the SG&A line item within the Consolidated Statements of Earnings. During fiscal 2014, the Company invested an incremental $13 million in itsdigital strategy as well as additional selling and R&D resources. In addition, the restructuring activities announced in fiscal 2013 continued into fiscal 2014,which partially reduced the savings expected from the restructuring plan in fiscal 2014.Due to the incremental investment in the digital initiative and the extension of the headcount reduction into fiscal 2014, this restructuring plan did notreduce overall SG&A expenses in fiscal 2014 compared to fiscal 2013 as the digital investments are also reported on the SG&A line item within theConsolidated Statements of Earnings. In connection with the 2014 and 2013 plans, restructuring charges were $15.0 million in fiscal 2014, which consistedprimarily of employee separation costs and facility closure costs. Of the $15.0 million recognized in fiscal 2014, $9.0 million was incurred within the IDSsegment and $6.0 million was incurred within the WPS segment.Restructuring charges were $26.0 million in fiscal 2013 and consisted of employee separation costs, fixed asset write-offs, and other facility closurecosts associated with the restructuring plan announced in February 2013 to reorganize into global product-based business platforms and reduce our globalcost structure. Of the $26.0 million recognized in fiscal 2013, $15.8 million was incurred within the IDS segment and $10.2 million was incurred within theWPS segment.The Company performed its annual goodwill impairment assessment on May 1, 2015, and subsequently concluded that the WPS Americas and WPSAPAC reporting units were impaired. In conjunction with the goodwill impairment analysis, management concluded that other long-lived assets were alsoimpaired. Refer to Item 7 - Business Segment Operating Results as well as Note 3 "Goodwill and Other Intangible Assets" of Item 8 for further discussionregarding the impairment charges. Impairment charges were $46.9 million in fiscal 2015, which consisted of $37.1 million in goodwill charges associatedwith the WPS Americas and WPS APAC reporting units and $9.8 million related to the impairment of certain other long-lived assets.The Company's annual goodwill impairment assessment performed in fiscal 2014 indicated that the PeopleID reporting unit was impaired. Inconjunction with the goodwill impairment analysis, management concluded that other finite and indefinite-lived intangible assets within the reporting unitwere also impaired. Impairment charges in continuing operations were $148.6 million in fiscal 2014, which consisted of $100.4 million in goodwill and$48.2 million in intangible assets primarily associated with the PeopleID reporting unit.The Company's annual goodwill impairment assessment performed in fiscal 2013 indicated that the WPS Americas and IDS APAC reporting units wereimpaired. In conjunction with the goodwill impairment analysis, management concluded that other finite and indefinite-lived intangible assets within thereporting units were also impaired. Impairment charges in continuing operations were $204.4 million in fiscal 2013, which consisted of $190.5 million ingoodwill and $13.9 million in intangible assets primarily associated with the WPS Americas and IDS APAC reporting units.18Table of ContentsOperating income from continuing operations was $35.3 million in fiscal 2015; excluding the impairment charges of $46.9 million and restructuringcharges of $16.8 million, the Company generated operating income from continuing operations of $99.0 million. The Company incurred an operating lossfrom continuing operations of $41.2 million in fiscal 2014; excluding the impairment charges of $148.6 million and restructuring charges of $15.0 million,the Company generated operating income from continuing operations of $122.4 million. The decrease of $23.4 million was primarily due to the segmentprofit declines in both the IDS and WPS segments, facility consolidation costs incurred in both segments, as well as the negative impact of currencyfluctuations during fiscal 2015 as compared to the prior year.The Company incurred an operating loss from continuing operations of $41.2 million in fiscal 2014; excluding impairment charges of $148.6 millionand restructuring charges of $15.0 million, the Company generated operating income from continuing operations of $122.4 million. The Company incurredan operating loss from continuing operations of $82.6 million in fiscal 2013; excluding the impairment charges of $204.4 million and restructuring chargesof $26.0 million, the Company generated operating income from continuing operations of $147.9 million. The decrease of $25.5 million was mainly due tothe decline in segment profit of the WPS business, which is discussed in further detail within the Business Segment Operating Results section below.OPERATING INCOME TO NET INCOME(Dollars in thousands) 2015 % Sales 2014 % Sales 2013 % SalesOperating income (loss) $35,306 3.0 % $(41,211) (3.4)% $(82,556) (7.1)%Other income and (expense): Investment and other income 845 0.1 % 2,402 0.2 % 3,523 0.3 % Interest expense (11,156) (1.0)% (14,300) (1.2)% (16,641) (1.4)%Earnings (loss) from continuing operations beforetax 24,995 2.1 % (53,109) (4.3)% (95,674) (8.3)%Income taxes 20,093 1.7 % (4,963) (0.4)% 42,583 3.7 %Earnings (loss) from continuing operations 4,902 0.4 % (48,146) (3.9)% (138,257) (11.9)%(Loss) earnings from discontinued operations, netof income taxes (1,915) (0.2)% 2,178 0.2 % (16,278) (1.4)%Net earnings (loss) $2,987 0.3 % $(45,968) (3.8)% $(154,535) (13.3)%Investment and Other IncomeInvestment and other income decreased to $0.8 million in fiscal 2015 compared to $2.4 million in fiscal 2014 and $3.5 million in fiscal 2013. Thedecline since 2013 was due primarily to a reduction in interest income and smaller gains recognized on securities held in executive deferred compensationplans.Interest ExpenseInterest expense decreased to $11.2 million in fiscal 2015 compared to $14.3 million in fiscal 2014 and $16.6 million in fiscal 2013. The decline since2013 was due to the Company's declining principal balance under its outstanding debt agreements.Income TaxesThe Company's effective tax rate from continuing operations was 80.4% in fiscal 2015, compared to the effective tax rate from continuing operations of9.3% in fiscal 2014. The effective tax rate was significantly impacted by the fiscal 2015 impairment charges of $46.9 million, $39.8 million of which wasnondeductible for income tax purposes. The effective income tax rate was further impacted by certain adjustments to tax accruals and reserves andfluctuations in geographic profit mix.Total foreign pre-tax earnings decreased from $81.5 million in fiscal 2014 to $25.6 million in fiscal 2015. This decrease was due primarily to foreignimpairment charges of $31.6 million in fiscal 2015 and overall lower pre-tax earnings globally than in fiscal 2014. The remainder of the significant decreasesin foreign pre-tax earnings and resulting impact on the effective tax rate was primarily related to decreased pre-tax net earnings in the following jurisdictions:1) Australia, where pre-tax earnings decreased by $3.5 million, and both the statutory and effective tax rates approximated 30%; 2) Malaysia, where pre-taxearnings decreased by $2.9 million, and both the statutory and effective tax rates approximated 25%; 3) England, where pre-tax earnings decreased $1.5million, and the statutory tax rate was approximately 21% while the effective tax rate approximated zero due to full valuation allowances recorded againstNOL carryforwards generated; and 4) China, where pre-tax earnings decreased $1.2 million, and both the statutory and effective tax rates approximated 25%.19Table of ContentsThe Company's effective tax rate from continuing operations was 9.3% in fiscal 2014, compared to the effective tax rate from continuing operations of(44.5)% in fiscal 2013. The income tax rate in fiscal 2014 was significantly impacted by the impairment and restructuring charges recorded in fiscal 2014.The income tax rate in fiscal 2013 was impacted by the impairment charges and a tax charge associated with the funding of the PDC acquisition. The increasein the effective income tax rate in fiscal 2014 compared to fiscal 2013 was further impacted by increased valuation allowances and fluctuations in geographicprofit mix.The impact on the effective income tax rate in fiscal 2014 due to restructuring charges was a result of the tax rate differential between charges incurredin the U.S. at 35% and charges incurred in foreign jurisdictions at an average tax rate of approximately 28%. The "International Rate Differential" line item of(1.3%) disclosed within the income tax rate reconciliation was primarily due to this impact of restructuring charges.Total foreign pre-tax earnings increased from $49.3 million in fiscal 2013 to $81.5 million in fiscal 2014. This increase was due to impairment chargesof $22.7 million during fiscal 2013, consisting primarily of goodwill within the Company’s IDS APAC reporting unit. The remainder of the increase inforeign pre-tax earnings and resulting impact on the effective tax rate was primarily related to increased pre-tax net earnings in the following jurisdictions: 1)Malaysia, where pre-tax earnings increased by $7.1 million, inclusive of fiscal 2013 impairment charges of $3.4 million, and both the statutory and effectivetax rates approximated 25%; 2) Sweden, where pre-tax earnings increased by $4.2 million, the statutory tax rate was 22%, and the effective tax rate wasnegative, resulting in a $1.0 million tax benefit due to the utilization of historical net operating loss (“NOL”) carryforwards that had full valuationallowances, as well as the adjustment of previously recorded valuation allowances; 3) England, where the pre-tax loss decreased by $3.9 million, and thestatutory tax rate was approximately 22% while the effective tax rate approximated zero due to full valuation allowances recorded against NOL carryforwardsgenerated; and 4) China, where pre-tax earnings increased by $6.6 million, inclusive of fiscal 2013 impairment charges of $1.7 million, and the statutory taxrate was 25% with a higher effective tax rate of approximately 38% due to losses incurred in certain Chinese entities in which full valuation allowances wererecorded against the associated NOL carryforwards. Partially offsetting these increases in foreign earnings was an increase of $4.5 million in the pre-tax lossin Brazil in fiscal 2014.Earnings (Loss) from Discontinued OperationsDiscontinued operations include the Asia Die-Cut and European Die-cut businesses ("Die-Cut"), of which a portion was divested in the fourth quarter offiscal 2014 and the remainder was divested in the first quarter of fiscal 2015. In addition, the Brady Medical and Varitronics businesses were divested in fiscal2013 and were reported within discontinued operations. These divested businesses were part of the IDS business segment.The loss from discontinued operations net of income taxes was $1.9 million in fiscal 2015, compared to earnings from discontinued operations net ofincome taxes of $2.2 million in fiscal 2014 and a loss from discontinued operations net of income taxes of $16.3 million in fiscal 2013. The loss in fiscal2015 consisted of a loss on operations of $1.5 million primarily related to professional fees associated with the divestiture and a $0.4 million loss on the saleof Die-Cut, recorded during the three months ended October 31, 2014. In fiscal 2014, the Die-Cut business had net earnings from operations of $3.4 million,offset by a net loss on the sale of Die-Cut of $1.2 million. The loss in fiscal 2013 primarily related to a $15.7 million write-down of the Die-Cut disposalgroup to estimated fair value less costs to sell.There was no depreciation or amortization expense recognized within discontinued operations for fiscal 2015 or fiscal 2014 as the Die-Cut business wasreported as held for sale beginning in the third quarter of fiscal 2013, at which point the fixed assets and intangible assets of these businesses were no longerdepreciated or amortized in accordance with applicable U.S. GAAP. Depreciation and amortization recognized within discontinued operations for fiscal 2013were $4.0 million and $4.8 million, respectively.20Table of ContentsBusiness Segment Operating ResultsThe Company is organized and managed on a global basis within two reportable segments: ID Solutions and Workplace Safety. The segment resultshave been adjusted to reflect continuing operations in all periods presented. The sales and profit of discontinued operations are excluded from the followinginformation.Following is a summary of segment information for the fiscal years ended July 31, 2015, 2014, and 2013: Years ended July 31,(Dollars in thousands) 2015 2014 2013SALES TO EXTERNAL CUSTOMERS ID Solutions $806,484 $825,123 $739,116WPS 365,247 399,911 418,676Total $1,171,731 $1,225,034 $1,157,792SALES GROWTH INFORMATION ID Solutions Organic 1.7 % 2.9 % 0.8 %Currency (4.0)% (0.2)% (1.0)%Acquisitions —% 8.9 % 16.3 %Total (2.3)% 11.6 % 16.1 %Workplace Safety Organic (0.4)% (4.6)% (7.0)%Currency (8.3)% 0.1 % (0.7)%Acquisitions —% —% 4.0 %Total (8.7)% (4.5)% (3.7)%Total Company Organic 1.0 % 0.2 % (2.4)%Currency (5.4)% (0.1)% (0.8)%Acquisitions —% 5.7 % 11.3 %Total (4.4)% 5.8 % 8.1 %SEGMENT PROFIT ID Solutions $149,840 $176,129 $174,390Workplace Safety 56,502 66,238 95,241Total $206,342 $242,367 $269,631SEGMENT PROFIT AS A PERCENT OF SALES ID Solutions 18.6 % 21.3 % 23.6 %Workplace Safety 15.5 % 16.6 % 22.7 %Total 17.6 % 19.8 % 23.3 %NET EARNINGS RECONCILIATION Years ended:(Dollars in thousands) July 31, 2015 July 31, 2014 July 31, 2013Total profit from reportable segments $206,342 $242,367 $269,631Unallocated costs: Administrative costs 107,348 120,015 121,693Restructuring charges 16,821 15,012 26,046Impairment charges 46,867 148,551 204,448Investment and other income (845) (2,402) (3,523)Interest expense 11,156 14,300 16,641Earnings (loss) from continuing operations before income taxes $24,995 $(53,109) $(95,674)21Table of ContentsID SolutionsFiscal 2015 vs. 2014 Approximately 70% of net sales in the IDS segment were generated in the Americas region, 20% in EMEA, and 10% in APAC. IDS sales decreased 2.3%to $806.5 million in fiscal 2015, compared to $825.1 million in fiscal 2014. Organic sales increased 1.7% and currency fluctuations decreased sales by 4.0%due to the strengthening of the U.S. dollar against other major currencies during the year ended July 31, 2015, as compared to the same period in the prioryear.Overall, organic sales within the IDS business grew in the low single digit percentages consistently for the first three quarters and declined slightly inthe fourth quarter of fiscal 2015. Organic growth in all regions was positive for the year with high-single digit growth in APAC, followed by low-single digitgrowth in the EMEA and Americas regions.Organic sales in the Americas grew in the low-single digits in fiscal 2015 as compared to fiscal 2014. This growth was primarily within the U.S. and wasdriven by our continued focus on expanding the core Brady-brand businesses and an increased focus on key customers, industries and new products. Ourareas of highest growth in fiscal 2015 were in the global safety and facility identification product offerings, as well as in portable printer consumables andproduct identification. This growth was partially offset by double-digit organic sales declines in Brazil in fiscal 2015 as compared to fiscal 2014. OEM saleswere down in Brazil due to weak economic conditions and increased competitive pressure. In fiscal 2015, the Company consolidated a facility in Brazil toreduce its cost structure.Organic sales in the EMEA region also grew in the low-single digits in fiscal 2015 as compared to fiscal 2014. This increase was primarily driven byCentral Europe where we increased our salesforce. Economic growth softened slightly in Western Europe, which impacted IDS sales at the beginning of thethird fiscal quarter and into the fourth quarter; however, this geography had stronger sales in the first half of the year which contributed to organic salesgrowth for the full fiscal year as compared to the prior year.Organic sales in Asia grew in the high-single digits in fiscal 2015 as compared to fiscal 2014. Similar to the prior year, we experienced slower growth inthe fourth quarter of fiscal 2015 as compared to the preceding three quarters. Product identification sales continue to increase, primarily to our OEMcustomers in China as we expand production capacity and capabilities. The investment in our MRO growth strategies and the expansion of the MRObusiness in China also continues to positively impact sales.Segment profit decreased to $149.8 million in fiscal 2015 from $176.1 million in fiscal 2014, a decrease of $26.3 million or 14.9%. As a percent ofsales, segment profit decreased to 18.6% in fiscal 2015, compared to 21.3% in the prior year. The decline in segment profit as a percent of sales was primarilyin the IDS Americas businesses and was a result of increased costs associated with facility consolidation activities such as duplicate labor and facilitiesexpenses, as well as increased costs from operating inefficiencies in our recently consolidated facilities in North America such as additional freight costs andexcess inventory and scrap charges. In addition, although a much smaller impact, the decline was also due to our geographic product mix, as Asia was ourregion of greatest sales growth in fiscal 2015 and generally has the lowest segment profit margins.Fiscal 2014 vs. 2013IDS sales increased 11.6% to $825.1 million in fiscal 2014, compared to $739.1 million in fiscal 2013. The acquisition of PDC in December 2012contributed to 8.9% of the sales growth for fiscal 2014. Organic sales increased by 2.9% and currency fluctuations were minimal, decreasing sales by 0.2% forthe year ended July 31, 2014, as compared to the prior fiscal year.Overall, organic sales within the IDS business grew in the low single digit percentages consistently each quarter in fiscal 2014. Organic growth in allregions was positive for the year with double digit growth in APAC, followed by mid-single digit growth in Europe and slightly lower growth in the Americasregion.Organic sales in the Americas grew in the low-single digits in fiscal 2014 as compared to fiscal 2013, primarily due to the sales force expansion and thedevelopment of proprietary new products in the core Brady brand business in the United States. This was partially offset by declines in Brazil and PDC. TheBrazil business declined due to continued economic challenges. Sales in the PDC business declined approximately 2% organically in fiscal 2014, comparedto annualized sales in fiscal 2013. PDC’s healthcare business correlates with U.S. hospital admission rates, which were down approximately 2% during fiscal2014.The IDS business in EMEA grew in the mid-single digits in fiscal 2014 compared to the prior year. This growth was driven by our businesses in theestablished Western European economies as well as Central Europe. Growth was the result of expanding and refocusing our sales organization and the sale ofnew products. The exceptions were France and Italy, which were facing weak economic environments.22Table of ContentsSales within the IDS business in APAC had double-digit growth for the year ended July 31, 2014. We experienced slower growth in the fourth quarter offiscal 2014 as compared to the preceding three quarters primarily due to the negative impact the Die-Cut divestiture had on certain Asia business units. Salesof product identification products to our OEM customers in China were particularly strong as we continue to expand production capacity and capabilities.The investment in our MRO growth strategies and the expansion of our MRO business in China also positively impacted sales.Segment profit increased to $176.1 million in fiscal 2014 from $174.4 million in fiscal 2013, an increase of $1.7 million or 1.0%. As a percent of sales,segment profit was 21.3% in fiscal 2014, compared to 23.6% in the prior year. The decline in segment profit as a percent of sales was due to lower grossmargin in fiscal 2014 as a result of product mix and increased costs associated with the facility consolidations. The main contributor to the product mix was afull year of PDC sales at lower gross margin than the existing business, as well as an increase in lower-margin printer sales. The Company performed its annual goodwill impairment assessment for fiscal 2014 on May 1, 2014, and subsequently concluded that the PeopleIDreporting unit was impaired. Organic sales within the PDC business declined in the low single digit percentages from fiscal 2013 to fiscal 2014. Hospitaladmission rates were the primary driver of PDC's sales under its strategy at the time, and there was a decline of approximately 2% in these rates during fiscal2014. In addition, management revisited its planned growth and profit for the PDC business and concluded that the growth may not materialize as expectedgiven slower than anticipated industry growth and fewer sales synergies than originally planned. Upon completion of the impairment assessment, theCompany recognized a goodwill impairment charge of $100.4 million during fiscal 2014. In conjunction with the goodwill impairment test of the PeopleIDreporting unit, finite and indefinite-lived intangibles associated with the reporting unit were revalued and analyzed for impairment. As a result, otherintangibles in the amount of $48.2 million primarily associated with the PeopleID reporting unit were also impaired during fiscal 2014.Workplace SafetyFiscal 2015 vs. 2014Approximately 50% of net sales in the WPS segment were generated in EMEA, 35% in the Americas, and 15% in APAC. WPS sales decreased 8.7% to$365.2 million in fiscal 2015, compared to $399.9 million in fiscal 2014, which consisted of an organic sales decline of 0.4% and a negative currency impactof 8.3%. Because approximately half of the WPS business is located in Western Europe and another 15% of the WPS segment is in Australia , thestrengthening of the U.S. dollar against the Euro and the Australian Dollar had a larger impact on the WPS segment than it did on the IDS segment.Over the past several years, the WPS segment has experienced a deterioration in sales and profits due to a reduction in direct catalog mailings, increaseddigital competition, and pricing adjustments. While traditional direct marketing channels such as catalogs are important means of selling WPS products, anincreasing number of customers are purchasing products on the Internet. Although we experienced an organic sales decline for the year ended July 31, 2015,the sales decline has lessened each year since fiscal 2013. This improving trend is a result of our focus on workplace safety critical industries, expansion ofour product offerings, further developed pricing capabilities, and increased investment in digital.Organic sales in EMEA grew in the low-single digits in fiscal 2015 compared to the prior year. The growth was driven primarily by Germany, France, andthe Nordics region due to improvements in website functionality and key account management. We experienced growth in both traditional catalog sales anddigital sales in EMEA over the prior year.Organic sales in the Americas declined in the low-single digits in fiscal 2015 compared to fiscal 2014. This decrease was primarily due to reduceddemand in the industrial end markets and a decrease in sales through traditional catalog channels.Organic sales in APAC, which consists entirely of Australia, declined in the mid-single digits in fiscal 2015 compared to fiscal 2014. Our business inAustralia is diversified in many industries; however, it has a higher concentration in industries that are experiencing economic challenges, includingmanufacturing and mining production.Profit for the WPS segment decreased to $56.5 million in fiscal 2015 from $66.2 million in fiscal 2014, a decrease of $9.7 million, or 14.7%. As apercentage of sales, segment profit decreased to 15.5% in fiscal 2015 compared to 16.6% in the prior year. The decrease in segment profit was mainly drivenby the decline in sales, increased spending for both on-line and traditional print advertising due to the timing of catalog mailings, investments in digitalcapabilities and the increased costs associated with facility consolidation activities in the U.S., such as duplicate labor and facilities expenses.23Table of ContentsThe Company performed its annual goodwill impairment assessment for fiscal 2015 on May 1, 2015, and subsequently concluded that the WPS APACand WPS Americas reporting units were impaired. The WPS APAC reporting unit consists entirely of the Company's business located in Australia. Organicsales declined in the mid-single digits in fiscal 2015 primarily due to a decline in the mining production and manufacturing industries. As a result of thedecline in sales and challenging economic conditions, the WPS APAC reporting unit's segment profit declined by nearly 30% in fiscal 2015.Organic sales within the WPS Americas reporting unit declined in fiscal 2015 as compared to fiscal 2014. The business has improved many of its digitalcapabilities over the past two years; however, sales through the traditional catalog model have decreased at a greater rate than expected, and digital saleshave not been sufficient to offset the decline in sales through catalogs. As a result of the decline in sales and the increased investment in digital capabilities,WPS Americas' segment profit declined by nearly 17% in fiscal 2015.Upon completion of the impairment assessment, the Company recognized goodwill impairment charges of $37.1 million during fiscal 2015, of which$26.2 million was in the WPS APAC reporting unit and $10.9 million was in the WPS Americas reporting unit. Other long-lived assets primarily associatedwith the WPS APAC and WPS Americas reporting units were also revalued and analyzed for impairment. As a result, long-lived assets in the amount of $9.8million were impaired during fiscal 2015.Fiscal 2014 vs. 2013Net sales in the WPS segment decreased 4.5% to $399.9 million in fiscal 2014 from $418.7 million in fiscal 2013. The sales decline consisted of adecrease in organic sales of 4.6%, partially offset by 0.1% growth due to positive currency fluctuations.Although we experienced an organic sales decline for the year ended July 31, 2014, the sales decline lessened each quarter and returned to growth inthe fourth quarter of fiscal 2014. This improving trend was primarily due to increased catalog mailings, better execution of our Internet offerings, and moreeffective pricing strategies that optimize both sales and profits. As a result of these changes, we saw WPS sales trends in the Americas improved slightly infiscal 2014 compared to 2013 as the percentage rate of decline lessened to mid-single digits. WPS sales in APAC, which consists entirely of Australia, andWPS sales in EMEA returned to modest growth in the fourth quarter, primarily due to an increase in new customers, order volumes, and growth initiatives.Segment profit decreased to $66.2 million in fiscal 2014 from $95.2 million in the prior year, a decline of $29.0 million, or 30.5%. As a percent of sales,segment profit was 16.6% in fiscal 2014, compared to 22.7% in the prior year. Similar to sales, although profit has declined, the rate of decline slowed in thesecond half of fiscal 2014 as the modified strategy began to take hold. WPS profit was also impacted by the increased costs due to facility consolidations andthe incremental investment in implementing its digital strategy.Liquidity & Capital ResourcesCash and cash equivalents were $114.5 million at July 31, 2015, an increase of $32.7 million from July 31, 2014. The significant changes were asfollows: Years ended July 31,(Dollars in thousands)2015 2014 2013Net cash flow provided by (used in): Operating activities$93,348 $93,420 $143,503Investing activities(14,365) 10,207 (325,766)Financing activities(32,152) (115,387) (33,060)Effect of exchange rate changes on cash(14,173) 2,536 481Net increase (decrease) in cash and cash equivalents$32,658 $(9,224) $(214,842)24Table of ContentsFiscal 2015 vs. 2014 Net cash provided by operating activities decreased slightly to $93.3 million during fiscal 2015 compared to $93.4 million in the prior year. The prioryear results included discontinued operations, which generated approximately $2.7 million in cash from operating activities. Therefore, there was an increasein cash flow from operating activities from continuing operations of $2.6 million. This increase was primarily due to a change in working capital of $36.0million, largely offset by the decrease in segment profit of $33.4 million. A majority of the decrease in working capital related to a decrease in prepaidcatalog costs at July 31, 2015 compared to July 31, 2014 due to a reduction in catalog mailings and a change in the timing of such catalog mailings.Inventories were also built in advance of facility consolidations in fiscal 2014, whereas inventories were effectively flat in fiscal 2015.Net cash used in investing activities was $14.4 million during fiscal 2015 primarily due to capital expenditures of $26.7 million, partially offset by the$6.1 million of net cash received from the Die-Cut divestiture during the three months ended October 31, 2014. In addition, certain assets were sold as part ofthe facility consolidation activities, which reduced cash used in investing activities by $6.2 million compared to the prior year. Net cash provided byinvesting activities was $10.2 million during fiscal 2014 due to the cash received from the first phase of the sale of the Die-Cut business of $54.2 million,offset by $43.4 million spent on capital expenditures in fiscal 2014.Net cash used in financing activities was $32.2 million during fiscal 2015, compared to $115.4 million during the prior year. The decrease in cash usedin financing activities of $83.2 million was primarily due to increased net borrowings of $40.1 million on the revolving loan agreement and lines of creditduring fiscal 2015 and a reduction in the principal payments on long-term debt of $18.8 million compared to the prior year. In addition, there were no sharerepurchases in fiscal 2015 compared to cash used of $30.6 million on share repurchases in the prior year, and proceeds from stock option exercises were lowerby $10.5 million in fiscal 2015 compared to the prior year.The effect of fluctuations in exchange rates reduced cash balances by $14.2 million in fiscal 2015 due to the strengthening of the U.S. dollar againstother major currencies.Fiscal 2014 vs. 2013Net cash provided by operating activities was $93.4 million during fiscal 2014 compared to $143.5 million in the prior year. The decrease was primarilydue to changes in operating assets and liabilities. The Company used cash of approximately $4 million, $13 million, and $21 million for accounts receivable,inventory and accounts payable and accrued expenses, respectively. Cash used for accounts receivable increased in fiscal 2014 due primarily to geographicsales mix. Sales increased in EMEA and APAC compared to the prior year and these regions have a higher days sales outstanding. The accounts payable andaccrued liabilities use of cash included $10 million of restructuring expenses related to fiscal 2013 that were paid in fiscal 2014. Cash used for inventoryincreased primarily to maintain service levels during facility consolidations.Net cash provided by investing activities was $10.2 million during fiscal 2014 primarily due to the cash received from the first phase of the sale of theDie-Cut business of $54.2 million, offset by $43.4 million spent on capital expenditures in fiscal 2014. Net cash used in investing activities was $325.8million during fiscal 2013 primarily due to the acquisition of PDC for $301.2 million.Net cash used in financing activities was $115.4 million during fiscal 2014, compared to $33.1 million during the prior year. In fiscal 2014, theCompany used cash to pay dividends of $40.5 million, purchased common shares for $30.6 million, and made a principal payment of $61.3 million on itsprivate placement debt. This was offset primarily by cash proceeds of $12.1 million from the issuance of common stock related to stock option exercisesduring the year. In fiscal 2013, the Company used cash of $39.2 million to pay dividends and made a principal payment of $61.3 million on its privateplacement debt. This was offset by cash proceeds of $20.3 million from the issuance of common stock related to stock option exercises, and by the borrowingactivity from the Company's credit revolver and multi-currency line of credit in China, which provided $50.6 million in cash in fiscal 2013.During fiscal 2006 and 2007, the Company completed two private placement note issuances totaling $350 million in ten-year fixed rate notes withvarying maturity dates to institutional investors at interest rates varying from 5.30% to 5.33%. The notes must be repaid equally over seven years, with finalpayments due in 2016 and 2017, with interest payable on the notes due semiannually on various dates throughout the year. The notes have certainprepayment penalties for repaying them prior to the maturity date. Under the debt agreement, the Company made scheduled principal payments of $42.5million during fiscal 2015 and $61.3 million during fiscal 2014.25Table of ContentsOn May 13, 2010, the Company completed a private placement of €75 million aggregate principal amount of senior unsecured notes to accreditedinstitutional investors. The €75 million of senior notes consists of €30 million aggregate principal amount of 3.71% Series 2010-A Senior Notes, dueMay 13, 2017 and €45 million aggregate principal amount of 4.24% Series 2010-A Senior Notes, due May 13, 2020, with interest payable on the notessemiannually. The notes have certain prepayment penalties for prepaying them prior to maturity. The notes have been fully and unconditionally guaranteedon an unsecured basis by the Company's domestic subsidiaries. These unsecured notes were issued pursuant to a note purchase agreement, dated May 13,2010.On February 1, 2012, the Company and certain of its subsidiaries entered into an unsecured $300 million multi-currency revolving loan agreement witha group of six banks that replaced and terminated the Company's previous credit agreement. Under the revolving loan agreement, which has a final maturitydate of February 1, 2017, the Company has the option to select either a base interest rate (based upon the higher of the federal funds rate plus one-half of 1%or the prime rate of Bank of America plus a margin based upon the Company's consolidated leverage ratio) or a Eurocurrency interest rate (at the LIBOR rateplus a margin based on the Company's consolidated leverage ratio). At the Company's option, and subject to certain conditions, the available amount underthe revolving loan agreement may be increased from $300 million up to $450 million. During fiscal 2015, the Company drew $60.0 million from itsrevolving loan agreement in order to fund general corporate needs and the maximum amount outstanding was $114.0 million. The borrowings bear interest atLIBOR plus 1.125% per annum. As of July 31, 2015, the outstanding balance on the credit facility was $102.0 million and the Company had outstandingletters of credit under the revolving loan agreement of $3.3 million. There was $194.7 million available for future borrowing under the credit facility, whichcan be increased to $344.7 million at the Company's option, subject to certain conditions.In February 2013, the Company entered into an unsecured $26.2 million multi-currency line of credit in China, which was amended in November 2013to $24.2 million and further amended in February 2015 to $10.0 million. In August 2014, the Company entered into an additional unsecured $10.0 millionmulti-currency line of credit in China. These lines of credit support USD-denominated or CNY-denominated borrowing to fund working capital andoperations for the Company's Chinese entities and are due on demand. The borrowings under these facilities may be made for a period up to one year from thedate of borrowing with interest on the USD-denominated borrowings incurred equal to U.S. dollar LIBOR on the date of borrowing plus a margin based uponduration and on the CNY-denominated borrowings incurred equal to the local China rate based upon duration. There is no ultimate maturity on the facilitiesand they are subject to periodic review and repricing. The Company is not required to comply with any financial covenants as part of the agreements. Themaximum amount outstanding on these facilities was $19.4 million and the Company repaid $9.0 million during fiscal 2015. As of July 31, 2015, theaggregate outstanding balance on these lines of credit in China was $10.4 million and there was $9.6 million available for future borrowings.The Company’s debt agreements require it to maintain certain financial covenants, including a ratio of debt to the trailing twelve months EBITDA, asdefined in the debt agreements, of not more than a 3.25 to 1.0 ratio (leverage ratio) and the trailing twelve months EBITDA to interest expense of not lessthan a 3.0 to 1.0 ratio (interest expense coverage). As of July 31, 2015, the Company was in compliance with these financial covenants, with the ratio of debtto EBITDA, as defined by the agreements, equal to 2.0 to 1.0 and the interest expense coverage ratio equal to 11.8 to 1.0.The Company's cash balances are generated and held in numerous locations throughout the world. At July 31, 2015, approximately 84% of theCompany's cash and cash equivalents were held outside the United States. The Company's growth has historically been funded by a combination of cashprovided by operating activities and debt financing. The Company believes that its cash flow from operating activities, in addition to its borrowing capacity,are sufficient to fund its anticipated requirements for working capital, capital expenditures, common stock repurchases, scheduled debt repayments, anddividend payments for the next twelve months.In fiscal 2014, the Company completed the first phase of the sale of its Die-Cut business and completed the second and final phase on August 1, 2014.In conjunction with the sale of this business, the Company repatriated approximately $57 million of the cash received to the United States. The cash receivedfrom the sale of Die-Cut in fiscal 2014 and the fiscal 2013 acquisition of PDC resulted in repatriations of cash to the United States from foreign jurisdictions,which resulted in $4.0 million and $26.6 million tax charges recognized in continuing operations during the fiscal years ended July 31, 2014 and 2013,respectively. The Company believes that its current credit arrangements are sound and that the strength of its balance sheet will allow financial flexibility torespond to both internal growth opportunities and those available through acquisition. However, future cash needs could require the Company to repatriateadditional cash to the U.S. from foreign jurisdictions, which could result in material tax charges recognized in the period in which the decisions are made.26Table of ContentsSubsequent Events Affecting Financial ConditionOn September 10, 2015, the Company's Board of Directors authorized an increase in the Company’s share repurchase program, authorizing therepurchase of up to a total of two million shares of the Company’s Class A Common Stock, inclusive of the shares in the existing share repurchase program.The plan may be implemented by purchasing shares in the open market or in privately negotiated transactions, with repurchased shares available for use inconnection with the Company's stock-based plans and for other corporate purposes.On September 10, 2015, the Company announced an increase in the annual dividend to shareholders of the Company's Class A Common Stock, from$0.80 to $0.81 per share. A quarterly dividend of $0.2025 will be paid on October 30, 2015, to shareholders of record at the close of business on October 9,2015. This dividend represents an increase of 1.3% and is the 30th consecutive annual increase in dividends.Off-Balance Sheet ArrangementsThe Company does not have material off-balance sheet arrangements or related-party transactions. The Company is not aware of factors that arereasonably likely to adversely affect liquidity trends, other than the risk factors described in this and other Company filings. However, the followingadditional information is provided to assist those reviewing the Company’s financial statements.Operating Leases — The leases generally are entered into for investments in facilities such as manufacturing facilities, warehouses and office space,computer equipment and Company vehicles.Purchase Commitments — The Company has purchase commitments for materials, supplies, services, and property, plant and equipment as part of theordinary conduct of its business. In the aggregate, such commitments are not in excess of current market prices and are not material to the financial positionof the Company. Due to the proprietary nature of many of the Company’s materials and processes, certain supply contracts contain penalty provisions forearly termination. The Company does not believe a material amount of penalties will be incurred under these contracts based upon historical experience andcurrent expectations.Other Contractual Obligations — The Company does not have material financial guarantees or other contractual commitments that are reasonablylikely to adversely affect liquidity.Related-Party Transactions — Based on an evaluation for the year ended July 31, 2015, the Company does not have material related party transactionsthat affect the results of operations, cash flow or financial condition.Payments Due Under Contractual ObligationsThe Company’s future commitments at July 31, 2015 for long-term debt, operating lease obligations, purchase obligations, interest obligations andother obligations are as follows (dollars in thousands): Payments Due by PeriodContractual Obligations Total Less than1 Year 1-3Years 3-5Years Morethan5 Years UncertainTimeframeLong-term Debt Obligations $243,288 $42,514 $151,332 $— $49,442 $—Operating Lease Obligations 90,877 19,102 29,627 19,901 22,247 —Purchase Obligations (1) 59,378 57,126 2,248 — 4 —Interest Obligations 15,227 5,503 5,980 3,744 — —Tax Obligations 21,133 — — — — 21,133Other Obligations (2) 9,097 717 1,290 1,106 5,984 —Total $439,000 $124,962 $190,477 $24,751 $77,677 $21,133 (1)Purchase obligations include all open purchase orders as of July 31, 2015.(2)Other obligations represent expected payments under the Company’s U.S. postretirement medical plan and international pension plans as disclosed inNote 5 to the Consolidated Financial Statements, under Item 8 of this report.27Table of ContentsInflation and Changing PricesEssentially all of the Company’s revenue is derived from the sale of its products and services in competitive markets. Because prices are influenced bymarket conditions, it is not always possible to fully recover cost increases through pricing. Changes in product mix from year to year, timing differences ininstituting price changes, and the large amount of part numbers make it impracticable to accurately define the impact of inflation on profit margins.Critical Accounting EstimatesManagement’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s ConsolidatedFinancial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of thesefinancial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, andrelated disclosure of contingent assets and liabilities. The Company bases these estimates and judgments on historical experience and on various otherassumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and judgments.The Company believes the following accounting estimates are most critical to an understanding of its financial statements. Estimates are considered tobe critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accountingestimates are made, and (2) material changes in the estimates are reasonably likely from period to period. For a detailed discussion on the application of theseand other accounting estimates, refer to Note 1 to the Company’s Consolidated Financial Statements.Income TaxesWe operate in numerous taxing jurisdictions and are subject to regular examinations by U.S. federal, state and non-U.S. taxing authorities. Our incometax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which we do business. Due to theambiguity of laws and rulings in each jurisdiction, the differences and interplay in tax laws between those jurisdictions, the uncertainty of how underlyingfacts may be construed and the inherent uncertainty in estimating the final resolution of complex tax audit matters, our estimates of income tax liabilitiesmay differ from actual payments or assessments.While we have support for the positions we take on our tax returns, taxing authorities may assert interpretations of laws and facts and may challengecross-jurisdictional transactions. The Company generally re-evaluates the technical merits of its tax positions and recognizes an uncertain tax benefit when(i) there is completion of a tax audit; (ii) there is a change in applicable tax law including a tax case ruling or legislative guidance; or (iii) there is anexpiration of the statute of limitations. The gross liability for unrecognized tax benefits, excluding interest and penalties, was $21.1 million and $17.8million as of July 31, 2015 and 2014, respectively, of which the entire amount would reduce our effective tax rate if recognized. Accrued interest andpenalties related to unrecognized tax benefits were $4.2 million and $4.4 million at July 31, 2015 and 2014, respectively. We recognize interest andpenalties related to unrecognized tax benefits in the income tax provision. We believe it is reasonably possible that the amount of gross unrecognized taxbenefits could be reduced by up to $4.4 million in the next twelve months as a result of the resolution of worldwide tax matters, tax audit settlements,amended tax filings, and/or statute expirations, which would be the maximum amount that would be recognized through the Consolidated Statements ofEarnings as an income tax benefit.We recorded a valuation allowance for a portion of our deferred tax assets related to net operating loss and tax credit carryforwards ("carryforwards")and certain temporary differences in the amount of $39.9 million at July 31, 2015 and $37.4 million at July 31, 2014 based on the projected profitability ofthe entity in the respective tax jurisdiction. The valuation allowance is based on an evaluation of the uncertainty that the carryforwards and certain temporarydifferences will be realized. Our income would increase if we determine we will be able to use more carryforwards or certain temporary differences thancurrently expected. Conversely, our income would decrease if we determine we are unable to realize our deferred tax assets in the future.The Company does not provide for U.S. deferred taxes on cumulative earnings of non-U.S. affiliates and associated companies that have been reinvestedindefinitely. As of July 31, 2015, we have not provided U.S. deferred taxes for $353.3 million of such earnings, since these earnings have been, and undercurrent plans will continue to be, permanently reinvested outside the U.S. At July 31, 2015, approximately $96 million of the Company's cash and cashequivalents were held outside the United States. In conjunction with the sale of the Die-Cut business, the Company repatriated approximately $57 million ofthe cash received to the United States in fiscal 2014. In fiscal 2013, the Company repatriated approximately $204 million of foreign cash to help fund theacquisition of PDC. Given the sale of the Die-Cut business was the largest business divestiture in the Company's history and the acquisition of PDC was thelargest acquisition in the Company's history, these repatriations were unique, and do not change management's assertion that the remaining cumulativeearnings are reinvested indefinitely.28Table of ContentsAt the end of each interim reporting period, we estimate a base effective tax rate that we expect for the full fiscal year based on our most recent forecastof pretax income, permanent book and tax differences and global tax planning strategies. We use this base rate to provide for income taxes on a year-to-datebasis, excluding the effect of significant unusual or extraordinary items and items that are reported net of their related tax effects. We record the tax effect ofsignificant unusual or extraordinary items and items that are reported net of their tax effects in the period in which they occur.Goodwill and Other Indefinite-lived Intangible AssetsThe allocation of purchase price for business combinations requires management estimates and judgment as to expectations for future cash flows of theacquired business and the allocation of those cash flows to identifiable intangible assets in determining the estimated fair value for purchase price allocationpurposes. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result ina possible impairment of the intangible assets and goodwill or require acceleration of the amortization expense of finite-lived intangible assets. In addition,accounting guidance requires that goodwill and other indefinite-lived intangible assets be tested at least annually for impairment. If circumstances or eventsprior to the date of the required annual assessment indicate that, in management's judgment, it is more likely than not that there has been a reduction of fairvalue of a reporting unit below its carrying value, the Company performs an impairment analysis at the time of such circumstance or event. Changes inmanagement's estimates or judgments could result in an impairment charge, and such a charge could have an adverse effect on the Company's financialcondition and results of operations. To aid in establishing the value of goodwill and other intangible assets at the time of acquisition, Company policy statesthat all acquisitions with goodwill of greater than $20 million requires the use of external valuations.The Company has identified six reporting units within its two reportable segments, IDS and WPS, with the following goodwill balances as of July 31,2015: IDS Americas & Europe, $289.6 million; PeopleID, $93.2 million; and WPS Europe, $50.4 million. The IDS APAC, WPS Americas, and WPS APACreporting units each have a goodwill balance of zero. Brady continues to believe that the discounted cash flow model and market multiples model provide areasonable and meaningful fair value estimate based upon the reporting units' projections of future operating results and cash flows and replicates how marketparticipants would value the Company's reporting units. The projections of future operating results, which are based on both past performance and theprojections and assumptions used in the Company's current and long range operating plans, are subject to change as a result of changing economic andcompetitive conditions. Significant estimates used by management in the discounted cash flows methodology include estimates of future cash flows based onexpected growth rates, price increases, fluctuations in gross profit margins and SG&A expense as a percentage of sales, capital expenditures, working capitallevels, income tax rates, and a weighted-average cost of capital that reflects the specific risk profile of the reporting unit being tested. Significant negativeindustry or economic trends, disruptions to the Company's business, loss of significant customers, inability to effectively integrate acquired businesses,unexpected significant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used inthe valuations.The Company completes its annual goodwill impairment analysis on May 1st of each fiscal year and evaluates its reporting units for potentialtriggering events on a quarterly basis in accordance with ASC 350, "Intangibles - Goodwill and Other." In addition to the metrics listed above, the Companyconsiders multiple internal and external factors when evaluating its reporting units for potential impairment, including (a) U.S. GDP growth, (b) industry andmarket factors such as competition and changes in the market for the reporting unit's products, (c) new product development, (d) hospital admission rates, (e)competing technologies, (f) overall financial performance such as cash flows, actual and planned revenue and profitability, and (g) changes in the strategy ofthe reporting unit. In the event the fair value of a reporting unit is less than the carrying value, including goodwill, the Company would then perform anadditional assessment that would compare the implied fair value of goodwill with the carrying amount of goodwill. The determination of the implied fairvalue of goodwill would require management to compare the fair value of the reporting unit to the estimated fair value of the assets and liabilities of thereporting unit. If necessary, the Company may consult valuation specialists to assist with the assessment of the estimated fair value of assets and liabilities forthe reporting unit. If the implied fair value of the goodwill is less than the carrying value, an impairment charge would be recorded.The Company considers a reporting unit’s fair value to be substantially in excess of its carrying value at 20% or greater. The annual impairment testingperformed on May 1, 2015, in accordance with ASC 350, “Intangibles - Goodwill and Other” (“Step One”) indicated that each of the following reportingunits had a fair value substantially in excess of its carrying value: IDS Americas & Europe, PeopleID, and WPS Europe. The Company concluded that theWPS APAC and WPS Americas reporting units failed Step One of the goodwill impairment test.29Table of ContentsWPS APAC Goodwill ImpairmentThe Company's WPS APAC reporting unit consists entirely of its business located in Australia. Management proceeded to measure the amount of thepotential impairment ("Step Two") by determining the implied fair value of the goodwill compared to the carrying value. Management allocated the fairvalue of the WPS APAC reporting unit to its assets and liabilities as if the reporting unit had been acquired in a business combination. There was no excessfair value of the reporting unit over the fair value of its identifiable assets and liabilities, which resulted in the entire goodwill balance of $26.2 million beingimpaired in fiscal 2015.WPS Americas Goodwill ImpairmentWith respect to the WPS Americas reporting unit, management similarly proceeded to measure the amount of the potential impairment ("Step Two") bydetermining the implied fair value of the goodwill compared to the carrying value. Management allocated the fair value of the WPS Americas reporting unitto its assets and liabilities as if the reporting unit had been acquired in a business combination. There was no excess fair value of the reporting unit over thefair value of its identifiable assets and liabilities, which resulted in the remainder of the goodwill of $10.9 million being impaired in fiscal 2015.Other Indefinite-Lived Intangible Assets ImpairmentOther indefinite-lived intangible assets were analyzed in accordance with the Company's policy outlined above using the income approach. Thevaluation was based upon current sales projections and profitability for each asset group, and the relief from royalty method was applied. As a result of theanalysis, indefinite-lived tradenames with a carrying amount of $24.8 million were written down to their estimated fair value of $19.5 million in fiscal 2015.New Accounting StandardsThe information required by this Item is provided in Note 1 of the Notes to Consolidated Financial Statements contained in Item 8 — FinancialStatements and Supplementary Data.Forward-Looking StatementsIn this annual report on Form 10-K, statements that are not reported financial results or other historic information are “forward-looking statements.”These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs,earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or similar terminology aregenerally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees,uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady's control, that could cause actual results to differ materiallyfrom those expressed or implied by such forward-looking statements. For Brady, uncertainties arise from:•Implementation of the Workplace Safety strategy;•Brady's ability to develop and successfully market technologically advanced new products;•Risks associated with restructuring plans and maintaining acceptable operational service metrics;•Technology changes and potential security violations to the Company's information technology systems;•Future competition;•Future financial performance of major markets Brady serves, which include, without limitation, telecommunications, hard disk drive, manufacturing,electrical, construction, laboratory, education, governmental, public utility, computer, healthcare and transportation;•Fluctuations in currency rates versus the U.S. dollar;•Risks associated with international operations;•Difficulties associated with exports;•Changes in the supply of, or price for, parts and components;•Increased price pressure from suppliers and customers;•Brady's ability to retain significant contracts and customers;•Risk associated with loss of key talent;•Risks associated with obtaining governmental approvals and maintaining regulatory compliance;30Table of Contents•Risk associated with product liability claims;•Environmental, health and safety compliance costs and liabilities;•Potential write-offs of Brady's substantial intangible assets;•Unforeseen tax consequences;•Risks associated with divestitures;•Risks associated with identifying, completing, and integrating acquisitions;•Risks associated with our ownership structure;•Brady's ability to maintain compliance with its debt covenants;•Increase in our level of debt; and•Numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive, and regulatory naturecontained from time to time in Brady's U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the“Risk Factors” section within Item 1A of Part I of this Form 10-K.These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady doesnot undertake to update its forward-looking statements except as required by law.Risk FactorsRefer to the information contained in Item 1A - Risk Factors.31Table of ContentsItem 7A. Quantitative and Qualitative Disclosures About Market RiskThe Company’s business operations give rise to market risk exposure due to changes in foreign exchange rates. To manage that risk effectively, theCompany enters into hedging transactions according to established guidelines and policies that enable it to mitigate the adverse effects of this financialmarket risk.The global nature of the Company’s business requires active participation in the foreign exchange markets. As a result of investments, productionfacilities and other operations on a global scale, the Company has assets, liabilities and cash flows in currencies other than the U.S. dollar. The objective ofthe Company’s foreign currency exchange risk management is to minimize the impact of currency movements on non-functional currency transactions. Toachieve this objective, the Company hedges a portion of known exposures using forward contracts. Main exposures are related to transactions denominatedin the British Pound, the Euro, Canadian dollar, Australian dollar, Malaysian Ringgit, and Singapore dollar. As of July 31, 2015, the notional amount ofoutstanding forward foreign exchange contracts designated as cash flow hedges was $33.2 million. The Company uses Euro-denominated debt of€75.0 million and British Pound-denominated intercompany debt of £25.0 million designated as hedge instruments to hedge portions of the Company’s netinvestments in its European and British Pound denominated foreign operations. The Company's revolving credit facility allows it to borrow up to $100.0million in currencies other than U.S. dollars under an alternative currency sub-limit. The Company has periodically borrowed funds in Euro and BritishPounds under this sub-limit. Debt issued in currencies other than U.S. dollars acts as a natural hedge to the Company's exposure to the associated currency.The Company also faces exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactionsbetween affiliates. Although the Company has a U.S. dollar functional currency for reporting purposes, it has manufacturing sites throughout the world and asignificant portion of its sales are generated in foreign currencies. Costs incurred and sales recorded by subsidiaries operating outside of the United States aretranslated into U.S. dollars using exchange rates effective during the respective period. As a result, the Company is exposed to movements in the exchangerates of various currencies against the U.S. dollar. In particular, the Company has more sales in European currencies than it has expenses in those currencies.Therefore, when European currencies strengthen or weaken against the U.S. dollar, operating profits are increased or decreased, respectively.Currency exchange rates decreased fiscal 2015 sales by 5.4% compared to fiscal 2014 as the U.S. dollar appreciated, on average, against other majorcurrencies throughout the year. The most significant impact on sales due to currency fluctuations occurred during the second half of fiscal 2015, as salesdeclined by 8.0% and 7.7% in the third and fourth quarters, respectively, as compared to the same periods in the prior year.The Company is subject to the risk of change in foreign currency exchange rates due to its operations in foreign countries. The Company hasmanufacturing facilities and sells and distributes its products throughout the world. As a result, the Company’s financial results could be significantlyaffected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Companymanufactures, distributes and sells its products. The Company’s operating results are principally exposed to changes in exchange rates between the U.S.dollar and the Euro, the Australian dollar, the Canadian dollar, the Mexican Peso, the Singapore dollar, the British Pound, the Brazilian Real, and the ChineseYuan. Changes in foreign currency exchange rates for the Company’s foreign subsidiaries reporting in local currencies are generally reported as a componentof stockholders’ investment. The Company’s currency translation adjustment recorded in fiscal 2015, 2014, and 2013 as a separate component ofstockholders’ investment was $120.3 million unfavorable, $7.5 million favorable and $2.3 million unfavorable, respectively. As of July 31, 2015 and 2014,the Company’s foreign subsidiaries had net current assets (defined as current assets less current liabilities) subject to foreign currency translation risk of$258.5 million and $200.1 million, respectively. The potential decrease in net current assets as of July 31, 2015, from a hypothetical 10 percent adversechange in quoted foreign currency exchange rates would be approximately $26 million. This sensitivity analysis assumes a parallel shift in all major foreigncurrency exchange rates versus the U.S. dollar. Exchange rates rarely move in the same direction relative to the U.S. dollar due to positive and negativecorrelations of the various global currencies. This assumption may overstate the impact of changing exchange rates on individual assets and liabilitiesdenominated in a foreign currency.The Company could be exposed to interest rate risk through its corporate borrowing activities. The objective of the Company’s interest rate riskmanagement 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 allows the Company to enter into approved interest rate derivatives if there is a desire to modify the Company’sexposure to interest rates. As of July 31, 2015, the Company had no interest rate derivatives. The Company had variable rate debt outstanding of $112.4million at a current weighted average interest rate of 1.5%. A hypothetical change in the interest rate of 10% from the Company's current weighted averageinterest rate on variable rate debt obligations of 1.5% would not have a material impact on the Company's interest expense.32Table of ContentsItem 8. Financial Statements and Supplementary DataBRADY CORPORATION & SUBSIDIARIESINDEX TO FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm34Financial Statements: Consolidated Balance Sheets — July 31, 2015 and 201435Consolidated Statements of Earnings — Years Ended July 31, 2015, 2014, and 201336Consolidated Statements of Comprehensive Loss — Years Ended July 31, 2015, 2014 and 201337Consolidated Statements of Stockholders’ Investment — Years Ended July 31, 2015, 2014, and 201338Consolidated Statements of Cash Flows — Years Ended July 31, 2015, 2014, and 201339Notes to Consolidated Financial Statements — Years Ended July 31, 2015, 2014, and 20134033Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofBrady CorporationMilwaukee, WisconsinWe have audited the accompanying consolidated balance sheets of Brady Corporation and subsidiaries (the "Company") as of July 31, 2015 and 2014, andthe related consolidated statements of earnings, comprehensive loss, stockholders' investment, and cash flows for each of the three years in the period endedJuly 31, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15. These consolidated financial statements and financialstatement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statementsand financial statement schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Brady Corporation and subsidiaries atJuly 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended July 31, 2015, in conformitywith accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered inrelation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal controlover financial reporting as of July 31, 2015, based on the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission and our report dated September 21, 2015, expressed an unqualified opinion on the Company'sinternal control over financial reporting./s/ DELOITTE & TOUCHE LLPMilwaukee, WisconsinSeptember 21, 201534Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSJuly 31, 2015 and 2014 2015 2014 (Dollars in thousands)ASSETS Current assets: Cash and cash equivalents$114,492 $81,834Accounts receivable — net157,386 177,648Inventories: Finished products66,700 73,096Work-in-process16,958 17,689Raw materials and supplies20,849 22,490Total inventories104,507 113,275Assets held for sale— 49,542Prepaid expenses and other current assets32,197 41,543Total current assets408,582 463,842Other assets: Goodwill433,199 515,004Other intangible assets68,888 91,014Deferred income taxes22,310 27,320Other18,704 22,314Property, plant and equipment: Cost: Land5,284 7,875Buildings and improvements94,423 101,866Machinery and equipment270,086 288,409Construction in progress2,164 12,500 371,957 410,650Less accumulated depreciation260,743 276,479Property, plant and equipment — net111,214 134,171Total$1,062,897 $1,253,665LIABILITIES AND STOCKHOLDERS’ INVESTMENT Current liabilities: Notes payable$10,411 $61,422Accounts payable73,020 88,099Wages and amounts withheld from employees30,282 38,064Liabilities held for sale— 10,640Taxes, other than income taxes7,250 7,994Accrued income taxes7,576 7,893Other current liabilities38,194 35,319Current maturities on long-term debt42,514 42,514Total current liabilities209,247 291,945Long-term obligations, less current maturities200,774 159,296Other liabilities65,188 69,348Total liabilities475,209 520,589Stockholders’ investment: Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively; (aggregate liquidationpreference of $42,803 and $42,803 at July 31, 2015 and 2014, respectively)513 513Class B voting common stock — Issued and outstanding 3,538,628 shares35 35Additional paid-in capital314,403 311,811Earnings retained in the business414,069 452,057Treasury stock — 3,480,303 and 3,477,291 shares, respectively of Class A nonvoting common stock, at cost(93,234) (93,337)Accumulated other comprehensive (loss) income(45,034) 64,156Other(3,064) (2,159)Total stockholders’ investment587,688 733,076Total$1,062,897 $1,253,665See Notes to Consolidated Financial Statements.35Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGSYears Ended July 31, 2015, 2014 and 2013 2015 2014 2013 (In thousands, except per share amounts)Net sales$1,171,731 $1,225,034 $1,157,792Cost of products sold613,299 615,470 548,444Gross margin558,432 609,564 609,348Operating expenses: Research and development36,734 35,048 33,552Selling, general and administrative422,704 452,164 427,858Restructuring charges16,821 15,012 26,046Impairment charges46,867 148,551 204,448Total operating expenses523,126 650,775 691,904Operating income (loss)35,306 (41,211) (82,556)Other income and (expense): Investment and other income845 2,402 3,523Interest expense(11,156) (14,300) (16,641)Earnings (loss) from continuing operations before income taxes24,995 (53,109) (95,674)Income tax expense (benefit)20,093 (4,963) 42,583Earnings (loss) from continuing operations$4,902 $(48,146) $(138,257)(Loss) earnings from discontinued operations, net of income taxes(1,915) 2,178 (16,278)Net earnings (loss)$2,987 $(45,968) $(154,535)Earnings (loss) from continuing operations per Class A Nonvoting Common Share Basic$0.10 $(0.93) $(2.70)Diluted$0.10 $(0.93) $(2.70)Earnings (loss) from continuing operations per Class B Voting Common Share: Basic$0.08 $(0.95) $(2.71)Diluted$0.08 $(0.95) $(2.71)(Loss) earnings from discontinued operations per Class A Nonvoting Common Share: Basic$(0.04) $0.04 $(0.32)Diluted$(0.04) $0.04 $(0.32)(Loss) earnings from discontinued operations per Class B Voting Common Share: Basic$(0.04) $0.05 $(0.32)Diluted$(0.04) $0.05 $(0.32)Net earnings (loss) per Class A Nonvoting Common Share: Basic$0.06 $(0.89) $(3.02)Diluted$0.06 $(0.89) $(3.02)Dividends$0.80 $0.78 $0.76Net earnings (loss) per Class B Voting Common Share: Basic$0.04 $(0.90) $(3.03)Diluted$0.04 $(0.90) $(3.03)Dividends$0.78 $0.76 $0.74Weighted average common shares outstanding (in thousands): Basic51,285 51,866 51,330Diluted51,383 51,866 51,330See Notes to Consolidated Financial Statements.36Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSYears Ended July 31, 2015, 2014 and 2013 2015 2014 2013 (Dollars in thousands)Net earnings (loss)$2,987 $(45,968) $(154,535)Other comprehensive (loss) income: Foreign currency translation adjustments: Net (loss) gain recognized in other comprehensive (loss) income(85,622) 4,543 (2,312)Reclassification adjustment for (gains) losses included in net earnings (loss)(34,697) 3,004 — (120,319) 7,547 (2,312) Net investment hedge translation adjustments21,477 (4,243) (6,537)Long-term intercompany loan translation adjustments: Net gain recognized in other comprehensive (loss) income546 211 3,108Reclassification adjustment for (gains) losses included in net earnings (loss)(393) 865 — 153 1,076 3,108 Cash flow hedges: Net gain (loss) recognized in other comprehensive (loss) income1,643 8 (652)Reclassification adjustment for gains included in net earnings (loss)(1,325) (147) (578) 318 (139) (1,230)Pension and other post-retirement benefits: Net gain recognized in other comprehensive (loss) income1,057 5,211 1,617Actuarial gain amortization(741) (240) (25)Prior service credit amortization(1,170) (203) (203)Reclassification adjustment for (gains) losses included in net earnings (loss)(1,741) 131 — (2,595) 4,899 1,389 Other comprehensive (loss) income, before tax(100,966) 9,140 (5,582)Income tax (expense) benefit related to items of other comprehensive (loss) income(8,224) (1,047) 2,234Other comprehensive (loss) income, net of tax(109,190) 8,093 (3,348)Comprehensive loss$(106,203) $(37,875) $(157,883)See Notes to Consolidated Financial Statements.37Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENTYears Ended July 31, 2015, 2014 and 2013 CommonStock AdditionalPaid-InCapital EarningsRetainedin theBusiness TreasuryStock AccumulatedOtherComprehensive(Loss)Income Other (In thousands, except per share amounts)Balances at July 31, 2012 $548 $313,008 $732,290 $(92,600) $59,411 $(3,304)Net earnings (loss) — — (154,535) — — —Other comprehensive (loss) income, net of tax — — — — (3,348) —Issuance of 1,080,089 shares of Class ACommon Stock under stock plan — (9,721) — 30,045 — —Other — (1,266) — (2,121) — 2,584Tax benefit from exercise of stock optionsand deferred compensation distributions — 2,434 — — — —Stock-based compensation expense (Note 8) — 1,736 — — — —Purchase of 188,167 shares of Class ACommon Stock — — — (5,121) — —Cash dividends on Common Stock Class A — $0.76 per share — — (36,613) — — —Class B — $0.74 per share — — (2,630) — — —Balances at July 31, 2013 $548 $306,191 $538,512 $(69,797) $56,063 $(720)Net earnings (loss) — — (45,968) — — —Other comprehensive (loss) income, net of tax — — — — 8,093 —Issuance of 490,507 shares of Class ACommon Stock under stock option plan — 847 — 11,266 — —Other — (371) — (4,225) — (1,439)Tax (shortfall) benefit from exercise of stockoptions and deferred compensationdistributions — (70) — — — —Stock-based compensation expense (Note 8) — 5,214 — — — —Purchase of 1,180,531 shares of Class ACommon Stock — — — (30,581) — —Cash dividends on Common Stock Class A — $0.78 per share — — (37,786) — — —Class B — $0.76 per share — — (2,701) — — —Balances at July 31, 2014 $548 $311,811 $452,057 $(93,337) $64,156 $(2,159)Net earnings (loss) — — 2,987 — — —Other comprehensive (loss) income, net of tax — — — — (109,190) —Issuance of 102,780 shares of Class ACommon Stock under stock plan — (1,315) — 2,735 — —Other — 2,312 — (2,632) — (905)Tax (shortfall) benefit from exercise of stockoptions, vesting of RSUs, and deferredcompensation distributions — (2,876) — — — —Stock-based compensation expense (Note 8) — 4,471 — — — —Cash dividends on Common Stock Class A — $0.80 per share — — (38,204) — — —Class B — $0.78 per share — — (2,771) — — —Balances at July 31, 2015 $548 $314,403 $414,069 $(93,234) $(45,034) $(3,064)See Notes to Consolidated Financial Statements.38Table of ContentsBRADY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYears Ended July 31, 2015, 2014 and 2013 2015 2014 2013 (Dollars in thousands)Operating activities: Net earnings (loss)$2,987 $(45,968) $(154,535)Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization39,458 44,598 48,725Non-cash portion of restructuring charges4,164 566 3,699Non-cash portion of stock-based compensation expense4,471 5,214 1,736Impairment charges46,867 148,551 204,448Loss on write-down of assets held for sale— — 15,658Loss on sales of businesses, net426 1,238 3,138Deferred income taxes(7,233) (27,516) 21,630Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures): Accounts receivable1,317 (3,600) 1,535Inventories(763) (12,608) 2,440Prepaid expenses and other assets9,188 (278) 5,036Accounts payable and accrued liabilities(8,516) (20,508) (2,285)Income taxes982 3,731 (7,722)Net cash provided by operating activities93,348 93,420 143,503Investing activities: Purchases of property, plant and equipment(26,673) (43,398) (35,687)Acquisition of business, net of cash acquired— — (301,157)Sales of businesses, net of cash retained6,111 54,242 10,178Other6,197 (637) 900Net cash (used in) provided by investing activities(14,365) 10,207 (325,766)Financing activities: Payment of dividends(40,976) (40,487) (39,243)Proceeds from issuance of common stock1,644 12,113 20,324Purchase of treasury stock— (30,581) (5,121)Proceeds from borrowing on credit facilities83,382 73,334 231,613Repayment of borrowing on credit facilities(32,314) (62,398) (181,000)Principal payments on debt(42,514) (61,264) (61,264)Income tax on equity-based compensation, and other(1,374) (6,104) 1,631Net cash used in financing activities(32,152) (115,387) (33,060)Effect of exchange rate changes on cash(14,173) 2,536 481Net increase (decrease) in cash and cash equivalents32,658 (9,224) (214,842)Cash and cash equivalents, beginning of period81,834 91,058 305,900Cash and cash equivalents, end of period$114,492 $81,834 $91,058Supplemental disclosures of cash flow information: Cash paid during the period for: Interest$11,164 $14,594 $17,162Income taxes, net of refunds25,024 33,043 34,030Acquisitions: Fair value of assets acquired, net of cash$— $— $168,724Liabilities assumed— — (37,747)Goodwill— — 170,180Net cash paid for acquisitions$— $— $301,157See Notes to Consolidated Financial Statements.39Table of ContentsBRADY CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears Ended July 31, 2015, 2014 and 2013(In thousands, except share and per share amounts)1. Summary of Significant Accounting PoliciesNature of Operations — Brady Corporation is an international manufacturer of identification solutions and specialty materials that identify and protectpremises, products and people. The ability to provide customers with a broad range of proprietary, customized, and diverse products for use in variousapplications, along with a commitment to quality and service, a global footprint, and multiple sales channels, have made Brady a world leader in many of itsmarkets.Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Brady Corporation and its subsidiaries(“Brady” or the “Company”), all of which are wholly-owned. All intercompany accounts and transactions have been eliminated in consolidation.Discontinued Operations — The results of operations of the Die-Cut businesses have been reported as discontinued operations for all periods presented.The corresponding assets and liabilities have been classified in accordance with the authoritative literature on assets held for sale at July 31, 2014. Therewere no assets held for sale at July 31, 2015 as the second and final phase of the Die-Cut sale closed in the first quarter of fiscal 2015. In accordance with theauthoritative literature, the Company has elected to not separately disclose the cash flows related to discontinued operations. See Note 15 for additionalinformation about the Company's discontinued operations.Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets andliabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differfrom those estimates.Subsequent Events — On September 10, 2015, the Company's Board of Directors authorized an increase in the Company’s share repurchase program,authorizing the repurchase of up to a total of two million shares of the Company’s Class A Common Stock, inclusive of the shares in the existing sharerepurchase program. The plan may be implemented by purchasing shares in the open market or in privately negotiated transactions, with repurchased sharesavailable for use in connection with the Company's stock-based plans and for other corporate purposes.On September 10, 2015, the Company announced an increase in the annual dividend to shareholders of the Company's Class A Common Stock, from$0.80 to $0.81 per share. A quarterly dividend of $0.2025 will be paid on October 30, 2015, to shareholders of record at the close of business on October 9,2015. This dividend represents an increase of 1.3% and is the 30th consecutive annual increase in dividends.Fair Value of Financial Instruments — The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accountsreceivable and accounts payable) is a reasonable estimate of the fair value of these instruments due to their short-term nature. See Note 7 for more informationregarding the fair value of long-term debt and Note 12 for fair value measurements.Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less when acquired to be cashequivalents, which are recorded at cost.Accounts Receivables — Accounts receivables are stated net of allowances for doubtful accounts of $3,585 and $3,069 as of July 31, 2015 and 2014,respectively. No single customer comprised more than 5% of the Company’s consolidated net sales in fiscal 2015, 2014 or 2013, or 5% of the Company’sconsolidated accounts receivable as of July 31, 2015 or 2014. Specific customer provisions are made during review of significant outstanding amounts, inwhich customer creditworthiness and current economic trends may indicate that collection is doubtful. In addition, provisions are made for the remainder ofaccounts receivable based upon the age of the receivable and the Company’s historical collection experience.Inventories — Inventories are stated at the lower of cost or market. Cost has been determined using the last-in, first-out (“LIFO”) method for certaindomestic inventories (12.7% of total inventories at July 31, 2015, and 11.7% of total inventories at July 31, 2014) and the first-in, first-out (“FIFO”) oraverage cost methods for other inventories. Had all domestic inventories been accounted for on a FIFO basis instead of on a LIFO basis, the carrying value ofinventories would have increased by $7,346 and $7,637 as of July 31, 2015 and 2014, respectively.40Table of ContentsGoodwill — Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might beimpaired. The Company completes impairment reviews for its reporting units using a fair-value method based on management's judgments and assumptions.The fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between market participants on an arms-lengthbasis. In estimating the fair value, the Company utilizes a discounted cash flow model and market multiples approach. The estimated fair value is comparedwith the carrying amount of the reporting unit, including goodwill. The annual impairment testing performed on May 1, 2015, in accordance with ASC 350,"Intangibles - Goodwill and Other" ("Step One") indicated that the following reporting units had a fair value substantially in excess of its carrying value: IDSAmericas & Europe, PeopleID, and WPS Europe. The results of the Step One analysis completed over the remaining reporting units, WPS Americas and WPSAPAC, indicated they were potentially impaired. Refer to Note 3, "Goodwill and Other Intangible Assets" for further information.Long-Lived and Other Intangible Assets — The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economicbenefits consumed on a straight-line basis, over the estimated periods benefited. Intangible assets with indefinite useful lives as well as goodwill are notsubject to amortization. These assets are assessed for impairment annually or more frequently as deemed necessary.The Company evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived and other finite-lived intangible assets may warrant revision or that the remaining balance of an asset may not be recoverable. If impairment is determined to exist, any relatedimpairment loss is calculated by comparing the fair value of the asset to its carrying value. In fiscal 2015, other intangible assets primarily associated with theWPS Americas and WPS APAC reporting units were analyzed for potential impairment. Refer to Note 3, "Goodwill and Other Intangible Assets" for furtherinformation.Property, Plant, and Equipment — Property, plant, and equipment are recorded at cost. The cost of buildings and improvements and machinery andequipment is being depreciated over their estimated useful lives using primarily the straight-line method for financial reporting purposes. The estimateduseful lives range from 3 to 33 years as shown below.Asset Category Range of Useful LivesBuildings & Improvements 10 to 33 YearsComputer Systems 5 YearsMachinery & Equipment 3 to 10 YearsFully depreciated assets are retained in property and accumulated depreciation accounts until disposal. Upon disposal, assets and related accumulateddepreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to operations. Leasehold improvementsare depreciated over the shorter of the lease term or the estimated useful life of the respective asset. Depreciation expense was $27,355, $26,727, and $22,976for the years ended July 31, 2015, 2014 and 2013, respectively.Catalog Costs and Related Amortization — The Company accumulates all direct costs incurred, net of vendor cooperative advertising payments, in thedevelopment, production, and circulation of its catalogs on its balance sheet until such time as the related catalog is mailed. The catalog costs aresubsequently amortized into selling, general, and administrative expense over the expected sales realization cycle, which is one year or less. Consequently,any difference between the estimated and actual revenue stream for a particular catalog and the related impact on amortization expense is realized within aperiod of one year or less. The estimate of the expected sales realization cycle for a particular catalog is based on the Company’s historical sales experiencewith identical or similar catalogs, and an assessment of prevailing economic conditions and various competitive factors. The Company tracks subsequentsales realization, reassesses the marketplace, and compares its findings to the previous estimate, and adjusts the amortization of future catalogs, if necessary.At July 31, 2015 and 2014, $9,547 and $13,959, respectively, of prepaid catalog costs were included in prepaid expenses and other current assets. Thedecrease in prepaid catalog costs at July 31, 2015, compared to July 31, 2014, was primarily due to a reduction in catalog mailings and a change in thetiming of such catalog mailings in fiscal 2015.41Table of ContentsRevenue Recognition — Revenue is recognized when it is both earned and realized or realizable. The Company’s policy is to recognize revenue whentitle to the product and risk of loss have transferred to the customer, persuasive evidence of an arrangement exists, and collection of the sales proceeds isreasonably assured, all of which generally occur upon shipment of goods to customers. The majority of the Company’s revenue relates to the sale ofinventory 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’sbusiness and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not contain estimates that materially affectthe results of operations, with the exception of estimated returns and credit memos. The Company provides for an allowance for estimated product returns andcredit memos which is recognized as a deduction from sales at the time of the sale. As of July 31, 2015 and 2014, the Company had a reserve for estimatedproduct returns and credit memos of $3,619 and $3,161, respectively.Sales Incentives — The Company accounts for cash consideration (such as sales incentives and cash discounts) given to its customers or resellers as areduction of revenue rather than an operating expense. Sales incentives for the years ended July 31, 2015, 2014, and 2013 were $36,591, $36,175, and$28,000, respectively. The increase in sales incentives for the years ended July 31, 2015 and 2014 as compared to July 31, 2013 was due to twelve months ofsales incentives related to Precision Dynamics Corporation ("PDC") compared to seven months in fiscal 2013.Shipping and Handling Fees and Costs — Amounts billed to a customer in a sale transaction related to shipping and handling fees are reported as netsales and the related costs incurred for shipping and handling are reported as cost of goods sold.Advertising Costs — Advertising costs are expensed as incurred, except catalog and mailing costs as outlined above. Advertising expense for the yearsended July 31, 2015, 2014, and 2013 was $86,090, $82,561, and $77,905, respectively.Stock-Based Compensation — The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options topurchase shares of Class A Nonvoting Common Stock, restricted stock unit awards ("RSUs"), or restricted and unrestricted shares of Class A NonvotingCommon Stock to employees and non-employee directors.The options issued under the plan have an exercise price equal to the fair market value of the underlying stock at the date of grant. Restricted sharesand RSUs issued under the plan have an issuance price equal to the fair market value of the underlying stock at the date of grant. The Company also grantsrestricted shares and RSUs to certain executives and key management employees that vest upon meeting certain financial performance conditions.In accordance with ASC 718 "Compensation - Stock Compensation," the Company measures and recognizes the compensation expense for all share-based awards made to employees and directors based on estimated grant-date fair values. The Black-Scholes option valuation model is used to determine thefair value of stock option awards on the date of grant. The Company recognizes the compensation cost of all share-based awards at the time it is deemedprobable the award will vest. This cost is recognized on a straight-line basis over the vesting period of the award. If it is determined that it is unlikely theaward will vest, the expense recognized to date for the award is reversed in the period in which this is evident and the remaining expense is not recorded.The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards. The Company uses historical dataregarding stock option exercise behaviors to estimate the expected term of options granted based on the period of time that options granted are expected tobe outstanding. Expected volatilities are based on the historical volatility of the Company’s stock. The expected dividend yield is based on the Company’shistorical dividend payments and historical yield. The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the grant date for the lengthof time corresponding to the expected term of the option. The market value is calculated as the average of the high and the low stock price on the date of thegrant.The Company includes as part of cash flows from financing activities the benefits of tax deductions in excess of the tax-effected compensation of therelated stock-based awards for options exercised and restricted shares and RSUs vested during the period. See Note 8 “Stockholder’s Investment” for moreinformation regarding the Company’s incentive stock plans.Research and Development — Amounts expended for research and development are expensed as incurred.Other Comprehensive Income — Other comprehensive income consists of foreign currency translation adjustments, net unrealized gains and losses fromcash flow hedges and net investment hedges, and the unamortized gain on the post-retirement medical plans net of their related tax effects.Foreign Currency Translation — Foreign currency assets and liabilities are translated into United States dollars at end of period rates of exchange, andincome and expense accounts are translated at the weighted average rates of exchange for the period. Resulting translation adjustments are included in othercomprehensive income.42Table of ContentsRisk Management Activities — The Company does not hold or issue derivative financial instruments for trading purposes.Income Taxes — The Company accounts for income taxes in accordance with ASC 740 "Income Taxes", which requires an asset and liability approachto financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financialstatement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable tothe periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assetsto 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 indeferred tax assets and liabilities. The Company recognizes the effect of income tax positions only if sustaining those positions is more likely than not.Changes in recognition or measurement are reflected in the period in which a change in judgment occurs.Foreign Currency Hedging — The objective of the Company’s foreign currency exchange risk management is to minimize the impact of currencymovements on non-functional currency transactions and minimize the foreign currency translation impact on the Company’s foreign operations. While theCompany’s risk management objectives and strategies are driven from an economic perspective, the Company attempts, where possible and practical, toensure that the hedging strategies it engages in qualify for hedge accounting and result in accounting treatment where the earnings effect of the hedginginstrument provides substantial offset (in the same period) to the earnings effect of the hedged item. Generally, these risk management transactions willinvolve the use of foreign currency derivatives to protect against exposure resulting from transactions in a currency differing from the respective functionalcurrency.The Company recognizes derivative instruments as either assets or liabilities in the accompanying Consolidated Balance Sheets at fair value. Changesin the fair value (i.e., gains or losses) of the derivatives are recorded in the accompanying Consolidated Statements of Earnings as "Investment and otherincome", net, or as a component of Accumulated Other Comprehensive Income ("AOCI") in the accompanying Consolidated Balance Sheets and in theConsolidated Statements of Comprehensive Loss, as discussed below.The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate risk of specific foreign currency denominatedtransactions. These contracts typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities of less than 18months. These instruments may or may not qualify as hedges under the accounting guidance for derivative instruments and hedging activities based upon theintended objective of the contract. Hedge effectiveness is determined by how closely the changes in the fair value of the hedging instrument offset thechanges 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 effectiveat the inception of the hedge and on an on-going basis. Gains or losses on the derivative related to hedge ineffectiveness are recognized in current earnings.The amount of hedge ineffectiveness was not significant for the fiscal years ended July 31, 2015, 2014, and 2013.The Company has designated a portion of its foreign exchange contracts as cash flow hedges. For these instruments, the effective portion of the gain orloss on the derivative is reported as a component of AOCI and in the cash flow hedge section of the Consolidated Statements of Comprehensive Loss, andreclassified into earnings in the same period or periods during which the hedged transaction affects earnings.The Company has designated a portion of its foreign exchange contracts as net investment hedges of the Company’s net investments in foreignoperations. The Company also utilizes Euro-denominated debt and British Pound-denominated intercompany loans designated as hedge instruments tohedge portions of the Company’s net investments in Euro and British- Pound denominated foreign operations. For net investment hedges that meet theeffectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded as cumulative translation within AOCI and areincluded in the net investment hedge section of the Consolidated Statements of Comprehensive Loss. Any ineffective portions are to be recognized inearnings. Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantiallycomplete liquidation of the net investment in the hedged foreign operation.The Company also enters into foreign exchange contracts to create economic hedges to manage foreign exchange risk exposure. The Company has notdesignated these derivative contracts as hedge transactions, and accordingly, the mark-to-market impact of these derivatives is recorded each period incurrent earnings.See Note 14 "Derivatives and Hedging Activities" for more information regarding the Company’s derivative instruments and hedging activities.43Table of ContentsNew Accounting Standards — In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory", which requires thatinventory within the scope of the guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (“LIFO”) isnot impacted by the new standard. This guidance is effective for interim and annual periods beginning after December 15, 2016, with early adoptionpermitted and the prospective transition method should be applied. The Company is currently evaluating the impact of this update on its consolidatedfinancial statements.In June 2014, the FASB issued ASU 2014-12, "Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance TargetCould be Achieved after the Requisite Service Period." The new guidance requires that a performance target that affects vesting and that could be achievedafter the requisite service period be treated as a performance condition. The guidance also clarifies that the performance target should not be reflected inestimating the grant-date fair value of the award. The guidance is effective for interim and annual periods beginning after December 15, 2015, with earlyadoption permitted. The Company does not expect the adoption of this update to have a material impact on the financial statements of the Company.In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers", which eliminates the transaction-and industry-specificrevenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. The new guidancerequires revenue recognition when control of the goods or services transfers to the customer, replacing the existing guidance which requires revenuerecognition when the risks and rewards transfer to the customer. Under the new guidance, companies should recognize revenues in amounts that reflect thepayment to which a company expects to be entitled in exchange for those goods or services. The standard permits the use of either the retrospective orcumulative effect transition method. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of theEffective Date," which defers the effective date of the new revenue recognition standard by one year. Under the ASU, the new revenue recognition standard iseffective for the Company beginning in fiscal 2019. We are currently evaluating the impact of this update on our consolidated financial statements.In April 2014, the FASB issued ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity", whichincludes amendments that change the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations.Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shiftsshould have a major effect on the organization’s operations and financial results. Additionally, ASU 2014-08 requires expanded disclosures aboutdiscontinued operations that will provide financial statement users with more information about the assets, liabilities, income, expenses and cash flows ofdiscontinued operations. The guidance is effective for fiscal and interim periods beginning after December 15, 2014. The adoption of this update did nothave a material impact on the financial statements of the Company.44Table of Contents2. AcquisitionsThe Company did not complete any business acquisitions during the fiscal years ended July 31, 2015 and 2014 and had one business acquisitionduring the fiscal year ended July 31, 2013. This transaction was accounted for using business combination accounting; therefore, the results of the acquiredoperations are included in the accompanying consolidated financial statements only since their acquisition date.Fiscal 2013On December 28, 2012, the Company acquired all of the outstanding shares of Precision Dynamics Corporation ("PDC"), a manufacturer ofidentification products primarily for the healthcare sector headquartered in Valencia, California. PDC is reported within the Company's ID Solutions segment.Financing for this acquisition consisted of $220,000 from the Company's revolving loan agreement and the balance from cash on hand. As of July 31, 2015,the Company has repaid the entire amount of the borrowing.The following table reflects the unaudited pro-forma operating results of the Company for fiscal year 2013 which give effect to the acquisition of PDCas if it had occurred at the beginning of fiscal 2012, after giving effect to certain adjustments, including amortization of intangible assets, interest expense onacquisition debt, and income tax effects. The pro-forma results have been prepared for comparative purposes only and are not necessarily indicative of theresults of operations which may occur in the future or that would have occurred had the acquisitions been effected on the date indicated, nor are theynecessarily indicative of the Company's future results of operations. 2013Net sales, as reported $1,157,792Net sales, pro forma 1,226,217(Loss) earnings from continuing operations, as reported (138,257)(Loss) earnings from continuing operations, pro forma (133,957)Basic (loss) earnings from continuing operations per Class A Common Share, as reported (2.70)Basic (loss) earnings from continuing operations per Class A Common Share, pro forma (2.61)Diluted (loss) earnings from continuing operations per Class A Common Share, as reported (2.70)Diluted (loss) earnings from continuing operations per Class A Common Share, pro forma (2.61)Pro forma results for fiscal 2013, were adjusted to exclude $3,600 of acquisition-related expenses and $1,530 of nonrecurring expense related to the fairvalue adjustment to acquisition-date inventory, and were adjusted to include $529 in interest expense on acquisition debt, $429 in income tax benefit, and$5,215 of pre-tax amortization expense related to intangible assets, respectively.3. Goodwill and Other Intangible AssetsChanges in the carrying amount of goodwill by reportable segment for the years ended July 31, 2015 and 2014, were as follows: IDS WPS TotalBalance as of July 31, 2013$517,029 $100,207 $617,236Impairment charge(100,412) — (100,412)Purchase accounting adjustments(2,168) — (2,168)Translation adjustments(2,160) 2,508 348Balance as of July 31, 2014$412,289 $102,715 $515,004Impairment charge— (37,112) (37,112)Translation adjustments(29,503) (15,190) (44,693)Balance as of July 31, 2015$382,786 $50,413 $433,199Goodwill decreased by $81,805 during fiscal 2015. The decline in the balance consisted of an impairment charge of $37,112 recognized on theCompany's WPS Americas and WPS APAC reporting units and foreign currency translation of $44,693.Goodwill at July 31, 2015 included $118,637 and $209,392 of accumulated impairment losses within the IDS and WPS segments, respectively, for atotal of $328,029. Goodwill at July 31, 2014 included $118,637 and $172,280 of accumulated impairment losses within the IDS and WPS segments,respectively, for a total of $290,917.45Table of ContentsThe annual impairment testing performed on May 1, 2015, in accordance with ASC 350, “Intangibles - Goodwill and Other” (“Step One”) indicated thateach of the following reporting units had a fair value substantially in excess of its carrying value: IDS Americas & Europe, PeopleID, and WPS Europe. Theresults of the Step One analysis completed over the Company's WPS Americas and WPS APAC reporting units indicated that they were potentially impaired.WPS APAC Goodwill ImpairmentThe WPS APAC reporting unit consists entirely of the Company's business located in Australia. Organic sales declined in the mid-single digits in fiscal2015 primarily due to a decline in the mining production and manufacturing industries. As a result of the decline in sales and challenging economicconditions, the WPS APAC reporting unit's segment profit declined by nearly 30% in fiscal 2015.Management believes that the digital investments and current strategy will result in sales growth and improved profitability over the long-term,however, improved financial performance in this reporting unit may take several years. As a result, management incorporated the decline in fiscal 2015 salesand profitability as well as current economic forecasts for the business' end user markets in Australia when performing the annual goodwill impairmentanalysis. Management used the discounted cash flow model and market multiples model in order to complete Step One of the analysis in accordance withASC 350 - Intangibles - Goodwill and Other, and concluded that the WPS APAC reporting unit failed, as the resulting fair value was less than the carryingvalue of the reporting unit.Management proceeded to measure the amount of the potential impairment ("Step Two") by determining the implied fair value of the goodwillcompared to the carrying value. Management allocated the fair value of the WPS APAC reporting unit to its assets and liabilities as if the reporting unit hadbeen acquired in a business combination. There was no excess fair value of the reporting unit over the fair value of its identifiable assets and liabilities, whichresulted in the entire goodwill balance of $26,246 being impaired in fiscal 2015.WPS Americas Goodwill ImpairmentOrganic sales within the WPS Americas reporting unit declined in fiscal 2015 as compared to fiscal 2014. The business has improved many of its digitalcapabilities over the past two years; however, sales through the traditional catalog model have decreased at a greater rate than expected, and digital saleshave not been sufficient to offset the decline in sales through catalogs. As a result of the decline in sales and the increased investment in digital capabilities,WPS Americas' segment profit declined by nearly 17% in fiscal 2015.Management believes that the digital investments and current strategy will result in sales growth and improved profitability over the long-term;however, improved financial performance is expected to take time. As a result, management incorporated the decline in fiscal 2015 sales and profitability andthe risk in achieving modest sales growth in future years when performing the annual goodwill impairment analysis. Management used the discounted cashflow model and market multiples model in order to complete Step One of the analysis in accordance with ASC 350 - Intangibles - Goodwill and Other, andconcluded that the WPS Americas reporting unit failed, as the resulting fair value was less than the carrying value of the reporting unit.Management proceeded to measure the amount of the potential impairment ("Step Two") by determining the implied fair value of the goodwillcompared to the carrying value. Management allocated the fair value of the WPS Americas reporting unit to its assets and liabilities as if the reporting unithad been acquired in a business combination. There was no excess fair value of the reporting unit over the fair value of its identifiable assets and liabilities,which resulted in the remainder of the goodwill of $10,866 being impaired in fiscal 2015.46Table of ContentsOther Intangible AssetsOther intangible assets include patents, tradenames, customer relationships, non-compete agreements and other intangible assets with finite lives beingamortized in accordance with the accounting guidance for other intangible assets. The net book value of these assets was as follows: July 31, 2015 July 31, 2014 WeightedAverageAmortizationPeriod(Years) GrossCarryingAmount AccumulatedAmortization Net BookValue WeightedAverageAmortizationPeriod(Years) GrossCarryingAmount AccumulatedAmortization Net BookValueAmortized other intangible assets: Patents5 $12,073 $(10,641) $1,432 5 $11,656 $(10,160) $1,496Tradenames and other5 14,375 (12,471) 1,904 5 15,366 (10,706) 4,660Customer relationships7 136,693 (94,537) 42,156 7 168,525 (114,363) 54,162Non-compete agreementsand other4 9,076 (9,032) 44 4 10,089 (9,622) 467Unamortized other intangibleassets: TradenamesN/A 23,352 — 23,352 N/A 30,229 — 30,229Total $195,569 $(126,681) $68,888 $235,865 $(144,851) $91,014The value of goodwill and other intangible assets in the Consolidated Balance Sheets at July 31, 2015 and 2014, differs from the value assigned tothem in the original allocation of purchase due to the effect of fluctuations in foreign exchange rates. Other intangible assets consisting of tradenames andcustomer relationships primarily associated with the WPS APAC and WPS Americas reporting units were written down to fair value. As a result, the Companyrecognized impairment charges of $6,651 during fiscal 2015.Amortization expense on intangible assets during fiscal 2015, 2014, and 2013 was $12,103, $17,871 and $17,148, respectively. The amortization overeach of the next five fiscal years is projected to be $8,843, $7,155, $6,464, $6,190 and $5,461 for the fiscal years ending July 31, 2016, 2017, 2018, 2019 and2020, respectively.4. Other Comprehensive (Loss) IncomeOther comprehensive (loss) income consists of foreign currency translation adjustments, unrealized gains and losses from cash flow hedges and netinvestment 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) income, net of tax, for theperiods presented: Unrealizedgain (loss) oncash flowhedges Gain onpostretirementplans Foreigncurrencytranslationadjustments Accumulatedothercomprehensive(loss) incomeEnding balance, July 31, 2013$99 $1,853 $54,111 $56,063Other comprehensive (loss) income before reclassification(21) 3,313 1,334 4,626Amounts reclassified from accumulated other comprehensiveincome(90) (312) 3,869 3,467Ending balance, July 31, 2014$(12) $4,854 $59,314 $64,156Other comprehensive (loss) income before reclassification829 2,236 (73,098) (70,033)Amounts reclassified from accumulated other comprehensiveincome(808) (3,652) (34,697) (39,157)Ending balance, July 31, 2015$9 $3,438 $(48,481) $(45,034)The decrease in accumulated other comprehensive (loss) income ("AOCI") as of July 31, 2015 compared to July 31, 2014 was primarily due to theappreciation of the U.S. dollar against other currencies, most of which was realized during the six-month period ended January 31, 2015. A significant portionof the decrease was also a result of the accumulated foreign currency translation gains in the China Die-Cut businesses, which were reclassified into netearnings upon the completion of the second phase of the Die-Cut divestiture during the three months ended October 31, 2014. The foreign currencytranslation adjustments column in the table above includes foreign currency translation, foreign currency translation on intercompany notes and the impact47Table of Contentsof settlements of net investment hedges, net of tax. Of the total $39,157 in amounts reclassified from AOCI, the $34,697 gain on foreign currency translationadjustments was reclassified to the net loss on the sale of the Die-Cut business, the $808 gain on cash flow hedges was reclassified into cost of products sold,and the $3,652 net gain on post-retirement plans, due primarily to a plan curtailment, was reclassified into SG&A on the Consolidated Statement of Earningsin fiscal 2015.The following table illustrates the income tax (expense) benefit on the components of other comprehensive income: 2015 2014 2013Income tax (expense) benefit related to items of other comprehensive (loss) income: Net investment hedge translation adjustments $(8,450) $302 $2,877Long-term intercompany loan settlements — 579 (650)Cash flow hedges (308) 28 454Pension and other post-retirement benefits 949 (1,898) (555)Other income tax adjustments (415) (58) 108Income tax (expense) benefit related to items of other comprehensive (loss) income $(8,224) $(1,047) $2,234The increase in the income tax expense in fiscal 2015 as compared to the prior two fiscal years was primarily related to the foreign currency translationadjustment on the Company's Euro-denominated debt due to the appreciation of the U.S. dollar against the Euro, which is designated as a net investmenthedge.5. Employee Benefit PlansThe Company provides postretirement medical benefits (the “Plan”) for eligible regular full and part-time domestic employees (including spouses) asoutlined by the Plan. Postretirement benefits are provided only if the employee was hired prior to April 1, 2008, and retires on or after attainment of age 55with 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 afterJuly 31, 1992, are covered by an unfunded, contributory postretirement healthcare plan where employer contributions will not exceed a defined dollarbenefit 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 accounting guidance on defined benefit pension and other postretirement plans requires full recognition of the funded status of defined benefit andother postretirement plans on the balance sheet as an asset or a liability. The guidance also requires that unrecognized prior service costs/credits, gains/losses,and transition obligations/assets be recorded in AOCI, thus not changing the income statement recognition rules for such plans.The Company amended the Plan effective January 1, 2015 to eliminate future increases in target contribution levels to eligible plan participants. Thisamendment resulted in a decrease in the accumulated benefit obligation of $1,011 in fiscal 2014.The Company amended the Plan effective March 16, 2015 to eliminate postretirement medical benefits for eligible domestic employees retiring on orafter January 1, 2016. This amendment resulted in a decrease in the accumulated postretirement benefit obligation of $4,490 and recognition of a curtailmentgain of $4,296 in fiscal 2015. The curtailment gain was recorded in SG&A on the Consolidated Statements of Earnings.The Plan is unfunded and recorded as a liability in the accompanying Consolidated Balance Sheets as of July 31, 2015 and 2014. The following tableprovides a reconciliation of the changes in the Plan’s accumulated benefit obligation during the years ended July 31: 2015 2014Obligation at beginning of year $8,056 $13,023Service cost 210 674Interest cost 222 534Actuarial loss (gain) 502 (4,691)Benefit payments (365) (473)Plan amendments (1,935) (1,011)Curtailment gain (2,555) —Obligation at end of fiscal year $4,135 $8,05648Table of ContentsIn fiscal 2014, estimated savings of $3,408 were included as an actuarial gain due to decreases in expected participation rate assumptions used in theactuarial valuation. The change in participation assumptions was primarily caused by the impact of the Health Care and Education Reconciliation Act of2010 and Patient Protection and Affordable Care Act and increased premium costs passed on to participants as a result of plan amendments made in recentprior years. It is anticipated that due to the availability of subsidized health insurance exchanges, which began operating January 1, 2014, the majority offuture eligible retirees will now have access to more affordable plans and will not elect coverage under the current Company-sponsored plan.As of July 31, 2015 and 2014, amounts recognized as liabilities in the accompanying Consolidated Balance Sheets consist of: 2015 2014Current liability $659 $476Non-current liability 3,476 7,580 $4,135 $8,056As of July 31, 2015 and 2014, pre-tax amounts recognized in accumulated other comprehensive income in the accompanying Consolidated BalanceSheets consist of: 2015 2014Net actuarial gain $6,655 $7,960Prior service credit 1,035 2,011 $7,690 $9,971Net periodic benefit cost for the Plan for fiscal years 2015, 2014, and 2013 includes the following components: Years Ended July 31, 2015 2014 2013Net periodic postretirement benefit cost included the following components: Service cost $210 $674 $770Interest cost 222 534 476Amortization of prior service credit (1,169) (203) (203)Amortization of net actuarial gain (804) (265) (47) Curtailment gain (4,296) — —Periodic postretirement benefit cost $(5,837) $740 $996The estimated net actuarial gain and prior service credit that will be amortized from accumulated other comprehensive income into net periodicpostretirement benefit cost over the next fiscal year are $646 and $1,035, respectively.The following assumptions were used in accounting for the Plan: 2015 2014 2013Weighted average discount rate used in determining accumulated postretirement benefit obligation 3.00% 3.50% 4.00%Weighted average discount rate used in determining net periodic benefit cost 3.41% 4.00% 3.25%Assumed health care trend rate used to measure APBO at July 31 7.00% 7.50% 8.00%Rate to which cost trend rate is assumed to decline (the ultimate trend rate) 5.50% 5.50% 5.50%Fiscal year the ultimate trend rate is reached 2018 2018 2018The discount rate utilized in preparing the accumulated postretirement benefit obligation liability was decreased to 3.00% in fiscal 2015 from 3.50% infiscal 2014 as a result of a decrease in the bond yield as of the Company’s measurement date of July 31, 2015.A one-percentage point change in assumed health care cost trend rates would have the following effects on the Plan:One-PercentagePoint IncreaseOne-PercentagePoint DecreaseEffect on future service and interest cost$2$(2)Effect on accumulated postretirement benefit obligation at July 31, 20158(8)49Table of ContentsThe following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the years ending July 31: 2016$65920176142018569201950820204392021 through 20251,264The Company sponsors defined benefit pension plans that are primarily unfunded and provide an income benefit upon termination or retirement forcertain of its international employees. As of July 31, 2015 and 2014, the accumulated pension obligation related to these plans was $6,020 and $4,553,respectively. As of July 31, 2015 and 2014, pre-tax amounts recognized in accumulated other comprehensive income in the accompanying ConsolidatedBalance Sheets were losses of $1,361 and $1,228, respectively. The net periodic benefit cost for these plans was $724, $286, and $388 during the years endedJuly 31, 2015, 2014 and 2013, respectively.The Company has retirement and profit-sharing plans covering substantially all full-time domestic employees and certain employees of its foreignsubsidiaries. Contributions to the plans are determined annually or quarterly, according to the respective plans, based on earnings of the respectivecompanies and employee contributions. Accrued retirement and profit-sharing contributions of $2,743 and $2,938 were included in other current liabilitieson the accompanying Consolidated Balance Sheets as of July 31, 2015 and 2014, respectively. The amounts charged to expense for these retirement andprofit sharing plans were $9,912, $10,830, and $10,110 during the years ended July 31, 2015, 2014 and 2013, respectively.The Company also has deferred compensation plans for directors, officers and key executives which are discussed below. At July 31, 2015 and 2014,$18,321 and $18,694, respectively, of deferred compensation was included in other long-term liabilities in the accompanying Consolidated Balance Sheets.During fiscal 1998, the Company adopted a new deferred compensation plan that invests solely in shares of the Company’s Class A NonvotingCommon Stock. Participants in a predecessor phantom stock plan were allowed to convert their balances in the old plan to this new plan. The new plan wasfunded initially by the issuance of shares of Class A Nonvoting Common Stock to a Rabbi Trust. All deferrals into the new plan result in purchases of Class ANonvoting Common Stock by the Rabbi Trust. No deferrals are allowed into a predecessor plan. Shares held by the Rabbi Trust are distributed to participantsupon separation from the Company as defined in the plan agreement.During fiscal 2002, the Company adopted a new deferred compensation plan for executives and non-employee directors that allows futurecontributions to be invested in shares of the Company’s Class A Nonvoting Common Stock or in certain other investment vehicles. Prior deferredcompensation deferrals must remain in the Company’s Class A Nonvoting Common Stock. All participant deferrals into the new plan result in purchases ofClass A Nonvoting Common Stock or certain other investment vehicles by the Rabbi Trust. Balances held by the Rabbi Trust are distributed to participantsupon separation from the Company as defined in the plan agreement. On May 1, 2006, the plan was amended to require that deferrals into the Company’sClass A Nonvoting Common Stock must remain in the Company’s Class A Nonvoting Common Stock and be distributed in shares of the Company’s Class ANonvoting Common Stock. On May 21, 2014, the Director Deferred Compensation Plan was amended to allow participants to transfer funds from otherinvestment funds into the Company’s Class A Nonvoting Common Stock. Funds are not permitted to be transferred from the Company’s Class A NonvotingCommon Stock into other investment funds until six months after the Director resigns from the Board. No such amendment was made to the ExecutiveDeferred Compensation Plan.50Table of Contents6. Income TaxesEarnings (loss) from continuing operations consists of the following: Years Ended July 31, 2015 2014 2013United States $(582) $(134,596) $(144,941)Other Nations 25,577 81,487 49,267Total $24,995 $(53,109) $(95,674)Income tax expense (benefit) from continuing operations consists of the following: Years Ended July 31, 2015 2014 2013Current income tax expense: United States $9,075 $(1,137) $64Other Nations 18,806 19,513 19,795States (U.S.) (352) 1,090 1,094 $27,529 $19,466 $20,953Deferred income tax expense (benefit): United States $(5,906) $(22,754) $22,882Other Nations (1,868) (1,803) (806)States (U.S.) 338 128 (446) $(7,436) $(24,429) $21,630Total income tax expense (benefit) $20,093 $(4,963) $42,583Deferred income taxes result from temporary differences in the recognition of revenues and expenses for financial statement and income tax purposes.The approximate tax effects of temporary differences are as follows: July 31, 2015 Assets Liabilities TotalInventories $4,387 $(197) $4,190Prepaid catalog costs — (2,179) (2,179)Employee benefits 1,612 — 1,612Accounts receivable 1,136 (14) 1,122Other, net 8,524 (1,510) 7,014Current $15,659 $(3,900) $11,759Fixed Assets 3,344 (3,213) 131Intangible Assets 1,242 (26,570) (25,328)Capitalized R&D expenditures 1,140 — 1,140Deferred compensation 19,549 — 19,549Postretirement benefits 3,563 — 3,563Tax credit carry-forwards and net operating losses 66,744 — 66,744Less valuation allowance (39,922) — (39,922)Other, net 1,014 (10,965) (9,951)Non-current $56,674 $(40,748) $15,926Total $72,333 $(44,648) $27,685 51Table of Contents July 31, 2014 Assets Liabilities TotalInventories $5,460 $(126) $5,334Prepaid catalog costs 30 (3,180) (3,150)Employee benefits 1,533 (27) 1,506Accounts receivable 852 (9) 843Other, net 8,700 (1,015) 7,685Current $16,575 $(4,357) $12,218Fixed Assets 2,431 (4,587) (2,156)Intangible Assets 1,706 (27,381) (25,675)Capitalized R&D expenditures 1,425 — 1,425Deferred compensation 21,733 — 21,733Postretirement benefits 5,002 (4) 4,998Tax credit carry-forwards and net operating losses 58,870 — 58,870Less valuation allowance (37,409) — (37,409)Other, net 1,411 (6,499) (5,088)Non-current $55,169 $(38,471) $16,698Total $71,744 $(42,828) $28,916Tax loss carry-forwards at July 31, 2015 are comprised of:•Foreign net operating loss carry-forwards of $126,293, of which $92,250 have no expiration date and the remainder of which expire within the nextfive to eight years.•State net operating loss carry-forwards of $54,731, which expire from 2016 to 2034.•Foreign tax credit carry-forwards of $22,812, which expire from 2018 to 2025.•State research and development credit carry-forwards of $11,178, which expire from 2016 to 2030.The valuation allowance increased by $2,513 during the fiscal year ended July 31, 2015 mainly due to increased valuation allowances against state taxcredit carry-forwards and increased valuation allowances in certain jurisdictions, including Brazil, China, Sweden, and the United Kingdom. These increaseswere primarily offset by reductions in the tax rates applied to valuation allowances in the United Kingdom. The valuation allowance increased by $267during the fiscal year ended July 31, 2014 mainly due to increased valuation allowances against state tax credit carry-forwards and increased valuationallowances in certain jurisdictions, including Brazil, Shenzhen, and Langfang. These increases were primarily offset by reductions in the tax rates applied tovaluation allowances in Sweden and the United Kingdom. If realized or reversed in future periods, substantially all of the valuation allowance would impactthe income tax rate. Rate ReconciliationA reconciliation of the tax computed by applying the statutory U.S. federal income tax rate to earnings (loss) from continuing operations before incometaxes to the total income tax expense is as follows: Years Ended July 31, 2015 2014 2013Tax at statutory rate 35.0 % 35.0 % 35.0 %Impairment charges (1) 55.8 % (40.3)% (53.4)%State income taxes, net of federal tax benefit (2) 1.6 % (1.1)% (0.2)%International rate differential (2.2)% (1.3)% (4.6)%Non-creditable withholding taxes — % — % (1.5)%Rate variances arising from foreign subsidiary distributions (0.3)% (7.5)% (25.3)%Adjustments to tax accruals and reserves (3) 17.8 % 25.5 % 1.0 %Research and development tax credits and section 199 manufacturer’s deduction (3.9)% 3.6 % 3.1 %Non-deductible divestiture fees and account write-offs (4.8)% (5.2)% — %Deferred tax and other adjustments (4) (21.1)% 0.7 % 2.4 %Other, net 2.5 % (0.1)% (1.0)%Effective tax rate 80.4 % 9.3 % (44.5)%52Table of Contents(1)$39.8 million of the total impairment charge of $46.9 million recorded during the year ended July 31, 2015 is nondeductible for income taxpurposes. $61.1 million of the total impairment charge of $148.6 million million recorded during the year ended July 31, 2014 is nondeductible forincome tax purposes. $168.9 million of the total impairment charge of $204.4 million recorded during the year ended July 31, 2013 isnondeductible for income tax purposes.(2)Includes a $3.1 million increase in valuation allowances against certain state tax credit carry-forwards during the year ended July 31, 2014.(3)Includes $4.5 million of current year uncertain tax positions and the reduction of uncertain tax positions resulting from the settlement of certaindomestic and foreign income tax audits and lapses in statutes of limitations during the years ended July 31, 2015, 2014, and 2013.(4)Includes an additional $1.0 million of federal research and development credit carry-forwards due to re-enacted law and an additional $5.0 millionforeign tax credit carryforward included on the fiscal 2014 U.S. tax return.In fiscal 2013, the Company was eligible for tax holidays on the earnings of certain subsidiaries. The benefits realized as a result of these tax holidaysreduced the consolidated effective income tax rate by approximately 0.7% in fiscal 2013. The Company did not benefit from any significant tax holidays infiscal 2015 or fiscal 2014.Uncertain Tax PositionsThe Company follows the guidance in ASC 740, "Income Taxes" regarding uncertain tax positions. The guidance requires application of a “more likelythan not” threshold to the recognition and de-recognition of tax positions. A reconciliation of unrecognized tax benefits (excluding interest and penalties) isas follows:Balance at July 31, 2012$36,532 Additions based on tax positions related to the current year4,015Additions for tax positions of prior years (1)2,809Reductions for tax positions of prior years—Lapse of statute of limitations(5,613)Settlements with tax authorities(590)Cumulative Translation Adjustments and other422 Balance as of July 31, 2013$37,575 Additions based on tax positions related to the current year4,596Additions for tax positions of prior years—Reductions for tax positions of prior years(14,569)Lapse of statute of limitations(3,711)Settlements with tax authorities(5,832)Cumulative Translation Adjustments and other(210) Balance as of July 31, 2014$17,849 Additions based on tax positions related to the current year5,862Additions for tax positions of prior years—Reductions for tax positions of prior years(280)Lapse of statute of limitations(805)Settlements with tax authorities(221)Cumulative Translation Adjustments and other(1,272) Balance as of July 31, 2015$21,133(1)Includes acquisitions53Table of ContentsThe $21,133 of unrecognized tax benefits, if recognized, would affect the Company's effective income tax rate. The Company has classified $15,402and $11,357, excluding interest and penalties, of the reserve for uncertain tax positions in Other Liabilities on the Consolidated Balance Sheets as of July 31,2015 and 2014, respectively. The Company has classified $5,731 and $6,492, excluding interest and penalties, as a reduction of long-term deferred incometax assets on the Consolidated Balance Sheets as of July 31, 2015 and 2014, respectively.The Company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes on the ConsolidatedStatements of Earnings.Interest expense is recognized on the amount of potentially underpaid taxes associated with the Company's tax positions, beginning in the first periodin which interest starts accruing under the respective tax law and continuing until the tax positions are settled. The Company recognized decreases of $157and $498, and an increase of $200 in interest expense during the years ended July 31, 2015, 2014, and 2013, respectively. There was no change to the reservefor uncertain tax positions for penalties during the year ended July 31, 2015 and there were increases of $25 and $313 of penalties related to the reserveduring the years ended July 31, 2014, and 2013, respectively. These amounts are net of reversals due to reductions for tax positions of prior years, statute oflimitations, and settlements. At July 31, 2015 and 2014, the Company had $1,531 and $1,739, respectively, accrued for interest on unrecognized tax benefits.Penalties are accrued if the tax position does not meet the minimum statutory threshold to avoid the payment of a penalty.At July 31, 2015 and 2014, the Company had $2,664 accrued for penalties on unrecognized tax benefits.The Company estimates that it is reasonably possible that the unrecognized tax benefits may be reduced by $6,809 within twelve months as a result ofthe resolution of worldwide tax matters, tax audit settlements, amended tax filings, and/or statute expirations. The maximum amount that would berecognized through the Consolidated Statements of Earnings as an income tax benefit is $6,809.During the year ended July 31, 2015, the Company recognized $905 of tax benefits (including interest and penalties) associated with the lapse ofstatutes of limitations.The Company and its subsidiaries file income tax returns in the U.S., various state, and foreign jurisdictions. The following table summarizes the opentax years for the Company's major jurisdictions:Jurisdiction Open Tax YearsUnited States — Federal F’13 — F’15France F’12 — F’15Germany F’09 — F’15United Kingdom F’14 — F’15Unremitted EarningsThe Company does not provide for U.S. deferred taxes on cumulative earnings of non-U.S. affiliates and associated companies that have been reinvestedindefinitely. These earnings relate to ongoing operations and at July 31, 2015, were approximately $353,300. These earnings have been reinvested in non-U.S. business operations, and the Company does not intend to repatriate these earnings to fund U.S. operations. It is not practicable to determine the incometax liability that would be payable if such earnings were not indefinitely reinvested. At July 31, 2015, $95,983 of the total $114,492 in cash and cashequivalents was held outside of the U.S.7. Total DebtIn February 2013, the Company entered into an unsecured $26,200 multi-currency line of credit in China, which was amended in November 2013 to$24,200 and further amended in February 2015 to $10,000. In August 2014, the Company entered into an additional unsecured $10,000 multi-currency lineof credit in China. These lines of credit support USD-denominated or CNY-denominated borrowing to fund working capital and operations for the Company'sChinese entities and are due on demand. The borrowings under these facilities may be made for a period up to one year from the date of borrowing withinterest on the USD-denominated borrowings incurred equal to U.S. dollar LIBOR on the date of borrowing plus a margin based upon duration and on theCNY-denominated borrowings incurred equal to the local China rate based upon duration. There is no ultimate maturity on the facilities and they are subjectto periodic review and repricing. The Company is not required to comply with any financial covenants as part of the agreements. The maximum amountoutstanding on these facilities was $19,437 and the Company repaid $9,026 during fiscal 2015. As of July 31, 2015, the aggregate outstanding balance onthese lines of credit in China was $10,41154Table of Contentsand there was $9,589 available for future borrowings. Due to the short-term nature of these credit facilities, the borrowings are classified as "Notes payable"within current liabilities on the Consolidated Balance Sheets.On February 1, 2012, the Company and certain of its subsidiaries entered into an unsecured $300,000 multi-currency revolving loan agreement. Underthe revolving loan agreement, the Company has the option to select either a base interest rate (based upon the higher of the federal funds rate plus one-half of1% or the prime rate of Bank of America plus a margin based on the Company’s consolidated leverage ratio) or a Eurocurrency interest rate (at the LIBOR rateplus a margin based on the Company’s consolidated leverage ratio). At the Company’s option, and subject to certain conditions, the available amount underthe revolving loan agreement may be increased from $300,000 up to $450,000. During fiscal 2015, the Company drew $60,000 from its revolving loanagreement in order to fund general corporate needs and the maximum amount outstanding was $114,000. The borrowings bear interest at LIBOR plus 1.125%per annum, which will be reset from time to time based upon changes in the LIBOR rate. As of July 31, 2015, the outstanding balance on the credit facilitywas $102,000 and the Company had outstanding letters of credit under the revolving loan agreement of $3,327. There was $194,673 available for futureborrowing under the credit facility, which can be increased to $344,673 at the Company's option, subject to certain conditions. The revolving loan agreementhas a final maturity date of February 1, 2017. As such, the borrowing is included in "Long-term obligations, less current maturities" on the ConsolidatedBalance Sheets.On May 13, 2010, the Company completed a private placement of €75.0 million aggregate principal amount of senior unsecured notes to accreditedinstitutional investors. The €75.0 million of senior notes consists of €30.0 million aggregate principal amount of 3.71% Series 2010-A Senior Notes, dueMay 13, 2017 and €45.0 million aggregate principal amount of 4.24% Series 2010-A Senior Notes, due May 13, 2020, with interest payable on the notessemiannually. This private placement was exempt from the registration requirements of the Securities Act of 1933. The notes were not registered for resaleand may not be resold absent such registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicablestate securities laws. The notes have certain prepayment penalties for repaying them prior to maturity. The notes have been fully and unconditionallyguaranteed on an unsecured basis by the Company’s domestic subsidiaries.During fiscal 2006 and 2007, the Company completed two private placement note issuances totaling $350 million in ten-year fixed rate notes withvarying maturity dates to institutional investors at interest rates varying from 5.30% to 5.33%. The notes must be repaid equally over seven years, with finalpayments due in 2016 and 2017, with interest payable on the notes due semiannually on various dates throughout the year. The private placements wereexempt from the registration requirements of the Securities Act of 1933. The notes were not registered for resale and may not be resold absent suchregistration or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The notes havecertain prepayment penalties for repaying them prior to the maturity date. Under the debt agreement, the Company made scheduled principal payments of$42.5 million during fiscal 2015 and $61.3 million during fiscal 2014.The Company’s debt agreements require it to maintain certain financial covenants, including a ratio of debt to the trailing twelve months EBITDA, asdefined in the debt agreements, of not more than a 3.5 to 1.0 ratio (leverage ratio) and the trailing twelve months EBITDA to interest expense of not less thana 3.0 to 1.0 ratio (interest expense coverage). As of July 31, 2015, the Company was in compliance with these financial covenants, with the ratio of debt toEBITDA, as defined by the agreements, equal to 2.0 to 1.0 and the interest expense coverage ratio equal to 11.8 to 1.0.55Table of ContentsTotal debt consists of the following as of July 31, 2015: 2015 2014Euro-denominated notes payable in 2017 at a fixed rate of 3.71% $32,960 $40,164Euro-denominated notes payable in 2020 at a fixed rate of 4.24% 49,442 60,246USD-denominated notes payable through 2016 at a fixed rate of 5.30% 26,143 52,286USD-denominated notes payable through 2017 at a fixed rate of 5.33% 32,743 49,114USD-denominated borrowing on revolving loan agreement at a weighted average rate of 1.2740% and 1.2472% as ofJuly 31, 2015 and 2014, respectively 102,000 42,000USD-denominated borrowing on revolving loan agreement at a weighted average rate of 1.9501% and 1.3548% as ofJuly 31, 2015 and 2014, respectively 1,836 6,923CNY-denominated borrowing on revolving loan agreements at a weighted average rate of 4.6634% and 5.0400% asof July 31, 2015 and 2014, respectively (USD equivalent) 8,575 12,499 $253,699 $263,232Less notes payable (10,411) (61,422)Total long-term debt $243,288 $201,810The Company had outstanding letters of credit of $3,327 and $3,634 at July 31, 2015 and July 31, 2014, respectively.The estimated fair value of the Company’s long-term obligations was $252,254 and $216,280 at July 31, 2015 and July 31, 2014, respectively, ascompared to the carrying value of $243,288 and $201,810 at July 31, 2015 and July 31, 2014, respectively. The fair value of the long-term obligations,which were determined using the market approach based upon the interest rates available to the Company for borrowings with similar terms and maturities,were determined to be Level 2 under the fair value hierarchy. Due to the short-term nature and variable interest rate pricing of the Company's revolving debtin China, it is determined that the carrying value of the debt equals the fair value of the debt.Maturities on long-term debt are as follows:Years Ending July 31, 2016$42,5142017151,3322018—2019—202049,442Total$243,2888. Stockholder's InvestmentInformation as to the Company’s capital stock at July 31, 2015 and 2014 is as follows: July 31, 2015 July 31, 2014 SharesAuthorized SharesIssued (thousands)Amount SharesAuthorized SharesIssued (thousands)AmountPreferred Stock, $.01 par value 5,000,000 5,000,000 Cumulative Preferred Stock:6% Cumulative 5,000 5,000 1972 Series 10,000 10,000 1979 Series 30,000 30,000 Common Stock, $.01 par value: Class ANonvoting 100,000,000 51,261,487 $513 100,000,000 51,261,487 $513Class B Voting 10,000,000 3,538,628 35 10,000,000 3,538,628 35 $548 $54856Table of ContentsBefore any dividend may be paid on the Class B Common Stock, holders of the Class A Common Stock are entitled to receive an annual,noncumulative cash dividend of $.01665 per share. Thereafter, any further dividend in that fiscal year must be paid on each share of Class A Common Stockand Class B Common Stock on an equal basis.Other than as required by law, holders of the Class A Common Stock are not entitled to any vote on corporate matters, unless, in each of the threepreceding fiscal years, the $.01665 preferential dividend described above has not been paid in full. Holders of the Class A Common Stock are entitled to onevote per share for the entire fiscal year immediately following the third consecutive fiscal year in which the preferential dividend is not paid in full. Holdersof Class B Common Stock are entitled to one vote per share for the election of directors and for all other purposes.Upon liquidation, dissolution or winding up of the Company, and after distribution of any amounts due to holders of Cumulative Preferred Stock,holders of the Class A Common Stock are entitled to receive the sum of $0.835 per share before any payment or distribution to holders of the Class BCommon Stock. Thereafter, holders of the Class B Common Stock are entitled to receive a payment or distribution of $0.835 per share. Thereafter, holders ofthe Class A Common Stock and Class B Common Stock share equally in all payments or distributions upon liquidation, dissolution or winding up of theCompany.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 thevoting 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 fiscal years ended July 31, 2015, 2014, and 2013: Unearned RestrictedStock Deferred Compensation Shares Held in RabbiTrust, at cost TotalBalances at July 31, 2012 $(3,763) $11,610 $(11,151) $(3,304)Shares at July 31, 2012 517,105 517,105 Sale of shares at cost — (1,461) 1,419 (42)Purchase of shares at cost — 891 (891) —Forfeitures of restricted stock 838 — — 838Amortization of restricted stock 1,788 — — 1,788Balances at July 31, 2013 (1,137) 11,040 (10,623) (720)Shares at July 31, 2013 $469,797 $469,797 Sale of shares at cost $— (1,637) 1,496 $(141)Purchase of shares at cost — 821 (821) —Effect of plan amendment — (2,435) — (2,435)Amortization of restricted stock 1,137 — — 1,137Balances at July 31, 2014 $— $7,789 $(9,948) $(2,159)Shares at July 31, 2014 338,711 423,415 Sale of shares at cost — (2,325) 2,235 (90)Purchase of shares at cost — 220 (1,035) (815)Balances at July 31, 2015 $— $5,684 $(8,748) $(3,064)Shares at July 31, 2015 252,261 362,025 Deferred Compensation PlansPrior to 2002, all Brady Corporation deferred compensation was invested in the Company’s Class A Nonvoting Common Stock. In 2002, theCompany adopted a new deferred compensation plan for both executives and directors which allowed investing in other investment funds in addition to theCompany’s Class A Nonvoting Common Stock. Under this plan, participants were allowed to transfer funds between the Company’s Class A NonvotingCommon Stock and the other investment funds. On May 1, 2006 the plan was amended with the provision that deferrals into the Company’s Class ANonvoting Common Stock must remain in the Company’s Class A Nonvoting Common Stock and be distributed in shares of the Company’s Class ANonvoting Common Stock. On May 21, 2014, the Director Deferred Compensation Plan was amended to allow participants to transfer funds from otherinvestment funds into the Company’s Class A Nonvoting Common Stock. Funds are not permitted to be transferred from the Company’s Class A NonvotingCommon Stock into other investment funds until six months after the Director resigns from the Board. No such amendment was made to the ExecutiveDeferred Compensation Plan.57Table of ContentsAt July 31, 2015, the deferred compensation balance in stockholders’ investment represents the investment at the original cost of shares held in theCompany’s Class A Nonvoting Common Stock for the deferred compensation plan prior to 2002 and the investment at the cost of shares held in theCompany’s Class A Nonvoting Common Stock for the plan subsequent to 2002, adjusted for the plan amendments on May 1, 2006 and May 21, 2014. Thebalance of shares held in the Rabbi Trust represents the investment in the Company’s Class A Nonvoting Common Stock at the original cost of all theCompany’s Class A Nonvoting Common Stock held in deferred compensation plans.Incentive Stock PlansThe Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options to purchase shares of Class ANonvoting Common Stock, restricted stock units ("RSUs"), or restricted and unrestricted shares of Class A Nonvoting Common Stock to employees and non-employee directors.As of July 31, 2015, the Company has reserved 4,178,405 shares of Class A Nonvoting Common Stock for outstanding stock options, RSUs andrestricted shares and 3,152,013 shares of Class A Nonvoting Common Stock remain for future issuance of stock options, RSUs and restricted and unrestrictedshares under the active plans. The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver shares under these plans.Total stock-based compensation expense recognized by the Company during the years ended July 31, 2015, 2014, and 2013 was $4,471 ($2,772 net oftaxes), $5,214 ($3,232 net of taxes), and $1,736 ($1,059 net of taxes), respectively. The increase in expense from fiscal 2013 to fiscal 2014 was due to thereversal of stock-based compensation expense of $7,883 in fiscal 2013, primarily related to performance awards that would not meet the financialperformance conditions to vest.As of July 31, 2015, total unrecognized compensation cost related to share-based compensation awards that are expected to vest was $17,035 pre-tax,net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 3.2 years.Stock optionsThe options issued under the plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and generally vestratably over a three-year period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding twoyears. Options issued under the plan, referred to herein as “service-based” options, generally expire 10 years from the date of grant.The Company has estimated the fair value of its service-based stock option awards granted during the years ended July 31, 2015, 2014, and 2013 usingthe Black-Scholes option valuation model. The weighted-average assumptions used in the Black-Scholes valuation model are reflected in the followingtable:Black-Scholes Option Valuation Assumptions 2015 2014 2013Expected term (in years) 6.05 5.97 5.93Expected volatility 34.01% 37.32% 38.67%Expected dividend yield 2.48% 2.35% 2.21%Risk-free interest rate 1.90% 1.80% 0.91%Weighted-average market value of underlying stock at grant date $22.76 $30.98 $30.58Weighted-average exercise price $22.76 $30.98 $30.58Weighted-average fair value of options granted during the period $6.12 $9.17 $9.05The following is a summary of stock option activity for the fiscal year ended July 31, 2015: Option Price Options Outstanding Weighted Average ExercisePriceBalance as of July 31, 2014 $17.23—$40.37 4,204,260 $30.82Options granted 22.66—27.28 628,340 22.76Options exercised 17.23—27.00 (68,533) 23.73Options cancelled 22.63—40.37 (1,263,116) 30.48Balance as of July 31, 2015 $20.95—$38.31 3,500,951 $29.6458Table of ContentsThe total fair value of options vested during the fiscal years ended July 31, 2015, 2014, and 2013 was $3,950, $6,605, and $11,086, respectively. Thetotal intrinsic value of options exercised during the fiscal years ended July 31, 2015, 2014, and 2013 was $208, $2,452, and $10,728, respectively.There were 2,642,955, 3,004,348, and 3,311,043 options exercisable with a weighted average exercise price of $30.88, $31.15, and $31.46 at July 31,2015, 2014, and 2013, respectively. The cash received from the exercise of options during the fiscal years ended July 31, 2015, 2014, and 2013 was $1,644,$12,113, and $20,324, respectively. The tax benefit on options exercised during the fiscal years ended July 31, 2015, 2014, and 2013 was $79, $952, and$1,964, respectively.The following table summarizes information about stock options outstanding at July 31, 2015: Options Outstanding Options Outstanding and ExercisableRange of Exercise Prices Number of SharesOutstanding atJuly 31, 2015 Weighted AverageRemainingContractual Life(in years) WeightedAverageExercisePrice SharesExercisableat July 31,2015 Weighted AverageRemainingContractual Life(in years) WeightedAverageExercisePrice$20.95 - $26.99 711,527 7.7 $22.27 180,667 3.4 $20.95$27.00 - $32.99 1,976,924 5.8 29.12 1,667,452 5.5 28.86$33.00 - $38.31 812,500 2.0 37.34 794,836 1.8 37.39Total 3,500,951 5.3 29.64 2,642,955 4.3 $30.88As of July 31, 2015, the aggregate intrinsic value (defined as the amount by which the fair value of the underlying stock exceeds the exercise price ofan option) of options outstanding and the options exercisable was $913 and $464, respectively.Restricted Shares and RSUsRestricted shares and RSUs issued under the plan have an issuance price equal to the fair market value of the underlying stock at the date of grant.In fiscal 2008 and 2013, the Company awarded restricted shares and RSUs to certain executives which vest upon meeting certain financial performanceconditions over a specified vesting period. The restricted shares awarded in 2008 were amended in fiscal 2011 to allow for vesting after either a five-yearperiod or a seven-year period based upon both performance and service conditions. These shares are referred to herein as “performance-based restrictedshares.” The RSUs granted in fiscal 2013 vest over a two-year period upon meeting both performance and service conditions, referred to herein as"performance-based RSUs".In fiscal 2013 and 2014, the Company awarded restricted shares that vest solely upon meeting specified service conditions, referred to herein as"service-based restricted shares". Restricted shares awarded in fiscal 2013 vest at the end of a three-year period and have a grant-date fair value of $32.99. Therestricted shares awarded in fiscal 2014 were issued to the Interim President and Chief Executive Officer in recognition of the increased duties uponappointment. The shares vested on August 4, 2014, which was the date of the end of the individual's term as Interim President and CEO.Beginning in fiscal 2014, the Company awarded RSUs that vest solely upon meeting specified service conditions, referred to herein as “service-basedRSUs.” The RSUs issued under the plan generally vest ratably over a three-year period, with one-third becoming exercisable one year after the grant date andone-third additional in each of the succeeding two years. In fiscal 2015, the Company also awarded 63,668 service-based RSUs that vest ratably at the end ofyears 3, 4, and 5 and 395,617 service-based RSUs that vest in increments of 10%, 20%, 30%, and 40% at the end of years 1, 2, 3, and 4, respectively.The following tables summarize the RSU and restricted share activity for the fiscal year ended July 31, 2015:Service-Based Restricted Shares and RSUs Shares Weighted AverageGrant Date Fair ValueBalance as of July 31, 2014 104,857 $31.02New grants 661,412 24.28Vested (34,247) 30.79Forfeited (54,568) 27.64Balance as of July 31, 2015 677,454 $24.7259Table of ContentsThe service-based restricted shares and RSUs awarded during the fiscal years ended July 31, 2014 and 2013 had a weighted-average grant-date fairvalue of $30.93 and $32.99, respectively.Performance-Based Restricted Shares and RSUs Shares Weighted AverageGrant Date Fair ValueBalance as of July 31, 2014 80,000 $32.50New grants — —Vested — —Forfeited (80,000) 32.50Balance as of July 31, 2015 — $—The performance-based restricted shares and RSUs awarded during the fiscal year ended July 31, 2013 had a weighted-average grant-date fair valueof $30.21. No performance-based restricted shares were granted during the fiscal year ended July 31, 2014.9. Segment InformationThe Company is organized and managed on a global basis within three business platforms, ID Solutions, Workplace Safety, and PeopleID, whichaggregate into two reportable segments: IDS and WPS. The Company evaluates short-term segment performance based on segment profit or loss and customersales. Segment profit or loss does not include certain administrative costs, such as the cost of finance, information technology, human resources, legal, andexecutive leadership, which are managed as global functions. Restructuring charges, impairment charges, equity compensation costs, interest expense,investment and other income (expense) and income taxes are also excluded when evaluating segment performance.Each business platform has a President or Vice-President that reports directly to the Company's chief operating decision maker, its Chief ExecutiveOfficer. Each platform has its own distinct operations, which are managed locally by its own management team, maintains its own financial reports and isevaluated based on global segment profit. The Company has determined that these business platforms comprise its three operating segments, which aggregateinto the two reportable segments based on the information used by the Chief Executive Officer to allocate resources and assess performance.The segment results have been adjusted to reflect continuing operations in all periods presented. The depreciation and amortization expense andexpenditures for property, plant and equipment for discontinued operations are included under “corporate,” which then reconcile to the total companyamounts as listed in the Consolidated Statements of Cash Flows.60Table of ContentsFollowing is a summary of segment information for the years ended July 31, 2015, 2014 and 2013: 2015 2014 2013Sales to External Customers: ID Solutions $806,484 $825,123 $739,116WPS 365,247 399,911 418,676Total Company $1,171,731 $1,225,034 $1,157,792Depreciation & Amortization: ID Solutions $25,658 $28,955 $25,920WPS 6,772 7,919 9,078Corporate 7,028 7,724 13,727Total Company $39,458 $44,598 $48,725Segment Profit: ID Solutions $149,840 $176,129 $174,390WPS 56,502 66,238 95,241Total Company $206,342 $242,367 $269,631Assets: ID Solutions $780,524 $882,440 $989,216WPS 167,797 239,848 239,219Corporate 114,576 131,377 210,248Total Company $1,062,897 $1,253,665 $1,438,683Expenditures for property, plant & equipment: ID Solutions $18,732 $28,774 $18,186WPS 3,970 10,580 8,459Corporate 3,971 4,044 9,042Total Company $26,673 $43,398 $35,687Following is a reconciliation of segment profit to net earnings (loss) for the years ended July 31, 2015, 2014 and 2013: Years Ended July 31, 2015 2014 2013Total profit from reportable segments$206,342 $242,367 $269,631Unallocated costs: Administrative costs107,348 120,015 121,693Restructuring charges16,821 15,012 26,046Impairment charges (1)46,867 148,551 204,448Investment and other income(845) (2,402) (3,523)Interest expense11,156 14,300 16,641Earnings (loss) from continuing operations before income taxes$24,995 $(53,109) $(95,674)(1) Of the total $46,867 impairment charges in fiscal 2015, $39,367 was in the WPS segment and $7,500 was in the IDS segment. The impairment charges in2014 were in the IDS reportable segments. Of the total $204,448 impairment charges in fiscal 2013, $182,800 was in the WPS reportable segment and$21,648 was in the IDS reportable segment. Revenues*Years Ended July 31, Long-Lived Assets**As of Years Ended July 31, 2015 2014 2013 2015 2014 2013Geographic information: United States $677,401 $675,771 $615,861 $389,150 $425,733 $576,539Other 559,649 615,974 602,582 224,151 314,456 319,706Eliminations (65,319) (66,711) (60,651) — — —Consolidated total $1,171,731 $1,225,034 $1,157,792 $613,301 $740,189 $896,245* Revenues are attributed based on country of origin.** Long-lived assets consist of property, plant, and equipment, other intangible assets and goodwill.61Table of Contents10. Net Earnings (Loss) per Common ShareNet earnings (loss) per common share is computed by dividing net earnings (loss) (after deducting restricted stock dividends and the applicablepreferential Class A Common Stock dividends) by the weighted average Common Shares outstanding of 51,285 for fiscal 2015, 51,866 for fiscal 2014, and51,330 for fiscal 2013. The Company utilizes the two-class method to calculate earnings per share.In June 2008, the Financial Accounting Standards Board (“FASB”) issued accounting guidance addressing whether instruments granted in share-basedpayment transactions are participating securities prior to vesting, and therefore, need to be included in the earnings allocation in computing earnings pershare. This guidance requires that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends be consideredparticipating securities in undistributed earnings with common shareholders. The Company adopted the guidance during the first quarter of fiscal 2010. As aresult, the dividends on the Company’s performance-based restricted shares are reconciling items in the basic and diluted earnings per share calculations forthe respective periods presented.62Table of ContentsReconciliations of the numerator and denominator of the basic and diluted per share computations for the Company’s Class A and Class B commonstock are summarized as follows: Years ended July 31, 2015 2014 2013Numerator: (in thousands) Earnings (loss) from continuing operations$4,902 $(48,146) $(138,257)Less: Restricted stock dividends— (92) (238)Numerator for basic and diluted earnings (loss) from continuing operations per Class A NonvotingCommon Share$4,902 $(48,238) $(138,495)Less: Preferential dividends(794) (813) (797)Preferential dividends on dilutive stock options(1) (6) (5)Numerator for basic and diluted earnings (loss) from continuing operations per Class B Voting CommonShare$4,107 $(49,057) $(139,297)Denominator: (in thousands) Denominator for basic earnings from continuing operations per share for both Class A and Class B51,285 51,866 51,330Plus: Effect of dilutive stock options98 — —Denominator for diluted earnings from continuing operations per share for both Class A and Class B51,383 51,866 51,330Earnings (loss) from continuing operations per Class A Nonvoting Common Share: Basic$0.10 $(0.93) $(2.70)Diluted$0.10 $(0.93) $(2.70)Earnings (loss) from continuing operations per Class B Voting Common Share: Basic$0.08 $(0.95) $(2.71)Diluted$0.08 $(0.95) $(2.71)(Loss) earnings from discontinued operations per Class A Nonvoting Common Share: Basic$(0.04) $0.04 $(0.32)Diluted$(0.04) $0.04 $(0.32)(Loss) earnings from discontinued operations per Class B Voting Common Share: Basic$(0.04) $0.05 $(0.32)Diluted$(0.04) $0.05 $(0.32)Net earnings (loss) per Class A Nonvoting Common Share: Basic$0.06 $(0.89) $(3.02)Diluted$0.06 $(0.89) $(3.02)Net earnings (loss) per Class B Voting Common Share: Basic$0.04 $(0.90) $(3.03)Diluted$0.04 $(0.90) $(3.03)Options to purchase approximately 3,568,264 shares of Class A Nonvoting Common Stock for the fiscal year ended July 31, 2015 were not includedin the computation of diluted net earnings (loss) per share as the impact of the inclusion of the options would have been anti-dilutive. In accordance withASC 260, “Earnings per Share,” all options to purchase Class A Nonvoting Common Stock were not included in the computation of diluted loss per share forfiscal 2014 and 2013 since to do so would be anti-dilutive.63Table of Contents11. Commitments and ContingenciesThe Company has entered into various non-cancellable operating lease agreements. Rental expense charged to continuing operations on a straight-linebasis was $19,029, $17,344, and 18,108 for the years ended July 31, 2015, 2014, and 2013, respectively. Future minimum lease payments required undersuch leases in effect at July 31, 2015 were as follows:Years ending July 31, 2016$19,102201715,696201813,931201911,70520208,196Thereafter22,247 $90,877In the normal course of business, the Company is named as a defendant in various lawsuits in which claims are asserted against the Company. In theopinion of management, the liabilities, if any, which may ultimately result from lawsuits are not expected to have a material effect on the consolidatedfinancial statements of the Company.12. Fair Value MeasurementsThe Company follows the guidance in ASC 820, "Fair Value Measurements and Disclosures" as it relates to its financial and non-financial assets andliabilities. The accounting guidance applies to other accounting pronouncements that require or permit fair value measurements, defines fair value basedupon an exit price model, establishes a framework for measuring fair value, and expands the applicable disclosure requirements. The accounting guidanceindicates, among other things, that a fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market forthe asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.The accounting guidance on fair value measurements establishes a fair market value hierarchy for the pricing inputs used to measure fair market value.The Company’s assets and liabilities measured at fair market value are classified in one of the following categories:Level 1 — Assets or liabilities for which fair value is based on unadjusted quoted prices in active markets for identical instruments that are accessible as ofthe reporting date.Level 2 — Assets or liabilities for which fair value is based on other significant pricing inputs that are either directly or indirectly observable.Level 3 — Assets or liabilities for which fair value is based on significant unobservable pricing inputs to the extent little or no market data is available,which result in the use of management's own assumptions.64Table of ContentsThe following tables set forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fairvalue on a recurring basis at July 31, 2015 and July 31, 2014, according to the valuation techniques the Company used to determine their fair values. InputsConsidered As Quoted Prices in ActiveMarkets for IdenticalAssets (Level 1) Significant OtherObservable Inputs(Level 2) Fair Values Balance Sheet ClassificationsJuly 31, 2015 Trading securities$15,356 $— $15,356 Other assetsForeign exchange contracts— 685 685 Prepaid expenses and other current assetsTotal Assets$15,356 $685 $16,041 Foreign exchange contracts$— $1,280 $1,280 Other current liabilitiesTotal Liabilities$— $1,280 $1,280 July 31, 2014 Trading securities$15,962 $— $15,962 Other assetsForeign exchange contracts— 166 166 Prepaid expenses and other current assetsTotal Assets$15,962 $166 $16,128 Foreign exchange contracts$— $389 $389 Other current liabilitiesTotal Liabilities$— $389 $389 The following methods and assumptions were used to estimate the fair value of each class of financial instrument:Trading securities: The Company’s deferred compensation investments consist of investments in mutual funds. These investments were classified asLevel 1 as the shares of these investments trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.Foreign exchange contracts: The Company’s foreign exchange contracts were classified as Level 2, as the fair value was based on the present value ofthe future cash flows using external models that use observable inputs, such as interest rates, yield curves and foreign exchange rates. See Note 14,“Derivatives and Hedging Activities” for additional information.There have been no transfers of assets or liabilities between the fair value hierarchy levels, outlined above, during the fiscal years ended July 31, 2015and July 31, 2014.The Company’s financial instruments, other than those presented in the disclosures above, include cash and cash equivalents, accounts receivable,notes payable, accounts payable, accrued liabilities and short-term and long-term debt. The fair values of cash and cash equivalents, accounts receivable,notes payable, accounts payable, and accrued liabilities approximated carrying values because of the short-term nature of these instruments. See Note 7 forinformation regarding the fair values of the Company's short-term and long-term debt.During fiscal 2015, goodwill with carrying amounts of $26,246 and $10,866 in the WPS APAC and WPS Americas reporting units, respectively, waswritten off entirely, resulting in impairment charges of $37,112. In order to arrive at the implied fair value of goodwill, the Company calculated the fair valueof all of the assets and liabilities of the reporting unit as if it had been acquired in a business combination. After assigning fair value to the assets andliabilities of the reporting unit, it was determined there was no excess fair value of the reporting units over the implied fair value of goodwill and thus, theremaining goodwill balances were impaired in fiscal 2015. The goodwill balances represented a Level 3 asset measured at fair value on a nonrecurring basissubsequent to its original recognition.The Company evaluates whether events and circumstances have occurred that indicate that the remaining estimated useful life of other intangibleassets may warrant revision or that the remaining balance of an asset may not be recoverable. Management completed an assessment of other indefinite-livedand other finite-lived intangible assets primarily associated with the WPS APAC and WPS Americas reporting units in accordance with ASC 350 - Intangibles- Goodwill and Other, and ASC 360 - Property, Plant, and Equipment, and concluded that certain assets were impaired. Organic sales declined in WPS APACprimarily due to a decline in economic conditions in the mining production industry, and organic sales declined in WPS Americas primarily due to a declinein sales through the traditional catalog model.65Table of ContentsDuring fiscal 2015, management evaluated other indefinite-lived intangible assets for recoverability using the income approach. The valuation wasbased upon current sales projections and profitability for each asset group, and the relief from royalty method was applied. Management evaluated otherfinite-lived intangible assets for recoverability using an undiscounted cash flow analysis based upon current sales projections and profitability for each assetgroup. This analysis resulted in an amount that was less than the carrying value of certain finite-lived intangible assets. Management measured theimpairment loss of both indefinite and finite-lived intangible assets as the amount by which the carrying amount of the assets exceeded their fair value. As aresult, other intangible assets with a carrying amount of $26,194 were written down to their estimated fair value of $19,543. These represented Level 3 assetsmeasured at fair value on a nonrecurring basis subsequent to their original recognition. These items resulted in a total impairment charge of $6,651 in fiscal2015.During fiscal 2014, goodwill with a carrying amount of $193,689 in the PeopleID reporting unit was written down to its estimated implied fair value of$93,277, resulting in an impairment charge of $100,412. In order to arrive at the implied fair value of goodwill, the Company calculated the fair value of allof the assets and liabilities of the reporting unit as if it had been acquired in a business combination. After assigning fair value to the assets and liabilities ofthe reporting unit, the result was the implied fair value of goodwill of $93,277, which represented a Level 3 asset measured at fair value on a nonrecurringbasis subsequent to its original recognition.During fiscal 2014, management completed an assessment of other finite-lived intangible assets primarily associated with the PeopleID reporting unitand concluded that the assets were impaired. These assets were primarily associated with the acquisition of Precision Dynamics Corporation ("PDC"). Organicsales in the PDC business declined in the low single-digit percentages from fiscal 2013 to fiscal 2014. U.S. hospital admission rates are a primary driver ofPDC's sales under its existing strategy, and there was a decline of approximately 2% in these rates during fiscal 2014. Therefore, management revisited itsplanned growth and profit for the PDC business and concluded that the growth may not materialize as expected given slower than anticipated industrygrowth and fewer sales synergies than originally planned.Management evaluated other finite-lived intangible assets for recoverability using an undiscounted cash flow analysis based upon sales projectionsand concluded there was an indicator of impairment. Management measured the impairment loss as the amount by which the carrying amount of the customerrelationships exceeded their fair value, which represented Level 3 assets measured at fair value on a nonrecurring basis subsequent to their originalrecognition. This resulted in an impairment charge of $48,139 recognized in fiscal 2014, which was classified within the "Impairment charges" line item onthe Consolidated Statements of Earnings and was part of the IDS reportable segment.During fiscal 2013, the Company implemented a plan to divest its Die-Cut business. A fair-value measurement was performed and the assets andliabilities of the disposal group were recorded at approximate fair value less costs to sell and classified as "Assets held for sale" and "Liabilities held for sale."This resulted in a loss on the write-down of the disposal group of $15,658, recorded within discontinued operations in the third quarter of fiscal 2013. Fairvalue measurements were performed each subsequent quarter through July 31, 2014. There were no additional fair value adjustments recorded during fiscal2014. The Die-Cut business was divested on August 1, 2014. Fair value was determined utilizing a combination of external market factors and internalprojections in accordance with ASC 360, "Property, Plant and Equipment."During fiscal 2013, goodwill with a carrying amount of $183,146 in the WPS Americas reporting unit was written down to its estimated implied fairvalue of $10,866, resulting in an impairment charge of $172,280. In order to arrive at the implied fair value of goodwill, the Company calculated the fairvalue of all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. After assigning fair value tothe assets and liabilities of the reporting unit, the result was the implied fair value of goodwill of $10,866, which represented a Level 3 asset measured at fairvalue on a nonrecurring basis subsequent to its original recognition.The WPS Americas reporting unit had intangible assets consisting of tradenames and customer relationships, which were valued using the incomeapproach. The valuation was based upon current sales projections and profitability for each asset group, and the relief from royalty method was applied. As aresult of the analysis, indefinite-lived tradenames with a carrying amount of $25,449 were written down to the estimated fair value of $14,881, whichrepresented a Level 3 liability measured at fair value on a nonrecurring basis subsequent to its original recognition. This resulted in an impairment charge of$10,568 within the WPS segment.66Table of ContentsDuring fiscal 2013, goodwill with a carrying amount of $18,225 in the IDS APAC reporting unit was written off, resulting in an impairment charge of$18,225. When management compared the fair value to the carrying value of the reporting unit as part of the annual goodwill impairment test (Step One), aqualitative assessment was completed for Step Two because the amount by which the carrying value exceeded fair value was more than the balance ofgoodwill remaining. The fair value of the reporting unit was determined utilizing a combination of external market factors, internal projections, and otherrelevant Level 3 measurements. As such, the Company recognized a goodwill impairment charge of the entire remaining goodwill balance of $18,225 duringthe year ended July 31, 2013. As a result of the goodwill impairment, the Company analyzed fixed assets for potential impairment within the IDS APACreporting unit by comparing undiscounted future cash flows to the carrying amount of the assets. Undiscounted future cash flows were determined using theCompany's internal projections and other relevant Level 3 measurements. As a result, the Company concluded that fixed assets with a carrying amount of$4,367 was written down to its estimated fair value of $1,100 during the year ended July 31, 2013.13. RestructuringIn fiscal 2013, the Company announced a restructuring action to reduce its global workforce to address its cost structure. In connection with thisrestructuring action, the Company incurred restructuring charges of $26,046 in continuing operations. These charges consisted of $18,350 of employeeseparation costs, $4,125 of fixed asset write-offs and $3,571 of other facility closure related costs. Of the $26,046 of restructuring charges recorded duringfiscal 2013, $15,870 was incurred within IDS and $10,176 within WPS. Long-lived asset write-offs include both the net book value of property, plant andequipment written off in conjunction with facility consolidations, as well as indefinite-lived tradenames written off in conjunction with brand consolidationswithin the WPS segment.In fiscal 2014, the Company announced a restructuring plan to consolidate facilities in the Americas, Europe, and Asia to enhance customer service,improve efficiency of operations and reduce operating expenses. The restructuring charges of $15,012 in continuing operations in fiscal 2014 related to thefiscal 2013 and fiscal 2014 restructuring plans and consisted of $9,328 of employee separation costs, $4,374 of facility closure related costs, $1,043 ofcontract termination costs, and $267 of non-cash asset write-offs. Of the $15,012 of restructuring charges recorded during fiscal 2014, $9,013 was incurredwithin IDS and $5,999 was incurred within WPS. Non-cash asset write-offs consist mainly of fixed assets written off in conjunction with facilityconsolidations.Facility consolidation activities extended into fiscal 2015. In connection with this restructuring plan, the Company incurred restructuring charges of$16,821 in continuing operations in fiscal 2015. These charges consisted of $5,465 of employee separation costs, $5,209 of facility closure related costs,$1,979 of contract termination costs, and $4,168 of non-cash asset write-offs. Of the $16,821 of restructuring charges recorded during fiscal 2015, $12,104was incurred within IDS and $4,717 was incurred within WPS. Non-cash asset write-offs consist mainly of fixed assets written off in conjunction with facilityconsolidations.The charges for employee separation costs consisted of severance pay, outplacement services, medical and other benefits. The costs related to theserestructuring activities were recorded on the Consolidated Statements of Earnings as restructuring charges. The Company expects the majority of theremaining cash payments to be made during the next twelve months. The liability is included in wages and amounts withheld from employees on theConsolidated Balance Sheets.67Table of ContentsA roll-forward of the Company’s restructuring activity for fiscal 2015, 2014 and 2013 is below. EmployeeRelated AssetWrite-offs Other FacilityClosure/LeaseTermination Costs TotalRestructuring liability ending balance, July 31, 2012 $8,809 $— $266 $9,075Restructuring charges in continuing operations 18,350 4,125 3,571 26,046Restructuring charges in discontinued operations 2,811 362 1,376 4,549Non-cash write-offs — (4,487) — (4,487)Cash payments (18,495) — (2,482) (20,977)Restructuring liability ending balance, July 31, 2013 $11,475 $— $2,731 $14,206Restructuring charges in continuing operations $9,328 $267 $5,417 $15,012Restructuring charges in discontinued operations 6,615 299 75 6,989Non-cash write-offs — (566) — (566)Cash payments (24,029) — (6,617) (30,646)Restructuring liability ending balance, July 31, 2014 $3,389 $— $1,606 $4,995Restructuring charges in continuing operations $5,465 $4,168 $7,188 $16,821Restructuring charges in discontinued operations — (4) 245 241Non-cash write-offs — (4,164) — (4,164)Cash payments (7,696) — (6,681) (14,377)Restructuring liability ending balance, July 31, 2015 $1,158 $— $2,358 $3,51614. Derivatives and Hedging ActivitiesThe Company utilizes forward foreign exchange contracts to reduce the exchange rate risk of specific foreign currency denominated transactions. Thesecontracts typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities of less than 18 months, whichqualify as cash flow hedges or net investment hedges under the accounting guidance for derivative instruments and hedging activities. The primary objectiveof the Company’s foreign currency exchange risk management program is to minimize the impact of currency movements due to transactions in other thanthe respective subsidiaries’ functional currency and to minimize the impact of currency movements on the Company’s net investment denominated in acurrency other than the U.S. dollar. To achieve this objective, the Company hedges a portion of known exposures using forward foreign exchange contracts.As of July 31, 2015 and July 31, 2014, the notional amount of outstanding forward foreign exchange contracts was $139,300 and $104,000, respectively.The Company hedges a portion of known exposures using forward foreign exchange contracts. Main exposures are related to transactions denominatedin the British Pound, the Euro, Canadian dollar, Australian dollar, Malaysian Ringgit and Singapore dollar. Generally, these risk management transactionswill involve the use of foreign currency derivatives to minimize the impact of currency movements on non-functional currency transactions.Hedge effectiveness is determined by how closely the changes in fair value of the hedging instrument offset the changes in the fair value or cash flowsof 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 anon-going basis. Gains or losses on the derivative related to hedge ineffectiveness are recognized in current earnings.Cash Flow HedgesThe Company has designated a portion of its forward foreign exchange contracts as cash flow hedges and recorded these contracts at fair value on theConsolidated Balance Sheets. For these instruments, the effective portion of the gain or loss on the derivative is reported as a component of othercomprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. At July 31,2015 and July 31, 2014, unrealized gains of $297 and unrealized losses of $21 have been included in OCI, respectively. These balances are expected to bereclassified from OCI to earnings during the next twelve months when the hedged transactions impact earnings. For the years ended July 31, 2015, 2014, and2013, the Company reclassified gains of $1,325, $147, and $578 from OCI into cost of goods sold, respectively.As of July 31, 2015 and 2014, the notional amount of outstanding forward foreign exchange contracts designated as cash flow hedges was $33,223 and$0, respectively.68Table of ContentsNet Investment HedgesThe Company has also designated intercompany and third party foreign currency denominated debt instruments as net investment hedges. At July 31,2015, the Company designated £25,000 of intercompany loans as net investment hedges to hedge portions of its net investment in British foreign operations.As of July 31, 2015 and 2014, the Company recognized in OCI gains of $889 and losses of $2,271, respectively, on its intercompany loans designated as netinvestment hedges. On May 13, 2010, the Company completed the private placement of €75.0 million aggregate principal amount of senior unsecured notesto accredited institutional investors. This Euro-denominated debt obligation was designated as a net investment hedge to selectively hedge portions of its netinvestment in European foreign operations. As of July 31, 2015 and 2014, the cumulative balance recognized in accumulated other comprehensive incomewere gains of $12,512 and losses of $5,495, respectively, on the Euro-denominated debt obligation. The changes recognized in other comprehensive incomeduring the years ended July 31, 2015, 2014 and 2013 were gains of $18,008 and losses of $660 and $7,470, respectively, on the Euro-denominated debtobligation. The Company’s foreign denominated debt obligations are valued under a market approach using publicized spot prices.Additionally, the Company utilizes forward foreign exchange contracts designated as hedge instruments to hedge portions of its net investments inforeign operations. The net gains or losses attributable to changes in spot exchange rates are recorded in other comprehensive income. Recognition inearnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete liquidation of thenet investment in the hedged foreign operation. At July 31, 2015 and 2014, the U.S dollar equivalent of these outstanding forward foreign exchangecontracts totaled $0 and $5,300, respectively. As of July 31, 2015 and 2014, the Company recognized in OCI gains of $45 and losses of $265, respectively,on its net investment hedges.Non-Designated HedgesDuring the fiscal years ended July 31, 2015 and 2014, the Company recognized losses of $1,705 and gains of $1,147, respectively, in “Investment andother income” on the Consolidated Statements of Earnings related to non-designated hedges.Fair values of derivative and hedging instruments in the Consolidated Balance Sheets were as follows: Asset Derivatives Liability Derivatives July 31, 2015 July 31, 2014 July 31, 2015 July 31, 2014 BalanceSheetLocation FairValue BalanceSheetLocation FairValue BalanceSheetLocation FairValue BalanceSheetLocation FairValueDerivatives designated ashedging instruments Cash flow hedges Foreign exchangecontractsPrepaid expensesand other currentassets $518 Prepaid expensesand other currentassets $— Other currentliabilities $737 Other currentliabilities $—Net investment hedges Foreign exchangecontractsPrepaid expensesand other currentassets $— Prepaid expensesand other currentassets $— Other currentliabilities $— Other currentliabilities $14Foreign currencydenominated debtPrepaid expensesand other currentassets $— Prepaid expensesand other currentassets $— Long termobligations, lesscurrent maturities $121,514 Long termobligations, lesscurrent maturities $100,410Total derivatives designated ashedging instruments $518 $— $122,251 $100,424Derivatives not designated ashedging instruments Foreign exchangecontractsPrepaid expensesand other currentassets $168 Prepaid expensesand other currentassets $166 Other currentliabilities $543 Other currentliabilities $375Total derivatives notdesignated as hedginginstruments $168 $166 $543 $37569Table of Contents15. Discontinued OperationsThe Company entered into an agreement with LTI Flexible Products, Inc. (d/b/a Boyd Corporation) on February 24, 2014, for the sale of the Die-Cutbusiness. The first phase of this divestiture closed on May 1, 2014 and included the Die-Cut businesses in Korea, Thailand and Malaysia, and the Balkhausenbusiness in Europe. The remainder of the Die-Cut business was located in China and it was divested on August 1, 2014. In addition, the Brady Medical andVaritronics businesses were divested in fiscal 2013 and were reported within discontinued operations. These divested businesses were part of the IDS businesssegment.The following table summarizes the operating results of discontinued operations for the fiscal years ending July 31, 2015, 2014, and 2013: 2015 2014 2013Net sales (1)$— $179,050 $214,137(Loss) earnings from discontinued operations (2)(1,201) 6,715 4,083(Loss) on write-down of disposal group (3)— — (15,658)Income tax expense (4)(288) (3,299) (4,703)Loss on sale of discontinued operations (5)(487) (1,602) —Income tax benefit on sale of discontinued operations (6)61 364 —Earnings (loss) from discontinued operations, net of tax$(1,915) $2,178 $(16,278)(1)The second and final phase of the Die-Cut divestiture closed on August 1, 2014. Thus, there were no sales from discontinued operations in fiscal 2015.(2)The loss from discontinued operations in fiscal 2015 primarily related to professional fees and restructuring charges associated with the divestiture.(3)The Company recorded a $15.7 million loss to write-down the Die-Cut business to its estimated fair value less costs to sell in the three months endedApril 30, 2013.(4)Fiscal 2013 income tax expense was significantly impacted by the fiscal 2013 losses in China and Sweden, which had no tax benefit, and the increasein valuation allowance related to Shenzhen, China.(5)The first phase of the Die-Cut divestiture was completed in the fourth quarter of fiscal 2014. A loss on the sale was recorded in the three months endedJuly 31, 2014 and includes $3.9 million in liabilities retained as part of the divestiture agreement. The second and final closing of the Die-Cutdivestiture was completed in the first quarter of fiscal 2015 and an additional loss on the sale was recorded in the three months ended October 31, 2014.(6)The income tax benefit on the sale of discontinued operations in fiscal 2014 was significantly impacted by the release of a reserve for uncertain taxpositions of $4.0 million, which was triggered as a result of the Thailand stock sale during the three months ended July 31, 2014. This was offset by$3.6 million in tax expense related to the gain on the sale of the Balkhausen assets. The Thailand stock sale and the Balkhausen asset sale wereincluded in the first phase of the Die-Cut divestiture.There were no assets or liabilities held for sale as of July 31, 2015. In accordance with authoritative literature, accumulated other comprehensive incomeof $34,697 was reclassified to the statement of earnings upon the closing of the second phase of the Die-Cut divestiture during the three months endedOctober 31, 2014.70Table of Contents16. Unaudited Quarterly Financial Information Quarters First Second Third Fourth Total2015 Net sales $310,240 $282,628 $290,227 $288,636 $1,171,731Gross margin 150,161 138,203 140,999 129,069 558,432Operating income (loss) * 26,973 16,811 24,285 (32,763) 35,306Earnings (loss) from continuing operations 15,499 11,584 17,213 (39,394) 4,902(Loss) earnings from discontinued operations, net of income taxes ** (1,915) — — — (1,915)Net earnings (loss) from continuing operations per Class A Common Share: Basic*** $0.30 $0.23 $0.34 $(0.77) $0.10Diluted*** $0.30 $0.23 $0.33 $(0.77) $0.10Net earnings (loss) from discontinued operations per Class A Common Share: Basic*** $(0.03) $— $— $— $(0.04)Diluted*** $(0.04) $— $— $— $(0.04)2014 Net sales $307,530 $291,194 $309,577 $316,733 $1,225,034Gross margin 157,847 142,536 155,120 154,061 609,564Operating income * 29,689 18,346 26,767 (116,013) (41,211)Earnings from continuing operations 18,135 10,517 20,183 (96,981) (48,146)Earnings (loss) from discontinued operations, net of income taxes ** 5,795 5,907 3,904 (13,428) 2,178Net earnings from continuing operations per Class A Common Share: Basic*** $0.35 $0.20 $0.39 $(1.89) $(0.93)Diluted*** $0.35 $0.20 $0.39 $(1.89) $(0.93)Net earnings (loss) from discontinued operations per Class A Common Share: Basic*** $0.11 $0.11 $0.08 $(0.26) $0.04Diluted*** $0.11 $0.11 $0.08 $(0.26) $0.04The fiscal 2014 quarterly financial data has been impacted by the reclassification of the Die-Cut business into discontinued operations. Refer to Note15 within Item 8 for further information on discontinued operations.* In fiscal 2015, the Company recorded before tax impairment charges of $46,867 in the fourth quarter ended July 31, 2015 and before tax restructuringcharges of $4,278, $4,879, $4,834 and $2,830 in the first, second, third, and fourth quarters of fiscal 2015, respectively, for a total of $16,821. In fiscal2014, the Company recorded before tax impairment charges of $148,551 in the fourth quarter ended July 31, 2014 and before tax restructuring chargesof $6,840, $4,324, $3,039, and $809 in the first, second, third and fourth quarters of fiscal 2014, respectively, for a total of $15,012.**In fiscal 2015, the loss from discontinued operations included a net loss on operations of $1,489 primarily related to professional fees associated withthe divestiture and a $426 net loss on the sale of Die-Cut, recorded in the first quarter ended October 31, 2014. In the fourth quarter of fiscal 2014, theCompany incurred restructuring charges of $6,989 and a net loss on the sale of the Die Cut business of $1,238 in discontinued operations.*** The sum of the quarters does not equal the year-to-date total for fiscal 2015 and fiscal 2014 due to the quarterly changes inweighted-average shares outstanding.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.71Table of ContentsItem 9A. Controls and ProceduresDisclosure Controls and Procedures:Brady Corporation maintains a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by theCompany in the reports filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed,summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation,controls and procedures designed to ensure that information required to be disclosed by the Company in the reports the Company files under the ExchangeAct is accumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officers, orpersons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company carried out an evaluation, underthe supervision and with the participation of its management, including its President and Chief Executive Officer and its Senior Vice President and ChiefFinancial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of theExchange Act. Based on that evaluation, the Company’s President and Chief Executive Officer and Senior Vice President and Chief Financial Officerconcluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.Management’s Report on Internal Control Over Financial Reporting:The management of Brady Corporation and its subsidiaries is responsible for establishing and maintaining adequate internal control over financialreporting for the Company, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control overfinancial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles.With the participation of the Chief Executive Officer and the Chief Financial Officer, management conducted an evaluation of the effectiveness of ourinternal control over financial reporting as of July 31, 2015, based on the framework and criteria established in Internal Control — Integrated Framework(2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, management concluded that, as ofJuly 31, 2015, the Company’s internal control over financial reporting is effective based on those criteria. The Company’s internal control over financialreporting, as of July 31, 2015, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, whichis included herein.Because of the inherent limitations of internal control over financial reporting, misstatements may not be prevented or detected on a timely basis. Also,projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.Changes in Internal Control Over Financial Reporting:There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) thatoccurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, theCompany’s internal control over financial reporting.72Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofBrady CorporationMilwaukee, WisconsinWe have audited the internal control over financial reporting of Brady Corporation and subsidiaries (the "Company") as of July 31, 2015, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. TheCompany's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is toexpress an opinion on the Company's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principalfinancial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition ofthe company's assets that could have a material effect on the financial statements.Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override ofcontrols, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of theeffectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2015, based on the criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financialstatements and financial statement schedule as of and for the year ended July 31, 2015, of the Company and our report dated September 21, 2015, expressedan unqualified opinion on those consolidated financial statements and financial statement schedule./s/ DELOITTE & TOUCHE LLPMilwaukee, WisconsinSeptember 21, 201573Table of ContentsItem 9B. Other InformationNone.PART IIIItem 10. Directors and Executive Officers of the RegistrantName Age TitleJ. Michael Nauman 53 President, CEO and DirectorAaron J. Pearce 44 Senior V.P., Chief Financial Officer and Chief Accounting OfficerThomas J. Felmer 53 Senior V.P., President - Workplace SafetyRussell R. Shaller 52 Senior V.P., President - Identification SolutionsHelena R. Nelligan 49 Senior V.P. - Human ResourcesLouis T. Bolognini 59 Senior V.P., Secretary and General CounselBentley N. Curran 53 V.P. - Digital Business and Chief Information OfficerPaul T. Meyer 46 Treasurer and Vice President - TaxPatrick W. Allender 68 DirectorGary S. Balkema 60 DirectorElizabeth P. (Pungello) Bruno 48 DirectorNancy L. Gioia 55 DirectorConrad G. Goodkind 71 DirectorFrank W. Harris 73 DirectorBradley C. Richardson 57 DirectorHarold L. Sirkin 55 DirectorJ. Michael Nauman - Mr. Nauman has served on the Company’s Board of Directors and as the Company’s President and CEO since August 2014. Priorto joining the Company, from 1994 to 2014 he held a number of senior management positions at Molex Incorporated. Mr. Nauman was Molex's ExecutiveVice President and President of the Global Integrated Products Division from 2009 to 2014, where he led global business units in the automotive, datacommunications, industrial, medical, military/aerospace and mobile sectors. From 2004 to 2009, he served as Molex’s Senior Vice President and President,Global Integrated Product Division, President, Integrated Products Division and President, High Performance Products Division. Prior to joining Molex in1994, Mr. Nauman was Controller and then President of Ohio Associated Enterprises, Inc., and a tax accountant and auditor for Arthur Andersen. He is a boardmember of the Arkansas Science & Technology Authority, Arkansas Science, Technology, Engineering and Math Coalition, and Museum of Discovery. Mr.Nauman’s broad operational and financial experience, as well as his leadership and strategic perspective, provide the Board with insight and expertise todrive the Company’s growth and performance. Mr. Nauman holds a bachelor’s of science degree in management from Case Western Reserve University, andis a certified public accountant and charter global management accountant.Aaron J. Pearce - Mr. Pearce joined the Company in 2004 as Director of Internal Audit. From 2006 to 2008, he served as Finance Director for theCompany’s Asia Pacific region, and from 2008 to 2010, served as Global Tax Director. In January 2010, Mr. Pearce was appointed Vice President, Treasurer,and Director of Investor Relations, and in April 2013, was named Vice President - Finance, with responsibility for finance support to the Company’sWorkplace Safety and ID Solutions businesses,74Table of Contentsfinancial planning and analysis, and investor relations. Mr. Pearce was appointed Senior Vice President and Chief Financial Officer in September 2014, andChief Accounting Officer in July 2015. Prior to joining the Company, Mr. Pearce was an auditor with Deloitte & Touche LLP from 1994 to 2004. He holds abachelor’s degree in business administration from the University of Wisconsin-Milwaukee and is a certified public accountant.Thomas J. Felmer - Mr. Felmer joined the Company in 1989 and held several sales and marketing positions until being named Vice President andGeneral Manager of Brady's U.S. Signmark Division in 1994. In 1999, Mr. Felmer moved to Europe where he led the European Signmark business for twoyears, then gained additional responsibility for the European direct marketing business platforms, which he also led for two years. In 2003, Mr. Felmerreturned to the United States where he was responsible for Brady's global sales and marketing processes, Brady Software businesses, and integration leader ofthe EMED acquisition. In June 2004, he was appointed President - Direct Marketing Americas, and was named Chief Financial Officer in January 2008. InOctober 2013, Mr. Felmer was appointed Interim President and CEO, and served in these positions until August 2014. In September 2014, Mr. Felmer wasnamed President - Workplace Safety. Mr. Felmer received a bachelor's degree in business administration from the University of Wisconsin - Green Bay. Russell R. Shaller - Mr. Shaller joined the Company in June 2015 as Senior Vice President and President - ID Solutions. Prior to joining the Company,Mr. Shaller served as President, Teledyne Microwave Solutions, from 2008 to 2015, with responsibility for advanced microwave products sold into theaerospace and communications industry. Before joining Teledyne in 2008, Mr. Shaller held a number of positions of increasing responsibility at W.L. Gore &Associates, including Division Leader, Electronic Products Division from 2003 to 2008 and General Manager of Gore Photonics from 2001 to 2003. Prior tojoining W.L. Gore in 1993, Mr. Shaller worked in engineering and program management positions at Westinghouse Corporation. He holds a bachelor’sdegree in electrical engineering from the University of Michigan, a master’s degree in electrical engineering from Johns Hopkins University and a master’sdegree in business administration from the University of Delaware.Helena R. Nelligan - Ms. Nelligan joined the Company as Senior Vice President - Human Resources in November 2013. Prior to joining the Company,Ms. Nelligan held a variety of human resources leadership roles at Eaton Corporation from 2005 to 2013, including Vice President of Human Resources -Electrical Products Group, Vice President - Human Resources, Electrical Sector Americas and Director Human Resources - Electrical Components Division.From 1997 to 2005, Ms. Nelligan served in human resources leadership roles with Merisant Worldwide, Inc. and British Petroleum. She holds a bachelor’sdegree in criminal justice and a master’s degree in labor relations and human resources from Michigan State University.Louis T. Bolognini - Mr. Bolognini joined the Company as Senior Vice President, General Counsel and Secretary in January 2013. Prior to joining theCompany, he served as Senior Vice President, General Counsel and Secretary of Imperial Sugar Company from June 2008 through September 2012 and wasVice President and General Counsel of BioLab, Inc., a pool and spa manufacturing and marketing company from 1999 to 2008. Mr. Bolognini served asAssistant General Counsel to BioLab's parent company, Great Lakes Chemical Corporation, from 1990 to 1999. Mr. Bolognini served as an officer of BioLab,Inc. within a two-year period prior to the March 18, 2009 Chapter 11 bankruptcy petition filed by BioLab's parent company, Chemtura Corporation, onbehalf of itself and 26 U.S. affiliates, including BioLab. He holds a bachelor's degree in political science from Miami University and a Juris Doctor degreefrom the University of Toledo.Bentley N. Curran - Mr. Curran joined the Company in 1999 and has held several technology leadership positions until being named Vice President ofInformation Technology in 2005. In October 2007, he was appointed Chief Information Officer of Brady globally. In February 2012, he was appointed to hiscurrent position, Vice President of Digital Business and Chief Information Officer. Prior to joining Brady, Mr. Curran served in a variety of technologyleadership roles for Compucom and the Speed Queen Company. He holds a bachelor's degree in business administration from Marian University and anassociate of science degree in electronics and engineering systems from Moraine Park Technical College.Paul T. Meyer - Mr. Meyer joined the Company in 2009 as Global Tax Director. In May 2013, he was appointed Treasurer, and was named VicePresident - Tax in November 2013. Prior to joining the Company, Mr. Meyer worked in the corporate tax departments of GE Healthcare and JohnsonDiversey.He began his career as a tax consultant with Ernst & Young. He holds a bachelor's degree in accounting and a master's degree in taxation from the Universityof Wisconsin-Milwaukee.Patrick W. Allender - Mr. Allender was elected to the Board of Directors in 2007. He serves as the Chair of the Finance Committee and as a member ofthe Audit and Corporate Governance Committees. He served as Executive Vice President and CFO of Danaher Corporation from 1998 to 2005 and ExecutiveVice President from 2005 to 2007. Additionally, he served as a public accountant at Arthur Andersen from 1968 to 1985. He has served as a director of ColfaxCorporation since 2008 and Diebold, Inc. since 2011. Mr. Allender's strong background in finance and accounting, as well as his past experience as the CFOof a public company, provides the Board with financial expertise and insight.75Table of ContentsGary S. Balkema - Mr. Balkema was elected to the Board of Directors in 2010. He currently serves as the Chair of the Management Development andCompensation Committee and is a member of the Audit and Technology Committees. From 2000 to 2011, he served as the President of Bayer HealthcareLLC and Worldwide Consumer Care Division. He was also responsible for overseeing Bayer LLC USA's compliance program. He has over 20 years of generalmanagement experience. Mr. Balkema brings strong experience in consumer marketing skills and mergers and acquisitions and integrations. His broadoperating and functional experience are valuable to the Company given the diverse nature of the Company's portfolio.Elizabeth P. (Pungello) Bruno, Ph.D - Dr. Bruno was elected to the Board of Directors in 2003. She serves as a member of the ManagementDevelopment and Compensation, Corporate Governance and Technology Committees. Dr. Bruno is the President of the Brady Education Foundation inChapel Hill, North Carolina and a Research Associate Professor in the Developmental Psychology Program at the University of North Carolina at Chapel Hill,and has appointments at the Frank Porter Graham Development Institute and the Center for Developmental Science. Dr. Bruno also serves on the editorialboard of the Journal of Marriage and Family and the Early Childhood Research Quarterly, as a reviewer for several other journals, and on a number of othernon-profit boards. She is the granddaughter of William H. Brady, Jr., the founder of Brady Corporation. As a result of her substantial ownership stake in theCompany, as well as her family's history with the Company, she is well positioned to understand, articulate and advocate for the rights and interests of theCompany's shareholders.Nancy L. Gioia - Ms. Gioia was elected to the Board of Directors in 2013. She serves as the Chair of the Technology Committee and is a member of theManagement Development and Compensation Committee. Ms. Gioia joined Ford Motor Company in 1982 and served in a variety of engineering andtechnology roles through her retirement in October 2014, including Director, Global Connectivity, Electrical and User Experience; Director, GlobalElectrification; Director, Sustainable Mobility Technologies and Hybrid Vehicle Programs; Director, North America Current Vehicle Model Quality;Engineering Director, Visteon/Ford Due Diligence; Engineering Director, Small FWD/RWD Car Platforms-North America; and Vehicle Programs Director,Lifestyle Vehicles. While at Ford Motor Company, she served as a Director of Auto Alliance International, a joint venture of Ford Motor Company andMazda Corporation; Director of the Electric Drive Transportation Association; Director of the California Plug-in EV Collaborative; and on the State ofMichigan, Governor’s Talent Investment Board; and Ms. Gioia currently serves as a Director of Inforum. Ms. Gioia's extensive experience in strategy,technology and engineering solutions, as well as her general business experience, provides the Board with important expertise in product development andoperations.Conrad G. Goodkind - Mr. Goodkind was elected to the Board of Directors in 2007. He currently serves as the Chair of the Board of Directors, Chair ofthe Corporate Governance Committee and as a member of the Finance and Audit Committees. He previously served as Secretary of the Company from 1999to 2007. Mr. Goodkind was a partner in the law firm of Quarles & Brady, LLP, where his practice concentrated in corporate and securities law from 1979 to2009. Prior to 1979, he served as Wisconsin's Deputy Commissioner of Securities. Mr. Goodkind previously served as a director of Cade Industries, Inc. andAble Distributing, Inc. His extensive experience in advising companies on a broad range of transactional matters, including mergers and acquisitions andsecurities offerings, and historical knowledge of the Company provide the Board with expertise and insight into governance, business and compliance issuesthat the Company encounters.Frank W. Harris, Ph.D - Dr. Harris was elected to the Board of Directors in 1991. He serves as a member of the Technology, Management Developmentand Compensation and Corporate Governance Committees. He served as the Distinguished Professor of Polymer Science and Biomedical Engineering at theUniversity of Akron from 1983 to 2008 and Professor of Chemistry at Wright State University from 1970 to 1983. He is the founder of several technology-based companies including Akron Polymer Systems, where he serves as President and CEO. Dr. Harris is the inventor of several commercialized products,including an optical film that realized over one billion dollars in sales. His extensive experience in technology and engineering solutions provides the Boardwith important expertise in new product development.Bradley C. Richardson - Mr. Richardson was elected to the Board of Directors in 2007. He serves as the Chair of the Audit Committee and is a memberof the Corporate Governance and Finance Committees. He is the Executive Vice President and CFO of PolyOne Corporation. He previously served as theExecutive Vice President and CFO of Diebold, Inc. from 2009 to 2013, and as Executive Vice President Corporate Strategy and CFO of ModineManufacturing from 2003 to 2009. Prior to Modine, he spent 21 years with BP Amoco serving in various financial and operational roles with assignments inNorth America, South America and Europe. Mr. Richardson previously served on the boards of Modine Manufacturing and Tronox, Inc. He brings to theCompany extensive knowledge and experience in the areas of operations, strategy, accounting, tax accounting and finance, which are areas of criticalimportance to the Company as a global public company.76Table of ContentsHarold L. Sirkin - Mr. Sirkin was elected to the Board of Directors in February 2015. He serves as a member of the Technology Committee. Mr. Sirkin isSenior Partner and Managing Director of the Boston Consulting Group, where he has worked since 1981. Prior to the Boston Consulting Group, Mr. Sirkinwas an auditor for Deloitte, Haskins & Sells, and is a certified public accountant. His extensive experience in advising companies on a broad range of matters,including strategy, operations and new product development, as well as general business experience, provides the Board with expertise and insight to driveoperations improvement and growth.All Directors serve until their respective successors are elected at the next annual meeting of shareholders. Officers serve at the discretion of the Board ofDirectors. None of the Company's Directors or executive officers has any family relationship with any other Director or executive officer.Board Leadership Structure - The Board does not have a formal policy regarding the separation of the roles of Chief Executive Officer and Chair of theBoard, as the Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and themembership of the Board. In fiscal 2010, the Board formalized the position of Lead Independent Director, which was elected on an annual basis from amongthe independent Directors of the Board based upon the recommendation of the Corporate Governance Committee. In fiscal 2011, upon the recommendationof the Corporate Governance Committee, the Board enhanced the duties of the Lead Independent Director, which included, among others: chairing executivesessions of the non-management Directors; meeting periodically with the Chief Executive Officer and consulting as necessary with management on currentsignificant issues facing the Company; facilitating effective communication among the Chief Executive Officer and all members of the Board; andoverseeing the Board's shareholder communication policies and procedures. In September 2015, upon the recommendation of the Corporate GovernanceCommittee, the Board determined to appoint a non-executive Chair of the Board, rather than a Lead Independent Director, in order to harmonize the Board'sleadership structure to prevailing governance practices. The duties of the non-executive Chair will not initially change from those of the Lead IndependentDirector. Mr. Goodkind served as the Lead Independent Director in fiscal 2015 and as Chair of the Board beginning in September 2015.The Board believes that its current leadership structure has enhanced the Board's oversight of, and independence from, Company management; theability of the Board to carry out its roles and responsibilities on behalf of the Company’s shareholders; and the Company’s overall corporate governance.Risk Oversight - The Board oversees the Company's risk management processes directly and through its committees. In general, the Board oversees themanagement of risks inherent in the operation of the Company's businesses, the implementation of its strategic plan, its acquisition and capital allocationprogram and its organizational structure. Each of the Board's committees also oversees the management of Company risks that fall within the committee'sareas of responsibility. The Company's management is responsible for reporting significant risks to executives at the quarterly disclosure committee meeting.The significance of the risk is assessed by executive management and escalation to the respective board committee and Board of Directors is determined. TheCompany reviews its risk assessment with the Audit Committee annually.Audit Committee Financial Expert - The Company's Board of Directors has determined that at least one Audit Committee financial expert is serving onits Audit Committee. Messrs. Richardson, Chair of the Audit Committee, and Allender and Balkema, members of the Audit Committee, are financial expertsand are independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.Director Independence - A majority of the Directors must meet the criteria for independence established by the Board in accordance with the rules of theNew York Stock Exchange (“NYSE”). In determining the independence of a Director, the Board must find that a Director has no relationship that mayinterfere with the exercise of his or her independence from management and the Company. In undertaking this determination with respect to the Company’sDirectors other than Mr. Nauman, the Board considered the commercial relationships of the Company, if any, with those entities that have employed theCompany’s Directors over the past three fiscal years. The commercial relationships, which involved the purchase and sale of products, or the provision ofconsulting services, on customary terms, did not exceed the maximum amounts proscribed by the director independence rules of the NYSE over the past threefiscal years. Furthermore, the compensation paid to the Company’s Directors by their employers was not linked in any way to the commercial relationshipstheir employers had with the Company in fiscal 2015. After consideration of these factors, the Board concluded that the commercial relationships were notmaterial and did not prevent the Company’s Directors from being considered independent. Based on application of the NYSE independence criteria, allDirectors, with the exception of Mr. Nauman, President and CEO, are deemed independent. All members of the Audit, Management Development andCompensation, and Corporate Governance Committees are deemed independent.77Table of ContentsMeetings of Non-management Directors - The non-management Directors of the Board regularly meet alone without any members of managementpresent. The Chair of the Board, currently Mr. Goodkind, is the presiding Director at these sessions. In fiscal 2015, there were 5 executive sessions. Interestedparties can raise concerns to be addressed at these meetings by calling the confidential Brady hotline at 1-800-368-3613.Audit Committee Members - The Audit Committee, which is a separately-designated standing committee of the Board of Directors, is composed ofMessrs. Richardson (Chair), Allender, Balkema, and Goodkind. Each member of the Audit Committee has been determined by the Board to be independentunder the rules of the SEC and NYSE.Code of Ethics - For a number of years, the Company has had a code of ethics for its employees. This code of ethics applies to all of the Company'semployees, officers and Directors. The code of ethics can be viewed at the Company's corporate website, www.bradycorp.com, or may be obtained in print byany person, without charge, by contacting Brady Corporation, Investor Relations, P.O. Box 571, Milwaukee, WI 53201. The Company intends to satisfy thedisclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of its code of ethics by placing suchinformation on its Internet website.Corporate Governance Guidelines - Brady's Corporate Governance Principles, as well as the charters of the Audit Committee, Corporate GovernanceCommittee, and Management Development and Compensation Committee, are available on the Company's Corporate website, www.bradycorp.com.Shareholders may request printed copies of these documents from Brady Corporation, Investor Relations, P.O. Box 571, Milwaukee, WI 53201.Director Qualifications - Brady's Corporate Governance Committee reviews the individual skills and characteristics of the Directors, as well as thecomposition of the Board as a whole. This assessment includes a consideration of independence, diversity, age, skills, expertise, and industry backgrounds inthe context of the needs of the Board and the Company. Although the Company has no policy regarding diversity, the Corporate Governance Committeeseeks a broad range of perspectives and considers both the personal characteristics and experience of Directors and prospective nominees to the Board so that,as a group, the Board will possess the appropriate talent, skills and expertise to oversee the Company's businesses.SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Exchange Act requires the Company’s Directors and executive officers, and persons who own more than ten percent of aregistered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stockand other equity securities of the Company. Executive officers, directors and greater than ten percent stockholders are required by SEC regulation tofurnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on a review of the copies of such reportsfurnished to the Company and written representations that no other reports were required, during the fiscal year ended July 31, 2015, all Section 16(a)filing requirements applicable to its officers, directors and greater than 10 percent beneficial owners were complied with other than with respect to thefollowing:•Forms 4 for Messrs. Felmer and Williamson, and Stephen Millar, were not filed on or before September 11, 2014, as required to report the forfeitureof 35,000 shares of restricted stock for each of Messrs. Felmer and Williamson, and 10,000 restricted stock units for Mr. Millar, on September 9,2014. These transactions were reported on Forms 4 that were filed on September 12, 2014; and•Forms 4 for Kathleen Johnson and Messrs. Curran, Felmer, Meyer, Pearce and Williamson, were not filed on or before September 23, 2014, toreport the withholding of 148, 332, 1,234, 92, 148 and 911 shares of Class A Nonvoting Stock, respectively, for withholding taxes on the vestingof restricted stock units. These transactions were reported on Forms 4 that were filed on October 27, 2014.78Table of ContentsItem 11. Executive CompensationCompensation Discussion and AnalysisOverviewOur Compensation Discussion and Analysis focuses upon the Company's total compensation philosophy, the role of the Management Development &Compensation Committee (for purposes of the Compensation Discussion and Analysis section, the “Committee”), total compensation components inclusiveof base salary, short-term incentives, long-term incentives, benefits, perquisites, severance amounts and change-in-control agreements for our executiveofficers, market and peer group data and the approach used by the Committee when determining each element of the total compensation package.For fiscal 2015, the following executive officers' compensation is disclosed and discussed in this section (the “named executive officers” or “NEOs”):•J. Michael Nauman, President, Chief Executive Officer and Director;•Aaron J. Pearce, Senior Vice President, Chief Financial Officer, and Chief Accounting Officer (1);•Thomas J. Felmer, Senior Vice President and President - Workplace Safety and Former Chief Financial Officer (2);•Bentley N. Curran, Vice President - Digital Business and Chief Information Officer;•Helena R. Nelligan, Senior Vice President - Human Resources;•Russell R. Shaller, Senior Vice President and President - Identification Solutions (3); and•Matthew O. Williamson, Former President-Identification Solutions and Former Vice President, Brady Corporation (4)(1) Mr. Pearce was appointed by the Company as Senior Vice President and Chief Financial Officer effective September 10, 2014. Effective July 22, 2015,Mr. Pearce was appointed as Chief Accounting Officer in addition to his current role as Senior Vice President and Chief Financial Officer.(2) Effective September 10, 2014, Mr. Felmer was appointed by the Company as Senior Vice President and President - Workplace Safety. In fiscal 2015,Mr. Felmer served as Interim Chief Executive Officer until August 4, 2014 and served as Chief Financial Officer until September 10, 2014.(3) Effective June 22, 2015, Mr. Shaller was appointed by the Company as Senior Vice President and President - Identification Solutions.(4) Effective February 9, 2015, Mr. Williamson resigned from his position as Vice President and President - Identification Solutions and retired from theCompany effective July 31, 2015. Retirement of Matthew Williamson: Effective February 9, 2015, and in connection with his retirement from the Company as of July 31, 2015, Mr.Williamson resigned as the Company’s Vice President and President - Identification Solutions. On February 9, 2015, the Company entered into a writtenagreement with Mr. Williamson to remain employed by the Company, where he was entitled to receive regular salary and benefits, through July 31, 2015, toassist in the transition of his duties to his successor and be otherwise available in a consultative position to assist with respect to transitional issues. Inaddition, the agreement with Mr. Williamson provided for a severance payment of $447,620 to be paid in equal installments throughout the 24 monthsfollowing his separation from employment, as well as non-competition and non-solicitation provisions stipulating his agreement not to compete with theCompany or solicit its employees, customers and vendors for a period of 24 months after his retirement, $15,000 of outplacement service fees and standardconfidentiality, waiver and non-disparagement provisions.Appointment of J. Michael Nauman: On August 1, 2014, the Board of Directors appointed J. Michael Nauman as President, Chief Executive Officer andDirector of the Company, effective August 4, 2014. The Company entered into an employment offer letter dated August 1, 2014 with Mr. Nauman (the “Offer Letter”)providing that Mr. Nauman will receive an annual base salary of $675,000, subject to periodic review and adjustment. The Offer Letter also provided that hewill participate in the Company’s annual cash incentive plan in fiscal 2015, with a targeted annual incentive opportunity of 100% of base salary and amaximum annual incentive opportunity of 200% of base salary. The Offer Letter also provided that he would receive awards under the Company’s 2012Omnibus Incentive Stock Plan in September 2014, subject to the discretion of the Committee, with a grant date value of $1.8 million, divided equallybetween time-based options and restricted stock units. Under the terms of the Offer Letter, Mr. Nauman is required to hold, directly or indirectly, shares ofBrady common stock equal to five times his base salary within five years of his appointment. 79Table of ContentsThe Offer Letter provided that Mr. Nauman is eligible to participate in all employee benefit plans and programs generally available to theCompany’s executive officers, including perquisites covering a car allowance, financial planning and executive physical program, and that he will bereimbursed for certain of his relocation expenses. The Offer Letter also contains 24-month non-competition and non-solicitation provisions, as well asstandard confidentiality, waiver and non-disparagement provisions. Should Mr. Nauman’s employment be terminated by the Company without cause orshould he resign for good reason (as such events are defined in the Offer Letter), the Company will pay Mr. Nauman a severance benefit equal to two times thesum of his base salary and target bonus. Upon commencement of his employment on August 4, 2014, and pursuant to the terms of the Offer Letter, the Company entered into a RestrictedStock Unit Agreement with Mr. Nauman (the “RSU Agreement”) under which Mr. Nauman received 53,668 time-based restricted stock units ("RSUs") with anaggregate award value of $1.5 million, as calculated based on the 30-day average NYSE closing price of the Company’s Class A Non-Voting CommonStock. The RSUs vest in equal annual increments on the third, fourth and fifth anniversaries of the grant date, with vesting accelerated in the event of death,disability, termination following a change of control, or termination by the Company without cause (as such events are defined in the RSU Agreement). Effective August 4, 2014, the Company also entered into a Change of Control Agreement with Mr. Nauman (the “Change of Control Agreement”). Under the terms of the Change of Control Agreement, in the event of a qualifying termination within 24 months following a change of control (as such eventsare defined in the Change of Control Agreement), Mr. Nauman will receive two times his annual base salary, two times his target bonus, and the amount of histarget bonus prorated based on when the termination occurs.Appointment of Russell R. Shaller: On June 5, 2015, the Company announced the appointment of Russell R. Shaller as Senior Vice President of theCompany and President - Identification Solutions, effective June 22, 2015 (the "Hire Date").The Company entered into an employment offer letter dated June 2, 2015 with Mr. Shaller (the “Offer Letter”). The Offer Letter provides that Mr.Shaller will receive an annual base salary of $340,000, with eligibility for a target annual bonus at 55% of base salary beginning in fiscal 2016,recommendation for a fiscal 2016 annual equity award with a grant date value of $450,000, a cash sign-on bonus of $115,000, and will participate in theCompany's equity incentive and other benefit plans on a basis similar to other executive officers, including an automobile allowance. The Offer Letter furtherprovided that Mr. Shaller would receive a sign-on award of time-based RSUs with a grant date value of $525,000, to be granted on the Hire Date. The RSUsvest in equal increments upon the first, second, third, fourth, and fifth anniversaries of the grant date. Mr. Shaller will have a Company share ownershiprequirement equal to three times his base salary.Pursuant to the terms of the Offer Letter, Mr. Shaller is eligible for a severance benefit equal to his base salary plus target bonus should hisemployment be terminated by the Company without cause or should he resign for good reason (as such events are defined in the Offer Letter). The OfferLetter also provided that Mr. Shaller would be eligible to enter into a change of control agreement in a form substantially the same as the change of controlagreements entered into by other executive officers of the Company, where in the event of a qualifying termination following a change of control, he wouldreceive payment of two times base salary and two times the average bonus payment received in the three years immediately prior to the date of the change ofcontrol.Effective August 28, 2015, the Company entered into a Change of Control Agreement with Mr. Shaller (the "Change of Control Agreement"). Underthe terms of the Change of Control Agreement, in the event of a qualifying termination within 24 months following a change of control (as such events aredefined in the Change of Control Agreement), Mr. Shaller will receive two times his base salary and two times the average bonus payment received in thethree years immediately prior to the date of the change of control.Effective September 11, 2015, the Company entered into a Change of Control Agreement with Mr. Pearce (the "Change of Control Agreement").Under the terms of the Change of Control Agreement, in the event of a qualifying termination within 24 months following a change of control (as such eventsare defined in the Change of Control Agreement), Mr. Pearce will receive two times his base salary and two times the average bonus payment received in thethree years immediately prior to the date of the change of control.Executive SummaryOur BusinessSince our founding over 100 years ago, we have grown the Company by developing innovative high-performing products, participating in growingmarkets, delivering on-time solutions and leveraging our core competencies across our businesses. Our strategy is to be the market leader in each of theglobal businesses we are focused on.80Table of ContentsOur passion around market leadership is tempered only by the fact that when we win, we win the right way. Our values have been, and will be, thecornerstone of everything that we do at Brady. Put Our Customer's Experience at the Center, Be Better Every Day, Differentiate Through Innovation, UnlockPotential in Yourself and Others, Deliver What You Promise, Protect Our Future and Win the Right Way describe the behaviors that we expect and reward atBrady.In order to achieve our goals, we recognize it is critical to assemble and maintain a leadership team with the integrity, skills and dedication needed toexecute our growth plan. We design and use our compensation plans to help us achieve these objectives and align our rewards with the intended behaviorsand outcomes.Our Fiscal 2015 Performance and Link to Pay DecisionsFiscal 2015 Resulted in No Incentive Plan Bonuses for NEOsOver the past two years, we have made significant portfolio and management decisions designed to better position the Company for growth in thefuture. These changes were a meaningful shift from the more volatile and less profitable consumer electronics industry to a focus on organic growthopportunities within our two current business segments, Identification Solutions ("IDS”) and Workplace Safety ("WPS"). In our IDS business, our strategy forgrowth includes expanding the business in high opportunity markets and investing in research and development ("R&D") activities to develop and launchinnovative, high-value products more efficiently. In our WPS business, our strategy to return to growth includes a focus on workplace safety criticalindustries, expansion of our product offerings, further developed pricing capabilities, and increased investment in digital.•On a GAAP basis, our fiscal 2015 net earnings from continuing operations were $4.9 million.•Brady continues to demonstrate adequate cash generation to meet ongoing business needs as we generated $93.3 million of cash flow fromoperating activities during the year ended July 31, 2015.•Our sales from continuing operations for the full year were $1.17 billion, down 4.4% from fiscal 2014. Organic sales were up 1.0% and foreigncurrency translation decreased sales by 5.4%.Our gross debt-to-EBIDTA is approximately 2.0 at July 31, 2015. Having a strong balance sheet puts us in a solid financial position to fund futuregrowth opportunities or return value to our shareholders.For fiscal 2015, with the exception of Messrs. Pearce and Felmer, we did not increase the base salary or target bonus opportunities of our namedexecutive officers. Mr. Pearce received a 30.1% increase in base salary over fiscal 2014 levels and his target bonus increased from 50% to 60% of base salaryas a result of his increased responsibilities associated with his appointment as Senior Vice President and Chief Financial Officer. Mr. Felmer's target bonusopportunity was increased over fiscal 2014 from 70% to 80% of base salary in recognition of his appointment as Senior Vice President and President -Workplace Safety.No named executive officer received a performance-based bonus award for fiscal 2015 since we did not achieve the threshold level of performancerelative to our WPS segment, IDS segment, or total Company objectives.As a group, the 2015 grant date fair market value of all equity compensation granted to our named executive officers was 268.9% of base salary. Fiscal2015 grants were made in the form of time-based stock options and time-based restricted stock units. Stock options, which are inherently performance-basedand have value only to the extent that the price of our stock increases, have been and continue to be a significant part of our named executive officers'compensation package. Restricted stock units that vest with the passage of time were granted to our named executive officers for the first time beginning infiscal 2014 and were intended to facilitate retention while shifting the Company's use of different equity types to more closely reflect general market norms.The grant date value of awards granted to our named executive officers was 148% higher than in fiscal 2014. Of the total increase in grant date valueover fiscal 2014, 95% was due to the fiscal 2015 equity compensation to Mr. Nauman, who was appointed as President, Chief Executive Officer and Directoreffective August 4, 2014. In fiscal 2014, no equity compensation was made to Mr. Nauman's predecessor and no significant incremental equity compensationwas made to Mr. Felmer, who served as the Company's Interim President and Chief Executive Officer. An additional 17% of the increase was due to the sign-on award of time-based restricted stock units to Mr. Shaller as a result of his appointment as Senior Vice President and President - Identification Solutions,effective June 22, 2015. The remaining 36% increase was due to time-based restricted stock units awarded to Messrs. Pearce, Curran, and Felmer and Ms.Nelligan during fiscal 2015 for retention purposes, which was not similarly awarded in the prior year. Overall, target total compensation for our namedexecutive officers, exclusive of the one-time retention awards, was at the median of our peer group companies for fiscal 2015.81Table of ContentsUpon commencement of his appointment as President, Chief Executive Officer and Director effective August 4, 2014, Mr. Nauman was awarded53,668 shares of time-based restricted stock units. The units vest in equal annual increments on the third, fourth and fifth anniversaries of the grant date, withvesting accelerated in the event of death, disability, termination following a change of control, or termination by the Company without cause.Upon the completion of his service as Interim President and Chief Executive Officer on August 4, 2014, Mr. Felmer was awarded 5,000 shares of time-based restricted stock units. The units vest upon the first anniversary of the grant date, with vesting accelerated in the event of death, disability, terminationfollowing a change of control, or upon termination of employment by the Company without cause.On October 1, 2014, Mr. Felmer was awarded 5,000 shares of time-based restricted stock units for retention purposes. The units will vest in equalincrements on the first, second, and third anniversaries of the grant date, with vesting accelerated in the event of death, disability, termination following achange of control, or upon termination of employment by the Company without cause.Effective November 28, 2014, Mr. Felmer was awarded 10,000 shares of time-based restricted stock units for retention purposes. The units will vest inequal increments on the third, fourth, and fifth anniversaries of the grant date, with vesting accelerated in the event of death, disability, or terminationfollowing a change of control.Upon commencement of his appointment as Senior Vice President and President - Identification Solutions effective June 22, 2015, Mr. Shaller wasawarded 20,992 shares of time-based restricted stock units. The units vest in equal increments on the first, second, third, fourth, and fifth anniversaries of thegrant date, with vesting accelerated in the event of death, disability, or termination following a change of control.Effective July 15, 2015, Messrs. Pearce and Curran and Ms. Nelligan were awarded 12,171, 11,565, and 11,765 shares of time-based restricted stockunits, respectively, to provide an incentive for retention. The units vest in increments of 10%, 20%, 30%, and 40% upon the first, second, third, and fourthanniversaries, respectively, of the grant date, with vesting accelerated in the event of death, disability, or termination following a change of control.82Table of ContentsExecutive Compensation PracticesAs part of the Company's pay for performance philosophy, the Company's compensation program includes several features that maintain alignmentwith shareholders: Emphasis on Variable Compensation More than 45% of the named executive officers' possible compensation is tied to Company performance, whichis intended to drive shareholder value. Ownership Requirements Mr. Nauman is required to own shares in the Company at a value equal to five times his base salary. Messrs.Pearce, Felmer and Shaller are required to own shares in the Company at a value equal to three times their basesalaries. Ms. Nelligan and Mr. Curran are required to own shares in the Company at a value equal to two timestheir base salaries and Mr. Williamson was required to hold at least 30,000 shares of stock. There is no deadlineto reach the required ownership levels, but the executive may not sell shares, other than to cover tax withholdingrequirements associated with the vesting or exercise of the equity award, until such time as they meet therequirements. Clawback Provisions Following a review and analysis of relevant governance and incentive compensation practices and policiesacross our compensation peer group and other public companies, the Committee instituted a recoupment policy,effective August 2013, under which incentive compensation payments and/or awards may be recouped by theCompany if such payments and/or awards were based on erroneous results. If the Committee determines that anexecutive officer or other key executive of the Company who participates in any of the Company's incentiveplans has engaged in intentional misconduct that results in a material inaccuracy in the Company's financialstatements or fraudulent or other willful and deliberate conduct that is detrimental to the Company or there is amaterial, negative revision of a performance measure for which incentive compensation was paid or awarded, theCommittee may take a variety of actions including, among others, seeking repayment of incentive compensation(cash and/or equity) that is greater than what would have been awarded if the payments/awards had been basedon accurate results and the forfeiture of incentive compensation. As this policy suggests, the Committee believesthat any incentive compensation should be based only on accurate and reliable financial and operationalinformation, and, thus, any inappropriately paid incentive compensation should be returned to the Company forthe benefit of shareholders. The Committee expects that the implementation of this policy will serve to enhancethe Company's compensation risk mitigation efforts. While the implemented policy affords the Committeediscretion regarding the application and enforcement of the policy, the Company and the Committee willconform the policy to any requirements that may be promulgated by the national stock exchanges in the future,as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Performance Thresholds and Caps Historically, 100% of annual cash and equity incentive awards were performance-based. Beginning in fiscal2014, 50% of the annual equity incentive award was granted in time-based restricted stock units to facilitateretention while shifting the Company's use of different equity types to more closely reflect general marketnorms. In addition, the annual cash incentive plan has a maximum payment cap. Securities Trading Policy Our Insider Trading Policy prohibits executive officers from trading during certain periods at the end of eachquarter until after we disclose our financial and operating results. We may impose additional restricted tradingperiods at any time if we believe trading by executives would not be appropriate because of developments thatare, or could be, material and which have not been publicly disclosed. The Insider Trading Policy also prohibitsthe pledging of Company stock as collateral for loans, holding Company securities in a margin account byofficers, directors or employees, and the hedging of Company securities. Annual Risk Reviews The Company conducts an annual compensation-related risk review and presents findings and suggested riskmitigation actions to both the Audit and Management Development and Compensation Committees.83Table of ContentsThe Company’s compensation programs also maintain alignment with shareholders by not including certain features:No Excessive Change of ControlPayments Mr. Nauman's maximum cash benefit is equal to 2 times salary and 2 times target bonus plus a prorated targetbonus in the year in which the termination occurs. For all other named executive officers except Messrs. Pearceand Shaller, the maximum cash benefit is equal to two times salary and two times the average bonus paymentreceived in the three years immediately prior to the date the change of control occurs. In the event of a change ofcontrol, unexercised stock options become fully exercisable or, if canceled, each named executive officer shallbe given cash or stock equal to the in-the-money value of the canceled stock options. In the event of a change ofcontrol, restricted stock units shall become unrestricted and fully vested.Messrs. Pearce and Shaller were not covered by a Change of Control Agreement in fiscal 2015. However,pursuant to the terms of Mr. Shaller's Offer Letter, dated June 2, 2015, he is eligible to enter into a change ofcontrol agreement in which he would receive two times base salary and two times the average bonus paymentreceived in the three years immediately prior to the date the change of control occurs, which agreement wasentered into on August 28, 2015. Effective September 11, 2015, the Company entered into a Change of ControlAgreement with Mr. Pearce under which he will also receive two times his base salary and two times the averagebonus payment received in the three years immediately prior to the date of the change of control. No Employment Agreements The Company does not maintain any employment agreements with its executives. Both Mr. Nauman's OfferLetter and Mr. Shaller's Offer Letter provide that each is deemed an at-will employee, but will receive aseverance benefit in the event his employment is terminated by the Company without cause or for good reasonas described in the respective Offer Letter and summarized above. No Reloads, Repricing, or OptionsIssued at a Discount Stock options issued are not repriced, replaced, or regranted through cancellation or by lowering the optionprice of a previously granted option.Compensation Philosophy and ObjectivesWe seek to align the interests of our executives with those of our investors by evaluating performance on the basis of key financial measurements thatwe believe closely correlate to long-term shareholder value. To this end, we have structured our compensation program around the following principles:•Provide a competitive total compensation package targeted at the median of our compensation peers;•Incentivize long-term shareholder value creation by encouraging behaviors which facilitate long-term success without undue risk taking; and•Realize top-tier company performance through a merit-based, pay-for-performance culture that is aligned with our Company values.Determining CompensationManagement Development and Compensation Committee’s RoleThe Committee is responsible for monitoring and approving the compensation of the Company's named executive officers. The Committee approvescompensation and benefit policies and strategies, approves corporate goals and objectives relative to the chief executive officer and other executive officercompensation, oversees the development process and reviews development plans of key executives, reviews compensation-related risk, administers ourequity incentive plans including compliance with executive share ownership requirements, approves all severance policies or pay-outs, and consults withmanagement regarding employee compensation generally. With respect to executive officers, at the beginning of each year, the Committee sets base salaries,approves the cash bonuses paid for the prior fiscal year, approves equity incentive awards for the new fiscal year and establishes the objective performancetargets to be achieved for the new year. When a new executive officer is hired, the Committee is involved in reviewing and approving base salary, annualincentive opportunity, sign-on incentives, annual equity awards, and other aspects of the executive's compensation.Consultants’ RoleThe Committee has historically utilized the services of an executive compensation consulting firm and legal counsel to assist with the review andevaluation of compensation levels and policies on a periodic basis, as well as to provide advice with respect to new or modified compensation arrangements.In fiscal 2015, the Committee utilized the services of Meridian Compensation Partners as compensation consultants and Quarles & Brady LLP, as legalcounsel, both of which were determined to be independent by the Committee.84Table of ContentsManagement’s RoleTo aid in determining compensation for fiscal 2015, management obtained data regarding comparable executive officer compensation through astandard data subscription with Equliar, Inc. For fiscal 2015, Mr. Nauman used this data to make recommendations to the Committee concerningcompensation for each named executive officer other than himself. In setting compensation for our named executive officers, the Committee takes intoconsideration these recommendations, along with the results of the Company during the previous fiscal year, the level of responsibility, demonstratedleadership capability, the compensation levels of executives in comparable roles from within our peer group and the results of annual performance reviewswhich, for our chief executive officer, included feedback from his direct reports and a self-appraisal. In addition, during fiscal 2015, the Committee took intoconsideration the recommendations of its independent compensation consultant, particularly with respect to compensation elements related to the chiefexecutive officer transition. Mr. Nauman did not attend the portion of any committee meeting during which the Committee discussed matters relatedspecifically to his compensation.Tally SheetsThe Committee reviews executive officer compensation tally sheets each year. These summaries set forth the dollar amount of all components of eachnamed executive officer's compensation, including base salary, annual target and actual cash incentive compensation, annual equity incentive compensation,the value of outstanding equity, stock option exercises during the year, stock option gains during the year, the value of Brady's contribution to retirementplans, the value of Company-provided health and welfare benefits and social security taxes paid on the executive's behalf. Reviewing this information allowsthe Committee to determine what an executive officer's total compensation is and how a potential change to an element of our compensation program wouldaffect the officer's overall compensation.Components of CompensationOur total compensation program includes five components: base salary, annual cash incentives, long-term equity incentives, employee benefits andperquisites. Each component serves a particular purpose and, therefore, each is considered independent of the other components, although all fivecomponents combine to provide a holistic total compensation approach. We use these components of compensation to attract, retain, motivate, develop andreward our executives.The base salary, annual cash and long-term equity incentive components are determined through a pay-for-performance approach, targeted at marketmedian for the achievement of performance goals with an opportunity for upper quartile pay when top-tier performance is achieved. Our compensationstructure is balanced by the payment of below market median compensation to our named executive officers when actual fiscal results do not meet or exceedexpected fiscal results, such as in fiscal years 2013, 2014, and 2015. The following table describes the purpose of each performance-based component andhow that component is related to our pay-for-performance approach:Compensation Component Purpose of Compensation Component Compensation Component in Relation to PerformanceBase salary A fixed level of income security used toattract and retain employees bycompensating them for the primaryfunctions and responsibilities of theposition. The base salary increase an employee receives depends upon the employee'sindividual performance, the employee's displayed skills and competenciesand market competitiveness. Annual cash incentive award To attract, retain, motivate and rewardemployees for achieving or exceedingannual performance goals at Company andplatform levels. Financial performance determines the actual amount of the executive'sannual cash incentive award. Award amounts are “self-funded” because theyare included in the financial performance results when determining actualfinancial performance. Annual equity incentiveaward: Time-based stockoptions and time-basedrestricted stock units To attract, retain, motivate and reward toptalent for the successful creation of long-term stockholder value. An assessment of executive leadership, experience and expected futurecontribution, combined with market competitive grant information, are usedto determine the amount of equity granted to each executive.Stock options are inherently performance-based in that the stock price mustincrease over time to provide compensation value to the executive.Restricted stock units are units that are settled in shares of common stockupon vesting. We believe restricted stock units serve as a strong reward andretention device, while promoting the alignment of executive decisionswith Company goals and shareholder interests.85Table of ContentsEstablishing Our Total Compensation Component LevelsThe Committee uses peer group data to test the reasonableness and competitiveness of several components of compensation, including base salaries,annual cash incentives, and long-term equity incentives of positions similar to those of our named executive officers. The Committee's assessment of therevenue of the companies in the fiscal 2014 peer group resulted in revisions to the peer group for fiscal 2015 to more closely align the Company with a peergroup of companies with similar annual revenues. The following 26 companies were included in the fiscal 2015 total compensation analysis conducted usingpublicly available data sourced through Equilar, Inc: Actuant Corporation; Acuity Brands, Inc.; A.O. Smith Corporation; Apogee Enterprises, Inc.; BarnesGroup Inc.; Clarcor Inc.; Curtiss-Wright Corporation; EnPro Industries, Inc.; Entegris, Inc.; ESCO Technologies Inc.; Federal Signal Corp.; Graco Inc.; HBFuller Company; Hexcel Corporation; IDEX Corporation; II-VI Incorporated; Modine Manufacturing Company; Mine Safety Appliances Company; MyersIndustries Inc.; Nordson Corporation; Plexus Corp.; Polypore International Inc.; Powell Industries, Inc.; Watts Water Technologies, Inc.; and ZebraTechnologies Corporation.Based on our analysis of the fiscal 2015 peer group used for determining fiscal 2015 compensation, performed in July 2014, the base salaries of ournamed executive officers were generally at the median of our peers. Fiscal 2015 target total compensation of our named executive officers, inclusive of basesalary, cash incentives and equity awards, was also at the median of our peer companies, although certain of the named executive officers were above andothers were below such mark.Fiscal 2015 Named Executive Officer CompensationBase SalariesOther than with respect to Mr. Pearce, Mr. Nauman did not recommend and the Committee did not approve increases in base salary for the namedexecutive officers because they were paid base salaries consistent with the median of base salaries for similar positions at our peer group companies. TheCommittee approved a 30.1% increase in base salary for Mr. Pearce for fiscal 2015 as a result of his increased responsibilities associated with his appointmentas Senior Vice President and Chief Financial Officer effective September 10, 2014.Named Executive Officer Fiscal 2014 Fiscal 2015 Percentage IncreaseJ. Michael Nauman (1) $— $675,000 —%Aaron J. Pearce 229,639 288,429 30.1%Thomas J. Felmer 384,625 386,937 —%Bentley N. Curran 283,314 285,053 —%Helena R. Nelligan 290,000 290,000 —%Russell R. Shaller (2) — 340,000 —%Matthew O. Williamson 383,675 383,675 —%(1)Mr. Nauman was appointed as President, Chief Executive Officer and Director of the Company, effective August 4, 2014.(2)Mr. Shaller was appointed as Senior Vice President and President - Identification Solutions, effective June 22, 2015.The salary detail in the table above reflects the annualized 12-month salary for each executive. The salaries in the Summary Compensation Table reflectfiscal year compensation earned including three (3) months at fiscal 2014 rates and nine (9) months at fiscal 2015 rates. The difference in base salary forMessrs. Felmer and Curran from fiscal 2014 to 2015 is entirely related to a base salary increase in fiscal 2014.Annual Cash Incentive AwardsThe Company is organized and managed on a global basis with two business platforms: Identification Solutions (“IDS”) and Workplace Safety(“WPS”), which are reportable segments. All named executive officers participate in an annual cash incentive plan, which is based on fiscal year financialresults of a segment or the Company. Set forth below is a description of the fiscal 2015 financial measures:•Organic sales growth: Organic sales growth is measured as the increase in total Company sales from continuing operations, excluding all acquiredand divested sales and adjusted for foreign currency changes for the current year, divided by organic sales from continuing operations from the prioryear. Organic sales are also known as “core sales” and “base sales." Organic sales growth is reported quarterly and annually in the Company's 10-Qand 10-K SEC filings.86Table of Contents•Segment organic sales growth: Segment organic sales growth is measured as the increase in segment sales excluding all acquired and divested salesand adjusted for foreign currency changes for the current year, divided by segment organic sales from the prior year.•Segment income from operations: Segment income from operations is measured as segment sales less the segment's cost of goods sold, sellingexpenses and research and development expenses, at budgeted exchange rates, for the current year.•Pre-tax income: Pre-tax income is defined as total Company revenues at actual exchange rates minus total Company expenses for the cost of doingbusiness. Pre-tax income excludes income tax expense, certain non-routine expenses such as restructuring charges, and income or loss fromacquisitions or divestitures completed in fiscal 2015.The achievement of the total Company sales growth and profit thresholds, for those named executive officers whose incentive is determined bythose goals, and of the segment sales growth and profit thresholds, for those named executive officers whose incentive is determined by those goals, definedabove, determines how much the annual bonus pool is funded. The bonus pool for an annual cash incentive plan is funded as 20% by the achievement of thesales growth thresholds and 80% by the achievement of the profit thresholds. However, if final fiscal year sales growth is negative for an annual cashincentive plan, no annual bonus pool is funded for that plan, regardless of the final profit threshold achieved. Similarly, if the minimum profit threshold is notmet for an annual cash incentive plan, no annual bonus pool is funded for that plan, regardless of the final sales growth threshold achieved.The achievement of the Company fiscal objectives called the "Focal Points", as agreed on by the CEO and Committee at the start of the fiscal year tobe critical to the execution of the Company's strategy, is used as a multiplier to determine how much of the funded bonus pool will be made available fordistribution as a bonus, with maximum achievement of 100%. Finally, the named executive officer's individual contribution, in line with their annualperformance rating, is used as a multiplier to determine what percentage of available bonus is earned and payable to him or her and can range from 0% to150%.Messrs. Nauman, Pearce and Curran and Ms. NelliganThe cash incentive payable to Messrs. Nauman, Pearce and Curran and Ms. Nelligan for fiscal 2015 was based on total Company organic sales growthand pre-tax income. We use organic sales growth because we believe that the long-term value of our enterprise depends on our ability to grow revenuewithout regard for acquisitions. We use pre-tax income to focus on effectively managing our costs while growing our revenue.For fiscal 2015, no bonus was funded for these named executive officers as the organic sales and pre-tax income thresholds were not achieved. Since nobonus was funded, the multipliers for the achievement of total Company objectives and individual performance did not apply. The threshold, target,maximum and actual amounts for Messrs. Nauman, Pearce and Curran and Ms. Nelligan were as follows: Performance Measure (weighting) Threshold Target Maximum Fiscal 2015 Actual ResultOrganic Sales Growth (20%) 2.3% 5% 7.0% or more 1.0%Pre-Tax Income (80%)(millions) $108.0 $126.6 $136.4 or more $41.8 Focal Point Multiplier 0% 100% 100% N/A Individual Performance Multiplier 0% 100% 150% N/A Fiscal 2015 Bonus Award Actual(% of Salary) Actual($)J. Nauman 0% 100% 200% 0% $0A. Pearce 0% 60% 120% 0% $0B. Curran 0% 60% 120% 0% $0H. Nelligan 0% 50% 100% 0% $0Messrs. Felmer and WilliamsonThe cash incentive payable to Mr. Felmer for fiscal 2015 was based on achievement of WPS segment organic sales growth and WPS segment incomefrom operations. The cash incentive payable to Mr. Williamson for fiscal 2015 was based on achievement of IDS segment organic sales growth and IDSsegment income from operations. We use segment organic sales and income from operations goals because we believe they align Messrs. Felmer andWilliamson to the management of sales and expenses directly within their control as the President-Workplace Safety, and Former President-IdentificationSolutions, respectively.87Table of ContentsFor fiscal 2015, no bonus was funded to Messrs. Felmer and Williamson as the respective segment organic sales and segment income from continuingoperations thresholds were not achieved. Since no bonus was funded, the multipliers for the achievement of Company objectives and individual performancedid not apply.For 2015, the threshold, target, maximum and actual amounts for Mr. Felmer were as follows:Performance Measure (weighting) Threshold Target Maximum Fiscal 2015 Actual ResultWPS Segment Organic Sales Growth (20%) 3.7% 7.5% 9.3% or more (0.4)%WPS Segment IFO (80%)(millions) $70.1 $77.6 $80.1 or more $61.0 Focal Point Multiplier 0% 100% 100% N/A Individual Performance Multiplier 0% 100% 150% N/A Fiscal 2015 Bonus Award Actual(% of Salary) Actual($)T. Felmer 0% 80% 160% 0 % $0For 2015, the threshold, target, maximum and actual amounts for Mr. Williamson were as follows:Performance Measure (weighting) Threshold Target Maximum Fiscal 2015 Actual ResultIDS Segment Organic Sales Growth (20%) 2.6% 4.8% 6.9% ormore 1.7%IDS Segment IFO (80%)(millions) $176.1 $187.5 $199.5 ormore $117.6 Focal Point Multiplier 0% 100% 100% N/A Individual Performance Multiplier 0% 100% 150% N/A Fiscal 2015 Bonus Award Actual(% of Salary) Actual($)M. Williamson 0% 70% 140% 0% $0Mr. ShallerMr. Shaller's Offer Letter provided that he is eligible to participate in Brady's annual cash incentive plan, beginning in fiscal 2016, with a target bonusopportunity of 55% of base salary with upside potential to 110% of base salary depending on individual performance and Company results. Mr. Shallerreceived a $115,000 sign-on bonus in fiscal 2015, which was intended to compensate for the forfeiture of his existing incentive opportunity at his formeremployer.The target annual cash incentive award that would be payable to each executive officer is calculated as a percentage of the officer's eligiblecompensation defined as base salary in effect during the fiscal year, pro-rated to reflect base salary adjustments throughout the fiscal year.For fiscal 2015, the Committee reviewed the impact of unusual and unforeseen events on the payout of bonuses and determined that none would beconsidered in the calculation of bonus payouts. In general, the Committee regularly reviews and makes decisions on the impact of unusual events on a case-by-case basis and continually evaluates compensation policies and practices in light of ongoing developments and best practices in the area of incentivecompensation. Long-Term Equity Incentive AwardsThe Company has historically utilized a variety of incentive vehicles including performance-based stock options, time-based stock options,performance-based restricted shares, time-based restricted shares and time-based restricted stock units to attract, retain and motivate key employees whodirectly impact the long-term performance of the Company. The size and type of equity awards for executives other than the chief executive officer aredetermined annually by the Committee with input from the chief executive officer. With regard to the award size given to the chief executive officer, theCommittee uses its discretion in combination with market competitive information obtained periodically from Equilar Inc and, for fiscal 2015 in connectionwith the chief executive officer transition, the recommendation of its independent compensation consultant.For fiscal 2015, the Committee reviewed the Black-Scholes valuations of historical grants, median levels of equity awarded to similar positions at ourpeer companies and the estimated value of all proposed grants and then authorized fiscal 2015 awards consisting of a combination of time-based stockoptions and time-based restricted stock units.Time-based Stock Options: The annual grant of time-based stock options in fiscal 2015 was reviewed and approved by the Committee on September 9,2014, with an effective grant date of September 25, 2015. The grant price was the fair market value88Table of Contentsof the stock on the grant date, which was calculated as the average of the high and low stock price on that date. The time-based stock options generally vestone-third each year for the first three years and have a ten-year life.Time-based Restricted Stock Units: The annual grant of time-based restricted stock units for fiscal 2015 was reviewed and approved by the Committee onSeptember 9, 2014, with an effective grant date of September 25, 2014. The grant price was the final closing price on the date of grant. These time-basedrestricted stock units vest one-third each year for the first three years.The following is a summary of the annual grant of time-based stock options and time-based RSUs made to our named executive officers onSeptember 25, 2014:Fiscal 2015 Annual Equity GrantsNamed Officers Number of Time-BasedStock Options Grant DateFair Value Number ofTime-BasedRSUs Grant DateFair ValueJ. Nauman 130,592 $893,282 39,876 $903,590A. Pearce 34,825 $238,212 10,634 $240,966T. Felmer 47,159 $322,580 14,400 $326,304B. Curran 12,697 $86,851 3,877 $87,853N. Nelligan 21,766 $148,885 6,646 $150,598R. Shaller — $— — $—M. Williamson 34,825 $238,212 10,634 $240,966In addition, upon commencement of his appointment as President, Chief Executive Officer and Director on August 4, 2014, Mr. Nauman wasawarded 53,668 shares of time-based restricted stock units. The units vest in equal annual increments on the third, fourth and fifth anniversaries of the grantdate, with vesting accelerated in the event of death, disability, termination following a change of control, or termination by the Company without cause.Upon the completion of his service as Interim President and Chief Executive Officer on August 4, 2014, Mr. Felmer was awarded 5,000 shares oftime-based restricted stock units. The units vest upon the first anniversary of the grant date, with vesting accelerated in the event of death, disability,termination following a change of control, or upon termination of employment by the Company without cause.On October 1, 2014, Mr. Felmer was awarded 5,000 shares of time-based restricted stock units for retention purposes. The units will vest in equalincrements on the first, second, and third anniversaries of the grant date, with vesting accelerated in the event of death, disability, termination following achange of control, or upon termination of employment by the Company without cause.Effective November 28, 2014, Mr. Felmer was awarded 10,000 shares of time-based restricted stock units for retention purposes. The units will vestin equal increments on the third, fourth, and fifth anniversaries of the grant date, with vesting accelerated in the event of death, disability, or terminationfollowing a change of control.Upon commencement of his appointment as Senior Vice President and President - Identification Solutions effective June 22, 2015, Mr. Shaller wasawarded 20,992 shares of time-based restricted stock units. The units vest in equal increments on the first, second, third, fourth, and fifth anniversaries of thegrant date, with vesting accelerated in the event of death, disability, or termination following a change of control.Effective July 15, 2015, Messrs. Pearce and Curran and Ms. Nelligan were awarded 12,171, 11,565, and 11,765 shares of time-based restricted stockunits, respectively, to provide an incentive for retention. The units vest in increments of 10%, 20%, 30%, and 40% upon the first, second, third, and fourthanniversaries, respectively, of the grant date, with vesting accelerated in the event of death, disability, or termination following a change of control.Other Elements of CompensationHealth and Welfare Benefits: We provide subsidized health and welfare benefits which include medical, dental, life and accidental death or dismembermentinsurance, disability insurance and paid time off. Executive officers are entitled to participate in our health and welfare plans on generally the same terms andconditions as other employees, subject to limitations under applicable law. In addition, the Company provides employer-paid long-term care insurance andmaintains a supplemental executive disability policy for executives. The supplemental disability policy provides for Group Long Term Disability insurance(LTD) of up to 60% of pre-tax base salary and bonus, up to a monthly maximum benefit of $25,000. Brady Corporation pays the premiums for these benefits;therefore, these benefits are taxable to the executive.89Table of ContentsRetirement Benefits: Brady employees (including named executive officers) in the United States and certain expatriate employees working for itsinternational subsidiaries are eligible to participate in the Brady Corporation Matched 401(k) Plan (the “Matched 401(k) Plan”). In addition, namedexecutive officers in the United States and employees at many of our United States locations are also eligible to participate in the Brady Corporation FundedRetirement Plan (“Funded Retirement Plan”).Under the Funded Retirement Plan, the Company contributes 4% of the eligible earnings of each employee covered by the Funded Retirement Plan. Inaddition, participants may elect to have their annual pay reduced by up to 5% and have the amount of this reduction contributed to their Matched 401(k)Plan and matched with an additional 4% contribution by the Company. Participants may also elect to have up to another 45% of their eligible earningscontributed to the Matched 401(k) Plan (without an additional matching contribution by the Company and up to the maximum allowed by the IRS). Theassets of the Matched 401(k) Plan and Funded Retirement Plan credited to each participant are invested by the trustee of the Plans as directed by each planparticipant in a variety of investment funds as permitted by the Matched 401(k) Plan and the Funded Retirement Plan.Due to the IRS income limitations for participating in the Matched 401(k) Plan and the Funded Retirement Plan, the named executive officers areeligible to participate in the Brady Restoration Plan. The Brady Restoration Plan is a non-qualified deferred compensation plan that allows an equivalentbenefit to the Matched 401(k) Plan and the Funded Retirement Plan for named executive officer income above the IRS compensation limits.Benefits are generally payable upon the death, disability, or retirement of the participant, or upon termination of employment before retirement,although benefits may be withdrawn from the Matched 401(k) Plan and paid to the participant if required for certain emergencies. Under certain specifiedcircumstances, the Matched 401(k) Plan allows loans to be drawn on a participant's account. The participant is immediately fully vested with respect toemployee contributions; all other contributions become fully vested over a two-year period of continuous service for the Matched 401(k) Plan and after sixyears of continuous service for the Funded Retirement Plan.Deferred Compensation Arrangements: During fiscal 2002, the Company adopted the Brady Corporation Executive Deferred Compensation Plan(“Executive Deferred Compensation Plan”), under which executive officers, corporate staff officers and certain key management employees of the Companyare permitted to defer portions of their 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 Executive Deferred Compensation Plan are held in a Rabbi Trust and are invested by the trustee as directed by the participant in severalinvestment funds as permitted by the Executive Deferred Compensation Plan. The investment funds available in the Executive Deferred Compensation Planinclude Brady Corporation Class A Nonvoting Common Stock and various mutual funds that are provided in the Matched 401(k) Plan. On May 1, 2006, theplan was amended to require that deferrals into the Company's Class A Nonvoting Common Stock must remain in the Company's Class A NonvotingCommon Stock and be distributed in shares of the Company's Class A Nonvoting Common Stock.At least one year prior to termination of employment, the executive must elect whether to receive their account balance following termination ofemployment in a single lump sum payment or by means of distribution under an Annual Installment Method. If the executive does not submit an electionform or has not submitted one timely, then payment shall be made each year for a period of five years. The first payment must be one-tenth of the balanceheld; the second one-ninth; and so on, with the balance held in the Rabbi Trust reduced by each payment. Distributions of the Company Class A NonvotingCommon Stock are made in-kind; distributions of other assets are in cash.Effective January 1, 2008, the Executive Deferred Compensation Plan was amended and restated to comply with the provisions of Section 409A of theInternal Revenue Code. Amounts deferred prior to January 1, 2005 (which were fully vested under the terms of the plan), including past and future earningscredited thereon, will remain subject to the terms in place prior to January 1, 2005.Perquisites: Brady provides the named executive officers with the following perquisites that are not available to other non-executive employees:•Annual allowance for financial and tax planning•Company car or car allowance•Long-term care insurance•Personal liability insuranceStock Ownership RequirementsWe believe that the interests of shareholders and executives become aligned when executives become shareholders in possession of a meaningfulamount of Company stock. Furthermore, this stock ownership encourages positive performance behaviors and discourages executive officers from takingundue risk. In order to encourage our executive officers and directors to acquire and retain ownership of a significant number of shares of the Company'sstock, stock ownership requirements have been established.90Table of ContentsThe Board of Directors has established the following stock ownership requirements for our named executive officers: J. Nauman 5 times base salaryA. Pearce 3 times base salaryT. Felmer 3 times base salaryB. Curran 2 times base salaryH. Nelligan 2 times base salaryR. Shaller 3 times base salaryM. Williamson 30,000 sharesThe stock ownership requirement for each director is 5,000 shares of Company stock.There is no deadline to reach the required ownership levels, and Messrs. Curran, Felmer and Williamson had met and retained their respectiveownership levels as of fiscal 2015. If an executive does not meet the above ownership level or certain interim levels, the Committee may direct that theexecutive's after-tax payout on any incentive plans will be in Class A Nonvoting Common Stock to bring the executive up to the required level, and theexecutive may not sell any shares, other than to cover tax withholding requirements associated with the exercise or vesting of the equity award, until suchtime as they meet the requirements.The Committee reviews the actual stock ownership levels of each of the named executive officers on an annual basis to ensure the guidelines are met.For purposes of determining whether an executive meets the required ownership level, Company stock owned outright, Company stock held in the ExecutiveDeferred Compensation Plan, Company stock owned in the Employee 401(k) Plan or pension plan and time-based restricted stock or restricted stock units areincluded. In addition, vested stock options that are “in the money” are included.Insider Trading PolicyThe Company's Insider Trading Policy prohibits hedging and other monetization transactions in Company securities by officers, directors andemployees. The prohibition on hedging transactions includes financial instruments such as prepaid variable forwards, equity swaps, collars and exchangefunds. The Insider Trading Policy also prohibits the pledging of Company stock as collateral for loans or holding Company securities in a margin account byofficers, directors or employees.Employment and Change of Control AgreementsIn fiscal 2015, the Company did not have employment agreements with our executives. The Offer Letter entered into with Mr. Nauman on August 1,2014, provides that he is deemed an at at-will employee, but will receive a severance benefit equal to two times the sum of his base salary and target bonus inthe event his employment is terminated without cause or for good reason as described therein. The Offer Letter entered into with Mr. Shaller on June 22,2015, provides that he is deemed an at at-will employee, but will receive a severance benefit equal to his base salary plus target bonus in the event hisemployment is terminated without cause or for good reason as described therein.The Board of Directors of Brady Corporation approved change of control agreements for certain executive officers of the Company, including Messrs.Curran, Felmer and Williamson and Ms. Nelligan. Messrs. Pearce and Shaller were not covered by a Change of Control Agreement in fiscal 2015. Inconjunction with Mr. Shaller's Offer Letter, dated June 2, 2015, the Board of Directors approved a change of control agreement in the same form executed byother named executive officers of the Company described herein, which agreement was entered into on August 28, 2015. Effective September 11, 2015, theCompany entered into a Change of Control Agreement with Mr. Pearce. The agreements applicable to the covered named executive officers other than Mr.Nauman provide a payment of an amount equal to two times their annual base salary and two times the average bonus payment received in the three yearsimmediately prior to the date the change of control occurs in the event of termination or resignation upon a change of control. The agreements for Messrs.Felmer, and Williamson also provide for reimbursement of any excise taxes imposed, and all of the agreements provide for up to $25,000 of attorney fees toenforce the executive's rights under the agreement. Payments under the agreement will be spread over two years. See the section entitled "Appointment of J.Michael Nauman" above for a description of Mr. Nauman's Change of Control Agreement.Under the terms of the 2012 Omnibus Incentive Stock Plan, in the event of (a) the merger or consolidation of the Corporation with or into anothercorporation 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, allthen-unexercised stock options become fully exercisable and all restrictions placed on restricted stock and restricted stock units will lapse. If any stockoption is canceled subsequent to the91Table of Contentsevents described above, the Corporation or the corporation assuming the obligations of the Corporation, shall pay an amount of cash or stock equal to the in-the-money value of the canceled stock options.Non-Compete/Non-Solicitation/ConfidentialitySince fiscal 2013, agreements memorializing equity awards under the Company's 2012 Omnibus Incentive Stock Plan have contained non-competition,non-solicitation and confidential information covenants applicable to the award recipients. The confidential information covenant prohibits the use,disclosure, copying or duplication of the Company's confidential information other than in the course of authorized activities conducted in the course of therecipient's employment with the Company. The other covenants prohibit the recipient, for 12 months after termination of employment with the Company,from (i) performing duties for or as a competitor of the Company which are the same or similar to those performed by the recipient in the 24 months prior totermination of employment with the Company or (ii) inducing or encouraging employees, vendors or clients of the Company to breach, modify or terminaterelationships or agreements they had with the Company during the 24 month period prior to the recipient's termination of employment. See the sectionentitled "Appointment of J. Michael Nauman" above for a description of the additional covenants applicable to Mr. Nauman.Compliance with Tax Regulations Regarding Executive CompensationSection 162(m) of the Internal Revenue Code, added by the Omnibus Budget Reconciliation Act of 1993, generally disallows a tax deduction to publiccompanies for compensation over $1 million paid to the Company's chief executive officer or 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 currentlyconstructed, is not likely to generate significant nondeductible compensation in excess of these limits. The Committee will continue to review these taxregulations as they apply to the Company's executive compensation program. It is the Committee's intent to preserve the deductibility of executivecompensation to the extent reasonably practicable and to the extent consistent with its other compensation objectives.The Committee also considers it important to retain flexibility to design compensation programs, even where compensation payable under suchprograms may not be fully deductible, if such programs effectively recognize a full range of criteria important to the Company's success and result in a gain tothe Company that would outweigh the limited negative tax effect.Management Development and Compensation Committee Interlocks and Insider ParticipationDuring fiscal 2015, the Board's Management Development and Compensation Committee was composed of Messrs. Balkema, Harris, Ms. Bruno andMs. Gioia, and Mr. Richardson from August 1, 2014 to November 19, 2014. None of these persons has at any time been an employee of the Company or anyof its subsidiaries. There are no relationships among the Company's executive officers, members of the Committee or entities whose executives serve on theBoard that require disclosure under applicable SEC regulations.Management Development and Compensation Committee ReportThe Committee has reviewed and discussed the Compensation Discussion and Analysis with management; and based on the review and discussions,the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's annual report on Form10-K.Gary Balkema, ChairmanNancy GioiaFrank HarrisElizabeth P. BrunoCompensation Policies and PracticesThe Company's compensation policies for executive officers and all other employees are designed to avoid incentives to create undue risks to theCompany. The Company's compensation programs are weighted towards offering long-term incentives that reward sustainable performance; do not offersignificant short-term incentives that might drive high-risk investments at the expense of the long-term Company value; and are set at reasonable andsustainable levels, as determined by a review of the Company's economic position, as well as the compensation offered by comparable companies. Under theoversight of its Audit and Management Development and Compensation Committees, the Company reviewed its compensation policies, practices andprocedures for all employees to evaluate and ensure that they do not foster risk taking beyond that deemed acceptable within the Company's businessmodel. The Company believes that its compensation policies, practices and procedures do not encourage employees to take unnecessary or excessive risksthat are reasonably likely to have a material adverse effect on the Company.92Table of ContentsSummary Compensation TableThe following table sets forth compensation awarded to, earned by, or paid to the named executive officers, who served as executive officers during thefiscal year ended July 31, 2015, for services rendered to the Company and its subsidiaries during the fiscal years ended July 31, 2015, July 31, 2014 andJuly 31, 2013.Name and Principal Position FiscalYear Salary($) Bonus($) RestrictedStock Awardsand RSUs($)(1) OptionAwards($)(2) Non-EquityIncentive PlanCompensation($)(3) All OtherCompensation($)(4) Total($)J.M. Nauman, President, CEO, &Director (5) 2015 $649,039 — $2,287,151 $893,282 $— $86,716 $3,916,188A.J. Pearce, Senior VP & CFO (5) 2015 290,121 — 540,982 238,212 — 43,418 1,112,733T.J. Felmer 2015 386,937 — 820,304 $322,580 — 57,364 1,587,185Senior VP, President-Workplace Safety,Former CFO 2014 384,397 — 477,221 325,001 — 59,842 1,246,461 2013 377,500 — — 422,007 — 54,164 853,671B.N. Curran, VP-Digital Business &CIO (5) 2015 285,053 — 372,930 86,851 — 57,459 802,293H.R. Nelligan, Senior VP-HR (5)(6) 2015 290,000 25,000 440,966 148,885 — 49,809 954,660R.R. Shaller, Senior VP & President -Identification Solutions (5)(7) 2015 26,154 115,000 524,590 — — 1,749 667,493M.O. Williamson 2015 383,675 — 240,966 238,212 — 77,046 939,899President - IDS & VP - BradyCorporation 2014 383,675 — 242,750 240,003 31,422 50,747 948,597 2013 380,666 — — 319,984 — 62,067 762,717 (1)Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year forrestricted stock awards and restricted stock units ("RSUs"). The grant date fair value is calculated based on the number of shares of Common Stockunderlying the restricted stock awards and RSUs, times the average of the high and low trade prices of Brady Common Stock on the date of grant. Theactual value of a restricted stock award or RSU will depend on the market value of the Company’s Common Stock on the date the stock is sold.(2)Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year fortime-based stock options. The assumptions used to determine the value of the awards, including the use of the Black-Scholes method of valuation bythe Company, are discussed in Note 1 of the Notes to Consolidated Financial Statements of the Company contained in Item 8 of this Form 10-K, forthe fiscal year ended July 31, 2015. The actual value, if any, which an option holder will realize upon the exercise of an option will depend on theexcess of the market value of the Company’s Common Stock over the exercise price on the date the option is exercised, which cannot be forecastedwith any accuracy.(3)Reflects incentive plan compensation earned during the listed fiscal years, which was paid during the next fiscal year.(4)The amounts in this column include: matching contributions to the Company’s Matched 401(k) Plan, Funded Retirement Plan and Restoration Plan,the costs of group term life insurance for each named executive officer, use of a Company car or car allowance, and associated expenses, the cost oflong-term care insurance, the cost of personal liability insurance, the cost of disability insurance and other perquisites. The perquisites may includerelocation assistance, annual allowances for financial and tax planning and the cost of an annual physical health exam.(5)Fiscal 2015 is the first year during the terms of Messrs. Nauman, Pearce, Curran, and Shaller and Ms. Nelligan in which the criteria as a NamedExecutive Officer were met.(6)In September 2014, Ms. Nelligan received the second installment of her sign-on bonus in the amount of $25,000 in conjunction with her appointmentas Senior Vice President, Human Resources, effective November 18, 2013.(7)Mr. Shaller received a sign-on bonus of $115,000 in fiscal 2015 in conjunction with his appointment as Senior Vice President and President -Identification Solutions, effective June 22, 2015.93Table of ContentsName FiscalYear RetirementPlanContributions($) CompanyCar($) GroupTermLifeInsurance($) Long-termCareInsurance($) Long-TermDisabilityInsurance($) Relocation ($) Other($) Total($)J.M. Nauman (1) 2015 $23,885 $17,308 $975 $4,860 $4,282 $27,676 $7,730 $86,716A.J. Pearce (1) 2015 24,854 15,313 424 — 2,727 — 100 43,418T.J. Felmer 2015 30,955 18,000 747 3,737 3,225 — 700 57,364 2014 30,505 20,159 1,102 4,048 4,028 — — 59,842 2013 30,200 14,940 791 3,737 3,436 — 1,060 54,164B.N. Curran (1) 2015 22,804 27,069 526 3,737 3,123 — 200 57,459H.R. Nelligan (1) 2015 25,200 18,000 457 2,491 3,422 — 239 49,809R.R. Shaller (1) 2015 — 1,383 — — 91 275 — 1,749M. O.Williamson (2) 2015 33,208 17,668 761 5,501 3,708 — 16,200 77,046 2014 30,694 8,925 1,046 5,959 4,123 — — 50,747 2013 40,581 10,847 798 5,501 3,916 — 424 62,067(1) Fiscal 2015 was the first year during the terms of Messrs. Nauman, Pearce, Curran, and Shaller and Ms. Nelligan in which the criteria as a NamedExecutive Officer were met.(2) Mr. Williamson resigned as Vice President and President - Identification Solutions effective February 9, 2015 and his employment with the Companyterminated on July 31, 2015 in connection with his retirement. Payment by the Company for $15,000 of outplacement service fees incurred inconjunction with his separation are included under the "Other " column in the table above.94Table of ContentsGrants of Plan-Based Awards for 2015The following table summarizes grants of plan-based awards made during fiscal 2015 to the named executive officers. GrantDate CompensationCommitteeApprovalDate Estimated Future Payouts UnderNon-Equity Incentive Plan Awards (1) All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions All OtherStock Awards:Number ofShares ofStock or Units Exerciseor BasePrice ofStockorOptionAwards GrantDate FairValueofStock andOptionAwardsName Threshold ($) Target ($) Maximum ($) (#) (#) (2) ($)J.M. Nauman $— $675,000 $1,350,000 8/4/2014 8/1/2014 — — — 53,668(3)$25.78 $1,383,561 9/25/2014 9/9/2014 — — — 130,592 39,876 22.66 1,796,873A.J. Pearce — 180,000 360,000 9/25/2014 9/9/2014 — — — 34,825 10,634 22.66 479,178 7/15/2015 7/14/2015 — — — 12,171(4)24.65 300,015T.J. Felmer — 309,550 619,100 8/4/2014 8/1/2014 — — — 5,000(5)25.78 128,900 9/25/2014 9/9/2014 — — — 47,159 14,400 22.66 648,884 10/1/2014 10/1/2014 — — — 5,000(6)22.56 112,800 11/28/2014 11/18/2014 — — — 10,000(7)25.23 252,300B.N. Curran — 171,032 342,063 9/25/2014 9/9/2014 — — — 20,678 3,877 22.66 174,704 7/15/2015 7/14/2015 — — — 11,565(4)24.65 285,077H.R. Nelligan — 145,000 290,000 9/25/2014 9/9/2014 — — — 21,766 6,646 22.66 299,483 7/15/2015 7/14/2015 — — — 11,765(4)24.65 290,007R.R. Shaller — — 6/22/2015 6/1/2015 20,992(8)24.99 524,590M.O.Williamson — 268,573 537,145 9/25/2014 9/9/2014 — — — 34,825 10,634 22.66 479,178 (1)At its September 2014 meeting, the Management Development and Compensation Compensation Committee approved the values of the annual cashincentive award under the Company's annual cash incentive plan. The structure of the plan is described in the Compensation Discussion and Analysisabove and was set prior to the beginning of the fiscal year. Target payout levels can range from 0 to 200 percent of base salary. In conjunction withMr. Shaller's Offer Letter, dated June 2, 2015, the Board of Directors approved that he is eligible to participate in Brady's annual cash incentive plan,beginning in fiscal 2016, with a target bonus opportunity of 55% of base salary with upside potential to 110% of base salary depending on individualperformance and Company results.(2)The exercise price and base price is the average of the high and low sale prices of the Company’s Class A Common Stock as reported by the New YorkStock Exchange on the date of the grant.(3)Represents 53,668 shares of time-based restricted stock units awarded to Mr. Nauman effective August 4, 2014 at a fair value of $25.78 per share uponhis appointment as President, Chief Executive Officer and Director.(4)Represents shares of time-based restricted stock units awarded to Messrs. Pearce and Curran and Ms. Nelligan on July 15, 2015 at a fair value of$24.65 for retention purposes.(5)Represents 5,000 shares of time-based restricted stock units awarded to Mr. Felmer on August 4, 2014, the date of the end of his term as InterimPresident and Chief Executive Officer, at a fair value of $25.78.(6)Represents 5,000 shares of time-based restricted stock units awarded to Mr. Felmer on October 1, 2014 at a fair value of $22.56 for retention purposes.(7)Represents 10,000 shares of time-based restricted stock units awarded to Mr. Felmer on November 28, 2014 at a fair value of $25.23 for retentionpurposes.(8)Represents 20,992 shares of time-based restricted stock units awarded to Mr. Shaller effective June 22, 2015 at a fair value of $24.99 per share uponhis appointment as Senior Vice President and President - Identification Solutions.95Table of ContentsOutstanding Equity Awards at 2015 Fiscal Year End Option Awards Stock AwardsName Number ofSecuritiesUnderlyingUnexercisedOptionsExercisable(#) Number ofSecuritiesUnderlyingUnexercisedOptionsUnexercisable(#) OptionExercisePrice($) OptionExpiration Date Number of Units of Stock ThatHave Not Vested(#) MarketValue of Units ofStock ThatHave Not Vested($)J.M. Nauman — 130,592(8)$22.66 9/25/2024 53,668(6)$1,262,271 39,786(9)937,884 A.J. Pearce 5,000 $37.83 11/30/2015 5,000 38.19 11/30/2016 5,000 38.31 12/4/2017 20,000 36.07 7/22/2018 5,000 20.95 12/4/2018 7,000 28.73 9/25/2019 10,000 29.10 9/24/2020 9,000 27.00 9/30/2021 6,000 3,000(1)30.21 9/21/2022 1,508 3,015(2)31.07 9/20/2023 — 34,825(8)22.66 9/25/2024 868(3)$20,415 10,634(9)250,112 12,171(13)286,262 T.J. Felmer 25,000 — 37.83 11/30/2015 25,000 — 38.19 11/30/2016 25,000 — 38.31 12/4/2017 25,000 — 20.95 12/4/2018 23,334 29.78 8/3/2019 35,000 — 28.73 9/25/2019 11,667 — 28.35 8/2/2020 40,000 — 29.10 9/24/2020 35,000 — 27.00 9/30/2021 30,334 15,166(1)30.21 9/21/2022 11,288 22,574(2)31.07 9/20/2023 — 47,159(8)22.66 9/25/2024 7,053(3)165,887 5,000(7)117,600 14,400(9)338,688 5,000(10)117,600 10,000(11)235,200 B.N. Curran 12,000 — $37.83 11/30/2015 12,000 — 38.19 11/30/2016 15,000 — 38.31 12/4/2017 15,000 — 20.95 12/4/2018 16,667 — 29.78 8/3/2019 96Table of Contents 25,000 — 28.73 9/25/2019 5,556 — 28.35 8/2/2020 15,000 — 29.10 9/24/2020 13,000 — 27.00 9/30/2021 8,667 4,333(1)30.21 9/21/2022 3,039 6,078(2)31.07 9/20/2023 — 12,697(8)22.66 9/25/2024 1,899(3)$44,664 3,877(9)91,187 11,565(13)272,009 H.R. Nelligan 5,568 11,135(4)$29.51 11/18/2023 — 21,766(8)22.66 9/25/2024 3,402(5)$80,015 6,646(9)156,314 11,765(13)276,713 R.R. Shaller 20,992(12)$493,732 M.O.Williamson 30,000 — 33.89 8/1/2015 25,000 — 37.83 11/30/2015 25,000 — 38.19 11/30/2016 25,000 — 38.31 12/4/2017 8,334 — 20.95 12/4/2018 23,334 — 29.78 8/3/2019 35,000 — 28.73 9/25/2019 10,000 — 28.35 8/2/2020 35,000 — 29.10 9/24/2020 30,000 — 27.00 9/30/2021 23,000 11,500(1)30.21 9/21/2022 8,336 16,670(2)31.07 9/20/2023 (1)The remaining shares will vest on September 21, 2015.(2)One-half of the options vest on September 20, 2015 and the remaining options vest on September 20, 2016.(3)This award represents time-based restricted stock units awarded on September 20, 2013 as part of the annual fiscal 2014 equity grant. One-half of theunits vest on September 20, 2015 and the remaining units vest on September 20, 2016.(4)Ms. Nelligan was granted 16,703 stock options on November 18, 2013, the date she joined the Company as an officer. One-half of the remainingoptions vest on November 18, 2015 and the remaining options vest on November 18, 2016.(5)Ms. Nelligan was awarded 5,104 shares of time-based restricted stock units on November 18, 2013, the date she joined the Company as an officer.One-half of the remaining units vest on November 18, 2015 and the remaining units vest on November 18, 2016.(6)Mr. Nauman was awarded 53,668 shares of time-based restricted stock units on August 4, 2014, the effective date of his appointment as President,Chief Executive Officer, and Director of the Company. One-third of the units vest on August 4, 2017, one-third of the units vest on August 4, 2018,and one-third of the units vest on August 4, 2019.(7)Mr. Felmer was awarded 5,000 shares of time-based restricted stock units effective August 4, 2014, the date of the end of his term as Interim Presidentand Chief Executive Officer. The units vested on August 4, 2015.(8)One-third of the options vest on September 25, 2015, one-third of the options vest on September 25, 2016, and one-third of the options vest onSeptember 25, 2017.(9)This award represents time-based restricted stock units awarded on September 25, 2014 as part of the annual fiscal 2015 equity grant. One-third of theunits vest on September 25, 2015, one-third of the units vest on September 25, 2016, and one-third of the units vest on September 25, 2017.97Table of Contents(10)Effective October 1, 2014, Mr. Felmer was awarded 5,000 shares of time-based restricted stock for retention purposes. One-third of the units vest onOctober 1, 2015, one-third of the units vest on October 1, 2016, and one-third of the units vest on October 1, 2017.(11)Effective November 28, 2014, Mr. Felmer was awarded 10,000 shares of time-based restricted stock for retention purposes. One-third of the units veston November 28, 2017, one-third of the units vest on November 28, 2018, and one-third of the units vest on November 28, 2019.(12)Mr. Shaller was awarded 20,992 shares of time-based restricted stock units on June 22, 2015, the effective date of his appointment as Senior VicePresident and President - Identification Solutions. One-fifth of the units vest on the first, second, third, fourth, and fifth anniversaries of the grantdate, respectively.(13)This award represents time-based restricted stock units awarded to Messrs. Pearce and Curran and Ms. Nelligan on July 15, 2015 for retentionpurposes. Ten percent of the units vest on July 15, 2016, twenty percent of the units vest on July 15, 2017, thirty percent of the units vest onJuly 15, 2018, and fourty percent of the units vest on July 15, 2019.Option Exercises and Stock Vested for Fiscal 2015The following table summarizes option exercises and the vesting of restricted stock during fiscal 2015 to the named executive officers. Option Awards Stock AwardsName Number of SharesAcquired onExercise (#) Value Realizedon Exercise ($) Number of SharesAcquired on Vesting Value Realizedon Vesting ($)J.M. Nauman — $— — $—A.J. Pearce — $— 435 $10,005T.J. Felmer — $— 8,527 $208,721B.N. Curran — $— 950 $21,850H.R. Nelligan — $— 1,702 $40,405R.R. Shaller — $— — $—M.O. Williamson — $— 2,605 $59,915Non-Qualified Deferred Compensation for Fiscal 2015The following table summarizes the activity within the Executive Deferred Compensation Plan and the Brady Restoration Plan during fiscal 2015 forthe named executive officers. Name ExecutiveContributions inLast Fiscal Year($) RegistrantContributions inLast Fiscal Year($) AggregateEarnings inLast Fiscal Year($) AggregateWithdrawals/Distributions($) AggregateBalance atLast Fiscal YearEnd ($)J.M. Nauman $4,977 $2,900 $(1) $— $7,876A.J. Pearce 56,470 3,325 5,432 — 447,813T.J. Felmer 5,078 10,155 252,621 — 2,826,205B.N. Curran 1,002 2,004 15,712 — 457,502H.R. Nelligan 2,200 4,400 (1) — 6,599R.R. Shaller — — — — —M.O. Williamson 6,204 12,408 35,943 — 1,231,415See discussion of the Company’s nonqualified deferred compensation plan in the Compensation Discussion and Analysis. The executive contributionamounts reported here are derived from the salary and non-equity incentive plan compensation columns of the Summary Compensation Table. The registrantcontribution amounts reported here are reported in the all other compensation columns of the Summary Compensation Table.Potential Payments Upon Termination or Change in ControlAs described in the Employment and Change of Control Agreements section of the Compensation Discussion and Analysis above, the Company hasentered into separate severance agreements and change of control agreements with certain named executive officers.98Table of ContentsThe terms of severance arrangements are triggered if (i) the executive’s employment with the Company is involuntarily terminated by the Companywithout cause or (ii) the executive’s employment with the Company is voluntarily terminated by the executive subsequent to (a) any reduction in the total ofthe executive’s annual base salary and target bonus without the prior written agreement of the executive, (b) a significant diminution in the authority, dutiesor responsibilities of the executive without the executive’s prior written agreement, or (c) the relocation of the executive’s position to a principal worklocation more than 50 miles from Milwaukee, Wisconsin and that is also further from the executive’s principal place of residence, without the executive’sprior written agreement. Should Messrs. Nauman’s or Shaller’s employment be terminated under the circumstances described above, the Company would payMr. Nauman a severance benefit equal to two times the sum of his base salary and target bonus and would pay Mr. Shaller a severance benefit equal to hisbase salary plus target bonus. The other named executive officers are not covered by severance arrangements.The terms of the change of control agreement are triggered if, within a 24 month period beginning with the date a change of control occurs, (i) theexecutive’s employment with the Company is involuntarily terminated other than by reason of death, disability or cause or (ii) the executive’s employmentwith the Company is voluntarily terminated by the executive subsequent to (a) any reduction in the total of the executive’s annual base salary, exclusive offringe benefits, and the executive’s target bonus in comparison with the executive’s annual base salary and target bonus immediately prior to the date thechange of control occurs, (b) a significant diminution in the responsibilities or authority of the executive in comparison with the executive’s responsibilityand 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 toa principal work location more than 50 miles from the executive’s principal work location immediately prior to the date the change of control occurs.Following termination due to a change in control, executives shall be paid a multiplier of their annual base salary in effect immediately prior to thedate the change of control occurs, plus a multiplier of their average bonus payment received over a three-year period prior to the date the change of controloccurs. For Mr. Nauman, a multiplier of the target bonus amount in effect immediately prior to the date change of control applies instead of the average bonuspayment received over the prior three-year period. For Messrs. Felmer and Williamson, the Company will also reimburse the executive for any excise taxincurred by the executive as a result of Section 280(g) of the Internal Revenue Code. If the payments upon termination due to change of control result in anyexcise tax incurred by Messrs. Nauman, and Curran and Ms. Nelligan as a result of Section 280(g) of the Internal Revenue Code, the officer will be solelyresponsible for such excise tax. The Company will also reimburse a maximum of $25,000 of legal fees incurred by the executive in order to enforce thechange of control agreement, in which the executive prevails.The following information and tables set forth the amount of payments to each named executive officer in the event of termination of employment as aresult of a change of control. See the section entitled "Retirement of Matthew Williamson" above in the Compensation Discussion and Analysis section for adescription of the severance benefits paid to Mr. Williamson upon his resignation. No other employment agreements have been entered into between theCompany and any of the named executive officers in fiscal year 2015.Assumptions and General PrinciplesThe following assumptions and general principles apply with respect to the tables that follow in this section.•The amounts shown in the tables assume that each named executive officer terminated employment on July 31, 2015. Accordingly, the tables reflectamounts earned as of July 31, 2015, and include estimates of amounts that would be paid to the named executive officer upon the termination oroccurrence of a change in control. The actual amounts that would be paid to a named executive officer can only be determined at the time oftermination.•The tables below include amounts the Company is obligated to pay the named executive officer as a result of the severance agreement and executedchange in control agreement. The tables do not include benefits that are paid generally to all salaried employees or a broad group of salariedemployees. Therefore, the named executive officers would receive benefits in addition to those set forth in the tables.•A named executive officer is entitled to receive base salary earned during his term of employment regardless of the manner in which the namedexecutive officer’s employment is terminated. As such, this amount is not shown in the tables.99Table of ContentsJ. Michael NaumanThe following table shows the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2015 and thenamed executive officer had to legally enforce the terms of the agreement.Base Salary ($)(1) Bonus ($) (2) Restricted StockUnit AccelerationGain $(3) Stock OptionAccelerationGain $ (4) Legal FeeReimbursement($) (5) Total ($)$1,350,000 $1,350,000 $2,200,155 $112,309 $25,000 $5,037,464(1)Represents two times the base salary in effect at July 31, 2015.(2)Represents two times the target bonus amount in effect at July 31, 2015.(3)Represents the closing market price of $23.52 on 93,544 unvested RSUs that would vest due to the change in control.(4)Represents the difference between the closing market price of $23.52 and the exercise price on 130,592 unvested stock options in-the-money thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.The following table shows the amount payable assuming that the severance terms of Mr. Nauman's Offer Letter were triggered on July 31, 2015 and thenamed executive officer had to legally enforce the severance terms of the agreement.Base Salary ($)(1) Bonus ($) (2) Restricted StockUnit AccelerationGain $(3) Total ($)$1,350,000 $1,350,000 $1,262,271 $3,962,271(1)Represents two times the base salary in effect at July 31, 2015.(2)Represents two times the target bonus amount in effect at July 31, 2015.(3)Represents the closing market price of $23.52 on 53,668 unvested RSUs that would vest due to termination without cause.Aaron J. PearceThe following table shows the amount payable assuming a change of control occurred on July 31, 2015 and the named executive officer had to legallyenforce the terms of the equity agreements.Restricted Stock Unit Acceleration Gain$ (1) Stock Option Acceleration Gain $ (2) Total ($)$556,789 $29,949 $586,738(1)Represents the closing market price of $23.52 on 23,673 unvested RSUs that would vest due to the change in control.(2)Represents the difference between the closing market price of $23.52 and the exercise price on 34,825 unvested stock options in-the-money thatwould vest due to change in control.Thomas J. FelmerThe following table shows the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2015 and thenamed executive officer had to legally enforce the terms of the agreement. Base Salary ($)(1) Bonus ($) (2) Restricted StockUnit AccelerationGain $ (3) Stock OptionAccelerationGain $ (4) Excise TaxReimbursement($) Legal FeeReimbursement($) (5) Total ($)$773,874 $— $974,975 $40,557 $— $25,000 $1,814,406(1)Represents two times the base salary in effect at July 31, 2015.(2)Represents two times the average bonus payment received in the last three fiscal years ended July 31, 2015, 2014 and 2013.(3)Represents the closing market price of $23.52 on 41,453 unvested RSUs that would vest due to the change in control.(4)Represents the difference between the closing market price of $23.52 and the exercise price on 47,159 unvested stock options in-the-money thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed. 100Table of ContentsBentley N. CurranThe following table shows the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2015 and thenamed executive officer had to legally enforce the terms of the agreement.Base Salary ($)(1) Bonus ($) (2) Restricted StockUnit AccelerationGain $ (3) Stock OptionAccelerationGain $ (4) Legal FeeReimbursement($) (5) Total ($)$570,106 $— $407,884 $10,919 $25,000 $1,013,909(1)Represents two times the base salary in effect at July 31, 2015.(2)Represents two times the average bonus payment received in the last three fiscal years ended July 31, 2015, 2014 and 2013.(3)Represents the closing market price of $23.52 on 17,342 unvested RSUs that would vest due to the change in control.(4)Represents the difference between the closing market price of $23.52 and the exercise price on 12,697 unvested stock options in-the-money thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.Helena R. NelliganThe following table shows the amount payable assuming that the terms of the change of control agreement were triggered on July 31, 2015 and thenamed executive officer had to legally enforce the terms of the agreement.Base Salary ($) (1) Bonus ($) (2) Restricted StockUnit AccelerationGain $(3) Stock OptionAccelerationGain $ (4) Legal FeeReimbursement($) (5) Total ($)$580,000 $— $489,522 $18,719 $25,000 $1,113,241(1)Represents two times the base salary in effect at July 31, 2015.(2)Represents two times the average bonus payment received in the last three fiscal years ended July 31, 2015, 2014 and 2013.(3)Represents the closing market price of $23.52 on 20,813 unvested RSUs that would vest due to the change in control.(4)Represents the difference between the closing market price of $23.52 and the exercise price on 21,766 unvested stock options in-the-money thatwould vest due to change in control.(5)Represents the maximum reimbursement of legal fees allowed.Russell R. ShallerThe following table shows the amount payable assuming a change of control occurred on July 31, 2015 and the named executive officer had to legallyenforce the terms of the equity agreements.Restricted Stock Unit Acceleration Gain$ (1) Stock Option Acceleration Gain$ (2) Total ($)$493,732 $— $493,732(1)Represents the closing market price of $23.52 on 20,992 unvested RSUs that would vest due to the change in control.(2)There are no unvested stock options at July 31, 2015.The following table shows the amount payable assuming that the severance terms of Mr. Shaller's Offer Letter were triggered on July 31, 2015 and thenamed executive officer had to legally enforce the severance terms of the agreement.Base Salary ($)(1) Bonus ($) (2) Total ($)$340,000 $187,000 $527,000(1)Represents one times the base salary in effect at July 31, 2015.(2)Represents one times the target bonus amount in effect at July 31, 2015.Matthew O. Williamson Mr. Williamson resigned and retired as Vice President and President - Identification Solutions of the Company effective February 9, 2015, andremained employed by the Company until July 31, 2015, the date of separation. The Company entered into a written agreement with Mr. Williamson inconnection with his retirement that provided for payment of his salary and benefits through July 31, 2015, and a severance payment of $447,620 to be paidin equal installments throughout the 24 months following his separation from employment on July 31, 2015. No vesting accelerations of unvested restrictedstock or unvested stock options resulted in any payment under his separation agreement.101Table of ContentsPotential Payments Upon Termination Due to Death or DisabilityIn the event of termination due to death or disability, all unexercised, unexpired stock options would immediately vest and all restricted stock awardswould immediately become unrestricted and fully vested. The following table shows the amount payable to the named executive officers should this eventoccur on July 31, 2015.Name Unvested RestrictedStock Units as ofJuly 31, 2015 Restricted StockUnit AccelerationGain $ (1) Unvested Stock OptionsIn-the Money as ofJuly 31, 2015 Stock OptionAccelerationGain $ (2)J. Michael Nauman 93,544 $2,200,155 130,592 $112,309A.J. Pearce 23,673 $556,789 34,825 $29,949T.J. Felmer 41,453 $974,975 47,159 $40,557B.N. Curran 17,342 $407,884 12,697 $10,919H.R. Nelligan 20,813 $489,522 21,766 $18,719R.R. Shaller 20,992 $493,732 — $—M.O. Williamson — $— — $—(1)Represents the closing market price of $23.52 on unvested awards that would vest due to death or disability.(2)Represents the difference between the closing market price of $23.52 and the exercise price on unvested stock options in-the-money that would vestdue to death or disability.Potential Payments Upon Termination Without CauseIn the event of termination without cause, as defined in the officer's Offer Letter or in the officer's equity agreements, as applicable, certain restrictedstock awards would immediately become unrestricted and fully vested. The following table shows the amount payable to the named executive officers shouldthis event occur on July 31, 2015.Name Unvested RestrictedStock Units as ofJuly 31, 2015 Restricted Stock UnitAccelerationGain $ (1)J. Michael Nauman 53,668 $1,262,271A.J. Pearce — $—T.J. Felmer 10,000 $235,200B.N. Curran — $—H.R. Nelligan — $—R.R. Shaller — $—M.O. Williamson — $—(1)Represents the closing market price of $23.52 on unvested awards that would vest due to termination without cause.Compensation of DirectorsTo ensure competitive compensation for the Directors, surveys prepared by various consulting firms and the National Association of CorporateDirectors are reviewed by the Corporate Governance Committee and the Management Development and Compensation Committee in makingrecommendations to the Board of Directors regarding Director compensation. Directors who are employees of the Company receive no additionalcompensation for service on the Board or on any committee of the Board. In fiscal 2015, the annual cash retainer paid to non-management Directors was$45,000. The remaining components of Director compensation in fiscal 2015 included $10,000 for each committee chair ($15,000 for the Audit CommitteeChair) and $1,500 plus expenses for each meeting of the Board or any committee thereof, which they attended and were a member or $1,000 for single issuetelephonic committee meetings of the Board. Directors also received $1,000 for each meeting they attended of any committee of which they were not amember. In addition, non-management Directors are eligible to receive compensation of up to $1,000 per day for special assignments required bymanagement or the Board of Directors, so long as the compensation does not impair independence and is approved as required by the Board.On September 10, 2015, based on the recommendation of its independent compensation consultant, Meridian Compensation Partners, the Boardapproved revisions in the compensation structure of Directors, which will become effective following the 2015 Annual Meeting of Shareholders. The annualcash retainer paid to non-management Directors will be $60,000. Each member of the Audit Committee will receive an annual retainer of $15,000, with theChair to receive an additional annual retainer of $15,000; each member of the Management Development and Compensation Committee will receive anannual retainer of $12,000, with102Table of Contentsthe Chair to receive an additional annual retainer of $12,000; and each member of the Corporate Governance, Finance and Technology Committees willreceive an annual retainer of $10,000, with the Chair of each such committee to receive an additional annual retainer of $10,000. These changes incompensation structure will result in the discontinuance of meeting fees.In fiscal 2015, the Lead Independent Director was paid an annual fee of $50,000, consistent with the evolving role of independent board leadership andthe enhanced responsibilities of the position. Mr. Goodkind served as Lead Independent Director in fiscal 2015, and beginning in September 2015,commenced service as Chair of the Board. The fiscal 2016 annual fee for the Chair of the Board is $50,000.Under the terms of the Brady Corporation 2012 Omnibus Incentive Stock Plan, 5,500,000 shares of the Company's Class A Common Stock have beenauthorized for issuance, and the Board has full and final authority to designate the non-management Directors to whom awards will be granted, the date onwhich awards will be granted and the number of shares of stock covered by each grant.On September 10, 2014, the Board approved an annual stock-based compensation award of 4,250 time-based stock options (having a grant date fairvalue of $6.94 per share) and 1,450 unrestricted shares of Class A Common Stock (having a grant date fair value of $22.57 per share), for each non-management Director, effective September 25, 2014.On February 17, 2015, Mr. Sirkin was appointed to the Board of Directors, and in connection with his appointment, the Board approved an annualstock-based compensation award of 4,250 time-based stock options (having a grant date fair value of $8.00 per share), and 1,450 time-based restricted stockunits of Class A Common Stock (having a grant date fair value of $27.24), for Mr. Sirkin, effective March 3, 2015.Directors are also eligible to defer portions of their fees into the Brady Corporation Director Deferred Compensation Plan (“Director DeferredCompensation Plan”), the value of which is measured by the fair value of the underlying investments. The assets of the Director Deferred Compensation Planare held in a Rabbi Trust and are invested by the trustee as directed by the participant in several investment funds as permitted by the Director DeferredCompensation Plan. The investment funds available in the Director Deferred Compensation Plan include Brady Corporation Class A Nonvoting CommonStock and various mutual funds that are provided in the Employee 401(k) Plan.At least one year prior to termination from the Board, the Director must elect whether to receive his/her account balance following termination in asingle lump sum payment or by means of distribution under an Annual Installment Method. If the Director does not submit an election form or has notsubmitted one timely, then payment shall be made each year for a period of ten years. The first payment must be one-tenth of the balance held; the secondone-ninth; and so on, with the balance held in the Trust reduced by each payment. Distributions of the Company Class A Nonvoting Common Stock aremade in-kind; distributions of other assets are in cash.Effective January 1, 2008, the Director Deferred Compensation Plan was amended and restated to comply with the provisions of Section 409A of theInternal Revenue Code. On May 21, 2014, the Director Deferred Compensation Plan was amended to allow participants to transfer funds from otherinvestment funds into the Company’s Class A Nonvoting Common Stock. Funds are not permitted to be transferred from the Company’s Class A NonvotingCommon Stock into other investment funds until six months after the Director resigns from the Board.Director Compensation Table — Fiscal 2015Name Fees Earnedor Paid inCash ($) OptionAwards ($) (1) StockAwards ($) (2) Total ($)Patrick W. Allender $103,500 $29,514 $32,727 $165,741Gary S. Balkema 105,000 29,514 32,727 167,241Elizabeth P. Bruno 69,500 29,514 32,727 131,741Nancy L. Gioia 91,000 29,514 32,727 153,241Conrad G. Goodkind 157,500 29,514 32,727 219,741Frank W. Harris 83,500 29,514 32,727 145,741Bradley C. Richardson 112,000 29,514 32,727 174,241Harold L. Sirkin (3) 36,500 33,990 39,498 109,988 103Table of Contents(1)Represents the grant date fair value computed in accordance with accounting guidance for equity grants made in fiscal 2015 for time-based stockoptions. The assumptions used to determine the value of the option awards, including the use of the Black-Scholes method of valuation by theCompany, are discussed in Note 1 of the Notes to Consolidated Financial Statements of the Company contained in Item 8 of this Form 10-K for thefiscal year ended July 31, 2015.The actual value, if any, which an option holder will realize upon the exercise of an option will depend on the excess of the market value of theCompany’s common stock over the exercise price on the date the option is exercised, which cannot be forecasted with any accuracy. Outstandingoption awards at July 31, 2015 for each individual who served as a Director in fiscal 2015 include the following: Mr. Allender, 55,800 shares; Mr.Balkema, 35,400 shares; Ms. Bruno, 57,800 shares; Ms. Gioia, 8,500 shares; Mr. Goodkind, 55,800 shares; Mr. Harris, 57,800 shares; Mr. Richardson,49,800 shares; and Mr. Sirkin, 4,250 shares.(2)With the exception of Mr. Sirkin, represents the fair value of shares of Brady Corporation Class A Non-Voting Common Stock granted in fiscal 2015as compensation for their services. For Mr. Sirkin, represents the fair value of shares of time-based restricted stock units of Class A Common Stockgranted in fiscal 2015 as compensation for his services. The shares of unrestricted stock and restricted stock units granted to the non-managementdirectors were valued at the closing market price of $22.57 and $27.24 on the grant dates of September 25, 2015 and March 3, 2015, respectively.Outstanding unvested restricted stock units at July 31, 2015 totaled 1,450 units, all of which were held by Mr. Sirkin.(3)Mr. Sirkin was appointed to the Board on February 17, 2015.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters(a) Security Ownership of Certain Beneficial OwnersThe following table sets forth the current beneficial ownership of shareholders who are known by the Company to own more than five percent (5%) ofany class of the Company’s voting shares on August 4, 2015. As of that date, nearly all of the voting stock of the Company was held by two trusts controlledby direct descendants of the Company’s founder, William H. Brady, as follows: Title of Class Name and Address of Beneficial Owner Amount of BeneficialOwnership Percent ofOwnership(2) Class B Common Stock EBL GST Non-Exempt Stock B Trust(1) c/o Elizabeth P.Bruno 2002 S. Hawick Ct. Chapel Hill, NC 27516 1,769,304 50% William H. Brady III Living Trust dated November 1,2013 (3) 1,769,304 50% c/o William H. Brady III249 Rosemont Ave.Pasadena, CA 91103 (1)The trustee is Elizabeth P. Bruno, who has sole voting and dispositive power and who is the remainder beneficiary. Elizabeth Bruno is the great-granddaughter of William H. Brady and currently serves on the Company’s Board of Directors.(2)An additional 20 shares are owned by a third trust with different trustees.(3)William H. Brady III is grantor of this revocable trust and shares voting and dispositive powers with respect to these shares with his co-trustee. WilliamH. Brady III is the grandson of William H. Brady.104Table of Contents(b) Security Ownership of ManagementThe following table sets forth the current beneficial ownership of each class of equity securities of the Company by each Director and Named ExecutiveOfficer individually and by all Directors and Officers of the Company as a group as of August 4, 2015. Unless otherwise noted, the address for each of thelisted persons is c/o Brady Corporation, 6555 West Good Hope Road, Milwaukee, Wisconsin 53223. Except as otherwise indicated, all shares are owneddirectly. Title of Class Name of Beneficial Owner & Nature of Beneficial Ownership Amount ofBeneficialOwnership(3)(4)(5) Percent ofOwnershipClass A Common Stock Elizabeth P. Bruno (1) 1,294,852 2.7% Thomas J. Felmer 380,177 0.8% Matthew O. Williamson 285,645 0.6% Bentley N. Curran 161,869 0.3% Conrad G. Goodkind 148,438 0.3% Patrick W. Allender (2) 106,207 0.2% Aaron J. Pearce 100,690 0.2% Frank W. Harris 82,696 0.2% Bradley C. Richardson 71,226 0.1% J. Michael Nauman 56,823 0.1% Gary S. Balkema 37,762 0.1% Helena R. Nelligan 16,147 * Nancy L. Gioia 5,758 * Harold L. Sirkin 3,000 * Russell R. Shaller 1,000 * All Officers and Directors as a Group (17 persons) 2,799,954 5.9% Class B Common Stock Elizabeth P. Bruno (1) 1,769,304 50.0%*Indicates less than one-tenth of one percent.(1)Ms. Bruno’s holdings of Class A Common Stock include 876,826 shares owned by a trust for which she is a trustee and has sole dispositive andvoting authority. Ms. Bruno’s holdings of Class B Common Stock include 1,769,304 shares owned by a trust over which she has sole dispositive andvoting authority.(2)Mr. Allender's holdings of Class A Common Stock include 20,000 shares owned by the Patrick and Deborah Allender Irrevocable Trust.(3)The amount shown for all officers and directors individually and as a group (17 persons) includes options to acquire a total of 1,227,084 shares ofClass A Common Stock, which are currently exercisable or will be exercisable within 60 days of July 31, 2015, including the following: Ms. Bruno,53,551 shares; Mr. Felmer, 328,796; Mr. Williamson, 267,839 shares; Mr. Curran, 152,534 shares; Mr. Goodkind, 51,551 shares; Mr. Allender, 51,551shares; Mr. Pearce, 89,625 shares; Mr. Harris, 53,551 shares; Mr. Richardson, 45,551 shares; Mr. Nauman, 43,531 shares; Mr. Balkema, 31,151 shares;Ms. Nelligan, 12,824 shares; Ms. Gioia, 2,834 shares; Mr. Sirkin, 0 shares; Mr. Shaller, 0 shares; Mr. Bolognini, 0 shares; and Mr. Meyer, 0 shares. Itdoes not include other options for Class A Common Stock which have been granted at later dates and are not exercisable within 60 days of July 31,2015.(4)The amount shown for all officers and directors individually and as a group (17 persons) includes unvested restricted stock units to acquire 33,979shares of Class A Common Stock, which will vest within 60 days of July 31, 2015, including the following: Mr. Felmer, 13,327 units; Mr. Williamson,0 units; Mr. Curran, 2,243 units; Mr. Pearce, 3,979 units; Mr. Nauman, 13,292 units; Ms. Nelligan, 2,216 units; Mr. Shaller, 0 units; Mr. Bolognini,435 units; and Mr. Meyer, 271 units. No unvested restricted stock units were held by directors which will vest within 60 days of July 31, 2015. It doesnot include other unvested restricted stock awards or restricted stock units to acquire Class A Common Stock which have been granted at later datesand will not vest within 60 days of July 31, 2015.(5)The amount shown for all officers and directors individually and as a group (17 persons) includes Class A Common Stock owned in deferredcompensation plans totaling 139,362 shares of Class A Common Stock, including the105Table of Contentsfollowing: Ms. Bruno, 2,408 shares; Mr. Felmer, 11,822 shares; Mr. Williamson, 16,112 shares; Mr. Curran, 116 shares; Mr. Goodkind, 40,584 shares;Mr. Allender, 34,656 shares; Mr. Pearce, 3,377 shares; Mr. Harris, 0 shares; Mr. Richardson, 25,675 shares; Mr. Nauman, 0 shares; Mr. Balkema, 4,611shares; Ms. Nelligan, 0 shares; Ms. Gioia, 0 shares; Mr. Sirkin, 0 shares; Mr. Shaller, 0 shares; Mr. Bolognini, 0 shares; and Mr. Meyer, 0 shares.(c) Changes in ControlNo arrangements are known to the Company, which may, at a subsequent date, result in a change in control of the Company.(d) Equity Compensation Plan Information As of July 31, 2015Plan Category Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights(a) Weighted-averageexercise price ofoutstanding options,warrants and rights(b) Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a))(c)Equity compensation plans approvedby security holders 4,178,405 $29.64 3,152,013Equity compensation plans notapproved by security holders None None NoneTotal 4,178,405 $29.64 3,152,013The Company’s equity compensation plan allows the granting of stock options, restricted stock, restricted stock units, and unrestricted stock to variousofficers, directors and other employees of the Company at prices equal to fair market value at the date of grant. The Company has reserved 5,500,000 sharesof Class A Nonvoting Common Stock for issuance under the Brady Corporation 2012 Omnibus Incentive Stock Plan. Generally, options will not beexercisable 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.Generally, restricted stock units vest one-third per year for the first three years.In August of 2009, 2010, and 2011, certain executives and key management employees were issued stock options that vest upon meeting certainfinancial performance conditions in addition to the vesting schedule described above. Performance-based options expire 10 years from the date of grant. Allgrants under the equity plans are at market price on the date of the grant.The Company granted 5,000 three-year cliff-vested restricted shares in December 2012, with a grant price and fair value of $32.99, which wereforfeited in fiscal 2015. The Company granted 5,000 service-based cliff-vested restricted shares in October 2013, with a grant price and fair value of $29.70,which vested in fiscal 2015. The Company granted 103,055 time-based RSUs in fiscal 2014, with a weighted average grant price and fair value of $30.99. Ofthe time-based RSUs granted in fiscal 2014, 8,198 units were forfeited in fiscal 2014, 26,147 units were forfeited in fiscal 2015, and 29,247 units vested infiscal 2015. The Company granted 661,412 time-based RSUs in fiscal 2015, with a weighted average grant price and fair value of $24.28, of which 23,241units have forfeited. As a result, as of July 31, 2015, 677,454 time-based RSUs were outstanding with a weighted average grant date fair value of $24.72.The Company granted 210,000 performance-based restricted shares in fiscal 2008, with a grant price and fair value of $32.83, and 100,000performance-based restricted shares in August 2010, with a grant price and fair value of $28.35. The Company granted 10,000 shares of performance-basedRSUs in September 2012, with a grant price and fair value of $30.21, which were forfeited in fiscal 2015. Of the fiscal 2008 performance-based restrictedshares granted, 55,000, 85,000, and 70,000 shares were forfeited in fiscal 2013, 2014, and 2015, respectively. Of the August 2010 performance-basedrestricted shares granted, 33,333 shares vested in fiscal 2013, 35,001 shares vested in fiscal 2014, and 31,666 shares were forfeited in fiscal 2014. As a result,as of July 31, 2015, there were no performance-based restricted shares or RSUs outstanding.Item 13. Certain Relationships, Related Transactions, and Director IndependenceThe Company annually solicits information from its Directors in order to ensure there are no conflicts of interest. The information gathered annually isreviewed by the Company and if any transactions are not in accordance with the rules of the New York Stock Exchange or are potentially in violation of theCompany’s Corporate Governance Principles, the transactions are referred to the Corporate Governance Committee for approval, ratification, or otheraction. Further, potential affiliated party transactions are discussed at the Company’s quarterly disclosure committee meetings. In addition, pursuant to itscharter, the106Table of ContentsCompany’s Audit Committee periodically reviews reports and disclosures of insider and affiliated party transactions with the Company, if any. Furthermore,the Company’s Directors are expected to be mindful of their fiduciary obligations to the Company and to report any potential conflicts to the CorporateGovernance Committee for review. Based on the Company’s consideration of all relevant facts and circumstances, the Corporate Governance Committeewill decide whether or not to approve such transactions and will approve only those transactions that are in the best interest of the Company. Additionally,the Company has processes in place to educate executives and employees about affiliated transactions. The Company maintains an anonymous hotline bywhich employees may report potential conflicts of interest such as affiliated party transactions.In undertaking its review of potential related party transactions, the Board considered the commercial relationships of the Company, if any, with thoseentities that have employed the Company’s Directors over the past three fiscal years. The commercial relationships, which involved the purchase and sale ofproducts, or the provision of consulting services, on customary terms, did not exceed the maximum amounts proscribed by the director independence rulesof the NYSE over the past three fiscal years. Furthermore, the compensation paid to the Company’s Directors by their employers, was not linked in any wayto the commercial relationships their employers had with the Company in fiscal 2015. After consideration of these factors, the Board concluded that none ofthe Directors whose employers had a commercial relationship with the Company had a material interest in the transactions and the commercial relationshipswere not material to the Company. Based on these factors, the Company has determined that it does not have material related party transactions that affectthe results of operations, cash flow or financial condition. The Company has also determined that no transactions occurred in fiscal 2015, or are currentlyproposed, that would require disclosure under Item 404 (a) of Regulation S-K.See Item 10 — Directors and Executive Officers of the Registrant for a discussion of Director independence.Item 14. Principal Accounting Fees and ServicesThe following table presents the aggregate fees incurred for professional services by Deloitte & Touche LLP and Deloitte Tax LLP during the yearsended July 31, 2015 and 2014. Other than as set forth below, no professional services were rendered or fees billed by Deloitte & Touche LLP or Deloitte TaxLLP during the years ended July 31, 2015 and 2014. 2015 2014 (Dollars in thousands)Audit, audit-related and tax compliance Audit fees (1) $2,426 $1,790Tax fees — compliance — 52Subtotal audit, audit-related and tax compliance fees 2,426 1,842Non-audit related Tax fees — planning and advice 359 413Subtotal non-audit related fees 359 413Total fees $2,785 $2,255 (1)Audit fees consist of professional services rendered for the audit of the Company’s annual financial statements, attestation of management’sassessment of internal control, reviews of the quarterly financial statements and statutory reporting compliance. 2015 2014Ratio of Tax Planning and Advice Fees to Audit Fees, Audit-Related Fees and Tax Compliance Fees 0.1 to 1 0.2 to 1Pre-Approval Policy — The services performed by the Independent Registered Public Accounting Firm (“Independent Auditors”) in fiscal 2015 werepre-approved in accordance with the pre-approval policy and procedures adopted by the Audit Committee, which was amended on February 15, 2015. Thepolicy requires the Audit Committee to pre-approve the audit and non-audit services performed by the Independent Auditors in order to assure that theprovision of such services does not impair the auditor’s independence. All services performed for the Company by the Independent Auditor must be approvedin advance by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.107Table of ContentsPART IVItem 15. Exhibits and Financial Statement SchedulesItem 15 (a) — The following documents are filed as part of this report:1) & 2) Consolidated Financial Statement Schedule -Schedule II Valuation and Qualifying AccountsAll other schedules are omitted as they are not required, or the required information is shown in the consolidated financial statements ornotes thereto.3) Exhibits — See Exhibit Index at page 109 of this Form 10-K.108Table of ContentsEXHIBIT INDEXExhibitNumberDescription2.1Agreement and Plan of Merger, dated as of December 28, 2012, by and among Brady Corporation, BC I Merger Sub Corporation,Precision Dynamics Corporation, and Precision Dynamics Holding LLC (29)2.2Share and Asset Purchase Agreement, dated as of February 24, 2014, by and among Brady Corporation and LTI Flexible Products,Inc. (d/b/a Boyd Corporation) (6)3.1Restated Articles of Incorporation of Brady Corporation (1)3.2By-laws of Brady Corporation, as amended (23)*10.1Form of Change of Control Agreement, amended as of December 23, 2008, entered into with Thomas J. Felmer and Matthew O.Williamson (12)*10.2Brady Corporation BradyGold Plan, as amended (2)*10.3Executive Additional Compensation Plan, as amended (2)*10.4Executive Deferred Compensation Plan, as amended (16)*10.5Directors’ Deferred Compensation Plan, as amended (25)*10.6Forms of Non-Qualified Employee Stock Option Agreement, Director Stock Option Agreement, and Employee Performance StockOption Agreement under 2006 Omnibus Incentive Stock Plan (10)*10.7Brady Corporation 2004 Omnibus Incentive Stock Plan, as amended (10)*10.8Form of Brady Corporation 2004 Nonqualified Stock Option Agreement under the 2004 Omnibus Incentive Stock Plan, asamended (13)10.9Brady Corporation Automatic Dividend Reinvestment Plan (4)*10.10Brady Corporation 2005 Nonqualified Plan for Non-employee Directors, as amended (3)*10.11Forms of Nonqualified Stock Option Agreements under 2005 Non-qualified Plan for Non-employee Directors, as amended (8)*10.12Brady Corporation 1997 Omnibus Incentive Stock Plan, as amended (10)*10.13Restricted Stock Unit Agreement, dated as of October 1, 2014, with Thomas J. Felmer (11)*10.14Complete and Permanent Release and Retirement Agreement, dated as of October 6, 2013, with Frank Jaehnert(14)*10.15Brady Corporation 2006 Omnibus Incentive Stock Plan, as amended (10)*10.16Restricted Stock Unit Agreement, dated as of November 28, 2014, with Thomas J. Felmer (20)*10.17Complete and Permanent Release and Retirement Agreement, dated as of February 9, 2015, with Matthew O. Williamson (21)*10.18Consolidated Amendment to Complete and Permanent Release and Retirement Agreement, dated as of May 21, 2015, withMatthew O. Williamson (27)*10.19Form of Performance-based Restricted Stock Agreement under Brady Corporation 2006 Omnibus Incentive Stock Plan (7)*10.20Restricted Stock Unit Agreement, dated as of March 3, 2015, with Harold L. Sirkin (24)*10.21Restated Brady Corporation Restoration Plan (5)*10.22Change of Control Agreement, dated as of February 28, 2013, entered into with Louis T. Bolognini (30)*10.23Brady Corporation 2003 Omnibus Incentive Stock Plan, as amended (10)*10.24Employment Offer Letter, dated as of June 2, 2015, with Russell Shaller (38)109Table of Contents*10.25Restricted Stock Unit Agreement, dated as of July 15, 2015, with Aaron J. Pearce (39)10.26Brady Note Purchase Agreement dated May 13, 2010 (19)*10.27Form of Amendment, dated February 17, 2010, to granting agreement for performance-based stock options issued on August 1,2005 to Thomas J. Felmer and Matthew O. Williamson (18)*10.28Brady Corporation 2010 Omnibus Incentive Stock Plan, as amended (22)*10.29Brady Corporation 2010 Nonqualified Stock Option Plan for Non-employee Directors (17)*10.30Form of Non-Qualified Employee Stock Option Agreement and Employee Performance Stock Option Agreement under 2010Omnibus Incentive Stock Plan (17)*10.31Form of Director Stock Option Agreement under 2010 Nonqualified Stock Option Plan for Non-employee Directors (17)*10.32Brady Corporation Incentive Compensation Plan for Senior Executives (15)*10.33Restricted Stock Agreement, dated as of October 7, 2013, with Thomas J. Felmer (36)*10.34Change of Control Agreement, dated as of March 3, 2014, with Bentley N. Curran (37)*10.35Restricted Stock Unit Agreement, dated as of August 4, 2014, with Thomas J. Felmer (9)*10.36Change of Control Agreement, dated as of March 3, 2014, with Helena R. Nelligan (37)*10.37Form of Fiscal 2012 Performance Stock Option under the 2010 Omnibus Incentive Stock Plan (26)*10.38Brady Corporation 2012 Omnibus Incentive Stock Plan (26)*10.39Form of Non-Qualified Employee Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (26)*10.40Form of Non-Qualified Employee Performance Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (26)*10.41Form of Director Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (26)*10.42Form of Fiscal 2013 Non-Qualified Employee Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (31)*10.43Form of Fiscal 2013 Director Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (31)10.44Revolving Credit Agreement, dated as of February 1, 2012 (28)*10.45Employment Offer Letter, dated as of August 1, 2014, with J. Michael Nauman (35)*10.46Restricted Stock Unit Agreement, dated as of August 4, 2014, with J. Michael Nauman (35)*10.47Change of Control Agreement, dated as of August 4, 2014, with J. Michael Nauman (35)*10.48Form of Fiscal 2014 Non-Qualified Employee Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (32)*10.49Form of Fiscal 2014 Director Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (32)*10.50Form of Fiscal 2014 Restricted Stock Unit Agreement under 2012 Omnibus Incentive Stock Plan (32)*10.51Deed of Release, dated as of August 1, 2014, with Stephen Millar (33)*10.52Separation Agreement, dated as of November 20, 2013, with Allan J. Klotsche (34)*10.53Form of Fiscal 2015 Non-Qualified Employee Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (9)*10.54Form of Fiscal 2015 Director Stock Option Agreement under 2012 Omnibus Incentive Stock Plan (9)110Table of Contents*10.55Form of Fiscal 2015 Restricted Stock Unit Agreement under 2012 Omnibus Incentive Stock Plan (9)*10.56Restricted Stock Unit Agreement, dated as of June 22, 2015, with Russell R. Shaller*10.57Form of Fiscal 2015 Employee Retention Restricted Stock Unit Agreement under 2012 Omnibus Incentive Plan*10.58Change of Control Agreement, dated as of August 28, 2015, with Russell R. Shaller*10.59Change of Control Agreement, dated as of September 11, 2015, with Aaron J. Pearce*10.60Form of Fiscal 2016 Non-Qualified Employee Stock Option Agreement under 2012 Omnibus Incentive Stock Plan*10.61Form of Fiscal 2016 Restricted Stock Unit Agreement under 2012 Omnibus Incentive Stock Plan21Subsidiaries of Brady Corporation23Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm31.1Rule 13a-14(a)/15d-14(a) Certification of J. Michael Nauman31.2Rule 13a-14(a)/15d-14(a) Certification of Aaron J. Pearce32.1Section 1350 Certification of J. Michael Nauman32.2Section 1350 Certification of Aaron J. Pearce101Interactive Data File*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 filed for the fiscal year ended July 31, 1989(3)Incorporated by reference to Registrant’s Current Report on Form 8-K filed November 25, 2008(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 Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2008(6)Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 25, 2014(7)Incorporated by reference to Registrant’s Current Report on Form 8-K filed January 9, 2008(8)Incorporated by reference to Registrant’s Current Report on Form 8-K filed December 4, 2006(9)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2014(10)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2008(11)Incorporated by reference to Registrant’s Current Report on Form 8-K filed October 2, 2014(12)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2009(13)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2005(14)Incorporated by reference to Registrant’s Current Report on Form 8-K filed October 7, 2013(15)Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 2, 2011(16)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2011(17)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2009(18)Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 23, 2010(19)Incorporated by reference to Registrant’s Current Report on Form 8-K filed May 14, 2010(20)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2014(21)Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 9, 2015(22)Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 27, 2010(23)Incorporated by reference to Registrant’s Current Report on Form 8-K filed July 18, 2014(24)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2015(25)Incorporated by reference to Registrant’s Current Report on Form 8-K filed September 15, 2011(26)Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 2011(27)Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2015(28)Incorporated by reference to Registrant’s Current Report on Form 8-K filed February 7, 2012(29)Incorporated by reference to Registrant's Current Report on Form 8-K filed December 31, 2012111Table of Contents(30)Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2013(31)Incorporated by reference to Registrant's Annual Report on Form 10-K for the fiscal year ended July 31, 2012(32)Incorporated by reference to Registrants Annual Report of Form 10-K for the fiscal year ended July 31, 2013(33)Incorporated by reference to Registrant's Current Report on Form 8-K filed August 1, 2014(34)Incorporated by reference to Registrant's Current Report on Form 8-K filed November 21, 2013(35)Incorporated by reference to Registrant's Current Report on Form 8-K filed August 4, 2014(36)Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2013(37)Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2014(38)Incorporated by reference to Registrant's Current Report on Form 8-K filed June 5, 2015(39)Incorporated by reference to Registrant's Current Report on Form 8-K filed July 16, 2015 BRADY CORPORATION AND SUBSIDIARIESSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Year ended July 31,Description 2015 2014 2013 (Dollars in thousands)Valuation accounts deducted in balance sheet from assets to which they apply — Accountsreceivable — allowance for doubtful accounts: Balances at beginning of period $3,069 $5,093 $6,005Additions — Charged to expense 1,954 779 1,018Due to acquired businesses — — 531Reclassified to continuing operations — 31 —Deductions — Bad debts written off, net of recoveries (1,438) (2,834) (1,429)Deductions — Reclassified to discontinued operations — — (1,032)Balances at end of period $3,585 $3,069 $5,093Inventory — Reserve for slow-moving inventory: Balances at beginning of period $12,259 $11,317 $11,316Additions — Charged to expense 3,017 3,100 2,629Due to acquired businesses — — 2,887Reclassified to continuing operations — 461 —Deductions — Inventory write-offs (2,007) (2,619) (1,811)Deductions — Reclassified to discontinued operations — — (3,704)Balances at end of period $13,269 $12,259 $11,317Valuation allowances against deferred tax assets: Balances at beginning of period $37,409 $37,142 $25,847Additions during year 8,111 10,182 10,853Due to acquired businesses — — 983Deductions — Valuation allowances reversed/utilized (5,598) (9,915) (541)Balances at end of period $39,922 $37,409 $37,142112Table of ContentsSIGNATURESPursuant 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 onits behalf by the undersigned, thereunto duly authorized this 21st day of September 2015.BRADY CORPORATIONBy: /s/ AARON J. PEARCE Aaron J. Pearce Senior Vice President, Chief Financial Officer, and Chief Accounting Officer (Principal Financial Officer and Principal Accounting 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 Registrantand in the capabilities and on the dates indicated.*Signature Title/s/ J. MICHAEL NAUMAN President and Chief Executive Officer; DirectorJ. Michael Nauman (Principal Executive Officer)/s/ PATRICK W. ALLENDER Patrick W. Allender Director/s/ GARY S. BALKEMA Gary S. Balkema Director/s/ NANCY L. GIOIA Nancy L. Gioia Director/s/ CONRAD G. GOODKIND Conrad G. Goodkind Director/s/ FRANK W. HARRIS Frank W. Harris Director/s/ ELIZABETH P. BRUNO Elizabeth P. (Pungello) Bruno Director/s/ BRADLEY C. RICHARDSON Bradley C. Richardson Director/s/ HAROLD L. SIRKIN Harold L. Sirkin Director*Each of the above signatures is affixed as of September 21, 2015.113EXHIBIT 10.56BRADY CORPORATIONRESTRICTED STOCK UNIT AGREEMENTUpon management’s recommendation, the Management Development and Compensation Committee (the “Committee”) of the Brady CorporationBoard of Directors has awarded to Russell Shaller (“Employee”) a restricted stock unit award effective June 22, 2015 pursuant to the terms of the BradyCorporation 2012 Omnibus Incentive Stock Plan (the “Plan”). The Corporation’s records shall be the official record of the grant described herein and, in theevent of any conflict between this description and the Corporation’s records, the Corporation’s records shall control.1.Number of UnitsThis Restricted Stock Unit Award applies to 20,992 shares of the presently authorized Class A Nonvoting Common Stock of the Corporation, $.01par value (the “Restricted Stock Units”). The Restricted Stock Units granted under this Agreement are units that will be reflected in a book accountmaintained by the Corporation until they become vested or have been forfeited.2.Service Vesting RequirementThe vesting of this Award (other than pursuant to accelerated vesting in certain circumstances as provided in Section 3 below) shall be subject to thesatisfaction of the condition set forth in Section 2(a) below:(a)Vesting. The Award shall be subject to the following service vesting requirement. If the Employee continues in employment through thevesting dates listed below, the Restricted Stock Units shall be vested as listed in the following table:Vesting DatePercentage of Vested Restricted Stock Units First anniversary of grant date20%Second anniversary of grant date20%Third anniversary of grant date20%Fourth anniversary of the grant date20%Fifth anniversary of the grant date20%(b)Forfeiture of Restricted Stock Units. Except as provided in Section 3, if the Employee terminates employment prior to the satisfaction of thevesting requirements set forth in Section 2(a) above, any unvested Restricted Stock Units shall immediately be forfeited. The period of timeduring which the Restricted Stock Units covered by this Award are forfeitable is referred to as the “Restricted Period.”3.Accelerated Vesting(a)Notwithstanding the terms and conditions of Section 2 hereof, in the event of the termination of the Employee’s employment with theCorporation (and any Affiliate) prior to the end of the Restricted Period due to death or Disability, the Restricted Stock Units shall becomefully vested.(b)In the event of the termination of the Employee’s employment with the Corporation (and any Affiliate) prior to the end of the RestrictedPeriod due to a Change in Control, the Restricted Stock Units 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 Securitiesand 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 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 Changeof Control occurs (i) the Employee’s employment with the Corporation (and any Affiliate) is involuntarily terminated (other than by reason of death,disability or Cause) or (ii) the Employee’s employment with the Corporation (and any Affiliate) is voluntarily terminated by the Employeesubsequent to (A) a 10% or more diminution in the total of the Employee’s annual base salary (exclusive of fringe benefits) and the Employee’starget bonus in comparison with the Employee’s total of annual base salary and target bonus immediately prior to the date the Change of Controloccurs, (B) a significant diminution in the responsibilities or authority of the Employee in comparison with the Employee’s responsibility andauthority immediately prior to the date the Change of Control occurs or (C) the imposition of a requirement by the Corporation that the Employeerelocate to a principal work location more than 50 miles from the Employee’s principal work location immediately prior to the date the Change ofControl occurs.For purposes of this Agreement, Cause means (i) the Employee’s willful and continued failure to substantially perform the Employee’s duties withthe Corporation (other than any such failure resulting from physical or mental incapacity) after written demand for performance is given to theEmployee by the Corporation which specifically identifies the manner in which the Corporation believes the Employee has not substantiallyperformed 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 toresult in significant injury (monetarily or otherwise) to the Corporation, as determined in good faith by the Committee.(c)In the event of (i) the merger or consolidation of the Corporation with or into another corporation or corporations in which the Corporationis not the surviving corporation, (ii) the adoption of any plan for the dissolution of the Corporation, or (iii) the sale or exchange of all orsubstantially all the assets of the Corporation for cash or for shares of stock or other securities of another corporation, the Restricted StockUnits shall become fully vested. (d)If the vesting of the Restricted Stock Units would result in any excise tax to the Employee as a result of Section 280G of the Code, theCorporation shall pay the Employee an amount equal to such excise tax.4.No DividendsNo dividends will be paid or accrued on any Restricted Stock Units during the Restricted Period.5.Settlement of Restricted Stock UnitsAs soon as practicable after Restricted Stock Units become vested, the Company shall deliver to the Employee one share of the Corporation's ClassA Nonvoting Common Stock, $.01 par value ("Corporation Stock") for each Restricted Stock Unit which becomes vested.6.Transfer RestrictionsThis Award is non-transferable and may not be assigned, pledged or hypothecated and shall not be subject to execution, attachment or similarprocess. Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and voidand the Restricted Stock Units shall be forfeited.7.Withholding TaxesThe Corporation may require payment of or withhold any tax which it believes is payable as a result of the Restricted Stock Units becoming vested,and the Corporation may defer making delivery of the Corporation Stock until arrangements satisfactory to the Corporation have been made withregard 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 ofsuch vesting, may elect, subject to such rules and regulations as the Committee may adopt from time to time, to have the Corporation withhold thatnumber of shares of Corporation Stock (valued at Fair Market Value on the date of vesting and rounded upward) required to settle such withholdingtaxes.8.Death of EmployeeIf the Restricted Stock Units shall vest upon the death of the Employee, the shares of Corporation Stock and any amounts in the Employee'sDividend Account shall be issued and paid to the estate of the Employee unless the Corporation shall have theretofore received in writing abeneficiary designation, in which event they shall be issued and paid to the designated beneficiary.9.Confidentiality, Non-Solicitation and Non-CompeteAs consideration for the grant of this Award, Employee agrees to, understands and acknowledges the following:(a)During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provide Employee withConfidential Information relating to the Company, its business and clients, the disclosure or misuse of which would cause severe andirreparable harm to the Company. Employee agrees that all Confidential Information is and shall remain the sole and absolute property ofthe Company. Upon the termination of Employee's employment with the Company for any reason, Employee shall immediately return tothe Company all documents and materials that contain or constitute Confidential Information, in any form whatsoever, including but notlimited to, all copies, abstracts, electronic versions, and summaries thereof. Executive further agrees that, without the written consent of theChief Executive Officer of the Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval ofthe Board of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use, disclosure,copying or duplication of any Confidential Information of the Company, other than in connection with the authorized activities conductedin the course of Employee's employment with the Company. Employee agrees to take all reasonable steps and precautions to prevent anyunauthorized disclosure, use, copying or duplication of Confidential Information. For purposes of this Agreement, Confidential Informationmeans any and all financial, technical, commercial or other information concerning the business and affairs of the Company that isconfidential and proprietary to the Company, including without limitation,(i)information relating to the Company’s past and existing customers and vendors and development of prospective customers andvendors, including specific customer product requirements, pricing arrangements, payments terms, customer lists and other similarinformation;(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced,acquired or used by the Company;(iii)the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or objectcode and all related documentation and training materials, including all upgrades, updates, improvements, derivatives andmodifications thereof and including programs and documentation in incomplete stages of design or research and development;(iv)the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, tradedress, manuals, operating instructions, training materials, and other industrial property, including such information in incompletestages of design or research and development; and(v)other confidential and proprietary information or documents relating to the Company’s products, business and marketing plansand techniques, sales and distribution networks and any other information or documents which the Company reasonably regards asbeing confidential.(b)Employee agrees that, without the written consent of the Chief Executive Officer of the Corporation, in the case of the Chief ExecutiveOfficer of the Corporation, without the written approval of the Board of Directors of the Corporation, Employee shall not engage in any ofthe conduct described in subsections (i) or (ii), below, either directly or indirectly, or as an employee, contractor, consultant, partner, officer,director or stockholder, other than a stockholder of less than 5% of the equities of a publicly traded corporation, or in any other capacity forany person, firm, partnership or corporation:(i)During the time of Employee's employment with Company, Employee will not: (A) perform duties as or for a Competitor; or (B)participate in the inducement of or otherwise encourage Company employees, clients, or vendors to currently and/or prospectivelybreach, modify, or terminate any agreement or relationship they have or had with Company.(ii)For a period of 12 months following the termination of Employee's employment with Company, Employee will not: (A) performduties as or for a Competitor that are the same as or similar to the duties performed by Employee for the Company at any timeduring any part of the 24 month periodpreceding the termination of Employee's employment with Company; or (B) participate in the inducement of or otherwiseencourage Company employees, clients, or vendors to currently and/or prospectively breach, modify, or terminate any agreementor relationship they have or had with Company during any part of the 24 month period preceding the termination of Employee'semployment with Company.For purposes of this Agreement, a Competitor shall mean any corporation, person, firm or organization (or division or part thereof) engagedin or about to become engaged in research and development work on, or the production and/or sale of, any product or service which isdirectly competitive with one with respect to which Employee acquired Confidential Information by reason of Employee's work with theCompany.(c)Employee acknowledges and agrees that compliance with this Section 9 is necessary to protect the Company, and that a breach of any ofthis Section 9 will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law. In theevent of a breach of this Section 9, or any part thereof, the Company, and its successors and assigns, shall be entitled to injunctive relief andto such other and further relief as is proper under the circumstances. The Company shall institute and prosecute proceedings in any Court ofcompetent jurisdiction either in law or in equity to obtain damages for any such breach of this Section 9, or to enjoin Employee fromperforming services in breach of Section 9(b) during the term of employment and for a period of 12 months following the termination ofemployment. Employee hereby agrees to submit to the jurisdiction of any Court of competent jurisdiction in any disputes that arise underthis Agreement.(d)Employee further agrees that, in the event of a breach of this Section 9, the Corporation shall also be entitled to recover the value of anyamounts previously paid or payable or any shares (or the value of any shares) delivered or deliverable to Employee pursuant to anyCompany bonus program, this Agreement, and any other Company plan or arrangement.(e)Employee agrees that the terms of this Section 9 shall survive the termination of Employee's employment with the Company.(f)EMPLOYEE HAS READ THIS SECTION 9 AND AGREES THAT THE CONSIDERATION PROVIDED BY THE CORPORATION IS FAIRAND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL ANDPROPRIETARY INFORMATION, THE POST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIRAND REASONABLE.10.ClawbackThis Award is subject to the terms of the Corporation's recoupment, clawback or similar policy as it may be in effect from time to time, as well as anysimilar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any shares ofCorporation Stock or other cash or property received with respect to the awards (including any value received from a disposition of the sharesacquired upon payment of the awards).11.Adjustment of SharesThe terms and provisions of this Award (including, without limitation, the terms and provisions relating to the number and class of shares subject tothis 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.12.Provisions of Plan ControllingThis Award is subject in all respects to the provisions of the Plan. In the event of any conflict between any provisions of this Award and theprovisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan permits the Committee to modify the terms of an Awardgrant and has done so herein. Terms defined in the Plan where used herein shall have the meanings as so defined. Employee acknowledges receipt ofa copy of the Plan.13.Wisconsin ContractThis Award has been granted in Wisconsin and shall be construed under the laws of that state.14.SeverabilityWherever possible, each provision of this Award will be interpreted in such manner as to be effective and valid under applicable law, but if anyprovision hereof is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibitionor invalidity, without invalidating the remainder of such provision or the remaining provisions hereof.IN WITNESS WHEREOF, the Corporation has granted this Award as of the day and year first above written.BRADY CORPORATIONBy: /s/ J. MICHAEL NAUMAN Name: J. Michael Nauman Its: President and Chief Executive Officer EMPLOYEE'S ACCEPTANCEI, Russell Shaller, hereby accept the foregoing Award and agree to the terms and conditions thereof, including the restrictions contained in Section 9of this Agreement.EMPLOYEE:Signature: /s/ RUSSELL SHALLERPrint Name: Russell Shaller EXHIBIT 10.57BRADY CORPORATIONRESTRICTED STOCK UNIT AGREEMENTUpon management’s recommendation, the Management Development and Compensation Committee (the “Committee”) of the Brady CorporationBoard of Directors has awarded to ______________ (“Employee”) a restricted stock unit award effective _____________, 20XX pursuant to the terms of theBrady Corporation 2012 Omnibus Incentive Stock Plan (the “Plan”). The Corporation’s records shall be the official record of the grant described herein and,in the event of any conflict between this description and the Corporation’s records, the Corporation’s records shall control.1.Number of UnitsThis Restricted Stock Unit Award applies to X,XXX shares of the presently authorized Class A Nonvoting Common Stock of the Corporation, $.01par value (the “Restricted Stock Units”). The Restricted Stock Units granted under this Agreement are units that will be reflected in a book accountmaintained by the Corporation until they become vested or have been forfeited.2.Service Vesting RequirementThe vesting of this Award (other than pursuant to accelerated vesting in certain circumstances as provided in Section 3 below) shall be subject to thesatisfaction of the condition set forth in Section 2(a) below:(a)Vesting. The Award shall be subject to the following service vesting requirement. If the Employee continues in employment through thevesting dates listed below, the Restricted Stock Units shall be vested as listed in the following table: Vesting DatePercentage of Vested Restricted Stock Units First anniversary of grant date10%Second anniversary of grant date20%Third anniversary of grant date30%Fourth anniversary of the grant date40% (b)Forfeiture of Restricted Stock Units. Except as provided in Section 3, if the Employee terminates employment prior to the satisfaction of thevesting requirements set forth in Section 2(a) above, any unvested Restricted Stock Units shall immediately be forfeited. The period of timeduring which the Restricted Stock Units covered by this Award are forfeitable is referred to as the “Restricted Period.”3.Accelerated Vesting(a)Notwithstanding the terms and conditions of Section 2 hereof, in the event of the termination of the Employee’s employment with theCorporation (and any Affiliate) prior to the end of the Restricted Period due to death or Disability, the Restricted Stock Units shall becomefully vested.(b)In the event of the termination of the Employee’s employment with the Corporation (and any Affiliate) prior to the end of the RestrictedPeriod due to a Change in Control, the Restricted Stock Units 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 Securitiesand 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 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 Changeof Control occurs (i) the Employee’s employment with the Corporation (and any Affiliate) is involuntarily terminated (other than by reason of death,disability or Cause) or (ii) the Employee’s employment with the Corporation (and any Affiliate) is voluntarily terminated by the Employeesubsequent to (A) a 10% or more diminution in the total of the Employee’s annual base salary (exclusive of fringe benefits) and the Employee’starget bonus in comparison with the Employee’s total of annual base salary and target bonus immediately prior to the date the Change of Controloccurs, (B) a significant diminution in the responsibilities or authority of the Employee in comparison with the Employee’s responsibility andauthority immediately prior to the date the Change of Control occurs or (C) the imposition of a requirement by the Corporation that the Employeerelocate to a principal work location more than 50 miles from the Employee’s principal work location immediately prior to the date the Change ofControl occurs.For purposes of this Agreement, Cause means (i) the Employee’s willful and continued failure to substantially perform the Employee’s duties withthe Corporation (other than any such failure resulting from physical or mental incapacity) after written demand for performance is given to theEmployee by the Corporation which specifically identifies the manner in which the Corporation believes the Employee has not substantiallyperformed 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 toresult in significant injury (monetarily or otherwise) to the Corporation, as determined in good faith by the Committee.(c)In the event of (i) the merger or consolidation of the Corporation with or into another corporation or corporations in which the Corporationis not the surviving corporation, (ii) the adoption of any plan for the dissolution of the Corporation, or (iii) the sale or exchange of all orsubstantially all the assets of the Corporation for cash or for shares of stock or other securities of another corporation, the Restricted StockUnits shall become fully vested.(d)If the vesting of the Restricted Stock Units would result in any excise tax to the Employee as a result of Section 280G of the Code, theCorporation shall pay the Employee an amount equal to such excise tax.4.No DividendsNo dividends will be paid or accrued on any Restricted Stock Units during the Restricted Period.5.Settlement of Restricted Stock UnitsAs soon as practicable after Restricted Stock Units become vested, the Company shall deliver to the Employee one share of the Corporation's ClassA Nonvoting Common Stock, $.01 par value ("Corporation Stock") for each Restricted Stock Unit which becomes vested.6.Transfer RestrictionsThis Award is non-transferable and may not be assigned, pledged or hypothecated and shall not be subject to execution, attachment or similarprocess. Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and voidand the Restricted Stock Units shall be forfeited.7.Withholding TaxesThe Corporation may require payment of or withhold any tax which it believes is payable as a result of the Restricted Stock Units becoming vested,and the Corporation may defer making delivery of the Corporation Stock until arrangements satisfactory to the Corporation have been made withregard 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 ofsuch vesting, may elect, subject to such rules and regulations as the Committee may adopt from time to time, to have the Corporation withhold thatnumber of shares of Corporation Stock (valued at Fair Market Value on the date of vesting and rounded upward) required to settle such withholdingtaxes.8.Death of EmployeeIf the Restricted Stock Units shall vest upon the death of the Employee, the shares of Corporation Stock and any amounts in the Employee'sDividend Account shall be issued and paid to the estate of the Employee unless the Corporation shall have theretofore received in writing abeneficiary designation, in which event they shall be issued and paid to the designated beneficiary.9.Confidentiality, Non-Solicitation and Non-CompeteAs consideration for the grant of this Award, Employee agrees to, understands and acknowledges the following:(a)During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provide Employee withConfidential Information relating to the Company, its business and clients, the disclosure or misuse of which would cause severe andirreparable harm to the Company. Employee agrees that all Confidential Information is and shall remain the sole and absolute property ofthe Company. Upon the termination of Employee's employment with the Company for any reason, Employee shall immediately return tothe Company all documents and materials that contain or constitute Confidential Information, in any form whatsoever, including but notlimited to, all copies, abstracts, electronic versions, and summaries thereof. Executive further agrees that, without the written consent of theChief Executive Officer of the Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval ofthe Board of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use, disclosure,copying or duplication of any Confidential Information of the Company, other than in connection with the authorized activities conductedin the course of Employee's employment with the Company. Employee agrees to take all reasonable steps and precautions to prevent anyunauthorized disclosure, use, copying or duplication of Confidential Information. For purposes of this Agreement, Confidential Informationmeans any and all financial, technical, commercial or other information concerning the business and affairs of the Company that isconfidential and proprietary to the Company, including without limitation,(i)information relating to the Company’s past and existing customers and vendors and development of prospective customers andvendors, including specific customer product requirements, pricing arrangements, payments terms, customer lists and other similarinformation;(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced,acquired or used by the Company;(iii)the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or objectcode and all related documentation and training materials, including all upgrades, updates, improvements, derivatives andmodifications thereof and including programs and documentation in incomplete stages of design or research and development;(iv)the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, tradedress, manuals, operating instructions, training materials, and other industrial property, including such information in incompletestages of design or research and development; and(v)other confidential and proprietary information or documents relating to the Company’s products, business and marketing plansand techniques, sales and distribution networks and any other information or documents which the Company reasonably regards asbeing confidential.(b)Employee agrees that, without the written consent of the Chief Executive Officer of the Corporation, in the case of the Chief ExecutiveOfficer of the Corporation, without the written approval of the Board of Directors of the Corporation, Employee shall not engage in any ofthe conduct described in subsections (i) or (ii), below, either directly or indirectly, or as an employee, contractor, consultant, partner, officer,director or stockholder, other than a stockholder of less than 5% of the equities of a publicly traded corporation, or in any other capacity forany person, firm, partnership or corporation:(i)During the time of Employee's employment with Company, Employee will not: (A) perform duties as or for a Competitor; or (B)participate in the inducement of or otherwise encourage Company employees, clients, or vendors to currently and/or prospectivelybreach, modify, or terminate any agreement or relationship they have or had with Company.(ii)For a period of 12 months following the termination of Employee's employment with Company, Employee will not: (A) performduties as or for a Competitor that are the same as or similar to the duties performed by Employee for the Company at any timeduring any part of the 24 month periodpreceding the termination of Employee's employment with Company; or (B) participate in the inducement of or otherwiseencourage Company employees, clients, or vendors to currently and/or prospectively breach, modify, or terminate any agreementor relationship they have or had with Company during any part of the 24 month period preceding the termination of Employee'semployment with Company.For purposes of this Agreement, a Competitor shall mean any corporation, person, firm or organization (or division or part thereof) engagedin or about to become engaged in research and development work on, or the production and/or sale of, any product or service which isdirectly competitive with one with respect to which Employee acquired Confidential Information by reason of Employee's work with theCompany.(c)Employee acknowledges and agrees that compliance with this Section 9 is necessary to protect the Company, and that a breach of any ofthis Section 9 will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law. In theevent of a breach of this Section 9, or any part thereof, the Company, and its successors and assigns, shall be entitled to injunctive relief andto such other and further relief as is proper under the circumstances. The Company shall institute and prosecute proceedings in any Court ofcompetent jurisdiction either in law or in equity to obtain damages for any such breach of this Section 9, or to enjoin Employee fromperforming services in breach of Section 9(b) during the term of employment and for a period of 12 months following the termination ofemployment. Employee hereby agrees to submit to the jurisdiction of any Court of competent jurisdiction in any disputes that arise underthis Agreement.(d)Employee further agrees that, in the event of a breach of this Section 9, the Corporation shall also be entitled to recover the value of anyamounts previously paid or payable or any shares (or the value of any shares) delivered or deliverable to Employee pursuant to anyCompany bonus program, this Agreement, and any other Company plan or arrangement.(e)Employee agrees that the terms of this Section 9 shall survive the termination of Employee's employment with the Company.(f)EMPLOYEE HAS READ THIS SECTION 9 AND AGREES THAT THE CONSIDERATION PROVIDED BY THE CORPORATION IS FAIRAND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL ANDPROPRIETARY INFORMATION, THE POST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIRAND REASONABLE.10.ClawbackThis Award is subject to the terms of the Corporation's recoupment, clawback or similar policy as it may be in effect from time to time, as well as anysimilar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any shares ofCorporation Stock or other cash or property received with respect to the awards (including any value received from a disposition of the sharesacquired upon payment of the awards).11.Adjustment of SharesThe terms and provisions of this Award (including, without limitation, the terms and provisions relating to the number and class of shares subject tothis 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.12.Provisions of Plan ControllingThis Award is subject in all respects to the provisions of the Plan. In the event of any conflict between any provisions of this Award and theprovisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan permits the Committee to modify the terms of an Awardgrant and has done so herein. Terms defined in the Plan where used herein shall have the meanings as so defined. Employee acknowledges receipt ofa copy of the Plan.13.Wisconsin ContractThis Award has been granted in Wisconsin and shall be construed under the laws of that state.14.SeverabilityWherever possible, each provision of this Award will be interpreted in such manner as to be effective and valid under applicable law, but if anyprovision hereof is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibitionor invalidity, without invalidating the remainder of such provision or the remaining provisions hereof.IN WITNESS WHEREOF, the Corporation has granted this Award as of the day and year first above written.BRADY CORPORATIONBy: J. MICHAEL NAUMANName: J. Michael NaumanIts: President and Chief Executive OfficerEMPLOYEE'S ACCEPTANCEI, ___________________________, hereby accept the foregoing Award and agree to the terms and conditionsthereof, including the restrictions contained in Section 9 of this Agreement.EMPLOYEE:Signature: Print Name: EXHIBIT 10.58Brady CorporationChange of Control AgreementAGREEMENT, made as of August 28, 2015, between Brady Corporation, a Wisconsin corporation, (“Corporation”) and Russell Shaller.WHEREAS, the Executive is now serving as an executive of the Corporation in a position of importance and responsibility; andWHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Corporation and its policies, markets and financial andhuman resources, and the Executive has acquired certain confidential information and data with respect to the Corporation; andWHEREAS, the Corporation wishes to continue to receive the benefit of the Executive’s knowledge and experience and, as an inducement forcontinued 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 Corporation 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 ofpersons (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 theirdescendants, or trusts for their benefit, and the William H. Brady, Jr. Family Trust, collectively, directly or indirectly controls in excess of 50% of the votingcommon stock of the Corporation.(b)Termination Due to Change of Control. A “Termination Due to Change of Control” shall occur if within the 24 month periodbeginning with the date a Change of Control occurs (i) the Executive’s employment with the Corporation is involuntarily terminated (other than by reason ofdeath, disability or Cause) or (ii) the Executive’s employment with the Corporation is voluntarily terminated by the Executive subsequent to (A) anyreduction 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’sannual base salary and target bonus immediately prior to the date the Change of Control occurs, (B) a significant diminution in the responsibilities orauthority 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 Corporation that the Executive relocate to a principal work location more than 50 miles from the Executive’s principalwork 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 theCorporation (other than any such failure resulting from physical or mental incapacity) after written demand for performance is given to the Executive by theCorporation which specifically identifies the manner in which the Corporation believes the Executive has not substantially performed and a reasonable timeto 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 anact 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.(d)“Beneficiary” means any one or more primary or secondary beneficiaries designated in writing by the Executive on a formprovided by the Corporation to receive any benefits which may become payable under this Agreement on or after the Executive’s death. The Executive shallhave the right to name, change or revoke the Executive’s designation of a Beneficiary on a form provided by the Corporation. The designation on file withthe Corporation at the time of the Executive’s death shall be controlling. Should the Executive fail to make a valid Beneficiary designation or leave nonamed 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 two times the annual basesalary paid the Executive by the Corporation in effect immediately prior to the date the Change of Control occurs, and two times the average bonus paymentreceived in the three years immediately prior to the date the Change of Control occurs. Such amount shall be paid in 24 monthly installments beginning onthe 15th day of the month following the month in which the Executive’s employment with the Corporation terminates.(b)If the scheduled payments under paragraph (a) above would result in disallowance of any portion of the Corporation’sdeduction therefore under Section 162(m) of the Code, the payments called for under paragraph (a) shall be limited to the amount which is deductible, withthe balance to be paid during the first taxable year in which the Corporation reasonably anticipates that the deduction of such payment is not barred bySection 162(m). However, in such event, the Corporation shall pay the Executive on a quarterly basis an amount of interest based on the prime raterecomputed each quarter on the unpaid scheduled payments.(c)It is intended that (A) each payment or installment of payments provided under this Section 2 is a separate “payment” forpurposes of Code Section 409A and (B) that the payments satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A,including those provided under Treasury Regulations 1.409A-1(b)(4) (regarding short-term deferrals), 1.409A-1(b)(9)(iii) (regarding the two-times, two yearexception), and 1.409A-1(b)(9)(v) (regarding reimbursements and other separation pay). Notwithstanding anything to the contrary in this Agreement, if theCorporation determines that on the Termination Due to Change of Control the Executive is a “specified employee” (as such term is defined under TreasuryRegulation 1.409A-1(i)(1)) of the Corporation and that any payments to be provided to Executive are or may become subject to the additional tax underCode Section 409A(a)(1)(B) or any other taxes or penalties imposed under Code Section 409A (“Section 409A Taxes”), then such payments shall be delayeduntil the date that is six (6) months after the Termination Due to Change of Control. Any delayed payments shall be made in a lump sum on the first day ofthe seventh month following the Termination Due to Change of Control, or such earlier date that, as determined by the Corporation, is sufficient to avoid theimposition of any Section 409A Taxes on Executive.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 theCorporation (the “Total Payments”) would result in the Executive incurring an excise tax as a result of Section 280(G) of the Code, the Executive will besolely responsible for such excise tax.(b)If the Executive is required to file a lawsuit to enforce the Executive’s rights under this Agreement and the Executive prevails insuch lawsuit, the Corporation will reimburse the Executive for attorney fees incurred up to a maximum of $25,000.00.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, anyremaining 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 Corporation which continuebeyond the Executive’s termination of employment. The payments to be made hereunder are conditioned upon the Executive’s compliance with the terms ofthe Confidential Information Agreement. The payments made hereunder shall be reduced by any payments the Corporation makes to the Executive underSection 3 of the Confidential Information Agreement. In the event the Executive violates the provisions of the Confidential Information Agreement, nofurther payments shall be due hereunder and the Executive shall be obligated to repay all previous payments received hereunder in the same manner asprovided 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 Corporation, shallnot 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 bindingupon the Corporation and its successors and assigns and shall also be enforceable by the Executive’s legal representatives.(b)Successors. The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation orotherwise) to all or substantially all of the business and/or assets of the Corporation expressly to assume and agree to perform this Agreement in the samemanner and to the same extent that the Corporation would have been required to perform it if no such succession had taken place. As used in this Agreement,“Corporation” shall mean both the Corporation as defined above and any such successor that assumes and agrees to perform this Agreement, by operation oflaw 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 provisionshereof 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 tothe other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:If to the Executive: Russell Shaller 6555 West Good Hope RoadMilwaukee, Wisconsin 53223If to the Corporation: Brady Corporation6555 West Good Hope RoadMilwaukee, Wisconsin 53223Attention: CFOor to such other address as either party furnishes to the other in writing in accordance with this paragraph. Notices and communications shall be effectivewhen actually received by the addressee.(e)Construction. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity orenforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remainingportion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to thefullest extent consistent with law.(f)No Guarantee of Employment. Nothing contained in this Agreement shall give the Executive the right to be retained in theemployment of the Corporation or affect the right of the Corporation to dismiss the Executive.(g)Amendment; Entire Agreement. This Agreement may not be amended or modified except by a written agreement executed bythe parties hereto or their respective successors and legal representatives. This Agreement contains the entire agreement between the parties on the subjectscovered 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 qualifiedor nonqualified plan or agreement of the Corporation, except as otherwise may be specifically provided by such plan or agreement.(i)Other Agreements. This Agreement supersedes any other severance arrangement or Change of Control Agreement between theCorporation and the Executive. This Agreement does not confer any payments or benefits other than the payments described in Sections 2 and 3 hereof.(j)Withholding. To the extent required by law, the Corporation shall withhold any taxes required to be withheld with respect tothis Agreement by the federal, state or local government from payments made hereunder or from other amounts paid to the Executive by the Corporation.(k)Facility of Payment. If the Executive or, if applicable, the Executive’s Beneficiary, is under legal disability, the Corporationmay 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, orto any legal guardian or conservator of such person. Any such distribution shall constitute a full discharge with respect to the Corporation and theCorporation shall not be required to see to the application of any distribution so made.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 aportion of a benefit under this Agreement, he or she may file a written claim for benefits with the Corporation. The Corporation shall review the claim andnotify the Claimant of the Corporation’s decision within 60 days of receipt of such claim, unless the Claimant receives written notice prior to the end of the60 day period stating that special circumstances require an extension of the time for decision. The Corporation’s decision shall be in writing, sent by mail tothe 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 thisAgreement on which the denial is based, a designation of any additional material necessary to perfect the claim, and an explanation of the claim reviewprocedure.(b)Appeal Procedure to the Board. A Claimant is entitled to request a review of any denial by the full Board by written request tothe 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 beconclusively denied. The Board shall afford the Claimant the opportunity to review all pertinent documents and submit issues and comments in writing andshall 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 extendthe 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 thedecision 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 Corporation has caused thisAgreement to be signed, all as of the date first set forth above.Signature: /s/ RUSSELL SHALLERExecutive- Russell ShallerVice President - President, Global Identification SolutionsBRADY CORPORATIONBy: /s/ J. MICHAEL NAUMANJ. Michael NaumanPresident and Chief Executive OfficerEXHIBIT 10.59Brady CorporationChange of Control AgreementAGREEMENT, made as of September 11, 2015, between Brady Corporation, a Wisconsin corporation, (“Corporation”) and Aaron Pearce.WHEREAS, the Executive is now serving as an executive of the Corporation in a position of importance and responsibility; andWHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Corporation and its policies, markets and financial andhuman resources, and the Executive has acquired certain confidential information and data with respect to the Corporation; andWHEREAS, the Corporation wishes to continue to receive the benefit of the Executive’s knowledge and experience and, as an inducement forcontinued 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 Corporation 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 ofpersons (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 theirdescendants, or trusts for their benefit, and the William H. Brady, Jr. Family Trust, collectively, directly or indirectly controls in excess of 50% of the votingcommon stock of the Corporation.(b)Termination Due to Change of Control. A “Termination Due to Change of Control” shall occur if within the 24 month periodbeginning with the date a Change of Control occurs (i) the Executive’s employment with the Corporation is involuntarily terminated (other than by reason ofdeath, disability or Cause) or (ii) the Executive’s employment with the Corporation is voluntarily terminated by the Executive subsequent to (A) anyreduction 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’sannual base salary and target bonus immediately prior to the date the Change of Control occurs, (B) a significant diminution in the responsibilities orauthority 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 Corporation that the Executive relocate to a principal work location more than 50 miles from the Executive’s principalwork 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 theCorporation (other than any such failure resulting from physical or mental incapacity) after written demand for performance is given to the Executive by theCorporation which specifically identifies the manner in which the Corporation believes the Executive has not substantially performed and a reasonable timeto 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 anact 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.(d)“Beneficiary” means any one or more primary or secondary beneficiaries designated in writing by the Executive on a formprovided by the Corporation to receive any benefits which may become payable under this Agreement on or after the Executive’s death. The Executive shallhave the right to name, change or revoke the Executive’s designation of a Beneficiary on a form provided by the Corporation. The designation on file withthe Corporation at the time of the Executive’s death shall be controlling. Should the Executive fail to make a valid Beneficiary designation or leave nonamed 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 two times the annual basesalary paid the Executive by the Corporation in effect immediately prior to the date the Change of Control occurs, and two times the average bonus paymentreceived in the three years immediately prior to the date the Change of Control occurs. Such amount shall be paid in 24 monthly installments beginning onthe 15th day of the month following the month in which the Executive’s employment with the Corporation terminates.(b)If the scheduled payments under paragraph (a) above would result in disallowance of any portion of the Corporation’sdeduction therefore under Section 162(m) of the Code, the payments called for under paragraph (a) shall be limited to the amount which is deductible, withthe balance to be paid during the first taxable year in which the Corporation reasonably anticipates that the deduction of such payment is not barred bySection 162(m). However, in such event, the Corporation shall pay the Executive on a quarterly basis an amount of interest based on the prime raterecomputed each quarter on the unpaid scheduled payments.(c)It is intended that (A) each payment or installment of payments provided under this Section 2 is a separate “payment” forpurposes of Code Section 409A and (B) that the payments satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A,including those provided under Treasury Regulations 1.409A-1(b)(4) (regarding short-term deferrals), 1.409A-1(b)(9)(iii) (regarding the two-times, two yearexception), and 1.409A-1(b)(9)(v) (regarding reimbursements and other separation pay). Notwithstanding anything to the contrary in this Agreement, if theCorporation determines that on the Termination Due to Change of Control the Executive is a “specified employee” (as such term is defined under TreasuryRegulation 1.409A-1(i)(1)) of the Corporation and that any payments to be provided to Executive are or may become subject to the additional tax underCode Section 409A(a)(1)(B) or any other taxes or penalties imposed under Code Section 409A (“Section 409A Taxes”), then such payments shall be delayeduntil the date that is six (6) months after the Termination Due to Change of Control. Any delayed payments shall be made in a lump sum on the first day ofthe seventh month following the Termination Due to Change of Control, or such earlier date that, as determined by the Corporation, is sufficient to avoid theimposition of any Section 409A Taxes on Executive.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 theCorporation (the “Total Payments”) would result in the Executive incurring an excise tax as a result of Section 280(G) of the Code, the Executive will besolely responsible for such excise tax.(b)If the Executive is required to file a lawsuit to enforce the Executive’s rights under this Agreement and the Executive prevails insuch lawsuit, the Corporation will reimburse the Executive for attorney fees incurred up to a maximum of $25,000.00.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, anyremaining 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 Corporation which continuebeyond the Executive’s termination of employment. The payments to be made hereunder are conditioned upon the Executive’s compliance with the terms ofthe Confidential Information Agreement. The payments made hereunder shall be reduced by any payments the Corporation makes to the Executive underSection 3 of the Confidential Information Agreement. In the event the Executive violates the provisions of the Confidential Information Agreement, nofurther payments shall be due hereunder and the Executive shall be obligated to repay all previous payments received hereunder in the same manner asprovided 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 Corporation, shallnot 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 bindingupon the Corporation and its successors and assigns and shall also be enforceable by the Executive’s legal representatives.(b)Successors. The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation orotherwise) to all or substantially all of the business and/or assets of the Corporation expressly to assume and agree to perform this Agreement in the samemanner and to the same extent that the Corporation would have been required to perform it if no such succession had taken place. As used in this Agreement,“Corporation” shall mean both the Corporation as defined above and any such successor that assumes and agrees to perform this Agreement, by operation oflaw 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 provisionshereof 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 tothe other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:If to the Executive:Aaron Pearce 4906 South Lake Road Colgate, WI 53017-9111If to the Corporation: Brady Corporation6555 West Good Hope RoadMilwaukee, Wisconsin 53223Attention: CFOor to such other address as either party furnishes to the other in writing in accordance with this paragraph. Notices and communications shall be effectivewhen actually received by the addressee.(e)Construction. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity orenforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remainingportion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to thefullest extent consistent with law.(f)No Guarantee of Employment. Nothing contained in this Agreement shall give the Executive the right to be retained in theemployment of the Corporation or affect the right of the Corporation to dismiss the Executive.(g)Amendment; Entire Agreement. This Agreement may not be amended or modified except by a written agreement executed bythe parties hereto or their respective successors and legal representatives. This Agreement contains the entire agreement between the parties on the subjectscovered 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 qualifiedor nonqualified plan or agreement of the Corporation, except as otherwise may be specifically provided by such plan or agreement.(i)Other Agreements. This Agreement supersedes any other severance arrangement or Change of Control Agreement between theCorporation and the Executive. This Agreement does not confer any payments or benefits other than the payments described in Sections 2 and 3 hereof.(j)Withholding. To the extent required by law, the Corporation shall withhold any taxes required to be withheld with respect tothis Agreement by the federal, state or local government from payments made hereunder or from other amounts paid to the Executive by the Corporation.(k)Facility of Payment. If the Executive or, if applicable, the Executive’s Beneficiary, is under legal disability, the Corporationmay 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, orto any legal guardian or conservator of such person. Any such distribution shall constitute a full discharge with respect to the Corporation and theCorporation shall not be required to see to the application of any distribution so made.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 aportion of a benefit under this Agreement, he or she may file a written claim for benefits with the Corporation. The Corporation shall review the claim andnotify the Claimant of the Corporation’s decision within 60 days of receipt of such claim, unless the Claimant receives written notice prior to the end of the60 day period stating that special circumstances require an extension of the time for decision. The Corporation’s decision shall be in writing, sent by mail tothe 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 thisAgreement on which the denial is based, a designation of any additional material necessary to perfect the claim, and an explanation of the claim reviewprocedure.(b)Appeal Procedure to the Board. A Claimant is entitled to request a review of any denial by the full Board by written request tothe 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 beconclusively denied. The Board shall afford the Claimant the opportunity to review all pertinent documents and submit issues and comments in writing andshall 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 extendthe 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 thedecision 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 Corporation has caused thisAgreement to be signed, all as of the date first set forth above.Signature: /s/ AARON J. PEARCEExecutive- Aaron PearceSenior Vice President, Chief Financial Officer, andChief Accounting OfficerBRADY CORPORATIONBy: /s/ J. MICHAEL NAUMANJ. Michael NaumanPresident and Chief Executive OfficerEXHIBIT 10.60BRADY CORPORATIONNONQUALIFIED STOCK OPTIONUpon management’s recommendation, the Management Development and Compensation Committee (the “Committee”) of the Brady CorporationBoard of Directors has awarded to _______________ (“Employee”) a non-qualified stock option (the “Option”) effective __________, 20__, pursuant to theterms of the Brady Corporation 2012 Omnibus Incentive Stock Plan (the “Plan”). The Corporation’s records shall be the official record of the Option grantdescribed herein and, in the event of any conflict between this description and the Corporation’s records, the Corporation’s records shall control.1.Number of Shares Optioned; Option PriceThe Corporation grants to the Employee the right and option to purchase, on the terms and conditions hereof, all or any part of an aggregate ofX,XXX shares of the presently authorized Class A Common Stock of the Corporation, $.01 par value, whether unissued or issued and reacquired bythe Corporation, at the price of $XX.XX per share (the “Option Price”).2.Conditions of Exercise of Options During Employee’s Lifetime; Vesting of OptionExcept as provided in this Section and in Section 3, this Option may not be exercised (a) unless Employee is at the date of the exercise in the employof the Corporation or an Affiliate, and (b) until Employee shall have been continuously so employed for a period of at least one year from the datehereof. Thereafter, this Option shall be exercisable for any amount of shares up to the maximum percentage of shares covered by this Option(rounded up to the nearest whole share), as follows (but in no event shall this Option be exercisable for any shares after the expiration date providedin Section 7):Number of Completed Years AfterDate of Grant of this OptionMaximumPercentageof Shares ForWhich Option isExercisable Less than 1ZeroAt least 1 but less than 233-1/3%At least 2 but less than 366-2/3%At least 3100%If Employee shall cease to be employed by the Corporation or an Affiliate for any reason other than as provided in Section 3 after Employee shallhave been continuously so employed for one year after the grant of this Option, Employee may, at any time within 90 days of such termination, butin no event later than the date of expiration of this Option, exercise this Option to the extent Employee was entitled to do so on the date of suchtermination. However, if Employee was dismissed for cause, of which the Committee shall be the sole judge, this Option shall forthwith expire. ThisAgreement does not confer upon Employee any right of continuation of employment by the Corporation or an Affiliate, nor does it impair any rightthe Corporation or any Affiliate may have to terminate the Employee’s employment at any time.3.Termination of EmploymentNotwithstanding the provisions of Section 2 hereof, if the Employee:(a)is terminated by the death of the Employee, any unexercised, unexpired Stock Options granted hereunder to the Employee 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 Employee’s personalrepresentative or by the person to whom the Stock Options are transferred under the Employee’s last will and testament or the applicablelaws of descent and distribution;(b)dies within 90 days after termination of employment by the Corporation or its Affiliates, other than for cause, any unexercised, unexpiredStock Options granted hereunder to the Employee 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 theEmployee’s personal representative or by the person to whom the Stock Options are transferred under the Employee’s last will andtestament or the applicable laws of descent and distribution;(c)is terminated as a result of the disability of the Employee (a disability means that the Employee is disabled as a result of sickness or injury,such that he or she is unable to satisfactorily perform the material duties of Employee’s job, as determined by the Board of Directors, on thebasis of medical evidence satisfactory to it), any unexercised, unexpired Stock Options granted hereunder to the Employee shall become100% vested and fully exercisable, in whole or in part, at any time within one year after the date of disability; or(d)is terminated as a result of the Employee’s retirement after age 65, any unexercised, unexpired Stock Options granted hereunder to theEmployee shall continue to vest as provided in Section 2 hereof and any option that is or becomes vested may be exercised in whole or inpart prior to the expiration date of such option.4.Deferral of ExerciseAlthough the Corporation intends to exert its best efforts so that the shares purchasable upon the exercise of this Option will be registered under, orexempt from, the registration requirements of, the Securities Act of 1933 (the “Act”) and any applicable state securities law at the time or times thisOption (or any portion of this Option) first becomes exercisable, if the exercise of this Option would otherwise result in a violation by theCorporation of any provision of the Act or of any state securities law, the Corporation may require that such exercise be deferred until theCorporation has taken appropriate action to avoid any such violation.5.Method of Exercising OptionThis Option shall be exercised by delivering to the Corporation, at the office of its Treasurer, a written notice of the number of shares with respect towhich this Option is at the time being exercised and by paying the Corporation in full the Option Price of the shares being acquired at the time.6.Method of PaymentPayment shall be made either (i) in cash; (ii) by delivering shares of the Corporation’s Class A Common Stock which have been beneficially ownedby the Employee, the spouse of the Employee, or both of them, for a period of at least six months prior to the time of exercise (“Delivered Stock”);(iii) by surrendering to the Corporation shares of Class A Common Stock otherwise receivable upon exercise of the Option (a “Net Exercise”); or (iv)any combination of the foregoing. Payment in the form of Delivered Stock shall be in the amount of the Fair Market Value of the stock at the date ofexercise, determined in accordance with Section 9.7.Expiration DateThis Option shall expire ten years after the date on which this Option was granted.8.Withholding TaxesThe Corporation may require, as a condition to the exercise of this Option, that the Employee concurrently pay to the Corporation any taxes whichthe Corporation is required to withhold by reason of such exercise. In lieu of part or all of any such payment, the Employee may elect, subject tosuch rules and regulations as the Committee may adopt from time to time, to have the Corporation withhold from the shares to be issued uponexercise that number of shares having a Fair Market Value, determined in accordance with Section 9, equal to the amount which the Corporation isrequired to withhold.9.Method of Valuation of StockThe “Fair Market Value” of the Class A Common Stock of the Corporation on any date shall mean, if the stock is then listed and traded on aregistered national securities exchange, or is quoted in the NASDAQ National Market System, the average of the high and low sales price recorded incomposite transactions for such date or, if such date is not a business day or if no sales of shares 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 therelevant date.10.Confidentiality, Non-Solicitation and Non-CompeteAs consideration for the grant of this Option, Employee agrees to, understands and acknowledges the following:(a)During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provide Employee withConfidential Information relating to the Company, its business and clients, the disclosure or misuse of which would cause severe andirreparable harm to the Company. Employee agrees that all Confidential Information is and shall remain the sole and absolute property ofthe Company. Upon the termination of Employee's employment with the Company for any reason, Employee shall immediately return tothe Company all documents and materials that contain or constitute Confidential Information, in any form whatsoever, including but notlimited to, all copies, abstracts, electronic versions, and summaries thereof. Executive further agrees that, without the written consent of theChief Executive Officer of the Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval ofthe Board of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use, disclosure,copying or duplication of any Confidential Information of the Company, other than in connection with the authorized activities conductedin the course of Employee's employment with the Company. Employee agrees to take all reasonable steps and precautions to prevent anyunauthorized disclosure, use, copying or duplication of Confidential Information. For purposes of this Agreement, Confidential Informationmeans any and all financial, technical, commercial or other information concerning the business and affairs of the Company that isconfidential and proprietary to the Company, including without limitation,(i)information relating to the Company’s past and existing customers and vendors and development of prospective customers andvendors, including specific customer product requirements, pricing arrangements, payments terms, customer lists and other similarinformation;(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced,acquired or used by the Company;(iii)the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or objectcode and all related documentation and training materials, including all upgrades, updates, improvements, derivatives andmodifications thereof and including programs and documentation in incomplete stages of design or research and development;(iv)the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, tradedress, manuals, operating instructions, training materials, and other industrial property, including such information in incompletestages of design or research and development; and(v)other confidential and proprietary information or documents relating to the Company’s products, business and marketing plansand techniques, sales and distribution networks and any other information or documents which the Company reasonably regards asbeing confidential.(b)Employee agrees that, without the written consent of the Chief Executive Officer of the Corporation, in the case of the Chief ExecutiveOfficer of the Corporation, without the written approval of the Board of Directors of the Corporation, Employee shall not engage in any ofthe conduct described in subsections (i) or (ii), below, either directly or indirectly, or as an employee, contractor, consultant, partner, officer,director or stockholder, other than a stockholder of less than 5% of the equities of a publicly traded corporation, or in any other capacity forany person, firm, partnership or corporation:(i)During the time of Employee's employment with Company, Employee will not: (A) perform duties as or for a Competitor; or (B)participate in the inducement of or otherwise encourage Company employees, clients, or vendors to currently and/or prospectivelybreach, modify, or terminate any agreement or relationship they have or had with Company.(ii)For a period of 12 months following the termination of Employee's employment with Company, Employee will not: (A) performduties as or for a Competitor that are the same as or similar to the duties performed by Employee for the Company at any timeduring any part of the 24 month period preceding the termination of Employee's employment with Company; or (B) participate inthe inducement of or otherwise encourage Company employees, clients, or vendors to currently and/or prospectively breach,modify, or terminate any agreement or relationship they have or had with Company during any part of the 24 month periodpreceding the termination of Employee's employment with Company.For purposes of this Agreement, a Competitor shall mean any corporation, person, firm or organization (or division or part thereof) engagedin or about to become engaged in research and development work on, or the production and/or sale of, any product or service which isdirectly competitive with one with respect to which Employee acquired Confidential Information by reason of Employee's work with theCompany.(c)Employee acknowledges and agrees that compliance with this Section 10 is necessary to protect the Company, and that a breach of any ofthis Section 10 will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law. In theevent of a breach of this Section 10, or any part thereof, the Company, and its successors and assigns, shall be entitled to injunctive reliefand to such other and further relief as is proper under the circumstances. The Company shall institute and prosecute proceedings in anyCourt of competent jurisdiction either in law or in equity to obtain damages for any such breach of this Section 10, or to enjoin Employeefrom performing services in breach of Section 10(b) during the term of employment and for a period of 12 months following the terminationof employment. Employee hereby agrees to submit to the jurisdiction of any Court of competent jurisdiction in any disputes that ariseunder this Agreement.(d)Employee further agrees that, in the event of a breach of this Section 10, the Corporation shall also be entitled to recover the value of anyamounts previously paid or payable or any shares (or the value of any shares) delivered or deliverable to Employee pursuant to anyCompany bonus program, this Agreement, and any other Company plan or arrangement.(e)Employee agrees that the terms of this Section 10 shall survive the termination of Employee's employment with the Company.(f)EMPLOYEE HAS READ THIS SECTION 10 AND AGREES THAT THE CONSIDERATION PROVIDED BY THE CORPORATION IS FAIRAND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL ANDPROPRIETARY INFORMATION, THE POST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIRAND REASONABLE.11.ClawbackThis Option is subject to the terms of the Corporation's recoupment, clawback or similar policy as it may be in effect from time to time, as well as anysimilar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any shares of CommonStock or other cash or property received with respect to the awards (including any value received from a disposition of the shares acquired uponpayment of the awards).12.No Rights in Shares Until Certificates IssuedNeither the Employee nor his heirs nor his personal representative shall have any of the rights or privileges of a stockholder of the Corporation inrespect of any of the shares issuable upon the exercise of the Option herein granted, unless and until certificates representing such shares shall havebeen issued or shares in book entry form shall have been recorded in the records of the Corporation’s transfer agent.13.Option Not TransferableNo portion of the Option granted hereunder shall be transferable or assignable (or made subject to any pledge, lien, obligation or liability of anEmployee) except (a) by last will and testament or the laws of descent and distribution (and upon a transfer or assignment pursuant to an Employee’slast will and testament or the laws of descent and distribution, any Option must be transferred in accordance therewith); (b) during the Employee’slifetime, nonqualified stock Options may be transferred by an Employee to the Employee’s spouse, children or grandchildren or to a trust for thebenefit of such spouse, children or grandchildren, provided that the terms of any such transfer prohibit the resale of shares acquired upon exercise ofthe 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.14.Prohibition Against Pledge, Attachment, Etc.Except as otherwise herein provided, the Option herein granted and the rights and privileges pertaining thereto shall not be transferred, assigned,pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.15.Changes in StockIn the event there are any changes in the Class A Common Stock of the Corporation through merger, consolidation, reorganization, recapitalization,stock dividend, stock split, combination or exchange of shares, rights offering or any other change affecting the Class A Common Stock of theCorporation, appropriate changes will be made by the Committee in the aggregate number of shares and the purchase price and kind of sharessubject to this Option, to prevent substantial dilution or enlargement of the rights granted to or available for Employee.16.Dissolution or MergerAnything contained herein to the contrary notwithstanding, upon the dissolution or liquidation of the Corporation, or upon any merger in which theCorporation is not the surviving corporation, at any time prior to the expiration date of the termination of this Option, the Employee shall have theright within 60 days prior to the effective date of such dissolution, liquidation or merger, to surrender all or any unexercised portion of this Option tothe Corporation for cash, subject to the discretion of the Committee as to the exact timing of said surrender. Notwithstanding the foregoing,however, in the event Employee has retired or died, Employee’s right to surrender all or any unexercised portion of this Option under this Sectionshall be available only to the extent that at the time of any such surrender, Employee would have been entitled to exercise this Option underSections 2 or 3 hereof, as the case may be. The amount of cash to be paid to Employee for the portion of this Option so surrendered, shall be equal tothe number of shares of Class A Common Stock subject to the surrendered Option multiplied by the difference between the Option Price per share, asdescribed in Section 1 hereof, and the Fair Market Value per share, determined in accordance with Section 9 hereof, as of the time of surrender.17.NoticesAny notice to be given to the Corporation under the terms of this Agreement shall be addressed to the Corporation in care of its Chief FinancialOfficer, and any notice to be given to the Employee may be addressed at the address as it appears on the Corporation’s records, or at such otheraddress as either party may hereafter designate in writing to the other. Except as provided in Section 5 hereof, any such notice shall be deemed tohave been duly given, if and when enclosed in a properly sealed envelope addressed as aforesaid, and deposited, postage prepaid, in the UnitedStates mail.18.Provisions of Plan ControllingThis Option is subject in all respects to the provisions of the Plan. In the event of any conflict between any provisions of this Option and theprovisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan permits the Committee to modify the terms of an Optiongrant and has done so herein. Terms defined in the Plan where used herein shall have the meanings as so defined. Employee acknowledges receipt ofa copy of the Plan.19.Wisconsin ContractThis Option has been granted in Wisconsin and shall be construed under the laws of that state.20.SeverabilityWherever possible, each provision of this Option will be interpreted in such manner as to be effective and valid under applicable law, but if anyprovision hereof is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibitionor invalidity, without invalidating the remainder of such provision or the remaining provisions hereof.IN WITNESS WHEREOF, the Corporation has granted this Option as of the day and year first above written.BRADY CORPORATIONBy: J. MICHAEL NAUMAN Name: J. Michael NaumanIts: President and Chief Executive Officer EMPLOYEE'S ACCEPTANCEI, ___________________________, hereby accept the foregoing Option award and agree to the terms and conditions thereof, including therestrictions contained in Section 10 of this Agreement.EMPLOYEE:Signature: Print Name: EXHIBIT 10.61BRADY CORPORATIONRESTRICTED STOCK UNIT AGREEMENTUpon management’s recommendation, the Management Development and Compensation Committee (the “Committee”) of the Brady CorporationBoard of Directors has awarded to ______________ (“Employee”) a restricted stock unit award effective _____________, 20XX pursuant to the terms of theBrady Corporation 2012 Omnibus Incentive Stock Plan (the “Plan”). The Corporation’s records shall be the official record of the grant described herein and,in the event of any conflict between this description and the Corporation’s records, the Corporation’s records shall control.1.Number of UnitsThis Restricted Stock Unit Award applies to X,XXX shares of the presently authorized Class A Nonvoting Common Stock of the Corporation, $.01par value (the “Restricted Stock Units”). The Restricted Stock Units granted under this Agreement are units that will be reflected in a book accountmaintained by the Corporation until they become vested or have been forfeited.2.Service Vesting RequirementThe vesting of this Award (other than pursuant to accelerated vesting in certain circumstances as provided in Section 3 below) shall be subject to thesatisfaction of the condition set forth in Section 2(a) below:(a)Vesting. The Award shall be subject to the following service vesting requirement. If the Employee continues in employment through thevesting dates listed below, the Restricted Stock Units shall be vested as listed in the following table: Vesting DateCumulative Percentage of Vested RestrictedStock Units First anniversary of grant date33-1/3%Second anniversary of grant date66-2/3%Third anniversary of grant date100% (b)Forfeiture of Restricted Stock Units. Except as provided in Section 3, if the Employee terminates employment prior to the satisfaction of thevesting requirements set forth in Section 2(a) above, any unvested Restricted Stock Units shall immediately be forfeited. The period of timeduring which the Restricted Stock Units covered by this Award are forfeitable is referred to as the “Restricted Period.”3.Accelerated Vesting(a)Notwithstanding the terms and conditions of Section 2 hereof, in the event of the termination of the Employee’s employment with theCorporation (and any Affiliate) prior to the end of the Restricted Period due to death or Disability, the Restricted Stock Units shall becomefully vested.(b)In the event of the termination of the Employee’s employment with the Corporation (and any Affiliate) prior to the end of the RestrictedPeriod due to a Change in Control, the Restricted Stock Units 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 Securitiesand 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 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 Changeof Control occurs (i) the Employee’s employment with the Corporation (and any Affiliate) is involuntarily terminated (other than by reason of death,disability or Cause) or (ii) the Employee’s employment with the Corporation (and any Affiliate) is voluntarily terminated by the Employeesubsequent to (A) a 10% or more diminution in the total of the Employee’s annual base salary (exclusive of fringe benefits) and the Employee’starget bonus in comparison with the Employee’s total of annual base salary and target bonus immediately prior to the date the Change of Controloccurs, (B) a significant diminution in the responsibilities or authority of the Employee in comparison with the Employee’s responsibility andauthority immediately prior to the date the Change of Control occurs or (C) the imposition of a requirement by the Corporation that the Employeerelocate to a principal work location more than 50 miles from the Employee’s principal work location immediately prior to the date the Change ofControl occurs.For purposes of this Agreement, Cause means (i) the Employee’s willful and continued failure to substantially perform the Employee’s duties withthe Corporation (other than any such failure resulting from physical or mental incapacity) after written demand for performance is given to theEmployee by the Corporation which specifically identifies the manner in which the Corporation believes the Employee has not substantiallyperformed 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 toresult in significant injury (monetarily or otherwise) to the Corporation, as determined in good faith by the Committee.(c)In the event of (i) the merger or consolidation of the Corporation with or into another corporation or corporations in which the Corporationis not the surviving corporation, (ii) the adoption of any plan for the dissolution of the Corporation, or (iii) the sale or exchange of all orsubstantially all the assets of the Corporation for cash or for shares of stock or other securities of another corporation, the Restricted StockUnits shall become fully vested.(d)If the vesting of the Restricted Stock Units would result in any excise tax to the Employee as a result of Section 280G of the Code, theCorporation shall pay the Employee an amount equal to such excise tax.4.No DividendsNo dividends will be paid or accrued on any Restricted Stock Units during the Restricted Period.5.Settlement of Restricted Stock UnitsAs soon as practicable after Restricted Stock Units become vested, the Company shall deliver to the Employee one share of the Corporation's ClassA Nonvoting Common Stock, $.01 par value ("Corporation Stock") for each Restricted Stock Unit which becomes vested.6.Transfer RestrictionsThis Award is non-transferable and may not be assigned, pledged or hypothecated and shall not be subject to execution, attachment or similarprocess. Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and voidand the Restricted Stock Units shall be forfeited.7.Withholding TaxesThe Corporation may require payment of or withhold any tax which it believes is payable as a result of the Restricted Stock Units becoming vested,and the Corporation may defer making delivery of the Corporation Stock until arrangements satisfactory to the Corporation have been made withregard 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 ofsuch vesting, may elect, subject to such rules and regulations as the Committee may adopt from time to time, to have the Corporation withhold thatnumber of shares of Corporation Stock (valued at Fair Market Value on the date of vesting and rounded upward) required to settle such withholdingtaxes.8.Death of EmployeeIf the Restricted Stock Units shall vest upon the death of the Employee, the shares of Corporation Stock and any amounts in the Employee'sDividend Account shall be issued and paid to the estate of the Employee unless the Corporation shall have theretofore received in writing abeneficiary designation, in which event they shall be issued and paid to the designated beneficiary.9.Confidentiality, Non-Solicitation and Non-CompeteAs consideration for the grant of this Award, Employee agrees to, understands and acknowledges the following:(a)During Employee's employment with the Corporation and its Affiliates (the "Company"), the Company will provide Employee withConfidential Information relating to the Company, its business and clients, the disclosure or misuse of which would cause severe andirreparable harm to the Company. Employee agrees that all Confidential Information is and shall remain the sole and absolute property ofthe Company. Upon the termination of Employee's employment with the Company for any reason, Employee shall immediately return tothe Company all documents and materials that contain or constitute Confidential Information, in any form whatsoever, including but notlimited to, all copies, abstracts, electronic versions, and summaries thereof. Executive further agrees that, without the written consent of theChief Executive Officer of the Corporation or, in the case of the Chief Executive Officer of the Corporation, without the written approval ofthe Board of Directors of the Corporation, Employee will not disclose, use, copy or duplicate, or otherwise permit the use, disclosure,copying or duplication of any Confidential Information of the Company, other than in connection with the authorized activities conductedin the course of Employee's employment with the Company. Employee agrees to take all reasonable steps and precautions to prevent anyunauthorized disclosure, use, copying or duplication of Confidential Information. For purposes of this Agreement, Confidential Informationmeans any and all financial, technical, commercial or other information concerning the business and affairs of the Company that isconfidential and proprietary to the Company, including without limitation,(i)information relating to the Company’s past and existing customers and vendors and development of prospective customers andvendors, including specific customer product requirements, pricing arrangements, payments terms, customer lists and other similarinformation;(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced,acquired or used by the Company;(iii)the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or objectcode and all related documentation and training materials, including all upgrades, updates, improvements, derivatives andmodifications thereof and including programs and documentation in incomplete stages of design or research and development;(iv)the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, tradedress, manuals, operating instructions, training materials, and other industrial property, including such information in incompletestages of design or research and development; and(v)other confidential and proprietary information or documents relating to the Company’s products, business and marketing plansand techniques, sales and distribution networks and any other information or documents which the Company reasonably regards asbeing confidential.(b)Employee agrees that, without the written consent of the Chief Executive Officer of the Corporation, in the case of the Chief ExecutiveOfficer of the Corporation, without the written approval of the Board of Directors of the Corporation, Employee shall not engage in any ofthe conduct described in subsections (i) or (ii), below, either directly or indirectly, or as an employee, contractor, consultant, partner, officer,director or stockholder, other than a stockholder of less than 5% of the equities of a publicly traded corporation, or in any other capacity forany person, firm, partnership or corporation:(i)During the time of Employee's employment with Company, Employee will not: (A) perform duties as or for a Competitor; or (B)participate in the inducement of or otherwise encourage Company employees, clients, or vendors to currently and/or prospectivelybreach, modify, or terminate any agreement or relationship they have or had with Company.(ii)For a period of 12 months following the termination of Employee's employment with Company, Employee will not: (A) performduties as or for a Competitor that are the same as or similar to theduties performed by Employee for the Company at any time during any part of the 24 month period preceding the termination ofEmployee's employment with Company; or (B) participate in the inducement of or otherwise encourage Company employees,clients, or vendors to currently and/or prospectively breach, modify, or terminate any agreement or relationship they have or hadwith Company during any part of the 24 month period preceding the termination of Employee's employment with Company.For purposes of this Agreement, a Competitor shall mean any corporation, person, firm or organization (or division or part thereof) engagedin or about to become engaged in research and development work on, or the production and/or sale of, any product or service which isdirectly competitive with one with respect to which Employee acquired Confidential Information by reason of Employee's work with theCompany.(c)Employee acknowledges and agrees that compliance with this Section 9 is necessary to protect the Company, and that a breach of any ofthis Section 9 will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law. In theevent of a breach of this Section 9, or any part thereof, the Company, and its successors and assigns, shall be entitled to injunctive relief andto such other and further relief as is proper under the circumstances. The Company shall institute and prosecute proceedings in any Court ofcompetent jurisdiction either in law or in equity to obtain damages for any such breach of this Section 9, or to enjoin Employee fromperforming services in breach of Section 9(b) during the term of employment and for a period of 12 months following the termination ofemployment. Employee hereby agrees to submit to the jurisdiction of any Court of competent jurisdiction in any disputes that arise underthis Agreement.(d)Employee further agrees that, in the event of a breach of this Section 9, the Corporation shall also be entitled to recover the value of anyamounts previously paid or payable or any shares (or the value of any shares) delivered or deliverable to Employee pursuant to anyCompany bonus program, this Agreement, and any other Company plan or arrangement.(e)Employee agrees that the terms of this Section 9 shall survive the termination of Employee's employment with the Company.(f)EMPLOYEE HAS READ THIS SECTION 9 AND AGREES THAT THE CONSIDERATION PROVIDED BY THE CORPORATION IS FAIRAND REASONABLE AND FURTHER AGREES THAT GIVEN THE IMPORTANCE TO THE COMPANY OF ITS CONFIDENTIAL ANDPROPRIETARY INFORMATION, THE POST-EMPLOYMENT RESTRICTIONS ON EMPLOYEE'S ACTIVITIES ARE LIKEWISE FAIRAND REASONABLE.10.ClawbackThis Award is subject to the terms of the Corporation's recoupment, clawback or similar policy as it may be in effect from time to time, as well as anysimilar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any shares ofCorporation Stock or other cash or property received with respect to the awards (including any value received from a disposition of the sharesacquired upon payment of the awards).11.Adjustment of SharesThe terms and provisions of this Award (including, without limitation, the terms and provisions relating to the number and class of shares subject tothis 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.12.Provisions of Plan ControllingThis Award is subject in all respects to the provisions of the Plan. In the event of any conflict between any provisions of this Award and theprovisions of the Plan, the provisions of the Plan shall control, except to the extent the Plan permits the Committee to modify the terms of an Awardgrant and has done so herein. Terms defined in the Plan where used herein shall have the meanings as so defined. Employee acknowledges receipt ofa copy of the Plan.13.Wisconsin ContractThis Award has been granted in Wisconsin and shall be construed under the laws of that state.14.SeverabilityWherever possible, each provision of this Award will be interpreted in such manner as to be effective and valid under applicable law, but if anyprovision hereof is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibitionor invalidity, without invalidating the remainder of such provision or the remaining provisions hereof.IN WITNESS WHEREOF, the Corporation has granted this Award as of the day and year first above written.BRADY CORPORATIONBy: J. MICHAEL NAUMAN Name: J. Michael NaumanIts: President and Chief Executive Officer EMPLOYEE'S ACCEPTANCEI, ___________________________, hereby accept the foregoing Award and agree to the terms and conditions thereof, including the restrictionscontained in Section 9 of this Agreement.EMPLOYEE:Signature: Print Name: EXHIBIT 21SCHEDULE OF SUBSIDIARIES OF BRADY CORPORATIONJuly 31, 2015 State (Country) Percentage of VotingName of Company Of Incorporation Securities OwnedBrady Corporation Wisconsin ParentTricor Direct, Inc. Delaware 100% Doing Business As: Seton Seton Name Plate Company D&G Sign and Label Seton Identification Products Emedco Champion America DAWG, Inc. Worldmark of Wisconsin Inc. Delaware 100%AIO Acquisition Inc. Delaware 100% Doing Business As: All-In-One Products Personnel Concepts Personnel Concepts Limited Personnel Concepts Ltd. PC Limited USA Printing & Mailing Dual Core LLC Wisconsin 100% Doing Business As: Identicard Systems Worldwide Brady People ID JAM Plastics PromoVision Palomino Temtec BIG Badges Brady Holdings Mexico LLC Delaware 100%Clement Communications, Inc. Pennsylvania 100%Brady International Co. Wisconsin 100%Brady Worldwide, Inc. Wisconsin 100% Doing Business As: Brandon International Sorbent Products Company TISCOR Electromark Precision Dynamics Corporation California 100% Doing Business As: Pharmex TimeMed Labeling Systems PDMX LLC California 100%Precision Dynamics International, Inc. California 100%Brady Australia Holdings Pty. Ltd. Australia 100%Brady Australia Pty. Ltd. Australia 100% Doing Business As: Scafftag Australia Seton Australia Trafalgar First Aid Visisign Accidental Health & Safety Pty. Ltd. Australia 100%Carroll Australasia Pty. Ltd. Australia 100%ID Warehouse Pty. Ltd. Australia 100%Mix Group Australasia Pty. Ltd. Australia 100%Transposafe Systems Belgium NV/SA Belgium 100%W.H. Brady, N.V. Belgium 100%PDC Belgium Holdings Sprl Belgium 100%PDC Europe Sprl Belgium 100%W.H.B. do Brasil Ltda. Brazil 100%BRC Financial Canada 100%W.H.B. Identification Solutions Inc. Canada 100% Doing Business As: Brady IDenticard IDenticam Systems IDenticard Systems Seton Brady Investment Management (Shanghai) Co., Ltd. China 100%Brady Technology (Wuxi) Co. Ltd. China 100%Brady (Beijing) Co. Ltd. China 100%Brady (Shenzhen) Co., Ltd. China 100%Brady Technology (Dongguan) Co., Ltd. China 100%Brady (Xiamen) Co., Ltd. China 100%Brady A/S Denmark 100%Braton Europe S.A.R.L France 100%Brady Groupe S.A.S France 100% Doing Business As: Seton Signals BIG Securimed S.A.S. France 100%Brady GmbH Germany 100% Doing Business As: Seton Transposafe Systems Deutschland GmbH Germany 100%Bakee Metal Manufactory Company Limited Hong Kong 100%Brady Corporation Hong Kong Limited Hong Kong 100%Brady Company India Private Limited India 100%Brady Italia, S.r.l. Italy 100%Nippon Brady K.K. Japan 100%Brady S.à r.l. Luxembourg 100%Brady Luxembourg S.à r.l. Luxembourg 100%Brady Finance Luxembourg S.à r.l. Luxembourg 100%Brady Technology SDN. BHD. Malaysia 100%W. H. Brady S. de R.L. de C.V. Mexico 100%Brady Mexico, S. de R.L. de C.V. Mexico 100%PDC Brazeletesy Productos S.de R.L. de C.V. Mexico 100%Brady B.V. Netherlands 100%Brady Finance B.V. Netherlands 100%Holland Mounting Systems B.V. Netherlands 100%Transposafe Systems Holland B.V. Netherlands 100%Brady AS Norway 100%Pervaco AS Norway 100%Brady Philippines Direct Marketing Inc. Philippines 100%Transposafe Systems Polska Sp. Z.o.o. Poland 100%Brady ID Solutions S.R.L. Romania 100%Brady LLC Russia 100%Brady Corporation S.E.A. Pte. Ltd. Singapore 100%Brady Corporation Asia Pte. Ltd. Singapore 100%Brady Asia Holding Pte. Ltd. Singapore 100%Brady Corporation Asia Pacific Pte. Ltd. Singapore 100%Brady Asia Pacific Pte. Ltd. Singapore 100%Brady s.r.o. Slovakia 100%Wiremarkers Africa Pty. Ltd. South Africa 100%Grafo Wiremarkers Pty. Ltd. South Africa 100%Brady IDS Korea LLP South Korea 100%Brady Identificación S.L.U. Spain 100%Brady AB Sweden 100%Brady Sweden Holding AB Sweden 100%Runelandhs Fastighter AB Sweden 100%Runelandhs Försäljnings AB Sweden 100%Brady Converting AB Sweden 100%Tradex AB Sweden 100%Brady (Thailand) Co. Ltd. Thailand 100%Brady Etiket ve Isaretleme Ticaret Ltd. Sirketi Turkey 100%Brady Middle East FZE United Arab Emirates 100%B.I. (UK) Limited United Kingdom 100%Brady Corporation Limited United Kingdom 100%Brady European Finance Limited United Kingdom 100%Brady European Holdings Limited United Kingdom 100%EXHIBIT 23CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement Nos. 333-38857, 333-38859, 333-44505, 333-92417, 333-99615; 333-110949, 333-122867, 333-134503, 333-137686, 333-141402, 333-162538 and 333-177039 on Form S-8 and 333-200653on Form S-3 of our reports dated September 21, 2015, relating to the consolidated financial statements and financial statement scheduleof Brady Corporation, and the effectiveness of Brady Corporation’s internal control over financial reporting, appearing in this AnnualReport on Form 10-K of Brady Corporation for the year ended July 31, 2015./s/ DELOITTE & TOUCHE LLPMilwaukee, WisconsinSeptember 21, 2015EXHIBIT 31.1RULE 13a-14(a)/15d-14(a) CERTIFICATIONI, J. Michael Nauman, 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 thestatements 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 thefinancial 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 inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervisionto provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’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 theregistrant’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 reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: September 21, 2015 /s/ J. MICHAEL NAUMAN J. Michael Nauman President and Chief Executive Officer EXHIBIT 31.2RULE 13a-14(a)/15d-14(a) CERTIFICATIONI, Aaron J. Pearce, 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 act necessary to make thestatements 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 thefinancial 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 inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervisionto provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’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 theregistrant’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 reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: September 21, 2015 /s/ AARON J. PEARCE Aaron J. Pearce Senior Vice President, Chief Financial Officer and ChiefAccounting Officer EXHIBIT 32.1SECTION 1350 CERTIFICATIONPursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of BradyCorporation (the “Company”) certifies to his knowledge that:(1) The Annual Report on Form 10-K of the Company for the year ended July 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) ofthe 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 theCompany. Date: September 21, 2015 /s/ J. MICHAEL NAUMAN J. Michael Nauman President and Chief Executive Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting thesignature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certification accompanies thisreport pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the SecuritiesExchange Act of 1934, as amended.EXHIBIT 32.2SECTION 1350 CERTIFICATIONPursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of BradyCorporation (the “Company”) certifies to his knowledge that:(1) The Annual Report on Form 10-K of the Company for the year ended July 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) ofthe 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 theCompany. Date: September 21, 2015 /s/ AARON J. PEARCE Aaron J. Pearce Senior Vice President, Chief Financial Officer and ChiefAccounting Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting thesignature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certification accompanies thisreport pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the SecuritiesExchange Act of 1934, as amended.

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